[Federal Register Volume 88, Number 160 (Monday, August 21, 2023)]
[Notices]
[Pages 56889-56890]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-17874]


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POSTAL REGULATORY COMMISSION

[Docket No. R2023-3; Order No. 6618]


Market Dominant Price Adjustment

AGENCY: Postal Regulatory Commission.

ACTION: Notice.

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SUMMARY: The Commission is recognizing a recently filed Postal Service 
notice of a Market Dominant price change proposing two incentives, 
along with proposed classification changes. This notice informs the 
public of the filing, invites public comment, and takes other 
administrative steps.

DATES: Comments are due: September 11, 2023.

ADDRESSES: Submit comments electronically via the Commission's Filing 
Online system at http://www.prc.gov. Those who cannot submit comments 
electronically should contact the person identified in the FOR FURTHER 
INFORMATION CONTACT section by telephone for advice on filing 
alternatives.

FOR FURTHER INFORMATION CONTACT: David A. Trissell, General Counsel, at 
202-789-6820.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction
II. Overview of the Postal Service's Filing
III. Initial Administrative Actions
IV. Ordering Paragraphs

I. Introduction

    On August 11, 2023, the Postal Service filed a notice of a Market 
Dominant price change proposing two incentives, along with 
classification changes to the Mail Classification Schedule (MCS).\1\ 
The intended effective date for the two new incentives is January 1, 
2024. Notice at 1. The Notice, which was filed pursuant to 39 CFR part 
3030, triggers a notice-and-comment proceeding. 39 CFR 3030.124.
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    \1\ United States Postal Service Notice of Market Dominant Price 
Change Creating Two Incentives, August 11, 2023 (Notice).
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II. Overview of the Postal Service's Filing

    The Postal Service's filing consists of the Notice, which the 
Postal Service represents addresses applicable requirements of 39 CFR 
3030.122 and 39 CFR 3030.123; one PDF attachment (Attachment A) to the 
Notice; and three Excel workbooks entitled ``Marketing Mail 
Incentive_Projections.xls,'' ``First Class Mail 
Incentive_Projections.xls,'' and ``CY24 Consolidated 
Incentives_Projections.xlsx.''
    Attachment A includes the changes to the MCS necessary to implement 
the incentives. Notice, Attachment A. The three Excel workbooks contain 
the Postal Service's financial models to support the proposed 
incentives.\2\
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    \2\ Notice, Excel files ``Marketing Mail 
Incentive_Projections.xls,'' ``First Class Mail 
Incentive_Projections.xls,'' and ``CY24 Consolidated 
Incentives_Projections.xlsx.''
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    The Postal Service states that ``incentives build stronger 
relationships between the Postal Service and the mailing industry and 
encourage mailers to continue to use the mail to engage with their 
customers, expand their customer base, and increase customer loyalty.'' 
Notice at 2-3. The Postal Service also asserts that ``incentives have 
the potential to improve the Postal Service's overall financial 
position.'' Id. at 3. Based on this, as well as declining volume 
trends, the Postal Service proposes an incentive for First-Class Mail 
(First-Class Mail Growth Incentive) and an incentive for USPS Marketing 
Mail (Marketing Mail Growth Incentive). Id.
    The Postal Service states that the two incentives are 
``substantially identical.'' Id. A mailer would be eligible for the 
First-Class Mail Growth Incentive when its combined volume of 
qualifying pieces in the incentive period, Calendar Year (CY) 2024, 
exceeds the incentive threshold. Id. The qualifying pieces are First-
Class Mail Presort Letters; First-Class Mail Presort Cards; or First-
Class Mail Presort Flats. Id. Similarly, a mailer would be eligible for 
the Marketing Mail Growth Incentive when its combined volume of 
qualifying pieces in CY 2024 exceeds the incentive threshold. Id. The 
qualifying pieces are USPS Marketing Mail Letters and High Density/
Saturation Letters; USPS Marketing Mail Flats and High Density/
Saturation Flats & Parcels; USPS Marketing Mail Carrier Route; or USPS 
Marketing Mail Parcels. Id.
    Under both incentives, ``for every qualifying piece mailed in 
calendar year 2024 after the first million pieces, mailers receive a 
credit equal to 30 percent of the average per-piece price paid for 
mailing all qualifying pieces, unless the volume of qualifying pieces 
the mailer sent in the preceding fiscal year exceeded 1,000,000 pieces. 
In that case, credits accrue only after the mailer surpasses its fiscal 
year 2023 volume of qualifying pieces.'' Id. The Postal Service states 
that its use of CY 2024 for the incentive period and Fiscal Year 2023 
for the comparison period ``is intentional'' and ``allows the Postal 
Service time to complete the administrative setup of the incentives 
before the incentive period begins.'' Id. at 4. The Postal Service 
states that calculating the credits earned is ``somewhat complex'' 
because ``[t]here is more than one qualifying product for each 
incentive, and within any given product, pieces of different weights, 
sortation levels, and dropship locations have different prices.'' Id. 
The Postal Service states that for each incentive, the credits earned 
are equal to ``the total actual price paid for all qualifying pieces 
(not including any special

