67514 Federal Register / Vol. 69, No. 222 / Thursday, November 18, 2004 / Proposed Rules 

1See Proposed Rulemaking Concerning 

Amendment to the Rules of Practice and Procedure, 

PRC Order No. 1389, January 16, 2004.

consumers improve their health and 

decrease their risk of contracting 

diseases by making sound dietary 

choices. The task force issued a final 

report on July 10, 2003 (68 FR 41387, 

July 11, 2003), which recommended that 

FDA seek public comment on several 

topics related to qualified health claims 

(i.e., claims that do not meet the 

significant scientific agreement (SSA) 

standard of evidence required by the 

Federal Food, Drug, and Cosmetic Act 

and FDA regulations to evaluate the 

scientific validity of health claims) and 

unqualified health claims (i.e., health 

claims that are supported by SSA and 

authorized by FDA by regulation). Some 

of the topics identified in the task force 

report were specifically addressed in the 

1995 proposal. FDA reopened the 

comment period on the 1995 proposal to 

seek comment on these topics, which 

include the following: (1) The proposed 

amendments to permit unqualified 

health claims on certain foods that do 

not contain 10 percent or more of one 

of certain required nutrients; (2) the 

proposed amendments to provide 

criteria that FDA would consider in 

determining whether to grant an 

exemption from disqualifying nutrient 

levels related to unqualified health 

claims of certain nutrients; and (3) the 

proposed amendments to retain the 

word ‘‘may’’ or ‘‘might’’ in unqualified 

health claims to describe the 

relationship between a substance and a 

disease or health-related condition. In 

addition, FDA sought comment on the 

proposed use of unlisted synonyms and 

abbreviated health claims. Specifically, 

for unlisted synonyms (i.e., terms not 

defined by regulation), FDA repeated its 

request for data or other information 

demonstrating that unlisted synonyms 

that are anchored to defined terms in 

nutrient content claims are reasonably 

understood by consumers to be 

synonyms of the defined terms. FDA 

also sought comments on the petition 

process in 21 CFR 101.69(n) for 

synonyms and examples of synonyms 

that industry may be seeking to use. For 

abbreviated health claims, FDA sought 

comments and requested data or other 

information regarding whether 

abbreviated health claims would 

mislead consumers.

Following publication of the May 4, 

2004, notice reopening the comment 

period, FDA received four requests for 

an extension of the comment period to 

allow interested persons additional time 

to comment. Two of the requests were 

submitted by NFPA and ABA, the 

petitioners. The requesters asserted that 

more time is needed, given the 

complexity of the issues, to thoroughly 

review the specific elements of the 1995 

proposal. Some requesters further 

supported their requests for additional 

time by noting that more than 7 years 

have passed since the 1995 proposal 

was last considered in comments and 

FDA’s May 4, 2004, notice reopening 

the comment period. NFPA and ABA, 

which are trade associations, 

specifically stated that, over the 

intervening years, many of their member 

companies’ representatives who were 

responsible for consideration of the 

technical aspects of the 1995 proposal 

have left their companies and have been 

replaced by staff that are less familiar 

with the 1995 proposal, subsequent 

comments, and underlying petitions. In 

addition, NFPA and ABA asserted that 

because the character of their 

membership has changed and current 

members may advocate different views 

of the issues raised in the 1995 proposal 

and in comments on the 1995 proposal 

received through 1997, additional time 

is needed to ensure that all members’

concerns are addressed to accurately 

comment and respond to FDA. Another 

requester, also a trade association, also 

requested more time to ensure that all 

of its members’ concerns are addressed 

to accurately comment and respond to 

FDA.

FDA has considered the requests for 

additional time to submit comments 

and, because the comment period for 

the 1995 proposal closed on July 6, 

2004, FDA is again reopening the 

comment period on the 1995 proposal 

for an additional 60 days to provide 

interested persons an opportunity to 

comment on the issues identified herein 

and in FDA’s May 4, 2004, notice 

reopening the comment period for the 

1995 proposal.

II. Comments

Interested persons may submit to the 

Division of Dockets Management (see 

ADDRESSES) written or electronic 

comments in response to FDA’s request 

for comments and available data or 

other information identified in FDA’s 

May 4, 2004, notice reopening the 

comment period on the 1995 proposal. 

Submit a single copy of electronic 

comments or two paper copies of any 

mailed comments, except that 

individuals may submit one paper copy. 

Identify comments with the docket 

numbers found in brackets in the 

heading of this document. Received 

comments may be seen in the Division 

of Dockets Management between 9 a.m. 

and 4 p.m., Monday through Friday.

Dated: November 8, 2004.

Jeffrey Shuren,

Assistant Commissioner for Policy.

[FR Doc. 04–25529 Filed 11–17–04; 8:45 am]

BILLING CODE 4160–01–S

POSTAL RATE COMMISSION

39 CFR Part 3001 

[Docket No. RM2004–1; Order No. 1424] 

Definition of Postal Service

AGENCY: Postal Rate Commission.

ACTION: Proposed rule.

SUMMARY: This document addresses a 

proposal to add a definition of the term 

‘‘postal service’’ to the rules of practice. 

This proposal is prompted by the Postal 

Service’s action with respect to 

nonpostal initiatives. There is often 

controversy and uncertainty regarding 

the postal character of the services 

provided under those initiatives. The 

proposed definition is intended to 

provide guidance to the Postal Service 

and the general public concerning 

services that are subject to sections 3622 

and 3623 of the Postal Reorganization 

Act.

DATES: 1. Deadline for filing initial 

comments: December 15, 2004. 

2. Deadline for filing reply comments: 

January 12, 2004.

ADDRESSES: File all documents referred 

to in this order electronically via the 

Commission’s Filing Online system at 

http://www.prc.gov.

FOR FURTHER INFORMATION CONTACT:

Stephen L. Sharfman, (202) 789–6818.

SUPPLEMENTARY INFORMATION: 

Regulatory History 

69 FR 3288, January 23, 2004. 

69 FR 11353, March 10, 2004. 

I. Introduction and Summary 

In Order No. 1389, the Commission 

proposed to amend its rules of practice 

and procedure to include a definition of 

the term ‘‘postal service.’’ 1 The postal 

character of a spate of relatively new 

services initiated unilaterally by the 

Postal Service is uncertain and the issue 

whether a service is postal or nonpostal 

has become increasingly controversial. 

Consequently, the Commission 

proposed to codify a definition of the 

term ‘‘postal service’’ in its rules to 

provide guidance to the Postal Service 

and the public for evaluating what falls 

within the scope of sections 3622 and 

Federal Register / Vol. 69, No. 222 / Thursday, November 18, 2004 / Proposed Rules 67515

2 Id. at 12.

3See Initial Comments of the United States Postal 

Service, March 15, 2004, at 2–3 (Postal Service 

Initial Comments).

4United Parcel Service v. U.S. Postal Service, 604 

F.2d 1370, 1381 (3rd Cir. 1979), cert. denied, 446 

U.S. 957 (1980).

5Postal Service Initial Comments at 3.

6To clarify, the Commission takes no position on 

services offered by the Postal Service that fall 

outside the proposed definition.

7See PRC Order No. 1389, supra, at 1–8.

8 Id. at 12–16.

3623 of the Postal Reorganization Act 

(PRA).

Specifically, the Commission 

proposed to amend its rules by 

including the following definition: 

Postal service means the delivery of 

letters, printed matter, or packages 

weighing up to 70 pounds, including 

acceptance, collection, processing, 

transmission, or other services 

supportive or ancillary thereto.2

Interested persons were invited to 

submit comments on the proposed rule.

No commenter, including the Postal 

Service, challenges the Commission’s 

authority to adopt a definition of the 

term postal service. Under the Postal 

Service’s construction of the Act, 

however, adopting a definition would 

essentially be an empty gesture since it 

contends that the Commission lacks the 

authority to determine the scope of its 

own jurisdiction. Under its theory, any 

service or product it unilaterally 

declares not to be a postal service is 

beyond the Commission’s jurisdiction.3

Thus, under its interpretation, the Postal 

Service becomes the arbiter of all things 

postal.

The Commission rejects the claim that 

it cannot determine the scope of its own 

jurisdiction. The law on this point is 

well settled. ‘‘[T]he agency entitled to 

deference in the interpretation of 39 

U.S.C. 3622–24 is the Rate 

Commission—not the Postal Service—as 

it is the Rate Commission which is 

charged with making recommended 

decisions on changes in rates and mail 

classification.’’ 4 Unilateral Postal 

Service actions do not determine the 

scope of the Commission’s jurisdiction 

over postal services. Management’s 

initial characterization of a service as 

postal or not, a prerequisite under the 

Act, is not dispositive of the 

Commission’s jurisdiction. Analysis of 

the statute, legislative history, and 

precedent confirms that the Postal 

Service is not free to engage in 

unfettered commercial activities under 

the guise that they are nonpostal.

In its comments, the Postal Service 

argues that the Commission’s definition 

of the term postal services imposes no 

limits on its authority under the Act.5

The Commission does not disagree. The 

proposed rule in no way restricts the 

types of services, postal or otherwise, 

that the Postal Service may wish to 

offer. It is free to offer whatever services 

it chooses subject to the requirements of 

the Act. For those that are postal 

services, within the meaning of the 

proposed rule, the Postal Service has an 

obligation to request a recommended 

decision before commencing service or 

charging rates. Nothing in the proposed 

rule affects the lawfulness of Postal 

Service products or services that are not

postal.6

While most commenters support the 

idea that the term postal service be 

defined, there is no unanimity on the 

definition. The diversity of views 

expressed has helped crystallize the 

Commission’s thinking about the issues. 

It is apparent that continuation of the 

status quo is not in the public interest. 

On numerous, recent occasions, parties 

have challenged the legitimacy of the 

Postal Service’s claim that various 

services, offered unilaterally pursuant to 

section 404(a)(6), are not postal services. 

The jurisdictional implications of these 

services, which have become 

increasingly controversial, are most 

efficaciously addressed by rule rather 

than on an ad hoc basis. Comments by 

competitors demonstrate that many of 

these services offered unilaterally by the 

Postal Service have a substantial public 

effect. Accordingly, the Commission 

believes that it is appropriate to include 

a definition of the term postal service in 

its rules. 

Based on a thorough consideration of 

the comments, however, the 

Commission has determined not to 

adopt either its initial proposal or any 

suggested in the comments. Instead, the 

Commission concludes that it would be 

preferable to define the term postal 

service by reference to the Postal 

Service’s statutory duties rather than as 

initially proposed or as specifically 

suggested by any commenter. The rule 

proposed herein represents an 

improvement over that proposed in 

Order No. 1389 since it makes the 

Service’s ‘‘postal service’’ duties the 

touchstone of the definition rather than 

any specific activities the Postal Service 

may or may not perform. 

The revised definition reads as 

follows: Postal service means the 

receipt, transmission, or delivery by the 

Postal Service of correspondence, 

including, but not limited to, letters, 

printed matter, and like materials; 

mailable packages; or other services 

supportive or ancillary thereto. Because 

the definition focuses on the Postal 

Service’s statutory functions, the 

proposed definition is distinguishable 

from that proposed in Order No. 1389. 

A major distinction is that the revised 

definition covers certain electronic 

services offered by the Postal Service, a 

result urged by several commenters. The 

Commission’s decision to include 

certain electronic services is grounded 

on the statute and legislative history, 

both of which contemplate the use of 

technological advances in the provision 

of postal services. Nevertheless, 

inclusion of these services in the 

definition should not be read as a 

conclusion that all such services are 

jurisdictional; only such services that 

entail correspondence become postal 

services. 

In lieu of adopting the foregoing 

definition now, the Commission will 

provide interested persons an 

opportunity to comment on the revised 

proposed rule. While not required under 

the Administrative Procedure Act, the 

additional comment period is deemed 

appropriate to assure that the impact of 

the rule is carefully considered and 

fully understood. Comments are due 

December 15, 2004. Reply comments 

may be filed on or before January 12, 

2005. 

II. Background 

Two rulemakings pending before the 

Commission are companion 

proceedings, designed to define postal 

services on the one hand, Docket No. 

RM2004–1, and reporting requirements 

for nonpostal services on the other, 

Docket No. RM2004–2. In Order No. 

1389, against the backdrop of an array 

of new services offered unilaterally by 

the Postal Service, the Commission 

reviewed both judicial and Commission 

precedent concerning the meaning, for 

jurisdictional purposes, of the term 

postal service.7 This review 

demonstrated that the postal character 

of these new services was unsettled, 

causing needless confusion and 

increasing controversy. Consequently, to 

address the issue, the Commission 

proposed to define the term postal 

service and provided interested persons 

an opportunity to comment on the 

proposed definition.8

67516 Federal Register / Vol. 69, No. 222 / Thursday, November 18, 2004 / Proposed Rules 

9Comments of Lifetime Addressing, Inc. Pursuant 

to Commission Order No. 1389, March 16, 2004 

(Lifetime Addressing Comments); Office of the 

Consumer Advocate and Consumer Action 

Comments on Proposed Amendment to the 

Commission’s Rules of Practice and Procedure, 

March 15, 2004 (Joint Initial Comments); Comments 

of the Parcel Shippers Association to the Proposed 

Rulemaking Concerning Amendment to the Rules of 

Practice and Procedure, March 15, 2004 (PSA 

Comments); Comments of Pitney Bowes Inc., March 

15, 2004 (Pitney Bowes Comments); PostCom 

Comments on Proposed Rulemaking Concerning 

Amendment to the Rules of Practice and Procedure, 

March 1, 2004 (PostCom Initial Comments); 

Comments of United Parcel Service in Support of 

Proposed Rule, March 9, 2004 (UPS Comments); 

Postal Service Initial Comments, supra, March 15, 

2004.

