Federal Register / Vol. 74, No. 111 / Thursday, June 11, 2009 / Notices 27845 

1United States Postal Service Notice of MarketDominant Price Adjustment, May 1, 2009 (Notice). 

2PRC Order No. 209, Notice and Order 

Concerning Standard Mail Volume Incentive 

Pricing Program, May 4, 2009; located at 74 FR 

21837 (May 11, 2009). 

3Much of the justification for the proposal was 

submitted in response to Chairman’s Information 

Request No. 1, May 8, 2009 (CHIR No. 1). Any such 

future proposals must be accompanied by the 

requisite financial (cost, revenue, and volume) data 

underlying them. 

4The threshold is calculated by comparing 

average volumes over distinct periods to determine 

a trend in the mailer’s volume. That trend is 

applied to the average expected mail volume over 

the Summer Sale program months, and any volume 

above the trend adjusted average is eligible for the 

discount. 

5To quantify this possibility, the Postal Service 

will measure each mailer’s October 2009 volumes 

using a trend analysis based on the mailer’s prior 

years’ volumes for that month. Id. at 4. 

6The pages to the Postal Service’s response to 

CHIR No. 1 are not numbered. For the convenience 

of the parties, the Commission has numbered the 

pages for purposes of citation. If the normal citation 

practice was followed (citing just the relevant 

question being answered), parties may have 

difficulty in finding the specific reference as some 

of the responses are lengthy. 

3. Pursuant to 39 U.S.C. 505, the 

Commission appoints Kenneth E. 

Richardson 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. 

Judith M. Grady, 

Acting Secretary. 

[FR Doc. E9–13744 Filed 6–10–09; 8:45 am] 

BILLING CODE 7710–FW–P 

POSTAL REGULATORY COMMISSION 

[Docket No. R2009–3; Order No. 219] 

Special Summer Postal Rate Program 

AGENCY: Postal Regulatory Commission. 

ACTION: Notice. 

SUMMARY: The Postal Service has 

prepared, and the Commission has 

approved, a special program offering 

reduced rates for Standard mailers this 

summer. This document addresses 

related issues and provides pertinent 

details. 

DATES: Effective June 11, 2009. 

FOR FURTHER INFORMATION CONTACT: 

Stephen L. Sharfman, General Counsel, 

202–789–6820 and 

stephen.sharfman@prc.gov. 

SUPPLEMENTARY INFORMATION: 

I. Introduction 

On May 1, 2009, the Postal Service 

filed with the Commission a notice 

announcing its intention to adjust prices 

for Standard Mail letters and flats 

pursuant to 39 U.S.C. 3622 and 39 CFR 

part 3010.1 The proposed adjustment is 

in the form of a ‘‘Standard Mail Volume 

Incentive Pricing Program’’ (Summer 

Sale program) with a planned 

implementation date of July 1, 2009 and 

a planned expiration date of September 

30, 2009. The Summer Sale program 

represents a reasoned approach by the 

Postal Service to exercise its flexibility 

in market dominant pricing under the 

Postal Accountability and Enhancement 

Act (PAEA), Public Law 109–435, 120 

Stat. 3218 (2006). 

In Order No. 209, the Commission 

established Docket No. R2009–3 to 

consider matters raised by the Postal 

Service’s filing, appoint public 

representatives, and afford interested 

persons an opportunity to comment.2 By 

this order, the Commission approves the 

proposed Standard Mail Volume 

Incentive Pricing Program. 

The Commission finds the proposal to 

be a judicious exercise of the Postal 

Service’s pricing flexibility under the 

PAEA. The Postal Service is to be 

commended for its response to current 

market conditions. Much can be learned 

from what, in essence, is a short-term 

pricing experiment. However, the 

program is not without risks. Thus, 

development and use of appropriate 

metrics in evaluating the program are 

critical in determining whether the 

program is successful, and also for 

assessing the long-term implications of 

such an approach. 

II. Standard Mail Volume Incentive 

Pricing Program 

A. Postal Service Filing 

The Postal Service notes that the 

Summer Sale program is necessary to 

counteract the dramatic volume 

reduction due to the economy, support 

a struggling mailing industry, and 

increase volume during a typically low 

volume period in which there is excess 

capacity; and secondarily to improve 

customer relations, to fine tune future 

programs, to gather feedback from 

customers, and to gather data which 

may improve postal data systems. 

Notice at 2–3. The Postal Service’s 

Notice provides a high level overview of 

the Summer Sale program, identifying 

its salient features as follows.3

Under the proposed Summer Sale 

program, eligible mailers will receive a 

30 percent rebate of postage paid on the 

volume of Standard Mail letters and 

flats mailed from July 1, 2009 to 

September 30, 2009 that exceeds mailerspecific thresholds.4 The rebate may be 

reduced for volumes shifted from 

October 2009 into the sales period.5

Notice at 3–4. 

Eligibility for the Summer Sale 

program is limited to mailers who are 

permit holders who have a 

demonstrable volume of at least 1 

million Standard Mail letters and flats 

between October 1, 2007 and March 31, 

2008 for one or more permit imprint 

advance deposit accounts, pre-canceled 

stamp permits, or postage meter 

permits. Id. at 4. 

Mail service providers are excluded 

from the program to help ensure that the 

Summer Sale program generates new 

volumes, rather than shifts existing 

volumes. However, individual mailers 

who meet the above criteria but use a 

mail service provider may participate if 

they meet certain conditions. Id. at 4– 

5. 

