[Federal Register Volume 71, Number 47 (Friday, March 10, 2006)]
[Notices]
[Pages 12405-12411]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-3403]


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POSTAL RATE COMMISSION

[Docket No. C2004-2; Order No. 1455]


Complaint on Electronic Postmark

AGENCY: Postal Rate Commission.

ACTION: Notice and order.

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SUMMARY: This document identifies preliminary procedural steps in a 
formal complaint case involving a challenge to an electronic postmark 
service offered by the Postal Service. It discusses the basis for the 
challenge, reviews pertinent filings, and sets deadlines for a 
submission of a statement by the complainant and for filing notices of 
intervention. Issuance of this document informs interested parties of 
the Commission's determinations to date.

DATES: 1. Deadline for complainant to provide a statement estimating 
amount of time required to develop and file a direct case: March 20, 
2006.
    2. Deadline for notices of intervention: March 21, 2006.

ADDRESSES: Submit comments electronically via the Commission's

[[Page 12406]]

Filing Online system at http://www.prc.gov.

FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, general counsel, 
at 202-789-6820.

SUPPLEMENTARY INFORMATION:

Regulatory History

    Definition of Postal Services Order, 69 FR 3288 (January 23, 2004).
    Definition of Postal Services Proposed Rule, 69 FR 67514 (November 
18, 2004).
    Definition of Postal Services Order, 71 FR 2464 (January 17, 2006).
    In a complaint, filed in Docket No. MC2004-2, DigiStamp, Inc. 
(DigiStamp or Complainant) contends that the Postal Service is 
providing a document delivery service called Electronic Postmark(tm) in 
violation of the Postal Reorganization Act.\1\ It requests, among other 
things, an order from the Commission finding that the ``Postal 
Service's document delivery service called `Electronic Postmark[supreg] 
(EPM)' is a `postal service' subject to the [Commission's] 
jurisdiction[.]'' \2\
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    \1\ Complaint of DigiStamp, February 25, 2004 (Complaint). On 
its Web site, the Postal Service refers to this service as ``USPS 
Electronic Postmark(tm) (EPM).'' For purposes of this Order, the 
service will be referred to as electronic postmark or USPS EPM.
    \2\ Motion to Notify the Postal Rate Commission of a Recent 
Example Where the Use of USPS EPM Replaces Traditional Mail Service, 
November 12, 2004, at 1 (DigiStamp Motion).
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    The Postal Service moves to dismiss DigiStamp's complaint on two 
grounds. First, it contends that the Commission lacks authority to 
resolve a complaint over the nature of the service provided.\3\ Second, 
the Postal Service argues that, even assuming the Commission's 
jurisdiction, the complaint should be dismissed since electronic 
postmark is not a postal service.\4\
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    \3\ Motion of the United States Postal Service to Dismiss, April 
26, 2004, at 2-5 (Motion to Dismiss).
    \4\ Id. at 6-17.
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    The motion to dismiss is denied because, as discussed in detail 
below, the Commission: (a) Rejects the Postal Service's contention that 
the Commission lacks authority to determine the scope of its own 
jurisdiction; and (b) finds that the parties' conflicting claims 
whether electronic postmark is or is not a postal service raise genuine 
issues of material fact that require a hearing in conformity with Sec.  
3624. See sections II and III, below. To that end, the Complainant is 
directed to file a statement, no later than March 20, 2006, estimating 
the amount of time it will require to develop and file a case-in-chief. 
Thereafter the Commission will issue a procedural schedule and, if 
warranted, special rules of practice.
    The motion to dismiss is, however, granted in one respect, 
specifically, as to DigiStamp's claim that the Postal Service violated 
section 3661 by failing to request an advisory opinion on electronic 
postmark. See section IV, below.