10Reply Comments of Lifetime Addressing, Inc., 

April 15, 2004 (Lifetime Addressing Reply 

Comments); Office of the Consumer Advocate and 

Consumer Action Reply Comments on Proposed 

Amendment to the Commission’s Rules of Practice 

and Procedure, April 15, 2004 (Joint Reply 

Comments); PostCom Reply Comments on the 

Proposed Rulemaking Concerning the Definition of 

‘‘Postal Service,’’ April 15, 2004 (PostCom Reply 

Comments); and Reply Comments of the United 

States Postal Service, April 15, 2004 (Postal Service 

Reply Comments).

11PostCom’s suggestion was offered as an 

alternative to its principal recommendation that the 

Commission not adopt a definition of the term 

postal service in this proceeding. PostCom Initial 

Comments at 1–2.

12See PRC Order No. 1394, March 5, 2004.

13 Joint Initial Comments, supra, at 15.

14 Ibid.

15See Complaint on Electronic Postmark, Docket 

No. C2004–2 and Complaint on Stamped 

Stationery, Docket No. C2004–3.

16Postal Service Initial Comments at 1–2.

17 Id. at 3; see also Postal Service Reply 

Comments at 8–9.

18See, e.g., PRC Op. R74–1, Vol. 2, Appendix F; 

PRC Op. R76–1, Vol. 1, at 263 et seq., and Vol. 2, 

Appendix F; PRC Order No. 1239, May 3, 1999, at 

9–14; see also United Parcel Service v. U.S. Postal 

Service, 604 F.2d 1370, 1381 (3rd Cir. 1979), cert. 

denied, 446 U.S. 957 (1980).

19See Postal Service Initial Comments at 2. As a 

general matter, the Postal Service referred to its 

comments in Docket *2003 in lieu of restating its 

position.

20 Id. at 3. In comments in Docket *2003, the 

Postal Service cast the argument, in part, as the 

Commission’s authority to determine the legal 

status of nonpostal services. Comments of United 

States Postal Service on Consumer Action Petition, 

Docket *2003, January 30, 2003, at 12–13.

21United Parcel Service v. U.S. Postal Service,

455 F. Supp. 857, 869 (E.D. Pa. 1978), aff’d, 604 

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

(1980).

Seven sets of initial comments 9 and 

four sets of reply comments 10 were 

filed. These comments, addressed in 

detail below, advocate a variety of 

different perspectives. Four, the 

Association for Postal Commerce 

(PostCom),11 the Office of the Consumer 

Advocate and Consumer Action (OCA/

CA), United Parcel Service (UPS), and 

the Postal Service, suggest revisions to 

the Commission’s proposed definition. 

Two, Parcel Shippers Association (PSA) 

and Pitney Bowes, Inc. (Pitney Bowes), 

endorse the proposed definition, albeit 

for different reasons; and one, Lifetime 

Addressing, supports OCA/CA’s 

proposal.

The principal legal issues in this 

proceeding are the Postal Service’s 

contention that the Commission lacks 

authority to determine the scope of its 

own jurisdiction and OCA/CA’s claim 

that nonpostal services mean only those 

services provided by the Postal Service 

on behalf of other government agencies. 

Docket No. RM2004–2, like this 

proceeding an outgrowth of Docket 

*2003, was initiated to consider the 

effects, if any, of non-jurisdictional 

services on jurisdictional rates.12

Nonpostal services are a subset of nonjurisdictional services. In tandem, the 

two rulemakings are complementary, 

addressing opposite sides of the same 

coin.

In this proceeding, OCA/CA, citing 

the interrelationship between the two 

dockets, urge the Commission to define 

the term nonpostal (as they interpret it) 

in this proceeding, essentially 

preempting the proposed amendment to 

rule 54 in Docket No. RM2004–2.13 In 

addition, OCA/CA propose that the 

Commission not employ the term 

nonpostal to identify services subject to 

the proposed reporting requirements in 

Docket No. RM2004–2.14

Lastly, since this proceeding 

commenced, two complaints have been 

filed with the Commission alleging that 

the Postal Service is providing postal 

services without first obtaining a 

recommended decision from the 

Commission.15 While not bearing 

directly on this proceeding, these 

complaints, particularly Docket No. 

C2004–2, underscore the continuing 

controversy and uncertainty 

surrounding the Postal Service’s 

unilateral actions.

III. Commission Authority 

Section 3603 of the PRA authorizes 

the Commission to adopt ‘‘rules and 

regulations and establish procedures, 

subject to chapters 5 and 7 of Title 5, 

and take any other action they deem 

necessary and proper to carry out their 

functions and obligations to the 

Government of the United States and 

the people as prescribed under this 

chapter.’’ 39 U.S.C. 3603. No commenter 

disputes the Commission’s authority to 

adopt a definition of the term postal 

service. The Postal Service, however, 

construes the Act in a manner that 

renders the exercise largely 

meaningless. 

As a preface to its comments on the 

proposed rule, the Postal Service, 

referencing its comments in Docket 

*2003, reiterates its position that the 

Commission lacks authority to 

determine the scope of its own 

jurisdiction under Chapter 36 of the 

PRA.16 It asserts that ‘‘the Postal Service 

would not in any way be bound by [the 

proposed] definition’’ concerning its 

determination of whether a service is 

postal or nonpostal.17 Under this theory, 

its unilateral declaration of whether any 

product or service is or is not a postal 

service is determinative. Thus, under 

the Postal Service’s interpretation, the 

Commission’s jurisdiction is based not 

on its own consideration of the facts as 

applicable to the rate and classification 

factors of the Act, but rather on what the 

Postal Service unilaterally determines to 

be postal. The Postal Service’s position 

is wholly without merit.

The Commission concludes that it has 

the primary responsibility for 

interpreting whether services offered or 

proposed by the Postal Service are 

subject to chapter 36 of the Act.18 The 

Postal Service, but no other commenter, 

disagrees.19 This dichotomy prompts 

several observations. The Postal Service 

argues that a Commission definition of 

the term postal service imposes no 

limits on its authority under the Act.20

The Commission does not disagree. The 

rule in no way restricts the types of 

service, postal or otherwise, that the 

Postal Service may wish to offer. The 

Postal Service is free to offer whatever 

services or products it wishes subject to 

the strictures of the Act. However, for 

those that are postal services, as defined 

by the Commission, the Postal Service 

has an obligation to obtain a 

recommended decision before 

commencing a service or charging the 

public.

The Act mandates that the Postal 

Service, to the extent it wishes to 

provide a postal service, submit a 

request to the Commission for a 

recommended decision on changes in 

the mail classification schedule. 

Management’s initial characterization of 

a service as postal or not neither 

deprives the Commission of jurisdiction 

over postal services nor precludes 

Commission review, on complaint or 

otherwise, for purposes of determining 

its statutory jurisdiction. Such review 

does not impinge on management’s 

prerogatives in a manner not 

contemplated by the Act. ‘‘The very 

existence and function of the Postal Rate 

Commission bespeaks a limitation on 

postal management’s freedom.’’ 21

Furthermore, it is well settled that in 

matters involving rates and mail 

classifications the Commission’s 

interpretation is entitled to deference. 

Federal courts have rejected the Postal 

Service’s argument that its 

Federal Register / Vol. 69, No. 222 / Thursday, November 18, 2004 / Proposed Rules 67517

22United Parcel Service v. U.S. Postal Service,

604 F.2d 1370, 1381 (3d Cir. 1979), cert. denied,

446 U.S. 957 (1980). Regarding the general principle 

that an agency’s interpretation of its jurisdiction is 

entitled to deference, see Chevron U.S.A., Inc. v. 

Natural Resources Defense Council, 467 U.S. 837, 

842–44 (1984); Transmission Access Policy Study 

Group v. Federal Energy Regulatory Commission,

225 F.3d 667, 694 (DC Cir. 2000) (‘‘It is the law of 

this circuit that the deferential standard of 

[Chevron] applies to an agency’s interpretation of its 

own statutory jurisdiction.’’); and Oklahoma 

Natural Gas Company v. Federal Energy Regulatory 

Commission, 28 F.3d 1281, 1283 (DC Cir. 1994).

23United Parcel Service, supra, 455 F. Supp. at 

869.

24Prior to the passage of the Private Express 

Statutes in 1845, intercity delivery services were 

offered by private carriers, principally railroads and 

steamboats. Private carriers operated within cities 

until barred by the Postal Code of 1872. Cato 

Handbook for Congress, http://www.cato.org/pubs/

handbook/hb105–34.html.

25While no party suggests to the contrary, Parcel 

Shippers Association, perhaps out of caution, 

addresses the point, expressing relief that the 

Commission’s proposed definition encompasses 

packages. PSA Comments at 2.

26The special services included, among others, 

insurance, registry, forwarding and return service, 

furnishing of mailing list corrections, return receipt, 

prepayment of postage, and money orders. ATCMU

at 1115.

27 Id. at 1118.

28 Id. at 1117. (‘‘As indicated above, this 

interpretation appears to accord quite well with the 

common meaning of the term ‘postal services.’ ’’)

29 Id. at 1115. Observing that the majority of 

money orders sold at post offices were sent by mail, 

the court concluded that ‘‘[t]herefore, it appears safe 

to say that all of these services would be considered 

‘postal services’ in ordinary parlance.’’

30 Ibid.

31NAGCP I at 596–97.

32 Id. at 597.

33 Id. at 597–98.

interpretation of the Act deserves 

deference. ‘‘[I]t was recognized there, [in 

NAGCP v. USPS, 569 F.2d 570 (DC Cir. 

1976)] as we do here, that the agency 

entitled to deference in the 

interpretation of 39 U.S.C. 3622–24 is 

the Rate Commission—not the Postal 

Service—as it is the Rate Commission 

which is charged with making 

recommended decisions on changes in 

rates and mail classification.’’ 22

Moreover, the Postal Service’s 

construction ignores a wealth of judicial 

precedent addressing the division of 

responsibility under the Act between 

the Postal Service and the Commission 

that makes it plain that rate and 

classification authority vests with the 

Commission. For example, in National 

Association of Greeting Card Publishers

v. U.S. Postal Service, 462 U.S. 810, 821 

(1983), the Supreme Court found:

Although the Postal Reorganization Act 

divides ratemaking responsibility between 

two agencies, the legislative history 

demonstrates ‘that ratemaking * * * 

authority [was] vested primarily in [the] 

Postal Rate Commission.’ S. Rep. No. 91–912, 

p. 4 (1970) (Senate Report); see Time, Inc. v. 

USPS, 685 F.2d 760, 771 (CA2 1982); 

Newsweek, Inc. v. USPS, 663 F.2d, at 1200–

1201; NAGCP III, 197 U.S. App. DC, at 87, 

607 F.2d, at 401. The structure of the Act 

supports this view. While the Postal Service 

has final responsibility for guaranteeing that 

total revenues equal total costs, the Rate 

Commission determines the proportion of the 

revenue that should be raised by each class 

of mail. In so doing, the Rate Commission 

applies the factors listed in § 3622(b). Its 

interpretation of that statute is due deference. 

See Time, Inc. v. USPS, 685 F.2d, at 771; 

United Parcel Service, Inc. v. USPS, 604 F. 

2d 1370, 1381 (CA3 1979), cert. denied, 446 

U.S. 957 (1980).

Specifically mindful of the bifurcation 

of authority under the Act, the court, in 

United Parcel Service, supra,

concluded: 23

The Commission’s existence insures that an 

agency independent of the Postal Service will 

provide for public notice and hearing input 

of those affected by the proposed action and 

full and on the record, see 39 U.S.C. 

§ 3624(a), consideration of pertinent factors 

and congressionally imposed goals before 

certain types of decisions are made.

IV. The Provision of Postal Services Is 

the Service’s Core Mission 

A. Grants of Authority Under the Act 

Although the PRA does not define the 

term ‘‘postal services,’’ it is clear that 

‘‘postal services’’ are central to the 

Postal Service’s mission. The point is 

underscored by the very first section of 

the Act: ‘‘The Postal Service shall have 

as its basic function the obligation to 

provide postal services to bind the 

Nation together through the personal, 

educational, literary, and business 

correspondence of the people.’’ 39 

U.S.C. 101(a). The Postal Service is 

explicitly directed to ‘‘plan, develop, 

promote, and provide adequate and 

efficient postal services at fair and 

reasonable rates and fees.’’ 39 U.S.C. 

403(a). 

The Postal Service performs a variety 

of activities; some clearly relate to its 

obligation to provide postal services, 

while others do not. Some have 

jurisdictional implications; others do 

not. By statute, the Postal Service has a 

monopoly over the carriage of letters. 39 

U.S.C. 601.24 The monopoly, however, 

does not limit ‘‘postal services’’

provided by the Service to the carriage 

of letters (or services ancillary thereto). 

Incontestably, the Postal Service’s 

carriage of mail not subject to the 

monopoly, such as packages and printed 

matter, is a ‘‘postal service.’’ Merely 

because such mail is outside the scope 

of the monopoly does not render such 

service ‘‘nonpostal.’’ 25

The Postal Service’s authority to 

engage in other activities also informs 

the scope of its core mission regarding 

postal services. These include authority 

to provide special, philatelic, 

international, and nonpostal services. It 

is well settled that special services, 

authorized by section 404(a)(6) of the 

Act, are postal services subject to the 

Commission’s rate and classification 

jurisdiction. In Associated Third Class 

Mail Users v. U.S. Postal Service, 405 F. 

