Price Cap Rules for Certain Postal Rate Adjustments, 52694-52710 [2013-20583]

Agencies

• POSTAL REGULATORY COMMISSION

[Federal Register Volume 78, Number 165 (Monday, August 26, 2013)]
[Rules and Regulations]
[Pages 52694-52710]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-20583]


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POSTAL REGULATORY COMMISSION

39 CFR Part 3010

[Docket No. RM2013-2; Order No. 1786]


Price Cap Rules for Certain Postal Rate Adjustments

AGENCY: Postal Regulatory Commission.

ACTION: Final rule.

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[[Page 52695]]

SUMMARY: The Commission is issuing a set of final rules addressing the 
price cap for market dominant price adjustments. Adoption of the rules 
follows a review of comments on proposed rules. In brief, proposed 
rules that generated no opposition have been adopted. Proposed rules 
that raised easily-resolved questions have been modified, as 
appropriate, and adopted. Action on proposals that generated 
significant opposition (such as the treatment of service reductions and 
promotional and incentive rates) has been deferred in the interest of 
additional research and analysis. Adoption of these rules will 
facilitate consideration of market dominant postal rate adjustments.

DATES: Effective September 25, 2013.

FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel, 
202-789-6820.

SUPPLEMENTARY INFORMATION: 

Regulatory History

72 FR 5230, February 5, 2007
72 FR 29284, May 25, 2007
72 FR 33261, June 15, 2007
72 FR 50744, September 4, 2007
72 FR 63622, November 9, 2007
73 FR 22490, April 16, 2013

Table of Contents

I. Introduction
II. Uncontroversial Rules
III. Changes Adopted In this Order
IV. Remaining Issues
V. Ordering Paragraphs

I. Introduction

    On March 22, 2013, the Commission issued a notice of proposed 
rulemaking relating to the Commission's price cap rules.\1\ That notice 
was intended, in part, to clarify and improve the manner in which 39 
CFR part 3010 implements statutory directives and policies previously 
expressed in Commission orders. See Order No. 1678 at 1.
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    \1\ Notice of Proposed Rulemaking Requesting Comments on 
Proposed Commission Rules for Determining and Applying the Maximum 
Amount of Rate Adjustments, March 22, 2013 (Order No. 1678). The 
Commission issued errata several days later. Notice of Errata, March 
25, 2013 (Errata). See also 78 FR 22490, April 16, 2013.
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    The Commission received comments and reply comments from the Public 
Representative \2\ and the Postal Service,\3\ as well as the 
Association of Magazine Media (MPA),\4\ the Association for Postal 
Commerce (PostCom),\5\ the National Association of Presort Mailers 
(NAPM),\6\ Pitney Bowes Inc.,\7\ and Valpak Direct Marketing Systems, 
Inc. and Valpak Dealers' Association, Inc. (Valpak).\8\ The National 
Postal Policy Council (NPPC) submitted reply comments.\9\
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    \2\ Public Representative Comments, May 17, 2013 (Public 
Representative Comments); Public Representative Reply Comments, May 
31, 2013 (PR Reply Comments). The Public Representative Comments 
were accompanied by a motion for late acceptance asserting that no 
party is harmed by the delay in filing. Public Representative Motion 
for Late Acceptance, May 17, 2013. The motion is granted.
    \3\ Initial Comments of the United States Postal Service, May 
16, 2013 (Postal Service Comments); Reply Comments of the United 
States Postal Service, June 3, 2013 (Postal Service Reply Comments). 
The Postal Service's reply comments were accompanied by a motion for 
late acceptance of filing asserting that no party is prejudiced by 
the delay. Motion for Late Acceptance of Reply Comments, June 3, 
2013. That motion is granted.
    \4\ Comments of MPA--The Association of Magazine Media, May 16, 
2013 (MPA Comments).
    \5\ Comments of the Association for Postal Commerce, May 16, 
2013 (PostCom Comments); Reply Comments of the Association for 
Postal Commerce, May 31, 2013 (PostCom Reply Comments).
    \6\ Comments of the National Association of Presort Mailers, May 
16, 2013 (NAPM Comments).
    \7\ Comments of Pitney Bowes Inc., May 16, 2013 (Pitney Bowes 
Comments).
    \8\ Valpak Direct Marketing Systems, Inc. and Valpak Dealers' 
Association, Inc. Comments on Notice of Proposed Rulemaking, May 16, 
2013 (Valpak Comments); Valpak Direct Marketing Systems, Inc. and 
Valpak Dealers' Association, Inc. Reply Comments on Notice of 
Proposed Rulemaking, May 31, 2013 (Valpak Reply Comments). Valpak 
also filed a reply to the late-filed reply comments of the United 
States Postal Service, along with a motion for leave to reply to the 
Postal Service's comments. Valpak Direct Marketing Systems, Inc. and 
Valpak Dealers' Association, Inc. Motion for Leave to File Response 
to Late-Filed Postal Service Reply Comments, June 4, 2013. This 
motion is granted.
    \9\ Reply Comments of the National Postal Policy Council, May 
31, 2013 (NPPC Reply Comments).
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    Some of the rules proposed in Order No. 1678 generated opposition. 
Others were relatively uncontroversial. The Commission finds that it 
will be beneficial to promptly adopt rules that were unopposed or 
raised issues that are easily resolved. The Commission will address the 
other proposed rules in later proceedings.
    This order is organized as follows. First, proposed rules that 
generated no opposition are described and adopted. Next, proposed rules 
that raised questions that are easily resolved are described, modified 
as appropriate, and adopted. Finally, proposals concerning the 
treatment of service reductions and promotional and incentive rates 
that generated significant opposition requiring additional research and 
analysis are described. Action in these areas is deferred to a later 
date.

