REPORT TO THE CONGRESS:

AUTHORITY OF THE UNITED STATES POSTAL SERVICE

TO INTRODUCE NEW PRODUCTS AND SERVICES AND

TO ENTER INTO RATE AND SERVICE AGREEMENTS WITH

INDIVIDUAL CUSTOMERS OR GROUPS OF CUSTOMERS

UNITED STATES OF AMERICA

POSTAL RATE COMMISSION

February 11, 2002
POSTAL RATE COMMISSION

Memorandum

February 11, 2002

TO: Senate Committee on Appropriations

House Committee on Appropriations

Senate Committee on Governmental Affairs

House Committee on Government Reform

SUBJECT: Report to the Congress on Authority of the United States Postal Service to

Introduce Innovative Products and Services and to Enter into Rate and

Service Agreements

In accordance with the direction of the Joint Committee of Conference

concerning the 2002 appropriation for the Postal Service, the Postal Rate Commission

hereby transmits its report on the scope of existing authority of the United States Postal

Service under current postal laws and regulations to introduce new products and

services and to enter into negotiated service agreements with individual customers or

groups of customers.

RESPECTFULLY SUBMITTED,

______________________________________

George A. Omas, Chairman

______________________________________

Ruth Y. Goldway, Vice Chairman

______________________________________

Dana B. Covington, Sr., Commissioner
REPORT TO THE CONGRESS:

AUTHORITY OF THE UNITED STATES POSTAL SERVICE

TO INTRODUCE NEW PRODUCTS AND SERVICES AND

TO ENTER INTO RATE AND SERVICE AGREEMENTS WITH

INDIVIDUAL CUSTOMERS OR GROUPS OF CUSTOMERS

__________________________

I. SUMMARY ...........................................................................................................1

II. BACKGROUND AND SCOPE OF ANALYSIS......................................................2

III. POSTAL SERVICE AUTHORITY TO DEVELOP, INTRODUCE AND PROVIDE

NEW PRODUCTS AND SERVICES.....................................................................4

A. Innovation under the Postal Reorganization Act ...................................................4

B. Commission Review of Proposed Changes in Domestic Mail

 Classification ........................................................................................5

C. Commission Procedures Adapted to the Expeditious Consideration of Proposed

Service Innovations...............................................................................................6

IV. POSTAL SERVICE AUTHORITY TO ENTER INTO NEGOTIATED RATE AND

SERVICE AGREEMENTS WITH INDIVIDUAL CUSTOMERS OR GROUPS OF

CUSTOMERS TO PROVIDE SERVICES...........................................................10

A. Statutory Bases of Potential Authority.................................................................10

B. Problematical “Contract Rates”...........................................................................12

C. Negotiated Service Agreements and Specialized “Niche Classifications”...........13

APPENDIX

Postal Service Product Innovations and Special-Purpose Mail Classification

Changes Reviewed by the Postal Rate Commission Since January 1, 2000
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I. SUMMARY

This report provides an analysis of the United States Postal Service’s current

legal authority to: (1) introduce and provide new products and services; and (2) enter

into negotiated service agreements with individual customers. This report also includes

background on the use of such authority within the past two years.

The Commission’s analysis of existing postal law yields the following

conclusions:

• The Postal Reorganization Act of 1970 gives the United States Postal Service

a clear mandate to innovate by developing effective and efficient services

adapted to the needs of the Nation’s mail users.

• The mechanism for implementing innovations in domestic mail services is the

joint authority shared by the Postal Service and the Postal Rate Commission

to adopt new mail classifications under 39 U.S.C. §§ 3623 through 3625.

• The Postal Rate Commission has developed specialized procedural rules that

provide for expeditious consideration of proposed service innovations in a

manner consistent with the due process rights of other interested persons.