Supp. 1109 (D.D.C. 1975) (ATCMU), the 

court (J. Sirica) enjoined the Postal 

Service’s unilateral attempt to increase 

fees for certain special services.26 The 

Postal Service argued that the phrase 

‘‘fee or fees for postal services’’ in 

section 3622 applied only to certain 

annual mailing or permit fees and not to 

special services. In rejecting the Postal 

Service’s argument that section 404(a)(6) 

authorized it to proceed without first 

requesting a recommended decision 

from the Commission, the court held 

that ‘‘the term ‘postal services’ was 

meant to embrace also those special and 

other services which are the subject of 

this litigation.’’ 27 The court’s finding 

that the special and other services were 

postal services was based on the 

‘‘common meaning’’ of the term.28 This 

finding was colored by two 

considerations. First, it observed that, 

with the possible exception of money 

orders, ‘‘nearly all of these other 

services are very closely related to the 

delivery of mail.’’ 29 Second, the court 

held, ‘‘[i]t is also clear that the fees set 

for these services have substantial 

public effect.’’ 30

The Court of Appeals, without 

adopting all of its reasoning, found the 

district court’s interpretation of the Act 

persuasive. National Association of 

Greeting Card Publishers v. U.S. Postal 

Service, 569 F.2d 570, 595 (DC Cir. 

1976), vacated on other grounds, 434 

U.S. 884 (1977) (NAGCP I). The DC 

Circuit’s discussion is instructive on 

several levels. First, it agreed that a 

‘‘plain reading’’ of section 3622 is 

proper, concluding that ‘‘ ‘postal 

services’ as used there is a generic term 

and was meant to include all the special 

services here at issue.’’ 31 Second, 

finding the Postal Service’s construction 

of the Act ‘‘wholly unconvincing,’’ the 

court held, ‘‘[b]ut most of all, any 

reasonable examination of the purposes 

of the Act discloses Congress’ implicit 

design that the distinct functions of 

service provision and rate adjustment be 

divided between the Postal Service and 

the Rate Commission.’’ 32 Third, the 

court also relied on the legislative 

history to conclude that repeal of the 

Postmaster General’s prior authority to 

establish special service fees 

unilaterally was not inadvertent.33

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34 Id. at 595, n.110.

35Previously, the Commission had addressed and 

asserted its jurisdiction over changes in fees for 

special services in Docket No. R74–1. See PRC Op. 

R74–1, Vol. 2, Appendix F.

36See PRC Op. R76–1, Vol. 2, Appendix F.

37PRC Op. R76–1, Vol. 1, at 266–67 (footnote 

omitted).

38 In Docket No. R76–1, the Commission found 

that the sale of philatelic products was not within 

its jurisdiction. PRC Op. R76–1, Vol. 2, Appendix 

F at 19–20; see also PRC Order No. 1075, September 

11, 1995. Likewise, the Commission’s rate 

jurisdiction does not extend to international mail. 

PRC Op. R76–1, Vol. 2, Appendix F at 17; PRC Op. 

R90–1, Vol. 1, para. 2105; see also Air Courier 

Conference of America/International Committee v. 

U.S. Postal Service, 959 F.2d 1213 (3rd Cir. 1992).

39 Joint Initial Comments, supra, at 9. PostCom 

appears to agree with this position although not 

with OCA/CA’s proposal. PostCom Reply 

Comments, supra, at 3–4.

40 Joint Initial Comments at 9; see also id. at 11–

12, and 15.

41 Id. at 10.

42 Ibid. In its discussion of public service costs 

(subsidies), the Kappel Commission included 

‘‘unreimbursed non-postal services’’ which it 

described as ‘‘some relatively small but widespread 

services rendered to other Government agencies 

(e.g., providing space for Civil Service 

examinations).’’ Kappel Commission Report at 137.

43 Joint Initial Comments at 10.

44 G. Cullinan, The United States Postal Service

(1973) at 196.

45 Id. at 198.

46 Joint Initial Comments at 11.

47ATCMU, supra, at 1117, n.3.

48 Docket No. R76–1, Tr. 4/503–08.

49PRC Op. R76–1, Vol. 2, Appendix F at 2.

50 Ibid.

Finally, at the outset of its discussion, 

the court suggests an alternate theory 

available to the district court. Noting 

that the Commission ‘‘advances an 

interpretation of the Act quite at odds 

with that of the Service and fully in 

accord with the conclusion reached by 

the district court,’’ the Court of Appeals 

states that ‘‘[t]he district court, in short, 

without expressly stating so might 

simply have deferred to the long-held 

and reasonable interpretation given the 

statute by the very agency whose 

jurisdiction is at issue.’’ 34

The Commission’s first substantive 

opportunity to address the jurisdictional 

implications of various special and 

other services occurred in Docket No. 

R76–1 following the ATCMU opinion.35

While it discussed in detail the 

principles governing the scope of its 

jurisdiction regarding the services at 

issue in a separate appendix,36 the 

Commission briefly restated its 

conclusions, providing a succinct 

definition.

Special postal services—that is, those which 

fall within the ambit of § 3622—are services 

other than the actual carriage of mail but 

supportive or auxiliary thereto. They 

enhance the value of service rendered under 

one of the substantive mail classes by 

providing such features as added security, 

added convenience or speed, indemnity 

against loss, correct information as to the 

current address of a recipient, etc.37

Although none of the three remaining 

specific grants of power is defined in 

the Act, two are readily distinguishable 

because each is limited by the types of 

service that could possibly be offered. 

Philatelic services, section 404(a)(5), 

relate exclusively to philately; 

international mail, section 407, 

exclusively involves service between or 

among countries. There is no real 

controversy over what each service 

entails or, for that matter, whether either 

could be considered a jurisdictional 

postal service.38 That is not the case 

concerning the Postal Service’s 

authority to provide nonpostal services.

B. OCA/CA’s Definition of the Term 

Nonpostal Is Flawed 

Parties dispute the meaning of the 

term as well as the Postal Service’s 

authority to provide certain services 

without prior Commission review. 

OCA/CA argue that ‘‘nonpostal’’ is a 

term of art under the statute limited to 

services provided by the Postal Service 

to other governmental agencies for 

which it is reimbursed.39 They ask the 

Commission to reconsider its prior 

determinations that ‘‘ ‘nonpostal’

products and services can be 

commercial in nature.’’ 40

In support of their position, OCA/CA 

cite the preexisting statute, the Kappel 

Commission Report, The United States 

Postal Service by Gerald Cullinan, and 

ATCMU. OCA/CA begin by pointing to 

section 2303 of former title 39, which 

references ‘‘nonpostal services, such as 

the sale of documentary stamps for the 

Department of the Treasury.’’ They 

argue that this reference indicates, as 

manifest by the legislative history, that 

the term ‘‘nonpostal’’ is limited to 

services provided by the Postal Service 

to other governmental agencies.41 As 

confirmation, they cite the Kappel 

Commission Report’s mention of 

nonpostal services within its larger 

discussion of ‘‘public service’’ costs.42

In addition, OCA/CA rely on the 

discussion of ‘‘nonpostal functions’’

found in The United States Postal 

Service.43 Cullinan indicates that during 

World War I, the Post Office performed 

various war-related nonpostal functions, 

including selling Liberty bonds, war 

savings certificates, and registering 

enemy aliens.44 In addition to these 

major nonpostal functions, the Post 

Office, over time, assumed various 

minor Federal functions as well. These 

included: alien address reporting, sale 

of U.S. savings bonds, sale of 

documentary and migratory-bird 

stamps, maintenance of wanted posters 

issued by the Federal Bureau of 

Investigation, and receiving and 

transmitting funds for volunteer 

charities such as the March of Dimes.45

Lastly, OCA/CA cite as most 

significant Judge Sirica’s comment 

concerning the likely meaning of the 

term nonpostal.46 Prefacing his 

comment with the observation that the 

exact meaning of nonpostal was 

uncertain, Judge Sirica stated that it 

likely encompassed activities such as 

selling U.S. savings bonds, maintaining 

an information service for civil service 

exams for government jobs, and 

conducting examinations for the Civil 

Service Commission.47

Relatively early in its institutional 

history, the Commission characterized 

certain services provided by the Postal 

Service as nonpostal. Once the 

jurisdictional issue over special services 

was joined in Docket No. R76–1, the 

Postal Service submitted a lengthy list 

of services it provided apart from the 

carriage of mail.48

The list included an assortment of 

services provided by the Postal Service, 

including those styled as follows: 

• Domestic ancillary services, e.g., 

address correction, certified mail, 

insurance; 

• International ancillary services, e.g., 

inquiry fee, storage charges, registry; 

• Special user charges, e.g., on-site 

meter settings, sale of philatelic 

products, photocopying service; 

• Services performed for other 

government agencies, e.g., passport 

applications, food stamps, civil defense;

• Community type services, i.e., 

bulletin boards and postmasters in 

Alaska as notaries public; and 

• Services for which a charge could 

be made, e.g., demurrage charge, meter 

license. 

Prior to considering the jurisdictional 

status of each service, the Commission 

distinguished between services 

provided by the Postal Service to the 

public and those it performed for other 

federal agencies. The Commission 

indicated that the latter included 

services such as ‘‘the distribution of 

migratory bird hunting stamps, the 

registration of aliens, and various forms 

of assistance to the Civil Service 

Commission.’’ 49 Concerning such 

services, the Commission concluded 

that ‘‘[i]t is clear that they are in no 

sense ‘postal’ services, and we conclude 

that they are outside the ambit of 

§ 3622.’’ 50

The Commission assessed each 

service based on its relationship to the 

Federal Register / Vol. 69, No. 222 / Thursday, November 18, 2004 / Proposed Rules 67519

51 Id. at 3.

52 Id. at 18–25.

53 Id. at 25. The Commission also found that 

international ancillary services were beyond its 

jurisdiction. Id. at 17. It did not substantively 

address the final category, services for which a 

charge could be made. Id. at 25–26.

54PRC Op. R76–1, Vol. 1 at 281–82. The Postal 

Service’s unilateral fee increase for box rentals was 

the subject of a separate complaint filed in July 

1975. See Complaint of Stephen Moses, Docket No. 

C76–1. In its answer to the complaint, the Postal 

Service advanced similar arguments to those 

considered and rejected by the court in ATCMU.

Docket No. C76–1 was terminated with the issues 

raised by the complaint transferred to the rate 

proceeding, Docket No. R76–1. PRC Order No. 85, 

October 9, 1975.

55PRC Op. R76–1, Vol. 1 at 282 (footnote 

omitted).

56United States Postal Service Answer to 

Complaint, Docket No. C76–1, August 11, 1975, at 

3–4.

57PRC Op. R76–1, Vol. 1, at 282–83.

58 Id. at 266.

59To some degree, OCA/CA appear to operate 

under the misimpression that the Commission has 

concluded that the Postal Service may engage in 

commercial nonpostal activities. See Joint Initial 

Comments at 9. (‘‘Regrettably, therefore, OCA and 

CA must ask the Commission to reconsider its 

determination that ‘nonpostal’ products and 

services can be commercial in nature.’’) In Order 

No. 1389, the Commission expressly took no 

position on the Postal Service’s claim that it had 

authority to provide commercial nonpostal services. 

PRC Order No. 1389, January 16, 2004, at 10. The 

phrase ‘‘commercial nonpostal activities’’ was used 

in Order No. 1394 solely to clarify the term 

‘‘nonpostal service,’’ not as an acknowledgement of 

their validity. PRC Order No. 1394, March 5, 2004, 

at 11.

60Without prejudging the issue, but based on 

representations to date, the Unisite Antenna 

program, which involves leasing space for wireless 

communications towers located on postal property, 

would appear to be such an example.

61While the Commission’s jurisdiction does not 

extend to nonpostal services, it is necessary to 

address the Postal Service’s interpretation because 

of its jurisdictional implications concerning postal 

services.

62Comments of United States Postal Service on 

Consumer Action Petition, supra, at 15.

63Section 411 provides as follows: ‘‘Executive 

agencies within the meaning of section 105 of title 

5 and the Government Printing Office are 

authorized to furnish property, both real and 

Continued

carriage of mail. ‘‘Those which can 

fairly be said to be ancillary to the 

collection, transmission, or delivery of 

mail are postal services within the 

meaning of § 3622.’’ 51 Among other 

things, the Commission found several 

special user charges were not 

jurisdictional, including the sale of 

philatelic products, photocopy service, 

record retrieval, the sale of postal 

related products, and vending stands 

and vending machines.52 In addition, 

the Commission disclaimed jurisdiction 

over community type services, 

specifically characterizing the provision 

of notary public services as ‘‘clearly 

non-postal.’’ 53

The Commission’s consideration of 

box rentals (lockbox service) in Docket 

R76–1 merits particular mention 

because, in addition to arguing that 

lockbox service was a special or similar 

service wholly within its authority, the 

Postal Service contended that box 

rentals were not ‘‘postal services’’

within the meaning of section 3622.54

The Postal Service argued that lockbox 

service simply enabled a customer to 

use Postal Service property pursuant to 

a rental agreement. It characterized 

lockboxes as ‘‘ ‘a premium service to any 

customer who, for his own convenience, 

desires more than basic free 

delivery.’ ’’ 55 Furthermore, stating that 

the Commission’s authority ‘‘extends 

only to ‘postal services’ ’’ and 

characterizing the complaint as limited 

to postal services, the Postal Service 

asserted that the Commission lacked 

authority to hear the complaint.56

Rejecting the Postal Service’s argument, 

the Commission found that box rentals 

are closely related to the delivery of 

mail and, further, satisfy the criteria 

established for jurisdictional special 

services.57

In addition to its analysis in Docket 

No. R76–1 Appendix F, the Commission 

summarized its findings in the main 

body of its opinion, stating that ‘‘[m]any 

of these services are clearly nonpostal in 

character.’’ 58 Thus, early on, the 

Commission found that its jurisdiction 

did not extend to what it characterized 

as nonpostal services, including in that 

rubric services other than those 

provided to other governmental 

agencies. OCA/CA would have the 

Commission adopt a narrow definition 

of the term limited to services 

performed by the Postal Service for 

other government agencies. Any other 

service provided by the Postal Service 

would, according to OCA/CA, be a 

postal service and thus subject to the 

Commission’s rate and classification 

jurisdiction.

