[Federal Register Volume 74, Number 34 (Monday, February 23, 2009)]
[Notices]
[Pages 8124-8129]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-3781]


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POSTAL REGULATORY COMMISSION

[Docket No. R2009-2; Order No. 180]


Postal Service Price Changes

AGENCY: Postal Regulatory Commission.

ACTION: Notice.

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SUMMARY: The Commission is conducting a review of the Postal Service's 
planned rate adjustments for essentially all products in the market 
dominant category, which includes the First-Class stamp, and limited 
classification changes. The adjustments are generally based on a method 
that relies on a price cap tied to annual changes in the consumer price 
index and, in some instances, also draws on unused or ``banked'' 
pricing authority. This document invites public comment and discusses 
other matters related to the Commission's review and the Postal 
Service's anticipated implementation of new rates.

DATES: March 2, 2009: Deadline for public comments.

ADDRESSES: Submit comments electronically via the Commission's Filing 
Online system at http://www.prc.gov.

FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel, 
202-789-6820 and [email protected].

SUPPLEMENTARY INFORMATION: Regulatory History, 73 FR 9363 (February 20, 
2008).

I. Overview

A. Background

    On February 10, 2009, the United States Postal Service (Postal 
Service) filed with the Postal Regulatory Commission (Commission) a 
document captioned United States Postal Service Notice of Market-
Dominant Price Adjustment (Adjustment Notice). This document was filed 
pursuant to 39 U.S.C. 3622 and 39 CFR part 3010. It announces the 
Postal Service's intention to adjust rates for all market dominant 
products in amounts that are, on average, within a 3.8 percent 
statutory price cap plus the unused pricing authority remaining from 
Docket No. R2008-1 for each class. The planned price adjustment for 
most market dominant products will take effect on May 11, 2009. The 
exceptions are new

[[Page 8125]]

prices related to a full-service option of Intelligent Mail which will 
take effect on November 29, 2009, and Personalized Stamped Envelopes 
options which will have their effective dates established by separate 
notice. The Commission notes that the average change, in some 
instances, includes significant percentage changes within a class. The 
Commission further notes that several worksharing discounts vary 
significantly from passing through 100 percent of avoided costs.
    The Adjustment Notice also addresses several mail classification 
changes the most sweeping of which provides a price differential for 
mailers who use the full-service option of Intelligent Mail and comply 
with mail preparation requirements. The Postal Service plans a November 
29, 2009 price reduction of 0.3 cents for full-service option 
Intelligent Mail within First-Class Mail, and 0.1 cents for full-
service option Intelligent Mail within Standard Mail, Package Services, 
and Periodicals Mail.\1\ Address Change Service (ACS) will be included 
with the full-service option of Intelligent Mail for Periodicals, 
providing the additional benefit of not having to incur the separate 
cost of ACS which is required for all Periodicals. Mailers can avail 
themselves of this price differential if they meet specific criteria, 
including a requirement that each piece have a unique Intelligent Mail 
barcode, be part of a mailing with unique container labels, and use 
electronic documentation.
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    \1\ Although the Adjustment Notice does not discuss a price 
differential for Package Services, Appendix A at 49 and 51 indicates 
the availability of the price differential for certain Bound Printed 
Matter Flats.
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    Additional class-specific classification changes also are planned. 
A minor classification change is made in First-Class Mail to separate 
the current ``Canada and Mexico'' Outbound Single-Piece First-Class 
Mail International Postcard category into two distinct price 
categories.
    Standard Mail will be subject to an additional 7 cents per-piece 
charge for mailings not compliant with the Move Update requirements. 
The Postal Service is planning an optional feature called ``Saturation 
Mail Volume Program'' to encourage new Saturation mail volumes. It is 
revising pricing categories for Standard Mail Not Flat-Machinable 
(NFMs)/Parcels and slightly modifying Domestic Mail Manual eligibility 
rules for those categories.
    The Postal Service plans to change the Single-Piece Parcel Post 
price structure by merging the Intra-BMC [bulk mail center] and Inter-
BMC prices into a single Parcel Post price category and deleting the 
non-machinable surcharge. Also descriptions for Zones 1-8 are added to 
the Mail Classification Schedule.
    Within special services, the Postal Service plans to modify Confirm 
by adding a new Bronze subscription level, and make changes to the Gold 
and Platinum levels to differentiate between mail owners and mail 
agents. The Stamped Envelopes product is supplemented with premium 
options available for personalized stamped envelopes. Finally, changes 
are made to Address Correction Service to incorporate the full-service 
option of Intelligent Mail.

