[Federal Register Volume 61, Number 95 (Wednesday, May 15, 1996)]
[Rules and Regulations]
[Pages 24447-24457]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-12130]
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POSTAL RATE COMMISSION
39 CFR Part 3001
[Docket No. RM95-4; Order No. 1110]
Rules of Practice and Procedure
AGENCY: Postal Rate Commission.
ACTION: Final rule.
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SUMMARY: This final rule sets forth amendments to the Commission's
rules of practice and procedure that provide for expedited
consideration of requests of the United States Postal Service to:
conduct market tests of new postal services in order to develop
information necessary to support a permanent mail classification
change; adopt, on a provisional basis, mail classification and
associated rate changes that supplement, but do not alter, existing
rates and mail classifications; and adopt permanent but narrowly
focused mail classification changes that supplement, but do not alter,
existing rates and mail classifications. In addition to these
amendments, the final rule adopts provisions that allow the Postal
Service to use a multi-year test period for the purpose of
demonstrating the financial viability of potential new services that
are the subject of a concurrent Postal Service request.
EFFECTIVE DATE: These rules are effective May 15, 1996 through May 15,
2001.
FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, Legal Advisor,
Postal Rate Commission, 1333 H Street NW., Suite 300, Washington DC
20268-0001 (telephone: 202/789-6820).
SUPPLEMENTARY INFORMATION: On October 27, 1995, the Commission
published a notice of proposed amendments to its rules of practice and
procedure designed to facilitate expedited consideration of Postal
Service requests to: (1) Conduct market tests of new postal services in
order to develop information necessary to support a permanent mail
classification change; (2) adopt, on a provisional basis, mail
classification and associated rate changes that supplement, but do not
alter, existing rates and mail classifications; and (3) adopt permanent
but narrowly focused mail classification changes that supplement, but
do not alter, existing rates and mail classifications. The proposed
amendments also include provisions that would permit the Postal Service
to request the Commission's use of a multi-year test period for the
purpose of demonstrating the financial viability of potential new
services that are the subject of a concurrent Postal Service request.
60 FR 54981-89 (October 27, 1995). The Commission's proposed rules
pursue specific recommendations of the Joint Task Force on Postal
Ratemaking,1 and are responsive to a majority of the initiatives
requested by the Postal Service in a petition submitted to the
Commission on April 13, 1995. Id. at 54981.
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\1\ See Postal Ratemaking in a Time of Change: A Report by the
Joint Task Force on Postal Ratemaking (June 1, 1992).
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The Commission received 17 sets of comments in response to the
Notice of October 27.2 The commenters present divergent views on
both the substance of the Commission's proposed rules and the propriety
of adopting them in the current proceeding. Additionally, several
commenters suggest that the Commission pursue other initiatives in this
proceeding that were originally recommended by the Joint Task Force
Report and proposed in the Postal Service's petition. In view of these
diverse statements of position, it is appropriate to begin with a
discussion of the considerations bearing on the Commission's
determination to adopt new rules at this time in four areas, on a five-
year trial basis.
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\2\ The American Bankers Association, American Business Press,
Advertising Mail Marketing Association, Direct Marketing
Association, Inc., Dow Jones & Company, Inc., Federal Express
Corporation, McGraw-Hill Companies, Inc., Major Mailers Association,
Mail Order Association of America, Magazine Publishers of America,
Newspaper Association of America, National Newspaper Association,
the Commission's Office of the Consumer Advocate, Parcel Shippers
Association, Time Warner, Inc., United Parcel Service, and the
United States Postal Service submitted comments in response to the
Notice. Some of these comments were not timely filed, primarily
owing to extraordinarily adverse weather conditions on the date they
were due. In order to avoid prejudice to any party who wished to
comment, the Commission has considered all comments received.
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I. Considerations Bearing on Adoption of Proposed Rules
In the Notice of Proposed Rulemaking published on October 27, the
Commission announced its determination to promulgate draft rules which
would implement a majority, but not all, of the seven procedural
initiatives contained in the Postal Service's Petition of April 13,
1995. 60 FR 54981. The Commission found that four of the initiatives
offered the greatest promise for procedural improvement in the near
term. Accordingly, the Commission published draft rules of procedure
governing market tests, limited-duration provisional service changes,
minor classifications changes, and multi-year test periods for new
services. With regard to the remaining three Postal Service
initiatives--rules for limited scope rate cases, rate bands for
competitive services, and Negotiated Service Agreements--the Commission
concluded that their consideration should be deferred for various
reasons, but stated that each of the areas merits further study and
deliberation in subsequent proceedings. Id. at 54981, 54985.
The Deferred Postal Service Proposals
Several commenters ask the Commission to take up one or more of the
three remaining initiatives, either in this proceeding or by initiating
another rulemaking in the near future. Time Warner urges the Commission
to reconsider the determination to defer consideration of rules for
establishing rate bands for competitive services and rules providing
for contract rates; Parcel Shippers Association comments that adoption
of procedures allowing rate bands and negotiated service contracts is
crucial to the competitive posture of the Postal Service. Advertising
Mail Marketing Association, Dow Jones & Company, Magazine Publishers of
America, and Mail Order Association of America comment in favor of
initiating a proceeding in the near future to consider one or more of
the three deferred initiatives. The Postal Service states that it would
have preferred that all its proposals be addressed in this proceeding,
but urges the Commission to issue a further rulemaking on the remaining
initiatives now that Docket No. MC95-1 has been concluded.
The Commission continues to believe that limited scope rate cases,
rate bands, and Negotiated Service Agreements present issues that are
qualitatively
[[Page 24448]]
different from, and more difficult than, those in the four areas for
which rules have been proposed. For this reason they will not be
considered in the current proceeding. In addition to the unresolved
legal and other issues cited in the Notice of October 27, see 60 FR
54985, consideration of rules in these three areas would necessarily
involve an exploration of technical and other substantive issues. For
example, development of a rule providing for rate bands would require
consideration of the technical resources available to support adoption
of a range of rates for competitive mail categories and to gauge the
impact of their adoption, and appropriate filing requirements to
support such requests. With regard to Negotiated Service Agreements,
adoption of rules applicable to such special classifications would
involve consideration of the objective criteria that would be required
of a mailer to qualify for reduced contract rates.3 The Commission
is prepared to take up the issues raised by limited scope rate cases,
rate bands, and Negotiated Service Agreements in a forthcoming
rulemaking proceeding.
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\3\ By way of analogy, the Postal Service's rules applicable to
International Customized Mail (ICM) service impose two objective
qualifications on potential international contract ratepayers:
minimum-volume qualifying criteria, and a single-point-of-origin
criterion. International Mail Manual Sec. 292; see 58 FR 29782.
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The Commission's Proposed Rules
One commenter--the Newspaper Association of America (NAA)--opposes
adoption of most of the Commission's proposed amendments as unsound
from a regulatory perspective. NAA urges the Commission to abandon the
proposed rules for market tests, provisional services, and multi-year
test periods because their adoption would violate the regulatory
structure of the Postal Reorganization Act, unjustifiably advancing
competitive considerations at the ultimate expense of captive monopoly
ratepayers.
A particular problem raised by the proposed rules, according to
NAA, ``is who bears any potential losses from market tests of new
services, provisional services, or from multi-year test periods.'' NAA
Comments at 4-5. Were the Postal Service a private regulated utility,
NAA observes, the Service's losses would be disallowed from its rate
base, or at least segregated from the costs of monopoly services, and
ultimately absorbed by its shareholders. In contrast, when the Service
loses money, that loss is cumulated in the Prior Years' Losses
component of the revenue requirement, and adds to the institutional
costs of the Postal Service. As a result, NAA argues, any financial
losses stemming from ill-advised or underpriced new services approved
under the proposed rules would ultimately be shifted in large measure
to monopoly mailers, thereby creating a cross-subsidy in contravention
of the intent of Congress. Unless and until Congress makes fundamental
changes in the Reorganization Act that would grant the Commission power
to police the rate effects of Postal Service forays into competitive
service--especially enhanced authority over the revenue requirement--
NAA states that the proposed rules should not be adopted.