• Negotiated Service Agreements (NSAs) or “niche classifications” are rate and

service adjustments arranged by the Postal Service and potential users that

are legally permissible, provided that:

❶ The proposal is reviewed in a public proceeding, as the Reorganization

Act requires;

❷ The agreed-upon rate and service changes will work to the mutual benefit

of mail users and the postal system as a whole; and

❸ The negotiated rate-and-service package is made available on the same

terms to other potential users willing to meet the same conditions of

service.
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II. BACKGROUND AND SCOPE OF ANALYSIS

In joint deliberations on appropriations for the United States Postal Service and

certain other agencies and departments for Fiscal Year 2002, the committee of

conference directed both the Postal Service and the Postal Rate Commission to

prepare reports on particular areas of the Postal Service’s authority under existing law.1

Specifically, the conferees directed:

...both the United States Postal Service and the Postal Rate

Commission to independently report, 90 days after enactment of

this Act, on the scope of existing authority of the US Postal

Service, under title 39, United States Code, and title 39, Code of

Federal Regulations, to introduce and provide new products and

services (including the introduction and provision of new products

and service on an experimental or market test basis) and to enter

into negotiated service agreements with individual customers or

groups of customers. Such reports shall include background on

the use of such authority within the past 24 months and shall be

provided to the Committees on Appropriations, the Senate

Committee on Governmental Affairs, and the House Committee

on Government Reform.

H. R. CONF. REP. NO. 107-253, 107th Cong., 1st Sess. 59 (2001). As directed, the

Commission submits this report to the Senate and House of Representatives

Committees on Appropriations, the Senate Committee on Governmental Affairs, and the

House Committee on Government Reform.

The report is presented in three sections. The first outlines the Postal Service’s

current legal authority to introduce new products and services, the role of the Postal

Rate Commission in that process, and the procedural mechanisms available for

expedited approval of such innovations. The second section addresses the same topics

in connection with Negotiated Service Agreements (NSAs), so-called “niche

classifications,” which are special service and rate arrangements negotiated between

the Postal Service and a particular mailer or groups of mailers with features tailored to

their use of the postal system. Finally, an appendix to the report summarizes recent

 1

 The amended bill produced by the conference committee was enacted as Pub. L. No. 107-67,

115 Stat. 514 (2001).
- 3 -

Commission proceedings in which the Postal Service has sought to introduce service

innovations—some of them customized for particular groups of mailers—on an

expedited basis.
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III. POSTAL SERVICE AUTHORITY TO DEVELOP, INTRODUCE AND PROVIDE

NEW PRODUCTS AND SERVICES

A. Innovation under the Postal Reorganization Act

While pre-existing law afforded limited opportunities for postal innovation,2

 the

Postal Reorganization Act of 1970 gave the newly-created United States Postal Service

a clear mandate to innovate by developing effective and efficient services adapted to

the needs of the Nation’s mail users. Section 101(a) of Title 39 establishes the Postal

Service’s paramount obligation “to provide postal services to bind the Nation together

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

The same section establishes the performance criterion that the Postal Service is

expected to achieve as a matter of postal policy: “It shall provide prompt, reliable, and

efficient services to patrons in all areas and . . . all communities.” Similarly, § 403(a)

assigns the Postal Service the duty to “plan, develop, promote, and provide adequate

and efficient postal services at fair and reasonable rates and fees.” The Act fosters

service innovation by assigning the Postal Service responsibility “to provide types of

mail service to meet the needs of different categories of mail and mail users[.]” 39

U.S.C. § 403(b)(2).

The Reorganization Act grants the Postal Service specific powers that serve as

the operational tools of service innovation. Section 404 of Title 39 grants the Postal

Service plenary authority over custody of the mail and its movement [§ 404(a)(1)]; over

the deployment of post offices, other facilities, and equipment [§ 404(a)(3)]; and over

the means by which stamps and other postage are sold [§ 404(a)(4) and (5)]. The

same section also authorizes the Postal Service “to provide, establish, change, or

abolish special nonpostal or similar services[.]” 39 U.S.C. § 404(a)(6).

Conclusion: The Postal Reorganization Act of 1970 clearly mandates that the

Postal Service innovate by developing effective and efficient postal services adapted to

the needs of the Nation’s mail users.

