[Federal Register Volume 68, Number 111 (Tuesday, June 10, 2003)]
[Notices]
[Pages 34678-34680]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-14483]


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POSTAL RATE COMMISSION

[Docket No. MC2003-2; Order No. 1373]


Experimental Parcel Return Services

AGENCY: Postal Rate Commission.

ACTION: Notice and order.

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SUMMARY: This document provides notice that the Postal Service has 
filed a request with the Commission seeking an expedited decision 
approving a two-year experiment testing bulk parcel return services. It 
briefly describes the proposal, which focuses primarily on the 
customer-to-merchant segment of retail transactions. The notice also 
addresses related terms and conditions, proposed rates, and eligibility 
for participation in the experiment. It identifies conference dates and 
deadlines for certain procedural steps in the initial stages of this 
case.

DATES: 1. June 18, 2003: notices of intervention, requests for a 
hearing, and comments on experimental status.
    2. June 24, 2003: (optional) comments on discovery-related 
deadlines.
    3. June 25, 2003: prehearing conference (2 p.m.).
    4. June 27, 2003: responses to conditional motion for waiver of 
certain filing requirements.

ADDRESSES: Submit documents electronically via the Commission's Filing 
Online system, which can be accessed at http://www.prc.gov. Settlement 
and prehearing conferences will be held in the Commission's hearing 
room, 1333 H Street NW., Suite 300, Washington, DC 20268-0001.

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

SUPPLEMENTARY INFORMATION: On May 28, 2003, the Postal Service filed a 
request seeking a recommended decision approving an experimental change 
in the Domestic Mail Classification Schedule (DMCS) to establish rate 
categories, including rates and fees, for certain parcels and bound 
printed matter that are returns from customers to merchants.\1\ 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\ Request of the United States Postal Service for a 
Recommended Decision on Experimental Parcel Return Services, Docket 
No. MC2003-2, May 28, 2003 (Request).
    \2\ Attachment A contains the proposed classification schedule 
provisions; attachment B sets forth the proposed rate and fee 
schedules; attachment C contains the certified financial statements 
for the years ending September 30, 2001 and September 30, 2002; 
attachment D is the certification required by Commission rule 54(p); 
attachment E is an index of testimonies; and attachment F is the 
statement addressing compliance with various filing requirements.
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    In contemporaneous filings, the Postal Service requests expedited 
consideration of its proposal, including establishment of settlement 
procedures,\3\ and a conditional motion for waiver of the filing 
requirements.\4\ The Postal Service's request for expedition is in 
addition to that generally available under the Commission's 
experimental rules [39 CFR 3001.67-3001.67d]. The request, accompanying 
testimony of witnesses Gullo (USPS-T-1), Eggleston (USPS-T-2), Kiefer 
(USPS-T-3), and Wittnebel (USPS-T-4), and other related material are 
available for inspection in the Commission's docket room during regular 
business hours. They also can be accessed electronically, via the 
Internet, on the Commission's Web site (http://www.prc.gov).
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    \3\ United States Postal Service Request for Expedition and 
Establishment of Settlement Procedures, May 28, 2003 (Request for 
Expedition).
    \4\ Statement of the United States Postal Service Concerning 
Compliance with Filing Requirements and Conditional Motion for 
Waiver, May 28, 2003 (Conditional Motion).
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I. Proposed Parcel Return Services