I. The Pleadings

    The complaint. DigiStamp's complaint contains three principal 
claims. First, DigiStamp alleges that the Postal Service is providing 
electronic postmark service in violation of the Act. It contends that 
electronic postmark is a class of mail or type of service and thus 
requires the Postal Service to request a recommended decision pursuant 
to sections 3622 and 3623 of the Act before service may be implemented 
or rates charged for the service.\5\ It describes electronic postmark 
as ``largely an electronic service [that] functions as a type of mail 
(and a service ancillary to mail), using recent technology, to provide 
evidence of the time and date of a document transmission and security 
against tampering with the contents of the document.'' Id. at 4, para. 
21. DigiStamp characterizes electronic postmark as ``mail,'' asserting 
that it substitutes for hardcopy mail. Ibid. paras. 23-24.
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    \5\ Complaint at 4-5, paras. 17-29.
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    Second, DigiStamp contends that the rates charged for electronic 
postmark fail to comply with section 3622(b).\6\ It asserts that the 
Postal Service is offering electronic postmark in competition with 
companies in the private sector, including DigiStamp, providing similar 
service. Id. at 7, paras. 43-44. DigiStamp further alleges that the 
Postal Service is cross-subsidizing electronic postmark service ``with 
monopoly revenues [which] may inhibit competition to the detriment of 
consumers of all such services.'' Ibid. para. 47.
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    \6\ Id. at 5-7, paras. 48-53.
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    Third, DigiStamp contends that the provision of electronic postmark 
violates section 3661,\7\ asserting that electronic postmark may affect 
the use of other mail services, e.g., First-Class Mail, registered or 
certified mail, because it will be used in lieu of such services. Ibid. 
para. 49. DigiStamp asserts that providing electronic postmarkservice 
therefore represents a change in the nature of postal services which 
will generally affect service on a nationwide or substantially 
nationwide basis.
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    \7\ Id. at 5-7, paras. 30-47.
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    The Postal Service's responses. Concurrently, the Postal Service 
filed an answer to the complaint and a motion to dismiss the complaint. 
In its answer, the Postal Service, among other things:
    Denies that electronic postmark is a ``document delivery service;' 
'' \8\
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    \8\ Answer of the United States Postal Service, April 26, 2004, 
at 2, para. 2 (Postal Service Answer).
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    Clarifies that electronic postmark service in ``its current 
configuration,'' which is offered through a strategic alliance with 
AuthentiDate, ``was launched in January, 2003.'' Id. at 2, para. 2 and 
5, paras. 14-16;
     Denies any continuing relevance of 18 U.S.C. 1341. Id. at 
3, para. 9;
     Admits that electronic postmark is a service provided by 
the Postal Service. Id. at 4, para. 11;
     Denies that electronic postmark has incurred a large net 
loss in its current configuration, stating that a large net loss was 
incurred during the period from its inception in 1996 until termination 
of that configuration. Id. at 5, para. 16;
     Denies that electronic postmark is a class of mail, type 
of mail service, or service ancillary to mail; id. at 6, paras. 17 and 
21; and
     Denies that the Postal Service cross-subsidizes electronic 
postmark with `` `monopoly revenue.' '' Id. at 12, para. 47.
    In moving to dismiss the complaint, the Postal Service advances two 
principal arguments. First, it contends that its decision to launch 
electronic postmark is unreviewable by the Commission.\9\ This 
assertion rests on the premise that the Postal Service's unilateral 
classification of a service as ``nonpostal'' is dispositive and is 
reviewable, if at all, only by a United States district court. Id. at 
3.
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    \9\ Motion to Dismiss at 2-3.9
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    Second, the Postal Service argues that, even assuming the 
Commission has authority to determine whether electronic postmark is a 
postal service, ``EPM is not a `postal service' for purposes of 
sections 3622, 3623, 3661, and 3662 of title 39, United States Code.'' 
Id. at 6. In support, the Postal Service highlights ``the primary 
precedents,'' which include the ATCMU and NAGCP I \10\ opinions and the 
Commission's decisions in Docket Nos. R76-1, C95-1, and C96-1. Based on 
its review, the Postal Service concludes that these authorities stand 
for the proposition that ``such services [to be deemed a postal 
service] must bear, at minimum, some relation to hardcopy postal 
delivery networks.'' \11\
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    \10\ Associated Third Class Mail Users v. U.S. Postal Service, 
405 F. Supp. 1109 (D. D.C. 1975) (ATCMU), affirmed, 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).
    \11\ Motion to Dismiss at 7.

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[[Page 12407]]