II. Uncontroversial Rules

    No commenter objected to the reorganization of part 3010. 
Consequently, the Commission adopts the changes relating to the 
reorganization of part 3010, including changes to section numbers and 
cross-references. The balance of this order refers to provisions of 
part 3010 by the section and subpart numbers that appear in the final 
rules, as printed below the signature of this order.
    Many of the rules proposed in Order No. 1678 generated either 
positive comments or no objections. In particular, commenters expressed 
approval of proposed Sec. Sec.  3010.11(c) (providing for public 
comments on consistency with Commission orders and directives); \10\ 
3010.12(e) (requiring that cost, avoided cost, volume, and revenue 
figures included in a notice be developed based on the most recent 
applicable analytical principles); \11\ 3010.23(b), requiring that the 
percentage change in rates for a product be calculated in the same 
manner as the percentage change in rates for a class,\12\ and 3010.43 
(specifying that the Commission is interested in the change in net 
financial position resulting from an agreement).\13\
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    \10\ Valpak Comments at 2 (``Valpak supports this proposed rule 
change.'').
    \11\ Pitney Bowes Comments at 2 (``The proposed change is a 
welcome improvement. . . .'').
    \12\ Valpak Comments at 2.
    \13\ Id. at 3 (``Valpak supports this proposed rule change.'').
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    One of the substantive changes proposed by Order No. 1678 received 
no comment. Section 3010.11(g) reduces the comment period for remanded 
rates from 10 days to 7 days. This change reflects the Commission's 
experience in Docket No. R2013-1, in which a 7-day period was 
sufficient to solicit public comment concerning an amended notice of 
rate adjustment.\14\ The Commission adopts these changes.
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    \14\ Order No. 1678 at 12.
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    Following is a section-by-section list of the changes the 
Commission finds to be uncontroversial. These changes are adopted and 
reflected in the final rules that appear below the signature of this 
order.
    Section 3010.1 defines the terms ``annual limitation,'' ``maximum 
rate adjustment,'' ``Type 1-A rate adjustment,'' ``Type 1-B rate 
adjustment,'' ``Type 2 rate adjustment,'' ``Type 3 rate adjustment,'' 
and ``unused rate adjustment authority.'' The definition of the term 
``class'' is discussed in section III.A below.
    Section 3010.2 reflects revisions that correct a statutory 
reference and ensure terms are used consistently.
    Section 3010.3 reflects revisions that ensure terms are used 
consistently and move the requirement that the Postal Service maintain 
a schedule tracking unused rate adjustment authority to Sec.  
3010.26(f).

[[Page 52696]]

    Section 3010.4 reflects revisions that ensure terms are used 
consistently.
    Section 3010.5 reflects revisions that strike duplicative 
provisions.
    Section 3010.6 reflects revisions that ensure terms are used 
consistently.
    Section 3010.7 reflects revisions that ensure terms are used 
consistently.
    Section 3010.8(d) reflects revisions that strike an obsolete 
transition requirement.
    Section 3010.8 reflects revisions that ensure terms are used 
consistently.
    Section 3010.10 reflects revisions that ensure terms are used 
consistently and a revision to the heading to clarify the contents of 
the section.
    The contents of former Sec. Sec.  3010.11 and 3010.12 are included 
in Sec. Sec.  3010.20, 3010.21, and 3010.22.
    Section 3010.11 reflects revisions throughout that ensure cross-
references are correct and terms are used consistently.
    Section 3010.11(c) reflects revisions to clarify that comments on 
compliance with relevant statutory provisions and Commission orders and 
directives are permitted.
    Section 3010.11(g) reflects revisions that change the comment 
period from 10 days to 7 days and provide that comments on amended 
notices may address subjects described in paragraph (c).
    Section 3010.12 reflects revisions that strike paragraph headings 
and ensure terms are used consistently.
    Section 3010.12 also reflects revisions that amend paragraph (b)(5) 
and add a paragraph (e) to require that cost, avoided cost, volume, and 
revenue figures be developed from the most recent approved analytical 
principles.
    Changes to Sec.  3010.12(c) relating to the filing of information 
concerning new discounts and surcharges are discussed in section III.B 
below.
    Section 3010.20 incorporates provisions from former Sec.  3010.11 
and reflects revisions that ensure terms are used consistently.
    Section 3010.22 reflects revisions that specify that it applies to 
rate adjustments filed less than 12 months apart, incorporate 
provisions from former Sec.  3010.12, and ensures terms are used 
consistently.
    Section 3010.23 reflects revisions throughout that ensure terms are 
used consistently. Further changes to this section are discussed in 
section III.D and IV.C.
    Section 3010.23(b) reflects revisions that require the percentage 
change in rates for a product to be calculated in the same manner as 
for a class. The remainder of Sec.  3010.23 is discussed at greater 
length below.
    Section 3010.24 reflects revisions that specify that it applies to 
calculations under Sec.  3010.23.
    Section 3010.25 reflects revisions that clarify that unused rate 
adjustment authority may only be applied after applying the annual 
limitation.
    Section 3010.26(c)(2) reflects revisions to correct cross-
references.
    Section 3010.27 reflects revisions that ensure terms are used 
consistently.
    Section 3010.28 reflects a revision to the heading to clarify the 
contents of the section. An additional proposed change to this section 
is discussed in section III.F.
    Former Sec.  3010.29 is stricken as an obsolete transition 
provision.
    Section 3010.41 reflects a revision to the heading to clarify the 
contents of the section.
    Section 3010.42 reflects revisions that ensure consistent 
formatting and the consistent use of terms.
    An additional comment concerning Sec.  3010.42 is discussed in 
section III G.
    Section 3010.43 reflects revisions that specify that both a plan 
and a report are required and that the net financial position of the 
Postal Service should be reported.
    Section 3010.44 reflects revisions that ensure terms are used 
consistently.
    The heading of subpart E reflects revisions that ensure terms are 
used consistently.
    Section 3010.60 reflects revisions that ensure terms are consistent 
with 39 U.S.C. 3622(d) and used consistently.
    Section 3010.61 reflects revisions that ensure terms are consistent 
with 39 U.S.C. 3622(d) and used consistently.
    Section 3010.62 reflects revisions that ensure terms are consistent 
with 39 U.S.C. 3622(d) and used consistently.
    Section 3010.63 reflects revisions that are consistent with Sec.  
3010.12(b)(2) and ensure that terms are used consistently.
    Section 3010.65 reflects revisions that ensure terms are used 
consistently.
    Section 3010.66 reflects revisions that ensure terms are used 
consistently.

