[Federal Register Volume 70, Number 73 (Monday, April 18, 2005)]
[Notices]
[Pages 20187-20191]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-7613]


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POSTAL RATE COMMISSION

[Order No. 1436; Docket No. R2005-1]


Postal Rate and Fee Changes

AGENCY: Postal Rate Commission.

ACTION: Notice and order in omnibus rate filing.

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DATES: May 2, 2005: Deadline for notices of intervention, answers to

[[Page 20188]]

motions and comments on request for expedition; May 5, 2005: Prehearing 
conference.

ADDRESSES: File notices of intervention and other documents 
electronically via the Commission's Filing Online system at http://www.prc.gov.
SUMMARY: This document informs the public that the United States Postal 
Service has filed a request for an expedited decision on proposed 
changes in essentially all domestic postage rate and fee changes, and 
notes that the Commission has taken several procedural steps in 
response to the filing. The request does not identify any proposed 
changes in mail classification or rate structure. The request, on 
average, seeks an across-the-board increase of 5.4 percent; however, 
there are limited (and in some instances, significant) exceptions.

FOR FURTHER INFORMATION CONTACT: Stephen L. Sharman, General Counsel, 
(202) 789-6818.

SUPPLEMENTARY INFORMATION:

I. Introduction

    Summary. This notice and order (Order) informs the public that on 
April 8, 2005, the United States Postal Service filed a formal Request 
with the Postal Rate Commission for an expedited recommended decision 
on proposed changes in domestic postage rates and fees for all classes 
of mail and special services, with the exception of Confirm, which is a 
special service.\1\ The Request does not identify any classification or 
rate structure changes. Interested persons are urged to carefully 
review the Service's filing in its entirety to determine the impact of 
the proposals.
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    \1\ Request of the United States Postal Service for a 
Recommended Decision on Changes in Rates of Postage and Fees for 
Postal Services, Docket No. R2005-1, April 8, 2005 (Request); United 
States Postal Service Request for Expedition and Early Consideration 
of Procedures Facilitating Settlement Efforts, April 8, 2005 
(Request for Expedition). The Service's rationale for excluding 
Confirm from its Request is presented in Notice of the United States 
Postal Service Regarding Exclusion of Confirm Service from General 
Rate Proceeding, April 8, 2005 (Notice Regarding Confirm Service).
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    The Request is unique in that it is premised on several policy 
conclusions associated with funding a pending escrow obligation 
associated with Public Law 108-18.\2\ These conclusions entail, among 
others, a decision to seek a 5.4 percent across-the-board increase for 
most rates and fees, with certain limited (but in at least three 
instances, significant) exceptions. The exceptions are attributed to a 
statutory requirement (in the case of Within County Periodicals mail); 
reported increases in costs (for Registered Mail and the Periodicals 
Re-entry Application), and rounding conventions (in many instances).
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    \2\ The Postal Civil Service Retirement System Funding Reform 
Act of 2003.
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    Significant exceptions. The Service's Within County proposal 
entails a 5.4 percent decrease on average. USPS-T-28 at 14. The 
Registered Mail fee proposals entail increases of around 70 percent. 
Id. at Exhibit USPS-28A, Table 10 at 57. The fee for Periodical Re-
entry Application increases by 12.5 percent. Id. at 55.
    Costing support. The Service asserts that the proposed across-the-
board approach treats all mail categories and services equally, while 
relegating specific costing issues to a secondary role in the 
supporting record.
    First-Class stamp. The price of the First-Class stamp under the 
Service's proposal would increase by 2 cents, thereby going from 37 
cents to 39 cents. The rate for additional ounces of First-Class Mail 
would increase by 1 cent, from 23 cents to 24 cents.
    Interest in expedition and settlement. The Service seeks maximum 
expedition of its Request, early implementation of resulting rates and 
fees (in calendar 2006), and suggests, based on efforts underway prior 
to filing, that there is a strong likelihood that all material issues 
can be settled.
    Initial action. This Order summarizes key features of the filing, 
including accompanying notices, motions and requests, and institutes a 
formal proceeding for consideration of the Service's proposals. It sets 
May 5, 2005 as the date for a prehearing conference, identifies certain 
other deadlines, and takes several preliminary procedural steps. The 
latter include authorization of settlement proceedings, based in part 
on the Service's representations that substantial support for 
settlement already exists, and appointment of the Postal Service as 
settlement coordinator.

