[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
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Reason for Average price Average
Periodical Associated class/ associated class/ for associated periodicals % Difference
subclass subclass class/subclass price \1\
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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.
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\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
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Pending class of mail Percent
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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
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* 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