[Federal Register Volume 71, Number 10 (Tuesday, January 17, 2006)]
[Rules and Regulations]
[Pages 2464-2472]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-180]


=======================================================================
-----------------------------------------------------------------------

POSTAL RATE COMMISSION

39 CFR Part 3001

[Docket No. RM2004-1; Order No. 1449]


Definition of Postal Service

AGENCY: Postal Rate Commission.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This document addresses adding a definition of the term 
``postal service'' to the rules of practice. This change is prompted by 
the Postal Service's action with respect to nonpostal initiatives. 
There is often controversy and uncertainty regarding the postal 
character of the services provided under those initiatives. The 
definition provides guidance to the Postal Service and the general 
public concerning services that are subject to sections 3622 and 3623 
of the Postal Reorganization Act.

DATES: 
    1. Effective Date: February 16, 2006.
    2. Deadline for (optional) Postal Service motion to dismiss Docket 
No. C2004-1: January 17, 2006.
    3. Deadline for (optional) Postal Service update on 14 services 
identified in Consumer Action petition: February 17, 2006.
    4. Deadline for Postal Service updates on postal and nonpostal 
services: June 1, 2006.

ADDRESSES: File all documents referred to in this order electronically 
via the Commission's Filing Online system at http://www.prc.gov.

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



[[Page 2465]]

SUPPLEMENTARY INFORMATION:

Regulatory History

    69 FR 3288, January 23, 2004.
    69 FR 11353, March 10, 2004.
    69 FR 67514, November 12, 2004.

I. Introduction and Summary

    The Commission initiated this rulemaking to consider amending its 
Rules of Practice and Procedure, 39 CFR 3001.1 et seq., to include a 
definition of the term ``postal service.'' \1\ As a result of comments 
received in response to Order No. 1389 as well as further consideration 
of the issues presented, the Commission proposed a revised definition, 
which read as follows: ``Postal service'' means the receipt, 
transmission, or delivery by the Postal Service of correspondence, 
including, but not limited to, letters, printed matter, and like 
materials; mailable packages; or other services supportive or ancillary 
thereto.'' \2\ The revised definition differed from that originally 
proposed in two principal respects. First, it made the Service's 
statutory ``postal service'' duties the touchstone of the definition 
rather than any specific activities the Postal Service may or may not 
perform. Second, in response to comments,\3\ the accompanying 
discussion made clear what had been implied--that electronic 
communication services offered by the Postal Service to the public fell 
within the scope of the definition.
---------------------------------------------------------------------------

    \1\ See Proposed Rulemaking Concerning Amendment to the Rules of 
Practice and Procedure, PRC Order No. 1389, January 16, 2004.
    \2\ Notice and Order Concerning Proposed Amendment to the 
Commission's Rules of Practice and Procedure, PRC Order No. 1424, 
November 12, 2004, at 3-4, 49.
    \3\ See, e.g., Comments of United Parcel Service in Support of 
Proposed Rule, March 9, 2004, at 3-4; and Office of the Consumer 
Advocate and Consumer Action Comments on Proposed Amendment to the 
Commission's Rules of Practice and Procedure, March 15, 2004, at 4-
6; see also PostCom Comments on Proposed Rulemaking Concerning 
Amendment to the Rules of Practice and Procedure, March 1, 2004, at 
3, 4.
---------------------------------------------------------------------------

    Order No. 1424 provided interested persons an opportunity to 
comment on the revised definition. The proposal is supported by mailing 
and consumer interests, as well as by a competitor of the Postal 
Service. It is opposed by two commenters, albeit on entirely different 
grounds.
    Parcel Shippers Association (PSA), Pitney Bowes Inc., and the 
Office of the Consumer Advocate and Consumer Action (OCA/CA), endorse 
the revised definition as is.\4\ United Parcel Service (UPS) supports 
the proposed rule, but suggests that the definition be modified to 
delete the reference to correspondence.\5\ The Association for Postal 
Commerce (PostCom) argues that the Postal Service is not authorized to 
offer purely electronic services unrelated to physical mail delivery 
whether on a regulated or unregulated basis. In the alternative, based 
on the assumption that the Commission will proceed with defining postal 
service, PostCom suggests modifications to more closely track the 
statute.\6\ The Postal Service restates its earlier contention that the 
Commission lacks the authority to determine the scope of its own 
jurisdiction, contending that the definition may only restate the 
``prevailing law,'' which it defines by reference to two court 
opinions.\7\
---------------------------------------------------------------------------

    \4\ See Comments of the Parcel Shippers Association to the 
Proposed Rule Concerning the Definition of ``Postal Service,'' 
January 11, 2005; Comments of Pitney Bowes Inc., February 1, 2005; 
and Office of the Consumer Advocate and Consumer Action Comments on 
Proposed Amendment to the Commission's Rules, February 1, 2005, at 2 
(OCA/CA Initial Comments). OCA/CA also suggest procedures by which 
the Commission can monitor the commercial activities of the Postal 
Service for compliance with the Postal Reorganization Act. Id. at 9-
19.
    \5\ Reply Comments of United Parcel Service on Revised Proposed 
Amendment to the Commission's Rule, March 1, 2005, at 2-3 (UPS Reply 
Comments).
    \6\ PostCom Comments on Proposed Rulemaking Concerning the 
Definition of ``Postal Service'', February 1, 2005 (PostCom Initial 
Comments).
    \7\ Initial Comments of the United States Postal Service in 
Response to Order No. 1424, February 1, 2005, at 4-6 (Postal Service 
Initial Comments).
---------------------------------------------------------------------------

    The Commission finds the comments of the parties to be helpful and, 
upon review, has revised the definition in minor respects in the final 
rule. The Postal Service is alone in its view that the Commission lacks 
authority to determine the scope of its own jurisdiction. While it 
reiterates that position in its comments, it fails to address the 
substance of Order No. 1424, which discussed in detail the merits of 
the Postal Service's arguments and the basis for the Commission's 
conclusions.\8\ In the instant order, the Commission rejects the Postal 
Service's contention that it is limited simply to restating 
``prevailing law'' as the Postal Service would define it, finding it 
both contrived and myopic. The final rule imposes no restrictions on 
the types of service, postal or otherwise, that the Postal Service may 
wish to offer. It remains free to offer whatever services or products 
management may wish to offer subject to the requirements of the Act. 
For those that fall within the meaning of the final rule, however, the 
Postal Service has an obligation to obtain a recommended decision 
before commencing a service or charging the public. Procedures are 
established herein to address existing services unilaterally begun by 
the Postal Service which meet the definition of the term postal 
service.
---------------------------------------------------------------------------

    \8\ See Order No. 1424, supra, at 6-39.
---------------------------------------------------------------------------

    The rule is supported by mailers, private industry in competition 
with the Postal Service, and consumer interests. The final rule 
comports with the statute, legislative history, and case law. It is in 
the public interest and is necessary and proper for the Commission to 
carry out its responsibilities under the Act.
    Having thoroughly considered the record, including the parties' 
comments, in this proceeding, the Commission finds it appropriate to 
adopt as its final rule new paragraph (s) to Sec.  3001.5 of its Rules 
of Practice and Procedure, 39 CFR 3001.1, as follows: ``Postal service 
means the receipt, transmission, or delivery by the Postal Service of 
correspondence, including, but not limited to, letters, printed matter, 
and like materials; mailable packages; or other services incidental 
thereto.'' The amendment is effective 30 days after publication in the 
Federal Register.

