[Federal Register Volume 67, Number 18 (Monday, January 28, 2002)]
[Notices]
[Pages 3918-3921]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-1413]


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POSTAL RATE COMMISSION

[Order No. 1320; Docket No. C2001-3]


First-Class Mail Service Standards

AGENCY: Postal Rate Commission.

ACTION: Notice and order concerning complaint.

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SUMMARY: The Commission has initiated a case to consider a complaint 
concerning the consistency of certain recent changes in First-Class 
Mail service standards with controlling statutory provisions. This will 
allow pertinent allegations to be reviewed. Rates are not affected. 
Notice of this action has also been mailed to persons on the 
Commission's mailing list and has been posted on the Commission's Web 
site.

DATES: See Supplementary Information section.

ADDRESSES: Send correspondence regarding this document to the attention 
of Steven W. Williams, secretary, 1333 H Street NW., suite 300, 
Washington, DC 20268-0001.

FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, general counsel, 
202-789-6820.

SUPPLEMENTARY INFORMATION:

I. Introduction

    This order addresses Douglas F. Carlson's formal request for 
institution of a service complaint proceeding, under 39 U.S.C. 3662, to 
address certain recent changes in First-Class Mail service 
standards.\1\ The referenced changes, implemented in 2000 and 2001, 
affect two- and three-day service standards for delivery of First-Class 
Mail.
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    \1\ Douglas F. Carlson Complaint on First-Class Mail service 
standards, June 15, 2001 (Carlson complaint). The complaint includes 
an appendix, and was accompanied by two library references. DFC-LR-1 
consists of correspondence with the Postal Service under the Freedom 
of Information Act (FOIA). DFC-LR-2 consists of service commitment 
diskettes and a service standards CD-ROM. Douglas F. Carlson notice 
of filing of library references, June 15, 2001. This order does not 
address FOIA issues.
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Scope and Extent of Changes

    Carlson asserts that these changes entail a net decrease in the 
volume of First-Class Mail subject to a two-day service standard, and a 
net increase in the volume of First-Class Mail subject to a three-day 
standard. Carlson Complaint at 11. Carlson also says the changes affect 
over 76,440 origin-destination three-digit ZIP Code pairs in all postal 
areas, and all states except Alaska and Hawaii. Id. at 2-3, 11. He 
asserts:

    The changes in First-Class Mail standards result in a net 
increase of approximately 22,250 origin-destination three-digit ZIP 
Code pairs for which the service standards is two days. However, the 
net volume of First-Class Mail subject to a two-day delivery 
standard instead of a three-day delivery standard has decreased by 
approximately 1.5 billion pieces per year. Moreover, the changes in 
First-Class Mail service standards have shifted over 3.4 billion 
pieces of mail per year from a two-day delivery standard to a three-
day delivery standard.

Id. at 11, paragraph 53 (emphasis in original).
    Rationale for seeking to explore recent changes in a service 
complaint.

    In brief, Mr. Carlson's theory is that the Service should have 
requested an advisory opinion from the Commission,

[[Page 3919]]

pursuant to 39 U.S.C. 3661(b), within a reasonable time prior to making 
the 2000-2001 changes, as these materially changed, departed from or 
abandoned the standards proposed by the Service in docket no. N89-1, 
and did so on a nationwide basis within the meaning of the Postal 
Reorganization Act. Although the Service did not request such an 
opinion, Carlson contends that the Commission nevertheless has 
jurisdiction to address the changes in the alternative setting of a 
service complaint proceeding--and should do so--as 39 U.S.C. 3662 
provides: ``Interested parties * * * who believe they are not receiving 
postal service in accordance with the policies of this title may lodge 
a complaint with the Postal Rate Commission * * *.''

