[Federal Register Volume 62, Number 113 (Thursday, June 12, 1997)]
[Notices]
[Pages 32125-32128]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-15382]


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POSTAL RATE COMMISSION

[Docket No. MC97-3]


Bound Printed Matter Weight Limitations; Notice and Order 
Initiating Proceedings to Consider Changes in Domestic Mail 
Classification Schedule Provisions Governing Bound Printed Matter and 
Directing Parties to Initiate Informal Procedures

Issued June 5, 1997.
Before Commissioners:
    Edward J. Gleiman, Chairman;
    H. Edward Quick, Jr., Vice Chairman;
    George W. Haley; W.H. ``Trey'' LeBlanc III

    In Order No. 1175, the Commission gave notice of the Postal 
Service's withdrawal of its Request for various reforms in the 
classification of parcels, and granted the Service's motion to close 
the docket which had been established to consider that Request. Docket 
No. MC97-2, notice of withdrawal of Request by United States Postal 
Service and Order Granting Motion to Close Docket, May 9, 1997. The 
Order also noted the filing of a Joint Motion 1 asking the 
Commission to

[[Page 32126]]

exercise its authority under 39 U.S.C. Sec. 3623(b) by initiating a 
proceeding, sua sponte, to consider whether the maximum weight 
limitation applicable to the bound printed matter subclass should be 
increased from 10 pounds to 15 pounds, as the Postal Service proposed 
in its Request. Id. at 2, n. 2. In view of the nature of the relief 
requested in the Joint Motion, the Commission decided to consider it 
independently, rather than ruling upon it as a pending motion in Docket 
No. MC97-2. Ibid.
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    \1\ Joint Motion of Advertising Mail Marketing Association, 
Association of American Publishers and the Direct Marketing 
Association for Bound Printed Matter (Joint Motion), April 23, 1997.
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    In a response filed on May 8, 1997,2 the United States 
Postal Service opposed the joint movants' request. No other party has 
submitted a response to the Joint Motion.
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    \2\ The Postal Service's untimely Response was accompanied by a 
Motion for Late Acceptance. On May 21, the joint movants filed a 
Reply to the Postal Service's Response, together with a request for 
acceptance of the reply pleading. In light of the further 
elucidation of issues provided by these pleadings, and of the 
parties' mutual opportunities to respond, both motions shall be 
granted.
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    For the reasons presented herein, the Commission has decided to 
initiate proceedings for the sole purpose of considering a possible 
modification in the Domestic Mail Classification Schedule provision 
limiting eligibility for mailing within the Bound Printed Matter 
subclass to ``Standard Mail weighing * * * not more than 10 pounds[.]'' 
DMCS Sec. 322.31, 39 C.F.R. Sec. 3001.322.31. While this proceeding is 
subject to the requirements of 39 U.S.C. Sec. 3624(a), rather than 
establishing a formal procedural schedule in the docket at this time, 
the Commission shall direct interested parties to participate in 
informal conferences with a view to the potential settlement of the 
matter.