II. The Unsettled Nature of New Services

    This proceeding was precipitated by a petition filed by Consumer 
Action, which requested the Commission to commence proceedings 
concerning 14 services offered by the Postal Service without prior 
Commission approval.\9\ It also was precipitated by a number of other 
recent proceedings in which the ``postal'' character of a new service 
was squarely at issue. In Order No. 1389, the Commission discussed the 
relatively few proceedings in which it was called upon to consider, for 
jurisdictional purposes, the meaning of the term ``postal service,'' 
following the decision in Associated Third Class Mail Users v. U.S. 
Postal Service (ATCMU),\10\ which vested the Commission with 
jurisdiction over special services.\11\ Following the Commission's 
review of special services in Docket No. R76-1 and Docket No. MC78-3, 
involving the Postal Service's request for a recommended decision to 
establish an Electronic Computer Originated Mail subclass, nearly 20 
years elapsed before the Commission had occasion again to consider the 
issue as presented in a series of dockets commencing in 1995.
---------------------------------------------------------------------------

    \9\ See PRC Order No. 1388, Docket *2003, January 16, 2004.
    \10\ Associated Third Class Mail Users v. U.S. Postal Service, 
405 F.Supp. 1109 (D. D.C. 1975); National Association of Greeting 
Card Publishers v. U.S. Postal Service, 569 F.2d 570 (D.C. Cir. 
1976); vacated on other grounds, 434 U.S. 884 (1977).
    \11\ See PRC Order No. 1389, January 16, 2004, at 1-9.
---------------------------------------------------------------------------

    The first two dockets in this series, Docket Nos. C95-1 and C96-1, 
raised

[[Page 2466]]

the issue of the meaning of the term ``postal service,'' and are 
distinguishable from subsequent proceedings in that neither involved 
new technology.\12\ Docket No. C95-1 concerned shipping and handling 
charges for orders placed with the Postal Service Philatelic Service 
Fulfillment Center,\13\ while Docket No. C96-1 concerned fees for a new 
packaging service (Pack & Send).\14\ Docket No. C99-1 introduced a 
novel element to the controversy involving the Postal Service's 
offering new services to the public without first requesting a 
recommended decision from the Commission, namely, the use of new 
technology to provide the service; indeed this has been central to 
virtually all subsequent disputes over the Postal Service's unilateral 
offering of new services.\15\
---------------------------------------------------------------------------

    \12\ Since this is the third order in this proceeding, it will 
be assumed that the reader is familiar with the background of this 
proceeding, including the Commission's institutional history 
involving jurisdictional determinations. Hence, the following 
discussion will be somewhat abbreviated. For a more complete 
discussion, see Order No. 1389, supra, at 1-9.
    \13\ The Commission dismissed the complaint, finding that the 
handling and shipping of catalog orders placed with the Philatelic 
Fulfillment Service Center were not closely related to the delivery 
of mail and, thus, charges for those services did not constitute 
fees for postal services under 39 U.S.C. 3662. PRC Order No. 1075, 
Docket No. C95-1, September 11, 1995.
    \14\ The Commission found Pack & Send to be a postal service 
because, among other things, it represented ``an entirely new form 
of access'' to parcel services and because of its potential public 
effect, particularly on the Commercial Mailing Receiving Agency 
industry. PRC Order No. 1145, Docket No. C96-1, December 16, 1996, 
at 12, 17-18. Following this finding, the Commission held further 
proceedings in Docket No. C96-1 in abeyance pending a filing by the 
Postal Service requesting a recommended decision concerning Pack & 
Send service, or the filing of a notice by the Service indicating 
that the packaging service was discontinued. Id. at 25. Further 
proceedings proved unnecessary as the Postal Service chose to 
discontinue Pack & Send service. PRC Order No. 1171, Docket No. C96-
1, April 25, 1997.
    \15\ The sole exception is Docket No. C2004-3 involving stamped 
stationery.
---------------------------------------------------------------------------

    The complaint in Docket No. C99-1 concerned Post Electronic Courier 
Service (Post E.C.S.), an all-electronic means of transmitting 
documents securely via the Internet.\16\ This proceeding was 
distinguishable from the earlier complaints because it involved an all-
electronic service, and also because the Commission never reached the 
question whether Post E.C.S. was or was not a postal service, as the 
complaint was subsequently dismissed as moot.\17\ Notably, however, the 
Commission did not find it dispositive that service did not entail 
hard-copy mail.\18\
---------------------------------------------------------------------------

    \16\ In its motion to dismiss, the Postal Service argued that 
the Commission lacked the authority to determine the status of the 
service as either postal or nonpostal. The Commission denied the 
motion, finding that its mail classification authority empowered it 
to review the status of services proposed or offered by the Postal 
Service. Nor was the Commission persuaded, based on the record 
developed to that point, that the service did not include domestic 
operations or that it was nonpostal. PRC Order No. 1239, Docket No. 
C99-1, May 3, 1999, at 12-21.
    \17\ PRC Order No. 1352, Docket No. C99-1, November 6, 2002.
    \18\ PRC Order No. 1239, supra, at 17-21.
---------------------------------------------------------------------------

    In Docket No. R2001-1, a discovery dispute ensued over various 
services offered by the Postal Service, e.g., Post E.C.S., USPS 
eBillPay, and USPS Send Money. The Postal Service objected to these 
interrogatories, characterizing the services as nonpostal and 
irrelevant to the rate proceeding. The Postal Service was directed to 
respond to certain interrogatories; however, this ruling was suspended 
as a result of a settlement filed in that proceeding.\19\
---------------------------------------------------------------------------

    \19\ See P.O. Ruling R2001-1/42, January 29, 2002, at 5-11, 13.
---------------------------------------------------------------------------

    The petition filed by Consumer Action, which became the springboard 
for this rulemaking, requested the Commission to initiate proceedings 
concerning 14 services offered by the Postal Service without prior 
Commission approval. The 14 services ranged from electronic services, 
such as online payment services and electronic postmark, to 
miscellaneous other services, such as retail merchandise and the 
Unisite Antenna Program. The Postal Service argued that all of the 
services identified in the petition were nonpostal.\20\
---------------------------------------------------------------------------

    \20\ For a complete discussion of issues concerning the 
petition, see PRC Order No. 1388, Docket *2003, January 16, 2004.
---------------------------------------------------------------------------

    Subsequent to the commencement of this proceeding, DigiStamp, Inc. 
filed a complaint which, among other things, contends that the Postal 
Service is offering a postal service, Electronic Postmark, without 
first obtaining a recommended decision from the Commission.\21\ As an 
element of its complaint, DigiStamp alleges competitive harm.\22\ The 
Postal Service submitted an answer to the complaint as well as a motion 
to dismiss, arguing, inter alia, that the Commission ``lacks authority 
to resolve the claims that DigiStamp has made.'' \23\ DigiStamp 
submitted a reply to the Postal Service's motion, challenging the 
Postal Service's authority to implement Electronic Postmark 
unilaterally.\24\ The matter is pending before the Commission.
---------------------------------------------------------------------------

