[Federal Register Volume 78, Number 226 (Friday, November 22, 2013)]
[Notices]
[Pages 70080-70084]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-28000]


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POSTAL REGULATORY COMMISSION

[Docket No. R2013-10; Order No. 1842]


Market Dominant Price Adjustment

AGENCY: Postal Regulatory Commission.

ACTION: Notice.

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SUMMARY: The Commission is noticing a recently-filed Postal Service 
notice announcing a proposal to adjust prices for market dominant 
products. The adjustments are scheduled to take effect January 26, 
2014. This notice addresses procedural steps associated with this 
filing.

DATES: Comment date: October 16, 2013. The Commission's policy is to 
accept comments otherwise subject to a filing date that falls during a 
lapse in appropriations if they are submitted via Filing Online when 
operations resume. Contact the person identified in the FOR FURTHER 
INFORMATION CONTACT section if additional information on the 
Commission's acceptance policy is needed.

ADDRESSES: Submit comments electronically by accessing the ``Filing 
Online'' link in the banner at the top of the Commission's Web site 
(http://www.prc.gov) or by directly accessing the Commission's Filing 
Online system at https://www.prc.gov/prc-pages/filing-online/login.aspx. Commenters who cannot submit their views electronically 
should contact the person identified in the FOR FURTHER INFORMATION 
CONTACT section as the source for case-related information for advice 
on alternatives to electronic filing.

FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel, 
at 202-789-6820 (case-related information) or [email protected] 
(electronic filing assistance).

SUPPLEMENTARY INFORMATION: Order No. 1842 was issued September 27, 
2013, and included a date for filing comments that occurred during the 
subsequent suspension of Commission operations. At the time the 
Commission suspended operations, it posted a notice on its Web site 
concerning its policy with respect to accepting comments subject to 
filing dates that occurred during the suspension. That policy allowed 
commenters to file their submissions upon resumption of Commission 
operations. The text of Order No. 1842 as issued on September 27, 2013, 
follows.

Table of Contents

I. Overview
II. Promotions
III. Summary of Price Changes by Class of Mail
IV. Preferred Mail and Worksharing Discounts
V. MCS Changes
VI. Administrative Actions
VII. Ordering Paragraphs

I. Overview

A. Index-Based Price Changes for Market Dominant Classes of Mail

    On September 26, 2013, the Postal Service filed notice, pursuant to 
39 U.S.C. 3622 and 39 CFR part 3010, of plans to adjust prices for its 
market dominant products.\1\ The planned adjustments affect both 
domestic and international market dominant products and are scheduled 
to take effect January 26, 2014.\2\ Concomitant with its filing, the 
Postal Service renewed its exigent rate request filed in Docket No. 
R2010-4R that would be added to the rates requested with this 
Notice.\3\
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    \1\ United States Postal Service Notice of Market-Dominant Price 
Adjustment, September 26, 2013 (Notice).
    \2\ The Postal Service represents that it is filing its Notice 
along with the Renewed Exigent Request of the United States Postal 
Service in Response to Commission Order No. 1059 (Exigent Request).
    \3\ Docket No. R2010-4R, Renewed Exigent Request of the United 
States Postal Service in Response to Commission Order No. 1059, 
September 26, 2013.
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    The Postal Service states that it has inflation-based price 
adjustment authority of 0.636 percent for Special Services and 1.696 
percent for all other mail classes based on the Consumer Price Index 
for All Urban Consumers, U.S. All Items (the ``CUUR0000SA0'') series 
(CPI-U). Notice at 3.
    The Postal Service also states that it has unused rate authority as 
indicated in the following table. Id.

   Table 1--Available Unused Price Adjustment Authority by Mail Class
------------------------------------------------------------------------
                                                              Unused
                  Market dominant class                    authority (%)
------------------------------------------------------------------------
First-Class Mail........................................          -0.544
Standard Mail...........................................          -0.441
Periodicals.............................................          -0.556
Package Services........................................          -0.555
Special Services........................................           3.678
------------------------------------------------------------------------

Id.
    The Postal Service asserts that it is authorized to raise prices 
for each class by the percentages in the following table.