 2

 Former 39 U.S.C. § 504(a) authorized the Postmaster General to maintain a research and

development program, and to conduct experiments to enhance the operational efficiency and economy of

the postal system.
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B. Commission Review of Proposed Changes in Domestic Mail

Classifications

Prior to 1970, the array of mail services provided by the Post Office Department

was codified as part of Title 39.3

 The Reorganization Act replaced this statutory

codification of postal services with an administrative process in which the Governors of

the Postal Service establish, and the Postal Rate Commission reviews proposed

changes in, the terms and conditions of postal services, which are compiled as the

Domestic Mail Classification Schedule (or “DMCS”).4

Section 3621 of Title 39 provides that “the Governors are authorized to establish

reasonable and equitable classes of mail . . . in accordance with the provisions of this

chapter.” Section 3623(a) directs the Postal Service to file a request with the Postal

Rate Commission for a recommended decision on establishing a mail classification

schedule within two years of the Reorganization Act’s effective date. The Postal

Service complied with this requirement early in 1973, and a Domestic Mail Classification

Schedule recommended by the Commission became effective on July 6, 1976.5

Following establishment of this initial mail classification schedule, § 3623(b)

provides that the Postal Service “may from time to time request that the Commission

submit, or the Commission may submit to the Governors on its own initiative, a

recommended decision on changes in the mail classification schedule.” Deliberations

on proposed mail classification changes follow proceedings in which an opportunity for

on the record hearings is afforded to mail users and an officer of the Commission

required to represent the interests of the general public. 39 U.S.C. § 3624(a). The

Commission’s procedural rules governing proposed changes in the mail classification

schedule are contained in Subpart C of title 39 of the Code of Federal Regulations, 39

C.F.R. § 3001.61 et seq.

 3 See former Title 39, Part IV—Mail Matter.

4

 The text of the Domestic Mail Classification Schedule is published as Appendix A to Subpart C

of 39 C.F.R. Part 3001, following 39 C.F.R. § 3001.68

5

 Docket No. MC73-1, Phase I, Opinion and Recommended Decision, April 15, 1976; accepted in

Decision of the Governors of the United States Postal Service on Establishing a Mail Classification

Schedule, June 2, 1976.
- 6 -

Over the past 25 years, the Postal Service has filed many such mail classification

requests with the Commission, seeking either to establish new postal products or to

reconfigure pre-existing services. Less frequently, the Commission has begun

proceedings on its own initiative, most commonly in response to a mail user’s request to

do so. Both forms of proceeding have proven to offer useful opportunities to introduce

innovations in postal services.

Conclusion: The joint authority shared by the Postal Service and the Postal

Rate Commission under the Reorganization Act to adopt new mail classifications is the

mechanism for implementing innovations in domestic mail service.

C. Commission Procedures Adapted to the Expeditious Consideration of

Proposed Service Innovations

Recognizing that certain types of proposed service innovations merit

consideration under specialized procedures, the Commission has adopted several sets

of rules that are customized for defined categories of Postal Service requests. The

rules depart from those generally applicable to proposed mail classification changes by

reducing the amount of supporting evidence the Postal Service is required to produce,

and by expediting the Commission’s procedural schedule for considering the particular

form of proposed change.

The Commission determined almost twenty years ago that there was a need for

specialized rules to facilitate Postal Service mail classification requests involving

proposed new services, or changes in existing services, that were intended to serve as

experiments. The rules, contained in 39 C.F.R. §§ 3001.67 through .67d, provide a

mechanism for limiting the issues on which a trial-type hearing is required; allow the

Postal Service to explain the unavailability of data that would otherwise have to be filed;

and provide for data collection for the duration of the experiment. The experimental

rules also incorporate a procedural time limit of 150 days from the Commission’s

determination that the proposed change is experimental in nature.

These rules were not used extensively. A joint Postal Service-Postal Rate

Commission task force suggested a number of areas where additional special rules
- 7 -

might further encourage Postal Service innovation.6

 The Postal Service petitioned the

Commission in 1995 to adopt rules to implement some of the task force’s

recommendations. The Commission conducted a rulemaking to consider the rules

proposed in the Service’s petition, and after considering the comments of interested

parties, implemented four of the proposed initiatives, albeit in revised form.

Three of the new sets of rules prescribe expedited procedures for particular

categories of Postal Service requests. The fourth set specifies conditions under which

the Service may use multi-year test periods to demonstrate that a proposed new service

will become compensatory over time.