B. Chairman’s Information Request No. 

1 (CHIR No. 1) 

CHIR No. 1 was designed to clarify 

the Postal Service’s proposal. The 

responses substantially expand on the 

Postal Service initial filing and provide 

essential details regarding the scope of 

the program and its underlying basis. 

CHIR No. 1 sought information on 

metrics to measure the success of the 

Summer Sale program, including 

complete cost analyses and volume 

migration from other classes or time 

periods, the definition of short-run 

excess capacity, eligibility for the 

program, contribution level for Standard 

Mail flats, and documentation of cost 

and revenue estimates. See CHIR No. 1. 

The Commission expects the Postal 

Service to provide this level of detail in 

future initial filings. 

The Postal Service defines the 

primary measure of success for the 

Summer Sale program as ‘‘incremental 

revenue and volume growth over the 

threshold for the universe of eligible 

participants[.]’’ See Response of the 

United States Postal Service to 

Chairman’s Information Request No. 1, 

May 15, 2009, at 2 (Response to CHIR 

No. 1).6 The Postal Service also 

anticipates monitoring customer 

feedback and the efficacy and efficiency 

of its administration of the program. Id. 

The Postal Service does not believe 

the additional incentive of the Summer 

Sale program will induce any First-Class 

advertising mail to migrate to the 

program, due to different demand 

characteristics and the significant gap in 

price which already exists. Id. at 4. 

Further, the Postal Service does not 

believe that mailers have enough lead 

time to shift volume from June or earlier 

into the program. Id. In addition, the 

Postal Service cites precautions it has 


jlentini on PROD1PC65 with NOTICES
27846 Federal Register / Vol. 74, No. 111 / Thursday, June 11, 2009 / Notices 

7The Postal Service states that secular volume 

changes reflect long-run trends and are considered 

permanent, whereas cyclical variations are caused 

by general economic conditions and are temporary. 

Seasonal volume fluctuations occur throughout the 

year and reflect seasonal variations in mailing 

patterns. Id. 

8Chairman’s Information Request No. 2, May 27, 

2009. 

9Comments of Mail Order Association of America 

to Postal Regulatory Commission Notice and Order 

Concerning Standard Mail Volume Incentive 

Pricing Program, May 12, 2009 (MOAA Comments); 

Comments of the Association for Postal Commerce 

in Response to Order No. 209 Concerning Standard 

Mail Volume Incentive Pricing Program, May 19, 

2009 (PostCom Comments); Comments of Parcel 

Shippers Association to Postal Regulatory 

Commission Notice and Order Concerning Standard 

Mail Volume Incentive Pricing Program (PSA 

Comments); Comments of the American Catalog 

Mailers Association on the Standard Mail Volume 

Incentive Program (Summer Sale) (ACMA 

Comments); Comments of Quad/Graphics, Inc. in 

Response to Order No. 209 (Quad/Graphics 

Comments); Comments of Bank of America 

Corporation on the United States Postal Service 

Proposal for a Summer Sale Program (BOA 

Comments); Comments of Pitney Bowes Inc. on the 

United States Postal Service Proposal for a Summer 

Sale Program (Pitney Bowes Comments); Comments 

of the Direct Marketing Association on the United 

States Postal Service ‘‘Summer Sale’’ (DMA 

Comments); Valpak Direct Marketing Systems, Inc. 

and Valpak Dealers’ Association, Inc. Comments 

Regarding Standard Mail Volume Incentive Pricing 

Program (Valpak Comments); and Comments of the 

Public Representatives (Public Representatives 

Comments); all filed on May 21, 2009; Comments 

of Discover Financial Services, May 22, 2009 (DFS 

Comments); and Comments of 7R Communications, 

June 2, 2009 (7R Comments). 

10Comments of National Automotive Marketing, 

May 19, 2009; Comments of Planner Pads Co., May 

21, 2009. 

11Comments of National Newspaper Association 

on Volume Incentive Program Known as the 

‘‘Summer Sale’’, May 21, 2009 (NNA Comments). 

taken, including mailer certification of 

volumes, to mitigate any attempt by 

mailers to shift volume among permits. 

Id. at 4–5. 

The Postal Service’s initial Notice 

references excess capacity only as it 

relates to delivery. Notice at 3. It makes 

no attempt to define or otherwise 

elaborate on the concept. In response to 

CHIR No. 1, the Postal Service indicates 

that excess capacity exists when 

‘‘capacity to handle volume is larger 

than the volume presented to it.’’ 

Response to CHIR No. 1 at 6. It also 

discusses the secular, cyclical, and 

seasonal effects on mail volumes that, in 

turn, affect capacity. Id.7

To support its claim of excess 

capacity, the Postal Service appears to 

rely principally on a cyclical decline in 

volume due to the general economic 

conditions and seasonal variation 

associated with the fourth quarter. Id. at 

6–8, 12. The Postal Service claims it is 

difficult, if not impossible, for it to 

reduce capacity at the same rate as 

volume has fallen when comparing year 

over year declines. Id. at 12–15. In 

addition, the Postal Service indicates 

that its inability to rapidly adjust work 

hours and building capacity contributes 

to seasonal excess capacity. Id. at 7–9. 

The Postal Service asserts that shortrun attributable costs for incremental 

pieces, during a period of excess 

capacity, are lower than the long-run 

attributable costs. See id. at 16–17. The 

Postal Service provides estimates of the 

attributable costs by product by 

breaking out each of the cost segments 

and examining where volume can be 

absorbed without incurring additional 

incremental cost. Id. at 17–24. As a 

result of this analysis, the Postal Service 

estimates that cost coverage for the 

incremental volume in each product 

included in the Summer Sale program 

will exceed 100 percent. Id. at 26. 