              Table 2--Price Adjustment Authority by Class
------------------------------------------------------------------------
                                                               Price
                  Market dominant class                     adjustment
                                                           authority (%)
------------------------------------------------------------------------
First-Class Mail........................................           1.696
Standard Mail...........................................           1.696
Periodicals.............................................           1.696
Package Services........................................           1.696
Special Services........................................           2.636
------------------------------------------------------------------------

Id. at 4.

    The following table presents the Postal Service's planned 
percentage price changes by class.

           Table 3--2013 Price Change Percentage by Mail Class
------------------------------------------------------------------------
                                                           Price change
                  Market dominant class                         (%)
------------------------------------------------------------------------
First-Class Mail........................................           1.587
Standard Mail...........................................           1.609
Periodicals.............................................           1.569

[[Page 70081]]

 
Package Services........................................           1.565
Special Services........................................           2.500
------------------------------------------------------------------------

Id. at 5.
    Price adjustments for products within classes vary from the 
average, sometimes substantially. Interested persons are encouraged to 
review the Notice and workpapers for specific details.
    Unused authority after the proposed price change. The following 
table identifies the unused price adjustment authority the Postal 
Service calculates as available following the proposed price change.

Table 4--Unused Pricing Authority Available Following Docket No. R2013-1
                              Price Changes
------------------------------------------------------------------------
                                                            Percentage
                          Class                               points
------------------------------------------------------------------------
First-Class Mail:
  R2013-1...............................................          -0.544
  R2013-10..............................................           0.109
                                                         ---------------
    Total...............................................          -0.435
Standard Mail:
  R2013-1...............................................          -0.441
  R2013-10..............................................           0.087
                                                         ---------------
    Total...............................................          -0.354
Periodicals:
  R2013-1...............................................          -0.556
  R2013-10..............................................           0.127
                                                         ---------------
    Total...............................................          -0.429
Package Services:
  R2013-1...............................................          -0.555
  R2013-10..............................................           0.131
                                                         ---------------
    Total...............................................          -0.424
Special Services:
  R2013-7...............................................           3.678
  R2013-10..............................................          -1.864
                                                         ---------------
    Total...............................................           1.814
------------------------------------------------------------------------

Id. at 6 (notes omitted).

    Classification changes. The Notice identifies numerous 
classification changes. See id. at 56-57. The Postal Service has 
included all price and classification changes in a legislative markup 
of the Mail Classification Schedule. Id. Attachment A.

B. The Postal Service's Filing

    The Notice includes an introductory section followed by four parts. 
There are four attachments to the Notice. The introductory section 
includes a certification, in accordance with rule 3010.14(a)(3), that 
the Postal Service will provide widespread notice of the planned 
adjustments prior to the planned implementation date. Id. at 1. It 
identifies Mr. Steve Monteith as the Postal Service official who will 
respond to queries from the Commission. Id. at 2.
    Part I discusses compliance with the price cap. Id. at 2-6. Part II 
describes several temporary promotions that it is proposing as part of 
the filing. Id. at 6-11. Part III discusses Flats Sequencing System 
(FSS) pricing and prices by class in detail, including workshare 
discounts. It also addresses the consistency of prices with the 
objectives and factors of 39 U.S.C. 3622 and with sections 3626, 3627, 
and 3629. Id. at 11-56. Part IV describes Mail Classification Schedule 
(MCS) changes. Id. at 56-57.
    Attachment A presents MCS changes in legislative format and new 
price schedules. Attachment B presents workshare discounts and related 
information. Attachment C presents the Postal Service's price cap 
calculation. The price cap calculation includes, in conformance with 
rule 3010.22(b), an adjustment to the moving average because less than 
12 months have passed since the most recent price change. Attachment D 
presents the 2014 Mailing Promotions and Incentives Calendar. The 
Postal Service filed six sets of workpapers:

First-Class Mail Workpapers: USPS-LR-R2013-10/1
Standard Mail Workpapers: USPS-LR-R2013-10/2
Periodicals Workpapers: USPS-LR-R2013-10/3
Package Services Workpapers: USPS-LR-R2013-10/4
Special Services Workpapers: USPS-LR-R2013-10/5
First-Class Mail International Workpapers: USPS-LR-R2013-10/NP1
Id. at 4-5.

