[Federal Register Volume 67, Number 196 (Wednesday, October 9, 2002)]
[Notices]
[Pages 62993-62995]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-25668]


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POSTAL RATE COMMISSION

[Docket No. MC2002-3; Order No. 1347]


Experimental Mail Classification Case

AGENCY: Postal Rate Commission.

ACTION: Notice and order on new experimental docket.

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SUMMARY: This document establishes a docket for consideration of a 
proposed two-year experiment. The experiment entails two new discounts 
for certain co-palletized Periodicals mail that is dropshipped to 
designated destination entry facilities. This document briefly reviews 
the proposal, sets initial procedural dates, authorizes settlement 
discussions, and identifies other pertinent Commission actions.

DATES: 1. September 26, 2002: Postal Service's request filed with the 
Commission.
    2. October 2, 2002: issuance of Commission notice and order (no. 
1347).
    3. October 18, 2002: deadline for notices of intervention, response 
to motion for waiver, comments on appropriateness of experimental 
status and use of expedited procedures.
    4. October 22, 2002: settlement conference (10 a.m.).
    5. October 23, 2002: prehearing conference (2 p.m.).

ADDRESSES: Send correspondence to the attention of Steven W. Williams, 
Secretary, Postal Rate Commission, 1333 H Street NW., Suite 300, 
Washington, DC 20268-001.

FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel, 
202-789-6815.

SUPPLEMENTARY INFORMATION: On September 26, 2002, the United States 
Postal Service filed a request seeking a recommended decision from the 
Postal Rate Commission approving an experimental mail classification, 
along with two related discounts, for certain Outside County 
Periodicals mail that is co-palletized and dropshipped to specified 
destination facilities.\1\ Request of the United States Postal Service 
for a Recommended Decision on Experimental Periodicals Co-Palletization 
Dropship Discounts (request). The request, which includes six 
attachments, was filed pursuant to chapter 36 of the Postal 
Reorganization Act, 39 U.S.C. 3601 et seq.\2\
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    \1\ The request also includes a proposal to delete a reference 
to an outdated ``ride-along'' rate in DMCS section 443.1a. USPS-T-1 
at 1-2.
    \2\ Attachments A and B to the request contain proposed 
classification schedule provisions (or revisions to existing 
provisions); attachment C incorporates by reference the certified 
financial statement provided in docket no. MC2002-2; attachment D is 
the certification required by Commission rule 54(p); attachment E is 
an index of testimony and exhibits; and attachment F is a compliance 
statement addressing satisfaction of various filing requirements.
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    In contemporaneous filings, the Service asks for waiver of certain 
standard filing requirements (if the Commission deems such waiver is 
required), and seeks expedited consideration of its proposal, including 
establishment of procedures for settlement. The Service's request for 
expedition is in addition to that generally available under the 
Commission's experimental rules [39 CFR 3001.67-3001.67d]. United 
States Postal Service Request for Expedition and Establishment of 
Settlement Procedures (request for expedition), September 26, 2002; 
Motion of United States Postal Service for Waiver (motion for waiver), 
September 26, 2002. The Service's request, the accompanying testimony 
of witness Taufique (USPS-T-1), and other related material are 
available for inspection in the Commission's docket section during 
regular business hours. They also can be accessed electronically, via 
the Internet, on the Commission's Web site (http://www.prc.gov).

I. The Service Characterizes Its Proposal as a Limited Initiative With 
the Potential To Improve Operational Efficiency and Control Costs

    The Postal Service proposes conducting a two-year experiment

[[Page 62994]]