The Commission is unpersuaded by 

the arguments advanced by OCA/CA.59

To be sure, nonpostal includes services 

provided by the Postal Service for other 

agencies, but even if limited as 

suggested by OCA/CA, the result would 

not cause all other activities to 

necessarily be considered postal. 

Historically, the Postal Service has 

performed various minor, miscellaneous 

services, including photocopying and 

community type services (maintaining 

bulletin boards and notaries public). 

Any claim that these services were 

postal would be tenuous at best. Rather, 

such services are provided more as a 

convenience to postal patrons than as 

commercial endeavors. Thus, for 

example, copying service may be 

available in a post office lobby as a 

minor benefit to mailers, enabling them 

to copy miscellaneous papers prior to 

mailing, e.g., tax returns.

The result urged by OCA/CA, that any 

service provided by the Postal Service 

that is not nonpostal (under their 

interpretation) would be subject to the 

Commission’s jurisdiction, cannot be 

reconciled with the Act. Section 

404(a)(6) authorizes the Postal Service 

‘‘to provide, establish, change, or 

abolish special nonpostal or similar 

services.’’ 39 U.S.C. 404(a)(6). OCA/

CA’s interpretation would render the 

phrase ‘‘similar services’’ surplusage. If 

nonpostal is restricted to services 

provided only to other government 

agencies, no other service could be 

‘‘similar,’’ thereby making it 

meaningless. 

Conceptually, under the OCA/CA’s 

interpretation, the Commission would 

be charged with recommending rates for 

any service or product that is not 

provided exclusively to other 

governmental agencies. Thus, they 

would have the Commission 

recommend rates for miscellaneous 

minor services, such as photocopying, 

as well as those having no evident 

connection to the Postal Service’s core 

mission.60 The Commission does not 

read the statute so broadly. Had 

Congress intended to define ‘‘postal 

service’’ as urged by OCA/CA it would 

have been more explicit. Certainly, at a 

minimum, Congress would have been 

less obtuse than to do so by negative 

inference.

C. Postal Services Are Not Defined by 

the Postal Service’s Interpretation of the 

Term Nonpostal 

At the other end of the spectrum, the 

Postal Service’s support for the 

proposition that it is authorized to 

engage in unlimited commercial, 

nonpostal activities is also 

unconvincing.61 First, it argues that 

section 411 authorizes the provision of 

services involving other government 

agencies. The Postal Service contends 

that since section 411 does not use the 

term nonpostal section 404(a)(6) must 

refer ‘‘at least to services other than 

those encompassed by section 411.’’ 62

The Commission agrees that the two 

sections refer to different services. It 

does not follow, however, that the 

Postal Service may unilaterally make 

available to the public whatever 

commercial service (or product) it may 

wish.

Section 411, which is entitled 

‘‘Cooperation with Other Government 

Agencies,’’ concerns the bilateral 

arrangements between the Postal 

Service and other federal agencies.63

67520 Federal Register / Vol. 69, No. 222 / Thursday, November 18, 2004 / Proposed Rules 

personal, and personal and nonpersonal services to 

the Postal Service, and the Postal Service is 

authorized to furnish property and services to them. 

The furnishing of property and services under this 

section shall be under such terms and conditions, 

including reimbursability, as the Postal Service and 

the head of the agency concerned shall deem 

appropriate.’’

64 Kappel Commission Report, Annex II, at 6–7; 

id. at 6–9 and 6–10; see also Kappel Commission 

Report at 136–138; and section 2303(a)(3) of former 

title 39, Pub. L. 86–682, September 2, 1960.

65Comments of United States Postal Service on 

Consumer Action Petition, supra, at 15.

66NAGCP I, supra, 569 F.2d at 596.

67 It is the Postal Service’s assertion that it has 

authority to engage in commercial, nonpostal 

services. The Commission takes no position on that 

contention other than as relates to commercial, 

communication services (or products) or those 

ancillary thereto which could, upon consideration, 

be classified as postal.

68H.R. Rep. No. 1104, 91st Cong., 2nd Sess. 33 

(1970), reprinted in 1970 U.S. Code Cong. & Admin. 

News, Vol. 2, 3682 (hereinafter H.R. Rep. No. 91–

1104 with page cites to U.S.C.C.A.N.).

69Comments of United States Postal Service on 

Consumer Action Petition, supra, at 16. 70 Id. at 16–17. 71 Id. at 17. 72 39 U.S.C. 101(a) (emphasis added). See also 

H.R. Rep. No. 91–1104, supra, at 3668. (‘‘The Postal 

Service is—first, last and always—a public 

service.’’) 73 39 U.S.C. 403(a) (emphasis added). 74 39 U.S.C. 101(a). 75 39 U.S.C. 403(a) (emphasis added). In its 

argument above, the Postal Service excises the term 

‘‘thereto’’ when referring to its authority to provide 

incidental services. The omission is not 

inconsequential. When read in context, the phrase 

‘‘services incidental thereto’’ means that the 

incidental, which is to say subordinate or 

nonessential, services relate to the Postal Service’s 

duty to provide mail services. This clause allows for 

ancillary and mail-related activities, but it does not 

authorize activities unrelated to providing postal 

services.

These are services provided to or 

received from other agencies. Support 

for this is found in the statute and 

implementing regulations. Sections 403 

and 409 specifically reference section 

411, providing examples of the types of 

bilateral arrangements permitted under 

the latter. For example, section 409(d) 

provides that the ‘‘Department of Justice 

shall furnish, under section 411 of this 

title, the Postal Service such legal 

representation as it may require[.]’’

Similarly, section 403(a) permits the 

Postal Service, pursuant to sections 406 

(concerning postal services at armed 

forces installations) and 411, to enter 

into arrangements concerning its duty to 

receive, transmit, and deliver nondomestic armed forces mail.

The regulations implementing section 

411, 39 CFR 259.1, indicate that it is the 

Postal Service’s policy to cooperate with 

other federal agencies when it will 

reduce the overall costs to the 

government. For its part, the Postal 

Service states that assistance will be 

provided ‘‘when the knowledge and 

abilities of postal employees are 

helpful.’’ 39 CFR 259.1(a). It is notable 

that the Postal Service uses the term 

‘‘nonpostal’’ to describe section 411 

arrangements in its implementing 

regulations. 39 CFR 259.1(b). ‘‘The 

Postal Service establishes reasonable 

fees and charges for nonpostal services 

performed for agencies of the Federal as 

well as State governments.’’

‘‘Nonpostal’’ fairly characterizes the 

nature of these services and its use in 

these regulations undercuts the Postal 

Service’s argument that the use of the 

term ‘‘nonpostal’’ in section 404(a)(6), 

but not section 411, is significant. 

Overwhelmingly, available 

information supports the conclusion 

that, at a minimum, nonpostal services 

encompass services performed ‘‘mainly 

for other Government agencies (e.g., sale 

of documentary stamps, provision of 

custodial services for building space 

occupied by other Government 

agencies).’’ 64 As discussed above, the 

Postal Service has historically 

performed other public service-type 

services, which, while not performed for 

another government agency, may 

reasonably be considered nonpostal in 

nature. Surely, in passing the PRA, 

Congress was aware of the Postal 

Service’s extensive history of providing 

these various nonpostal services.

The Postal Service’s assertion that 

because Congress did not, in section 

404(a)(6), ‘‘explicitly exclude any type 

of service,’’ 65 it may unilaterally engage 

in whatever commercial, nonpostal 

activities it chooses is utterly 

unconvincing.

By the Postal Service’s logic, section 

404(a)(6) authorizes it to engage in any

type of commercial, nonpostal activity. 

Thus, it could operate, for example, 

donut shops or car dealerships as they 

are obviously nonpostal. The Postal 

Service’s position, like that it espoused 

regarding special services, is premised 

on a ‘‘curious construction’’ of the term 

as well as the Act.66

Congress’ ‘‘failure’’ to ‘‘explicitly 

exclude any type of service’’ cannot 

reasonably be interpreted as authorizing 

the Postal Service to engage in an 

unlimited variety of commercial, 

nonpostal activities.67 Rather, against 

the historical backdrop, it is the absence

of any authority to engage in services 

other than traditional activities that is 

telling. Had Congress intended such a 

sea change in the meaning of the term 

nonpostal surely it would have 

elaborated on the point. It did not. And 

what scant legislative history exists 

supports a narrow reading of the term, 

one consistent with the historical 

perspective.

In discussing what became section 

404 of the Act, the House Report states: 

‘‘This section catalogs the specific 

powers of the Postal Service, which 

powers, in conjunction with the general 

powers granted in section [401], are to 

be used to carry out postal service 

duties.’’ 68 Significantly, there is no 

mention of expanding the Postal 

Service’s authority regarding nonpostal 

services. Instead, the only emphasis 

concerning the Postal Service’s powers 

is that they be ‘‘used in carrying out 

postal service duties.’’ Plainly, nothing 

in section 404 or the legislative history 

suggests that the Postal Service may 

unilaterally undertake to offer a broad 

range of services to the public.

Stating that it relies on more than 

‘‘section 404(a)(6) to authorize the 

establishment of nonpostal services,’’

the Postal Service alludes to its 

‘‘statutory mission and functions.’’ 69 As 

support, the Postal Service cites 

generally to its ‘‘duty to provide mail 

services’’ and ‘‘incidental services 

appropriate to its functions and in the 

public interest.’’ 70 It concludes that 

‘‘these provisions’’ authorize it ‘‘to 

develop mail and related services that 

contribute to a coherent, effective postal 

system.’’ 71

The foregoing is a confounding 

rationale for the proposition advanced. 

The Postal Service attempts to justify its 

expansive interpretation of its authority 

to offer commercial, nonpostal services 

by reference to its postal duties and 

authority. Its argument is not 

persuasive. The Postal Service’s 

undeniable authority to provide postal

services, including related supporting 

activities, cannot legitimately be read to 

expand its limited statutory authority to 

provide nonpostal services. The two are 

unconnected. 

The Postal Service’s obligation to 

provide postal services has no bearing 

on its authority to provide nonpostal 

services. As a matter of policy, the 

Postal Service is to be ‘‘operated as a 

basic and fundamental service’’ and 

‘‘have as its basic function the 

obligation to provide postal services to 

bind the Nation together through the 

personal, educational, literary, and 

business correspondence of the 

people.’’ 72 Its general duties include 

planning, developing, promoting, and 

providing adequate and efficient postal

services at reasonable rates.73 It has a 

universal service obligation.74 It is 

obliged to receive, transmit, and deliver 

‘‘written and printed matter, parcels, 

and like materials and provide such 

other services incidental thereto as it 

finds appropriate to its functions and in 

the public interest.’’ 75 In addition, it is 

Federal Register / Vol. 69, No. 222 / Thursday, November 18, 2004 / Proposed Rules 67521

76 39 U.S.C. 403(b)(2).

77 39 U.S.C. 401. These general powers include, 

for example, the power to sue and be sued, to 

contract, to determine its own system of accounts, 

and to acquire property.

78 39 U.S.C. 404. To the extent the Postal Service 

may rely on section 401(a)(10) for authority to 

engage in commercial, nonpostal activities, the 

Commission believes such reliance to be misplaced.

79The latter provides that revenues from postal 

and nonpostal services are to be deposited in the 

Postal Service Fund.

80The United States Postal Service, supra, at 

196–99.

81See Act of June 25, 1910, ch. 386, 36 Stat. 814 

and Act of March 28, 1966, 80 Stat. 92; see also The 

United States Postal Service, supra, at 193–95.

82Answer of the United States Postal Service, 

Docket No. C2004–2, April 26, 2004, Attachment A 

at 1.

83Report on Nonpostal Initiatives, Docket *2003, 

March 10, 2003, at 1 (Report on Nonpostal 

Initiatives).

84 In a similar vein, the Postal Service’s desire ‘‘to 

leverage its existing resources as efficiently as 

possible’’ is entirely in keeping with its duties to 

provide postal services and to operate in a more 

business-like fashion. But, again, under the Act, this 

desire does not necessarily mean that it is free to 

undertake unilaterally to offer competitive, 

commercial services.

85Report on Nonpostal Initiatives, supra, at 1; 

citing H.R. Rep. No. 1104, 91st Cong. 2nd Sess. 9 

(1970) at 3657; see also Answer of the United States 

Postal Service, Docket No. C2004–2, April 26, 2004, 

Attachment A at 1.

86H.R. Rep. No. 91–1104, supra, at 3657.

87 Ibid.

88 Id. at 3650.

89Report on Nonpostal Initiatives, supra, at 1; 

citing H.R. Rep. No. 1104, 91st Cong. 2nd Sess. 20 

(1970) at 3668–69; see also Answer of the United 

States Postal Service, Docket No. C2004–2, April 26, 

2004, Attachment A at 2.

charged with, among other things, 

providing types of mail service to meet 

the public’s needs.76

The Act also grants the Postal Service 

certain general and specific powers to 

carry out these duties. The general 

powers enable the Postal Service to 

function as a business, an enumeration 

necessary since, under the Act, it would 

no longer operate as an executive 

department of the federal government.77

The specific powers relate, for the most 

part, to matters involving postal 

operations, e.g., the handling of mail, 

payment of postage, the need for post 

offices, and investigating postal 

offenses.78

In contrast to the overriding emphasis 

on the Postal Service’s obligations 

regarding postal services, the Act 

contains but two references to nonpostal 

services, sections 404(a)(6) and 

2003(b)(1).79 Certainly, Congress was 

aware that historically the Postal 

Service provided sundry nonpostal or 

nonmail services. Section 2303 of 

former title 39 specifically refers to 

nonpostal services, illustratively citing 

the sale of documentary stamps for the 

Department of the Treasury. As 

chronicled by Cullinan, the Post Office 

Department (POD), over time, performed 

numerous, miscellaneous nonpostal 

functions such as: Alien address 

reporting, selling U.S. savings bonds, 

maintaining ‘‘wanted’’ posters issued by 

the Federal Bureau of Investigation, and 

witnessing the marking of absentee 

ballots.80

When the POD offered a commercial 

service unrelated to the mails it was 

based on specific congressional 

authorization, namely by an amendment 

to its then-existing statutory authority. 