B. Context

    The filing of the Adjustment Notice marks the second instance in 
which the Postal Service is exercising its authority, under the Postal 
Accountability and Enhancement Act of 2006 (PAEA) and related 
Commission rules, to make an annual adjustment in rates for products in 
the market dominant category under a new streamlined, index-based 
approach. The market dominant product category is one of two business 
lines established in the PAEA. It includes, generally, First-Class Mail 
letters and sealed parcels; First-Class Mail cards; Periodicals; 
Standard Mail; Single-Piece Parcel Post; Media Mail; Bound Printed 
Matter; Library Mail; Special Services; and Single-Piece International 
Mail. 39 U.S.C. 3621. The second business line is the competitive 
products category, which includes Priority Mail; Expedited Mail; Bulk 
Parcel Post; and Bulk International Mail. Specific market dominant 
product and the competitive product lists are published at 39 CFR 
Appendix A to Subpart A of Part 3020--Mail Classification Schedule. 
Rate and fee adjustments for each business category are governed by 
different procedures.

C. Statutory Price Cap

    The statutory price cap limits the increase in rates for market 
dominant products to the change in the CPI-U for the past 12 months, 
calculated under Commission rules implementing the PAEA.\2\ For the 12 
months ending December 2008, the price cap is 3.8 percent.
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    \2\ The reference to CPI-U is to the Department of Labor's 
Consumer Price Index for All Urban Consumers.
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II. Impact on Mailers

    Summary. The planned adjustments, summarized in terms of average 
percentage change at the class level, are First-Class Mail, 3.771 
percent; Standard Mail, 3.781 percent; Periodicals, 3.966 percent; 
Package Services, 3.800 percent; and Special Services, 3.837 percent. 
The unused pricing authority remaining from Docket No. R2008-1 by class 
are First-Class Mail, 0.014 percent; Standard Mail, 0.062 percent; 
Periodicals, 0.176 percent; Package Services, 0.025 percent; and 
Special Services, 0.052 percent. When combined with the current 3.8 
percent statutory price cap, the total price adjustment authority by 
class are First-Class Mail, 3.814 percent; Standard Mail, 3.862 
percent; Periodicals, 3.976 percent; Package Services, 3.825 percent; 
and Special Services, 3.852 percent. As calculated by the Postal 
Service, each percentage adjustment is below the allowable total price 
adjustment authority. Adjustment Notice at 3-5.
    The First-Class stamp. The planned change in the First-Class 
postage stamp, which is widely used by the general public for eligible 
mail weighing 1 ounce or less, is an increase of 2 cents. This raises 
the rate from its current level of 42 cents to 44 cents. The additional 
ounce price and the non-machinable surcharge will be held at current 
levels. Id. at 12.
    The Forever Stamp. As a result of Docket No. R2006-1, the Postal 
Service introduced a First-Class Mail ``Forever Stamp.'' The price of 
this stamp at the time of its introduction was 41 cents, which equated 
to the Docket No. R2006-1 price for the first ounce of single-piece 
First-Class Mail. The price of this stamp increased to 42 cent as a 
result of the Docket No. R2008-1 price adjustment. This stamp will 
continue to be sold for 42 cents through May 10, 2009, and will cover 
postage for mailing single-piece First-Class Mail even after the 
anticipated price increase to 44 cents on May 11, 2009. On and after 
May 11, under the planned adjustments, a new purchase of a Forever 
Stamp will be at the 44-cent rate. These stamps, like the original 
issue, will continue to cover the mailing of 1-ounce single-piece 
First-Class Mail, regardless of future increases in the underlying 
rate.

III. Unused Rate Adjustment Authority

    The Postal Service states that the unused price adjustment 
authority remaining following this price change is accordance with the 
following schedule.