    Each set of workpapers includes a preface with an explanation of 
its contents. Id. at 5. In addition, the preface for the first five 
workpapers provides an overview, a discussion of adjustments to the 
billing determinants for the four quarters ending FY 2013, quarter 3, 
and an explanation of revenue calculations. Id.

II. Promotions

    Similar to the price adjustments proposed in Docket No. R2013-1, 
the Postal Service seeks approval of eight promotions and one incentive 
during calendar year 2014.\4\ The following table identifies the 
promotions/incentive and timeframe.
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    \4\ The Postal Service states that it seeks approval for these 
promotions and price incentives in this price adjustment to address 
customers' concern about not having sufficient time to fully 
participate in the promotions. Id. at 7.

             Table 5--Calendar Year 2014 Promotion Timeframe
------------------------------------------------------------------------
      Promotion/incentive                       Timeframe
------------------------------------------------------------------------
High Density and Saturation      January-December 2014.
 Incentive Program.
Branded Color Mobile Technology  February-March 2014.
 Promotion.
EDDM Coupon Program............  March-December 2014.
Premium Advertising Promotion..  April-June 2014.
Earned Value Reply Mail          April-June 2014.
 Promotion.
Mail and Digital                 May-June 2014.
 Personalization Promotion.
Emerging Technology Promotion:   August-September 2014.
 Featuring Near Field
 Communication.
Color Print in First-Class Mail  August-December 2014.
 Transactions Promotion.
Mail Drives Mobile Commerce      November-December 2014.
 Promotion.
------------------------------------------------------------------------

Id. at 7-10.

    The Postal Service states that it will only seek to preserve the 
additional cap

[[Page 70082]]

space approved in Docket No. R2013-1 \5\ by continuing to offer similar 
mobile technology promotions and the Earned Value Reply Mail promotion 
in 2014. Accordingly, it represents that no changes in cap space are 
justified based on these promotions. Id. at 10-11.
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    \5\ Nine million for First-Class Mail and Twenty-four million 
for Standard Mail.
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III. Summary of Price Changes by Class of Mail

A. FSS Pricing

    The Postal Service explains that it is taking three steps regarding 
FSS pricing. First, it plans to require FSS preparation for all flat-
shaped mail pieces destinating in FSS zones. Second, it is proposing 
separate FSS pricing for presorted flat-shaped pieces in Standard Mail, 
Outside County Periodicals, and Bound Printed Matter Flats that 
destinate in FSS zones. These proposed prices are designed to minimize 
changes in postage for flats mailers. Third, it is proposing to 
introduce discounts for mail on FSS scheme pallets entered at the 
location of the destinating FSS machine (DFSS). Id. at 16.

B. First-Class Mail

    The following table identifies the Postal Service's planned 
percentage price changes for its First-Class Mail products.

                 Table 6--First-Class Mail Price Changes
------------------------------------------------------------------------
                                                          Percent change
                First-class mail product                        (%)
------------------------------------------------------------------------
Single-Piece Letters/Cards..............................           1.141
Presort Letters/Cards...................................           1.615
Flats...................................................           1.267
Parcels.................................................           6.335
First-Class Mail International..........................           5.994
Overall.................................................           1.587
------------------------------------------------------------------------