The principal example is the postal 

savings system, which Congress 

established in 1910 and discontinued in 

1966.81 In contrast, the PRA contains no 

explicit authorization enabling the 

Postal Service to offer commercial, 

nonpostal services.

In filings subsequent to its comments 

on the petition in Docket *2003, the 

Postal Service elaborates on its assertion 

regarding its authority to provide 

commercial, nonpostal services, 

principally by quoting two sentences 

from the House Report on H.R. 17070. 

Before examining those excerpts, two 

preliminary observations are in order. 

First, as a general matter, the Postal 

Service’s philosophy regarding 

nonpostal services is that it ‘‘only 

develops products and services to meet 

the needs of postal patrons[.]’’ 82

Assuming the Service is referring to 

postal patrons in their capacity as 

consumers of postal products and not as 

a general description of all United States 

residents, the incongruity is apparent—

products and services designed to meet 

the demands of postal patrons would 

appear, ipso facto, to be postal.

Second, in its Report on Nonpostal 

Initiatives, the Postal Service again 

alludes to its mandate regarding postal 

services to support its unilateral offering 

of various ‘‘nonpostal’’ services. It 

states: ‘‘To fulfill its universal service 

mandate and mission, the Postal Service 

must find ways to use existing resources 

to generate new revenue.’’ 83 This 

statement, by itself, is unobjectionable, 

but it does not justify the unilateral 

offering of an unfettered range of 

commercial services as nonpostal. In the 

final analysis, the Postal Service can 

point to no statutory language 

supporting its expansive view of the 

term nonpostal.84

The two excerpts from the House 

Report on H.R. 17070 are apparently 

cited for the proposition that the Postal 

Service can engage in whatever 

nonpostal activities it may wish. As 

approbation, such reliance is misplaced. 

The Postal Service quotes the following 

sentence as justifying its expansive 

definition of the term nonpostal: ‘‘The 

Postal Service is empowered to engage 

in research and development programs 

directed toward the expansion of 

present postal services and development 

of new services responsive to the 

evolving needs of the United States.’’ 85

This one sentence, part of a larger 

discussion summarizing the bill, is 

preceded by statements underscoring 

the Postal Service’s postal obligations, 

namely to develop adequate and 

efficient postal service, to maintain its 

universal service obligation, and to 

provide effective postal service in rural 

and urban communities.86 It is followed 

immediately by a recitation of some of 

the Postal Service’s specific powers, as 

reflected in section 404 of the Act, 

notably however, without any reference 

to its authority to provide special, 

nonpostal or similar services.87 Thus, in 

context, the quoted language is simply 

part of an abbreviated recitation of the 

Postal Service’s postal duties. Moreover, 

the specific language is nothing more 

than a variation of a basic purpose of the 

bill, namely to ‘‘[e]nable the postal

service to continue to provide—and 

extend and improve upon—the present 

quality and scope of postal service 

* * *.88 Thus, it was Congress’

expectation that research and 

development would produce 

improvements in the present and future 

communications services provided to 

postal patrons.

While only inferred by its comments, 

the Postal Service apparently interprets 

the phrase ‘‘new services’’ to mean 

nonpostal. If so, this construction is 

wholly without support. The entire 

discussion is framed in terms of the 

Postal Service’s postal obligations; there 

is no mention of its nonpostal authority, 

even when the subject turns to the 

Postal Service’s specific powers; and 

finally, it would suggest, contrary to the 

carefully crafted balance reflected in the 

Act, that Congress granted the Postal 

Service carte blanche to engage in 

whatever ‘‘new services’’ it may wish 

without any opportunity for regulatory 

review or public input. 

Nor does the second passage from the 

House Report provide any support for 

the Postal Service’s interpretation of the 

term nonpostal. The sentence relied on 

reads as follows: ‘‘H.R. 17070 envisions 

a national postal service that is forever 

searching for new markets and new 

ways by which the communications 

needs of the American people may be 

served.’’ 89 This statement is included in 

a discussion concerning procedures for 

changes in postal service under H.R. 

17070, which provided for review of 

such changes by the regulatory body, 

67522 Federal Register / Vol. 69, No. 222 / Thursday, November 18, 2004 / Proposed Rules 

90H.R. Rep. No. 91–1104, supra, at 3668.

91 Ibid. Based on the record, the Board would 

issue an initial decision that would become final 

unless modified or revoked by the Commission on 

Postal Costs and Revenues.

92As with the prior excerpt, one can only infer 

that the Postal Service interprets the phrase ‘‘new 

markets and new ways’’ to mean nonpostal. For the 

reasons discussed above, if that is its position, it, 

too, is wholly unsupported. Examples of new 

markets and new ways to communicate were 

manifest shortly after passage of the Act in the form 

of Electronic Computer Originated Mail and 

Mailgrams.

93H.R. Rep. No. 91–1104, supra, at 3668 

(emphasis in original).

94 Id. at 3671.

95 Ibid.

96United Parcel Service, supra, 455 F. Supp. at 

869.

97See 39 U.S.C. 3622(b)(4) and (b)(5).

98United States Postal Service v. Flamingo 

Industries (USA) Ltd., 540 U.S. 736 (2004) 

(Flamingo Industries).

99 Joint Initial Comments at 13–15.

100 Id. at 13–14. Given their proposed definition 

of the term nonpostal, OCA/CA take issue with the 

Court’s statement that the Postal Service may set 

prices and earn profits on some products or services 

offered to the public. Id. at 14–15.

101Postal Service Reply Comments, supra, at 6, 

citing Flamingo Industries, slip op. at 10.

102 Flamingo Industries, slip op. at 9.

103 Id. at 10.

104 Ibid.

105 Ibid.

106 Id. at 10–11.

107See Brief for Respondents, Case No. 02–1290, 

September 15, 2003, at 22–23.

namely the Postal Regulatory Board.90

The discussion makes it clear that while 

the Postal Service, as a public service, 

should be operated ‘‘on a businesslike 

basis,’’ H.R. 17070 provided a 

mechanism for public input in the form 

of regulatory review.

In establishing the Postal Service on a 

businesslike basis, H.R. 17070 provides 

significant assurance that the postal 

management will in fact be responsive to the 

people to a greater degree than has heretofore 

been known. But in addition, H.R. 17070 

contains specific provisions requiring 

justification and review of changes in service. 

Following procedures comparable to those 

for proposed rate changes, operating 

management would submit proposals relating 

to changes in service to the Rate Board with 

public notice and opportunity for comment. 

The Board would have discretion as to 

whether to hold public hearings. Written 

submissions would be permitted in any 

case.91

Again, there is no suggestion in this 

discussion (or elsewhere) that the ‘‘new 

markets and new ways by which the 

communications needs of the America 

people may be served’’ refer to anything 

other than postal services as they may 

evolve over time.92 The heading for the 

entire discussion is ‘‘Procedures for 

changes in postal service’’.93 Moreover, 

that the ‘‘communications needs’’ refers 

to postal services is confirmed by the 

House Report’s description of section 

101(a) of H.R. 17070, concerning the 

‘‘postal policy’’ underlying what became 

the Act.94 ‘‘[T]he United States Postal 

Service shall be operated as a basic 

communication service provided to all 

the people by the Government of the 

United States[.]’’ 95

Furthermore, the Postal Service’s 

construction is flawed for another 

reason. It fails to consider the 

independent role reserved for the 

Commission under the Act. In United 

Parcel Service, supra, the court 

observed: 96

Management was vested in the Postal 

Service, rate and classification supervision in 

the Postal Rate Commission. We recognize 

and weigh heavily the congressional goal of 

greater managerial flexibility, but also 

recognize another congressional purpose that 

finds its incarnation in the Postal Rate 

Commission. The Commission’s existence 

insures that an agency independent of the 

Postal Service will provide for public notice 

and hearing input of those affected by the 

proposed action and full and on the record, 

see 39 U.S.C. 3624(a), consideration of 

pertinent factors and congressionally 

imposed goals before certain types of 

decisions are made.

In ceding its ratemaking authority, 

Congress established procedures for the 

review of Postal Service rate, 

classification, and service changes. 

Among other things, it was mindful of 

the need for the Commission to consider 

competitive concerns.97 The Act thus 

reflects a careful balance between 

allowing the Postal Service to operate in 

a more business-like manner (and free of 

politics) while affording the public 

reasonable protections, including the 

opportunity for public input. In contrast 

to this carefully constructed scheme, the 

Postal Service interprets nonpostal 

expansively to justify the provision of 

any type of service to the public, 

commercial or not, that it classifies as 

not postal. Section 404(a)(6) is simply 

too thin a reed to support such a 

reading. It suggests that Congress would 

be unconcerned with the competitive 

implications of putative nonpostal 

services, while, at the same time, it 

expressly considered them concerning 

postal matters. A fair reading of section 

404(a)(6) within the context of the Act 

suggests that the term nonpostal has a 

more limited reach.

D. Flamingo Industries Did Not Address 

the Meaning of the Term Nonpostal 

In their initial comments, OCA/CA 

assert that the Supreme Court’s 

statements in Flamingo Industries 98

concerning nonpostal lines of business 

operated by the Postal Service and its 

predecessor the Post Office Department 

are irrelevant to issues in this 

proceeding.99 Among other things, 

OCA/CA contend that the Court used 

the term ‘‘nonpostal’’ in a non-technical 

sense and further that the authorities it 

cites do not support the statements 

made.100 In its Reply Comments, the 

Postal Service notes, without 

elaboration, the Court’s observation that 

‘‘[t]he Postal Service does operate 

nonpostal lines of business, for which it 

is free to set prices independent of the 

Commission, and in which it may seek 

profits to offset losses in the postal 

business.’’ 101

The question presented in Flamingo 

Industries was whether the Postal 

Service is a ‘‘person’’ under Federal 

antitrust laws. In holding that the Postal 

Service is not a person separate from the 

United States itself, the Court relied, in 

large measure, on the Service’s statutory 

designation as ‘‘an ‘independent 

establishment of the executive branch of 

the Government of the United 

States.’ ’’ 102 In support of its conclusion, 

the Court cited the Postal Service’s 

‘‘nationwide, public responsibilities’’

that distinguish it from private 

enterprise, including its breakeven 

requirement, universal service 

obligation, and national security 

responsibilities. The Court also noted 

that the Postal Service possesses powers 

more characteristic of Government than 

private enterprise including its statutory 

monopoly, the power of eminent 

domain, and the power to conclude 

international postal agreements.103

Further, the Court observed that because 

the Postal Service lacked the power to 

set prices, ‘‘[i]t lacks the prototypical 

means of engaging in anticompetitive 

behavior.’’ 104 The Court concluded that 

these ‘‘public characteristics and 

responsibilities indicate [the Postal 

Service] should be treated under the 

antitrust laws as part of the Government 

of the United States, not a market 

participant separate from it.’’ 105

The Court then proceeded to discuss 

the Postal Service’s ‘‘nonpostal lines of 

business,’’ 106 an issue that arose only 

because, in its brief to the Court, 

Flamingo Industries raised the collateral 

argument that the Postal Service was 

authorized to engage in commercial 

activities, citing section 404(a)(6).107 It 

offered this argument, notably without 

any analysis of the term nonpostal, in 

support of its ultimate position that the 

Postal Service should be perceived as a 

person subject to federal antitrust laws, 

contending that such activities 

demonstrate that the Postal Service 

operates like private industry in the 

commercial world.

Federal Register / Vol. 69, No. 222 / Thursday, November 18, 2004 / Proposed Rules 67523

108 In its comments, Pitney Bowes contends that 

in reaching its conclusion that the Postal Service 

was not subject to federal antitrust laws the Court 

relied, in part, on the Commission’s role in 

providing regulatory review of services and 

products offered by the Postal Service. Thus, 

according to Pitney Bowes, ‘‘there is all the more 

reason to assure that the Commission’s oversight 

remains strong and effective.’’ Pitney Bowes 

Comments, supra, at 3, n.1.

109Postal Service Initial Comments at 4.

110See, e.g., PRC Order No. 724, December 2, 

1986, at 11; PRC Order No. 1239, May 3, 1999, at 

13.

111 39 U.S.C. 403(a).

112 Ibid.

113 39 U.S.C. 403(b)(1) and (b)(2).

114H.R. Rep. No. 91–1104, supra, at 3671.

115 Id. at 3650.

116See, e.g., Pitney Bowes Comments, supra, at 

2–4, UPS Comments, supra, at 1–2, and Lifetime 

Addressing Comments, supra, at 2.

117United Parcel Service, supra, 455 F. Supp. at 

869.

The Court’s observations concerning 

the Postal Service’s ‘‘nonpostal lines of 

business’’ were not offered as 

dispositive of the meaning of the term 

nonpostal. Nor, parenthetically, does 

the Postal Service contend this. Rather, 

the observations, largely dicta in 

character, simply indicate that the 

(unspecified) lines of business do not 

demonstrate that the Postal Service 

should be viewed as separate from the 

Government under antitrust laws. Thus, 

other than perhaps as suggested by 

Pitney Bowes, Flamingo Industries has 

no bearing on issues before the 

Commission in this proceeding.108

In sum, nothing in either the statute 

or the legislative history provides 

support for the Postal Service’s position. 

Prior to the enactment of the PRA, the 

Post Office Department’s provision of 

miscellaneous nonpostal services was 

well recognized. In the main, the Post 

Office Department served as a surrogate 

for the government providing relatively 

minor services unrelated to the mails. 

