ANNUAL REPORT

2023

TO THE PRESIDENT AND CONGRESS

FISCAL YEAR

Postal Regulatory Commission

Submitted 02/21/2024 07:42 AM

Filing ID: 128092

Accepted 2/21/2024
i | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

On behalf of the Postal Regulatory Commission, I am pleased to submit the agency’s Fiscal Year 2023 

Annual Report to the President and Congress. This report details the Commission's primary activities 

and accomplishments over the last fiscal year. It includes information required under the Postal 

Accountability and Enhancement Act of 2006 (PAEA) on the operations of the Commission, including 

the extent to which regulations are achieving the objectives outlined in the PAEA, and an annual 

estimate of the cost of the Universal Service Obligation and the value of the postal monopoly.

The last fiscal year was marked by significant achievements and changes at the Commission and 

throughout the industry. The Commission embraced its role under the 2022 Postal Service Reform Act 

and is committed to increased transparency, collaboration, and oversight over Postal Service activities 

that may have an impact on service nationwide. 

In FY 2023, the Commission received steady and increased interest from Members of Congress, 

stakeholders, and the public in the Postal Service’s Delivering for America plan. The Commission 

opened a Public Inquiry docket to engage with the public and stakeholders on their areas of concern 

as the Postal Service implements its plan. We continue to keep a keen eye on the changes being 

implemented by the Postal Service that may affect service on a nationwide scale. 

The Commission focused on implementing its 2023-2028 Strategic Plan, leveraging its limited 

resources effectively. Strategic initiatives included a stakeholder analysis that has played a pivotal 

role in informing the Commission on issues that are important to its role as regulator and reflect the 

concerns of postal customers. In line with policies requiring the modernization of government, as well 

as best practices in the public and private sectors, the Commission is using technology and data to 

meet its mission of providing transparency and accountability of the Postal Service with a budget that 

amounts to .03 percent of the Postal Service’s budget. 

The activities described in this report reflect the hard work and dedication of the Commission’s 

professional staff and demonstrate our continued commitment to work with the President, Members 

of Congress, the Postal Service, mailers, and the public as critical decisions are made to sustain the 

nation’s valued treasure– the U.S. Postal Service.

CHAIRMAN

FROM THE

LETTER

FEBRUARY 2024

Respectfully submitted,

Michael M. Kubayanda

Chairman
Chapter 1 | ii

Guiding Principles

The Commission is committed to and operates by the principles of:

Mission Statement

Ensure transparency and accountability of the United States Postal Service and foster a vital and 

efficient universal mail system.

Vision Statement

To be an independent regulator respected for effectively engaging postal stakeholders to promote a robust universal mail system through objective, accurate, and timely regulatory analyses and decisions.

We will look to achieve our vision by:

Mission Statement 

POSTAL REGULATORY COMMISSION

• Taking a multi-disciplinary and integrated 

approach to work

• Monitoring the environment and 

anticipating changes to enhance agility

• Utilizing rigorous evaluative methods

• Optimizing stakeholder engagement 

through an appropriate and clearlydefined public involvement process

• Developing staff expertise to ensure that 

the Commission is a center for excellence 

in postal regulatory matters

• Ensuring that the Commission is an 

employer of choice

• Ensuring efficient stewardship of resources

Op e n n e s s

Public 

participation



I n t e g r i t y

Fairness and 

impartiality

Timely and 

rigorous analysis



Me r i t

Commitment to 

excellence

Collegiality and 

multi-disciplinary 

approaches



Adaptability

Proactive response 

to the rapidly 

changing postal 

environment

Mission, Vision&, Guiding Principles
iii | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

CONTENTS

CHAPTER 1 • Fiscal Year 2023 at a Glance

• Other FY 2023 Accomplishments

CHAPTER 2 • About the Commission

• Current Commission Leadership

• Staff and Office Structure

• Strategic Planning & Foresight

CHAPTER 3 • FY 2023 Proceedings

• Rate Adjustments

 Market Dominant Products

 Rates of General Applicability

 Rates Not of General Applicability

 Competitive Products

 Rates of General Applicability

 Rates Not of General Applicability

 Assumed Federal Income Tax

• Changes to Product Lists and the Mail

 Classification Schedule

 Product Lists

 Mail Classification Schedule

• Rulemakings Amending Commission

 Regulations

 Institutional Cost Contribution

 Requirement

 Revisions to Service Performance 

 Reporting Requirements

 Competitive Negotiated Service

 Agreements

 Performance Incentive Mechanism

 Rate Incentives for Market Dominant

 Products

International Mail Rule Changes

• Annual Reports

 Annual Compliance Determination

 Financial Analysis

 Analysis of Performance Goals

• Public Inquiries

 Delivering for America Plan

 Classification of First-Class Package

 Service

 Review of Postal Service Cost

 Attribution Regulations

 Value of the Postal Monopoly

 Universal Service Obligation Valuation 

 Methodology

 Resolving Suspended Post Offices

• Proposals to Change Analytical

 Principles

 Completed Proposals

 Docket No. RM2023-9 (Proposal 9)

 Docket No. RM2023-4 (Proposal 1)

 Dockets Related to Removing 

 Prefunding Payment Liabilities

 Docket Nos. RM2023-1, RM2023-2

 (Proposal Seven), and RM2023-3

 (NPPC et al. Proposal One)

 Docket No. RM2023-2 

 (Proposal Seven). 

 Docket No. RM2023-3, 

 NPPC et al. Proposal One

 Other Completed Proposals

 Pending Dockets

• Other Proceedings

 Market Tests

 Proposed Conversion to Permanent 

	 	 Offering

 Extension of Market Test

 Complaints

 Complaint of Mark Allan Edwards

 Other Complaints

 Post Office Closing Appeals

 Flats Operations Study

• Court of Appeals Cases

• International Postal Policy

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Chapter 1 TOC | iv

CHAPTER 4 • Universal Service Obligation & 

Postal Monopoly

• Background

 Estimated USO Cost

 Postal Services to Areas of the Nation the 

 Postal Service Would Not Otherwise Serve

 Maintaining Small Post Offices

 Alaska Air Subsidy

 Group E Post Office Boxes

 Free or Reduced Rates

 Preferred Rate Discounts Net of Costs

 Periodicals Losses

 Other Public Services or Activities

 Six-Day Delivery

 Uniform Rates

 Postal Inspection Service

• Value of the Postal Monopoly

CHAPTER 5 • Public Affairs

 Consumer Relations-Comments & Inquiries

 Inquiries by Issue

 Inquiries by Location

CHAPTER 6 • Administration

Strategic Planning

 Financial Management & Budget

 FY 2023 Budget & Expenses

 FY 2024 Budget Request

 Data & Records Management

 Data Management

 Records & Privacy

 Workforce Development

Information Technology

 Docketing System

 Website Replacement

 Transition to Cloud

 Cybersecurity and Data Protection

ENDNOTES

PHOTO CREDITS

ACRONYMS

ANPR

ACD

ACR

C.F.R.

CAG

CHIR

CIR

CCCS

CPI

CY

FEVS

FOIA

FSS

FY

IMb

IOCS

MCS

NPR

NSA

PAEA

RRM

SPM

SPR

TACS

U.S.C.

UPU

Advanced Notice of Proposed Rulemaking

Annual Compliance Determination

Annual Compliance Report

Code of Federal Regulations

Cost Ascertainment Group

Chairman’s Information Request

Commission Information Request

City Carrier Cost System

Consumer Price Index

Calendar Year

Federal Employee Viewpoint Survey

Freedom of Information Act

Flats Sequencing System

Fiscal Year

Intelligent Mail barcode

In-Office Cost System

Mail Classification Schedule

Notice of Proposed Rulemaking

Negotiated Service Agreement

Postal Accountability and Enhancement Act

Return Receipt for Merchandise

Service Performance Management

Special Purpose Route

Time and Attendance Collection System

United States Code

Universal Postal Union

Table of Contents • Acronyms | iv

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1 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

CHAPTER ONE

FISCAL YEAR 2023 AT A GLANCE
Chapter 1 | 2

The Commission plays an important role in the postal industry following the statutory guidelines set 

out for it by Congress. In Fiscal Year (FY) 2023, the Commission achieved significant accomplishments 

in support of its mission to ensure transparency and accountability of the U.S. Postal Service and foster a vital and efficient universal mail system. 

Some of the Commission’s key activities in FY 2023 include: 

• Providing transparency into Service Performance 

and Postal Service Initiatives to redesign its 

network through:

▸ Initiating a Public Inquiry into the Postal 

Service’s “Delivering for America” Plan

▸ New Service Performance reporting 

requirements including requirements for the 

Postal Service public service performance 

dashboard as outlined by Postal Service Reform 

Act (PSRA)

▸ Annual Compliance Determination (ACD) 

directives aimed at improving service 

performance results for Postal Service products 

or product categories that did not meet their 

service performance targets

• Protecting postal customers from excessive rate increases and ensuring fair competition 

in competitive postal markets through:

▸ Issuing the Annual Compliance Determination to evaluate whether any rates or fees 

in effect during FY 2023 were not compliant

▸ Adjudicating two general Market Dominant Rate Cases and reviewing proposed rates 

for Competitive products to ensure compliance with existing regulatory and statutory 

requirements

▸ Soliciting public comments regarding adding a Performance Incentive Mechanism to 

the existing ratemaking system

▸ Implementing rules defining the appropriate share of institutional costs that must be 

covered by the Postal Service’s Competitive products (such as parcels)

▸ Reviewing and approving 557 Negotiated Service Agreements (NSAs) and nonpublished rate agreements to ensure these Competitive products comply with cost 
3 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

coverage requirements

• Engaging with stakeholders across the postal community including:

▸ Soliciting public comment and appointing a Public Representative to represent the 

general public’s interests in most proceedings

▸ Engaging with the public through public inquiry dockets related to the classification 

of First-Class Package Service, postal cost attribution regulations, the postal 

monopoly, the cost of the Universal Service Obligation, and suspended post offices

▸ Processing more than 8,800 inquiries from the general public on postal matters

▸ Meetings between the Commissioners and postal stakeholder groups

▸ Quarterly Consultations with the Postmaster General and key USPS executives

▸ Outreach to Postal Service Board of Governors to explain Commission budgetary 

processes and priorities

▸ Regular consultations with Postal Service Office of Inspector General (OIG)

▸ Engagement with the U.S. State Department to advise and assist with key 

international postal policy issues, including the 2023 Universal Postal Union (UPU) 

Extraordinary Congress

Other FY 2023 Accomplishments

The Commission’s other accomplishments and achievements include:

• Engaging in rulemakings related to Competitive NSAs, rate incentives for Market Dominant 

products, and non-public materials submitted to the Commission in connection with 

foreign-policy deliberations

• Approving two new Market Dominant rate incentives and provisionally approving the 

Publisher’s Clearing House NSA. In order to provide flexibility for the review and approval 

of Market Dominant NSAs while ensuring legal compliance, the Commission also proposed a 

proceeding to develop new methodologies to evaluate whether a contract complies with the 

requirements of title 39

• Commissioners planned site visits to view Postal Service processing facilities in Georgia which 

are implementing DFA (with the intention of executing the site visits in FY 2024

• Considering 11 proposals to change accepted analytical principles and issued final orders for 

all but two proposals)
Chapter 1 | 4

• Considering four complaints filed by postal customers alleging mail delivery service issues 

and reviewing two post office closing appeals

• Issuing a Flats Operation Study with principal findings as required by the PSRA

• Began implementing the Commission’s 2023-2028 Strategic Plan
5 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

CHAPTER TWO

ABOUT THE COMMISSION

Above: Commissioner Ashley Poling, Vice Chairman Ann Fisher, Commissioner Robert Taub, Chairman Michael Kubayanda, Commissioner 

Mark Acton The Commission is an independent establishment of the Executive Branch of the United States Government. It has exercised regulatory oversight over the Postal Service since its creation by the Postal 

Reorganization Act of 1970, with expanded responsibilities under the PAEA of 2006. 

The Commission is composed of five Commissioners, each of whom is appointed by the President, by 

and with the advice and consent of the Senate, for a term of six years. A Commissioner may continue 

to serve after the expiration of his or her term until a successor is confirmed, except that a Commissioner may not continue to serve for more than 1 year after the date on which his or her term would 

have otherwise expired. Not more than 3 of the Commissioners may be adherents of the same political 

party.

Photo Credit: Tamela Davis
Chapter 2 | 6

President Joseph R. Biden, Jr. designated Michael M. Kubayanda 

chairman of the Commission in January 2021. Chairman Kubayanda 

was reappointed to the Commission on December 9, 2021, for a 

second term expiring November 22, 2026, following his renomination 

by President Biden and second unanimous confirmation by the United 

States Senate. He was named vice chairman in August 2019 and 

served in that position through the end of 2020. 

Chairman Kubayanda embraces the use of technology to modernize government and improve 

performance while serving the Commission’s traditional mission of providing transparency and 

accountability of the Postal Service. Since becoming Chairman, he has focused on boosting the 

Commission’s data and knowledge management capacity and launched an analytics unit within the 

Office of Accountability and Compliance. 

The additional capacity in the micro agency (with fewer than 100 employees, compared with more 

than 600,000 for the Postal Service) is aimed at updating the Commission’s ability to evaluate issues 

such as network efficiency and performance. The new unit can serve as a focal point for analysis 

informed by statistics, engineering, operations, and computational expertise, complementing the 

Commission’s skills in economic, financial, and legal analysis. These capabilities and an updated 

technology stack also help in implementing the Foundations for Evidence-Based Policymaking Act of 

2018, part of an ongoing effort to organize the Commission’s information for use by internal analysts, 

industry stakeholders, researchers, and citizens. The Technology Modernization Fund has awarded 

support to the Commission for these efforts. 

Chairman Kubayanda has encouraged engagement by the Commission with a nonpartisan, world-class 

group of experts in operations, economics, law, electronic commerce, government transparency, and 

foresight. The Commission has also developed a new strategic plan for 2023 – 2028 using scenario 

planning to prepare the Commission for a range of potential futures affecting the agency and the 

broader ecosystem. 

Prior to joining the Commission, Chairman Kubayanda served as a board member and privacy officer 

for a digital health startup with operations in the U.S. and emerging markets. He previously worked 

with the Office of Inspector General of the U.S. Postal Service, as director of government relations and 

in the OIG’s research group. At the OIG, he advocated successfully for appropriations for the OIG’s 

analytics platform. He also authored reports on network economics and the impact of technology and 

partnerships on the postal system. Prior to his work with the OIG, he served as counsel to the House 

Committee on Oversight and Government Reform.

Current Commission Leadership

Michael M. Kubayanda | CHAIRMAN
7 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

Thomas Day | VICE CHAIRMAN

Commissioner Thomas G. Day was nominated by President Joseph 

Biden and confirmed by the United States Senate on September 28, 

2023, for the remainder of a six-year term that expires October 14, 

2028. Mr. Day served 45 years in the federal government in both the 

U.S. Army and the U.S. Postal Service. During his 35-year career in the 

Postal Service, he held senior executive positions as vice presidentengineering, senior vice president-government relations, senior 

vice president-intelligent mail, and the chief sustainability officer. In 

addition, at the Postal Service, he was the chair of the Standards Board at the Universal Postal Union. 

Mr. Day was recognized with a Board of Governors award for his leadership in response to the Anthrax 

attack. Following his retirement from the Postal Service, he was employed by the International Post 

Corporation where he was the chief commercial and chief financial officer. 

Commissioner Day holds a BS in Engineering from the US Military Academy at West Point, a MA in 

Management from Central Michigan University and a MS in Management from the Graduate School of 

Business at Stanford University.

Ann C. Fisher | COMMISSIONER

Ann C. Fisher was sworn in as Commissioner of the Postal Regulatory 

Commission on August 8, 2019, for a first term, following her 

nomination by President Donald J. Trump and confirmation by the 

United States Senate. Commissioner Fisher is a proud 30-year federal 

employee. Prior to joining the Commission, Fisher spent twelve years 

working in the U.S. Senate, advising members on small business, 

health care, federal employee and Postal Service issues. She began 

her career serving as an economist for her home state senator, Larry 

Pressler (R-SD) on the Senate Small Business Committee. She later joined Senator Thad Cochran’s 

staff on the International Security, Proliferation and Federal Services Subcommittee, serving as the 

Senator’s advisor on federal employee and U.S. Postal Service issues. 

Her final four years in the Senate were as deputy staff director to then-Chairman Susan Collins (RME) on the Senate Homeland Security and Governmental Affairs Committee. Fisher was the primary 

Senate Republican aide overseeing passage of the Postal Accountability and Enhancement Act of 

2006. Additionally, Fisher spent four years as government relations executive at the U.S. Postal Service 

Headquarters. She was charged with overseeing resolution of congressional concerns throughout the 

country’s Midwest region. In 2006, Fisher joined Postal Regulatory Commission Chair Dan G. Blair as 
Chapter 2 | 8

chief of staff at the newly renamed and empowered Postal Rate Commission. Prior to her nomination 

by President Trump, Fisher served for several years as the Commission’s director of public affairs and 

government relations. Commissioner Fisher holds a B.S. degree in mathematics from Minnesota State 

University, Mankato and an M.A. degree in economics from the University of South Dakota. Her term 

expires October 14, 2024. 

Ashley E. Poling | COMMISSIONER

Robert G. Taub| COMMISSIONER

Ashley Jay Elizabeth Poling was sworn in as commissioner for a first 

term on August 8, 2019, following confirmation by the United States 

Senate. Prior to joining the Postal Regulatory Commission, Ms. Poling 

served as the director of governmental affairs and senior counsel 

to Ranking Member Gary C. Peters (D-MI) on the Senate Homeland 

Security and Governmental Affairs Committee where she advised 

Senator Peters on policy issues, negotiated with stakeholders to 

advance bipartisan legislation, and implemented strategies to advance Senator Peters’ governmental 

affairs priorities. Ms. Poling also served as senior policy counsel to Senator Heidi Heitkamp (D-ND) 

and as counsel to Senator Jon Tester (D-MT) on their respective Homeland Security and Governmental 

Affairs Subcommittees, where she focused on postal reform and federal workforce issues. Ms. Poling’s 

term expires on November 22, 2024. Commissioner Poling holds a J.D. degree from Elon University 

School of Law and an English degree from The College of William and Mary. She is a native of North 

Carolina. 

Robert G. Taub was chairman of the Commission for more than 

6 years, from December 2014 until January 2021. Three times 

appointed to the Commission following unanimous confirmations 

by the U.S. Senate in 2011, 2016, and 2023, Commissioner Taub has 

more than 40 years of public service experience at the local, state, 

and federal levels. Before joining the Commission in October 2011, he 

was a principal civilian advisor to the Secretary of the Army John M. 

McHugh. 

As an Army senior executive, he helped the Secretary lead a workforce of more than 1.2 million 

people, and manage an annual budget exceeding $200 billion. Commissioner Taub was awarded 

the Army's Decoration for Distinguished Civilian Service. Before his appointment to the Army, 

Mr. Taub served as Chief of Staff to U.S. Representative John M. McHugh (R-NY) for the preceding 
9 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

decade. As chief of staff, he oversaw the day-to-day operations of Representative McHugh’s staff 

and offices in Washington, D.C. and Northern New York State. In a variety of leadership roles on the 

U.S. House Oversight & Government Reform Committee for 12 years, Mr. Taub also worked closely 

with Congressman McHugh on matters relating to the nation’s postal and delivery sector. He crafted 

Representative McHugh’s legislation for modernizing America’s postal laws for the first time since 

1970, culminating in passage of the Postal Accountability and Enhancement Act in 2006. 

Mr. Taub also helped Representative McHugh conduct hearings and investigations into postal 

operations that ultimately led to the enactment of a dozen other postal laws. During his tenure in 

public office, Mr. Taub has addressed numerous national and regional conventions of postal employee 

organizations, mailing industry groups, and government and academic conferences both in the U.S. 

and abroad, on issues confronting the postal sector. The OIG, postal employee unions, and mailing 

industry associations and nonprofits have all recognized Mr. Taub with several awards and honors. 

Prior to his time with the House of Representatives, Mr. Taub worked for eight years at the U.S. 

Government Accountability Office (GAO), the investigative arm of Congress. As a senior policy analyst, 

Mr. Taub planned and directed evaluations for the Congress on environmental, banking, energy, and 

defense issues. Previous to his position with the GAO, Mr. Taub worked as a staff member for three 

different Members of Congress, a Member of the British Parliament, and state and county officials in 

upstate New York.

Note: Thomas Day was elected vice chairman of the agency at the departure of former Commissioner Mark Acton, who served in the capacity of vice 

chairman for most of 2023 and until he departed from the Commission on October 5, 2023.
Chapter 2 | 10

Staff and Office Structure

Of f i c e o f Ac c o u n t a b i l i t y

& C o mp l i a n c e

Of f i c e o f t h e

Ge n e r a l Co u n s e l

Pu b l i c Af f a i r s & 

Gove r nme n t Re l a t i o n s

Of f i c e o f S e c r e t a r y

& A dm i n i s t r a t i o n

Commission staff has expertise in law, economics, finance, statistics, and cost accounting. 

The Commission is organized into four operating offices:

The Office of Accountability and 

Compliance is responsible for technical 

analysis and formulating policy 

recommendations for the Commission on 

domestic and international matters.

The Office of the General Counsel ensures 

the Commission fulfills its statutory 

and regulatory obligations by providing 

legal guidance on matters involving the 

Commission’s responsibilities.

The Office of Public Affairs and 

Government Relations facilitates prompt 

and responsive communications with the 

public, Congress, federal agencies, the 

Postal Service, and the media.

The Office of the Secretary and 

Administration records the Commission’s 

official actions; manages the Commission’s 

records, human resources, budget and 

accounting, and information technology; 

and provides other support services.
11 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

Figure II-1

FY 2024 Organizational Structure

ANN FISHER

Commissioner 

ASHLEY POLING

Commissioner 

ROBERT TAUB

Commissioner 

THOMAS DAY

vice chairman MICHAEL KUBAYANDA

Chairman

MARGARET CIGNO

Director

Office of Accountability

 & Compliance

MATTHEW ROBINSON Accountability Division

Deputy directors

JESSICA RAINES

Compliance Division

LYUDMILA BZHILYANSKAYA Analytics Division

JENNIFER ALVEREZ WARBURTON

Director

Office of Public Affairs

& Government Relations

ERICA BARKER

Secretary & Chief Administrator

Office of Secretary & 

Administration

DAVID TRISSELL

General Counsel

Office of the 

General Counsel

CHRISTOPHER LAVER

Deputy General Counsels

LAUREN D'AGOSTINO

Strategic Planning & Foresight

At the start of FY 2023, the Commission implemented its new 2023-2028 Strategic Plan. The Strategic 

Plan is robust and resilient, allowing the Commission to anticipate changes to the postal system and to 

adapt as necessary to ensure transparency and accountability of the United States Postal Service. The 

Commission’s recognition and anticipation of a potentially significant degree of change to the postal 

system and the Postal Service during the strategic planning period led to a foresight-based strategic 

planning process that explored multiple future scenarios. To support a foresight-based strategic 

planning effort, the Commission engaged Toffler Associates, a strategic advisory firm that assists 

civilian and defense government organizations and commercial entities with scenario planning.
Chapter 2 | 12

The Strategic Plan is based on a hierarchy of four strategic goals, followed by strategic objectives, 

and performance indicators. Together, these elements provide the strategic focus and priorities for 

the Commission. During its inaugural year of implementing its ambitious five-year Strategic Plan, 

the Commission has established its strategic planning framework, leadership, governance structure, 

project management to achieve tangible results while setting the stage for continued success and 

momentum. 

Here are the strategic goals for 2023-2028 with a summary

 of the progress the Commission has made for each of the four strategic goals:

STRATEGIC GOAL 1

Anticipate and adapt to an evolving postal system 

through a responsive and trusted regulatory 

framework.

PROGRESS

TYPE OF REGULATOR

Several foundational initiatives are underway for 

Goal 1, including a Stakeholder Analysis, efforts to 

examine internal processes, and data efforts related 

to accessibility of postal data. The outcomes of 

these initiatives will enhance the efficiency of the 

Commission’s mission critical work and will provide key 

insights for other upcoming initiatives.

STRATEGIC GOAL 2

Enhance and expand communication of accurate and 

relevant regulatory information to postal stakeholders, 

policymakers, and the general public.

PROGRESS

AUDIENCE AND COMMUNICATIONS

The key initiative taking place for Goal 2 is the website 

redesign effort. Significant progress has been made in 

engaging critical Commission stakeholders regarding 

their website inputs. The Stakeholder Analysis Initiative 

from Goal 1 will inform future Goal 2 efforts.

STRATEGIC GOAL 3

 Develop an internal infrastructure to support and 

strengthen our regulatory capabilities through adaptive 

policies, efficient processes, and scalable platforms.

PROGRESS

 CAPABILITY MODERNIZATION

Foundational actions are underway, driven by the Chief 

Data Officer (CDO), to modernize the Commission’s use 

and management of data. A critical effort also took place 

to redesign the Commission’s budget process, making it 

more collaborative and comprehensive. Funding for FY 

2024 was secured via the Board of Governors, but longterm financial planning still needs to take place.

STRATEGIC GOAL 4

 Build an organization that will attract, develop, and 

retain a diverse workforce of experts.

