[Federal Register Volume 89, Number 189 (Monday, September 30, 2024)]
[Proposed Rules]
[Pages 79489-79491]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-22125]


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POSTAL REGULATORY COMMISSION

39 CFR Part 3030

[Docket No. RM2020-5; Order No. 7559]
RIN 3211-AA27


Market Dominant Postal Products

AGENCY: Postal Regulatory Commission.

ACTION: Proposed rule.

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SUMMARY: The Commission seeks comment on amendments to its rules 
concerning rate incentives for Market Dominant products. The Commission 
proposes to revise the criteria that a rate incentive must satisfy to 
be included in the percentage change in rates calculation. The 
Commission also proposes to revise the definition of ``rate of general 
applicability'' for Market Dominant rate adjustment proceedings. 
Further, the Commission proposes to modify associated filing and 
reporting requirements.

DATES: Comments are due: October 30, 2024. Reply comments are due: 
November 14, 2024.

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. The Rule Summary can be found on the Commission's Rule 
Summary Page at https://www.prc.gov/rule-summary-page.

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

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background
II. Basis for Proposed Rule Change
III. Proposed Rule

I. Background

    In its general Market Dominant rate adjustment filings, the Postal 
Service routinely proposes to offer rate incentives in the form of 
promotions that reduce rates by providing discounts, rebates, or 
credits to participating mailers of certain types of mailpieces. 
Typically, such promotions are offered for several months during a 
particular calendar year for certain mailpieces in the First-Class Mail 
and USPS Marketing Mail classes. If the Commission approves, then the 
promotion may be offered again, with or without modifications, in the 
next calendar year.
    Each rate incentive offered by the Postal Service is either a rate 
of general applicability or a rate not of general applicability. A rate 
incentive of general applicability may be eligible for inclusion in the 
percentage change in rates calculation (provided that it satisfies all 
the applicable criteria under the Commission's rules), which will allow 
for the Postal Service to generate price cap authority for the 
applicable class of mail. By contrast, a rate incentive not of general 
applicability has been ineligible for inclusion in the percentage 
change in rates calculation.
    The Commission previously adopted regulations concerning rate 
incentives for Market Dominant products.\1\ However, in connection with 
an appeal, the Commission stated that it would reconsider Order No. 
5510 and that it ``does not intend to enforce Order No. 5510 during the 
reconsideration period.'' \2\ In Order No. 6325, the Commission 
proposed modifying its rules and sought comments on its proposal.\3\ 
Subsequently, the Commission sought supplemental comments.\4\ Having 
considered the comments that it received, the Commission proposes 
further changes to its rules.
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    \1\ Docket No. RM2020-5, Order Adopting Final Rules Regarding 
Rate Incentives for Market Dominant Products, May 15, 2020 (Order 
No. 5510).
    \2\ Docket No. RM2020-5, Notice of Intent to Reconsider, August 
26, 2020, at 2 (Order No. 5655); see U.S. Postal Serv. v. Postal 
Reg. Comm'n, Joint Motion for Voluntary Dismissal and Vacatur, No. 
20-1208 (DC Cir. Sept. 11, 2020).
    \3\ Docket No. RM2020-5, Notice of Proposed Rulemaking to Amend 
Rules Regarding Rate Incentives for Market Dominant Products, 
November 14, 2022 (Order No. 6325).
    \4\ Docket No. RM2020-5, Supplemental Notice of Proposed 
Rulemaking to Amend Rules Regarding Rate Incentives for Market 
Dominant Products, November 17, 2023 (Order No. 6801).
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II. Basis for Proposed Rule Change

    The Commission proposes to modify its rules by revising the 
criteria that a rate incentive must satisfy to be included in the 
percentage change in rates calculation; revising the definition of 
``rate of general applicability''; and revising filing and reporting 
requirements.
    First, the Commission proposes to create a mechanism allowing 
certain rate incentives that are not rates of general applicability to 
be included in the percentage change in rates calculation. Second, the 
Commission proposes to remove the currently-not-enforced requirement 
that a rate incentive must be made available to all mailers equally on 
the same terms and conditions to be included in the percentage change 
in rates calculation. Third, the Commission proposes to revise the 
definition of ``rate of general applicability'' at Sec.  3030.101(j). 
This revision would clarify a potential ambiguity. The Commission also 
continues to propose to revise Sec.  3030.101(j) as initially proposed 
in Order No. 6325 to clarify that to qualify as a rate of general 
applicability, a rate incentive cannot have eligibility criteria based 
on historical mail volumes or prior participation in a rate incentive 
or promotion. Fourth, the Commission proposes to revise filing 
requirements to ensure that the Postal Service provides sufficient 
information at the outset of a Market Dominant rate adjustment 
proceeding. Fifth, the Commission proposes to add a provision 
authorizing it to require the submission of information to ensure that 
rate incentives included in the percentage change in rates calculation 
comply with applicable requirements.
    The proposed mechanism allowing certain rate incentives that are 
not rates of general applicability to be included in the percentage 
change in rates calculation would allow a rate incentive for which a 
mailer's eligibility depends on the mailer increasing its volumes of a 
product (or multiple products) to be included in the percentage change 
in