    The Postal Service proposes an experimental bulk parcel return 
service applicable to merchandise returned as either Parcel Post or 
Bound Printed Matter (BPM) mail. Collectively, the experimental changes 
are referred to as Parcel Return Services, comprised of Parcel Select 
Return Service (PSRS) and Bound Printed Matter Return Service (BPMRS). 
Witness Kiefer sponsors the proposed rates and classifications. See 
USPS-T-3. The proposed rates are based on workshare savings for 
returned parcels retrieved in bulk by shippers (or their agents) at 
designated delivery units or bulk mail centers.
    PSRS adds two rate categories to the Parcel Post subclass, Parcel 
Select Return Delivery Unit (RDU) and Parcel Select Return Bulk Mail 
Center (RBMC). The proposed RDU rate for mail retrieved in bulk at 
delivery units is $2.00 per parcel. The proposed RBMC rates for parcels 
retrieved in bulk at the first BMC they reach range between $0.86 and 
$1.51 below the non-workshared rates for regular-sized parcels.\5\ Id. 
at 2.
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    \5\ Nonmachinable RBMC Parcel Post mail is subject to 
nonmachinable surcharges. See proposed DMCS 521.7.
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    BPMRS adds one rate category to the BPM subclass, Bound Printed 
Matter Bulk Mail Center (RBMC). Similar to Parcel Select Return 
Service, the RBMC rate is applicable to BPM parcels retrieved in bulk 
at the first BMC they reach. The proposed rates are $0.24 below the 
non-workshared BPM rates. Id.; see also Request at 2.\6\
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    \6\ BPM mailers are eligible for RDU service and rates if they 
so choose.
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    Witness Kiefer's proposed rates are based on cost data supplied by 
witness Eggleston. See USPS-T-2. The Postal Service indicates that the 
cost avoidance measures underlying its proposed rates are estimated 
using the same cost base supporting the Commission rate recommendations 
in Docket No. R2001-1. In addition, the Postal Service states that the 
proposed experiment will not materially affect its overall revenues. 
Request at 2-3.
    In support of its proposal, the Postal Service also submits the 
testimony of witness Gullo (USPS-T-1), who describes the proposed 
Parcel Return Services products, and witness Wittnebel, who discusses, 
from a mailer's perspective, the processing of returns and the benefits 
associated with the experiment (USPS-T-4).
    Experimental designation. By designating its proposal as 
experimental, the Postal Service seeks consideration of its Request 
under rules 67-67d. The Postal Service suggests that these rules are 
appropriate as they contemplate review of proposed experimental 
classifications in the absence of historical data that normally 
underlie requests for permanent classification changes. While 
acknowledging that it lacks data about the potential response to the

[[Page 34679]]

experiment, the Postal Service states that it 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 Postal Service proposes to 
limit the number of participants to 20 in the first year of the 
experiment, enlarging it by 10 in the second year. USPS-T-1 at 16.
    The Service says the expedition allowed under the experimental 
rules is appropriate in the interest of putting the proposed services 
into effect in time for the 2003 holiday mailing season. Request at 5.

II. Conditional Request for Waiver of Certain Filing Requirements

    The Postal Service avers that its filing complies with applicable 
Commission filing requirements, but, as a precautionary alternative, 
seeks waiver of various filing requirements should the Commission 
conclude otherwise.\7\ In support of its request, the Postal 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 materials from docket no. R2001-1, the most recent omnibus 
rate case.\8\ It states that incorporation satisfies the filing 
requirements pertaining to classes of mail and special services. In 
addition, the Postal Service contends that the experimental parcel 
return services will not materially alter the rates, fees and 
classifications established in docket No. R2001-1. It concludes that 
its proposal 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.
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    \7\ The Request (at 5) limits the waiver request to rules 54 and 
64. While the Conditional Motion also references rule 67 (at 4), the 
relief requested is limited to rules 54 and 64. Conditional Motion 
at 5, n.4.
    \8\ Conditional Motion at 1 and 3.
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    Notwithstanding its principal position, the Postal Service 
recognizes that the Commission may find that it has failed to comply 
with the filing requirements. Accordingly, the Postal Service requests 
a waiver of certain filing requirements if the Commission concludes 
that the materials incorporated from the omnibus case are not 
sufficient to satisfy those requirements. Id. at 4. Responses to the 
Postal Service's conditional motion are due on or before June 27, 2003.

III. The Postal Service Requests Expedition, Suggesting Several 
Specific Procedures, Including Settlement Procedures

    In support of its request for expedition beyond that contemplated 
by the rules governing experimental classifications, the Postal Service 
asserts that the proposed classification change is straightforward, and 
of limited scope and duration. It also states that the proposed parcel 
return services would have an insignificant effect on overall volumes, 
revenues, and costs. Further, it states that, based on discussions with 
industry representatives, the proposal has widespread support and 
should have no significant adverse impact on competitors. The Postal 
Service believes there is a distinct possibility for settlement.\9\
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    \9\ Request for Expedition at 1-2.
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    In lieu of proposing a specific schedule, the Postal Service 
identifies four procedures the Commission could employ to expedite the 
proceeding. 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 may warrant such a hearing. In 
addition, the Postal Service requests that a settlement conference be 
scheduled as quickly as possible following the deadline for 
intervention. Finally, it suggests that the time allotted for 
discovery, if found to be necessary, be abbreviated and limited to 
matters related directly to its proposal. Id. at 2-3.