PROGRESS

WORKFORCE AND PEOPLE DEVELOPMENT

The focus for most strategic initiatives to date was 

on earlier goals (e.g., Goal 1); however, significant 

progress has still been made to enhance the 

onboarding process for new employees. Several new 

initiatives will take place during FY 2024.
13 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

CHAPTER THREE

FY 2023 PROCEEDINGS
Chapter 3 | 14

The Postal Accountability and Enhancement Act (PAEA)1 requires the Commission to submit an 

Annual Report to the President and the Congress (Annual Report) that includes an analysis “concerning 

the operations of the Commission under [Title 39], including the extent to which regulations are 

achieving the objectives under sections 3622 and 3633” of Title 39 of the United States Code.2 These 

sections contain laws related to Market Dominant and Competitive products, respectively.3 Market 

Dominant products are those products over which the Postal Service “exercises sufficient market 

power that it can effectively set the price[s] of such product[s] substantially above costs, raise prices 

significantly, decrease quality, or decrease output, without risk of losing a significant level of business 

to other firms offering similar products.”4 Competitive products consist of all other products.5

The Annual Report must analyze the extent to which regulations are achieving the objectives under 

section 3622, which relate to Market Dominant products. The modern system for regulating rates and 

classes for Market Dominant products (Market Dominant Rate System) must be designed to achieve 

the following objectives in 39 U.S.C. § 3622(b):

1. Maximize incentives to reduce costs and increase efficiency

2. Create predictability and stability in rates

3. Maintain high quality service standards established under 39 U.S.C. § 3691

4. Allow the Postal Service pricing flexibility

5. Assure adequate revenues, including retained earnings, to maintain financial stability

6. Reduce the administrative burden and increase the transparency of the ratemaking

process

7. Enhance mail security and deter terrorism

8. Establish and maintain a just and reasonable schedule for rates and classifications without 

prohibiting the Postal Service from making changes of unequal magnitude within, between, 

or among classes of mail

9. Allocate the total institutional costs of the Postal Service appropriately between Market

Dominant and Competitive products6

The Commission initially established regulations governing the Market Dominant Rate System in 2007 

shortly after the PAEA was enacted.7 In FY 2021, the Commission issued final rules adopting changes 

to the regulations governing the Market Dominant Rate System after completing its review of the 

Market Dominant Rate System, which began 10 years after the PAEA was enacted as required by 39 

U.S.C. § 3622(d)(3).8 The Commission’s review, findings, and proposed and final rules were discussed 

in the FY 2021 Annual Report.

9
15 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

The Annual Report must also analyze the extent to which regulations are achieving the objectives 

under 39 U.S.C. § 3633 relating to Competitive products.10The Commission’s regulations in 39 C.F.R. 

part 3035 support the requirements of section 3633, which are discussed below under the “Rate 

Adjustments - Competitive Products” section. This chapter also describes the Commission’s major 

orders, reports, and proceedings during FY 2023 and early FY 2024.

Rate Adjustments

One of the Commission’s major statutory responsibilities is to ensure that the Postal Service’s 

proposed rate adjustments for Market Dominant and Competitive products comply with applicable 

statutory and regulatory requirements. Rates for Market Dominant and Competitive products are 

either (1) rates of general applicability or (2) rates not of general applicability. Rates of general 

applicability are “available to all mailers equally on the same terms and conditions.”11 These rates are 

available to the general public; examples include Forever Stamps and Priority Mail Flat Rate boxes. All 

customers pay the same rate for a product, although some products are only available to businesses 

and not individuals.

In general, rates not of general applicability are offered by the Postal Service to specific mailers 

through negotiated service agreements (NSAs).12 NSAs are written contracts between the Postal 

Service and a mailer that are effective for a defined period of time.13 They provide for customerspecific rates, fees, and/or terms of service according to the terms and conditions of the contract.14

Proposed rate adjustments often include requests to change the Market Dominant or Competitive 

product lists and the Mail Classification Schedule (MCS), which contains rates, fees, and descriptions 

for each product. Product list and MCS requirements are discussed below in the “Changes to Product 

Lists and the Mail Classification Schedule” section.

In FY 2023, the Commission reviewed the Postal Service’s proposed changes to rates for both Market 

Dominant and Competitive products, along with corresponding MCS changes. Each is discussed below.

Market Dominant Products

RATES OF GENERAL APPLICABILITY

Market Dominant products with rates of general applicability are divided into five mail classes as 

shown in Figure III-1:
Chapter 3 | 16

Figure III-1

Market Dominant Classes and Products Rates of General Applicability

 

When the Postal Service decides to change rates of general applicability for any Market Dominant 

product, it must inform the public and file a request with the Commission to review its planned rate 

adjustments and related MCS changes no later than 90 days before the planned implementation date 

of the rate adjustments.15 The Commission then initiates a proceeding to consider the proposed rate 

and MCS changes, appoints a Public Representative, and provides an opportunity to comment.16 When 

reviewing proposed Market Dominant rate adjustments, the Commission applies the requirements 

of 39 C.F.R. part 3030, Commission directives and orders, and 39 U.S.C. §§ 3626, 3627, and 3629 to 

determine whether they are consistent with applicable law.17

The Commission’s regulations governing Market Dominant rate adjustments have several key 

features. First, the regulations provide for multiple forms of rate authority, which set the limitation 

on how much the Postal Service may raise rates.18 In general, the maximum rate adjustment 

authority available to the Postal Service for each Market Dominant class consists of the following rate 

authorities:

• Consumer Price Index – Based on changes in the Consumer Price Index for all Urban 

Consumers

• Density – Based on costs to address consequences of declines in the volume of mail per 

delivery point

Source: 39 C.F.R. pt. 3040, subpt. A, Appendix A.
17 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

• Retirement Obligation – Based on statutorily-mandated amortization payments for certain 

retirement costs

• Non-Compensatory Classes – Applies to any class where the attributable cost of that class 

exceeds the revenue from the class

• Banked Rate Authority – Based on unused rate adjustment authority accumulated for future 

use19

Second, the regulations contain provisions governing non-compensatory products that do not 

cover their attributable cost.20 The regulations prohibit the Postal Service from reducing rates for 

any non-compensatory product.21 Also, if a non-compensatory product is part of a mail class that 

is compensatory overall, rates for each non-compensatory product in that class must increase by a 

minimum of 2 percentage points above the percentage increase for that class.22 For example, in FY 

2021 the USPS Marketing Mail class covered its attributable costs, but three products within that class 

did not cover costs.23 Thus, in the Docket No. R2023-1 Market Dominant rate adjustment, the Postal 

Service was required to propose rate increases for these products that were at least 2 percentage 

points above the USPS Marketing Mail class average.24

Third, the regulations set requirements for workshare discounts25:

• If a workshare discount equals the cost avoided by the Postal Service, then the size of the

discount cannot change

• If a workshare discount exceeds the cost avoided by the Postal Service, then the size of the 

discount cannot increase

• If a workshare discount is less than the cost avoided by the Postal Service, then the size of the 

discount cannot decrease26

The regulations also set specific limitations for setting workshare discounts that do not equal avoided 

costs.27 The Postal Service may not set a workshare discount that exceeds its avoided costs unless the 

discount is new, is at least 20 percent less than the existing discount, or relates to a subclass of mail 

consisting exclusively of mail matter of educational, cultural, scientific, or informational value.28 The 

Postal Service may not set a workshare discount that is less than its avoided costs unless the discount 

is new, is at least 20 percent more than the current discount, or produces a passthrough of at least 

85 percent.29 If none of these exceptions applies, the Postal Service must apply for a waiver from the 

Commission at least 60 days before the rate adjustment filing in which the waiver is proposed to 

apply.30

In FY 2023, the Postal Service filed two notices proposing rate adjustments and related MCS changes 

for most Market Dominant products in Docket Nos. R2023-1 and R2023-2.31 After analyzing the record 

and considering comments received, the Commission issued orders concluding that the planned rate 

adjustments, including workshare discounts, were consistent with 39 C.F.R. part 3030 and applicable 

Commission directives and orders.32 It found that the planned rate adjustments were consistent with 
Chapter 3 | 18

the pricing requirements in 39 U.S.C. § 3626, and the planned MCS changes, as revised in the order, 

were consistent with applicable law.33 The new rates and related MCS changes became effective on 

January 22, 2023 and July 9, 2023.34

When approving the second set of planned rate and MCS changes in Docket No. R2023-2, the 

Commission observed that the Postal Service’s initial rate adjustment filing contained many material 

errors, including errors in the workpapers for all five mail classes.35 It stated that these errors 

and issues undermine not only the efficiency of the Commission’s review, but also “the overall 

transparency of the proceeding for all participants and create delays and frustration for mailers and 

software companies working to implement the proposed price and classification changes.”36 Thus, 

the Commission directed the Postal Service to investigate the source(s) of the inaccuracies and 

incompleteness with its initial filing and file a report describing the results of its investigation and a 

plan to correct the identified issues in future rate adjustment proceedings.37 The Postal Service filed 

this report and plan on July 31, 2023.38

Market Dominant rate incentives

On August 11, 2023, the Postal Service proposed two new Market Dominant rate incentives and 

related MCS changes named First-Class Mail Growth Incentive and USPS Marketing Mail Growth 

Incentive.39 These incentives were designed to drive mail owners to increase the volume of First-Class 

Mail and USPS Marketing Mail entered into the postal network while providing mailers lower overall 

postage costs on incremental growth.40

First-Class Mail and USPS Marketing Mail customers are eligible for the growth incentives when their 

combined volume of qualifying pieces during the incentive period (CY 2024) exceeds the incentive 

threshold.41 Under both growth incentives, every qualifying piece mailed in CY 2024 after the first 

million pieces would be considered volume eligible for a credit unless the volume of qualifying pieces 

sent by the mailer in FY 2023 exceeded 1,000,000 pieces.42 In that case, a mailer accrues credits after 

surpassing its FY 2023 volume of qualifying pieces.43 The credits earned are equal to the total actual 

price paid for all qualifying pieces, divided by the total volume of qualifying pieces, which is then 

multiplied by the total volume of pieces eligible for credits and finally multiplied by 30 percent.44

After reviewing the record and considering comments received, the Commission found that both 

incentives were consistent with applicable law and could take effect as planned on January 1, 2024.45

Application for waiver of rate increase for USPS Marketing Mail Carrier Route

In the FY 2022 ACD, the Commission found that the USPS Marketing Mail class covered its attributable 

costs, but three products within that class did not cover costs, including USPS Marketing Mail Carrier 

Route.46 Thus, under 39 C.F.R. § 3030.221, the Postal Service was required to propose rate increases 

for these products that were least 2 percentage points above the USPS Marketing Mail class average in 

each of its notices of Market Dominant rate adjustment.47
19 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

On September 27, 2023, the American Catalog Mailers Association (ACMA) filed a motion requesting a 

temporary waiver of 39 C.F.R. § 3030.221 as applied to the USPS Marketing Mail Carrier Route product 

in the next Market Dominant rate adjustment proceeding, which it expected the Postal Service to file 

in early October 2023.48 It asserted that because this product almost covered its attributable cost in 

FY 2022 and has already received above-average price increases in both of the Market Dominant rate 

increases during FY 2023, raising rates again could cause further volume declines and have other 

adverse effects.49 It stated that waiving this requirement will not harm the Postal Service or mailers.50

On October 6, 2023, the Postal Service filed comments on ACMA’s motion for temporary waiver 

explaining that although it supports ACMA’s motion in principle, it had already approved the pricing 

strategy for its forthcoming notice of rate adjustment, which it stated would comply with the 

Commission’s rules and not reflect a potential waiver.51 That same day, the Postal Service filed a notice 

proposing rate adjustments and related MCS changes for most Market Dominant products, including 

rate increases for USPS Marketing Mail Carrier Route that complied with 39 C.F.R. § 3030.221.52 Thus, 

the Commission denied ACMA’s motion for temporary waiver as moot.53

RATES NOT OF GENERAL APPLICABILITY

For Market Dominant products, the Postal Service may set rates not of general applicability by 

entering into NSAs with mailers or groups of mailers.54 The Commission reviews these NSAs to ensure 

they comply with 39 U.S.C. §§ 3622(c)(10) and 3642 as well as the Commission’s regulations in 39 

C.F.R. part 3040, subparts B and G. Applicable statutory and regulatory provisions require that Market 

Dominant NSAs either improve the Postal Service’s net financial position or enhance the performance 

of its operational functions.55 Also, Market Dominant NSAs may “not cause unreasonable harm to the 

marketplace” and must be “available on public and reasonable terms to similarly situated mailers.”56

On August 11, 2023, the Postal Service filed a request to add an NSA with Publisher’s Clearing House 

(PCH NSA) to the Market Dominant product list.57 PCH is a direct mail marketing company that sends 

a variety of letter mail to consumers related to sweepstakes entries, marketing materials, invoicing, 

and related correspondence.58 Under the terms of the PCH NSA, the Postal Service will provide PCH 

with an initial 1-million-piece mailing of USPS Marketing Mail letters priced at the Postal Service’s 

attributable cost.59 This initial mailing will be limited to 1 million dormant prospecting customer 

addresses, which PCH has not mailed to within the past 3 months.60 To maintain the discount on the 

initial mailing, PCH has committed to certain performance targets for follow-on mailings (both from 

addresses on the dormant prospecting list to PCH and from PCH to the addresses on the dormant 

prospecting list) that are expected to result from the initial mailing, also known as the “multiplier 

effect.”61 Specifically, PCH expects that 2 million pieces will result from the initial mailing, mailed at 

published rates, within 9 months of the date of the initial mailing.62

To maintain the discount on the initial mailing, PCH will need to achieve at least 50 percent of its 

forecasted total multiplier volume.63 If PCH does not achieve at least 50 percent of the forecasted 

multiplier volume, PCH will lose the discount on the initial mailing, which will be paid back to the 
Chapter 3 | 20

Postal Service.64 However, if PCH is able to achieve 90 percent or more of its 

forecasted multiplier volume, the Postal Service will provide an additional 

discount to PCH off the price paid for the initial mailing in the form of a postage 

credit, which will have the effect of making the initial mailing essentially free 

of charge.65 If the parties deem the initial mailing and performance satisfactory, 

an additional second prospecting mailing (“subsequent mailing”) could be 

authorized at least 6 months after the initial mailing.66

After reviewing the record and considering comments received, the Commission 

issued an order provisionally adding the PCH NSA to the Market Dominant 

product list.67 The Commission found that the PCH NSA was properly classified 

as a Market Dominant product; was not expected to cause unreasonable harm to 

the marketplace; and the Postal Service had appropriately committed to making 

functionally equivalent NSAs available to similarly situated mailers.68 With 

respect to the PCH NSA’s impact on the Postal Service’s net financial position, 

the Commission expressed concern regarding the lack of an accepted analytical 

principle for objectively evaluating the contribution of NSAs structured like the 

PCH NSA, and the Commission faulted the Postal Service for failing to propose 

such an analytical principle.69 The Commission announced that it would be 

initiating a rulemaking proceeding to develop such an analytical principle 

for the evaluation of future NSAs (At the time of publication of this report, 

the Commission’s proposed proceeding to create a regulatory framework for 

such NSAs is on hold, as the Postal Service withdrew the PCH NSA despite the 

Commission’ approval early in FY 2024).70

Nevertheless, the Commission found that the risk of the PCH NSA failing to 

improve the Postal Service’s net financial position was minimized.71 Moreover, 

given the PCH NSA’s small scale, the Commission found that it had the potential 

to serve as a useful experiment, offering the Postal Service the opportunity to 

pilot a novel NSA structure with minimal financial risk, and providing both the 

Postal Service and the Commission with valuable data and experience that will 

be useful in developing an accepted analytical principle to be applied to future 

NSAs structured like the PCH NSA.72 However, the Commission stated that it 

will not approve any other NSAs structured like the PCH NSA until a relevant 

accepted analytical principle is in place.73

The Commission directed the Postal Service to file monthly data with respect 

to the PCH NSA, as well as to file a report prior to authorizing a subsequent 

mailing that explains the metrics used to determine whether PCH’s initial 

mailing was a success.74 The Postal Service was also required to promptly 

notify the Commission of the PCH NSA implementation date.75
21 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

Competitive Products

For Competitive products, when the Postal Service decides to change rates or classes of general 

applicability, it must file a notice with the Commission describing the proposed adjustments at least 

30 days before the new rates or classes become effective.76 For proposed changes to rates or classes 

not of general applicability, the Postal Service must provide 15 days’ advance notice.77 The notice of 

proposed rate or class adjustment must include an explanation and justification for the proposed 

changes, the effective date of the new rates or classes, and either a schedule of the changed rates or 

the record of proceedings regarding the changes.78

The Commission then initiates a proceeding to consider the proposed rate or class adjustments, 

appoints a Public Representative, and provides an opportunity for comment. It reviews proposed rate 

adjustments for Competitive products to ensure they comply with three statutory requirements in 39 

U.S.C. § 3633(a):

1. Market Dominant products must not subsidize Competitive products79

2. Revenue for each Competitive product must cover its attributable costs, which are 

“the direct and indirect postal costs attributable to such product through reliably 

identified causal relationships”80

3. All Competitive products must collectively cover what the Commission determines to

 be an appropriate share of the Postal Service’s institutional costs81

Competitive rate adjustments must also comply with the Commission’s rules in 39 C.F.R. part 3035. 

In FY 2023, the Commission reviewed the Postal Service’s proposed changes to both rates of general 

applicability and rates not of general applicability for Competitive products. Each is discussed below.

RATES OF GENERAL APPLICABILITY

Competitive products with rates of general applicability are grouped into domestic and international 

products, as shown in Figure III-2:
Chapter 3 | 22

Figure III-2

Domestic and International Competitive Products

a The Competitive Ancillary Services product consists of the following services: Adult Signature, Package Intercept Service, Premium Data Retention and 

Retrieval Service, and Label Delivery Service. FY 2022 ACD at 72 n.104; see MCS § 2645.

b The International Ancillary Services product consists of the following services: International Certificate of Mailing, Inbound International Tracked 

Delivery Service, Competitive International Registered Mail (which further includes Outbound Competitive International Registered Mail and Inbound 

Competitive International Registered Mail), Outbound International Return Receipt, Outbound International Insurance, and Customs Clearance and 

Delivery Fee. FY 2022 ACD at 80 n.128; see MCS § 2615.

Source: 39 C.F.R. pt. 3040, subpt. A, Appendix B; FY 2022 ACD at 72, 75.

On November 10, 2022, the Postal Service filed a notice proposing changes in rates of general 

applicability for several domestic and international Competitive products, along with proposed 

changes to the MCS.82 After reviewing the record and considering comments received, the Commission 

approved the proposed rate adjustments and MCS changes, finding that they complied with 39 U.S.C. 

§ 3633(a) and the Commission’s regulations in 39 C.F.R. part 3035.83 The new rates and MCS changes 

became effective on January 22, 2023.84

On February 10, 2023, the Postal Service proposed changes in rates of general applicability for FirstClass Package Service (FCPS) and Parcel Select.85 The Postal Service also proposed MCS changes for 

these two products.86 After reviewing the record and considering comments received, the Commission 

approved the proposed rate changes.87 The Commission also approved all of the proposed MCS 

changes except for two proposed changes, which the Commission denied on procedural grounds.88

The new rate and MCS changes became effective on July 9, 2023, except as superseded by other 

Commission action.89
23 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

On May 10, 2023, the Postal Service filed another notice proposing more rate and MCS changes 

for FCPS and Parcel Select.90 After reviewing the record and considering comments received, the 

Commission approved the proposed rate and MCS changes, noting that most of the proposed changes 

were previously approved.91 The new rate and MCS changes became effective on July 9, 2023.92

RATES NOT OF GENERAL APPLICABILITY

Negotiated Service Agreements

For Competitive products, in general the Postal Service sets rates not of general applicability by 

entering into NSAs with specific mailers. These NSAs require prior Commission review for compliance 

with 39 U.S.C. § 3633(a) and 39 C.F.R. part 3035. In FY 2023, the Commission reviewed and approved 

280 Competitive NSAs: 245 domestic and 35 international. Table III-1 shows the number of NSAs the 

Commission approved between FY 2019 and FY 2023.

Table III-1

Competitive NSAs Approved by the Commission,

FY 2019 through FY 2023a

a

 This table shows approved NSAs the Postal Service filed as new products or as functionally equivalent to the baseline agreement of existing 

products. This table does not include NSA modifications or amendments.

Source: www.prc.gov; select References then Negotiated Service Agreements.

Products with non-published rates enable the Postal Service to enter into contracts featuring 

negotiated rates without prior Commission approval of the rates specific to each contract. The 

Commission reviews rates for the product as a whole for compliance with statutory standards, rather 

than the rates for each contract before implementation. These non-published rate contracts must 

comply with applicable filing and regulatory requirements, including pre-approved pricing formulas, 

minimum cost coverage, and documentation. The absence of prior review of specific contract rates 

streamlines the approval process, providing the Postal Service with additional flexibility.
Chapter 3 | 24

In FY 2023, the Postal Service implemented 277 NSAs with non-published rates. Table III-2 shows 

the number of non-published rate NSAs implemented by the Postal Service between FY 2019 and FY 

2023.

Table III-2

Non-Published Rate NSAs Implemented by the Postal Service,

FY 2019 through FY 2023

Source: www.prc.gov; select References then Negotiated Service Agreements.

Business Rate Card

On May 12, 2023, the Postal Service filed a notice proposing to add new, non-published rates called 

“Business Rate Card (BRC)” for Priority Mail Express, Priority Mail, and USPS Ground Advantage.93

BRC rates would only be available to business customers using the USPS Click-N-Ship platform.94

These rates are dynamically adjustable, which allows the Postal Service to respond to competitors’ 

targeted pricing or changing market conditions.95 Dynamic rates would not be allowed to fall below 

the established price floor submitted to the Commission in any price cell.96

After reviewing the record and considering comments received, the Commission conditionally 

approved the proposed BRC rates and accompanying MCS changes.97 It found that proposed rate 

and MCS changes complied with 39 U.S.C. § 3633(a) and were appropriately classified as rates not 

of general applicability.98 However, the Commission stated that the Postal Service’s request for 

proposed changes was incomplete because they did not contain the actual terms and conditions 

governing access to BRC rates, which “caused delay in the Commission’s consideration of and ultimate 

conditional approval of the request.”99 For this reason, the Commission conditioned its approval 

of the BRC rate and MCS changes on the Postal Service implementing the terms and conditions as 

represented.100 It directed the Postal Service to file a copy of the BRC rate terms and conditions at least 

15 days before the rates become effective, which the Postal Service filed on August 28, 2023.101
25 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

Inbound Letter Post

Under the Universal Postal Union (UPU) Convention, by June 1, 2023, the Postal Service had to submit 

to the UPU any self-declared rates for Inbound Letter Post Small Packets and Bulky Letters that would 

become effective on January 1, 2024.102 On April 28, 2023 the Postal Service filed a notice with the 

Commission proposing specific per-item and per-kilogram self-declared rates for Inbound Letter Post 

Small Packets and Bulky Letters, which would become effective on January 1, 2024.103 Based on its 

review of the record and comments received, the Commission issued an order finding that the selfdeclared rates complied with 39 U.S.C. § 3633(a) and 39 C.F.R. part 3035.104

Inbound Parcel Post (at UPU rates)

Inbound Parcel Post (at UPU rates) is a Competitive product for the acceptance and delivery of 

inbound parcels weighing up to 70 pounds from foreign postal operators at air rates, surface rates, 

and e-commerce parcel rates.105 Rates for Inbound Parcel Post (at UPU rates) are rates not of general 

applicability because they are only available to foreign postal operators. Under the Regulations of the 

UPU Convention, the Postal Service and other foreign postal operators may qualify for semi-annual 

increases to their “base” rates for inbound air parcels if they provide certain value-added services.106

These rate increases are applied to the base rates effective January 1 and July 1 of each year.107

On November 22, 2022, the Postal Service filed a notice announcing its intention to change rates 

not of general applicability for Inbound Parcel Post (at UPU rates) effective January 1, 2023.108 The 

Commission analyzed the planned rate changes and issued an order acknowledging them, finding 

that they satisfied the relevant statutory and regulatory requirements of 39 U.S.C. § 3633(a) and the 

Commission’s rules.109

ASSUMED FEDERAL INCOME TAX

Each year, the Postal Service is required to calculate the assumed Federal income tax on income from 

its Competitive products and to transfer the amount calculated from the Competitive Products Fund to 

the Postal Service Fund.110 On January 11, 2023, the Postal Service filed its calculation of the assumed 

Federal income tax on Competitive products income for FY 2022.111 Responding to an information 

request, the Postal Service filed a revised calculation of the FY 2022 assumed Federal income tax on 

Competitive products “based on an intervening Commission order with respect to the appropriate 

accounting treatment of the forgiveness of the Postal Service’s retiree health benefit (RHB) prefunding 

liabilities in FY 2022 pursuant to the Postal Service Reform Act of 2022 (PSRA).112 After reviewing 

the record and comments received, the Commission approved the Postal Service’s revised FY 2022 

calculation of the assumed Federal income tax on Competitive products’ income in accordance with 39 

C.F.R. § 3060.42.113
Chapter 3 | 26

Changes to Product Lists and the Mail Classification 

Schedule

Product Lists

The Postal Service and mail users may ask the Commission to change the Market Dominant and 

Competitive product lists by adding new products, removing current products, or transferring 

products between the lists.114 The Commission reviews requests to change the product lists for 

compliance with 39 U.S.C. § 3642 and the Commission’s regulations in 39 C.F.R. part 3040.115 The 

criteria for evaluating proposed changes to the product lists are described in 39 U.S.C. § 3642(b). First, 

a product may not be classified as Competitive if the Postal Service exercises sufficient market power 

so that it can do any of the following without risk of losing a significant level of business to other firms 

offering similar products:

• Set the product’s price substantially above costs

• Raise prices significantly

• Decrease quality

• Decrease output116

Second, a product covered by the postal monopoly may not be transferred from the Market Dominant 

product list.117 Third, the Commission must consider concerns of the private sector, product users, and 

small businesses.118 When filing a request to modify the product lists, the Postal Service must include 

the contents and supporting justification required by 39 C.F.R. §§ 3040.131-.132.

