[Federal Register Volume 82, Number 61 (Friday, March 31, 2017)]
[Proposed Rules]
[Pages 16015-16018]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-06355]


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POSTAL REGULATORY COMMISSION

39 CFR Part 3010

[Docket No. RM2016-6; Order No. 3827]


Motions Concerning Mail Preparation Changes

AGENCY: Postal Regulatory Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Commission is noticing the reinstatement of a proposed 
rulemaking. This notice informs the public of the docket's 
reinstatement, invites public comment, and takes other administrative 
steps.

DATES: Comments are due on or before May 1, 2017.

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. Comments on Initial NPR
III. Revised Proposed Rule
IV. Comments Requested

I. Introduction

    On January 22, 2016, the Commission published a notice of proposed 
rulemaking (initial NPR) which proposed procedural rules for motions 
concerning mail preparation changes that require compliance with the 
price cap rules.\1\ The initial NPR was issued in conjunction with the 
Commission's order in Docket No. R2013-10R setting forth a standard to 
determine when mail preparation changes require compliance with Sec.  
3010.23(d)(2).\2\ In the initial NPR, the Commission explained that the 
Postal Service has the affirmative burden to determine whether a mail 
preparation change requires compliance with Sec.  3010.23(d)(2) under 
the Commission's standard in Order No. 3047.\3\ The initial NPR 
proposed a procedural rule to permit interested parties to file a 
motion with the Commission where the Postal Service fails to recognize 
or account for a mail preparation change that has a rate effect under 
Sec.  3010.23(d)(2).
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    \1\ The initial NPR was published in the Federal Register on 
February 1, 2016. See 81 FR 5085 (Feb. 1, 2016).
    \2\ Order No. 3048, Notice of Proposed Rulemaking on Motions 
Concerning Mail Preparation Changes, January 22, 2016. The initial 
NPR was held in abeyance pending the Commission's resolution of the 
Postal Service's motion for reconsideration of Order No. 3047. See 
Order No. 3096, Order Holding Rulemaking in Abeyance, February 23, 
2016. It was reinstated on July 27, 2016, and comments were received 
on September 2, 2016. See Notice Reinstating Rulemaking, July 27, 
2016.
    \3\ Docket No. R2013-10R, Order Resolving Issues on Remand, 
January 22, 2016 (Order No. 3047).
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    Specifically, the initial proposed rule Sec.  3001.21(d) of this 
chapter required interested parties to file a motion with the 
Commission upon actual or constructive notice of a mail preparation 
change that had a rate effect requiring compliance with Sec.  
3010.23(d)(2). It also proposed a 30-day timeframe within which 
interested parties could file a motion concerning a mail preparation 
change, after which the Commission would either institute a proceeding 
or consider the motion within an ongoing matter.
    In response to comments received on the initial NPR, the Commission 
is issuing this revised notice of proposed rulemaking (revised NPR) 
that: (1) Withdraws the proposed procedural rule under Sec.  3001.21(d) 
of this chapter for motions concerning mail preparation changes; and 
(2) requires the Postal Service to publish all mail preparation changes 
in a publicly-available single source and affirmatively designate 
whether or not a mail preparation change requires compliance with Sec.  
3010.23(d)(2). The revised NPR specifies that, if raised by the 
Commission or challenged by a mailer, the Postal Service must 
demonstrate by a preponderance of the evidence that a change does not 
require compliance with Sec.  3010.23(d)(2). The revised NPR narrows 
the scope of the initial proposed rule and provides an opportunity for 
public comment on this new proposed approach to ensure that the Postal 
Service properly accounts for the rate effects of mail preparation 
changes under Sec.  3010.23(d)(2) in accordance with the Commission's 
standard articulated in Order No. 3047.

II. Comments on Initial NPR

    The Commission received comments in response to the initial NPR, of 
which three were from the mailing industry, one was from the Public 
Representative, and one was from the Postal Service. Most commenters do 
not oppose the proposed rule, but raise questions about whether it 
impacts the Commission's authority and responsibility to independently 
review mail preparation changes for compliance with the price cap 
rules, or whether mailers could raise issues concerning mail 
preparation changes in other proceedings before the

[[Page 16016]]

Commission. Commenters provide input generally on the following issues: 
(1) The timing provisions and effect on the Commission's independent 
authority; (2) the multiple sources used by the Postal Service to 
provide notice of mail preparation changes; (3) the Postal Service's 
affirmative statement of whether a mail preparation change has a rate 
impact; and (4) the standard of proof/evidentiary burden.

