To amend title 39, United States Code, to provide for procedures under which persons wrongfully arrested by the Postal Inspection Service on narcotics charges may seek compensation from the United States Postal Service.

Requires the Judicial Officer of the U.S. Postal Service to establish procedures under which any individual arrested by the Postal Inspection Service (PIS) (pursuant to any investigation in which a paid confidential informant was used) after December 31, 1983, for violating a law prohibiting the use, sale, or possession of a controlled substance, who is not convicted of such offense, may seek compensation after exhausting all administrative and judicial procedures otherwise available.

Requires a petition to be considered by a panel of three administrative law judges. Authorizes the panel to award such amount to a petitioner as it considers appropriate (up to $500,000) to compensate the individual for any harm or injury suffered by the petitioner or his or her spouse or child resulting from the petitioner's wrongful arrest. Requires the compensation to be: (1) payable out of the Postal Service Fund; and (2) computed taking into account the nature and degree of the harm or injury suffered, the degree to which the PIS failed to take reasonable precautions to prevent any such wrongful arrest from occurring, any history or pattern of similar wrongful arrests by PIS, and any compensation awarded in any earlier proceeding in connection with the petitioner's arrest.

Exempts the panel's determinations from administrative or judicial review.