When adding a product to the Competitive product list, the proposed product must also meet 

the financial requirements of 39 U.S.C. § 3633, which are discussed in the “Rate Adjustments – 

Competitive Products” section above.119

In FY 2023, the Commission approved the Postal Service’s request to (1) remove Priority Mail 

International Regional Rate Boxes (PMI RRB) – Non-Published Rates and PMI RRB Contracts from the 

Competitive product list and (2) change the Competitive classification language concerning Global 

Reseller Expedited Package (GREP) Contracts.120

Mail Classification Schedule

The Market Dominant and Competitive product lists are published in the MCS, which also includes 

rates, fees, and descriptions for each product. The MCS also contains applicable size and weight 

limitations for mail matter as part of the description for each product.121 The Postal Service may 

propose changes to the MCS by filing a request, which the Commission reviews for compliance with 

its regulations.122 In FY 2023, the Commission approved the Postal Service’s proposed MCS changes 
27 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

concerning the Priority Mail Express and Priority Mail Loyalty Program as well as several Market 

Dominant international mail Special Services.123

Rulemakings Amending Commission Regulations

Institutional Cost Contribution Requirement

The PAEA requires Competitive products to “collectively cover what the Commission determines to 

be an appropriate share of the [Postal Service’s] institutional costs... .”124 The “appropriate share” 

is the minimum amount that Competitive products as a whole must contribute to institutional 

costs annually.125 At least every 5 years, the Commission must revisit its regulations concerning the 

appropriate share to determine if the minimum contribution requirement should be “retained in its 

current form, modified, or eliminated.”126 When making this determination, the Commission must 

consider “all relevant circumstances, including the prevailing competitive conditions in the market, 

and the degree to which any costs are uniquely or disproportionately associated with any competitive 

products.”127

On January 9, 2023, the Commission issued an order finalizing rules relating to the appropriate 

share.128 This order resolved the issues previously identified by the District of Columbia Circuit (D.C. 

Circuit) and concluded the Commission’s third 5-year review of the appropriate share pursuant to 

39 U.S.C. § 3633(b).129 First, the Commission described its statutory interpretation of 39 U.S.C. § 

3633(a)(3) and (b) and how those provisions interact with the rest of the PAEA.130 After considering 

alternative statutory interpretations proposed by commenters, it concluded that its interpretation 

accounted for the full text and structure of section 3633, as well as for the PAEA’s legislative history 

and purposes.131

Second, the Commission addressed comments regarding its analysis of “all relevant circumstances” 

listed in section 3633(b) and concluded that its dynamic formula-based approach for calculating 

the appropriate share captures “all relevant circumstances, including the prevailing competitive 

conditions in the market.”132 Third, the Commission considered specific costs and alternatives to the 

appropriate share raised by comments.133 Based on its analysis and review of comments received, the 

Commission readopted the dynamic formula-based approach to calculating the appropriate share, 

which is codified in 39 C.F.R. § 3035.107(c).

Revisions to Service Performance Reporting Requirements

On September 21, 2022, the Commission issued an NPR proposing several changes to the existing 

annual and periodic service performance reporting requirements for Market Dominant products, as 

well as related changes consistent with the PSRA.134
Chapter 3 | 28

After reviewing the record and considering comments received, the Commission adopted final rules 

on February 9, 2023.135 The final rules impose new requirements on the Postal Service to periodically 

report:

• The average actual “delivery days” (days in which Market Dominant products are eligible for 

delivery) for each Market Dominant product

• Point impact data (the number of percentage points by which on-time performance decreased 

due to a specific root cause of failure) for the top 10 root causes of on-time performance 

failures

• Data related to its Site-Specific Operating Plans (SSOPs), by Region, Division, and at the 

National level

• Information on nonpostal products, consistent with the new PSRA requirements

• Information regarding mail excluded from measurement.136

Additionally, the Commission adopted specific requirements for the Postal Service’s online dashboard, 

which included reporting service performance data for each District, and Area, and at the National 

level.137 The dashboard should “provide a 5-Digit ZIP Code lookup feature that allows the user to enter 

their ZIP Code and review the service performance results for the corresponding District.”138 The 

Postal Service must report processing scores for political, election, and nonprofit mail “to the extent 

identifiable.”139 The Commission also set implementation deadlines for the Postal Service dashboard 

and directed the Postal Service to include a detailed explanation of the methodology and underlying 

data with the dashboard.140

Competitive Negotiated Service Agreements

On February 24, 2023, the Commission issued an ANPR to codify regulations for adding Competitive 

NSAs to the Competitive product list.141 The goals of the rulemaking are to codify and streamline 

procedures and standards pertaining to Competitive NSAs to “provide increased clarity concerning 

filing requirements and the review process” while maintaining the pricing flexibility NSAs afford the 

Postal Service.142 Considering these goals, the Commission developed a conceptual framework that 

contains a three-track system for reviewing Competitive NSAs.143

The Commission invited general comments and sought comments on several specific topics, including 

the proposed framework.144 This proceeding is pending.
29 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

Performance Incentive Mechanism

On January 15, 2021, the Commission issued an ANPR to seek input on performance incentive 

mechanisms (PIMs) that would maximize incentives to increase efficiency and reduce costs, maintain 

high-quality service standards, and assure financial stability (including retained earnings).145

Regulators use PIMs to set a target for acceptable performance by a regulated entity in a specific area 

and attach financial benefits and/or consequences to ensure compliance.146 The Commission invited 

comments on ideas for PIMs that would:

• Connect direct financial consequences with increasing efficiency, reducing costs, and 

maintaining high-quality service standards

• Incentivize the Postal Service to increase efficiency and reduce costs using an operational 

efficiency-based requirement such as Total Factor Productivity

• Maintain high-quality service standards and hold the Postal Service accountable for 

consistently achieving those standards147

• This rulemaking was held in abeyance pending resolution of an appeal before the D.C. 

Circuit, and the Commission reactivated the proceeding on June 12, 2023.148 The Commission 

sought input on the topics identified in the ANPR and is currently considering comments 

received. This proceeding is pending before the Commission.

Rate Incentives for Market Dominant Products

On November 14, 2022, the Commission issued a second NPR proposing amendments to the 

Commission’s regulations concerning rate incentives for Market Dominant products appearing in 

39 C.F.R. part 3030.149 For purposes of Market Dominant rate adjustment proceedings, the proposed 

amendments would revise the regulation defining “rate of general applicability” to clarify that “to 

qualify as a rate of general applicability, a rate incentive may not be based on historical mail volumes 

or prior mailer participation in a rate incentive or promotion.”150 The Commission clarified that a 

characteristic of the mail “is a feature of the mail sent, not of the mailer sending the mail.”151

The Commission also proposed to republish and begin enforcing two rules previously adopted in 

Order No. 5510.152 Enforcing these rules would (1) add an additional criterion for a rate incentive to 

be eligible for inclusion in a percentage change in rates calculation and (2) require that a notice of rate 

adjustment include more information concerning Market Dominant rate incentives.153

The Commission sought comments on the proposed rules and received three comments and one 

reply comment.154 After comments were filed, the Postal Service proposed two Market Dominant rate 

incentives in Docket No. R2023-3 for First-Class Mail and USPS Marketing Mail, which the Commission 

approved.155 Because these incentives were proposed after the time frame for submitting comments, 
Chapter 3 | 30

the Commission provided an opportunity to comment on the relationship between the proposed rules 

and these rate incentives.156 This rulemaking is currently pending before the Commission.

International Mail Rule Changes

When conducting United States foreign policy regarding international postal and delivery services, 

the Secretary of State must coordinate with other government agencies, including the Commission.157

Coordination about foreign affairs requires the timely, free, and frank flow of information between 

agencies. To set appropriate expectations about the status of these foreign-policy deliberations, the 

Commission initiated a rulemaking to consider proposed changes to its rules in 39 C.F.R. part 3011 

that pertain to non-public materials, “which are any documents or things provided to the Commission 

identified as containing non-public information.”158 Specifically, it proposed to exempt non-public 

materials submitted to the Commission in connection with foreign-policy deliberations under 39 

U.S.C. § 407(b)(2)(A) from the requirements in 39 C.F.R. part 3011, as well as revise certain rules in 39 

C.F.R. part 3006 pertaining to requests filed under the Freedom of Information Act (FOIA).159

After reviewing the record and considering comments received, the Commission adopted the rule 

changes as proposed with clarifying revisions to procedures for FOIA requests.160 The revised rules 

were intended to strike a reasonable balance between ensuring the free flow of information in the 

interagency deliberative process and maintaining adequate transparency.161

Annual Reports

Besides the Annual Report to Congress, the Commission issues three other reports each year that 

analyze information from the Postal Service’s Annual Compliance Report (ACR). The ACR analyzes 

costs, revenues, rates, and quality of service for Market Dominant and Competitive products.162 The 

ACR also includes information about mail volumes, service performance, and customer satisfaction for 

Market Dominant products, as well as information on workshare discounts and market tests.163 The 

PAEA requires the Postal Service to prepare and submit the ACR to the Commission within 90 days 

after the fiscal year ends on September 30.164

The Commission’s Annual Compliance Determination (ACD) assesses the Postal Service’s compliance 

with statutory pricing and service requirements. The Financial Analysis Report analyzes the 

Postal Service’s overall financial position. The Analysis of Postal Service Performance Goals and 

Performance Plan evaluates whether the Postal Service met its performance goals and makes related 

recommendations. In FY 2023, each report was issued in Docket No. ACR2022 and is described 

below.165
31 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

Annual Compliance Determination

The ACD is an important tool for enhancing transparency and accountability by determining whether 

the Postal Service complied with statutory pricing and service requirements in a given fiscal year. 

After receiving the ACR, the Commission has 90 days to solicit public comment and determine 

whether (1) any rates or fees in effect during the fiscal year did not comply with applicable laws and 

(2) the Postal Service met its service standards in effect during the fiscal year.166 The Commission 

publishes its analysis of the ACR in the ACD.

The Commission issued the FY 2022 ACD on March 29, 2023, and made several principal findings and 

directives, which are shown in Figure III-3.
Chapter 3 | 32

Figure III-3

FY 2022 ACD Principal Findings and Corresponding Directives/Recommendations

a

 The Pilot Program for Gift Cards allows postal retail customers to use payroll and business checks to purchase stored value Gift Cards, which is a 

Competitive product. FY 2022 ACD at 4. To date, the Postal Service has sold 7 gift cards as a part of this pilot program.

b

 IAAs are Postal Service agreements with other government agencies for providing nonpostal products. Id.

Source: FY 2022 ACD at 1-4, 18-19, 22, 27, 29, 36-37, 48, 52-53, 56-57, 61-62, 64, 87.

With respect to service performance, the Commission evaluated each Market Dominant product by 

comparing the percentage of mailpieces that achieve the stated service standard with targets set by 

the Postal Service.167 It found that a significant number of Market Dominant products failed to meet 

their annual service performance targets for FY 2022.168 Figure III-4 below shows whether each 
33 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

Market Dominant product achieved their annual service performance targets for FY 2022. Of the 27 

Market Dominant products/categories measured, 13 products/categories did not meet their targets in 

FY 2022, and some were substantially below the applicable target.169

Figure III-4

FY 2022 Service Performance Results for Market Dominant Products

Source: FY 2022 ACD at 105.

The Commission found that reduced employee availability, transportation disruptions, and changes 

in the mail mix continued to affect service performance results in FY 2022.170 For the noncompliant 

products shown in Figure III-4, the Commission directed the Postal Service to improve service 

performance results to achieve the applicable on-time percent target level in FY 2023.171 It developed 

directives designed to elicit information and data regarding service performance for non-compliant 

products and the steps the Postal Service will need to take to restore service performance for these 

products in FY 2023.172 These directives included continued Postal Service reporting of specific 

information developed from its internal metrics within 90 days after the FY 2022 ACD was issued and 

as part of the FY 2023 ACR.173
Chapter 3 | 34

Financial Analysis

The Commission issued its Financial Analysis of the United States Postal Service Financial Results and 

10-K Statement for FY 2022.174 The report provided comprehensive analysis of the Postal Service’s 

financial status primarily using information reported in its FY 2022 Form 10-K and its FY 2022 

Integrated Financial Plan.175 The Commission found that in FY 2022, the Postal Service recorded a 

net loss from operations of $0.5 billion, a $2.2 billion improvement from FY 2021.176 The decrease in 

the FY 2022 net operating loss was the result of a $1.6 billion increase in revenue and a $0.5 billion 

decrease in operating expenses.177

The Commission found that at the end of FY 2022:

• The Postal Service’s total net loss excluding the removal of the RHB liability was $0.9 billion

• The Postal Service experienced the highest positive growth recorded in capital 

assets since the start of the PAEA

• Cash and cash equivalents (excluding restricted cash) totaled $19.6 billion, a decrease 

of $4.3 billion

• Operating revenue was $78.6 billion, which was $1.6 billion more than FY 2021

• Total operating expenses were $79.1 billion, which were $0.5 billion less than FY 2021

• Approximately 72.6 percent of total expenses were personnel-related178

Analysis of Performance Goals

Each year, the Commission must evaluate whether the Postal Service met the performance goals 

established in the Postal Service’s annual performance report and performance plan.179 The 

Commission may also provide the Postal Service with recommendations related to protecting or 

promoting public policy objectives in Title 39.180

On June 28, 2023, the Commission issued a detailed analysis of the Postal Service’s progress during 

FY 2022 toward its four performance goals: (1) High-Quality Service, (2) Excellent Customer 

Experience, (3) Safe Workplace and Engaged Workforce, and (4) Financial Health.181 In its analysis, 

the Commission evaluated whether the FY 2023 Annual Performance Plan and FY 2022 Annual 

Performance Report complied with 39 U.S.C. §§ 2803 and 2804.182 Also, the Commission found that 

the Postal Service either met or partially met each performance goal in FY 2022.183 The Commission 

provided related observations and recommendations for each performance goal to help the Postal 

Service meet the performance goal and better assess its performance in future years.184
35 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

Public Inquiries

Public inquiry dockets are established by the Commission to provide a venue to explore issues 

of general interest. Six public inquiry dockets were before the Commission in FY 2023 that dealt 

with matters related to the Postal Service’s Delivering for America strategic plan (DFA Plan), the 

classification of FCPS, postal cost attribution regulations, the value of the postal monopoly, the cost of 

the Universal Service Obligation (USO), and resolving suspended Post Offices.

Delivering for America Plan

On April 20, 2023, the Commission established 

a public inquiry docket in Docket No. PI2023-

4 to examine the recent and planned network 

changes associated with the Postal Service’s 

DFA Plan.185 The DFA Plan is the Postal 

Service’s 10-year strategic plan announcing 

potential changes intended to achieve financial 

stability and service excellence.186 The DFA 

Plan describes several significant changes to 

the Postal Service network, including plans 

to redesign and modernize its processing 

and delivery network by creating sorting and delivery centers (S&DCs) nationwide.187 S&DCs will 

consolidate multiple delivery units and package sortation operations into one facility.188

The Commission observed that “stakeholders have expressed concerns regarding a lack of a forum to 

explore the impacts of these proposed changes” resulting from the DFA Plan.189 It stated that providing 

a forum to learn more about DFA Plan initiatives that may significantly impact the postal community 

would be beneficial and promote transparency.190 Accordingly, the Commission established a public 

inquiry docket to provide a forum for seeking more information about the S&DCs and other planned 

initiatives associated with the DFA Plan.191

The Postal Service subsequently filed a motion asking the Commission to reconsider its order 

establishing the public inquiry and withdraw Docket No. PI2023-4 for several reasons.192 First, it 

asserted that the Commission lacked statutory authority to initiate this proceeding and failed to 

identify any legal authority for doing so.193 It took the position that the Commission has no oversight 

over the Postal Service’s strategic plans, and the Commission may not rely on its authority under 39 

U.S.C. §§ 503 and 504(f).194 Second, the Postal Service asserted that the Commission lacks authority 

to review the DFA Plan because it is a forward-looking document that the Postal Service regularly 

evaluates, updates, and revises.195 Third, it observed that inquiring into specific initiatives within the 

DFA Plan are properly resolved through other proceedings that permit Commission review and public 

input, such as advisory opinions.196
Chapter 3 | 36

Several parties filed responses to the Postal Service’s motion.197 After reviewing the motion 

and considering comments received, the Commission issued an order denying the motion for 

reconsideration.198 The Commission found that the motion was premature because it had merely 

opened a public inquiry docket and had not issued any orders or directives.199 It reiterated that the 

public inquiry was not intended to be an advisory opinion or comprehensive review of the DFA 

Plan.200 The Commission explained that it previously recognized that portions of the DFA Plan, such 

as workforce-related initiatives and legislative advocacy, fall outside the scope of the Commission’s 

jurisdiction.201 It stated that “where planned and implemented initiatives may implicate Commission 

oversight, the Commission must ensure these initiatives comply with statutory and regulatory 

requirements[,]” and the public inquiry docket was an appropriate forum for doing so.202

Five Chairman’s Information Requests (CHIRs) were issued.203 This proceeding is pending before the 

Commission.

Classification of First-Class Package Service

On April 7, 2023, the Commission issued an order initiating a public inquiry on the classification of 

First-Class Package Service (FCPS) (now part of the expanded USPS Ground Advantage product).204

FCPS was a Competitive product that allowed customers to ship under-1-pound packages across 

the continental United States in 2 to 5 business days.205 The Commission described the historical 

classification of FCPS and explained how FCPS was transferred from the Market Dominant to the 

Competitive product list.206 It then described recent developments regarding FCPS that led to concerns 

about whether FCPS should be classified as a Competitive product.207 The Commission stated that 

it “recognize[d] that the larger history of price increases and reductions in service standards raised 

by the commenters may call into question whether FCPS is correctly classified as a Competitive 

product."208 Thus, it initiated this public inquiry to examine this issue further.

The Commission invited interested persons to comment on whether FCPS, or its equivalent within 

USPS Ground Advantage, is correctly classified as a Competitive product.209 One CHIR was issued 

and six comments and reply comments were filed. This proceeding is currently pending before the 

Commission.

Review of Postal Service Cost Attribution Regulations

Postal cost attribution involves allocating the Postal Service’s incurred costs to each mail class, 

product, and service. The Postal Service uses a two-tier costing system to categorize its accrued 

costs.210 It first identifies all costs that can be reliably and causally linked to individual postal products 

or groups of products and attributes those costs to products or product groupings.211 All remaining 

costs are classified as institutional.212
37 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

The PSRA required the Commission to initiate a review of postal cost attribution regulations issued 

pursuant to 39 U.S.C. §§ 3633(a) and 3652(a)(1) “to determine whether revisions are appropriate to 

ensure that all direct and indirect costs attributable to competitive and market-dominant products are 

properly attributed to those products . . . .”213 During this review, the Commission must also consider 

the underlying methodologies in determining cost attribution, as well as options to revise these 

methodologies.214 After notice and public comment, if the Commission determines that revisions are 

appropriate, it must make changes or adopt alternative methodologies as necessary.215

The Commission initiated this review on March 31, 2023 by establishing a public inquiry in Docket No. 

PI2023-2.216 It sought comments on whether any changes are necessary to regulations and analytical 

principles (including costing methodologies or cost models) related to postal cost attribution “to 

ensure that all direct and indirect costs attributable to competitive and market-dominant products 

are properly attributed to those products . . . .”217 This proceeding is currently pending before the 

Commission.

Value of the Postal Monopoly

In Chapter IV of the Annual Report, the Commission estimates the value of the Postal Service’s 

combined letter and mailbox monopolies, which are referred to as the postal monopoly. The Annual 

Report includes a separate estimate of the value of the mailbox monopoly alone.218 The letter 

monopoly is the Postal Service’s exclusive right to carry and deliver most addressed, paper-based 

correspondence.219 The mailbox monopoly is the Postal Service’s exclusive right to deliver to and 

collect from mailboxes.220

In FY 2020, the Commission initiated a public inquiry docket to evaluate the methodology for 

estimating the value of the postal and mailbox monopolies (Estimation Methodology).221 The 

Commission requested comments on the Estimation Methodology.222 On August 31, 2023, after 

reviewing the record and considering comments received, the Commission issued an order revising 

the Estimation Methodology to account for the effect of City Carrier Cost System (CCCS) data 

changes.223 It filed an accompanying library reference consisting of data used to develop FY 2020 and 

FY 2021 estimates of the value of the postal monopoly and mailbox monopoly.224

The Commission stated that it would accept comments on the revised Estimation Methodology and 

accompanying library reference.225 Docket No. PI2020-1 remains pending to allow the Postal Service 

to file data the Commission requires to estimate the value of the combined postal and mailbox 

monopolies in the Annual Report, as well as consider other issues the Commission may designate.226
Chapter 3 | 38

Universal Service Obligation Valuation Methodology

On December 10, 2020, the Commission initiated a public inquiry docket to consider potential 

changes to the Commission’s methodology for estimating the cost of the USO (USO Cost).227 The 

Commission last considered this methodology in its 2008 report on the USO and postal monopoly.228

In this report, the Commission explained that the Postal Service’s overarching USO is set forth in 

39 U.S.C. § 101(a), which requires the Postal Service to “provide postal services to bind the Nation 

together through the personal, educational, literary, and business correspondence of the people. It 

shall provide prompt, reliable, and efficient services to patrons in all areas and shall render postal 

services to all communities.”229

In the USO Report, the Commission estimated the USO Cost, which it updates each year in the Annual 

Report, based on the methodological approach adopted in the USO Report.230 This methodology 

was based on economic, technical, legislative, and societal considerations in 2008, which have 

potentially changed since then.231 Thus, the Commission established Docket No. PI2021-1 to revisit 

the assumptions underlying this methodology to ensure that the Commission’s estimated USO Cost 

reflects the current environment in which the Postal Service operates.232

The Commission sought public comment on any and all aspects of the methodology for estimating 

the USO Cost, including suggestions for revising any outdated assumptions and input on what data or 

analytical methods would be necessary to incorporate suggested changes into the methodology.233 It 

identified frequency of delivery and maintaining small Post Offices as two USO Cost components with 

valuation assumptions that appear ripe for revisiting.234

To facilitate potentially updating or improving selected inputs into the Commission’s calculation of the 

USO Cost, four CHIRs were issued, and responses were filed by the Postal Service. This proceeding is 

currently pending before the Commission.

Resolving Suspended Post Offices

On February 3, 2022, the Commission established a proceeding concerning suspended Post Offices.235

A Post Office suspension occurs when the Postal Service stops operations at a Post Office because 

of an emergency or similar situation.236 The Commission explained that it has monitored the Postal 

Service’s progress in resolving suspended Post Offices for multiple fiscal years, primarily via its ACR 

review proceedings.237 In recent ACDs, the Commission expressed concern regarding the large number 

of suspended Post Offices and the apparent lack of commitment by the Postal Service in addressing 

and resolving them.238 Accordingly, the Commission initiated this public inquiry docket “to identify 

and address issues impeding the Postal Service’s progress in resolving these suspended post offices 

in a timely manner.”239 It sought input from the public regarding suggested procedures or courses of 

action for how the Postal Service may expeditiously resolve suspended Post Offices.240
39 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

The Commission received three comments, and one CHIR was issued. This proceeding is currently 

pending before the Commission.

Proposals to Change Analytical Principles

Analytical principles are economic, mathematical, or statistical theories or assumptions the Postal 

Service applies when producing reports it submits to the Commission each year, such as the ACR.241

In these reports, the Postal Service must use only those analytical principles previously accepted by 

the Commission and applied in the most recent ACD, unless a different analytical principle has been 

subsequently approved through a Commission proceeding.242

To add or change an accepted analytical principle, any interested person, including the Postal Service 

or a Public Representative, may submit a petition asking the Commission to initiate a proceeding 

to consider proposed changes.243 Petitions are filed with the Commission as numbered proposals. 

Proposals must be designed to improve the quality, accuracy, or completeness of data or data analysis 

in the reports that the Postal Service submits each year to the Commission.244

During FY 2023, the Commission considered 10 Postal Service proposals and 1 proposal filed by NPPC 

et al. The Commission issued final orders for all but two proposals. Major proposals are described 

below.