A. Comments on the Timing Provisions and Effect on the Commission's 
Independent Authority

    A major area of concern raised by the commenters is the proposed 
rule's effect on the Commission's independent authority to review mail 
preparation changes for price cap compliance. Commenters raise 
questions about the rule's effect on the right to use existing 
procedures available in rate, annual compliance, and complaint 
proceedings to challenge the Postal Service's compliance with the price 
cap.
    PostCom raises numerous issues with the proposed 30-day time limit 
and notice provisions set forth in the proposed rule.\4\ PostCom notes 
that, absent a waiver of the 30-day timeframe in certain circumstances, 
the 30-day requirement for filing motions conflicts with the 
Commission's price cap authority and responsibilities under 39 U.S.C. 
3662 to hear complaints. PostCom Comments at 5-9. PostCom contends 
that, although it makes sense to provide mailers with a set procedure 
to raise issues with mail preparation changes, the Commission ``should 
review the Postal Service's mail preparation changes and act 
independently if it determines that a change may result in prices in 
excess of the cap.'' Id. at 8. PostCom submits that the 30-day window 
for filing motions potentially conflicts with the complaint procedures 
under 39 U.S.C. 3662(a) and contends that the Commission should not 
foreclose the ability of parties to utilize the complaint process which 
ensures ``that violations of the price cap that are not immediately 
apparent can still be challenged.'' Id. at 9.
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    \4\ Comments of the Association for Postal Commerce, September 
2, 2016 (PostCom Comments).
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    Valpak states that the proposed rule will not fulfill the goal of 
ensuring that the Postal Service properly accounts for the rate effects 
of mail preparation changes under the Commission's price cap rules.\5\ 
Valpak views the 30-day timeframe and the potential foreclosure of 
``any other opportunity or method of raising such an issue in another 
forum or at a later time'' as conflicting with the stated purpose of 
the rule. Valpak Comments at 2. Valpak notes that the structure of the 
proposed rule could be used by the Postal Service to argue that the 
``other avenues to request that the Commission require Postal Service 
compliance to the price cap rules, including filing comments in pricing 
dockets and annual compliance reviews, as well as filing a complaint'' 
would be foreclosed if an interested party fails to file a motion under 
the proposed rule. Id. at 3. Valpak requests the Commission clarify 
that the proposed rule was not intended to be the exclusive remedy for 
issues regarding price cap compliance of mail preparation requirement 
changes. Id.
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    \5\ Comments of Valpak Direct Marketing Systems, Inc. and the 
Valpak Franchise Association, Inc. on Proposed Rule on Motions 
Concerning Mail Preparation Changes, September 2, 2016, at 1-2 
(Valpak Comments).
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    The National Postal Policy Council, the National Association of 
Presort Mailers, and the Association for Mail Electronic Enhancement 
(Joint Commenters) submit that the proposed rule should not be the 
exclusive means to raise the issue of price cap compliance for mail 
preparation requirements as a procedural rule ``cannot substitute for 
the Commission's and Postal Service's legal responsibilities to ensure 
that rates for market-dominant products comply with the price cap 
restrictions established by the Congress.'' \6\ The Joint Commenters 
submit that the proposed rule ``cannot shift to mailers the burden of 
proving that a mailing preparation change constitutes a classification 
change with cap implications merely by creating a procedural means of 
raising the issue.'' Joint Comments at 12-13. Further, the Joint 
Commenters contend that a 30-day time period is insufficient to 
recognize the price cap implication of certain mail preparation changes 
and also prepare and file a motion within that timeframe. Id. at 7-8.
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    \6\ Comments of the National Postal Policy Council, the National 
Association of Presort Mailers, and the Association for Mail 
Electronic Enhancement, September 2, 2016, at 3 (Joint Comments).
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    The Public Representative questions the utility of a time limit on 
motions concerning mail preparation changes where such changes are made 
effective immediately or a short time after notice.\7\ Additionally, he 
questions whether a time limit on filing motions would mean that the 
Postal Service would be able to potentially violate the price cap if a 
motion was untimely. PR Comments at 10. His main concern is that the 
proposed rule leaves open a gap in price cap compliance review, where
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    \7\ Public Representatives Comments, September 2, 2016, at 10 
(PR Comments).

a rate impact resulting from [mail preparation] changes would not 
necessarily be discovered if the Postal Service is required only to 
notify the Commission when it finds deletion or redefinition will 
occur and files for a rate change, or where an interested person 
recognizes a potential rate change and is willing to undertake the 
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effort to file a motion with the Commission.