    \21\ See Complaint of DigiStamp, Docket No. C2004-2, February 
25, 2004.
    \22\ Id. at 3 and 7.
    \23\ Motion of the United States Postal Service to Dismiss, 
Docket No. C2004-2, April 26, 2004, at 5. In the alternative, the 
Postal Service argues that the complaint should be dismissed because 
Electronic Postmark is a nonpostal service. Id. at 6 et seq. See 
also Answer of the United States Postal Service, Docket No. C2004-2, 
April 26, 2004.
    \24\ Digistamp Answer in Response to Motion of the United States 
Postal Service to Dismiss, Docket No. C2004-2, May 3, 2004.
---------------------------------------------------------------------------

    Finally, the dispute over the status of various services offered by 
the Postal Service continued in the latest omnibus rate proceeding, 
Docket No. R2005-1. During discovery, OCA sought relatively detailed 
data about every domestic service or product sold by the Postal Service 
that is not contained in the Domestic Mail Classification Schedule. The 
Postal Service provided some information but objected to the 
interrogatories arguing, among other things, lack of relevance, i.e., 
that nonpostal services are outside the Commission's jurisdiction. 
Following motion practice, the Postal Service was directed to file 
certain additional information in response to the interrogatories.\25\
---------------------------------------------------------------------------

    \25\ See P.O. Ruling R2005-1/58 and P.O. Ruling R2005-1/70.
---------------------------------------------------------------------------

III. The Commission Has Authority to Determine Its Own Jurisdiction

    Section 3603 of the Postal Reorganization Act, 39 U.S.C. 101 et 
seq., authorizes the Commission to adopt ``rules and regulations and 
establish procedures, subject to chapters 5 and 7 of title 5, and take 
any other action [it] deem[s] necessary and proper to carry out [its] 
functions and obligations to the Government of the United States and 
the people as prescribed under this chapter.'' 39 U.S.C 3603. No party 
disputes the Commission's authority to adopt a definition of the term 
``postal service.'' The Postal Service, however, argues that the 
Commission is limited simply to restating ``prevailing law,'' which it 
defines as the ATCMU opinion as affirmed by NAGCP I.\26\
---------------------------------------------------------------------------

    \26\ National Association of Greeting Card Publishers v. U.S. 
Postal Service, 569 F.2d 570 (D.C. Cir. 1976) (NAGCP I), vacated on 
other grounds, 434 U.S. 884 (1977). See Postal Service Initial 
Comments at 3.
---------------------------------------------------------------------------

    The Postal Service concept of ``prevailing law'' is contrived. On 
the one hand, it would limit those precedents to the factual situation 
prevailing 30 years ago. On the other hand, the Postal Service ignores 
``prevailing law'' establishing that the Commission's interpretation, 
not the Postal Service's, is entitled to deference regarding rate and 
classification matters.
    While ATCMU and NAGCP I provide a standard for evaluating analogous 
services, it is indisputable that those opinions addressed a narrow 
question, i.e., whether certain long-established, traditional special 
services were postal

[[Page 2467]]

services or not.\27\ Those opinions did not address or even consider 
the potential impact of the profound technological changes that have 
occurred in the nearly 30 years since they were issued and which have 
been central to many of the new services offered unilaterally by the 
Postal Service. The ``prevailing law'' is simply not the prevailing 
factual situation; rather it is the standards which are to be used to 
evaluate and resolve controversies wrought by wholly new technologies 
not envisioned when the opinions were issued.\28\
---------------------------------------------------------------------------

    \27\ The Postal Service has concluded similarly. In their 
decision in Docket No. C96-1, the Governors characterized ATCMU as 
the ``one case which attempted a definition of postal versus 
nonpostal as applied to specific services then offered.'' Decision 
of the Governors of the United States Postal Service on the 
Recommended Decision of the Postal Rate Commission on the Complaint 
of the Coalition Against Unfair USPS Competition, Docket No. C96-1, 
April 8, 1997, at 11 (Governors' Decision Docket No. C96-1) 
(emphasis added).
    \28\ In an effort to bolster its contention that the legal 
standard for the term ``postal service'' has been definitively 
determined, the Postal Service quotes a passage from Order No. 1145 
paraphrasing NAGCP I. Postal Service Initial Comments at 2. The 
attempt is unavailing. The Commission's reliance on that precedent 
to frame the jurisdictional issue in Docket No. C96-1 was entirely 
appropriate since Pack & Send service had the earmarks of service 
traditionally offered by the Postal Service, notably without any 
reliance on new technology. In contrast, in Docket No. C99-1, the 
Commission found existing precedent inadequate to resolve the 
jurisdictional dispute regarding Post E.C.S. service, an all-
electronic means of transmitting documents securely via the 
Internet. PRC Order No. 1239, May 3, 1999, at 18. As noted above, 
the Commission did not find it dispositive that Post E.C.S. service 
did not entail hard-copy mail. Id. at 15-21.
---------------------------------------------------------------------------

    The Postal Service takes the position that the Commission lacks 
authority to determine the scope of its own jurisdiction under Chapter 
36 of the Act.\29\ The Postal Service further contends that it cannot 
be bound by any definition that extends beyond its interpretation of 
prevailing law.\30\ Under its theory, its unilateral declaration of 
whether any service or product is or is not postal is determinative. 
Thus, under the Postal Service's theory, the Commission's jurisdiction 
is based not on its own consideration of the facts as applicable to 
policies and the rate and classification factors of the Act, but rather 
on what the Postal Service unilaterally determines to be postal.
---------------------------------------------------------------------------

    \29\ See Initial Comments of the United States Postal Service, 
March 15, 2004, at 1-2.
    \30\ Postal Service Initial Comments at 4. This is similar to 
its claim in earlier comments that it ``would not in any way be 
bound by the definition which the Commission is now proposing [in 
Order No. 1389] to incorporate into its rules.'' Initial Comments of 
the United States Postal Service, March 15, 2004, at 3.
---------------------------------------------------------------------------

    In Order No. 1424, the Commission rejected this claim, explaining 
in some detail the basis of its conclusion that it has the primary 
responsibility for interpreting whether services offered by the Postal 
Service are subject to Chapter 36 of the Act.\31\ Nothing in the Postal 
Service's comments warrants altering that conclusion. The Postal 
Service's interpretation remains wholly unconvincing.
    The Postal Service's view of the ``prevailing law'' ignores a 
series of cases, including NAGCP I, holding that the Commission's 
interpretation of rate and classification matters is due deference.\32\
---------------------------------------------------------------------------

    \31\ PRC Order No. 1424, supra, at 2; see also id. at 6-9. This 
has been a consistent long-held position by the Commission. See, 
e.g., PRC Op. R74-1, Vol. 2, Appendix F; PRC Op. R76-1, Vol. 1, at 
263 et seq., and Vol. 2, Appendix F; PRC Order No. 1239, May 3, 
1999, at 9-14; see also United Parcel Service v. U.S. Postal 
Service, 604 F.2d 1370, 1381 (3rd Cir. 1979), cert. denied, 446 U.S. 
957 (1980).
    \32\ Furthermore, the Postal Service's interpretation is 
contrary to the well-settled principle that an agency's 
interpretation of its own jurisdiction is entitled to deference. See 
Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 
837, 842-44 (1984) (Chevron); Transmission Access Policy Study Group 
v. Federal Energy Regulatory Commission, 225 F.3d 667, 694 (D.C. 
Cir. 2000) (``It is the law of this circuit that the deferential 
standard of [Chevron] applies to an agency's interpretation of its 
own statutory jurisdiction.''); and Oklahoma Natural Gas Company v. 
Federal Energy Regulatory Commission, 28 F.3d 1281, 1283 (D.C. Cir. 
1994).
---------------------------------------------------------------------------