Nor is it insignificant that the legislative 

history of the Act contains no 

substantive discussion of the term 

‘‘nonpostal.’’ Against this considerable 

backdrop, it is unreasonable to suggest 

that the simple reference to ‘‘nonpostal’’

in section 404(a)(6) can be read to 

empower the Postal Service to offer 

unilaterally to the public whatever 

service, commercial or otherwise, it 

might wish. Such a reading is too at 

odds with the statute, legislative history, 

and historical operations to be credible. 

Had Congress intended something more, 

it would have been explicit, as it was 

when it detailed the Postal Service’s 

postal functions. 

Recognizing that the differences 

between its and the Commission’s 

interpretations may need to be resolved 

judicially, the Postal Service states that 

until that happens the Commission 

‘‘cannot authoritatively impose its own 

formulation and interpretation on the 

Postal Service’s conduct[.]’’ 109 That is 

neither the intent nor purpose of the 

rule. The Commission properly is acting 

to clarify the scope of its own 

jurisdiction. To reiterate, the Postal 

Service remains free to offer whatever 

services are consistent with its statutory 

mandate. Nothing in the rule affects the 

lawfulness of the Postal Service 

initiatives that are not postal. As the 

Commission has noted previously, it 

lacks equitable powers to enjoin Postal 

Service actions. Thus, the lawfulness of 

Postal Service’s nonpostal activities is 

not an issue before the Commission.110

However, the prices for postal services 

must be set in accordance with section 

3624.

V. Definition of the Term Postal Service 

Early consideration of what 

constituted a ‘‘postal service’’ was 

limited perforce to hard copy mail. 

That, after all, simply reflected the state 

of Postal Service operations at the time. 

One of the issues now before the 

Commission is whether services relying 

on new technology, such as electronic 

services, fall within the ambit of postal 

services under the Act. As elaborated on 

below, the Commission concludes that 

those services in which the Postal 

Service receives, transmits, or delivers 

correspondence constitute postal 

services. This conclusion is drawn from 

the Act and its legislative history.

Section 403 sets out the general duties 

of the Postal Service, beginning with the 

duty to ‘‘plan, develop, promote, and 

provide adequate and efficient postal 

services at fair and reasonable rates and 

fees.’’ 111 It is required to ‘‘receive, 

transmit, and deliver * * * written and 

printed matter, parcels, and like 

materials and provide such other 

services incidental thereto as it finds 

appropriate to its functions and in the 

public interest.’’ 112 Its responsibilities 

also include maintaining an efficient 

delivery system and providing types of 

service to meet the needs of different 

users.113

There are no limitations inherent in 

these broad general duties, or elsewhere 

in the Act, which would suggest that the 

Postal Service should not consider 

technological advances when carrying 

out its functions. Section 101(a) 

instructs that the Postal Service ‘‘shall 

have as its basic function the obligation 

to provide postal services to bind the 

Nation together through the personal, 

educational, literary, and business 

correspondence of the people.’’ In 

describing this section, the House 

Report states that the ‘‘Postal Service 

shall be operated as a basic 

communications service provided to all 

the people by the Government of the 

United States[.]’’ 114 The policy that the 

Postal Service is to be operated as ‘‘a 

basic communications service’’ can only 

be fulfilled if the Postal Service can 

avail itself, consistent with the Act, of 

technological innovations effecting 

communications. The Act does not 

require the Postal Service to ignore 

innovations, and to remain, in essence, 

the equivalent to the best buggy whip 

manufacturer it can be.

The House Report confirms that 

Congress envisioned that postal services 

would change over time as influenced 

by, among other things, technological, 

economic, and social growth. In 

reforming the then-existing postal 

system, Congress intended to ‘‘[c]reate a 

lasting foundation for a modern, 

dynamic, and viable postal institution 

that is both equipped and empowered at 

all times to satisfy the postal 

requirements of the future 

technological, economic, cultural, and 

social growth of the Nation.’’ 115

Comments by competitors raise 

legitimate concerns about the Postal 

Service’s unilateral offering of 

commercial, ‘‘nonpostal’’ services.116

These comments demonstrate that many 

of these services have a substantial 

public effect. Congress envisioned that a 

‘‘modern, dynamic, and viable postal 

institution’’ would satisfy the Nation’s 

postal needs by harnessing 

technological and economic changes. In 

short, not surprisingly, Congress 

anticipated that postal services would 

evolve over time. Moreover, by 

bifurcating the authority under the Act 

between the Commission and the Postal 

Service, Congress provided a 

mechanism to ensure that legitimate 

public interests would continue to be 

protected. As described by the court in 

United Parcel Service, supra, the 

Commission ‘‘was designed as a sort of 

sunshine mechanism to avoid undue 

political influence and to assure the 

public is heard from and the public 

interest represented before rate, 

classification, and significant service 

changes are made.’’ 117

The careful balancing of authorities 

between the Commission and the Postal 

Service under the Act reflects Congress’

concern that the public be adequately 

protected once congressional control of 

the Post Office Department was 

relinquished. In light of the safeguards 

built into the Act, there was no pressing 

need to define the term ‘‘postal service,’’

particularly since, as discussed above, 

the entire thrust of the Act concerns the 

67524 Federal Register / Vol. 69, No. 222 / Thursday, November 18, 2004 / Proposed Rules 

118This represents a marked contrast to postal 

legislation currently pending before Congress. The 

Senate bill, S. 2468, limits the term ‘‘postal service’’

to physical deliveries whereas the House bill, H.R. 

4341, employs the phrase ‘‘carriage of.’’ Both would 

delete current section 404(a)(6), with the Senate bill 

appearing to preclude all such services other than 

under section 411, while the House bill would 

grandfather service provided as of May 12, 2004.

119 39 U.S.C. 403(a).

120 Id. § 101(a). 121PRC Order No. 1389, January 16, 2004, at 8.

122 Initial Brief of the United States Postal 

Service, Docket No. MC78–3, November 9, 1979, at 

9. In that proceeding, the Postal Service argued that 

‘‘E–COM service fits squarely within the scheme of 

transmitting messages envisioned by the Postal 

Reorganization Act. * * * The E–COM proposal 

keeps pace with advances in technology * * * by 

utilizing electronics to move mail, instead of 

utilizing [a surface or air carrier].’’ Ibid.

123PRC Op. MC78–3, December 17, 1979, at 172 

(footnote omitted).

124 Docket No. MC98–1, Tr. 7/1718.

125 General Accounting Office Report, 

Development and Inventory of New Products, GAO/

GGD–99–15 (November 24, 1998) at 36. See also 61 

FR 42,219 (1996) (Electronic services ‘‘will provide 

security and integrity to electronic correspondence 

and transactions, giving them attributes usually 

associated with First-Class Mail.’’)

126 39 U.S.C. 101(a).

127 39 U.S.C. 403(a); see also 39 U.S.C. 403(b)(2) 

(The Postal Service shall ‘‘provide types of mail 

service to meet the needs of different categories of 

mail and mail users.’’)

128 39 U.S.C. 2010.

Postal Service’s postal mission.118 The 

need only arises now, as discussed in 

Order No. 1389, because the spate of 

recent services introduced unilaterally 

by the Postal Service has created 

uncertainty and controversy regarding 

the postal character of those services. 

Codifying the term in the Commission’s 

rules should alleviate those problems by 

providing guidance to the Postal Service 

and the public concerning services that 

are subject to sections 3622 and 3623 of 

the Act. As a general matter, the 

Commission concludes that services 

offered by the Postal Service that 

provide an alternative to more 

traditional mail services, such as 

electronic communication services, 

would fall within the proposed 

definition. With that elaboration, the 

Commission proposes to adopt new rule 

5(s) to read as follows: Postal service

means the receipt, transmission, or 

delivery by the Postal Service of 

correspondence, including, but not 

limited to, letters, printed matter, and 

like materials; mailable packages; or 

other services supportive or ancillary 

thereto.

This definition employs statutorily 

linked terms descriptive of the Postal 

Service’s duties and mission. The Postal 

Service has a duty to plan, develop, and 

provide adequate and efficient postal 

services. To fulfill that duty, it is 

required to ‘‘receive, transmit, and 

deliver * * * written and printed 

matter, parcels, and like materials[.]’’ 119

As its ‘‘basic function,’’ it is obligated 

‘‘to provide postal services to bind the 

Nation together through the personal, 

educational, literary, and business 

correspondence of the people.’’ 120

Neither its duties nor obligations are 

predicated on preconceived notions of 

what ‘‘postal services’’ might be. Nor are 

they framed by reference to mail or the 

then existing mailstream, e.g., letters, 

publications, etc. Rather, the statute 

uses generic terms to describe 

application of the Postal Service’s 

mission to ‘‘correspondence’’ and 

‘‘written and printed matter, parcels, 

and like materials.’’ As evidenced by the 

legislative history, the statute 

anticipates the influence of 

technological, economic, and social 

change on the provision of postal 

services. Accordingly, it is appropriate 

to utilize the statutorily derived terms.

The benefit of focusing on the 

statutory functions of the Postal Service 

can be shown through the following 

hypothetical. Assume the Postal Service 

assigns every American a permanent email address, and charges individuals 

an annual fee to access e-mails sent to 

those addresses. The Service would be 

accepting, transmitting and delivering 

business and personal correspondence. 

Under the proposed definition this 

would be a postal service, even though 

no tangible hard copy changed hands. 

The private express statutes do not, and 

should not apply to e-mail, but the 

Postal Service would be competing with 

private firms and its own products in a 

healthy industry, and its rates and fees 

should be fair and nondiscriminatory. 

The terms of the proposed definition 

are easily understood and their meaning 

clear. The term ‘‘receipt’’ is the act of 

receiving something; ‘‘transmission’’

covers the act of transmitting, that is 

sending or conveying something to a 

destination or recipient; and ‘‘delivery’’

is the act of transferring, turning over, 

or making available the item(s) 

transmitted to the recipient. 

Collectively, these terms encompass the 

related activities associated with postal 

services, e.g., acceptance, collection, 

verification, and processing.

It is appropriate to reflect electronic 

services in the definition of the term 

postal service. Postal services have 

continually evolved over time with 

changes in technology. For example, 

stagecoaches, which were initially used 

to transport the mails, were supplanted 

by railroads which, in turn, gave way to 

trucks and airplanes. In considering the 

evolutionary effects of technology, the 

Commission has observed: 121

It is not merely that these technological 

advances provided for improved service, 

rather they gave rise to wholly new forms of 

‘‘postal service.’’ Examples include airmail 

service, Express Mail services, as well as 

electronic mail. In addition, technology has 

given rise to many new types of special 

postal services such as Confirm, and delivery 

and signature confirmation.

Indeed, the Postal Service has 

recognized the role of technology in 

shaping the nature of postal services. 

Commenting on its Electronic Computer 

Originated Mail (E–COM) proposal in 

Docket No. MC78–3, the Postal Service 

characterized its entry into the 

electronic mail field as ‘‘a natural 

progression of technology,’’ by using 

‘‘electronics to move the mail’’ instead 

of a surface or air carrier.122 Moreover, 

regarding its proposal, the Postal 

Service maintained the position that E–

COM messages, while in electronic 

form, were deemed ‘‘ ‘in the mails.’ ’’ 123

Similarly, concerning Mailing Online 

Service, a Postal Service witness 

characterized the bits of electronic data 

that would ultimately be reduced to 

hard copy messages ‘‘as mail pieces.’’ 124

There are other contemporaneous 

indications that the Postal Service has 

considered electronic service offerings 

as an extension of traditional mail 

services. For example, upon review of 

new products offered by the Postal 

Service, the General Accounting Office 

reported that the Postal Service ‘‘views 

its entry into the electronic commerce 

market as an extension of its core 

business—the delivery of traditional 

mail. According to Service officials, 

electronic mail has the same attributes 

as traditional mail * * *.’’ 125

The Postal Service use of technology 

to develop new types of postal service 

is entirely consistent with its statutory 

mandate ‘‘to provide postal services to 

bind the Nation together’’ by 

‘‘provid[ing] prompt, reliable, and 

efficient services to patrons in all areas 

* * *.’’ 126 The Postal Service’s central 

mission is to ‘‘plan, develop, promote, 

and provide adequate and efficient 

postal services * * *.’’ 127 Furthermore, 

it is instructed to ‘‘promote modern and 

efficient operations’’ while refraining 

from any practice ‘‘which restricts the 

use of new equipment or devices which 

may reduce the cost or improve the 

quality of postal services[.]’’ 128

Consistent with these mandates, the 

Postal Service has employed technology 

in the pursuit of more efficient and 

modern postal services.

This rulemaking is not the 

appropriate forum for the Commission 

Federal Register / Vol. 69, No. 222 / Thursday, November 18, 2004 / Proposed Rules 67525

129See Complaint of United Parcel Service, 

Docket No. C99–1, October 5, 1998. UPS’s 

complaint was based on three claims: (a) That the 

service may only be established pursuant to 

sections 3622 and 3623 of the Act; (b) that the 

provision of the service at no charge violates 

sections 3622(b)(3) and 3622(b)(4); and (c) that Post 

ECS represents a change in the nature of postal 

services affecting service on a nationwide or 

substantially nationwide basis. 130Motion of the United States Postal Service to 

Dismiss, Docket No. C99–1, November 5, 1998. 131PRC Order No. 1239, May 3, 1999, at 12. 132PRC Order No. 1352, November 6, 2002. The 

Postal Service terminated Post ECS service and 

moved to dismiss the complaint as moot.

133PRC Order No. 1239, supra, at 15–21.

134 Id. at 19 (emphasis in original).

135Report on Nonpostal Initiatives, supra, at 8–

9.

136http://www.usps.com/paymentservices/

ops_discontinued.htm; see also Update to Report on 

Nonpostal Initiatives, Docket *2003, November 14, 

2003.