    In addition, the Postal Service contends that electronic postmark 
service is not a postal service because it is entirely electronic and, 
further, does not deliver anything between senders and recipients. Id. 
at 12-13. The Postal Service describes the purpose of electronic 
postmark service as being ``to protect the integrity of electronic 
data.'' Id. at 13. The Postal Service states that electronic postmark 
service neither requires nor accomplishes the transmission of content. 
Id. at 14. Thus, the Postal Service contends that, since nothing moves 
between the sender and recipient, ``it is impossible to construe any 
`carriage of mail' that is the sine qua non of a postal service.'' Id. 
14-15.
    The Postal Service notes that that electronic postmark service may 
``enhance the utility of subsequent electronic document exchange,'' 
describing the ``EPM process [as] often a step towards broader 
participation in electronic commerce, and other varieties of electronic 
information transmission.'' Id. at 15. It characterizes electronic 
postmark service as ``a wholly independent transaction,'' not ancillary 
to the electronic information transmission.\12\
    DigiStamp's answer to the motion.
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    \12\ Ibid. In an accompanying footnote, the Postal Service 
briefly discusses the ``superficial resemblance'' between electronic 
postmark service and money orders, discounting the appropriateness 
of any such comparison. Id. at 15, n.12. It also compares electronic 
postmark service with services provided by a notary public. Id. at 
15-16.
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    DigiStamp filed an answer opposing the Postal Service's motion to 
dismiss.\13\ It addresses each of the Postal Service's principal 
claims. First, DigiStamp contests the Postal Service's conclusion that 
the Commission lacks authority to determine the scope of its own 
jurisdiction as well as its characterization of the issue as entailing 
approval or review of the Postal Service's exercise of its independent 
authority under the Postal Reorganization Act. Id. at 2-3. DigiStamp 
also contends that the Postal Service mischaracterizes the complaint by 
misreading section 3662. According to DigiStamp, the complaint is not 
primarily about the lawfulness of electronic postmark service, but 
whether the Postal Service must obtain Commission review and a 
recommended decision prior to commencing a new postal service. Id. at 
3-4. Further, DigiStamp counters the Postal Service's claim that 
review, if any, is available only by a U.S. district court, arguing 
that the statute does not preclude review by the Commission via the 
complaint process. Id. at 4-5.
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    \13\ DigiStamp Answer in Response to Motion of the United States 
Postal Service to Dismiss, May 3, 2004 (DigiStamp Answer).
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    Regarding the Postal Service's second principal argument--that even 
assuming Commission authority to consider the complaint, electronic 
postmark is not a postal service--DigiStamp contends that the issue is 
a matter for hearing. Id. at 6-14. In support, DigiStamp, among other 
things:
     Cites several examples from a Postal Service press release 
comparing the similarities of electronic postmark to mail service, 
e.g., `` `creating the first in a series of `First-Class' Mail 
electronic commerce services[,]' '' and ``the Postal Service is 
developing `` `a series of services to mirror those of First-Class 
Mail.' '' Id. at 8, citing Exhibit A to the Complaint; \14\
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    \14\ DigiStamp acknowledges that the press release relates to a 
superseded version of the service, but asserts that there has been 
no showing that the essential elements of the current service are 
significantly different. Id. at 8.
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     Contends that electronic postmark service adds value to 
the mail similar to other security and evidentiary features such as 
certified and registered mail. Id. at 9;
     Disputes the Postal Service's contention that electronic 
postmark service does not entail `` `the transfer of something from a 
sender to a recipient,' * * * indicat[ing] a product ancillary to 
mail.'' Ibid.;
     Quotes material from the Postal Service's web site which, 
DigiStamp contends, suggests the Postal Service views ``EPM service as 
a substitute for traditional services.'' Ibid.;
     Cites Postal Service advertising claims implying an 
ancillary relationship to hard-copy mail and imbuing electronic 
postmark service with characteristics reserved only for mail service. 
Id. at 10; and
     Contends that the status of electronic postmark service as 
a postal service or not ``requires a hearing into the specific facts 
surrounding this service[.]'' Id. at 14-15.
    DigiStamp also moves to supplement its complaint with information 
not available when the complaint was filed.\15\ The motion indicates 
that the Postal Service's electronic postmark service has been added to 
South Carolina's Uniform Electronic Transactions Act (UETA) as an 
alternative to certified or registered mail for certain types of 
electronic communications, e.g., process of service. Id. at 1-2. 
DigiStamp represents that the electronic service has the ``same force 
of law and legal effect as those physical mail services.'' Id. at 
Exhibit A. It contends that the ``specific application of UETA in South 
Carolina excludes any service provider other than the Postal Service.'' 
Id. at 2.
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    \15\ See DigiStamp Motion, supra, November 12, 2004.
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    DigiStamp also asserts that ``EPM software and service [include] 
what has been historically marketed as the Electronic Courier 
Service.'' Ibid. Stating that the Postal Service had discontinued the 
latter line of business in November 2002, but subsequently re-entered 
it in July 2004, DigiStamp asserts that ``EPM is now being combined 
with other communications functions to operate as Electronic Courier 
Service under a new name.'' Id. at 3. It requests that this allegation 
be made part of its complaint. Ibid. The Postal Service did not file an 
answer to this motion.

II. The Commission's Jurisdiction To Consider Complaints

    The complaint alleges that electronic postmark is a postal service 
and therefore the Postal Service should have requested a recommended 
decision before initiating service. The Postal Service argues that the 
Commission lacks ``authority to approve or review the Postal Service's 
exercise of its independent authority to carry out its own powers and 
duties under the statute.'' \16\ The issue raised by the complaint is 
not whether the Postal Service's action is lawful or not; rather it is 
whether electronic postmark service is a postal service, a matter 
appropriately before the Commission.
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    \16\ Motion to Dismiss at 1. As a variation of this claim, the 
Postal Service argues that the Commission lacks authority ``to 
declare independent actions of the Postal Service to be either 
lawful or unlawful.'' Id. at 3.
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    In Docket No. RM2004-1, the Commission proposed and, after several 
rounds of comments, subsequently adopted an amendment to its rules of 
practice defining the term postal service 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. See PRC Order No. 1449, January 4, 2006. This definition 
became effective February 16, 2006.
    The rulemaking proceeding was initiated, in large part, because the 
Commission determined that the jurisdictional implications of a spate 
of new services implemented unilaterally by the Postal Service would be 
most efficaciously addressed by rule rather