III. Changes Adopted in This Order

    Interested parties submitted comments suggesting modifications to 
changes proposed in Order No. 1678 as well as additional changes to 39 
CFR part 3010. The Commission has received sufficient information 
concerning several of these changes to address commenter concerns. This 
section discusses the changes that the Commission adopts, or declines 
to adopt, in this order. They are grouped by the section of 39 CFR part 
3010 they affect or, if no single section of part 3010 is affected, by 
topic.

A. Section 3010.1(b)--Definition of ``class''

    One commenter suggests that the definition of the term ``class'' in 
Sec.  3010.1(b) should be modified to more closely track the definition 
of the term ``class'' from 39 U.S.C. 3622(d)(2)(A). MPA Comments at 2. 
MPA argues that the proposed definition ``is both circular and 
insufficiently precise.'' Id. at 1. It asserts that applying the price 
cap rules at the class level is an essential requirement of the Postal 
Accountability and Enhancement Act (PAEA) that promotes rate stability 
and predictability. Id. at 2-3. MPA urges that the definition of 
``class'' be modified to read that a class is a class of mail as 
defined in the Domestic Mail Classification Schedule in effect on the 
date of enactment of the Postal Accountability and Enhancement Act. Id. 
at 2.
    Two commenters object to MPA's proposed change. Valpak Reply 
Comments at 10-11; Postal Service Reply Comments at 5-6. Valpak objects 
to a definition of the term ``class'' that would apply to rate 
adjustments that are not subject to an annual limitation, such as 
negotiated service agreements and exigent rate adjustments. Valpak 
Comments at 10-11. It cautions that the proposed change has the 
potential to work against congressional intent when applied outside the 
context of 39 U.S.C. 3622(d). Id. at 11. Finally, it speculates that 
the proposed change is an attempt to protect mailpieces that were 
considered part of the Periodicals class at the time the PAEA was 
enacted from future reclassification to the First-Class Mail or 
Standard Mail class. Id. at 12. The Postal Service objects to MPA's 
proposed change on the basis that it would require the Commission to 
ignore the effects of changes to the market dominant and competitive 
product lists made pursuant to 39 U.S.C. 3642. Postal Service Reply 
Comments at 5-6.
    The Commission does not propose to apply the annual limitation 
under subpart B of part 3010 at anything other than the class level, 
consistent with the clear language of 39 U.S.C. 3622(d)(2)(A). However, 
the Commission does not intend to expand the annual limitation 
requirements to negotiated service agreements or exigent requests. 
Because the term ``class'' appears in the rules concerning exigent 
requests, particularly Sec. Sec.  3010.61(a)(2) and 3010.63, the 
definition of that term for purposes of part 3010 should not be limited 
to the 39 U.S.C. 3622(d)(2)(A) definition. Additionally, the Commission 
does not intend to limit the ability of the Postal Service to seek

[[Page 52697]]

transfers of products between the market dominant and competitive 
product lists under 39 U.S.C. 3642 or to create, change, or remove 
products.
    Rather, it seeks to use the definition of the term ``class'' to 
limit the scope of the part 3010 rules to market dominant postal 
products (as opposed to competitive products or nonpostal products). 
This approach is consistent with chapter 36 of title 39, United States 
Code, as a whole, not just 39 U.S.C. 3622(d)(2)(A). The revised Sec.  
3010.1(b) will read that a ``class'' means a class of market dominant 
postal products.

B. Section 3010.12(c)--Filing of Information for Discounts and 
Surcharges

    Two commenters object to the proposed changes to Sec.  3010.12(c) 
concerning information provided for workshare discounts and other 
discounts and surcharges. Valpak Comments at 6-7; NPPC Reply Comments 
at 8-9. Valpak argues that the proposed changes are ``too broad'' to 
address the workshare issues identified in Order No. 1678 and hints 
that the resulting requirement exceeds the Commission's statutory 
authority. Valpak Comments at 6. It also contends that the proposed 
rule would unnecessarily increase the administrative burden of the 
Postal Service in preparing notices of rate adjustments. Id. at 6-7. 
NPPC concurs with the Valpak Comments, arguing that Congress did not 
intend to impose the heightened standards for workshare discounts under 
39 U.S.C. 3622(e)(4)(C) on other types of discounts or surcharges. NPPC 
Reply Comments at 6-7. NPPC goes further, though, positing that the 
proposed rule creates a substantive restriction on the Postal Service's 
ability to offer discounts, limiting it only to discounts that would 
not `` `adversely affect either the rates or the service levels' of 
postal users that do not use the discount.'' Id. at 8. NPPC suggests 
that the Commission should ``simply defer, as an initial matter,'' to 
the Postal Service's judgment about what constitutes a workshare 
discount and then request supplemental information if necessary. Id. at 
8-9.
    The Commission, not the Postal Service, has the responsibility to 
determine what constitutes a workshare discount. See 39 U.S.C. 
3622(e)(1); see also U.S. Postal Service v. Postal Regulatory 
Commission, 717 F.3d 209,209 (D.C. Cir. 2013) citing Chevron U.S.A. 
Inc. v. Natural Resources Defense Council, 467 US 837 (1984). When 
faced with a Type 1-A or Type 1-B rate adjustment that must be approved 
or denied within 45 days, the Commission may not be able to easily 
identify the discounts and surcharges that qualify as workshare 
discounts. On the other hand, the Commission has no desire to create an 
unnecessary administrative burden for the Postal Service.
    Consistent with these goals, the Commission modifies proposed Sec.  
3010.12(c) to remove references to discounts and surcharges. It also 
adds a new paragraph (d) concerning the information that the Postal 
Service must file with respect to any discount or surcharge that it 
believes is not a workshare discount. Namely, the Postal Service must 
file an explanation of the basis for its belief that the discount or 
surcharge is not a workshare discount and a certification that its 
treatment of the discount or surcharge conforms with approved 
analytical principles. This information will enable the Commission to 
quickly determine whether it is necessary to request supplemental 
information concerning the discount in order to carry out the 
Commission's responsibilities under 39 U.S.C. 3622(e).

