To amend title 39, United States Code, to modernize the Postal Service regulations, and for other purposes.

This bill amends title 39 of the United States Code to modernize Postal Service regulations. It changes how postal rates are set, introduces sanctions for service failures, revises procedures for changes in service, limits rate increases to once every 12 months, restricts surcharges on non-compensatory mail classes, establishes an Office of the Customer Advocate, improves the complaint process, and requires the Postal Regulatory Commission to develop a mail volume estimation model. It also amends title 5 to change how the Postal Service Retiree Health Benefits Fund is invested.

Sec. 1, Modernizing postal regulations: This section makes several changes to postal regulations. It revises the formula for setting market-dominant postal rates, tying them to the Consumer Price Index minus a productivity adjustment. It allows the Postal Regulatory Commission to reduce the maximum rate increase for market-dominant products if the Postal Service fails to meet service targets. It changes the process for the Postal Service to get approval for changes in service, requiring a decision instead of an advisory opinion and allowing the Commission to order the Postal Service to justify plans that imply a service change. It limits rate increases for market-dominant products to no more than once every 12 months. It allows the Commission to authorize rate increases above the annual cap for non-compensatory mail classes only if the Postal Service meets certain service targets. It requires that the objectives for the postal rate system apply to each class or type of mail service and product. It clarifies that retained earnings from cost savings must result only from efficiency improvements or cost reductions. It establishes an Office of the Customer Advocate within the Postal Regulatory Commission to represent the general public in Commission proceedings. It revises the complaint process, setting deadlines for the Commission to act on complaints and allowing for reimbursement if the Postal Service unreasonably delays a proceeding. It requires the Commission to order a reduction in future rate increase authority if a rate is found unlawful, and allows an additional reduction if the Postal Service caused unreasonable delay. It adds maintaining and increasing the volume of market-dominant mail as an objective for the postal rate system. It adds new criteria for defining market-dominant products. It requires the Postal Regulatory Commission to develop a model for estimating demand for postal services, without using models developed by the Postal Service. It requires arbitration boards in labor disputes to consider the current and projected financial condition of the Postal Service.

Sec. 2, Investment of the Postal Service Retiree Health Benefits Funds: This section changes how the Postal Service Retiree Health Benefits Fund is invested. It requires the Secretary of the Treasury to invest a specified percentage of the Fund in index funds modeled after those in the Thrift Savings Plan, using professional asset managers. It establishes a Postal Service Retiree Health Benefits Fund Investment Committee to consult with the Secretary. It requires an annual audit and a management report to Congress on the investments.