[Federal Register Volume 74, Number 205 (Monday, October 26, 2009)]
[Notices]
[Pages 55075-55076]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-25750]



[[Page 55075]]

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POSTAL REGULATORY COMMISSION

[Docket No. R2010-1; Order No. 318]


Postal Service Price Adjustment

AGENCY: Postal Regulatory Commission.

ACTION: Notice.

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SUMMARY: The Commission is noticing a recently-filed Postal Service 
request to establish a Move Update assessment charge for First-Class 
Mail. This notice addresses procedural steps associated with this 
filing.

DATES: Comments are due November 4, 2009.

ADDRESSES: Submit comments electronically via the Commission's Filing 
Online system at http://www.prc.gov. Commenters who cannot submit their 
views electronically should contact the person identified in FOR 
FURTHER INFORMATION CONTACT by telephone for advice on alternatives to 
electronic filing.

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

SUPPLEMENTARY INFORMATION: 

I. Overview
II. Postal Service Filing
III. Commission Action
IV. Ordering Paragraphs

I. Overview

    On October 15, 2009, the Postal Service filed with the Commission a 
notice announcing its intention, pursuant to 39 U.S.C. 3622 and 39 CFR 
part 3010, to establish a Move Update assessment charge for First-Class 
Mail.\1\ The Notice describes related pricing and classification 
information specifying how the Move Update assessment will be applied 
to First-Class Mail. The Notice also announces classification changes 
which revise the way the Move Update assessment will be applied to 
Standard Mail. The Postal Service intends to implement these changes on 
January 4, 2010. Id. at 1.
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    \1\ United States Postal Service Notice of Market Dominant Price 
Adjustment and Classification Changes, October 15, 2009 (Notice).
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    The Notice addresses plans for public notice; a description of the 
price and classification changes; price cap compliance; the statutory 
objectives and factors; workshare discounts; and preferred rates. The 
changes described in the Notice are supported by Appendix A (hard 
copy), and Appendices B1, B2, and B3 (electronic format). Appendix A 
specifies proposed Mail Classification Schedule (MCS) language. The B 
appendices provide the following information: B1--Calculation of 
Percentage of Mail Expected to Pay a Move Update Assessment, B2--
Calculation of Revenue Estimate for First Class Mail, and B3--
Calculation of Revenue Estimate for Standard Mail. The Notice and all 
appendices are available for review on the Commission's Web site at 
http://www.prc.gov.

II. Postal Service Filing

    Background. In Docket No. R2009-2, Notice of Market Dominant Price 
Adjustment, filed February 10, 2009, the Postal Service provided notice 
that, at acceptance, Standard Mail mailings that fail a Move Update 
verification would be assessed an additional 7 cents per piece for each 
piece in the mailing. First-Class Mail mailings that fail a Move Update 
verification would be charged the single-piece rate on all pieces in 
the mailing. In March 2009, the Postal Service notified the Commission 
of its decision to delay the implementation of the Standard Mail Move 
Update assessment until January 2010. Id. at 2-3.
    Price and classification description. In this docket, the Postal 
Service proposes to revise Move Update assessments at acceptance. 
First, the Postal Service indicates that the 7-cent per-piece Move 
Update assessment will be applicable to First-Class Mail.\2\ Id. at 3.
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    \2\ These assessments are applicable only to customers who 
certify that their mail meets Move Update requirements. Customers 
who do not certify that their mail meets Move Update requirements or 
are determined not to have met the requirements are subject to 
single-piece First-Class Mail prices on all pieces in the mailing.
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    Second, for both First-Class Mail and Standard Mail, the Postal 
Service intends to apply the Move Update assessment to a smaller 
percentage of a mailing (above an established tolerance) than was 
previously proposed in Docket No. R2009-2. At acceptance, a sample of 
mail will be used to calculate the ratio of addresses that the mailer 
failed to update based on customer-supplied Change of Address orders, 
to the number of Change of Address orders on record. If the ratio is 
above the specified tolerance, an assessment would apply based on the 
percentage of the sample above this tolerance. Initially, the Postal 
Service will use a tolerance of 30 percent which is equivalent to a 
threshold of 70 percent. This tolerance will be reduced over time after 
providing appropriate public notice. Id. at 3-4.
    Revenue. The Postal Service estimates that 0.096 percent of 
Standard Mail volume will be subject to the assessment. This would 
result in an estimated $4.6 million in additional Standard Mail 
revenue. This estimate is a downward revision from the $7 million 
estimate revenue provided in Docket No. R2009-2. Id. at 4.
    The Postal Service estimates that 0.136 percent of presorted First-
Class Mail volume will be subject to the assessment. This would result 
in an estimated $4.4 million in presorted First-Class Mail revenue. 
This is less than what currently is paid given that the mailpieces 
otherwise would have to pay the full single-piece rate. Id. at 4-5.
    Mail Classification Schedule. The Postal Service proposes Mail 
Classification Schedule language to add the 7-cent per-piece assessment 
to the appropriate First-Class Mail sections. New to the First-Class 
Mail sections and as a change to the Standard Mail sections, the Postal 
Service changes the name of the assessment from ``Move Update 
Noncompliance Charge'' to ``Move Update Assessment Charge.'' This 
reflects the fact that Performance Based Verification by itself does 
not establish compliance or noncompliance with Move Update standards. 
Finally, language changes are proposed to indicate that the application 
of the assessment is only to a percentage of the pieces that fail a 
Move Update verification. Id. at 5.
    Conformance with public notice and other requirements. In 
conformance with rule 3010.14(a)(3), the Postal Service certifies that 
it will inform customers of the planned price adjustments in numerous 
ways. Id. at 1-2. In addition to the formal Notice filed with the 
Commission, these include notice via http://www.USPS.com, the Postal 
Explorer Web site, the DMM Advisory, the P&C Weekly, and the RIBBS Web 
site. Id. at 1-2. The Postal Service identifies Don O'Hara as the 
official contact for Commission queries. Id. at 2.
    Impact on the price cap. The Postal Service asserts that the 
proposed adjustments have no impact on price cap issues. Therefore, it 
has made no calculation of cap or price changes described by rule 
3010.14(b)(1) through (4). For First-Class Mail, the Postal Service 
explains that the new price represents a price decrease. Previously, 
First-Class Mail that failed a Performance Based Verification would pay 
the First-Class Mail single-piece rate which is greater than the newly 
proposed 7 cent per-piece assessment. Furthermore, the Postal Service 
contends that this adjustment is outside of the annual CPI-cap price 
change and that Commission's price cap rules do