NAA's comments raise legitimate concerns regarding the possible
impact of non-compensatory services upon other postal ratepayers,
particularly monopoly mailers. The Commission agrees that new services
adopted to meet competitive or other perceived needs must be offered at
compensatory rates, and cannot be allowed to become a revenue burden on
other categories of mail. However, the possibility that the
Commission's proposed rules could become a vehicle for producing such
results does not compel the conclusion that they should not be adopted.
Rather, it is a reason for fashioning and applying the rules in a
manner that will avoid this potential harm. Each of the proposed rules
for introducing new services includes provisions that will serve to
limit the potential negative financial impact of its application.
Market tests will be limited in duration and typically will occur in
only a few areas. Provisional services also will be limited in
duration. Minor classification changes will be recommended only if
their anticipated impact on overall postal costs and revenues is minor.
Furthermore, in applying the rules the Commission will be bound, as
always, by the requirement in Sec. 3622(b)(3) to recommend rates that
recover estimated costs and contribute to the institutional costs of
the Postal Service.
National Newspaper Association (NNA) and other commenters raise a
different general concern regarding the proposed rules: potential
problems of due process associated with the 90- to 120-day procedural
schedules established in the rules. NNA comments that the speed made
necessary by the foreshortened decisional deadlines equates to
advantage for the Postal Service as proponent, to exclusion of
potential parties, to expense borne by parties who do participate, and
to harm of the Commission's decisional process by limiting the time in
which to develop an evidentiary record. NNA Comments at 3-4. The
Commission's Office of the Consumer Advocate also identifies due
process and evidentiary problems that could result from the abbreviated
procedural schedules as its primary concerns regarding the rules. OCA
asks the Commission to state explicitly that any new rules adopted in
this proceeding will not be used to shift the burden of proof from the
Postal Service or limit discovery. OCA Comments at 7-10. Similar
concerns regarding particular proposed rules were voiced by American
Bankers Association, McGraw-Hill, Newspaper Association of America, and
United Parcel Service.
Procedural schedules of 90 or 120 days admittedly may impose some
extraordinary demands on participants, but they are by no means
impossible to meet, as the prompt litigation and deliberations in
Docket No. MC96-1 demonstrate. The Reorganization Act directs the
Commission to consider rate and classification change requests
``promptly,'' and authorizes it to adopt rules ``[i]n order to conduct
its proceedings with utmost expedition consistent with procedural
fairness to the parties.'' 39 U.S.C. Sec. 3624(a), (b). The Commission
has designed the rules adopted in this proceeding with features--such
as registration and expedited notice provisions--to increase the
feasibility of the prescribed decisional schedules. However, the
Commission wishes to assure all parties that it will not allow these
rules to be used to alter the normally applicable standards of proof,
curtail legitimate discovery and hearing practice, or otherwise deprive
interested parties of their procedural rights. It should also be borne
in mind that in any proceeding conducted under the new rules, an
affected participant may lodge a motion for extension of the procedural
schedule, which the Commission will grant if it finds that an extension
is required to provide due process.
Additionally, in light of the various concerns expressed by
commenters about the operation of the proposed rules and their
consequences, the Commission is including a ``sunset'' provision in
each of the four components of the final rule, which will cause them to
be reviewed or terminated within a five-year period.
II. Market Tests of Potential New Services
Applicability of Rule
Several parties filed comments suggesting changes which would
enlarge applicability of the Commission's proposed market test rule.
Both the Postal Service and Time Warner express support for a rule that
[[Page 24449]]
would go beyond the Joint Task Force's recommendations by encompassing
market tests of rate changes as well as market tests of new services.
Federal Express Corporation comments that the rule should extend to
tests of new international mail services, as well as domestic services;
the National Newspaper Association suggests that non-postal services
contemplated by the Postal Service should also be included. Finally,
American Bankers Association suggests that a Postal Service request for
a permanent change in mail classification should not be a pre-requisite
for procedures that would authorize market tests of potential new
services.
The final rule adopted by the Commission preserves the terms of
applicability recommended by the Joint Task Force Report and
incorporated in the proposed market test rule. As the Commission
observed in the Notice of October 27, tests of pure rate changes in the
usual selective form of market testing would necessarily raise
questions of fairness and equity under 39 U.S.C. Sec. 3622(b)(1) and of
undue discrimination or preference among mail users under Sec. 403(c).
Comments provided in response to the October 27 Notice do not provide
persuasive countervailing considerations that would justify inclusion
of rate tests in the rule.4 Similarly, in the absence of clear
statutory bases for including market tests of international postal
services and non-postal services to--which types of service none of the
Commission's current rules applies--the Commission declines to extend
the final rule into these areas. The Commission also declines to
broaden the rule beyond the context contemplated by the Joint Task
Force recommendation, namely, in connection with the filing of a
request for a permanent change in mail classification. In the
Commission's view, a ``free-standing'' market test rule would require a
different set of procedures, and possibly additional forms of
evidentiary support by the Postal Service.
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\4\ The Postal Service is, of course, free to request expedited
consideration under special rules of practice in connection with any
rate change request it may wish to submit.
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As the preamble states, the final rule includes a new
Sec. 3001.161(b), which establishes a five-year sunset provision for
the effectiveness of the market test rule.
Evidentiary Requirements
Several parties commented on the appropriateness of the evidentiary
requirements applicable to market test proposals prescribed in proposed
Sec. 3001.162. The Postal Service commented generally that the proposed
section requires the preparation and provision of too much information,
and more particularly that the required estimate of the number of
customers who will participate in the market test could be difficult to
produce. In contrast, other commenters--including American Bankers
Association, Newspaper Association of America, and National Newspaper
Association--suggested that the Postal Service should be required to
produce additional information to support proposed market tests.
The Commission's final rule maintains the evidentiary requirements
of the proposed rule, with minor alterations to accommodate the
concerns of commenters. The Commission continues to believe that the
general standard declared in proposed Sec. 3001.162, namely, the
provision of ``such information and data . . . as are necessary and
appropriate fully to inform the Commission and the parties of the
nature, scope, significance and impact of the proposed market test,''
establishes the appropriate standard of evidentiary support. In
response to the Postal Service's comments, Sec. 3001.162(g) of the
final rule requires the Service to provide an estimate of the number of
customers who will participate in the test ``to the extent that such an
estimate is practicable.'' Also, in order to implement Federal Express
Corporation's proposal of a mechanism that would provide an alternative
to rendering a ``yes or no'' decision on proposed market tests,
Sec. 3001.162(f) of the final rule adds a requirement that the Postal
Service state the goals and objectives of the market test, and
subsection (g) requires the Service to identify ``those features of the
proposed market test that, [in its opinion,] cannot be modified without
significantly impairing the value of the test.''
Rule for Decision
Proposed Sec. 3001.164 provides for the Commission's issuance of a
``yes or no'' decision either in favor of or against the Postal
Service's proposed market test. Several commenters--Federal Express
Corporation, the Commission's Office of the Consumer Advocate, and
United Parcel Service--question the consistency of this decisional
standard with the exercise of the Commission's best judgment in
performing its statutory responsibilities. As noted above, Federal
Express proposes an alternative to a ``yes or no'' decisional standard:
allowing the Postal Service to designate those elements of its proposed
market test which cannot be modified without negating its value, and
adopting a decisional standard which would preclude the Commission only
from modifying those designated elements. The Commission would thereby
retain the option of making necessary modifications in less essential
elements of a proposed market test.