The first set of these new procedural rules, incorporated into the Commission’s

rules of practice as sections 161 through 166,7

 establish expedited procedures for

consideration of Postal Service proposed market tests of potential new services. The

rules specify the limited information the Service is required to file in support of a

proposed market test, including a plan for testing the proposed new service and

associated data collection and reporting requirements. They also streamline public

notice and hearing procedures, and provide for issuance of a “yes or no” Commission

decision on the proposed market test within 90 days, consistent with the procedural due

process rights of interested persons. The Postal Service’s innovative Mailing Online

service, for which a three-year experimental trial was requested and approved in Docket

No. MC2000-2, was initially considered and recommended by the Commission under

the market test rules. See the Appendix to this report under the heading for Docket No.

MC2000-2.

The second set of rules,8

 apply to Postal Service proposals to implement new

services that would supplement, but not alter, existing mail classifications and rates on a

provisional basis for a limited time. As in the market test rules, the provisional service

rules identify the supporting information to be provided by the Postal Service; in

addition, they allow the Service to explain why it should not be required to provide

 6 See Postal Ratemaking in a Time of Change: A Report by the Joint Task Force on Postal

Ratemaking, June 1, 1992.

7

 39 C.F.R. §§ 3001.161-.166.

8

 39 C.F.R. §§ 3001.171-.176.
- 8 -

information called for in the Commission’s general rules for mail classification proposals.

The rules likewise expedite public notice and procedural scheduling, providing for a “yes

or no” Commission decision within 90 days, consistent with the due process rights of

other parties.

A third set of rules, adopted as sections 69 through 69c of the rules of practice,9

applies to Postal Service requests for permanent mail classification changes that are

minor in character. “Minor” classification changes are defined as those that would not

change any existing rate or fee; would not impose any new restriction on eligibility for

mailing; and would not significantly increase or decrease the estimated contribution of

the affected mail subclass or service category to the institutional costs of the Postal

Service. The rules specify limited required supporting information, allow the Service to

explain the unavailability of otherwise required data, and also streamline procedural

scheduling. Under these rules for minor classification proposals, the procedural

deadline for rendering a Commission decision is 90 days from the filing of the Postal

Service request if no hearings are held, and 120 days if hearings are scheduled in the

case.

Finally, the fourth set of rules, contained in sections 181 and 182 of the rules of

practice, 10 applies to Postal Service requests for new services that it believes cannot

recover all their associated costs in the first full fiscal year of their operation. In such

instances, the Service’s request must be supported by testimony of a Postal Service

witness that explains the rationale for the proposed multi-year test period. The request

should also provide Return on Investment projections, other available financial

analyses, and cost, revenue, and volume estimates for the new service for the entire

proposed test period. The rules establish a policy standard that allows test periods of

up to five fiscal years for the purpose of determining breakeven for newly introduced

postal services.

The Commission adopted these four sets of rules in 1996, to be effective for a

period of five years. In light of their apparent workability in several Commission

proceedings and their continuing usefulness for affording procedural flexibility to the

 9

 39 C.F.R. §§ 3001.69-69c.

10 39 C.F.R. §§ 3001.181-.182.
- 9 -

Postal Service, the Commission extended their application for an additional five-year

period in a recent rulemaking.11

Conclusion: Specialized Postal Rate Commission rules of procedure are

currently available for use by the Postal Service to provide expeditious consideration of

proposed service innovations in a manner consistent with the due process rights of all

interested persons.

 11 Docket No. RM2001-3, Order No. 1322, 66 Fed. Reg. 54436 (2001).
- 10 -

IV. POSTAL SERVICE AUTHORITY TO ENTER INTO NEGOTIATED RATE AND

SERVICE AGREEMENTS WITH INDIVIDUAL CUSTOMERS OR GROUPS OF

CUSTOMERS TO PROVIDE SERVICES

For a number of years, some mailers have pursued the idea of establishing

customized postal rates and/or terms of service through negotiation with the Postal

Service. Depending on their respective objectives and features, contractual

arrangements of this kind have been labeled “contract rates,” “negotiated service

agreements,” or more recently, “niche classifications.” In addressing the consistency of

these various approaches with current law, it is important to identify and consider all of

their characteristics. For example, the legality of an agreement may be dependent on

whether the contract is agreed upon and performed without any regulatory scrutiny, or

instead submitted for some form of review by the Postal Rate Commission prior to its

effectiveness.

