[Federal Register Volume 86, Number 235 (Friday, December 10, 2021)]
[Rules and Regulations]
[Pages 70382-70385]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-26716]


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POSTAL SERVICE

39 CFR Part 111


Periodicals Pending Authorization Postage

AGENCY: Postal ServiceTM.

ACTION: Final rule.

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SUMMARY: The Postal Service is amending Mailing Standards of the United 
States Postal Service, Domestic Mail Manual (DMM[supreg]) subsection 
207.5.2 to revise the process for calculating postage on a Periodicals 
publication pending authorization.

DATES: Effective Date: January 9, 2022.

FOR FURTHER INFORMATION CONTACT: Elke Reuning-Elliott at (202) 268-4063 
or Garry Rodriguez at (202) 268-7281.

SUPPLEMENTARY INFORMATION: On September 30, 2021, the Postal Service 
published a notice of proposed rulemaking (NPRM) (86 FR 54142) to 
revise the postage calculation standards for Periodicals pending 
authorization. In response to the proposed rule, four commenters 
submitted comments.
    Comment: One commenter supported the proposal changes, stating that 
it would make pricing Pending periodicals more efficient and effective.
    USPS Response: The Postal Service is grateful for the support.

[[Page 70383]]

    Comment: One commenter opposed the proposal, characterizing it as a 
price increase unsupported by data, analysis, or fiscal studies that 
would assess its effects.
    USPS Response: The Postal Service believes this comment 
misunderstands the proposal. The Postal Service was not proposing a 
price increase, which in any event would have to be brought as a price 
case before the Postal Regulatory Commission, not a change to the 
Domestic Mail Manual. Rather, the Postal Service proposed an 
alternative method of assigning non-Periodicals prices to mailings 
while a mailer's application for Periodicals mailing privileges is 
pending.
    Mailers seeking Periodicals mailing privileges must submit an 
application for approval, together with appropriate fees and supporting 
information to demonstrate eligibility (DMM 207.4.1-207.4.2; 207.4.13; 
207.5.1.1-207.5.1.10; 207.10.7.1-207.10.7.3). While this application is 
pending, a mailer may prepare its mailing as Periodicals and make use 
of all available dropshipping and pre-sorting options available for 
Periodicals, but the mailing is not eligible for Periodicals prices.
    As such, the mailer must provide two postage statements with each 
mailing, a Periodicals postage statement and a postage statement for 
the non-Periodicals price most closely applicable to the mailing (DMM 
207.17.2.5). The process is automated, however, and a mailer that has 
an account with the Postal Service need only enter a Periodicals 
postage statement into the Postal Service computer systems, which then 
automatically generate the non-Periodicals postage statement and 
calculate the closest applicable non-Periodicals prices. It is the 
methodology its computer systems use to assign non-Periodicals prices 
that the Postal Service proposed to revise because the current 
methodology is unwieldy and limited.
    On the one hand, maintaining the underlying mapping between 
Periodicals and non-Periodicals prices is labor intensive. There are 
hundreds of possible rate cells to map between Periodicals prices and 
possible non-Periodicals prices. The price for out-of-county 
Periodicals, for example, includes a per-pound price for the percentage 
of advertising space; a per-pound price for the percentage of non-
advertising space; a per-piece price that varies by shape (i.e., 
letters, flats, or parcels), sorting level (e.g., CR, 5-Digit, 3-Digit, 
ADC, etc.), and machinability; and a per-bundle or per container price, 
the latter of which varies by dropship level (Notice 123, August 29, 
2021).
    On the other hand, and more importantly, the current methodology 
does not provide exact pricing. In some cases, for example, a mailing 
might receive a non-Periodical rate that most closely matches by size, 
weight, and shape but for which the mailing nevertheless does not 
qualify because it does not meet volume requirements. The minimum 
volume requirement for a mailing pre-sorted to ADC, 3-Digit, or 5-
Digit, for example, is 6 pieces for Periodicals and 10 pieces for 
Marketing Mail, the most closely analogous price. Pending Periodicals 
mailings between 6 and 9 pieces receive the Marketing Mail price even 
though those mailings do not qualify for that price.
    In other cases, an equivalent appropriate rate simply may not 
exist. For example, an out-of-county Periodical mailing will pay one 
price, an identical in-county Periodical mailing will pay a different 
and lower price, id., but no other mail product makes an equivalent in-
county/outside-county pricing distinction. Thus, the most closely 
applicable price to charge pending in-county Periodicals as opposed to 
pending outside-county Periodicals is unclear.
    Accordingly, in the September 30 NPRM, the Postal Service proposed 
a simplified way to charge current non-Periodical rates for Periodicals 
mailings while a mailer's application for Periodicals privileges is 
pending. Mailers pay non-Periodical rates based upon commonalities of 
size, shape, and weight between the Periodicals mailed and other 
products. Table 1, an expanded version of DMM Exhibit 5.2.3, sets out 
possible Periodical types, corresponding non-Periodicals products, the 
reason for the association, the relevant average per-piece prices, and 
the non-Periodicals price to be paid, expressed as a percentage to be 
added to the Periodicals prices.

