[Federal Register Volume 66, Number 52 (Friday, March 16, 2001)]
[Notices]
[Pages 15303-15304]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-6516]


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POSTAL RATE COMMISSION

[Docket No. R2000-1; Order No. 1305]


Notice and Order Concerning Request for Reconsideration of 
Commission's Docket No. R2000-1 Further Opinion and Recommended 
Decision

AGENCY: Postal Rate Commission.

ACTION: Notice and order on reconsideration of Commission's docket no. 
R2000-1 further opinion and recommended decision.

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SUMMARY: This document informs the public that the Governors of the 
Postal Service have requested reconsideration of the Commission's 
further opinion and recommended decision in docket no. R2000-1 as it 
relates to the Service's revenue requirement. It invites comments on 
several questions. It also sets deadlines for initial and reply 
comments.

DATES: Initial comments are due March 19, 2001. Reply comments are due 
March 26, 2001.

ADDRESSES: Send comments to the attention of Steven W. Williams, acting 
secretary, 1333 H Street NW., Suite 300, Washington, DC 20268-0001.

FOR MORE INFORMATION CONTACT: Stephen L. Sharfman, General Counsel, 
202-789-6820.

SUPPLEMENTARY INFORMATION:

A. Authority to Reconsider the Decision

    39 U.S.C. 3625(f).

B. Procedural History

    65 FR 79141, Dec. 18, 2000.

C. Background

    On November 13, 2000 the Commission issued its initial opinion and 
recommended decision in docket no. R2000-1. On December 5, 2000 the 
Governors of the United States Postal Service accepted that recommended 
decision under protest and returned it for reconsideration of certain 
specified issues. After obtaining an explanation from the Postal 
Service, comments from other participants, and reply comments from the 
Postal Service the Commission provided its opinion and further 
recommended decision addressing these issues on February 9, 2001.
    On March 6, 2001 the decision of the Governors of the United States 
Postal Service on the further recommended decision of the Postal Rate 
Commission on postal rate and fee changes, docket No. R2000-1 
(Governors decision) was transmitted to the Commission. The Governors 
decision rejects the Commission's opinion and further recommended 
decision and returns docket no. R2000-1 for reconsideration of the 
Postal Service's revenue requirement.
    The Governors believe that the revenue requirement is $69.8 
billion. They forthrightly urge the Commission either to recommend 
rates that would generate this amount of revenue, or to provide some 
other recommended decision ``with great expedition so that we can 
consider exercising our statutorily-limited modification option.''
    The Governors recognize that the Commission has previously found 
that the existing evidentiary record in docket no. R2000-1 does not 
support a $69.8

[[Page 15304]]

billion revenue requirement, however they specifically state that they 
do not ask the Commission to reopen the record and base its decision on 
new facts. Governors decision at 4. Instead, they say:

    Last month, the chief financial officer told us that the Postal 
Service stands to lose between $2 billion and $3 billion this fiscal 
year, which is the rate case test year. While we are not asking the 
Commission to recommend rates to eliminate this latest projected net 
loss, we are asking the Commission to recommend rates and fees that 
meet the updated cost estimates already developed on the record, 
including a 2.5 percent contingency provision. This would reduce the 
projected net loss.

Id. at 4.

D. Commission's Proposed Course of Action

    The Commission will again review the record evidence on the items 
identified by the Governors, and respond expeditiously to the 
Governors' request. The issues before the Commission have been 
sufficiently developed in the Governors decision so that the process 
can be shortened by foregoing an initial explanatory statement by the 
Postal Service. The Commission has identified three questions that 
directly relate to the issues before it. All participants, including 
the Postal Service are invited to provide comments on these questions 
as well as other issues before the Commission, and to reply to comments 
filed by other participants.
    The three questions are: (1) Can the Commission lawfully recommend 
higher rates as requested by the Governors; (2) should the Commission 
recommend higher rates as requested by the Governors; and (3) if the 
answer to the first two questions is yes, how should higher rates be 
developed?

Can the Commission Lawfully Recommend Higher Rates?

    The Governors now ask the Commission to recommend rates that will 
annually generate $69.8 billion. The initial rate request sought rates 
that would annually generate $69.0 billion. Are there any statutory or 
procedural impediments to a Commission recommendation of rates designed 
to produce the higher revenue amount?

Should the Commission Recommend Higher Rates?

    Although the Governors contend that further Commission action can 
be based on the evidentiary record developed before September 8, 2000, 
their request for reconsideration is obviously predicated on their 
access to information on current postal finances. See for example, ``we 
find ourselves, almost halfway into the test year, operating under 
rates inadequate to meet the Postal Service's revenue needs.'' 
Governors decision at 3. See also, ``the Postal Service stands to lose 
between $2 billion and $3 billion this fiscal year,'' id. at 4. The 
Governors state that a new rate case is now being prepared and that 
immediate additional rate increases will affect the amount of 
additional funds it will have to seek.
    Thus, the Governors present indirectly the question of whether the 
Service's financial health depends to some degree on an immediate 
infusion of additional rate revenues. This issue certainly may play a 
major role in any decision the Governors make on the Commission's next 
recommended decision. Whether, and how, the Commission's findings in 
the current proceeding can be influenced by such statements is less 
clear. See United Parcel Service versus U.S. Postal Service, 184 F3d 
827, 834-36 (D.C. Cir. 1999).
    With regard to whether rates should be increased, participants 
might express a preference for an immediate small increase, if that 
would reduce the size of the expected, substantial increase planned for 
next year. On the other hand, participant comments on issues raised in 
the earlier request for reconsideration indicated that small increases 
can be so disruptive to mailing practices as to be counter-productive. 
See Reply of the United States Postal Service to Comments of 
Participants in Response to the Postal Service's Memorandum on 
Reconsideration, January 19, 2001, at 35-38 and 40, and comment cited 
therein.

How Should Higher Rates Be Developed?

    The attribution methods applied in this case by the Commission are 
not in controversy on reconsideration. Thus, participants should be 
able to estimate the amount by which the attributable costs of any 
class of mail would increase if the Commission finds that the revenue 
requirement should include those additional items highlighted by the 
Governors.
    In the memorandum of the Postal Service on reconsideration and 
request for expedition, December 20, 2000, at 22-26, the Service 
expressed the general view that there is sufficient record evidence to 
allow the Commission to design rates that would provide all necessary 
revenues and be consistent with the policies of the [Postal 
Reorganization] Act as required by 39 U.S.C. 3622(b). Although it chose 
not to suggest any specific rates, it further advised the Commission 
that rate adjustments in Bound Printed Matter should not reduce 
workshare differentials. Id. at 31. Other participants may have 
suggestions of this nature.
    Because the issues presented by this request for further 
reconsideration have already been the subject of comments to the 
Commission, and in light of the Governors' request for maximum 
expedition, only ten days will be allowed for initial comments, and 
seven days will be allowed for replies.

Ordering Paragraphs

    Ordering paragraph No. 1 provides that participants' comments on 
the request for further reconsideration are to be filed on or before 
March 19, 2001. Ordering paragraph No. 2 provides that reply comments 
are to be filed on or before March 26, 2001. Ordering paragraph No. 3 
provides that the acting secretary shall arrange for publication of 
this order in the Federal Register.

    By the Commission.
Steven W. Williams,
Acting Secretary.
[FR Doc. 01-6516 Filed 3-15-01; 8:45 am]
BILLING CODE 7710-FW-P