I. Bases of Joint Movants' Request for Proceedings

    The movants note that the Postal Service's Request in Docket No. 
MC97-2 contained a proposal to increase the maximum allowable weight of 
a piece that otherwise meets the conditions of eligibility for mailing 
at the Bound Printed Matter (BPM) rates from 10 to 15 pounds. They 
further observe that this revision was the only change proposed by the 
Service in the conditions of eligibility for BPM rates, and that no 
change was proposed in the structure of those rates. Thus, under the 
Service's proposal, otherwise eligible pieces between 10 and 15 pounds 
would pay pre-existing BPM per-piece and per-pound rates according to 
their actual weight. Joint Motion at 1-2.
    Notwithstanding the Postal Service's withdrawal of its Request in 
MC97-2, the joint movants argue that the Commission is authorized to 
consider the limited BPM proposal on its own initiative, and should do 
so at this time. They characterize the proposal as a ``pure'' 
classification matter, as ``it would simply extend existing rates to 
mail matter made eligible for BPM as a result in the increase in the 
maximum rate limitation.'' Id. at 3. Because the proposal does not 
raise the ``thorny question'' of the Commission's authority to 
recommend a new rate in the absence of a Postal Service rate request, 
movants claim that the Commission's statutory power to establish a 
classification proceeding to consider the change is beyond dispute. Id. 
at 2-3.
    Movants argue that the Commission should exercise its statutory 
authority and discretion to institute a classification proceeding at 
this time for three reasons. First, they claim that the proposed change 
warrants serious consideration because there is at least a prima facie 
question whether the current 10 pound limitation serves basic postal 
policy purposes any longer, and a change in the maximum to 15 pounds 
would be lawful on its face and responsive to the applicable policy 
considerations. To support this point, movants represent that some 
mailers, including book publishers, currently split their shipments in 
order to meet the 10-pound weight limitation. This practice purportedly 
increases costs to the mailer, and ultimately to its customers, while 
decreasing Postal Service operational efficiencies. Id. at 4.
    Second, movants claim that failure to initiate the requested 
proceeding will harm those mailers who stand to benefit from a 
relaxation of the current maximum weight limitation, as well as their 
customers. Movants observe that the Postal Service's notice withdrawing 
its Request in MC97-2 did not state when an omnibus rate case might be 
filed, but they anticipate that there will be an interval of at least 
two years between the filing of the original Request and possible 
implementation of a higher BPM weight limit recommended in the next 
general rate case. Absent some countervailing consideration, movants 
argue that there is no reason to deprive mailers of the potential 
benefits of the classification change when there is an opportunity to 
implement it more quickly. Id. at 4-5.
    Finally, the joint movants argue that instituting a proceeding at 
this time would not overburden the resources of either the Postal 
Service or the Commission, and would be consistent with administrative 
efficiency. In the context of the instant proposal, they argue, the 
Postal Service's resources are not likely to be taxed because it has 
already done the surveys and prepared the testimony necessary for its 
support in Docket No. MC97-2. Id. at 5-6. They also claim that 
consideration of the proposed increase in the maximum weight limit for 
BPM would not be likely to require protracted proceedings because the 
proposed change would not produce significant impact upon Postal 
Service costs or revenues, or upon other users of Bound Printed Matter 
or other mail categories. Joint movants state a belief that a 
negotiated settlement in the proceeding is ``distinctly possible.'' Id. 
at 6. Even if the matter cannot be resolved by a settlement among the 
parties, they anticipate that conduct of the proceeding should not 
require more than 90 days. Id. at 6. Expeditious resolution of this 
issue would represent an efficient use of Commission and Postal Service 
resources, movants argue, because it would narrow the scope of the next 
general rate proceeding and remove uncertainty as to how potential 
pieces of BPM between 10 and 15 pounds should be treated for purposes 
of forecasting volumes, costs and revenues. Id. at 6-7.

II. Postal Service Response and Joint Movants' Rejoinder

    In its Response of May 8, the Postal Service opposes institution of 
a proceeding to consider the requested BPM classification change at 
this time. The Service states that the proposal to increase the BPM 
weight limit was ``part and parcel'' of the initiatives which were 
withdrawn in Docket No. MC97-2, but that there is no reason to doubt 
that it will be included in the next omnibus rate case. Response at 1. 
Under these circumstances, and in light of the other work it is 
currently undertaking, the Service states that it is unwilling to 
refile the materials it submitted in support of the proposal and to 
provide a witness to sponsor those materials. Ibid.
    The Service also disputes joint movants' position that the proposed 
change in the BPM weight limit is a ``pure'' classification change that 
the Commission can initiate sua sponte. According to the Service, the 
proposal raises ``clear rate and revenue issues'' that would be better 
considered as part of a more comprehensive proposal that would 
accommodate all potential rate and revenue effects. Id. at 1-2. The 
Service suggests that the next general rate case, ``or, if it is not 
imminent, another parcel case'' would be the appropriate setting in 
which to consider the proposed BPM change. Id. at 2.