Id. at 17.
    The First-Ounce First-Class Mail price. The price of a stamp for 
the first-ounce of single-piece letter mail (including the Forever 
stamp), increases by one cent under the Postal Service's plan, from 46 
cents to 47 cents. Id.
    Single-Piece Letters and Cards. The overall increase of 1.141 
percent for single-piece letters and cards reflects continuation of 
current prices for metered letters and single-piece cards, which is 
largely responsible for the average increase for single-piece mail 
being lower than the increase for presorted mail. Id. The proposed 
price increase will increase the per-piece price differential between 
letters and flats, and between letters and parcels. Id. at 18. The new 
proposed price differential between a single-piece letter and single-
piece flats increases from 46 cents to 47 cents. The letter-parcel 
differential increases from $1.61 to $1.76. Id.
    Metered Mail. In this docket, the Postal Service is introducing a 
new price for single-piece metered letters. The proposed metered mail 
category includes single-piece letters with postage affixed by meter, 
information-based indicia (IBI), permit imprint, or pre-cancelled 
stamps. Only pieces bearing non-cancelled stamps or postal validation 
imprint (PVI) indicia \6\ would remain in the stamped mail category. 
Id. at 18. The stated purpose is to encourage the adoption of metered 
mail by small businesses. Id. at 19.
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    \6\ PVI includes payment indicia printed out by the Automated 
Postal Center (APC) equipment.
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    Residual Single-Piece Letters. In Docket No. R2013-1, the Postal 
Service introduced a new single-piece price for residual letters 
presented as part of a presort mailing. Id. at 20. In this docket, the 
Postal Service proposes a new single-piece price structure for residual 
letters as follows--residuals from uniform 1-ounce presort letter 
mailings will pay the 1-ounce metered rate of 46 cents; residuals from 
uniform 2-ounce presort letter mailings will pay the 2-ounce metered 
rate of 66 cents; and residuals from mixed mailings will pay the 
Residual rate of 48 cents. Id. at 21.
    Presort Letters/Postcards. The Postal Service states that the 
overall increase for this product is slightly above the overall average 
for First-Class Mail. The unit price for the least presorted automation 
category increases by 1 cent while the other categories increase by 0.5 
to 0.6 cents. The price increases for Mixed AADC, AADC, 3-Digit, and 5-
Digit automation presort letters are 2.5 percent, 1.3 percent, 1.3 
percent, and 1.7 percent, respectively. The Postal Service continues to 
price AADC and 3-Digit letters and cards at the same level, and the 
free second-ounce continues for all presort First-Class Mail letters 
(Non-automation and Automation). Id.
    Flats. The overall increase for Flats is 1.267 percent. Id. at 22. 
Price changes within this product vary. Id.
    Parcels. First-Class Mail Parcels receive a 6.335 percent increase, 
higher than the overall increase for First-Class Mail. Id. The Postal 
Service states that this above-average increase is expected to improve 
cost coverage for this product, which it considers low by First-Class 
Mail standards. Id.
    International. Prices for Outbound Single-Piece First-Class Mail 
International (FCMI) increase by 2.192 percent, above the First-Class 
Mail average of 1.587 percent. Id. at 22. The Postal Service asserts 
that the increase is necessary to increase contribution and improve 
cost coverage for FCMI Flats. Id.

C. Standard Mail

    The following table presents the Postal Service's planned 
percentage price changes for Standard Mail products.

                  Table 7--Standard Mail Price Changes
------------------------------------------------------------------------
                                                          Percent change
                  Standard mail product                         (%)
------------------------------------------------------------------------
Letters.................................................           1.614
Flats...................................................           1.809
Parcels.................................................           1.820
High Density and Saturation Letters.....................           1.322
High Density and Saturation Flats Parcels...............           1.412
Carrier Route...........................................           1.666
Every Door Direct Mail--Retail..........................           5.000
Overall.................................................           1.609
------------------------------------------------------------------------

Id. at 24.
    Flats receive an above-average price increase, pursuant to the 
three-year schedule of above-average CPI increases for Flats proposed 
by the Postal Service in the 2012 Annual Compliance Report. Id. at 24. 
The Postal Service is also proposing new FSS pricing for Flats, High 
Density flats, High Density plus flats, and Carrier Route flats. Id.
    Standard Mail Parcels receive an above-average price increase to 
continue the Postal Service's previously announced plan to move the 
product toward full cost coverage while also recognizing that Standard 
Mail Parcels are underpriced in the marketplace. Id. at 25. The 
proposed prices for AADC and 3-Digit presort letters will continue to 
be equal in 2014 until the Postal Service is able to determine which 
preparation standard will be most consistent with the redesigned 
processing network. Id.
    The Postal Service is continuing the Simple Samples initiative this 
year. Id. It is also reducing the price of Customized Market Mail and 
introducing new prices for Every Door Direct Mail--Commercial. It is 
increasing the price of Every Door Direct Mail Retail to 16.8 cents and 
retaining the current approved price of 2 cents for a picture permit 
indicia on Standard Mail. Id. at 26-27. It will moderately increase the 
price of Detached Address Labels (DAL).