                               Table III-1
------------------------------------------------------------------------
                                                                 Percent
                             Class                               change
------------------------------------------------------------------------
First-Class Mail..............................................     0.043
Standard Mail.................................................     0.081

[[Page 8126]]

 
Periodicals...................................................     0.010
Package Services..............................................     0.025
Special Services..............................................     0.015
------------------------------------------------------------------------

Id. at 6.

IV. Consistency of Adjustment Notice With Commission Rules

    Relationship of streamlined procedures to intended implementation 
date. Commission rules implementing the PAEA require the Postal Service 
to file notice of its intention to adjust market dominant rates at 
least 45 days prior to the intended implementation date. The Commission 
notes, in this instance, that the Postal Service is providing more than 
the minimum amount of notice, given that the anticipated effective date 
is May 11, 2009.

V. Commission Action

    In Docket No. RM2007-1, the Commission developed a set of 
procedures to carry out its review of an adjustment notice in 
accordance with the PAEA and pertinent provisions of the Administrative 
Procedure Act. Pursuant to these procedures, the filing of an 
adjustment notice triggers a requirement that the Commission establish 
a formal docket to review the consistency of the planned adjustments 
with regulations that subsume legal provisions, policy issues, and 
technical matters. Requirements related to public notice, official 
publication, public representation, a public comment period, and other 
matters also attach to the review.
    The Commission takes several steps at this time in conformance with 
these requirements. First, it has posted the Postal Service's 
Adjustment Notice on its Web site, http://www.prc.gov. It also has made 
the Adjustment Notice available for copying and inspection during 
regular business hours (8 a.m. to 4:30 p.m.) at the Commission, 901 New 
York Avenue, NW., Suite 200, Washington, DC 20268-0001. Any subsequent 
Postal Service filings in this docket, along with any written comments 
and filings by others, also will be posted on the Commission's Web site 
and made available for public inspection and copying at the Commission 
during regular business hours.
    Second, the Commission establishes the requisite formal docket, 
captioned Docket No. R2009-2, Notice of Price Adjustment, to conduct 
its mandatory review of the Postal Service's planned rate adjustments. 
It notes that this review is conducted under the legal authority of 39 
U.S.C. 3622.
    The Commission's intention is to conduct this review by bringing 
its judgment to bear on the basis of the material presented in the 
Adjustment Notice, the objectives, factors and requirements of the 
PAEA, including referenced postal policies, Commission rules, and 
public comments.
    Third, the Commission issues this notice addressing the Adjustment 
Notice and related matters, in conformance with 39 CFR 3010.13. It also 
directs the Secretary of the Commission to arrange for prompt 
publication of this notice and order in the Federal Register. It 
appoints Kenneth E. Richardson, Pamela A. Thompson, and William C. 
Miller to represent the interests of the general public in conformance 
with 39 CFR 3010.13(a)(4).
    Public comment period; focus of comments. The Commission provides a 
20-day comment period starting from the date of the filing of the 
Adjustment Notice in conformance with 39 CFR 3010.13(a)(5). The comment 
period extends through close of business on March 2, 2009. Rule 
3010.13(b) provides that public comments should focus primarily on 
whether planned rate adjustments comply with the following mandatory 
requirements of 39 U.S.C. chapter 36, subchapter 1, including:

    (1) Whether the planned rate adjustments measured using the 
formula established in section 3010.23(b) are at or below the annual 
limitation established in section 3010.11; and
    (2) Whether the planned rate adjustments measured using the 
formula established in section 3010.23(b) are at or below the 
limitations established in section 3010.28.

    Method for filing comments. The formal intervention process set out 
in the Commission's rules does not apply in this type of docket. 
Instead, interested persons are to submit comments electronically via 
the Commission's Filing Online system. The Commission will provide 
assistance to anyone not familiar with this method of filing. Those 
seeking assistance should contact the Docket Section at 202-789-6846.
    Additional procedural steps; timetable. Rule 3010.13(c) provides 
that the Commission, within 14 days of the conclusion of the public 
comment period, will determine, at a minimum, whether the planned rate 
adjustments are consistent with the annual limitation set forth in 
section 3010.11; the limitations set forth in section 3010.28; and 39 
U.S.C. 3626, 3627 and 3629, and issue an order announcing its findings. 
In this instance, the deadline for the Commission's determination is 
March 16, 2009. If the planned rate adjustments are found consistent 
with applicable law by the Commission, they may take effect pursuant to 
appropriate action by the Postal Service. In the event the Commission 
determines that planned rate adjustments are not consistent with 
applicable considerations, additional procedures apply. See 39 CFR 
3010.13(c) through 3010.13(i).