Id. at 8. He concludes that the Commission ``should not abdicate its 
responsibility to administer the price cap rules by not ensuring 
consideration of whether rate cells are effectively deleted or 
redefined by such changes, whether noticed in the DMM or elsewhere.'' 
Id. at 7.
    The Postal Service submits that the proposed rule should include a 
deadline for resolving motions, in addition to the 30-day timeframe for 
filing motions, as it seeks to know the ``outcome of a mail-preparation 
motion before going forward with its pricing plans.'' \8\ It proposes 
that the Commission be required to resolve any motions concerning mail 
preparation changes within 60 calendar days of their filing. Postal 
Service Comments at 8.
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    \8\ United States Postal Service Comments on Proposed Rules for 
Motions Concerning Mail Preparation Changes, September 2, 2016, at 
7-8 (Postal Service Comments).
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B. Comments on the Multiple Sources Used by the Postal Service To 
Provide Notice of Mail Preparation Changes

    In addition to issues with setting a 30-day timeframe for motions 
concerning mail preparation requirements, commenters submit that it is 
difficult to monitor the multiple sources used by the Postal Service to 
provide notice of mail preparation changes. Numerous commenters request 
that the Commission direct the Postal Service to identify a publication 
where all mail preparation changes will be published. Commenters submit 
that this requirement would allow mailers and the Commission to more 
easily monitor mail preparation changes for price cap compliance.
    PostCom asserts that the multiple sources used by the Postal 
Service to publish mail preparation changes, changes between draft and 
final mail preparation changes, and informal communications about 
proposed changes make it difficult to determine what would trigger the 
30-day timeframe for motions under the proposed rule. PostCom Comments 
at 2-4. As a result of these difficulties, PostCom proposes directing 
``the Postal Service to identify a publication in which all mail 
preparation changes will

[[Page 16017]]

be published.'' Id. at 5. The Joint Commenters also submit that the 
Postal Service's practice of publishing mail preparation changes in 
multiple, overlapping sources, ``has made it harder for mailers to know 
the current (or future) rules and, by extension, even more difficult to 
know whether the real effects of mail preparation changes affect the 
price cap.'' Joint Comments at 5. The Public Representative also 
supports requiring the Postal Service to file notice of mail 
preparation changes in a single source. PR Comments at 6-7. He submits 
that, because the changes are not published in a single source, ``the 
Commission is not in a position to review the effects of each mail 
preparation change'' and this creates a gap in regulatory coverage. Id.

C. Comments on the Postal Service's Affirmative Statement of Whether a 
Mail Preparation Change Has a Rate Impact

    A third issue raised by commenters is the utility of the proposed 
rule's requirement that the Postal Service only designate where mail 
preparation changes have a rate impact. PostCom submits that the Postal 
Service should provide an affirmative statement of no price impact, 
providing clarity for mailers and no additional burden on the Postal 
Service in light of their affirmative duty to make the initial 
determination. PostCom Comments at 7. The Public Representative 
contends that the proposed rule does not include a mechanism to ensure 
that the Postal Service will comply with its burden to review mail 
preparation changes for rate impacts and submits that the Postal 
Service should be required to affirmatively state whether a mail 
preparation change has a rate impact for every change. PR Comments at 
6-8. The Joint Commenters submit that the Postal Service should also 
provide information concerning the effect of the change on rate 
categories and cells, numbers of mailpieces affected by the change, an 
affirmative statement of whether or not the change has a rate effect, 
and statement of why the change ``will or will not constitute a 
classification change under the standard adopted in Order No. 3047 as 
affirmed in Order No. 3441.'' Joint Comments at 8-11.

