[Federal Register Volume 85, Number 32 (Tuesday, February 18, 2020)]
[Proposed Rules]
[Pages 8789-8791]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-03156]


=======================================================================
-----------------------------------------------------------------------

POSTAL REGULATORY COMMISSION

39 CFR Chapter III

[Docket No. RM2020-4; Order No. 5422]


Amendments to Rules of Practice

AGENCY: Postal Regulatory Commission.

ACTION: Advanced notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: The Commission seeks input from the public about what 
regulations promulgated by the Commission may be necessary to carry out 
certain statutory responsibilities related to the letter monopoly, 
specifically those instances where the letter monopoly does not apply 
to a mailpiece.

DATES: Comments are due: April 7, 2020.

ADDRESSES: For additional information, Order No. 5422 can be accessed 
electronically through the Commission's website at https://www.prc.gov. 
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. Issues for Consideration
IV. Ordering Paragraphs

I. Introduction

    The Commission issues this advance notice of proposed rulemaking to 
seek input from the public about what regulations promulgated by the 
Commission may be necessary to carry out the requirements of 39 U.S.C. 
601, ``Letters carried out of the mail,'' which, as explained in 
greater detail below, describes when the letter monopoly does not apply 
to a mailpiece.\1\
---------------------------------------------------------------------------

    \1\ The scope of this proceeding and inquiry does not extend to 
the mailbox monopoly (or mailbox rule), which grants the Postal 
Service the exclusive ability to deposit mailable matter in a letter 
box. See 18 U.S.C. 1725.
---------------------------------------------------------------------------

II. Background

    The Postal Service has exclusive rights in the carriage and 
delivery of letters under certain circumstances. This letter monopoly 
is codified in the Private Express Statutes (PES), which are a group of 
civil and criminal statutes that make it unlawful for any entity other 
than the Postal Service to send or carry letters. See 18 U.S.C. 1693-
1699; 39 U.S.C. 601-606.\2\
---------------------------------------------------------------------------

    \2\ Although these provisions of the U.S. Code are customarily 
referred to collectively as the ``Private Express Statutes,'' they 
do not all relate to private expresses or prohibit carriage of 
letters out of the mails.
---------------------------------------------------------------------------

    Section 601 provides specific instances (exceptions) where letters 
may be carried out of the mail (i.e., not subject to the letter 
monopoly). These statutory exceptions include letters charged more than 
six times the current rate for the first ounce of a single-piece first 
class letter and letters weighing more than 12.5 ounces. See 39 U.S.C. 
601(b)(1), (b)(2). A ``grandfather clause'' in Section 601(b)(3) also 
references exceptions from prior Postal Service policies and 
regulations. The statute also directs the Commission to promulgate any 
regulations necessary to carry out this section. See 39 U.S.C. 601(c).
    Prior to the Postal Accountability and Enhancement Act (PAEA) of 
2006, the Postal Service issued regulations to define and suspend the 
PES.\3\ These regulations defined the crucial term ``letter'' as ``a 
message directed to a specific person or address and recorded in or on 
a tangible object,'' subject to several provisions. 39 CFR 310.1(a). 
The regulations also described several statutory exceptions to the 
letter monopoly, such as when the letter accompanies and relates to 
cargo or when a special messenger is used. See 39 CFR 310.3. In 
addition, the regulations describe administrative suspensions of the 
PES (39 CFR 310.1(a)(7) n.1, 320), including suspensions for certain 
data processing materials or for extremely urgent letters. See 39 CFR 
320.2, 320.6. These regulations were originally promulgated by the 
Postal Service in 1974 and have been amended several times.\4\ In 2003,

[[Page 8790]]

the President's Commission on the United States Postal Service 
recommended that the scope of the letter monopoly should be clarified 
and periodically reviewed by a Postal Regulatory Board.\5\
---------------------------------------------------------------------------