                                Table 1--Pending Periodicals and Associated Rates
----------------------------------------------------------------------------------------------------------------
                                                     Reason for       Average price      Average
          Periodical            Associated class/ associated class/  for associated    periodicals  % Difference
                                    subclass          subclass       class/subclass     price \1\
----------------------------------------------------------------------------------------------------------------
Periodicals Flats.............  Marketing Mail    Meets Flat                  $0.542        $0.333            63
                                 Flats \2\.        Dimension
                                                   Requirement up
                                                   to 15.99 ozs.
Periodicals Letters...........  Marketing Mail    Meets Letter                 0.258         0.295             0
                                 Letters \2\.      Dimension
                                                   Requirement up
                                                   to 15.99 ozs.
Periodicals NP Flats..........  Marketing Mail    Eligible for                 0.328         0.234            40
                                 NP Flats \2\.     both
                                                   Periodicals
                                                   Nonprofit &
                                                   Marketing
                                                   Nonprofit &
                                                   Meets Flat
                                                   Dimension
                                                   Requirement up
                                                   to 15.99 ozs.
Periodicals NP Letters........  Marketing Mail    Eligible for                 0.131         0.292             0
                                 NP Letters \2\.   both
                                                   Periodicals
                                                   Nonprofit &
                                                   Marketing
                                                   Nonprofit &
                                                   Meets Letter
                                                   Dimension
                                                   Requirement up
                                                   to 15.99 ozs.
Periodicals NP Parcels........  Marketing Mail    Minimum of 200               1.724         0.730           136
                                 NP Parcels \2\.   pcs or 50 lbs.
                                                   Parcels under 1
                                                   pound.
Periodicals Parcels...........  Bound Printed     Bound                        1.190         1.210             0
                                 Matter Parcels    Publication
                                 \3\.              with weight 1
                                                   lb & over \3/4\
                                                   inch thick.
Periodicals Flats.............  Bound Printed     Bound                        0.820         0.333           146
                                 Matter Flats      Publication
                                 \3\.              with weight 1
                                                   lb & Meets Flat
                                                   Dimension
                                                   Requirement.
Periodicals Letters...........  First Class       Mailing less                 0.575         0.295            95
                                 Letters--Single   than 200 pieces
                                 Piece \4\.        Meets Letter
                                                   Dimension
                                                   Requirement.
Periodicals Flats.............  First Class       Mailing less                 1.754         0.333           427
                                 Flats--Single     than 200 pieces
                                 Piece \4\.        & Meets Flat
                                                   Dimension
                                                   Requirement.
Periodicals Parcels...........  First Class       Mailing less                 4.970         1.210           311
                                 Parcels--Retail   than 200 pieces
                                 \4\.              & Meets Flat
                                                   Dimension
                                                   Requirement.
Periodicals Parcels...........  Parcel Select     Unbound                      8.290         1.210           585
                                 \5\.              Publication and
                                                   exceeds \3/4\''
                                                   thick or weighs
                                                   over 15.99 ozs.
Periodicals Parcels...........  Priority Mail     Commercial                   7.810         1.210           545
                                 Commercial        Parcels weighs
                                 Parcels \6\.      under 1 pound.
Periodicals Parcels...........  Priority Mail     Commercial                   8.580         1.210           609
                                 Commercial        Parcels weighs
                                 Parcels \6\.      over 1 pound
                                                   but under 2
                                                   pounds.

[[Page 70384]]

 
Periodicals Flats.............  Priority Mail     Commercial Flats             7.650         0.333         2,197
                                 Commercial        weighs under 1
                                 Flats \6\.        pound.
Periodicals Flats.............  Priority Mail     Commercial                   7.780         0.333         2,236
                                 Commercial        Parcels weighs
                                 Flats \6\.        over 1 pound
                                                   but under 2
                                                   pounds.
----------------------------------------------------------------------------------------------------------------
\1\ Average revenue per piece from Shape Indica for FYQ3-FY21Q2: With August approved Prices.
\2\ Average Price based on Q3FY2020-Q2Fy2021.
\3\ Average piece with weight at least 1 pound and up to 15 pounds based on Q3FY2020-Q2Fy2021.
\4\ Average Price based on Q3FY2020-Q2Fy2021.
\5\ Average Price based on Q3FY2020-Q2Fy2021 Ground and Destination Entry excluding light weight parcels.
\6\ Average Price based on Q3FY2020-Q2Fy2021.

