[Senate Report 112-143]
[From the U.S. Government Publishing Office]
Calendar No. 296
112th Congress } { Report
2d Session } SENATE { 112-143
_______________________________________________________________________
21ST CENTURY POSTAL SERVICE ACT OF 2012
__________
R E P O R T
of the
COMMITTEE ON HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
to accompany
S. 1789
together with
ADDITIONAL VIEWS
TO IMPROVE, SUSTAIN, AND TRANSFORM THE UNITED STATES POSTAL SERVICE
January 31, 2012.--Ordered to be printed
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware SCOTT P. BROWN, Massachusetts
MARK L. PRYOR, Arkansas JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri ROB PORTMAN, Ohio
JON TESTER, Montana RAND PAUL, Kentucky
MARK BEGICH, Alaska JERRY MORAN, Kansas
Michael L. Alexander, Staff Director
Beth M. Grossman, Deputy Staff Director and Chief Counsel
Lawrence B. Novey, Associate Staff Director and Chief Counsel for
Governmental Affairs
Kenya N. Wiley, Counsel
Nicholas A. Rossi, Minority Staff Director
Mark B. LeDuc, Minority General Counsel
J. Kathryn French, Minority Deputy Staff Director
John A. Kane, Minority Professional Staff Member
Trina Driessnack Tyrer, Chief Clerk
Calendar No. 296
112th Congress Report
SENATE
2d Session 112-143
======================================================================
TO IMPROVE, SUSTAIN, AND TRANSFORM THE UNITED STATES POSTAL SERVICE
_______
January 31, 2012.--Ordered to be printed
_______
Mr. Lieberman, from the Committee on Homeland Security and Governmental
Affairs, submitted the following
R E P O R T
[To accompany S. 1789]
The Committee on Homeland Security and Governmental
Affairs, to which was referred the bill (S. 1789) to improve,
sustain, and transform the United States Postal Service, having
considered the same, reports favorably thereon with an
amendment in the nature of a substitute and recommends that the
bill do pass.
CONTENTS
Page
I. Purpose and Summary..............................................1
II. Background and Need for the Legislation..........................2
III. Legislative History.............................................23
IV. Section-by-Section Analysis.....................................25
V. Evaluation of Regulatory Impact.................................34
VI. Congressional Budget Office Estimate............................35
VII. Changes in Existing Law Made by the Bill, as Reported...........48
VIII.Additional Views................................................95
I. Purpose and Summary
S. 1789, the 21st Century Postal Service Act of 2012, seeks
to strengthen the United States Postal Service (Postal Service
or USPS) and preserve its unique role in the nation's economy
and infrastructure. The dramatic rise of electronic
communication and the recent economic downturn have combined to
imperil the viability of the Postal Service as it currently
exists. S. 1789 is intended to put the Postal Service on a path
toward sustainability. The bill would lessen some of the
immediate financial pressure on the Postal Service, as well as
establish a framework to address some of the long-term
challenges the Postal Service confronts.
II. Background and Need for the Legislation
The federal government's provision of mail service dates to
the early days of the country's history. By the mid-20th
century, the U.S. Post Office Department was an extensive
federal agency staffed by career federal civil servants.
Pressure mounted, however, to transform the nation's mail
service into a leaner and more self-sufficient entity.
The modern-day Postal Service was created through the
enactment of the Postal Reorganization Act of 1970.\1\ That
legislation, while retaining the Postal Service as a federal
entity, sought to transition the Service to a private-sector
model. Whereas the Post Office Department received federal
subsidies, the new Postal Service would be fully funded through
the rates charged for the products and services it offered to
its customers. Postal employees would no longer be part of the
regular federal civil service, yet substantial federal
involvement and oversight would remain. For instance, tens of
thousands of postal employees would remain in the existing
federal health and pension programs. Also, the Postal Service
would remain subject to potential statutory mandates governing
its operations, such as requirements for universal service and
for six-day delivery. Additionally, postal rate increases would
be approved by the Postal Regulatory Commission, an independent
regulatory agency, and rates for monopoly products would be
subject to statutory rates caps in order to ensure that mail
service remains affordable.
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\1\P.L. 91-375, codified at 39 U.S.C. Sec. Sec. 101 et seq.
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Yet by the early 21st century, the structure and service
model established in the 1970 Act had become seriously frayed.
Congress periodically intervened to provide relief and reforms,
including in the costly and complex area of employee retirement
benefits. Those measures, however, could not keep pace with the
collapse of the traditional demand for mail services, and now
the Postal Service once again faces serious challenges. As the
Government Accountability Office (GAO) stated in September
2011, ``Little time remains to prevent USPS--the largest
federal civilian employer--from insolvency. The stark reality
is that USPS's business model is broken . . . USPS cannot
continue providing services at current levels without dramatic
changes in its cost structure.''\2\
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\2\U.S. Postal Service in Crisis: Proposals to Prevent a Postal
Shutdown: Hearing Before the Senate Committee on Homeland Security and
Governmental Affairs, 112th Cong. (Sept. 6, 2011) (statement of Phillip
Herr, Director for Physical Infrastructure Issues, Government
Accountability Office, at p.1)[hereinafter Herr Testimony at HSGAC
Hearing Sept. 6, 2011].
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The Postal Service plays a critical role in the U.S.
economy. As of the end of fiscal year 2011, the Postal Service
employed just over 557,000 people\3\ and, in the course of the
year, delivered nearly 168 billion pieces of mail\4\ to more
than 150 million households and businesses.\5\ It operates at
the center of an over $1 trillion mailing industry that employs
nearly 8.7 million people in both the public and private
sectors.\6\ The Postal Service is vital, then, not only to
those who use it directly, but also as a result of the ripple
effects its operations have throughout the economy.
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\3\U.S. Postal Service Form 10-K for fiscal year 2011 at p. 23,
available at http://about.usps.com/who-we-are/financials/10k-reports/
fy2011.pdf [hereinafter USPS FY2011 10-K].
\4\See USPS FY2011 10-K at p.18.
\5\Patrick R. Donahoe, Postmaster General and CEO, U.S. Postal
Service, Speech at the National Press Club, (November 21, 2011), at p.1
(Nov. 21, 2011) available at http://about.usps.com/news/speeches/2011/
pr11_pmg1121.pdf [hereinafter Donahoe NPC Speech].
\6\Donahoe NPC Speech, at p.1.
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The Postal Service faces a dilemma: even as it stretches to
deliver to more addresses, the overall volume of mail it
handles is in decline. In 2011, the annual number of addresses
to which the Postal Service delivered increased by more than
636,000, but the 168 billion pieces of mail it handled
represented a 1.7 percent decline from fiscal year 2010. This
decline followed decreases in mail volume of 3.3 percent in
fiscal year 2010, 12.7 percent in fiscal year 2009, 4.8 percent
in fiscal year 2008, and 0.4 percent in fiscal year 2007.\7\ In
total, mail volume in fiscal year 2011 was down 21 percent
since its peak in fiscal year 2006 at more than 213 billion
pieces.\8\
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\7\Data is from USPS Form 10-K for fiscal years 2007, 2008, 2009,
2010, 2011, available at http://about.usps.com/who-we-are/financials.
\8\USPS FY2011 10-K at p.15.
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The Postal Service generated a total of about $65.7 billion
in revenue in fiscal year 2011.\9\ Expenses, however, totaled
about $70.6 billion, leading to nearly $5 billion in losses for
the year.\10\ These losses followed a record $8.5 billion in
losses in fiscal year 2010.\11\ The fiscal year 2011 losses
would have more than doubled--exceeding $10 billion for the
year--had Congress not delayed the due date for a statutorily-
required retiree health pre-funding payment originally due on
September 30, 2011 until the next fiscal year.\12\ Postmaster
General Patrick R. Donahoe has repeatedly argued that, absent
significant changes, the Postal Service will have completely
exhausted its cash and borrowing authority at some point during
fiscal year 2012, putting ongoing operations in jeopardy.\13\
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\9\USPS FY2011 10-K at p.15.
\10\USPS FY2011 10-K at p.15.
\11\U.S. Postal Service Form 10-K for fiscal year 2010 at p. 12,
available at http://about.usps.com/who-we-are/financials/10k-reports/
fy2010.pdf.
\12\P.L 112-33, Sec. 124.
\13\See, e.g., U.S. Postal Service in Crisis: Proposals to Prevent
a Postal Shutdown: Hearing Before the Senate Committee on Homeland
Security and Governmental Affairs, 112th Cong. (Sept. 6, 2011)(oral
testimony of Patrick R. Donahoe, Postmaster General and CEO, U.S.
Postal Service) available at http://www.hsgac.senate.gov/hearings/us-
postal-service-in-crisis-proposals-to-prevent-a-postal-shutdown
[hereinafter Donahue Testimony at HSGAC Hearing Sept. 6, 2011].
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In a November 21, 2011 speech at the National Press Club,
Mr. Donahoe blamed statutory restrictions and obligations
placed on the Postal Service for the difficult financial
situation it faces despite aggressive actions to cut costs and
grow new lines of business. He said at one point: ``We are in a
deep financial crisis today because we have a business model
that is tied to the past. We are expected to operate like a
business, but we do not have the flexibility to do so.''\14\
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\14\Donahoe NPC Speech at p.4.
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Throughout his National Press Club speech, Mr. Donahoe
highlighted actions he argues that private delivery companies
have taken to cut costs, but that the Postal Service is
prohibited from doing, such as adjusting delivery frequency. He
also cited the Postal Service's costly pension and retiree
health obligations. He said that the Postal Service has been
required to pay $11.4 billion more than it owes into the
Federal Employee Retirement System (FERS) over the past 21
years.\15\ He also said that the Postal Service's $6.6 billion
in total losses during fiscal years 2008 and 2009--the two
years which saw the most dramatic declines in mail volume
following the recent economic slowdown--were due to the $7
billion in retiree health pre-funding payments paid out during
that period.\16\
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\15\Donahoe NPC Speech at p.5.
\16\Donahoe NPC Speech at p.5.
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The committee held a hearing to consider these and other
issues facing the Postal Service on September 6, 2011. Senators
Lieberman, Collins, Carper, and Scott Brown then introduced
this comprehensive Postal Service reform legislation on
November 2, 2011--S. 1789, the 21st Century Postal Service Act.
The legislation addresses many of the major financial and
structural challenges confronting the Postal Service and works
to put the Postal Service on a sustainable path, so that it
will continue to provide mail service to all Americans, as it
has done since the early days of the Republic.
DISCUSSION OF LEGISLATIVE ISSUES
FERS overpayments
USPS employees, like federal employees, participate in the
Federal Employees Retirement System (FERS). Thus, the Postal
Service is required to make the employer contributions for
postal employees participating in FERS. Each year, the Office
of Personnel Management (OPM) calculates the Postal Service's
liability for these contributions under FERS. OPM has
determined that the Postal Service currently has a surplus
under the FERS program.\17\ Beginning in fiscal year 2011, S.
1789 authorizes the Director of OPM to provide the Postal
Service with a refund of any amount it has overpaid into FERS.
The Postal Service would be required to use a portion of any
refund it receives for fiscal years 2011, 2012 and 2013 to
provide retirement incentives to employees. Postal Service
officials have told the Committee that they anticipate that the
expected FERS refund will give them more than enough cash to
successfully encourage 100,000 postal employees to retire--
potentially saving the Postal Service as much as $8 billion per
year or more. Any funds from the FERS surplus remaining after
the implementation of a retirement incentive program could be
used to fund Postal Service obligations related to pensions,
retiree health, and workers' compensation.
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\17\Office of Personnel Management Office of Inspector General, A
Study of the Risks and Consequences of the USPS OIG's Proposals to
Change USPS's Funding of Retiree Benefits, at p.23 (Feb. 28, 2011).
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Retiree health pre-funding payments
The Postal Service is under various statutory mandates
concerning retirement health benefits for its current and
former employees. While it is critical that the Postal Service
behave responsibly with respect to its retirement obligations,
this bill seeks to recalibrate these mandates in order to
lessen their immediate burden while still ensuring that the
Postal Service will contribute sufficiently to meet realistic
estimates of future needs.
The Postal Accountability and Enhancement Act of 2006\18\
required the Postal Service to make a series of ten payments
beginning in fiscal year 2007 to pre-fund its future retiree
health obligations. The amount of each payment is set in
statute and ranges from $5.4 billion to $5.8 billion annually,
although Congress decreased the size of the payment due in
fiscal year 2009 from $5.4 billion to $1.4 billion in an effort
to ease the financial strain on the Postal Service.\19\
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\18\P.L. 109-435.
\19\P.L. 111-68, Sec. 164.
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Under current law the Postal Service is scheduled in fiscal
year 2017 to begin paying down whatever retiree health
obligations remain over a period of 40 years.\20\
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\20\5 U.S.C. Sec. 8909a(d)(2)(B).
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As of the end of fiscal year 2011, the Postal Service has
made $21 billion in retiree health payments. These retiree
health payments were in addition to the premium payments the
Postal Service made each year on behalf of current retirees.
According to data provided to the Committee by the Postal
Service, those premium payments totaled $1.7 billion in fiscal
year 2007 and are projected to reach $4 billion annually by
fiscal year 2016.
The Committee recognizes that the statutorily mandated
retiree health payment schedule has been difficult to meet due
to the declining revenues of the Postal Service as a result of
the electronic diversion of the mail and a major recession that
significantly affected mail volume. At the same time, the
Committee is aware that easing or eliminating the pre-funding
obligation could one day either break promises made to
retirees, or leave taxpayers with a significant financial
obligation in the event that the Postal Service becomes unable
to make the payments itself.
In order to provide the Postal Service with financial
relief while maintaining its responsibility for the costs
related to its employees, S. 1789 would make three major
reforms to the Postal Service's current retiree health payment
schedule and structure:
1. It would replace the existing payment schedule--the
remaining statutory annual payments and the 40-year
amortization schedule that will start in fiscal year 2017--with
a new 40-year amortization schedule that would start in fiscal
year 2012.
2. It would set the pre-funding goal underlying the new
amortization schedule at 80 percent of the obligation (rather
than the current 100 percent), in recognition of the fact that
the Postal Service, if necessary, has additional assets it
could draw upon to meet these obligations.
3. It would allow current retirees' premiums to be paid out
of the health benefit fund in the Treasury in which the Postal
Service's pre-funding payments have been deposited since fiscal
year 2007. That fund--the Postal Service Retiree Health Benefit
Fund--currently includes just over $41 billion.
According to data provided to the committee by the Postal
Service, the combination of these three provisions could cut
the Postal Service's total retiree health payments by roughly
half each year.
Postal Service Health Plan
The Postal Service has proposed to sponsor its own health
care plan, rather than continue to participate in the Federal
Employee Health Benefits program, as a way to reduce health
care costs as well as reduce the amount of the retiree health
benefits payments.\21\ The Committee did not legislate such a
change, but instead chose to leave the outcome up to the Postal
Service and its recognized unions. The Committee chose to give
the Postal Service and its employees the flexibility necessary
to use the collective bargaining process to potentially develop
a set of changes to the health benefits offered to postal
employees. No changes in health benefits would go into effect
without the concurrence of the Postal Service and each of the
unions. Depending on the details of any agreement, these
negotiations could, according to information provided to the
Committee by the Postal Service, lead to a reduction in the
Postal Service's total retiree health obligation to less than
$3 billion annually.
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\21\Donahoe Testimony at HSGAC Hearing Sept. 6, 2011 at pp.12-13.
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Binding arbitration in resolution of labor disputes
Unlike most federal agencies and their employees, which are
governed by government-wide civil service rules, the Postal
Service generally sets pay and other terms and conditions of
employment through a process of collective bargaining between
postal management and postal unions. If the parties are unable
to reach a timely agreement, the dispute must be resolved by
binding arbitration.\22\ Under statute, when an existing
collective bargaining agreement approaches its expiration date,
or when a party to the agreement proposes to modify or
terminate it before its expiration date, the parties have an
opportunity to reach agreement or to adopt a procedure for
binding resolution on their own and then with the assistance of
a mediator. If the parties still cannot reach agreement, the
statute calls for conclusive and binding arbitration.\23\
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\22\39 U.S.C. Sec. 1207.
\23\If a situation arose where a postal union did not have an
agreement with the Postal Service, the existing statute gives the
parties an opportunity to reach an agreement through collective
bargaining on their own and then with the assistance of a mediator. But
if the parties fail to reach agreement within 180 days after the
commencement of collective bargaining, the statute calls for conclusive
and binding arbitration. See 39 U.S.C. Sec. 1207(d).
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The statutory process for binding arbitration of labor
disputes is established in 39 U.S.C. 1207(c). The arbitration
board will consist of three members, one appointed by the
Postal Service, one by the union, and one by the other two
members. The instructions to the board in current statute are
as follows:
(2) The arbitration board shall give the parties a
full and fair hearing, including an opportunity to
present evidence in support of their claims, and an
opportunity to present their case in person, by counsel
or by other representative as they may elect. Decisions
of the arbitration board shall be conclusive and
binding upon the parties. The arbitration board shall
render its decision within 45 days after its
appointment.\24\
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\24\39 U.S.C. Sec. 1207(c)(2).
The Postal Service has requested a statutory amendment to
specifically require that the arbitration board must consider
the Postal Service's financial health when making a decision.
Then-Postmaster General Potter explained this request in April
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22, 2010 testimony in the following terms:
. . . Under existing law, arbitration is always a
possibility. The financial health of the Postal Service
and the affordability of postal products should be key
considerations in any arbitration ruling. While some
arbitrators have considered the fiscal health of the
Postal Service, they are not required to take it into
account. . . . We ask that legislation be adopted to
require arbitrators to take into account the Postal
Service's financial condition before making any
decision.\25\
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\25\The Future of the U.S. Postal Service: Hearing Before the
Subcomm. on Federal Financial Management of the Senate Committee on
Homeland Security and Governmental Affairs, 111th Cong. (Apr. 22,
2010)(Testimony of John E. Potter, Former Postmaster General, at p.9).
Donohoe, the current Postmaster General, reiterated the
Postal Service's support for such a provision in testimony on
May 17, 2011.\26\ GAO has also recommended such a change to
statute: ``If USPS and its unions go to arbitration, there is
no statutory requirement for arbitrators to consider USPS's
financial condition. We continue to favor such an arbitration
requirement.''\27\
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\26\Addressing the U.S. Postal Service's Financial Crisis: Hearing
Before the Subcomm. on Federal Financial Management, Government
Information, Federal Services and International Security of the Senate
Committee on Homeland Security and Governmental Affairs, 112th Cong.
(May 17, 2011) (Testimony of Patrick R. Donahoe, Postmaster General and
CEO, U.S. Postal Service at p.8).
\27\Finding Solutions to Challenges Facing the U.S. Postal Service:
Hearing Before the Subcomm. on Federal Financial Management, Government
Information, Federal Services and International Security of the Senate
Committee on Homeland Security and Governmental Affairs, 111th Cong.
(Dec. 2, 2010) (Statement submitted by Phillip Herr, Director for
Physical Infrastructure Issues, Government Accountability Office, at
p.9).
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The unions representing postal employees have expressed
strong opposition to such a provision. For example, Cliff
Guffey, president of the American Postal Workers Union, AFL-
CIO, testified on May 17, 2011, ``I must state our unalterable
opposition to proposals to change the standard'' for binding
labor arbitration.\28\ The previous year, Fredric V. Rolando,
President of the National Association of Letter Carriers, AFL-
CIO, explained on December 2, 2010 that since ``the Postal
Service has at least one appointed arbitrator on every
arbitration board,'' if the Postal Service presents evidence on
postal finances, ``[t]here is no way for an arbitration board
to avoid considering the finances of the Postal Service in
their decisions . . .'' In reality, Rolando testified, ``at
least one of the parties (union or management) has presented
evidence and testimony on the financial condition of the Postal
Service to every arbitration board that has been established,''
and arbitrators consider all of the evidence presented, whether
as a matter of legal requirement or of professional practice.
He testified that it would be unwarranted for legislation to
give special status to the financial condition of the Postal
Service or of any other ``managerial objectives.''\29\
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\28\Addressing the U.S. Postal Service's Financial Crisis: Hearing
Before the Subcomm. on Federal Financial Management, Government
Information, Federal Services and International Security of the Senate
Committee on Homeland Security and Governmental Affairs, 112th Cong.
(May 17, 2011) (Testimony of Cliff Guffy, President of the American
Postal Workers Union, at p.12).
\29\Finding Solutions to Challenges Facing the U.S. Postal Service:
Hearing Before the Subcomm. on Federal Financial Management of the
Senate Committee on Homeland Security and Governmental Affairs, 111th
Cong. (Dec. 2, 2010) (Testimony by Frederic V. Rolando, President,
National Association of Letter Carriers, at pp.10-11).
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The Committee decided that, at this period when the Postal
Service faces such dire financial difficulties, arbitrators
must consider the financial condition of the Postal Service,
and S. 1789 should say so explicitly. However, the Committee
was determined to include a balanced provision in S. 1789,
making it clear that Congress does not believe the financial
condition of the Postal Service, or any other objectives put
forward by either the Postal Service or one of its unions, are
the only factors that arbitrators must consider.
Accordingly, section 105 of the bill states that, in
resolving a labor dispute by binding arbitration under 39
U.S.C. 1207(c)--
``the arbitration board shall consider such relevant
factors as--
(i) the financial condition of the Postal
Service;
(ii) the requirements relating to pay and
compensation comparability under section
1003(a) [of title 39 of the U.S. Code]; and
(iii) the policies of this title [39 of the
U.S. Code].''
The second clause of this provision in the bill refers to
the existing statutory requirement that it ``be the policy of
the Postal Service to maintain compensation and benefits for
all officers and employees on a standard of comparability to
the compensation and benefits paid for comparable levels of
work in the private sector of the economy.'' The third clause
refers to title 39, which is the title of the U.S. Code
governing all aspects of the Postal Service, including both its
service responsibilities and its employment policies.
The Committee believes that all of the factors stated or
referenced in section 105 of the bill will be relevant to labor
disputes and should be considered by the arbitration boards
resolving such disputes under 39 U.S.C. 1207(c). However, the
Committee certainly does not intend to stack the deck in favor
of management, and this provision would not do so. Witnesses
indicated to the Committee that arbitration boards are already
considering the financial condition of the Postal Service, and
the Committee decided it is desirable to say so explicitly. The
provision does not, however, say that financial condition
preempts any other relevant factor considered by an arbitration
board or is more important than any other factor. Additionally,
the factors referred to in clauses (i), (ii), and (iii) are not
exclusive or limiting. The Committee determined that those
factors are inherently relevant and must be considered by an
arbitration board, but section 105 also provides that the board
is to consider any other factors that are relevant to the
dispute.
Mail processing facility closures
In order to address the financial challenges it faces using
authorities it possesses under current law, the Postal Service
announced a proposal on September 15, 2011, to change the
First-Class mail delivery standard. The proposed service change
would lengthen the delivery window for some First-Class mail.
The projected cost savings from this proposal would come
largely from closing or consolidating the mail processing
facilities that currently support shorter delivery times.
According to the Postal Service, the proposed change would
enable it to close or consolidate as many as 250 mail
processing facilities around the country.\30\ Despite having
concerns about these changes, the Committee chose not to
curtail or eliminate the Postal Service's existing authority to
modify service standards and, in the process, restructure its
processing footprint. Nonetheless, the Committee is concerned
that employees, customers, and representatives of communities
that could be affected by the closure or consolidation of a
mail processing facility may not have an opportunity to provide
sufficient input before the Postal Service makes a final
decision.
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\30\Press Release, U.S. Postal Service, Postal Service Faces New
Reality, at p.1 (Sept. 15, 2011), available at http://about.usps.com/
news/national-releases/2011/pr11_103.htm.
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Going forward, S. 1789 would make the process used to
consider processing facility closures or consolidations more
transparent and would give interested parties a more meaningful
role in the decision. Specifically, Section 201 of S. 1789
would mandate that the Postal Service provide at least 45 days
advance notice before making a final decision to close or
consolidate a facility; that it provide adequate opportunities
for public comment; and that it conduct an area mail processing
study that includes a plan to reduce the capacity of the postal
facility rather than close it. Before finalizing a closure, the
Postal Service would have to publish a written justification
for the decision that responds to any public comments and
demonstrates the Postal Service has considered potential undue
burdens from the proposed closure. The Postal Service would
also be required to make reasonable efforts to provide
alternatives for those who would be affected by the closure of
the processing facility.
The Committee chose not to freeze or overturn facility
closure or consolidation procedures currently underway or to
overturn decisions that have already been made.\31\ At the same
time, the Committee recognizes that these changes may be going
forward under procedures that would not meet the standards set
forth in the bill and which stakeholders and members of the
Committee would find inadequate. For that reason, the bill
requires additional review in cases where a processing facility
has been studied for possible closure but no final
determination has been made. In those cases, the Postal Service
would need to consider the option of reducing the capacity of
the facility rather than closing it--if it had not already done
so--and to publish the results of that consideration as an
amendment to the original area mail processing study. Nothing
in the bill, however, would prohibit the Postal Service from
ultimately deciding to close or consolidate a facility or
require it to overturn a decision made before enactment to
close or consolidate a facility.
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\31\Subsequent to the Committee's consideration of S. 1789, the
Postal Service, in response to concerns raised by the public and
Members of Congress, announced that it would delay all pending closings
or consolidations of mail processing facilities until May 15, 2012.
Press Release, U.S. Postal Service, Statement on Delay of Closing or
Consolidation of Post Offices and Mail Processing Facilities, at p.1
(Dec. 13, 2011) available at http://about.usps.com/news/national-
releases/2011/pr11_1213closings-v2.pdf.
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Post Offices
Recognizing that closing some underused post offices is
likely unavoidable if the Postal Service is to become
financially stable, the Committee has sought to improve the
process for determining which offices will be shut.
GAO has previously recommended shrinking the Postal
Service's retail network as part of an overall restructuring to
restore financial viability.\32\ The Postal Service is actively
considering 728 retail facilities for closure, and has plans to
close many more.\33\ The Postal Service announced in July 2011
that it would conduct studies of approximately 3,700 post
offices, retail annexes, stations, and branches nationwide for
possible closure, and submitted its closure plan to the Postal
Regulatory Commission (PRC) for review.\34\ Ultimately, the
Postal Service seeks to reduce the total number of retail
facilities from 32,000 currently, to fewer than 20,000 by
2015.\35\ The Postal Service has estimated that it could
potentially save $1.5 billion annually by consolidating its
retail network.\36\
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\32\Government Accountability Office (GAO), U.S. Postal Service:
Restructuring Urgently Needed to Achieve Financial Viability, GAO-09-
958T, at p.6 (Aug. 2009). But see GAO, U.S. Postal Service: Actions
Needed to Stave off Financial Insolvency, GAO-11-926T, at p.15 (Sept.
2011)(noting some of the challenges, including public resistance, that
may arise in trying to restructure USPS's retail network).
\33\Congressional Research Service (CRS), The U.S. Postal Service:
Common Questions About Post Office Closures, R41950, at pp. 3-4 (Jan.
13, 2012).
\34\Press Release, U.S. Postal Service, Postal Service Takes Next
Steps in Optomizing Retail Network, at p.1 (July 26, 2011) available at
http://about.usps.com/news/national-releases/2011/pr11_089.htm.
\35\Herr Testimony at HSGAC Hearing Sept. 6, 2011 at p.14.
\36\Donahoe Testimony at HSGAC Hearing Sept. 6, 2011 at p.7.
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Thus far, the PRC has expressed concerns about the plans.
The Commission issued an advisory opinion on December 23, 2011
stating that the Postal Service's approach failed to provide
adequate retail access in the event of a post office
closure.\37\ Meanwhile, Members of Congress and others have
also raised concerns about the planned closings. In response,
the Postal Service in December 2011 announced that it would
delay the closing or consolidation of post offices and mail
processing facilities until May 15, 2012.
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\37\Postal Regulatory Commission, Advisory Opinion on Retail Access
Optimization Initiative, Docket No. N2011-1, at p.1 (Dec. 23,
2011)[hereinafter PRC Retail Access Opinion].
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Current law requires the Postal Service to consider several
factors in determining whether to close a post office, such as
the effect of the closing on the community, the effect on
postal employees, whether the closing would undermine effective
service for rural communities, and the amount of the projected
savings.\38\
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\38\39 U.S.C. Sec. 404(d)(2)(A).
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The Postal Service must notify the affected public of its
intent to close or consolidate a particular post office and
hold a 60-day comment period prior to the proposed date of such
closure or consolidation.\39\ The public may appeal the Postal
Service's decision to the PRC within 30 days after USPS has
made its determination to close such post office. The
Commission then has 120 days to make a determination about
whether proper procedures were followed during the closure
process.
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\39\39 U.S.C. Sec. 404(d)(1).