The Postal Service identifies the 

administrative costs of the Summer Sale 

program as $977 thousand. Id. at 32. 

The Postal Service estimates that it may 

require up to six full-time employees for 

four months at $300 thousand, up to 10 

part-time employees for four months at 

$250 thousand, and up to four contract 

analysts for up to four months at $400 

thousand. Id. The Postal Service assigns 

$7 thousand to Web site development 

and $20 thousand to production of 

invitation letters to eligible customers. 

Id. 

The Postal Service justifies the 

eligibility threshold principally on the 

grounds that the administrative costs 

(approximately $20 million) of 

including Standard Mail customers who 

mailed less than 1 million pieces during 

the relevant period would exceed the 

net revenues (approximately $17.2 

million) attributed to such sales. Id. at 

27–28. In addition, it estimates that the 

average small business would only save 

42 dollars, which probably would not be 

worth the business’s time and trouble. 

Id. at 28–29. 

The Postal Service reiterates that the 

rationale for not including mail service 

providers (MSP) in the Summer Sale 

program is to protect it from MSPs 

shifting volumes to optimize the 

discount. Id. at 29. The Postal Service 

indicates that First-Class advertising 

mail was not considered for the program 

since it could not reasonably segregate 

First-Class advertising mail from other 

First-Class Mail. Id. 

Finally, the Postal Service also 

believes including Standard Mail flats 

in the Summer Sale program, despite its 

low cost coverage, is justified since the 

program may help offset challenges to 

postal customers hit hardest by the 

challenging economic climate, and 

because the incremental volume will 

cover its costs. Id. at 30. 

C. Chairman’s Information Request No. 

2 (CHIR No. 2) 

CHIR No. 2 8 was designed to gather 

information on the Postal Service’s 

initial estimates for the program, and to 

assist the Commission in determining 

measurement of the success of the 

program compared to those estimates. 

CHIR No. 2 was also designed to bring 

to light the Postal Service methodology 

for determining the volumes, revenues, 

and costs caused by the Summer Sale 

program, so that such measurements are 

straightforward at the completion of the 

program. 

The Postal Service states that it 

developed the incremental volume 

estimates for the Summer Sale program 

by taking into account the demand 

models provided to the Commission on 

January 20, 2009, consulting Postal 

Service managers and executives, and 

corresponding with mailers. See 

Response of United States Postal Service 

to Chairman’s Information Request No. 

2, June 2, 2009, at Q.1 (Response to 

CHIR No. 2). The Postal Service states 

that it did not derive separate volume 

estimates for each Standard Mail 

product. Id. 

The Postal Service plans to measure 

incremental volumes caused by the 

Summer Sale program based on the 

same trend calculations used to 

establish mailer threshold for program 

eligibility. Id. at Q.2. The Postal Service 

plans to measure actual short-run 

attributable costs resulting from the 

Summer Sale program volume by 

applying the same method it used to 

estimate those costs in response to CHIR 

No. 1. Id. To ensure the application of 

those costs is appropriate, the Postal 

Service will revisit the assumptions it 

made regarding excess capacity in its 

response to CHIR No. 1. Id. 

III. Comments 

The Postal Service’s proposal has 

generated significant interest and 

support from the mailing community. 

The Commission received 23 formal 

comments: 20 support the Summer Sale 

program,9 2 request inclusion in it,10

while 1 does not oppose it.11 The 

Summer Sale program enjoys broad 

support and the majority of the 

commenters, citing the recession and its 

effect on the Postal Service and mailers, 

urge the Commission to approve it 

expeditiously. See, e.g., MOAA 

Comments, BOA Comments, Pitney 

Bowes Comments, PostCom Comments, 

PSA Comments, Quad/Graphics 


jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 74, No. 111 / Thursday, June 11, 2009 / Notices 27847 

12These letters are maintained in the 

Commission’s ‘‘Commenter File’’ for Docket No. 

R2009–3. The file includes letters, e-mails, and 

faxes sent to the Commission, but not filed in the 

docket or stylized as comments. It is available for 

inspection at the Commission’s Public Reading 

Room during normal business hours. 

13While the secular effects do not appear to be 

applicable to Standard Mail, there is, nonetheless 

an effect on capacity. 

14Seasonal effects on mail volume, though 

evident, are not unique to this year. This opinion 

does not evaluate whether a recurring seasonal 

effect may justify short-run marginal cost pricing. 

The Commission is sensitive to the combined effect 

of seasonal effects, with secular and cyclical effects, 

on the Postal Service’s ability to shed capacity (and 

thus costs) to keep up with falling volume. 

15See USPS Preliminary Financial Information 

(Unaudited), May 27, 2009. 

Comments, DMA Comments, and 

ACMA Comments. 

While the majority of the commenters 

endorse the program without 

reservation, a few express concerns 

regarding the scope of the program and 

measurement of it. See, e.g., Valpak 

Comments regarding measurement of 

the program success; see also NNA 

Comments regarding scope of the 

program. Specific comments are 

addressed below in section IV, 

Commission Analysis. 

In addition, the Commission’s Office 

of Public Affairs and Government 

Relations received nearly 300 letters, 

expressing nearly unanimous support 

for the program, and urging the 

Commission to approve it.12 Several 

letters suggested that the Postal Service 

should lower the participation 

threshold. 

Short-run marginal cost pricing. 

Valpak comments that the Postal 

Service’s use of short-run marginal cost 

to justify pricing in the Summer Sale 

program raises methodological issues. 