VI. Summary of Postal Service Adjustment Notice

    Background. Commission rule 3010.14 requires the Postal Service to 
include certain explanatory and supporting information in each 
adjustment notice, but leaves organization of the notice and 
presentation of the requisite material to the discretion of the Postal 
Service. The purpose of the information the Postal Service provides is 
to facilitate expeditious review of the consistency of the adjustment 
notice with pertinent considerations.
    Organization of adjustment notice. The Adjustment Notice in this 
docket consists of an introductory section; three sections designated 
as parts; three appendices; and five attachments.
    Introductory section. The Postal Service identifies the planned 
effective date as May 11, 2009 for most price adjustments. It states 
that the new prices related to a full-service option of Intelligent 
Mail will take effect on November 29, 2009, and the Personalized 
Stamped Envelopes options will have their effective dates established 
by separate notice. It also represents, in conformance with the notice 
requirements of 39 CFR 3010.14(a)(3), that it will issue public notice 
of the planned rate changes at least 45 days before the effective date 
via several means in addition to its Adjustment Notice. Specifically, 
it states that this includes issuing notice of the price changes, on 
the same day of its filing with the Commission, on the Postal Service's 
Web site (http://www.usps.com), the Postal Explorer Web site (http://www.pe.usps.com), the DMM [Domestic Mail Manual] Advisory, and the P&C 
[Producers and Consumers] Weekly; and a press release announcing the 
changes. The Postal Service also states that it plans to provide public 
notice of the price changes in future issues of the PCC [Postal 
Customer Council] Insider, MailPro (March/April issue), the Postal 
Bulletin, and Federal Register. Id. at 1-2.
    The Postal Service identifies Joseph D. Moeller, Manager of 
Pricing, as the

[[Page 8127]]

Postal Service official who will be available to provide prompt 
responses to requests for clarification from the Commission. In the 
remainder of the Adjustment Notice, it provides supporting technical 
information and justifications, including workpapers where applicable. 
39 CFR 3010.13(a)(1), 3010.13(a)(3), 3010.13(a)(4), and 3010.14(b). Id. 
at 2.
    Part I. The Postal Service represents that the material presented 
in part I, captioned Price Cap Compliance, complies with 39 CFR 
3010.14(b)(1) through (4) by identifying the amount of the applicable 
price cap; the amount of any unused rate (price) adjustment authority 
available for each class of mail; the percentage change in prices for 
each class of mail; and the amount of any unused rate adjustment 
authority generated by this price change. Id.
    Part II. The Postal Service represents that the material presented 
in part II, captioned Description of the Prices, responds to 39 CFR 
3010.14(b)(7) and (8). These rules require the Postal Service to 
discuss how the planned prices ``help achieve'' the objectives of 
section 3622(b) and ``properly take into account'' the factors of 
section 3622(c); and how the planned prices are consistent with 
sections 3626, 3627 and 3629. In addition, the Postal Service discusses 
the workshare discounts included within the planned price adjustments 
as required by 39 CFR 3010.14(b)(5) through (6). Id. at 6-7.
    Part III. The Postal Service represents that part III, captioned 
MCS [Mail Classification Schedule] Product Description Changes, 
responds to the requirement in 39 CFR 3010.14(b)(9) that the instant 
notice include all the changes to the product descriptions within the 
MCS that are necessitated by the planned rate adjustments. These 
changes are presented based on draft MCS language that is being 
developed by the Commission in cooperation with the Postal Service. The 
draft MCS will be the subject of a future rulemaking, which will 
include the opportunity for public comment. Id. at 45.
    Appendices. The Adjustment Notice is accompanied by three 
appendices. Appendix A provides the schedules of new prices and 
classification changes in Mail Classification Schedule format; Appendix 
B provides workshare discounts, cost differentials, and passthroughs; 
and Appendix C provides the price cap calculation.
    Attachments. The attachments consist of workbooks the Postal 
Service prepared to demonstrate that the prices identified in the 
appendices comply with the price cap. The five attachments are 
identified as USPS-R2009-2/1: Cap Compliance for First-Class Mail Price 
Changes; USPS-R2009-2/2: Standard Mail Cap Compliance; USPS-R2009-2/3: 
Periodicals Cap Compliance; USPS-R2009-2/4: Package Services Cap 
Compliance; and USPS-R2009-2/5: Special Services Cap Compliance.

