[Federal Register Volume 60, Number 86 (Thursday, May 4, 1995)]
[Proposed Rules]
[Pages 22017-22019]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-10944]
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POSTAL RATE COMMISSION
39 CFR Part 3001
[Docket No. RM95-4]
Rules of Practice and Procedure
AGENCY: Postal Rate Commission.
ACTION: Advance notice of proposed rulemaking.
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SUMMARY: The Commission is soliciting comments on a Postal Service
petition, including proposed rules for initiation of a rulemaking on
procedural changes intended to foster expedition, flexibility and
innovation in seven aspects of ratemaking and classification. Proposed
rules accompanied the petition. The changes are based in part on
recommendations in a joint Postal Service/Postal Rate Commission task
force report on improvements in the ratemaking process. The proposed
rules generally provide for a lesser amount of initial supporting
documentation in Postal Service requests for certain rate and
classification changes and a specific, limited period for public
comments and Commission review of those requests.
DATES: Comments must be submitted on or before July 5, 1995.
ADDRESSES: Comments and correspondence should be sent to Margaret
Crenshaw, Secretary of the Commission, 1333 H Street NW, Suite 300,
Washington, DC 20068-0001 (telephone: 202/789-6840).
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 April 13, 1995, the Postal Service filed
with the Commission a petition for initiation of a rulemaking involving
changes in, or additions to, procedural mechanisms for handling certain
rate and classification matters. In support thereof, the petition
asserts a keen interest on the part of postal management and the
Governors in improving approaches to general rate changes. The petition
also acknowledges the influence of certain recommendations of the Joint
Task Force on Postal Ratemaking (June 1, 1992). The petition, the Joint
Task Force's report, and other reports referred to in the Service's
petition are on file in the Commission's Docket Room. A summary of the
proposed changes, a number of additional related topics for
consideration. The text of the rule changes proposed by the Postal
Service may be obtained from the Secretary of the Commission upon
request.
``Limited Scope'' Rate Cases
Citing the Joint Task Force's acknowledgement that certain
circumstances might call for limited adjustments to rates outside the
context of an omnibus rate proceeding, the Postal Service proposes
rules that would allow expedited, limited rate changes between rate
cases. Petition at 7 (internal citation omitted). The Service says the
rules are intended to permit extensive reliance on the most recent
[[Page 22018]] general rate case, and to keep the inquiry narrowly
focused on areas related to the limited nature of the change and the
effects on revenues and costs. The rules would require the Commission
to issue a recommended decision on requests that are not challenged
within 60 days. If the request is challenged, a 90-day period for
issuance of a Commission decision would apply. Ibid.
Rate Bands
The Service indicates that its proposal for rate bands for
competitive services adopts the Joint Task Force's framework of
establishing a range within a general rate proceeding, but differs in
several other respects. Id. at 8. For example, instead of a written
notice procedure, the proposed rules create a mechanism in general rate
cases for establishing a band of rates for competitive services based
on a range of markups over attributable costs, and an aggregate
institutional cost contribution for each product or service classified
as competitive. The band and contribution thereby established would
serve as the criteria for recommending rates in each general rate case
and for changing rates within the bands between cases. Provisions in
the Domestic Mail Classification Schedule (DMCS) would identify certain
categories of mail as eligible to benefit from rate band flexibility.
Between general rate cases, the Service would submit to the Commission
a request for a recommended decision on whether to adjust prices within
the pre-established bands. The Commission would be required to issue a
decision within 30 days if the request is not challenged, and within 60
days if challenged. The Service says it believes that a classification
proceeding under existing rules would be adequate to create the
necessary DMCS provision to implement the rate band mechanism.
Expedited Minor Classification Cases
The Service also proposes rules that would allow expedited
treatment for certain narrowly focused, limited classification changes,
such as those affecting mailing requirements, eligibility standards,
and categories of service with low aggregate costs and revenues.
Initial filing requirements would be less demanding than those
applicable to more complex classification cases, and findings from the
last omnibus rate case would not be relitigated. The Commission would
be required to issue a recommended decision within 60 days if the
Service's request is not challenged, and within 90 days if it is
challenged.
Market Tests
The Postal Service asserts that its rules for market tests attempt
to track elements of a procedure outlined in the Joint Task Force
Report. Id. at 11. The proposed rules would allow consideration of
proposals to obtain data from actual market testing of mail
classification or rate changes. There would be limits on the scope,
scale and duration of the test. Initially, only information available
to support the experimental proposal and a description of the test and
the plan for collecting the necessary additional data would need to be
filed. Information obtained from the test could be considered in a
later portion of the proceeding to determine whether the change should
be made permanent. The scope of inquiry in the initial phase would be
limited to issues of general legality, the design and necessity of the
test, and the nature of any adverse effect on competitors or
discrimination among mailers. The Commission would either recommend or
not recommend the service as proposed, without modification. However,
if the Commission made suggestions for modifications, the Service could
incorporate those suggestions in a new request. The petition notes that
the rules would embody a presumption in favor of innovation.