[[Page 79490]]

rates calculation. The Commission proposes this mechanism to encourage 
the Postal Service to develop and offer such rate incentives, with the 
goal of combatting volume decline.
    The Commission also proposes to remove the currently-not-enforced 
requirement that a rate incentive must be made available to all mailers 
equally on the same terms and conditions to be included in the 
percentage change in rates calculation. The Commission proposes to 
remove this requirement because fairness concerns can be addressed 
through other means and because this requirement has the potential to 
cause confusion.
    The Commission proposes revising the definition of ``rate of 
general applicability'' in Sec.  3030.101(j) by adding the word 
``only'' to the sentence addressing rates benefiting a single mailer so 
that the sentence reads as follows: ``A rate is not a rate of general 
applicability if it benefits only a single mailer.'' This change 
removes a potential ambiguity in the sentence and ensures that the 
sentence reflects the Commission's intent in adding the sentence to the 
definition.
    The Commission also continues to propose the changes to Sec.  
3030.101(j) that it proposed in Order No. 6325. See Order No. 6325 at 
26-34. These proposed changes to the definition of ``rate of general 
applicability'' in Sec.  3030.101(j) are designed to clarify what rate 
incentives may qualify for inclusion in the percentage change in rates 
calculation as rates of general applicability. Under the Commission's 
existing rules ``[a] rate is not a rate of general applicability if 
eligibility for the rate is dependent on factors other than the 
characteristics of the mail to which the rate applies[.]'' 39 CFR 
3030.101(j). As initially proposed in Order No. 6325, the proposed 
changes add an additional sentence to clarify that a rate incentive is 
not a rate of general applicability if eligibility for the rate is 
dependent in whole or in part on the volume of mail sent by a mailer in 
a past year or years or on the participation by a mailer in a rate 
incentive or promotion in a past year or years.
    The Commission proposes to modify its rules for the technical 
documentation required to support proposed rate incentives. These 
proposed changes would implement changes conforming to the Commission's 
proposed changes to its rules for including rate incentives in the 
percentage change in rates calculation. Thus, under the proposed 
revision, the Commission's rules would require a statement describing 
the purpose of the rate incentive. Similarly, and to conform with the 
proposed change to the definition of ``rate of general applicability,'' 
under the proposed revision, the rule would require a statement 
affirming that a rate incentive proposed to be included in the 
percentage change in rate calculation will not benefit only a single 
mailer.
    In addition, the Commission proposes requiring each request to 
include a rate incentive in the percentage change in rates calculation 
to include an estimate of the effect of the rate incentive on mailers 
in the affected class that do not participate in the rate incentive, as 
well as all information and calculations relied upon to develop such 
estimate. The Commission proposes this change for transparency. This 
proposed change would ensure that the public is provided notice of the 
estimated effect of the proposed rate incentive on non-participating 
mailers in the affected class. The Commission requires the information 
and calculations relied upon to develop the estimate to ensure that it 
understands the basis for the estimate and to provide transparency to 
the public and affected stakeholders.
    The Commission also proposes adding a provision authorizing it to 
require the submission of information to ensure that rate incentives 
included in the percentage change in rates calculation comply with 
applicable requirements. In the Commission's experience, reporting 
requirements are important to ensure that the Commission understands 
how rate incentives operate in practice. The Commission's revised 
proposal codifies the Commission's authority to impose such reporting 
requirements.

III. Proposed Rule

List of Subjects

39 CFR Part 3030

    Administrative practice and procedure, Fees, Postal Service.

    For the reasons stated in the preamble, the Commission proposes to 
amend 39 CFR part 3030 as follows:

PART 3030--REGULATION OF RATES FOR MARKET DOMINANT PRODUCTS

0
1. The authority citation for part 3030 continues to read as follows:

    Authority:  39 U.S.C. 503; 3622.

0
2. Amend Sec.  3030.101 by revising paragraph (j) to read as follows:


Sec.  3030.101  Definitions.