    For example, for Periodicals under one pound that meet the size 
requirements for Flats, mailers pay Marketing Mail Flats prices, 
achieved by multiplying the applicable Periodicals Flats price by 1.63, 
(i.e., adding an additional 63 percent of the Periodicals price to the 
average per-piece Periodicals price to reach the average, per-piece 
Periodicals Flats price) and not, as some commenters understood it, by 
paying only 63 percent of the Periodicals price. For Periodicals 
weighing more than one pound or that are more than 0.75'' thick, 
mailers pay Bound Printed Matter Parcels prices, achieved by 
multiplying the Periodicals Parcels price by 2.46. All of this is 
detailed on the Periodicals postage statement, PS Form 3541.
    The non-Periodicals prices to be paid are expressed as the 
percentage difference between the current, average per-piece price for 
Periodicals and the current, average per-piece price for the 
corresponding product. The average prices are derived from volume and 
revenue data for the previous four quarters, and thus the Postal 
Service may update the percentages in Exhibit 5.2.3 each quarter to 
reflect quarterly changes in volumes and revenues.
    For all of the foregoing reasons, the Postal Service disagrees with 
the commenter's contention that the September 30 proposal for 
calculating pending Periodicals prices is a price increase and is 
making no changes as a result of the comment. The Postal Service is, 
however, revising the pending postage table from the proposed rule 
(Exhibit 5.2.3) by adding ``Nonprofit USPS Marketing Mail Parcels'' as 
an option for eligible Periodicals during the pending authorization 
process. This option was inadvertently omitted from the proposal.
    Comment: The two remaining commenters oppose the proposal on a 
number of grounds, though they stated that they generally support the 
intent to simplify and improve the current process for calculating 
rates for pending Periodicals.
    Primarily, these commenters state that the proposed rule appears to 
be a price change that must first be approved by the Commission. If the 
Postal Service's intent was to apply existing prices, that was not 
clear from, or supported by, information or discussion in the proposed 
rule.
    The commenters also state that the proposal would result in widely 
divergent, often too-high, prices and, therefore, that the Postal 
Service should either reduce the percentages given or provide an 
intermediate appeals process for the mailer to seek review of the 
pending Periodicals price charged.
    USPS Response: The Postal Service appreciates the commenters' 
support for improving the process for assessing prices for pending 
Periodicals.
    As explained in its response to the previous comment, the Postal 
Service disagrees that the proposal for changing the methodology for 
calculating prices for pending Periodicals also proposed a change in 
prices. Again, the Postal Service proposed an alternative method of 
assigning prices to mailings while a mailer's application for 
Periodicals mailing privileges is pending. The new methodology assigns 
closely applicable non-Periodicals prices to pending Periodicals, and 
these prices are expressed as a percentage difference between the 
current, average per-piece price for Periodicals and the corresponding 
current, average per-piece price for the corresponding product, based 
upon volume and revenue for the previous four quarters. The overall 
result is to assess, averaged across all mailings, the same amount 
before and after the proposal is adopted.
    Looked at somewhat differently, just as the proposal makes no 
direct changes in prices, it makes no indirect changes in prices 
either. Nothing about the proposal will force pending Periodical 
mailings into a higher price category because existing, associated 
prices are already applied, nor has the Postal Service eliminated any 
rate cells or categories. United States Postal Service v. Postal 
Regulatory Commission, 785 F.3d 740, 751-52 (D.C. Cir. 2015); United 
States Postal Service v. Postal Regulatory Commission, 886 F.3d 1261, 
1273 (D.C. Cir. 2018) (indirect changes in prices). In short, with no 
changes in prices or in available rate categories or cells, the 
proposal can have no price cap implications. Moreover, there is no 
technical way to map the changes described here on to the billing 
determinants--a prerequisite for any price cap analysis--because 
billing determinants data do not separately set out non-Periodicals 
rates paid by pending Periodicals volume.
    The Postal Service apologizes that the proposal was not 
sufficiently clear and trusts that this explanation shows that it is 
not seeking to change prices for pending Periodicals.
    As to wide fluctuation or variability in prices under the new 
methodology, the Postal Service does not agree that the proposed 
methodology results in higher prices. Because the proposed methodology 
is based upon historical volumes and current, average prices, it is 
possible that for any given mailing, a mailer may pay a different price 
than it would have paid under the existing methodology. But those 
prices may be higher than, lower than, or unchanged from the existing 
methodology, though the Postal Service expects the prices to be close 
to those given by the present methodology.
    Over multiple mailings during the pendency of an application for 
Periodicals privileges, however, mailers should collectively be paying 
approximately the same prices under both the previous and proposed 
methodologies. As such, the Postal Service disagrees that it should 
reduce the proposed percentage multipliers in DMM Exhibit 5.2.3.
    For that same reason, the Postal Service disagrees that it should 
provide an additional opportunity for review of pending Periodicals 
pricing. What is

