[Federal Register Volume 75, Number 217 (Wednesday, November 10, 2010)]
[Notices]
[Pages 69143-69145]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-28362]


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POSTAL REGULATORY COMMISSION

[Docket No. R2011-1; Order No. 577]


Postal Rate and Classification Changes

AGENCY: Postal Regulatory Commission.

ACTION: Notice.

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SUMMARY: This document addresses a recently-filed Postal Service 
request for three postal rate and classification changes. One change 
will affect certain senders of First-Class Mail Presort and Automation 
Letters. Another change will affect Standard Mail and High Density 
milers. The third change affects the Move Update Charge threshold. This 
document provides details about the anticipated changes and addresses 
procedural steps associated with this filing.

DATES: Comments are due: November 22, 2010.

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 the For 
Further Information Contact section 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. Introduction
II. Postal Service Filing
III. Commission Action
IV. Ordering Paragraphs

[[Page 69144]]

I. Introduction

    On November 2, 2010, the Postal Service filed with the Commission a 
notice of three price adjustments and related classification changes 
for market dominant products.\1\ The adjustments affecting First-Class 
Mail and Standard Mail are scheduled to become effective January 2, 
2011.
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    \1\ United States Postal Service Notice of Market Dominant Price 
Adjustment, November 2, 2010 (Notice).
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    These three adjustments and changes were previously filed and 
included with the Postal Service's recent request to adjust market 
dominant rates due to extraordinary or exceptional circumstances.\2\ In 
rejecting that exigent rate request, the Commission noted that its 
decision made it unnecessary to address the merits of the 
classification change requests, but stated that the Postal Service may 
refile one or more of the requests as separate proposals and may 
designate relevant testimony or supporting documents filed in that case 
as part of supporting materials.\3\
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    \2\ Docket No. R2010-4, Exigent Request of the United States 
Postal Service, July 6, 2010.
    \3\ Docket No. R2010-4, Order Denying Request for Exigent Rate 
Adjustments, September 30, 2010, at 30.
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II. Postal Service Filing

    Reply Rides Free. This pricing initiative is available for mailers 
of First-Class Mail Automation Letters. Automation Letters weighing 
more than one ounce but not more than one and two-tenths (1.2) ounces 
when the letters include a reply card or reply envelope will qualify 
for postage payment at the one-ounce rate. A typical reply envelope 
weighs 0.2 ounces. For participating mailers, Automation Letters would 
qualify until May 1, 2010, and thereafter only with the full-service 
Intelligent Mail barcode (IMb). All presort and automation letter 
volumes will quality for an annual incentive. Mailers must agree to 
meet a volume threshold of First-Class Mail Presort and Automation 
Letters, and enclose either a reply card or envelope as a courtesy 
reply or business reply which may be a reusable envelope. For 
compliance purposes, samples must be presented with each mailing. 
Notice at 1-2.
    Only customers who mailed First-Class Mail Presort and Automation 
Letters in FY 2009 and FY 2010 qualify for this initiative. The volume 
commitment is the trend of those volumes between FY 2009 and FY 2010 
plus 2.5 percent. Id. at 4.
    In support, the Postal Service states that the initiative is 
designed to slow mailers' diversion of mail to online bill and 
statement delivery, and payment acceptance. Mailers include promotional 
inserts only if a mailpiece remains subject to the one-ounce rate. 
Allowing up to 1.2 ounces for qualifying envelopes will offer mailers 
an incentive to retain reply envelopes in mailings in order to generate 
revenues and offset mailing costs. Reply Rides Free would increase the 
value of the mail for marketing purposes and encourage mailers to use 
mailings for direct marketing purposes. It would also encourage 
customers to reply with single-piece First-Class Mail and slow 
electronic diversion of responses. Id. at 3-4.
    Saturation and High Density incentive. The Standard Mail and High 
Density incentive provides a rebate on incremental mailpieces above a 
predetermined volume baseline, which each participant is equal to the 
aggregate total Standard Mail Saturation and High Density volume in 
calendar year 2010 plus 5.0 percent. Volumes above the baseline will be 
eligible for a rebate of 22 percent of participant's average revenue 
per piece for commercial Saturation Mail and 13 percent for commercial 
High Density mail. For nonprofit High Density and Saturation volumes, 
the rebate is 8 percent. Id. at 4. This discount is less than the 
discount for commercial mailers, but the ratio between nonprofit and 
commercial mailers will meet the statutory requirement of 60 percent. 
39 U.S.C. 3626(a)(6). Id. at 13.
    To participate, mailers who apply must meet several requirements:
    1. To identify current and frequent mailers of this product, 
mailers must be current Saturation and High Density customers with at 
least six mailings in FY 2010;
    2. Mailers must be holders of a permit imprint advance deposit 
account or owners of qualifying volume entered through a similar 
account by a mail service provider at a facility having PostalOne! 
capability;
    3. Only the volume of mail owners will be eligible. Mail service 
providers and customers supplying inserts or the components of 
Saturation or High Density mailings of another mailer are not eligible; 
and
    4. Mailers must electronically submit postage statements and mail 
documentation to the PostalOne! system during the specified period. 
Mailers using defined market area(s) must use Mail.dat or Mail.XML. 
Other applicants may submit postal statements via Postal Wizard. Id. at 
5.
    During participation in this incentive, customers may not 
participate in any other Standard Mail incentive or ``sale'' including 
Saturation or High Density products to prevent receiving two incentives 
for the same mail volume. Id.
    Customers have the option of participating under one of two market 
models:
    1. Total Market (or National) volume. Customers must demonstrate 
increased total Saturation and High Density mail volume letters and 
flats over the base year for their total market.
    2. Specific Geographic Markets. Subject to Postal Service approval, 
customers designate specific geographic target markets of specific 
Postal Service Sectional Center Facilities (SCFs) for increased volume 
over the base year. Up to 20 SCFs may be selected or up to five target 
markets (consisting of multiple contiguous SCFs). Customers must have 
made the qualifying six mailing during FY 2010 for each market in which 
they participate. Id. at 6.
    Increases in Move Update Assessment Charge threshold. For First-
Class Mail subject to Move Update Standards and all Standard Mail, the 
threshold below which the Move Update Assessment Charge is assessed is 
increased from 70 to75 percent. That is, the tolerance will be reduced 
from 30 percent to 25 percent. The Postal Service states that the 
change is consistent with plans announced in a previous docket,\4\ is 
needed to encourage the use of Move Update processes, and will affect 
few mailings. Notice at 6-7.
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    \4\ Docket No. R2010-1, United States Postal Service Notice of 
Market Dominant Price Adjustment and Classification Changes, October 
15, 2009, at 3-4.
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    Impact on price cap. To comply with 39 CFR 3010.14(b)(1), the 
Postal Service discusses and provides tables listing the amount of 
unused price adjustment authority available for First-Class Mail and 
Standard Mail, the percentage change in prices for each of those 
classes of mail, and the amount of any new unused price adjustment 
authority for those two classes generated by this price change. Id. at 
7-9.
    Workpapers intended to demonstrate how the prices comply with the 
price cap are designated in the Notice as follows: USPS-R2011-1-1/1--
First-Class Worksheets; USPS-R2011-1-1/2--Standard Mail Worksheets; and 
USPS-R2011-1-1/3--Impact of Move Update Assessment Charge. Id. at 8. 
The Postal Service states the workpapers demonstrate that the 
calculated negative price changes serve to increase the banked amount 
for First-Class and Standard Mail and thus comply with the available 
overall price adjustment authority. Id. at 9.
    Objectives and factors. The Postal Service lists and discusses the