137Report on Nonpostal Initiatives, supra, at 9.

138Moreover, these efforts by the Postal Service 

to harness technology are precisely what the statute 

has in mind with respect to postal services, namely 

to plan, develop, and provide adequate and efficient 

postal services and to bind the nation together 

through, in these instances, business 

correspondence. The Commission’s rules provide 

various options for expedited review of such 

proposals. See 39 CFR 3001.67 et seq. and 3001.161 

et seq.

139Report on Nonpostal Initiatives, supra, at 5.

140Update to Report on Nonpostal Initiatives, 

supra, at 1.

141PSA Comments at 1–2.

142Pitney Bowes Comments at 1.

to address the jurisdictional status of 

specific services, such as those 

identified in Consumer Action’s 

petition, that the Commission has not 

had an opportunity to consider fully. To 

provide some guidance as to the 

application of the new rule, however, 

the Commission will, for illustrative 

purposes, refer to several services no 

longer offered by the Postal Service. 

In Docket No. C99–1, the complainant 

contended that the Postal Service was 

providing a new service, Post Electronic 

Courier Service (Post ECS), in violation 

of the Act.129 Post ECS service, a pilot 

program available only to licensees, 

offered an all-electronic means of 

transmitting documents securely via the 

Internet. Briefly, licensees could 

transmit documents to a Postal Service 

Electronic Commerce Server whereupon 

the Postal Service would notify the 

addressee by e-mail that the document 

was available at a specified URL 

address. To retrieve the document, the 

addressee would access the site, enter 

the appropriate password, and, if 

desired, download the document.

The Postal Service moved to dismiss 

the complaint arguing, first, that the 

Commission lacked authority to 

determine the status of the service as 

either postal or nonpostal, and second 

that, even assuming the Commission 

had authority to determine the status of 

Post ECS service, the complaint should 

be dismissed as beyond the 

Commission’s authority because the 

service is neither postal nor 

domestic.130 The Commission denied 

the motion, finding that its mail 

classification authority empowered it to 

review the status of services proposed or 

offered by the Postal Service.131 Nor was 

the Commission persuaded, based on 

the record developed to that point, that 

the service did not include domestic 

operations or that it was nonpostal. 

Ultimately, however, the issue whether 

Post ECS was, or was not, a postal 

service was not reached as the 

complaint was subsequently dismissed 

as moot.132

Recognizing that the proceeding 

concluded without benefit of a hearing, 

but assuming that Post ECS service 

included some wholly domestic 

transactions, all indications suggest that 

Post ECS would be a postal service 

under the new rule. In that proceeding, 

the Commission did not find it 

dispositive that service did not entail 

hard copy mail.133 As the Commission 

noted in Order No. 1239, ‘‘a colorable 

claim [was made] that [Post ECS service] 

not only is very closely related to the 

carriage of mail, it is the delivery of mail 

because it accomplishes by electronic 

means all the functions that would 

otherwise be performed by conveying a 

physical message or document.’’ 134

The Postal Service offers various ways 

to receive and pay bills. These currently 

include First-Class Mail, Priority Mail, 

and Express Mail. Until earlier this year, 

it also offered online payment services, 

consisting of USPS eBillPay, USPS Send 

Money, and USPS Pay@Delivery.135

These services were discontinued May 

1, 2004.136

USPS eBillPay enabled customers to 

receive, review, and pay their bills via 

the Postal Service’s Web site. The Postal 

Service described it as an all electronic 

service, except for any payments mailed 

at standard rates of postage.137 It would 

appear that USPS eBillPay operated 

simply as a surrogate for more 

traditional means of receiving and 

paying bills. Some payments utilized 

the mails. In this regard, there are 

obvious parallels to money orders, 

currently a jurisdictional special 

service. Thus, under the statute, based 

on currently available information, this 

service would likely be considered a 

postal service.138

In the recent past, the Postal Service 

offered a stored value card, LibertyCash, 

for use in purchasing postage and 

related products. Consideration was also 

given to the possibility of using it as a 

means to provide refunds to postal 

customers.139 Apparently, the Postal 

Service did not charge a separate fee for 

the card, but only the value of the 

postage encoded on it. The card is no 

longer offered for sale.140 Based on 

publicly available information, it would 

appear that LibertyCash was designed to 

give postal patrons a different payment 

option for purchasing postage or related 

products. Recognizing that the outcome 

would be dependent on the facts, two 

scenarios can be hypothesized for 

illustrative purposes. On the one hand, 

the card may have properties analogous 

to an advance deposit account, some of 

which are subject to an annual 

accounting fee recommended by the 

Commission. In that case, it likely 

would be viewed as an ancillary postal 

service. On the other hand, the card may 

have characteristics more analogous to a 

gift card, available to purchase Postal 

Service merchandise (mugs, etc.) as well 

as postage. In that event, it likely would 

not be considered an ancillary postal 

service.

VI. The Parties’ Comments Regarding 

the Proposed Rule 

The breadth of comments received in 

response to the proposed rulemaking 

was useful in the Commission’s 

deliberations. They range from a 

suggestion that the Commission do 

nothing to one defining postal services 

based on a narrow meaning of the term 

nonpostal. Each of the comments has 

been carefully considered. In the final 

analysis, the Commission determination 

not to adopt either the proposed rule or 

variations suggested by commenters is 

predicated on its conclusion that it 

would be preferable to link the 

definition of the term ‘‘postal service’’ to 

the Postal Service’s statutory duties 

rather than by reference to specific 

activities that the Postal Service may or 

may not perform. 

Of the seven sets of initial comments 

received, four suggest revisions to the 

proposed rule. Each is addressed below. 

Two of the remaining three commenters 

support the proposed rule, although for 

different reasons. In brief comments, the 

Parcel Shippers Association endorses 

the proposed rule, expressing its 

support for the treatment of the delivery 

of packages as a core postal service.141

Pitney Bowes advocates that the Postal 

Service should focus on its core 

mission, which it describes as 

maintaining universal physical mail 

service.142 To the extent that the Postal 

Service engages in non-core activities, 

Pitney Bowes argues that regulatory 

oversight is imperative given the Postal 

Service’s statutorily defined monopoly 

67526 Federal Register / Vol. 69, No. 222 / Thursday, November 18, 2004 / Proposed Rules 

143 Id. at 2–3.

144 Id. at 3–4.

145Lifetime Addressing Comments at 2.

146 Ibid.

147Lifetime Addressing Reply Comments at 2. 

Lifetime Addressing filed a motion for late 

acceptance of its initial comments. Motion for Late 

Acceptance of Comments of Lifetime Addressing, 

Inc., March 16, 2004. The motion is granted.

148Postal Service Initial Comments at 3.

149 Id. at 4–5, citing NAGCP I, supra, 569 F.2d at 

595–98.

150Postal Service Reply Comments at 3.

151Postal Service Initial Comments at 5.

152PRC Op. R76–1, Vol. 1, at 266, n.1. The use 

of the conjunctive does not imply that the term is 

contingent on all three functions being performed 

by the Postal Service. As the Commission 

explained, ‘‘[a] special postal service is thus one 

which is ancillary to one or more of these three 

steps.’’ Ibid.

153Postal Service Initial Comments at 5.

154 Ibid.

155The same would not be the case concerning 

PostCom’s proposed definition, which contains no 

reference to maximum weight or mailability. 

PostCom Initial Comments at 4. PostCom’s 

suggestion has rate and classification implications 

and could, if adopted, create some confusion 

concerning the eligibility to mail items in excess of 

70 pounds.

156Postal Service Reply Comments at 3.

157PostCom Initial Comments at 1–2.

158 Id. at 4.

159 In its reply comments, PostCom states its 

belief that a comprehensive definition of the term 

‘‘postal services’’ can only be undertaken by 

Congress. PostCom Reply Comments at 1. Even 

accepting this statement at face value, however, 

does not negate the Commission’s responsibilities 

under the current statute.

160PostCom Initial Comments at 4.

161 Ibid.

162PRC Op. R76–1, Vol. 2, Appendix F at 3.

163PostCom Initial Comments at 4–5.

and service obligation.143 While it 

would prefer a legislative solution to the 

issue, Pitney Bowes endorses the 

proposed rule as sufficiently expansive 

to ensure necessary regulatory 

oversight.144

The last of the remaining commenters, 

Lifetime Addressing, asserts that ‘‘[t]he 

public interest is best served by a broad 

definition of jurisdiction.’’ 145 In 

addition, it contends that the proper 

role for the Postal Service, as a 

government entity, is to deliver physical 

mail, not to provide services available 

from the private sector.146 In its reply 

comments, Lifetime Addressing urges 

the Commission to adopt a broad 

definition of the term ‘‘postal service’’ to 

protect the public interest and endorses 

the definitions proposed by OCA/CA.147

Postal Service comments.

Conceptually, the Postal Service does 

not oppose including a definition of the 

term postal service in the Commission’s 

rules, characterizing it as ‘‘a logical 

addition to the rules.’’ 148 The Postal 

Service suggests the rule would be 

improved if it referenced NAGCP I, 

ostensibly to clarify that the effect of the 

definition is ‘‘merely to restate 

prevailing law.’’ 149 In addition, the 

Postal Service would define postal 

service to mean ‘‘the carriage of letters, 

printed matter, or mailable packages, 

including acceptance, collection, 

processing, delivery, or other services 

supportive or ancillary thereto.’’ 150 This 

alternative differs from the 

Commission’s in several respects.

First, the Postal Service proposes to 

define postal service in terms of 

‘‘carriage of’’ mail rather than ‘‘delivery 

of’’ mail, arguing that ‘‘as far back as 

Docket No. R76–1 * * * [the 

Commission] has focused on the 

‘‘carriage of mail.’’ 151 The Commission 

will not adopt this suggestion as it 

appears to overlook that the term 

‘‘carriage of mail’’ is shorthand for the 

collection, transmission, and delivery of 

mail matter.152 Hence, including the 

‘‘carriage of’’ terminology in the 

definition of postal service would not 

serve to clarify its meaning. To the 

extent the Postal Service was posing a 

definition that overly emphasizes the 

delivery function, the definition 

proposed herein avoids that concern.

Second, the Postal Service would 

eliminate reference to the maximum 

weight of packages, noting that the 

statutory maximum was deleted in 

1982.153 It proposes that, in lieu of 

including a set maximum weight limit, 

the definition simply refer to ‘‘mailable’’

packages.154 This is a useful suggestion 

and will be incorporated into the 

definition. The virtue of the proposal is 

its simplicity. It incorporates the 

concept of eligibility while eliminating 

the need to make conforming changes to 

the definition should the maximum 

weight limit be revised subsequently.155

Third, in a revision to the definition 

it originally proposed, the Postal Service 

would delete reference to 

‘‘transmission.’’ 156 This revision was 

prompted by PostCom’s suggested 

alternative to the proposed rule. For the 

reasons discussed below, the 

Commission declines to adopt it.

PostCom comments. PostCom 

contends that the Commission should 

not proceed with this rulemaking, citing 

indications that the Postal Service may 

have curtailed its ‘‘nonpostal’’ activities 

and potential legislative reform.157

Alternatively, it suggests a definition 

limiting postal services to physical 

deliveries, ‘‘including acceptance, 

collection, verification, sorting and 

transportation, and directly related 

services and functions.’’ 158

The initial appeal of its argument that 

the Commission do nothing wanes on 

consideration.159 Doing nothing would 

perpetuate the status quo, a result that, 

under the circumstances, is not in the 

public interest. Further, the mere 

prospect of relief via potential 

legislative reform is insufficient to 

dissuade the Commission from 

addressing this controversy. The need to 

define the term arises precisely because 

uncertainty exists whether what the 

Postal Service calls ‘‘initiatives’’ are 

‘‘postal services.’’ Those filing 

complaints with the Commission 

contesting this point are entitled to a 

reasoned response. The proposed rule is 

intended to provide guidance to the 

Postal Service and the public 

concerning services that fall within the 

ambit of sections 3622 and 3623 of the 

Act.

PostCom’s alternative proposal is 

designed to remove ‘‘electronic delivery 

mechanisms’’ from the definition.160

Among other things, PostCom proposes 

to substitute the term ‘‘transportation’’

for ‘‘transmission,’’ expressing concern 

that ‘‘transmission’’ may be construed to 

include electronic rather than only 

physical delivery.161 The Commission 

will not adopt PostCom’s proposed 

alternative definition. As discussed 

above, the current statute contemplates 

that the Postal Service will avail itself 

of technological advances in providing 

postal services. The term 

‘‘transmission’’ derives from the statute 

and has been used historically by the 

Commission. Among its general duties, 

the Postal Service ‘‘shall receive, 

transmit, and deliver throughout the 

United States, its territories and 

possessions, * * * written and printed 

matter, parcels, and like materials 

* * *.’’ 39 U.S.C. 403(a). Furthermore, 

the Commission has employed the term 

‘‘transmission’’ for almost 30 years. In 

Docket No. R76–1, the Commission 

determined that special postal services 

were those ‘‘ancillary to the collection, 

transmission, or delivery of mail.’’ 162 It 

is a standard invoked in other 

proceedings as well. See PRC Order No. 

1128, July 30, 1996, at 10; PRC Order 

No. 1145, December 16, 1996, at 8; and 

PRC Order No. 1239, May 3, 1999, at 16 

and 19.