Valpak Comments at 4. As such, Valpak 

suggests a proceeding, apart from the 

Commission’s review of the Summer 

Sale program, which gives interested 

persons an opportunity to address those 

methodological issues. Id. 

In its response to CHIR No. 1, the 

Postal Service cites secular, cyclical, 

and seasonal effects on mail volume to 

support its conclusion of excess 

capacity and to justify its use of shortrun marginal cost pricing. In reviewing 

the Postal Service’s claims of excess 

capacity, the Commission, for purposes 

of the Summer Sale program, relies on 

secular and cyclical effects on mail 

volume to support its conclusions.13

The principal cause of the sharp volume 

reductions is the current serious 

economic recession, a cyclical 

occurrence. Thus, under the 

circumstances, the Postal Service’s 

proposal represents a reasonable 

attempt to maintain volume-related 

efficiencies.14

The Commission agrees that the 

Postal Service’s use of short-run 

marginal cost to justify a change in price 

raises methodological issues which may 

impact future pricing incentive 

programs and the Commission’s Annual 

Compliance Determination. The 

methodological change has broad 

implications which warrant 

examination. This, however, is not the 

forum for that examination. The 

Summer Sale program is unique on 

several levels and can, for purposes of 

this proceeding, be addressed on the 

merits. After this program has been 

completed and its results analyzed, the 

Commission may better evaluate 

whether to initiate a proceeding to 

consider the methodological issues 

surrounding short-run marginal cost 

pricing. 

IV. Commission Analysis 

Faced with unprecedented historic 

volume and revenue declines, the Postal 

Service has put forth an integrated 

proposal designed to stem that trend 

and assist the mailing industry. See 

Notice at 2–8. Illustrative of the current 

challenges faced by the Postal Service, 

recently released data show a net loss 

for April of 2009 of $381 million, with 

a year-to-date loss of $2.7 billion.15

Total volume decreased 14.8 percent 

over Same Period Last Year (SPLY), 

with Standard Mail down 17.8 percent. 

Total year-to-date volume has declined 

about 15.2 billion pieces or 12.3 

percent. Id. Total revenues for the 

month are down 11.9 percent and yearto-date revenues are about $41.7 billion, 

or 8.8 percent less than SPLY. Id. 

Impact on the price cap. The Postal 

Service proposes to treat the Summer 

Sale program, for purposes of its effect 

on the price cap, as if all the discounted 

incremental volume paid the applicable 

full postage. Notice at 8. This is 

analogous to the way Negotiated Service 

Agreement (NSA) volume is treated for 

purposes of the price cap. Id. The 

proposal, therefore, does not result in a 

net price decrease, which could be 

banked and applied to all mailers as a 

future rate increase, including those 

which could not participate in the 

Summer Sale program. Id. 

DMA suggests that the Postal 

Service’s proposal to treat incremental 

Summer Sale program volume as if it 

paid the full rate is justified, as it 

protects mailers who do not participate 

in the sale from future rate increases 

based on an increased banked amount 

in the cap. DMA Comments at 2–3. 

Valpak comments that since the Postal 

Service proposes to treat the program as 

an NSA, for purposes of the price cap, 

its results should be comprehensively 

evaluated in a similar fashion. Valpak 

Comments at 2–3. The Public 

Representatives do not oppose the 

Postal Service’s proposal to treat the 

program as analogous to an NSA for 

purposes of calculating the price cap. 

Public Representatives Comments at 10. 

The Postal Service’s treatment of the 

Summer Sale program as an NSA for 

purposes of the price cap is reasonable. 

It shields mailers not eligible for the 

program from being charged higher rates 

based on the amount which otherwise 

would be banked from the program. 

Objectives and factors, workshare 

discounts, and preferred rates. Pursuant 

to the Commission’s rules, 39 CFR 

3010.14(b)(7), the Postal Service 

addresses how the Summer Sale 

program helps achieve the objectives of 

39 U.S.C. 3622(b) and takes into account 

the factors of 39 U.S.C. 3622(c). See 

Notice at 8–13. It asserts that the 

Summer Sale program does not 

substantially alter the degree to which 

Standard Mail prices address the 

objectives and factors, but further 

satisfies the objectives of pricing 

flexibility and financial stability. Id. at 

8–9. The Postal Service also believes the 

‘‘program is a prime example of how the 

Postal Service can utilize the pricing 

flexibility provided under the PAEA in 

order to encourage increased mail 

volume[.]’’ Id. at 12. It projects the 

program will not hinder Standard Mail’s 

ability to cover cost and will help to 

alleviate the burden that the current 

economic conditions have placed on 

some mailers. Id. The Postal Service 

also claims that workshare discounts 

will remain in compliance, and the 

fixed discount ensures that the proper 

ratio for preferred rates remains 

unchanged. Id. at 13. 

The Public Representatives do not 

dispute any of the Postal Service’s 

claims that the Summer Sale program 

satisfies the objectives and factors, 

workshare discount requirements, and 

preferred rate requirements. See Public 

Representatives Comments at 10–12. 

The Public Representatives express 

concern regarding the cost coverage for 

Standard Mail flats. Id. at 11. However, 

upon review of the Response to CHIR 

No. 1, the Public Representatives 

conclude that the Postal Service has 

made an adequate demonstration that 

the factor requiring attributable cost 

coverage for each class of mail is 

satisfied. Id. 