Policies in Issue

    The policies allegedly implicated by the Service's actions, and 
cited in Mr. Carlson's original complaint, include 39 U.S.C. 3361(a), 
which requires the Service to provide ``adequate postal services'' and 
39 U.S.C. 403(c), which proscribes undue and unreasonable 
discrimination among users of the mail. A proposed amendment to the 
complaint also alleges that the service standard changes violate 39 
U.S.C. 101(e) and (f).\2\ Douglas F. Carlson motion for leave to amend 
complaint, August 14, 2001 (Carlson motion to amend complaint).
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    \2\ Section 101(e) provides that the Service shall give the 
highest consideration to the requirement for the most expeditious 
collection, transportation, and delivery of important letter mail. 
Section 101(f) provides that in selecting modes of transportation, 
the Service shall give highest consideration to the prompt and 
economical delivery of all mail and shall make a fair and equitable 
distribution of mail business to carriers providing similar modes of 
transportation services.
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    Structure of the complaint and initial Commission action. Upon 
filing, Mr. Carlson's complaint was designated as docket no. C2001-3 
for administrative purposes, pending a decision on whether to proceed 
on the merits. Pursuant to Commission rules, the secretary of the 
Commission transmitted the complaint the Postal Service.
    In conformance with Commission rules, Carlson's complaint provides 
formal identification of the complainant and his mailing address (in 
paragraph 1); addresses Commission jurisdiction (paragraphs 2-8); and 
summarizes the complaint (paragraphs 9-21). It also describes why 
First-Class Mail service is inadequate under the recent changes 
(paragraphs 22-32); reviews criteria for two-day service standards 
(paragraphs 22-40); addresses undue and unreasonable discrimination 
(paragraphs 41-43); and notes the purported lack of public input 
(paragraphs 33-48). The complaint discusses the scope of changes in 
service standards (paragraphs 49-61, noting appendix 1's printouts of 
maps from the service commitment program and service standards 
program.) It also describes the class of persons affected (paragraphs 
62-64) and identifies the relief that is sought (paragraph 65). 
Paragraph 66 (to be filed) supplements the postal policies identified 
in the original compliant by adding 39 U.S.C. 101(e) and (f).

Requested Relief

    The relief Carlson seeks (in paragraph 65) includes a specific 
request that the Commission issue a public report documenting the 
following four matters: the inadequate First-Class Mail service that 
many customers are now receiving; the undue and unreasonable 
discrimination some mailers located in California and other western 
states are suffering; the change in, departure from, or abandonment of 
criteria the Service announced in docket no. N89-1 and the 2001 ZIP 
Code directory for two-day service standards for First-Class Mail; and 
the Service's failure to seek an advisory opinion before the effective 
date of those changes.

Other Pleadings

    The Service has filed a paragraph-by-paragraph answer to the 
complaint (along with a general denial), a motion to dismiss, and a 
declaration prepared by Postal Service employee Charles Gannon.\3\ See 
order no. 1318, issued July 13, 2001. Mr. Carlson and the Commission's 
office of the consumer advocate (OCA) have each filed answers opposing 
the Service's motion to dismiss.\4\ In addition, the Service has filed 
a reply to both of these answers, and Mr. Carlson has filed a response 
to this reply.\5\
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    \3\ Answer of the United States Postal Service [to Carlson's 
docket no. C2001-3 complaint on First-Class Mail service standards], 
July 13, 2001 (Postal Service answer); Motion of the United States 
Postal Service to dismiss complaint, July 30, 2001 (motion to 
dismiss) and declaration of Charles M. Gannon, July 30, 2001 (Gannon 
declaration).
    \4\ Douglas F. Carlson answer in opposition to Postal Service 
motion to dismiss, August 11, 2001 (Carlson answer to motion to 
dismiss); answer of the office of the consumer advocate to United 
States Postal Service motion to dismiss complaint, August 14, 2001 
(OCA answer to motion to dismiss).
    \5\ Motion of the United States Postal Service for leave to 
reply to answers in opposition to Postal Service motion to dismiss 
(August 21, 2001) and reply of the United States Postal Service to 
the answers of the office of the consumer advocate and the 
complainant in opposition to the motion to dismiss (August 21, 
2001). Douglas F. Carlson response to reply of the United States 
Postal Service to the answers of the office of the consumer advocate 
and the complainant in opposition to the motion to dismiss (August 
29, 2001); see also Douglas F. Carlson response to reply of the 
United States Postal Service to the answers of the consumer office 
of the advocate and the complainant in opposition to the motion to 
dismiss--erratum (August 25, 2001). The erratum notes two errors, 
neither of which affect the substance of the reply. A previous 
Commission order (no. 1318, issued July 13, 2001) granted the Postal 
Service's unopposed motion for an extension of time (from July 19, 
2001) to file this motion and the referenced declaration.
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    The instant complaint and related filings draw extensively on 
docket no. N89-1, change in service 1989, First-Class delivery 
standards realignment. In that docket, the Service proposed a phased 
realignment of First-Class Mail delivery, or service standards. The 
Gannon declaration provides a useful review of key aspects of that 
proposal, and of developments since issuance of the Commission's 
advisory opinion.\6\
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    \6\ The Commission's docket no. N89-1 opinion advised against 
implementation of the service standard changes proposed at that 
time. PRC Op. N89-1 at 2.
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II. Status of Key Allegations