II. Establishment of Formal Docket

    The Request was filed pursuant to chapter 36 of title 39, United 
States Code, based on the Service's determination that such changes 
would be in the public interest and in accordance with policies of that 
title. The Commission hereby institutes a proceeding under 39 U.S.C. 
3622, designated as Docket No. R2005-1, Postal Rate and Fee Changes, to 
consider the instant request. In the course thereof, participants may 
propose alternatives to the Service's proposal, and the Service itself 
may revise, supplement, or amend its filing. The Commission's review of 
the Request, including any revisions, alternatives proposed by others, 
or options legally within the purview of the Service's request, may 
result in recommendations that differ from proposed rates and fees.

III. Availability, Web Site Posting

    The Commission has posted the Request and related material on its 
Web site at http://www.prc.gov. Additional Postal Service filings in 
this case will also be posted on the Web site, if provided in 
electronic format or amenable to conversion, and not subject to a valid 
protective order. Information on how to use the Commission's Web site 
is available online or by contacting the Commission's webmaster via 
telephone at (202) 789-6873 or via electronic mail at [email protected].
    The Request and related documents are available for public 
inspection in the Commission's docket section. Docket section hours are 
8 a.m. to 4:30 p.m., Monday through Friday, except on federal 
government holidays. Docket section personnel can be contacted via 
electronic mail at [email protected] or via telephone at (202) 789-
6846. The Service addresses how intervenors can obtain paper copies of 
its filing in Notice of the United States Postal Service Regarding 
Availability and Distribution of Paper Copies of the Postal Service 
Direct Case, April 8, 2005 (Notice Regarding Distribution).

IV. Contents of the Service's Filing

    The Service's Docket No. R2005-1 filing includes its formal 
Request, along with an explicit request for expedition; six 
attachments; 33 pieces of testimony (and related exhibits) presented by 
31 witnesses; and 116 library references.\3\ Witness Potter (USPS-T-1) 
addresses the policy rationale underlying the Request, which centers 
mainly on the aforementioned CSRS escrow funding obligation. Witness 
Alenier (USPS-T-33) presents ``roadmap'' testimony in compliance with 
Commission rule 53(b). This testimony includes, among other pertinent 
information, two attachments, captioned Roadmap Testimony Quick 
Reference Guide (Attachment 1) and Postal Testimony Flowchart 
(Attachment 2). A master list of library references also appears in 
Notice of the United States Postal Service of Filing of Master List of 
Library References, April 8, 2005.

[[Page 20189]]

Witness Robinson (USPS-T-27) addresses rate levels; witness Taufique 
(USPS-T-28) reviews current and proposed rates.
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    \3\ The Service has prepared, but withheld, one library 
reference (USPS-LR-K-85) pending resolution of a request for 
protective conditions. See Motion of United States Postal Service 
for Waiver and for Protective Conditions for Library Reference that 
Includes Costs and Other Data Associated with the FedEx 
Transportation Agreement, April 8, 2005 (Combined Waiver Motion).
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    Attachments to the Request. Attachment A, Requested Changes in 
Rates and Fees, identifies requested changes in the Domestic Mail 
Classification Schedule (DMCS). Attachment B, Specification of the 
Rules, Regulations, and Practices That Establish Standards of Service 
and Conditions of Mailability, addresses Commission rule 54(b)(2), and 
designates the contents of the Domestic Mail Manual (DMM) as specifying 
those rules, regulations and practices establishing conditions of 
mailability and standards of service. It also provides a copy of the 
table of contents of the DMM (updated as of March 17, 2005). The DMM is 
available for review on the Postal Service's Web site, http://www.USPS.gov.
    Attachment C is the certification, required by rule 54(p), 
attesting to the accuracy of cost statements and other documentation 
submitted with the Request. Attachment D consists of a report of the 
Service's independent auditors, and includes related audited financial 
statements. Attachment E is an index that identifies witnesses, the 
numerical designation of each piece of testimony, related exhibits and 
library references, and attorney contacts. Attachment F is a compliance 
statement addressing pertinent provisions of rules 53, 54 and 64, and 
refers to a separate notice and motion for waiver related to the 
alternate cost presentation required by these rules.
    The Service contemporaneously filed several motions pertaining to 
library references, including one that seeks protective conditions. It 
also filed, including the Library Reference Notice, several notices.