testing two discounts for qualifying Outside County Periodicals mail 
that is co-palletized and dropshipped to either an area distribution 
center (ADC) or a sectional center facility (SCF).\3\ The proposed ADC 
discount is 0.7 cent per piece; the proposed SCF discount is 1.0 cent 
per piece. USPS-T-1 at 10. Both discounts were developed using the cost 
base, advertising pound rates, and test year that underlie the 
Commission's Periodicals rate recommendations in docket no. R2001-1. 
Request at 2; USPS-T-1 at 10. The ADC discount reflects passthrough of 
95 percent of the underlying cost avoidance estimates; the SCF discount 
reflects 80 percent passthrough. USPS-T-1 at 13. The proposed discounts 
leave existing Periodicals classifications and rates otherwise 
unchanged. Request at 2.
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    \3\ The Service defines co-palletization as the practice of 
combining bundles of different publications going to the same 
destination ADC or SCF, on the same pallet. It defines co-mailing as 
the combination of different publications in the same bundles, with 
the bundles then combined on pallets. Request at 3.
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    In support of the experiment, the Service states that 70 percent of 
Periodicals mail is already prepared on pallets, but the remainder is 
not because it lacks the volume and/or density, as individual 
publications, to reach the requisite pallet minimum of 250 pounds. 
Since preparing co-pallets is typically more onerous than preparing 
single-publication pallets, the Service believes these discounts may 
encourage mailer participation in worksharing behavior that benefits 
both customers and the Postal Service. Id. at 1-2. In particular, it 
says the discounts are designed to provide an additional incentive for 
publishers, printers and consolidators to combine different 
publications or print runs on pallets, so that Periodicals mail can be 
prepared on pallets, rather than in sacks, and dropshipped to 
destination facilities. Id. at 1.
    The Service proposes extending the new discounts only to 
Periodicals mail that lacks the density to prepare single-publication 
pallets; however, both smaller circulation publications and smaller 
portions of larger circulation publications will be able to participate 
and receive the proposed discounts under applicable rules. Request at 2 
and 6. Qualifying co-palletized mail must be prepared either on ADC or 
SCF pallets of 250 or more pounds. To limit the scope of the experiment 
and simplify administration, mail that is co-palletized on 5-digit or 
3-digit pallets will not be eligible for the new discounts. USPS-T-1 at 
8.
    Experimental designation. The Service seeks consideration of its 
proposal under the Commission's experimental rules (rules 67-67d). In 
support of this approach, it notes that it currently lacks data about 
how much response there will be to a rate incentive for co-
palletization, but intends to gather more complete data during the 
proposed term of the experiment. It says this effort may support a 
request for a permanent classification. Id. at 3-4. The Service 
proposes that the experimental classification be in effect for two 
years, but also seeks approval of a provision that would allow for a 
brief extension if permanent classification authority is sought while 
the experiment is pending.
    The Service says the expedition allowed under the experimental 
rules is appropriate in light of the interest in controlling 
Periodicals costs as soon as possible. It also says flexibility is 
required because the detailed, conventional data necessary to support a 
request for a permanent classification are currently unavailable. Id. 
at 5. The Service says it believes that this proposal will be 
attractive to mailers, contribute to the long-term viability of the 
postal system, and further the general policies of efficient postal 
operations and reasonable rates and fees enunciated in the Postal 
Reorganization Act, including 39 U.S.C. 3622(b) and 3623(c). Id. at 4-
5.

II. The Service Seeks Waiver of Certain Filing Requirements, if Deemed 
Necessary

    The Service maintains that its filing satisfies applicable 
Commission filing requirements, but seeks waiver of pertinent 
provisions of rules 54, 64 and 67 to the extent the Commission 
concludes otherwise. In support of its primary position, the Service 
says its compliance statement (attachment F to the request) addresses 
each filing requirement and indicates which parts of the filing satisfy 
each rule. It also notes that it has incorporated by reference 
pertinent documentation from the recent omnibus rate case (docket no. 
R2001-1). Motion for waiver at 1. The Service contends, among other 
things, that the rate case documentation satisfies most filing 
requirements because the proposed discounts will not materially alter 
the rates, fees and classifications established in that docket, and 
therefore will have only a limited impact on overall postal costs, 
volumes and revenues. Id. at 1. It also asserts that there is 
substantial overlap between information sought in the general filing 
requirements and the materials provided in docket no. R2001-1. Id. at 
2.
    However, if the Commission concludes that the materials from the 
omnibus case are not sufficient to satisfy the requirements, the 
Service contends strict compliance is not warranted, and seeks waiver. 
It cites the reasons expressed in support of its general position on 
the adequacy of its filing; the nature of the proposed experiment; and 
the small impact on total costs and revenues and on the costs, volumes 
and revenues of mail categories. Id. at 5. Responses to the Service's 
motion for waiver are due by October 18, 2002.

III. The Service Seeks Expedition and Suggests Several Specific 
Procedures, Including Prompt Establishment of Settlement Procedures

    In support of expedition, the Service asserts that the proposed 
change is straightforward; limited in scope and duration; and 
insignificant in terms of its effect on overall volumes, revenues and 
costs. It also states that the proposal is a candidate for settlement, 
given widespread support for it within the Periodicals industry, and 
the lack of adverse effect on competitors or other mailers. Request for 
expedition at 1-2.
    The Service does not propose a specific schedule, but identifies 
four procedures the Commission could employ to facilitate a quick 
resolution of this case. These include setting a relatively short 
intervention period and requiring participants to identify, in their 
notices of intervention, whether they intend to seek a hearing and to 
identify any genuine issues of material fact that would warrant such a 
hearing. They also include scheduling a settlement conference as 
quickly as possible following the deadline for intervention; dispensing 
with discovery if there is no hearing or no genuine issues of material 
fact; or, should discovery be necessary, shortening various time 
limits. Id. at 2-3.

