[Federal Register Volume 60, Number 86 (Thursday, May 4, 1995)]
[Proposed Rules]
[Pages 22017-22019]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-10944]



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POSTAL RATE COMMISSION

39 CFR Part 3001

[Docket No. RM95-4]


Rules of Practice and Procedure

AGENCY: Postal Rate Commission.

ACTION: Advance notice of proposed rulemaking.

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SUMMARY: The Commission is soliciting comments on a Postal Service 
petition, including proposed rules for initiation of a rulemaking on 
procedural changes intended to foster expedition, flexibility and 
innovation in seven aspects of ratemaking and classification. Proposed 
rules accompanied the petition. The changes are based in part on 
recommendations in a joint Postal Service/Postal Rate Commission task 
force report on improvements in the ratemaking process. The proposed 
rules generally provide for a lesser amount of initial supporting 
documentation in Postal Service requests for certain rate and 
classification changes and a specific, limited period for public 
comments and Commission review of those requests.

DATES: Comments must be submitted on or before July 5, 1995.

ADDRESSES: Comments and correspondence should be sent to Margaret 
Crenshaw, Secretary of the Commission, 1333 H Street NW, Suite 300, 
Washington, DC 20068-0001 (telephone: 202/789-6840).

FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, Legal Advisor, 
Postal Rate Commission, 1333 H Street NW, Suite 300, Washington, DC 
20268-0001 (telephone: 202/789-6820).

SUPPLEMENTARY INFORMATION: On April 13, 1995, the Postal Service filed 
with the Commission a petition for initiation of a rulemaking involving 
changes in, or additions to, procedural mechanisms for handling certain 
rate and classification matters. In support thereof, the petition 
asserts a keen interest on the part of postal management and the 
Governors in improving approaches to general rate changes. The petition 
also acknowledges the influence of certain recommendations of the Joint 
Task Force on Postal Ratemaking (June 1, 1992). The petition, the Joint 
Task Force's report, and other reports referred to in the Service's 
petition are on file in the Commission's Docket Room. A summary of the 
proposed changes, a number of additional related topics for 
consideration. The text of the rule changes proposed by the Postal 
Service may be obtained from the Secretary of the Commission upon 
request.

``Limited Scope'' Rate Cases

    Citing the Joint Task Force's acknowledgement that certain 
circumstances might call for limited adjustments to rates outside the 
context of an omnibus rate proceeding, the Postal Service proposes 
rules that would allow expedited, limited rate changes between rate 
cases. Petition at 7 (internal citation omitted). The Service says the 
rules are intended to permit extensive reliance on the most recent 
[[Page 22018]] general rate case, and to keep the inquiry narrowly 
focused on areas related to the limited nature of the change and the 
effects on revenues and costs. The rules would require the Commission 
to issue a recommended decision on requests that are not challenged 
within 60 days. If the request is challenged, a 90-day period for 
issuance of a Commission decision would apply. Ibid.

Rate Bands

    The Service indicates that its proposal for rate bands for 
competitive services adopts the Joint Task Force's framework of 
establishing a range within a general rate proceeding, but differs in 
several other respects. Id. at 8. For example, instead of a written 
notice procedure, the proposed rules create a mechanism in general rate 
cases for establishing a band of rates for competitive services based 
on a range of markups over attributable costs, and an aggregate 
institutional cost contribution for each product or service classified 
as competitive. The band and contribution thereby established would 
serve as the criteria for recommending rates in each general rate case 
and for changing rates within the bands between cases. Provisions in 
the Domestic Mail Classification Schedule (DMCS) would identify certain 
categories of mail as eligible to benefit from rate band flexibility. 
Between general rate cases, the Service would submit to the Commission 
a request for a recommended decision on whether to adjust prices within 
the pre-established bands. The Commission would be required to issue a 
decision within 30 days if the request is not challenged, and within 60 
days if challenged. The Service says it believes that a classification 
proceeding under existing rules would be adequate to create the 
necessary DMCS provision to implement the rate band mechanism.

Expedited Minor Classification Cases

    The Service also proposes rules that would allow expedited 
treatment for certain narrowly focused, limited classification changes, 
such as those affecting mailing requirements, eligibility standards, 
and categories of service with low aggregate costs and revenues. 
Initial filing requirements would be less demanding than those 
applicable to more complex classification cases, and findings from the 
last omnibus rate case would not be relitigated. The Commission would 
be required to issue a recommended decision within 60 days if the 
Service's request is not challenged, and within 90 days if it is 
challenged.

Market Tests

    The Postal Service asserts that its rules for market tests attempt 
to track elements of a procedure outlined in the Joint Task Force 
Report. Id. at 11. The proposed rules would allow consideration of 
proposals to obtain data from actual market testing of mail 
classification or rate changes. There would be limits on the scope, 
scale and duration of the test. Initially, only information available 
to support the experimental proposal and a description of the test and 
the plan for collecting the necessary additional data would need to be 
filed. Information obtained from the test could be considered in a 
later portion of the proceeding to determine whether the change should 
be made permanent. The scope of inquiry in the initial phase would be 
limited to issues of general legality, the design and necessity of the 
test, and the nature of any adverse effect on competitors or 
discrimination among mailers. The Commission would either recommend or 
not recommend the service as proposed, without modification. However, 
if the Commission made suggestions for modifications, the Service could 
incorporate those suggestions in a new request. The petition notes that 
the rules would embody a presumption in favor of innovation.
Provisional Services