    A review of the pleadings at this stage of the case indicates that 
several allegations related to the timing, scope, and effect of the 
underlying changes are undisputed. Specifically, the complainant and 
the Postal Service appear to be in agreement that the complained-of 
changes were implemented by the Postal Service in 2000 and 2001; affect 
more than 76,440 three-digit ZIP Code origin-destination pairs; and 
have the volume impact cited by the complainant. Postal Service answer 
at 2-3, and 11-15.
    However, the pleadings have not resolved other important 
allegations and legal questions. For example, as framed by the Postal 
Service, a threshold question is the context in which the changes 
occurred. Carlson's view is that the 2000-2001 changes were necessarily 
so different and so attentuated in time from the docket no. N89-1 
delivery realignment plan that they required a new advisory opinion 
prior to implementation. In contrast, the Service contends that the 
changes were simply the long-delayed, but nevertheless related, 
implementation of ``phase II'' of the earlier proposal, and cites the 
Gannon declaration for support. Postal Service motion to dismiss at 4-
5. In effect, the Service argues that the changes are part of a 
continuum that required no new advisory opinion.
    Other legal questions center on whether the impact is nationwide 
within the meaning of the Postal Reorganization Act; whether the 
criteria and/or resulting service are unduly discriminatory and 
inadequate or implicate other statutory policies; whether the 
Commission should

[[Page 3920]]

exercise its jurisdiction to hear a complaint that entails alleged 
failure to comply with 39 U.S.C. 3661; and whether the Commission has 
the authority to grant relief on all of the requested terms.

III. Positions on the Service's Motion To Dismiss

Carlson's Answer

    Mr. Carlson's answer to the Service's motion to dismiss cites four 
grounds justifying exercise of the Commission's jurisdiction. These 
include reiteration of the argument that the Service should have sought 
an advisory opinion prior to implementing the changes, given the 
nationwide scope of the 2000-2001 changes and the assertion that new 
standards depart from the original criteria. They also include claims 
that resulting First-Class Mail service is not adequate within the 
meaning of 39 U.S.C. 3661(a) for some customers, and that the standards 
unduly and unreasonably discriminate among users of the mail, contrary 
to 39 U.S.C. 403(c). Carlson answer at 2-3.
    The OCA's answer. The OCA contends that the pleadings raise 
sufficient issues of law and fact to warrant the Commission's denial of 
the motion to dismiss. It proposes that the Commission establish 
``further procedures to allow participants to undertake a more detailed 
inquiry into the facts alleged in order to create a full record for the 
Commission to reach a reasoned decision as to the appropriate 
disposition of the complaint.'' OCA Answer at 2. In particular, the OCA 
suggests that the Commission should order the Postal Service to provide 
the results of ``relevant and appropriate investigations of the cost 
consequences of changes in delivery standards'' undertaken by the 
Postal Service in relation to the service standard changes in issue. It 
notes that the Commission previously recommended that the Service 
undertake such studies before implementing nationwide service 
standards. Id. at 2-3.