C. Sections 3010.21 and 3010.26--Calculation of Annual Limitation and 
Interim Unused Rate Adjustment Authority When Notices of Rate 
Adjustments Are 12 or More Months Apart

    Commenters focused on two issues concerning the calculation of the 
annual limitation under Sec.  3010.21. One of these issues, a proposal 
to incorporate reductions in service standards into the calculation of 
the annual limitation, is discussed in section IV.A below. The second 
issue concerns the appropriateness of using a 12-month period to 
calculate the annual limitation when notices of rate adjustment are 
more than 12 months apart. This issue is related to the questions of 
how and when interim unused rate adjustment authority that accrues 
between notices of rate adjustment may be used under Sec.  3010.26.
    The Postal Service requests that the Commission reconsider existing 
rules that require the annual limitation to be calculated using only 
the most recent 12 months of available data and interim unused rate 
adjustment authority to be calculated using data from the period 
preceding the most recent 12-month period. Postal Service Comments at 
2. It argues that the proposed rules (as well as current Commission 
practices) create a ``disincentive to waiting beyond twelve months to 
raise rates.'' Id. at 1. The Postal Service's objections seem to arise 
chiefly in two contexts: (1) in periods of deflation, or (2) in periods 
of high inflation. The Postal Service asserts that the Commission's 
reading of 39 U.S.C. 3622(d)(1)(A)--which requires that the annual 
limitation be equal to the change in the Consumer Price Index for All 
Urban Consumers (CPI-U) ``over the most recent available 12-month 
period''--is ``overly literal'' and at odds with the Commission's rules 
allowing for calculation of a partial year limitation. Id. at 3. It 
proposes that the Commission use data from the entire period between 
notices of rate adjustment to calculate the annual limitation, not just 
from the most recent 12 months, and allow the Postal Service to decide 
whether to adjust rates to the full extent permissible consistent with 
the annual limitation. Id. at 3-4.
    Two commenters object to proposed Sec.  3010.26(d) and to the 
Postal Service's proposal to revisit the calculation of the annual 
limitation and interim unused rate adjustment authority.
    The Public Representative argues that Sec. Sec.  3010.21 and 
3010.26 are contrary to both Order No. 606 and the requirement under 39 
U.S.C. 3622(d)(2)(C)(iii)(III) that unused rate adjustment authority be 
used on a first-in, first-out (FIFO) basis. Public Representative Reply 
Comments at 2-4. He reads Order No. 606 to require that ``interim 
[unused rate adjustment authority] be added to annual [unused rate 
adjustment authority], and both [. . .] become available for use by the 
Postal Service in future rate cases on a FIFO basis by the terms of 39 
U.S.C. 3622(d)(2)(C)(iii)(III).'' Id. at 3. He contends that proposed 
Sec.  3010.26(d) allows the Postal Service to use interim unused rate 
adjustment authority immediately, a practice that he views as allowing 
the use of unused rate adjustment authority on a last-in, first-out 
basis. Id. at 4.
    Valpak agrees that ``it is not clear that the Commission's proposal 
is correct under PAEA.'' Valpak Reply Comments at 9. It argues that 39 
U.S.C. 3622(d)(1)(D) prevents a rate adjustment that uses ``more than 
12 months of CPI increase plus the earliest available banked 
authority,'' because the statute only allows rate adjustments that are 
``not in excess of the annual limitations.'' Id. (Emphasis in 
original). Valpak reads the plural ``limitations'' to refer to both the 
annual limitation (based on CPI-U) established under 39 U.S.C. 
3622(d)(1)(A) and the limitation on the use of unused rate adjustment 
authority under 39 U.S.C. 3622(d)(2)(C). It argues that because section 
3622(d)(2)(C)(iii)(III) specifies that unused rate adjustment authority 
may only be used on a first-in, first-out basis, interim unused rate 
adjustment authority may not be used in the same

[[Page 52698]]

