[Federal Register Volume 87, Number 98 (Friday, May 20, 2022)]
[Notices]
[Pages 31007-31009]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-10899]


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POSTAL REGULATORY COMMISSION

[Docket No. MC2022-60; Order No. 6174]


Mail Classification Schedule

AGENCY: Postal Regulatory Commission.

ACTION: Notice.

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SUMMARY: The Commission is initiating a filing requesting an 
examination of the potential need to make modifications to the Mail 
Classification Schedule. This notice informs the public of the filing, 
invites public comment, and takes other administrative steps.

DATES: Comments are due: June 30, 2022.

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. Background
III. Notice of Commission Action
IV. Ordering Paragraphs

I. Introduction

    The Postal Regulatory Commission (Commission) initiates the instant 
docket to examine the potential need to make a modification to the Mail 
Classification Schedule (MCS) in order to fulfill the Commission's 
responsibilities under the Postal Accountability and Enhancement Act 
(PAEA), Public Law 109-435, 120 Stat. 3198 (2006), the Postal Service 
Reform Act of 2022, Public Law 117-89, 136 Stat. 1127 (2022), and 
pursuant to 39 CFR 3040 subpart D.\1\ Specifically, the Commission 
seeks information on the Postal Service's recent pilot program in which 
it added to the accepted payment methods, at specifically-identified 
Post Offices, in order to allow postal retail customers to exchange 
payroll and business checks for stored value Gift Cards (Pilot 
Program). The Commission seeks the information to determine whether the 
Pilot Program has changed the nature of the Competitive product at 
issue (Special Services--Greeting Cards and Stationery) to the degree 
that the Gift Cards price category (or an undefined sub-component) may 
be categorized as a non-postal product.\2\ A finding that the price 
category, product, or sub-component is a non-postal product would 
require its termination.\3\
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    \1\ 39 CFR 3040 subpart D contains multiple requirements for 
proposals of the Commission to modify the Competitive product list, 
including an indication of whether a proposal would add, move, or 
remove a product, as well as providing justification supporting the 
proposal. In this instance, it is not appropriate to include this 
information, as the proposal is a vehicle to receive information to 
make a determination of whether a concerted proposed action is 
required.
    \2\ As discussed further below, the Commission, in approving the 
Gift Cards price category within the Greeting Cards and Stationery 
product, determined that it was appropriately a postal product (as 
opposed to a non-postal product).
    \3\ 39 U.S.C. 404(e) details the statutory authority for 
terminating non-postal products, and the statutory authority is 
noted in multiple precedents, including a 2010 ruling in the United 
States Court of Appeals for the District of Columbia Circuit, which 
noted that ``Congress[. . .] provide[d] that the Postal Regulatory 
Commission was to conduct a review of `each nonpostal service 
offered by the Postal Service' . . . to determine whether it should 
be terminated. . . .'' USPS v. Postal Regul. Comm'n, 599 F.3d 705, 
707 (D.C. Cir. 2010). Additionally, the United States Postal Service 
Office of Inspector General published a management advisory report 
in 2012 that stated that the PAEA ``repealed the Postal Service's 
authority to offer `non-postal services' and prohibited offering any 
new non-postal services.'' United States Postal Service, Office of 
Inspector General, Report No. DA-MA-12-005, 21st Century Post 
Office: Non-Postal Products and Services, July 16, 2012, at 9, 
available at https://www.uspsoig.gov/sites/default/files/document-library-files/2015/DA-MA-12-005.pdf.
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II. Background

    In FY 2014, the Commission approved the Postal Service's sale of 
Gift Cards \4\ as a product that was ``likely to be mailed, similar to 
greeting cards and stationery'' and was often involved in the sale of 
other postal retail products such as greeting cards.\5\ In the Docket 
No. MC2014-26 Request, the Postal Service stated that it ``d[id] not 
intend to use th[e] filing as a step into offering banking services,'' 
and if any Postal Service proposal should ever offer banking services, 
``such proposals would be done in a separate filing.'' See Docket No. 
MC2014-26, Request, Attachment B at 3 n.2.
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    \4\ Gift Cards is a price category within the Gift Cards and 
Stationery product. The Commission and the Postal Service have both 
referred to Gift Cards as a product in multiple filings, and for the 
purposes of this inquiry, the Commission will continue to do so 
throughout this Order to avoid confusion.
    \5\ See Docket No. MC2014-26, Request of the United States 
Postal Service to Add Gift Cards as a New Price Category in the 
Greeting Cards and Stationery Product, June 9, 2014, Attachment B at 
7 (Docket No. MC2014-26 Request). See also Docket No. MC2014-26, 
Order Granting Request to Add Gift Cards to the Competitive Product 
List, August 8, 2014 (Order No. 2145).
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    Following the Postal Service's publication of the FY 2021 Annual 
Compliance Report (ACR), the Commission submitted an information 
request for the Postal Service to provide additional insight regarding 
a pilot program to allow postal retail customers to cash payroll and 
business checks in exchange for stored value Gift Cards.\6\
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    \6\ See Docket No. ACR2021, Commission Information Request No. 
1, January 7, 2022 (Docket No. ACR2021, CIR No. 1). See also Docket 
No. ACR2021, Responses of the United States Postal Service to 
Questions 1-7 of Commission Information Request No. 2, PowerPoint 
file ``CIR.2.Q.4.Pictures of Promo Items.pptx,'' February 4, 2022 
(Docket No. ACR2021, Response to CIR No. 2).

