[Federal Register Volume 68, Number 57 (Tuesday, March 25, 2003)]
[Notices]
[Pages 14435-14437]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-7022]


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POSTAL RATE COMMISSION 39 U.S.C. 3623

[Docket No. MC2003-1; Order No. 1365]


Customized Market Mail

AGENCY: Postal Rate Commission.

ACTION: Notice and order instituting mail classification case.

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SUMMARY: This document informs the public that the Postal Service has 
requested an expedited Commission decision on Customized Market Mail 
(CMM). CMM would allow non-rectangular pieces of Standard Mail, which 
currently are prohibited because of their shape, to be mailed under 
certain conditions. The document identifies key deadlines for various 
filings, authorizes settlement proceedings, and makes other preliminary 
procedural rulings.

DATES: 1. April 3, 2003--preferred date for participant's submission of 
notices of intervention, requests for hearing, and responses to 
expedition request and waiver motion.
    2. April 9, 2003--prehearing conference; final date for 
intervention, requests for hearing, and responses to expedition request 
and waiver motion.

ADDRESSES: Submit responsive filings electronically via the 
Commission's Filing Online system at http://www.prc.gov.

FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel, 
202-789-6818.

SUPPLEMENTARY INFORMATION:

I. Introduction

    Notice is hereby given that on March 14, 2003, the United States 
Postal Service filed a formal request with the Postal Rate Commission, 
pursuant to 39 U.S.C. 3623, seeking a recommended decision on a 
proposed minor classification change for a new Standard Mail option 
referred to as Customized Market Mail (CMM). The Service's designation 
of its request as a minor classification change signals its interest in 
application of procedural rules that allow for expedited consideration 
and issuance of a Commission decision, if no hearing is required, 
within 90 days. Request of the United States Postal Service for a 
Recommended Decision on Customized Market Mail Minor Classification 
Changes, March 14, 2003 (Request).
    The proposal relaxes Standard Mail's longstanding restriction to 
rectangular pieces. It would allow certain non-rectangular or other 
nonstandard-shaped pieces to be sent as Standard Mail, subject to 
certain conditions. These include complying with packaging and other 
preparation requirements and shipping CMM directly to the destination 
delivery unit, thereby bypassing intermediate handlings.
    The proposal entails minor changes to the Domestic Mail 
Classification Schedule (DMCS) and the addition of new footnotes to 
Standard Mail Rate Schedules 321A and 323A. The Service asserts that 
the changes would not have a significant effect on the Postal

[[Page 14436]]

Service's overall volumes, revenues and costs. Id. at 1.

Rates, Surcharges, Permits

    Qualifying CMM pieces would pay the basic nonletter rate for 
Standard Mail Regular or Nonprofit subclass mail, plus the residual 
shape charge. CMM would not be eligible for the destination entry rate, 
the parcel barcode discount or for ancillary services. Ineligibility 
for the destination entry rate is based, in part, on the assumption 
that most CMM mailings would not meet the minimum volume threshold. No 
additional permit would be required.

Contents; Availability

    The Request includes four attachments. Attachments A and B, 
respectively, present requested changes in the Domestic Mail 
Classification Schedule and Rate Schedules. Attachment C is an index of 
testimony. Attachment D addresses compliance with 39 CFR 3001.64 and 
3001.69a. Contemporaneous submissions include the testimony of 
witnesses Ashe (USPS-T-1) and Hope (USPS-T-2); two library references; 
a request for expedition and establishment of settlement procedures; 
and a motion for waiver of several rules related to data and 
information. United States Postal Service Request for Expedition and 
Establishment of Settlement Procedures, March 14, 2003; Motion of 
United States Postal Service for Waiver, March 14, 2003 (Postal Service 
Motion).
    The Request and other referenced material are on file in the 
Commission's docket room and are available for inspection during the 
Commission's regular business hours. This material can also be accessed 
via the Commission's Web site at http://www.prc.gov.\1\
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    \1\ This is the case except for USPS-LR-1, which consists of 
physical examples of CMM. Facsimiles of these pieces appear in USPS-
T-1, Exhibit USPS-1.
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II. Grounds for Service's Designation of Docket No. MC2003-1 as a Minor 
Classification Change