case in which it is generated. Id. at 9-10.
    The Commission agrees that section 3622(d)(2)(C)(iii)(III) requires 
the Postal Service to use unused rate adjustment authority on a first-
in, first-out basis. However, Valpak's argument conflates the annual 
limitations under subparagraph (A) (i.e., the annual limitations based 
on CPI-U) with the unused rate adjustment authority permitted under 39 
U.S.C. 3622(d)(2)(C). Section 3622(d)(1)(D) clearly refers only to the 
CPI-U limitation established ``under subparagraph (A)'' (that is, under 
subparagraph (A) of Sec.  3622(d)(1)). It would be a distortion of the 
statute to infer that the use of the plural ``limitations'' rather than 
the singular ``limitation'' in paragraph (1)(D) was meant to encompass 
both the annual limitation based on CPI-U and the unused rate 
adjustment authority calculated under paragraph (2)(C). That 
construction would require the Commission to ignore the modifiers 
surrounding the word ``limitations'' both ``annual'' that precedes it, 
and importantly, the ``under subparagraph (A)'' that follows.
    Interim unused rate adjustment authority calculated pursuant to 
Sec.  3010.26(c) is distinct from the annual unused rate adjustment 
authority calculated pursuant to Sec.  3010.26(b). It allows the Postal 
Service to accrue some rate adjustment authority in the period between 
notices of rate adjustments that are more than 12 months apart while 
respecting the statutory directive that the annual limitation be 
calculated on a 12-month basis.
    The plain language of section 3622(d)(1)(A) (``the most recent 
available 12-month period'') prevents the Commission from accepting the 
Postal Service's request that it be allowed to include more than 12 
months of data in the calculation of the annual limitation. Unused rate 
adjustment authority, on the other hand, is intended to take into 
consideration the amount of the rate adjustment that the Postal Service 
``actually makes'' in a given year. 39 U.S.C. 3622(d)(2)(C)(i)(II). In 
instances where notices of rate adjustments are filed 12 or more months 
apart, the annual limitation does not allow the Postal Service to make 
a rate adjustment that would take into account the period in excess of 
12 months.\15\ Interim unused rate adjustment authority is a means of 
addressing the difference between the period over which the statute 
allows the annual limitation to be calculated and the actual period 
between notices of rate adjustment.
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    \15\ For example, when notices of rate adjustment are filed 14 
months apart, the ``annual limitation'' excludes the first 2 months 
of that period.
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    Section 3010.26(d) allows the Postal Service to use interim rate 
adjustment authority in the same case in which it is generated in order 
to take into consideration the economic events of the entire period 
between notices of rate adjustment. This authority is, of course, 
limited by the FIFO requirements of 39 U.S.C. 3622(d)(2)(C)(iii)(III) 
and 39 CFR 3010.27. In times of inflation, this practice has generally 
worked to the Postal Service's advantage, allowing it to use interim 
unused rate adjustment authority to increase prices consistent with the 
change in CPI-U over the entire period between notices of rate 
adjustment. Now, the Postal Service proposes that the Commission allow 
it to ignore periods of deflation (which can result in negative unused 
rate adjustment authority), but continue to calculate interim unused 
rate adjustment authority for periods of inflation. The Commission 
finds no legal basis for the Postal Service's proposed approach. Just 
as the Postal Service benefits from positive interim unused rate 
adjustment authority in periods of inflation, it must accept that in 
periods of deflation, interim unused rate adjustment authority will be 
negative.
    The Commission does not find the use of interim unused rate 
adjustment authority to violate the FIFO principle of 39 U.S.C. 
3622(d)(2)(C)(iii)(III). Contrary to the assertions of the Public 
Representative and Valpak, 39 CFR part 3010 does not permit the Postal 
Service to use interim unused rate adjustment authority before unused 
rate adjustment authority generated during the previous 5 years. When 
the Postal Service files a notice of rate adjustment more than 12 
months after the previous notice of rate adjustment, the Commission 
immediately calculates both interim and annual unused rate adjustment 
authority under Sec.  3010.26(c). The interim unused rate adjustment is 
immediately added to the schedule of unused rate adjustment authority 
described in Sec.  3010.26(f) (commonly referred to as ``the bank''). 
Section 3010.26(d) allows the Postal Service to use that interim unused 
rate adjustment authority in the same case in which it is generated, 
but only after it uses all unused rate adjustment authority from the 
previous 5 years.\16\ This is consistent with the requirement under 
Sec.  3010.27 that the unused rate adjustment authority used for a 
class to make a Type 1-B rate adjustment ``shall be subtracted from the 
existing unused rate adjustment authority for the class, using a first-
in, first-out (FIFO) method, beginning 5 years before the instant 
notice.''
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    \16\ This is assuming the sum of the unused rate adjustment 
authority from the previous five years does not exceed 2 percentage 
points. If the sum of the unused rate adjustment authority from the 
previous five years exceeds 2 percentage points, the Postal Service 
could be prevented from using the interim unused rate adjustment 
authority generated in a case by operation of Sec.  3010.28.
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    The Postal Service objects to this approach because it creates a 
``disincentive to waiting beyond twelve months to raise rates.'' Postal 
Service Comments at 1. The Commission's rules and past practice are 
based on 39 U.S.C. 3622, which was carefully crafted to foster the 
objective of predictable and stable rates. Increases are limited to the 
percentage change in CPI over the preceding 12 months plus up to 2 
percent of previously unused authority. The Commission's current rules 
were designed to be consistent with this statutory scheme, as are the 
amendments approved in this order.
    For these reasons, the Commission declines to alter its approach to 
the calculation and use of interim unused rate adjustment authority. 
However, the comments indicate that proposed Sec.  3010.26(d) did not 
clearly convey the Commission's intent with respect to the use of 
interim unused rate adjustment authority. Accordingly, the Commission 
modifies Sec.  3010.26(d).

D. Section 3010.23(d)--Anticipated Changes in Mailer Behavior

    Two commenters suggest that Sec.  3010.23(d) be altered to allow 
adjustments to billing determinants based on anticipated changes in 
mailer behavior. PostCom at 8-9; Postal Service Comments at 4-5. 
PostCom argues that a ``complete prohibition on relying on anticipated 
changes in mailer behavior is too restrictive.'' PostCom Comments at 8. 
It points to Standard Mail Flats as an example of a product for which 
the Postal Service should be allowed to take into consideration the 
effect of potential mailer behavior on the ability of the product to 
cover costs. Id. Although it acknowledges that the Commission 
disapproved of this approach to Standard Mail Flats in Order No. 
1541,\17\ it argues the Postal Service could ``inadvertently drive 
volume to less profitable categories or out of the system entirely'' if 
it does not take mailer behavior into consideration in setting rates. 
PostCom Comments at 8-9. PostCom advocates allowing the

[[Page 52699]]

Postal Service to make adjustments to billing determinants based on 
anticipated changes in mailer behavior in particular cases if it can 
demonstrate that the changes are ``reasonably likely to occur.'' Id. at 
9.
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    \17\ Docket No. R2013-1, Order on Price Adjustments for Market 
Dominant Products and Related Mail Classification Changes, November 
16, 2012, at 39-41 (Order No. 1541).
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    The Postal Service proposes that the Commission establish a 
prohibition on the use of anticipated changes in mailer behavior to 
make adjustments to billing determinants as its ``default approach'' 
but also allow exceptions to the rules for ``particular 
circumstances.'' Postal Service Comments at 4. The Postal Service 
points to two cases as examples of the Commission using anticipated 
changes in mailer behavior to make adjustments to billing determinants: 
the Full-Service Intelligent Mail barcode (IMb) discounts in Docket No. 
R2009-2 and the Mobile Barcode Promotion approved in Docket No. R2013-
1. Id. at 4-5. It argues that these cases prove that the Commission 
should allow the Postal Service to use projections of mailer behavior 
``where it believes using historical volumes would either understate 
volumes or otherwise be inappropriate.'' Id. at 5.
    Valpak opposes the use of anticipated changes in mailer behavior to 
make adjustments to billing determinants in any situation and supports 
the proposed rule as written. Valpak Reply Comments at 4-8. It quotes 
extensively from Order No. 1541 to support its contention that cost 
projections are not appropriate in a rate case. Id. at 4-6. It asserts 
that projections of mailer behavior are necessarily based on 
``assumptions, speculation, and uncertainty'' that ``should be open to 
challenge.'' Id. at 7. It further asserts that such challenges are not 
feasible under the ``accelerated timetable'' of a market dominant rate 
case. Id.
    As the commenters point out, the Commission's experience with 
projections based on forecasts of anticipated mailer behavior has not 
been positive. As was the case with the Postal Service's projection of 
future volume changes associated with Standard Mail Flats, projections 
of mailer behavior carry the risk of relying on assumptions that are 
``unfounded,'' ``unsupported,'' or ``erroneous.'' See Order No. 1541 at 
40. In Docket No. R2011-1, the Commission disapproved of the use of 
projections of mailer behavior.\18\
---------------------------------------------------------------------------