I. Summary of the Nature and Impact of the Proposed Changes

    Defining feature. The defining feature of the Service's Request is 
that it is based on several policy judgments linked solely to funding 
an escrow obligation. This obligation was imposed by Public Law 108-18, 
and requires the Service to begin annual funding of an escrow account 
in fiscal year 2006.\4\ The escrow amount, which the law identifies as 
an operating expense, is $3.1 billion. The Service expresses an 
intention to withdraw the case should the referenced law be changed in 
a fashion that precludes the need to meet this obligation.
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    \4\ Additional information on the escrow requirement is provided 
in USPS-T-1.
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    The escrow obligation gives rise to several related policy 
conclusions on the part of Postal Service regarding the need for, 
amount, timing and nature of its Request. In particular, the Service 
concludes that it must file a request now so that it will have revenue 
to meet this obligation; that it would not seek an increase at this 
time in the absence of this obligation; that all costs related to this 
obligation are institutional; that an across-the-board approach is 
appropriate, except in situations involving a statutory requirement, 
significantly higher reported costs, or rounding conventions; and that 
no classification and rate structure changes should be proposed. These 
conclusions, in turn, drive the Service's request for maximum 
expedition, based on a belief that this case can be settled, and its 
interest in early implementation of resulting rate and fee changes.
    Proposed changes. The Service presents a summary of the percentage 
changes in proposed rates relative to current rates at USPS-T-27, 
Exhibit USPS-27D. These percentages are reproduced below:

------------------------------------------------------------------------
                                                              Docket No.
                                                               R2005-1
                                                               proposed
                                                              percentage
                                                                change
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First-Class Mail:
  Letters and Sealed Parcels...............................          5.3
  Cards....................................................          4.9
Priority Mail..............................................          5.4
Express Mail...............................................          5.5
Periodicals:
  Within County............................................         -5.4
  Outside County...........................................          5.4
Standard Mail:
  Regular..................................................          5.4
  Nonprofit................................................          5.5
  Enhanced Carrier Route...................................          5.5
  Nonprofit Enhanced Carrier Route.........................          6.0
Package Services:
  Parcel Post..............................................          5.4
  Bound Printed Matter.....................................          5.5
  Media Mail...............................................          5.4
  Library Mail.............................................          5.7
                                                            ------------
      Total All Mail.......................................          5.4
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    See also USPS-T-28 in its entirety for other representations of 
proposed percentage rate changes. A summary of proposed percentage 
changes for special services appears at USPS-T-27, Exhibit USPS-27F and 
at USPS-28, Exhibit USPS-28A, Table 10 at 53-59.

VI. Expedition and Settlement

    In its separate but related Request for Expedition, the Service 
seeks early resolution of its Request, expresses interest in 
implementing the proposed rate and fee changes in early calendar year 
2006, and suggests that that there is a strong likelihood that most, if 
not all, participants will sign a Stipulation and Agreement. It 
documents efforts toward achieving a settlement that have been underway 
for some time, and therefore seeks maximum expedition of its Request. 
These include, among others, discussions and individual consultations, 
a general letter corresponding with all parties of record in Docket No. 
R2001-1. This letter outlines the Service's proposal, reports on the 
general state of negotiations with prospective participants up to that 
point, and invites all prospective participants to engage in further 
discussions leading to settlement. Id. at 5-6. The letter is set out as 
an attachment to the Request for Expedition.
    The Service suggests that consideration of the request could be 
completed in less than 10 months (the statutory maximum) without 
interfering with the Commission's interests or compromising 
participants' due process rights. It further maintains that several 
benefits (primarily associated with implementation) would flow from 
completing the case even one month earlier than the statutory maximum.
    The Service states that the distinct circumstances of this case and 
the nature of its proposals have improved settlement potential relative 
to the settlement posture of Docket No. R2001-1. Id. at 5. It notes 
that it has been consulting individually with mailers, mailer 
associations, and other likely participants in upcoming proceedings. 
Id. at 5. In particular, it states that it has consulted 38 out of 64 
participants in Docket No. R2001-1, as well as some organizations and 
individual mailers who do not typically intervene separately from their 
membership in associations. Id. at 8.
    The Service believes that many of the interim dates in the overall 
procedural schedule can be advanced, relative to previous omnibus 
proceedings, and that other aspects, such as discovery, can be 
compressed. The Service's proposed schedule is set out in an attachment 
to the Request for Expedition.