Completed Proposals

DOCKET NO. RM2023-9 (PROPOSAL FOUR)

In Proposal Four, the Postal Service proposed a new methodology to adjust the Priority Mail 

transportation costs utilized for financial projections of the expected cost coverage for NSAs.245 First, 

the proposed changes would make a correction to the base year Priority Mail Transportation Cost 

Model.246 Second, Proposal Four would create a new mechanism for adjusting transportation costs by 

zone.247

The Commission approved Proposal Four because it found that “the proposed revisions to the 

analytical principles related to Priority Mail transportation costs by zone represent an improvement 

to the quality, accuracy, and completeness of the analysis of data contained in the Postal Service’s 

annual periodic reports to the Commission.248 It explained that the two proposed changes represent 

an improvement to the quality and accuracy of analysis because they allow the Postal Service to 

account for operational changes occurring throughout the fiscal year.249 The Postal Service stated 

that it anticipates transportation network changes to continue in the remainder of CY 2023 and 

into CY 2024, indicating that prior fiscal year Priority Mail costs (with inflation applied) may no 

longer be appropriately predictive of the Priority Mail NSAs’ expected costs.250 Therefore, this update 

represented an improvement in the analysis of expected cost coverage of each NSA.251
Chapter 3 | 40

DOCKET NO. RM2023-4 (PROPOSAL ONE)

Proposal One sought to update the Postal Service’s methodology for calculating workshare discount 

passthrough percentages for dropshipped, flat-shaped USPS Marketing Mail pieces.252 The Postal 

Service explained that, in its next notice of rate adjustment for Market Dominant products, it 

intended to revise its pricing for flat-shaped USPS Marketing Mail pieces with piece and pound price 

components by using a pricing structure “based primarily upon pieces” rather than one based upon 

pounds.253 The Postal Service stated that, under this revision, every piece, regardless of weight, will 

pay a fixed per-piece price depending on where the price was entered.254 The Postal Service also 

explained that pieces heavier than the breakpoint will pay a per-pound price for pounds above the 

breakpoint.255 Moreover, all dropship discounts will be “piece-price based,” and pound prices will not 

vary by dropship entry point.256

The Postal Service asserted that, by replacing the old structure “with the new structure based 

upon pieces rather than pounds, workshare discount passthrough percentages cannot vary with 

the different weights of the pieces mailed because passthrough percentages will be calculated 

independently of the volumes and weights of pieces mailed.”257 Therefore, according to the Postal 

Service, “the new pricing paradigm removes the underlying cause of the problem where it was 

difficult, and sometimes impossible, for the Postal Service to make passthrough percentages for 

some flat-shaped [USPS] Marketing Mail pieces comply” with 39 C.F.R. §§ 3030.283 and 3030.284.258

The Postal Service asserted that its proposal “will allow the Postal Service to retire the current 

methodology for calculating workshare discount passthrough percentages at issue here and use the 

same methodology as it uses for most other products, dividing the per-piece discount by the per-piece 

cost avoidance . . . .”259 The Postal Service provided examples of the proposed pricing structure and 

workshare discount passthrough calculations “[u]sing illustrative, revenue-neutral prices from the 

new pricing paradigm.”260

The Commission approved Proposal One because it will improve accuracy under the Postal Service’s 

planned rate structure.261 It stated that because the planned price structure will be based upon pieces 

rather than pounds, the existing methodology to calculate the passthrough would no longer align with 

planned rate structure.262 The Commission found that Proposal One’s revision to the passthrough 

calculation better reflects the pricing elements of the planned rate structure and produces a more 

accurate measure of workshare discount compliance than the existing methodology used to calculate 

passthroughs.263

Photo Credit: USPS
41 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

Dockets Related to Removing Prefunding Payment Liabilities

DOCKET NOS. RM2023-1, RM2023-2 (PROPOSAL SEVEN), AND RM2023-3 

(NPPC ET AL. PROPOSAL ONE)

These three dockets pertained to the accounting treatment of the PSRA’s removal of prefunding 

payment liabilities264 culminating with the Commission’s approval of Proposal Seven in Docket No. 

RM2023-2.265

Retiree health benefit normal costs represent the present value of the estimated retiree health 

benefits attributable to active employees’ current year of service.266 Between FY 2017 and FY 2021, 

the Postal Service was required to pay retiree health benefit normal costs and amortization payments 

for the unfunded portion of the Postal Service Retiree Health Benefit Fund (PSRHBF) obligation as 

calculated by the Office of Personnel Management.267 When the PSRA was enacted, among other 

changes, it repealed this requirement and instead required that the Postal Service pay into the 

PSRHBF for current retiree health care costs equal to the excess of the cost of annual claims over 

premiums.268

The PSRA’s removal of prefunding liabilities resulted in a one-time reversal of $57.0 billion accrued 

but unpaid RHB prefunding liabilities between September 2012 and September 2021.269 On August 

12, 2022, the Postal Service filed with the Commission a letter explaining its proposed costing 

treatment of retiree health benefit normal costs in FY 2022.270 The Commission initially approved 

the Postal Service’s proposed approach, but reversed its approval in response to a petition for 

reconsideration.271 The Commission issued Order No. 6363 granting the petition for reconsideration in 

part and describing how accepted analytical principles would apply to the treatment of retiree health 

benefit normal costs in FY 2022.272 It stated that if any party seeks to change this approach, it needed 

to file a petition to change analytical principles pursuant to 39 C.F.R. part 3050.273

The Commission received two responses to Order No. 6363. First, the Postal Service filed a petition 

proposing an accounting treatment for the removal of the Postal Service’s retiree health benefit 

prefunding liabilities effected by the PSRA, which the Commission designated as Proposal Seven.274

Second, several mailers filed a petition seeking to include, accrue, and attribute retiree health benefit 

normal costs in the Postal Service’s and Commission’s reporting and analysis of FY 2022 and future 

years, which the Commission designated as NPPC et al. Proposal One.275 Each proposal is discussed 

below.

DOCKET NO. RM2023-2 (PROPOSAL SEVEN)

Proposal Seven sought a modification to the CRA that would not recognize the effect of removal of the 

liability as a negative expense.276 The Postal Service offered two alternatives for recording the PSRA 

adjustment.277 Alternative One would not include the $57.0 billion in the CRA.278 Consequently, the 

total expenses in the General Ledger would not match the total costs in the CRA for FY 2022, and the 
Chapter 3 | 42

data in the supporting reports (CRA, Cost Segment and Component Reports (CSC)) for FY 2022 would 

be unreconciled with the general ledger and not accurate and complete in comparison with the Postal 

Service’s FY 2022 Form 10-K.279

Alternative Two would include the $57.0 billion in the CRA and also reconcile the supporting reports 

with the Postal Service’s FY 2022 Form 10-K.280 The Commission found that Alternative Two was more 

accurate and improved transparency by reporting the $57.0 billion in the supporting documents, 

which Alternative One does not.281 The Commission approved Proposal Seven with a modification to 

Alternative Two.282

DOCKET NO. RM2023-3, NPPC ET AL. PROPOSAL ONE 

NPPC et al. Proposal One sought to ensure that retiree health benefit normal costs are treated as 

accrued in FY 2022 and attributed to products as they have been in past years.283 After reviewing the 

record and considering comments received, the Commission rejected NPPC et al. Proposal One.284 The 

Commission explained that attributing costs for which there is no actual expense in a given fiscal year 

would result in less accurate costing data, could cause illogical and unfair pricing effects, would not 

improve the quality of the comparability of data across fiscal years, and is inconsistent with the PAEA’s 

cost causation standards.285

OTHER COMPLETED PROPOSALS

In FY 2023, the Commission approved Postal Service proposals to:

• Modify the Parcel Select (PS)/Parcel Return Service (PRS) mail processing and

 transportation cost models286

• Improve and streamline the ICRA Cost model provided in ACR Library Reference NP2287

• Develop procedures for estimating the revenues and costs associated with interagency 

agreements288

• Revise analytical principles that apply to Contract Delivery Service costs289

• Use additional sampling of peak season trips with the Transportation Cost System to 

develop a separate distribution key for the costs in peak season highway accounts290

PENDING DOCKETS

Docket No. RM2022-3 (Proposal One)

Proposal One sought to update and improve the methodology for calculating attributable city carrier, 

letter route, street time costs. 291 This would be accomplished through a new study of city carrier 

street time costs that relies upon expanded operational carrier data and employs an overall top-down 

model as requested by the Commission in Docket No. RM2015-7.292 This proceeding is currently 

pending before the Commission.
43 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

Docket No. RM2023-11 (Proposal Six)

Proposal Six sought to make changes to the mail processing and destination entry cost models for 

letter-shaped USPS Marketing Mail pieces to account for recent price structure changes.293 This 

proceeding is currently pending before the Commission.

Docket No. RM2022-1 (Priorities for Future Data Collection and Analytical Work)

In FY 2021, the Commission established a proceeding to set priorities for future data collection and 

analytical work.294 The purpose of this proceeding was “to consider possible improvements to the 

quality, accuracy, or completeness of data” the Postal Service provides in the ACR.295 The objective was 

“to arrive at a consensus as to the priorities that should be assigned to various areas of future research 

and the nature of the data and analytical methods that future research should employ.”296

Participants filed comments and reply comments, and the Commission subsequently approved several 

Postal Service petitions to change analytical principles.297 On May 8, 2023, the Commission issued an 

order directing the Postal Service to submit an update describing developments and progress from the 

time it filed reply comments on April 29, 2022.298 In the update, the Postal Service was required to:

• Describe progress made on each of the research topics identified in its initial comments

• Identify and describe any new research topics it proposes to include in this docket

• Set a tentative schedule and action plan for each research topic

• Include any other information it proposes that the Commission consider299

The Postal Service filed the update on June 16, 2023.300 The Commission stated that after reviewing 

this update, it intends to provide future procedural guidance for further participation in this 

proceeding, which may include additional opportunity for comments and technical conferences 

concerning particular research topics.301 This proceeding is currently pending before the Commission.

Other Proceedings

Several other proceedings were before the Commission in FY 2023, which are described below.

Market Tests

The PAEA permits the Postal Service to conduct market tests of experimental products, which allows 

the Postal Service to offer products and services for a limited time period without being subject to 

the applicable requirements of 39 U.S.C. §§ 3622, 3633, or 3642, or the regulations promulgated 

under those sections.302 Before initiating a market test, the Postal Service must provide at least 30 

days’ advance notice to the Commission through a filing containing certain information.303 A proposed 

market test cannot proceed unless the experimental product satisfies three requirements:
Chapter 3 | 44

• From the viewpoint of the mail users, the product is significantly different from all products 

offered by the Postal Service within the 2-year period preceding the start of the test

• The introduction or continued offering of the experimental product will not create an unfair 

or otherwise inappropriate competitive advantage for the Postal Service or any mailer, 

particularly in regard to small business concern.

• The Postal Service identifies the product as either Market Dominant or Competitive304

A market test may not exceed 24 months in duration unless the Commission authorizes an extension 

for up to an additional 12 months.305 Generally, experimental product revenues may not exceed $10 

million in any fiscal year (in FY 2008 dollars, adjusted for CPI-U), unless the Commission grants an 

exemption.306 For each market test, the Postal Service must provide quarterly reports of volumes 

and revenues disaggregated by geographic area, as well as reports of attributable costs incurred in 

conducting the test.307

One market test was active in FY 2023. On January 4, 2022, the Commission authorized the market 

test of an experimental product called USPS Connect Local Mail, which offers an alternative to longdistance end-to-end mailing that business mailers may use to send documents locally with regular 

frequency.308 It provides same-day or next-day delivery, 6 days per week, with customers receiving 

same-day or next-day delivery based on when they enter their mail.309

PROPOSED CONVERSION TO PERMANENT OFFERING

The Commission’s regulations permit the Postal Service to add an experimental product to the Market 

Dominant or Competitive product list as a new, permanent offering by filing a request under 39 U.S.C. 

§ 3642 and 39 C.F.R. part 3040, subpart B.310 On October 11, 2022, the Postal Service filed an initial 

request to convert the USPS Connect Local Mail experimental product to a permanent offering.311

The Commission dismissed without prejudice the Initial Request because it did not “contain the 

information required by law and necessary for the Commission to determine the appropriateness 

of converting USPS Connect Local Mail to a permanent product offering . . . .”312 It provided the 

Postal Service the opportunity to refile a compliant request, which the Postal Service submitted on 

November 9, 2022.313

Commenters raised significant issues concerning whether converting USPS Connect Local Mail to 

a permanent offering would violate 39 U.S.C. § 404a.314 Section 404a, in relevant part, prohibits 

the Postal Service from establishing any rule, regulation, or standard that effectively “precludes 

competition or establish the terms of competition unless the Postal Service demonstrates that the 

regulation does not create an unfair competitive advantage for itself or any entity funded (in whole 

or in part) by the Postal Service[.]”315 Specifically, commenters pointed out that the Postal Service was 

restricting payment options for USPS Connect Local Mail to those the Postal Service provides, which 

they alleged precludes or establishes the terms of competition for postage evidencing services.316

After reviewing the filings and comments received, the Commission dismissed the Revised Request 
45 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

without prejudice.317 The Commission found that commenters raised meaningful issues suggesting 

that converting USPS Connect Local Mail to a permanent offering may violate section 404a, and the 

Postal Service did not adequately address these issues.318 Also, the Commission observed that the 

Revised Request was premature because of several cost, operational, and pricing uncertainties with 

USPS Connect Local Mail that required further investigation before converting it to a permanent 

offering.319 It stated that it expects a future revised conversion request to meaningfully address four 

topics: (1) projections of costs, product performance, volume trends, and seasonality; (2) revenues 

and financial stability; (3) impact of S&DCs on customer demand; and (4) appropriate pricing 

options.320

EXTENSION OF MARKET TEST

On December 13, 2023, the Commission approved the Postal Service’s request to extend the 

USPS Connect Local Mail market test for another 12 months to expire on January 9, 2025.321 The 

Commission stated that granting an extension would provide the Postal Service more time to address 

issues identified with converting the USPS Connect Local Mail experimental product to a permanent 

offering.322 It directed the Postal Service to continue filing quarterly data collection reports and to 

include updates describing its progress toward allowing third-party payment options.323

Complaints

A complaint may be filed with the Commission by any interested person (including the Public 

Representative) who believes the Postal Service is not complying with certain requirements of Title 

39.324 Within 90 days after it receives a complaint, the Commission must issue an order that either 

(1) finds that the complaint raises at least one material issue of fact or law and begins proceedings 

on the complaint or (2) dismisses the complaint.325 The Commission’s rules governing complaints are 

codified in 39 C.F.R. part 3022.

COMPLAINT OF MARK ALLAN EDWARDS

On July 7, 2023, Mark Allan Edwards filed a complaint pursuant to 39 U.S.C. §§ 3662(a), 401(2), 

and 403(c) with the Commission challenging the Postal Service’s decision to terminate delivery of 

oversized packages to his front door.326 The Postal Service filed a motion to dismiss the complaint.327

The Commission issued an order328 finding that the Complaint raised material issues of fact relevant to 

whether the Postal Service’s actions or inactions violated 39 U.S.C. § 403(c), which prohibits the Postal 

Service from making any undue or unreasonable discrimination among mail users, as well as granting 

any undue or unreasonable preferences to a mail user.329

The Commission initiated limited formal proceedings and appointed a Presiding Officer to determine 

outstanding issues of material fact.330 The Presiding Officer issued a ruling establishing a procedural 

schedule and case management procedures and setting dates for discovery, a prehearing video 

conference, and hearing of evidence.331 The Presiding Officer also issued two information requests.332

The complaint is currently pending before the Commission.
Chapter 3 | 46

OTHER COMPLAINTS

On November 4, 2022, Stephen Stahlman filed a complaint pursuant to 39 U.S.C. §§ 3662(a) and 

101(b) concerning the cancellation of mail delivery service to his home.333 The Postal Service filed a 

motion to dismiss the complaint.334 The Commission granted the motion to dismiss and dismissed the 

complaint with prejudice because Mr. Stahlman failed to state a claim for which relief can be granted, 

did not comply with the Commission’s rules for filing complaints, and requested relief that the 

Commission does not have the authority to grant.335

However, in an effort to help Mr. Stahlman, the Commission referred the matter to the Postal Service as 

a rate or service inquiry pursuant to 39 C.F.R. § 3022.13(b).336 Within 45 days after receiving the rate 

or service inquiry, the Postal Service was required to advise the Commission in writing, with a copy to 

Mr. Stahlman, of its resolution of the inquiry or its inability or refusal to do so.337 On March 17, 2023, 

the Postal Service filed with the Commission a letter to Mr. Stahlman responding to his inquiry.338

On February 6, 2023, the Commission received a complaint pursuant to 39 U.S.C. §§ 3662(a), 3691(d), 

and 403(c) from Richard Orville, Torp challenging the Postal Service’s decision to terminate general 

delivery service to him at the South Haven Post Office.339 The Postal Service filed a motion to dismiss 

the complaint.340 Before the Commission acted on the complaint, Mr. Orville, Torp filed an appeal with 

the D.C. Circuit, which is discussed below under “Court of Appeals Cases.”

On May 3, 2023, the Commission granted the motion to dismiss in part and dismissed the complaint 

without prejudice because Mr. Orville, Torp did not comply with the Commission’s rules for filing 

complaints.341 Although the complaint alleged statutory violations within the Commission’s subject 

matter jurisdiction, the Commission found that Mr. Orville, Torp did not provide “any nexus between 

the facts presented and those alleged statutory violations for the Commission to review.”342

On October 17, 2023, an unnamed postal customer (Complainant) filed a complaint with the 

Commission concerning the suspension of mail delivery to her home.343 The Postal Service filed a 

motion to dismiss the complaint, which Complainant opposed.344 Complainant also filed a motion 

for preliminary injunctions, which the Postal Service opposed.345 On November 28, 2023, the Postal 

Service filed a response stating that it does not oppose Complainant’s request for a temporary stay to 

determine the prospects for settling this complaint.346 The Commission granted the motion to dismiss 

in part and dismissed with prejudice all claims except for one alleging undue discrimination under 39 

U.S.C. § 403(c).347 It referred the matter to the Postal Service as a rate or service inquiry pursuant to 39 

C.F.R. § 3022.13(b).348

On February 2, 2024 the Postal Service advised the Commission that the complaint is resolved and the 

parties agreed to relocate the customer’s delivery point.349
47 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

POST OFFICE CLOSING APPEALS

The PAEA permits any person served by a Post Office to appeal its closing or consolidation to the 

Postal Regulatory Commission.350 In FY 2023, there were two Post Office closing appeals that the 

Commission ultimately dismissed for lack of jurisdiction. On July 25, 2023, Daniel Karmolinski 

and Dorothy Karmolinski appealed the Postal Service’s determination to close the Westbrookville 

Community Post Office (CPO) located in Westbrookville, New York.351 The Commission dismissed 

the appeal with prejudice because it lacked jurisdiction to consider appeals of contractor-operated 

facilities such as CPOs that were not the “sole source” of postal services for the community.352

On August 16, 2023, Catherine Hackett-Brown appealed the Postal Service’s determination to close 

the Sherwood retail facility located in Topeka, Kansas.353 The Commission dismissed the appeal with 

prejudice for lack of jurisdiction because the facility in question was a mail sorting and delivery 

facility that did not fall under the Commission’s jurisdiction over Post Office closings.354

FLATS OPERATIONS STUDY

Flat-shaped mail (flats) refers to large envelopes, magazines, and other flexible, rectangular mail that 

meet certain criteria.355 Service performance and operational efficiency for flats has historically been 

below other types of mail. Thus, the PSRA required the Commission to conduct a Flats Operation 

Study (Flats Study) to comprehensively identify the causes of inefficiencies when collecting, sorting, 

transporting, and delivering flats.356 The Flats Study must also quantify the effects of the volume 

trends, investment decisions, excess capacity, and Postal Service operational inefficiencies on flats 

attributable costs.357

To implement the Flats Study, the Commission initiated Docket No. SS2022-1 to facilitate receiving 

data and information from the Postal Service to prepare the report.358 In addition to reviewing flats 

data provided by the Postal Service, Commission staff also visited Postal Service facilities, visited 

mailers’ facilities, contracted with an operations expert, and consulted with the Postal Service Office of 

Inspector General. On April 6, 2023, the Commission issued the Flats Study and made several principal 

findings:

• In FY 2022, the cost coverage for all flats products increased, but unit attributable costs

 also increased for most flats products

• Since FY 2010, total flats volume has declined by 43.4 percent, an average of 4.6 percent 

annually

• Six pinch points that the Commission identified in past ACDs continue to contribute to flats 

cost and service issues: bundle processing, automated processing, manual sorting, allied 

operations, transportation, and last mile/delivery

• Bundle breakage often results in inefficient manual processing of individual flats, 

and reported bundle breakage rates are likely underestimated
Chapter 3 | 48

• For manual flats sorting, measuring both workhours and volumes are unreliable because of 

clocking errors and the lack of machine counts

• Insufficient data and data quality issues make it difficult to assess the Postal Service’s ability 

to improve flats processing efficiency359

The PSRA also required the Postal Service to either develop and implement a plan to remedy each 

inefficiency identified in the Flats Study (Flats Plan) or explain why remedying such inefficiency is 

impracticable.360 The Commission must approve the Flats Plan before the Postal Service implements 

it.361 The Postal Service submitted the Flats Plan to the Commission for approval on October 6, 2023.362

To evaluate the Flats Plan for approval, the Commission sought further information from the Postal 

Service and invited comments from interested persons on whether the Flats Plan was consistent with 

applicable statutory requirements.363 This proceeding is currently pending before the Commission.

Court of Appeals Cases

A person adversely affected or aggrieved by a Commission final order or decision may appeal 

the order or decision to the D.C. Circuit within 30 days after it becomes final.364 Four appeals of 

Commission decisions were pending before the D.C. Circuit in FY 2023.

On February 25, 2022, UPS filed a petition for review of Order No. 6048 rejecting UPS Proposal One.365

The D.C. Circuit issued an order holding the appeal in abeyance pending the issuance of a final order in 

Docket No. RM2022-2 concerning institutional costs.366 The Commission issued a final order in Docket 

No. RM2022-2 when it finalized rules related to the appropriate share in Order No. 6399.367 UPS also 

appealed Order No. 6399,368 and the D.C. Circuit issued an order setting briefing schedules for both 

court of appeals cases.369 Oral argument for both appeals occurred on December 5, 2023.

On January 6, 2023, the Postal Service appealed Order No. 6363 that reversed the Commission’s 

previous approval of the Postal Service’s proposed costing treatment of retirement debt relief.370 The 

Postal Service and the Commission subsequently filed a joint motion to hold the appeal in abeyance 

until the completion of Docket No. RM2023-2 concerning Proposal Seven.371On March 17, 2023, the 

Commission issued a final order in Docket No. RM2023-2372 and filed a status report with the D.C. 

Circuit stating that parties will file motions as required by the court.373

On April 3, 2023, Richard Orville, Torp filed a petition for review concerning the complaint he filed 

with the Commission.374 This petition was filed before the Commission issued a final order dismissing 

the complaint.375 On May 18, 2023, the Commission filed a motion asking the D.C. Circuit to dismiss the 

petition for review as premature because the petition was filed before the Commission took any action 

on the complaint.376
49 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

International Postal Policy

The Secretary of State is responsible for formulating, coordinating, and overseeing international 

postal policy, as well as concluding postal treaties such as those involving the UPU.377 Headquartered 

in Berne, Switzerland, the UPU is an international treaty organization responsible for facilitating highquality universal mail service at affordable rates. Although the U.S. Department of State has primary 

authority over international postal policy, it must request the Commission’s views on whether any 

treaty, convention, or amendment that establishes a rate or classification for a Market Dominant 

product is consistent with the Market Dominant Rate System.378 The U.S. Department of State must 

ensure that each treaty, convention, or amendment concluded is consistent with the Commission’s 

views unless there is a foreign policy or national security concern.379

In FY 2023, the Commission also served in an advisory capacity to the U.S. Department of State in the 

formulation of U.S. Government positions in the UPU. These positions mainly related to ongoing work 

on remuneration for all international mail products and UPU reform towards the achievement of U.S. 

international postal policies in 39 U.S.C. § 407(a).

In particular, the Commission worked closely with the U.S. Department of State and other agencies 

to advance proposals and develop U.S. Government positions for the UPU Extraordinary Congress in 

Riyadh, Saudi Arabia. These included proposals to open the UPU to the wider postal sector in order to 

facilitate greater operational interconnectivity and interoperability between postal operators and the 

private sector to the benefit of consumers. These also included proposals to modernize international 

postal products and services. The UPU Extraordinary Congress adopted all of these proposals.

The Commission represented the U.S. Government in the Postal Union of the Americas, Spain, and 

Portugal Committee on Postal Regulation, which promotes regulatory frameworks in the postal sector 

of the Americas region that ensure efficient, quality services in fulfillment of a USO. In addition, the 

Commission participated in the Federal Advisory Committee on International Postal and Delivery 

Services chaired by the U.S. Department of State.
Chapter 4 | 50

CHAPTER FOUR

UNIVERSAL SERVICE OBLIGATION

 & POSTAL MONOPOLY

Photo Credit: USPS
51 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

Background

In this chapter, the Commission provides its annual estimates of the cost of the Universal Service 

Obligation (USO) and the value of the postal monopoly. In its Report on Universal Postal Service and 

the Postal Monopoly, the Commission stated that the overarching USO of the Postal Service is set 

forth in 39 U.S.C. § 101(a), which states that the Postal Service must “provide postal services to bind 

the Nation together through the personal, educational, literary, and business correspondence of the 

people. It shall provide prompt, reliable, and efficient services to patrons in all areas and shall render 

postal services to all communities.” The USO has seven principal attributes: (1) geographic scope, 

(2) product range, (3) access, (4) delivery, (5) pricing, (6) service quality, and (7) an enforcement 

mechanism.380

The postal monopoly is the Postal Service’s exclusive right to carry and deliver certain types of mail 

and deposit mail into mailboxes.381 Unlike the cost of the USO (USO Cost), the Commission is not 

required to estimate annually the value of the postal monopoly. In this chapter, the Commission 

provides estimates for both the USO Cost and the postal monopoly to present a balanced perspective. 

In 2008, the Commission estimated the USO Cost and the value of the postal monopoly in the USO 

Report. The Commission updates these estimates each year in the Annual Report. Beginning in FY 

2018, the net cost of the Postal Inspection Service was included in the estimate of the USO Cost. 