    \18\ Docket No. R2011-1, Order Approving Market Dominant 
Classification and Price Changes, and Applying Price Cap Rules, 
December 10, 2010, at 19 (Order No. 606).
---------------------------------------------------------------------------

    In contrast, the Commission found that the calculation of 
percentage change in rates for the Mobile Barcode Promotion did not 
rely on ``forecasts of expected volume.'' Order No. 1541 at 17. Rather, 
the Postal Service permissibly used ``actual volumes . . .'' from the 
promotion to make adjustments to billing determinants in Docket No. 
R2013-1. Id. The Commission does not intend for Sec.  3010.23(d) to 
prevent adjustments to billing determinants similar to the adjustments 
made for the Mobile Barcode Promotion, ``where historical volumes 
[were] available for the calculation of the effect of the price change 
resulting from the promotions on the price cap.'' Id. To the contrary: 
an adjustment that uses actual historical volumes to account for the 
effects of a classification change ameliorates the problems anticipated 
by Valpak.
    A brief review of the development of Sec.  3010.23(d) in Docket No. 
RM2007-1 demonstrates that the additional language is consistent with 
how the rule was originally intended to operate. In response to the 
Commission's initial advance notice of proposed rulemaking inviting 
comments on 39 U.S.C. 3622,\19\ the Postal Service outlined the basic 
concept that eventually formed the basis of Sec.  3010.23(d).\20\ The 
Postal Service proposed a method of calculating the average price 
change for each class using a fixed rate index of prices, where the 
prior year's billing determinants served as the weight for each rate 
cell that was proposed by the Postal Service, and allowing for 
adjustments to reflect changes in the rate design structure. Id.
---------------------------------------------------------------------------

    \19\ Docket No. RM2007-1, Order No. 2, Advance Notice of 
Proposed Rulemaking on Regulations Establishing a System of 
Ratemaking, January 30, 2007 (Order No. 2).
    \20\ Docket No. RM2007-1, Reply Comments of the United States 
Postal Service, May 7, 2007, Appendix C at 7-8.
---------------------------------------------------------------------------

    To explore some of the important issues raised by commenters in the 
responses to Order No. 2, the Commission issued a second advance notice 
of proposed rulemaking, which asked parties to comment on several 
questions.\21\ The Commission specifically requested additional 
discussion about how adjustments to billing determinants might be 
developed in circumstances where historical billing determinants were 
not available. Id. at 5.
---------------------------------------------------------------------------

    \21\ Docket No. RM2007-1, Second Advance Notice of Proposed 
Rulemaking on Regulations Establishing a System of Ratemaking, May 
17, 2007 (Order No. 15).
---------------------------------------------------------------------------

    The Postal Service replied with an extended discussion of the 
issue.\22\ It distinguished between ``mail characteristics which appear 
in the mailstream, but for which billing determinants are not available 
because those characteristics previously were not associated with 
distinct rate treatment'' and ``those characteristics which do not 
appear at all within the existing mailstream.'' Id. at 6-7. The Postal 
Service explained that in either case, ``[t]o maintain consistency with 
historical billing determinants, of course, the focus must remain on 
the volume proportions as they exist without any rate distinction.'' 
\23\ Id. at 8. It described the adjustments as a process whereby ``the 
Postal Service would `map' the historical volumes to the noticed price 
structure using the best data available. These data could include 
historical volume data (e.g., for shape distribution) that were not 
previously needed for postage calculation; the results of mail 
characteristics or market research studies; or, observed volume 
patterns for a recent period (shorter than a full year) for which the 
price structures were in effect.'' Id. at 9. The Postal Service 
anticipated that ``all `adjustments' to billing determinants would be 
explained . . . with the materials submitted with the Notice of Price 
Adjustment.'' Id.
---------------------------------------------------------------------------

    \22\ Docket No. RM2007-1, Initial Comments of the United States 
Postal Service on the Second Advance Notice of Proposed Rulemaking, 
June 18, 2007, at 7-10 (Postal Service Second Notice Comments).
    \23\ The Postal Service further explained that estimating the 
volume change in response to new price incentives may be useful for 
other purposes, but that such an exercise should not be used ``for 
purposes of calculating compliance with the cap.'' Id. at n.3.
---------------------------------------------------------------------------

    PostCom initially expressed concern that the use of adjustments by 
the Postal Service might entangle the process in the difficulties of 
forecasting or rolling forward volumes.\24\ The Alliance of Nonprofit 
Mailers (ANM) and the Magazine Publishers of America, Inc. (MPA) raised 
an additional concern that the Postal Service's approach would need to 
allow an exception to account for the price cap implications of 
``changes in mail preparation requirements'' that require an adjustment 
``to reflect the impact of the rule change on rate eligibility.'' \25\
---------------------------------------------------------------------------

