Opinion ID: 370472
Heading Depth: 2
Heading Rank: 1

Heading: Limitation of Presort Discount

Text: 102 As noted above, Supra note 80, the second-class regular rate (for mailings of 5,000 or more copies, mailed outside the county of publication) consists of three separate charges: a piece rate, a poundage rate for the editorial portion of the publication, and a poundage rate for the advertising portion that is zoned according to distance. In Docket No. R77-1, the Commission adopted for the first time a three-tier piece rate that varies according to the degree of presortation. 93 Mail presorted to carrier route is charged a piece rate of 4.4 cents. Mail presorted to five digit zip code (or three digit ZIP code for certain cities) is charged a piece rate of 5.4 cents. All other second-class regular rate is charged a piece rate of 7.0 cents. 94 Although Postal Service regulations require that all second-class mail be presorted to the greatest extent possible, 95 the two presort discounts are available only where the presorted mail is sorted into sacks either at least one-third full or weighing at least 20 pounds. 103 American Business Press (ABP) attacks the limitation on eligibility for the presort discount as discriminatory against smaller publications that cannot fill one-third sacks when the presorting is to five digit zip codes, either because of low circulation or wide geographic dispersion. Record evidence suggested that only a small percentage of all publications would be eligible for the discounts, 96 although approximately 77 percent of regular rate mail, by volume, would be eligible. 97 ABP argued before the Commission that the proper measure of eligibility for the presort discounts should be the six-copy bundle, the standard prescribed by postal regulations for separating bulk mailing from individual mailings. 104 We find the Commission's limitations on eligibility supported by the evidence. Postal Service witness McCaffrey stated that the one-third sack requirement in presortation was a standard USPS requirement. 98 Witness Madison found the presort discount justified by cost savings. 99 His study was based, however, on the assumption of a one-third sack limitation. The Commission noted that there was no correlation between the Madison cost and volume data and the presortation of six piece bundles which is the eligibility requirement sought by ABP. 100 ABP attacks as not explained the reliance on the Madison study. 101 Its position presumes that the effect on USPS costs of presortation to six-copy bundles would not differ from the cost effects of presortation to one-third sacks. We cannot ignore or gainsay the likelihood that the significantly smaller six copy bundle would entail greater handling costs than the one-third sack. Since precise cost data was lacking with regard to the six copy bundle, the PRC was justified, at least in its first attempt at devising a second-class presort discount, in choosing to limit the availability of the discount to those mailings for which it had reliable data. 105 We find no basis for ABP's claim that, in adopting the second-class rate structure, the PRC focused on one ratemaking criterion the degree of preparation performed by the mailer 102 to the exclusion of other factors, particularly the effect of rate increases on mail users. 103 106 We read the PRC's opinion as reflecting a full consideration of the pertinent factors. The Commission expressly took into account the interests of small publications though not to the degree ABP desires by modifying the presort discount, limited to mailers using five digit zip codes, so as to be availa ble as well to those using three-digit city zip codes (though still subject to the one-third sack restriction). 104 The Commission also rejected a zoned editorial charge, because small publications are least able to avoid the highest zone charges through the device of multiple points of entry. 105 107