[[Page 70083]]

D. Periodicals

    The following table presents the Postal Service's planned 
percentage price changes for the Periodicals class.

                   Table 8--Periodicals Price Changes
------------------------------------------------------------------------
                                                          Percent change
                   Periodicals product                          (%)
------------------------------------------------------------------------
Outside County Periodicals..............................           1.563
In-County Periodicals...................................           1.705
Overall.................................................           1.569
------------------------------------------------------------------------

Id. at 28.

    The Postal Service states that despite Periodicals' continued 
failure to cover costs, it recognizes the value of this class to the 
public. Accordingly, the proposed price change refines price 
relationships to encourage efficiency and containerization, while 
limiting the price increases for individual publications. It is also 
requiring FSS preparation for Periodicals in DFSS zones. The DFSS 
prices will be the same as the DCSF pound prices. It is introducing FSS 
prices at the bundle level, sack level, and pallet level at all entry 
points. To encourage FSS preparation and destination entry, there will 
be a price of zero for FSS pallets brought to a DFSS. Id.

E. Package Services

    The following table presents the Postal Service's planned 
percentage price changes for the Package Services class.

                 Table 9--Package Services Price Changes
------------------------------------------------------------------------
                                                          Percent change
                Package services product                        (%)
------------------------------------------------------------------------
Alaska Bypass Service...................................           2.440
Bound Printed Matter Flats..............................           0.314
Bound Printed Matter Parcels............................           1.680
Media Mail/Library Mail.................................           2.061
Inbound Surface Parcel Post *...........................           2.152
Overall.................................................           1.565
------------------------------------------------------------------------
* Prices for Inbound Surface Parcel Post (at UPU rates) are determined
  by the Universal Postal Union and are not under the Postal Service's
  control. These prices are adjusted by the Postal Operations Council.

    Id. at 30.

F. Special Services

    The overall increase for Special Services is 2.500 percent. Id. at 
32. The Postal Service states that for most of the products, fee 
increases were designed to be close to 2.509 percent, while maintaining 
consistency with historical rounding constraints (to simplify 
transactions for customers). Id. The following table, based on price 
changes identified in the body of the Notice, indicates the differing 
effects of the Postal Service's Special Services pricing decisions.

                Table 10--Special Services Price Changes
------------------------------------------------------------------------
                                                          Percent change
                    Special services                            (%)
------------------------------------------------------------------------
Collect on Delivery.....................................           4.2
Special Handling Prices.................................           5.5
Stamp Fulfillment Services..............................           0.0
USPS Tracking (formerly Delivery Confirmation Service)..          10.4
Stamped Cards...........................................           0.0
Address Management Services.............................          12.5
Credit Card Authentication..............................           0.0
Customized Postage......................................           3.175
Money Order.............................................           0.017
International Certificates of Mailing...................           5.48
------------------------------------------------------------------------

Id. at 33-35.

IV. Preferred Mail and Worksharing Discounts

    Preferred mail. The Notice includes the Postal Service's 
explanation that it implemented section 3626 pricing requirements in 
the same manner as in the Docket No. R2013-1 price change, and notes 
the Commission concluded the Postal Service's interpretation of section 
3626 is appropriate. Id. at 35. The Postal Service identifies each of 
the preferred products or components (In-County Periodicals, Nonprofit 
and Classroom Periodicals, Science of Agriculture Periodicals 
advertising pounds, Nonprofit Standard Mail, and Library Mail) and 
describes how the planned adjustments comport with applicable statutory 
factors. Id. at 35-37.
    Consistency with 39 U.S.C. 3627 and 3629. The Notice observes that 
neither of these sections is implicated by the price change, as the 
Postal Service does not seek to alter free rates (section 3627) or 
change the eligibility requirements for nonprofit rates. Id. at 37.
    Workshare discounts. The Notice includes the Postal Service's 
justification and explanation, in accordance with rules 3010.14(b)(5) 
and (6), for workshare discounts that exceed 100 percent of avoided 
costs or that are substantially below 100 percent for each affected 
class or individual product. Id. at 37-56.