    \3\ See Postal Accountability and Enhancement Act, Public Law 
109-435, 120 Stat. 3198 (2006); see also 39 CFR 310, 320.
    \4\ See Comprehensive Standards for Permissible Private 
Carriage, 39 FR 33211 (Sept. 16, 1974).
    \5\ Embracing the Future: Making the Tough Choices to Preserve 
Universal Mail Service, July 31, 2003, at 71. The President's 
Commission recommended ``transforming the narrowly focused Postal 
Rate Commission [ ] into an independent Postal Regulatory Board.'' 
Id. at XIII.
---------------------------------------------------------------------------

    In 2006, Congress passed PAEA to clarify the limited statutory 
exemptions to the monopoly.\6\ In addition to adding price and weight 
limits as exceptions (601(b)(1), (b)(2)), Congress also added a 
``grandfather clause'' in Section 601(b)(3) to authorize the 
continuation of private activities that the Postal Service had 
permitted by regulations to be carried out of the mail. The House 
Report on the PAEA explains that the clause protects mailers and 
private carriers who had relied upon the regulations adopted as of the 
date of the bill. See id. at 58. Congress also eliminated the Postal 
Service's authority to adopt any future regulations creating additional 
exceptions or defining the scope of the postal monopoly. See 39 U.S.C. 
401(2), 404a(a)(1), 601. Congress instead gave the Commission the 
authority to promulgate ``any regulations necessary to carry out this 
section [601].'' \7\ To date, the Commission has not promulgated any 
regulations pursuant to Section 601(c), and issues this advance notice 
of proposed rulemaking to explore potential options for doing so now.
---------------------------------------------------------------------------

    \6\ See H.R. Rep. No. 109-66 (2005) part 1, at 57. Congress 
stated that ``the bill clarifies the scope of the statutory monopoly 
that historically has been defined solely by the [Postal Service].'' 
Id. at 58.
    \7\ 39 U.S.C. 601(c). Docket Nos. MC2012-14 and R2012-8, Order 
Approving Addition of Valassis Direct Mail, Inc. Negotiated Service 
Agreement to the Market Dominant Product List, August 23, 2012, at 
6-7 (Order No. 1448) (citing Section 601(c) and stating that the 
Postal Service no longer has authority to issue regulations 
interpreting or defining the postal monopoly); see also Docket No. 
MC2012-13, Order Conditionally Granting Request to Transfer Parcel 
Post to the Competitive Product List, July 20, 2012, at 6-7 (Order 
No. 1411) (``As a result of the PAEA, the Postal Service no longer 
has authority to issue regulations interpreting or defining the 
postal monopoly. The Commission now has the authority to promulgate 
such regulations.''). Order No. 1411 at 7 n.13.
---------------------------------------------------------------------------

III. Issues for Consideration

    In the more than 45 years since the Postal Service initially 
promulgated its regulations, the postal industry has fundamentally 
changed. The Postal Service recently stated that the ``most significant 
competitor for First-Class Mail is digital communication, including 
electronic mail, and other digital technologies such as online bill 
payment and presentment.'' \8\ The USPS Office of Inspector General 
also released a report citing electronic diversion as a key factor that 
has affected the First-Class Mail correspondence segment.\9\
---------------------------------------------------------------------------

    \8\ The U.S. Postal Service Five-Year Strategic Plan FY2020-
FY2024, January 7, 2020, at 14.
    \9\ See USPS Office of Inspector General, A New Reality: 
Correspondence Mail in the Digital Age, March 5, 2018, at 9.
---------------------------------------------------------------------------

    Over time there have been several published reports discussing or 
evaluating the letter monopoly. In a 2007 report, the Federal Trade 
Commission stated that the monopoly should only be as broad as needed 
to satisfy the statutory requirement of universal service.\10\ The 
Commission, in response to Section 702 of the PAEA, issued a report on 
Universal Postal Service and the Postal Monopoly, which traced the 
history of the monopoly to its current status.\11\ The Government 
Accountability Office reported that narrowing the monopoly could 
decrease revenues and threaten the universal service obligation, but 
may also lead to greater efficiencies and innovation.\12\ In 2018, the 
Task Force on the United States Postal System stated that the statutory 
monopoly business model is increasingly ineffective.\13\ In particular, 
it explained that ``technological changes have significantly reduced 
the effectiveness of the statutory monopoly business model by 
undermining the historical barriers to market competition and product 
substitution.'' Id.
---------------------------------------------------------------------------

