[Federal Register Volume 80, Number 139 (Tuesday, July 21, 2015)]
[Notices]
[Pages 43134-43135]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-17782]


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POSTAL REGULATORY COMMISSION

[Docket No. R2013-10R; Order No. 2586]


Rate Adjustment Product

AGENCY: Postal Regulatory Commission.

ACTION: Notice.

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SUMMARY: The Commission is noticing a recent court of appeals remand of 
its decision concerning implementation of the Full Service IMb 
requirements. This notice informs the public of the filing, invites 
public comment, and takes other administrative steps.

DATES: Comments are due: August 3, 2015. Reply comments are due: August 
14, 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: On May 12, 2015, the United States Court of 
Appeals for the District of Columbia Circuit issued its opinion in 
United States Postal Service v. Postal Regulatory Commission, 785 F.3d 
740 (D.C. Cir. 2015). The court denied in part and granted in part a 
Postal Service petition for review of the Commission's November 21, 
2013 order denying implementation of the Full Service IMb requirements 
for failure to comply with 39 U.S.C. 3622(d).\1\ 785 F.3d at 744.
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    \1\ Order on Price Adjustments for Market Dominant Products and 
Related Mail Classification Changes, November 21, 2013 (Order No. 
1890).
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    On July 8, 2015, the court issued its mandate remanding the case to 
the Commission. This order establishes procedures on remand and 
solicits comments on the standard to be applied when considering 
whether mail preparation changes are changes in rates with respect to 
39 U.S.C. 3622(d).
    Background. On September 26, 2013, the Postal Service filed notice 
of its planned priced adjustment for market dominant products.\2\ The 
Postal Service's Notice and proposed rate increases failed to account 
for the planned implementation of the Full Service IMb requirements. 
Previously, on April 18, 2013, the Postal Service revised its Domestic 
Mail Manual to modify the eligibility requirements for mailers to 
qualify for automation First-Class, Standard, Periodicals, and Package 
Services rates. 78 FR 23137 (April 18, 2013). Full Service IMb was now 
required to qualify for automation rates, where previously mailers 
could qualify for automation rates by using either Full Service IMb or 
Basic IMb. This change in the mail preparation requirement for 
automation rates was scheduled to take place on January 26, 2014. Id. 
However, in its Notice, the Postal Service failed to adjust its billing 
determinants to account for the effects on the price cap calculation of 
the Full Service IMb requirements.
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    \2\ United States Postal Service Notice of Market-Dominant Price 
Adjustment, September 26, 2013 (Notice).
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    After considering the Postal Service's responses to information 
requests and comments from interested parties, the Commission issued 
Order No. 1890, finding that the Full Service IMb requirements 
``constitute a classification change with rate implications pursuant to 
39 U.S.C. 3622(d)(1)(A) and 39 CFR 3010.23(d).'' Order No. 1890 at 2. 
Accordingly, as the Postal Service failed to account for the deletion 
and redefinition of rate cells as a result of the Full Service IMb 
requirement when adjusting its billing determinants for First-Class, 
Standard, and Periodicals, the Commission found that the proposed rate 
adjustments exceeded the price cap.\3\ As a result, the Commission gave 
the Postal Service the option either to defer implementation of the 
Full Service IMb requirements or to submit an amended notice of rate 
adjustment that included billing determinants adjusted to account for 
the effects of the new requirements. Id. at 36. The Postal Service 
chose to defer implementation of the Full Service IMb requirements and 
filed an appeal with the DC Circuit Court of Appeals.\4\
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    \3\ Id. at 5. The Postal Service made adjustments to the billing 
determinants to account for the effects of the Full Service IMb 
requirements on the price cap calculation for Package Services.
    \4\ Response of the United States Postal Service to Order No. 
1890, November 29, 2013.
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    The court's opinion. On appeal the court affirmed the Commission's 
authority to determine when mail preparation changes affect the 
application of the price cap. Specifically, the court found that

[t]he Commission's interpretation of the statute prevents the Postal 
Service from evading the price cap by shifting mailpieces to higher 
rates through manipulation of its mail preparation requirements. The 
Commission's interpretation is therefore consistent with the price 
cap's language and purpose, and the Commission's delegated authority 
to administer the cap. 785 F.3d at 751.