    The Supreme Court has affirmed this principle:

    Although the Postal Reorganization Act divides ratemaking 
responsibility between two agencies, the legislative history 
demonstrates `that ratemaking * * * authority [was] vested primarily 
in [the] Postal Rate Commission.' S. Rep. No. 91-912, p. 4 (1970) 
(Senate Report); see Time, Inc. v. USPS, 685 F. 2d 760, 771 (CA2 
1982); Newsweek, Inc. v. USPS, 663 F. 2d, at 1200-1201; NAGCP III, 
197 U.S. App. D.C., at 87, 607 F. 2d, at 401. The structure of the 
Act supports this view. While the Postal Service has final 
responsibility for guaranteeing that total revenues equal total 
costs, the Rate Commission determines the proportion of the revenue 
that should be raised by each class of mail. In so doing, the Rate 
Commission applies the factors listed in Sec.  3622(b). Its 
interpretation of that statute is due deference. See Time, Inc. v. 
USPS, 685 F. 2d, at 771; United Parcel Service, Inc. v. USPS, 604 F. 
2d 1370, 1381 (CA3 1979), cert. denied, 446 U.S. 957 (1980).

    National Association of Greeting Card Publishers v. U.S. Postal 
Service, 462 U.S. 810, 821 (1983).
    The Court of Appeals for the D.C. Circuit specifically resolved any 
suggestion that the Commission lacked the implicit authority to assert 
jurisdiction: ``[A]ny reasonable examination of the purposes of the Act 
discloses Congress' implicit design that the distinct functions of 
service provision and rate adjustment be divided between the Postal 
Service and the Rate Commission.'' NAGCP I at 597.\33\
---------------------------------------------------------------------------

    \33\ The court's holding answers the Postal Service's misplaced 
claim that the Act excludes ``an implicit delegation of authority to 
the Commission to define postal and nonpostal services.'' Postal 
Service Initial Comments at 6-7. Moreover, the Postal Service's 
statement misreads the order. The Commission has not asserted or 
even suggested that it has authority to define nonpostal services.
---------------------------------------------------------------------------

    Criticizing the Postal Service's jurisdictional argument as 
``wholly unconvincing,'' \34\ the Court noted that the Commission 
``advances an interpretation of the Act quite at odds with that of the 
Service and fully in accord with the conclusion reached by the district 
court.'' In light of this, the Court of Appeals stated that ``[t]he 
district court, in short, without expressly stating so might simply 
have deferred to the long-held and reasonable interpretation given the 
statute by the very agency whose jurisdiction is at issue.'' \35\
---------------------------------------------------------------------------

    \34\ NAGCP I at 597.
    \35\ Id. at 595, n.110.
---------------------------------------------------------------------------

    The 3rd Circuit Court of Appeals reaffirmed the principle 
succinctly: ``[I]t was recognized there, [in NAGCP v. USPS, 569 F.2d 
570 (D.C. Cir. 1976)] as we do here, that the agency entitled to 
deference in the interpretation of 39 U.S.C. 3622-24 is the Rate 
Commission--not the Postal Service--as it is the Rate Commission which 
is charged with making recommended decisions on changes in rates and 
mail classification.'' \36\
---------------------------------------------------------------------------

    \36\ United Parcel Service v. U.S. Postal Service, 604 F.2d 
1370, 1381 (3d Cir. 1979), cert. denied, 446 U.S. 957 (1980).
---------------------------------------------------------------------------

    In sum, it is clear that ``rate and classification supervision 
[vests] in the Postal Rate Commission.'' \37\
---------------------------------------------------------------------------

    \37\ United Parcel Service v. U.S. Postal Service, 455 F. Supp. 
857, 869 (E.D. Pa. 1978), aff'd, 604 F.2d 1370 (3d Cir. 1979), cert. 
denied, 446 U.S. 957 (1980).
---------------------------------------------------------------------------

    Furthermore, the deference afforded the agency is particularly 
compelling regarding challenges to rules adopted under notice and 
comment rulemaking.\38\ In such a situation, if Congress has not 
directly addressed a matter and if the agency's answer is based upon a 
permissible construction of the statute, the agency's interpretation 
will be upheld by a reviewing court.\39\ This is especially

[[Page 2468]]

true when the agency is using the rulemaking to clarify the extent of 
its jurisdiction.\40\ Courts give strong deference to agency 
regulations that have undergone strict notice and comment rulemaking 
because: \41\
---------------------------------------------------------------------------

    \38\ U.S. v. Mead Corp., 533 U.S. 218, 229-31 (2001). 
(clarifying that Chevron deference is afforded to rules issued with 
procedural safeguards such as notice and comment). See generally 
Chevron, supra, 467 U.S. at 842-44 (1984), concerning the high 
degree of deference afforded to agencies.
    \39\ Chevron U.S.A., Inc. v. Natural Resources Defense Council, 
467 U.S. 837, 842-44 (1984).
    \40\ National Ass'n of Greeting Card Publishers v. U.S. Postal 
Service, 462 U.S. 810, 820-21 (1983) (Upholding the Commission's 
position that the Act does not dictate or exclude the use of any 
method of attribution of costs method and stating that: ``[a]n 
agency's interpretation of its enabling statute must be upheld 
unless the interpretation is contrary to the statutory mandate or 
frustrates Congress' policy objectives.''); see also Federal 
Election Commission v. Democratic Senatorial Campaign Committee, 454 
U.S. 27, 32 (1981).
    \41\ Fior d'Italia, Inc. v. United States, 242 F.3d 844, 852 
(9th Cir. 2001), rev'd on other grounds, 536 U.S. 238 (2002).

    The rulemaking process, by its very design, encourages public 
scrutiny of an agency's proposed course of action. By giving notice 
of the proposed rule, the agency provides interested parties with 
the opportunity to express their views and bring their political 
---------------------------------------------------------------------------
influence to bear on the process.

These procedural safeguards give all interested parties the ability to 
influence the rulemaking and agency process in a meaningful way.\42\ 
Accordingly, a rule promulgated and vetted through the formal 
rulemaking process by the Commission on matters clarifying its 
jurisdiction is entitled to significant deference, whereas ad hoc, 
unilateral, unchecked Postal Service decisions on services it believes 
are not subject to Commission review are not.\43\
---------------------------------------------------------------------------

    \42\ See Ohio Dep't of Human Servs. v. U.S. Dep't of Health and 
Human Servs., 862 F.2d 1228, 1236 (6th Cir. 1988).
    \43\ See U.S. v. Mead Corp., 533 U.S. 218, 229-31 (2001). Even 
assuming that the Postal Service's unilateral determinations were 
entitled any deference, it would be minimal since its determinations 
are not pursuant to APA's rulemaking or adjudicatory procedures. See 
also Skidmore v. Swift & Co., 323 U.S. 134 (1984).
---------------------------------------------------------------------------