The Commission finds that the 

objectives and factors in 39 U.S.C. 3622 

appear to be satisfied by explanations 


jlentini on PROD1PC65 with NOTICES
27848 Federal Register / Vol. 74, No. 111 / Thursday, June 11, 2009 / Notices 

16Business Mail Entry Unit clerks create ghost 

permit numbers to identify mail owners when no 

permit number is associated with mail owners’ 

names in PostalOne! See http://www.uspsoig.gov/ 

FOIA_files/MS-MA-06-002.pdf at 1–2. 

17Eligible Standard Mail users meeting the 

qualifying conditions established for the Summer 

Sale program. See Notice at 4. 

and data in the Notice and Response to 

CHIR No. 1. 

39 U.S.C. 3622(e) requires that 

workshare discounts given by the Postal 

Service do not exceed their avoided 

costs unless certain criteria are fulfilled. 

The Postal Service claims that 

workshare discounts will be made 

smaller by virtue of the 30 percent 

discount; and, therefore, the Summer 

Sale program moves those discounts 

which are out of compliance closer to 

compliance. See Notice at 13. 

The Commission finds that given the 

expected mail mix, relatively small net 

impact of the volume induced by the 

Summer Sale program, and that the 

rebate applies at all workshare discount 

tiers, the program’s effect on workshare 

discounts evaluated in Docket No. 

R2009–2 will be limited. 

39 U.S.C. 3626 requires that nonprofit 

categories of products shall be set to 

yield 60 percent of the per-piece 

revenue of their commercial 

counterparts. The Postal Service expects 

that, given the Summer Sale program’s 

flat 30 percent discount on incremental 

mail volume across nonprofit and 

commercial subclasses alike, the 

required 60 percent differential will be 

maintained. Id. Based on the Postal 

Service’s estimate of the mail mix of the 

incremental volume, the Commission 

agrees that the required 60 percent 

differential will be maintained. 

Eligibility threshold. The volume 

threshold for eligibility in the program 

raises two principal concerns: first, 

whether it is reasonable, and second 

whether it can be manipulated, e.g., for 

mailers to earn discounts on mail that 

would have been sent without the 

discount. 

Several commenter letters to the 

Commission request that the Postal 

Service include lower volume mailers in 

the Summer Sale program. NNA also 

comments that the Summer Sale 

program ‘‘offers little to smaller mailers, 

with the possible exception of the 

system-wide benefits if a short-term 

infusion of revenues reaches USPS 

coffers[.]’’ NNA Comments at 3. 

The Commission is sensitive to the 

mailers who wish to participate but do 

not meet the volume minimums set out 

by the Postal Service for participation in 

the Summer Sale program. On review 

however, recognizing this is a first effort 

to test a ‘‘sale’’ price, the Postal Service 

has provided a reasonable rationale for 

the threshold. Issues arising from Postal 

Service calculation of usage by mailers, 

and whether adequate communication 

took place with appropriate mailer 

executives, also can be better resolved 

in future programs should they be 

developed. 

The Postal Service provides 

calculations which demonstrate that, if 

the average expected incremental 

volume increase held for mailers of 

generally lower volume, the incremental 

volume generated would cover its shortrun variable costs. However, such mail 

would not produce enough revenue to 

cover the increased administrative costs 

of the broadened program. See Response 

to CHIR No. 1 at 27–28. The 

Commission accepts the Postal Service’s 

analysis that opening the program to all 

Standard Mail customers would create 

administrative costs which outstrip the 

net incremental revenue the program 

would generate. Also, the relatively 

small probable impact and limited, 

experimental nature of the program 

suggest that small mailers would neither 

significantly benefit from nor be 

disadvantaged by the program. 

The Postal Service recognizes the 

possibility that the threshold may be 

effectively manipulated and has taken 

steps to guard against this happening. 

Because some participants may use 

MSPs for a portion of their mailings, the 

Commission is concerned about the 

possibility for discounts to be awarded 

for mail shifted from MSP permits to 

mailer owned permits, which would not 

be incremental volume. The Postal 

Service responds to these concerns by 

explaining that participants will be 

required to certify to the best of their 

knowledge that their threshold is based 

on an accurate representation of all 

Standard Mail sent by the mailer. See id. 

at 4–5. 

In Response to CHIR No. 1, the Postal 

Service attached guidelines for mailers 

seeking to document their MSP volumes 

for participation in the Summer Sale 

program. The guidelines state that 

‘‘[t]here are two situations though that 

leave the Postal Service blind to a 

mailer’s mailing history. The first is 

when no ghost permit is assigned to a 

mailing sent on an MSP permit. The 

second is when a mailer’s mailing is 

part of a co-mail program run through 

an MSP permit.’’ See id. at Attachment 

B.16 The Commission expects that the 

Postal Service will develop and 

implement appropriate revenue 

protection mechanisms to verify that 

participants do not exploit these blind 

spots and receive discounts for nonincremental volume. 

Data collection and program 

evaluation. Valpak comments that a 

plan for evaluation, ‘‘including criteria 

against which success (or failure) will 

be assessed’’ should be established 

immediately. Valpak Comments at 3. 

Valpak asserts that public availability of 

the plan and subsequent results are 

required under the PAEA for 

transparency and accountability. Id. 

Such transparency would foster 

understanding and help identify and 

avoid possible problems with any other 

similar program in the future. Id. Pitney 

Bowes notes the Postal Service’s efforts 

to ensure qualifying volume in the 

program is actually new incremental 

volume rather than a result of volume 

shifting. Pitney Bowes Comments at 4. 

Similarly, the Public Representatives 

express concern about the possibility of 

volume migration from First-Class 

advertising mail to Standard Mail as a 

result of the program, accuracy of the 

cost coverage projections, and volume 

migration from the months prior to the 

program. Public Representatives 

Comments at 13. The Public 

Representatives call for the Postal 

Service to issue a report on these issues 

at the conclusion of the program. Id. 