Upon consideration, the Commission believes that the mechanism
proposed by Federal Express is preferable to restricting the
Commission's decision to a blanket approval or rejection of a proposed
market test. As noted in the Notice of October 27, the Commission's
preference and practice has been to cure any identified inconsistencies
with statutory policies or factors by recommending modifications, if
they are feasible. 60 FR 54982. Yet, the Commission also noted, a
recommendation to modify a market test in a manner that would depart
significantly from postal management's plan ``could jeopardize the
timeliness of the test and seriously impair its usefulness.'' Ibid.
Because the mechanism proposed by Federal Express would better
accommodate these competing considerations, Sec. 3001.164 of the final
rule provides for issuance of a decision in accordance with the
policies of the Reorganization Act, but without ``modification of any
feature of the proposed market test which the Postal Service has
identified in accordance with Sec. 3001.162(f)'' as one that cannot be
modified without significantly impairing the value of the test.5
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\5\ Commenter McGraw-Hill suggests an alternative mechanism
which would provide for preliminary Commission advice to the Postal
Service to modify unacceptable features of the proposed market test
prior to rendition of a decision. While this proposal also has
merit, the Commission anticipates that its implementation could
significantly extend the 90-day schedule proposed by the Commission
and adopted in the final rule.
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Data Collection and Reporting Requirements
Several parties submitted comments addressing the data collection
and reporting requirements specified in proposed Sec. 3001.165, and the
exemption from providing market test data afforded by proposed
Sec. 3001.166(b). The Postal Service comments that the provision
requiring it to submit all test data to the Commission no later than 60
days following the conclusion of the test could prove to be an
obstacle. McGraw-Hill suggests that the rule should be modified to
require the Postal Service to report all test data collected.
Similarly, United Parcel Service states that the rule
[[Page 24450]]
should require periodic public reporting of the test data without
exception.
The Commission's final market test rule retains the data collection
and reporting provisions of the proposed rule. The 60-day requirement
in Sec. 3001.165 is intended to establish a benchmark for the Service's
production of market test data in the proceeding to consider
recommendation of the proposed service as a permanent mail
classification; if the Postal Service encounters difficulty in meeting
this deadline in a particular case, the Commission will entertain a
motion for a reasonable extension. The Commission also continues to
believe that an inflexible rule requiring the Postal Service to report
all market test data on a periodic basis, without exception, would be
insufficiently flexible to accommodate the Service's legitimate needs,
especially with regard to services tested in a competitive field.
Accordingly, the final rule continues to require production of all test
data only if the Postal Service elects to pursue recommendation of the
tested new service as a permanent mail classification.
Suspension, Continuation or Termination of Proceeding
Section 3001.166 of the Commission's proposed rule provides for
Postal Service motions to suspend the proceeding to consider its
request for a permanent mail classification change, and states that the
Commission shall grant the motion ``if, in the Commission's opinion, it
would be reasonable under the circumstances to defer consideration of
the request'' until data to be produced by the market test becomes
available. In its comments on this provision, the Postal Service states
that the suspension of its request should be automatic.
The Commission is concerned that the Postal Service may have
misunderstood the intent of this provision. It is not designed to
compel the Service to litigate its proposal while the market test is
being conducted. Rather, it is designed to preserve the opportunity to
move forward in the consideration of the requested permanent change in
mail classification if meaningful progress can be made, for the sake of
expedition. Automatic suspension of the proceeding would foreclose this
option. If no progress appears likely until information produced in the
market test is available, the Commission will order a suspension.
III. Requests for Provisional Service Changes of Limited Duration
Applicability of Rule
Commenters raised two issues regarding applicability of a rule for
provisional service changes: (1) whether such a rule would serve any
independent purpose, given adoption of a market test rule; and (2) what
the proper scope of a provisional service change rule should be.
Several commenters--including American Business Press, the
Newspaper Association of America, the Commission's Office of the
Consumer Advocate, and United Parcel Service--take the position that a
rule for considering provisional service changes would perform no
separately identifiable function, or that the concept of a
``provisional service change'' is too nebulous to warrant adoption of a
rule. Notwithstanding these comments, the Commission continues to
believe, as the Joint Task Force concluded, that a separate rule may be
useful for considering certain types of service changes for which
market testing would not be appropriate or adequate. While it would be
impossible to foresee the full spectrum of such changes, the Commission
anticipates that certain types of systemwide, seasonal, or special
service changes would be more appropriately considered as provisional
service changes, rather than as the subjects of market tests.
Therefore, the final rule contains separate provisions for the
expeditious consideration of provisional service changes.
However, the Commission declines to expand the rule to include
provisional changes in rates or in the terms of existing mail
classifications, as the Postal Service and Time Warner suggest in their
comments. The Joint Task Force recommended that an expedited procedure
for introducing provisional service changes ``should be available,
under more restrictive terms, for use in appropriate circumstances.''
Report at 52. [Emphasis added.] The ``restrictive terms'' include a
limitation to ``innovations * * * which supplement existing rates and
classifications without altering any of them, so that customers could
either try the new service or stick with the existing service menu, or
both.'' Ibid. American Business Press, Newspaper Association of
America, and McGraw-Hill express concern in their comments that the
provisional service change rule could be used to restructure existing
services under the guise of introducing a ``new'' service, or otherwise
alter pre-existing service options. In order to address these concerns,
and to implement the concept envisioned by the Joint Task Force, the
Commission's final rule retains the proposed rule's limitation of
applicability to proposed provisional services that ``will supplement,
but will not alter, existing mail classifications and rates for a
limited and fixed duration.'' Sec. 3001.171(a).
As the preamble states, the final rule includes a new
Sec. 3001.171(b), which establishes a five-year sunset provision for
the effectiveness of the provisional service change rule.
Evidentiary Requirements
The Postal Service comments that the filing requirements contained
in proposed Sec. 3001.172 would increase the complexity of seeking a
provisional service change, and would be likely to impair the
expedition with which such changes could be adopted. American Bankers
Association takes the position that the rule should require the Service
to provide the maximum cost and revenue information available, in order
to prevent shifting the cost burden of providing the provisional
service to captive users of First-Class Mail.
The final rule maintains the filing requirements of the proposed
rule. The Commission continues to believe that requiring the Service to
provide a description of the salient features of a proposed provisional
service change, together with an estimate of the effects of
implementing it and all other available information responsive to the
requirements in current Sec. 3001.64, imposes a reasonable standard of
evidence. If the Postal Service experiences difficulty in developing
the required information, it may file a motion for waiver, or an
explanation of unavailability as provided in Sec. 3001.172(b). On the
other hand, if a participant believes that critical information has not
been produced, it may seek to compel its production through discovery
and motions practice.
As with the market test rule, in order to implement Federal Express
Corporation's proposal of a mechanism that would provide an alternative
to rendering a ``yes or no'' decision on proposed provisional service
changes, Sec. 3001.172(a)(2) of the final rule adds a requirement that
the Postal Service state its goals and objectives in introducing the
provisional service, and subsection (a)(3) requires the Service to
identify ``those features of the proposed provisional service that, [in
its opinion,] cannot be modified without significantly reducing the
benefits of introducing the proposed service.''