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Section 204 of S. 1789 improves the current process for
post office closings by providing the Postal Service with the
necessary tools to right-size its retail network while also
ensuring that postal customers receive adequate access to
retail services. The bill allows the Postal Service to provide
retail alternatives to dedicated post offices, but also puts in
place safeguards against premature or inappropriate closures.
These safeguards are particularly important for individuals in
small towns and rural areas. S. 1789 requires the Postal
Service to consider several options prior to closing a post
office, such as consolidating two post offices within a
reasonable distance, reducing the number of operating hours at
a particular post office instead of a closure or consolidation,
and permitting a contractor or rural carrier to provide retail
services in the community served by the post office. S. 1789
also requires the Postal Service to establish certain retail
service standards that take into account such factors as the
proximity of retail postal services to customers, the age and
disability status of individuals in the area, and the
transportation challenges in the areas served. S. 1789
prohibits the Postal Service from closing any post offices
(except for health and safety reasons) prior to establishing
such retail service standards.
Conversion of door delivery points
The mode of mail delivery plays an important role in the
efficiency and cost of delivery operations. The primary modes
of delivery points for the Postal Service are door, curbside,
and centralized. Door delivery refers to delivering mail to
slots or receptacles at a customer's door. The Postal Service
provides curbside delivery to customers who have mailboxes at
the curb and that mail carriers can service from their
vehicles. Centralized delivery includes cluster boxes and other
mail receptacles at one delivery point, as currently used in
some suburban areas, apartment buildings and gated communities.
According to a recent report by the Postal Service's Office of
Inspector General, door delivery is the most expensive mode of
delivery, costing the Postal Service as much as $353 per
delivery point, totaling $12 billion annually.\40\ The USPS IG
also stated that converting existing door delivery to curbside
delivery could save the Postal Service more than $4.5 billion
annually, and converting all delivery modes to centralized
delivery could save the Postal Service an additional $5.1
billion per year.\41\ Curbside delivery is more cost effective
because it allows the carrier to remain in the vehicle during
delivery, allowing faster mail delivery and lessening the
possibility of injury (such as stress and strain, falls, and
dog bites).
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\40\U.S. Postal Service, Office of Inspector General, Audit
Report--Modes of Delivery, DR-AR-11-006, at p.2 (2011) [hereinafter
USPS IG Report].
\41\USPS IG Report, at p.2.
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S. 1789 attempts to improve the efficiency of mail delivery
and reduce the Postal Service's costs by authorizing the
conversion of door delivery points, where practicable. Section
205 of the bill authorizes the Postal Service, where feasible,
to deliver to curbside, sidewalk,\42\ or centralized mailboxes
rather than to door delivery points no later than 2015. S. 1789
also provides for certain exceptions to the conversion to
curbside, sidewalk, or centralized mailboxes, including
physical hardship of a customer, weather conditions in a
geographical area (such as snow), street parking in urban areas
that obstructs access to curbside mailboxes, or ``other
exceptional circumstances.''
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\42\A sidewalk mailbox is one where the delivery point is along a
sidewalk adjacent to the street address, but not directly on the
street, so that a letter carrier cannot reach the mailbox without
exiting his or her vehicle.
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Changes to mail delivery schedule
Mail is currently delivered six days a week to most homes
and businesses in the United States. Six-day-a-week delivery
dates to the mid-19th century,\43\ and as late as 1950, mail
was even delivered twice a day or more in some areas.\44\
Nonetheless, beginning in 1976, there have been a series of
proposals to reduce mail delivery to five days a week as a
means of reducing operating costs and avoiding rate
increases.\45\ Most recently, President Obama proposed allowing
the Postal Service to move to five-day delivery as part of the
Administration's deficit reduction package.\46\ To date,
however, Congress has rejected these proposals and, since at
least 1983, has included language in annual appropriation bills
intended to preserve six-day-per-week delivery service.\47\
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\43\U.S. Postal Service, Delivery: Monday through Saturday since
1863, at p.1 (June 2009), available at http://about.usps.com/who-we-
are/postal-history/delivery-monday-through-saturday.pdf; CRS, The U.S.
Postal Service and Six-Day Delivery: Issues for Congress, R40626, at
p.3, (June 9, 2009), [hereinafter CRS R40626]. Six-day mail delivery
has never been universal, however. Home delivery to rural addresses did
not begin until 1896, and even today, there are a small number of
remote or sparsely settled communities that receive mail only five
days, or even three days, per week.
\44\CRS R40626, at p.2; U.S. Postal Service, Deliveries per Day, at
p.1 (June 2005), available at http://about.usps.com/who-we-are/postal-
history/deliveries-per-day.pdf.
\45\CRS R40626, at pp.4-7, 14-20.
\46\Office of Management and Budget, Living Within Our Means and
Investing in the Future: The President's Plan for Economic Growth and
Deficit Reduction, at p.23 (Sept. 2011).
\47\CRS R40626 at.6-7; see, e.g., P.L. 112-74 (Consolidated
Appropriations Act, 2012).
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Faced with steep declines in mail volume, an increase in
the number of delivery addresses, and increasingly difficult
financial circumstances, the Postal Service now asserts that it
is essential to move to a five-day delivery schedule. The
Postal Service has estimated that it will save a net of $3.1
billion dollars annually ($3.3 billion in cost savings less
$0.2 billion in lost revenue) by switching to five-day
delivery--and argues that this is more than it can save through
any other single operational change.\48\ According to the
Postal Service, these cost savings would result from removing
certain direct costs of Saturday delivery, such as
transportation and fuel costs, and through efficiencies that
would be achieved by delivering the same volume of mail over
five days rather than six.\49\
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\48\See Postal Regulatory Commission, Request of the U.S. Postal
Service for an Advisory Opinion in the Nature of Postal Services,
Docket No. N2010-1, at p.4 (March 30, 2010); Initial Brief of the U.S.
Postal Service, Six-Day to Five-Day Street Delivery and Related Service
Changes, 2010 (Postal Regulatory Commission October 15, 2010) (No.
N2010-1) at pp. 49-50, 59. [hereinafter Initial Brief].
\49\Initial Brief of the U.S. Postal Service, pp. 44-49.
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The PRC has taken issue with some of the Postal Service's
analysis. On March 30, 2010, the Postal Service submitted a
request to the PRC for an advisory opinion on the Postal
Service's proposal to eliminate mail delivery on Saturdays. On
March 24, 2011, the PRC issued its opinion, in which it
concluded that the switch to five-day delivery, while saving
money, would save considerably less than the Postal Service
asserted. Specifically, the PRC concluded that the likely cost
savings would be approximately $2.3 billion annually ($1
billion less than USPS's estimate) and that lost revenue would
be nearly $0.6 billion ($400 million greater than USPS's
estimate); in other words, the net savings, according to the
PRC would be approximately $1.7 billion per year, only about
half of what was estimated by the Postal Service.\50\ The PRC
also raised concerns that the Postal Service had not adequately
addressed how the shift to five-day service might
disproportionately affect certain groups or geographic areas
that are arguably more dependent on mail service, including
rural areas, newspapers, mail-order pharmacies, and communities
that offer vote-by-mail programs.\51\ The Postal Service
subsequently issued a report strongly disputing the PRC's
conclusions.\52\
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\50\Postal Regulatory Commission, Advisory Opinion on Elimination
of Saturday Delivery, Docket No. N2010-1, at pp. 1-2 (March 24, 2011)
[hereinafter PRC Saturday Delivery Opinion].
\51\PRC Saturday Delivery Opinion, at pp.144-152.
\52\U.S. Postal Service, Report of the U.S. Postal Service
Regarding Advisory Opinion in Postal Regulatory Commission Docket No.
N2010-1, available at http://about.usps.com/news/electronic-press-kits/
five-day-delivery/pdf/USPS-Report-re-PRC-Advisory-Opinion.pdf.
---------------------------------------------------------------------------
GAO, in response to a Congressional request, conducted an
independent analysis of the Postal Service's cost savings
estimate as well as the criticisms of the estimate. In a March
2011 report, GAO concluded that the Postal Service was likely
to achieve ``significant cost savings'' by reducing delivery to
five days, but noted that some of those savings would depend on
the extent to which the Saturday workload could be absorbed
through more efficient operations the rest of the week.\53\ GAO
identified as a particular area of uncertainty whether there
was excess capacity in city-delivery operations, as the Postal
Service has asserted. In other words, if, because of reduced
mail volume, urban mail carriers were not delivering as much
mail as they could, Saturday mail could be added to the
existing workload without increasing costs; on the other hand,
if urban mail carriers were already working to capacity,
additional routes and personnel--and therefore costs--might be
needed to handle the additional mail that would have previously
been delivered on Saturday. GAO also noted that a move from
six-day to five-day service would not alone be sufficient to
put the Postal Service on stable financial footing.
---------------------------------------------------------------------------
\53\GAO, U.S. Postal Service: Ending Saturday Delivery Would Reduce
Costs, but Comprehensive Restructuring Is Also Needed, GAO-11-270, at
p.11 (March, 2011).
---------------------------------------------------------------------------
It is clear that a shift to five-day delivery has the
potential to save the Postal Service a substantial amount of
money but there is not agreement on what the potential cost
savings might be. Changing a delivery schedule that has been in
place for nearly 150 years is a significant step and one that
involves difficult tradeoffs, including the potential to reduce
mail volume further and to eliminate an advantage that the
Postal Service has over its competitors--the provision of
Saturday delivery at no additional cost.
As a result, and because public and customer reaction to
the Postal Service's five-day delivery proposal has been mixed,
S. 1789 prohibits the elimination of Saturday delivery for two
full years while other savings initiatives are implemented.
After that period, five-day delivery could only be adopted if
it is truly the last, but still necessary resort. Specifically,
the bill requires that the Postal Service first implement
alternative measures (authorized elsewhere in the bill) to
increase revenue and reduce costs; that it identify, and
develop measures to ameliorate any disproportionate negative
impact that the change to five-day delivery may have on
particular categories of customers and communities; and that it
submit a report describing the actions it has taken to
Congress, GAO, and the PRC. GAO is then directed to submit an
independent report evaluating the measures the Postal Service
has undertaken and assessing whether a change in delivery
service is necessary for the Postal Service to become
profitable by 2015 and achieve long-term financial solvency.
Finally, the PRC is to issue, and submit to Congress, an
advisory opinion determining (1) whether the measures developed
by the Postal Service ameliorate any disproportionate, negative
impact that a shift to five-day delivery may have on certain
customers and communities; and (2) whether, based on the GAO's
report, the change to five-day service is financially
necessary. Only if the PRC determines that the Comptroller
General has concluded that the change is necessary to allow the
Postal Service to become profitable by fiscal year 2015 and to
achieve long-term financial solvency, may the Postal Service
implement a five-day delivery schedule.\54\
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\54\Note that the bill provides that the Postal Service's ability
to implement a five-day delivery schedule is dependent only on the
PRC's determination regarding the Comptroller General's conclusions and
does not depend on whether the PRC itself determines that such a change
is advisable.
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Finally, the Postal Service is not seeking--and S. 1789
makes clear that the switch to five-day delivery to street
addresses does not authorize--changes in schedules for post
offices, for delivery to post office boxes, or for competitive
mail products such as Express Mail, or to reduce the delivery
schedule for any route for which mail delivery is currently
provided less frequently than six days per week. The bill also
provides that there may not be more than two consecutive days
without mail delivery service, even in the case of federal
holidays and three-day weekends.
Nonpostal products and services
As mail volumes and revenues continue to decline, the
Postal Service might consider new ways to increase its revenues
through nonpostal products and services. Current law limits the
Postal Service to postal products and services and to certain
nonpostal services approved under criteria set out in the 2006
Postal Accountability and Enhancement Act (PAEA).\55\
Specifically, PAEA authorized the Postal Service to continue
providing nonpostal services that were offered as of January 1,
2006, and that the PRC determined should continue. PAEA
required the PRC, when making its determination, to take into
account ``the public need for the service'' and ``the ability
of the private sector to meet the public need for the
service.''\56\ These grandfathered nonpostal services include
officially licensed retail products such as USPS apparel and
china. In addition to the grandfathered nonpostal services,
current law authorizes the Postal Service to provide services
to federal government agencies.\57\ Under this authority, the
Postal Service provides services for such as passport
applications and the sale of migratory bird hunting and
conservation stamps for the U.S. Fish and Wildlife Service.\58\
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\55\39 U.S.C. Sec. 404(e)
\56\Postal Accountability and Enhancement Act, P.L. 109-435.
\57\39 U.S.C. Sec. 411.
\58\U.S. Postal Service FY 2010 Annual Compliance Report, at p.71
(Dec. 29, 2010).
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In 2009, the Postal Service asked Congress to pass
legislation allowing it to expand into new nonpostal areas.\59\
The Congressional Research Service (CRS) has indicated that the
Postal Service could increase revenue by offering more
nonpostal products and services.\60\ However, there are
differing views about the wisdom of such a move. GAO reviewed
the nonpostal products and services that the Postal Service
offered prior to the enactment of PAEA in 2006 and found that
19 products marketed or under development during fiscal years
1995, 1996, and 1997 resulted in a net loss of nearly $85
million through fiscal year 1997 and a net loss of $3.7 million
during the first three quarters of fiscal year 1998.\61\ GAO
stated that ``whether USPS should be allowed to engage in
nonpostal activities should be carefully considered, including
its poor past performance in this area, as should the risks and
fair competition issues.''\62\
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\59\U.S. Postal Service in Crisis: Hearing Before the Subcomm. on
Federal Financial Management of the Senate Committee on Homeland
Security and Governmental Affairs, 111th Cong. (Aug. 6, 2009)(Testimony
of John E. Potter, Former Postmaster General, at p.15).
\60\CRS, The U.S. Postal Service's Financial Condition: Overview
and Issues for Congress, R41024 at p.8 (Dec. 16, 2011).
\61\GAO, U.S. Postal Service: Strategies and Options to Facilitate
Progress toward Financial Viability, GAO-10-455, at p.43 (Apr.
2010)[hereinafter GAO 10-455]; GAO, U.S. Postal Service: Development
and Inventory of New Products, GAO/GGD-99-15, at p. 20 ( Nov. 1998).
\62\GAO 10-455, at p.42.
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S. 1789 attempts to provide the Postal Service with the
flexibility to generate revenue through nonpostal products and
services, while also including certain safeguards to ensure
that such products and services will not create unfair
competition with the private sector and will actually improve
the Postal Service's financial position. Section 209 of the
bill would allow the Postal Service to offer nonpostal products
and services if the PRC has determined that the products and
services: (1) make use of USPS's processing, transportation,
delivery, retail network, or technology; (2) are consistent
with the public interest and a demonstrated demand for the
Postal Service to offer them; (3) do not create unfair
competition with the private sector; and (4) have the potential
to improve the Postal Service's financial condition.
Federal Employees' Compensation Act (FECA)
This title would make changes to the Federal Employees'
Compensation Act (FECA),\63\ the statute governing the workers'
compensation program for federal civilian employees and postal
employees. FECA provides wage-replacement and medical benefits
and offers rehabilitation services and return-to-work
assistance to workers who suffer occupational injury or
disease. Survivors receive benefits if the covered worker dies
from the workplace injury or illness. The program is
administered by the Department of Labor (DOL), which pays
benefits from a special fund and is then reimbursed by federal
agencies and the Postal Service for benefits paid to their
employees.
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\63\5 U.S.C. Sec. Sec. 8101 et seq.
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The FECA program pays a basic benefit for a total
disability equal to two-thirds of an injured worker's pre-
disability wage if the worker has no dependents; for those with
dependents, the benefit rises to 75 percent (called ``augmented
compensation''). For a partial disability, the benefit is in
proportion to the wage-earning capacity that the worker lost.
These benefits are adjusted for inflation and are tax-free, and
continue for as long as the injury or illness renders the
individual unable to work. Persons with specific permanent
disabilities involving the loss of, or loss of use of, an
appendage or bodily function are entitled to disability
benefits for a set number of weeks provided by schedules set by
statute and regulation (which an individual may receive in
addition to benefits for total and partial disability, but not
at the same time as them). The FECA program also covers all
medical costs associated with work related injuries and
provides vocational rehabilitation services and assistance in
returning to work. During the first 45 days after a traumatic
injury, an employee receives regular salary (called
``continuation of pay''), subject to tax, rather than FECA
benefits. The survivors of employees killed on the job are
entitled to cash benefits based on the worker's wages and a
modest benefit for funeral costs.
THE NEED FOR FECA REFORM AND ITS INCLUSION IN S. 1789
Congress enacted FECA in 1916\64\ and has not substantially
updated it since 1974.\65\ A series of GAO reports,\66\
Inspector General reports,\67\ and proposals by both the
current Administration\68\ and the previous Administration\69\
have identified serious problems in the FECA statute that have
yet to be addressed. CBO has analyzed the budgetary
implications of some of these proposals.\70\ On July 26, 2011,
the Committee through, its Subcommittee on Oversight of
Government Management, the Federal Workforce, and the District
of Columbia, held a hearing to examine the FECA program and
consider proposals for improving it. The Subcommittee heard
testimony from the DOL official in charge of administering
FECA, the Deputy Director of the Office of Personnel
Management, two representatives of employee organizations, and
experts from the Government Accountability Office and from the
International Association of Industrial Accident Boards and
Commissions (IAIABC).\71\
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\64\Federal Employee Compensation Act of September 7, 1916.
\65\P.L. 93-416.
\66\GAO, Federal Employees' Compensation Act: Preliminary
Observations on Fraud-Prevention Controls: Statement for the Record of
Gregory D. Kutz, Director Forensic Audits and Investigative Service, to
the Committee on Homeland Security and Governmental Affairs, U.S.
Senate, GAO-12-212T (Nov. 9, 2011); GAO, Federal Employees'
Compensation Act: Redefining Continuation of Pay Could Result in
Additional Refunds to the Government, GAO/GGD-95-135, (June 1995).
\67\U.S. Postal Service Office of Inspector General, Postal Service
Workers' Compensation Program: Audit Report, Report Number HR-AR-11-007
(Sept. 30, 2011); Department of Labor Office of the Inspector General,
Semi Annual Report to Congress: April-September 2010 (2010).
\68\OMB, Budget of the U.S. Government, Fiscal Year 2012,
``Terminations, Reductions, and Savings,'' at p.163 (Feb. 2011); OMB,
Budget of the U.S. Government, Fiscal Year 2011, ``Terminations,
Reductions, and Savings,'' at p.107 (Feb. 2010) [hereinafter, OMB
Budgets FY 2011 and FY 2012].
\69\OMB, Major Savings and Reforms in the President's 2008 Budget,
at p.178 (Feb. 2007); OMB, Major Savings and Reforms in the President's
2007 Budget, at p.192 (Feb. 2006); OMB, ``Major Savings and Reforms in
the President's 2006 Budget,'' at page 201 (Feb. 11, 2005); The
President, Budget of the U.S. Government, Fiscal Year 2003, at p. 222
(Feb. 2002).
\70\CBO, Budget Options, Vol. 2, Option 920, at p.171-172 (Aug.
2009), available at http://www.cbo.gov/ftpdocs/102xx/doc10294/08-06-
BudgetOptions.pdf (2009); CBO, Budget Options, Option 920, at p.249-250
(Feb. 2007), available at http://www.cbo.gov/ftpdocs/78xx/doc7821/02-
23-BudgetOptions.pdf (2007); CBO, Budget Options, Option 600, at p.222
(Feb. 2005), available at http://www.cbo.gov/ftpdocs/60xx/doc6075/02-
15-BudgetOptions.pdf (2005).
\71\Examining the Federal Workers' Compensation Program for Injured
Employees: Hearing Before the Subcommittee on Oversight of Government
Management, the Federal Workforce, and the District of Columbia to the
Senate Committee on Homeland Security and Governmental Affairs, 112th
Cong., (July 26, 2011) [hereinafter HSGAC July 2011 hearing]. The
following witnesses testified and submitted written statements: The
Honorable Christine M. Griffin, Deputy Director, U.S. Office of
Personnel Management; Mr. Gary Steinberg, Acting Director, Office of
Workers' Compensation Programs, U.S. Department of Labor; Mr. Andrew
Sherrill, Director, Education, Workforce, and Income Security, U.S.
Government Accountability Office; Mr. Joseph Beaudoin, President,
National Active and Retired Federal Employees Association; Mr. Ronald
Watson, Consultant, National Association of Letter Carriers, AFL-CIO,
Dr. Gregory Krohm, Executive Director, International Association of
Industrial Accident Boards and Commissions. Available at http://
www.hsgac.senate.gov/subcommittees/oversight-of-government-management/
hearings/examining-the-federal-workers-compensation-program-for-
injured-employees.
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Based on this record, the Committee found that FECA needs
updating and reform in several respects. Because individuals
can receive FECA benefits indefinitely, as long as their injury
impairs their ability to work, and because those benefits are
generally larger than federal retirement benefits, the program
creates a financial incentive for injured workers to remain on
the FECA rolls up to and beyond retirement age. In addition,
the augmented compensation under FECA is out of line with other
compensation systems. For example, no state workers
compensation systems provide augmentation for dependents, and
the 75 percent level of benefit far exceeds that of any
comparable compensation program. Whereas state systems deter
minor claims by imposing brief waiting periods between the time
of injury and the time an employee becomes eligible for
benefits, FECA's waiting period for non-postal employees does
not come until after the 45-days of continuation of pay. The
FECA statute also fails to allow the federal government to
obtain reimbursement of continuation of pay when third parties
are liable for having caused the on-the-job injury. In
addition, DOL would be better able to prevent improper payments
if it were allowed to cross-match FECA records with Social
Security records and had other statutory authorities to improve
program integrity. Finally, some benefit levels for specific
injuries and for funeral costs in FECA are inordinately low
because they have not been changed in many decades.
FECA reform is necessarily intertwined with the effort to
stabilize the Postal Service's finances. Employees of the
Postal Service represent a disproportionate number of FECA
beneficiaries, and are responsible for a larger share of FECA
benefits than are the employees of any federal department or
agency. Specifically, approximately 40 percent of injuries,
illnesses, and fatalities that resulted in FECA claims during
fiscal year 2010 involved Postal Service employees.\72\
According to DOL, in fiscal year 2010, injuries and illnesses
of USPS employees resulted in 218.7 lost production days per
100 employees, compared with the rest of the federal government
that lost 77.4 days per 100 employees.\73\
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\72\Department of Labor, Occupational Safety and Health
Administration, Federal Injury and Illness Statistics for Fiscal Year
2010, available at http://www.osha.gov/dep/fap/statistics/
fedprgms_stats10_final.html#footnote4a.
\73\Department of Labor, Office of Workers' Compensation Programs,
FY2010 End of Year LPD Report for All Government, available at http://
www.dol.gov/owcp/dfec/share/lpd/FY20104thQtr/AllGovernment.htm.
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Because FECA costs are so expensive for the Postal Service,
the Committee determined that cost-cutting FECA reforms must be
included in this legislation to place the Postal Service on a
sound financial footing.
Moreover, the Committee determined that applying FECA
reforms only to the Postal Service would cause harmful
fragmentation and confusion within the FECA program, and also
that these reforms would be as valuable and appropriate for
non-postal agencies as they are for the Postal Service.
Accordingly, S. 1789 reforms the federal workers' compensation
program government-wide.
In considering what--if any--elements of FECA reform to
include in S. 1789, the Committee evaluated three proposals:
(1) the comprehensive FECA reforms developed and advocated by
the Obama Administration,\74\ (2) S. 261, introduced by Senator
Collins to address the issue of individuals (postal and non-
postal) remaining on the FECA rolls past retirement age; and
(3) S. 353, Senator Collins' ``U.S. Postal Service Improvements
Act of 2011,'' which contained the same FECA-related provisions
as S. 261 as an integral part of the postal reform legislation.
The Committee decided to adopt the best elements of these three
proposals. The provisions in S. 1789 will help injured
employees get rehabilitated and back to work and will reduce
some disproportionately high benefit levels that now create
financial incentives that directly or indirectly may be
discouraging injured workers from achieving rehabilitation and
going back to work. Helping and encouraging employees to get
back to work is healthy for the employee and also saves money
for the Postal Service and the rest of government.
---------------------------------------------------------------------------
\74\See OMB Budgets FY 2011 and FY 2012.
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KEY PROVISIONS ON FECA
Reforms Applicable to Retirement-Age Employees. Under
current law, FECA compensation and FECA medical benefits are
payable for the duration of a person's disability. Because
there is no time limit for either total or partial disability,
beneficiaries who are eligible for the Civil Service Retirement
System (CSRS) or Federal Employees Retirement System (FERS)
retirement or disability annuities may instead choose to remain
in the FECA program as long as they remain eligible. (To be
eligible for disability benefits under CSRS or FERS, the
employee must have worked for the requisite period of service
creditable under the retirement system (5 years under CSRS, 18
months under FERS) and have become disabled due to disease or
injury regardless of whether it was work-related.)
The DOL reports that, although less than two percent of new
injury cases stay on the FECA rolls for more than two years,
approximately 45,000 cases currently receive long-term
disability benefits and 15,000, or one-third of these cases,
involve beneficiaries aged 66 or older.\75\ The U.S. Postal
Service informed the Committee in November 2011, that as of
September 30, 2011 the FECA rolls include 9,501 postal workers
aged 55 or older; 6,028 aged 60 or older; and 2,054 aged 70 or
older, 894 aged 80 or older; and 144 age 90 or older including
two aged 99.
---------------------------------------------------------------------------
\75\HSGAC July 2011 hearing (Statement of Gary Steinberg, Acting
Director, Office of Workers' Compensation Programs, U.S. Department of
Labor, at p.6).
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Further, as noted above, FECA compensation is generally
higher than a CSRS or FERS annuity. This situation is
inequitable for employees who complete their careers of
government service and then receive a smaller benefit in their
retirement than do their contemporaries who suffered a
workplace injury. Moreover, as Gary Steinberg, the acting head
of DOL's Office of Workers' Compensation Programs testified,
``injured workers may have an incentive to consciously or
unconsciously resist rehabilitation and instead, in certain
cases, may cling to the self-perception of being `permanently
disabled.'''\76\ Such an outcome is not only costly for the
government, but it is also damaging to the employee. The
executive director of the International Association of
Industrial Accident Boards and Commissions, Dr. Gregory Krohm,
explained that getting back to work is good for injured workers
``physically''--it ``complements the healing process.''\77\
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\76\HSGAC July 2011 hearing (Statement of Gary Steinberg, Acting
Director, Office of Workers' Compensation Programs, U.S. Department of
Labor, at p.9).
\77\HSGAC July 2011 hearing (Statement of Dr. Gregory Krohm,
Executive Director, International Association of Industrial Accident
Boards and Commissions at p.8).
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Consistently since 2002, the DOL Office of the Inspector
General has reported on the FECA program and has suggested that
it is a de facto retirement program. In 2010, the DOL Office of
the Inspector General expressed its support for reforms to the
FECA program, specifically saying Congress should ``move
claimants into a form of retirement after a certain age if they
are still injured.''\78\ Both the current Administration and
the previous Administration have likewise advocated for
converting retirement-age FECA beneficiaries ``to a retirement
annuity-level benefit.''\79\
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\78\Department of Labor Office of the Inspector General, Semi
Annual Report to Congress: April-September 2010, at p.60 (2010).
\79\OMB Budgets FY 2011 and FY 2012; OMB Budgets FY 2003 through FY
2008
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The specific proposal of the Obama Administration is to
reduce FECA benefits for enrollees to 50 percent of the pre-
disability wage upon the enrollee reaching full retirement age,
as defined in the Social Security Act. Joseph A. Beaudoin,
president of the National Active and Retired Federal Employees
Association, testified that this proposal would provide a
retirement-level income, but that ``it still does not fully
account for disadvantages faced by FECA recipients,'' notably
the lost raises, promotions, and benefits from having a working
career cut short by disabling injury.\80\ Ron Watson,
testifying for the National Association of Letter Carriers
(NALC), also argued that FECA benefits are not generally higher
than federal retirement benefits, considering that most federal
employees are covered by FERS, under which retirees receive an
annuity, Social Security and Thrift Savings Plan benefits.\81\
GAO has advised the Committee that a preliminary analysis by
GAO shows the median FECA benefit to be about 26 percent higher
than the median annual annuity received by federal retirees.
---------------------------------------------------------------------------
\80\HSGAC July 2011 hearing (Statement of Joseph Beaudoin,
President, National Active and Retired Federal Employees Association at
p.5).
\81\HSGAC July 2011 hearing (Statement of Ronald Watson,
Consultant, National Association of Letter Carriers, AFL-CIO at p. 6).
---------------------------------------------------------------------------
The Committee recognizes that workers who suffer workplace
disability often suffer financial as well as other
disadvantages, but was persuaded by other testimony and
materials showing that the current FECA benefit levels are
inequitably high after retirement age. The Committee determined
to incorporate a provision similar to the Administration's
proposal into S. 1789.
The Committee also gave considerable attention to the
question of whether and how to apply the changed benefit
structure to individuals injured before the date of enactment.