[[Page 12408]]

than on an ad hoc basis.\17\ In Docket No. RM2004-1, based on a 
detailed analysis of statute, legislative history, precedent, and the 
parties' comments, the Commission rejected the Postal Service's 
contention that the Commission lacked authority to determine the scope 
of its own jurisdiction. Consequently, the Commission finds it 
unnecessary to revisit that issue, choosing instead to incorporate by 
reference its findings and conclusions from that rulemaking.\18\
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    \17\ PRC Order No. 1389, January 16, 2004, at 8; PRC Order No. 
1424, supra, at 3 and PRC Order No. 1449, supra, at 16-17.
    \18\ See PRC Order No. 1424, November 12, 2004, at 6-39, and PRC 
Order No. 1449, supra, at 5-21. The Postal Service Motion to Dismiss 
predated both of the foregoing orders. Postal Service arguments in 
this proceeding reiterated arguments it advanced in Docket No. 
RM2004-1. The merits of its arguments were thoroughly considered in 
the latter docket.
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    Section 3662 provides interested parties an independent means to 
bring rate and classification matters before the Commission between 
rate cases. A complaint will lie if the interested party believes that 
``the Postal Service is charging rates which do not conform to the 
policies set out in [title 39] or * * * that [he/she is] not receiving 
postal service in accordance with the policies of this title[.]'' If, 
in its discretion, the Commission holds hearings, its response is 
dependent, in the first instance, on finding the complaint to be 
justified and, secondly, on whether the subject matter of the complaint 
is covered by subchapter II of title 39. Subchapter II encompasses rate 
and classification matters.
    DigiStamp's complaint includes both rate and classification 
elements. It complains that the rates charged for electronic postmark 
service do not conform to the policies of title 39 since: (a) The 
Postal Service implemented service and began charging rates without 
first obtaining a recommended decision from the Commission; (b) the 
rates charged do not comply with section 3622(b); and (c) the rates for 
electronic postmark service are being cross-subsidized.\19\
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    \19\ See Complaint at 4-8, paras. 20, 27-29, 42, 45-47, and 54. 
DigiStamp's allegations of an unlevel playing field may have 
implications for whether or not the Postal Service's provision of 
this service has a substantial public effect. See ATCMU, supra, 405 
F. Supp. at 1115.
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    DigiStamp's classification claim, that the Postal Service has 
failed to comply with section 3623,\20\ also bears on the issue whether 
``postal service'' is being received in accordance with the policies of 
title 39. That facet of the complaint is framed in terms of a 
competitor, not user of the service. DigiStamp's claim of unfair 
competition goes to this issue.\21\
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    \20\ Complaint at 4-5, paras. 19, and 27-29.
    \21\ See Complaint at 3-4, para. 13, 7, para. 45, and Exhibit G.
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    The gravamen of the complaint, according to the Postal Service, is 
unrelated to the rates being charged, ``but [rather] whether the Postal 
Service acted lawfully when offering USPS EPM without a recommended 
decision from the Commission.''\22\ The Postal Service mischaracterizes 
the complaint. DigiStamp contends that electronic postmark is a postal 
service. Its complaint satisfies the elements of section 3662 by 
raising both rate and service issues. It may be that the latter become 
moot if the Commission concludes that electronic postmark is not a 
postal service, but that conclusion (or any other jurisdictional 
finding made by the Commission) is not, as the Postal Service would 
characterize it, synonymous with finding the Postal Service's actions 
lawful or unlawful. Rather, the result is a product of the Commission 
acting properly under the statute to determine the scope of its own 
jurisdiction.
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    \22\ Motion to Dismiss at 2.
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    The Postal Service argues its decision not to seek a recommended 
decision is unreviewable by the Commission and that review, if any, may 
be obtained by DigiStamp only by filing suit in a United States 