[[Page 24451]]
Rule for Decision
Proposed Sec. 3001.174 provides for the Commission's issuance of a
``yes or no'' decision either in favor of or against the Postal
Service's proposed provisional service change. Several commenters--
Federal Express Corporation, the Commission's Office of the Consumer
Advocate, and United Parcel Service--challenge this mode of decision,
as they did with respect to market tests. Once again, Federal Express
proposes an alternative that would allow the Postal Service to
designate those elements of its proposed provisional service change
which cannot be modified without negating its value, together with a
decisional standard which would preclude the Commission only from
modifying those designated elements.
Because the same decisional considerations are mutually applicable
to market tests and provisional service changes, the Commission has
decided to modify proposed Sec. 3001.174 to provide for issuance of a
decision in accordance with the policies of the Reorganization Act, but
without ``modification of any feature of the proposed service which the
Postal Service has identified in accordance with Sec.
3001.172(a)(2).''6
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\6\ McGraw-Hill once again proposes an alternative providing for
preliminary Commission advice to the Postal Service to modify
unacceptable features of the proposal prior to a decision. The
Commission declines to adopt this mechanism on the same bases cited
with respect to the market test rule.
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Data Collection and Reporting Requirements
Section 3001.175 of the proposed rule directs the Postal Service to
collect and report data pertaining to a recommended provisional service
during the period in which it is in effect. The section would allow the
Service to satisfy these requirements either through its regular data
collection and reporting systems, in combination with the Service's
regularly filed periodic reports under 39 CFR Sec. 3001.102, or by
conducting and reporting the results of special studies on a
corresponding schedule ``to the extent reasonably practicable.''
In its comments, the Postal Service ``strongly objects'' to the
requirements in proposed Sec. 3001.175. Comments at 19. The Service
asserts that it is ``neither necessary nor practical'' to require it to
modify its regular data reporting systems to include a provisional
service, and that it is ``unreasonable'' to expect it to conduct
special studies on a quarterly basis. Ibid. In the Service's view, data
pertaining to a provisional service will not be germane until a record
is developed for the purpose of determining whether to recommend the
service as a permanent mail classification, and ``[d]ata issues will
receive a full airing then.'' Ibid.
The Postal Service's resistance to periodic data collection and
reporting for recommended provisional services is, quite frankly,
difficult to fathom. Under Sec. 3001.171(a) of the final rule, a
provisional service may be recommended for a duration of up to two
years. The Postal Service collects and publicly reports cost and
revenue data for all services it offers on at least an annual basis;
there is no apparent justification for exempting a recommended
provisional service from this practice. Proposed Sec. 3001.175 does not
require the Service to perform quarterly special studies for
provisional services; it only cites Sec. 3001.102 reporting
requirements as a standard, and directs the Service to observe them
``to the extent reasonably practicable.'' The final rule retains this
reasonable standard of data collection and reporting.
IV. Expedited Consideration of Requests for Minor Mail Classification
Changes
Applicability of Rule
Proposed Sec. 3001.69 states that a requested mail classification
change may be considered to be ``minor in character,'' and therefore
eligible for expedited consideration, if it would not involve a change
in any existing rate or fee and: (a) involves only changes in
eligibility standards or requirements applicable to mail classes or
services; or (b) would only affect categories of service with low
aggregate costs and revenues. Several commenters suggested that the
section's standard of applicability should be clarified, or replaced
with an alternative definition of ``minor in character.''
The Postal Service comments that the proposed rule's applicability
criteria require further explanation; Direct Marketing Association
regards the Commission's standards as an improvement over those in the
Service's proposed rule, but observes that application in specific
instances will present difficulties. American Bankers Association,
Newspaper Association of America, National Newspaper Association, and
McGraw-Hill challenge the proposed rule's definition of eligibility
changes as ``minor,'' drawing on experience in recent dockets such as
MC95-1 to illustrate that putative eligibility changes may produce
major impacts on users of the affected mail classification. Other
commenters question the appropriateness of the ``low costs and
revenues'' standard. OCA comments that the standard is ambiguous, and
may be over-inclusive in light of past mail classification
controversies that arguably involved low costs and revenues but
required more extensive scrutiny. United Parcel Service comments that
imposition of the ``low costs and revenues'' standard would tend to
reduce scrutiny of classification changes in almost all the competitive
subclasses. Advertising Mail Marketing Association comments that
neither of the proposed rule's standards will serve to include minor
classification changes and exclude major ones, and proposes an
alternative two-part test that would treat a proposed change as
``minor'' if it:
(a) Does not materially alter the conditions of eligibility for
the entry of mail in a particular subclass, or for a particular rate
element or work sharing discount; and (b) does not materially
increase or decrease the estimated or projected institutional cost
contribution of the affected subclass.
AMMA Comments at 5-6.
Upon consideration of the parties' comments, the Commission agrees
that the definition of ``minor'' classification changes in proposed
Sec. 3001.69 should be amended. Therefore, the Commission has re-
drafted the applicability provisions to include only those proposed
mail classification changes that are likely to be moderate in their
impact both on mailers and on the postal system as a whole. The
substitute retains the introductory clause precluding any change in
existing rates or fees, and models two additional clauses on AMMA's
suggested language, with one alteration: the clause concerning changes
in conditions of eligibility has been modified to preclude only
requests for more restrictive eligibility terms. Thus, proposals to
make existing mail classifications more inclusive could be considered
under the minor classification change provisions.
As the preamble states, the final rule includes a new
Sec. 3001.69(b), which establishes a five-year sunset provision for the
effectiveness of the minor classification change rule.
Expedition of Procedural Schedule--Expedited Notice
Commenter McGraw-Hill suggests that the expedited procedures
specified in proposed Sec. 3001.69b should be supplemented to include
registration and expedited notice provisions similar to those contained
in the proposed market test rule [Sec. 3001.163(b)-(d)] and proposed
rule for provisional service changes [Sec. 3001.173(b)-(d)]. McGraw-
Hill comments that the inclusion of such conforming provisions ``are
[[Page 24452]]
justified by the short timeframes contemplated for the proceedings in
question.'' McGraw-Hill Comments at 5.
The Commission agrees that inclusion of such provisions in the
minor classification change rule is justified, and would be beneficial.
Expedited notice of the Postal Service's filing of a request can be
expected to enable interested parties to intervene, and initiate
discovery if they so desire, earlier in the proceeding. Consequently,
the final rule has been amended to add three new subsections to
proposed Sec. 3001.69b. New subsection (b) provides for registration
with the Secretary of the Commission by persons who are interested in
participating in minor classification change proceedings. These
registrants will automatically become parties to each such proceeding,
but they may withdraw at any time. New subsection (c) requires service
of the Postal Service's complete filing by hand delivery to registrants
with addresses within the Washington metropolitan area, and by Priority
Mail to all other registrants. New subsection (d) requires the Postal
Service to give notice by First-Class Mail of the filing of its request
to all participants in the most recent omnibus rate proceeding. Service
by Priority Mail and First-Class Mail have been substituted for Express
Mail, which is required in the market test and provisional service
change rules, in view of the potentially longer procedural schedule
available in minor classification change proceedings, and to reduce the
resulting burden on the Postal Service. Also, in order to enable the
Service to identify the last day for parties' intervention in the
notice required by new subsection (d), Sec. 3001.69b(e) of the final
rule has been modified to provide that the Commission's notice of
proceeding ``shall afford all interested parties 26 days after filing
of the Postal Service's request within which to intervene[.]''
V. Multi-Year Test Periods for Proposed New Services
Applicability of Rule.
Several commenters question the terms under which proposed
Sec. 3001.181 would allow the Postal Service to use multi-year test
periods for proposed new services. Newspaper Association of America,
United Parcel Service, and McGraw-Hill take the position that the rule
should not extend to permit test periods as long as five years, in
light of the Postal Service's demonstrated limitations in producing
forecasts in prior Commission proceedings. In contrast, the Postal
Service comments that a five-year period may not be sufficient for some
proposed services, and that the appropriate length of a test period
should be determined on a case-by-case basis.