IV. Commission Ruling

    Proceeding under the experimental rules. The Postal Service's 
request was filed pursuant to the Commission's rules 67-67d involving 
experimental classification changes. Formal status as an experiment 
under these rules 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 comments on this matter by 
June 18, 2003. See rule 67(c).
    Postal Service's request for expedition.The Postal Service requests 
that the Commission expedite this proceeding, advancing several reasons 
to support its request. First, the Postal Service states that the 
proposal is straightforward and has a limited scope and duration, as 
explained in the testimony of witness Gullo and in its Request. 
Further, the Postal Service contends that the proposed changes would 
not significantly effect its overall revenues, volumes, or costs. 
Finally, the Postal Service states that industry representatives 
support the proposal, concluding that it should have no adverse effect 
on competitors.\10\
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    \10\ Request for Expedition at 1-2.
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    To expedite the proceeding, the Postal Service suggests several 
procedures for the Commission's consideration, including establishing a 
relatively short intervention period, requiring the prospective 
participants to request a hearing and identify any issues of material 
fact in their notices of intervention.\11\ In addition, the Postal 
Service requests that a settlement conference be convened at an early 
date, and further that the time allotted for discovery, if necessary, 
be abbreviated.\12\
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    \11\ Id. at 2-3.
    \12\ Id. at 3.
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    The reasons offered by the Postal Service in support of expedition 
are essentially the same as advanced in prior requests.\13\ This 
undercuts the claim for expedition since there is nothing to 
distinguish this proceeding from any other. Moreover, it gives the 
appearance that such requests have become routine. In any event, the 
reasons advanced to accelerate this proceeding are not particularly 
compelling.
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    \13\ Compare United States Postal Service Request for Expedition 
and Establishment of Settlement Procedures, Docket No. MC2002-3 
September 26, 2002; and Motion of the United States Postal Service 
for Expedition, and Waiver of Certain Provisions of Rule 161 and 
Certain Provisions of 64(h), Docket No. MC2000-1, September 27, 
2000.
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    It would appear to be axiomatic that any proposed experiment would 
have the characteristics that the Postal Service offers to support an 
expedited schedule. For example, presumably all experimental changes 
would have a limited scope and duration, be sufficiently explained by 
supporting testimony, and be supported by industry representatives. 
Even taking these as a given, they fail to warrant accelerating this 
proceeding in the manner suggested by the Postal Service.
    The Postal Service requests a relatively short intervention period. 
The Postal Service does not suggest a

[[Page 34680]]