[[Page 56890]]

services that might be added to and paid for with these pieces), 
divided by the total volume of qualifying pieces,'' which is then 
multiplied by the total volume of pieces eligible for credits and 30 
percent. Id. at 4-5.
    The Postal Service estimates the First-Class Mail Growth Incentive 
``will spur $259 to $432 million in growth revenue, pay $78 to $130 
million in credits, and result in $91 to $152 million in net 
contribution . . . .'' Id. at 7. The Postal Service estimates that the 
Marketing Mail Growth Incentive will spur between $544 and $907 million 
in growth revenue, pay $163 to $272 million in credits, and result in a 
net contribution of $17 to $28 million. Id. at 6-7.
    The Postal Service contends that the two incentives are rates of 
general applicability. Id. at 9. Under 39 CFR 3030.122(i), the Postal 
Service must state whether it elects to generate unused rate adjustment 
authority. 39 CFR 3030.122(i). The Postal Service states that it does 
elect to have the two incentives generate unused rate adjustment 
authority, but that ``sufficient billing determinants do not yet exist 
for the incentives to be included in any percentage calculation for a 
change in rates.'' Id. at 8. The Postal Service states that the soonest 
it would have sufficient billing determinants to include the incentives 
in a percentage calculation for a change in rates and generate rate 
adjustment authority would be an omnibus rate case in 2025. Id. at 9.
    The Postal Service contends that 39 CFR 3030.221, which requires 
the Postal Service to raise rates for non-compensatory products in 
compensatory classes by at least 2 percentage points above the average 
for that class, does not apply in this proceeding because the Postal 
Service only seeks to lower prices. Id. at 12. The Postal Service also 
contends that applying 39 CFR 3030.221 to rate cases in which the 
Postal Service seeks to lower rates conflicts with 39 CFR 3030.122(i), 
which it asserts ``expressly contemplates and permits the Postal 
Service to bring rate cases in which it only lowers prices . . . .'' 
Id. at 13.

III. Initial Administrative Actions

    Pursuant to 39 CFR 3030.124(a), the Commission establishes Docket 
No. R2023-3 to consider the planned Market Dominant price change 
creating two incentives as well as the related classification changes 
identified in the Notice. The Commission invites comments from 
interested persons on whether the Postal Service's planned price 
adjustments are consistent with applicable statutory and regulatory 
requirements. 39 CFR 3030.125. The applicable statutory and regulatory 
requirements the Commission considers in its review are the 
requirements of 39 CFR part 3030, Commission directives and orders, and 
39 U.S.C. 3626, 3627, and 3629. 39 CFR 3030.126(b). Comments are due no 
later than September 11, 2023. 39 CFR 3030.124(f).
    The Postal Service's filing is available for review on the 
Commission's website (http://www.prc.gov). Comments and other material 
filed in this proceeding will be available for review on the 
Commission's website unless the information contained therein is 
subject to an application for non-public treatment. The Commission's 
rules on non-public materials (including access to documents filed 
under seal) appear in 39 CFR part 3011.
    Pursuant to 39 U.S.C. 505, the Commission appoints John Avila to 
represent the interests of the general public (Public Representative) 
in this proceeding.

IV. Ordering Paragraphs

    It is ordered:
    1. The Commission establishes Docket No. R2023-3 to consider the 
planned Market Dominant price change creating two incentives, as well 
as the related classification changes, identified in the Postal 
Service's August 11, 2023 Notice.
    2. Comments on the planned price adjustments and related 
classification changes are due no later than September 11, 2023.
    3. Pursuant to 39 U.S.C. 505, John Avila is appointed to serve as 
an officer of the Commission to represent the interests of the general 
public (Public Representative) in this proceeding.
    4. The Commission directs the Secretary of the Commission to 
arrange for prompt publication of this notice in the Federal Register.

    By the Commission.
Mallory Richards,
Attorney-Adviser.
[FR Doc. 2023-17874 Filed 8-18-23; 8:45 am]
BILLING CODE 7710-FW-P