NNA comments that the Summer Sale 

program does not guard against the 

possibility of volume shifting from 

November and December into the sale 

period. NNA Comments at 3. 

The Commission expects the Summer 

Sale program to yield data which will 

prove useful in assessing the merits of 

other pricing incentive programs. The 

Public Representatives’ and Valpak’s 

comments are well taken that evaluation 

criteria and a plan for data collection 

must be established prior to the 

implementation of the program. The 

Commission shall require data reporting 

from the Postal Service within 15 days 

after the Postal Service credits the 

rebates due to the Summer Sale 

program’s participants. 

In considering the data needed to 

evaluate the Summer Sale program 

fully, the Commission concludes that 

the following information is required. 

First, for each eligible Standard Mail 

user,17 the Postal Service shall provide 

monthly volumes and revenues for all 

Standard Mail letters by product and 

flats by product, further broken out into 

commercial and nonprofit categories. 

The reporting period shall be from 

October of 2006 through October of 

2009. The Postal Service shall also 

provide information on any rebate paid 

to each eligible user, with supporting 

calculations. The information provided 

pursuant to this paragraph shall be filed 

under seal, and the Postal Service may 

mask mailer identities by using a 


jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 74, No. 111 / Thursday, June 11, 2009 / Notices 27849 

18The Postal Service has not collected First-Class 

Mail permit data from the eligible mailers, but once 

such data are obtained, it can be used to evaluate 

the effect on First-Class Mail volumes due to the 

program. Given the finite universe of eligible 

mailers and the speed with which the Postal 

Service gathered Standard Mail permit volume 

information, the Commission does not expect the 

collection of First-Class Mail volumes for the same 

mailers to burden the Postal Service. 

generic identification number. See 

Appendix A. 

Second, the Postal Service shall 

publicly provide the monthly 

information requested in the preceding 

paragraph, but aggregating mailer data. 

Third, for each eligible Standard Mail 

user, the Postal Service shall provide 

monthly permit volumes for First-Class 

presort letters, cards, and flats.18 The 

information provided pursuant to this 

paragraph shall be filed under seal, and 

the Postal Service shall, if it masks 

mailer identities, use the same generic 

identification number used to report 

Standard Mail data. 

Fourth, the Postal Service shall 

identify the actual short-run volumevariable cost by each Standard Mail 

letter and flat product. See Response to 

CHIR No. 1 at 18–24. 

Fifth, the Postal Service shall identify 

the actual administrative costs of the 

program. See id. at 32. 

The data requested should provide 

the Commission and public an 

opportunity to evaluate thoroughly the 

program’s impact on Postal Service 

volumes, revenues, and costs. This 

information is likely to be instrumental 

in the design of future Postal Service 

programs of a similar nature. 

Conclusion. The Postal Service 

proposes to implement a novel program, 

broadly supported by the mailing 

industry and commenters in this 

proceeding. The Commission is hopeful 

the program may offer one solution to 

cyclical and secular volume declines, 

and provide information useful for 

considering other potential pricing 

incentives. The Commission believes 

the reporting required by this order is an 

essential feature of the program. 

Without such metrics, the merits of the 

program cannot be fairly evaluated. 

The Commission has reviewed the 

threshold volume, average revenue per 

piece, short-run attributable cost data 

submitted by the Postal Service, and 

conducted its own preliminary analysis 

using such data. The Postal Service 

estimates the volume response from the 

program as 2.0 to 5.15 percent over 

threshold levels. Based on these 

assumptions and other submitted data, 

the Commission estimates positive 

contribution for both the upper and 

lower bound volume figures. Separately, 

based on an analysis using demand 

elasticities from the latest set of Postal 

Service demand models and 

incorporating a First-Class Mail presort 

demand shift, the Commission finds a 

much lower, but still positive 

contribution. See PRC–LR–1 (Library 

Reference 1 to be filed with this order). 

Thus, based on these scenarios, the 

Commission concludes that a positive 

contribution from the program is likely. 

The Commission notes, however, that 

results are sensitive to the degree to 

which First-Class Mail migrates to 

Standard Mail, an aspect of the program 

that must be carefully evaluated in 

assessing its merits. 

V. Ordering Paragraphs 

A full review of the United States 

Postal Service Notice of MarketDominant Price Adjustment, filed May 

1, 2009, has been completed. With 

regard to the price adjustments 

contained therein, for the reasons set 

forth above, it is ordered: 

1. The Commission approves the 

Standard Mail Volume Incentive Pricing 

Program. 

2. The Commission directs the Postal 

Service to report on the Standard Mail 

Volume Incentive Pricing Program 

within 15 days after the Postal Service 

credits the rebates due to the Summer 

Sale program’s participants as 

consistent with this order. 

3. The Motion of Discover Financial 

Services for Late Acceptance of 

Comments, filed May 22, 2009, and the 

Motion of 7R Communications, LLC for 

Late Acceptance of Comments, filed 

June 2, 2009, are granted. 

4. The Secretary of the Commission 

will arrange for publication of this order 

in the Federal Register. 

By the Commission. 

Steven W. Williams, 

Secretary. 

Appendix A 

Summer Sale Data Collection Plan and 

Rebate Calculation Information 

This appendix contains an outline of the 

Summer Sale Data Report contents as 

specified in Order No. 219. The template is 

presented to help clarify the disaggregation 

by product, commercial or nonprofit status, 

and time period as described in the order. 