The final rule retains the declaration of a Commission policy in
favor of test periods of up to five fiscal years. The Joint Task Force
Report recommended the adoption of ``rules providing for a multi-year
break-even period of at least four or five years[,]'' Report at 51, and
the Commission accordingly has used five years as a policy benchmark.
The Commission is well aware that Postal Service projections have
usually been limited to two- or three-year horizons in postal rate and
classification proceedings. However, the Commission is prepared to
provide the Service with the opportunity to submit longer-range
forecasts, and to use those projections if they prove to be credible.
Furthermore, the Postal Service is free in any given proceeding to ask
the Commission to expand its policy declaration, if it can furnish even
longer-range projections that it believes to be reliable.
The Postal Service, Advertising Mail Marketing Association, and
Direct Marketing Association oppose another portion of the Commission's
policy declaration in proposed Sec. 3001.181, which refers to
``convincing substantial evidence in support of the test period
proposed.'' These commenters challenge the quoted language on the
ground that it would subject the Postal Service's evidence in support
of a multi-year test period to a higher standard of proof than the
``substantial evidence'' standard of evidentiary support commonly
required of administrative decisions. The Postal Service suggests that
this language ``be eliminated as unjustified and unnecessary.'' Postal
Service Comments at 25.
The proposed rule's use of the phrase ``convincing substantial
evidence'' in the policy declaration was not intended to establish an
extraordinary evidentiary standard for application to the Postal
Service's test year projections; it was only intended to declare a
policy in favor of departure from the normally-applicable test year
rule when the Service's evidence persuades the Commission that such a
departure is justified. In order to remove any ambiguity on this point,
the final rule deletes the word ``convincing.''
As the preamble states, the final rule includes a new
Sec. 3001.181(b), which establishes a five-year sunset provision for
the effectiveness of the multi-year test period rule.
Filing of Evidence in Support of Formal Request.
In its comments, the Postal Service opposes the filing requirements
in proposed Sec. 3001.182 (b)(2) and (b)(3) of the proposed rule, which
direct the Service to produce Return on Investment projections and all
other financial analyses prepared in connection with determining the
cost and revenue impact of the proposed new service, and any other
analyses by the Service that bear on the overall effects of introducing
the new service during the requested test period. The Service claims
these requirements are unnecessary, would introduce needless complexity
and confusion into the proceeding, and call for material that is
``likely to include pre-decisional material and/or material of
commercial sensitivity that would not ordinarily be disclosed in
Commission proceedings.'' Postal Service Comments at 26. Time Warner
also comments on the ``excessive data and documentation requirements''
of the proposed rule, Comments at 4, and urges the Commission to
``accommodate its information and documentation requirements to the
inevitability that new services will be supported by scarcer, more
attenuated data than established ones. . . .'' Time Warner Comments at
5.
The Commission is well aware of the problems of information
deficiency that can be associated with new services, and does not
intend to apply unrealistic standards of proof to such services.
However, the Commission is also aware from experience in prior
proceedings that financial analyses and other information of the types
responsive to proposed Sec. 3001.182(b) (2) and (3) are likely to
underlie the Postal Service's cost and revenue estimates for a proposed
new service, or will at least bear significantly on the credibility and
accuracy of those estimates. The relevance and probative value of these
analyses are likely to be intensified when estimates are projected as
much as five years into the future. Consequently, the final rule
retains these filing requirements, to put the Postal Service on notice
that all relevant supporting analyses will be scrutinized in the
proceeding. If the Postal Service believes that special considerations
of privilege and resulting harm should exempt certain responsive
information in any given case, it may file a motion for waiver
explaining why the requirement should not apply.
[[Page 24453]]
VI. Regulatory Evaluation
It has been determined pursuant to 5 U.S.C. 605(b) that these rules
will apply exclusively to the United States Postal Service in
proceedings conducted by the Postal Rate Commission, and to parties who
choose to participate in those proceedings. Therefore, it is certified
that these rules will not have a significant impact on a substantial
number of small entities under the terms of the Regulatory Flexibility
Act, 5 U.S.C. 501 et seq. Because these rules will only apply to the
Postal Service and other participants in Commission proceedings, it has
also been determined that these rules do not have sufficient federalism
implications to warrant the preparation of a Federalism Assessment
pursuant to Executive Order 12612. Inasmuch as the rules impose
information-gathering and reporting requirements exclusively upon the
United States Postal Service for the purpose of conducting mail
classification change proceedings, they do not contain any information
collection requirements as defined in the Paperwork Reduction Act [44
U.S.C. 3502(4)], and consequently the review provisions of 44 U.S.C.
3507 and the implementing regulations in 5 CFR part 1320 do not apply.
List of Subjects in 39 CFR Part 3001
Administrative practices and procedure, Postal Service.
For the reasons set out in the preamble, 39 CFR part 3001 is
amended as follows:
PART 3001--RULES OF PRACTICE AND PROCEDURE
1. The authority citation for 39 CFR part 3001 continues to read as
follows:
Authority: 39 U.S.C. 404(b), 3603, 3622-24, 3661, 3662.
2. Sections 3001.69 through 3001.69c are added to Subpart C to read
as follows:
Sec. 3001.69 Expedited minor classification cases--applicability.
(a) This section and Secs. 3001.69a through 3001.69c apply in cases
where the Postal Service requests a recommended decision pursuant to
section 3623 and seeks expedited review on the ground that the
requested change in mail classification is minor in character. The
requirements and procedures specified in these sections apply
exclusively to the Commission's consideration of requested mail
classification changes which the Postal Service denominates as, and the
Commission finds to be, minor in character. A requested classification
change may be considered to be minor in character if it:
(1) Would not involve a change in any existing rate or fee;
(2) Would not impose any restriction in addition to pre-existing
conditions of eligibility for the entry of mail in an existing subclass
or category of service, or for an existing rate element or work sharing
discount; and
(3) Would not significantly increase or decrease the estimated
institutional cost contribution of the affected subclass or category of
service.
(b) This section and Secs. 3001.69a through 69c are effective May
15, 1996 through May 15, 2001.
Sec. 3001.69a Expedited minor classification cases--filing of formal
request and prepared direct evidence.
(a) Whenever the Postal Service determines to request that the
Commission submit a decision recommending a mail classification change,
and to seek expedited review on the ground that the requested change is
minor in character, it shall file a request for a change in mail
classification pursuant to section 3623 that comports with the
requirements of this section and of subpart C of this part. Each such
formal request shall include the following particular information:
(1) A description of the proposed classification change or
changes, including proposed changes in the text of the Domestic Mail
Classification Schedule and any pertinent rate schedules;
(2) A thorough explanation of the grounds on which the Postal
Service submits that the requested change in mail classification is
minor in character; and
(3) An estimate, prepared in the greatest level of detail
practicable, of the overall impact of the requested change in mail
classification on postal costs and revenues, mail users, and
competitors of the Postal Service.
(b) If the Postal Service believes that data required to be filed
under Sec. 3001.64 are unavailable, it shall explain their
unavailability, as required by Sec. 3001.64(a)(2) (i), (ii), and (iv).
If the Postal Service believes that any of the data or other
information required to be filed under Sec. 3001.64 should not be
required in light of the minor character of the requested change in
mail classification, it shall move for a waiver of that requirement,
stating with particularity the reasons why the character of the request
and its circumstances justify a waiver of the requirement. A
satisfactory explanation of the unavailability of information required
under Sec. 3001.64, or of why it should not be required to support a
particular request, will be grounds for excluding from the proceeding a
contention that the absence of the information should form a basis for
rejection of the request, unless the party desiring to make such
contention:
(1) Demonstrates that, having regard to all the facts and
circumstances of the case, it was clearly unreasonable for the Postal
Service to propose the change in question without having first secured
the information and submitted it in accordance with Sec. 3001.64; or
(2) Demonstrates other compelling and exceptional circumstances
requiring that the absence of the information in question be treated as
bearing on the merits of the proposal.