VII. Class-Specific Summary of Price Adjustments and Classification 
Changes

A. First-Class Mail

    The Postal Service identifies six First-Class Mail products: 
Single-Piece Letters/Postcards; Presorted Letters/Postcards; Flats, 
Parcels; Outbound Single-Piece First-Class Mail International; and 
Inbound Single-Piece First-Class Mail International. The planned price 
changes for these products, in percentage terms, range from 2.567 
percent to 4.616 percent. Product-specific changes appear in the 
following table.

                               Table VII-1
------------------------------------------------------------------------
                                                                 Percent
                            Product                              change
------------------------------------------------------------------------
Single-Piece Letters & Cards..................................     4.616
Presort Letters & Cards.......................................     3.080
Flats.........................................................     3.882
Parcels.......................................................     2.567
International *...............................................     4.136
Overall.......................................................     3.771
------------------------------------------------------------------------
* This includes Inbound and Outbound Single-Piece First-Class Mail
  International.

Id. at 11-12.

    The Postal Service states that a major driver of the overall 
increase for First-Class Mail is the price of a stamp for 1-ounce, 
single-piece letters. It plans to increase this price by 2 cents (4.8 
percent). This increase also reflects the integer (cent) rounding 
constraint traditionally applied to this price. The Postal Service 
asserts that the additional ounce price and the non-machinable 
surcharge are held at current levels, thus tempering the increase 
caused by the 2-cent increase on the first-ounce price for letters. Id. 
at 12.
    Presort Letters and Cards. The Postal Service plans less-than-
average increases in automation prices to help maintain letter volume. 
In addition, the Postal Service will make optional some requirements 
for presortation of automation First-Class Mail Id. at 13.
    Classification changes. To facilitate the adoption of the full-
service option of Intelligent Mail the Postal Service has added a price 
differential to the MCS for customers who use this option with First-
Class Mail presorted letters and flats. The price when using this 
option is reduced by 0.3 cents from what otherwise would have been 
paid. The specific mail preparation requirements for this 
classification have not been fully specified. Id. at 14.

B. Standard Mail

    The Postal Service identifies six Standard Mail products: Letters; 
Flats; Parcels and Not-Flat Machinables (NFMs); High Density and 
Saturation Letters; High Density and Saturation Flats and Parcels; and 
Carrier Route Letters, Flats, and Parcels. The planned price changes 
for these products range from 1.248 percent to 16.425 percent. Product-
specific changes appear in the following table.

                               Table VII-2
------------------------------------------------------------------------
                                                                Percent
                           Product                               change
------------------------------------------------------------------------
Letters......................................................      3.829
Flats........................................................      2.306
Parcels and NFMs.............................................     16.425
High Density/Saturation Letters..............................      1.248
High Density/Saturation Flats and Parcels....................      2.233
Carrier Route Letters, Flats and Parcels.....................      4.310
Overall......................................................      3.781
------------------------------------------------------------------------

Id.

