[Federal Register: February 5, 2007 (Volume 72, Number 23)]
[Proposed Rules]
[Page 5230-5232]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05fe07-14]
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POSTAL REGULATORY COMMISSION
39 CFR 3001
[Docket No. RM2007-1; Order No. 2]
Administrative Practice and Procedure, Postal Service
AGENCY: Postal Regulatory Commission.
ACTION: Advance notice of proposed rulemaking.
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SUMMARY: Recent legislation alters the postal ratemaking process, and
tasks the Postal Regulatory Commission to develop regulations to
implement this process. This notice invites public comment, in advance
of formulating substantive rule proposals, to guide this process.
DATES: Initial comments due April 6, 2007; reply comments due May 7,
2007.
ADDRESSES: Submit comments electronically via the Commission's Filing
Online system at http://www.prc.gov.
FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel,
202-789-6820 and stephen.sharfman@prc.gov.
SUPPLEMENTARY INFORMATION: The Postal Accountability and Enhancement
Act, Public Law 109-435 (PAEA), directs that the Postal Regulatory
Commission (Commission) shall by regulation establish a modern system
for regulating rates and classes for market dominant postal products.
The PAEA further directs that the Commission shall promulgate
regulations to bound Postal Service discretion in setting rates for
competitive postal products. Both of these tasks are to be completed by
June 19, 2008.
Interested persons are invited to provide written comments and
suggestions as to how the Commission can best fulfill these
responsibilities to achieve the purposes of the PAEA. Comments are due
within 60 days of the date of publication of this notice in the Federal
Register. All comments and suggestions received will be available for
review on the Commission's Web site, http://www.prc.gov. Interested
persons are further invited to review these submissions and provide
follow-up comments and suggestions within 30 additional days, that is,
within 90 days of the publication of this notice in the Federal
Register.
Commenters are requested to specifically explain how suggestions
will comport with the specific applicable statutory directions as set
out below.
I. Modern Rate Regulation of Market Dominant Products
The PAEA reforms the postal laws of the United States. Among other
things, it alters the method by which the rates and fees for postal
products may be changed. Separate rules are to apply for market
dominant, as opposed to competitive, postal services. The Commission is
given 18 months to develop and implement this system. In fulfilling
this responsibility, the Commission is to effectuate the following
specific policies set forth in the PAEA.
A. Requirements
The system for regulating rates and classes for market dominant
products shall:
1. Establish a schedule whereby rates, when necessary and
appropriate, would change at regular intervals by predictable amounts;
2. Include an annual limitation on the percentage changes in rates,
to be set by the Commission, that will be equal to the change in the
Consumer Price Index for All Urban Consumers unadjusted for seasonal
variation over the most recent available 12-month period preceding the
date the Postal Service files notice of its intention to increase
rates;
3. Establish procedures whereby the Postal Service may adjust rates
not in excess of the annual limitation;
4. Provide that not later than 45 days before the implementation of
any adjustment in rates subject to this limitation, including special
rates pursuant to factor (10), below:
(a) Require the Postal Service to provide public notice of the
adjustment;
(b) Provide an opportunity for review by the Commission;
(c) Provide for the Commission to notify the Postal Service of any
noncompliance of the adjustment with this annual limitation;
(d) Require the Postal Service to respond to the notice provided
under the previous clause and describe the actions to be taken to
comply with this annual limitation; and
5. Establish procedures to allow rate adjustments in excess of the
annual limitation on an expedited basis due to either extraordinary or
exceptional circumstances, provided:
(a) There is not sufficient unused rate authority as defined in 39
U.S.C. 3622(d)(2)(C); and
(b) The Commission determines, after notice and opportunity for a
public hearing and comment, and within 90 days after any request by the
Postal Service, that such adjustment is reasonable and equitable and
necessary to enable the Postal Service, under best practices of honest,
efficient, and economical management, to maintain and continue the
development of postal services of the kind and quality adapted to the
needs of the United States.
B. Objectives
The system for regulating rates and classes for market dominant
products shall be designed to achieve the following objectives, each of
which shall be applied in conjunction with the others:
[[Page 5231]]
1. To maximize incentives to reduce costs and increase efficiency;
2. To create predictability and stability in rates;
3. To maintain high quality service standards established under 39
U.S.C. 3691;
4. To allow the Postal Service pricing flexibility;
5. To assure adequate revenues, including retained earnings, to
maintain financial stability;
6. To reduce the administrative burden and increase the
transparency of the ratemaking process;
7. To enhance mail security and deter terrorism;
8. To establish and maintain a just and reasonable schedule for
rates and classifications, however the objective under this paragraph
shall not be construed to prohibit the Postal Service from making
changes of unequal magnitude within, between, or among classes of mail;
and
9. To allocate the total institutional costs of the Postal Service
appropriately between market dominant and competitive products.