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not specifically address the case of a price decrease. No price change 
is proposed for Standard Mail. Thus, for Standard Mail the Postal 
Service argues that cap compliance calculations are even less 
appropriate. Id. at 5-7.
    Statutory objectives and factors. The Notice further provides, in 
compliance with rules 3010.14(b)(5) through 3010.14(b)(8), the Postal 
Service's assessment of how the planned program helps achieve the 
objectives of 39 U.S.C. 3622(b) and properly takes into account the 
factors of 39 U.S.C. 3622(c). See generally id. at 8-12.
    With respect to statutory objectives, the Postal Service concludes 
that the price adjustment and classification changes do not 
substantially alter the degree to which First-Class Mail and Standard 
Mail prices already address the statutory objectives, or how they are 
addressed by the design of the system itself. It argues that by 
mitigating the assessments, the proposed changes reflect the Postal 
Service's use of pricing flexibility (Objective 4) to address mailer 
concerns, and at most, only cause a slight decrease in revenue while 
still providing proper incentives (Objective 5). The Postal Service 
argues that high quality service will improve by encouraging use of 
Move Update (Objective 3). Finally, parallel assessment of 7 cents per 
piece for both First-Class Mail and Standard Mail is transparent and 
keeps administration of the assessment simple (Objective 6). Id. at 9.
    In terms of statutory factors, the Postal Service asserts that, as 
with the objectives, the price and classification changes do not 
substantially alter the degree to which First-Class Mail and Standard 
Mail address the factors of 39 U.S.C. 3622(c). The Postal Service 
asserts that the Move Update adjustments will encourage mailers to 
adopt Move Update while reasonably taking the impact of price changes 
into account (factors 3 and 7). The Postal Service uses the adjustments 
as an example of enhancing operational efficiency by reducing 
undeliverable-as-addressed mail through the use of customer supplied 
Change of Address orders (factors 7 and 12). Finally, the Postal 
Service contends that the adjustments should not materially affect the 
cost coverage of either First-Class Mail or Standard Mail (factor 2). 
Id. at 12.
    Workshare discounts. The Postal Service asserts that the Move 
Update assessment revisions do not constitute a change to workshare 
discounts. The Postal Service states that all passthrough values should 
be similar to those reviewed in Docket No. R2009-2. Id. at 12-13.
    Preferred rates. The Postal Service contends that the program will 
have no impact on preferred rates in Standard Mail, and is not expected 
to affect the 60 percent ratio between nonprofit and commercial 
Standard Mail prices. Id. at 13.

III. Commission Action

    Establishment of docket; comments. The Commission establishes 
Docket No. R2010-1 to consider all matters related to the Notice. 39 
CFR 3010.13(a). It also issues the instant order to provide notice of 
the Postal Service's filing. Interested persons may express views and 
offer comments on whether the planned price adjustments and 
classification changes are consistent with the policies of 39 U.S.C. 
3622 and with applicable requirements of 39 CFR part 3010. Consistent 
with the Commission's rules, 39 CFR 3010.13(a)(5), comments are due no 
later than November 4, 2009.
    Public representative. Pursuant to 39 U.S.C. 505, the Commission 
appoints Jeremy L. Simmons to serve as the Public Representative to 
represent the interests of the general public in this docket.

IV. Ordering Paragraphs

    It is ordered:
    1. The Commission establishes Docket No. R2010-1 to consider 
matters related to the Postal Service's October 15, 2009 filing.
    2. Interested persons may submit comments on the planned 
classification changes and price adjustments. Comments are due November 
4, 2009.
    3. Pursuant to 39 U.S.C. 505, the Commission appoints Jeremy L. 
Simmons to represent the interests of the general public in this 
proceeding.
    4. The Commission directs the Secretary of the Commission to 
arrange for publication of this document in the Federal Register.

    By the Commission.
Shoshana M. Grove,
Secretary.
[FR Doc. E9-25750 Filed 10-23-09; 8:45 am]
BILLING CODE 7710-FW-P