A. Statutory Bases of Potential Authority

No provision in existing law explicitly authorizes or prohibits the Postal Service

from entering into rate or service agreements with mail users. Section 401(3) of Title 39

generally empowers the Service “to enter into and perform contracts,” and there is no

prohibition elsewhere against the Postal Service and mail users negotiating and

reaching consensus as to how rates or conditions of service should be changed.

However, other provisions in Title 39 cast into doubt the conclusion that the Service’s

authority under § 401(3) is sufficiently broad to encompass changes in rates or mail

classifications by agreement alone.

The obstacles to this conclusion are both procedural and substantive. From a

procedural perspective, the legal soundness of rate or mail classification changes by

contract alone is doubtful because the only means of making such changes recognized

in the Reorganization Act are the procedures prescribed in Chapter 36 of Title 39.

These provisions require that rate or mail classification changes desired by the Postal

Service must be filed as a request with the Postal Rate Commission, allowing for public

scrutiny and deliberations by the Commission and the Governors of the Postal Service.
- 11 -

Failure to abide by the procedural requirements of Chapter 36 has been recognized as

a sufficient legal basis for voiding the intended change.12

Negotiated rate or service changes also may run afoul of the substantive

standards prescribed for rates and mail classifications in the Reorganization Act.

Section 403(c) of Title 39 directs that:

In providing services and in establishing classifications, rates, and

fees under this title, the Postal Service shall not, except as

specifically authorized in this title, make any undue or

unreasonable discrimination among users of the mails, nor shall it

grant any undue or unreasonable preferences to any such user.

Sections 3622 and 3623 similarly specify fairness and equity, together with other

criteria, as considerations to be observed in making rate and mail classification

changes. Without public scrutiny and review of the terms of a given rate or service

agreement between the Postal Service and a customer, there could be no assurance

that these substantive criteria would be satisfied.

However, assuming the procedural requirements of Chapter 36 are met, changes

negotiated by the Postal Service and a mail user for their mutual benefit may merit

recommendation under the applicable statutory standards. Section 3623(c) directs the

Commission to consider “the desirability and justification for special classifications and

services of mail” [§ 3623(c)(2)] and “the desirability of special classifications from the

point of view of both the user and of the Postal Service” [§ 3623(c)(5)]. Regarding

rates, § 3622(b)(6) establishes “the degree of preparation of mail for delivery into the

postal system performed by the mailer and its effect upon reducing costs to the Postal

Service” as a factor to be considered in connection with a proposed change. In

combination with other factors and the policies of the Reorganization Act, these

 12 United Parcel Service v. U. S. Postal Service, 455 F.Supp. 857 (E.D. Pa. 1978), affirmed, 604

F.2d 1370 (3d Cir. 1979), cert. denied, 446 U.S. 957 (1980).
- 12 -

considerations could support recommendation of rate and classification changes

tailored to the capabilities and needs of particular mailers.

Conclusion: Rate and service agreements negotiated by the Postal Service and

mail users are permissible under current law if the procedural and substantive

requirements of the Postal Reorganization Act are satisfied.

B. Problematical “Contract Rates”

In a rulemaking proceeding conducted in the late 1980s at the request of a

mailer, the Commission addressed the question of the Postal Service’s authority to

negotiate rate changes in the form of a proposal to recognize “contract rates.” After

considering comments of the Postal Service and other participants, the Commission

found the proposal problematical, and declined to pursue it.

The initial proposal, considered in Docket No. RM89-5, included two variants:

1. The Commission might, after considering cost and other

relevant evidence, establish a range of permissible rates for

particular subclasses, with the Postal Service and individual

mailers free thereafter to negotiate rates within this range; or

2. The Postal Service and one or more mailers would negotiate a

rate and service package which would then (i) be submitted to

the Commission for a review, and (ii) thereafter be available on

the same terms to all potential users.