[[Page 32127]]

    The joint movants responded to the Service's arguments in a Reply 
filed on May 21. First, they argue that the Service's declared 
disinclination to refile supporting evidence or to sponsor a witness is 
irrelevant to the Commission's statutory authority to initiate 
classification proceedings pursuant to Sec. 3623(b), which ``does not 
accord the Postal Service veto power over such Commission initiatives 
by holding the Commission captive to the Postal Service's willingness 
to supply testimony and witnesses in such proceedings.'' Reply at 2. 
Should a witness appear to be required to advance the proposal in the 
Commission's proceeding, joint movants represent that ``AMMA, AAP, and 
The DMA would almost certainly be in a position to provide such a 
witness.'' Ibid.
    The joint movants also deny that the rate and revenue issues cited 
in the Postal Service's Response pose any obstacle to initiating the 
requested proceeding. Inasmuch as the requested classification change 
entails no change in BPM rates--just as the Service's proposal in MC97-
2 did not--joint movants argue that no substantial rate issues are 
posed by the proposal. Citing the pre-filed direct testimony of a 
Postal Service witness in MC97-2, they also challenge the existence of 
any ``knotty revenue issues'' in connection with the proposed BPM 
classification change. Thus, they argue, the Postal Service has not 
advanced any meritorious basis for declining to go forward with the 
requested proceeding. Ibid.

III. Considerations Leading to Initiation of Proceedings

    Upon consideration of the arguments presented by joint movants and 
the Postal Service, the Commission concludes that the topic of Bound 
Printed Matter weight limitations is a mail classification matter which 
the Commission is authorized to consider in a proceeding commenced on 
it own initiative. Moreover, in view of the factors cited by joint 
movants, the Commission has determined to initiate such a proceeding 
for the prompt consideration of potentially appropriate changes in the 
current BPM weight limit.
    While implementation of a change in the current weight limit 
admittedly may have some associated revenue and cost effects, the 
Commission cannot agree with the Postal Service's argument that 
jurisdiction to initiate a proceeding on the Commission's own 
initiative is lacking because the proposal intrinsically raises revenue 
and other rate-related issues that would require a rate request from 
the Governors. As joint movants have noted, the proposal does not 
involve any change in existing Bound Printed Matter rates, and its 
implementation would not require any change whatsoever in current rate 
schedules. On the contrary, an adjustment in the current BPM weight 
limit to include heavier pieces would be a classic exercise of the 
Commission's authority to recommend changes in mail classification, 
which consists of `` `grouping' of mailing matter for the purpose of 
assigning it a specific rate or method of handling. Relevant factors 
include size, weight, content ease of handling, and identity of both 
posting party and recipient.'' National Retired Teachers Association v. 
U.S. Postal Service, 430 F.Supp. 141, 146-47 (D.D.C. 1977), aff'd, 593 
F.2d 1360 (D.C. Cir. 1979). (Emphasis added.)
    Similarly, the Commission sees no procedural or evidentiary 
impediments to going forward with a proceeding to consider the 
requested change at this time. The proposed increase in the maximum 
weight limit for BPM is a limited and self-contained change in existing 
mail classifications, as movants note. This being the case, there is no 
compelling need to await the filing of other parcel classification 
initiatives prior to considering the requested change. With regard to 
evidentiary requirements, the proposal's effects on Postal Service 
revenues and costs are issues to be considered, but it is reasonable to 
anticipate that evidence bearing on them will be forthcoming. While the 
Postal Service has stated its disinclination to re-submit evidence from 
its direct case in MC97-2, the joint movants have undertaken the 
evidentiary burden of advancing the proposal, as noted above, and the 
Postal Service will of course have the opportunity to provide evidence 
in response.
    On the other hand, there appear to be several affirmative reasons 
for going forward with the proceeding at this time. This particular 
proposal has already been considered by Postal Service management and 
approved for submission by the Governors in Docket No. MC97-2, and 
evidently was received with favor by a significant segment of Bound 
Printed Matter mailers. While the Postal Service's Request in MC97-2 is 
no longer before the Commission, these facts strongly suggest that the 
proposal merits consideration. Taken together with statements in the 
Postal Service's Response to the Joint Motion, they also suggest that 
the Commission ultimately will be called upon to make a recommendation 
regarding this proposal, if not in the proceeding requested by joint 
movants, then in a subsequent case in the foreseeable future. In 
addition, the joint movants apparently are sanguine about the prospects 
of settlement on this proposal in the proceeding they request now.
    Furthermore, consideration of the proposed change prior to the 
Postal Service's filing of an omnibus rate request, or initiation of 
another parcel classification reform docket, may serve to accelerate 
the removal of a restriction that, movants claim, induces mailer 
practices that are detrimental to the mailer, its customers, and 
arguably to the operational objectives of the Postal Service. 
Additionally, if the Commission determines that the proposal warrants 
recommendation, its adoption would constitute a modest first step in 
advancing classification reform of the parcel categories, and serve to 
simplify and facilitate the rest of the process.
    For these reasons, the Commission shall initiate special 
proceedings to consider potential changes in the portion of Domestic 
Mail Classification Schedule section 322.31 (39 CFR 3001.322.31) which 
restricts eligibility for mailing within the Bound Printed Matter 
subclass to ``Standard Mail weighing * * * not more than 10 pounds[.]'' 
As a mail classification proceeding, this docket is subject to the 
formal procedural requirements specified in 39 U.S.C. Sec. 3624(a). 
However, in light of the limited scope of the proceeding and the 
history of the BPM proposal in connection with Docket No. MC97-
2,3 the Commission shall direct interested parties to 
participate in informal conferences with a view to the potential 
settlement of the matter initially, rather than establishing a formal 
schedule in the docket at this time. The first such conference will be 
scheduled for July 9, at 10:00 a.m., in the Hearing Room of the 
Commission, 1333 H Street, N.W., Suite 300, Washington, D.C. Those 
attending this conference should designate a spokesperson to inform the 
Commission by July 23, 1997, of the progress made toward reaching a 
negotiated settlement. The Commission itself will not take an active 
role in these informal discussions.