specific deadline, creating some uncertainty as to what might satisfy 
its request since the Commission's rules do not specify an intervention 
deadline. Deadlines for interventions in the last three proceedings 
under the experimental rules were 22 days (docket no. MC2002-3), 28 
days (docket no. MC2002-2), and 20 days (docket no. MC2001-2).\14\ In 
any event, it would appear that the request is designed to compel 
potential participants to evaluate the merits of the proposal in an 
even shorter time. Under the circumstances, that result would be 
inappropriate.
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    \14\ See PRC Order No. 1347, October 2, 2002, PRC Order No. 
1346, September 24, 2002, and PRC Order No. 1323, September 25, 
2001, respectively.
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    By statute, the Commission is required ``to conduct its proceedings 
with utmost expedition consistent with procedural fairness to the 
parties.'' \15\ Accordingly, the Commission will conduct this 
proceeding with dispatch. Moreover, assuming this case is considered 
under the experimental rules, nothing in those rules precludes an 
adoption of a recommended decision in advance of the 150-day deadline. 
See rule 67d.
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    \15\ 39 U.S.C. 3624(b); see also id. at 3624(a) (``The Postal 
Rate Commission shall promptly consider a request made under section 
3622 or 3623 of this title, * * *.'')
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    The Postal Service indicates it wishes to implement this program in 
time for the 2003 holiday mailing season, suggesting an early October 
effective date would be necessary.\16\ This is a reasonable goal, but 
the Service does not provide any explanation of when a recommendation 
would have to be issued to enable the Service to achieve that goal. The 
Postal Service controls its own calendar. It is the Commission's 
understanding that this proposal has been under development for some 
time, perhaps 12 months or more.
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    \16\ Request at 4-5; Request for Expedition at 2.
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    The due date for notices of intervention is June 18, 2003. Any 
person wishing to intervene must file a notice electronically via the 
Commission's Filing Online system, in conformance with the Commission's 
rules 9 through 12. See 39 CFR 3001.9-3001.12. Notices should indicate 
whether participation will be on a full or limited basis. See 39 CFR 
3001.20 and 3001.20a.
    Turning to the balance of the Postal Service's suggestions, 
participants should indicate in their notices of intervention whether 
they request a hearing and, if so, they should identify all issues of 
material fact that may warrant such a hearing.\17\ Given the due date 
for interventions established by this order, prospective intervenors 
will have sufficient time to review the Postal Service's proposal and 
formulate a position on whether or not to request a hearing. No 
decision has been made at this point on whether a hearing will be held 
in this case.
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    \17\ Notices of intervention not addressing these issues will be 
deemed not to have requested a hearing.
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    Settlements are to be encouraged. Given the Postal Service's 
representations that the proposal is widely supported and should not 
adversely affect competitors or other mailers, the Commission will 
authorize settlement negotiations in this proceeding. It appoints 
Postal Service counsel as settlement coordinator. In this capacity, 
Postal Service counsel shall file periodic reports on the status of 
settlement discussions. The Commission authorizes the settlement 
coordinator to hold a settlement conference on June 23, 24 or 25, 2003, 
at 10:00 a.m. in the Commission's hearing room. Authorization of 
settlement discussions does not constitute a finding on the proposal's 
experimental status or on the need for a hearing.
    Finally, under the Commission's rules, discovery is permissible 
upon intervention. The Postal Service suggests that time limits for 
discovery be abbreviated without suggesting specific time limits. At 
this stage of the proceeding, the Commission is unable to determine 
whether and to what extent, if any, discovery may ensue. Nonetheless, 
to facilitate resolution of this proceeding, participants desiring to 
engage in any discovery are encouraged to submit it promptly and to be 
prepared to discuss the need for additional discovery at the prehearing 
conference. Postal Service's responses will be due within 10 days after 
the filing of the discovery. Objections, if any, should be filed within 
7 days of the filing of the discovery. Motions to compel, if any, 
should be filed within 7 days of the filing of the relevant 
objection.\18\
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    \18\ Participants may, if desired, file comments concerning 
these deadlines. Such comments should be provided on or before June 
24, 2003.
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    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.
    Prehearing conference. A prehearing conference will be held June 
25, 2003, 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. MC2003-2, experimental 
parcel return services, 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 June 18, 
2003.
    4. Notices of intervention shall indicate whether the participant 
seeks a hearing and, if so, identify with particularity any genuine 
issues of material fact that may warrant a hearing.
    5. Responses to the Postal Service's conditional motion for waiver 
of certain filing requirements are due on or before June 27, 2003.
    6. The United States Postal Service's request for expedition and 
establishment of settlement procedures is denied, in part, and granted, 
in part, as set forth in the body of this order.
    7. Postal Service counsel is appointed to serve as settlement 
coordinator in this proceeding.
    8. A prehearing conference will be held June 25, 2003 at 2:00 p.m. 
in the Commission's hearing room.
    9. Shelley S. Dreifuss, director of the Commission's Office of the 
Consumer Advocate, is designated to represent the interests of the 
general public.
    10. The Secretary shall arrange for publication of this notice and 
order in the Federal Register.

    By the Commission.

    Issued June 3, 2003.
Steven W. Williams,
Secretary.
[FR Doc. 03-14483 Filed 6-9-03; 8:45 am]
BILLING CODE 7710-FW-P