[Federal Register Volume 69, Number 42 (Wednesday, March 3, 2004)]
[Notices]
[Pages 10077-10079]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-4769]


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POSTAL RATE COMMISSION

[Docket No. MC2004-1; Order No. 1392]


Experimental Mail Classification Case

AGENCY: Postal Rate Commission.

ACTION: Notice and order on new experimental docket.

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SUMMARY: This document provides notice of a Postal Service request for 
several changes affecting Periodicals mailers. It also addresses 
related preliminary procedural matters, including authorization of 
settlement discussions. One proposal would extend alternative 
experimental discounts to co-palletized, dropshipped Periodicals 
publications exhibiting a relatively heavy-weight, high-editorial, 
small-circulation profile. Another proposal would extend the expiration 
date of the current Periodicals co-palletization experiment, thereby 
establishing coinciding expiration dates. A third proposal would allow 
sample copies of Periodicals publications to be mailed with parcels at 
Parcel Post or Bound Printed Matter rates. Publication of this notice 
will allow interested parties to determine their position on the Postal 
Service's request.

DATES: 
    1. March 17, 2004: deadline for intervention.
    2. March 19, 2004: deadline for (a) answers to Postal Service 
motion for waiver, and (b) comments on Postal Service request for 
experimental treatment.
    3. March 18-19 and March 22-23, 2004: settlement conferences (as 
needed).
    4. March 25, 2004: prehearing conference at 10 a.m.

ADDRESSES: Submit documents 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:

Regulatory History

    See 67 FR 62993 (October 9, 2002).
    On February 25, 2004, the United States Postal Service filed a 
request seeking a recommended decision from the Postal Rate Commission 
approving an experimental mail classification, along with related 
discounts, for certain high-editorial, heavy-weight, small-circulation 
Periodicals mail that is co-palletized and dropshipped.\1\ The Request 
further proposes a modification to the expiration date of the 
Periodicals co-palletization dropship discounts experiment recommended 
in Docket No. MC2002-3 such that the expiration date for that 
experiment and the recommended expiration date for the instant request 
for experiment expire on the same date. The Request also includes a 
request for a minor classification change to Domestic Mail 
Classification Schedule (DMCS) Sec.  511, which proposes to allow 
sample copies of periodicals to be mailed with parcels using Parcel 
Post or Bound Printed Matter rates. This request is unrelated to the 
request for experiment. 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 Periodicals Co-Palletization 
Dropship Discounts for High-Editorial, Heavy-Weight, Small-
Circulation Publications, February 25, 2004 (Request).
    \2\ Attachments A and B to the Request contain proposed changes 
to the Domestic Mail Classification Schedule and the associated rate 
and fee schedules; Attachment C references the United States 
Certified Financial Statements for the Years Ended September 30, 
2003, and September 30, 2002; 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),\3\ and seeks expedited consideration of its proposal, 
including establishment of procedures for settlement.\4\ The Service's 
request for expedition is in addition to that generally available under 
the Commission's experimental rules (39

[[Page 10078]]

CFR 3001.67-3001.67d). 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).
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    \3\ Statement of the United States Postal Service Concerning 
Compliance with Filing Requirements and Conditional Motion for 
Waiver, February 25, 2004 (Motion for Waiver).
    \4\ United States Postal Service Request for Expedition and 
Establishment of Settlement Procedures, February 25, 2004 (Request 
for Expedition).
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I. The Service Characterizes Its Proposal as a Logical Extension of the 
Co-Palletization Discounts Recommended in Docket No. MC2002-3 to 
Mailers of Certain High-Editorial, Heavy-Weight, Small-Circulation 
Periodicals Mail That Is Co-Palletized and Dropshipped

    Docket No. MC2002-3 established experimental co-palletization 
dropship per-piece discounts for Periodicals that allow mailers to 
combine different publications or print runs on pallets with the 
objective of moving certain Periodicals mail from sacks to pallets, and 
to encourage mailers to dropship closer to final destination. Although 
the Postal Service asserts that these discounts have begun to generate 
a significant amount of co-palletization, the discounts do not provide 
an effective incentive for mailers of low-circulation, heavy, high-
editorial publications to co-palletize their mail.
    To encourage mailers of high-editorial, heavy-weight, small-
circulation Periodicals mail to co-palletize and dropship closer to 
final destination, the Postal Service proposes conducting a two-year 
experiment to test discounts for certain Periodicals mail that is co-
palletized and dropshipped to either an area distribution center (ADC) 
or a sectional center facility (SCF). The discounts would apply 
exclusively to publications with advertising content of 15 percent or 
less, copy weight of 9 ounces or more, and circulation of 75,000 pieces 
or less (including all editions, issues and supplemental mailings). The 
proposed discounts range from $0.008 to $0.131 per editorial content 
pound. The amount of discount is proposed to be based on the number of 
zones skipped as a result of co-palletization and dropshipping, and 
whether the mail is entered at an ADC or a SCF. The discounts would be 
available only as an alternative to the existing co-palletization 
discounts. Request at 1-4. The discounts were developed using the 
advertising pound rates used in Docket No. R2001-1 and the general 
methodology used in Docket No. MC2002-3. USPS-T-1 at 12-14. A 
conservative passthrough of 30 percent of estimated cost savings is 
proposed. Id. at 16. The proposed discounts leave existing Periodicals 
classifications and rates otherwise unchanged.
    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 focused on high-editorial, heavy-weight, small-
circulation publications, 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. 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. Request at 4-5.
    The Service contends that the expedition allowed under the 
experimental rules is appropriate in light of the interest in promoting 
efficiency in Periodicals operations as soon as possible. It also 
states that flexibility is required because the detailed, conventional 
data necessary to support a request for a permanent classification are 
currently unavailable. The Service 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 6.

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 
contends that 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). 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. 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. Motion for Waiver at 1-4.
    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 4-5. Responses to the Service's 
Motion for Waiver are due by March 19, 2004.

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 there is a distinct possibility of 
settlement in this case. 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; 
abbreviating the time allotted for discovery on the Postal Service's 
direct case, including limiting the related time for responses, 
objections, and motions; and, considering the possibility of dispensing 
with briefs and oral argument. 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

[[Page 10079]]

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 March 19, 2004.
    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 settlement 
conferences on March 18, 19, 22, or 23, 2004, 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.
    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.
    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 March 17, 2004. 
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.
    Prehearing conference. A prehearing conference will be held March 
25, 2004, at 10 a.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. MC2004-1, Experimental 
Periodicals Co-Palletization Dropship Discounts For High Editorial 
Publications 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 March 17, 
2004.
    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 March 19, 2004.
    6. The deadline for comments on the Postal Service's request for 
treatment under Commission rules 67-67d is March 19, 2004.
    7. The Commission will make its hearing room available for 
settlement conferences on March 18, 19, 22, or 23, 2004, at such times 
as 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 Thursday, March 25, 2004, 
at 10 a.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.

    Issued: February 27, 2004.
Steven W. Williams,
Secretary.
[FR Doc. 04-4769 Filed 3-2-04; 8:45 am]
BILLING CODE 7710-FW-P