    \3\ Because of the BPM proposal's presence in the Postal 
Service's Request in Docket No. MC97-2, the Commission will direct 
the Secretary to serve copies of this Notice and Order upon all 
parties of record in that proceeding.
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It is ordered:

    (1) The Joint Motion of Advertising Mail Marketing Association, 
Association of American Publishers and the Direct

[[Page 32128]]

Marketing Association for Bound Printed Matter, filed April 23, 1997, 
is granted.
    (2) The Motion of United States Postal Service for Late Acceptance 
of Response to Joint Motion of AMMA, AAP, and DMA, filed May 8, 1997, 
is granted.
    (3) The Joint Motion of Advertising Mail Marketing Association, 
Association of American Publishers and the Direct Marketing Association 
for Acceptance of Reply Pleading, filed May 21, 1997, is granted.
    (4) Notices of intervention in this proceeding shall be filed no 
later than June 30, 1997.
    (5) W. Gail Willette, Director of the Commission's Office of the 
Consumer Advocate, is designated to represent the general public in 
this proceeding.
    (6) An informal conference among the parties for the purpose of 
exploring the potential for a negotiated settlement in this proceeding 
will be held on July 9, 1997, at 10:00 a.m. in the Hearing Room of the 
Commission.
    (7) The Secretary shall cause this Notice and Order to be served 
upon each party of record in Docket No. MC97-2, and to be published in 
the Federal Register.

    By the Commission.
Margaret P. Crenshaw,
Secretary.
[FR Doc. 97-15382 Filed 6-11-97; 8:45 am]
BILLING CODE 7710-FW-P