* * * * *
    (j) Rate of general applicability means a rate applicable to all 
mail meeting standards established by the Mail Classification Schedule, 
the Domestic Mail Manual, and the International Mail Manual. A rate is 
not a rate of general applicability if eligibility for the rate is 
dependent on factors other than the characteristics of the mail to 
which the rate applies. A rate incentive is not a rate of general 
applicability if eligibility for the rate is wholly or partially 
dependent on the volume of mail sent by a mailer in a past year or 
years or on the participation by a mailer in a rate incentive or 
promotion in a past year or years. A rate is not a rate of general 
applicability if it benefits only a single mailer. A rate that is only 
available upon the written agreement of both the Postal Service and a 
mailer, a group of mailers, or a foreign postal operator is not a rate 
of general applicability.
* * * * *
0
3. Amend Sec.  3030.123 by revising paragraph (j) to read as follows:


Sec.  3030.123  Supporting technical documentation.

* * * * *
    (j) Whenever the Postal Service includes a rate incentive with its 
planned rate adjustment, it must include with its filing:
    (1) Whether the rate incentive is being treated under Sec.  
3030.128(f)(2) or under Sec.  3030.128(f)(1) and (g);
    (2) If the Postal Service seeks to include the rate incentive in 
the calculation of the percentage change in rates under Sec.  
3030.128(f)(2):
    (i) The terms and conditions of the rate incentive;
    (ii) The factors that determine eligibility for the rate incentive;
    (iii) A statement that affirms that the rate incentive will not 
benefit only a single mailer;
    (iv) A statement that affirms that the rate incentive is not only 
available upon the written agreement of both the Postal Service and a 
mailer, or group of mailers, or a foreign postal operator;
    (v) A statement describing the purpose of the rate incentive; and
    (vi) An estimate of the effect of the rate incentive on mailers in 
the affected class that do not participate in the rate incentive and 
all information and calculations relied upon to develop such estimate.
* * * * *
0
4. Amend Sec.  3030.128 by:
0
a. Revising paragraph (f)(2);
0
b. Adding paragraph (f)(3); and
0
c. Revising paragraph (g)(1).
    The addition and revisions read as follows:


Sec.  3030.128  Calculation of percentage change in rates.

* * * * *
    (f) * * *

[[Page 79491]]

    (2) A rate incentive may be included in a percentage change in 
rates calculation if it meets the following criteria:
    (i) The rate incentive is in the form of a discount or can be 
easily translated into a discount;
    (ii) Sufficient billing determinants are available for the rate 
incentive to be included in the percentage change in rate calculation 
for the class, which may be adjusted based on known mail 
characteristics or historical volume data (as opposed to forecasts of 
mailer behavior); and
    (iii) The rate incentive is either:
    (A) A rate of general applicability; or
    (B) A rate not of general applicability that satisfies the 
following requirements:
    (1) The rate incentive is not only available upon the written 
agreement of both the Postal Service and a mailer, or group of mailers, 
or a foreign postal operator;
    (2) The rate incentive is applicable to all mail meeting standards 
established by the Mail Classification Schedule, the Domestic Mail 
Manual, and the International Mail Manual;
    (3) The rate incentive does not benefit only a single mailer;
    (4) The rate incentive is designed to increase volume; and
    (5) A mailer's eligibility for the rate incentive depends on the 
mailer's sending, in a specified period of time (which must not be less 
than three months) a volume of mail of specified products that exceeds 
a specified threshold volume of mail, provided that such threshold 
volume of mail is not less than the volume of the specified products 
that the mailer sent in the specified period of time in the immediately 
preceding fiscal year or calendar year.
    (3) The Commission may require submission of such information as it 
deems necessary to ensure that rate incentives included in the 
percentage change in rates calculation comply with the requirements of 
this section.
    (g)(1) Mail volumes sent at rates under a negotiated service 
agreement or a rate incentive that is not a rate of general 
applicability are to be included in the calculation of the percentage 
change in rates under this section as though they paid the appropriate 
rates of general applicability, except as provided in paragraph (f)(2) 
of this section. Where it is impractical to identify the rates of 
general applicability (e.g., because unique rate categories are created 
for a mailer), the volumes associated with the mail sent under the 
terms of the negotiated service agreement or the rate incentive that is 
not a rate of general applicability shall be excluded from the 
calculation of the percentage change in rates.
* * * * *

    By the Commission.
Erica A. Barker,
Secretary.
[FR Doc. 2024-22125 Filed 9-27-24; 8:45 am]
BILLING CODE 7710-FW-P