IV. The Meaning of the Term ``Postal Service'' Is Not Frozen in Time

    In its comments, the Postal Service contends that the meaning of 
the term ``postal service'' has been, for all intents and purposes, 
settled since the mid-1970s, following the District Court's ATCMU 
opinion as affirmed in NAGCP I.\44\ It argues that both the Commission 
and it have employed the ``resulting legal standard since that 
time[,]'' quoting, as affirmation, the Commission's order in Docket No. 
C96-1 involving the complaint regarding Pack & Send service.\45\
---------------------------------------------------------------------------

    \44\ Postal Service Initial Comments, supra, at 1-2.
    \45\ Id. at 2.
---------------------------------------------------------------------------

    The Postal Service's premise, that the meaning of the term ``postal 
service'' was resolved in the 1970s, is flawed. First, the question 
before the ATCMU court was a narrow one, namely whether or not certain 
special services were subject to the Commission's jurisdiction. In 
affirming the Commission's jurisdiction, neither the ATCMU nor the 
NAGCP I courts addressed the jurisdictional status of services not 
before them, let alone completely new forms of service.
    As a general matter, each of the services then at issue, e.g., 
forwarding and return, registry, insurance, collect on delivery, and 
money orders, was a long-time, traditional service offered by the 
Postal Service and its predecessor, the Post Office Department. 
Significantly, each involved some form of hard-copy service. Thus, 
there was no reason for the court to engage in a broader inquiry.
    Secondly, the Postal Service's argument rests on an implicit 
assumption that the absence of controversy renders the matter settled. 
In fact, the absence of controversy is merely an indication of 
inactivity, a manifestation of the status quo, not an indication that 
the matter is settled. As discussed above, during the 20 years 
following the ATCMU opinion, there was simply little occasion or need 
to revisit the issue. The absence of controversy is of no import in 
determining whether the term ``postal service'' applies to the spate of 
new services introduced by the Postal Service, some of which entail the 
use of electronic communications not in existence at the time of the 
ATCMU opinion.
    Finally, the Postal Service overreaches in characterizing the 
matter as settled based on the ATCMU opinion. The Governors' remarks in 
Docket No. C96-1 cast that opinion in the correct light. While 
expressing various policy concerns with the Commission's conclusion in 
that proceeding that ``Pack & Send'' was a postal service, the 
Governors note that, ``[v]irtually the only judicial assistance for the 
task has come from one case, litigated more than 23 years ago, early in 
the history of the reorganized Postal Service.'' \46\ The ATCMU opinion 
remains instructive in evaluating proposed services that exhibit 
characteristics similar to those at issue in that case, and for 
identifying the agency responsible for applying Chapter 36 to entirely 
new services based on technologies not extant at the time of that 
decision. Contrary to the Postal Service's contention, ATCMU is not 
dispositive of matters it never considered, let alone addressed.
---------------------------------------------------------------------------

    \46\ Governors' Decision Docket No. C96-1, supra, at 17.
---------------------------------------------------------------------------

    The Governors' decision is pertinent for a separate reason. In 
discussing its policy concerns with the Commission's order, the 
Governors lament the lack of clarity surrounding what is or is not a 
postal service. ``It would be far better if the legal standards were 
clear, well settled, and universally understood, so that full attention 
could be given to meeting the real needs of the public.'' Id. at 16. 
``With the benefit of additional years of experience, perhaps it is now 
time to revisit the drawing of the relevant lines.'' Id. at 17. The 
Commission does not disagree with these sentiments and, indeed, as 
noted in prior orders, they are consistent with the purpose of this 
proposed rulemaking.
    In amending its Rules of Practice to include a definition of the 
term ``postal service,'' the Commission's intent is ``to provide 
guidance to the Postal Service and the public for evaluating what falls 
within the scope of sections 3622 and 3623 of the Postal Reorganization 
Act.'' \47\ The need to develop a definition became apparent because, 
as evident from the discussion above, the jurisdictional status of 
various services offered unilaterally by the Postal Service had become 
increasingly controversial. Accordingly, the Commission concluded that 
``it would be administratively most efficacious to clarify [the term] 
by rule rather than on an ad hoc basis.'' \48\ The Commission's 
decision to proceed in this fashion is well within its discretion.\49\
---------------------------------------------------------------------------

    \47\ PRC Order No. 1424, November 12, 2004, at 1.
    \48\ PRC Order No. 1389, January 16, 2004, at 8; see also PRC 
Order No. 1424, supra, at 3.
    \49\ See NLRB v. Bell Aerospace Co., 416 U.S. 267, 290-95 
(1974); see also SEC v. Chenery Corp., 332 U.S. 194, 199-204 (1947).
---------------------------------------------------------------------------

    It has also become apparent that the uncertainty is exacerbated by 
a lack of transparency. Service may be offered (and subsequently 
terminated) by the Postal Service without an opportunity for any public 
input or review. Illustratively, many of the services at the heart of 
Consumer Action's petition are no longer offered by the Postal Service 
or are offered in reconstituted form. Some may have had or continue to 
have substantial public effect.
    The Postal Service's status as a government entity supports the 
need for Commission review of new postal products. Services provided 
include those subject to its statutory monopoly as well as those in 
competition with the private sector. The potential for harm is 
significant, raising issues of possible undue discrimination/preference 
and unfair competition. The need to prevent this is acute and the 
statute provides a means for affected parties to be heard. 39 U.S.C. 
3624(a). The Commission fully appreciates the Postal Service's

[[Page 2469]]

need to grow revenues.\50\ The Commission, however, has a concomitant 
duty to consider, among other things, the effect of establishing new 
postal services and their rates on the general public and on 
competitive enterprises in the private sector.
---------------------------------------------------------------------------

    \50\ See Report on Nonpostal Initiatives, Docket *2003, March 
10, 2003, at 1 (``To fulfill its universal service mandate and 
mission, the Postal Service must find ways to use existing resources 
to generate new revenue.'')
---------------------------------------------------------------------------

    None of the foregoing is intended to suggest that any specific 
existing, but unreviewed service, or any new service offered by the 
Postal Service would necessarily be considered a postal service. But 
for those that fall reasonably within the meaning of the rule, it is 
imperative that the Postal Service follow the requirements of the 
statute, i.e., by requesting a recommended decision from the Commission 
thereby allowing affected members of the public an opportunity to 
present facts and argument before an expert, independent agency.

V. The Rule Does Not Limit Services the Postal Service May Wish to 
Offer

    In Order No. 1424, responding to a Postal Service argument that a 
Commission definition of the term ``postal service'' imposes no limit 
on its authority under the Act, the Commission made it clear that the 
rule in no way limits the types of service, postal or otherwise, that 
the Postal Service may wish to offer.

    The Postal Service is free to offer whatever services or 
products it wishes subject to the strictures of the Act. However, 
for those that are postal services, as defined by the Commission, 
the Postal Service has an obligation to obtain a recommended 
decision before commencing a service or charging the public.'' \51\
---------------------------------------------------------------------------

    \51\ PRC Order No. 1424, supra at 7-8.