Sec. 3001.69b Expedited minor classification cases--expedition of
procedural schedule.
(a) The purpose of this section is to provide a schedule for
expediting proceedings in which the Postal Service requests that the
Commission recommend a change in mail classification and expedite
consideration of that request on the ground that the change is minor in
character.
(b) Persons who are interested in participating in proceedings to
consider Postal Service requests for minor changes in mail
classification may register at any time with the Secretary of the
Postal Rate Commission, who shall maintain a publicly available list of
the names and business addresses of all such registrants. Persons whose
names appear on this list will automatically become parties to each
proceeding in which the Postal Service requests a minor mail
classification change pursuant to Secs. 3001.69 through 3001.69c.
Parties may withdraw from the register or a particular case by filing a
notice with the Secretary of the Commission.
(c) When the Postal Service files a request under the provisions of
Secs. 3001.69 through 3001.69c, it shall on that same day effect
service by hand delivery of the complete filing to each person
registered pursuant to paragraph (b) of this section who maintains an
address for service within the Washington metropolitan area and serve
the complete filing by Priority Mail service on all other registrants.
Each registrant is responsible for insuring that his or her address
remains current.
(d) When the Postal Service files a request under the provisions of
Secs. 3001.69 through 3001.69c, it shall on that same day send by
First-Class Mail to all participants in the most recent omnibus rate
case a notice which briefly
[[Page 24454]]
describes its proposal. This notice shall indicate on its first page
that it is a notice of a request for a minor change in mail
classification to be considered under Secs. 3001.69 through 3001.69c,
and identify the last day for filing a notice of intervention with the
Commission.
(e) Within 5 days after receipt of a Postal Service request
invoking the operation of Secs. 3001.69 through 3001.69c, the
Commission shall issue a notice of proceeding and provide for
intervention by interested parties pursuant to Sec. 3001.20. The notice
of proceeding shall state that the Postal Service has denominated the
mail classification change it requests a minor change, and has
requested expedited consideration pursuant to Secs. 3001.69 through
3001.69c. The notice shall further state the grounds on which the
Postal Service submits that the requested change in mail classification
is minor in character, and shall afford all interested parties 26 days
after filing of the Postal Service's request within which to intervene,
submit responses to the Postal Service's request for consideration of
its proposed mail classification change under the terms of
Secs. 3001.69 through 3001.69c, and request a hearing.
(f) Within 28 days after publication of the notice of proceeding
pursuant to paragraph (e) of this section, the Commission shall decide
whether to consider the request of the Postal Service as a minor
classification change request under Secs. 3001.69 through 3001.69c, and
shall issue an order in the proceeding incorporating that ruling. The
Commission shall order a request to be considered under Secs. 3001.69
through 3001.69c if it finds that:
(1) The requested classification change is minor in character, and
(2) The effects of the requested change are likely to be
appropriately limited in scope and overall impact.
(g) If the Commission determines that the request of the Postal
Service is not appropriate for consideration as a minor classification
change request, no further procedures under Secs. 3001.69 through
3001.69c shall be ordered, and the request will be considered in
accordance with other appropriate provisions of Subpart C of this part.
(h) If the Commission determines that the Postal Service request is
appropriate for consideration under Secs. 3001.69 through 3001.69c,
those respondents who request a hearing shall be directed to state with
specificity within 14 days after publication of the notice the issues
of material fact that require a hearing for resolution. Respondents
shall also identify the fact or facts set forth in the Postal Service's
filing that the party disputes, and when possible, what the party
believes to be the true fact or facts and the evidence it intends to
provide in support of its position.
(i) The Commission will hold hearings on a Postal Service request
which is considered under Secs. 3001.69 through 3001.69c when it
determines that there are genuine issues of material fact to be
resolved, and that a hearing is needed to resolve those issues.
Hearings on the Postal Service request will commence within 21 days
after issuance of the Commission order pursuant to paragraph (f) of
this section. Testimony responsive to the Postal Service request will
be due 14 days after the conclusion of hearings on the Postal Service
request.
Sec. 3001.69c Expedited minor classification cases--time limits.
The Commission will treat cases to which Secs. 3001.69 through
3001.69c apply as subject to the maximum expedition consistent with
procedural fairness. The schedule for adoption of a recommended
decision will therefore be established, in each such case, to allow for
issuance of such decision not more than 90 days after the filing of the
request of the Postal Service if no hearing is held, and not more than
120 days after the filing of the request if a hearing is scheduled.
3. Sections 3001.161 through 3001.166 are added as Subpart I to
read as follows:
Subpart I--Rules Applicable to Requests for Market Tests of Proposed
Mail Classification Changes
Sec.
3001.161 Applicability.
3001.162 Filing of market test proposal and supporting direct
evidence.
3001.163 Procedures--expedition of public notice and procedural
schedule.
3001.164 Rule for decision.
3001.165 Data collection and reporting requirements.
3001.166 Suspension, continuation or termination of proceeding.
Subpart I--Rules Applicable to Requests for Market Tests of
Proposed Classification Changes
Sec. 3001.161 Applicability.
(a) This section and Secs. 3001.162 through 3001.166 apply in cases
in which the Postal Service requests a recommended decision pursuant to
section 3623 preceded by testing in the market in order to develop
information necessary to support a permanent change. The requirements
and procedures specified in these sections apply exclusively to the
Commission's determination to recommend in favor of or against a market
test proposed by the Postal Service, and do not supersede any other
rules applicable to the Postal Service's request for recommendation of
a permanent change in mail classification. In administering this
subpart, it shall be the policy of the Commission to recommend market
tests that are reasonably calculated to produce information needed to
support a permanent change in mail classification, and that are
reasonably limited in scope, scale, duration, and potential adverse
impact. Except in extraordinary circumstances and for good cause shown,
the Commission shall not recommend market tests of more than one year
in duration; however, this limitation is not intended to bar the Postal
Service from conducting more than one market test in support of a
potential permanent change in mail classification in appropriate
circumstances.
(b) This section and Secs. 3001.162 through 3001.166 are effective
May 15, 1996 through May 15, 2001.
Sec. 3001.162 Filing of market test proposal and supporting direct
evidence.
Whenever the Postal Service determines to request that the
Commission submit a recommended decision on a change in mail
classification preceded by testing in the market, the Postal Service
shall file with the Commission, in addition to its request for a
permanent change in mail classification pursuant to section 3623, a
request for a recommended decision in favor of its proposed market test
of the requested change in mail classification. Each formal request
filed under this subpart shall include such information and data and
such statements of reasons and bases as are necessary and appropriate
fully to inform the Commission and the parties of the nature, scope,
significance and impact of the proposed market test, and to show that
it is in the public interest and in accordance with the policies of the
Act and the applicable criteria of the Act. Each formal request shall
also include the following particular information:
(a) A description of the services to be provided in the market
test, and the relationship between the services to be provided and the
permanent change or changes in the mail classification schedule
requested by the Postal Service;
(b) A statement of each rate or fee to be charged for each service
to be provided during the market test, together with all information
relied upon to establish consistency of those rates and fees with the
factors specified in section 3622(b);
[[Page 24455]]
(c) A description of the number and extent of the service areas in
which the market test will be conducted, including the number and type
of postal facilities which will be used;
(d) A statement of the planned duration of the market test;
(e) Proposed Domestic Mail Classification Schedule provisions which
incorporate the information required in paragraphs (a) through (d) of
this section;
(f) A statement of the goals and objectives of the proposed market
test, supported by quantitative projections of anticipated results to
the extent practicable.