V. MCS Changes

    The Notice, in conformance with rule 3010.14(b)(9), identifies 
numerous changes to the MCS. Certain substantive changes are identified 
by the Postal Service. Id. at 56-57. Attachment A to the Notice 
presents the price and classification changes to the Mail 
Classification Schedule in legislative format. Id. at 56. Changes to 
the MCS may alter the rights and responsibilities of mailers and 
reviewers are advised to review this material carefully.

VI. Administrative Actions

    The Commission hereby establishes a formal docket, captioned Docket 
No. R2013-10, Notice of Market Dominant Price Adjustment, to conduct 
the review of the Postal Service's planned price adjustments mandated 
in 39 U.S.C. 3622. The Commission has posted the Notice on the 
Commission's Web site (http://www.prc.gov), and has made the Notice 
available for copying and inspection during the agency's regular 
business hours of 8:00 a.m. to 4:30 p.m. weekdays, except Federal 
holidays.
    Public comment period. The Commission's rules provide a period of 
20 days from the date of the Postal Service's filing for public 
comment. 39 CFR 3010.13(a)(5). Comments by interested persons are due 
no later than October 16, 2013.\7\ Interested persons are encouraged to 
review the Postal Service's Notice and workpapers in their entirety.
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    \7\ See Notice of Erratum, September 30, 2013.
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    Commission rule 3010.13(b) further provides that public comments 
are to focus primarily on whether the planned price adjustments comply 
with the following mandatory requirements under the Postal 
Accountability and Enhancement Act (PAEA):

    (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.

    Parties are also encouraged to comment on proposed Mail 
Classification changes, particularly whether these changes have any 
rate implications.
    Participation and designated filing method. Interested persons may 
submit comments electronically via the Commission's Filing Online 
system, unless a waiver is obtained. Instructions for obtaining an 
account to file documents online may be found on the Commission's Web 
site (http://www.prc.gov), or by contacting the Commission's Docket 
Section staff at 202-789-6846.

[[Page 70084]]

    Persons without access to the Internet or otherwise unable to file 
documents electronically may request a waiver of the electronic filing 
requirement by filing a motion for waiver with the Commission. The 
motion may be filed along with any comments the person may wish to 
submit in this docket. Persons requesting a waiver may file hardcopy 
documents with the Commission either by mailing or by hand delivery to 
the Office of the Secretary, Postal Regulatory Commission, 901 New York 
Avenue NW., Suite 200, Washington, DC 20268-0001 during regular 
business hours by the date specified for such filing. Any person 
needing assistance in requesting a waiver may contact the Docket 
Section at 202-789-6846. Hardcopy documents filed in this docket will 
be scanned and posted on the Commission's Web site.
    Appointment of Public Representative. In conformance with 39 U.S.C. 
505, the Commission appoints Kenneth E. Richardson to represent the 
interests of the general public in this proceeding.

VII. Ordering Paragraphs

    It is ordered:
    1. The Commission establishes Docket No. R2013-10 to consider 
planned price adjustments in rates, fees and classifications for market 
dominant postal products and services identified in the Postal 
Service's September 26, 2013 Notice.
    2. Comments by interested persons on the planned price adjustments 
are due no later than October 16, 2013.
    3. Pursuant to 39 U.S.C. 505, the Commission appoints Kenneth E. 
Richardson 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.

    By the Commission.
Ruth Ann Abrams,
Acting Secretary.
[FR Doc. 2013-28000 Filed 11-21-13; 8:45 am]
BILLING CODE 7710-FW-P