D. Comments on the Standard of Proof/Evidentiary Burden

    Commenters also submit questions regarding the evidentiary record 
and standard of proof that would be required for motions concerning 
mail preparation requirements and whether it would differ from existing 
procedures.
    The Postal Service requests additional discovery procedures that 
would ``allow for the development of an evidentiary record'' under the 
proposed rule. Postal Service Comments at 4. First, it requests a 
requirement that mailers offer proof of costs and operational impact 
when filing a motion challenging the price cap impact of a mail 
preparation change. Id. at 5. Second, it submits that the proposed rule 
should include various discovery procedures to assist the Commission 
and the Postal Service ``with evaluating whether the moving party has 
met its burden of demonstrating that the change imposes costs and 
burdens significant enough to require compliance with the price cap 
rules.'' Id. at 6. In addition, the Postal Service suggests a meet and 
confer requirement prior to any motion practice over mail preparation 
changes under the proposed rule. Id. at 9.
    PostCom submits that although the proposed rule ``correctly 
declines to specify what information a party must provide in support of 
its motion, as the type of information available will differ in 
individual circumstances,'' it fails to set forth the standard of 
review the Commission will apply to determine whether a motion warrants 
further procedures. PostCom Comments at 6. PostCom suggests that the 
Commission apply a ``standard similar to that employed in a motion to 
dismiss and determine whether the mail preparation change would have a 
price impact if the consequences alleged by the movant were to occur.'' 
Id.

III. Revised Proposed Rule

    The revised proposed rule would require the Postal Service to 
affirmatively designate whether or not a mail preparation requirement 
change implicates the price cap in a single, publicly available source. 
Further, if challenged by a mailer or raised by the Commission, the 
Postal Service would have to demonstrate by a preponderance of the 
evidence that a mail preparation change does not require compliance 
with Sec.  3010.23(d)(2).
    As numerous commenters raised questions regarding standard of proof 
for issues regarding compliance with Sec.  3010.23(d)(2) for mail 
preparation changes, the Commission clarifies that it is the Postal 
Service's burden to demonstrate, by a preponderance of the evidence, 
that a specific mail preparation change does not implicate the price 
cap. This burden is consistent with the Postal Service's obligation to 
evaluate changes to mail preparation requirements for compliance with 
Sec.  3010.23(d)(2) in accordance with the Commission's standard set 
forth in Order No. 3047. For the deletion prong of the Commission's 
standard, the inquiry is limited to whether the mail preparation change 
causes the elimination of a rate, or the functional equivalent of an 
elimination of a rate.\9\ For the redefinition prong, the Postal 
Service's showing does not require detailed analysis of mailer cost for 
a mail preparation change because the significance prong of the 
Commission's standard only requires a determination of whether the mail 
preparation change is large in magnitude. Order No. 3441 at 31.
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    \9\ Order No. 3047 at 15-16; Docket No. R2013-10R, Order 
Resolving Motion for Reconsideration of Commission Order No. 3047, 
at 31, July 20, 2016 (Order No. 3441).
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    As with the majority of proceedings before the Commission, the 
specific evidence presented will be largely fact dependent subject to 
the individual circumstances of the matter and the Postal Service's 
showing will be evaluated based on the evidence available at the time. 
Accordingly, in any proceeding where the price cap impact of a mail 
preparation change is being determined or challenged, the Postal 
Service must be able to show that the greater weight of the available 
evidence favors a finding that the change does not implicate Sec.  
3010.23(d)(2). In addition, as the Postal Service is in the best 
position to gather information on mailer costs and operational 
adjustments, in light of its abundant contact and consultation with the 
mailing industry, the Postal Service may submit such evidence and seek 
a determination from the Commission using the procedures set forth 
under Sec.  3001.21 of this chapter prior to implementation of the 
change.
    Under the revised rule, the Postal Service may designate a single 
source of its choosing, so long as the source is published and publicly 
available. The Postal Service shall file notice with the Commission 
after it designates the source it will use. Proposed Sec.  
3010.23(d)(5) also directs the Postal Service to affirmatively state in 
the single source publication whether or not the change requires 
compliance with Sec.  3010.23(d)(2). This flows from the Postal 
Service's obligation to properly evaluate its mail preparation changes 
for compliance with the price cap rules.
    Single source publication will allow the Commission to 
independently review mail preparation changes and will, in most 
circumstances, eliminate the need to have parties initiate motions to 
bring such changes to the Commission's attention. Accordingly, the 
revised proposed rule eliminates the