The specific format of the report may be 

tailored to fit the presentation format of the 

data generation programs of the Postal 

Service, but should be in a broadly available 

electronic format such as Microsoft Excel. 

Workbook 1: Mailer Information contains 

the disaggregated Volume and Revenue 

information to be reported for each mailer 

eligible for the summer sale. This tab, and the 

summer sale rebate calculations contained 

therein, should be replicated for each eligible 

mailer. 

Workbook 2: Aggregate Information 

contains the Volume and Revenue categories 

as they appear in tab 1. The Summer Sale 

Aggregate Incremental Volume and Aggregate 

Rebate should be a summation calculation 

linked to each mailer information tab so that 

each volume and revenue figure represents 

the total for all eligible mailers for the 

relevant month. 

WORKBOOK 1—MAILER INFORMATION

Mailer-specific information 

Month (for each month) 

October 2006 through 

October 2009 1

Volume .....................................................................................................................................................................

Commercial .......................................................................................................................................................

Letters ...............................................................................................................................................................

Flats ..................................................................................................................................................................

Carrier Route Letters ........................................................................................................................................

Carrier Route Flats ...........................................................................................................................................

High Density and Saturation Letters ................................................................................................................

High Density and Saturation Flats ....................................................................................................................

First-Class Presort Letters and Cards ..............................................................................................................

First-Class Flats ................................................................................................................................................

Nonprofit ...........................................................................................................................................................

Letters ...............................................................................................................................................................

Flats ..................................................................................................................................................................

Carrier Route Letters ........................................................................................................................................


jlentini on PROD1PC65 with NOTICES
27850 Federal Register / Vol. 74, No. 111 / Thursday, June 11, 2009 / Notices 

WORKBOOK 1—MAILER INFORMATION—Continued 

Mailer-specific information 

Month (for each month) 

October 2006 through 

October 2009 1

Carrier Route Flats ...........................................................................................................................................

High Density and Saturation Letters ................................................................................................................

High Density and Saturation Flats ....................................................................................................................

Revenue ...................................................................................................................................................................

Commercial .......................................................................................................................................................

Letters ...............................................................................................................................................................

Flats ..................................................................................................................................................................

Carrier Route Letters ........................................................................................................................................

Carrier Route Flats ...........................................................................................................................................

High Density and Saturation Letters ................................................................................................................

High Density and Saturation Flats ....................................................................................................................

First-Class Presort Letters and Cards ..............................................................................................................

First-Class Flats ................................................................................................................................................

Nonprofit ...........................................................................................................................................................

Letters ...............................................................................................................................................................

Flats ..................................................................................................................................................................

Carrier Route Letters ........................................................................................................................................

Carrier Route Flats ...........................................................................................................................................

High Density and Saturation Letters ................................................................................................................

High Density and Saturation Flats ....................................................................................................................

Rebate Calculation for each mailer Formula Calculation 

Threshold .................................................................................................................................................................

Incremental Volume .................................................................................................................................................

October 2009 Adjustment ........................................................................................................................................

Eligible Volume ........................................................................................................................................................

Average Revenue Per Piece ...................................................................................................................................

Rebate .....................................................................................................................................................................

1Formulas used in the determination of Volume Threshold, Incremental Volume, October 2009 Adjustment, Average Revenue per Piece, and 

Summer Sale Rebate should be shown on each mailer page. Only mailer input data should be hardcoded. 

WORKBOOK 2—AGGREGATE INFORMATION

Eligible mailer information 

Month (for each month) 

October 2006 through 

October 2009 1

Volume .....................................................................................................................................................................

Commercial .......................................................................................................................................................

Letters ...............................................................................................................................................................

Flats ..................................................................................................................................................................

Carrier Route Letters ........................................................................................................................................

Carrier Route Flats ...........................................................................................................................................

High Density and Saturation Letters ................................................................................................................

High Density and Saturation Flats ....................................................................................................................

First-Class Presort Letters and Cards ..............................................................................................................

First-Class Flats ................................................................................................................................................

Nonprofit ...........................................................................................................................................................

Letters ...............................................................................................................................................................

Flats ..................................................................................................................................................................

Carrier Route Letters ........................................................................................................................................

Carrier Route Flats ...........................................................................................................................................

High Density and Saturation Letters ................................................................................................................

High Density and Saturation Flats ....................................................................................................................

Revenue ...................................................................................................................................................................

Commercial .......................................................................................................................................................

Letters ...............................................................................................................................................................

Flats ..................................................................................................................................................................

Carrier Route Letters ........................................................................................................................................

Carrier Route Flats ...........................................................................................................................................

High Density and Saturation Letters ................................................................................................................

High Density and Saturation Flats ....................................................................................................................

First-Class Presort Letters and Cards ..............................................................................................................

First-Class Flats ................................................................................................................................................

Nonprofit ...........................................................................................................................................................

Letters ...............................................................................................................................................................

Flats ..................................................................................................................................................................

Carrier Route Letters ........................................................................................................................................

Carrier Route Flats ...........................................................................................................................................


jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 74, No. 111 / Thursday, June 11, 2009 / Notices 27851 

WORKBOOK 2—AGGREGATE INFORMATION—Continued 

Eligible mailer information 

Month (for each month) 

October 2006 through 

October 2009 1

High Density and Saturation Letters ................................................................................................................

High Density and Saturation Flats ....................................................................................................................

Rebate Calculation for each mailer Formula Calculation 

Incremental Volume .................................................................................................................................................

Rebate .....................................................................................................................................................................