Also, the Commission initiated public inquiry proceedings to consider potential changes to the 

Commission’s methodology for estimating the USO Cost and postal monopoly.382

Estimated USO Cost

The PAEA requires the Commission to estimate the costs incurred by the Postal Service in providing 

three types of public services or activities:383

• Postal services to areas of the nation the Postal Service would not otherwise serve

• Free or reduced rates for postal services as required by Title 39

• Other public services or activities the Postal Service would not otherwise provide but for the 

requirements of law

The USO Cost is the total amount of costs incurred by the Postal Service in providing these public 

services or activities. Table IV-1 illustrates the estimated USO Cost for the last 5 fiscal years, FY 2018 

through FY 2022.384 Components of the USO are discussed individually below. 
Chapter 4 | 52

Table IV-1:

Estimated USO Cost ($ Millions)

The sum of columns may not equal total due to rounding.

In this chapter, the Commission provides estimates of the costs incurred by the Postal Service in 

providing the public services or activities under 39 U.S.C. § 3651(b)(1), describes related statutory 

requirements, and explains the methodologies used to estimate these costs.385

Postal Services to Areas of the Nation the Postal Service Would Not 

Otherwise Serve

The Commission must estimate the costs incurred by the Postal Service in providing:

postal services to areas of the Nation where, in the judgment of the Postal 

Regulatory Commission, the Postal Service either would not provide services 

at all or would not provide such services in accordance with the requirements 

of [Title 39] if the Postal Service were not required to provide prompt, reliable, 

and efficient services to patrons in all areas and all communities, including as 

required under the first sentence of [39 U.S.C.] section 101(b)[.]386

The Commission determines these costs by combining the estimated costs of maintaining small Post 

Offices, the Alaska Air Subsidy, and Group E Post Office (PO) Boxes. Table IV-2 compares the costs of 

each one from FY 2018 through FY 2022.
53 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

As shown in Table IV-2, the estimated total cost of providing postal services to areas of the nation the 

Postal Service would not otherwise serve increased each year between FY 2018 and FY 2022. This 

increase is mainly due to the annual increase in clerk costs for maintaining small Post Offices.

Table IV-2: 

Estimated Costs of Providing Postal Services to Areas of the 

Nation the Postal Service Would Not Otherwise Serve ($ Millions)

a The Maintaining Small Post Offices cost figures are higher than previous Annual Reports due to updates and refinements described in Table IV-3. 

The sum of columns may not equal total due to rounding.

MAINTAINING SMALL POST OFFICES

The Postal Service maintains small Post Offices, which are generally located in rural or remote 

areas, as part of its duty “to establish and maintain postal facilities of such character and in such 

locations, that postal patrons throughout the Nation will, consistent with reasonable economies 

of postal operations, have ready access to essential postal services.”387 The Postal Service uses 

Cost Ascertainment Group (CAG) classifications A to L to categorize Post Offices based on revenue 

generated.388 Small Post Offices are those that fall within CAG K and L classifications.389

The Commission determines the costs of maintaining small Post Offices by estimating the amount the 

Postal Service would save if rural carriers provided the same services as those provided at small Post 

Offices, as well as the amount of revenue lost from existing CAG K and L PO Boxes. The Commission 

uses the Rural Mail Count to estimate the cost of rural carriers providing retail services and for new 

delivery service to those who would no longer have a CAG K and L PO Box.390
Chapter 4 | 54

Table IV-2 lists the estimated costs of maintaining small Post Offices from FY 2018 through FY 2022. 

The estimated costs of maintaining small Post Offices incorporate the main categories of employees 

who may perform functions that were previously performed primarily by Postmasters.391

Table IV-3 disaggregates the costs of maintaining small Post Offices by component and illustrates the 

recent large shifts among these components. The clerks’ and Postmasters’ costs for the 5-year period 

in Table IV-3 are higher than previous Annual Reports due to two changes in the calculations: cost 

data from the National Consolidated Trial Balance are used, and clerk piggyback costs are added to 

clerks’ salary costs.392 Rural carrier delivery services and PO Box revenues forgone in Table IV-3 are 

also higher than previous Annual Reports due to the updating of the current number of PO Boxes 

used to calculate these costs. Additionally, rural carriers providing retail services costs are lower than 

figures shown in previous Annual Reports due to the current lower number of estimated retail visits 

used to calculate costs.393
55 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

Table IV-3:

Estimated Cost Savings from Closing CAG K and L Post Offices

Derivation of Updated Costs of Maintaining Small Post Offices ($ Millions)

Select CAG K and L Post Offices Annual Operating Costs FY 2022 FY 2021 FY 2020 FY 2019 FY 2018

CAG K and L Postmastersa 100 83 73 71 67

Postmaster Relief/Leave Replacements 22 21 20 20 22

Clerksb 700 674 629 607 564

Total Potential Operating Costs Saved

 (If CAG K and L Post Offices Closed)

822 778 722 698 654

Cost Savings Adjustmentc FY 2022 FY 2021 FY 2020 FY 2019 FY 2018

Rural Carrier Now Provides Retail Services Costd 11 12 13 10 8

Rural Carrier Now Provides Delivery ServiceCoste 55 55 52 51 49

Post Office Boxes Revenue Forgonef 57 49 47 47 45

Total FY Cost Savings Adjustment 122 116 112 108 103

Cost of Maintaining Small Post Offices

(Potential Operating Costs Saved Less Cost Savings Adjustments)700 663 610 590 551

Note: The sum of individual row components may not equal totals due to rounding. Estimated costs of Maintaining Small Post Offices for FY 2018 

and FY 2019 differ from previous Annual Reports because a more complete data source for Postmasters’ and clerks’ costs was identified from the 

USPS National Consolidated Trial Balance (NCTB) data and the addition of piggyback costs for clerks. Additionally, estimated costs of Maintaining 

Small Post Offices inputs differ due to updated inputs for the number of occupied Market Dominant PO Boxes and retail visits incorporated into the 

FY 2018 through FY 2022 calculations. An upcoming library reference in Docket No. PI2021-1 will detail the sources and methodologies used.

a Postmasters’ costs include piggyback costs for overhead and other personnel and non-personnel-related costs.

b

 Clerks’ costs include piggyback costs for overhead and other personnel and non-personnel-related costs.

c The cost savings adjustments are used to reduce the potential operating costs saved, as there would presumably be an increase in rural carrier costs 

and PO Box revenue forgone if the small Post Offices were to close.

d

 The estimated fiscal year number of CAG K and L retail transactions was approximated using the most currently available data for FY 2019 through 

FY 2022. The approximated FY 2019 number of retail visits was used as a proxy for FY 2018 to develop the estimated cost of retail services now 

provided by rural carriers if small Post Offices were to close.

e The current number of occupied Market Dominant CAG K and L PO Boxes was used to estimate, for the fiscal years shown, the number of new 

delivery points for those CAG K and L PO Box customers who would now no longer have delivery to the PO Box if small Post Offices were to close.

f The current number of occupied Market Dominant CAG K and L PO Boxes was used with the respective fiscal year Market Dominant PO Box unit 

revenue to develop estimated revenue forgone.

Sources for this table are based on information filed in past Annual Compliance Reports (ACRs) and in Docket No. PI2021-1. See FY 2021 Annual 

Report at 54.

National Consolidated Trial Balance Data (clerks’ and postmasters’ operating costs): Commission analysis of respective fiscal year ACRs NCTB data 

(sub-account 104 and 105 for clerks, sub-account 101 for postmasters) for CAG K and L Post Offices provided in ACR Library Reference NP18. 

Postmaster Relief/Leave Replacements: Library Reference 5, Cost Segments and Components Reconciliation to Financial Statement and Account 

Reallocation, tab “seg 1” in the respective fiscal year ACRs.

Rural Carrier Retail Unit and Delivery Service Costs: Rural Mail Count is based on the following: Docket No. ACR2018, Library Reference USPSFY18-40, December 28, 2018; and Rural Mail Count updates for FY 2019 through FY 2021 were provided in Docket No. PI2020-1, Library Reference 

USPS-P2020-1/NP3, May 11, 2020; Docket No. PI2020-1, Library Reference USPS-PI2020-1/NP5, June 2, 2021; Docket No. PI2020-1, Library 

Reference USPS-PI2020-1/NP6, March 31, 2022. 

Clerks Costs by Function (for Piggyback cost development): CAG K and L clerk function proportions are based on the activities of sampled clerks in 

the In-Office Cost System Post Offices in CAGs K and L. FY 2018 clerk function proportions are based on the average of the clerk function proportions 

in FYs 2017, 2019 and 2020; FY 2019 and FY 2020 clerk function proportions were provided in Docket No. PI2021-1, Response to CHIR No. 1, question 

3. b.; FY 2021 clerk function proportions were provided in Docket No. PI2021-1, CHIR No. 3, question 2.; and FY 2022 clerk function proportions were 

provided in Docket No. PI2021-1, Response to CHIR No. 4, question 2.

Piggyback Factors: Library Reference 24 in the respective fiscal year ACRs.

Retail Visits: The number of approximated CAG K and L Post Offices retail transactions inputs for FY 2019 and FY 2020 were provided in Docket No. 

PI2021-1, Response to CHIR No. 1, question 2.b.; FY 2021 was provided in Docket No. PI2021-1, Response to CHIR No. 3 question 1.a.-1.b.; and FY 

2022 was provided in Docket No. PI2021-1, Response to CHIR No. 4, question 1.a.-1.c.

PO Boxes: Docket No. PI2021-1, Response to CHIR No. 1, question 2.c.; Docket No. PI2021-1, Response to CHIR No. 3, question 1.d.; Docket No. 

PI2021-1, Response to CHIR No. 4, question 1.d. Market Dominant PO Box unit revenues were developed from Library Reference 4 Market Dominant 

billing determinants in respective fiscal year ACRs.
Chapter 4 | 56

ALASKA AIR SUBSIDY

Alaska Bypass Service allows mailers to ship goods such as food and other cargo on pallets directly 

to rural customers in Alaska. Commercial airline carriers deliver goods on pallets to hub airports in 

either Anchorage or Fairbanks. Smaller airline companies or independent pilots then break down 

these pallets and deliver the goods to remote communities accessible only by air, which are commonly 

called bush sites. The shipped goods “bypass” the Postal Service’s network.

With Alaska Bypass Service, the Postal Service pays for the cost of air transportation from hub 

airports to bush sites. The difference between this cost of air transportation from hub airports to 

bush sites and the average cost of ground transportation, if it were available, is called the Alaska Air 

Subsidy. The Commission previously concluded that the Alaska Air Subsidy is part of the USO.394 In FY 

2022, there was a decrease of $8.7 million over the FY 2021 Alaska Air Subsidy cost. 

GROUP E POST OFFICE BOXES

Group E PO Boxes are provided free of charge to customers when the Postal Service does not offer 

carrier delivery to their physical address.395 To meet its USO delivery obligation,396 the Postal Service 

makes Group E PO Boxes available “for the purpose of resolving potential discrimination issues arising 

from instances in which the Postal Service chooses to provide, or not to provide, customers with a 

carrier delivery option.”397 In FY 2011, the Commission approved treating the cost of providing Group 

E PO Boxes as an institutional cost to more equitably distribute the USO Cost. The Commission also 

concluded that this treatment was analogous to, and consistent with, the treatment of the Alaska Air 

Subsidy.398 Consequently, the Commission included the cost of Group E PO Boxes, which are primarily 

facility-related, in estimating the USO Cost. In FY 2022, servicing Group E PO Boxes cost approximately 

$20.1 million. Beginning in FY 2020, the Group E PO Boxes cost was impacted by a new Postal Service 

facility analysis that decreased measured PO Box space costs.399

FREE OR REDUCED RATES

The Commission must estimate the costs incurred by the Postal Service in providing “free or 

reduced rates for postal services as required by [Title 39.]”400 The Commission estimates these costs 

by combining preferred rate discounts net of costs and the negative contribution of Periodicals 

(Periodicals Losses). Table IV-4 shows the estimated revenue not received as a result of preferred rate 

discounts and Periodicals losses between FY 2018 and FY 2022.
57 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

Table IV-4:

Estimated Revenue Not Received Due to Free or Reduced Rates ($ Millions)

a

 The Preferred Rate Discounts Net of Costs figures include In-County Periodicals. At the time of the USO Report, In-County Periodicals had 

little impact on the results of that analysis and were not included. See USO Report, Appendix F, section 3 (Robert H. Cohen and Charles 

McBride, Estimates of the Current Costs of the USO in the U.S., at 18-19 n.20). The sum of columns may not equal total due to rounding.

PREFERRED RATE DISCOUNTS NET OF COSTS

39 U.S.C. § 3626 requires the Postal Service to provide reduced rates for preferred rate categories in 

USPS Marketing Mail, Periodicals, and Library Mail.401 The Commission determines estimated revenue 

not received by quantifying the difference in revenue between mail that is statutorily required to 

receive a discount and the revenue the Postal Service would have received if those mailpieces were 

not discounted. This increase in revenue is adjusted for potential decreases in costs. If not discounted, 

rates for these mailpieces would be higher, resulting in a loss of volume and, consequently, lower 

costs. In FY 2022, preferred rate discounts net of costs were $1.185 billion. The costs declined in FY 

2022 principally due to a 35.5 percent decrease in the Nonprofit ECR volume from FY 2021 to FY 

2022.

PERIODICALS LOSSES

Periodicals losses are the annual amount by which Periodicals’ attributable cost exceeds revenue.402

The price cap on Market Dominant products does not allow the Postal Service to fully recover 

Periodicals losses through rate increases.403 It is assumed that, if not for the price cap, the Postal 

Service would raise Periodicals rates to the level necessary to cover attributable cost.404 Accordingly, 

the Commission considers these losses to be part of the USO Cost.

In FY 2022, Periodicals losses were $611.7 million. FY 2022 revenue from Periodicals covered 61.1 

percent of the attributable cost of the Periodicals class, an increase from 53.2 percent in FY 2021.405

On a unit basis, both In-County and Outside County Periodicals revenues increased while costs 

decreased in FY 2022.406
Chapter 4 | 58

The Periodicals class has routinely failed to cover its attributable cost in the preceding fiscal 

years.407 The Commission took steps to address this issue by finalizing rules adopting changes to the 

regulations governing the Market Dominant ratemaking system.408 Specifically, for non-compensatory 

mail classes such as Periodicals, the final rules provide the Postal Service an additional 2 percentage 

points of rate authority per class per fiscal year.409 Similar to CPI-based rate authority, if all of this 

authority is not immediately used, it may be banked for use in future years. The first price increase for 

Periodicals using the new rate authorities took effect August 29, 2021, only 1 month before the end 

of FY 2021.410 As such, the FY 2018 through FY 2021 data evaluated in this section essentially reflects 

the operation of the original price cap’s more restrictive statutory parameters. The Periodicals losses 

receded in FY 2022 as an aftermath of implementing the price increase for Periodicals, even as volume 

continues to decline. Periodicals volume declined by 7.6 percent and revenue increased by 1.8 percent 

from FY 2021 to FY 2022. 

Other Public Services or Activities

The Commission must estimate the costs incurred by the Postal Service in providing “other public 

services or activities which, in the judgment of the Postal Regulatory Commission, would not 

otherwise have been provided by the Postal Service but for the requirements of law.”411 These costs 

include the costs of providing Six-Day Delivery (rather than Five-Day Delivery), uniform rates for 

First-Class Mail and Media Mail/Library Mail, and the net cost of the Postal Inspection Service. Table 

IV-5 shows the costs of providing these public services or activities from FY 2018 through FY 2022.

Table IV-5: 

Other Public Services or Activities the Postal Service 

Would Not Provide but for Legal Requirements ($ Millions)412
59 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

SIX-DAY DELIVERY

Since 1984, appropriations bills have included a provision requiring the Postal Service to continue 

providing Six-Day Delivery.413 On April 6, 2022, the PSRA codified the Six-Day Delivery requirement 

in revised 39 U.S.C. § 101(b).414 The cost of providing Six-Day Delivery is measured as the estimated 

savings the Postal Service would achieve by providing residential delivery service 5 days a week 

instead of 6 days a week. Table IV-5 shows the cost of Six-Day rather than Five-Day Delivery from 

FY 2018 through FY 2022.415 In FY 2022, the estimated cost of providing Six-Day Delivery was 

approximately $2.68 billion, an increase from the estimated FY 2021 cost of $2.64 billion.

UNIFORM RATES

Rates for First-Class Mail must be uniform throughout the United States.416 To determine the cost of 

uniform First-Class Mail rates, the Commission estimates the increased contribution that the Postal 

Service would earn if dropship discounts were allowed for 

workshared First-Class Mail. Table IV-5 shows the estimated 

cost of uniform First-Class Mail rates. The estimated cost of 

uniform First-Class Mail rates increased from $65.6 million in 

FY 2021 to $74.0 million in FY 2022.

Media Mail/Library Mail rates must be uniform for mail 

of the same weight and must not vary with the distance 

transported.417 The Commission estimates the cost of 

the distance component by assuming that without this 

requirement, Media Mail/Library Mail would provide the unit 

contribution of Bound Printed Matter, a proxy that does not 

have this restriction. The Commission estimates the additional 

unit contribution by determining the difference between the 

unit contributions of Bound Printed Matter and Media Mail/

Library Mail. Media Mail/Library Mail total volumes are then multiplied by the estimated additional 

unit contribution to produce an estimate of the total additional contribution if Media Mail/Library 

Mail rates were not uniform.

In FY 2022, the estimated cost of providing uniform Media Mail/Library Mail rates was approximately 

$50.3 million, a decrease from the estimated FY 2021 cost of $75.8 million. The decrease in cost 

between FY 2021 and FY 2022 was because the increase in the Media Mail/Library Mail unit 

contribution was greater than the increase in the unit contribution of Bound Printed Matter in FY 

2022.418

POSTAL INSPECTION SERVICE

In the FY 2019 Annual Report, the Commission began including the net cost of the Postal Inspection 

Service in the estimated cost of the USO as an “other public service or activity” under 39 U.S.C. § 
Chapter 4 | 60

3651(b)(1)(C).419 The Postal Inspection Service enforces more than 200 federal laws that relate to 

crimes involving the postal system, its employees, and its customers.420 The mission of the Postal 

Inspection Service is “to support and protect the [Postal Service] and its employees, infrastructure, 

and customers; enforce the laws that defend the nation’s mail system from illegal or dangerous use; 

and ensure public trust in mail.”421 Law enforcement activities of the Postal Inspection Service involve 

defending the nation’s mail from illegal or dangerous use by, for example, combatting illegal narcotics, 

mail fraud, and mail and package theft.422 The costs of the Postal Inspection Service are partially offset 

by fines collected and restitution, which are subtracted from the total cost to calculate the net cost.

In FY 2022, the net cost of the Postal Inspection Service was approximately $551.4 million, compared 

to the estimated FY 2021 net cost of $541.3 million.423

Value of the Postal Monopoly

The mailbox monopoly is the Postal Service’s exclusive right to deliver to and collect from 

mailboxes.424 The letter monopoly is the Postal Service’s exclusive right to carry and deliver most 

addressed, paper-based correspondence.425 The combined letter and mailbox monopolies are referred 

to as the postal monopoly. The Annual Report includes estimates of both the value of the postal 

monopoly and the value of the mailbox monopoly alone.

The value of the postal monopoly is an estimate of the profit that the Postal Service would potentially 

lose if both the mailbox and letter monopolies were lifted and the Postal Service was subject to 

competition for mail currently covered by the postal monopoly.

The value of the mailbox monopoly is estimated based on contestable mail volumes in Periodicals, 

select USPS Marketing Mail prepared in carrier route sequence, and Parcel Select.426 Changes in the 

volume of contestable mail affect the number of profitable routes the competitor could deliver to and 

the amount of profit the Postal Service would lose if the competitor captured the contestable mail on 

those routes.

The Commission uses a modified version of the model described in the USO Report to update current 

estimates.427 The model assumes that the competitor will “win” or “skim” all of the contestable mail on 

a route if the revenue it would earn from these mail volumes is greater than the fixed and attributable 

costs related to the volumes. The model also assumes the competitor would deliver only local and 

regional mail to focus on the most profitable delivery routes and avoid the need for significant capital 

to establish a processing and transportation network.

Even with the postal monopoly, competitors still deliver material (e.g., newspapers’ weekly 

advertising supplements) that might otherwise be sent via the Postal Service. If the mailbox monopoly 

alone was lifted, competitors could deliver and deposit into mailboxes products that fall outside of the 

letter monopoly, such as Periodicals, unaddressed saturation mail, catalogs exceeding 24 pages, and 
61 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

letters exceeding 12.5 ounces. The letter monopoly prevents competitors from delivering certain mail 

that is directed to a specific person or address, such as First-Class Presorted Letters/Postcards and 

USPS Marketing Mail Letters. If the letter monopoly was also lifted, this restriction would not apply. 

The model currently evaluates the competitor’s entry for each route regardless of the extent of 

route clustering. Focusing on routes in the same cluster or area would reduce the competitor’s fixed 

costs.428 Also, because the model assumes that the competitor does not incur mail processing costs, 

values of the postal and mailbox monopolies do not reflect the cost of sorting to carrier routes, which 

is necessary to deliver mail presorted to the 5-digit ZIP Code. The model also does not account for 

mailers’ switching costs or brand loyalty.429 In addition, bulk parcels, which are Competitive products, 

are considered contestable mail. 

The Commission’s estimates of the postal and mailbox monopolies are based on the assumed midrange (base case model) values for four key variables: (1) the volumes that an entrant could contest; 

(2) the entrants’ costs; (3) the entrants’ delivery frequency; and (4) the discount that the entrant 

offers to entice customers. The base case model for calculating both estimates of the postal and 

mailbox monopolies assumes that an entrant would offer a 10 percent discount, have a 10 percent 

cost advantage (be 10 percent more efficient), and skim 100 percent of the contestable mail on 

profitable routes.430 The FY 2018 through FY 2022 postal and mailbox monopoly estimates calculated 

using the base case model assumptions are presented in Table IV-6. The large increase in the value of 

the postal monopoly between FY 2021 and FY 2022 is due primarily to the increase in Marketing Mail 

volume.

Table IV-6:

Base Case Model

Values of the Postal and Mailbox Monopolies431 ($ Billions)

While the base case represents the most likely scenario for entry by competitors, given the uncertain 

nature of how competition would evolve in the absence of the postal and mailbox monopolies, 

variations in the assumptions are possible. To illustrate this sensitivity of the estimates to these 

assumptions, the Commission also presents the FY 2022 estimates of the postal and mailbox 
Chapter 4 | 62

monopolies based on alternative assumed values (“low” and “high” models) for the four key variables 

(in addition to the assumed base case model mid-range values).432

Table IV-7 illustrates the impact on the FY 2022 monopoly estimates given variations in the 

assumptions of the four key variables: (1) the amount of discount offered by the entrant; (2) the 

entrant’s cost advantage; (3) the number of delivery days; and (4) the percentage of contestable 

mail skimmed on profitable routes.433 The monopoly estimates calculated using the “low” and “high” 

values of the four key variables are unlikely to represent the actual value of the monopolies but may 

be helpful to conceptualize the lower and upper bounds of reasonable estimates. Table IV-7 illustrates 

the sensitivity of the monopoly estimates to potential changes in the key model input variables’ values.

Table IV-7:

FY 2022 Value of the Postal and Mailbox Monopolies434 ($ Billions)

a

 Discount 20%, Delivery Days 6, Entrant’s Cost Advantage 0%, Contestable Volume 50%

b Discount 10%, Delivery Days 3, Entrant’s Cost Advantage 10%, Contestable Volume 100%

c Discount 0%, Delivery Days 1, Entrant’s Cost Advantage 30%, Contestable Volume 150%

d Discount 20%, Delivery Days 6, Entrant’s Cost Advantage 0%, Contestable Volume 50%

e

 Discount 10%, Delivery Days 1, Entrant’s Cost Advantage 10%, Contestable Volume 100%

f Discount 0%, Delivery Days 1, Entrant’s Cost Advantage 30%, Contestable Volume 150%
63 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

CHAPTER FIVE

PUBLIC AFFAIRS

Photo Credit: USPS
Chapter 5 | 64

The Commission’s Office of Public Affairs and Government Relations (PAGR) is the primary resource 

in support of public outreach and education; complaint processing; media relations; and liaison 

with the U. S. Congress, the Administration, the Postal Service, and other government agencies. This 

office informs and advises commissioners and Commission staff on legislative matters and policies 

related to the Commission and the Postal Service in addition to coordinating the preparation of both 

congressional testimony and responses to congressional inquiries concerning Commission policies 

and activities. PAGR is the primary office assisting the general public. 

Consumer Relations - Comments and Inquiries

In Fiscal Year 2023, PAGR received over 8,800 questions, suggestions, comments and inquiries. The 

greatest percentage of these were received through the online “Contact PRC” email link on the 

Commission’s website. The remaining contact was by phone and hardcopy mail. 

Table V-1: 

FY 2023 Number of Inquiries Received by Contact

Commission Order No. 195 directs the Postal Service to respond to rate and service inquiries that the 

Commission forwards to the USPS Office of the Consumer Advocate within 45 days. The order also 

requires the Postal Service to file a monthly report summarizing the general nature of inquiries they 

received. These reports are available on the Commission’s website at www.prc.gov, under the USPS 

Reports tab.