district court. Id. at 2-3. The Postal Service argues that its position 
is supported by ``the contemporaneous interpretation'' of the Act 
``immediately following postal reorganization.'' Id. at 3. Citing the 
ATCMU case, it concludes that ``district courts are available to 
address and resolve the exact issue upon which the DigiStamp complaint 
must hinge.''\23\ While this statement is accurate regarding the 
availability of district court review, it does not get the Postal 
Service very far.
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    \23\ Ibid. (footnote omitted). Regarding the ATCMU case, the 
Postal Service asserts that it initially took the position that 
``all special services were `nonpostal' and [thus] excluded from 
Commission jurisdiction.'' Ibid. That contention appears to misstate 
the Postal Service's argument regarding the special services at 
issue in that case. The Postal Service did not argue that those 
special services were nonpostal. Rather, it argued, inter alia, that 
those services were not subject to the requirements of chapter 36 of 
the Act and further that ``special'' services were exempt from the 
Commission's jurisdiction by virtue of section 404(a)(6). See ATCMU, 
supra, 405 F. Supp. at 1116-18. The court rejected the Postal 
Service's arguments.
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    First, that parties in prior cases challenged certain services as 
postal by filing in district court rather than with the Commission is 
not dispositive of subsequent complainants' choice of forum. They are 
free to elect to proceed under section 3662, an election made by 
DigiStamp.
    Second, the court's jurisdiction is not exclusive. See 39 U.S.C. 
409(a). (``[T]he United States district courts shall have original but 
not exclusive jurisdiction over all actions brought by or against the 
Postal Service.'') Furthermore, section 409(a) expressly exempts cases 
covered by section 3628 from its reach, thus assuring the Commission's 
primary jurisdiction over postal rate and classification matters. In 
sum, nothing in the statute either precludes a complainant from 
electing to proceed under section 3662 or bars the Commission from 
considering, on complaint, the jurisdictional status of the subject 
service.\24\
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    \24\ The Postal Service also cites Order No. 724 as lending 
support for its contention that the district court is the only forum 
in which this complaint may be heard. Its reliance on Order No. 724 
is misplaced. The Postal Service suggests that in Order No. 724 the 
Commission ``redirect[ed] parties initiating complaints under 
section 3662 to district court.'' Motion to Dismiss at 4. In fact, 
however, the Commission asserted jurisdiction over the complaint 
filed in that proceeding. The language relied on by the Postal 
Service is taken out of context and does not support the Postal 
Service's position. The passages cited by the Postal Service concern 
a challenge to a Postal Service regulation issued in the Domestic 
Mail Manual. The Commission found that the regulation did not raise 
a classification issue and therefore was outside its jurisdiction. 
The relevant point, however, is that the Commission did decide the 
jurisdictional issue in that proceeding, the very result that 
DigiStamp urges in this proceeding.
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    The court cases relied upon by the Postal Service stand for the 
proposition that the services there at issue fell within the 
Commission's jurisdiction. In the first two omnibus rate cases, the 
Postal Service did not propose any changes in special service fees. The 
Commission, nonetheless, asserted its jurisdiction over special 
services.\25\ That issue, however, did not come to a head until the 
Postal Service proposed a unilateral increase in special service fees 
in 1975. The litigation that ensued--ATCMU and NAGCP I--resolved the 
issue whether those services were postal or not and, in doing so, 
confirmed that the Commission had primary jurisdiction over postal rate 
and classification matters, including determining the scope of its own 
jurisdiction. In discussing the ``great deference [a reviewing court 
must give] to the interpretation given a statute by the agency charged 
with its administration,'' the NAGCP I court observed, ``[t]he district 
court, in short, without expressly stating so might simply have 
deferred to a long-held and reasonable interpretation given the statute 
by the very agency [the