    The Postal Service states that the price change for the Flats 
product is lower than the price cap (2.306 percent) to moderate the 
increase for catalog mailers, whose volume fell considerably in FY 
2008. Although FY 2008 data shows a cost coverage below 100 percent, 
the Postal Service asserts it is mitigating the price increase to 
maintain the viability of the catalog industry. It also is either 
reducing or limiting the increase of the pound rate category for the 
Flats product. Id. at 15.
    The Postal Service notes that it is working to improve contribution 
for the Parcels and NFMs product. It plans a 16.425 percent average 
increase. However, incentives to more efficient transportation and 
entry practices dropship deeper into the system are enhanced to 
encourage. Id. at 16.
    Classification changes. The Postal Service has planned new price 
incentives targeted at encouraging new Saturation mail volumes. The 
incentives will reduce the price for new Saturation letters mailed 
during defined periods by 3.7 cents (2.2 cents for nonprofit Saturation 
letters). Id.
    The Postal Service is revising the pricing categories for Standard 
Mail Parcels/NFMs. There no longer will be a separate price for 
machinable parcels, irregular parcels, and NFMs presorted to 5-digit 
and entered at origin. For such pieces, the lowest price available will 
be the BMC price. Separate prices also will

[[Page 8128]]

be eliminated for origin entered SCF [sectional center facility] 
irregular parcels and NFMs, DSCF [destination section center facility] 
entered BMC irregular parcels and NFMs, and DSCF and DBMC [destination 
bulk mail center] entered Mixed BMC irregular parcels and NFMs. Id. at 
17.
    To facilitate the adoption of the full-service option of 
Intelligent Mail, the Postal Service has added a price differential to 
the MCS for customers who use this option with Standard Mail. The price 
when using this option is reduced by 0.1 cents from what otherwise 
would have been paid. The specific mail preparation requirements for 
this classification have not been fully specified. Id. at 17-18.
    The Postal Service changed mail preparation standards in November 
2008 to require Standard Mail customers to use an approved Move Update 
method. Customers not complying with the Move Update standard will be 
subject to a charge of 7 cents per piece. Id. at 18.

C. Periodicals

    The Postal Service identifies two Periodicals products: Within 
County Periodicals and Outside County Periodicals. The planned price 
changes are relatively close and both are below the cap. Product-
specific changes appear in the following table.

                               Table VII-3
------------------------------------------------------------------------
                                                                 Percent
                            Product                              change
------------------------------------------------------------------------
Outside County................................................     3.973
Within County.................................................     3.802
Overall.......................................................     3.966
------------------------------------------------------------------------

Id. at 19.
    The Postal Service asserts that the Periodicals class has been 
challenging in terms of cost coverage. The Postal Service states that 
Periodicals is the only class of mail failing to cover attributable 
costs in FY 2008. It also is cognizant of the value of the class to the 
public. It contends the adjusted prices are designed to balance the 
impact on publications, while taking advantage of the new price 
structure that will improve the efficiency of the product. Id.
    Classification changes. To facilitate the adoption of the full-
service option of Intelligent Mail, the Postal Service has added a 
price differential for customers who use this option with Periodicals. 
The per-piece charge when using this option is reduced by 0.1 cents 
from what otherwise would have been paid. The specific mail preparation 
requirements for this classification have not been fully specified. Id. 
at 20.
    Currently, Periodicals are required to use ACS and pay a fee of 25 
cents per address change. By adopting the full-service option of 
Intelligent Mail, a publication also qualifies for no-fee ACS, which, 
in itself, is a substantial incentive to use the full-service option. 
Id.

D. Package Services

    The Postal Service identifies five Package Services products: 
Single-Piece Parcel Post; Bound Printed Matter Flats; Bound Printed 
Matter Parcels; Media Mail/Library Mail; and Inbound Surface Parcel 
Post (at Universal Postal Union (UPU) rates). The planned price changes 
range from 2.0 percent reduction to an increase of 7.468 percent. 
Product-specific changes appear in the following table.

                               Table VII-4
------------------------------------------------------------------------
                                                                Percent
                           Product                               change
------------------------------------------------------------------------
Single-Piece Parcel Post.....................................      4.450
BPM Flats....................................................     -2.000
BPM Parcels..................................................      2.504
Media Mail and Library Mail..................................      7.468
Inbound Surface Parcel Post..................................    * 5.027
Overall......................................................     3.800
------------------------------------------------------------------------
* The Postal Service notes that prices for Inbound (International)
  Surface Parcel Post (at UPU rates) are determined by the Universal
  Postal Union and are not under its (the Postal Service's) control. Id.
  at 20, n.16.