    Commission rules tie eligibility for treatment as an expedited 
minor classification change to satisfaction of three criteria. 
Specifically, the proposal (1) must not involve a change in any 
existing rate or fee; (2) must not impose any restriction in addition 
to pre-existing conditions of eligibility for entry of mail in an 
existing subclass or category of service, or for an existing rate 
element or worksharing discount; and (3) must not significantly 
increase or decrease the estimated institutional cost contribution of 
the affected subclass or category of service. 39 CFR 3001.69 through 
3001.69c.
    The Service asserts that its proposal meets all three criteria. It 
states that CMM will be subject to the existing Standard Mail Regular 
and Nonprofit nonletter basic category mail rates and the residual 
shape surcharge, and therefore will not entail new rates, fees or 
surcharges. It says eligibility standards will not be restricted, 
because for pieces less than \1/4\-inch in thickness, the proposed 
classification changes will make existing classifications more 
inclusive. For pieces greater than \1/4\-inch but less than or equal to 
``-inch in thickness, the proposed classification changes will 
establish optional entry and handling procedures. In addition, the 
Service says CMM will not cause a significant impact on the 
contribution of Standard Mail toward institutional costs. Id. at 4. The 
Service also states that the requested amendments to the DMCS will 
further the general policies of the Postal Reorganization Act to plan, 
promote and provide adequate and efficient postal services at fair and 
reasonable rates and fees, and are consistent with applicable statutory 
criteria.

III. Testimony

    Witness Ashe (USPS-T-1). Witness Ashe describes the Service's 
proposal and related market research.\2\ He identifies the anticipated 
customer base, reviews related postal operating plans for handling CMM, 
and addresses mailing requirements. Ashe also addresses why the 
proposal satisfies the criteria for consideration of a minor 
classification change. USPS-T-1 at 13. Ashe explains that existing DMCS 
6020 and DMM C010.1.1 require, as a basic condition for mailability, 
that all mail pieces \1/4\-inch thick or less must be rectangular in 
shape. He notes that administrative rulings interpreting this 
requirement have held that mail pieces do not meet the definition of 
``rectangular'' if they do not have four right-angle corners and four 
straight and regular edges, or if they have any holes or other voids 
with their dimensions. Id. at 1. Ashe characterizes CMM as a response 
to customer interest in using more creative advertising, and describes 
it as a ``niche'' piece whose characteristics and costs for preparation 
and mailing make it suitable only for targeted, carefully developed 
promotional messages to a selected audience. Id. at 4. He expects that 
CMM, at least for the foreseeable future, will remain a low-volume form 
of mail that generates proportionally small revenues, used in 
situations where a message of this sort makes financial and commercial 
sense. Id. at 6-7.
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    \2\ The market research has been filed as USPS-LR-2.
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    Witness Hope (USPS-T-2). Witness Hope provides an overview of 
classification changes; a description of how CMM fits into the current 
Standard Mail rate design and DMCS; and a review of the proposal's 
consistency with statutory classification criteria. She also provides a 
summary of benefits and explains why the proposal qualifies as a minor 
classification change. USPS-T-2 at 1. Witness Hope says no volume 
estimate is available, and anticipates that the CMM's overall impact on 
the affected subclasses will be minimal. She expects the effect on 
coverage of institutional costs to be negligible. Id. at 9.

IV. Service's Position on Expedited Procedures and Settlement Potential

A. Expedited Procedures

    The Service seeks expedition of this proceeding under Sec. Sec.  21 
and 69 of the Commission's rules of practice. It proposes that the 
Commission issue the requisite finding on the threshold question of 
eligibility as a minor classification change well before the end of the 
prescribed 28-day period. It also suggests that the Commission schedule 
a settlement conference as soon as possible following the deadline for 
intervention and make several adjustments in the area of discovery. 
These include shortening the time for discovery on the Service's case 
(should discovery be found necessary); limiting discovery to matters 
bearing directly on the proposed classification changes; and shortening 
time limits for responses to discovery requests and to related 
objections and motions. Request at 3. The Service also urges the 
Commission to require parties opting to request oral cross-examination 
to state not only ``the issues of material fact that require a hearing 
for resolution,'' as required under Sec.  69b(h), but also to make a 
compelling case that oral cross-examination could not otherwise be 
obtained through written discovery.
Rationale for Expedition
    The Service believes expedition is reasonable because the proposed 
classification changes are straightforward and of limited scope. Id. at 
1. The proposal expands eligibility for certain types of non-
rectangular shapes that are currently not mailable under existing 
provisions of the DMCS. These pieces would be limited to the basic 
nonletter rate categories in the Standard Regular and Nonprofit 
subclasses. No

[[Page 14437]]

new rates or surcharges are proposed for this matter. The proposal 
entails minor changes to the DMCS and the addition of new footnotes to 
Standard Mail Rate Schedules 321A and 323A. The changes would not have 
a significant effect on the Postal Service's overall volumes, revenues 
and costs. Id. at 1. Moreover, the Service asserts that there is a 
strong possibility of settlement, given indications from potential 
participants. Id. at 2. It also notes that because the proposal is 
likely to appeal to highly targeted mailings, it should have no adverse 
effect on other mailers or competitors. Ibid.