[[Page 12409]]

Commission] whose jurisdiction is at issue.''\26\
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    \25\ See, e.g., PRC Op. R74-1, August 28, 1975, Appendix F.
    \26\ NAGCP I, supra, 569 F.2d. at 595, n.110.
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III. Issues of Material Fact

    The Postal Service's contention that electronic postmark service is 
a nonpostal service has two prongs: First, that it is a totally 
electronic service and, second, that it does not entail the transfer of 
something from a sender to a recipient, which the Service characterizes 
as the essence of a postal function.\27\ It contends that ``either of 
these facts would be sufficient to demonstrate that USPS EPM is not a 
postal service.'' Ibid.
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    \27\ Motion to Dismiss at 12.
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    That electronic postmark service is totally electronic is not 
conclusive of whether or not it is a postal service. Currently, the 
Postal Service offers several wholly electronic services that are 
postal services, e.g., electronic return receipt, Confirm, and Delivery 
Confirmation. Moreover, this issue was specifically addressed in Docket 
No. RM2004-1 in orders issued subsequent to the Postal Service's filing 
of its motion to dismiss. The Commission concluded that services in 
which the Postal Service receives, transmits, or delivers 
correspondence, including electronic communication services, constitute 
postal services under the Act.\28\ The Commission noted, however, that 
``inclusion of [electronic] services in the definition should not be 
read as a conclusion that all such services are jurisdictional; only 
such services that entail correspondence become postal services.'' Id. 
at 4. Consequently, whether or not electronic postmark service is 
postal or not turns on the nature of the service provided.
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    \28\ PRC Order No. 1424, supra, at 31-39.
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    The Postal Service and DigiStamp offer significantly different 
views on the nature of the service itself. The parties agree, however, 
that electronic postmark: Features the use of auditable time stamps, 
digital signatures, and hash codes; provides proof (as postmarked by 
the Postal Service) for a third party to verify the authenticity of the 
electronic postmark item's content; provides evidence to support non-
repudiation of the item's content; and is designed to deter and detect 
any tampering or alteration of the item's content.\29\ They differ in 
almost all other respects about the nature of electronic postmark 
service.
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    \29\ See Complaint at 1, para. 3 and Postal Service Answer at 2.
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    The Postal Service states that electronic postmark service neither 
requires nor accomplishes transmission of content.\30\ The Postal 
Service argues that ``[t]here is no necessary linkage between 
application of an USPS EPM to electronic data, and the transmission of 
that data between a sender and a recipient.'' Ibid. According to the 
Postal Service, this is not meant to imply that electronic postmark 
service could not be used to ``enhance the utility of subsequent 
electronic document exchange.'' Id. at 15. The Postal Service views 
electronic postmark service as a totally independent transaction, not 
ancillary to any electronic transmission. It compares electronic 
postmark with notarial services, noting that the Commission previously 
found notary public services by postmasters in Alaska to be nonpostal. 
Id. at 15-16.
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    \30\ Motion to Dismiss at 14.
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    For its part, DigiStamp refers to a 1996 Postal Service press 
release that characterizes electronic postmark service in terms of its 
postal or mail-like attributes, including, for example, describing 
electronic postmark as the first in ``a series of services to mirror 
those of First-Class Mail.'' \31\ The Postal Service denies that this 
press release ``accurately describes the current status of, or its 
current expectation regarding, the Postal Service's programs in these 
areas.'' \32\ This denial, however, does not resolve the factual 
dispute between the parties. That the ``current status'' is different 
from what it may have been does not reveal what it has become or how it 
is different. Nor does the denial shed any light on the Postal 
Service's current expectations. Moreover, as DigiStamp observes, the 
Postal Service has not shown that its strategic alliance with 
AuthentiDate, apparently commenced in 2003, effects any significant 
change in the elements of the service.\33\
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    \31\ Complaint at Exhibit A; see also DigiStamp Answer at 7-9. 
In addition, the press release identifies future electronic services 
such as return receipt, certified, registered, and verification of 
the sender and recipient, each of which, DigiStamp contends, are 
already deemed to be postal services. DigiStamp Answer at 8.
    \32\ Postal Service Answer at 3, para. 6.
    \33\ DigiStamp Answer at 8.
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    DigiStamp also cites statements contained on the Postal Service web 
site which it contends give the impression that electronic postmark is, 
at a minimum, ``a service ancillary to the Postal Service's historical 
activity of carrying the mail.'' Id. at 10. These include attributing 
unique postal statutory attributes to electronic postmark service such 
as: `` `correspondence handled by USPS [is] subject to confidentiality 
statutes and regulations;' '' referencing the mandate of section 101 of 
the Act ``to bind the nation together through the * * * correspondence 
of the people;'' and the history of providing postmarks with legal 
significance. Ibid.
    In addition, the web site also lists various criminal statutes 
applicable to the Postal Service's electronic postmark, e.g., 18 U.S.C. 
1343 concerning wire fraud, and 18 U.S.C. 2510 concerning electronic 
communications. See http://www.usps.com/electronicpostmark /
benefits.htm. DigiStamp argues that by extending the criminal statutes 
designed to protect mail to electronic postmark service, the Postal 
Service gives ``EPM the status of a mail service.'' Ibid. The Postal 
Service acknowledges that, at the time the complaint was filed, the web 
site did include a reference to 18 U.S.C. 1341, concerning mail fraud. 
It states, however, that the reference was inadvertent, has been 
removed, and denies that section 1341 has any continuing relevance to 
this matter.\34\
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    \34\ Postal Service Answer at 3, para. 9. The Postal Service 
suggests that criminal interference with the operation of the Postal 
Service's electronic postmark service may be subject to 
investigation by the United States Postal Inspection Service and to 
prosecution under several federal statutes. Id. at 4, para. 11.
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    DigiStamp describes the Postal Service's electronic postmark as a 
document delivery service, a characterization that the Postal Service 
rejects, arguing that there is ``no necessary linkage'' between 
application of the electronic postmark to data and the transmission of 
that data.\35\ DigiStamp takes issue with the Postal Service's 
statement. It notes that the Postal Service's previously mentioned 
press release specifically states that a third party sends the 
electronically postmarked message to the recipient `` `via a value-
added network.' '' \36\ DigiStamp asserts that electronic postmark 
service adds value similar to that of various special services, such as 
certified mail, registered mail, and signature confirmation.\37\ 
DigiStamp concludes, contrary to the Postal Service's characterization, 
that ``there will nevertheless apparently be the `transfer of something 
from a sender to a recipient' * * * indicat[ing] a product ancillary to 
mail.'' Ibid.
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    \35\ Compare Complaint at 4, para. 12 and Postal Service Answer 
at 2, para. 2; and see Motion to Dismiss at 14.
    \36\ DigiStamp Answer at 9; see also Complaint, Exhibit A.
    \37\ DigiStamp Answer at 9. As relates to its third claim, 
DigiStamp argues that electronic postmark service may even replace 
or cannibalize some special services. Ibid.
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    Elsewhere, DigiStamp expands on its contention that electronic 
postmark is a value-added service, arguing that it has the attributes 
of a special service. Id. at