    The Service also proposes a mechanism for implementing the Joint 
Task Force's concept of new services with provisional status. The 
proposed rules would allow fast-track consideration of proposals to 
introduce a new service. The type of service eligible for this 
treatment, in line with the Joint Task Force's recommendation, would be 
one which supplements existing rates and classifications without 
changing any of them. The service would be approved initially for only 
a limited period, and subsequent review would be expected. This 
provisional status would justify an expedited, more limited degree of 
review. Although the service could affect future overall revenue 
requirements, it would not be tied to the rates for any existing class 
or category. The scope of inquiry would be limited to whether the 
proposal would have a material adverse effect on revenue or costs, or 
pose unnecessary or unreasonable harm for competitors. Commission 
approval or disapproval would be required within 90 days. As with the 
market test rules, the Postal Service could incorporate Commission 
modifications in a new request. In the absence of a showing of adverse 
effect or unreasonable harm to competitors, the rules contemplate that 
the Commission would recommend the provisional service.

Multi-Year Test Periods for New Services

    The Service proposes rules authorizing the use of multi-year test 
periods for potential new services that are not expected to generate 
sufficient volumes and revenues to cover costs in their first year or 
two of existence, but which are expected to generate an appropriate 
contribution to institutional costs when they mature. Currently, the 
Commission recommends rates based on a comparison of costs and revenues 
over a one-year period soon after the implementation of a new service. 
The Service claims that the proposed rules would encourage innovation 
by examining costs and revenues for a new service over a multi-year 
period.

Negotiated Service Agreements

    The petition notes that the proposed rules contemplate 
authorization for the Service to negotiate agreements with mailers. The 
Service would agree to provide mail services not currently included 
within the DMCS, at rates attractive to the mailer and beneficial to 
the Postal Service. The petition indicates that implementation of this 
proposal would involve two steps. One is introducing DMCS language 
enabling the Service to provide service in the context of a Negotiated 
Service Agreement (NSA). The other is establishing procedural rules to 
govern the actions undertaken by the Commission to allow such 
agreements to be placed into effect. Under the proposed DMCS 
provisions, only mailers who meet specified standards and who are 
willing to submit mailings within closely defined parameters would be 
eligible to enter NSAs. The negotiated rate must contribute a 
reasonable amount towards the recovery of institutional costs, with a 
minimum markup level identified as presumptively reasonable. Similarly 
situated mailers would be able to apply to receive the same service at 
the same rate. In addition to providing the text of the NSA, the 
Service would be required to demonstrate that the NSA would be 
beneficial to the Postal Service. The Commission would either approve 
or reject the tentative NSA as submitted. Furthermore, when the 
effective markup equals or exceeds the percentage amount previously 
specified as reasonable in the DMCS, the Commission could avoid further 
debate as to whether that markup is [[Page 22019]] appropriate. The 
Commission would be required to issue a recommendation within 60 days.

Request for Comments

    The Commission invites interested parties to submit their views on 
the subject matters addressed in the Service's petition, and on its 
substantive and procedural proposals. In particular, the Commission 
invites comments on the following topics.
    1. The Service's petition acknowledges the influence of the Joint 
Task Force's recommendations on the development of its proposals. Does 
that report offer other recommendations not included in the Service's 
petition that warrant consideration?
    2. The petition states, without further elaboration, that existing 
Commission and judicial precedent create impediments to accommodating 
many promising ideas for carrying out the Joint Task Force's 
recommendations. Id. at 4. The Postal Service is requested to specify 
to what judicial precedents the petition refers, and how the proposed 
rules accommodate these precedents.
    3. Any commenter which considers one or more of these proposals to 
violate current law as judicially interpreted is requested to explain 
why that proposal might be considered unlawful. Comments addressing 
whether the proposals are consistent with the Administrative Procedure 
Act, 5 U.S.C. 556, 557, are requested to specify adequate time periods 
for various procedural steps.
    4. The petition indicates that the proposed rules for market tests 
and provisional services include certain presumptions that would apply 
in evaluating Postal Service proposals. Id. at 11 and 13. Is inclusion 
of these presumptions an appropriate approach to Commission review of 
Service requests? Should these presumptions be specified in the rules?
    5. The petition indicates that the Service and Governors believe 
that improvements in the ratemaking process may require direct 
legislative change or an explicit clarification that flexibilities 
already exist in the current law. Moreover, the petition states that 
certain fundamental changes in the law seem advisable in any event, 
particularly in basic structural matters and in substantive areas that 
have been the most controversial in the past. Petition at 3-4. The 
Postal Service is requested to explain what legislative changes it 
believes would be needed to foster further expedition and flexibility 
if the Commission were to adopt the proposed rules.
    6. The petition acknowledges the Commission's workload, but 
nonetheless urges that a rulemaking docket be opened to consider the 
proposed changes. Petition at 5-6. Should the Commission consider all 
seven of these proposed changes at this time, or should part or all of 
the rulemaking be postponed? If some, but not all, of the proposals are 
considered at this time, which ones should be reviewed first, and which 
should be deferred? Why?

    Issued by the Commission on April 24, 1995.
Cyril J. Pittack,
Acting Secretary.
[FR Doc. 95-10944 Filed 5-3-95; 8:45 am]
BILLING CODE 7710-FW-P