[Federal Register Volume 85, Number 114 (Friday, June 12, 2020)]
[Rules and Regulations]
[Pages 35807-35809]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-10902]


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

POSTAL REGULATORY COMMISSION

39 CFR Part 3030

[Docket No. RM2020-5; Order No. 5510]


Market Dominant Postal Products

AGENCY: Postal Regulatory Commission.

ACTION: Final rule.

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

SUMMARY: The Commission is revising its rules concerning rate 
incentives for market dominant products to clarify the definition of 
``rate of general applicability'' within the context of a market 
dominant rate adjustment proceeding; to add an additional criterion for 
a rate incentive to be included in a percentage change in rates 
calculation at discounted prices; and to state clearly what information 
the Postal Service must file to support a claim that a rate incentive 
meets the necessary criteria to be included in a percentage change in 
rates calculation at discounted prices.

DATES: Effective: July 13, 2020.

ADDRESSES: For additional information, Order No. 5510 can be accessed 
electronically through the Commission's website at https://www.prc.gov.

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

[[Page 35808]]


SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Background
II. Basis for Rule Changes
III.Final Rules

I. Background

    The Commission's rules permit the Postal Service, when adjusting 
market dominant rates as part of a market dominant rate adjustment 
proceeding, to include discounted prices for rate incentives that the 
Postal Service plans to offer in the percentage change in rates 
calculation, as long as the rate incentive meets certain criteria. 39 
CFR 3030.523(e). These criteria are: (1) That the rate incentive is in 
the form of a discount or can be easily translated into a discount; (2) 
that sufficient billing determinants are available for the rate 
incentive to be included in the percentage change in rates calculation; 
and (3) that the rate incentive is a rate of general applicability. 39 
CFR 3030.523(e)(2). The Commission's rules also require the Postal 
Service to provide ``sufficient information to demonstrate that the 
rate incentive is a rate of general applicability.'' 39 CFR 
3030.512(b)(9)(i).
    When the Commission previously promulgated rules with regard to the 
treatment of market dominant rate incentives, it included a specific 
definition of ``rate of general applicability'' in the context of 
market dominant rate adjustments which provided, inter alia, that ``[a] 
rate is not a rate of general applicability if eligibility for the rate 
is dependent on factors other than the characteristics of the mail to 
which the rate applies.'' 39 CFR 3030.501(g). The Commission explained 
that mail volume sent by a mailer in a previous year is not a 
characteristic of the mail to which rates under an incentive program 
apply.\1\
---------------------------------------------------------------------------

    \1\ See Docket No. RM2014-3, Order Adopting Final Rules on the 
Treatment of Rate Incentives and De Minimis Rate Increases for Price 
Cap Purposes, June 3, 2014, at 15-16 (Order No. 2086).
---------------------------------------------------------------------------

    In the most recent market dominant rate adjustment proceeding that 
the Commission conducted, a question arose regarding the extent to 
which a particular rate incentive proposed by the Postal Service 
constituted a ``rate of general applicability'' appropriate for 
inclusion in the percentage change in rates calculation at discounted 
prices.\2\ After determining that a potential ambiguity existed in the 
Commission's rules concerning whether a rate incentive featuring a 
mailer-specific volume threshold based on historical volume data could 
constitute a ``rate of general applicability,'' the Commission 
permitted the rate incentive to be included in the percentage change in 
rates calculation in Docket No. R2020-1, but indicated that it would 
initiate a rulemaking proceeding to clarify the issue. Id. at 23-24. 
The Commission then opened Docket No. RM2020-5 and issued a Notice of 
Proposed Rulemaking proposing amendments to its rules regarding rate 
incentives for market dominant products and soliciting comments from 
the public.\3\
---------------------------------------------------------------------------

    \2\ Docket No. R2020-1, Order on Price Adjustments for USPS 
Marketing Mail, Periodicals, Package Services, and Special Services 
Products and Related Mail Classification Changes, November 22, 2019, 
at 17, 19-24 (Order No. 5321).
    \3\ Docket No. RM2020-5, Notice of Proposed Rulemaking to Amend 
Rules Regarding Rate Incentives for Market Dominant Products, 
February 14, 2020 (Order No. 5433).
---------------------------------------------------------------------------

II. Basis for Rule Changes

    In Order No. 5433, the Commission proposed to clarify its rules by 
making three revisions. First, the Commission proposed to amend Sec.  
3030.501(g) to clarify that in order to qualify as a rate of general 
applicability, a rate cannot be based on mailer-specific data, such as 
historical mailer volume. Order No. 5433 at 8, 10, 13. Second, the 
Commission proposed to amend Sec.  3030.523(e)(2) to add an additional 
criterion for a rate incentive to be eligible for inclusion in a 
percentage change in rates calculation at discounted prices--the rate 
incentive must be made available to all mailers equally on the same 
terms and conditions. Order No. 5433 at 8, 10, 14-15.
    The Commission explained that its basis for proposing these 
revisions was twofold. The Commission was concerned that interpreting 
``rate of general applicability'' to permit volume thresholds based on 
historical volume data would contravene the policy reasons underlying 
the general applicability requirement, because, as the Commission has 
found before, ``volume sent by a mailer in a previous year is not a 
characteristic of the mail to which rates under [an] incentive program 
apply[,]'' due to the fact that past behavior by mailers bears no 
relationship to mail being sent in the present.\4\ The Commission 
stated that it was equally concerned about the fairness of permitting 
mailer-specific thresholds for determining eligibility for market 
dominant rate incentives. Where a rate incentive is not made available 
to all mailers on the same terms and conditions, the potential exists 
for non-qualifying mailers to be forced to subsidize the rate 
incentives received by qualifying mailers.
---------------------------------------------------------------------------