[[Page 12410]]

11. DigiStamp compares electronic postmark service to money orders, 
noting that transactions involving the latter may be independent of 
subsequent mailing.\38\ In response to the Postal Service's discussion 
of notarial services, DigiStamp argues that the mails can serve a 
similar purpose suggesting the postmark and certified delivery offer 
third-party proof that a document existed or was received on a specific 
date. Implicitly acknowledging that the comparison may be less than 
perfect, DigiStamp's larger point appears to be that the legal 
implications of the effects of changing technology on services offered 
by the Postal Service must be considered and that hearings on its 
complaint are an appropriate forum for doing so. DigiStamp Answer at 
11-12.
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    \38\ The Postal Service, too, discusses money orders, arguing 
that, unlike purchasers of electronic postmark service, purchasers 
are unlikely to use money orders other than to transfer funds from 
one person or entity to another. It contends that ``[t]he broad 
range of potential applications of EPMs precludes any such facile 
analysis.'' Motion to Dismiss at 15, n.12.
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    Based on the pleadings, the Commission is unable to determine 
whether electronic postmark service is or is not a postal service. The 
parties' sharply contrasting contentions regarding the nature of the 
service cannot be resolved on this record. Thus, it would be premature 
to grant the Postal Service's motion to dismiss. The facts necessary to 
support the parties' contentions need to be developed on the record.
    Each party challenges the other's characterization of the service. 
For example, the Postal Service argues that electronic postmark service 
can be viewed as a stand-alone service, and that it is independent of 
transmission. It suggests that the non-electronic service most 
analogous to electronic postmark is notarial service.\39\
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    \39\ Motion to Dismiss at 15-16. The Postal Service also 
suggests that electronic postmark may be applied to electronic data 
intended to be stored in the user's own files; for example, a doctor 
might apply it to electronic notes of patient records on a daily 
basis to verify, if required, that the records were created 
contemporaneously with the patient's visit. Id. at 14.
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    DigiStamp counters that apparently something is transferred between 
the sender and recipient. In addition, DigiStamp touts electronic 
postmark's value-added properties, contending that electronic postmark 
service has attributes indistinguishable from recognized special 
services such as return receipt, certified mail, registered mail, and 
verification of the sender and recipient.
    Furthermore, in its supplemental motion addressing South Carolina's 
legislation adopting the UETA,\40\ DigiStamp alleges that electronic 
postmark software and service ``includes what has been historically 
marketed as the Electronic Courier Service.'' Ibid. It provides a brief 
timeline of the latter, noting that Docket No. C99-1 was dismissed when 
the Postal Service exited that business, but contending ``that EPM is 
now being combined with other communications functions to operate as 
Electronic Courier Service under a new name.'' Id. at 3. It requests 
that its complaint be broadened to include this allegation. As noted 
above, the Postal Service did not respond to this motion. The 
relationship between these two services may be addressed at the 
hearings. However, if no nexus is demonstrated between the two 
services, the Commission reserves the right to limit the issues to the 
original complaint.
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    \40\ DigiStamp Motion, supra, at 2. Under the legislation, USPS 
EPM applied e-mails may be used as an alternative to certified or 
registered mail for certain types of electronic communications. 
DigiStamp contends that the Postal Service is the exclusive 
electronic postmark provider. Ibid.
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    In Docket No. RM2004-1, the Commission adopted a definition of the 
term postal service. That definition became effective February 16, 
2006. In light of this and in summary fashion, the task of the parties 
in this proceeding is to develop a record demonstrating that, by the 
nature of the service provided, electronic postmark falls within (or 
outside) that meaning. The parties' contentions lack factual support 
needed before the Commission can fairly determine whether electronic 
postmark service is (or is not) a postal service. In addition to the 
foregoing, the parties may also wish to develop a record, to the extent 
deemed relevant, on the experience of foreign posts in offering 
electronic postmark as a postal service or not. Accordingly, the 
Commission shall set this matter for hearing.