IV. Action on Proposed Amendment to Compliant

    Carlson proposes an amendment to his complaint, based on his review 
of the Gannon declaration. He alleges that this ``reveals that the 
Postal Service has changed the definition of two-day First-Class mail 
to exclude the use of air transportation for most or all mail for which 
a two-day delivery standard applies.'' Carlson motion to amend 
compliant at 1, citing paragraph 18 of the Gannon declaration. Carlson 
says he thus has formed a reasonable belief that the new definition of 
the two-day First-Class Mail delivery area is consistent with 39 U.S.C. 
101(e) and (f). Id. at 1-2.
    The Commission finds that the proposed amendment of the complaint 
is consistent with the general framework of the original compliant; 
reflects information that is apparently newly-available to Mr. Carlson; 
and may foster efficiency in the review and administration of the 
complainant's concerns. Accordingly, the motion to amend is granted. 
The Commission directs Mr. Carlson to file a revised page 16 showing an 
additional paragraph (No. 66) containing this allegation, pursuant to 
the complainant's offer. The remaining discussion assumes this 
amendment.

V. Discussion

    Further action on the instant complaint requires several 
preliminary decisions. One is a determination of whether Mr. Carlson 
has made a prima facie showing that his complaint has statutory merit. 
In terms of what has emerged as the threshold question--the context of 
the charges--the Commission must conclude that the decade-plus ``gap'' 
in implementation of the recent standards raises the possibility that 
the changes in issue may have legally fallen within the scope of 39 
U.S.C. 3661(b). The Gannon declaration stands as an informative and 
impressive narration of decisions and events that have transpired since 
docket no. N89-1, but is not persuasive on the main point the Service 
presses here, which is that the changes can reasonably be considered, 
for purposes of the statute, as a continuum of the original plan. 
Instead, despite characterization of changes as ``phase II,'' the 
Gannon declaration chronicles near-abandonment of the realignment at 
various times over the ensuing years. Thus, while front-line postal 
managers may have made a good-faith attempt to stay focused on the 
original plan, it is reasonable that Carlson (and others) may regard 
the ``gap'' as a break.
    There is, as the Service notes, no explicit time limit in the 
statute for completion of changes subject to 39 U.S.C. 3661; however, 
reading out a ``rule of reasonableness'' effectively would nullify the 
provision, as one broad service change request could then arguably be 
deemed to operate essentially in perpetuity. It is unlikely the authors 
of this provision would have intended this result. A common-sense 
interpretation requires acknowledgement that passage of time, in some 
instances, may require the Service to request a new advisory opinion. 
Where, as here, time has not simply passed, but has passed with several 
changes of postmasters general, several changes in Governors, several 
reorganizations, and numerous changes in operations, technology--and 
possibly public need--the case is even stronger. Accordingly, the 
Commission finds that Mr. Carlson has made a prima facie showing on 
this threshold question.
    On certain other critical policy issues, such as whether the 
resulting postal service is adequate, whether there is undue or 
unreasonable discrimination, and whether the highest consideration has 
been given to certain considerations pertaining to delivery of First-
Class Mail, no final answer can be discerned at this time. Indeed, 
these are points on which Mr. Carlson may need to provide more specific 
evidence, such as mail users' need for certain service standards. 
However, it again appears that the complainant has made a prima facie 
showing that the alleged policy violations have occurred as a result of 
the recent changes.

Related Jurisdictional Issues

    The provisions in question here--39 U.S.C. 361 and 3662--are not 
mutually exclusive, so there is no automatic bar to Mr. Carlson's 
interest in pursuing certain service concerns under the service 
complaint proceedings. At the same time, the latter are not 
automatically available to remedy any perceived failure to seek an 
advisory opinion. Instead, exercise of complaint jurisdiction is 
discretionary, and the Commission must consider whether it is 
appropriate to proceed.
    In addition to the conclusion above regarding the prima facie 
showing Mr. Carlson has made, the Commission has considered that public 
input is a hallmark of 39 U.S.C. 3661. Although the Gannon declaration 
indicates postal administrators apparently have been well-intentioned 
in implementing the changes, there is little, if any, indication of 
whether there was any direct public input. Instead, these changes, as 
Mr. Gannon notes, entailed many internal logistical decisions, 
including adoption of a maximum 12-hour drive time range to determine 
2-day service destinations in place of the previous standard of a 600-
mile radius. Gannon declaration at 9-10. As Mr. Gannon notes, the 
process of determining the changes to make in the ``phase 2 
finalization'' also differed from that contemplated in docket no. N89-
1: the organization management structure had changed significantly; a 
service standard mapping program had been developed (thereby allowing 
more centralization in deciding what changes to consider in 
implementing the new