    \10\ Accounting for Laws that Apply Differently to the United 
States Postal Service and its Private Competitors: A Report by the 
Federal Trade Commission, January 16, 2008, at 93.
    \11\ Report on Universal Service and the Postal Monopoly, 
December 19, 2008, at 15-84 (USO Report). The USO Report includes, 
as an appendix, George Mason University's presentation and analysis 
of the history of the postal monopoly. See George Mason University, 
School of Public Policy, Postal Monopoly Laws: History and 
Development of the Monopoly on the Carriage of Mail and the Monopoly 
on Access to Mailboxes, November 2008, at 250 (``[A]ny decision by 
the Commission interpreting the term letter in section 601 would be 
considered tantamount to defining the scope of the monopoly.''). Id.
    \12\ U.S. Governmental Accountability Office, U.S. Postal 
Service, Key Considerations for Potential Changes to USPS's 
Monopolies, GAO-17-543, June 22, 2017, at 8.
    \13\ Task Force on the United States Postal Service, United 
States Postal Service: A Sustainable Path Forward, December 2018, at 
33.
---------------------------------------------------------------------------

    The Commission has generally discussed or acknowledged the letter 
monopoly when reviewing requests to modify the product lists. In such 
cases, the Commission must consider whether a product is covered by the 
monopoly. See 39 U.S.C. 3642(b)(2). For example, in Docket Nos. MC2012-
14 and R2012-8, where the Commission approved a new product as a Market 
Dominant Negotiated Service Agreement, the Commission acknowledged, 
without considering the merits of, assertions by the Postal Service 
that a specific product is subject to the postal monopoly. Order No. 
1448 at 6-7.
    Specifically in dockets where the Postal Service seeks to classify 
a product as competitive, it often cites various statutory and 
regulatory exceptions to the monopoly. For example, in Docket No. 
MC2012-13, the Postal Service asserted that the contents of Parcel Post 
are outside the scope of the letter monopoly because: (1) Invoices or 
receipts accompanying merchandise mailed as Parcel Post are subject to 
the cargo exception in 39 CFR 310.3(a), (2) incidental, non-addressed, 
non-personalized advertising may be enclosed pursuant to 39 CFR 320.7, 
and (3) any letters enclosed would be permitted due to the price 
exception pursuant to 39 U.S.C. 601(b)(1). Order No. 1411 at 6-7. In 
another case, the Postal Service acknowledged that a sealed parcel 
could contain letter material and, therefore, stated it intended to 
raise prices consistent with 39 U.S.C. 601(b)(1) to avoid the 
application of the PES.\14\ The Commission has acknowledged these past 
assertions.\15\
---------------------------------------------------------------------------

    \14\ See Docket No. MC2015-7, Request of the United States 
Postal Service to Transfer First-Class Mail Parcels to the 
Competitive Product List, November 14, 2014, Attachment B at 2.
    \15\ See Docket No. MC2015-7, Order Conditionally Approving 
Transfer, July 20, 2017, at 35 (Order No. 4009); Order No. 1411 at 
7.
---------------------------------------------------------------------------

    In Docket No. MC2013-57, several parties addressed whether the 
Round-Trip Mailer product, which consists of a round-trip mailing of a 
disc, was covered by the postal monopoly.\16\ In particular, the 
parties disputed whether the content of the Round-Trip Mailer 
constitutes a ``letter'' that is subject to the Private Express 
Statutes. Id. Because of a finding on market power, the Commission did 
not rule on the merits of the monopoly issue. Id. at 56. However, the 
Commission noted that ``[t]he legal and policy issues surrounding the 
postal monopoly have far-reaching and important implications that go 
beyond the boundaries of this proceeding.'' Id. The Commission further 
stated that the ``issue may be appropriate for review in a separate 
proceeding.'' Id. The Commission believes it is now time for that 
separate proceeding.
---------------------------------------------------------------------------