[[Page 69145]]

objectives and factors of 39 U.S.C. 3622 and their relationship to the 
proposed changes. The Postal Service asserts that changes do not 
substantially alter the degree First-Class Mail rates address the 
objectives and factors. Id. at 11. Reply Rides Free is an example of 
increased flexibility allowed the Postal Service (Objective 4), and it 
is an initiative to enhance the Postal Service's financial position 
(Objective 5). The incentive to mailers to continue using First-Class 
Mail (Factor 3) encourages increased mail volume (Factor 7), but does 
not imperil the coverage of attributable costs (Factor 2). Move Update 
improves overall efficiency of mail processing (Objective 1, Factors 5 
and 12). Id. at 11-12.
    Similarly, for Standard Mail, the changes do not alter the degree 
that prices and system design already address the objectives and 
factors of section 3622. Move Update improves overall efficiency 
(Objective 1, Factors 5 and 12). The Saturation and High Density 
initiative is also an example of increased flexibility allowed the 
Postal Service (Objective 4) and provides an incentive to mailers to 
enhance the financial position of the Postal Service (Objective 5). It 
also encourages increased mail volume (Factor 7), incents the use of 
Standard Mail (Factor 3), and will not inhibit coverage of attributable 
costs (Factor 2). Id. at 12.
    Workshare discounts. The Postal Service states that none of the 
price changes impacts workshare discounts for First-Class Mail or for 
Standard Mail. Id. at 13.
    Conformance with 39 CFR part 3010. The Postal Service provides 
notice pursuant to section 3622 and 39 CFR part 3010 that the Governors 
have authorized the Postal Service to adjust the classification 
language and prices for these market dominant products. The Postal 
Service represents that, in conformance with the notice requirements of 
39 CFR 3010.14(a)(3), it will publish notice of these changes at least 
45 days prior to the planned implementation date. The Notice will be 
published at USPS.com, the Postal Explorer Web site, the DMM Advisory, 
the P&C Weekly, and a press release. Public notice will also be 
provided in future issues of PCC Insider, MailPro, the Postal Bulletin, 
and the Federal Register. Id. at 1. Pursuant to 39 CFR 3010.14(a)(4), 
the Postal Service identifies Greg Dawson, Manager, Pricing Strategy, 
as the official available to provide prompt responses to requests for 
clarification from the Commission. Id. at 2.
    Pursuant to 39 CFR 3010.14(b)(9), the changes in the product 
descriptions within the Mail Classification Schedule are included in 
Appendix A attached to the Notice.

III. Commission Action

    The Commission establishes Docket No. R2011-1 to consider all 
matters related to the Notice as required by 39 U.S.C. 3622. Interested 
persons may express views and offer comments on whether the planned 
changes are consistent with the policies of 39 U.S.C. 3622 and the 
Commission's applicable regulations. Comments are due no later than 
November 22, 2010.
    The Commission appoints James Waclawski to represent the interests 
of the general public in this proceeding. See 39 U.S.C. 505.

IV. Ordering Paragraphs

    It is ordered:
    1. The Commission establishes Docket No. R2011-1 to consider the 
matters raised by the Postal Service's November 2, 2010 Notice.
    2. Interested persons may submit comments on the planned 
adjustments to classification language and price changes. Comments are 
due November 22, 2010.
    3. Pursuant to 39 U.S.C. 505, the Commission appoints James 
Waclawski to represent the interests of the general public (Public 
Representative) in this proceeding.
    4. The Commission directs the Secretary of the Commission to 
arrange for prompt publication of this Notice in the Federal Register.

    By the Commission.
Shoshana M. Grove,
Secretary.
[FR Doc. 2010-28362 Filed 11-9-10; 8:45 am]
BILLING CODE 7710-FW-P