    The Postal Service quotes this passage and argues that it is the 
Commission's belief that ``however it expands its definition of postal 
services, the Postal Service would be required to seek its approval 
prior to offering any service that the Commission had defined to be a 
postal service.'' \52\ It then offers conjecture suggesting that the 
Commission may act arbitrarily, changing the definition capriciously 
over time.\53\
---------------------------------------------------------------------------

    \52\ Postal Service Initial Comments at 5.
    \53\ Id. at 5-6.
---------------------------------------------------------------------------

    The Postal Service's representation of the Commission's belief is a 
red herring; and its conjecture that the Commission will redefine the 
term ``postal service'' without regard to the statute or the facts is 
not well-founded. The Commission has thoroughly documented its reasons 
for initiating this rulemaking.\54\
---------------------------------------------------------------------------

    \54\ See, e.g., PRC Order No. 1389, supra at 1-12; and PRC Order 
No. 1424, supra, at 1-6.
---------------------------------------------------------------------------

    The final rule is a product of a long, deliberative process. 
Interested persons, including the Postal Service, have been afforded 
multiple opportunities to comment. The Commission has reviewed those 
comments thoroughly. In fact, based on that review, the Commission 
revised the proposed rule and gave parties a further opportunity to 
comment. At the same time, the Commission explained in detail the basis 
for its conclusions. Thus, this rulemaking does not represent a case of 
the Commission ``changing its thinking'' (see Postal Service Initial 
Comments at 6), but rather is the Commission's de novo review of its 
authority under Chapter 36 of the Act for purposes of providing 
guidance to the Postal Service and the public as to what constitutes 
postal services.
    Although the Postal Service may chafe under the requirements of the 
Act,\55\ it should respect the existing law. Under the Act, the Postal 
Service must submit a request to the Commission for a recommended 
decision on changes in the mail classification schedule to the extent 
it wishes to provide a postal service. Management's initial 
characterization of a service as postal or not neither deprives the 
Commission of jurisdiction over postal services nor precludes 
Commission review, on complaint or otherwise, for purposes of 
determining its statutory jurisdiction. Such review does not encroach 
on management's prerogatives in a manner not contemplated by the Act. 
The United Parcel Service court addressed this very point: \56\
---------------------------------------------------------------------------

    \55\ See, e.g., Governors' Decision, Docket No. C96-1, (``The 
Postal Service should be able, quickly and efficiently, to test the 
viability and design of service offerings that provide service of 
value to the general public, and that have already been established 
in the marketplace.'')
    \56\ United Parcel Service v. U.S. Postal Service, aff'd, 604 
F.2d 1370 (3d Cir. 1979), cert. denied, 446 U.S. 957 (1980).

    Management was vested in the Postal Service, rate and 
classification supervision in the Postal Rate Commission. We 
recognize and weigh heavily the congressional goal of greater 
managerial flexibility, but also recognize another congressional 
purpose that finds its incarnation in the Postal Rate Commission. 
The Commission's existence insures that an agency independent of the 
Postal Service will provide for public notice and hearing input of 
those affected by the proposed action and full and on the record, 
see 39 U.S.C. 3624(a), consideration of pertinent factors and 
congressionally imposed goals before certain types of decisions are 
made.

* * * * *
    The very existence and function of the Postal Rate Commission 
bespeaks a limitation on postal management's freedom.

    Moreover, the Commission has adopted rules specifically to 
accommodate requests for expeditious consideration of experimental 
classifications. See 39 CFR 3001.67. If the Postal Service believes 
that the current rules are inadequate for its purposes, it may petition 
for appropriate relief.
    In the final analysis, the Commission properly is acting to clarify 
the scope of its own jurisdiction. The proposed rule is consistent with 
the Act, its legislative history, and precedent. It concerns only the 
provision of postal services. The Postal Service remains free to offer 
whatever services are consistent with its statutory mandate. Nothing in 
the rule affects the lawfulness of the Postal Service initiatives that 
are not postal. The lawfulness of the Postal Service's nonpostal 
activities is not an issue for resolution by the Commission.\57\ 
However, the prices for services within the ambit of the rule adopted 
herein must be set in accordance with section 3624.
---------------------------------------------------------------------------

    \57\ See, e.g., PRC Order No. 724, December 2, 1986, at 11; PRC 
Order No. 1239, May 3, 1999, at 13.
---------------------------------------------------------------------------

VI. Substantive Comments

A. PostCom

    PostCom reiterates its claim that the Postal Service is not 
authorized to offer electronic services unless they are ``directly 
related to the delivery of `written and printed matter, parcels, and 
like materials.' '' \58\ Consequently, it contends that what it labels 
``purely electronic services'' cannot be within the Commission's 
jurisdiction.\59\ PostCom argues that the only technological advances 
contemplated by Congress in passing the Postal Reorganization Act in 
1970 ``are those that contribute to the efficient physical carriage of 
mail.'' \60\
---------------------------------------------------------------------------

    \58\ PostCom Initial Comments, PostCom initial Comments, supra. 
at 1.
    \59\ Ibid.; see PostCom Reply Comments on the Proposed 
Rulemaking Concerning the Definition of ``Postal Service,'' April 
15, 204, at 2.
    \60\ PostCom Initial Comments at 2.
---------------------------------------------------------------------------

    PostCom fails to support its suggestion that Congress contemplated 
that the Postal Service's use of new technology would be limited to 
physical deliveries with more than supposition. It argues that postal 
services ``cannot include all manner of technological innovations 
affecting communications'' such as facsimile, Voice-Over-Internet-
Protocol (VOIP), and video

[[Page 2470]]

conferencing, for to do so ``would open a Pandora's box of confusing 
federal jurisdictional issues.'' \61\ As OCA/CA note, PostCom reads 
Order No. 1424 too broadly.\62\ The Commission's jurisdiction is 
restricted to domestic services provided by the Postal Service and 
further to the panoply of ``postal services'' offered by the Postal 
Service, including those used to ``bind the Nation together through the 
personal, educational, literary, and business correspondence of the 
people.'' 39 U.S.C. 101(a). Thus, there is no federal jurisdictional 
controversy.\63\
---------------------------------------------------------------------------

    \61\ Ibid.
    \62\ OCa/CA Reply Comments at 5-6.
    \63\ PostCom's concern over opening Pandora's box appears to be 
overblown for another reason. It is not the purpose of this order to 
attempt to foresee how future technological change may affect the 
Postal Service. On more than one occasion, however, the Commission 
has dealt with possibly competing federal jurisdictional issues with 
comity and dispatch. See, e.g., PRC Op. Docket Nos. MC76-1 et al., 
June 15, 1977; PRC Op. Docket Nos. MC78-3, December 17, 1979.
---------------------------------------------------------------------------

    In concluding that the Postal Service may avail itself of 
technological advances to provide postal services, the Commission 
relies on Congress' own words that it intended to: ``[c]reate a lasting 
foundation for a modern, dynamic, and viable postal institution that is 
both equipped and empowered at all times to satisfy the postal 
requirements of the future technological, economic, cultural, and 
social growth of the Nation.'' \64\ That Congress intended a ``modern, 
dynamic, and viable postal institution'' did not require it to envision 
particular future technological advances, but only that it contemplated 
that the Postal Service would be ``equipped and empowered'' to use them 
in meeting the ``postal requirements'' of the Nation. As the Commission 
has observed: ``The Act does not require the Postal Service to ignore 
innovations, and to remain, in essence, the equivalent to the best 
buggy whip manufacturer it can be.'' \65\
---------------------------------------------------------------------------

    \64\ See PRC Order No. 1424, supra, at 32, quoting H.R. Rep. No. 
1104, 91st Cong., 2nd Sess. 2 (1970), reprinted in 1970 U.S. Code 
Cong. & Admin. News, Vol. 2, at 3650; (hereinafter H.R. Rep. No. 91-
1104 with page cites to U.S.C.C.A.N.).
    \65\ PRC Order No. 1424 at 32.
---------------------------------------------------------------------------