    \16\ Docket No. MC2013-57, Order Denying Request, December 23, 
2014, at 54-56 (Order No. 2306).
---------------------------------------------------------------------------

    With this background, the Commission issues this advance notice of 
proposed rulemaking to consider approaches to fulfilling its statutory

[[Page 8791]]

responsibilities under 39 U.S.C. 601(c), including considering whether 
changes are needed to the regulations concerning the letter monopoly or 
necessary to carry out Section 601.
    The Commission is soliciting comments to identify issues that may 
be considered when developing regulations to implement 39 U.S.C. 601. 
See 39 U.S.C. 601(c). All relevant comments will be considered. 
However, the Commission is interested in comments on the following 
specific issues:
    1. Are the statutory requirements of 39 U.S.C. 601(a) clear and 
concise, or are additional regulations necessary to carry out the 
intent of the statute?
    2. Are the statutory requirements of 39 U.S.C. 601(b) clear and 
concise, or are additional regulations necessary to carry out the 
intent of the statute?
    3. Is the scope of 39 U.S.C. 601(b)(3)--permitting that the 
carriage of letters out of the mail provided ``such carriage is within 
the scope of services described by regulations of the United States 
Postal Service (including, in particular, sections 310.1 and 320.2-
320.8 of title 39 of the Code of Federal Regulations, as in effect on 
July 1, 2005) that purport to permit private carriage by suspension of 
the operation of this section (as then in effect)''--sufficiently clear 
and concise, or are additional regulations necessary to carry out the 
intent of the statute?
    4. Do any terms that currently appear in 39 U.S.C. 601 require 
further definition?
    5. Can consumers and competitors easily determine when a mailpiece 
is subject to monopoly protections?
    6. What is the current effect of the letter monopoly on consumers, 
small businesses, and competitors?
    7. Are the weight and/or price requirements found in 39 U.S.C. 
601(b) still relevant?
    8. Are the weight and/or price requirements found in 39 U.S.C. 
601(b) applied uniformly?
    9. Have there been any post-PAEA Postal Service regulations that 
appear to limit, expand, or otherwise affect the scope of the letter 
monopoly contrary to law?
    10. Is the term ``letter'' clear and concise, or can any 
improvements be made to the definition? If so, please provide any 
proposed definitions and explain how the proposed definition may better 
implement the intent of Congress and affect the scope of the letter 
monopoly.
    11. Do the current statutory and regulatory requirements correctly 
implement the intent of Congress and advance the public interest, or 
should consideration be given to any changes that may be implemented by 
regulation?
    12. How might changes to the statutory and regulatory requirements 
regarding the scope of the letter monopoly affect the financial 
condition of the Postal Service, competitors of the Postal Service, 
users of the Postal Service, and/or the general public interest?
    13. Are there any social, economic, technological, or other trends 
that should be taken into account by Congress in considering the scope 
of the monopoly?
    14. Because the Commission is tasked with developing regulations to 
carry out 39 U.S.C. 601, to what extent should the Commission adopt 
regulations that replicate, in whole or in part, the Postal Service's 
regulations that appear at 39 CFR 310.1 and 320.2 through 320.8?

IV. Ordering Paragraphs

    It is ordered:
    1. Docket No. RM2020-4 is established for the purpose of 
considering amendments to the Code of Federal Regulations, title 39, 
chapter III, as discussed in this advance notice of proposed 
rulemaking.
    2. Interested persons may submit comments no later than April 7, 
2020.
    3. Pursuant to 39 U.S.C. 505, Kenneth E. Richardson is appointed to 
serve as Public Representative in this proceeding.
    4. The Secretary shall arrange for publication of this Order in the 
Federal Register.

    By the Commission.
Erica A. Barker,
Secretary.
[FR Doc. 2020-03156 Filed 2-14-20; 8:45 am]
 BILLING CODE 7710-FW-P