Id.
    The Postal Service states that its overall goal in Package Services 
is to improve the profitability of the product. It notes that in FY 
2008, Media Mail, Library Mail, and Single-Piece Parcel Post failed to 
cover costs, although the class as a whole had a positive cost 
coverage. Because Bound Printed Matter flats already have a healthy 
cost coverage, the Postal Service plans on reducing the average price 
for Bound Printed Matter flats in order to offset the needed higher 
price increases for the lower performing products. Id. at 21.
    Classification changes. The Postal Service plans to change the 
Single-Piece Parcel Post price structure by merging the Intra-BMC and 
Inter-BMC prices to create a single price at each weight level in each 
zone. The separate price for the Local zone is being merged with the 
Zones 1 and 2 prices. Id. at 21-22.
    The current price structure for Single-Piece Parcel Post includes a 
surcharge for non-machinable parcels. The Postal Service is eliminating 
this surcharge and incorporating its effect into the base price. Id. at 
22.

E. Special Services

    The Postal Service identifies 11 Special Services products: 
Ancillary Services; International Ancillary Services; Address List 
Services; Caller Service; Change-of-Address Credit Card Authentication; 
Confirm; International Reply Coupon Service; International Business 
Reply Mail Service; Money Orders; Post Office Box Service; and Premium 
Forwarding Service. The planned overall increase is 3.837 percent. Id. 
at 22-23.
    The Postal Service states that fee increases for many Special 
Services are generally designed to be close to the percentage increase 
in CPI-U, while maintaining consistency with historical rounding 
constraints. Id. at 23. It says that Special Services affected by this 
approach include Business Reply Mail, and several Ancillary Services, 
including Certified Mail; Address List Services; Account Maintenance; 
Application and Mailing Permit fees; Parcel Airlift Service; Post 
Office Boxes; Return Receipt (green card); and Shipper Paid Forwarding. 
Id. The Postal Service states the greater increases for Electronic 
Return Receipt and Return Receipt After Mailing reflect their high 
value of service. Id., n.17.
    Address Correction Service (ACS). The Postal Service states that a 
significant portion of ACS will be incorporated into the full-service 
option of Intelligent Mail. It notes that manual fees are not increased 
while Automated and Electronic fees have increases exceeding the cap. 
Id.
    Certificate of Mailing. The Postal Service asserts that for 
Certificate of Mailing, it designed fees for individual pieces to 
increase by a percentage as close to the cap percentage as possible, 
consistent with the historical nickel rounding constraint for this 
special service. However, it increases fees for Certificates of Mailing 
for bulk pieces slightly above the cap to reflect the low price 
compared to a high value of service. Id.
    Confirm. The Postal Service plans a classification change for 
Confirm by adding a new ``Bronze'' price tier, and new segments within 
the two existing tiers which differentiate between mail owners and mail 
agents. Id. at 24.
    Insurance. The Postal Service states that the planned above-average 
price increases for the $50.01 to $100 fee and the $100.01 to $200 fee 
are intended to smooth the price relationships among the various 
increments. It says the increase in the incremental fee reflects the 
increased value of service provided as the item's value increases. Id.

[[Page 8129]]

    Registered Mail. The Postal Service plans to increase fees for 
Registered Mail by an average of 8.7 percent to reflect the high value 
of service offered, and to improve the very low cost coverage. Id.
    Stamped Envelopes. The Postal Service plans to increase the fees 
for single-piece stamped envelopes by one cent. It says it keeps the 
fees for plain envelopes in packs of 500 as close to the cap as 
possible within the rounding constraints. Fees for personalized 
envelopes, however, increase by more than the cap to reflect the 
convenience this service provides. The Postal Service states that it is 
enhancing the value of service by introducing new envelope options, 
some of which will be available on a date later than May 11, 2009. Id. 
at 24-25.
    Stamped Cards. The Postal Service does not plan to increase the fee 
for single Stamped Cards. Id. at 25.
    Bulk Parcel Return Service. The Postal Service states that the 
increase in the per-piece fee is similar to the general increase for 
Standard Mail parcels. Id.
    Restricted Delivery, Collect on Delivery Notice of Nondelivery and 
Alteration of Charges, and Money Order inquiries. The Postal Service 
says the fee increases for these services reflect their high value of 
service. Id.
    International Special Services. The Postal Service says its general 
approach to international special services has been to set fees for 
those services that are similar to the fees for the equivalent domestic 
service, and that it has followed this approach for International 
Certificates of Mailing; International Registered Mail; International 
Return Receipts; and International Restricted Delivery. Id.