INQUIRIES BY ISSUE 

As reported to the Commission, and consistent with prior reporting, service-related issues remain the 

leading complaint type. There was a notable increase in inquires related to local post offices placing 

inconsistent mail collection times on external and internal lobby mail collection receptacles. Escalated 

service-related inquiries are forwarded to the USPS Office of Consumer Advocate for resolution and 

response. 
65 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

Table V-2: 

 Number of Inquiries Received by Issue in FY 2023

Top Issue Total

Inconsistent mail collection box schedule 90

Not receiving mail every day 47

Letters missing in the mail 23

Carrier not making an initial attempt to deliver packages 17

Postmaster requesting resident move mailbox 16

Receiving others mail 15

Postmaster suspended delivery service 13

Mail being returned to sender in error 13

Package missing in mail 13

NDCBU damaged, LPO refused to replace 9

Resident incorrectly charged a fee for “Group E No-Fee” P.O. 

box service 7

Postmaster refusing to meet with developer to establish mode 

of delivery for new community 7

Mail not forwarded as requested 7

Packages delayed in mail 7

INQUIRIES BY LOCATION

The US Postal Service Retail and Delivery operation is geographically divided into 4 Area Offices and 

50 District Offices.

In FY 2023, a review of the inquiries received by postal defined districts revealed that a large 

percentage of service-related concerns originated in the Illinois 1, California 2, Maryland, ArizonaNew Mexico, and Florida 3 postal defined districts.
Chapter 5 | 66

Figure V-1:

FY 2023 Inquiries Received by State

Table V-3

FY 2023 Number of Inquiries Received by Area and District

Area Office District Total 

Received Top Issue

Central Area Illinois 1 79 Lobby – Collection Box - Incorrect Time/Schedule

KS-MO 13 Postmaster requesting customer move mailbox

Western-Pacific Area

California 2 21 Not receiving mail everyday

Arizona-New 

Mexico 17 Carrier not making an initial attempt to deliver packages

Southern Area

Florida 3 16 Employee rude to customer

Georgia 14 LPO requesting customer move mailbox

AL-MS 13 Mail being returned to sender in error

Texas 1 12 Postmaster requesting customer move mailbox

Atlantic Area

Maryland 19 Letters missing in the mail

North Carolina 14 Not receiving mail every day

Virginia 14 Not receiving mail every day

DE-PA 14 Letters missing in the mail

New York 1 13 Not receiving mail every day
67 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

Figure V-2:

US Postal Service Area/District Map

Source: USPS Report to Congress: Fiscal Year 2022 Annual Report to Congress (usps.com)
Chapter 6 | 68

CHAPTER SIX

ADMINISTRATION

Photo Credit: USPS
69 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

The Commission’s Office of the Secretary and Administration (OSA) has spent the last four years 

building out its administration systems and services to modernize and standardize the environment 

to support the agency’s core mission and improve user experience. OSA ensures that the Commission 

has the physical, financial, technological, and human capital infrastructure needed to accomplish 

its mission. Responsibilities include financial management, records management, human resources 

management, equal employment opportunity, administrative support, and information technology. 

Strategic Planning

The Commission developed and released a new, ambitious strategic plan in FY 2023. OSA is 

responsible for coordinating the Commission’s strategic planning. 

During FY 2023, OSA continued to implement significant infrastructure and administrative 

improvements, striving for the goals of the Commission’s 2023-2028 Strategic Plan, particularly for:

• Goal 3 – Develop an internal infrastructure to support and strengthen our regulatory 

capabilities through adaptive policies, efficient processes, and scalable platforms; and 

• Goal 4 – Build an organization that will attract, develop, and retain a diverse workforce of 

experts.

Financial Management and Budget

To enable the Commission to fulfill its mission and the additional responsibilities created by the PSRA, 

the agency grew to 82 full-time equivalent (FTE) employees in FY 2023. It also had an increase in total 

expenses of $1.7 million (9.3 percent), even with realizing a one-time lease savings of $1.5 million 

compared to FY 2022. This growth is necessary as the Commission continues to rebuild after having 

been underfunded for many years. 

FY 2023 BUDGET AND EXPENSES

FY 2023 was the Commission’s first time receiving its budget by approval from the United States 

Postal Service’s Board of Governors (USPS Governors). For this fiscal year, the USPS Governors 

approved the Commission’s budget request of $20,613,000.435 In addition to that budget, the 

Commission planned to use $2,000,000 from its prior year balances and $1,866,000 from its 

Technology Modernization Fund (TMF) awards, for total planned expenses of $24,479,000. 

The Commission sought and received an award from the TMF in FY 2022, and again in FY 2023; 

the Commission has until FY 2025 to use these funds. The TMF, authorized by the Modernizing 

Technology Government Act of 2017, enables agencies to reimagine and transform the way they use 

technology to deliver services to the American public in a secure, efficient, and effective manner. In FY 

2022, the Commission received a transfer from the TMF in the amount of $2,029,000 to fund critical 

cybersecurity and IT infrastructure projects. In FY 2023, the Commission received an additional award 
Chapter 6 | 70

and transfer of $1,400,000. The Commission anticipates receiving its final transfer of $616,000 in FY 

2024. The Commission will use these funds to adopt cloud-based applications and develop critical 

platforms that are essential to its regulatory role. This dedicated funding will allow the Commission to 

commit to the necessary but costly IT investments that would be difficult to accommodate within its 

normal budget. 

In FY 2023 the Commission’s total expenditures totaled $20,156,258. Of the total expenses, $782,914 

were categorized as TMF expenses. While the Commission’s total expenses were 9.3 percent more 

than FY 2022, these were $4.3 million under its plan. This under-execution was due to several factors 

including delays in hiring, deferred IT project and deferred consulting needs. 

Historically, (1) compensation including benefits and (2) rent have accounted for the bulk of 

Commission expenses. However, in FY 2023 rent only accounted for 2.4 percent of total expenditures 

due to the Commission receiving approximately $1.5 million in rent abatements during the fiscal 

year, which will begin to expire in FY 2024. Personnel compensation accounted for 82.8 percent of 

expenditures; consulting accounted for 4.8 percent of expenditures; TMF expenses accounted for 3.9 

percent of expenditures; and the remaining 6.1 percent of expenditures was for all other operating 

expenses including IT, training, travel, consulting services, and communications. Figure VI-1 below 

shows the distribution of the Commission’s expenditures for FY 2023.

Figure VI-1:

FY 2023 Annual Budget Expenditures
71 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

FY 2024 BUDGET REQUEST

In August of FY 2023, the Commission submitted its FY 2024 Budget Request to the USPS Governors 

for review and approval; the Commission requested a budget of $23.399 million for FY 2024. The 

Governors approved a FY 2024 budget of $21.124 million, which is $2.275 million less than originally 

requested by the Commission. In addition to this approved annual funding, the Commission plans to 

use approximately $2.078 million from its TMF award, and $4.0 million from its prior year balances. 

Thus FY 2024 expenses are anticipated to total $27.202 million. 

Data and Records Management

DATA MANAGEMENT

In the past fiscal year, the Commission achieved a significant milestone by embarking on the 

establishment of a comprehensive data management program. Data and records management 

comprise part of the internal infrastructure and efficient processes that will help the Commission to 

achieve Strategic Goal 3. 

The Commission initiated a strategic effort to create an internal data management system that 

organizes, streamlines, centralizes, and facilitates the Commission in harnessing the power of data. 

The CDO is the primary staff member responsible for making this happen. The CDO assessed the 

agency’s current-state data program, developed a plan to modernize capabilities, and designed a 

scalable and flexible system architecture to meet the Commission’s data needs. This management 

system hosts several key datasets and workflows vital to core Commission activities and stores 

geospatial data to expand the agency’s mapping and geo-analytical resources.

In tandem with building this management system, the CDO’s team engaged and interviewed 

stakeholders and users during FY 2023 to get their data viewpoints and assess their needs to form 

a short- and long-term data roadmap for the agency. This roadmap, coupled with several technical 

workshops, significantly advanced the data program at the Commission.

RECORDS AND PRIVACY 

The Commission also focused on enhancing administration of its responsibilities relating to 

compliance with federal records management and privacy requirements/regulations. In July of 2023 

the Commission instituted the NARA marking system for internal use of controlled unclassified 

information (CUI) to apply to personally identifiable information (PII) and business identifiable 

information (BII) in personnel, pre-contract vendor, and docket-related records. The Commission aims 

to automate this process during FY 2024. 

During FY 2023, records liaisons were selected and trained for each of the Commission’s departments, 

and an annual training requirement was established to provide staff with a basic understanding of 

their duties and expectations regarding the labeling and disposition of the records they use and/or 

create. In August of 2023 the Commission’s records management and IT staff asked all departments to 
Chapter 6 | 72

assess and provide disposition for their records in accordance with the agency’s Records Schedule to 

prepare for file migration to O365. This review significantly reduced the quantity of files and memory 

needing to be transferred and helped staff to better assess and account for the resources stored within 

each department’s file holdings.

Workforce Development

Within the pages of this annual report, it is imperative to underscore the pivotal role played by the 

Commission’s small, yet dynamic professional staff. Recognizing the paramount importance of its 

staff, the Commission remains steadfast in its commitment to enhancing the workforce experience. 

Goal 4 of the 2023-2028 Strategic Plan focuses on the recruitment, development, and retention of a 

diverse, high-performing workforce. The Commission was able to successfully support its workforce 

and recruit 18 new employees while embracing a hybrid work environment that supports meaningful 

in-office collaboration and efficient remote work. 

The Commission’s outstanding FEVS results—outscoring government wide responses in every 

measured area—reflect its dedication to providing a supportive, inclusive, and fulfilling work 

environment for its exceptional professionals. The Commission has a highly engaged workforce, 

scoring 90 percent on the Employee Engagement Index, compared to 72 percent government-wide, 

with strong scores on the three subcomponents: Leaders Lead, 82 percent vs. 61 percent; Intrinsic 

Work Experience, 90 percent vs. 72 percent; and Supervisors, 97 percent vs. 80 percent. The 

Commission reported zero challenge areas, and reported its top strengths as related to supervisors, 

customer service, and employee contributions. 

Table VI-1:

 Top Five Strengths from the FEVS

The Commission continued its commitment to equal employment opportunity and representation in 

its initiatives to recruit, develop, and retain a skilled, high-achieving, and diverse workforce. Overall 

Commission demographics are comparable to the U.S. Census National Civilian Labor Force (CLF), 

and almost all ethnic and racial groups have higher levels of representation at the Commission when 
73 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

compared to the CLF, except for Hispanic and Latino male representation. In FY 2023, women and 

minorities accounted for 64 percent and 33 percent, respectively, of the Commission’s workforce. 

Representation of women in leadership remained positive, with women filling 56 percent of the 

agency’s executive positions.

The Commission’s Diversity and Inclusion (D&I) Committee has successfully engaged employees with 

various informative essays, announcements, and virtual events highlighting diversity and inclusion 

awareness. During FY 2023, the D&I Committee reviewed Commission policies to ensure that genderinclusive language is used in all Commission communications. The Committee initiated a review of 

Commission facilities to ensure that the Commission is not only compliant with the requirements of 

the Americans with Disabilities Act (ADA) requirements, but also that remediation of any accessibility 

issues receive dedicated funding in the Commission’s annual budget.

Information Technology

The Commission has made significant progress on long-deferred modernization efforts to its 

technology infrastructure. These initiatives would not be possible without funding from the TMF and 

are directly related to the Commission’s public-facing services, replacement of antiquated systems, 

and protection from cybersecurity threats. 

DOCKETING SYSTEM

The Commission replaced its legacy electronic filing and docketing system, which is the primary 

conduit for hearing matters from stakeholders and serves as the repository for most of the agency’s 

permanent records, including sensitive postal data. Recognizing the critical role of this system, the 

Commission applied a portion of its TMF award to expedite the transfer to a more secure and stable 

system and engaged a contractor to develop a new cloud-based system. The new system launched 

in June of 2023, and offers users streamlined account setup, the capability to include both public 

and protected materials in the same filing, and direct access to protected materials (with approval) 

via users’ accounts. The Commission continues to enhance the system, directly incorporating user 

experience feedback into additional modifications to the system to ensure a seamless and userfriendly experience. Linked to the agency’s primary website PRC.gov, this docketing system website 

can be found at https://prc.arkcase.com/portal/home.

WEBSITE REPLACEMENT

The PRC.gov website is the Commission’s primary communication tool and the main outlet for public 

outreach and engagement. In FY 2023, the Commission began a project to replace this website to 

improve interaction with the public, stakeholder engagement, and data visibility. Funding for this 

project is being provided by the TMF. The new website will meet all the standards of the 21st Century 

Integrated Digital Experience Act (IDEA) and provide significant data visualization capabilities. 

The Commission collects significant data from the Postal Service and will be providing that data on 

its new website, supporting its mission to ensure the transparency and accountability of the Postal 

Service.
Chapter 6 | 74

TRANSITION TO CLOUD

During FY 2023 the Commission significantly updated its work processes while modernizing its 

systems and enhancing security. As part of its TMF award, the Commission successfully migrated to 

Office 365, leading to the decommissioning of legacy file share devices; installed new multifunction 

printers with PIV capabilities to ensure more secure printing; implemented improved and more 

secure mobile device management; and enhanced security to ensure the Commission staff on foreign 

travel can authenticate to cloud resources. The Commission also was able to purchase long-overdue 

replacement network hardware and its cloud transition activities have allowed it to shut down 90% of 

on-site servers.

The Commission’s IT staff has also completed various important and time-saving projects not related 

to TMF funding that will improve the quality of staff’s work experiences and provide for a more 

efficient workday. The Commission does not have internal administrative software and requires 

manual processes for its Human Resources, Finance, Records Management, and Data Management 

tracking and reporting. Due to the contributions of its IT staff, the Commission has leveraged its IT 

tools to create automated HR workflows; develop a standard method for consuming and reporting 

the annual FEVS data using PowerBI; and establish automation of various approval workflows at 

the department level. Still in progress are other projects further automating document generation 

templates and inventory attestation, which will help save manhours and provide for more accurate 

recordkeeping. 

CYBERSECURITY AND DATA PROTECTION 

The Commission has committed to hardening its cybersecurity posture and implemented an active, 

flexible program for managing its cybersecurity risk. During FY 2023 cybersecurity staff undertook a 

review of existing IT infrastructure and identified areas for improvement. As a result, all Commission 

mobile devices are in the process of being updated with zero trust access components, and a new 

network architecture has been configured and prepared for production transition in early FY 2024. 

As mentioned above, the Commission embraced cloud technologies from various FedRAMP providers 

and federal partners; this enabled cybersecurity staff to establish certificate-based authentication 

and PIV integration across the agency’s operating system. All remaining physical hardware has been 

placed on a phase-out plan. 

The Commission achieved a significant cybersecurity milestone through acquisition of the Department 

of Justice’s (DOJ) Security Operations Center services. Funding from the TMF has provided certainty 

and dedicated funds for the Commission to ensure accelerated implementation of the Federal 

shared services and has provided a scalable and compliant security foundation for the Commission’s 

operations. The decision to leverage DOJ shared services greatly reduced the cost, risk, and time to 

deploy Security Operation Center services and their Zero Trust Architecture standards, set to be fully 

operational in FY 2024.
75 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

ENDNOTES

1 Postal Accountability and Enhancement Act, 

Pub. L. 109-435, 120 Stat. 3198 (2006).

2 39 U.S.C. § 3651(a).

3 39 U.S.C. § 3642(b)(1). Postal Service 

products are categorized as either Market 

Dominant or Competitive. “Product” means 

“a postal service with a distinct cost or 

market characteristic for which a rate or 

rates are, or may reasonably be, applied[.]” 

39 U.S.C. § 102(6).

4 39 U.S.C. § 3642(b)(1). Market Dominant 

products are grouped within five classes of 

mail: First-Class Mail, USPS Marketing Mail, 

Periodicals, Package Services, and Special 

Services. 39 U.S.C. § 3621(a).

5 39 U.S.C. § 3642(b)(1). Examples of 

Competitive products include Priority Mail, 

Priority Mail Express, and USPS Ground 

Advantage.

6 39 U.S.C. § 3622(b).

7 Docket No. RM2007-1, Order Establishing 

Ratemaking Regulations for Market 

Dominant and Competitive Products, 

October 29, 2007 (Order No. 43); See

Docket No. RM2007-1, Errata Notice 

Concerning Order No. 43, October 31, 2007 

(Docket No. RM2007-1, Errata).

8 Docket No. RM2017-3, Order Adopting Final 

Rules for the System of Regulating Rates 

and Classes for Market Dominant Products, 

November 30, 2020 (Order No. 5763).

9 Postal Regulatory Commission, Annual 

Report to the President and Congress, Fiscal 

Year 2021, January 25, 2022, at 18-21 (FY 

2021 Annual Report).

10 39 U.S.C. § 3651(a).

11 39 C.F.R. § 3010.101(q).

12 39 C.F.R. § 3010.101(f).

13 Id.

14 Id.

15 39 C.F.R. § 3030.121(c) and (d). The Postal 

Service must also consider how the planned 

rate adjustments are in accordance with 

the provisions of 39 U.S.C. chapter 36. Id. § 

3030.121(b).

16 Id. §§ 3030.124, 3030.125

17 Id. § 3030.126(b).

18 Id. § 3030.127(a).

19 Id. § 3030.101; 39 C.F.R. pt. 3030, subpts. C, 

D, E, G, and H.

20 39 C.F.R. pt. 3030, subpt. G. The 

Commission determines whether a product 

is non-compensatory. Id. § 3030.220.
Endnotes | 76

21 Id. § 3030.127(b).

22 Id. § 3030.221. This requirement “does 

not apply to a non-compensatory product 

for which the Commission has determined 

that the Postal Service lacks independent 

authority to set rates (such as rates set by 

treaty obligation).” Id.

23 FY 2021 ACD at 50. These products were 

USPS Marketing Mail Flats, USPS Marketing 

Mail Carrier Route, and USPS Marketing 

Mail Parcels. Id.

24 Id. at 61, 65, 69; See Docket No. R2023-1, 

Order on Price Adjustments for First-Class 

Mail, USPS Marketing Mail, Periodicals, 

Package Services, and Special Services 

Products and Related Mail Classification 

Changes, November 28, 2022, at 56 (Order 

No. 6341).

25 A workshare discount is a discount that a 

mailer receives for additional preparation 

of a mailpiece, such as presorting, 

prebarcoding, handling, or transportation, 

and relieves the Postal Service of the cost of 

performing those activities. Order No. 5763 

at 198 n.267; See 39 U.S.C. § 3622(e)(1).

26 39 C.F.R. § 3030.282.

27 39 C.F.R. § 3030.283-.284.

28 39 C.F.R. § 3030.283. The proposed 

workshare discount that relates to a 

subclass of mail consisting exclusively 

of mail matter of educational, cultural, 

scientific, or informational value must also 

comply with 39 C.F.R. § 3030.285(c).

29 39 C.F.R. § 3030.284.

30 39 C.F.R. §§ 3030.283(d), 3030.284(d), 

3030.286(a).

31 Docket No. R2023-1, United States Postal 

Service Notice of Market-Dominant Price 

Change, October 7, 2022; Docket No. 

R2023-2, United States Postal Service 

Notice of Market-Dominant Price Change, 

April 10, 2023.

32 Order No. 6341 at 2; Docket No. R2023-2, 

Order on Price Adjustments for First-Class 

Mail, USPS Marketing Mail, Periodicals, 

Package Services, and Special Services 

Products and Related Mail Classification 

Changes, May 31, 2023, at 2 (Order No. 

6526).

33 Order No. 6341 at 2; Order No. 6526 

at 2. The Commission also found that 

the proposed rate adjustments did 

not implicate the pricing requirements 

appearing in 39 U.S.C. §§ 3627 and 3629. Id.

34 Order No. 6341 at 108; Order No. 6526 at 

120.

35 Order No. 6526 at 2.

36 Id.

37 Id. at 121.

38 Docket No. R2023-2, USPS Report on 

Investigation Into Errors in the Market 

Dominant Rate Case Initial Filing and 

Remedial Plan, July 31, 2023.

39 Docket No. R2023-3, United States Postal 

Service Notice of Market Dominant Price 

Change Creating Two Incentives, August 11, 

2023 (Docket No. R2023-3, Notice).

40 United States Postal Service, “USPS 

Files with PRC to Establish Mail Growth 

Incentives,” August 11, 2023, available 

at https://about.usps.com/newsroom/

national-releases/2023/0811-uspsfiles-with-prc-to-establish-mail-growth-
77 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

incentives.htm.

41 Docket No. R2023-3, Notice at 3. For 

First-Class Mail, qualifying pieces consist 

of Presort Letters, Presort Cards, or 

Presort Flats. Id. For USPS Marketing Mail, 

qualifying mail pieces consist of Letters and 

High Density/Saturation Letters; Flats and 

High Density/Saturation Flats & Parcels; 

Carrier Route; or Parcels. Id.

42 Id.

43 Id.

44 Id. at 4-5.

45 Docket No. R2023-3, Order on Market 

Dominant Price Change Creating Two 

Incentives, September 27, 2023, at 32 

(Order No. 6713).

46 Docket No. ACR2022, Annual Compliance 

Determination, March 29, 2023, at 36-37 

(FY 2022 ACD).

47 Id. at 48, 52-53, 56; 39 C.F.R. § 3030.221.

48 Docket No. RM2023-12, Motion of the 

American Catalog Mailers Association 

Requesting Temporary Waiver of Rule 

3030.221, September 27, 2023, at 1 (Docket 

No. RM2023-12, Motion).

49 Docket No. RM2023-12, Motion at 1-2, 4-6.

50 Id. at 7.

51 Docket No. RM2023-12, Comments of the 

United States Postal Service Supporting the 

Motion of the American Catalog Mailers 

Association Requesting Temporary Waiver 

of Rule 3030.221, October 6, 2023, at 2.

52 Docket No. R2024-1, United States Postal 

Service Notice of Market-Dominant Price 

Change, October 6, 2023. The Commission 

issued a final order on November 22, 

2023. Docket No. R2024-1, Order Order 

on Price Adjustments for First-Class Mail, 

USPS Marketing Mail, Periodicals, Package 

Services, and Special Services Products 

and Related Mail Classification Changes, 

November 22, 2023 (Order No. 6814).

53 Docket No. RM2023-12, Order Denying 

Motion for Temporary Waiver of 39 C.F.R. 

§ 3030.221, October 23, 2023 (Order No. 

6748).

54 39 U.S.C. § 3030.101(j).

55 See 39 U.S.C. § 3622(c)(10)(A).

56 39 U.S.C. § 3622(c)(10)(B).

57 Docket Nos. MC2023-222 and R2023-

4, USPS Notice of Filing of Contract and 

Supporting Data and Request to Add 

Publisher’s Clearing House Negotiated 

Service Agreement to the Market-Dominant 

Product List, with Portions Filed Under Seal, 

August 11, 2023 (PCH NSA Request).

58 PCH NSA Request at 3.

59 Id. at 7.

60 Id. at 5.

61 Id.

62 Id.

63 Id. at 7.

64 Id.

65 Id.

66 Id. at 5.

67 Docket Nos. MC2023-222 and R2023-4, 

Order Provisionally Adding Publisher’s 

Clearing House Negotiated Service 

Agreement to the Market Dominant 
Endnotes | 78

Product List and Directing the Postal Service 

to Collect and Report Data on a Monthly 

Basis, November 22, 2023 (Order No. 6813).

68 Order No. 6813 at 12, 24, 26.

69 Id. at 13-19.

70 Id. at 19.

71 Id. at 22.

72 Id.

73 Id. at 22-23.

74 Id. at 32-33.

75 Id. at 34. 

76 39 U.S.C. § 3632(b)(2); 39 C.F.R. §§ 

3035.102-.104. The Postal Service must 

also publish its decision to change rates 

or classes of general applicability in the 

Federal Register at least 30 days before the 

new rates or classes become effective. Id.

77 39 U.S.C. § 3632(b)(3); 39 C.F.R. § 

3035.105(a).

78 39 C.F.R. §§ 3035.102-.105. For proposed 

decreases in rates of general applicability 

and changes to rates or classes not of 

general applicability, the notice must also 

include (1) sufficient revenue and cost 

data for the 12-month period following the 

effective date of the change demonstrating 

that each affected Competitive product 

will cover its attributable costs and (2) a 

Postal Service certified statement attesting 

to the accuracy of the data submitted 

and explaining why, following the change, 

Competitive products in total will not be 

subsidized by Market Dominant products 

and will cover an appropriate share of the 

Postal Service’s institutional costs. 39 C.F.R. 

§§ 3035.103(c), 3035.105(c).

79 39 U.S.C. § 3633(a)(1).

80 39 U.S.C. §§ 3633(a)(2), 3631(b).

81 39 U.S.C. § 3633(a)(3). The appropriate 

share is codified in 39 C.F.R. § 3035.107. 

See “Rulemakings Amending Commission 

Regulations – Institutional Cost Contribution 

Requirement” section above.

82 Docket No. CP2023-42, USPS Notice of 

Changes in Rates of General Applicability for 

Competitive Products, November 10, 2022.

83 Docket No. CP2023-42, Order Approving 

Price Adjustments for Competitive Products, 

December 22, 2022, at 11-12 (Order No. 

6384).

84 Order No. 6384 at 13.

85 Docket No. CP2023-113, USPS Notice 

of Changes in Rates and Classifications 

of General Applicability for First-Class 

Package Service, February 10, 2023; 

Docket No. CP2023-114, USPS Notice of 

Changes in Rates and Classifications of 

General Applicability for Parcel Select, 

February 10, 2023. The Postal Service 

filed these proposed changes in two 

different dockets, which the Commission 

consolidated because they both involve 

similar issues regarding streamlining 

product offerings and price changes. Docket 

Nos. CP2023-113 and CP2023-114, Notice 

and Order Concerning Changes in Rates 

and Classifications of General Applicability 

for First-Class Package Service and Parcel 

Select, February 15, 2023, at 4-5 (Order No. 

