[Federal Register Volume 80, Number 117 (Thursday, June 18, 2015)]
[Notices]
[Pages 34937-34939]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-14965]


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POSTAL REGULATORY COMMISSION

[Docket No. R2013-11R; Order No. 2540]


Rate Adjustment Remand

AGENCY: Postal Regulatory Commission.

ACTION: Notice.

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SUMMARY: The Commission is noticing a proceeding to address the 
methodological approach for accounting for volume losses in calculating 
the exigent surcharge, as well as other relevant issues. This notice 
informs the public of the filing, invites public comment, and takes 
other administrative steps.

DATES: Comments are due: June 26, 2015; reply comments are due: July 6, 
2015.

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

FOR FURTHER INFORMATION CONTACT: David A. Trissell, General Counsel, at 
202-789-6820.

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Introduction
II. Background
III. Commission Action on Remand
IV. Ordering Paragraphs

I. Introduction

    On June 5, 2015, the United States Court of Appeals for the 
District of Columbia Circuit issued its opinion in Alliance of 
Nonprofit Mailers v. Postal Regulatory Commission, 2015 WL 3513394 
(D.C. Cir. June 5, 2015). In that opinion, the court granted in part a 
Postal Service petition for review of the Commission's December 24, 
2013 order that had approved in part a Postal Service request for an 
exigent rate adjustment under 39 U.S.C. 3622(d)(1)(E).\1\ 2015 WL 
3513394 at 10. Although the court largely affirmed Order No. 1926, it 
vacated the count once portion of the Commission's order and remanded 
the case for proceedings consistent with its opinion. Id.
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    \1\ Docket No. R2013-11, Order Granting Exigent Price Increase, 
December 24, 2013 (Order No. 1926).
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    On June 8, 2015, the Postal Service filed a motion requesting the 
Commission expeditiously implement remand proceedings and take a number

[[Page 34938]]

of additional steps pending completion of the remand proceedings.\2\
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    \2\ Docket No. R2013-11, Motion of the United States Postal 
Service to Suspend Exigent Surcharge Removal Provisions of Order No. 
1926 and to Establish Remand Proceedings, June 8, 2015 (Postal 
Service Motion).
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    On June 11, 2015, the Commission received two responses to the 
Postal Service Motion. The first response was filed by the American 
Postal Workers Union, AFL-CIO (APWU) in support of the Postal Service 
Motion.\3\ The second response was filed by a group of mailers 
(Mailers) in opposition to the Postal Service Motion.\4\
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    \3\ Comments of American Postal Workers Union, AFL-CIO in 
Support of Postal Service Motion to Suspend Exigent Surcharge 
Removal Procedures, June 11, 2015 (APWU Comments).
    \4\ Response of Association for Postal Commerce, MPA--The 
Association of Magazine Media, Alliance of Nonprofit Mailers, Direct 
Marketing Association, Inc., American Catalog Mailers Association, 
Envelope Manufacturers Association, Epicomm, Idealliance, Major 
Mailers Association, National Newspaper Association, and Saturation 
Mailers Coalition to the Motion of the United States Postal Service 
to Suspend Exigent Surcharge Removal Provisions of Order No. 1926 
and to Establish Remand Proceedings, June 11, 2015 (Mailers 
Response).
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    For the reasons set forth below, the Commission suspends the 
requirement that the Postal Service file a 45-day notice of intent to 
remove the exigent rate surcharge pending issuance of a further 
order.\5\ This action is appropriate in light of the May 19, 2015, 
letter from counsel for the Postal Service advising the court that the 
Postal Service is expected to recoup the entirety of the surcharge by 
early August.\6\ If this estimate is correct, the Postal Service stated 
that it would need to notify its customers of a prospective rescission 
as early as mid-June. Id. The Commission also establishes expedited 
comment procedures to afford all interested persons an opportunity to 
address the question of how to count the volume of lost mail in 
calculating the exigent surcharge, as well as any other relevant 
issues.
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    \5\ The 45-day notice requirement was originally imposed by the 
Commission order granting an exigent price increase. Order No. 1926 
at 185. That requirement was subsequently confirmed in an order 
addressing the Postal Service's surcharge removal plan. Docket No. 
R2013-11, Order on Exigent Surcharge Removal, January 12, 2015, at 
15 (Ordering Paragraph 1) (Order No. 2319).
    \6\ Letter to Mark Langer, Clerk of Court, from Paul D. Clement, 
Counsel for Petitioner United States Postal Service, dated May 19, 
2015, at 1.
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II. Background