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[[Page 31008]]

    The Postal Service provided a response to Docket No. ACR2021, CIR 
No. 1 detailing that in FY 2021, the Postal Service initiated such a 
Pilot Program, stating that it was ``merely testing a new form of 
payment for an established postal product--gift cards.'' \7\
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    \7\ See Docket No. ACR2021, Responses of the United States 
Postal Service to Questions 1-2 of Commission Information Request 
No. 1, January 14, 2022, question 1.c. (Docket No. ACR2021, Response 
to CIR No. 1).
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    The Postal Service initiated the Pilot Program on September 13, 
2021, at four Post Office retail locations in response to a request 
from a stakeholder that identified the program as ``an initiative that 
could potentially be useful for a segment of consumers.'' \8\ The 
Postal Service stated that in order to gain insight into this market, 
it considered secondary research, including a 2019 survey by the 
Federal Deposit Insurance Corporation called ``How America Banks: 
Household Use of Banking and Financial Services'' as well as USPS 
Office of Inspector General reports on potential postal financial 
services. Id. question 1.b.
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    \8\ See Docket No. ACR2021, Response to CIR No. 1, questions 
1.a.-1.b. The four locations are: Baychester Post Office, 1525 E Gun 
Hill Road, Bronx, NY 10469; Bailey Crossroads Post Office, 6021 
Leesburg Pike, Falls Church, VA 22041; National Capitol (Dorothy 
Height) Post Office, 2 Massachusetts Ave. NE, Washington, DC 20002; 
and Baltimore Post Office, 900 E Fayette Street, Baltimore, MD 
21233. Id. question 1.a. Since all four locations already offered 
Gift Cards, the Postal Service asserts that minimal training was 
necessary for the 28 clerks and 8 management staff to allow for the 
additional form of payment. Id. questions 1.o.-1.p. The training was 
``[i]n partnership with a major postal union'' and ``consisted of 
content providing a background of the pilot, . . . discussions of 
check handling processes, standard work instruction for the 
transaction including Point-of-Sale workflow, and FAQs.'' Id. 
question 1.p.
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    Under the Pilot Program, the additional forms of payment accepted 
for Gift Cards at the four test sites are payroll or business checks, 
defined as a printed check with a company's name pre-printed, made 
payable to the customer, and accepted in accordance with Handbook F-
101. See Docket No. ACR2021, Response to CIR No. 1, questions 1.a.-
1.q.; see also Docket No. ACR2021, Response to CIR No. 2, question 5. 
The customer is charged a fee of $5.95 for a variable Gift Card up to 
$500 (or $5.95 per Gift Card, if the customer elects to put the value 
on multiple cards), the total amount loaded on the Gift Card(s) cannot 
exceed $500 per day per customer, and no cash is disbursed to the 
customer. As with the policy for all Gift Card purchases, once the Gift 
Card is activated it cannot be returned for a refund or credit. See 
Docket No. ACR2021, Response to CIR No. 1, questions 1.a.-1.q.
    While the Pilot Program only accepts business and payroll checks 
made payable to the customer in connection with the sale of Gift Cards 
at the four test sites, the Postal Service noted that for many years it 
has cashed or redeemed salary checks or Money Orders in a limited 
number of circumstances. See Docket No. ACR2021, Response to CIR No. 2, 
question 5. Specifically, the Postal Service has been issuing Money 
Orders since the Civil War, and for the past 50 years, the Postal 
Service has been cashing Postal Service-issued salary checks and Money 
Orders at no additional charge. Id. The Postal Service also noted that 
in the last 10 years, and ``in cooperation with the United States 
Treasury, the Postal Service has cashed Treasury checks for a nominal 
fee.'' Id. It further noted that ``[c]ommerical checks have long been 
accepted as payment for purchase of postage.'' Id.
    The Postal Service stated in Docket No. ACR2021, Response to CIR 
No. 2 that ``no new products or services are involved,'' but the market 
research referred to in Docket No. ACR2021, Response to CIR No. 1 
suggested that the new payment option is targeted specifically at a 
market looking for financial services. Compare Docket No. ACR2021, 
Response to CIR No. 2, question 6, with Docket No. ACR2021, Response to 
CIR No. 1, question 1.b. The Postal Service's own promotional materials 
market the product using the language, ``Need to `cash' a check?'' \9\ 
The Postal Service's payment change coupled with changes in the 
marketing and planned usage of the product have the potential to change 
the nature of the product, thereby necessitating the examination of the 
impact of the Pilot Program to the underlying Gift Cards product.
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    \9\ See Docket No. ACR2021, Response to CIR No. 2, PowerPoint 
file ``CIR.2.Q.4.Pictures of Promo Items.pptx.''
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    Additionally, although the Postal Service asserts that the Gift 
Cards product was already approved by the Commission, the approval of 
the product was based on the premise that the availability of Gift 
Cards ``stimulates demand for postal services'' and ``enhances the use 
of the mail.'' See Order No. 2145 at 4. The Postal Service's evidence 
in Docket No. MC2014-26 demonstrated at the time that the majority of 
Gift Cards sales not only involved the purchase of other postal items 
but were more likely to be mailed than Gift Cards purchased elsewhere. 
Id. at 5-6. From September 13, 2021, to January 12, 2022, a total of 
six Gift Cards were purchased under the Pilot Program (using the 
business or payroll check payment method) generating a total fee 
revenue of $35.70. See Docket No. ACR2021, Response to CIR No. 1, 
questions 1.d., 1.g., 1.h. Additionally, the Postal Service provided 
the total fee revenue for the Gift Cards associated with business 
checks in Quarter 2 of $5.95, representing one single transaction.\10\ 
The Commission notes that under the current Pilot Program, none of the 
transactions have involved the sale of other postal products. 
Furthermore, the Postal Service does not track whether Gift Cards are 
mailed (regardless of the method of purchase) and has not made an 
attempt as of yet to determine via surveys or other tools whether 
customers are likely to mail the Gift Cards purchased under the Pilot 
Program. See Docket No. ACR2021, Response to CIR No. 2, questions 2-3.
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    \10\ See Docket No. ACR2021, Second Response of the United 
States Postal Service to Commission Requests for Additional 
Information in the FY 2021 Annual Compliance Determination, May 10, 
2022, at 11.
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    In its FY 2021 Annual Compliance Determination (ACD), the 
Commission directed the Postal Service to report quarterly information 
on the Pilot Program, including updates on volume and revenue, as well 
as future plans for the Pilot Program as long as it remains in 
effect.\11\ In addition, the Commission directed the Postal Service to 
file a notice of termination with the Commission when the Pilot Program 
ends, including notification no later than 14 days after the 
publication of the ACD of whether the Postal Service is continuing the 
program past its initially anticipated end date of March 2022. Id.
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    \11\ Docket No. ACR2021, Annual Compliance Determination, March 
29, 2022, at 103.
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    The Postal Service provided a response to the Pilot Program ACD 
directive, stating that ``the Postal Service has continued the pilot 
program,'' and ``[n]o final determinations have been reached with 
regard to ending the pilot, or with regard to any other potential steps 
that might be taken to modify the pilot.'' \12\ The Postal Service 
further stated that it ``remains of the view that the pilot program is 
an appropriate and limited test of an alternative payment method for 
the established gift card product, which does not implicate the current 
Mail Classification Schedule, and that