C. Factors
In establishing the system for regulating rates and classes for
market dominant products, the Commission shall take into account:
1. The value of the mail service actually provided each class or
type of mail service to both the sender and the recipient, including
but not limited to the collection, mode of transportation, and priority
of delivery;
2. The requirement that each class of mail or type of mail service
bear the direct and indirect postal costs attributable to each class or
type of mail service through reliably identified causal relationships
plus that portion of all other costs of the Postal Service reasonably
assignable to such class or type;
3. The effect of rate increases upon the general public, business
mail users, and enterprises in the private sector of the economy
engaged in the delivery of mail matter other than letters;
4. The available alternative means of sending and receiving letters
and other mail matter at reasonable costs;
5. The degree of preparation of mail for delivery into the postal
system performed by the mailer and its effect upon reducing costs to
the Postal Service;
6. Simplicity of structure for the entire schedule and simple,
identifiable relationships between the rates or fees charged the
various classes of mail for postal services;
7. The importance of pricing flexibility to encourage increased
mail volume and operational efficiency;
8. The relative value to the people of the kinds of mail matter
entered into the postal system and the desirability and justification
for special classifications and services of mail;
9. The importance of providing classifications with extremely high
degrees of reliability and speed of delivery and of providing those
that do not require high degrees of reliability and speed of delivery;
10. The desirability of special classifications for both postal
users and the Postal Service in accordance with the policies of Title
39, including agreements between the Postal Service and postal users,
when available on public and reasonable terms to similarly situated
mailers, that
(a) Either improve the net financial position of the Postal Service
through reducing Postal Service costs or increasing the overall
contribution to the institutional costs of the Postal Service; or
enhance the performance of mail preparation, processing,
transportation, or other functions; and
(b) Do not cause unreasonable harm to the marketplace;
11. The educational, cultural, scientific, and informational value
to the recipient of mail matter;
12. The need for the Postal Service to increase its efficiency and
reduce its costs, including infrastructure costs, to help maintain high
quality, affordable postal services;
13. The value to the Postal Service and postal users of promoting
intelligent mail and of secure, sender-identified mail; and
14. The policies of this title as well as such other factors as the
Commission determines appropriate.
D. Additional Consideration
The system for regulating rates and classes for market dominant
products must enable the Commission to ensure that workshare discounts,
as defined in 39 U.S.C. 3622(e)(1), do not exceed the cost that the
Postal Service avoids as a result of workshare activity unless:
1. The discount is
(a) Associated with a new postal service, a change to an existing
postal service, or with a new workshare initiative related to an
existing postal service; and
(b) Necessary to induce mailer behavior that furthers the
economically efficient operation of the Postal Service and the portion
of the discount in excess of the cost that the Postal Service avoids as
a result of the workshare activity will be phased out over a limited
period of time; or
2. The amount of the discount above costs avoided
(a) Is necessary to mitigate rate shock; and
(b) Will be phased out over time; or
3. The discount is provided in connection with subclasses of mail
consisting exclusively of mail matter of educational, cultural,
scientific, or informational value; or
4. Reduction or elimination of the discount would impede the
efficient operation of the Postal Service.
Application of these standards shall not require that a workshare
discount be reduced or eliminated if the reduction or elimination of
the discount would:
1. Lead to a loss of volume in the affected category or subclass of
mail and reduce the aggregate contribution to the institutional costs
of the Postal Service from the category or subclass subject to the
discount below what it otherwise would have been if the discount had
not been reduced or eliminated; or
2. Result in a further increase in the rates paid by mailers not
able to take advantage of the discount.
II. Provisions Applicable to Rates for Competitive Products
With regard to competitive products, regulations are to be
established that:
1. Prohibit the subsidization of competitive products by market
dominant products;
2. Ensure that each competitive product covers its costs
attributable; and
3. Ensure that all competitive products collectively cover what the
Commission determines to be an appropriate share of the institutional
costs of the Postal Service.
Ordering Paragraphs
It is ordered:
1. Docket No. RM2007-1 is established for the purpose of receiving
comments in advance of developing regulations effectuating a modern
system of ratemaking.
2. Interested persons may submit comments no later than 60 days
from the date of publication of this notice in the Federal Register.
3. Reply comments also may be filed no later than 90 days from the
date of publication of this notice in the Federal Register.
4. Shelley S. Dreifuss, director of the Office of the Consumer
Advocate, is designated to represent the interests of the general
public in this docket.
5. The Secretary shall arrange for publication of this Notice in
the Federal Register.
[[Page 5232]]
By the Commission.
Steven W. Williams,
Secretary.
[FR Doc. E7-1787 Filed 2-2-07; 8:45 am]
BILLING CODE 7710-FW-P