Both the current Administration and the previous Administration
advocated that any reduced benefits under FECA reforms should
apply only to individuals injured after the date of enactment.
S. 261 and S. 353 took a different approach, applying to
individuals injured before the effective date as well as those
injured in the future.
The Committee decided that current and future FECA
enrollees should generally be subject to the same provisions.
However, recognizing a potential burden to current recipients
who would face cuts, the Committee opted to gradually
transition current recipients to the new benefit structure and
to exempt the most severely disabled employees. Therefore, the
bill grandfathers certain existing FECA beneficiaries and
provides a delayed transition for others, as detailed in
section 302 of the bill. DOL has advised the Committee that,
under these provisions, about half of FECA beneficiaries who
are now on FECA's long-term disability rolls will not see their
benefit level reduced under S.1789, either because they are
already over retirement age or because they qualify under the
bill's criteria for being permanently, totally disabled and
unable to return to work.\82\
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\82\DOL estimates that, of the 50,000 individuals on the FECA
periodic roll, roughly 24,000 will qualify for either a disability or
age exemption or both. And this number may grow in the next few years,
those who recently qualified for total disability would avoid a
reduction if they maintain that status for three years.
---------------------------------------------------------------------------
Augmented Compensation for Dependents. Under FECA, the rate
of compensation is 66 2/3 percent of a worker's pre-disability
wage lost due to the occupational injury, if the worker is
unmarried and has no dependents. However, for beneficiaries
with a spouse or other dependent, the augmented compensation
provision under the FECA program raises benefits to a rate of
75 percent of their pre-disability wages. Currently, more than
70 percent of FECA beneficiaries are receiving augmented
compensation.\83\
---------------------------------------------------------------------------
\83\HSGAC July 2011 hearing (Statement of Gary Steinberg Acting
Director, Office of Workers' Compensation Programs, U.S. Department of
Labor at p.3).
---------------------------------------------------------------------------
Both the current Administration and the previous
Administration have called for eliminating the augmented
compensation rate because it is out of line with benefits under
state workers' compensation systems. As the acting head of the
DOL Office of Workers' Compensation Programs testified, ``Few
state systems provide any augmentation for dependents, and none
approaches the Federal level.''\84\ He also told the committee
that the 75 percent rate is so high that it can create a
financial disincentive for an injured employee to successfully
rehabilitate and return to work.\85\ Ron Watson, testifying on
behalf of the NALC, argued that the FECA tax-free 75 percent
rate does not often exceed pre-injury take-home pay and does
not create a financial disincentive to forego the pay, together
with substantial benefits, that the individual would receive if
able to return to work.\86\
---------------------------------------------------------------------------
\84\HSGAC July 2011 hearing (Statement of Gary Steinberg Acting
Director, Office of Workers' Compensation Programs, U.S. Department of
Labor at p.8).
\85\HSGAC July 2011 hearing (Statement of Gary Steinberg Acting
Director, Office of Workers' Compensation Programs, U.S. Department of
Labor at p.8).
\86\HSGAC July 2011 hearing (Statement of Ronald Watson,
Consultant, National Association of Letter Carriers, AFL-CIO at p. 6).
---------------------------------------------------------------------------
The Obama Administration recommended that all disabled FECA
beneficiaries receive compensation at a rate of 70 percent of
lost wages--a percentage that is between the current 75 percent
rate for individuals who have dependents and the current 66 2/3
rate applicable to those without dependents. However, the
Committee determined that the rate should be set at 66 2/3 of
lost pre-disability wages for all beneficiaries. This
provision, in section 303 of the bill, brings the program in
line with a majority of the state programs, including the
District of Columbia. Currently, 36 states and the District of
Columbia have total disability benefit rates that are set at
this level.\87\ This also brings the program in line with
benefits offered under other federal workers' compensation
programs, such as the Longshore and Harbor Workers'
Compensation Act, which also sets benefits at two-thirds of the
pre-disability wage.
---------------------------------------------------------------------------
\87\Ishita Sengupta, Virginia Reno, and John F. Burton, Jr.,
Workers' Compensation: Benefits, Coverage, and Costs, 2009, National
Academy of Social Insurance, Washington, DC, August 2011, at pp. 86-95.
---------------------------------------------------------------------------
Section 303 also contains provisions to phase in the new
compensation rate for current beneficiaries, and to exempt
those who are permanently and totally disabled.
``Schedule Compensation Payments.'' An employee who suffers
a permanent disability involving the loss of an appendage or
bodily function is entitled to disability benefits for a number
of weeks, as provided under schedules set by statute and
regulation.\88\ The employee may receive the schedule
compensation benefit in addition to FECA benefits for partial
or total disability but may not receive both simultaneously.
Section 304 of the bill would make a limited but important
exception: if an individual was injured before enactment of
this legislation and faces a reduction in the level of
disability benefits under section 302 or 303 of the bill, the
individual may receive ``schedule compensation payments'' once
the individual starts receiving the reduced benefits for
partial or total disability.
---------------------------------------------------------------------------
\88\See 5 U.S.C. Sec. Sec. 8107.
---------------------------------------------------------------------------
Strengthened back-to-work program. In addition to removing
certain financial disincentives to returning to work, S. 1789
adopts several provisions from the Obama Administration's
proposal to strengthen existing programs that help injured
workers get back to work:
Extends the vocational rehabilitation program
under FECA, which now covers injured workers who are totally
disabled, to also cover those who are partially disabled.
Authorizes DOL to pay a federal employer the
salary of a beneficiary for up to three years as an incentive
to hire workers off of the FECA program rolls. Current law
permits these payments only to non-federal employers.
Makes compliance with the Return to Work plan
developed between the program and the beneficiary a condition
of receiving continued benefits (except this condition would
not apply to beneficiaries who are over the age of retirement).
Subrogation of Continuation of Pay. FECA states that, when
third parties are responsible for employees' workplace
injuries, DOL may require that employees pursue collection
actions and then reimburse the government to cover
``compensation'' that the employees received.\89\ (In legal
terminology, this is called a right of subrogation.)
Alternatively, DOL may require that employees assign to the
government their collection rights against third parties.
However, judicial and administrative decisions have held that
continuation of pay received by employees during the first 45
days after an occupational injury is not considered
``compensation'' and is therefore not covered under the FECA
provision granting subrogation rights to DOL.
---------------------------------------------------------------------------
\89\5 U.S.C. Sec. Sec. 8131, 8132.
---------------------------------------------------------------------------
GAO recommended that Congress amend FECA's subrogation
provision to cover continuation of pay. Both the current
Administration and previous Administration have proposed such
an amendment, and the Committee has included this change in
section 311 of the bill.
Waiting Period. Since minor workplace injuries often heal
very quickly, state workers' compensation programs generally
impose a brief waiting period before providing compensation, in
order to avoid minor or frivolous claims. FECA has a three-day
waiting period for postal employees, but for non-postal workers
the waiting period comes after the end of the 45-day
continuation-of-pay period, during which the individual
continues to receive salary while a FECA claim is being
processed.\90\
---------------------------------------------------------------------------
\90\5 U.S.C. Sec. 8117.
---------------------------------------------------------------------------
Both the current Administration and the previous
Administration proposed to establish a uniform up-front waiting
period for all FECA claimants, postal and non-postal, and
section 308 of the bill includes a mandatory, up-front three-
day waiting period.\91\ As under current law governing postal
employees,\92\ the injured non-postal employee may receive FECA
compensation for those three days if the period of disability
exceeds 14 days.
---------------------------------------------------------------------------
\91\OMB, Budget of the U.S. Government, Fiscal Year 2012,
``Terminations, Reductions, and Savings,'' at p. 163 (February 2011);
OMB, Budget of the U.S. Government, Fiscal Year 2011, ``Terminations,
Reductions, and Savings,'' at p.107 (Feb. 2010); OMB, Major Savings and
Reforms in the President's 2008 Budget, at p.178 (Feb. 2007); OMB,
Major Savings and Reforms in the President's 2007 Budget, at p.192
(Feb. 2006); OMB, Major Savings and Reforms in the President's 2006
Budget, at p.201 (Feb. 11, 2005); The President, Budget of the U.S.
Government, Fiscal Year 2003, at p.222 (Feb. 2002).
\92\5 U.S.C. Sec. 8117.
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Amount of Compensation. The current Administration has
proposed that several statutory benefit amounts, which have not
been updated in many years, be significantly increased. The
Committee agreed to include those statutory updates in section
313 of the bill. These limits of the current law, for severe
disfigurement and funeral expenses, have not been significantly
changed since 1949.
Disability Management Review; Independent Medical
Examinations. Under current FECA practice, claimants select
their own physician, and must be examined by a physician
employed or selected by DOL only when the Department deems that
a second opinion is needed. Both GAO and the Postal Service
Inspector General have called for greater checks on the
determinations of doctors selected by FECA participants. GAO,
in preliminary observations on fraud-prevention controls in the
FECA program, said that the lack of review by a government-
selected physician worsens potential vulnerabilities both when
the government validates initial claims and as it monitors
long-term cases.\93\ In addition, the USPS Inspector General
reported the lack of employer-selected physicians exposed the
Postal Service to a higher risk of fraud and increased workers'
compensation costs.\94\ The USPS Inspector General reported
that ``mandatory use of employer-selected physicians
streamlines the process for managing workers' compensation
cases, reduces the potential risk for fraud, and provides
services that focus on returning employees to work.''\95\
---------------------------------------------------------------------------
\93\GAO, Federal Employees' Compensation Act: Preliminary
Observations on Fraud-Prevention Controls, GAO-12-212T, at p.14
(November 2011).
\94\U.S. Postal Service Office of Inspector General, Postal Service
Workers' Compensation Program: Audit Report, Report Number HR-AR-11-
007, at p.4 (September 30, 2011).
\95\U.S. Postal Service Office of Inspector General, Postal Service
Workers' Compensation Program: Audit Report, Report Number HR-AR-11-
007, at p.4 (September 30, 2011).
---------------------------------------------------------------------------
GAO has also reported complaints about the process for
obtaining a second-opinion examination if an agency has doubts
about the validity of a claim. Under current practice DOL
determines whether a second opinion is warranted, and some
employing agencies have reported to GAO ``that there have been
instances where Labor failed to respond to their requests to
have a second-opinion examination performed at the employing
agencies' request even though the costs would be borne by their
agencies.''\96\ (Labor officials responded to GAO that FECA
claims examiners are highly skilled at determining when second
opinion examinations are needed, and that requiring such
additional examinations when FECA examiners deem them
unnecessary would be very resource intensive.)\97\ GAO's
preliminary observations are reinforced by experience in the
private sector. The use of employer-selected physicians for
independent medical examinations and second opinions is a
common practice in the private sector under state-level
workers' compensation programs.\98\
---------------------------------------------------------------------------
\96\GAO, Federal Employees' Compensation Act: Preliminary
Observations on Fraud-Prevention Controls, GAO-12-212T, at pp. 14-15
(November 2011). GAO noted that it did not verify these claims.
\97\GAO, Federal Employees' Compensation Act: Preliminary
Observations on Fraud-Prevention Controls, GAO-12-212T, at pp. 14-15
(November 2011).
\98\Sengupta et al., 2011, pp. 24-25.
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In response to this situation, section 307 of the bill
requires an independent medical assessment of disability and
potential for return to work for beneficiaries after six months
in the program and on a regularly scheduled basis thereafter,
but no less frequently than every three years. This does not
change existing law where a FECA beneficiary may choose to see
his or her own doctor for treatment and initial assessment.
This provides a check point for continued participation in the
program as the individual moves to the long-term or periodic
rolls. Moreover, this section gives employing agencies, which
may be concerned about potentially irregular claims, the right
to request that DOL obtain a second opinion at any time. If the
agency makes the request before DOL has conducted any second-
opinion examination, DOL must grant the agency's request, and
if the agency makes the request later, DOL must either grant
the request or explain to the agency why the request was
denied.
Reporting of Outside Income; Program Integrity and
Compliance. S. 1789 includes two provisions requested by this
Administration to help avoid improper FECA payments including
fraudulent claims. Section 306 of the bill directs the
Secretary of Labor to require beneficiaries to report to DOL
any outside income they receive. Section 312 also enables DOL
to cross-match FECA records with Social Security data and
contains several additional provisions to strengthen integrity
and compliance efforts at FECA.
III. Legislative History
On May 17, 2011, the Senate Homeland Security and
Governmental Affairs Committee's Federal Financial Management,
Government Information, Federal Services, and International
Security Subcommittee held a hearing titled ``Addressing the
U.S. Postal Service's Financial Crisis'' to discuss long-term
solutions to improve the Postal Service's financial viability.
Postmaster General Patrick Donahoe; Margaret Cigno, the
Director of Accountability and Compliance at the PRC; USPS
Inspector General David Williams; and Phillip Herr, Director,
Physical Infrastructure Issues at GAO, testified at the
hearing. Representatives from the American Postal Workers
Union, the National League of Postmasters, and the Direct
Marketing Association also testified.
On September 6, 2011, the Senate Homeland Security and
Governmental Affairs Committee held a hearing titled ``U.S.
Postal Service in Crisis: Proposals to Prevent a Postal
Shutdown'' to examine the Postal Service's current financial
condition and possible solutions. Postmaster General Patrick
Donahoe, OPM Director John Berry, and Phillip Herr from GAO
testified at the hearing. Representatives from the private
sector and postal employee and management associations also
testified.
S. 1789 was introduced by Senators Lieberman, Collins,
Carper, and Brown on November 2, 2011, and referred to the
Committee. The Committee considered the legislation at a
business meeting on November 9, 2011. S. 1789 was ordered
reported favorably by a roll call vote with several adopted
amendments:
A Lieberman-Collins-Carper-Brown substitute amends the
provisions regarding the treatment of postal funding surplus to
FERS, Medicare coverage for Postal Service Medicare-eligible
annuitants, the Postal Service Health Benefits Program, postal
facilities, the conversion of door delivery points, limitations
on changes to mail delivery schedule, and the Federal Employees
Compensation Act. Senators Lieberman, Levin, Akaka, Carper,
Pryor, Landrieu, Tester, Begich, Collins, Coburn, Brown,
McCain, Johnson, Paul, and Moran were present and the amendment
was adopted by voice vote.
Senator Levin offered an amendment that prohibits the
Postal Service from entering into any contract that restricts
the ability of Congress to exercise oversight authority.
Senators Lieberman, Levin, Akaka, Carper, Pryor, Landrieu,
Tester, Begich, Collins, Coburn, Brown, McCain, Johnson, Paul,
and Moran were present and the amendment was adopted by voice
vote.
An Akaka amendment strikes section 103 of S. 1789, which
required Medicare-eligible postal retirees to enroll in
Medicare Parts A and B and directed the Postal Service to work
with OPM to develop Medigap-like plans that offer comparable
benefits within the Federal Employee Health Benefits program
for postal retirees and their dependents. The amendment was
adopted by a roll call vote of 10-6, with Senators Akaka,
Pryor, Tester, Begich, Landrieu, McCaskill, Coburn, McCain,
Johnson, and Paul recorded as a yes vote, and Senators
Lieberman, Carper, Collins, Brown, Moran, and Portman recorded
as a no vote. Senators Lieberman, Akaka, Carper, Pryor, Tester,
Begich, Collins, Brown, and Moran were present for the vote.
A Pryor-McCaskill-Landrieu amendment, as modified, requires
the Postal Service to respond to each recommendation by the
Postal Regulatory Commission, including each advisory opinion.
Senators Lieberman, Levin, Akaka, Carper, Pryor, Begich, Pryor,
Begich, Collins, Brown, Paul, and Moran were present and the
amendment was adopted by voice vote.
A McCaskill amendment provides for access by the
Comptroller General to the National Directory of New Hires. The
amendment was adopted by voice vote, with Senators Lieberman,
Levin, Akaka, Carper, Pryor, McCaskill, Begich, Collins, Brown,
and Moran present.
A Moran-Tester-Collins-Pryor-Begich-McCaskill-Landrieu
amendment changes the current process for closing and
consolidating post offices to carefully consider the needs of
rural areas and small towns. The amendment requires the Postal
Service to consider instead of closing or consolidating a post
office to reduce the number of operating hours, procure a
contract providing retail services in the community served by
the post office, or provide services through a rural carrier.
The amendment was adopted by a roll call vote of 12-4, with
Senators Lieberman, Levin, Akaka, Carper, Pryor, Begich,
Collins, Brown, Moran, Landrieu, McCaskill, and Tester recorded
as a yes vote, and Senators Coburn, McCain, Johnson, and
Portman recorded as a no vote. Senators Lieberman, Levin,
Akaka, Carper, Pryor, Begich, Collins, Brown, and Moran were
present for the vote.
The Committee ordered the bill, as amended, favorably
reported by a roll call vote of 9-1. Senators Lieberman, Levin,
Carper, Pryor, McCaskill, Begich, Collins, Brown, and Moran
voted in favor of the bill, while Senator Akaka voted in
opposition. Senators Landrieu and Portman asked to be recorded
in favor of the bill by proxy, while Senators Tester, Coburn,
McCain, Johnson, and Paul asked to be recorded against the bill
by proxy.
IV. Section-by-Section Analysis
Section 1--Short title
Section 1 establishes the title of the legislation as the
``21st Century Postal Service Act of 2012.''
Section 2--Table of contents
Section 2 sets forth the table of contents for the four
titles in the Act.
TITLE I: POSTAL WORKFORCE MATTERS
Section 101--Treatment of surplus contributions to Federal Employees
Retirement System (FERS)
This section requires a calculation of the Postal Service's
FERS balance each year, and directs any overpayment to be
transferred to the Postal Service, upon request of the
Postmaster General. For fiscal years 2011 through 2013, a
portion of this overpayment is to be used for retirement
incentives, including buyouts (up to the existing cap for
federal workers of $25,000 for any one individual) or
additional service credits under section 102. If there are
additional funds remaining, these may be used by the Postal
Service for certain other items such as repaying debt, workers'
compensation payments, paying down the retiree health liability
and pension obligations.
Section 102--Additional service credit
This section allows the Postal Service (through OPM) to
offer up to one year of credited service for individuals in the
CSRS pension system and up to two years for individuals in FERS
as an incentive to encourage retirement. Thus, an individual
who needed 30 years of service to retire and had 29 years of
service could be offered an additional year so as to be
eligible for full retirement. This section further provides
that an individual who receives additional service credit as a
retirement incentive may not also receive a cash buyout.
Section 103--Restructuring of payments for retiree health benefits
This section would restructure the Postal Service's pre-
funding requirements for retiree health benefits. The bill
would immediately begin a 40-year amortized payment schedule
for the Postal Service to fund retirees' health benefits
(previously scheduled to begin in fiscal year 2017). It would
also reduce the pre-funding goal for retiree health benefits to
80 percent of the projected liability.
Section 104--Postal Service Health Benefits Program
This section would authorize the Postal Service to enter
into negotiations with all of its recognized unions for the
purpose of developing a potential new Postal Service health
care plan outside the Federal Employee Health Benefit Plan
(FEHB). The new Postal Service Health Benefits Program would
only be implemented if all of the unions and the Postal Service
agree. This section also requires USPS to consult with
organizations representing supervisory and other managerial
employees of the Postal Service in the course of its
negotiations over the health care plan, and provides that any
postal employee not represented by a recognized employee union
may participate in any new Postal Service health plan agreed on
by the Postal Service and the unions at the option solely of
that employee.
Section 105--Arbitration; labor disputes
This section would require that arbitrators deciding a
contract dispute between the Postal Service and one of its
recognized unions take into consideration such relevant factors
as the following when rendering a binding decision: (1) the
financial condition of the Postal Service; (2) the requirement
in law that the Postal Service consider comparability of wages
and benefits to those offered in the private sector; and (3)
the policies of Title 39, the section of the U.S. Code that
deals with postal matters.
TITLE II: POSTAL SERVICES AND OPERATIONS
Section 201--Postal facilities
This section requires certain steps before the closure of a
mail processing facility:
(1) A complete and published study that includes the
feasibility of downsizing rather than closing the
facility;
(2) A 45-day public comment period after publishing
the study;
(3) A 30-day period for the Postal Service to
consider any concerns raised, culminating with the
publication of a justification on its web site, which
shall include:
(a) Responses to public comments;
(b) A discussion of the effect of closure on
the affected community, including any
disproportionate impact on a State, region or
locality;
(c) The change in travel times and distances
for affected customers;
(d) The change in delivery times for all
classes of mail;
(e) A consideration of geographical factors
such as remoteness, weather related factors,
and broadband availability;
(f) Any other appropriate factors.
(4) A waiting period of at least 15 days after the
publication on the USPS web site of the closure
justification before USPS may close the processing
facility.
Section 202--Additional Postal Service planning
This section requires the Postal Service to consider how
its plans to increase the use of alternate retail might affect
customers' access to the products and services offered by the
Postal Service, and how to improve access to postal services
where possible. Current law requires the Postal Service to
report annually on its efforts to change and streamline its
network of processing and retail facilities. One aspect of the
required report involves a discussion of the Postal Service's
plans to expand the use of retail alternatives to post offices.
This section builds on that report. It also requires any plans
to replace post offices with alternate retail to: (1) consider
the impact on small communities and rural areas; (2) ensure
that the Postal Service continues to serve small communities
and rural areas after the implementation of the plan; and (3)
allow for the solicitation of community input.
Section 203--Area and district office structure
In an effort to reduce costs and create efficiencies, this
section requires the Postal Service to develop and update every
five years a strategic plan relating to area and district
office structure and to develop a 10-year plan with timetables
that provides for the consolidation of area and district
offices wherever the Postal Service determines that such
consolidation would be cost effective and would not
substantially and adversely affect operations. This section
also requires the Postal Service, consistent with the required
plans, to consolidate district offices located within 50 miles
of each other, to consolidate those area and district offices
that have less than the mean mail volume and number of work
hours for all area and district offices, and to relocate area
offices to headquarters.
Section 204--Post Offices; retail service standards
This section requires the Postal Service to consider
several options prior to making a determination to close or
consolidate a post office. These include considering whether to
consolidate two post offices within a reasonable distance,
reduce the number of operating hours at a particular post
office instead of a closure or consolidation, and permit a
contractor or rural carrier to provide retail services in the
community served by the post office. The Postal Service must
provide notice at least 60 days prior to the proposed date of
such post office closure or consolidation to persons served by
such post office. This section also requires the Postal Service
to develop a set of service standards that would guarantee its
customers a certain level of access to retail services, whether
at a post office or some alternative to a post office, taking
into consideration the following: (1) the universal service
obligation; (2) the alternate retail plan required under
section 302 of the PAEA, as amended by section 202 of this
bill; (3) the population served, including population density
and demographic factors that may affect customers' ability to
access services, such as age or disability status; (4) the
feasibility of offering retail access in addition to that
offered at post offices; and (5) the existing requirement that
the Postal Service serve remote areas and communities with
transportation challenges and other conditions, including
inclement weather, that could impede access to services.
Customers who believe that the Postal Service has failed to
provide them or their community with a level of service
consistent with the standard would be permitted to file a
complaint with the PRC.
Section 205--Conversion of door delivery points
This section authorizes the Postal Service to convert door
delivery points to curbside, sidewalk, or centralized delivery
points, and defines these terms. This section also provides
certain exceptions to the use of this authority, including
physical hardship of a customer, weather conditions in a
geographical area (such as where snow removal efforts could
obstruct access to mailboxes), circumstances in urban areas
(such as obstructive street parking) that preclude efficient
use of curbside delivery points, or ``other exceptional
circumstances.'' This section further requires the Postal
Service to establish procedures to solicit, consider, and
respond to input from individuals affected by the conversion of
door delivery points, and to report to Congress and the USPS
Inspector General on its progress in carrying out this section.
Section 206--Limitations on changes to mail delivery schedule
This section would prohibit the Postal Service from
implementing any plan to eliminate Saturday delivery for at
least two years. In addition, a switch to five-day delivery
could only move forward if the following conditions are met:
(1) the Postal Service identifies customers who may be affected
disproportionately by five-day delivery and develops measures
to ameliorate the negative impact; (2) the Postal Service makes
use of its other authorities under current law and the new
authorities and mandates included in this bill to increase
revenue and reduce costs; and (3) after implementing these
other savings options, the Postal Service determines that a
five-day schedule is still necessary to achieve long-term
financial sustainability, and submits a report on the other
steps it has taken to Congress, the PRC and GAO. GAO is to
review the Postal Service's financial situation, projections,
and the adequacy of the savings initiatives already implemented
in order to determine whether the implementation of five-day
delivery is necessary for the Postal Service to become
profitable by fiscal year 2015 and to achieve long-term
financial solvency. The Postal Service would not be able to
implement a five-day schedule unless the Comptroller General
has made a determination that doing so is necessary, and the
PRC confirms that the Comptroller General has done so.
This section further specifies that where five-day delivery
is implemented, there can be no more than two consecutive days
without mail (e.g., on holiday weekends). The section also
clarifies that the bill does not authorize further reductions
in the delivery schedule for areas that may already have less
than six-day delivery, nor any changes to the schedules for
post offices, post office boxes, mail acceptance, or
competitive products such as Express Mail.
Section 207--Time limits for consideration of service changes
This section establishes a default timeline of 90 days for
advisory opinions to be issued by the PRC if an alternate
schedule is not mutually agreed upon between the PRC and the
Postal Service. Subsequent to the issuance of the opinion, the
Postal Service would not be permitted to act on the proposed
service change until 30 days after it has formally responded to
the opinion and any recommendations it might include. This
section also requires the Postal Service to submit to the
President and Congress a statement as to whether it plans to
address the PRC's concerns and implement any recommendations
made by the PRC. If the Postal Service determines not to
address or implement the PRC's recommendations, it must provide
the reasons for its determination.
Section 208--Public procedures for significant changes to mailing
specifications
This section requires the Postal Service to provide at
least 30 days notice of any proposed changes to mailing
specifications not reviewed by the PRC, and to receive and
respond to public comments on the changes. The section further
requires the Postal Service to analyze the financial impact of
the proposed change on the Postal Service and its customers.
Section 209--Nonpostal products and services
Subsection (a) of this section provides that the Postal
Service may provide nonpostal products and services, provided
that the PRC determines that the offering of such product or
service meets all of the following criteria:
(1) It utilizes the Postal Service's processing,
transportation, delivery, or retail network or
technology;
(2) It is consistent with the public interest and a
demonstrated demand for the Postal Service to provide
this new product or service rather than or in addition
to another entity;
(3) It does not abuse the Postal Service's monopoly
status nor create unfair competition with the private
sector;
(4) It is justified by a market analysis that has
been conducted by the Postal Service and submitted to
Congress and the PRC that demonstrates the potential to
improve the financial position of the Postal Service.
Subsection(a) also provides that the PRC must designate any
new product or service that meets the above criteria under an
existing mailing product classification: market-dominant,
competitive, or experimental. Classification of the product
would allow it to be regulated in the same manner as existing
postal products and services.
Subsection (b) of this section requires the Postal Service
to submit a market analysis to the PRC during the 5-year period
beginning on the date of enactment of this Act. The market
analysis serves as the basis for determining whether a
potential nonpostal product or service will improve the net
financial position of the Postal Service.
TITLE III: FEDERAL EMPLOYEES' COMPENSATION ACT
Section 301--Short title and references
This section says that title III of the bill may be cited
as the ``Workers' Compensation Reform Act of 2012.'' The
section also provides that, whenever a provision in title III
of the bill refers to a statutory section being amended, the
provision is in reference to title 5 of the United States Code
unless noted otherwise.
Section 302--Federal workers' compensation reforms for retirement age
employees
This section generally reduces FECA benefits for totally
disabled enrollees to 50 percent of the pre-disability wage
upon the enrollee reaching full retirement age, as defined in
the Social Security Act. For partially disabled enrollees, the
benefits are generally reduced to 50 percent of the pre-
disability wage, multiplied by the percentage of wage-earning
capacity lost due to the injury.
For individuals whose workplace injury occurs before the
date of enactment, section 302 contains provisions to delay
application of the reduced benefit level and to provide full
exemption for those most severely injured and those already
over retirement age. Specifically--
(1) Those who are permanently, totally disabled and
unable to return to work are exempt from this section
(``grandfathered''), and their benefit rate is not
reduced to 50 percent. This category of grandfathered
individuals is defined under the legislation as those
who satisfy any one of the following criteria:
(a.) Lost the use of two appendages (e.g.,
arms/legs);
(b.) Receiving custodial home nursing care or
full nursing home care for at least one year
prior to enactment; or
(c.) Receiving ``total disability'' wage-loss
compensation for at least three years prior to
enactment or will have done so within the first
three years after enactment.
(2) Those who are already at the age of retirement on
the date of enactment are also exempt from this
section.
(3) For those who do not qualify as permanently,
totally disabled (``grandfathered'') and are not
already over the retirement age, the benefit level will
be reduced to 50 percent upon reaching retirement age
or three years after the date of enactment, whichever
is later.