IV. Commission Response

    Appropriateness of proceeding under the experimental rules. For 
administrative purposes, the Commission has docketed the instant filing 
as an experimental case. Formal status as an experiment under 
Commission rules 67-67d is based on an evaluation of factors such as 
the proposal's novelty, magnitude, ease or difficulty of data 
collection, and duration. A final determination regarding the 
appropriateness of the experimental designation and application of 
Commission rules 67-67d will not be made until participants have had an 
adequate opportunity to comment. Participants are invited to file

[[Page 62995]]

comments on this matter by October 18, 2002.
    Appropriateness of establishing other expedited procedures. The 
Commission grants the Service's request for expedition to the extent of 
authorizing settlement procedures; allowing a shorter-than-usual period 
for intervention; and requiring participants, in their notices of 
intervention, to state whether they intend to seek a hearing and to 
identify with particularity any genuine issues of material fact that 
would warrant a hearing. Decisions on other expedited procedures, such 
as limiting discovery time limits, will be made at a later time.
    Settlement. The Commission authorizes settlement negotiations in 
this proceeding. It appoints Postal Service counsel as settlement 
coordinator. In this capacity, counsel for the Service shall file 
periodic reports on the status of settlement discussions. The 
Commission authorizes the settlement coordinator to hold a settlement 
conference on October 22, 2002, at 10 a.m. in the Commission's hearing 
room. Authorization of settlement discussion does not constitute a 
finding on the proposal's experimental status or on the need for a 
hearing.
    Representation of the general public. In conformance with section 
3624(a) of title 39, the Commission designates Shelley S. Dreifuss, 
director of the Commission's office of the consumer advocate (OCA), to 
represent the interests of the general public in this proceeding. 
Pursuant to this designation, Ms. Dreifuss will direct the activities 
of Commission personnel assigned to assist her and, upon request, will 
supply their names for the record. Neither Ms. Dreifuss nor any of the 
assigned personnel will participate in or provide advice on any 
Commission decision in this proceeding. The OCA shall be separately 
served with three copies of all filings, in addition to and at the same 
time as, service on the Commission of the 24 copies required by 
Commission rule 10(d) (39 CFR 3001.10(d)).
    Intervention; need for hearing. Those wishing to be heard in this 
matter are directed to file a written notice of intervention with 
Steven W. Williams, secretary of the Commission, 1333 H Street, NW., 
suite 300, Washington, DC 20268-0001, on or before October 18, 2002. 
Notices should indicate whether participation will be on a full or 
limited basis. See 39 CFR 3001-20 and 3001-20a. No decision has been 
made at this point on whether a hearing will be held in this case. To 
assist the Commission in making this decision, participants are 
directed to indicate, in their notices of intervention, whether they 
seek a hearing and, if so, to identify with particularity any genuine 
issues of material facts believed to warrant such a hearing.
    Experimental status. Participants may comment on whether the 
Service's request should be evaluated under Commission rules 67-67d. 
Comments are due by October 18, 2002. Participants should be prepared 
to discuss relevant issues at the prehearing conference.
    Prehearing conference. A prehearing conference will be held October 
23, 2002, at 2 p.m. in the Commission's hearing room. Participants 
shall be prepared to address matters referred to in this ruling.

Ordering Paragraphs

    It is ordered:
    1. The Commission establishes docket no. MC2002-3, experimental 
periodicals co-palletization dropship discounts, to consider the Postal 
Service request referred to in the body of this order.
    2. The Commission will sit en banc in this proceeding.
    3. The deadline for filing notices of intervention is October 18, 
2002.
    4. Notices of intervention shall indicate whether the participant 
seeks a hearing and identify with particularity any genuine issues of 
material fact that warrant a hearing.
    5. The deadline for answers to the motion of United States Postal 
Service for waiver is October 18, 2002.
    6. The deadline for comments on United States Postal Service 
request for expedition and establishment of settlement procedures is 
October 18, 2002.
    7. The Commission will make its hearing room available for a 
settlement conference on Tuesday, October 22, 2002, at 10 a.m., and at 
such other times deemed necessary by the settlement coordinator.
    8. Postal Service counsel is appointed to serve as settlement 
coordinator in this proceeding.
    9. The Postal Service's request for expedition is granted to the 
extent of allowing a shorter-than-usual intervention period, allowing 
settlement discussions, and requiring participants' interest in a 
hearing to be identified in the notice of intervention.
    10. A prehearing conference will be held Wednesday, October 23, 
2002 at 2 p.m. in the Commission's hearing room.
    11. Shelley S. Dreifuss, director of the Commission's office of the 
consumer advocate, is designated to represent the interests of the 
general public.
    12. The Secretary shall arrange for publication of this notice and 
order in the Federal Register.

    By the Commission.
Garry J. Sikora,
Acting Secretary.
[FR Doc. 02-25668 Filed 10-8-02; 8:45 am]
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