[[Page 70385]]

more, the opportunity for this review already exists. When the Postal 
Service grants a mailer's application for Periodicals mailing 
privileges, the Postal Service refunds to the mailer the difference 
between the Periodicals prices for the mailings made while the 
application was pending and the higher, non-Periodicals prices the 
mailer actually paid for those mailings (DMM 207.5.2.2b, 207.5.3.5). 
Any mailer whose application for Periodicals privileges is denied and 
who therefore does not receive this refund may appeal the denial (DMM 
207.5.3.7). This appeal was available to the approximately 25 percent 
of 289 applications for Periodicals privileges denied by the Postal 
Service in FY 2020 and 2021.
    The Postal Service is revising the process to calculate pending 
postage by assigning the existing applicable class of mail prices based 
upon common characteristics of shape and weight. Each applicable class 
of mail price will be expressed as a percentage from the corresponding 
Periodicals price. This new process will simplify the calculation 
process during the authorization review period, and the refund process 
when a Periodicals publication is approved.
    We believe this revision will provide customers with a more 
efficient and easier process.

List of Subjects in 39 CFR Part 111

    Administrative practice and procedure, Postal Service.

    The Postal Service adopts the following changes to Mailing 
Standards of the United States Postal Service, Domestic Mail Manual 
(DMM), incorporated by reference in the Code of Federal Regulations. 
See 39 CFR 111.1.
    We will publish an appropriate amendment to 39 CFR part 111 to 
reflect these changes.
    Accordingly, 39 CFR part 111 is amended as follows:

PART 111--[AMENDED]

0
1. The authority citation for 39 CFR part 111 continues to read as 
follows:

    Authority:  5 U.S.C. 552(a); 13 U.S.C. 301-307; 18 U.S.C. 1692-
1737; 39 U.S.C. 101, 401-404, 414, 416, 3001-3018, 3201-3220, 3401-
3406, 3621, 3622, 3626, 3629, 3631-3633, 3641, 3681-3685, and 5001.


0
2. Revise the Mailing Standards of the United States Postal Service, 
Domestic Mail Manual (DMM) as follows:

Mailing Standards of the United States Postal Service, Domestic Mail 
Manual (DMM)

* * * * *

200 Commercial Mail Letters, Flats, and Parcels

* * * * *

207 Periodicals

* * * * *

5.0 Applying for Periodicals Authorization

* * * * *

5.2 Mailing While Application Pending

* * * * *
    [Renumber 5.2.3 and 5.2.4 as 5.2.4 and 5.2.5, add new 5.2.3 to read 
as follows:]

5.2.3 Pending Postage

    Postage for a Periodicals publication pending authorization is 
calculated by applying the applicable percent in Exhibit 5.2.3 to PS 
Form 3541, Part P, Line P-1.

Exhibit 5.2.3 Pending Postage

------------------------------------------------------------------------
                    Pending class of mail                       Percent
------------------------------------------------------------------------
USPS Marketing Mail Letters..................................       * 00
USPS Marketing Mail Flats....................................         63
Nonprofit USPS Marketing Mail Letters........................       * 00
Nonprofit USPS Marketing Mail Flats..........................         40
Nonprofit USPS Marketing Mail Parcels........................        136
Bound Printed Matter Flats...................................        146
Bound Printed Matter Parcels.................................       * 00
Parcel Select Parcels........................................        585
First-Class Mail Letters.....................................         95
First-Class Mail Flats.......................................        427
First-Class Package Service-R................................        311
Priority Mail................................................        545
------------------------------------------------------------------------
* Use Periodicals prices.

* * * * *

Ruth B. Stevenson,
Chief Counsel, Ethics and Legal Compliance.
[FR Doc. 2021-26716 Filed 12-7-21; 11:15 am]
BILLING CODE P