Section 303--Augmented compensation for dependents
This section eliminates the additional compensation in
current law for beneficiaries who have dependents.
For individuals whose workplace injury occurs before the
date of enactment, section 303 contains provisions to delay
application of the reduced benefit level and to provide full
exemption for those most severely injured. Specifically--
(1) Those who are permanently, totally disabled and
unable to return to work are exempt from this section
(``grandfathered''), and they will continue to receive
the additional level of compensation if they have
dependants. This category of grandfathered individuals
is the same as those grandfathered under section 302.
(2) For those who do not qualify as permanently,
totally disabled (``grandfathered'') will lose the
right to receive augmented compensation three years
after the bill is enacted.
Section 304--``Schedule compensation payments''
This section allows workers' compensation beneficiaries to
receive ``schedule compensation payments'' if their benefits
are reduced under sections 302 or 303, after such reduction.
Schedule compensation payments are specific payments authorized
under existing law for certain injuries, such as loss of use of
a limb. Under current law, an injured individual is not
eligible to receive a schedule compensation payment for an
injury simultaneously with benefits for total or partial
disability.
Section 305--Vocational rehabilitation
This section includes several provisions to strengthen
existing programs that help injured workers get back to work:
(1) Extends existing vocational rehabilitation
opportunities under FECA for workers who are totally
disabled to those who are partially disabled as well.
(2) Authorizes DOL to pay a federal employer the
salary of a beneficiary for up to three years as an
incentive to hire workers off of the FECA program
rolls. Current law permits these payments only to non-
federal employers.
(3) Makes compliance with the Return to Work plan
developed between the program and the beneficiary a
condition of receiving continued benefits (except this
condition would not apply to beneficiaries who are over
the age of retirement).
Section 306--Reporting requirements
This section requires the Secretary to require
beneficiaries to report any outside income they receive to the
Department of Labor. An employee who fails to comply will lose
the right to receive compensation.
Section 307--Disability management review; independent medical
examinations
This section requires an independent medical assessment of
disability and potential for return to work for beneficiaries
after six months in the program and on a regularly scheduled
basis thereafter, but no less frequently than every three
years. This does not change existing law under which a FECA
beneficiary may choose to see his or her own doctor for
treatment and initial assessment. Moreover, employing agencies
may request that DOL obtain an independent medical examination
at any time, and, if the agency makes the request before DOL
has conducted such an examination, DOL must grant the agency's
request.
Section 308--Waiting period
Because minor workplace injuries often heal quickly, FECA
provides a three-day waiting period before compensation begins.
For postal employees, FECA's three-day waiting period comes
immediately after the injury, but for non-postal workers the
waiting period does not comes until after the end of the 45-day
continuation-of-pay period.
Section 308 begins the three-day waiting period immediately
after a work-related injury for all injured employees. As under
current law, injured employees may receive FECA compensation
for those three days if the period of disability exceeds 14
days.
Section 309--Election of benefits
If an individual is eligible for compensation benefits both
under FECA and under CSRS or FERS or another retirement system
for federal employees, the individual must elect which benefits
to receive, and the election shall be irrevocable if the
individual chose benefits under the retirement system while
eligible for FECA benefits. This section prevents an injured
worker from retroactively claiming workers' compensation
benefits after having declined such benefits in favor of
federal retirement benefits. This provision is intended to
prevent a claimant from electing federal retirement benefits as
a means of avoiding required participation in vocational
rehabilitation or acceptance of an offered suitable job and
then later retroactively electing the potentially more generous
workers' compensation benefits.
Section 310--Sanctions for non-cooperation with nurses
This section suspends benefits when an injured worker fails
to cooperate with a field nurse. A ``field nurse'' is defined
to mean a registered nurse who assists DOL in the medical
management of disability claims and assists claimants in
coordinating medical care, and DOL is authorized to use field
nurses to coordinate medical services and vocational
rehabilitation services.
Section 311--Subrogation of continuation of pay
This section allows the federal government to recover
``continuation of pay'' (i.e., salary that's continued to be
paid to the beneficiary during the 45-day period between the
injury and the initiation of FECA disability benefits) from
third parties that are liable for the beneficiary's work-
related injury.
Section 312--Integrity and compliance
This section includes several provisions to strengthen the
integrity and compliance efforts within the FECA program. No
later than 270 days after enactment, the Secretary of Labor
must establish an Integrity and Compliance Program to prevent,
identify, and recover improper payments (including those
obtained by fraud) for the FECA program. The section also
directs the Secretary to cooperate with other agencies,
including the Postal Service, and the agency inspectors
general, to prevent, identify, and recover improper payments.
The section also requires the Secretary of Health and Human
Services to make the National Directory of New Hires available
to the Secretary of Labor, the Postmaster General, the DOL
Inspector General, the USPS Inspector General, and GAO, so that
they can cross-match that data with claimant data under the
FECA program. The Comptroller General is granted access to the
National Directory of New Hires under this provision for any
audit, evaluation, or investigation, including any audit,
evaluation, or investigation relating to program integrity.
Section 313--Amount of compensation
This section increases the amount an injured worker
receives for a severe disfigurement of the face, head or neck
from $3,500 to a maximum of $50,000. This section also
increases the amount allowed to reimburse funeral expenses
incurred due to a death from a work-related injury from $800 to
a maximum of $6,000. The limits in the current law have not
been significantly changed since 1949.
Section 314--Technical and conforming amendments
This section contains technical and conforming amendments
to the FECA statute in title 5 of the United States Code.
Section 315--Regulations
This section requires the Labor Department to issue
regulations to carry out this title of the legislation.
TITLE IV: OTHER MATTERS
Section 401--Profitability plan
This section requires the Postal Service to submit to
Congress within 90 days of enactment a plan detailing how it
will become profitable by fiscal year 2015 and achieve long-
term financial solvency. The plan must take into consideration
the Postal Service's current legal authorities, the authorities
given to it under this bill, cost savings that will be achieved
through negotiations with employees of the Postal Service, and
projected changes in mail volume. The plan must also be updated
each quarter until the last quarter of fiscal year 2015.
Section 402--Postal rates
This section requires the PRC, not earlier than two years
after enactment, to commence a study regarding: (1) the extent
to which any market-dominant classes, products, or types of
mail services do not bear their attributable costs; and (2) the
impact of any excess mail processing, transportation, or
delivery capacity of the Postal Service on the costs
attributable to any class that bears less than 100 percent of
the costs attributable to such classes, products, or types of
mail service. The PRC must also hold a public hearing before
completing the study. At the conclusion of this study, for
certain classes deemed by the PRC to recover less than 90
percent of costs, the Postmaster General may increase rates for
such classes by no more than 2 percent a year above the current
allowable rate increase until such time as the class is
covering 90 percent of its costs.
Section 403--Cooperation with State and local governments
This section allows the Postal Service to work with state
and local governments to provide government services (such as
fishing licenses or tax forms) in post offices in the same way
as it currently does with services provided on behalf of
federal agencies (such as passports).
Section 404--Shipping of wine and beer
This section amends Title 18 of the U.S. Code and would
allow the Postal Service to ship wine and beer (which private
carriers such as FedEx and UPS already do), sent by a licensed
winery or brewery in accordance with the laws of the state to
which the items are addressed and received.
The section would further require that the Postal Service
issue regulations providing that wine and beer is mailed
directly to a person who is at least 21 years old and
presenting a valid, government-issued form of identification at
the time of delivery.
Section 405--Annual report on U.S. mailing industry
This section requires the PRC to publish annually a report
on the financial health of the U.S. mailing industry, and
requires the Postal Service and any other appropriate federal
agency to assist in the report's preparation.
Section 406--Use of negotiated service agreements
This section authorizes the Postal Service to enter into
Negotiated Service Agreements (NSAs) with individual mailers to
retain existing mail volume, clearing up an ambiguity in the
law. The section also requires the Postal Service to coordinate
with the PRC to increase the use of NSAs.
Section 407--Contracts disputes
This section corrects a mistake in the Postal
Accountability and Enhancement Act of 2006, which inadvertently
deleted the Postal Service and the PRC from the list of
agencies covered by the Contract Disputes Act of 1978. The
Contract Disputes Act governs how contractor claims against
federal agencies are to be handled.
Section 408--Contracting provisions
This section institutes contracting reforms and new ethics
provisions for the Postal Service and the PRC. These include:
(1) establishing the position of Advocate for Competition, who
will encourage the use of commercial items, challenge barriers
to competition, and review procurement; (2) clarifying that the
Postmaster General and the PRC Chairman are ultimately
responsible for any delegation of authority with respect to
contracting, and requires public posting of such delegations;
(3) requiring the Postal Service and PRC to publicly post
justifications for noncompetitive contracts, with the PRC
required to post all such contracts, and the Postal Service
required to post all contracts valued at more than $250,000;
(4) requiring that if a contracting officer identifies an
ethical issue surrounding a proposed contract, that contract
must be submitted to the agency's designated ethics official
before it is awarded; (5) clarifying ethics rules by requiring
employees who have a decision-making role in the award of
noncompetitive contracts to disclose any relationship that
could potentially lead to questions about their impartiality,
requiring a review by the ethics counsel of any disclosures to
determine if disqualification of the employee from
participation is warranted, and requiring contractors to
disclose conflicts of interest. This section also allows the
Postmaster General and the PRC Chairman to void a contract and
recover funds when a violation is proven. This section also
prohibits the Postal Service from entering into any contracts
that restrict Congress from exercising its oversight authority.
V. Evaluation of Regulatory Impact
Pursuant to the requirements of paragraph 11(b) of rule
XXVI of the Standing Rules of the Senate, the Committee has
considered the regulatory impact of S. 1789. The Congressional
Budget Office states that the bill contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandate Reform Act and would impose no costs on state,
local, or tribal governments, or private entities. The
enactment of this legislation will not have significant
regulatory impact.
VI. Congressional Budget Office Cost Estimate
January 26, 2012.
Hon. Joseph I. Lieberman,
Chairman, Committee on Homeland Security and Governmental Affairs, U.S.
Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 1789, the 21st
Century Postal Service Act of 2011.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Mark
Grabowicz.
Sincerely,
Douglas W. Elmendorf.
Enclosure.
S. 1789--21st Century Postal Service Act of 2011
Summary: S. 1789 would change the laws that govern the
operation of the United States Postal Service (USPS). Major
provisions of the bill would:
Transfer more than $11 billion in surplus
retirement contributions from the Civil Service
Retirement and Disability Fund (CSRDF) to the Postal
Service Fund;
Change the payments that the Postal Service
is required to make to the Postal Service Retiree
Health Benefits Fund (PSRHBF);
Permit the Postal Service to reduce mail
delivery from six days per week to five;
Authorize the Postal Service to offer
employees credit for additional years of service as an
incentive to retire; and
Reduce payments to most federal workers
receiving benefits under the Federal Employees'
Compensation Act (FECA) and reform the administration
of that act.
In addition, other provisions of S. 1789 would aim to help
the Postal Service reduce its costs and increase its revenues.
CBO estimates that enacting the bill would result in off-
budget savings of $25.6 billion over the 2012-2022 period and
on-budget costs totaling about $31.9 billion. (USPS cash flows
are recorded in the federal budget in the Postal Service Fund
and are classified as off-budget, while the cash flows of the
PSRHBF, CSRDF, and the FECA account are on-budget.)
Combining those effects, CBO estimates that the net cost to
the unified budget of enacting S. 1789 would be $6.3 billion
over the 2012-2022 period. All of those effects reflect changes
in direct spending. In addition, we estimate that enacting S.
1789 would decrease revenues by $15 million over the 2012-2015
period. Pay-as-you-go procedures apply because enacting the
legislation would increase on-budget direct spending and
decrease revenues.
S. 1789 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of S. 1789 is shown in Table 1. The costs of
this legislation fall within budget functions 370 (commerce and
housing credit) and 600 (income security).
TABLE 1--SUMMARY OF BUDGETARY IMPACT OF S. 1789, THE 21ST CENTURY POSTAL SERVICE ACT OF 2011
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
----------------------------------------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2012-2017 2012-2022
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
OFF-BUDGET CHANGES IN DIRECT SPENDING
Estimated Budget Authority....................... -5,299 -1,730 -2,123 -2,364 -3,022 -1,932 -1,900 -1,865 -1,830 -1,796 -1,764 -16,469 -25,624
Estimated Outlays................................ -5,299 -1,750 -2,123 -2,364 -3,022 -1,932 -1,900 -1,865 -1,830 -1,796 -1,764 -16,469 -25,624
ON-BUDGET CHANGES IN DIRECT SPENDING
Estimated Budget Authority....................... 10,945 3,139 3,311 3,350 3,477 1,272 1,284 1,281 1,280 1,278 1,274 25,494 31,891
Estimated Outlays................................ 10,945 3,139 3,311 3,350 3,477 1,272 1,284 1,281 1,280 1,278 1,274 25,494 31,891
UNIFIED BUDGET CHANGES IN DIRECT SPENDING
Estimated Budget Authority....................... 5,647 1,410 1,189 986 455 -660 -616 -584 -550 -518 -490 9,026 6,268
Estimated Outlays................................ 5,647 1,410 1,189 986 455 -660 -616 -584 -550 -518 -490 9,026 6,268
CHANGES IN REVENUES
Estimated Revenues............................... -4 -5 -5 -1 0 0 0 0 0 0 0 -15 -15
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Estimated Authorization Level.................... 0 31 26 27 5 24 -51 -66 -95 -119 -146 65 -412
Estimated Outlays................................ 0 27 26 27 4 -23 -51 -67 -94 -119 -146 62 -415
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Note: Components may not sum to totals because of rounding. For spending, positive numbers indicate increases in costs; negative numbers indicate reductions in costs. For revenues, negative
numbers indicate reductions in revenue collections.
Basis of estimate: For the purposes of this estimate, CBO
assumes that S. 1789 will be enacted early in calendar year
2012. The bill would affect outlays of the Postal Service Fund,
which is off-budget, and of the PSRHBF, CSRDF, and FECA
accounts--all of which are on-budget. CBO estimates that the
net cost to the unified budget would total $6.3 billion over
the 2012-2022 period. In addition, we estimate that enacting
the bill would decrease revenues by $15 million over the 2012-
2015 period (with no impact on revenues after 2015).
Background on USPS Payments for Employees Health Insurance and
Retirement
The following sections present background information
relating to the major provisions of S. 1789 that would affect
postal finances.
Postal Service Obligations for Retiree Health Care. Under
current law, the Postal Service will make annual payments over
the 2012-2016 period to two accounts for retirees' health
insurance premiums. (USPS spending on those activities is
classified as off-budget.) The agency will make a direct
payment to the on-budget Federal Employees Health Benefits
(FEHB) fund for current retirees. CBO estimates that this
payment will be about $2.7 billion in 2012, rising to $3.8
billion by 2016.
In addition, over the 2012-2016 period, the Postal Service
is required (under current law) to make specified annual
payments that range from $5.6 billion to $11.1 billion to the
PSRHBF, an on-budget account established by the Postal
Accountability and Enhancement Act (Public Law 109-435) to
prefund future retirees' health benefits. Under current law,
funds in the PSRHBF may not be expended for retirees' health
cost until fiscal year 2017.
Beginning in 2017, the Postal Service will make estimated
annual payments to the PSRHBF to cover the ``normal costs'' of
providing health benefits to future retirees. Those payments
will be equal to the annual increase in retiree health care
liabilities attributable to current employees. In addition, the
agency will make annual payments amortized over 40 years to
liquidate the unfunded liability for retirees' health benefits.
The unfunded liability is the total liability accrued to date
for retirees' health benefits minus the PSRHBF balance that is
equivalent to the amount that has not been set aside to cover
future liabilities. Those payments will be estimated by the
Office of Personnel Management (OPM) before 2017.
The payments to the PSRHBF that are required under current
law are shown in the memorandum to Table 2.
Postal Service Pension Obligations. Most postal employees
participate in the Federal Employees Retirement System (FERS),
while some workers with longer tenure participate in the Civil
Service Retirement System (CSRS). The Postal Service and its
employees make payroll contributions toward FERS and CSRS.
TABLE 2--OFF-BUDGET CHANGES IN DIRECT SPENDING UNDER S. 1789
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, outlays in millions of dollars--
-----------------------------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2012-2022
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in USPS Payments for Retiree Health Benefits........ 508 -1,522 -1,615 -1,665 -1,761 -655 -655 -655 -655 -655 -655 -9,984
Net Effect of Transfer of Surplus Retirement Contributions.. -5,700 0 0 0 0 0 0 0 0 0 0 -5,700
Reduction in Mail Delivery.................................. 0 0 -300 -600 -1,250 -1,250 -1,200 -1,150 -1,100 -1,050 -1,000 -8,900
Increased Credits for USPS Retirees......................... -107 -214 -215 -108 0 0 0 0 0 0 0 -643
Changes in USPS Payments for Workers' Compensation.......... 0 6 7 8 -11 -27 -45 -60 -75 -91 -109 -397
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Total Off-Budget Changes............................ -5,299 -1,730 -2,123 -2,364 -3,022 -1,932 -1,900 -1,865 -1,830 -1,796 -1,764 -25,624
MEMORANDUM--USPS PAYMENTS FOR RETIREE HEALTH BENEFITS
Under Current Law:
Estimated Payments to FEHB.............................. 2,666 2,911 3,189 3,489 3,792 0 0 0 0 0 0 16,047
Specified Payments to PSRHBFa........................... 2,100 5,600 5,700 5,700 5,800 0 0 0 0 0 0 24,900
Estimated Payments for Normal Costsb.................... 0 0 0 0 0 4,181 4,410 4,651 4,902 5,165 5,440 28,749
Estimated Amortization Paymentsc........................ 0 0 0 0 0 3,410 3,410 3,410 3,410 3,410 3,410 20,460
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Total............................................... 4,766 8,511 8,889 9,189 9,592 7,591 7,820 8,061 8,312 8,575 8,850 90,156
Under S. 1789:
Estimated Payment for Normal Costs...................... 3,174 3,368 3,560 3,760 3,970 4,181 4,410 4,651 4,902 5,165 5,440 46,581
Estimated Amortization Payments......................... 2,100 2,100 2,100 2,100 2,100 2,100 2,100 2,100 2,100 2,100 2,100 23,100
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Subtotal............................................ 5,274 5,468 5,660 5,860 6,070 6,281 6,510 6,751 7,002 7,265 7,540 69,681
Changes in Other USPS Spending.......................... 0 1,522 1,615 1,665 1,761 655 655 655 655 655 655 10,492
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Total............................................... 5,274 6,990 7,275 7,525 7,831 6,936 7,165 7,406 7,657 7,920 8,195 80,173
Changes in Payments for Retiree Health Benefits 508......... 508 -1,522 -1,615 -1,665 -1,761 -655 -655 -655 -655 -655 -655 -9,984
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Components may not sum to totals because of rounding.
USPS = United States Postal Service; FEHB = Federal Employees Health Benefits fund; PSRHBF = Postal Service Retiree Health Benefits Fund.
a. In fiscal year 2012, the Postal Service is required to pay $11.1 billion to the PSRHBF. However, CBO estimates that the agency will be able to pay only $2.1 billion.
b. These payments are equal to the annual increase in retiree health care liabilities attributable to current employees.
c. These costs are based on information provided by the Office of Personnel Management.
Beginning in fiscal year 2017, the Postal Service will make
annual payments amortized over 27 years to liquidate any
``unfunded liability'' (as estimated by OPM) for retirees' CSRS
pensions benefits. The unfunded liability is the total
liability accrued to date for retirees' pension benefits minus
the portion of the CSRDF attributable to Postal Service
contributions that is equivalent to the amount that has not
been set aside to cover future liabilities.
Off-Budget Changes in Direct Spending (Postal Service Fund)
CBO estimates that enacting S. 1789 would reduce net USPS
spending by $25.6 billion over the 2012-2022 period; as noted
above, USPS spending is classified as off-budget. Details of
changes in spending from the Postal Service Fund are summarized
in Table 2 and discussed in the following subsections.
Changes in Payments for Retiree Health Benefits. CBO
estimates that the bill's provisions that would change payments
to the PSRHBF would result in off-budget savings of about $10
billion over the 2012-2022 period, as discussed below.
Payments to the PSRHBF under S. 1789. The legislation would
authorize the Postal Service, over the 2012-2016 period, to
make payments to the FEHB fund for current retirees' health
insurance premiums from the PSRHBF (under current law, funds in
the PSRHBF are not available for spending until fiscal year
2017). S. 1789 also would eliminate the current specified
payments into the PSRHBF for fiscal years 2012 through 2016. In
addition, beginning in 2012, the bill would direct the Postal
Service to make estimated annual payments to the PSRHBF to
cover the normal costs of providing health benefits to future
retirees and estimated 40-year amortization payments to cover
80 percent of the unfunded liability for retirees' health
benefits (under current law, those payments would not begin
until 2017). The payments required under S. 1789 are shown in
the memorandum on Table 2; as detailed in the table's
footnotes, CBO does not expect the Postal Service to be able to
make the full payments required in 2012.
The bill's changes in payments for retirees' health
insurance premiums would lower the Postal Service's costs for
those activities over the 2013-2022 period as shown in Table 2
(see memorandum). For example, under current law, the Postal
Service will pay a total of about $8.5 billion in 2013, but
under S. 1789, the agency would pay $5.5 billion in that year.
CBO also expects that lowering health care expenses would lead
to an increase in other USPS costs totaling $1.5 billion in
2013 and about $10.5 billion over the 2013-2022 period. We
estimate that enacting S. 1789 would reduce net USPS spending
by about $10 billion over the 10-year period. (Those provisions
also would affect cash flows of the PSRHBF, as discussed
below.)
Changes in Other USPS Spending. CBO expects that lowering
health care expenses would lead the agency to modify its
ongoing efforts under current law to reduce spending. Faced
with an imbalance of receipts from postal customers and
operational costs, the Postal Service has made significant
efforts to reduce spending in recent years. For example, early
in 2009, the Postal Service announced plans to cut spending by
$5.9 billion over the 2009-2010 period. Just a few months
later, in response to worsening financial conditions, the
agency accelerated the plan to cut $5.9 billion in 2009 alone.
Since then, the Postal Service has announced the possibility of
closing offices, laying off employees, and making major
reductions in service.
CBO expects that lowering health care expenses would lead
the agency to alter its cost-reduction program by cutting
spending less aggressively than it would without the
legislation. CBO anticipates that enacting this legislation
would lead the USPS to increase its net operational spending
relative to current law. We estimate that the net increase in
such USPS outlays over the 2013-2022 period would be about half
of the reduction in health care payments about $1.5 billion in
2013 and $10.5 billion over the 2013-2022 period.
Net Effect of Transfer of Surplus Postal Retirement
Contributions. For each of fiscal years 2011 through 2013, S.
1789 would authorize the Postal Service Fund to receive a
transfer of any surplus in the USPS FERS account within the
CSRDF as of the end of the fiscal year. S. 1789 would permit
the Postal Service to use the transferred amounts to fund
employee buyout plans, pay off its debt to the U.S. Treasury,
make payments for workers' compensation benefits, and for other
expenses.
OPM estimates that the Postal Service's surplus for its
FERS account in the CSRDF was $11.4 billion as of September 30,
2011. Under the bill, CBO estimates that $11.4 billion would be
transferred from the CSRDF to the Postal Service Fund in fiscal
year 2012. This intragovernmental transfer would be classified
as a savings of $11.4 billion in off-budget direct spending for
the Postal Service Fund in 2012. (This transfer also would
result in a cost of $11.4 billion to the on-budget CSRDF as
discussed below.)
As with the bill's provision to lower the health care
expenses, CBO expects that the transfer would lead the agency
to alter its cost-reduction program by cutting spending less
aggressively than it otherwise would and thus increase other
expenses relative to current law. We estimate that this
increase in other expenses would be about half the $11.4
billion that would be transferred--$5.7 billion in 2012; we
estimate that the net effect of this provision would be a
savings of $5.7 billion in 2012 (as shown in Table 2).
CBO has no basis for estimating whether there would be any
surplus in the USPS FERS account in fiscal years 2012 and 2013
to transfer to the Postal Service Fund.
Reduction in Mail Delivery. S. 1789 would authorize the
Postal Service to deliver mail five days per week, beginning no
earlier than two years after enactment. Before any change in
service, however, the Government Accountability Office (GAO)
would have to evaluate the financial need for such a change and
the Postal Regulatory Commission (PRC) would have to determine
that a reduction in mail delivery would be necessary for the
Postal Service to achieve long-term financial solvency. In
addition, the bill would require the Postal Service to develop
measures to reduce any disproportionate effects that five-day
delivery would have on certain customers and communities.
CBO estimates that reducing mail delivery to five days per
week would result in savings of about $1.3 billion by fiscal
year 2016. Estimated savings in 2015 and 2014 would be lower--
about $600 million and $300 million, respectively--as the
Postal Service gradually increases efficiency under the new
delivery system. Beginning in 2018, we expect that annual
savings would gradually decline as those funds would probably
be spent by the Postal Service or returned to mailers in the
form of lower rates rather than accumulating as large annual
surpluses in the Postal Service Fund. We estimate that annual
savings would fall to $1 billion by 2022.
Implementation of five-day delivery under S. 1789 would
depend upon evaluations by GAO and PRC, and we cannot predict
the actions of those agencies. However, we expect that there is
a 50 percent chance that GAO and PRC actions would lead to
five-day delivery. The anticipated savings of about $1.3
billion in 2016 is based on estimates prepared by the Postal
Service and the PRC, reduced by 50 percent to reflect the
uncertainty of future actions by GAO and the PRC.\1\
---------------------------------------------------------------------------
\1\The Postal Service estimates that eliminating mail delivery on
Saturdays would eventually result in net savings of $3.1 billion
annually, mostly in personnel and transportation costs. The PRC
estimates that reduction of mail delivery from six to five days per
week would save only $1.7 billion per year. The PRC estimates lower net
savings largely because it disagrees with the Postal Service's
assumption that most mail currently delivered on Saturday could be
delivered on Mondays with minimal increased costs. PRC's estimate
therefore includes a bigger expected offset to the gross savings for
eliminating Saturday deliveries.
---------------------------------------------------------------------------
Increased Credits for USPS Retirees. For certain employees
who retire before 2015, section 102 of S. 1789 would authorize
the USPS to offer credit for additional years of service as an
incentive to retire. As discussed below, the provision would
affect spending from the CSRDF and would result in several
thousand USPS employees retiring over the 2012-2014 period a
few years earlier than expected under current law. Over that
period, the Postal Service would make lower employer
contributions toward retirement and would spend less in
salaries and benefits. CBO estimates that provision of S. 1789
would save the USPS about $640 million over the 2012-2015
period.
Changes in Workers' Compensation for the USPS. The bill
would make several changes to the Federal Employees'
Compensation Act, which provides wage and medical benefits to
federal employees who are injured in the course of their work.
Based on information from the Department of Labor (DOL),
CBO estimates that the changes proposed in S. 1789 would reduce
gross outlays under FECA by $1.2 billion over the 2012-2022
period. That gross savings would be partially offset by reduced
reimbursements from federal agencies, including the Postal
Service, of $1 billion during that period, for net savings to
the FECA account over 10 years of about $200 million. Based on
historical spending patterns, CBO estimates that about 40
percent of the gross FECA savings would accrue to the USPS,
which, accordingly, would pay about $400 million less in
reimbursements to the FECA account under S. 1789 over the 2012-
2022 period as shown in Table 2.
On-Budget Changes in Direct Spending and Revenues
CBO estimates that enacting S. 1789 would increase on-
budget direct spending by $31.9 billion over the 2012-2022
period. Those costs would result from changes in the cash flows
of PSRBHF, CSRDF, and FECA accounts as summarized in Table 3
and discussed in the following subsections.
Changes in USPS Payments to PSRHBF. As discussed
previously, the bill would change payments that the Postal
Service makes for retiree health benefits, and CBO estimates
that those changes would decrease net on-budget direct spending
by about $500 million in 2012 but would increase direct
spending by about $20.5 billion over the 2012-2022 period.
Those costs result from changes in cash flows of the PSRHBF as
displayed in the memorandum to Table 3; as detailed in the
table's footnotes, CBO does not expect the Postal Service to be
able to make the specified payments required in 2012. S. 1789
would not affect the net cash flows of the FEHB fund (although
under the bill's provisions, the payments to this fund would be
made out of the PSRHBF rather than the Postal Service Fund).
CBO estimates that the payments to FEHB from the PSRHBF
would range from $2.7 billion in 2012 to $3.8 billion in 2016.