    \24\ Docket No. RM2007-1, Comments of PostCom in Response to 
Second Advance Notice of Proposed Rulemaking on Regulations 
Establishing a System of Ratemaking, June 18, 2007. After the Postal 
Service provided further clarification that forecasts and 
rollforwards would be unnecessary, PostCom found the approach 
``entirely reasonable''. Docket No. RM2007-1, Reply Comments of 
PostCom in Response to Second Advance Notice of Proposed Rulemaking, 
July 3, 2007, at 4 (2007 PostCom Reply Comments).
    \25\ Docket No. RM2007-1, Initial Comments of Alliance of 
Nonprofit Mailers and Magazine Publishers of America, Inc. on 
Further Advance Notice of Proposed Rulemaking (Order No. 15), June 
18, 2007, at 1-3.
---------------------------------------------------------------------------

    The Postal Service explained that the concerns expressed by these 
commenters were founded on a

[[Page 52700]]

misunderstanding of both the Postal Service's intent and its proposed 
method of developing the billing determinant adjustments.\26\ It 
emphasized that its approach represented ``a sensible way to calculate 
compliance for new rate structures by the use of historical volumes, 
without the need for forecasts and rollforwards.'' Id. at 4 (footnote 
omitted). The Postal Service also described how billing determinant 
adjustments would be applied to ensure that a change in mail 
preparation requirements that shifts some mail into a different price 
category is fairly evaluated for compliance with the cap. Id. at 3.
---------------------------------------------------------------------------

    \26\ Docket No. RM2007-1, Reply Comments of the United States 
Postal Service on the Second Advance Notice of Proposed Rulemaking, 
July 3, 2007, at 3-6.
---------------------------------------------------------------------------

    Nearly all parties who commented on the issue in Docket No. RM2007-
1 ultimately supported the Postal Service's proposed weighting system.

    Many of the comments in support of this approach cited the fact 
that it would avoid ``the complexity and practical difficulty of 
projected volume data'' as an important element that would help 
ensure the speed and simplicity of the system of regulation 
envisioned by the PAEA.\27\
---------------------------------------------------------------------------

    \27\ Docket No. RM2007-1, Reply Comments of Pitney Bowes Inc. in 
Response to Second Advance Notice of Proposed Rulemaking on 
Regulations Establishing a System of Ratemaking, July 3, 2007, at 4; 
see also Initial Comments of Pitney Bowes Inc. in Response to Second 
Advance Notice of Proposed Rulemaking on Regulations Establishing a 
System of Ratemaking, June 18, 2007, at 3-4; Comments of ADVO, Inc. 
in Response to Second Advance Notice of Proposed Rulemaking on 
Regulations Establishing a System of Ratemaking, June 18, 2007, at 
3; Valpak Direct Marketing Systems, Inc. and Valpak Dealers' 
Association, Inc. Reply Comments on Regulations Establishing a 
System of Ratemaking in Response to Commission Order No. 15, July 3, 
2007, at 12-3; Initial Comments of the American Postal Workers Union 
AFL-CIO, in Response to Second Advance Notice of Proposed Rulemaking 
on Regulations Establishing a System of Ratemaking, June 18, 2007, 
at 3; 2007 PostCom Reply Comments at 4.

    With the broad support for the approach among commenters and the 
detailed explanations from the Postal Service of how it would be 
applied in various scenarios, the Commission's final rule adopted the 
concept of weighting the current and new rates by a fixed set of 
historical billing determinants, with adjustments based on additional 
historical mail characteristics data where necessary to reflect changes 
in the rate and classification structure.
    Consistent with the original design of the rule and its past 
practice, the Commission finds that Sec.  3010.23(d) should be modified 
to clarify that adjustments to billing determinants may not be based on 
forecasts of mailer behavior. It is worth noting that, consistent with 
the discussion above, an adjustment that ``maps'' historical volume 
data to a noticed price structure, using the best available data, is 
not considered an adjustment based on forecasts of mailer behavior.\28\ 
Paragraph (d) of Sec.  3010.23 is revised accordingly.
---------------------------------------------------------------------------

    \28\ The Postal Service indicated that it may wish to use ``the 
results of mail characteristics or market research studies'' to make 
adjustments to billing determinants. Postal Service Second Notice 
Comments at 9. If the Postal Service intends to use such studies to 
make adjustments to billing determinants in a particular rate case, 
the Commission encourages it to submit such studies to the 
Commission in advance of its notice of proposed rate adjustment, to 
provide the Commission and interested parties with additional time 
for review.
---------------------------------------------------------------------------

E. Section 3010.26(f)--Clarify That Unused Rate Adjustment Authority Is 
a Series of Numbers Rather Than a Single Number

    The Public Representative expressed concern that Order No. 1678 
appears to refer to a single ``calculation'' of unused rate adjustment 
authority, rather than separate calculations for each class in each 
rate case. Public Representative Comments at 2. He notes, however, that 
proposed Sec.  3010.26(f) properly reflects the complexity of unused 
rate adjustment authority calculations by requiring a table that tracks 
the establishment and subsequent use of unused rate adjustment 
authority by class.\29\ The Public Representative is correct that 
unused rate adjustment is calculated for each class, in each rate case.
---------------------------------------------------------------------------

    \29\ Id. Section 3010.12(b)(2) also requires the Postal Service 
to submit with each notice of Type 1-A or Type 1-B rate adjustment a 
``schedule showing unused rate adjustment authority available for 
each class of mail displayed by class and available amount for each 
of the preceding 5 years.''
---------------------------------------------------------------------------

    The Public Representative also expresses concern that the 
Commission ``essentially treats [unused rate adjustment authority] for 
a class as a single, cumulative number--the sum of five years of 
[unused rate adjustment authority].'' Public Representative Comments at 
2. He correctly points out that 39 U.S.C. 3622(d)(2)(C) requires the 
Postal Service to use the oldest unused rate adjustment authority 
first, and does not require it to use the sum of the unused rate 
adjustment authority generated during the previous five years all at 
once. Id. at 2-3. The Commission finds that the proposed rules 
adequately express the nature of unused rate adjustment authority. 
Section 3010.20(d)(2) allows for a maximum rate adjustment that 
consists, in part, of ``the unused rate adjustment authority for the 
class that the Postal Service elects to use, subject to the limitation 
under Sec.  3010.28.'' Section 3010.27 provides that the unused rate 
adjustment authority used in a case for a class ``shall be subtracted 
from the existing unused rate adjustment authority for the class, using 
a first-in, first-out (FIFO) method, beginning 5 years before the 
instant notice.'' In combination, these rules allow the Postal Service 
to elect to use all, part, or none of its available unused rate 
adjustment authority, provided that it uses the oldest unused rate 
adjustment authority first.
    Neither of the Public Representative's concerns appears to require 
a modification of the proposed rules.