VIII. Compliance With Preferred Mail Requirements

    The Postal Service explains its compliance with section 3626, which 
sets forth pricing requirements for certain preferred categories of 
mail. Id. at 25-27. It contends that the price adjustment continues to 
recognize the preferential status of Within County Periodicals. 39 
U.S.C. 3626(a)(3). The Postal Service states that the rate adjustments 
maintain the rate preference for Nonprofit and Classroom pieces at a 5 
percent discount on all components of postage except for advertising 
pounds and ride-along postage. 3626(a)(4)(A)-(B). The Postal Service 
continues to provide Science of Agriculture Periodicals with 
advertising pound rates for DDU [destination delivery unit], DSCF, DADC 
[destination area destination center] and Zones 1 & 2 that are 75 
percent of the advertising pound rates applicable to regular 
Periodicals. 39 U.S.C. 3626(a)(5). Nonprofit Standard Mail prices are 
set to achieve a revenue per-piece ratio of 60.2 percent of the 
commercial average revenue per piece. 39 U.S.C. 3626(a)(6). The Postal 
Service states that it has set the prices for Library Mail to be, as 
nearly as practical, equal to 95 percent of the prices for Media Mail. 
39 U.S.C. 3626(a)(7). Finally, the Postal Service states that it 
implemented a new ``limited circulation'' discount in 2008, which gives 
Outside County pieces of Periodicals having fewer than 5,000 Outside 
County pieces and at least one Within County piece a discount 
equivalent to the Nonprofit and Classroom Periodicals discount.

IX. Compliance With Workshare Discount Rules

    The Postal Service explains that section 3622(e) requires the 
Postal Service to justify any worksharing discounts that exceed 100 
percent of avoided costs by reference to the exceptions specified in 
that provision. Id. at 27. In addition, 39 CFR 3010.14(b)(6) requires 
the Postal Service to explain any discount set substantially below 100 
percent of avoided costs. Id. at 29. The workshare discounts, cost 
differentials, and passthroughs are shown in Appendix B. The 
accompanying explanations are provided on a class-by-class basis in the 
Adjustment Notice at pages 29-45.

X. Mail Classification Schedule Product Description Changes

    The Postal Service addresses 39 CFR 3010.14(b)(9) in part III of 
its Adjustment Notice. Id. at 45-47. This rule requires that the 
Adjustment Notice include all the changes to the product descriptions 
within the MCS that are necessitated by the planned price adjustments. 
These changes are presented based on draft MCS language that is being 
developed by the Commission in cooperation with the Postal Service. The 
draft MCS will be the subject of a future rulemaking, which will 
include the opportunity for public comment. The Postal Service provides 
the proposed MCS revisions in Appendix A.
    Part III of the Adjustment Notice also summarizes the 
classification changes identified above in this notice and previously 
in the Adjustment Notice. It also identifies a further Outbound Single-
Piece First-Class Mail International classification change which splits 
the current Canada and Mexico Postcard category into two distinct price 
categories. Id. at 46.

XI. Ordering Paragraphs

    It is ordered:
    1. The Commission establishes Docket No. R2009-2 to consider the 
planned price adjustments in rates and fees for market dominant postal 
products and services identified in the Postal Service's February 10, 
2009 Adjustment Notice.
    2. Interested persons may submit comments on the planned price 
adjustments. Comments are due March 2, 2009.
    3. Pursuant to 39 U.S.C. 505, the Commission appoints Kenneth E. 
Richardson, Pamela A. Thompson, and William C. Miller to represent the 
interests of the general public in this proceeding.
    4. The Commission directs the Secretary of the Commission to 
arrange for prompt publication of this notice in the Federal Register.

    Dated February 12, 2009.

    By the Commission.
Steven W. Williams,
Secretary.
[FR Doc. E9-3781 Filed 2-20-09; 8:45 am]
BILLING CODE 7710-FW-P