    Under PostCom's theory, the Postal Service may employ new 
technology, but only if related to physical mail delivery. PostCom 
would permit the Postal Service to modernize to a limited degree, e.g., 
electronic return receipt and tracking services, but preclude it from 
employing technological advances that affect its principal duties of 
receiving, transmitting, and delivering mail services, as they may 
evolve over time, to postal patrons.\66\ The distinction is arbitrary 
and without support.
---------------------------------------------------------------------------

    \66\ H.R. Rep. No. 91-1104, supra, at 3671. (``[T]he United 
States Postal Service shall be operated as a basic communications 
service provided to all the people by the Government of the United 
States[.]'')
---------------------------------------------------------------------------

    PostCom takes issue with the Commission's description of Airmail 
and Express Mail as new forms of postal service, arguing that ``these 
services are a new means to deliver the same written and printed 
matter, and parcels.'' \67\ While that characterization is not 
incorrect, the quality that gave rise to the new form of postal service 
is the transmission, not the delivery, which, in any event, remained 
the same.\68\
---------------------------------------------------------------------------

    \67\ PostCom Initial Comments at 3-5.
    \68\ In its initial comments in this proceeding, PostCom appears 
to recognize that transmission connotes something more than 
vehicular transportation. PostCom Comments on Proposed Rulemaking 
Concerning Amendment to the Rules of Practice and Procedure, March 
1, 2004, at 4. The concept is not new. As early as Docket No. MC78-
3, involving Electronic Computer Originated Mail, the Postal Service 
characterized electronic communications as a form of transportation. 
PRC Op., Docket No. MC78-3, December 17, 1979, at 59.
---------------------------------------------------------------------------

    In the alternative to its legal position, PostCom expresses general 
support for the proposed definition, but suggests that it be revised in 
two ways.\69\ First, noting that the terms ``ancillary and supportive'' 
lack a statutory predicate, PostCom suggests substituting the term 
``incidental thereto'', which is found in section 403(a).\70\ The 
Commission finds this suggestion reasonable and adopts it, albeit not 
for reasons advanced by PostCom. In suggesting the change, PostCom 
contends that ``it is these very terms that over-extend the definition 
of `postal services' to encompass electronic communications services 
unrelated to physical mail delivery.'' \71\ The Commission rejects this 
contention.
---------------------------------------------------------------------------

    \69\ PostCom Initial Comments at 3-5. The Postal Service views 
PostCom's suggestions as preferable to the proposed rule. Reply 
Comments of the United States Postal Service in Response to Order 
No. 1424, March 1, 2005, at 2.
    \70\ PostCom Initial Comments at 5.
    \71\ Id. at 4.
---------------------------------------------------------------------------

    The phrase ``supportive or ancillary thereto'' has been used by the 
Commission for nearly 30 years to describe jurisdictional special 
services that support or are ancillary to the collection, transmission, 
or delivery of mail.\72\ Elaborating, the Commission noted that such 
services ``enhance the value of service rendered under one of the 
substantive mail classes by providing such features as added security, 
added convenience or speed, indemnity against loss, correct information 
as to the current address of a recipient, etc.'' \73\ PostCom describes 
``incidental services'' in virtually the same terms, i.e., as services 
which enhance the value of mail.\74\ Thus, while adopting this change, 
the Commission does not perceive it as substantively altering the scope 
of its long-held views of supportive or ancillary services.
---------------------------------------------------------------------------

    \72\ See PRC Op. R76-1, Vol. 1, at 266-67 (footnote omitted); 
id., Vol. 2, Appendix F.
    \73\ PRC Op. R76-1, Vol. 1, at 267.
    \74\ PostCom Initial Comments at 4.
---------------------------------------------------------------------------

    Second, PostCom suggests that the phrase ``including, but not 
limited to'' be deleted, noting that it is not found in section 403 and 
contending that it is redundant to the phrase ``and like materials'' 
which is. This suggestion will not be adopted.
    The two phrases serve different purposes. The phrase ``and like 
materials'' takes into account changes in postal services required by 
``the future technological, economic, cultural, and social growth of 
the Nation.'' \75\ The phrase ``including, but not limited to,'' was 
employed to make it plain that the term ``correspondence'' was intended 
to encompass all forms of written communications. This is consistent 
with section 101(a), that the Postal Service be ``operated as a basic 
communications service,'' \76\ and section 403(a), the requirement that 
it receive, transmit, and deliver written and printed matter, parcels, 
and like materials.
---------------------------------------------------------------------------

    \75\ H.R. Rep. No. 1104, supra, at 3650.
    \76\ Id. at 3671.
---------------------------------------------------------------------------

B. United Parcel Service

    UPS contends that many non-package items, such as catalogs and 
printed advertisements, ``are arguably not `correspondence.' '' \77\ 
Because such items are undeniably postal services, UPS suggests that 
potential controversy would be avoided by substituting the phrase 
``letters, other written and printed matter, and like materials'' for 
``correspondence, including, but not limited to, letters, printed 
matter, and like materials.'' \78\
---------------------------------------------------------------------------

    \77\ UPS Reply Comments, supra, at 2.
    \78\ Ibid. UPS's suggestion does not reply to any parties' 
comments and as such is more properly considered as initial 
comments. Since no party objected to the suggestion or sought to 
file a reply, the Commission will address it.
---------------------------------------------------------------------------

    The Commission will not adopt the suggestion, but will clarify that 
``correspondence,'' as used in the rule, includes all manner of non-
package materials, e.g., advertisements, catalogs, solicitations, 
newspapers, magazines, etc. In short, ``non-package items'' are covered 
by the term ``printed matter.'' The Commission includes the term 
``correspondence'' in the rule because that is the means by which the 
Postal Service fulfills its basic function,

[[Page 2471]]

namely ``to provide postal services to bind the Nation together through 
the * * * correspondence of the people.'' Section 101(a). As used in 
section 101(a), correspondence includes all forms of written 
communications between and among ``the people,'' running the gamut from 
personal to business to cultural. UPS's suggested alternative language 
would forego use of this term and, therefore, the Commission does 
perceive it as an improvement over the proposed rule.