    Underlying proceeding before the Commission. On September 26, 2013, 
the Postal Service renewed its request for an exigent rate adjustment 
pursuant to 39 U.S.C. 3622(d)(1)(E).\7\ In Order No. 1926, the 
Commission found that the Postal Service had justified the recovery of 
$2.776 billion in additional contribution by showing a causal link 
between the extraordinary or exceptional circumstances of the Great 
Recession and mail volume losses. Order No. 1926 at 193 (Ordering 
Paragraph 1). The Commission therefore permitted an exigent rate 
surcharge to go into effect on January 26, 2014. Id. (Ordering 
Paragraph 2). The Commission also required the Postal Service to report 
periodically on the surcharge revenue it was collecting, to file a 
report with the Commission by May 1, 2014, that included a proposed 
plan for removing the exigent rate surcharge, and to file a notice of 
the surcharge's removal not less than 45 days prior to the effective 
date of such removal. Id. at 185.
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    \7\ Docket No. R2013-11, Renewed Exigent Request of the United 
States Postal Service in Response to Order No. 1059, September 26, 
2013. The history underlying the Postal Service's renewed request is 
summarized by the court in its decision. See 2015 WL 3513394 at 2-3.
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    The court's opinion. On appeal, the court affirmed the Commission's 
use of the new normal test to measure the causal effect of the exigent 
circumstance. 2015 WL 3513394 at 6. However, it found the Commission's 
count once rule to be inconsistent with the Commission's adoption of 
the new normal test. Id. at 8. Under the count once rule, lost mail 
volume was counted only in the first year in which it was lost, 
regardless of whether the new normal test showed the exigent 
circumstance was ongoing. The Court vacated and remanded the count once 
portion of Order No. 1926 for further proceedings. Id. at 10.
    The Postal Service's motion. In its motion, the Postal Service 
seeks expedited implementation of the remand proceedings. Postal 
Service Motion at 1. It also presents an analysis which, it asserts, 
demonstrates that the floor for a revised estimate of the total 
contribution loss is no less than $3.957 billion. Id. at 2. To arrive 
at its $3.957 billion floor, the Postal Service offers a methodological 
approach for counting volume losses due to the Great Recession in a 
cumulative manner. The Postal Service uses volume losses, by year, from 
Table VI-5 in Order No. 1926 at 101. The Postal Service then calculates 
the cumulative volume loss in each year by combining the volume first 
lost in that year, plus annual volume lost in the previous year(s). 
Postal Service Motion at 5. It then translates the calculated 
cumulative volume loss into an increase in lost contribution from 
$2.766 billion to $3.957 billion. Id. at 6 (emphasis omitted). The 
Postal Service then applies the methodology of Table VII-2 in Order No. 
1926 to calculate a revised Surcharge Revenue Limitation from the 
increase in lost contribution resulting from the cumulative volume 
loss. Id. The Postal Service estimates that the Surcharge Revenue 
Limitation increases from $3.238 billion to $4.633 billion as a result 
of the cumulative counting of volume losses. Id. at 7.
    The Postal Service asserts that the additional amount to which it 
claims to be entitled provides a cushion for maintaining the surcharge 
while further proceedings are conducted. Id. at 2. The Postal Service, 
therefore, requests the suspension of the $2.766 billion surcharge 
removal target. Id. at 3. In the Postal Service's view, the additional 
surcharge revenue made possible by suspension of the surcharge removal 
target will be sufficient to allow consideration of the full range of 
issues that need to be addressed in the remand proceeding. Id. at 7. In 
the meantime, the Postal Service states that it would continue to track 
exigent surcharge revenue and file quarterly reports with the 
Commission as required under Order No. 1926. Id.
    Without suspension of the surcharge removal target, the Postal 
Service asserts that the possibility of alternating rate decreases and 
increases would needlessly burden the public, the Postal Service, and 
the mailing industry as the Commission conducts the remand proceedings. 
Id. at 3. Finally, the Postal Service requests the Commission to 
establish a schedule and procedures for consideration of the range of 
remand issues. Id. at 8.
    Responses to the Postal Service's motion. In its comments, APWU 
supports the relief requested by the Postal Service and argues that the 
court's order to vacate the count once rule necessitates the Commission 
suspending the mechanism for removal of the exigent rate surcharge. 
APWU Comments at 1-2.
    The Mailers argue that the Postal Service has misstated the scope 
of the court's remand. Mailers Response at 1. In particular, they 
assert that the Postal Service seeks to relitigate the new normal 
limitation and argue that the scope of the Commission's remand 
proceedings should be limited to the count once analysis. See id. at 3-
8. The Mailers also question the Commission's authority to grant the 
relief requested by the Postal Service prior to issuance of the court's 
mandate. Id. at 8-9. Finally, the Mailers claim that uncertainty over 
whether the Commission can complete its action on remand before the 
Postal Service reaches the surcharge cap

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requires the Commission to take steps to prevent an over collection of 
the surcharge. Id. at 1, 9-10.