    \4\ Order No. 5433 at 8-9 (citing Order No. 2086 at 15).
---------------------------------------------------------------------------

    The third and final revision the Commission proposed was to amend 
Sec.  3030.512(b)(9) to add additional requirements intended to ensure 
that the Postal Service provides sufficient information at the outset 
of a market dominant rate adjustment proceeding to permit the 
Commission and stakeholders to verify that all rate incentives included 
in a percentage change in rates calculation comply with the definition 
of ``rates of general applicability'' and are made available to all 
mailers equally on the same terms and conditions.
    The Commission received four sets of comments with regard to its 
proposed rule revisions. Order No. 5510 at 7. In general, commenters 
other than the Postal Service were supportive of the changes. Id. at 7-
8. The Postal Service argued that mailer-specific volume thresholds 
promote fairness among mailers because more mailers would participate 
in such promotions than would participate under a static volume 
threshold. Id. at 8-9. However, the Commission found that this did not 
address its primary concern, which is fairness among all mailers in a 
class, including those not eligible to participate in promotions. Id. 
at 9-10. The Commission determined that from a policy standpoint it is 
necessary to have bright-line rules with regard to what promotions can 
and cannot be included in a percentage change in rates calculation. Id. 
at 10. Therefore, the Commission adopted the proposed rules without 
modification. Id. at 11.

III. Final Rules

    Final Sec.  3030.501(g). Final Sec.  3030.501(g) is revised to 
state clearly that the definition of ``rate of general applicability'' 
within the context of a market dominant rate adjustment proceeding 
means a rate incentive that is not based on mailer-specific data, such 
as historical volume data.
    Final Sec.  3030.512(b)(9). Final Sec.  3030.512(b)(9) is revised 
to state clearly what information the Postal Service must file to 
support its claim that a rate incentive meets the necessary criteria to 
be included in a percentage change in rates calculation.
    Final Sec.  3030.523(e)(2)(iv). Final Sec.  3030.523(e)(2)(iv) is 
added to make it a criterion for a market dominant rate incentive to be 
included in a percentage change in rates calculation that the incentive 
be available to all mailers equally on the same terms and conditions.

[[Page 35809]]

List of Subjects for 39 CFR Part 3030

    Administrative practice and procedure.

    For the reasons stated in the preamble, the Commission amends 
chapter III of title 39 of the Code of Federal Regulations as follows:

PART 3030--REGULATION OF RATES FOR MARKET DOMINANT PRODUCTS

0
1. The authority citation for part 3030 continues to read as follows:

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


0
2. Amend Sec.  3030.501 by revising paragraph (g) to read as follows:


Sec.  3030.501  Definitions.

* * * * *
    (g) Rate of general applicability means a rate applicable to all 
mail meeting standards established by the Mail Classification Schedule, 
the Domestic Mail Manual, and the International Mail Manual. A rate is 
not a rate of general applicability if eligibility for the rate is 
dependent on factors other than the characteristics of the mail to 
which the rate applies, including the volume of mail sent by a mailer 
in a past year or years. A rate is not a rate of general applicability 
if it benefits a single mailer. A rate that is only available upon the 
written agreement of both the Postal Service and a mailer, a group of 
mailers, or a foreign postal operator is not a rate of general 
applicability.

0
3. Amend Sec.  3030.512 by revising paragraph (b)(9) to read as 
follows:


Sec.  3030.512  Contents of notice of rate adjustment.

* * * * *
    (b) * * *
    (9) For a notice that includes a rate incentive:
    (i) Whether the rate incentive is being treated under Sec.  
3030.523(e)(2) or under Sec. Sec.  3030.523(e)(1) and 3030.524.
    (ii) If the Postal Service seeks to include the rate incentive in 
the calculation of the percentage change in rates under Sec.  
3030.523(e)(2), whether the rate incentive is available to all mailers 
equally on the same terms and conditions.
    (iii) If the Postal Service seeks to include the rate incentive in 
the calculation of the percentage change in rates under Sec.  
3030.523(e)(2), sufficient information to demonstrate that the rate 
incentive is a rate of general applicability, which at a minimum 
includes: The terms and conditions of the rate incentive; the factors 
that determine eligibility for the rate incentive; a statement that 
affirms that the rate incentive will not benefit a single mailer; and a 
statement that affirms that the rate incentive is not only available 
upon the written agreement of both the Postal Service and a mailer, or 
group of mailers, or a foreign postal operator.

0
4. Amend Sec.  3030.523 by revising paragraph (e)(2) to read as 
follows:


Sec.  3030.523   Calculation of percentage change in rates.

* * * * *
    (e) * * *
    (2) A rate incentive may be included in a percentage change in 
rates calculation if it meets the following criteria:
    (i) The rate incentive is in the form of a discount or can easily 
be translated into a discount;
    (ii) Sufficient billing determinants are available for the rate 
incentive to be included in the percentage change in rate calculation 
for the class, which may be adjusted based on known mail 
characteristics or historical volume data (as opposed to forecasts of 
mailer behavior);
    (iii) The rate incentive is a rate of general applicability; and
    (iv) The rate incentive is made available to all mailers equally on 
the same terms and conditions.

    By the Commission.
Erica A. Barker,
Secretary.
[FR Doc. 2020-10902 Filed 6-11-20; 8:45 am]
BILLING CODE 7710-FW-P