1Formulas used in the determination of Volume Threshold, Incremental Volume, October 2009 Adjustment, Average Revenue per Piece, and 

Summer Sale Rebate should be shown on each mailer page. Only mailer input data should be hardcoded. 

[FR Doc. E9–13641 Filed 6–10–09; 8:45 am] 

BILLING CODE 7710–FW–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. IC–28758; 812–13619] 

Nuveen Tax-Advantaged Total Return 

Strategy Fund, et al.; Notice of 

Application 

June 4, 2009. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of application for an 

order under section 6(c) of the 

Investment Company Act of 1940 

(‘‘Act’’) for an exemption from sections 

18(a)(1)(A) and (B) of the Act. 

APPLICANTS: Nuveen Tax-Advantaged 

Total Return Strategy Fund, Nuveen 

Real Estate Income Fund, Nuveen 

Diversified Dividend and Income Fund, 

Nuveen Multi-Strategy Income and 

Growth Fund, Nuveen Multi-Strategy 

Income and Growth Fund 2, Nuveen 

Quality Preferred Income Fund, Nuveen 

Quality Preferred Income Fund 2, 

Nuveen Quality Preferred Income Fund 

3, Nuveen Senior Income Fund, Nuveen 

Floating Rate Income Fund and Nuveen 

Floating Rate Income Opportunity Fund 

(each, a ‘‘Fund’’ and collectively, 

‘‘Funds’’). 

SUMMARY OF APPLICATION: Applicants 

request an order (‘‘Order’’) granting an 

exemption from sections 18(a)(1)(A) and 

(B) of the Act for a period from the date 

of the Order until October 31, 2010. The 

Order would permit each Fund to issue 

or incur debt subject to asset coverage 

of 200% that would be used to refinance 

all of the Fund’s issued and outstanding 

auction rate preferred shares (‘‘ARPS’’) 

issued prior to February 1, 2008 that are 

outstanding at the time such post-order 

debt is issued or incurred. The Order 

also would permit each Fund to declare 

dividends or any other distributions on, 

or purchase, capital stock during the 

term of the Order, provided that such 

post-Order debt has asset coverage of at 

least 200% after deducting the amount 

of such transaction. 

FILING DATES: The application was filed 

on December 29, 2008, and amended on 

March 27, 2009, and June 2, 2009. 

HEARING OR NOTIFICATION OF HEARING: An 

order granting the application will be 

issued unless the Commission orders a 

hearing. Interested persons may request 

a hearing by writing to the 

Commission’s Secretary and serving 

applicants with a copy of the request, 

personally or by mail. Hearing requests 

should be received by the Commission 

by 5:30 p.m. on June 29, 2009, and 

should be accompanied by proof of 

service on applicants, in the form of an 

affidavit or, for lawyers, a certificate of 

service. Hearing requests should state 

the nature of the writer’s interest, the 

reason for the request, and the issues 

contested. Persons who wish to be 

notified of a hearing may request 

notification by writing to the 

Commission’s Secretary. 

ADDRESSES: Secretary, Securities and 

Exchange Commission, 100 F Street, 

NE., Washington, DC 20549–1090. 

Applicants: c/o Gifford R. Zimmerman, 

Managing Director, Assistant Secretary 

and Associate General Counsel, Nuveen 

Asset Management, 333 West Wacker 

Drive, Chicago, IL 60606. 

FOR FURTHER INFORMATION CONTACT: 

Bruce R. MacNeil, Senior Counsel, at 

(202) 551–6817, or Julia Kim Gilmer, 

Branch Chief, at (202) 551–6821 

(Division of Investment Management, 

Office of Investment Company 

Regulation). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained via the Commission’s 

Web site by searching for the file 

number, or an applicant using the 

Company name box, at http:// 

www.sec.gov/search/search.htm or by 

calling (202) 551–8090. 

Applicants’ Representations 

1. Each of the Funds is organized as 

a Massachusetts business trust and is a 

closed-end management investment 

company registered under the Act. Each 

Fund is advised by Nuveen Asset 

Management (‘‘Nuveen’’) and has issued 

and outstanding a class of common 

shares and a class of one or more series 

of ARPS. 

2. Applicants state that the Funds 

issued their outstanding ARPS for 

purposes of investment leverage to 

augment the amount of investment 

capital available for use in the pursuit 

of their investment objectives. 

Applicants state that, through the use of 

leverage, the Funds seek to enhance the 

investment return available to the 

holders of their common shares by 

earning a rate of portfolio return (which 

includes the return obtained from 

securities purchased from the proceeds 

of ARPS offerings) that exceeds the 

dividend rate that the Funds pay to 

holders of the ARPS. Applicants 

represent that ARPS shareholders are 

entitled to receive a stated liquidation 

preference amount of $25,000 per share 

(plus any accumulated but unpaid 

dividends) in any liquidation, 

dissolution, or winding up of the 

relevant Fund before any distribution or 

payment to holders of the Fund’s 

common shares. Applicants also state 

that dividends declared and payable on 

ARPS have a similar priority over 

dividends declared and payable on the 

Funds’ common shares. In addition, 

applicants state that ARPS are 

‘‘perpetual’’ securities and are not 

subject to mandatory redemption by a 

Fund (provided certain asset coverage 

tests are met). Further, applicants state 

that ARPS are redeemable at each 

Fund’s option. 

3. Applicants state that prior to 

February 2008, dividend rates on the 

ARPS for each dividend period were set 

at the market clearing rate determined 

through an auction process that brought 

together bidders, who sought to buy 

ARPS, and holders of ARPS, who sought 


jlentini on PROD1PC65 with NOTICES