[[Page 31009]]

no further regulatory action is warranted at this time.'' Id.
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    \12\ Docket No. ACR2021, First Response of the United States 
Postal Service to Commission Requests for Additional Information in 
the FY 2021 Annual Compliance Determination, April 12, 2022, at 2.
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    The Commission noted in the ACD that should the Pilot Program 
remain in effect after March 2022, the Commission would initiate this 
Mail Classification proceeding pursuant to 39 CFR 3040 to explore and 
review the issues discussed in the ACD. During this Mail Classification 
proceeding, the Commission will conduct information gathering to 
explore and review the product at issue and may determine in the course 
of this proceeding whether the product at issue, or a defined sub-unit 
of that product, must be categorized as non-postal and therefore 
terminate.

III. Notice of Commission Action

    Pursuant to 39 CFR 3040.173, the Commission establishes Docket No. 
MC2022-60 to gather information to determine appropriate classification 
action and invites comments on whether the Postal Service's Pilot 
Program comports with 39 CFR 3035, 39 CFR 3040, 39 CFR 3045, 39 U.S.C. 
404, 39 U.S.C. 3632, 39 U.S.C. 3633, and 39 U.S.C. 3641. Comments are 
due no later than June 30, 2022. The filing can be accessed via the 
Commission's website (https://www.prc.gov).
    The Commission appoints Kenneth E. Richardson to represent the 
interests of the general public (Public Representative) in this docket.

IV. Ordering Paragraphs

    It is ordered:
    1. The Commission establishes Docket No. MC2022-60 to consider 
matters raised by this Notice.
    2. Comments are due no later than June 30, 2022.
    3. Pursuant to 39 U.S.C. 505, the Commission appoints Kenneth E. 
Richardson to serve as an officer of the Commission (Public 
Representative) to represent the interests of the general public 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.
Erica A. Barker,
Secretary.
[FR Doc. 2022-10899 Filed 5-19-22; 8:45 am]
BILLING CODE 7710-FW-P