    The court nevertheless concluded that the Commission's exercise of 
its authority was arbitrary and capricious for failing to ``articulate 
a comprehensible standard for the circumstances in which a change to 
mail preparation requirements such as the one in this case will be 
considered a `change in rates.' '' Id. at 753. In the court's view, the 
Commission failed to properly explain the standard it was applying to 
determine when a mail preparation change constituted a price change. 
Id. at 754. Thus, it granted the Postal Service's petition in part and 
remanded the case to the Commission to ``enunciate an intelligible 
standard and then reconsider its decision in light of that standard.'' 
Id. at 756.
    Request for comment. As directed by the court, the Commission will 
proceed to enunciate the standard applied to determine when mail 
preparation changes have rate effects with price cap implications, 
based on its expertise and past decisions considering similar changes. 
The Commission requests comments to afford all interested persons an 
opportunity to provide input on the standard used by the Commission.
    In conducting its analysis of whether a mail preparation change 
constitutes a rate change, the Commission will evaluate the following 
four factors: (1) Whether the change alters a basic characteristic of a 
mailing, (2) the effect

[[Page 43135]]

of the change on mailers, (3) the purpose of the change, and 4) whether 
the change results in a shift in volume of mail from one rate category 
to another. Each of these factors is weighed individually and the 
Commission intends to apply these factors to the Full Service IMb 
requirements in the decision on remand.
    In assessing the first factor, whether a mail preparation change 
alters a basic characteristic of a mailing, the Commission considers 
the following characteristics: (a) Whether the change modifies the 
size, weight, or content of eligible mail, (b) whether the change 
alters the presentation and/or preparation of the mailing in a 
substantial way, (c) regularity of the change (periodic vs. one-time), 
(d) magnitude of the change, and (e) the complexity of the change 
relating to mailer behavior.
    For the second factor, the Commission evaluates the following 
components to determine the effect of the mail preparation requirement 
on mailers: (a) Whether the change imposes fixed or variable costs, (b) 
the effect on high volume and low volume mailers, (c) the number of 
mailers affected, (d) the volume of mail affected, (e) the benefits to 
mailers, and (f) the timeframe for mailers to comply with the change.
    In considering the purpose of the change, the Commission examines 
whether the change: (a) Improves the expeditious collection, 
transportation, and/or delivery of the mail, (b) aligns with changes in 
the Postal Service's network and/or equipment, and (c) is intended to 
increase a price.
    For the final factor, the Commission takes into account whether the 
change in mail preparation requirements causes a shift in volume of 
mail from one rate category to another. This factor considers whether 
the changes result in the de facto elimination of a rate category or 
the deletion of a rate cell.
    These factors are intended to serve as a guide for a case-by-case 
analysis to determine whether a mail preparation change is a rate 
change with price cap implications. In the absence of explicit 
statutory definitions for determining when a mail preparation change 
constitutes a rate change with respect to 39 U.S.C. 3622(d), commenters 
are invited to provide any views on whether the four factors listed 
above (i.e., alter a basic characteristic of a mailing, effect on 
mailers, purpose of change, and shift volumes between rate cells) 
adequately set forth the parameters of mail preparation requirement 
changes to be examined to determine whether a change in mail 
preparation requirements has rate effects with price cap implications. 
Accordingly, to ensure that the Postal Service and other interested 
persons have an opportunity to provide input on the standard used by 
the Commission, the Commission solicits comments from interested 
persons on the four factors listed above and their components. Initial 
comments are due no later than August 3, 2015. Reply comments are due 
no later than August 14, 2015. All comments must be filed under Docket 
No. R2013-10R.
    It is ordered:
    1. The Commission establishes Docket No. R2013-10R to consider 
issues on remand.
    2. Kenneth E. Richardson will continue to serve as an officer of 
the Commission (Public Representative) to represent the interests of 
the general public in this proceeding.
    3. Initial comments addressing the Commission's standard to 
determine when mail preparation changes have rate effects with price 
cap implications are due no later than August 3, 2015.
    4. Reply comments addressing matters raised in initial comments are 
due no later than August 14, 2015.
    5. All comments and other documents related to issues on remand 
must be filed under Docket No. R2013-10R.
    6. The Secretary shall arrange for publication of this order in the 
Federal Register.

    By the Commission.
Ruth Ann Abrams,
Acting Secretary.
[FR Doc. 2015-17782 Filed 7-20-15; 8:45 am]
 BILLING CODE 7710-FW-P