6442).

86 Order No. 6442 at 2-4.

87 Docket Nos. CP2023-113 and CP2023-114, 

Order Concerning Changes in Rates of 
79 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

General Applicability and Classifications 

for First-Class Package Service and Parcel 

Select, June 7, 2023, at 26 (Order No. 6536).

88 Order No. 6536 at 16-17, 26-28.

89 Id. at 28.

90 Docket No. CP2023-151, USPS Notice 

of Changes in Rates and Classifications 

of General Applicability for Competitive 

Products, May 10, 2023.

91 Docket No. CP2023-151, Order Concerning 

Changes in Rates of General Applicability 

and Classifications for Competitive 

Products, June 23, 2023 (Order No. 6552).

92 Order No. 6552 at 9.

93 Docket No. CP2023-155, USPS Notice of 

Changes in Rates and Classifications Not 

of General Applicability for Competitive 

Products, May 12, 2023 (Docket No. 

CP2023-155, Notice).

94 Docket No. CP2023-155, Notice at 1, 4. 

Click-N-Ship is an online Postal Service 

shipping application that customers may 

access through usps.com to print shipping 

labels with postage from their own 

computers. “Click-N-Ship,” United States 

Postal Service Publication 32, Glossary of 

Postal Terms, July 2013, available at https://

about.usps.com/publications/pub32/

pub32_terms.htm.

95 Id. at 4.

96 See Id. at 4, 6.

97 Docket No. CP2023-155, Order 

Conditionally Approving Rates and 

Classifications Not of General Applicability 

for Competitive Products, August 25, 2023 

(Order No. 6647).

98 Order No. 6647 at 7-8.

99 Id. at 8.

100 Id. at 8, 10.

101 Id.; Docket No. CP2023-155, USPS Notice 

of Implementation Date and Terms and 

Conditions for Business Rate Card, August 

28, 2023.

102 UPU Convention, Decisions of the 2021 

Abidjan Congress, Article 29.1 (Berne 

2022), available at https://www.upu.int/

UPU/media/upu/files/aboutUpu/acts/03-

actsConventionAndFinalProtocol/

conventionAndFinalProtocolAdoptedAtAbidjanEn.

pdf (UPU Convention Articles). Destination 

postal operators may set higher selfdeclared rates for the handling and delivery 

of inbound small packets and bulky letters 

in lieu of the default rates also established 

in the UPU Convention.

103 Docket No. CP2023-142, Notice of the 

United States Postal Service of Rates Not of 

General Applicability for Inbound E-Format 

Letter Post, and Application for Non-Public 

Treatment, April 28, 2023.

104 Docket No. CP2023-142, Order Approving 

Prices for Inbound E-Format Letter Post, 

May 26, 2023, at 4 (Order No. 6525).

105 UPU Convention, Articles 17.7 and 17.8.

106 Regulations to the UPU Convention and 

Final Protocol, Article 33-201 (Berne 

2021), available at https://www.upu.int/

en/Universal-Postal-Union/About-UPU/

Acts#overview-of-the-acts-of-the-union.

107 Id. Article 33-202.

108 Docket No. CP2023-54, Notice of the United 
Endnotes | 80

States Postal Service of Filing Changes 

in Rates Not of General Applicability for 

Inbound Parcel Post (at UPU Rates), and 

Notice of Filing Non-Public Materials Under 

Seal, November 22, 2022.

109 Docket No. CP2023-54, Order 

Acknowledging Changes in Rates for 

Inbound Parcel Post (at UPU Rates), 

December 16, 2022, at 5-6 (Order No. 

6376).

110 39 U.S.C. § 3634; 39 C.F.R. §§ 3060.40, et 

seq.

111 Docket No. T2023-1, Notice of the United 

States Postal Service of Submission of the 

Calculation of the FY 2022 Assumed Federal 

Income Tax on Competitive Products, 

January 11, 2023.

112 Docket No. T2023-1, Response of the 

United States Postal Service to Question 1 

of Chairman’s Information Request No. 1, 

March 30, 2023.

113 Docket No. T2023-1, Order Approving the 

Calculation of the FY 2022 Assumed Federal 

Income Tax on Competitive Products, May 

24, 2023, at 5 (Order No. 6523).

114 39 U.S.C. § 3642(a). The Commission 

may also initiate a proceeding to change 

the product lists. Id. Product list updates 

are issued in Docket No. RM2020-8 and 

published in the Federal Register.

115 39 C.F.R. pt. 3040, subpts. B, C, D.

116 39 U.S.C. § 3642(b)(1).

117 39 U.S.C. § 3642(b)(2).

118 39 U.S.C. § 3642(b)(3).

119 See 39 C.F.R. § 3040.132(c).

120 Docket Nos. MC2023-45 and MC2023-46, 

Order Removing Priority Mail International 

Regional Rate Boxes - Non-Published Rates 

and Priority Mail International Regional 

Rate Boxes Contracts from the Competitive 

Product List and Approving Competitive 

Classification Changes Concerning Global 

Reseller Expedited Package Contracts, 

December 20, 2022 (Order No. 6378).

121 39 C.F.R. § 3040.211; See 39 U.S.C. § 3682.

122 39 C.F.R. pt. 3040, subpt. E. The Postal 

Service may propose material changes or 

minor corrections to the MCS depending 

on “the degree to which the proposed 

alteration affects the characteristics of the 

product.” Docket No. RM2015-6, Notice 

of Proposed Rulemaking on Changes and 

Corrections to the Mail Classification 

Schedule, November 14, 2014, at 9, 14 

(Order No. 2250).

123 Docket No. MC2023-132, Order Approving 

Minor Changes to Product Description, 

May 8, 2023 (Order No. 6500); Docket No. 

MC2023-148, Order Approving Changes 

in Classifications of General Applicability 

for Priority Mail Express and Priority Mail 

(Loyalty Program), June 1, 2023 (Order No. 

6529).

124 39 U.S.C. § 3633(a)(3). Institutional costs 

are the costs that remain after attributing 

all reliably identifiable, causally-related 

product-level and group-level costs to 

products. Docket Nos. RM2017-1 and 

RM2022-2, Supplemental Notice of 

Proposed Rulemaking and Order Initiating 

the Third Review of the Institutional Cost 

Contribution Requirement for Competitive 

Products, November 18, 2021 (Order No. 

6043). Requirements for Competitive 
81 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

products are discussed in the “Rate 

Adjustments – Competitive Products” 

section below.

125 Docket No. RM2017-1, Order Adopting 

Final Rules Relating to the Institutional Cost 

Contribution Requirement for Competitive 

Products, January 3, 2019, at 18 (Order No. 

4963).

126 39 U.S.C. § 3633(b).

127 Id.

128 Docket Nos. RM2017-1 and RM2022-

2, Order Finalizing Rule Relating to the 

Institutional Cost Contribution Requirement 

for Competitive Products, January 9, 2023 

(Order No. 6399). On January 10, 2023, 

UPS filed a petition for review of Order No. 

6399 with the D.C. Circuit. This appeal is 

discussed below in the “Court of Appeals 

Cases” section.

129 Order No. 6399 at 1-2. The background and 

procedural history of this proceeding were 

described in the FY 2022 Annual Report and 

Order No. 6399. See FY 2022 Annual Report 

at 14-15; Order No. 6399 at 4-15.

130 Order No. 6399 at 18-22.

131 Id. at 22-75.

132 Id. at 75-165.

133 Id. at 177-268.

134 Docket No. RM2022-7, Notice of Proposed 

Rulemaking to Revise Periodic Reporting 

of Service Performance, September 21, 

2022 (Order No. 6275). This NPR and its 

preceeding ANPR are described in the FY 

2022 Annual Report. FY 2022 Annual Report

at 15.

135 Docket No. RM2022-7, Order Revising 

Rules for Periodic Reporting of Service 

Performance, February 9, 2023 (Order No. 

6439).

136 Id. at 4-20.

137 Id. at 37.

138 Id. at 23. 

139 Id. at 25-26.

140 Id. at 27, 30-31.

141 Docket No. RM2023-5, Advance Notice 

of Proposed Rulemaking on Regulations 

Pertaining to Competitive Negotiated 

Service Agreements, February 24, 2023 

(Order No. 6446). Competitive NSAs are 

discussed above under “Rate Adjustments – 

Competitive Products Rates Not of General 

Applicability.”

142 Id. at 10-11.

143 Id. at 12.

144 Id. at 18-21.

145 Docket No. RM2021-2, Advance Notice 

of Proposed Rulemaking Regarding 

Performance Incentive Mechanism, January 

15, 2021, at 1 (Order No. 5816).

146 Order No. 5816 at 4.

147 Id. at 5-14.

148 Docket No. RM2021-2, Order Reactivating 

Docket and Setting Comment Deadline, 

June 12, 2023 (Order No. 6537). The 

background of this rulemaking was 

described in the order and FY 2021 Annual 

Report. Order No. 6537 at 1-2; Postal 

Regulatory Commission, Annual Report 

to the President and Congress, Fiscal Year 

2021, January 25, 2022, at 21-22 (FY 2021 

Annual Report).
Endnotes | 82

149 Docket No. RM2020-5, Notice of Proposed 

Rulemaking to Amend Rules Regarding Rate 

Incentives for Market Dominant Products, 

November 14, 2022 (Order No. 6325). 

The procedural history of this rulemaking 

is described in the order and the FY 2022 

Annual Report. Order No. 6325 at 2-3; FY 

2022 Annual Report at 16-17.

150 Order No. 6325 at 1; See Id. at 26.

151 Id. at 1.

152 Id. at 1-2. These rules are codified in 39 

C.F.R. §§ 3030.123(j)(3) and 3030.128(f)(2)

(iv).

153 Id. at 2, 26. 

154 Order No. 6325 at 39; See Docket No. 

RM2020-5, Order on Public Representative’s 

Second Motion for Information Request 

and Providing an Opportunity to File Reply 

Comments, December 12, 2022 (Order No. 

6364).

155 Docket No. RM2020-5, Supplemental 

Notice of Proposed Rulemaking to Amend 

Rules Regarding Rate Incentives for Market 

Dominant Products, November 17, 2023, 

at 4 (Order No. 6801). These incentives are 

discussed above under “Rate Adjustments – 

Market Dominant Products Rates of General 

Applicability.”

156 Order No. 6801 at 6-7.

157 39 U.S.C. § 407(b)(2)(A).

158 Docket No. RM2023-6, Notice of Proposed 

Rulemaking Regarding Materials Provided 

to the Commission in Connection with 

Activities Under 39 U.S.C. 407(b)(2)(A), 

March 3, 2023, at 1-2 (Order No. 6451).

159 Order No. 6451 at 2.

160 Docket No. RM2023-6, Order Adopting Final 

Rules Regarding Materials Provided to the 

Commission in Connection with Activities 

Under 39 U.S.C. § 407(b)(2)(A), June 1, 2023 

(Order No. 6530).

161 Order No. 6530 at 14.

162 39 U.S.C. § 3652(a)(1).

163 39 U.S.C. § 3652(a)(2), (b), (c).

164 39 U.S.C. § 3652(a).

165 These reports are on the Commission’s 

website, available at https://www.prc.gov/

prc-reports.

166 39 U.S.C. § 3653(a), (b).

167 FY 2022 ACD at 104.

168 Id. at 5.

169 Id.

170 Id. at 106.

171 Id. at 5.

172 Id.

173 Id.

174 Docket No. ACR2022, Financial Analysis 

of United States Postal Service Financial 

Results and 10-K Statement, Fiscal Year 

2022, May 17, 2023 (FY 2022 Financial 

Analysis).

175 FY 2022 Financial Analysis at 1.

176 Id.

177 Id.

178 Id. at 3-4.

179 39 U.S.C. § 3653(d).

180 Id.
83 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

181 Docket No. ACR2022, Analysis of the Postal 

Service’s FY 2022 Annual Performance 

Report and FY 2023 Performance Plan, June 

28, 2023 (FY 2022 Analysis).

182 FY 2022 Analysis at 13-24.

183 Id. at 5. The Postal Service met the Financial 

Health performance goal and partially 

met the High-Quality Service, Excellent 

Customer Experience, and Safe Workplace 

and Engaged Workforce goals. Id. The 

Commission considers the Postal Service 

to have partially met a performance goal if 

the Postal Service meets or exceeds some 

but not all targets for each performance 

indicator measuring progress toward that 

goal. Id.

184 Id. at 25-111.

185 Docket No. PI2023-4, Notice and Order 

Initiating Public Inquiry Associated with the 

Delivering for America Plan, April 20, 2023 

(Order No. 6488).

186 United States Postal Service, Delivering for 

America: Our Vision and Ten-Year Plan to 

Achieve Financial Sustainability and Service 

Excellence, March 23, 2021, available at 

https://about.usps.com/what/strategicplans/delivering-for-america/assets/USPS_

Delivering-For-America.pdf (DFA Plan).

187 United States Postal Service, Delivering for 

America Second-Year Progress Report, April 

2023, at 18; available at https://about.usps.

com/what/strategic-plans/delivering-foramerica/assets/usps-dfa-two-year-report.

pdf.

188 Id.

189 Order No. 6488 at 3.

190 Id. at 4.

191 Id.

192 Docket No. PI2023-4, United States Postal 

Service’s Motion for Reconsideration of 

Order No. 6488, May 5, 2023 (Docket No. 

PI2023-4, Motion).

193 Docket No. PI2023-4, Motion at 5-6.

194 Id. at 8-15.

195 Id. at 15-16.

196 Id. at 20-22.

197 See Docket No. PI2023-4, Order Denying 

Motion for Reconsideration, June 21, 2023, 

at 3 n.6 (Order No. 6548).

198 See Order No. 6548.

199 Id. at 8.

200 Id. at 9.

201 Id. at 10.

202 Id. at 12-13.

203 Docket No. PI2023-4, Chairman’s 

Information Request No. 1, June 21, 

2023; Docket No. PI2023-4, Chairman’s 

Information Request No. 2 and Notice of 

Filing Under Seal, August 8, 2023; Docket 

No. PI2023-4, Chairman’s Information 

Request No. 3, September 1, 2023; Docket 

No. PI2023-4, Chairman’s Information 

Request No. 4, October 13, 2023; 

Chairman’s Information Request No. 5, 

November 22, 2023.

204 Docket No. PI2023-3, Notice and Order 

Initiating Inquiry of the Classification of the 

First-Class Package Product, April 7, 2023 

(Order No. 6479).

205 As part of the establishment of the USPS 

Ground Advantage product, FCPS was 
Endnotes | 84

expanded to packages weighing up to 70 

pounds. United States Postal Service, “USPS 

Ground Advantage” (October 25, 2023), 

available at https://faq.usps.com/s/article/

USPS-Ground-Advantage.

206 Order No. 6479 at 9. Requirements for 

transferring products from the Market 

Dominant to the Competitive product list 

are described above in the “Changes to 

Product Lists and the Mail Classification 

Schedule – Product Lists.”

207 Id. at 9-12.

208 Id. at 11-12 (citing Order No. 6384 at 10-

11).

209 Id. at 12-13.

210 Docket No. PI2023-2, Notice and Order 

Initiating Proceeding to Review Postal 

Service Cost Attribution, March 31, 2023, at 

6 (Order No. 6471).

211 Order No. 6471 at 6. The Postal Service 

must use Commission-approved analytical 

principles to identify these costs. Id. 

Analytical Principles are discussed in the 

“Proposals to Change Analytical Principles” 

section below.

212 Id. A detailed description of the approach 

to postal cost attribution that the Postal 

Service and the Commission currently use 

appears in Order No. 6043. Docket Nos. 

RM2017-1 and RM2022-2, Supplemental 

Notice of Proposed Rulemaking and 

Order Initiating the Third Review of the 

Institutional Cost Contribution Requirement 

for Competitive Products, November 18, 

2021, at 11-35 (Order No. 6043).

213 PSRA § 203. Section 3633(a) contains 

requirements for Competitive products, 

which are discussed in the “Rate 

Adjustments – Competitive Products” 

section above. Section 3652(a)(1) refers to 

the Postal Service’s ACR, which is discussed 

in the “Annual Reports” section above.

214 PSRA § 203.

215 Id.

216 See Order No. 6471.

217 Id. at 11 (citing PSRA § 203).

218 See “Chapter IV - Value of the Postal 

Monopoly” below.

219 Order No. 6658 at 1. The letter monopoly is 

codified in the Private Express Statutes. See

18 U.S.C. §§ 1693-1699, 39 U.S.C. §§ 601-

606.

220 18 U.S.C. § 1725.

221 Docket No. PI2020-1, Notice and Order 

Providing an Opportunity to Comment, 

October 1, 2019 (Order No. 5260).

222 Order No. 5260 at 1-2; Docket No. PI2020-1, 

Notice of Filing Library Reference PRC-LRPI2020-1-NP1 and Order Setting Comment 

Deadline, February 10, 2021, at 7-8 (Order 

No. 5832). The Estimation Methodology 

is described in Order No. 6658. Order No. 

6658 at 5-8.

223 Order No. 6658 at 2, 8, 29-30.

224 See Docket No. PI2020-1, Library Reference 

PRC-LR-PI2020-1-NP2, August 31, 2023.

225 Order No. 6658 at 3, 50.

226 Id. at 2-3. These issues include using RRECS 

data in the Estimation Methodology. Id. at 

31, 49.

227 Docket No. PI2021-1, Notice and Order 
85 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

Providing an Opportunity to Comment with 

Respect to Universal Service Obligation 

Valuation Methodology, December 10, 2020 

(Order No. 5777).

228 See Postal Regulatory Commission, Report 

on Universal Postal Service and Postal 

Monopoly, December 19, 2008 (USO 

Report).

229 39 U.S.C. § 101(a); See USO Report at 18.

230 Order No. 5777 at 2; See “Chapter IV – 

Universal Service Obligation and Postal 

Monopoly” section below; 39 U.S.C. § 

3651(b)(1).

231 Order No. 5777 at 3.

232 Id.

233 Id. at 1, 3, 8-9.

234 Id. at 3-8.

235 Docket No. PI2022-1, Notice and Order 

Providing an Opportunity to Comment on 

the Postal Service’s Process for Resolving 

Suspended Post Offices, February 3, 2022 

(Order No. 6101).

236 Order No. 6101 at 1-2.

237 Id. at 2.

238 Id. at 3.

239 Id. The Postal Service resolves a suspended 

Post Office by either discontinuing or 

reopening the Post Office. Id. at 2.

240 Id. at 3.

241 39 C.F.R. § 3050.1(c).

242 39 C.F.R. §§ 3050.1(a), 3050.10.

243 39 U.S.C. § 3652(e)(2); 39 C.F.R. § 

3050.11(a). The Commission, acting on its 

own behalf, may also initiate a proceeding 

to change an accepted analytical principle. 

39 C.F.R. § 3050.11(a).

244 Id.

245 Docket No. RM2023-9, Order Approving 

Analytical Principles Used in Periodic 

Reporting (Proposal Four), November 2, 

2023, at 1, 3 (Order No. 6771).

246 Order No. 6771 at 4.

247 Id.

248 Id. at 7.

249 Id.

250 Id.

251 Id.

252 Docket No. RM2023-4, Petition of the 

United States Postal Service for the 

Initiation of a Proceeding to Consider 

Proposed Changes in Analytical Principles 

(Proposal One), February 10, 2023 (Docket 

No. RM2023-4, Petition, Proposal One).

253 Docket No. RM2023-4, Petition, Proposal 

One at 7.

254 Id.

255 Id. at 7-8.

256 Id. at 8.

257 Id. at 10.

258 Id.

259 Id. at 8.

260 Id. at 10.

261 Docket No. RM2023-4, Order on Analytical 

Principles Used in Periodic Reporting 

(Proposal One), April 6, 2023, at 6 (Order 
Endnotes | 86

No. 6474).

262 Id. at 13.

263 Id.

264 Docket Nos. RM2023-1 and RM2023-3, 

Order Denying Request for Reconsideration 

and Notice of Proposed Rulemaking on 

Analytical Principles Used in Periodic 

Reporting (NPPC et al. Proposal One), 

January 25, 2023 (Order No. 6430); Docket 

No. RM2023-3, Order Rejecting Proposed 

Changes to Accepted Analytical Principles 

(NPPC et al. Proposal One), March 27, 2023 

(Order No. 6464); Docket No. RM2023-

2, Order on Analytical Principles Used in 

Periodic Reporting (Proposal Seven), March 

17, 2023 (Order No. 6459).

265 See Order No. 6459.

266 Order No. 6430 at 2.

267 Id. at 3 (citing former 5 U.S.C. § 8909a(d)(3)

(B)).

268 Order No. 6430 at 3. Payments will not be 

required until OPM computes whether “top 

up” payments are due or the PSRHBF is 

exhausted. Id.

269 Order No. 6459 at 3.

270 See Letter to Erica A. Barker, Secretary and 

Chief Administrative Officer, August 12, 

2022, available at https://www.prc.gov/

docs/122/122469/Lttr%20re%20PSRA%20

Effects%20ACR%20CRA.pdf.

271 Docket No. RM2023-1, Order Granting, in 

Part, For Reconsideration, December 9, 

2022, at 2 (Order No. 6363); See Docket No. 

RM2023-1, Petition for Reconsideration and 

Initiation of Proceeding, November 4, 2022. 

The Postal Service appealed Order No. 6363 

to the D.C. Circuit, which is discussed in the 

“Court of Appeals Cases” section below.

272 Order No. 6363 at 7-11. Specifically, the 

Commission proposed to treat the PSRAforgiven defaulted accruals differently than 

other items allocated to the Cost Segment 

and Components report for FY 2022. Id.

273 Order No. 6363 at 11.

274 Docket No. RM2023-2, Petition of the 

United States Postal Service for the 

Initiation of a Proceeding to Consider 

Proposed Changes to Analytical Principles 

(Proposal Seven), December 12, 2022 

(Docket No. RM2023-2, Petition).

275 Docket Nos. RM2023-1 and RM2023-3, 

Motion for Reconsideration or, in the 

Alternative, Petition to Initiate a Proceeding 

Regarding the Appropriate Analytical 

Principle for Retiree Health Benefit Normal 

Costs, December 19, 2022 (NPPC et al. 

Proposal One); See Docket Nos. RM2023-1 

and RM2023-3, Order Denying Request for 

Reconsideration and Notice of Proposed 

Rulemaking on Analytical Principles Used 

in Periodic Reporting (NPPC et al. Proposal 

One), January 25, 2023 (Order No. 6430).

276 Docket No. RM2023-2, Petition at 1.

277 Order No. 6459 at 7.

278 Id. at 19.

279 Id. at 19-20.

280 Id. at 20.

281 Id.

282 Id. Specifically, modified Alternative Two 

relalocated the $57.0 billion from where it 

had been recorded as negative institutional 
87 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

costs in the “All Other” row in the 

“Attributable Cost” column of the CRA, and 

instead reports it as a positive amount in 

the row titled “Miscellaneous Items” in the 

Revenue Column of the CRA. Id.

283 NPPC et al. Proposal One at 1.

284 Docket No. RM2023-3, Order Rejecting 

Proposed Changes to Accepted Analytical 

Principles (NPPC et al. Proposal One), 

March 27, 2023, at 2 (Order No. 6464).

285 Id. at 60.

286 Docket No. RM2023-10, Order Approving 

Analytical Principles Used in Periodic 

Reporting (Proposal Five), November 16, 

2023 (Order No. 6798).

287 Docket No. RM2023-8, Order Approving 

Analytical Principles Used in Periodic 

Reporting (Proposal Three), August 9, 2023 

(Order No. 6608).

288 Docket No. RM2023-7, Order on Analytical 

Principles Used in Periodic Reporting 

(Proposal Two) Directing the Postal Service’s 

Participation in Further Proceedings and 

Providing Notice of Filing Attachment Under 

Seal, August 31, 2023 (Order No. 6659).

289 Docket No. RM2022-11, Order Approving 

Analytical Principles Used in Periodic 

Reporting (Proposal Five), October 20, 

2022 (Order No. 6307). This proposal was 

discussed in the FY 2022 Annual Report. FY 

2022 Annual Report at 49.

290 Docket No. RM2022-13, Order on Analytical 

Principles Used in Periodic Reporting 

(Proposal Six), November 3, 2022 (Order 

No. 6322). This proposal was discussed in 

the FY 2022 Annual Report. FY 2022 Annual 

Report at 49-50.

291 Docket No. RM2022-3, Petition of the 

United States Postal Service for the 

Initiation of a Proceeding to Consider 

Proposed Changes in Analytical Principles 

(Proposal One), January 5, 2022.

292 Id.

293 Docket No. RM2023-11, Petition of the 

United States Postal Service for the 

Initiation of a Proceeding to Consider 

Proposed Changes in Analytical Principles 

(Proposal Six), September 15, 2023.

294 Docket No. RM2022-1, Notice and Order 

of Proposed Rulemaking on Periodic 

Reporting, October 8, 2021 (Order No. 

6004).

295 Id. at 1. The ACR is discussed above in the 

“Annual Reports” section.

296 Docket No. RM2022-1, Order Requiring 

Postal Service Progress Update, May 8, 

2023, at 1-2 (Order No. 6501). Background 

on this proceeding is described in the FY 

2022 Annual Report. FY 2022 Annual Report 

at 51-52.