B. Motion for Waiver

    The Postal Service seeks waiver, in whole or part, of several rules 
that call for detailed data and information. 39 CFR 3001.64(b)(3); 39 
CFR 3001.64(d) and 39 CFR 3001.69a(a)(3).\3\ In general, it asserts 
that waivers are appropriate, in the public interest, and not 
prejudicial to the interests of any participant because the 
classification changes in issue are minor in nature and will not have a 
substantial effect on the volume, revenue and cost estimates, or on the 
relationships of mail. Moreover, the Service says production of the 
information would be unduly burdensome. Motion of United States Postal 
Service for Waiver, (Postal Service Waiver Motion), March 14, 2003, at 
1 and 3.
    Rule 64(b)(3)--information on the economic substitutability between 
various classes and subclasses of mail, including a description of 
cross-elasticity of demand between various classes of mail.
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    \3\ The Service seeks partial waiver for rule 69a(a)(3).
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    The Service notes that economic substitutability of demand would 
not be expected to change under this proposal, particularly since 
potential users would only be able to enter CMM into the basic 
nonletter category tier in Standard Mail. Accordingly, it asserts the 
data this section seeks are not necessary or useful in considering the 
Service's proposal, and waiver will not impair the ability of the 
Commission or any participant to evaluate the Request. Postal Service 
Waiver Motion at 2.
    Rule 64(d)--effects on cost assignments, total costs, and total 
revenues and 69a(a)(3)--a detailed estimate of the overall impact of 
the requested change in mail classification on postal costs and 
revenues, mail users, and competitors of the Postal Service.
    The Service invokes the explanations provided in the testimony of 
its two witnesses as to why the proposal will not result in significant 
changes to postal cost and revenue relationships. Id. at 3. It says the 
cost of conducting detailed analyses is not justified by the limited 
scope of the proposal and the small number of users likely to avail 
themselves of these new classification provisions. Ibid. It also says 
that given the expected insignificant near-term effect on costs and 
revenue, waiver of section 64(d) will not impair the ability of the 
Commission or prospective participants to evaluate the Service's 
presentation. Ibid.

V. Initial Procedural Steps

    Although some aspects of the Service's proposal necessarily await 
an opportunity for interested parties to assess the filing, the 
Commission agrees with the Service that several steps can be taken now 
to expedite this case.

Dates for Intervention, Statements, and Responses

    The Commission prefers that those wishing to be heard in this 
matter submit a notice of intervention on or before April 3, 2003. 
Notices should indicate whether participation will be on a full or 
limited basis and state whether a hearing is requested. The Commission 
also prefers that responses to the Service's Request for Expedition and 
to the Postal Service Waiver Motion be filed no later than April 3, 
2003.\4\
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    \4\ Interventions as of right, requests for a hearing and 
responses to the Service's request for expedition will be accepted 
until the April 9, 2003, prehearing conference.
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Settlement Matters and Prehearing Conference

    Subject to reconsideration if responses from participants so 
warrant, the Commission authorizes settlement proceedings in this case. 
It appoints Postal Service counsel to serve as settlement coordinator 
and to schedule settlement conferences as deemed appropriate. A 
settlement conference held before the prehearing conference would 
facilitate prompt action on the Request. Participants and the 
Commission are to be provided reasonable notice of such conferences. 
The Postal Service is also directed to file periodic status reports 
with the Commission. A prehearing conference is scheduled for April 9, 
2003, at 10 a.m. in the Commission's hearing room. Participants should 
be prepared to discuss matters pertinent to the Service's proposal, 
especially the need for a hearing, and the request for expedition, 
including the Service's suggestions related to discovery.

Representation of the General Public

    In conformance with 39 U.S.C. 3624(a), 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. Pursuant to this designation, Ms. Dreifuss will direct the 
activities of Commission personnel assigned to assist her and, when 
requested, shall provide 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. Service 
of documents on the OCA shall conform to Commission rules.

Ordering Paragraphs

    It is ordered:
    1. The Commission will sit en banc in this proceeding.
    2. Participants are encouraged to file notices of intervention, 
respond to the Request for Expedition and Establishment of Settlement 
Procedures, respond to the Postal Service's Motion for Waiver, and 
submit a request for a hearing no later than April 3, 2003.
    3. Shelley S. Dreifuss, Director of the Commission's Office of the 
Consumer Advocate, is designated to represent the interests of the 
general public.
    4. The Commission authorizes settlement discussions in this 
proceeding.
    5. Postal Service counsel is appointed to act as settlement 
coordinator in this proceeding, subject to reconsideration.
    6. Settlement conferences are authorized to be held at time, dates 
and places arranged by the settlement coordinator.
    7. The settlement coordinator shall file periodic status reports 
with the Commission.
    8. A prehearing conference is scheduled for April 9, 2003, at 10 
a.m. in the Commission's hearing room.
    9. The Secretary shall cause this notice and order to be published 
in the Federal Register.

    By the Commission.

    Issued: March 19, 2003.
Steven W. Williams,
Secretary.
[FR Doc. 03-7022 Filed 3-24-03; 8:45 am]
BILLING CODE 7710-FW-P