The bill would eliminate the specified payments required under
current law from the Postal Service Fund into the PSRHBF over
the 2012-2016 period (which total $24.9 billion). In addition,
S. 1789 would direct the Postal Service, beginning in 2012, to
make estimated annual payments to the PSRHBF to cover the costs
of providing health benefits to future retirees. (Currently,
payments for those so-called ``normal costs'' will not be made
until 2017.) Based on information from OPM, CBO estimates that
those payments would grow from $3.2 billion in 2012 to $5.4
billion by 2022. Under the bill, the agency also would make
estimated 40-year amortization payments toward the unfunded
liability for retirees' health benefits beginning in 2012
rather than in 2017 as under current law. OPM estimates that
those payments would be $2.1 billion annually.
TABLE 3--CHANGES IN DIRECT SPENDING FOR ON-BUDGET ACCOUNTS UNDER S. 1789
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, outlays in millions of dollars--
-----------------------------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2012-2022
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in USPS Payments to PSRHBF.......................... -508 3,043 3,229 3,329 3,522 1,310 1,310 1,310 1,310 1,310 1,310 20,475
Transfer of Surplus Retirement Contributions................ 11,400 0 0 0 0 0 0 0 0 0 0 11,400
Increased Credits for USPS Retirees......................... 53 80 81 27 -1 -1 -1 -1 -1 -1 -1 234
Net Changes in FECA......................................... 0 16 1 -6 -44 -37 -25 -28 -29 -31 -35 -219
-----------------------------------------------------------------------------------------------------------------------------------
Total Changes in On-Budget Costs.................... 10,945 3,139 3,311 3,350 3,477 1,272 1,284 1,281 1,280 1,278 1,274 31,891
Memorandum--PSRHBF Estimates:
Under Current Law:
Specified Payment from USPSa............................ -2,100 -5,600 -5,700 -5,700 -5,800 0 0 0 0 0 0 -24,900
Normal Payments......................................... 0 0 0 0 0 -4,181 -4,410 -4,651 -4,902 -5,165 -5,440 -28,749
Amortization Payments................................... 0 0 0 0 0 -3,410 -3,410 -3,410 -3,410 -3,410 -3,410 -20,460
-----------------------------------------------------------------------------------------------------------------------------------
Total............................................... -2,100 -5,600 -5,700 -5,700 -5,800 -7,591 -7,820 -8,061 -8,312 -8,575 -8,850 -74,109
Under S. 1789:
FEHB Paymentb........................................... 2,666 2,911 3,189 3,489 3,792 0 0 0 0 0 0 16,047
Normal Payments......................................... -3,174 -3,368 -3,560 -3,760 -3,970 -4,181 -4,410 -4,651 -4,902 -5,165 -5,440 -46,581
Amortization Payments................................... -2,100 -2,100 -2,100 -2,100 -2,100 -2,100 -2,100 -2,100 -2,100 -2,100 -2,100 -23,100
-----------------------------------------------------------------------------------------------------------------------------------
Total............................................... -2,608 -2,557 -2,471 -2,371 -2,278 -6,281 -6,510 -6,751 -7,002 -7,265 -7,540 -53,634
Changes for PSRHBF.......................................... -508 3,043 3,229 3,329 3,522 1,310 1,310 1,310 1,310 1,310 1,310 20,475
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Components may not sum to totals because of rounding.
PSRHBF = Postal Service Retiree Health Benefits Fund; USPS = United States Postal Service; FECA = Federal Employees' Compensation Act; FEHB = Federal Employees Health Benefits Fund.
aIn fiscal year 2012, the Postal Service is required to pay $11.1 billion to the PSRHBF. However, CBO estimates that the agency will be able to pay only $2.1 billion.
bUnder current law, the FEHB payment would be made from the PSRHBF beginning in 2017, so S. 1789 would not affect cash flows over the 2017-2022 period.
Transfer of Surplus Postal Retirement Contributions. As
discussed previously, S. 1789 would transfer to the Postal
Service Fund any surplus in the USPS FERS account within the
CSRDF as of September 30, 2011. Based on information from OPM,
CBO estimates that $11.4 billion would be transferred from the
CSRDF to the Postal Service Fund in 2012. This transfer would
increase on-budget spending from the CSRDF by $11.4 billion in
2012.
Increased Credits for USPS Retirees. For certain employees
who retire before 2015, section 102 would authorize the USPS to
offer credit for additional years of service as an incentive to
retire. Eligible USPS employees in CSRS could be offered up to
one year of additional service credit, and eligible employees
in FERS could be offered up to two years of credit; those years
of service would be used to determine eligibility for
retirement and would be included in the calculation of any
retirement annuity. Employees who accept the additional service
credit offer could not also receive a voluntary separation
incentive payment (cash buyout) available under current law.
Accepting an additional service credit would boost an
employee's retirement annuity by about 2 percent; on average,
that increase would add $1,000 to $2,000 per year to the
employee's pension. Based on the response to recent buyout
offers, CBO estimates that a relatively small number of USPS
employees would accept the service credit offer and that it
would mostly appeal to employees who are within a year or two
of eligibility for full retirement.
CBO estimates that under this provision direct spending
would increase by $234 million over the 2012-2022 period;
employees who accept the service credit would begin receiving
retirement benefits from the Civil Service Retirement and
Disability Trust Fund earlier than under current law.
The payment of employee retirement contributions made on
behalf of participating employees would end earlier than
expected under current law. The payment of employee
contributions toward retirement are recorded in the budget as
revenues. CBO estimates that enacting S. 1789 would lower
revenues by $15 million over the 10-year period because of
early retirement.
Changes in Workers' Compensation for Agencies Other Than
USPS. The bill would make several changes to the Federal
Employees' Compensation Act, which provides wage and medical
benefits to federal employees who are injured in the course of
their work. Proposed changes include:
Reducing benefits to 50 percent of a
claimant's pre-injury wage upon reaching retirement age
(as defined in the Social Security Act);
Eliminating augmented benefits to claimants
who have dependents (so that all claimants who are
below retirement age--except certain exempt
individuals--receive a benefit equal to two-thirds of
their pre-injury wage);
Improving cross-matching of data to identify
cases where individuals are wrongly receiving benefits;
Increasing benefits under the disfigurement
compensation schedule and for funeral expenses;
Establishing a schedule for managing
disability reviews, including requiring periodic
medical exams; and
Improving the ability of the government to
recapture compensation costs from responsible parties.
Under current law, FECA provides compensation for lost
wages of up to 75 percent of a worker's salary if that person
can no longer work because of debilitating injuries sustained
on the job, as well as medical expenses relating to the injury
and certain death benefits. In 2010, governmentwide benefits
totaled $2.9 billion; most of those expenses are charged back
to the beneficiaries' employing agency, so that in 2010, net
FECA outlays (gross outlays less reimbursements from agencies)
totaled $216 million.
Based on information from DOL, CBO estimates that the
changes proposed in S. 1789 would reduce gross outlays under
FECA by $1.2 billion over the 2012-2022 period--which would be
partially offset by reduced reimbursements of $1 billion during
that period--for net savings to the FECA account of about $200
million over the period (see Table 3).
Other provisions that could affect direct spending
The bill would direct arbitrators involved in future labor
negotiations to consider the financial condition of the Postal
Service when mediating disputes between USPS and its labor
unions and would reform certain Postal Service contracting
practices. Those provisions might reduce USPS costs, but CBO
expects that any net savings probably would be
indistinguishable from savings that could result from the
Postal Service's current efforts to negotiate more favorable
labor contracts and improve procurement practices.
In recent years the Postal Service has attempted to reduce
its workforce by offering incentives for employees to retire
early. (The agency has reduced its employee complement by more
than 100,000 workers over the past three years, mostly through
attrition.) CBO expects the Postal Service will continue to
offer such incentives to lower its costs. As discussed earlier,
S. 1789 would permit the Postal Service to use amounts
transferred from its FERS account within the CSRDF to pay for
employee buyout plans (including payments of up to $25,000 per
employee). It is possible that enacting S. 1789 could increase
the number of employees who retire during the next several
years and thus lower USPS labor costs, but CBO has no basis for
estimating any such effects.
S. 1789 also would authorize the Postal Service to
establish a program to provide services for agencies of the
federal government or the states for a fee. Implementing this
program would require the Postal Service to offer cost-
effective alternatives for services to state or federal
agencies. Those proposed programs might increase USPS income
but also would add to costs. CBO has no information to predict
the net budget impact of such new ventures if any were
undertaken by the Postal Service.
Spending Subject to Appropriation
Changes to FECA in S. 1789 would result in lower
discretionary costs of about $600 million over the 2012-2022
period to federal agencies' salaries and expense accounts
because of the lower reimbursements that would be required.
However, S. 1789 would require DOL to institute and manage the
new disability reviews, appeals from the procedures, and other
requirements of the bill. CBO estimates that implementing those
provisions would increase spending by about $200 million over
the 2012-2022 period, assuming appropriation of the necessary
amounts, resulting in an estimated net discretionary cost of
$415 million over the 2012-2022 period.
Pay-As-You-Go considerations: The Statutory Pay-As-You-Go
Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or
revenues. The net changes in outlays and revenues that are
subject to those pay-as-you-go procedures are shown in the
following table. Only on-budget changes to outlays or revenues
are subject to pay-as-you-go procedures.
CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR S. 1789, THE 21ST CENTURY POSTAL SERVICE ACT OF 2011, AS ORDERED REPORTED BY THE SENATE COMMITTEE ON HOMELAND
SECURITY AND GOVERNMENTAL AFFAIRS ON NOVEMBER 9, 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
--------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2012-2017 2012-2022
--------------------------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE OR DECREASE (-) IN THE ON-BUDGET DEFICIT
Statutory Pay-As-You-Go Impact........... 10,941 3,134 3,306 3,349 3,477 1,272 1,284 1,281 1,280 1,278 1,274 25,479 31,876
--------------------------------------------------------------------------------------------------------------------------------------------------------
Intergovernmental and private-sector impact: S. 1789
contains no intergovernmental or private-sector mandates as
defined in the Unfunded Mandates Reform Act and would impose no
costs on state, local, or tribal governments.
Previous CBO estimate: On December 1, 2011, CBO transmitted
a cost estimate for H.R. 2309, the Postal Reform Act of 2011,
as ordered reported by the House Committee on Oversight and
Government Reform on October 13, 2011. We estimated that
enacting H.R. 2309 would result in off-budget savings totaling
$26.2 billion and on-budget costs of $7.7 billion over the
2012-2021 period for a net savings to the unified budget of
$18.5 billion.
Estimate prepared by: Federal Spending: Mark Grabowicz--
USPS, Christi Hawley Anthony--Federal Employees' Compensation,
Amber Marcelino--USPS Retiree Credits; Impact on State, Local,
and Tribal Governments: Elizabeth Cove Delisle; Impact on the
Private Sector: Paige Piper/Bach.
Estimate approved by: Theresa Gullo, Deputy Assistant
Director for Budget Analysis.
VII. Changes in Existing Law Made by the Bill, as Reported
TITLE V--GOVERNMENT ORGANIZATION AND EMPLOYEES
* * * * * * *
PART III--EMPLOYEES
* * * * * * *
Subpart G--Insurance and Annuities
* * * * * * *
CHAPTER 81--COMPENSATION FOR WORK INJURIES
* * * * * * *
Subchapter I--Generally
* * * * * * *
Sec. 8101. Definitions
For the purpose of this subchapter (5 USCS Sec. Sec. 8101
et seq.)--
(1) ``employee'' means--
(A) * * *
(B) * * *
(C) * * *
(D) an individual employed by the government
of the District of Columbia for an injury that
occurred before the effective date of section
204(e) of the District of Columbia Self-
Government and Governmental Reorganization Act
(Public Law 93-198; 87 Stat. 783; 5 U.S.C. 8101
note); and
(E) * * *
(2) * * *
(3) * * *
(4) * * *
(5) * * *
(6) * * *
(7) * * *
(8) * * *
(9) * * *
(10) * * *
(11) * * *
(12) * * *
(13) * * *
(14) * * *
(15) * * *
(16) * * *
(17) * * *
(18) ``price index'' means the Consumer Price Index
(all items--United States city average) published
monthly by the Bureau of Labor Statistics; [and]
(19) ``organ'' means a part of the body that performs
a special function, and for purposes of this subchapter
(5 USCS Sec. Sec. 8101 et seq.) excludes the brain,
heart, and back; [and]
(20) ``United States medical officers and hospitals''
includes medical officers and hospitals of the Army,
Navy, Air Forces, Department of Veterans Affairs, and
United States Public Health Service, and any other
medical officer or hospital designated as a United
States medical officer or hospital by the Secretary of
Labor;[.]
(21) `retirement age' has the meaning given that term
under section 216(l)(1) of the Social Security Act (42
U.S.C. 416(l)(1));
(22) `covered claim for total disability' means a
claim for a period of total disability that commenced
before the date of enactment of the Workers'
Compensation Reform Act of 2012;
(23) `covered claim for partial disability' means a
claim for a period of partial disability that commenced
before the date of enactment of the Workers'
Compensation Reform Act of 2012; and
(24) `individual who has an exempt disability
condition' means an individual--
(A) who--
(i) is eligible to receive continuous
periodic compensation for total
disability under section 8105 on the
date of enactment of the Workers'
Compensation Reform Act of 2012; and
(ii) meets the criteria under section
8105(c);
(B) who, on the date of enactment of the
Workers' Compensation Reform Act of 2012--
(i) is eligible to receive continuous
periodic compensation for total
disability under section 8105; and
(ii) has sustained a currently
irreversible severe mental or physical
disability for which the Secretary of
Labor has authorized, for at least the
1-year period ending on the date of
enactment of the Workers' Compensation
Reform Act of 2012, constant in-home
care or custodial care, such as
placement in a nursing home; or
(C) who is eligible to receive continuous
periodic compensation for total disability
under section 8105--
(i) for not less than the 3-year
period ending on the date of enactment
of the Workers' Compensation Reform Act
of 2012; or
(ii) if the individual became
eligible to receive continuous periodic
compensation for total disability under
section 8105 during the period
beginning on the date that is 3 years
before the date of enactment of the
Workers' Compensation Reform Act of
2012 and ending on such date of
enactment, for not less than the 3-year
period beginning on the date on which
the individual became eligible.
* * * * * * *
Sec. 8104. Vocational rehabilitation
(a) [The Secretary of Labor may direct a permanently
disabled individual whose disability is compensable under this
subchapter (5 USCS Sec. Sec. 8101 et seq.) to undergo
vocational rehabilitation.] In General.--
(1) Direction.--Except as provided in paragraph (2),
not earlier than the date that is 6 months after the
date on which an individual eligible for wage-loss
compensation under section 8105 or 8106 is injured, or
by such other date as the Secretary of Labor determines
it would be reasonable under the circumstances for the
individual to begin vocational rehabilitation, and if
vocational rehabilitation may enable the individual to
become capable of more gainful employment, the
Secretary of Labor shall direct the individual to
participate in developing a comprehensive return to
work plan and to undergo vocational rehabilitation at a
location a reasonable distance from the residence of
the individual. The Secretary shall provide for
furnishing the vocational rehabilitation services. In
providing for these services, the Secretary, insofar as
practicable, shall use the services or facilities of
State agencies and corresponding agencies which
cooperate with the [Secretary of Health, Education, and
Welfare in carrying out the purposes of chapter 4 of
title 29] the Secretary of Education in carrying out
the purposes of the Rehabilitation Act of 1973 (29
U.S.C. 701 et seq.), except to the extent that the
Secretary of Labor provides for furnishing these
services under section 8103 of this title (5 USCS
Sec. 8103). The cost of providing these services to
individuals undergoing vocational rehabilitation under
this section shall be paid from the Employees'
Compensation Fund. However, in reimbursing a State or
corresponding agency under an arrangement pursuant to
this section the cost to the agency reimbursable in
full [under section 32(b)(1) of title 29] under section
5 of the Rehabilitation Act of 1973 (29 U.S.C. 704) is
excluded.
(2) Exception.--The Secretary of Labor may not direct
an individual who has attained retirement age to
participate in developing a comprehensive return to
work plan or to undergo vocational rehabilitation.
(b) Contents of Return to Work Plan.--A return to work plan
developed under subsection (a)--
(1) shall--
(A) set forth specific measures designed to
increase the wage-earning capacity of an
individual;
(B) take into account the prior training and
education of the individual and the training,
educational, and employment opportunities
reasonably available to the individual; and
(C) provide that any employment undertaken by
the individual under the return to work plan be
at a location a reasonable distance from the
residence of the individual;
(2) may provide that the Secretary will pay out of
amounts in the Employees' Compensation Fund reasonable
expenses of vocational rehabilitation (which may
include tuition, books, training fees, supplies,
equipment, and child or dependent care) during the
course of the plan; and
(3) may not be for a period of more than 2 years,
unless the Secretary finds good cause to grant an
extension, which may be for not more than 2 years.
[(b)] (c) Compensation.--Notwithstanding section 8106 (5
USCS Sec. 8106), individuals directed to undergo vocational
rehabilitation by the Secretary shall, while undergoing such
rehabilitation, receive compensation at the rate provided in
sections 8105 and 8110 of this title (5 USCS Sec. Sec. 8105 and
8110), less the amount of any earnings received from
remunerative employment[, other than employment undertaken
pursuant to such rehabilitation].
(d) Assisted Reemployment Agreements.--
(1) In general.--The Secretary may enter into an
assisted reemployment agreement with an agency or
instrumentality of any branch of the Federal Government
or a State or local government or a private employer
that employs an individual eligible for wage-loss
compensation under section 8105 or 8106 to enable the
individual to return to productive employment.
(2) Contents.--An assisted reemployment agreement
under paragraph (1)--
(A) may provide that the Secretary will use
amounts in the Employees' Compensation Fund to
reimburse an employer in an amount equal to not
more than 100 percent of the compensation the
individual would otherwise receive under
section 8105 or 8106; and
(B) may not be for a period of more than 3
years.
(e) List.--To facilitate the hiring of individuals eligible
for wage-loss compensation under section 8105 or 8106, the
Secretary shall provide a list of such individuals to the
Office of Personnel Management, which the Office of Personnel
Management shall provide to all agencies and instrumentalities
of the Federal Government.
* * * * * * *
Sec. 8105. Total Disability
(a) [If] In General.--Subject to subsection (b), if the
disability is total, the United States shall pay the employee
during the disability monthly monetary compensation equal to 66
2/3 percent of his monthly pay, which is known as his basic
compensation for total disability.
(b) Conversion of Entitlement at Retirement Age.--
(1) In general.--Except as provided in paragraph (2),
the basic compensation for total disability for an
employee who has attained retirement age shall be 50
percent of the monthly pay of the employee.
(2) Exceptions.--
(A) Covered recipients who are retirement age
or have an exempt disability condition.--
Paragraph (1) shall not apply to a covered
claim for total disability by an employee if
the employee--
(i) on the date of enactment of the
Workers' Compensation Reform Act of
2012, has attained retirement age; or
(ii) is an individual who has an
exempt disability condition.
(B) Transition period for certain
employees.--For a covered claim for total
disability by an employee who is not an
employee described in subparagraph (A), the
employee shall receive the basic compensation
for total disability provided under subsection
(a) until the later of--
(i) the date on which the employee
attains retirement age; and
(ii) the date that is 3 years after
the date of enactment of the Workers'
Compensation Reform Act of 2012.
[(b)] (c) The loss of use of both hands, both arms, both
feet, or both legs, or the loss of sight of both eyes, is prima
facie permanent total disability.
* * * * * * *
Sec. 8106. Partial Disability
(a) [If] In General._Subject to subsection (b), if the
disability is partial, the United States shall pay the employee
during the disability monthly monetary compensation equal to 66
2/3 percent of the difference between his monthly pay and his
monthly wage-earning capacity after the beginning of the
partial disability, which is known as his basic compensation
for partial disability.
(b) Conversion of Entitlement at Retirement Age.--
(1) In general.--Except as provided in paragraph (2),
the basic compensation for partial disability for an
employee who has attained retirement age shall be 50
percent of the difference between the monthly pay of
the employee and the monthly wage-earning capacity of
the employee after the beginning of the partial
disability.
(2) Exceptions.--
(A) Covered recipients who are retirement
age.--Paragraph (1) shall not apply to a
covered claim for partial disability by an
employee if, on the date of enactment of the
Workers' Compensation Reform Act of 2012, the
employee has attained retirement age.
(B) Transition period for certain
employees.--For a covered claim for partial
disability by an employee who is not an
employee described in subparagraph (A), the
employee shall receive basic compensation for
partial disability in accordance with
subsection (a) until the later of--
(i) the date on which the employee
attains retirement age; and
(ii) the date that is 3 years after
the date of enactment of the Workers'
Compensation Reform Act of 2012.
[(b)] (c) The Secretary of Labor may require a
partially disabled employee to report his earnings from
employment or self-employment, by affidavit or
otherwise, in the manner and at the times the Secretary
specifies. The employee shall include in the affidavit
or report the value of housing, board, lodging, and
other advantages which are part of his earnings in
employment or self-employment and which can be
estimated in money. An employee who--
(1) fails to make an affidavit or report when
required; or
(2) knowingly omits or understates any part of of his
earnings; forfeits his right to compensation with
respect to any period for which the affidavit or report
was required. Compensation forfeited under this
subsection, if already paid, shall be recovered by a
deduction from the compensation payable to the employee
or otherwise recovered under section 8129 of this title
(5 USCS Sec. 8129), unless recovery is waived under
that section.
[(c)] (d) A partially disabled employee who--
(1) refuses to seek suitable work; or
(2) refuses or neglects to work after suitable work
is offered to, procured by, or secured for him;
is not entitled to compensation.
* * * * * * *
Sec. 8106a. Reporting requirements
(a) Definition.--In this section, the term `employee
receiving compensation' means an employee who--
(1) is paid compensation under section 8105 or 8106; and
(2) has not attained retirement age.
(b) Authority.--The Secretary of Labor shall require an
employee receiving compensation to report the earnings of the
employee receiving compensation from employment or self-
employment, by affidavit or otherwise, in the manner and at the
times the Secretary specifies.
(c) Contents.--An employee receiving compensation shall
include in a report required under subsection (a) the value of
housing, board, lodging, and other advantages which are part of
the earnings of the employee receiving compensation in
employment or self-employment and the value of which can be
estimated.
(d) Failure To Report and False Reports.--
(1) In general.--An employee receiving compensation who
fails to make an affidavit or other report required
under subsection (b) or who knowingly omits or
understates any part of the earnings of the employee in
such an affidavit or other report shall forfeit the
right to compensation with respect to any period for
which the report was required.
(2) Forfeited compensation.--Compensation forfeited
under this subsection, if already paid to the employee
receiving compensation, shall be recovered by a
deduction from the compensation payable to the employee
or otherwise recovered under section 8129, unless
recovery is waived under that section.
* * * * * * *
Sec. 8107. Compensation schedule
(a) If there is permanent disability involving the loss, or
loss of use, of a member or function of the body or involving
disfigurement, the employee is entitled to basic compensation
for the disability, as provided by the schedule in subsection
(c) of this section, [at the rate of 66 2/3 percent of his
monthly pay] at the rate specified under subsection (d). The
basic compensation is--
(1) payable regardless of whether the cause of the
disability originates in a part of the body other than
that member;
(2) payable regardless of whether the disability also
involves another impairment of the body; and
(3) in addition to compensation for temporary total
or temporary partial disability.
(b) * * *
(c) The compensation schedule is as follows:
(1) * * *
(2) * * *
(3) * * *
(4) * * *
(5) * * *
(6) * * *
(7) * * *
(8) * * *
(9) * * *
(10) * * *
(11) * * *
(12) * * *
(13) * * *
(14) * * *
(15) * * *
(16) * * *
(17) * * *
(18) * * *
(19) * * *
(20) * * *
(21) For serious disfigurement of the face, head, or
neck of a character likely to handicap an individual in
securing or maintaining employment, proper and
equitable compensation [not to exceed $3,500] in
proportion to the severity of the disfigurement, not to
exceed $50,000 shall be awarded in addition to any
other compensation payable under this schedule. The
maximum amount of compensation under this paragraph
shall be increased on March 1 of each year by the
amount determined by the Secretary of Labor to
represent the percent change in the price index
published for December of the preceding year over the
price index published for the December of the year
prior to the preceding year, adjusted to the nearest
one-tenth of 1 percent.
(22) * * *
(d) Rate for Compensation.--
(1) Annual salary.--
(A) In general.--Except as provided in
paragraph (2), the rate under subsection (a)
shall be the rate of 66\2/3\ percent of the
annual salary level established under
subparagraph (B), in a lump sum equal to the
present value (as calculated under subparagraph
(C)) of the amount of compensation payable
under the schedule.
(B) Establishment.--
(i) In general.--The Secretary of
Labor shall establish an annual salary
for purposes of subparagraph (A) in the
amount the Secretary determines will
result in the aggregate cost of
payments made under this section being
equal to what would have been the
aggregate cost of payments under this
section if the amendments made by
section 304(a) of the Workers'
Compensation Reform Act of 2012 had not
been enacted.
(ii) Cost of living adjustment.--The
annual salary established under clause
(i) shall be increased on March 1 of
each year by the amount determined by
the Secretary of Labor to represent the
percent change in the price index
published for December of the preceding
year over the price index published for
the December of the year prior to the
preceding year, adjusted to the nearest
one-tenth of 1 percent.
(C) Present value.--The Secretary of Labor
shall calculate the present value for purposes
of subparagraph (A) using a rate of interest
equal to the average market yield for
outstanding marketable obligations of the
United States with a maturity of 2 years on the
first business day of the month in which the
compensation is paid or, in the event that such
marketable obligations are not being issued on
such date, at an equivalent rate selected by
the Secretary of Labor, true discount
compounded annually.
(2) Certain injuries.--For an injury that occurred
before the date of enactment of the Workers'
Compensation Reform Act of 2012, the rate under
subsection (a) shall be 66\2/3\ percent of the
employee's monthly pay.
(e) Simultaneous Receipt.--
(1) Total disability.--An employee who receives
compensation for total disability under section 8105
may only receive the lump sum of schedule compensation
under this section in addition to and simultaneously
with the benefits for total disability after the
earlier of--
(A) the date on which the basic compensation
for total disability of the employee becomes 50
percent of the monthly pay of the employee
under section 8105(b); or
(B) the date on which augmented compensation
of the employee terminates under section
8110(b)(2)(A)(ii), if the employee receives
such compensation.
(2) Partial disability.--An employee who receives
benefits for partial disability under section 8106 may
only receive the lump sum of schedule compensation
under this section in addition to and simultaneously
with the benefits for partial disability after the
earlier of--
(A) the date on which the basic compensation
for partial disability of the employee becomes
50 percent of the difference between the
monthly pay of the employee and the monthly
wage-earning capacity of the employee after the
beginning of the partial disability under
section 8106(b); or
(B) the date on which augmented compensation
of the employee terminates under section
8110(b)(2)(B), if the employee receives such
compensation.
* * * * * * *
Sec. 8110. Augmented compensation for dependents
(a) * * *
(b) Termination of Augmented Compensation.--
(1) In general.--Subject to paragraph (2), augmented
compensation for dependants under subsection (c) shall
not be provided.
(2) Exceptions.--
(A) Total disability.--For a covered claim
for total disability by an employee--
(i) the employee shall receive
augmented compensation under subsection
(c) if the employee is an individual
who has an exempt disability condition;
and
(ii) the employee shall receive
augmented compensation under subsection
(c) until the date that is 3 years
after the date of enactment of the
Workers' Compensation Reform Act of
2012 if the employee is not an employee
described in clause (i).
(B) Partial disability.--For a covered claim
for partial disability by an employee, the
employee shall receive augmented compensation
under subsection (c) until the date that is 3
years after the date of enactment of the
Workers' Compensation Reform Act of 2012.
(C) Permanent disability compensated by a
schedule.--For a claim for a permanent
disability described in section 8107(a) by an
employee that commenced before the date of
enactment of the Workers' Compensation Reform
Act of 2012, the employee shall receive
augmented compensation under subsection (c).
[(b)] (c) A disabled employee with one or more dependents
is entitled to have his basic compensation for disability
augmented--
(1) at the rate of 8\1/3\ percent of his monthly pay
if that compensation is payable under section 8105 or
8107(a) of this title (5 USCS Sec. 8105 or 8107(a));
(2) at the rate of 8\1/3\ percent of the difference
between his monthly pay and his monthly wage-earning
capacity if that compensation is payable under section
8106(a) of this title (5 USCS Sec. 8106(a)).
* * * * * * *
Sec. 8112. Maximum and minimum monthly payments
(a) Except as provided by subsections (b) and (c) and
section 8138 of this title [5 USCS Sec. 8138], the monthly rate
of compensation for disability, [including augmented
compensation under section 8110 of this title (5 USCS
Sec. 8110) but] not including additional compensation under
section 8111 of this title (5 USCS Sec. 8111), may not be more
than [75 percent] 66\2/3\ percent of the monthly pay of the
maximum rate of basic pay for GS-15, and in case of total
disability may not be less than [75 percent] 66\2/3\ percent of
the monthly pay of the minimum rate of basic pay for GS-2 or
the amount of the monthly pay of the employee, whichever is
less.