Nor will the Commission adopt 

PostCom’s suggestion to substitute 

‘‘directly related services and functions’’

for ‘‘other services supportive or 

ancillary thereto.’’ While PostCom is 

mildly critical of the terms ‘‘ancillary’’

and ‘‘supportive,’’ it offers no support 

for the term ‘‘directly related’’ other 

than to assert that it is ‘‘more 

precise.’’ 163 Again, the terms used in 

the proposed rulemaking trace to Docket 

No. R76–1 where the Commission 

described special services as ancillary to 

Federal Register / Vol. 69, No. 222 / Thursday, November 18, 2004 / Proposed Rules 67527

164PRC Op. R76–1, Vol. 2, Appendix F at 3. 165PRC Op. R76–1, Vol. 1, at 266–67. While this 

restatement uses the term ‘‘auxiliary,’’ an acceptable 

meaning of that term, as PostCom recognizes, is 

ancillary. See PostCom Initial Comments at 5. (‘‘The 

plain meaning of the term ‘ancillary’ implies 

services which are auxiliary or subordinate to other 

postal services provided.’’)

166Postal Service Reply Comments at 2.

167 Joint Initial Comments at Appendix A.

168 Ibid.

169 Id. at 6–8; 23–39.

170 Id. at Appendix A.

171 Id. at 15.

172 Id. at 6.

173 Id. at 23–32.

174 Id. at 34–35. They indicate that such changes 

would constitute de facto classification changes 

subject to the Commission’s jurisdiction. Id. at 35.

175 Id. at 37.

176 Id. at 38–39.

177Postal Service Reply Comments at 9.

178Previously, the Postal Service evaluated postal 

services in terms of processing of mail. A new 

service not involving mail is characterized as 

nonpostal. Report on Nonpostal Initiatives at 4. 

Implicitly, this evaluation is predicated only on 

hard copy mail. The Postal Service should reassess 

its conclusions in light of the rule ultimately 

adopted herein.

the collection, transmission, or delivery 

of mail.164 Restating its conclusions, the 

Commission described special services 

as ‘‘supportive or auxiliary’’ to the 

collection, transmission or delivery of 

mail because they enhance the value of 

service of one of the substantive classes 

of mail.165

The Postal Service, which opposes 

PostCom’s suggestion, confirms that the 

Commission’s proposed language 

‘‘tracks the approach used consistently 

for decades.’’ 166 In sum, PostCom’s 

suggestion represents no improvement 

over the long-used terms.

OCA/CA comments. As discussed 

above, OCA/CA propose a revamped 

definition of the term postal service 

based on the view that postal services 

are any service or product retailed by 

the Postal Service that is not provided 

to another government entity. 

Accordingly, they propose to define 

postal service in terms of activities 

undertaken by the Postal Service that, 

for example, significantly affect the cost 

or value of existing services, put 

significant Postal Service revenues at 

risk, or have a significant adverse effect 

on the existing market.167 They also 

propose that the Commission’s rules be 

amended to include a definition of 

nonpostal service, namely, services 

provided by the Postal Service on behalf 

of other governmental agencies.168 In 

addition, OCA/CA discuss various 

services offered by the Postal Service, 

including de facto services, pilot tests, 

strategic alliances, and electronic 

services, which they believe should be 

deemed to be postal services.169

OCA/CA list a set of conditions which 

would trigger a finding that a Postal 

Service activity is subject to sections 

3622 and/or 3623. For example, an 

activity would be deemed a postal 

service if one of the following 

conditions applies: (a) It significantly 

affects the intrinsic cost of an existing 

class, subclass or rate category or the 

relative costs of existing classes, 

subclasses or rate categories; (b) it grants 

a significant preference to any person; 

or (c) it deviates significantly from 

established methods of providing a 

service.170 This set of conditions offers, 

at best, a cumbersome means for 

identifying a postal service and, in any 

event, is not free from ambiguity. A 

conclusion that a particular activity is a 

postal service or not would be 

dependent on a factual inquiry, e.g., 

whether the activity had a significant 

effect on an existing rate category, Postal 

Service revenues, or a competitor, etc.

This would appear to be a 

problematic way to define the term 

postal service. Interested persons would 

have to speculate how the Commission 

might view the nexus between the 

Postal Service activity and its impact on 

other services, classes of mail, or 

entities. Because of this, it would be 

unlikely to reduce uncertainty, a major 

goal of this rulemaking. 

OCA/CA also propose to include a 

definition of the term nonpostal in the 

Commission’s rules and further urge the 

Commission not to employ the term 

‘‘nonpostal’’ as proposed in a 

companion proceeding, Docket No. 

RM2004–2.171 The Commission finds it 

unnecessary to define the term 

nonpostal in this proceeding. The need 

only arises under OCA/CA’s proposal 

because the term nonpostal defines, by 

negative implication, the term postal 

service. Likewise, the request that the 

Commission refrain from using the term 

nonpostal in proposed rule 54(h)(1)(i) 

need not be addressed in this 

proceeding. The Commission will 

consider that issue in Docket No. 

RM2004–2, where OCA/CA have also 

raised it.

Finally, OCA/CA discuss other 

services which they believe qualify as 

postal services and urge the 

Commission to encompass these 

services in its rules.172 They identify the 

following types of services:

(a) De facto classification and service 

changes implemented without a 

recommended decision from the 

Commission. As examples, OCA/CA cite a 

new carrier pickup service and Electronic 

Tracking Confirmation service.173

(b) Pilot tests, described as experimental 

services, but including trials or other types of 

tests. They suggest that the definition of the 

term postal service include ‘‘changes to the 

rates or terms of service for any mailer that 

deviates from the classification language 

contained in the DMCS or from the 

evidentiary record that established the terms 

of service[.]’’ 174

(c) Services provided through a strategic 

alliance or contract with one or more parties. 

As an example, OCA/CA cite NetPost 

CardStore. They contend that the Service’s 

‘‘interactions and representations to the 

public are the main determinant for 

concluding that a service or product offered 

through a partnership arrangement that 

leverages the Postal Service’s ‘‘brand’’ is a 

Chapter 36 ‘‘postal service.’’ 175

(d) Electronic services. They advocate that 

the rule explicitly state that services 

provided in whole or in part by electronic 

means are postal services.176

In its reply comments, the Postal 

Service ‘‘urges the Commission to 

refrain from addressing the merits of 

CA/OCA’s arguments and conclusions 

regarding any current or future Postal 

Service activities’’ cautioning that any 

attempt to do so ‘‘would be prejudicial, 

unwise, and potentially invalid.’’ 177

OCA/CA’s discussion of various 

services offered by the Postal Service is 

germane to consideration of the term 

postal service. This does not mean, 

however, that this rulemaking is the 

appropriate forum for determining 

whether a specific service mentioned is 

a postal service or not. Facts necessary 

to make that determination are not 

available on this record. Moreover, it is 

unclear which services or their 

permutations the Postal Service 

continues to offer. 

Nonetheless, the Commission 

anticipates that the Postal Service will 

file the appropriate requests for a 

recommended decision to the extent 

that services of this type fall within the 

rule ultimately adopted.178

The Postal Service’s apparent 

increasing use of alliances with private 

sector companies to provide services to 

the public merits brief mention. Such 

arrangements are not determinative of 

whether a service is or is not a postal 

service. That determination is 

dependent on the nature of the service 

provided. To the extent it substitutes for 

traditional mail service or is offered in 

fulfillment of the Postal Service’s core 

mission, it may reasonably be 

considered to be a postal service. 

Illustratively, two examples may clarify 

the point. Pay@Delivery, a service no 

longer offered by the Postal Service, 

provided for the release of the buyer’s 

funds to the seller after delivery via 

Priority Mail is confirmed by Delivery 

Confirmation. As a variation of collect 

on delivery, this service would appear 

to have the hallmarks of a postal service. 

On the other hand, any connection of 

67528 Federal Register / Vol. 69, No. 222 / Thursday, November 18, 2004 / Proposed Rules 

179As the name suggests, this card is simply a 

prepaid phone card. The card, which is a product 

of an alliance between the Postal Service and 

AT&T, is sold at postal facilities.

180UPS Comments at 2.

181See id. at 2–4.

First-Class Phone Cards to postal service 

would appear to be tenuous at best.179

United Parcel Service comments. UPS 

proposes that the term postal service be 

defined to mean ‘‘the acceptance, 

collection, processing, transmission, or 

delivery of letters, printed matter, or 

packages weighing up to 70 pounds 

(including, but not limited to, partially 

or wholly electronic services), and other 

services supportive or ancillary 

thereto.’’ 180 This proposal differs from 

that advanced by the Commission in 

Order No. 1389 in two ways. First, UPS 

reads the Commission’s proposed 

definition as possibly contingent on 

actual delivery by the Postal Service. 

Consequently, UPS would define postal 

service to encompass the various 

activities performed by the Postal 

Service, e.g., acceptance, transmission, 

etc., to preclude the argument that such 

services, if provided by the Postal 

Service exclusive of delivery, are not 

postal services. Second, UPS would 

explicitly include services that are 

either wholly or partially electronic.181

UPS raises a valid, if largely 

theoretical, point. Its alternative, 

however, could be construed as overly 

broad. Entities other than the Postal 

Service collect, process, and transmit 

mail prior to its deposit with the Postal 

Service. The definition suggested by 

UPS would expand the term postal 

service to include activities performed 

by entities, such as presort bureaus and 

consolidators, not subject to the 

Commission’s jurisdiction. Inserting the 

phrase ‘‘by the Postal Service’’ after the 

term ‘‘delivery’’ would foreclose this 

construction and, as so modified, would 

represent an improvement over the 

definition proposed by the Commission. 

In lieu of adopting this language, 

however, the Commission concludes, 

for reasons previously discussed, that it 

would be preferable to define the term 

postal service based on statutorily 

derived terms.

VII. Comments 

Because it declines to adopt either its 

initially proposed rule or those 

suggested by any commenter, the 

Commission concludes that it would be 

appropriate to provide any interested 

person an opportunity to comment on 

the revised proposed rule. Accordingly, 

comments are due December 15, 2004. 

Reply comments may be filed on or 

before January 12, 2005. It is the 

Commission’s expectation to review 

such comments expeditiously and 

thereafter amend its rules as may be 

appropriate. 

Ordering Paragraphs 

It is ordered:

1. The Commission proposes to 

amend its Rules of Practice and 

Procedure by inserting new rule 5(s), 39 

CFR 3001.5(s) as follows: Postal service

means the receipt, transmission, or 

delivery by the Postal Service of 

correspondence, including, but not 

limited to, letters, printed matter, and 

like materials; mailable packages; or 

other services supportive or ancillary 

thereto. 

2. Interested persons may submit 

comments by no later than December 

15, 2004. Reply comments may also be 

filed and are due no later than January 

12, 2005. 

3. The Motion for Late Acceptance of 

Comments of Lifetime Addressing, Inc., 

March 16, 2004, is granted. 

4. Proposed revisions suggested by 

commenters not adopted herein are 

deemed denied. 

5. The Secretary shall arrange for 

publication of this Order in the Federal 

Register.

Dated: November 12, 2004.

By the Commission. 

Steven W. Williams, 

Secretary.

List of Subjects in 39 CFR Part 3001 

Administrative practice and 

procedure, Postal service.

For the reasons discussed above, the 

Commission proposes to amend 39 CFR 

part 3001 as follows:

PART 3001—RULES OF PRACTICE 

AND PROCEDURE 

1. The authority citation for part 3001 

continues to read as follows:

Authority: 39 U.S.C. 404(b); 3603; 3622–

24; 3661, 3663.

Subpart A—Rules of General 

Applicability 

2. Amend § 3001.5 by adding new 

paragraph(s) to read as follows:

§ 3001.5 Definitions.

* * * * *

(s) Postal service means the receipt, 

transmission, or delivery by the Postal 

Service of correspondence, including, 

but not limited to, letters, printed 

matter, and like materials; mailable 

packages; or other services supportive or 

ancillary thereto.

[FR Doc. 04–25567 Filed 11–17–04; 8:45 am] 

BILLING CODE 7710–FW–P

DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric 

Administration

50 CFR Part 648

[Docket No. 041108311–4311–01; I.D. 

110204B]

RIN 0648–AR52

Fisheries of the Northeastern United 

States; Proposed 2005, 2006, and 2007 

Fishing Quotas for Atlantic Surfclams, 

Ocean Quahogs, and Maine Mahogany 

Ocean Quahogs

AGENCY: National Marine Fisheries 

Service (NMFS), National Oceanic and 

Atmospheric Administration (NOAA), 

Commerce.

ACTION: Proposed rule.

SUMMARY: NMFS proposes quotas for the 

Atlantic surfclam, ocean quahog, and 

Maine mahogany ocean quahog fisheries 

for 2005–2007. Regulations governing 

these fisheries require NMFS to publish 

the proposed specifications for the 

2005–2007 fishing years and seek public 

comment on such proposed measures. 

The intent of this action is to propose 

allowable harvest levels of Atlantic 

surfclams and ocean quahogs from the 

Exclusive Economic Zone and an 

allowable harvest level of Maine 

mahogany ocean quahogs from Atlantic 

waters north of 43 50’ N. lat.

DATES: Comments must be received no 

later than 5 p.m., eastern standard time, 

on December 20, 2004.

ADDRESSES: Written comments on the 

proposed specifications should be sent 

to: 

• Email /mailbox address: The 

mailbox address for providing email 

comments is 0648AR52@noaa.gov. 

Include in the subject line of the email 

the following document identifier: 

‘‘Comments on Surfclam/Ocean Quahog 

Proposed Specifications.’’

• Federal e-Rulemaking Portal: 

www.Regulations.gov

• Mail address for mailing paper,disk, 

or CD-ROM comments: Patricia A. 

Kurkul, Regional Administrator, 

Northeast Region, NMFS, One 

Blackburn Drive, Gloucester, MA 

01930–2298. Mark on the outside of the 

envelope,‘‘Comments on Surfclam/

Ocean Quahog Proposed 

Specifications.’’

• Fax number: Facsimile (fax) to (978) 

281–9135. Comments on this proposed 

rule may be submitted via email.

Copies of supporting documents, 

including the Environmental 

Assessment, Regulatory Impact Review, 

Initial Regulatory Flexibility Analysis