C. OCA/CA

    OCA/CA, who support the proposed rule, characterize the 
Commission's findings and suggest procedures for reviewing the Postal 
Service's unclassified commercial activities. In discussing the 
Commission's ``jurisdictional findings,'' OCA/CA make several 
statements that appear to be problematic in certain respects. For 
example, they state that ``[t]he Commission's order accepts the OCA and 
CA interpretation that Sec.  404(a)(6) only relates to Postal Service 
activities undertaken on behalf of other government agencies.'' \79\ 
The Commission did not adopt OCA/CA's ``narrow definition,'' \80\ a 
conclusion seemingly acknowledged elsewhere in their comments.\81\ 
However, other than illustratively, the Commission finds it unnecessary 
to address these statements since the order speaks for itself and, 
moreover, OCA/CA do not seek any modification to the proposed rule.
---------------------------------------------------------------------------

    \79\ OCA/CA Initial Comments, supra, at 5.
    \80\ PRC Order No. 1424, supra, at 17. The Commission's view is 
that appropriate courts must resolve what nonpostal services the 
Postal Service may or may not offer.
    \81\ See OCA/CA Initial Comments at 12.
---------------------------------------------------------------------------

    OCA/CA propose procedures for reviewing all Postal Service 
activities for compliance with the Act.\82\ First, they request that 
the Commission initiate classification proceedings pursuant to section 
3623 to review the current commercial services provided by the Postal 
Service.\83\ They suggest that if the Commission concludes that no 
classification is warranted, whether a postal service or not, it should 
issue a declaratory order finding the service to be inappropriate or 
unauthorized.\84\
---------------------------------------------------------------------------

    \82\ Id. at 11, 12-13.
    \83\ Id. at 11. Separately, CA requests the Commission to 
initiate a classification proceeding regarding the services that 
were the subject of its petition in Docket No. * 2003. Id. at 10.
    \84\ Id. at 14. For activities found not to be postal, they 
suggest that the Commission order that they be terminated as ultra 
vires. Id. at 15.
---------------------------------------------------------------------------

    Second, OCA/CA suggest that, upon complaint, the Commission may 
review commercial activities pursuant to section 3662. For services 
found to be postal, they suggest that the Commission issue findings via 
a declaratory order; for services found not to be postal, they suggest 
that the Commission issue ``a public report advising the Postal Service 
to desist from continuing to offer such services.'' \85\
---------------------------------------------------------------------------

    \85\ Id. at 18.
---------------------------------------------------------------------------

    The procedures suggested by OCA/CA are premature and thus 
needlessly confrontational. The Commission believes that the Postal 
Service should take the lead in assuring that current services comply 
with the rule and the procedures discussed below are intended to 
facilitate that approach. It is the Commission's hope and expectation 
that those procedures will bring an end to the uncertainty regarding 
the postal status of ongoing services unilaterally offered by the 
Postal Service.

VII. Procedures

    The Commission had no predetermined outcome in mind when it 
initiated this proceeding. Its goal was to provide guidance to the 
Postal Service and the public concerning services that are subject to 
sections 3622 and 3623 of the Act. All interested persons have had 
ample opportunity to comment on the proposed rule. The proposed rule is 
supported by mailer, competitor, and consumer interests. Notably, no 
party supports the Postal Service's position.
    The Commission has carefully considered the comments, as evidenced 
by both Order No. 1424 and this order issuing the final rule. In 
particular, recognizing that the Postal Service maintained a different 
legal theory, the Commission took great pains to address its arguments 
thoroughly. See, e.g., Order No. 1424, supra, at 18-39. The final rule 
is a product of painstaking analyses and is fully consistent with the 
Act, the legislative history, and precedent.
    The Commission comes with an open mind to the next step in this 
process, classifying services as postal or not. Those services or 
products that satisfy the definition are subject to the rule. There may 
be some contentious issues and ``hard'' choices. Nonetheless, in a 
reasonable period of time, controversy and confusion associated with 
such services will be eliminated.
    It is the Commission's expectation that the Postal Service will 
exercise good faith in complying with procedures outlined below. Since 
the genesis of this rulemaking is the Consumer Action petition, the 
Postal Service is requested to submit an update of each of the 14 
services referenced in the petition, briefly describing its current 
status. The successor, if any, to each service no longer offered or 
otherwise terminated should be described. The Postal Service is 
requested to file the update by no later than February 17, 2006.
    For each current unreviewed service (or product) that fairly falls 
within the meaning of the final rule, the Postal Service shall file, 
not later than June 1, 2006, a request for a recommended decision to 
establish such service as a permanent or experimental classification 
with rates and fees consistent with 39 U.S.C. 3622(b).\86\ The request 
should conform to the Commission's rules for such requests. Five months 
is provided to afford the Postal Service sufficient time to prepare the 
requisite filings. To the extent practicable, however, the Postal 
Service should endeavor to file such requests as they are prepared.
---------------------------------------------------------------------------

    \86\ ``Unreviewed'' is intended to apply to services (or 
products) currently offered by the Postal Service that have not been 
established through the procedures of Sec. Sec.  3622-3625.
---------------------------------------------------------------------------

    Finally, the Postal Service shall file a list identifying and 
providing a brief description of each current unreviewed service that, 
in its opinion, falls outside the meaning of the final rule. In a 
series of interrogatory responses in Docket No. R2005-1, the Postal 
Service provided a description of its nonpostal services offered during 
the base year.\87\ It should be a relatively easy matter to update this 
material as needed. This material should be filed no later than June 1, 
2006.
---------------------------------------------------------------------------

    \87\ See, e.g., Tr. 8D/4730-42.
---------------------------------------------------------------------------

    The Commission has before it two complaints alleging that the 
Postal Service is providing ``postal service'' without first obtaining 
a recommended decision from the Commission. See Docket No. C2004-2, 
Complaint on Electronic Postmark and Docket No. C2004-3, Complaint on 
Stamped Stationery. A motion to dismiss is pending in Docket No. C2004-
2. It is the Commission's intent to address the threshold issue whether 
or not to hear these complaints in orders to be issued relatively early 
in the New Year.\88\
---------------------------------------------------------------------------

    \88\ In its answer to the complaint in Docket No. C2004-3, the 
Postal Service indicated its intent to file a motion to dismiss. 
Answer of United States Postal Service, Docket No. C2004-3, August 
31, 2004, at 8. Apparently, none was filed. If the Postal Service 
wishes to submit a motion to dismiss, it should do so by no later 
than January 17, 2006.
---------------------------------------------------------------------------

    It is ordered:
    1. The Commission amends its Rules of Practice and Procedure by 
inserting new paragraph 5(s), 39 CFR 3001.5(s) as follows: ``Postal 
service means the receipt, transmission, or delivery by the Postal 
Service of correspondence,

[[Page 2472]]

including, but not limited to, letters, printed matter, and like 
materials; mailable packages; or other services incidental thereto.'' 
effective 30 days after publication in the Federal Register.
    2. For each current unreviewed service (or product) that fairly 
falls within the meaning of the final rule, the Postal Service shall 
file, not later than June 1, 2006, a request for a recommended decision 
to establish such service as a permanent or experimental 
classification.
    3. The Postal Service shall file, not later than June 1, 2006, a 
list identifying and providing a brief description of each current 
unreviewed service that, in its opinion, falls outside the meaning of 
the final rule.
    4. The Secretary shall arrange for publication of this Order in the 
Federal Register.

    By the Commission.
Steven W. Williams,
Secretary.

List of Subjects in 39 CFR Part 3001

    Administrative practice and procedure, Postal service.

0
For the reasons discussed above, the Commission amends 39 CFR part 3001 
as follows:

PART 3001--RULES OF PRACTICE AND PROCEDURE

0
1. The authority citation for part 3001 continues to read as follows:

    Authority: 39 U.S.C. 404(b); 3603; 3622-24; 3661, 3663.

Subpart A--Rules of General Applicability

0
2. Amend Sec.  3001.5 by adding new paragraph (s) to read as follows:


Sec.  3001.5  Definitions.

* * * * *
    (s) Postal service means the receipt, transmission, or delivery by 
the Postal Service of correspondence, including, but not limited to, 
letters, printed matter, and like materials; mailable packages; or 
other services incidental thereto.

[FR Doc. 06-180 Filed 1-13-06; 8:45 am]
BILLING CODE 7710-FW-P