VII. Postal Service Notice Regarding Exclusion of Confirm Service From 
Request

    The Service does not propose any change in the fees for Confirm 
service.\5\

[[Page 20190]]

The Service briefly reviews the introduction, development and current 
status of this offering in its Notice Regarding Confirm Service. It 
generally concludes that Confirm has shown promise in actual 
operations, but has experienced significant implementation 
complications; has attracted a base of customers who are still learning 
how to use this offering; and has encountered a market that is 
relatively slow to react. Notice Regarding Confirm Service at 1-2.
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    \5\ Confirm is a special service that was recommended and 
approved as a result of Docket No. MC2002-1. It involves the use of 
PLANET barcodes to track mail as it flows through the system.
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    The Service's assessment is that Confirm is being offered in the 
context of comparatively rapid evolution of the Confirm infrastructure 
and steep learning curves for both customers and the Postal Service in 
determining how Confirm can best be used. Given this context, it has 
determined that an in-depth review of Confirm operations and 
performance and an evaluation of its price structure is warranted. It 
therefore concludes that it would be premature to propose increased 
fees at this time. The Service further states that it is evaluating its 
options, including the potential for changing the structure of the fee 
schedule, and expects that it will address both fees and service 
aspects of Confirm in a separate, future proceeding. Id. at 2-3.

VIII. Motions for Waiver of Various Commission Rules, Including a 
Combined Pleading Seeking Protective Conditions Prior to Filing USPS-
LR-K-85

    Motions for waiver of certain provisions of the library references 
rules for Category 1, 2, 3 and 5 library references.\6\ In four 
separate motions, the Service seeks waiver, to the extent deemed 
necessary, of the Commission's rules on library references for 
documents in the following categories: Category 1 (Data Reporting 
Systems); 2 (Witness Foundational Material); 3 (Reference Material); 
and 5 (Disassociated Material). Each motion clearly identifies the 
library references proposed to be covered by the waiver request. See 
Motion of the United States Postal Service Requesting Waiver of the 
Commission Rules with Respect to Category 1 Library References; Motion 
of the United States Postal Service Requesting Waiver of the Commission 
Rules with Respect to Category 2 Library References; Motion of the 
United States Postal Service Requesting Waiver of the Commission Rules 
with Respect to Category 3 Library References; and Motion of the United 
States Postal Service Requesting Waiver of the Commission Rules with 
Respect to Category 5 Library References, all filed April 8, 2005 
(Waiver Motions). Answers to the referenced Waiver Motions are due no 
later than May 2, 2005.
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    \6\ Library reference categories are identified in Commission 
rule 31(b)(2).
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    Combined motion for waiver of certain rules and request for 
protective conditions in connection with FedEx transportation agreement 
(USPS-LR-K-85). The Postal Service has prepared, but not filed, USPS-
LR-K-85, Calculation of FedEx Variability. This document is identified 
as a category 2 library reference sponsored by witness Nash (USPS-T-
17). Combined Waiver Motion at 1. The Service's reason for withholding 
this document is its interest in application of protective conditions. 
The proposed conditions appear as Attachment A to the Service's 
Combined Waiver Motion. The Service also seeks waiver of relevant 
portions of rules 31(k) and 54 for this document.
    In support of its interest in protective conditions, the Service 
states the FedEx agreement contains commercially sensitive information, 
given that it includes daily volume information and cost data for fuel 
charges, non-fuel charges, and handling charges, all on a daily basis, 
as well as applicable contract prices. Id. at 1. It also, among other 
things, notes that similar conditions were granted by the Postal Rate 
Commission in Docket No. R2001-1 for FedEx data. Id. at 2-3, citing 
Presiding Officer's Ruling No. R2001-1/5 (October 31, 2001). Answers to 
the Service Combined Waiver Motion are due no later than May 2, 2005.