IV. DigiStamp's Third Claim

    Neither party devotes much attention to DigiStamp's third claim, 
that the Postal Service failure to request an advisory opinion on 
electronic postmark service violates 39 U.S.C. 3661. DigiStamp 
predicates this claim on electronic postmark being a postal 
service.\41\ It argues that electronic postmark service may have an 
adverse affect on the use of various mail services, such as First-Class 
Mail, Express Mail, Certified Mail, Return Receipt, and Delivery 
Confirmation. DigiStamp contends that by cannibalizing these services, 
electronic postmark will generally affect service on a nationwide 
basis. Id. at 7-8, paras. 49-50.
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    \41\ Complaint at 7, para. 48.
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    The Postal Service addresses the claim in a footnote, arguing that 
the claim is without merit because section 3661 does not apply to 
nonpostal services.\42\ In addition, the Postal Service argues that, 
while unstated by DigiStamp, this claim must be in the alternative to 
the first claim ``because there is no basis in the Act * * * that a new 
service proposed to be established in accordance with sections 3622-
3625 also be the subject of a request for an advisory opinion pursuant 
to section 3661.'' Ibid. DigiStamp does not address the Postal 
Service's arguments in its reply to the Service's motion to dismiss.
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    \42\ Motion to Dismiss at 2, n.1.
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    It is not apparent that premising this claim on electronic postmark 
being a postal service is necessary to support a claim based on section 
3661. If the Commission finds electronic postmark service to be a 
postal service, section 3623, change in mail classification, would 
apply, rather than section 3661, concerning a change in the nature of 
postal services. On the other hand, if electronic postmark is found not 
to be a postal service, section 3661 may apply if, as DigiStamp 
alleges, there is a nationwide or substantially nationwide affect on 
existing postal services. Nonetheless, since DigiStamp premises its 
third claim on electronic postmark being a postal service and further 
chose not to reply to the Postal Service's arguments, the Commission 
will dismiss this claim from this proceeding without prejudice to 
reconsidering this issue, on motion or otherwise, should the record 
developed herein support it.\43\
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    \43\ A similar issue arose in Docket No. C99-1. The Commission 
found that considering the issue would not exceed the scope of its 
authority under section 3662, noting that ``to the extent that the 
Sec.  3662 complaint mechanism has been viewed as a remedial 
supplement to the review of substantially nationwide service changes 
required under Sec.  3661, consideration of a Postal Service action 
purportedly in violation of Sec.  3661 in a complaint proceeding 
appears compatible with the statutory scheme of the Reorganization 
Act.'' PRC Order No. 1239, May 3, 1999 at 14 (footnote omitted).
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V. Procedural Matters

    Hearing. For the reasons discussed above, the Commission concludes 
that consideration of DigiStamp's complaint is authorized under 39 
U.S.C. 3662. Accordingly, this matter will be set for hearing.
    Notice. Pursuant to Rule 17 of the Commission's rules of practice 
and procedure, 39 CFR 3001.17, this order provides notice of this 
proceeding.

[[Page 12411]]

    Intervention. Those wishing to be heard in this matter are directed 
to submit a notice of intervention, on or before March 21, 2006, via 
the Commission's Filing Online system, which can be accessed 
electronically at http://www.prc.gov. Persons needing assistance with 
Filing Online may contact the Commission's Docket Section at 202-789-
6846. Notices shall indicate whether participation will be on a full or 
limited basis. See 39 CFR 3001.20 and 3001.20a.
    Statement. To facilitate the development of a procedural schedule 
for this docket, DigiStamp is directed to provide a statement, due on 
or before March 20, 2006, estimating the amount of time it will require 
to develop and file a case-in-chief. The Commission will thereafter 
issue a procedural schedule and, if need be, special rules of practice.
    Representation of the general public. In conformance with Sec.  
3624(a) of title 39, 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 this designation, Ms. Dreifuss will direct the activities 
of Commission personnel assigned to assist her and, upon request, will 
supply their names for the record. Neither Ms. Dreifuss nor any of the 
assigned personnel will participate in or provide advice on any 
Commission decision in this proceeding.
    Public notice. The Commission directs the Secretary to arrange for 
publication of this order in the Federal Register.

Ordering Paragraphs

    It is ordered:
    1. The Motion of the United States Postal Service to Dismiss, filed 
April 26, 2004, is denied, in part, and granted, in part, as set forth 
in the body of this order.
    2. Proceedings in conformity with 39 U.S.C. 3624 shall be held in 
this matter.
    3. The Commission will sit en banc in this proceeding.
    4. Notices of intervention are due no later than March 21, 2006.
    5. Shelley Dreifuss, director of the Commission's Office of the 
Consumer Advocate, is designated to represent the interests of the 
general public in Docket No. C2004-2.
    6. Complainant shall provide a statement, due on or before March 
20, 2006, estimating the amount of time it will require to develop and 
file a direct case in this proceeding.
    7. The Secretary shall arrange for publication of this Order in the 
Federal Register.

    By the Commission.
Steven W. Williams,
Secretary.
[FR Doc. E6-3403 Filed 3-9-06; 8:45 am]
BILLING CODE 7710-FW-P