[[Page 3921]]

``drive time'' standard); and a preference for surface transportation 
had emerged in the face of less dependable air transportation for 2-day 
mail. Id. at 10-13.
    Mr. Gannon acknowledges that as a result, ``more western and 
Pacific area origin-destination First Class Mail shifted from 2-day to 
3-day service, than occurred throughout the remainder of the country'' 
and that within certain states (California, Nevada, Texas, Wyoming and 
Alaska) there are home state pairs that have a 3-day standard. Id. at 
13. Moreover, in response to Mr. Carlson's comments about a certain 
non-reciprocal origin-destination pair, Mr. Gannon suggests: ``If we 
had included overnight standards as part of our recent adjustments, the 
originating service standards would, very likely, have ended up as 
being 3-days in both directions between Ashland, Oregon and Yreka, 
California, based on our processing network design.'' Id. at 15. 
Overall, the net effect of the Service's actions involve 48 states; 
affect service standards for more than 76,440 origin-destination three-
digit ZIP Code pairs in all postal areas; and shift more than 3.4 
billion pieces of mail annually to a three-day service standard from a 
two-day standard. Postal Service answer at 15-16.

Relief

    The statute provides for a public hearing and if the complaint is 
found justified, for the Commission to issue a recommended decision or 
public report, as appropriate. Carlson seeks these remedies, as well as 
a change in service standards. In addition, the OCA suggests that cost 
data and information should be provided. It is reasonable to assume 
that if warranted, at least some of the relief Mr. Carlson has 
requested can be provided. This clearly constitutes a major, national 
service change. The issue of whether First-Class service continues to 
meet the policies established in the Act is important, and the 
Commission will hold hearings on this complaint.

Further Action

    Information procedures do not appear likely to resolve these 
issues. The Commission hereby denies the Postal Service motion to 
dismiss and institutes a formal docket. The Commission therefore 
directs Mr. Carlson to provide, no later than September 24, 2001, an 
estimate of the amount of time he anticipates needing for discovery, 
the earliest date by which he could present evidence, and 
identification of any other procedural requests. Responses to Mr. 
Carlson's filing will be due on October 1, 2001. Ted P. Gerarden, the 
director of the Commission's office of the consumer advocate, is 
directed to represent the interests of the public in any further 
proceedings in this case. Others who believe they may be affected by 
this proceeding are invited to intervene. Notices of intervention shall 
be filed with the Commission no later than October 1, 2001. It is 
ordered:
    1. The Douglas F. Carlson motion for leave to amend complaint, 
August 11, 2001, is granted.
    2. The motion of the United States Postal Service for leave to 
reply to answers in opposition to Postal Service motion to dismiss, 
August 21, 2001, is granted.
    3. The motion of the United States Postal Service to dismiss 
complaint, July 30, 2001, is denied.
    4. The Commission institutes a formal service complaint proceeding 
to address the allegations raised in the captioned proceeding.
    5. Complainant is directed to inform the Commission, no later than 
September 24, 2001, of the amount of time he believes is necessary to 
prepare his case.
    6. Responses to Mr. Carlson's filing are due October 1, 2001.
    7. Ted P. Gerarden, director of the Commission's office of the 
consumer advocate, is appointed to represent the interests of the 
general public.
    8. Interested persons shall intervene no later than October 1, 
2001.
    9. The Secretary is directed to arrange for publication of this 
order in the Federal Register.

    By the Commission.

    Dated: September 12, 2001.
Steven W. Williams.
Acting Secretary.
[FR Doc. 02-1413 Filed 1-25-02; 8:45 am]
BILLING CODE 7710-FW-M