IX. Participation

    The Commission invites participation in this case by interested 
persons. Commission rules allow a participant to elect full, limited or 
commenter status. Persons electing full or limited status shall file 
notices of intervention conforming to Commission rules no later than 
May 2, 2005. Persons seeking to intervene on a full or limited basis 
after that date must file a motion for intervention. Commenters do not 
need to file intervention notices or motions; instead, they may direct 
their comments to the attention of Steven W. Williams, Secretary of the 
Commission, 1333 H Street NW., Suite 300, Washington, DC 20268-0001. 
Commenters may also submit their views via electronic mail by 
addressing them to [email protected]. Persons unsure of their 
intervention status under the Commission's rules or seeking more 
information on how to participate in this case should contact Shelley 
S. Dreifuss, Director of the Commission's Office of the Consumer 
Advocate, by telephone at (202) 789-6837 or via electronic mail at 
[email protected].

X. Representation of the Interests of the General Public

    The Commission designates Shelley S. Dreifuss, director of the 
Commission's Office of the Consumer Advocate, to represent the 
interests of the general public in this proceeding, pursuant to 39 
U.S.C. 3624(a). Ms. Dreifuss shall direct the activities of Commission 
personnel assigned to assist her and, at an appropriate time, provide 
the names of these employees for the record. Neither Ms. Dreifuss nor 
the assigned personnel shall participate in or advise as to any 
Commission decision in this proceeding, other than in their designated 
capacity.

XI. Prehearing Conference Date; Other Scheduling Matters

    The Commission will hold a prehearing conference on Thursday, May 
5, 2005, at 10 a.m. in the Commission's hearing room, 1333 H Street 
NW., Suite 300, Washington, DC 20268-0001. The Commission appreciates 
the Service's interest in and efforts related to an expedited schedule. 
The intervention deadline and date for the prehearing conference 
responds in part to this interest. It is anticipated that the Presiding 
Officer will promptly issue a ruling addressing topics to be discussed 
at the prehearing conference and inviting participants to suggest other 
relevant topics. Other procedural matters, including the compressed 
schedule the Service seeks, will be addressed shortly. It is ordered:
    1. The Commission hereby institutes Docket No. R2005-1 for 
consideration of the Service's request for omnibus rate and fee 
changes.
    2. The Commission will sit en banc in this proceeding.
    3. Notices of intervention will be accepted through May 2, 2005.
    4. Shelley S. Dreifuss, director of the Commission's Office of the 
Consumer Advocate, is designated to represent the interests of the 
general public in this proceeding.
    5. The Commission authorizes settlement negotiations, without 
prejudice to participants' opportunity to seek a hearing.
    6. The Commission appoints the Postal Service as settlement 
coordinator.
    7. A prehearing conference will be held on Thursday, May 5, 2005, 
at 10 a.m. in the Commission's hearing room.
    8. Comments on the need for expedition and procedures for

[[Page 20191]]

facilitating settlement of this case are due no later than May 2, 2005.
    9. Answers to the Motion of the United States Postal Service for 
Waiver and for Protective Conditions for Library Reference that 
Includes Costs and Other Data Associated with the FedEx Transportation 
Agreement, filed April 8, 2005, are due no later than May 2, 2005.
    10. Answers to Motion of the United States Postal Service 
Requesting Waiver of the Commission Rules with Respect to Category 1 
Library References, filed April 8, 2005, are due no later than May 2, 
2005.
    11. Answers to the Motion of the United States Postal Service 
Requesting Waiver of the Commission Rules with Respect to Category 2 
Library References, filed April 8, 2005, are due no later than May 2, 
2005.
    12. Answers to the Motion of the United States Postal Service 
Requesting Waiver of the Commission Rules with Respect to Category 3 
Library References, filed April 8, 2005, are due no later than May 2, 
2005.
    13. Answers to the Motion of the United States Postal Service 
Requesting Waiver of the Commission Rules with Respect to Category 5 
Library References, filed April 8, 2005, are due no later than May 2, 
2005.
    14. The Secretary shall cause this Notice and Order to be published 
in the Federal Register.

    By the Commission.
Steven W. Williams,
Secretary.
[FR Doc. 05-7613 Filed 4-15-05; 8:45 am]
BILLING CODE 7710-FW-P