(b) Exceptions.--
(1) Covered disability condition.--For a covered
claim for total disability by an employee, if the
employee is an individual who has an exempt disability
condition--
(A) the monthly rate of compensation for
disability that is subject to the maximum and
minimum monthly amounts under subsection (a)
shall include any augmented compensation under
section 8110; and
(B) subsection (a) shall be applied by
substituting `75 percent' for `66\2/3\ percent'
each place it appears.
(2) Partial disability.--For a covered claim for
partial disability by an employee, until the date that
is 3 years after the date of enactment of the Workers'
Compensation Reform Act of 2012--
(A) the monthly rate of compensation for
disability that is subject to the maximum and
minimum monthly amounts under subsection (a)
shall include any augmented compensation under
section 8110; and
(B) subsection (a) shall be applied by
substituting `75 percent' for `66\2/3\ percent'
each place it appears.
[(b)] (c) The provisions of [subsection (a)] subsections
(a) and (b) shall not apply to any employee whose disability is
a result of an assault which occurs during an assassination or
attempted assassination of a Federal official described under
section 351(a) or 1751(a) of title 18, and was sustained in the
performance of duty.
* * * * * * *
Sec. 8113. Increase or decrease of basic compensation
(a) * * *
(b) If an individual without good cause fails to apply for
and undergo vocational rehabilitation when so directed under
section 8104 of this title (5 USCS Sec. 8104), the Secretary,
on review under section 8128 of this title (5 USCS Sec. 8128)
and after finding that in the absence of the failure the wage-
earning capacity of the individual would probably have
substantially increased, [may reduce] shall reduce
prospectively the monetary compensation of the individual in
accordance with what would probably have been his wage-earning
capacity in the absence of the failure, until the individual in
good faith complies with the direction of the Secretary. An
individual who has attained retirement age may not be required
to undergo vocational rehabilitation.
* * * * * * *
Sec. 8116. Limitations on right to receive compensation
(a) * * *
(b) * * *
(c) * * *
(d) * * *
(e) Retirement Benefits.--
(1) In general.--An individual entitled to
compensation benefits payable under this subchapter and
under chapter 83 or 84 or any other retirement system
for employees of the Government, for the same period,
shall elect which benefits the individual will receive.
(2) Election.--
(A) Deadline.--An individual shall make an
election under paragraph (1) in accordance with
such deadlines as the Secretary of Labor shall
establish, which shall be a reasonable period
after the individual has received notice of a
final determination that the individual is
entitled to compensation benefits payable under
this subchapter.
(B) Revocability.--An election under
paragraph (1) shall be revocable,
notwithstanding any other provision of law,
except for any period during which an
individual--
(i) was qualified for benefits
payable under both this subchapter and
under a retirement system described in
paragraph (1); and
(ii) was paid benefits under the
retirement system after having been
notified of eligibility for benefits
under this subchapter.
(3) Informed choice.--The Secretary of Labor shall
provide information, and shall ensure that information
is provided, to an individual described in paragraph
(1) about the benefits available to the individual
under this subchapter or under chapter 83 or 84 or any
other retirement system referred to in paragraph (1)
the individual may elect to receive
* * * * * * *
Sec. 8117. [Time of accrual of right] Waiting period
(a) [An employee other than a Postal Service employee is
not entitled] In General.--An employee is not entitled to
continuation of pay within the meaning of section 8118 for the
first 3 days of temporary disability or, if section 8118 does
not apply, is not entitled to compensation for the first 3 days
of temporary disability, except--
(1) when the disability exceeds 14 days; or
[(2) when the disability is followed by permanent
disability; or]
[(3)] (2) as provided by sections 8103 and 8104 of
this title (5 USCS Sec. Sec. 8103 and 8104).
(b) [A Postal Service employee is not entitled to
compensation or continuation of pay for the first 3 days of
temporary disability, except as provided under paragraph (3) of
subsection (a). A Postal Service] Use of Leave.--An employee
may use annual leave, sick leave, or leave without pay during
[that 3-day period] the first 3 days of temporary disability,
except that if the disability exceeds 14 days [or is followed
by permanent disability], the employee may have their sick
leave or annual leave reinstated or receive pay for the time
spent on leave without pay under this section.
* * * * * * *
Sec. 8118. Continuation of pay[; election to use annual or sick leave]
(a) * * *
(b) Continuation of pay under this subchapter (5 USCS
Sec. Sec. 8101 et seq.) shall be furnished--
(1) without a break in time, except as provided under
[section 8117(b) (5 USCS Sec. 8117(b))] section 8117,
unless controverted under regulations of the Secretary;
(2) for a period not to exceed 45 days; and
(3) under accounting procedures and such other
regulations as the Secretary may require.
[(c) An employee may use annual or sick leave to his credit
at the time the disability begins, but his compensation for
disability does not begin, and the time periods specified by
section 8117 of this title (5 USCS Sec. 8117) do not begin to
run, until termination of pay as set forth in subsections (a)
and (b) or the use of annual or sick leave ends.]
[(d)] (c) If a claim under subsection (a) is denied by the
Secretary, payments under this section shall, at the option of
the employee, be charged to sick or annual leave or shall be
deemed overpayments of pay within the meaning of section 5584
of title 5, United States Code.
[(e)] (d) Payments under this section shall not be
considered as compensation as defined by section 8101(12) of
this title (5 USCS Sec. 8101(12)).
* * * * * * *
Sec. 8123. Physical examinations
(a) * * *
(b) * * *
(c) * * *
(d) * * *
(e) Disability Management Review.--
(1) Definitions.--In this subsection--
(A) the term ``covered employee'' means an
employee who is in continuous receipt of
compensation for total disability under section
8105 for a period of not less than 6 months;
and
(B) the term `disability management review
process' means the disability management review
process established under paragraph (2)(A).
(2) Establishment.--The Secretary of Labor shall--
(A) establish a disability management review
process for the purpose of certifying and
monitoring the disability status and extent of
injury of each covered employee; and
(B) promulgate regulations for the
administration of the disability management
review process.
(3) Physical examinations required.--Under the
disability management review process, the Secretary of
Labor shall periodically require covered employees to
submit to physical examinations under subsection (a) by
physicians selected by the Secretary. A physician
conducting a physical examination of a covered employee
shall submit to the Secretary a report regarding the
nature and extent of the injury to and disability of
the covered employee.
(4) Frequency.--
(A) In general.--The regulations promulgated
under paragraph (2)(B) shall specify the
process and criteria for determining when and
how frequently a physical examination should be
conducted for a covered employee.
(B) Minimum frequency.--
(i) Initial.--An initial physical
examination shall be conducted not more
than a brief period after the date on
which a covered employee has been in
continuous receipt of compensation for
total disability under section 8015 for
6 months.
(ii) Subsequent examinations.--After
the initial physical examination,
physical examinations of a covered
employee shall be conducted not less
than once every 3 years.
(5) Employing agency or instrumentality requests.--
(A) In general.--The agency or
instrumentality employing an employee who has
made a claim for compensation for total
disability under section 8105 may at any time
submit a request for the Secretary of Labor to
promptly require the employee to submit to a
physical examination under this subsection.
(B) Requesting officer.--A request under
subparagraph (A) shall be made on behalf of an
agency or instrumentality by--
(i) the head of the agency or
instrumentality;
(ii) the Chief Human Capital Officer
of the agency or instrumentality; or
(iii) if the agency or
instrumentality does not have a Chief
Human Capital Officer, an officer with
responsibilities similar to those of a
Chief Human Capital Officer designated
by the head of the agency or
instrumentality to make requests under
this paragraph.
(C) Information.--A request under
subparagraph (A) shall be in writing and
accompanied by--
(i) a certification by the officer
making the request that the officer has
reviewed the relevant material in the
employee's file;
(ii) an explanation of why the
officer has determined, based on the
materials in the file and other
information known to the officer, that
requiring a physical examination of the
employee under this subsection is
necessary; and
(iii) copies of the materials
relating to the employee that are
relevant to the officer's determination
and request, unless the agency or
instrumentality has a reasonable basis
for not providing the materials.
(D) Examination.--If the Secretary of Labor
receives a request under this paragraph before
an employee has undergone an initial physical
examination under paragraph (4)(B)(i), the
Secretary shall promptly require the physical
examination of the employee. A physical
examination under this subparagraph shall
satisfy the requirement under paragraph
(4)(B)(i) that an initial physical examination
be conducted.
(E) After initial examination.--
(i) In general.--If the Secretary of
Labor receives a request under this
paragraph after an employee has
undergone an initial physical
examination under paragraph (4)(B)(i),
the Secretary shall--
(I) review the request and
the information, explanation,
and other materials submitted
with the request; and
(II) determine whether to
require the physical
examination of the employee who
is the subject of the request.
(ii) Not Granted.--If the Secretary
determines not to grant a request
described in clause (i), the Secretary
shall promptly notify the officer who
made the request and provide an
explanation of the reasons why the
request was denied.
(f) Field Nurses.--
(1) Definition.--In this subsection, the term `field
nurse' means a registered nurse that assists the
Secretary in the medical management of disability
claims under this subchapter and provides claimants
with assistance in coordinating medical care.
(2) Authorization.--The Secretary may use field
nurses to coordinate medical services and vocational
rehabilitation programs for injured employees under
this subchapter. If an employee refuses to cooperate
with a field nurse or obstructs a field nurse in the
performance of duties under this subchapter, the right
to compensation under this subchapter shall be
suspended until the refusal or obstruction stops.''
* * * * * * *
Sec. 8131. Subrogation of the United States
(a) If an injury or death for which continuation of pay or
compensation is payable under this subchapter (5 USCS
Sec. Sec. 8101 et seq.) is caused under circumstances creating
a legal liability on a person other than the United States to
pay damages, the Secretary of Labor may require the beneficiary
to--
(1) assign to the United States any right of action
he may have to enforce the liability or any right he
may have to share in money or other property received
in satisfaction of that liability; or
(2) prosecute the action in his own name. An employee
required to appear as a party or witness in the
prosecution of such an action is in an active duty
status while so engaged.
(b) A beneficiary who refuses to assign or prosecute an
action in his own name when required by the Secretary is not
entitled to continuation of pay or compensation under this
subchapter (5 USCS Sec. Sec. 8101 et seq.).
(c) The Secretary may prosecute or compromise a cause of
action assigned to the United States. When the Secretary
realizes on the cause of action, he shall deduct therefrom and
place to the credit of the Employees' Compensation Fund the
amount of continuation of pay or compensation already paid to
the beneficiary and the expense of realization or collection.
Any surplus shall be paid to the beneficiary and credited on
future payments of continuation of pay or compensation payable
for the same injury. However, the beneficiary is entitled to
not less than one-fifth of the net amount of a settlement or
recovery remaining after the expenses thereof have been
deducted.
(d) * * *
* * * * * * *
Sec. 8132. Adjustment after recovery from a third person
If an injury or death for which continuation of pay or
compensation is payable under this subchapter (5 USCS
Sec. Sec. 8101 et seq.) is caused under circumstances creating
a legal liability in a person other than the United States to
pay damages, and a beneficiary entitled to continuation of pay
or compensation from the United States for that injury or death
receives money or other property in satisfaction of that
liability as the result of suit or settlement [by him or in his
behalf] by the beneficiary or on behalf of the beneficiary, the
beneficiary, after deducting therefrom the costs of suit and a
reasonable attorney's fee, shall refund to the United States
the amount of continuation of pay and compensation paid by the
United States and credit any surplus on future payments of
[compensation payable to him] continuation of pay or
compensation payable to the beneficiary for the same injury. No
court, insurer, attorney, or other person shall pay or
distribute to the beneficiary or [his designee] the designee of
the beneficiary the proceeds of such suit or settlement without
first satisfying or assuring satisfaction of the interest of
the United States. The amount refunded to the United States
shall be credited to the Employees' Compensation Fund. [If
compensation has not been paid to the beneficiary, he shall
credit the money or property on compensation payable to him by
the United States] If continuation of pay or compensation has
not been paid to the beneficiary, the money or property shall
be credited against continuation of pay or compensation payable
to the beneficiary by the United States for the same injury.
However, the beneficiary is entitled to retain, as a minimum,
at least one-fifth of the net amount of the money or other
property remaining after the expenses of a suit or settlement
have been deducted; and in addition to this minimum and at the
time of distribution, an amount equivalent to a reasonable
attorney's fee proportionate to the refund to the United
States.
* * * * * * *
Sec. Sec. 8133. Compensation in case of death
(a) If death results from an injury sustained in the
performance of duty, the United States shall pay a monthly
compensation equal to a percentage of the monthly pay of the
deceased employee in accordance with the following schedule:
(1) To the widow or widower, if there is no child, 50
percent.
(2) To the widow or widower, if there is a child, 45
percent and in addition 15 percent for each child not
to exceed a total of 66\2/3\ percent (except as
provided in subsection (g)) for the widow or widower
and children.
(3) To the children, if there is no widow or widower,
40 percent for one child and 15 percent additional for
each additional child not to exceed a total of [75
percent] 66\2/3\ percent (except as provided in
subsection (g)), divided among the children share and
share alike.
(4) To the parents, if there is no widow, widower, or
child, as follows:
(A) 25 percent if one parent was wholly
dependent on the employee at the time of death
and the other was not dependent to any extent;
(B) 20 percent to each if both were wholly
dependent; or
(C) a proportionate amount in the discretion
of the Secretary of Labor if one or both were
partly dependent.
If there is a widow, widower, or child, so much of the
percentages are payable as, when added to the total percentages
payable to the widow, widower, and children, will not exceed a
total of [75 percent] 66\2/3\ percent (except as provided in
subsection (g)).
(5) To the brothers, sisters, grandparents, and
grandchildren, if there is no widow, widower, child, or
dependent parent as follows:
(A) 20 percent if one was wholly dependent on
the employee at the time of death;
(B) 30 percent if more than one was wholly
dependent, divided among the dependents share
and share alike; or
(C) 10 percent if no one is wholly dependent
but one or more is partly dependent, divided
among the dependents share and share alike.
If there is a widow, widower, or child, or dependent
parent, so much of the percentages are payable as, when added
to the total percentages payable to the widow, widower,
children, and dependent parents, will not exceed a total of [75
percent] 66\2/3\ percent (except as provided in subsection
(g)).
(b) * * *
(c) * * *
(d) * * *
(e) In computing compensation under this section, the
monthly pay is deemed not less than the minimum rate of basic
pay for GS-2. However, the total monthly compensation may not
exceed--
(1) the monthly pay computed under section 8114 of
this title (5 USCS Sec. 8146a), except for increases
authorized by section 8146a of this title (5 USCS
Sec. 8146a); or
(2) [75 percent] 66\2/3\ percent (except as provided
in subsection (g)) of the monthly pay of the maximum
rate of basic pay for GS-15.
(f) * * *
(g) If the death occurred before the date of enactment of
the Workers' Compensation Reform Act of 2012, subsections (a)
and (e) shall be applied by substituting `75 percent' for
`66\2/3\ percent' each place it appears.
* * * * * * *
8134. Funeral expenses; transportation of body
(a) If death results from an injury sustained in the
performance of duty, the United States shall pay, to the
personal representative of the deceased or otherwise, funeral
and burial expenses not to exceed [$800] $6,000, in the
discretion of the Secretary of Labor. The maximum amount of
compensation under this subsection shall be increased on March
1 of each year by the amount determined by the Secretary of
Labor to represent the percent change in the price index
published for December of the preceding year over the price
index published for the December of the year prior to the
preceding year, adjusted to the nearest one-tenth of 1 percent.
(b) * * *
* * * * * * *
Sec. 8139. Employees of the District of Columbia
Compensation awarded under this subchapter to an employee
of the government of the District of Columbia shall be paid in
the manner provided by statute for the payment of the general
expenses of the government of the District of Columbia.
* * * * * * *
Sec. 8141. Civil Air Patrol volunteers
(a) * * *
(b) In administering this subchapter (5 USCS Sec. Sec. 8101
et seq.) for a member of the Civil Air Patrol covered by this
section--
(1) * * *
(2) the percentages applicable to payments under
section 8133 of this title (5 USCS Sec. 8133) are--
(A) * * *
(B) 20 percent for section 8133(a)(3) of this
title (5 USCS Sec. 8133(a)(3)) for one child
and 10 percent additional for each additional
child, but not to exceed a total of [75
percent] 66\2/3\ percent (except as provided in
subsection (c)), if the member died fully or
currently insured under subchapter II of
chapter 7 of title 42 (42 USCS Sec. Sec. 401 et
seq.); and
(C) * * *
(3) * * *
(4) * * *
(5) * * *
(c) If the death occurred before the date of enactment of
the Workers' Compensation Reform Act of 2012, subsection
(b)(2)(B) shall be applied by substituting `75 percent' for
`66\2/3\ percent'.
[(c)] (d) The Secretary of Labor or his designee may inform
the Secretary of the Air Force or his designee when a claim is
filed. The Secretary of the Air Force, on request of the
Secretary of Labor, shall advise him of the facts concerning
the injury and whether or not the member was rendering service,
or engaged in travel to or from service, in performance or
support of an operational mission of the Civil Air Patrol at
the time of injury. This subsection does not dispense with the
report of the immediate superior of the member required by
section 8120 of this title (5 USCS Sec. 8120), or other reports
agreed on under that section.
* * * * * * *
Sec. 8147. Employees' Compensation Fund
(a) * * *
(b) * * *
(c) * * *
(d) Notwithstanding subsection (b), any benefits or other
payments paid to or on behalf of an employee under this
subchapter or any extension or application thereof for a
recurrence of injury, consequential injury, aggravation of
injury, or increase in percentage of impairment to a member for
which compensation is provided under the schedule under section
8107 suffered in a permanent position with an agency or
instrumentality of the United States while the employment with
the agency or instrumentality is covered under an assisted
reemployment agreement entered into under section 8104(d) shall
not be included in total cost of benefits and other payments in
the statement provided to the agency or instrumentality under
subsection (b) if the injury was originally incurred in a
position not covered by an assisted reemployment agreement.
* * * * * * *
Sec. 8148. Forfeiture of benefits by convicted felons
(a) Any individual convicted of a violation of section 1920
of title 18, or any other Federal or State criminal statute
relating to fraud in the application for or receipt of any
benefit under this subchapter or subchapter III of this chapter
(5 USCS Sec. Sec. 8101 et seq. or 8191 et seq.), shall forfeit
(as of the date of such conviction) any entitlement to any
benefit such individual would otherwise be entitled to under
this subchapter or subchapter III (5 USCS Sec. Sec. 8101 et
seq. or 8191 et seq.) for any injury occurring on or before the
date of such conviction. Such forfeiture shall be in addition
to any action the Secretary may take under [section 8106]
section 8106a or 8129 (5 USCS Sec. 8106 or 8129).
(b) * * *
(c) * * *
* * * * * * *
Sec. 8153. Integrity and Compliance Program
(a) Definitions.--In this section--
(1) the term `FECA program' means the Federal
Employees Compensation Program administered under this
subchapter;
(2) the term `Integrity and Compliance Program' means
the Integrity and Compliance Program established under
subsection (b);
(3) the term `provider' means a provider of medical
or other services under the FECA program; and
(4) the term `Secretary' means the Secretary of
Labor.
(b) Integrity and Compliance Program.--Not later than 270
days after the date of enactment of this section, the Secretary
shall establish an Integrity and Compliance Program for the
purpose of preventing, identifying, and recovering improper
payments (including improper payments obtained by fraud) for
the FECA program, which shall include--
(1) procedures for identifying potentially improper
payments (including improper payments obtained by
fraud) before payment is made to claimants and
providers, including, where appropriate, predictive
analytics;
(2) reviews after payment is made to identify
potentially improper payments (including improper
payments obtained by fraud) to claimants and providers;
(3) on-going screening and verification procedures to
ensure the continued eligibility of medical providers
to provide services under the FECA program, including
licensure, Federal disbarment, and the existence of
relevant criminal convictions;
(4) provision of appropriate information, education,
and training to claimants and providers on requirements
to ensure the integrity of the FECA program, including
payments under the FECA program;
(5) appropriate controls and audits to ensure that
providers adopt internal controls and procedures for
compliance with requirements under the FECA program;
(6) procedures to ensure--
(A) initial and continuing eligibility of
claimants for compensation, benefits, or
services under the FECA program; and
(B) ongoing verification of databases of
information relating to claimants to ensure
accuracy and completeness; and
(7) appropriately sharing and accessing data and
information with other agencies and instrumentalities
of the United States, including the United States
Postal Service.
(c) Interagency Cooperation on Anti-fraud Efforts.--
(1) In general.--In administering the FECA program,
including the Integrity and Compliance Program, the
Secretary shall cooperate with other agencies and
instrumentalities of the United States (including the
United States Postal Service) and the Inspectors
General of such agencies and instrumentalities to
prevent, identify, and recover improper payments
(including improper payments obtained by fraud) under
the FECA program.
(2) Task force.--
(A) In general.--There is established a task
force, which shall be known as the FECA
Integrity and Compliance Task Force (in this
paragraph referred to as the `Task Force').
(B) Membership.--The members of the Task
Force shall be--
(i) the Secretary, who shall serve as
the Chairperson of the Task Force;
(ii) the Postmaster General, who
shall serve as the Vice Chairperson of
the Task Force;
(iii) the Attorney General;
(iv) the Director of the Office of
Management and Budget;
(v) the Inspector General of the
Department of Labor;
(vi) the Inspector General of the
United States Postal Service;
(vii) the Inspectors General of other
appropriate agencies and
instrumentalities of the United States
that employ a significant number of
individuals receiving compensation,
benefits, or services under the FECA
program, as determined by the
Chairperson and Vice Chairperson of the
Task Force; and
(viii) other appropriate Federal
officials, as determined by the
Chairperson and Vice Chairperson of the
Task Force.
(C) Duties.--The Task Force shall--
(i) set forth, in writing, a
description of the respective roles and
responsibilities in preventing,
identifying, recovering, and
prosecuting fraud under, and otherwise
ensuring integrity and compliance of,
the FECA program of--
(I) the Secretary (including
subordinate officials such as
the Director of the Office of
Workers' Compensation
Programs);
(II) the Inspector General of
the Department of Labor;
(III) the Inspectors General
of agencies and
instrumentalities of the United
States that employ claimants
under the FECA program;
(IV) the Attorney General;
and
(V) any other relevant
officials;
(ii) develop procedures for sharing
information of possible fraud under the
FECA program or other intentional
misstatements by claimants or providers
under the FECA program, including
procedures addressing--
(I) notification of
appropriate officials of the
Department of Labor of
potential fraud or intentional
misstatements, including
provision of supporting
information;
(II) timely and appropriate
response by officials of the
Department of Labor to
notifications described in
subclause (I);
(III) the inclusion of
information and evidence
relating to fraud and other
intentional misstatements in
criminal, civil, and
administrative proceedings
relating to the provision of
compensation, benefits, or
medical services (including
payments to providers) under
the FECA program;
(IV) the coordination of
criminal investigations with
the administration of the FECA
program; and
(V) the protection of
information relating to an
investigation of possible fraud
under the FECA program from
potential disclosure, including
requirements that enable
investigative files to be
appropriately separated from
case management files;
(iii) not later than 1 year after the
date of enactment of this section,
submit to the Committee on Homeland
Security and Governmental Affairs of
the Senate and the Committee on
Oversight and Government Reform and the
Committee on Education and the
Workforce of the House of
Representatives a report that includes
the description and procedures required
under clauses (i) and (ii).
(d) Improvements to Access of Federal Databases.--
(1) In general.--The Secretary, the Postmaster
General, the Inspector General of the United States
Postal Service, and the Inspector General of the
Department of Labor shall have access to and make use
of the agency databases described in this subsection in
order to improve compliance with the requirements under
and the integrity of the FECA program.
(2) Social security earnings information.--
(A) In general.--Notwithstanding section 552a
or any other provision of Federal or State law,
upon written request, the Commissioner of
Social Security shall make available to the
Secretary, the Inspector General of the
Department of Labor, the Postmaster General,
and the Inspector General of the United States
Postal Service the Social Security earnings
information of a living or deceased employee
required by the Secretary to carry out this
subchapter.
(B) Procedures.--The Secretary shall
establish procedures for correlating the
identity and status of recipients of
compensation, benefits, or services under this
subchapter with Social Security earnings
information described in subparagraph (A).
(3) Office of personnel management federal retiree
database.--Notwithstanding section 552a or any other
provision of Federal or State law, upon written
request, the Director of the Office of Personnel
Management shall make available to the Secretary, the
Inspector General of the Department of Labor, the
Postmaster General, and the Inspector General of the
United States Postal Service the information in the
databases of Federal employees and retirees maintained
by the Director.
(4) Department of veterans affairs beneficiaries
database.--Notwithstanding section 552a or any other
provision of Federal or State law, upon written
request, the Secretary of Veterans Affairs shall make
available to the Secretary, the Inspector General of
the Department of Labor, the Postmaster General, and
the Inspector General of the United States Postal
Service the information in the database of disabled
individuals maintained by the Secretary of Veterans
Affairs.
(5) National directory of new hires.--Notwithstanding
section 552a, section 453(j) of the Social Security Act
(42 U.S.C. 653(j)), or any other provision of Federal
or State law, upon written request, the Secretary of
Health and Human Services shall make available to the
Secretary, the Inspector General of the Department of
Labor, the Postmaster General, the Inspector General of
the United States Postal Service, and the Comptroller
General of the United States the information in the
National Directory of New Hires. The Comptroller
General may obtain information from the National
Directory of New Hires under this paragraph for any
audit, evaluation, or investigation, including any
audit, evaluation, or investigation relating to program
integrity.
(6) Provision.--Information requested under this
subsection shall be provided--
(A) in a timely manner;
(B) at a reasonable cost to the Secretary,
the Inspector General of the Department of
Labor, the Postmaster General, the Inspector
General of the United States Postal Service, or
the Comptroller General of the United States;
and
(C) in the manner, frequency, and form
reasonably specified by the officer making the
request, which, upon request, shall include
electronic form.
(7) Assessment of data cost-effectiveness.--
(A) In general.--The Secretary shall consider
and assess procedures for correlating the
identity and status of recipients of
compensation, benefits, or services under this
subchapter with information relating to
employees, retirees, and individuals described
in paragraphs (3), (4), and (5).
(B) Report.--Not later than 1 year after the
date of enactment of this section, the
Secretary shall submit to the Committee on
Homeland Security and Governmental Affairs of
the Senate and the Committee on Oversight and
Government Reform and the Committee on
Education and the Workforce of the House of
Representatives a report on the cost-
effectiveness of the use of the databases
described in paragraphs (3), (4), and (5) for
program compliance and integrity. The report
required under this subparagraph may be
included as part of the report required under
subsection (f).
(8) United states postal service feca enrollee
database.--Not later than 180 days after the date of
enactment of this section, in order to track, verify,
and communicate with the Secretary and other relevant
entities, the Postmaster General shall establish an
electronic database of information relating to
employees of the United States Postal Service who have
applied for or are receiving compensation, benefits, or
services under this subchapter.
(e) General Protocols and Security.--
(1) Establishment.--
(A) In general.--In order to ensure strong
information security and privacy standards, the
Secretary, the Postmaster General, the
Inspector General of the Department of Labor,
and the Inspector General of the United States
Postal Service shall establish protocols for
the secure transfer and storage of any
information provided to an individual or entity
under this section.
(B) Considerations.--In establishing
protocols under subparagraph (A), the
Secretary, the Postmaster General, the
Inspector General of the Department of Labor,
and the Inspector General of the United States
Postal Service shall consider any
recommendations submitted to the Secretary by
the Inspector General of the Department of
Health and Human Services with respect to the
secure transfer and storage of information, and
to comply with privacy laws and best practices.
(C) Fraud case protection.--The Secretary,
the Postmaster General, the Inspector General
of the Department of Labor, and the Inspector
General of the United States Postal Service
shall establish protocols and procedures to
enable information and materials relating to an
active investigation of possible fraud relating
to the FECA program to be appropriately kept
separate from the files for employees relating
to the provision of compensation, benefits, or
services under the FECA program.
(2) Compliance.--The Secretary, the Postmaster
General, the Inspector General of the Department of
Labor, and the Inspector General of the United States
Postal Service shall ensure that any information
provided to an individual or entity under this section
is provided in accordance with protocols established
under paragraph (1).
(f) Report.--Not later than 1 year after the date of
enactment of this section, and annually thereafter for 5 years,
the Secretary shall submit a report on the activities of the
Secretary under this section, including implementation of the
Integrity and Compliance Program, to--
(1) the Committee on Homeland Security and
Governmental Affairs of the Senate; and
(2) the Committee on Oversight and Government Reform
and the Committee on Education and the Workforce of the
House of Representatives.