The Commission solicited two rounds of comments on the proposal from interested

parties. The proponent and one other mailer took the position that the Postal Service is

authorized to enter into such contracts, provided the procedural requirement of review

under Chapter 36 is observed. Other commenters—including the Commission’s Office

of Consumer Advocate—expressed doubts regarding the legal soundness of one or

both of the proposed variants of such agreements. The Postal Service commented that,

in its view, legal constraints would not preclude a contract mechanism in principle, but

that no such arrangement would be permissible without the Commission’s participation

in accordance with 39 U.S.C. §§ 3622 through 3625.
- 13 -

Upon consideration of the initial comments it received, the Commission declined

to pursue the contract rate proposal, but solicited further comments on several broad

issues concerning possible changes in the mail classification system. The Commission

explained that its reluctance to pursue the concept of contract rates was based on

substantial uncertainty regarding the legal sufficiency of examining agreed-upon rates

after the fact, rather than in a prior review. It also raised the potential problems of

unreasonable discrimination that such contracts might cause, in contravention of 39

U.S.C. § 403(c), and the preservation of fair contributions to the Postal Service’s

institutional costs by mail volumes.13 Such problems might well arise if the Service were

to negotiate “discounted” rates—unaccompanied by a change in service conditions that

provided cost or revenue justification.

Conclusion: Negotiated rates—unaccompanied by a change in service

conditions that provides cost justification—are a problematical approach to introducing

additional flexibility into Postal Service business practices.

C. Negotiated Service Agreements and Specialized “Niche Classifications”

Following publication of the report of the joint Postal Service-Postal Rate

Commission task force on ratemaking, the Postal Service petitioned the Commission to

adopt rules to implement some of the report’s recommendations. One recommendation

included in the Service’s petition was adoption of Commission rules for reviewing on an

expedited basis “service agreements with postal customers, varying from the general

rate and classifications schedules in ways which add value both for the customer and

for the postal system as a whole.”14

The proposal in the Postal Service’s petition would have established Negotiated

Service Agreements as a new form of mail classification, with individual agreements to

be reviewed by the Commission within 60 days. In the Commission’s Notice of

Proposed Rulemaking, it deferred consideration of the NSA proposal, citing legal

uncertainty regarding the consistency of negotiated rates with the Reorganization Act’s

 13 Docket No. RM89-5, Further Invitation for Comments, 54 Fed. Reg. 47223 (1989).

14 Postal Ratemaking in a Time of Change, supra, at 54.
- 14 -

ratemaking provisions. However, the Commission also expressed a general willingness

to address the concept in a subsequent rulemaking.

Since then, the Commission has conducted several mail classification

proceedings under the other expedited procedures adopted in that rulemaking. These

procedures have been shown to be well suited to the consideration of “niche

classification” proposals. Niche classifications are specialized mail classifications—

including reduced, but cost-justified rates or fees—that have been developed by the

Postal Service in direct consultation with its customers, to meet the needs and

capabilities of a mailer or group of mailers. For example, the Commission approved a

two-year experiment of a program that enabled users of bulk, nonletter-size Business

Reply Mail such as photofinishers that could reliably determine postage and fees due, to

obtain earlier access to their mail at revised fees.15 The Commission subsequently

granted a requested extension of the experiment,16 and ultimately approved a request to

make the experimental program a permanent mail classification.17 More recently, in

Docket No. MC2001-1, the Commission recommended three new worksharing-based

discounted Priority Mail categories after negotiating with mailers who were willing to

presort their mail in new ways that could reduce the Postal Service’s costs.18 Such

“niche classification” proposals are essentially Negotiated Service Agreements, without

any associated legal uncertainties or additional administrative barriers.

Conclusion: Rate and service adjustments agreed upon by the Postal Service

and mailers are legally authorized if three conditions are satisfied:

❶ The proposal is reviewed in a public proceeding, as the Reorganization

Act requires;

❷ The agreed-upon rate and service changes will work to the mutual benefit

of mail users and the postal system as a whole; and

 15 Docket No. MC97-1, Opinion and Recommended Decision, April 2, 1997.

16 Docket No. MC99-1, Opinion and Recommended Decision Approving Revised Stipulation and

Agreement, May 14, 1998.