(g) A statement of those features of the proposed market test that,
in the opinion of the Postal Service, cannot be modified without
significantly impairing the value of the test;
(h) An estimate of the number of customers who will participate in
the market test to the extent that such an estimate is practicable,
together with a description of the means by which the Postal Service
plans to provide equal access to all potential users in the test market
service areas; and
(i) A plan for testing the proposed change or changes in the
market, including a plan for gathering the data needed to support a
permanent change in mail classification and for reporting the test data
to the Commission. If periodic reporting of the test data would be
harmful to the purposes of the test, such as by revealing information
that might encourage competitors or mailers to take actions that would
affect the test results, the plan may provide for presentation of the
test data as part of the subsequent filing of data supporting a
permanent mail classification change.
Sec. 3001.163 Procedures--expedition of public notice and procedural
schedule.
(a) The purpose of this section is to provide a schedule for
expediting proceedings in which the Postal Service proposes to conduct
a market test of a requested change in mail classification it has
submitted to the Commission pursuant to section 3623.
(b) Persons who are interested in participating in proceedings to
consider Postal Service requests to conduct a market test may register
at any time with the Secretary of the Postal Rate Commission, who shall
maintain a publicly available list of the names and business addresses
of all such registrants. Persons whose names appear on this list will
automatically become parties to each proceeding in which the Postal
Service requests to conduct a market test pursuant to this subpart.
Other interested persons may intervene pursuant to Sec. 3001.20 within
28 days after the filing of a formal request made under the provisions
of this subpart. Parties may withdraw from the register or a particular
case by filing a notice with the Secretary of the Commission.
(c) When the Postal Service files a request under the provisions of
this subpart, it shall on that same day effect service by hand delivery
of the complete filing to each person registered pursuant to paragraph
(b) who maintains an address for service within the Washington
metropolitan area and serve the complete filing by Express Mail service
on all other registrants. Each registrant is responsible for insuring
that his or her address remains current.
(d) When the Postal Service files a request under the provisions of
this subpart, it shall on that same day send by Express Mail to all
participants in the most recent omnibus rate case a notice which
briefly describes its proposal. This notice shall indicate on its first
page that it is a notice of a Market Test Request to be considered
under Secs. 3001.161 through 3001.166, and identify the last day for
filing a notice of intervention with the Commission.
(e) Within 5 days after receipt of a Postal Service request under
the provisions of this subpart, the Commission shall issue a notice of
proceeding and provide for intervention by interested parties pursuant
to Sec. 3001.20. In the event that a party wishes to dispute a genuine
issue of material fact to be resolved in the consideration of the
Postal Service's request, that party shall file with the Commission a
request for a hearing within the time allowed in the notice of
proceeding. The request for a hearing shall state with specificity the
fact or facts set forth in the Postal Service's filing that the party
disputes, and when possible, what the party believes to be the true
fact or facts and the evidence it intends to provide in support of its
position. The Commission will hold hearings on a Postal Service request
made pursuant to this subpart when it determines that there is a
genuine issue of material fact to be resolved, and that a hearing is
needed to resolve that issue.
Sec. 3001.164 Rule for decision.
The Commission will issue a decision on the Postal Service's
proposed market test in accordance with the policies of the Postal
Reorganization Act, but will not recommend modification of any feature
of the proposed market test which the Postal Service has identified in
accordance with Sec. 3001.162(g). The purpose of this subpart is to
allow for consideration of proposed market tests within 90 days,
consistent with the procedural due process rights of interested
persons.
Sec. 3001.165 Data collection and reporting requirements.
In any case in which the Commission has issued a recommended
decision in favor of a market test requested by the Postal Service, and
the Board of Governors has put the market test recommended by the
Commission into effect, the Postal Service shall gather test data and
report them to the Commission in accordance with the plan submitted
pursuant to Sec. 3001.162(h). If the Postal Service's plan for
reporting test data does not provide for periodic reporting during the
conduct of the test, the Postal Service shall submit all test data to
the Commission no later than 60 days following the conclusion of the
test.
Sec. 3001.166 Suspension, continuation or termination of proceeding.
(a) In any case in which the Commission has issued a recommended
decision in favor of a market test requested by the Postal Service, and
the Board of Governors has put the market test recommended by the
Commission into effect, the Postal Service may move for suspension of
the proceeding in which its request for a permanent change in mail
classification is to be considered. The Commission shall grant the
Postal Service's motion for suspension if, in the Commission's opinion,
it would be reasonable under the circumstances to defer consideration
of the request until the information to be produced in connection with
the market test becomes available.
(b) At any time during the pendency of a market test recommended by
the Commission pursuant to this subpart, or following the completion of
such a market test, the Postal Service may move to revise or withdraw
its request for a permanent change in mail classification. If the
Postal Service moves to revise its request, it shall file with the
Commission all data necessary to support its amended request. If the
Postal Service moves to withdraw its request, it shall explain the
circumstances leading to its motion, but need not produce the test data
that would otherwise be submitted pursuant to Sec. 3001.165.
4. Sections 3001.171 through 3001.176 are added as Subpart J, to
read as follows:
[[Page 24456]]
Subpart J--Rules Applicable to Requests for Provisional Service Changes
of Limited Duration
Sec.
3001.171 Applicability.
3001.172 Filing of formal request and prepared direct evidence.
3001.173 Procedures-expedition of public notice and procedural
schedule.
3001.174 Rule for decision.
3001.175 Data collection and reporting requirements.
3001.176 Continuation or termination of provisional service.
Subpart J--Rules Applicable to Requests for Provisional Service
Changes of Limited Duration
Sec. 3001.171 Applicability.
(a) This section and Secs. 3001.172 through 3001.176 apply in cases
in which the Postal Service requests that the Commission recommend the
establishment of a provisional service which will supplement, but will
not alter, existing mail classifications and rates for a limited and
fixed duration. The requirements and procedures specified in these
sections apply exclusively to the Commission's determination to
recommend in favor of or against a provisional service proposed by the
Postal Service, and do not supersede the rules applicable to requests
for permanent changes in rates, fees, mail classifications, and in the
nature of postal services. In administering this subpart, it shall be
the policy of the Commission to recommend the introduction of
provisional services that enhance the range of postal services
available to the public, without producing a material adverse effect
overall on postal revenues or costs, and without causing unnecessary or
unreasonable harm to competitors of the Postal Service. Except in
extraordinary circumstances and for good cause shown, the Commission
shall not recommend provisional services of more than two years in
duration; however, the Commission may grant a request to extend a
provisional service for an additional year if a Postal Service request
to establish the provisional service as a permanent mail classification
is pending before the Commission.
(b) This section and Secs. 3001.172 through 3001.176 are effective
May 15, 1996 through May 15, 2001.
Sec. 3001.172 Filing of formal request and prepared direct evidence.
(a) Whenever the Postal Service determines to request that the
Commission submit a decision recommending the establishment of a
provisional service of limited and fixed duration, it shall file a
request for a change in mail classification pursuant to section 3623
that comports with the requirements of this subpart and of subpart C of
this part. Each formal request shall include the following particular
information:
(1) A description of the proposed classification, including
proposed Domestic Mail Classification Schedule language and rate
schedules;
(2) A statement of the goals and objectives of introducing the
proposed provisional service, supported by quantitative projections of
anticipated results to the extent practicable.