297 Order No. 6501 at 2, 13.

298 Id. at 13.

299 Id.

300 Docket No. RM2022-1, Response of the 

United States Postal Service to Request for 

Progress Report in Order No. 6501, June 16, 

2023.

301 Order No. 6501 at 13.

302 39 U.S.C. § 3641(a)(2).

303 39 U.S.C. § 3641(c)(1); 39 C.F.R. §§ 3045.2, 

3045.3.
Endnotes | 88

304 39 U.S.C. § 3641(b).

305 39 U.S.C. § 3641(d); 39 C.F.R. §§ 3045.10-

.11

306 39 U.S.C. § 3641(e)(1), (g); 39 C.F.R. § 

3045.15(b), (c).

307 39 C.F.R. § 3045.20(a).

308 Docket No. MT2022-1,Order Authorizing 

Market Test of Experimental Product – USPS 

Connect Local Mail, January 4, 2022 (Order 

No. 6080).

309 Order No. 6080 at 2.

310 39 C.F.R. § 3045.18. Requirements under 

39 U.S.C. § 3642 and 39 C.F.R. part 3040 are 

discussed in the “Changes to the Product 

Lists and the Mail Classification Schedule” 

above.

311 Docket No. MC2023-12, United States 

Postal Service Request to Convert USPS 

Connect Local Mail to a Permanent 

Offering, October 11, 2022 (Initial Request).

312 Docket No. MC2023-12, Order Dismissing 

Without Prejudice Postal Service’s Request 

to Convert USPS Connect Local Mail Market 

Test to a Permanent Offering, October 17, 

2022, at 5-6 (Order No. 6301).

313 Order No. 6301 at 2; Docket No. MC2023-

12, United States Postal Service Revised 

Request to Convert USPS Connect Local 

Mail to a Permanent Offering, November 9, 

2022 (Revised Request).

314 Docket No. MC2023-12, Order Dismissing 

Without Prejudice the Postal Service’s 

Revised Request to Convert USPS Connect 

Local Mail Market Test to a Permanent 

Offering, January 20, 2023, at 2 (Order No. 

6423).

315 39 U.S.C. § 404a(a)(1). The Commission’s 

rules for complaints alleging violations of 

section 404a are codified in 39 C.F.R. part 

3024.

316 Order No. 6423 at 8. A “postage 

evidencing system” is a “device or system 

of components that a customer uses to 

generate and print evidence that postage 

required for mailing has been paid.” 39 

C.F.R. § 501.1(a). Under the USPS Connect 

Local Mail market test, the Postal Service 

has required participants to pay using 

postage evidencing system it provides: ClickN-Ship and USPS application programming 

interface. Order No. 6423 at 8.

317 See Order No. 6423.

318 Id. at 6, 10, 15.

319 Id. at 12.

320 Id. at 12-15. On November 23, 2022, the 

Postal Service filed a notice notifying the 

Commission of its intent to establish new 

service standards for USPS Connect Local 

Mail and make corresponding changes to 

the Market Dominant Service Performance 

Measurement plan. Because the issues 

raised were contingent on converting USPS 

Connect Local Mail to a permanent offering, 

the Commission dismissed the notice 

without prejudice. Docket No. PI2023-

1, Order Dismissing Without Prejudice 

Notice of Intent to Establish New Service 

Standards, Proposed Modifications to 

Service Performance Measurement Plan for 

Market Dominant Products, and Request 

to Use Internal Service Performance 

Measurement System, January 20, 2023 
89 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

(Order No. 6424).

321 Docket No. MT2022-1, Order Authorizing 

Extension of USPS Connect Local Mail 

Market Test, December 13, 2023, at 13 

(Order No. 6860).

322 Order No. 6860 at 8.

323 Id. at 13.

324 39 U.S.C. § 3662(a). Specifically, a complaint 

may be filed if the complainant “believes 

the Postal Service is not operating in 

conformance with the requirements of the 

provisions of [39 U.S.C. §§] 101(d), 401(2), 

403(c), 404a, or 601, or this chapter [36] (or 

regulations promulgated under any of those 

provisions) . . . .” Id.

325 39 U.S.C. § 3662(b); 39 C.F.R. § 3022.30(a).

326 Docket No. C2023-6, Complaint of Mark 

Allan Edwards, July 7, 2023.

327 Docket No. C2023-6, United States Postal 

Service’s Motion to Dismiss, July 27, 2023 

(Motion to Dismiss).

328 Docket No. C2023-6, Order Partially Denying 

United States Postal Service’s Motion to 

Dismiss and Notice of Limited Formal 

Proceedings, September 18, 2023, at 1-2, 9 

(Order No. 6688). The Commission granted 

the Postal Service Motion to Dismiss for the 

other claims. Id. at 6, 9.

329 39 U.S.C. § 403(c).

330 Order No. 6688 at 8.

331 Docket No. C2023-6, Presiding Officer’s 

Ruling Establishing Procedural Schedule and 

Additional Case Management Procedures, 

October 31, 2023 (POR No. C2023-6/2).

332 Docket No. C2023-6, Presiding Officer’s 

Information Request No. 1, November 7, 

2023 (POIR No. 1); Docket No. C2023-6, 

Presiding Officer’s Information Request No. 

2, November 7, 2023.

333 Docket No. C2023-1, Complaint of Stephen 

Stahlman, November 4, 2022.

334 See Docket No. C2023-1, Order Granting 

Motion and Dismissing Complaint without 

Prejudice, January 24, 2023, at 1 (Order No. 

6428).

335 Order No. 6428 at 1-2.

336 Id. at 2.

337 Id. at 9; See 39 C.F.R. § 3023.11(a).

338 Docket No. C2023-1, Response of United 

States Postal Service, ME-NH-VT District, to 

Stephen Stahlman, March 17, 2023.

339 Docket No. C2023-2, Complaint of Richard 

Orville, Torp, February 6, 2023.

340 See Docket No. C2023-2, Order Granting 

Motion to Dismiss, May 3, 2023, at 1 (Order 

No. 6497).

341 Order No. 6497 at 2.

342 Id.

343 Docket No. C2023-11, Plaintiff’s Amended 

Complaint, October 17, 2023.

344 Docket No. C2023-11, United States Postal 

Service’s Motion to Dismiss, November 6, 

2023; Docket No. C2023-11, Opposition of 

Postal Customer to USPS Motion to Dismiss, 

November 14, 2023.

345 Docket No. C2023-11, Plaintiff’s Motion for 

Preliminary Injunction, October 17, 2023; 

Docket No. C2023-11, United States Postal 
Endnotes | 90

Service’s Opposition to Complainant’s 

Motion for Preliminary Injunction, October 

24, 2023.

346 Docket No. C2023-11, United States Postal 

Service Response to Complainant Request 

for a Stay, November 28, 2023.

347 Docket No. C2023-11, Order Granting 

Motion to Dismiss in Part and Denying 

Motion for Preliminary Injunction, 

December 19, 2023 (Order No. 6880).

348 Order No. 6880 at 2.

349 Docket No. C2023-11, United States Postal 

Service Notice of Resolution, February 2, 

2024.

350 39 U.S.C. § 404(d)(5).

351 Docket No. A2023-1, Petition for Review 

Received from Daniel Karmolinski and 

Dorothy Karmolinski Regarding the 

Westbrookville, NY Post Office, July 25, 

2023.

352 Docket No. A2023-1, Order Granting Motion 

to Dismiss, September 21, 2023, at 7, 13 

(Order No. 6696).

353 Docket No. A2023-2, Petition for Review 

Received from Catherine Hackett-Brown 

Regarding the Sherwood, KS Post Office, 

August 16, 2023.

354 Docket No. A2023-2, Order Dismissing 

Appeal on Jurisdictional Grounds, 

November 15, 2023, at 13, 16 (Order No. 

6792).

355 United States Postal Service, Publication 32, 

Glossary of Postal Terms, July 1, 2016, at 

88, available at https://postalpro.usps.com/

storages/2016-04/pub32_glossary.pdf.

356 PSRA § 206(a)(1)(A).

357 Id. § 206(a)(1)(B).

358 Docket No. SS2022-1, Notice Initiating 

Proceeding for Flats Operations Study, July 

14, 2022.

359 Docket No. SS2022-1, Flats Operations 

Study Report, April 6, 2023, at 1-2.

360 PSRA § 206(b)(1).

361 Id. § 206(b)(2)(A).

362 Docket No. SS2022-1, Submission of the 

United States Postal Service Flats Plan 

Pursuant to Section 206 of the Postal 

Service Reform Act of 2022, October 6, 

2023.

363 Docket No. SS2022-1, Notice and Order 

on Postal Service Submission of Flats Plan, 

November 17, 2023, at 6-7 (Order No. 

6803).

364 39 U.S.C. § 3663.

365 Petition for Review, United Parcel Serv., Inc. 

v. Postal Regul. Comm’n, No. 22-1029 (D.C. 

Cir. filed Feb. 25, 2022). Order No. 6048 was 

described in the FY 2021 Annual Report. FY 

2021 Annual Report at 41-42.

366 Order, United Parcel Serv., Inc. v. Postal 

Regul. Comm’n, No. 22-1029 (D.C. Cir. filed 

Oct. 13, 2022).

367 Order No. 6399 is discussed above in the 

“Rulemakings Amending Commission 

Regulations – Institutional Cost Contribution 

Requirement” section.

368 Petition for Review, United Parcel Serv., Inc. 

v. Postal Regul. Comm’n, No. 23-1006 (D.C. 

Cir. filed Jan. 10, 2023). 

369 Order, United Parcel Serv., Inc. v. Postal 

Regul. Comm’n, No. 22-1029 (D.C. Cir. filed 
91 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

Mar. 28, 2023); Order, United Parcel Serv., 

Inc. v. Postal Regul. Comm’n, No. 23-1006 

(D.C. Cir. filed Mar. 29, 2023).

370 Petition for Review, U.S. Postal Serv. v. 

Postal Regul. Comm’n, No. 23-1003 (D.C. 

Cir. filed Jan. 6, 2023). Order No. 6363 is 

discussed above under the “Proposals to 

Change Analytical Principles” section. 

371 Joint Motion to Hold Appeal in Abeyance, 

U.S. Postal Serv. v. Postal Regul. Comm’n,

No. 23-1003 (D.C. Cir. filed Jan. 30, 2023). 

Proposal Seven is discussed above under 

the “Proposals to Change Analytical 

Principles” section.

372 See Order No. 6459.

373 Status Report, U.S. Postal Serv. v. Postal 

Regul. Comm’n, No. 23-1003 (D.C. Cir. filed 

Apr. 3, 2023).

374 Petition for Review, Richard Orville, Torp. 

v. Postal Regul. Comm’n, No. 23-1093 

(D.C. Cir. filed Apr. 3, 2023). This complaint 

is discussed above under the “Other 

Proceedings – Complaints” section.

375 See Order No. 6497.

376 Respondent’s Motion to Dismiss, Richard 

Orville, Torp. v. Postal Regul. Comm’n, No. 

23-1093 (D.C. Cir. filed May 18, 2023); 

See Respondent’s Reply in Support of the 

Motion to Dismiss, Richard Orville, Torp. v. 

Postal Regul. Comm’n, No. 23-1093 (D.C. Cir. 

filed June 13, 2023).

377 39 U.S.C. § 407(b)(1).

378 Id. § 407(c)(1).

379 Id. § 407(c)(2).

380 Postal Regulatory Commission, Report on 

Universal Postal Service and the Postal 

Monopoly, December 19, 2008, at 18 (USO 

Report).

381 USO Report at 10 n.1; See Chapter IV - Value 

of the Postal Monopoly section below.

382 The public inquiry proceedings (Docket No. 

PI2021-1: Public Inquiry on the Universal 

Service Obligation Valuation Methodology 

and Docket No. PI2020-1: Public Inquiry 

on the Methodology to Estimate the Value 

of the Postal Service Letter and Mailbox 

Monopolies) are described above in the 

“Public Inquiries” section of Chapter III.

The Commission modified the letter and 

mailbox monopolies (postal monopoly) 

estimation methodology to account for the 

Postal Service recent data changes. Docket 

No. PI2020-1, Order Describing Updated FY 

2020 and FY 2021 Estimation Methodology, 

Directing Certain Postal Service Data 

Reporting, and Providing Notice of Filing 

Library Reference PRC-LR-PI2020-1-NP2, 

August 31, 2023, at 51 (Order No. 6658). 

Additionally, the Commission notified the 

public that it would continue proceedings 

in Docket No. PI2020-1 to consider (among 

other things) the use of data generated by 

the Rural Route Evaluated Compensation 

System (RRECS) in the estimation 

methodology. See Id. at 2-3. In May 2023, 

the Postal Service replaced the prior route 

evaluation system to determine each 

route’s evaluated time with RRECS, which 

now serves as the basis for determining 

compensation for rural carriers. See Docket 

No. RM2024-2, Petition of the United 

States Postal Service for the Initiation of a 

Proceeding to Consider Proposed Changes 

in Analytical Principles (Proposal Eight), 

November 21, 2023 (pending Postal Service 
Endnotes | 92

proposal seeking to update methodology 

to use RRECS data in periodic reports to the 

Commission). 

383 39 U.S.C. § 3651(b)(1).

384 At the time the FY 2023 Annual Report

was prepared, the most currently available 

complete data were from FY 2022.

385 See 39 U.S.C. § 3651(b)(2).

386 39 U.S.C. § 3651(b)(1)(A). 39 U.S.C. § 101(b) 

requires the Postal Service to “provide a 

maximum degree of effective and regular 

postal services to rural areas, communities, 

and small towns where post offices are not 

self-sustaining.” 39 U.S.C. § 101(b).

387 39 U.S.C. § 403(b)(3).

388 Docket No. RM2015-19, Order Approving 

Analytical Principles Used in Periodic 

Reporting (Proposal Ten), November 24, 

2015, at 1 n.2 (Order No. 2837).

389 See USO Report, Appendix F, section 3 

(Robert H. Cohen and Charles McBride, 

Estimates of the Current Costs of the USO in 

the U.S., at 26).

390 The Rural Mail Count classifies all 

remunerable activities of rural carriers 

as either Post Office or street activities. 

However, some Post Office activities can 

occur on the street. For example, parcel 

acceptance on the street is considered a 

Post Office activity because it can substitute 

for a customer sending a parcel at a Post 

Office window.

391 See Postal Regulatory Commission, Annual 

Report to the President and Congress, Fiscal 

Year 2016, January 12, 2017, at 42.

392 Piggyback costs augment labor cost 

estimates by adding the costs associated 

with supervisors and administration, 

service-wide benefits, along with facilityrelated and equipment-related costs. See

Docket No. ACR2022, Library Reference 

USPS-FY22-24, December 29, 2022, PDF file 

“USPS-FY22-24.Preface.pdf, at 1; Docket 

No. PI2021-1, Responses of the United 

States Postal Service to Questions 1-3 of 

Chairman’s Information Request No. 1, 

September 24, 2021, question 3. (Docket 

No. PI2021-1, Response to CHIR No. 1); 

Docket No. PI2021-1, Responses of the 

United States Postal Service to Questions 

1-2 of Chairman’s Information Request No. 

3, June 16, 2022, question 2 (Docket No. 

PI2021-1, Response to CHIR No. 3); Docket 

No. PI2021-1, Responses of the United 

States Postal Service to Questions 1-2 of 

Chairman’s Information Request No. 4, April 

6, 2023, question 2 (Docket No. PI2021-1, 

Response to CHIR No. 4).

393 The Postal Service states that “[t]he ratio 

of retail transactions per retail revenue 

dollar declined 68 percent from 0.552 to 

0.176 between FY 2007 and FY 2020.” See

Docket No. PI2021-1, Response to CHIR No. 

1, question 2.b.iii.; Docket No. PI2021-1, 

Response to CHIR No. 3, question 1; Docket 

No. PI2021-1, Response to CHIR No. 4, 

question 1.

394 USO Report at 139.

395 The former Postal Rate Commission found 

it equitable to offer one PO Box at no 

charge to any customer whom the Postal 

Service determined ineligible for carrier 

delivery. Docket No. MC96-3, Opinion and 

Recommended Decision, April 2, 1997, at 

62.
93 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

396 See USO Report at 196.

397 Docket No. RM2011-9, Petition of the 

United States Postal Service Requesting 

Initiation of a Proceeding to Consider a 

Proposed Change in Analytical Principles 

(Proposal One), April 6, 2011, at 1.

398 Docket No. RM2011-9, Order Concerning 

Analytical Principles Used in Periodic 

Reporting (Proposal One), June 9, 2011, at 4 

(Order No. 744).

399 See Docket No. RM2020-1, Order on 

Analytical Principles Used in Periodic 

Reporting (Proposal Nine), August 17, 2020 

(Order No. 5637), Appendix B at 4; Docket 

No. RM2020-1, Responses of the United 

States Postal Service to Questions 1-16 of 

Chairman’s Information Request No. 3, June 

10, 2020, questions 7.c.-d., 9.b.; Docket No. 

ACR2020, Library Reference USPS-FY20-8, 

December 29, 2020, PDF file “USPS-FY20-8.

Preface.pdf,” at 1.

400 39 U.S.C. § 3651(b)(1)(B). The Postal Service 

provides free postage for blind and disabled 

persons and for overseas voting. 39 U.S.C. 

§§ 3403-3406. The Postal Service receives 

appropriated funds reimbursing it for 

providing free postage. 39 U.S.C. § 2401(c). 

For this reason, the cost of providing free 

postage is not included in the USO Cost.

401 FY 2018 ACD at 39.

402 In this Annual Report, attributable cost 

means incremental cost. See Order No. 

3506 at 125. 39 U.S.C. § 3622(c)(2) defines 

attributable cost as the “direct and indirect 

postal costs attributable to each class 

or type of mail service through reliably 

identified causal ,relationships plus that 

portion of all other costs of the Postal 

Service reasonably assignable to such 

class or type[.]” In Order No. 3506, the 

Commission revised the methodology for 

determining attributable cost to include 

inframarginal costs, developed as part of 

the estimation of incremental costs. Before 

that order, attributable cost only included 

the sum of volume-variable costs, which 

rise as volume increases and fall as volume 

decreases, and product-specific fixed costs, 

which are costs caused by a specific product 

but do not vary with volume. See Docket 

No. ACR2016, Financial Analysis of United 

States Postal Service Financial Results and 

10-K Statement Fiscal Year 2016, March 31, 

2017, at 37.

403 Periodicals is a preferred class of mail and 

receives several statutory discounts, such 

as a 5 percent discount for nonprofit and 

classroom publications. These losses were 

initially called “Losses on Market Dominant 

Products” in past Annual Reports. The 

Commission later clarified that the USO 

Cost only includes Periodicals Losses. Postal 

Regulatory Commission, Annual Report to 

the President and Congress Fiscal Year 2012, 

January 3, 2013, at 37 n.3. Losses on other 

unprofitable Market Dominant products 

are not included, because those products 

are in classes that were profitable overall; 

therefore, the Postal Service had the pricing 

flexibility to remedy those losses. USO 

Report at 134. 

404 The Postal Service has 2 percentage points 

of additional rate authority, however, it is 

aimed only at narrowing the cost-coverage 

gap over time. If the cost coverage rises to 

provide positive contribution, the Postal 
Endnotes | 94

Service’s eligibility for the 2-percentagepoint increase would cease. See Order No. 

5763 at 357-58; Order No. 5337 at 168-71.

405 FY 2021 Financial Analysis, Appendix A; FY 

2022 Financial Analysis, Appendix A.

406 Id.

407 FY 2022 ACD at 29-30. The Periodicals 

class is comprised of two products: InCounty and Outside County. In-County is 

typically used by newspapers with smaller 

weekly circulations for distribution within 

the county of publication. Outside County 

consists of publications with a wide variety 

of circulation sizes, distribution patterns, 

and frequency. FY 2022 Financial Analysis at 

60. 

408 See Order No. 5763. The final rules are 

described in Chapter III in the Rulemakings 

Amending Commission Regulations – 

Statutory Review of Market Dominant Rate 

System section above.

409 Order No. 5763 at 159-60, 190-91. 

Order No. 5763 revised 39 C.F.R. part 

3030 to create a new subpart for Noncompensatory Classes or Products. Id. at 

370; Id. Attachment at 38-39.

410 See Docket No. R2021-2, Order on Price 

Adjustments for First-Class Mail, USPS 

Marketing Mail, Periodicals, Package 

Services, and Special Services Products and 

Related Mail Classification Changes, July 19, 

2021 (Order No. 5937).

411 39 U.S.C. § 3651(b)(1)(C).

412 The Postal Service provided updated Rural 

Mail Count data for FY 2019 through FY 

2021. See Docket No. PI2020-1, Response to 

CHIR No. 6, question 1; Docket No. PI2020-

1, Library Reference USPS-PI2020-1/NP5, 

folder “ChIR6.Q1;” Docket No. PI2020-1, 

Library Reference USPS-PI2020-1/NP3, 

folder “Q1;” Docket No. PI2020-1, Library 

Reference USPS-PI2020-1-NP6, March 

31, 2022, Update of Nonpublic Material 

Provided in Response to CHIR No. 6. 

Uniform First-Class Mail Rates costs for FY 

2019 through FY 2022 methodologies use 

elasticities based on data that include the 

respective fiscal year and do not use the 

forecasting model volumes used in the USO 

Report.

413 See, e.g., Consolidated Appropriations Act, 

2021, Pub. L. 116-260, 134 Stat. 1182, 1423 

(2020) (“6-day delivery and rural delivery of 

mail shall continue at not less than the 1983 

level[.]”).

414 PSRA § 202, 136 Stat., 1146-47 (2022).

415 The methodology for calculating the 

current cost of Six-Day Delivery differs 

from the methodology applied in the USO 

Report in 2008 because it reflects refined 

and more comprehensive costs based on 

the Commission’s findings in its Advisory 

Opinion on Elimination of Saturday Delivery. 

See Docket No. N2010-1, Advisory Opinion 

on Elimination of Saturday Delivery, March 

24, 2011; Postal Regulatory Commission, 

Annual Report to the President and 

Congress Fiscal Year 2011, December 21, 

2011, at 41.

416 39 U.S.C. § 404(c).

417 39 U.S.C. § 3683.

418 FY 2021 Financial Analysis, Appendix A; FY 

2022 Financial Analysis, Appendix A.

419 See FY 2019 Annual Report at 49.
95 | Postal Regulatory Commission • FY 2023 ANNUAL REPORT

420 See United States Postal Inspection Service, 

What We Do, Our Jurisdiction is Worldwide, 

available at https://www.uspis.gov/about/

what-we-do/.

421 See United States Postal Inspection Service, 

Leadership, available at https://www.uspis.

gov/leadership.

422 See United States Postal Inspection Service, 

What We Do, Our Jurisdiction is Worldwide, 

available at https://www.uspis.gov/about/

what-we-do/.

423 See Docket No. ACR2022, Library Reference 

USPS-FY22-32, December 29, 2022, PDF file 

“USPS-FY22-32 Preface.pdf,” at 4.

424 18 U.S.C. § 1725.

425 The letter monopoly is codified in the 

Private Express Statutes. See 18 U.S.C. §§ 

1693-99; 39 U.S.C. §§ 601-606.

426 Contestable mail is certain mail that is 

dropshipped to the processing facility or 

delivery unit closest to its destination.

427 See USO Report at 143-52. The Commission 

described the current methodologies 

employed in Order No. 6658 and Docket 

No. PI2020-1, Library Reference PRC-LRPI2020-1-NP2.

428 The Commission would need route-level, 

geographic-specific data to account for 

clustering. Further improvements could be 

made by assuming the competitor would 

design routes to more efficiently deliver 

the contestable mail. However, this would 

require information about volume delivered 

to each stop that is not currently available.

429 Although the model assumes a 10 percent 

discount would be necessary to entice 

customers to switch, brand loyalty, inertia, 

the need to prove quality, and other 

factors affect the pace at which customers 

would switch from the Postal Service to a 

competitor. The base case model assumes 

a competitor would capture 100 percent 

of the contestable mail on routes that are 

skimmed. See USO Report at 149. However, 

some customers may not switch to a 

competitor even if a discount were offered.

430 The base case model entrant delivery 

frequency differs for the postal and mailbox 

monopoly estimates calculation, i.e., 

assumed entrant delivery frequency for the 

postal monopoly estimate is 3 days a week 

and 1 day a week for the mailbox monopoly 

estimate.

431 Subtracting the value of the mailbox 

monopoly from the value of the postal 

monopoly does not yield the value of the 

letter monopoly because there is an overlap 

in the contestable mail and a different 

frequency of delivery by the competitor. 

Without access to mailboxes, it is unlikely 

that the competitor could successfully 

capture mail directed to a specific person 

or address because those mailpieces are 

delivered to and collected from mailboxes. 

Therefore, a separate estimate of the value 

of the letter monopoly alone (retaining the 

mailbox monopoly) is not provided.

432 See USO Report at 144, Table 5 notes 2, 5; 

Id. at 143-46.

433 See notes to Table IV-7.

434 The FY 2022 estimates reflect the transfer 

of First-Class Package Service to the 

Competitive products category and are 

adjusted to the respective fiscal year 
Endnotes | 96

national estimates as estimated by the CCCS 

and the Rural Carrier Cost System.

435 From FY 2008 to FY 2022, the Commission 

received its funding through the Federal 

appropriations process. 

Photo Credits

Tamela Davis: Cover, pages 1, 5, 13, 59

USPS: Pages 20, 35, 40, 50, 63, 68

PRC: Page 2
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