[[Page 16018]]

separate procedural component for motions concerning mail preparation 
changes. This change was triggered by commenter concerns over a 
potentially duplicative procedural rule that would conflict with the 
Commission's existing procedures and authority to review mail 
preparation changes for compliance with the price cap rules. The 
Commission submits that the existing procedures available to interested 
parties should be sufficient to raise issues of price cap compliance 
for mail preparation changes. Mailers may notify the Commission using 
the general motion procedures set forth in Sec.  3001.21 of this 
chapter if they disagree with the Postal Service's determination of 
compliance with Sec.  3010.23(d)(2). The rules under Sec.  3001.21 of 
this chapter require motions to ``set forth with particularity the 
ruling or relief sought, the grounds and basis therefor, and the 
statutory or other authority relied upon . . .'' Accordingly, any 
motions filed under Sec.  3001.21 of this chapter concerning mail 
preparation changes shall provide all information the mailers have to 
rebut the Postal Service's determination, consistent with the 
Commission's standard set forth in Order No. 3047. The Commission shall 
weigh the available evidence and provide a determination as soon as 
practicable based on a preponderance of the evidence standard.
    The initial NPR was intended to create a streamlined process by 
which mailers could submit, and the Commission could review, challenges 
to the Postal Service's failure to designate a mail preparation 
requirement change as having a rate effect under Sec.  3010.23(d)(2). 
However, as submitted by the commenters, the Commission's rules already 
provide numerous avenues for interested parties to raise issues 
relating to price cap compliance of mail preparation requirement 
changes, making an additional procedure redundant. The initial NPR 
would not foreclose any party from utilizing existing procedures and, 
as informed by the comments, would not be effective in practice as 
originally envisioned by the Commission. Accordingly, the Commission 
revises the proposed rule to better target the specific goal of 
ensuring that the Postal Service properly accounts for mail preparation 
requirement changes under Sec.  3010.23(d)(2).

IV. Comments Requested

    Interested persons are invited to provide written comments 
concerning the proposed rule. The Commission seeks comments on the 
revised rule, specifically the utility of (1) requiring the Postal 
Service to publish all mail preparation changes in a single source with 
an affirmative designation of whether or not the changes require price 
cap compliance; and (2) the elimination of a separate procedural rule 
for motions concerning mail preparation requirements.
    Comments are due no later than 30 days after the date of 
publication of this notice in the Federal Register. All comments and 
suggestions received will be available for review on the Commission's 
Web site, http://www.prc.gov.
    It is ordered:
    1. Interested persons may submit comments no later than 30 days 
from the date of the publication of this notice in the Federal 
Register.
    2. The Secretary shall arrange for publication of this order in the 
Federal Register.

    By the Commission.
Stacy L. Ruble,
Secretary.

List of Subjects in 39 CFR Part 3010

    Administrative practice and procedure, Postal Service.

    For the reasons discussed in the preamble, the Commission proposes 
to amend chapter III of title 39 of the Code of Federal Regulations as 
follows:

PART 3010--REGULATION OF RATES FOR MARKET DOMINANT PRODUCTS

0
1. The authority citation of part 3010 continues to read as follows:

    Authority:  39 U.S.C. 503; 3622.

0
2. Amend Sec.  3010.23 by adding paragraph (d)(5) to read as follows:


Sec.  3010.23   Calculation of percentage change in rates.

* * * * *
    (d) * * *
    (5) Procedures for mail preparation changes. The Postal Service 
shall provide published notice of all mail preparation changes in a 
single, publicly available source. The Postal Service shall file notice 
with the Commission of the source it will use to provide published 
notice of all mail preparation changes. When providing notice of a mail 
preparation change, the Postal Service shall affirmatively state 
whether or not the change requires compliance with paragraph (d)(2) of 
this section. If raised by the Commission or challenged by a mailer, 
the Postal Service must demonstrate, by a preponderance of the 
evidence, that a mail preparation change does not require compliance 
with paragraph (d)(2) of this section in any proceeding where 
compliance is at issue.
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[FR Doc. 2017-06355 Filed 3-30-17; 8:45 am]
 BILLING CODE 7710-FW-P