III. Commission Action on Remand

    The Commission agrees with the Postal Service that a prompt 
response to the court's opinion is necessary. If the Postal Service 
were to file the 45-day notice of intent to remove the surcharge by 
mid-June, this notice could trigger a burdensome series of rate 
decreases and increases as described in the Postal Service's Motion. 
The Commission agrees that it is desirable to avoid such a 
circumstance.
    While the Commission agrees that prompt action is necessary, it 
does not believe that it is necessary for the $2.766 billion surcharge 
target to be suspended, as requested by the Postal Service, in order to 
accommodate the remand proceedings and avoid disruptive and burdensome 
rate changes. At this juncture, the Commission finds a more measured 
approach is appropriate and suspends the 45-day notice filing 
requirement. Such a suspension forestalls a series of rate fluctuations 
and provides the Commission the opportunity to conclude expedited 
remand proceedings before the $2.766 billion surcharge target is 
reached.
    The Commission is not persuaded by APWU's assertions that the 
Commission must suspend the procedures for removal of the exigent rate 
surcharge in light of the court's directive. The court has not yet 
issued its mandate. In the absence of further action by the court, the 
mandate will not, under the court's generally applicable rules, be 
issued until July 27, 2015. See Fed. R. App. P. 35(c), 40(a)(1) and 
41(b). Pending issuance of the mandate, the Commission is not prevented 
from considering the impact of the court's opinion on collection of the 
exigent surcharge. As discussed above, the Commission is establishing 
procedures that will permit it to act once the court's mandate is 
issued. In the meantime, the Postal Service continues to be authorized 
to collect the exigent surcharge.
    The Mailers express different concerns. They strongly oppose the 
Postal Service's interpretation of the court's opinion as a 
misstatement of the proper scope of the case on remand. Mailers 
Response at 1, 3-8. They also argue that a temporary extension of the 
exigent surcharge pending remand can only be given if the Postal 
Service agrees to conditions that would make mailers whole if the 
additional surcharge revenue is ultimately found unwarranted. The 
Mailers' arguments on these issues and any others they wish to present 
in the proceedings established by this Order will be considered by the 
Commission when it acts on remand.
    The Mailers also question whether the Commission has jurisdiction 
to act in this docket until the court's mandate issues. Mailers 
Response at 8-9. The action taken by the Commission in this Order is 
not precluded by the fact that the mandate has not yet issued. Even 
though the court's mandate has not been issued, its decision calls into 
question the volume of lost mail that should be used to calculate the 
exigent rate surcharge. The Commission's suspension of this 45-day 
notice requirement maintains the status quo in order to enable prompt 
action on remand without making any premature determination as to 
whether and when rate changes will be required. The 45-day notice 
requirement can be reinstated at the conclusion of the remand 
proceedings. The 45-day notice requirement was initially adopted by 
Order No. 1926, but it was also reexamined and independently confirmed 
as part of the Postal Service's surcharge removal plan approved by 
Order No. 2319. Order No. 1926 at 185; Order No. 2319 at 15 (Ordering 
Paragraph 1). Order No. 2319 was not the subject of the court's review 
proceeding.
    In order to afford the Postal Service and other interested persons 
an opportunity to comment on the Postal Service's methodological 
approach for accounting for volume losses due to the Great Recession in 
a cumulative manner and any other relevant issues they wish to address, 
the Commission is inviting initial and reply comments. Initial comments 
are due no later than June 26, 2015. Reply comments are due no later 
than July 6, 2015.
    The Commission establishes Docket No. R2013-11R to consider issues 
on remand. Since Docket Nos. R2013-11 and R2013-11R are part of the 
same proceeding, the Commission shall consider all documents filed to 
date in Docket No. R2013-11 as part of the record in Docket No. R2013-
11R. All comments and other documents related to issues on remand must 
be filed under Docket No. R2013-11R.

IV. Ordering Paragraphs

    It is ordered:
    1. The Commission establishes Docket No. R2013-11R to consider 
issues on remand.
    2. James Waclawski will continue to serve as officer of the 
Commission (Public Representative) to represent the interests of the 
general public in this proceeding.
    3. Initial comments are due no later than June 26, 2015.
    4. Reply comments addressing matters raised in initial comments are 
due no later than July 6, 2015.
    5. All comments and other documents related to remand issues must 
be filed under Docket No. R2013-11R.
    6. The Secretary shall arrange for publication of this order in the 
Federal Register.

    By the Commission.
Ruth Ann Abrams,
Acting Secretary.
[FR Doc. 2015-14965 Filed 6-17-15; 8:45 am]
BILLING CODE 7710-FW-P