17 Docket No. MC99-2, Opinion and Recommended Decision Approving Stipulation and

Agreement, July 14, 1999.

18 See the description of this proceeding in the Appendix.
- 15 -

❸ The negotiated rate-and-service package is made available on the same

terms to other potential users willing to meet the same conditions of

service.

Examples of “niche classification” proposals recommended in recent Commission

proceedings, and Postal Service product innovations considered in other cases, are

described in the Appendix to this report.
Report To The Congress Appendix

Feb. 11, 2002 Page 1 of 2

Postal Service Product Innovations and Special-Purpose Mail Classification

Changes Reviewed by the Postal Rate Commission Since January 1, 2000

__________________________

Docket No. MC2001-1—Experimental Presorted Priority Mail Rate Categories

• Nature of service or change: Experimental trial of three new presorted rate

categories of Priority Mail.

• Target users: Mailers who can meet minimum quantity, mail preparation and

containerization requirements for presorting their Priority Mail shipments.

• Rate(s) and justification: Three levels of presort discounts based on processing

costs bypassed because of worksharing by mailers.

• Procedural history: Request filed by Postal Service on March 7, 2001. Settlement

agreement among parties filed on May 17, 2001. PRC decision approving

settlement agreement transmitted to Postal Service Governors on May 25, 2001.

Governors approved PRC decision on June 4, 2001.

Docket No. MC2000-1—Experimental “Ride-Along” Classification Change for

Periodicals

• Nature of service or change: Experiment allowing one piece of advertising matter

to “ride-along” in a Periodicals publication for a flat additional ten-cent rate.

• Target users: Publishers who wish to include innovative advertisements in their

periodicals at a more affordable rate than Standard A postage.

• Rate(s) and justification: Flat ten-cent rate available only for “ride-along” pieces

that do not cause any significant additional mail processing or delivery costs.

• Procedural history: Request filed by Postal Service on September 27, 1999.

Settlement agreement among parties filed on December 20, 1999. PRC decision

approving settlement agreement transmitted to Postal Service Governors on

February 3, 2000. Governors approved PRC decision on February 8, 2000.

➨ Update: Postal Service request for permanent authority filed September 24,

2001 in Docket No. R2001-1. Action by Commission is pending. Postal Service

Request for extension of experiment filed in Docket No. MC2001-3 on September

28, 2001. PRC decision approving request transmitted to Postal Service

Governors on January 11, 2002.
Report To The Congress Appendix

Feb. 11, 2002 Page 2 of 2

Docket No. MC2000-2—Mailing Online Experiment

• Nature of service or change: Experimental service enabling computer users to

transmit documents in electronic form to Postal Service for printing, processing, and

delivery as Express Mail, First-Class Mail or Standard A Mail.

• Target users: Single-piece mailers and small office/home office (SOHO) operators

who have difficulty taking advantage of traditional mail service providers.

• Rate(s) and justification: Applicable bulk mailing rate plus fee to recover costs of

printing, technological resources, advertising and other program-related expenses.

• Procedural history: Market test of same service approved by PRC in Docket No.

MC98-1. Request for three-year experiment filed by Postal Service on November

16, 1999. Hearings held December, 1999 through February, 2000. PRC decision

approving proposal, with recommended fee modifications, on June 21, 2000.

Governors approved PRC decision on August 7, 2000.

Docket No. MC2001-2—Experimental Seasonal Delivery Confirmation Fee

• Nature of service or change: Experiment to provide manual delivery confirmation

without charge to retail Priority Mail users during two weeks before the peak of the

holiday mailing season.

• Target users: Small volume mailers that might be made more inclined to mail

before the holiday peak, and that also might, as a result of the test, increase their

purchases of delivery confirmation service in the future.

• Rate(s) and justification: Delivery confirmation to be available at no charge to

retail Priority Mail users during the early stages of the holiday season.

• Procedural History: Request Filed by Postal Service September 20, 2001. Postal

Service withdrew request on November 5, 2001 because the disruption of other

events made conducting the experiment inadvisable.