Provisional Services
The Service also proposes a mechanism for implementing the Joint
Task Force's concept of new services with provisional status. The
proposed rules would allow fast-track consideration of proposals to
introduce a new service. The type of service eligible for this
treatment, in line with the Joint Task Force's recommendation, would be
one which supplements existing rates and classifications without
changing any of them. The service would be approved initially for only
a limited period, and subsequent review would be expected. This
provisional status would justify an expedited, more limited degree of
review. Although the service could affect future overall revenue
requirements, it would not be tied to the rates for any existing class
or category. The scope of inquiry would be limited to whether the
proposal would have a material adverse effect on revenue or costs, or
pose unnecessary or unreasonable harm for competitors. Commission
approval or disapproval would be required within 90 days. As with the
market test rules, the Postal Service could incorporate Commission
modifications in a new request. In the absence of a showing of adverse
effect or unreasonable harm to competitors, the rules contemplate that
the Commission would recommend the provisional service.
Multi-Year Test Periods for New Services
The Service proposes rules authorizing the use of multi-year test
periods for potential new services that are not expected to generate
sufficient volumes and revenues to cover costs in their first year or
two of existence, but which are expected to generate an appropriate
contribution to institutional costs when they mature. Currently, the
Commission recommends rates based on a comparison of costs and revenues
over a one-year period soon after the implementation of a new service.
The Service claims that the proposed rules would encourage innovation
by examining costs and revenues for a new service over a multi-year
period.
Negotiated Service Agreements
The petition notes that the proposed rules contemplate
authorization for the Service to negotiate agreements with mailers. The
Service would agree to provide mail services not currently included
within the DMCS, at rates attractive to the mailer and beneficial to
the Postal Service. The petition indicates that implementation of this
proposal would involve two steps. One is introducing DMCS language
enabling the Service to provide service in the context of a Negotiated
Service Agreement (NSA). The other is establishing procedural rules to
govern the actions undertaken by the Commission to allow such
agreements to be placed into effect. Under the proposed DMCS
provisions, only mailers who meet specified standards and who are
willing to submit mailings within closely defined parameters would be
eligible to enter NSAs. The negotiated rate must contribute a
reasonable amount towards the recovery of institutional costs, with a
minimum markup level identified as presumptively reasonable. Similarly
situated mailers would be able to apply to receive the same service at
the same rate. In addition to providing the text of the NSA, the
Service would be required to demonstrate that the NSA would be
beneficial to the Postal Service. The Commission would either approve
or reject the tentative NSA as submitted. Furthermore, when the
effective markup equals or exceeds the percentage amount previously
specified as reasonable in the DMCS, the Commission could avoid further
debate as to whether that markup is [[Page 22019]] appropriate. The
Commission would be required to issue a recommendation within 60 days.
Request for Comments
The Commission invites interested parties to submit their views on
the subject matters addressed in the Service's petition, and on its
substantive and procedural proposals. In particular, the Commission
invites comments on the following topics.
1. The Service's petition acknowledges the influence of the Joint
Task Force's recommendations on the development of its proposals. Does
that report offer other recommendations not included in the Service's
petition that warrant consideration?
2. The petition states, without further elaboration, that existing
Commission and judicial precedent create impediments to accommodating
many promising ideas for carrying out the Joint Task Force's
recommendations. Id. at 4. The Postal Service is requested to specify
to what judicial precedents the petition refers, and how the proposed
rules accommodate these precedents.
3. Any commenter which considers one or more of these proposals to
violate current law as judicially interpreted is requested to explain
why that proposal might be considered unlawful. Comments addressing
whether the proposals are consistent with the Administrative Procedure
Act, 5 U.S.C. 556, 557, are requested to specify adequate time periods
for various procedural steps.
4. The petition indicates that the proposed rules for market tests
and provisional services include certain presumptions that would apply
in evaluating Postal Service proposals. Id. at 11 and 13. Is inclusion
of these presumptions an appropriate approach to Commission review of
Service requests? Should these presumptions be specified in the rules?
5. The petition indicates that the Service and Governors believe
that improvements in the ratemaking process may require direct
legislative change or an explicit clarification that flexibilities
already exist in the current law. Moreover, the petition states that
certain fundamental changes in the law seem advisable in any event,
particularly in basic structural matters and in substantive areas that
have been the most controversial in the past. Petition at 3-4. The
Postal Service is requested to explain what legislative changes it
believes would be needed to foster further expedition and flexibility
if the Commission were to adopt the proposed rules.
6. The petition acknowledges the Commission's workload, but
nonetheless urges that a rulemaking docket be opened to consider the
proposed changes. Petition at 5-6. Should the Commission consider all
seven of these proposed changes at this time, or should part or all of
the rulemaking be postponed? If some, but not all, of the proposals are
considered at this time, which ones should be reviewed first, and which
should be deferred? Why?
Issued by the Commission on April 24, 1995.
Cyril J. Pittack,
Acting Secretary.
[FR Doc. 95-10944 Filed 5-3-95; 8:45 am]
BILLING CODE 7710-FW-P