(3) A statement of those features of the proposed provisional
service that, in the opinion of the Postal Service, cannot be modified
without significantly reducing the benefits of introducing the proposed
service;
(4) An explanation and complete documentation of the development of
the rates proposed for the provisional service;
(5) A termination date on which the proposed provisional service
will be discontinued;
(6) An estimate of the effect of implementing the proposed
provisional service on overall Postal Service costs and revenues during
the period in which it is in effect; and
(7) A plan for meeting the data collection and reporting
requirements specified in Sec. 3001.175.
(b) If the Postal Service believes that data required to be filed
under Sec. 3001.64 are unavailable, it shall explain their
unavailability, as required by Sec. 3001.64 (a)(2)(i), (ii), and (iv).
In particular, if the provisional character of the request bears on the
unavailability of the data in question, the Postal Service shall
explain in detail the nexus between these circumstances. A satisfactory
explanation of the unavailability of data will be grounds for excluding
from the proceeding a contention that the absence of the data should
form a basis for rejection of the request, unless the party desiring to
make such contention:
(1) Demonstrates that, having regard to all the facts and
circumstances of the case, it was clearly unreasonable for the Postal
Service to propose the change in question without having first secured
the data which are unavailable, or
(2) Demonstrates other compelling circumstances requiring that the
absence of the data in question be treated as bearing on the merits of
the proposal.
Sec. 3001.173 Procedures--expedition of public notice and procedural
schedule.
(a) The purpose of this section is to provide a schedule for
expediting proceedings in which the Postal Service requests that the
Commission recommend the establishment of a provisional service which
will supplement, but will not alter, existing mail classifications and
rates for a limited and fixed duration.
(b) Persons who are interested in participating in proceedings to
consider Postal Service requests to establish a provisional service may
register at any time with the Secretary of the Postal Rate Commission,
who shall maintain a publicly available list of the names and business
addresses of all such registrants. Persons whose names appear on this
list will automatically become parties to each proceeding in which the
Postal Service requests establishment of a provisional service pursuant
to this subpart. Other interested persons may intervene pursuant to
Sec. 3001.20 within 28 days after the filing of a formal request made
under the provisions of this subpart. Parties may withdraw from the
register or a particular case by filing a notice with the Secretary of
the Commission.
(c) When the Postal Service files a request under the provisions of
this subpart, it shall on that same day effect service by hand delivery
of the complete filing to each person registered pursuant to paragraph
(b) of this section who maintains an address for service within the
Washington metropolitan area and serve the complete filing by Express
Mail service on all other registrants. Each registrant is responsible
for insuring that his or her address remains current.
(d) When the Postal Service files a request under the provisions of
this subpart, it shall on that same day send by Express Mail service to
all participants in the most recent omnibus rate case a notice which
briefly describes its proposal. Such notice shall indicate on its first
page that it is a notice of a Request for Establishment of a
Provisional Service to be considered under Secs. 3001.171 through
3001.176, and identify the last day for filing a notice of intervention
with the Commission.
(e) Within 5 days after receipt of a Postal Service request under
the provisions of this subpart, the Commission shall issue a notice of
proceeding and provide for intervention by interested parties pursuant
to Sec. 3001.20. In the event that a party wishes to dispute a genuine
issue of material fact to be resolved in the consideration of the
Postal Service's
[[Page 24457]]
request, that party shall file with the Commission a request for a
hearing within the time allowed in the notice of proceeding. The
request for a hearing shall state with specificity the fact or facts
set forth in the Postal Service's filing that the party disputes, and
when possible, what the party believes to be the true fact or facts and
the evidence it intends to provide in support of its position. The
Commission will hold hearings on a Postal Service request made pursuant
to this subpart when it determines that there is a genuine issue of
material fact to be resolved, and that a hearing is needed to resolve
that issue.
Sec. 3001.174 Rule for decision.
The Commission will issue a decision on the Postal Service's
proposed provisional service in accordance with the policies of the
Postal Reorganization Act, but will not recommend modification of any
feature of the proposed service which the Postal Service has identified
in accordance with Sec. 3001.172(a)(3). The purpose of this subpart is
to allow for consideration of proposed provisional services within 90
days, consistent with the procedural due process rights of interested
persons.
Sec. 3001.175 Data collection and reporting requirements.
In any case in which the Commission has issued a recommended
decision in favor of a provisional service of limited duration
requested by the Postal Service, and the Board of Governors has put the
provisional service recommended by the Commission into effect, the
Postal Service shall collect and report data pertaining to the
provisional service during the period in which it is in effect in
accordance with the periodic reporting requirements specified in
Sec. 3001.102. If the Postal Service's regular data reporting systems
are not revised to include the provisional service during the period of
its effectiveness, the Postal Service shall perform, and provide to the
Commission on a schedule corresponding to Sec. 3001.102 reports,
special studies to provide equivalent information to the extent
reasonably practicable.
Sec. 3001.176 Continuation or termination of provisional service.
At any time during the period in which a provisional service
recommended by the Commission and implemented by the Board of Governors
is in effect, the Postal Service may submit a formal request that the
provisional service be terminated, or that it be established, either as
originally recommended by the Commission or in modified form, as a
permanent mail classification. Following the conclusion of the period
in which the provisional service was effective, the Postal Service may
submit a request to establish the service as a mail classification
under any applicable subpart of the Commission's rules.
5. Sections 3001.181 and 3001.182 are added as Subpart K, to read
as follows:
Subpart K--Rules for Use of Multi-Year Test Periods
Sec.
3001.181 Use of multi-year test period for proposed new services.
3001.182 Filing of formal request and prepared direct evidence.
Subpart K--Rules for Use of Multi-Year Test Periods
Sec. 3001.181 Use of multi-year test period for proposed new services.
(a) The rules in Secs. 3001.181 and 3001.182 apply to Postal
Service requests pursuant to section 3623 for the establishment of a
new postal service, with attendant rates, which in the estimation of
the Postal Service cannot generate sufficient volumes and revenues to
recover all costs associated with the new service in the first full
fiscal year of its operation. In administering these rules, it shall be
the Commission's policy to adopt test periods of up to 5 fiscal years
for the purpose of determining breakeven for newly introduced postal
services where the Postal Service has presented substantial evidence in
support of the test period proposed.
(b) This section and Sec. 3001.182 are effective May 15, 1996
through May 15, 2001.
Sec. 3001.182 Filing of formal request and prepared direct evidence.
In filing a request for establishment of a new postal service
pursuant to section 3623, the Postal Service may request that its
proposal be considered for a test period of longer duration than the
test period prescribed in Sec. 3001.54(f)(2). Each such request shall
be supported by the following information:
(a) The testimony of a witness on behalf of the Postal Service, who
shall provide:
(1) A complete definition of the multi-year test period requested
for the proposed new service;
(2) A detailed explanation of the Postal Service's preference of a
multi-year test period, including the bases of the Service's
determination that the test period prescribed in Sec. 3001.54(f)(2)
would be inappropriate; and
(3) A complete description of the Postal Service's plan for
achieving an appropriate contribution to institutional costs from the
new service by the end of the requested test period.
(b) Complete documentary support for, and detail underlying, the
test period requested by the Postal Service, including:
(1) Estimated costs, revenues, and volumes of the proposed new
service for the entire requested test period;
(2) Return on Investment projections and all other financial
analyses prepared in connection with determining the cost and revenue
impact of the proposed new service; and
(3) Any other analyses prepared by the Postal Service that bear on
the overall effects of introducing the proposed new service during the
requested test period.
Issued by the Commission on May 7, 1996.
Margaret P. Crenshaw,
Secretary.
[FR Doc. 96-12130 Filed 5-14-96; 8:45 am]
BILLING CODE 7710-FW-P