(g) GAO Review.--The Comptroller General of the United
States shall--
(1) conduct periodic reviews of the Integrity and
Compliance Program; and
(2) submit reports on the results of the reviews
under paragraph (1) to the Committee on Homeland
Security and Governmental Affairs of the Senate and the
Committee on Oversight and Government Reform and the
Committee on Education and the Workforce of the House
of Representatives not later than--
(A) 2 years after the date of enactment of
this section; and
(B) 3 years after submission of the report
under subparagraph (A).
* * * * * * *
CHAPTER 83--RETIREMENT
* * * * * * *
Subchapter III--Civil Service Retirement
* * * * * * *
Sec. 8332. Creditable service
(a) * * *
(b) * * *
(c) * * *
(d) * * *
(e) * * *
(f) * * *
(g) * * *
(h) * * *
(i) * * *
(j) * * *
(k) * * *
(l) * * *
(m) * * *
(n) * * *
(o) * * *
(p)(1)(A) For an employee of the United States Postal
Service who is covered under this subchapter and voluntarily
separates from service before October 1, 2014, at the direction
of the United States Postal Service, the Office shall add not
more than 1 year (as specified by the United States Postal
Service) to the total creditable service of the employee for
purposes of determining entitlement to and computing the amount
of an annuity under this subchapter (except for a disability
annuity under section 8337).
(B) An employee who receives additional creditable service
under this paragraph may not receive a voluntary separation
incentive payment from the United States Postal Service.
(2)(A) Subject to subparagraph (B), and notwithstanding any
other provision of law, no deduction, deposit, or contribution
shall be required for service credited under this subsection.
(B) The actuarial present value of the additional liability
of the United States Postal Service to the Fund resulting from
this subsection shall be included in the amount calculated
under section 8348(h)(1)(A).
* * * * * * *
Sec. 8337. Disability retirement
(a) * * *
(b) * * *
(c) * * *
(d) * * *
(e) * * *
(f)(1) * * *
(2) * * *
(3) [Paragraphs] Except as provided under chapter 81,
paragraphs (1) and (2) do not bar the right of a claimant to
the greater benefit conferred by either this subchapter (5 USCS
Sec. Sec. 8331 et seq.) or subchapter I of chapter 81 (5 USCS
Sec. Sec. 8101 et seq.).
(g) * * *
(h) * * *
* * * * * * *
CHAPTER 84--FEDERAL EMPLOYEES' RETIREMENT SYSTEM
* * * * * * *
Subchapter II--Basic Annuity
* * * * * * *
Sec. 8411. Creditable service
(a) * * *
(b) * * *
(c) * * *
(d) * * *
(e) * * *
(f) * * *
(g) * * *
(h) * * *
(i) * * *
(j) * * *
(k) * * *
(l) * * *
(m)(1)(A) For an employee of the United States Postal
Service who is covered under this chapter and voluntarily
separates from service before October 1, 2014, at the direction
of the United States Postal Service, the Office shall add not
more than 2 years (as specified by the United States Postal
Service) to the total creditable service of the employee for
purposes of determining entitlement to and computing the amount
of an annuity under this chapter (except for a disability
annuity under subchapter V of that chapter).
(B) An employee who receives additional creditable service
under this paragraph may not receive a voluntary separation
incentive payment from the United States Postal Service.
(2)(A) Subject to subparagraph (B), and notwithstanding any
other provision of law, no deduction, deposit, or contribution
shall be required for service credited under this subsection.
(B) The actuarial present value of the additional liability
of the United States Postal Service to the Fund resulting from
this subsection shall be included in the amount calculated
under section 8423(b)(1)(B).
* * * * * * *
Sec. 8423. Government Contributions
(a) * * *
(b)(1) The Office shall compute--
(2) * * *
(3) * * *
(4) * * *
(5)(A) In this paragraph, the term `postal funding surplus'
means the amount by which the amount computed under paragraph
(1)(B) is less than zero.
(B)(i) Beginning with fiscal year 2011, for each fiscal
year in which the amount computed under paragraph (1)(B) is
less than zero, upon request of the Postmaster General, the
Director shall transfer to the United States Postal Service
from the Fund an amount equal to the postal funding surplus for
that fiscal year for use in accordance with this paragraph.
(ii) The Office shall calculate the amount under paragraph
(1)(B) for a fiscal year by not later than June 15 after the
close of the fiscal year, and shall transfer any postal funding
surplus to the United States Postal Service within 10 days
after a request by the Postmaster General.
(C) For each of fiscal years 2011, 2012, and 2013, if the
amount computed under paragraph (1)(B) is less than zero, a
portion of the postal funding surplus for the fiscal year shall
be used by the United States Postal Service for the cost of
providing to employees of the United States Postal Service who
voluntarily separate from service before October 1, 2014--
(i) voluntary separation incentive payments
(including payments to employees who retire under
section 8336(d)(2) or 8414(b)(1)(B) before October 1,
2014) that may not exceed the maximum amount provided
under section 3523(b)(3)(B) for any employee; and
(ii) retirement service credits, as authorized under
section 8332(p) or 8411(m).
(D) Any postal funding surplus for a fiscal year not
expended under subparagraph (C) may be used by the United
States Postal Service for the purposes of--
(i) repaying any obligation issued under section 2005
of title 39; or
(ii) making required payments to--
(I) the Employees' Compensation Fund
established under section 8147;
(II) the Postal Service Retiree Health
Benefits Fund established under section 8909a;
(III) the Employees Health Benefits Fund
established under section 8909; or
(IV) the Civil Service Retirement and
Disability Fund.
[(5)](6) For the purpose of carrying out paragraph (1) with
respect to any fiscal year, the Office may--
(A) require the Board of Actuaries of the Civil
Service Retirement System to make actuarial
determinations and valuations, make recommendations,
and maintain records in the same manner as provided in
section 8347(f) (5 USCS Sec. 8347(f)); and
(B) use the latest actuarial determinations and
valuations made by such Board of Actuaries.
* * * * * * *
Sec. 8464a. Relationship between annuity and workers' compensation
(a)(1) * * *
(2) * * *
(3) [Paragraphs] Except as provided under chapter 81,
paragraphs (1) and (2) do not bar the right of a claimant to
the greater benefit conferred by either this chapter or
subchapter I of chapter 81 (5 USCS Sec. Sec. 8401 et sq. or
8101 et seq.).
(b) * * *
* * * * * * *
CHAPTER 89--HEALTH INSURANCE
* * * * * * *
Sec. 8906. Contribution
(a) * * *
(b) * * *
(c) * * *
(d) * * *
(e) * * *
(f) * * *
(g)(1) Except as provided in paragraphs (2) and (3), the
Government contributions authorized by this section for health
benefits for an annuitant shall be paid from annual
appropriations which are authorized to be made for that purpose
and which may be made available until expended.
(2)(A) The Government contributions authorized by this
section for health benefits for an individual who first becomes
an annuitant by reason of retirement from employment with the
United States Postal Service on or after July 1, 1971, or for a
survivor of such an individual or of an individual who died on
or after July 1, 1971 while employed by the United States
Postal Service, shall [through September 30, 2016, be paid by
the United States Postal Service, and thereafter shall] after
the date of enactment of the 21st Century Postal Service Act of
2012 be paid first from the Postal Service Retiree Health
Benefits Fund up to the amount contained in the Fund, with any
remaining amount paid by the United States Postal Service.
(B) In determining any amount for which the Postal Service
is liable under this paragraph, the amount of the liability
shall be prorated to reflect only that portion of total service
which is attributable to civilian service performed (by the
former postal employee or by the deceased individual referred
to in subparagraph (A), as the case may be) after June 30,
1971, as estimated by the Office of Personnel Management.
(3) The Government contribution for persons enrolled in a
health benefits plan as part of the demonstration project under
section 1108 of title 10 shall be paid as provided in
subsection (i) of that section.
(h) * * *
(i) * * *
* * * * * * *
Sec. 8909a. Postal Service Retiree Health Benefit [Benefits] Fund
(a) * * *
(b) * * *
(c) * * *
(d)(1) * * *
(2)(A) * * *
(B) Not later than June 30, [2017] 2012, the Office shall
compute, and by June 30 of each succeeding year shall
recompute, a schedule including a series of annual installments
which provide for the liquidation of any liability or surplus
by September 30, 2056, or within 15 years, whichever is later,
of 80 percent of the net present value determined under
subparagraph (A), including interest at the rate used in that
computation.
(3)(A) The United States Postal Service shall pay into such
Fund--
(i) $ 5,400,000,000, not later than September 30,
2007;
(ii) $ 5,600,000,000, not later than September 30,
2008;
(iii) $ 1,400,000,000, not later than September 30,
2009; and
(iv) $ 5,500,000,000, not later than September 30,
2010[;].
[(v) $ 5,500,000,000, not later than October 4, 2011;
[(vi) $ 5,600,000,000, not later than September 30,
2012;
[(vii) $ 5,600,000,000, not later than September 30,
2013;
[(viii) $ 5,700,000,000, not later than September 30,
2014;
[(ix) $ 5,700,000,000, not later than September 30,
2015; and
[(x) $ 5,800,000,000, not later than September 30,
2016.]
(B) Not later than September 30, 2012 [2017], and by
September 30 of each succeeding year, the United States Postal
Service shall pay into such Fund the sum of--
(i) the net present value computed under paragraph
(1); and
(ii) any annual installment computed under paragraph
(2)(B).
(4) * * *
(5) * * *
(6) * * *
(e) Subsections (a) through (d) shall be subject to section
104 of the 21st Century Postal Service Act of 2012.
* * * * * * *
TITLE XVIII--CRIMES AND CRIMINAL PROCEDURE
* * * * * * *
PART I--CRIMES
* * * * * * *
CHAPTER 53--INDIANS
* * * * * * *
Sec. 1161. Application of Indian liquor laws
The provisions of sections 1154, 1156, 3113, 3488, and
3669, of this title, shall not apply within any area that is
not Indian country, nor to any act or transaction within any
area of Indian country provided such act or transaction is in
conformity both with the laws of the State in which such act or
transaction occurs and with an ordinance duly adopted by the
tribe having jurisdiction over such area of Indian country,
certified by the Secretary of the Interior, and published in
the Federal Register, and, with respect to the mailing of wine
or malt beverages (as those terms are defined in section 117 of
the Federal Alcohol Administration Act (27 U.S.C. 211)), is in
conformity with section 3001(p) of title 39.
* * * * * * *
CHAPTER 83--POSTAL SERVICE
* * * * * * *
Sec. 1716. Injurious articles as nonmailable
(a) * * *
(b) * * *
(c) * * *
(d) * * *
(e) * * *
(f) All spirituous, vinous, malted, fermented, or other
intoxicating liquors of any kind are nonmailable and shall not
be deposited in or carried through the [mails] mails, except to
the extent that the mailing is allowable under section 3001(p)
of title 39.
* * * * * * *
TITLE XXXI--MONEY AND FINANCE
* * * * * * *
Subtitle II--The Budget Process
* * * * * * *
CHAPTER 15--APPROPRIATION ACCOUNTING
* * * * * * *
Subchapter III--Transfers and Reimbursements
* * * * * * *
Sec. 1538. Authorization for assisted reemployment
Funds may be transferred from the Employees' Compensation
Fund established under section 8147 of title 5 to the
applicable appropriations account for an agency or
instrumentality of any branch of the Federal Government for the
purposes of reimbursing the agency or instrumentality in
accordance with an assisted reemployment agreement entered into
under section 8104 of title 5.
* * * * * * *
TITLE XXXIX--POSTAL SERVICE
* * * * * * *
PART I--GENERAL
* * * * * * *
CHAPTER 4--GENERAL AUTHORITY
* * * * * * *
Sec. 404. Specific powers
(a) Subject to the provisions of section 404a, but
otherwise without limitation of the generality of its powers,
the Postal Service shall have the following specific powers,
among others:
(1) to provide for the collection, handling,
transportation, delivery, forwarding, returning, and
holding of mail, and for the disposition of
undeliverable mail;
(2) to prescribe, in accordance with this title, the
amount of postage and the manner in which it is to be
paid;
(3) to determine the need for post offices, postal
and training facilities and equipment, and to provide
such offices, facilities, and equipment as it
determines are needed;
(4) to provide and sell postage stamps and other
stamped paper, cards, and envelopes and to provide such
other evidences of payment of postage and fees as may
be necessary or desirable;
(5) to provide philatelic services;
(6) after the date of enactment of the 21st Century
Postal Service Act of 2012, and except as provided in
subsection (e), to provide other services that are not
postal services, after the Postal Regulatory
Commission--
(A) makes a determination that the provision
of such services--
(i) uses the processing,
transportation, delivery, retail
network, or technology of the Postal
Service;
(ii) is consistent with the public
interest and a demonstrated or
potential public demand for--
(I) the Postal Service to
provide the services instead of
another entity providing the
services; or
(II) the Postal Service to
provide the services in
addition to another entity
providing the services;
(iii) would not create unfair
competition with the private sector;
and
(iv) has the potential to improve the
net financial position of the Postal
Service, based on a market analysis
provided to the Postal Regulatory
Commission by the Postal Service; and
(B) for services that the Postal Regulatory
Commission determines meet the criteria under
subparagraph (A), classifies each such service
as a market-dominant product, competitive
product, or experimental product, as required
under chapter 36 of title 39, United States
Code;
[(6)] (7) to investigate postal offenses and civil
matters relating to the Postal Service;
[(7)] (8) to offer and pay rewards for information
and services in connection with violation of the postal
laws, and, unless a different disposal is expressly
prescribed, to pay one-half of all penalties and
forfeitures imposed for violations of law affecting the
Postal Service, its revenues, or property, to the
person informing for the same, and to pay the other
one-half into the Postal Service Fund; and
[(8)] (9) to authorize the issuance of a substitute
check for a lost, stolen, or destroyed check of the
Postal Service.
[(9) Redesignated (8)]
(b) * * *
(c) * * *
[(d)(1) The Postal Service, prior to making a determination
under subsection (a)(3) of this section as to the necessity for
the closing or consolidation of any post office, shall provide
adequate notice of its intention to close or consolidate such
post office at least 60 days prior to the proposed date of such
closing or consolidation to persons served by such post office
to ensure that such persons will have an opportunity to present
their views.]
(d)(1) The Postal Service, prior to making a determination
under subsection (a)(3) of this section as to the necessity for
the closing or consolidation of any post office, shall--
(A) consider whether--
(i) to close the post office or consolidate
the post office and another post office located
within a reasonable distance;
(ii) instead of closing or consolidating the
post office--
(I) to reduce the number of hours a
day that the post office operates; or
(II) to continue operating the post
office for the same number of hours a
day;
(iii) to procure a contract providing full,
or less than full, retail services in the
community served by the post office; or
(iv) to provide postal services to the
community served by the post office through a
rural carrier;
(B) provide postal customers served by the post
office an opportunity to participate in a nonbinding
survey conducted by mail on a preference for an option
described in subparagraph (A); and
(C) if the Postal Service determines to close or
consolidate the post office, provide adequate notice of
its intention to close or consolidate such post office
at least 60 days prior to the proposed date of such
closing or consolidation to persons served by such post
office to ensure that such persons will have an
opportunity to present their views.
(2) * * *
(3) * * *
(4) * * *
(5) A determination of the Postal Service to close or
consolidate any post office, station, or branch may be appealed
by any person served by such office, station, or branch to the
Postal Regulatory Commission within 30 days after such
determination is made available to such person [under paragraph
(3)]. The Commission shall review such determination on the
basis of the record before the Postal Service in the making of
such determination. The Commission shall make a determination
based upon such review no later than 120 days after receiving
any appeal under this paragraph. The Commission shall set aside
any determination, findings, and conclusions found to be--
(A) arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with the law;
(B) without observance of procedure required by law;
or
(C) unsupported by substantial evidence on the
record.
The Commission may affirm the determination of the Postal
Service or order that the entire matter be returned for further
consideration, but the Commission may not modify the
determination of the Postal Service. The Commission may suspend
the effectiveness of the determination of the Postal Service
until the final disposition of the appeal. The provisions of
section 556, section 557, and chapter 7 of title 5 shall not
apply to any review carried out by the Commission under this
paragraph.
(e)(1) * * *
(2) [Nothing in this section shall be considered to permit
or require that the Postal Service provide any nonpostal
service, except that the] The Postal Service may provide
nonpostal services which were offered as of January 1, 2006, as
provided under this subsection.
(3) * * *
(4) * * *
(5) * * *
(f) Closing or Consolidation of Certain Postal
Facilities.--
(1) Postal facility.--In this subsection, the term
`postal facility'--
(A) means any Postal Service facility that is
primarily involved in the preparation,
dispatch, or other physical processing of mail;
and
(B) does not include--
(i) any post office, station, or
branch; or
(ii) any facility used only for
administrative functions.
(2) Area mail processing study.--
(A) New area mail processing studies.--After
the date of enactment of this subsection,
before making a determination under subsection
(a)(3) as to the necessity for the closing or
consolidation of any postal facility, the
Postal Service shall--
(i) conduct an area mail processing
study relating to that postal facility
that includes a plan to reduce the
capacity of the postal facility, but
not close the postal facility;
(ii) publish the study on the Postal
Service website; and
(iii) publish a notice that the study
is complete and available to the
public, including on the Postal Service
website.
(B) Completed or ongoing area mail processing
studies.--
(i) In general.--In the case of a
postal facility described in clause
(ii), the Postal Service shall--
(I) consider a plan to reduce
the capacity of the postal
facility, but not close the
post facility; and
(II) publish the results of
the consideration under
subclause (I) with or as an
amendment to the area mail
processing study relating to
the postal facility.
(ii) Postal facilities.--A postal
facility described in this clause is a
postal facility for which, on or before
the date of enactment of this
subsection--
(I) an area mail processing
study that does not include a
plan to reduce the capacity of
the postal facility, but not
close the facility, has been
completed or is in progress;
and
(II) a determination as to
the necessity for the closing
or consolidation of the postal
facility has not been made.
(3) Notice; public comment; and public hearing.--If
the Postal Service makes a determination under
subsection (a)(3) to close or consolidate a postal
facility, the Postal Service shall--
(A) provide notice of the determination to--
(i) Congress; and
(ii) the Postal Regulatory
Commission;
(B) provide adequate public notice of the
intention of the Postal Service to close or
consolidate the postal facility;
(C) ensure that interested persons have an
opportunity to submit public comments during a
45-day period after the notice of intention is
provided under subparagraph (B);
(D) before the 45-day period described in
subparagraph (C), provide for public notice of
that opportunity by--
(i) publication on the Postal Service
website;
(ii) posting at the affected postal
facility; and
(iii) advertising the date and
location of the public community
meeting under subparagraph (E); and
(E) during the 45-day period described under
subparagraph (C), conduct a public community
meeting that provides an opportunity for public
comments to be submitted verbally or in
writing.
(4) Further considerations.--Not earlier than 30 days
after the end of the 45-day period for public comment
under paragraph (3), the Postal Service, in making a
determination whether or not to close or consolidate a
postal facility, shall consider--
(A) the views presented by interested persons
solicited under paragraph (3);
(B) the effect of the closing or
consolidation on the affected community,
including any disproportionate impact the
closure or consolidation may have on a State,
region, or locality;
(C) the effect of the closing or
consolidation on the travel times and distances
for affected customers to access services under
the proposed closing or consolidation;
(D) the effect of the closing or
consolidation on delivery times for all classes
of mail;
(E) any characteristics of certain
geographical areas, such as remoteness,
broadband internet availability, and weather-
related obstacles to using alternative
facilities, that may result in the closing or
consolidation having a unique effect; and
(F) any other factor the Postal Service
determines is necessary.
(5) Justification statement.--Before the date on
which the Postal Service closes or consolidates a
postal facility, the Postal Service shall post on the
Postal Service website a closure or consolidation
justification statement that includes--
(A) a response to all public comments
received with respect to the considerations
described under paragraph (4);
(B) a description of the considerations made
by the Postal Service under paragraph (4); and
(C) the actions that will be taken by the
Postal Service to mitigate any negative effects
identified under paragraph (4).
(6) Closing or consolidation of postal facilities.--
(A) In general.--Not earlier than the 15 days
after posting and publishing the final
determination and the justification statement
under paragraph (6) with respect to a postal
facility, the Postal Service may close or
consolidate the postal facility.
(B) Alternative intake of mail.--If the
Postal Service closes or consolidates a postal
facility under subparagraph (A), the Postal
Service shall make reasonable efforts to ensure
continued mail receipt from customers of the
closed or consolidated postal facility at the
same location or at another appropriate
location in close geographic proximity to the
closed or consolidated postal facility.
(7) Postal service website.--For purposes of any
notice required to be published on the Postal Service
website under this subsection, the Postal Service shall
ensure that the Postal Service website--
(A) is updated routinely; and
(B) provides any person, at the option of the
person, the opportunity to receive relevant
updates by electronic mail.
(8) Protection of certain information.--Nothing in
this subsection may be construed to require the Postal
Service to disclose--
(A) any proprietary data, including any
reference or citation to proprietary data; and
(B) any information relating to the security
of a postal facility.
* * * * * * *
Sec. 411. Cooperation with other Government agencies and within the
Postal Service
[Executive agencies] (a) Cooperation With State and Local
Governments.--Executive agencies within the meaning of section
105 of title 5, [and the Government Printing Office] the
Government Printing Office, and agencies and other units of
State and local governments are authorized to furnish property,
both real and personal, and personal and nonpersonal services
to the Postal Service, and the Postal Service is authorized to
furnish property and services to them. The furnishing of
property and services under this [section] subsection shall be
under such terms and conditions, including reimbursability, as
the Postal Service and the head of the agency concerned shall
deem appropriate.
(b) Cooperation Within the Postal Service.--The Office of
the Inspector General and other components of the Postal
Service may enter into agreements to furnish to each other
property, both real and personal, and personal and nonpersonal
services. The furnishing of property and services under this
subsection shall be under such terms and conditions, including
reimbursability, as the Inspector General and the head of the
component concerned shall deem appropriate
* * * * * * *
CHAPTER 7_CONTRACTING PROVISIONS
* * * * * * *
CHAPTER 7--CONTRACTING PROVISIONS
Sec.
701. Definitions.
702. Advocate for competition.
703. Delegation of contracting authority.
704. Posting of noncompetitive purchase requests for noncompetitive
contracts.
705. Review of ethical issues.
706. Ethical restrictions on participation in certain contracting
activity.
707. Congressional oversight authority.
Sec. 701. Definitions
In this chapter--
(1) the term `contracting officer' means an employee
of a covered postal entity who has authority to enter
into a postal contract;
(2) the term `covered postal entity' means--
(A) the Postal Service; or
(B) the Postal Regulatory Commission;
(3) the term `head of a covered postal entity'
means--
(A) in the case of the Postal Service, the
Postmaster General; or
(B) in the case of the Postal Regulatory
Commission, the Chairman of the Postal
Regulatory Commission;
(4) the term `postal contract' means any contract
(including any agreement or memorandum of
understanding) entered into by a covered postal entity
for the procurement of goods or services; and
(5) the term `senior procurement executive' means the
senior procurement executive of a covered postal
entity.
Sec. 702. Advocate for competition
(a) Establishment and Designation.--
(1) Establishment.--There is established in each
covered postal entity an advocate for competition.
(2) Designation.--The head of each covered postal
entity shall designate for the covered postal entity 1
or more officers or employees (other than the senior
procurement executive) to serve as the advocate for
competition.
(b) Responsibilities.--The advocate for competition of each
covered postal entity shall--
(1) be responsible for promoting competition to the
maximum extent practicable consistent with obtaining
best value by promoting the acquisition of commercial
items and challenging barriers to competition;
(2) review the procurement activities of the covered
postal entity; and
(3) prepare and transmit to the head of each covered
postal entity, the senior procurement executive of each
covered postal entity, the Board of Governors, and
Congress, an annual report describing--
(A) the activities of the advocate under this
section;
(B) initiatives required to promote
competition;
(C) barriers to competition that remain; and
(D) the number of waivers made by each
covered postal entity under section 704(c).
Sec. 703. Delegation of contracting authority
(a) In General.--
(1) Policy.--Not later than 60 days after the date of
enactment of the 21st Century Postal Service Act of
2012, the head of each covered postal entity shall
issue a policy on contracting officer delegations of
authority for the covered postal entity.
(2) Contents.--The policy issued under paragraph (1)
shall require that--
(A) notwithstanding any delegation of
authority with respect to postal contracts, the
ultimate responsibility and accountability for
the award and administration of postal
contracts resides with the senior procurement
executive; and
(B) a contracting officer shall maintain an
awareness of and engagement in the activities
being performed on postal contracts of which
that officer has cognizance, notwithstanding
any delegation of authority that may have been
executed.
(b) Posting of Delegations.--
(1) In general.--The head of each covered postal
entity shall make any delegation of authority for
postal contracts outside the functional contracting
unit readily available and accessible on the website of
the covered postal entity.
(2) Effective date.--This paragraph shall apply to
any delegation of authority made on or after 30 days
after the date of enactment of the 21st Century Postal
Service Act of 2012.
Sec. 704. Posting of noncompetitive purchase requests for
noncompetitive contracts
(a) Posting Required.--
(1) Postal regulatory commission.--The Postal
Regulatory Commission shall make the noncompetitive
purchase request for any noncompetitive award,
including the rationale supporting the noncompetitive
award, publicly available on the website of the Postal
Regulatory Commission--
(A) not later than 14 days after the date of
the award of the noncompetitive contract; or
(B) not later than 30 days after the date of
the award of the noncompetitive contract, if
the basis for the award was a compelling
business interest.
(2) Postal service.--The Postal Service shall make
the noncompetitive purchase request for any
noncompetitive award of a postal contract valued at
$250,000 or more, including the rationale supporting
the noncompetitive award, publicly available on the
website of the Postal Service--
(A) not later than 14 days after the date of
the award; or
(B) not later than 30 days after the date of
the award, if the basis for the award was a
compelling business interest.
(3) Adjustments to the posting threshold for the
postal service.--
(A) Review and determination.--Not later than
January 31 of each year, the Postal Service
shall--
(i) review the $250,000 threshold
established under paragraph (2); and
(ii) based on any change in the
Consumer Price Index for all-urban
consumers of the Department of Labor,
determine whether an adjustment to the
threshold shall be made.
(B) Amount of adjustments.--An adjustment
under subparagraph (A) shall be made in
increments of $5,000. If the Postal Service
determines that a change in the Consumer Price
Index for a year would require an adjustment in
an amount that is less than $5,000, the Postal
Service may not make an adjustment to the
threshold for the year.
(4) Effective date.--This subsection shall apply to
any noncompetitive contract awarded on or after the
date that is 90 days after the date of enactment of the
21st Century Postal Service Act of 2012.
(b) Public Availability.--
(1) In general.--Subject to paragraph (2), the
information required to be made publicly available by a
covered postal entity under subsection (a) shall be
readily accessible on the website of the covered postal
entity.
(2) Protection of proprietary information.--A covered
postal entity shall--
(A) carefully screen any description of the
rationale supporting a noncompetitive award
required to be made publicly available under
subsection (a) to determine whether the
description includes proprietary data
(including any reference or citation to the
proprietary data) or security-related
information; and
(B) remove any proprietary data or security-
related information before making publicly
available a description of the rational
supporting a noncompetitive award.
(c) Waivers.--
(1) Waiver permitted.--If a covered postal entity
determines that making a noncompetitive purchase
request publicly available would risk placing the
Postal Service at a competitive disadvantage relative
to a private sector competitor, the senior procurement
executive, in consultation with the advocate for
competition of the covered postal entity, may waive the
requirements under subsection (a).
(2) Form and content of waiver.--
(A) Form.--A waiver under paragraph (1) shall
be in the form of a written determination
placed in the file of the contract to which the
noncompetitive purchase agreement relates.
(B) Content.--A waiver under paragraph (1)
shall include--
(i) a description of the risk
associated with making the
noncompetitive purchase request
publicly available; and
(ii) a statement that redaction of
sensitive information in the
noncompetitive purchase request would
not be sufficient to protect the Postal
Service from being placed at a
competitive disadvantage relative to a
private sector competitor.
(3) Delegation of waiver authority.--A covered postal
entity may not delegate the authority to approve a
waiver under paragraph (1) to any employee having less
authority than the senior procurement executive.
Sec. 705. Review of ethical issues
If a contracting officer identifies any ethical issues
relating to a proposed contract and submits those issues and
that proposed contract to the designated ethics official for
the covered postal entity before the awarding of that contract,
that ethics official shall--
(1) review the proposed contract; and
(2) advise the contracting officer on the appropriate
resolution of ethical issues.
Sec. 706. Ethical restrictions on participation in certain contracting
activity
(a) Definitions.--In this section--
(1) the term `covered employee' means--
(A) a contracting officer; or
(B) any employee of a covered postal entity
whose decisionmaking affects a postal contract
as determined by regulations prescribed by the
head of a covered postal entity;
(2) the term `covered relationship' means a covered
relationship described in section 2635.502(b)(1) of
title 5, Code of Federal Regulations, or any successor
thereto; and
(3) the term `final conviction' means a conviction,
whether entered on a verdict or plea, including a plea
of nolo contendere, for which a sentence has been
imposed.
(b) In General.--
(1) Regulations.--The head of each covered postal
entity shall prescribe regulations that--
(A) require a covered employee to include in
the file of any noncompetitive purchase request
for a noncompetitive postal contract a written
certification that--
(i) discloses any covered
relationship of the covered employee;
and
(ii) the covered employee will not
take any action with respect to the
noncompetitive purchase request that
affects the financial interests of a
friend, relative, or person with whom
the covered employee is affiliated in a
nongovernmental capacity, or otherwise
gives rise to an appearance of the use
of public office for private gain, as
described in section 2635.702 of title
5, Code of Federal Regulations, or any
successor thereto;
(B) require a contracting officer to consult
with the ethics counsel for the covered postal
entity regarding any disclosure made by a
covered employee under subparagraph (A)(i), to
determine whether participation by the covered
employee in the noncompetitive purchase request
would give rise to a violation of part 2635 of
title 5, Code of Federal Regulations (commonly
referred to as the `Standards of Ethical
Conduct for Employees of the Executive
Branch');
(C) require the ethics counsel for a covered
postal entity to review any disclosure made by
a contracting officer under subparagraph (A)(i)
to determine whether participation by the
contracting officer in the noncompetitive
purchase request would give rise to a violation
of part 2635 of title 5, Code of Federal
Regulations (commonly referred to as the
`Standards of Ethical Conduct for Employees of
the Executive Branch'), or any successor
thereto;
(D) under subsections (d) and (e) of section
2635.50 of title 5, Code of Federal
Regulations, or any successor thereto, require
the ethics counsel for a covered postal entity
to--
(i) authorize a covered employee that
makes a disclosure under subparagraph
(A)(i) to participate in the
noncompetitive postal contract; or
(ii) disqualify a covered employee
that makes a disclosure under
subparagraph (A)(i) from participating
in the noncompetitive postal contract;
(E) require a contractor to timely disclose
to the contracting officer in a bid,
solicitation, award, or performance of a postal
contract any conflict of interest with a
covered employee; and
(F) include authority for the head of the
covered postal entity to a grant a waiver or
otherwise mitigate any organizational or
personal conflict of interest, if the head of
the covered postal entity determines that the
waiver or mitigation is in the best interests
of the Postal Service.
(2) Posting of waivers.--Not later than 30 days after
the head of a covered postal entity grants a waiver
described in paragraph (1)(F), the head of the covered
postal entity shall make the waiver publicly available
on the website of the covered postal entity.
(c) Contract Voidance and Recovery.--
(1) Unlawful conduct.--In any case in which there is
a final conviction for a violation of any provision of
chapter 11 of title 18 relating to a postal contract,
the head of a covered postal entity may--
(A) void that contract; and
(B) recover the amounts expended and property
transferred by the covered postal entity under
that contract.
(2) Obtaining or disclosing procurement
information.--
(A) In general.--In any case where a
contractor under a postal contract fails to
timely disclose a conflict of interest to the
appropriate contracting officer as required
under the regulations promulgated under
subsection (b)(1)(D), the head of a covered
postal entity may--
(i) void that contract; and
(ii) recover the amounts expended and
property transferred by the covered
postal entity under that contract.
(B) Conviction or administrative
determination.--A case described under
subparagraph (A) is any case in which--
(i) there is a final conviction for
an offense punishable under section
27(e) of the Office of Federal
Procurement Policy Act (41 U.S.C.
423(e)); or
(ii) the head of a covered postal
entity determines, based upon a
preponderance of the evidence, that the
contractor or someone acting for the
contractor has engaged in conduct
constituting an offense punishable
under section 27(e) of that Act.
Sec. 707. Congressional oversight authority
The Postal Service may not enter into any contract that
restricts the ability of Congress to exercise oversight
authority.
* * * * * * *
PART II--PERSONNEL
* * * * * * *
CHAPTER 12--EMPLOYEE-MANAGEMENT DISAGREEMENTS
* * * * * * *
Sec. 1207. Labor Disputes
(a) * * *
(b) * * *
(c) (1) * * *
(2)(A) The arbitration board shall give the parties a full
and fair hearing, including an opportunity to present evidence
in support of their claims, and an opportunity to present their
case in person, by counsel or by other representative as they
may elect. Decisions of the arbitration board shall be
conclusive and binding upon the parties. [The arbitration board
shall render its decision within 45 days after its
appointment.] The arbitration board shall render a decision not
later than 45 days after the date of its appointment.
(B) In rendering a decision under this paragraph, the
arbitration board shall consider such relevant factors
as--
(i) the financial condition of the Postal
Service;
(ii) the requirements relating to pay and
compensation comparability under section
1003(a); and
(iii) the policies of this title.
(3) * * *
(d) * * *
* * * * * * *
PART III--MODERNIZATION AND FISCAL ADMINISTRATION
* * * * * * *
CHAPTER 24--APPROPRIATIONS AND ANNUAL REPORT
* * * * * * *
Sec. 2403. Annual report on the fiscal stability of the United States
mailing industry
(a) In General.--Not later than 1 year after the date of
enactment of this section, and annually thereafter, the Postal
Regulatory Commission shall submit a report on the fiscal
stability of the United States mailing industry with respect to
the preceding fiscal year to--
(1) the Committee on Homeland Security and
Governmental Affairs of the Senate; and
(2) the Committee on Oversight and Government Reform
of the House of Representatives.
(b) Assistance.--The United States Postal Service and any
Federal agency involved in oversight or data collection
regarding industry sectors relevant to the report under
subsection (a) shall provide any assistance to the Postal
Regulatory Commission that the Postal Regulatory Commission
determines is necessary in the preparation of a report under
subsection (a).
* * * * * * *
PART IV--MAIL MATTER
* * * * * * *
CHAPTER 30--NONMAILABLE MATTER
* * * * * * *
Sec. 3001. Nonmailable Matter
(a) * * *
(b) * * *
(c) * * *
(d) * * *
(e) * * *
(f) * * *
(g) * * *
(h) * * *
(i) * * *
(j) * * *
(k) * * *
(l) * * *
(m) * * *
(n) * * *
(o) * * *
(p)(1) In this subsection, the terms `wine' and `malt
beverage' have the same meanings as in section 117 of the
Federal Alcohol Administration Act (27 U.S.C. 211).
(2) Wine or malt beverages shall be considered mailable if
mailed--
(A) by a licensed winery or brewery, in accordance
with applicable regulations under paragraph (3); and
(B) in accordance with the laws of--
(i) the State, territory, or district of the
United States where the sender or duly
authorized agent initiates the mailing; and
(ii) the State, territory, or district of the
United States where the addressee or duly
authorized agent takes delivery.
(3) The Postal Service shall prescribe such regulations as
may be necessary to carry out this subsection, including
regulations providing that--
(A) the mailing shall be by a means established by
the Postal Service to ensure direct delivery to the
addressee or a duly authorized agent;
(B) the addressee (and any duly authorized agent)
shall be an individual at least 21 years of age;
(C) the individual who takes delivery, whether the
addressee or a duly authorized agent, shall present a
valid, government-issued photo identification at the
time of delivery;
(D) the wine or malt beverages may not be for resale
or other commercial purpose; and
(E) the winery or brewery involved shall--
(i) certify in writing to the satisfaction of
the Postal Service, through a registration
process administered by the Postal Service,
that the mailing is not in violation of any
provision of this subsection or regulation
prescribed under this subsection; and
(ii) provide any other information or
affirmation that the Postal Service may
require, including with respect to the
prepayment of State alcohol beverage taxes.
(4) For purposes of this subsection--
(A) a winery shall be considered to be licensed if it
holds an appropriate basic permit issued--
(i) under the Federal Alcohol Administration
Act; and
(ii) under the law of the State in which the
winery is located; and
(B) a brewery shall be considered to be licensed if--
(i) it possesses a notice of registration and
bond approved by the Alcohol and Tobacco Tax
and Trade Bureau of the Department of the
Treasury; and
(ii) it is licensed to manufacture and sell
malt beverages in the State in which the
brewery is located.
* * * * * * *
CHAPTER 36--POSTAL RATES, CLASSES, AND SERVICES
* * * * * * *
Subchapter I--Provisions Relating to Market-Dominant Products
* * * * * * *
Sec. 3622. Modern rate regulation
(a) * * *
(b) * * *
(c)(1) * * *
(2) * * *
(3) * * *
(4) * * *
(5) * * *
(6) * * *
(7) * * *
(8) * * *
(9) * * *
(10) the desirability of special classifications for both
postal users and the Postal Service in accordance with the
policies of this title, including agreements between the Postal
Service and postal users, when available on public and
reasonable terms to similarly situated mailers, that--
(A) [either] will--
(i) improve the net financial position of the
Postal Service through reducing Postal Service
costs or increasing the overall contribution to
the institutional costs of the Postal Service;
[or]
(ii) enhance the performance of mail
preparation, processing, transportation, or
other functions; [and] or
(iii) preserve mail volume and revenue; and
(B) do not cause unreasonable harm to the
marketplace.
(d) * * *
(e) * * *
(f) * * *
(g) Coordination.--The Postal Service and the Postal
Regulatory Commission shall coordinate actions to identify
methods to increase the use of negotiated service agreements
for market-dominant products by the Postal Service consistent
with subsection (c)(10).
* * * * * * *
Subchapter V--Postal Services, Complaints, and Judicial Review
* * * * * * *
Sec. 3661. Postal services
(a) The Postal Service shall develop and promote adequate
and efficient postal services.
[(b) When the Postal Service determines that there should
be a change in the nature of postal services which will
generally affect service on a nationwide or substantially
nationwide basis, it shall submit a proposal, within a
reasonable time prior to the effective date of such proposal,
to the Postal Regulatory Commission requesting an advisory
opinion on the change.
[(c) The Commission shall not issue its opinion on any
proposal until an opportunity for hearing on the record under
sections 556 and 557 of title 5 has been accorded to the Postal
Service, users of the mail, and an officer of the Commission
who shall be required to represent the interests of the general
public. The opinion shall be in writing and shall include a
certification by each Commissioner agreeing with the opinion
that in his judgment the opinion conforms to the policies
established under this title.]
(b) Proposed Changes for Market-dominant Products.--
(1) Submission of proposal.--If the Postal Service
determines that there should be a change in the nature
of postal services relating to market-dominant products
that will generally affect service on a nationwide or
substantially nationwide basis, the Postal Service
shall submit a proposal to the Postal Regulatory
Commission requesting an advisory opinion on the
change.
(2) Advisory opinion.--Upon receipt of a proposal
under paragraph (1), the Postal Regulatory Commission
shall--
(A) provide an opportunity for public comment
on the proposal; and
(B) issue an advisory opinion not later
than--
(i) 90 days after the date on which
the Postal Regulatory Commission
receives the proposal; or
(ii) a date that the Postal
Regulatory Commission and the Postal
Service may, not later than 1 week
after the date on which the Postal
Regulatory Commission receives the
proposal, determine jointly.
(3) Response to opinion.--The Postal Service shall
submit to the President and to Congress a response to
an advisory opinion issued under paragraph (2) that
includes--
(A) a statement of whether the Postal Service
plans to modify the proposal to address any
concerns or implement any recommendations made
by the Commission; and
(B) for any concern that the Postal Service
determines not to address and any
recommendation that the Postal Service
determines not to implement, the reasons for
the determination.
(4) Action on proposal.--The Postal Service may take
action regarding a proposal submitted under paragraph
(1)--
(A) on or after the date that is 30 days
after the date on which the Postal Service
submits the response required under paragraph
(3);
(B) on or after a date that the Postal
Regulatory Commission and the Postal Service
may, not later than 1 week after the date on
which the Postal Regulatory Commission receives
a proposal under paragraph (2), determine
jointly; or
(C) after the date described in paragraph
(2)(B), if--
(i) the Postal Regulatory Commission
fails to issue an advisory opinion on
or before the date described in
paragraph (2)(B); and
(ii) the action is not otherwise
prohibited under Federal law.
(5) Modification of timeline.--At any time, the
Postal Service and the Postal Regulatory Commission may
jointly redetermine a date determined under paragraph
(2)(B)(ii) or (4)(B).
* * * * * * *
Subchapter VII--Modern Service Standards
* * * * * * *
Sec. 3691. Establishment of modern service standards
(a) * * *
(b) * * *
(c) * * *
(d) * * *
Postal Service Plan.
Pub. L. 109-435, title III, Sec. 302, Dec. 20, 2006, 120
Stat. 3219, provided that:
``(a) * * *
``(b) * * *
``(c) * * *
``(d) Alternate Retail Options.--The Postal Service plan
[shall include] shall--
(1) include plans to expand and market retail access
to postal services, in addition to post offices,
including--
``[(1)] (A) vending machines;
``[(2)] (B) the Internet;
``[(3)] (C) postage meters;
``[(4)] (D) Stamps by Mail;
``[(5)] (E) Postal Service employees on
delivery routes;
``[(6)] (F) retail facilities in which
overhead costs are shared with private
businesses and other government agencies;
``[(7)] (G) postal kiosks; or
``[(8)] (H) any other nonpost office access
channel providing market retail access to
postal services[.]; and
``(2) where possible, provide for an improvement in
customer access to postal services;
``(3) consider the impact of any decisions by the
Postal Service relating to the implementation of the
plan on small communities and rural areas; and
``(4) ensure that--
``(A) small communities and rural areas
continue to receive regular and effective
access to retail postal services after
implementation of the plan; and
``(B) the Postal Service solicits community
input in accordance with applicable provisions
of Federal law.''
* * * * * * *
Sec. 3692. Conversion of door delivery points
(a) Definitions.--In this section, the following
definitions shall apply:
(1) Centralized delivery point.--The term
`centralized delivery point' means a group or cluster
of mail receptacles at 1 delivery point that is within
reasonable proximity of the street address associated
with the delivery point.
(2) Curbline delivery points.--The term `curbline
delivery point' means a delivery point that is--
(A) adjacent to the street address associated
with the delivery point; and
(B) accessible by vehicle on a street that is
not a private driveway.
(3) Door delivery point.--The term `door delivery
point' means a delivery point at a door of the
structure at a street address.
(4) Sidewalk delivery point.--The term `sidewalk
delivery point' means a delivery point on a sidewalk
adjacent to the street address associated with the
delivery point.
(b) Conversion.--Except as provided in subsection (c), and
in accordance with the profitability plan required under
section 401 and standards established by the Postal Service,
the Postal Service is authorized to, to the maximum extent
feasible, convert door delivery points to--
(1) curbline delivery points;
(2) sidewalk delivery points; or
(3) centralized delivery points.
(c) Exceptions.--
(1) Continued door delivery.--The Postal Service may
allow for the continuation of door delivery due to--
(A) a physical hardship of a customer;
(B) weather, in a geographic area where snow
removal efforts could obstruct access to
mailboxes near a road;
(C) circumstances in an urban area that
preclude efficient use of curbside delivery
points;
(D) other exceptional circumstances, as
determined in accordance with regulations
issued by the Postal Service; or
(E) other circumstances in which the Postal
Service determines that alternatives to door
delivery would not be practical or cost
effective.
(2) New door delivery points.--The Postal Service may
provide door delivery to a new delivery point in a
delivery area that received door delivery on the day
before the date of enactment of this section, if the
delivery point is established before the delivery area
is converted from door delivery under subsection (b).
(d) Solicitation of Comments.--The Postal Service shall
establish procedures to solicit, consider, and respond to input
from individuals affected by a conversion under this section.
(e) Review.--Subchapter V of this chapter shall not apply
with respect to any action taken by the Postal Service under
this section.
(f) Report.--Not later than 60 days after the end of each
fiscal year through fiscal year 2015, the Postal Service shall
submit to Congress and the Inspector General of the Postal
Service a report on the implementation of this section during
the preceding fiscal year that--
(1) includes the number of door delivery points--
(A) that existed at the end of the fiscal
year preceding the preceding fiscal year;
(B) that existed at the end of the preceding
fiscal year;
(C) that, during the preceding fiscal year,
converted to--
(i) curbline delivery points or
sidewalk delivery points;
(ii) centralized delivery points; and
(iii) any other type of delivery
point; and
(D) for which door delivery was continued
under subsection (c)(1);
(2) estimates any cost savings, revenue loss, or
decline in the value of mail resulting from the
conversions from door delivery that occurred during the
preceding fiscal year;
(3) describes the progress of the Postal Service
toward achieving the conversions authorized under
subsection (b); and
(4) provides such additional information as the
Postal Service considers appropriate.
* * * * * * *
TITLE XLI--PUBLIC CONTRACTS
* * * * * * *
Subtitle III--Contract Disputes
* * * * * * *
CHAPTER 71--CONTRACT DISPUTES
* * * * * * *
Sec. 7101. Definitions
(1) * * *
(2) * * *
(3) * * *
(4) * * *
(5) * * *
(6) * * *
(7) * * *
(8) * * *
(A) * * *
(B) * * *
(C) an independent establishment as defined in
section 104 of title 5, except that the term does not
include the Government Accountability Office; [and]
(D) a wholly owned Government corporation as defined
in section 9101(3) of title 31[.]; and
(E) the United States Postal Service and Postal
Regulatory Commission.
VIII. ADDITIONAL VIEWS
While many of the provisions in this important and pressing
legislation would meaningfully improve the financial situation
of the Postal Service, we have strong objections to the FECA
benefit changes and the arbitration language in the bill.
THE FEDERAL EMPLOYEES' COMPENSATION ACT (FECA)
Title III of the bill would make certain cuts to benefits
and reforms to the Federal Employee Compensation Act (FECA).
The benefit reductions in sections 302 and 303 are premature,
unnecessary, and unfair.
The Committee report asserts that changes to FECA benefits
must be included in this legislation to place the Postal
Service on a sound financial footing.\1\ However, according to
CBO, these workers' compensation changes contribute nothing to
the Postal Service's financial solvency in the next five
critical years for stabilizing the Postal Service's
finances.\2\ Indeed, through 2016, the changes would result in
a net increase of $10 million in Postal Service costs,
according to CBO.\3\ In total, over the ten-year scoring
window, these benefit cuts would save the Postal Service a
total of $397 million. Contrast this savings with the $8.9
billion in net savings CBO projects the Postal Service would
save over the same time period by eliminating Saturday mail
delivery, which is another issue that many Senators have raised
significant concerns about.\4\ In other words, CBO estimates
that the workers' compensation provisions would save about four
percent of what five-day delivery would save during the scoring
window. Due to the concerns raised about this issue, the
Committee appropriately exhibits caution with delivery
reductions, allowing them only after first implementing
alternative cost-saving measures, undergoing review by the GAO
and PRC, and finding that it is necessary to the Postal
Service's solvency.\5\ We should exhibit at least the same
caution with savings that comes out of the pockets of employees
disabled in service to their country.
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\1\See supra.
\2\See CBO, Cost Estimate S. 1789--21st Century Postal Service Act
of 2011, table 2.
\3\Id.
\4\Id. This includes only nine years of projected savings because
savings for the implementation of five-day delivery start in 2014.
\5\See supra.
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The Committee report cites the record of the hearing of the
Committee's Subcommittee on Oversight of Government Management,
the Federal Workforce, and the District of Columbia on July 26,
2011, as a basis for moving forward with this reform. However,
many questions and concerns were raised at that hearing that
are still outstanding and should be answered before we move
forward with FECA reforms. The Committee report further states
that the FECA benefit reforms included in S.1789 are largely
based a proposal by the George W. Bush Administration and
carried forward by the Obama Administration; however there are
some significant differences between this bill and the
Administration's proposal. The benefit reductions in this bill
are greater than those in the Administration's proposal, and
most concerning, this bill would apply benefit reductions
retroactively to up to half of FECA beneficiaries who are now
on FECA's long-term disability rolls.
Witnesses at the Subcommittee's July 2011 hearing were
especially concerned with the retroactive application of
benefit reductions to those already injured. Gary Steinberg,
Acting Director of the Office of Workers' Compensation Programs
at the Department of Labor, testified that the Administration
proposed prospective rather than retroactive changes to
benefits because it would provide a level of fairness and
equity since recipients have planned for a certain level of
benefits into the future and changing things immediately has
the potential to cause a hardship for them.\6\
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\6\HSGAC/OGM hearing on July 26, 2011.
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FECA, like state workers' compensation programs, is a form
of insurance providing wage replacement and medical benefits to
employees injured on the job in exchange for mandatory
relinquishment of the employees' right to sue the government
for those injuries. FECA provides such employees' their
exclusive remedy against the federal government, and employees
may not recover non-economic losses such as compensation for
pain and suffering.\7\ Retroactive changes to benefit levels
after the injury has occurred violate the government's part of
this bargain. Just as a litigant is not permitted to
unilaterally change the terms of a settlement after it is made,
the federal government should not be able to unilaterally
change its workers' compensation liability after that liability
has attached. Furthermore, retroactive changes violate a basic
premise of insurance. A responsible employee may choose to
further insure himself or herself against disability, but that
is not possible if their coverage under the workers'
compensation statute can be changed after the fact.
---------------------------------------------------------------------------
\7\5 U.S.C. Sec. 8116(c); United States v. Lorenzetti, 467 U.S.
167, 169 (1984).
---------------------------------------------------------------------------
The Government Accountability Office (GAO) is currently
conducting a number of reviews of the FECA program, including a
review of both pre- and post-retirement age benefits to
determine fair benefit amounts at the request of a bipartisan
group of members from the House Committee on Education and
Workforce. The outcome of these reviews would help inform any
changes to FECA benefits. Without the results of these GAO
reviews we do not have the information we need to decide on
fair benefit levels. There are too many complex issues related
to the appropriate benefit levels that deserve more analysis.
We must be extremely cautious when making cuts to benefits that
could harm employees who were disabled by injuries sustained in
service to their country, especially elderly disabled
employees.
The tax-free nature of FECA benefits makes determining
appropriate benefit levels particularly complicated. The
Committee report states that the current FECA compensation
benefit levels can provide a financial disincentive for an
injured employee to return to work because the FECA benefit
could exceed their pre-injury take home pay. While this may be
the case for some higher-income workers, this is not true for
those with lower wages. GAO has reported that lower wage
workers often receive less in FECA benefits than their pre-
injury, after-tax wages and that the majority of FECA
recipients receive less on FECA than before their injury.\8\
Lower-income employees who pay no federal income tax currently
experience a one-fourth to one-third drop in income on FECA
full disability, depending on whether they have dependents.
With this legislation, all lower-wage workers with no federal
income tax liability would experience a one-third reduction in
income.\9\
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\8\GAO, Federal Employee Compensation Act: Percentages of Take-Home
Pay Replaced by Compensation Benefits, GAO/GGD-98-174 (August 17,
1998), at pp. 6-7.
\9\Employees who had been eligible for refundable income tax
credit, such as the Earned Income Tax Credit or the Additional Child
Tax Credit may fare even worse because disability payments are not
categorized as earned income, needed to claim these refundable credits.
---------------------------------------------------------------------------
The interaction between FECA and the Social Security
program creates additional complicating factors that the
Committee has not taken into account. Although the reduction in
FECA benefits is triggered by reaching full retirement age, as
defined in the Social Security Act, employees in the Civil
Service Retirement System (CSRS) do not participate in Social
Security and therefore do not receive Social Security
retirement benefits. For other employees, Social Security
should offset some of the reduction in benefits, but not for
CSRS employees. S. 1789 does not take this important
distinction into account. Employees in the Federal Employee
Retirement System (FERS) do participate in Social Security.
However, FERS employees with long-term disabilities may have
little Social Security credit since they do not continue
accruing additional Social Security benefits while receiving
FECA benefits, but there is no adjustment for those employees
either. In both cases, many injured employees over retirement
age would have to rely on reduced FECA benefits with either
very little or no additional retirement income from Social
Security. Employees on FECA also are unable to save money
through the Thrift Savings Program, and they may have had
limited ability to save money otherwise because they missed out
in wage growth during their time on FECA.
In addition, many people continue to work long after the
Social Security retirement age. Those injured later in their
careers will receive a lower benefit solely because of their
age. Congress previously passed legislation that allowed
benefit reductions at age 70, but repealed it because of the
burden it placed on injured employees (and on the Department of
Labor which had been tasked with conducting reviews), and
because it was deemed to be age discriminatory.\10\ This
legislation raises the same concerns.
---------------------------------------------------------------------------
\10\HSGAC/OGM hearing on July 26, 2011 (Statement of Andrew
Sherrill, Director, Education, Workforce, and Income Security, U.S.
Government Accountability Office).
---------------------------------------------------------------------------
Reducing benefits at retirement age is not the norm in
state workers' compensation programs. The majority of states
have permanent benefits for permanent disabilities. Dr. Gregory
Krohm testified before the Subcommittee that 33 states have no
reduction of benefits at retirement age.\11\ In addition, he
said that ``seems to be a very settled part of the law in those
States'' and he has ``seen no discussion of any of those States
changing that.''\12\
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\11\HSGAC/OGM hearing on July 26, 2011 (Statement of Dr. Gregory
Krohm, Executive Director, International Association of Industrial
Accident Boards and Commissions).
\12\HSGAC/OGM hearing on July 26, 2011.
---------------------------------------------------------------------------
By making the proposed changes to FECA benefits without
first studying and determining the appropriate benefit levels,
lower income workers may see additional, significant reductions
that they cannot afford. Despite this potential, there are no
provisions to take into account the severe economic hardship
that may result.
Many employee groups strongly oppose the FECA provisions in
this bill, including the American Federation of Labor and
Congress of Industrial Organizations (AFL-CIO); the American
Federation of Government Employees, AFL-CIO; the American
Federation of State, County and Municipal Employees, AFL-CIO;
the American Foreign Service Association; the American Postal
Workers' Union, AFL-CIO; the Federal Law Enforcement Officers
Association; Federally Employed Women; the International
Federation of Professional & Technical Engineers, AFL-CIO; the
National Active and Retired Federal Employees; the National
Association of Letter Carriers, AFL-CIO; the National Postal
Mail Handlers Union; the National Rural Letter Carriers' Union;
the National Treasury Employees Union; the Organization of
Professional Employees of the U.S. Department of Agriculture;
and the Professional Aviation Safety Specialists, AFL-CIO.
At the Subcommittee's hearing, Joseph Beaudoin, President
of the National Active and Retired Federal Employees,
summarized many of the concerns, testifying:
FECA reforms need not, and should not, sacrifice
basic principles of fairness in the name of achieving
cost savings. Rather, FECA reforms should save money by
helping bring FECA recipients back into the workforce,
eliminating inefficiencies in the processing of claims,
allowing for full reimbursement from liable third
parties, or reducing improper payments and fraud . . .
But current proposals to take money away from
individuals who are irrefutably unable to work because
they were injured or become ill as a result of their
service for the federal government fails a basic
fairness test . . . Thus, I urge all members of
Congress to seriously consider the significant
financial implications that proposed reductions to FECA
benefits could have on disabled public servants who
have lost the ability to earn income to adjust their
financial situation to new circumstances.\13\
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\13\HSGAC/OGM hearing on July 26, 2011, supra note 65 (Statement of
Joseph A. Beaudoin, President, National Active and Retired Federal
Employees Association).
We should heed his sound advice.
BINDING ARBITRATION IN RESOLUTION OF LABOR DISPUTES
We also remain concerned about statutorily mandating
standards for arbitration decisions, in Section 105 of S. 1789,
as reported. This provision has evolved over time in several
bills since its inclusion as part of S. 1507 as reported by
this Committee in the 111th Congress. While this report
indicates that the ``Committee certainly does not intend to
stack the deck in favor of management,''\14\ the creation of
any statutory criteria without accompanying statutory
recognition of the current open-ended factors an arbitrator may
consider demonstrates that the Committee has determined that
these criteria are in fact of some greater importance. My
concerns are more thoroughly addressed in the Committee Report
accompanying S. 1507.\15\
---------------------------------------------------------------------------
\14\See supra.
\15\S. Rept. 111-203 (additional views of Senator Akaka and Senator
Levin).
---------------------------------------------------------------------------
An amendment filed by Senator Begich during consideration
of S. 1789 would have helped to clarify the intent of the
arbitration provision by adding that nothing in 39 U.S. Code
should be taken to limit any factors that an arbitration board
could consider in rendering a decision. We urge the Committee
to continue working on this issue.
The Postal Service certainly faces an immediate financial
crisis, brought on by a number of factors and accelerated by
the worst economic crisis since the Great Depression. Efforts
to reform benefit levels in the FECA program, while important,
should be examined separately. We strongly support the aims of
this bill, with the exception of the changes to FECA benefits
in Title 3 of the bill and the arbitration language in Section
105.
Daniel K. Akaka.
Jon Tester.
Mark Begich.