F. Section 3010.28--Maximum Size of Unused Rate Adjustment Authority 
Rate Adjustment

    One commenter argues that Sec.  3010.28 ``creates an ambiguity that 
arguably might allow the Postal Service to raise rates by two percent 
even when it lacks the unused rate authority necessary to do so.'' NPPC 
Reply Comments at 2. It suggests that Sec.  3010.28 be revised.
    The Commission finds this suggested change to be unnecessary. 
Section 3010.28 establishes the maximum amount of unused rate 
adjustment authority that may be used for a class in any one 12-month 
period. Nothing in the plain language of this section creates (or 
allows for the creation of) unused rate adjustment authority not 
generated pursuant to Sec.  3010.26. A simple limitation on the amount 
of unused rate adjustment authority used in any one 12-month period is 
not enough to create additional authority.

G. Section 3010.42(f)--Projections of Changes in Net Financial Position 
Resulting From Market Dominant Negotiated Service Agreements

    Valpak suggests that the Commission modify Sec.  3010.42(f) to 
require that the Postal Service's projection of the change in net 
financial position resulting from a market dominant negotiated service 
agreement be based on ``the Commission's methodology, including its 
choice of proxy.'' Valpak Comments at 11. In addition, Valpak proposes 
that the Commission detail how market dominant negotiated service 
agreements are reported in the Postal Service's Annual Compliance 
Report. Id. Valpak's concerns stem from the Postal Service's reporting 
concerning the Discover Financial Services 1 product. Id.
    Requirements relating to the Annual Compliance Report are found in 
39 CFR part 3050 and are outside the scope of this docket. The 
Commission will not address them here.

[[Page 52701]]

    As for Sec.  3010.42(f), the Commission reaffirmed its accepted 
analytical principle for the assessment of the financial effects of 
price incentives (including negotiated service agreements) designed to 
increase mail volume or shift mail volume between products in Docket 
No. RM2010-9.\30\ In that docket, the Postal Service proposed a new 
methodology for calculating the financial impact of pricing incentive 
programs based on ``trend analysis'' to replace the Commission's 
elasticity-based methodology. Id. at 1. The Commission rejected the 
Postal Service's proposed methodology in favor of its accepted 
analytical principle that the financial effect of price incentive 
programs should be ``based on the Postal Service's best estimate of the 
price elasticity of the discounted product.'' Id. at 3 (quotation marks 
omitted). However, the Commission also encouraged the Postal Service to 
continue to examine other methods for evaluating the financial impact 
of pricing incentive programs that would be based on ``accurate and 
reliable data.'' Id. at 16.
---------------------------------------------------------------------------

    \30\ Docket No. RM2010-9, Order Terminating Proceeding, May 27, 
2011 (Order No. 738).
---------------------------------------------------------------------------

    Consistent with Order No. 738, the Commission finds that, although 
in many cases, the Commission's accepted analytical principles will 
provide the best available model for evaluating the net financial 
impact of a market dominant negotiated service agreement, part 3010 
should not unnecessarily limit the Postal Service's ability to 
supplement its filing with an alternative analysis of the net financial 
impact. However, if the Postal Service elects to include a methodology 
that differs from the Commission's accepted analytical principles, it 
should include an explanation of why it believes its model produces a 
more accurate estimate than the Commission's. Including an alternative 
model does not remove the obligation to provide the Commission with a 
calculation of net financial impact that is based on the Commission's 
approved analytical principles. Finally, the Commission reminds the 
Postal Service that, as a general matter, if it develops improved 
methodologies it may propose them in a separate docket in accordance 
with 39 CFR 3050.11. Generally speaking, a petition under 39 CFR 
3050.11 will provide the Commission and interested persons with a 
better opportunity to evaluate proposed methodologies thoroughly 
without delaying the consideration of a notice of a market dominant 
negotiated service agreement filed under 39 CFR 3010 subpart D.
    In light of the foregoing considerations, the Commission modifies 
Sec.  3010.42(f).

H. Library of Commission-Approved Cost Models

    Two commenters support the establishment of an online, indexed 
library of the Commission's approved cost models. Pitney Bowes Comments 
at 2-3. Postal Service Reply Comments at 6. Pitney Bowes argues that 
such a library would be consistent with the goals of this docket, aid 
the Postal Service in complying with Sec.  3010.12(e), and result in 
pricing decisions based on the most recent and accurate cost data. 
Pitney Bowes Comments at 3. It notes that the Postal Service previously 
requested similar information in connection with its FY 2012 Annual 
Compliance Report. Id. at 2. The Postal Service expresses its support 
for Pitney Bowes' recommendation. Postal Service Reply Comments at 6.
    The development of rules to establish a library of Commission-
approved cost models is beyond the scope of this rulemaking. Such 
regulation would more properly be considered in the context of 39 CFR 
part 3050 rules. The Commission will not address the ramifications of 
such rules here. However, the Commission agrees that such a library 
would be useful for the Postal Service and postal customers. It earlier 
made available on its Web site a chart identifying the most recent 
Commission-approved workshare cost avoidance models.\31\ The Commission 
will endeavor to provide additional and updated cost models as 
appropriate.
---------------------------------------------------------------------------

    \31\ PRC Workshare Cost Avoidance Models, Last Update: 05/07/
2013, available https://www.prc.gov/prc-docs/home/whatsnew/Directory%20of%20PRC%20Workshare%20Cost%20Avoidance%20Models_3155.pdf.
---------------------------------------------------------------------------

IV. Remaining Issues

    Several of the proposed rules generated significant opposition or 
additional suggestions from commenters. The issues raised by the 
comments concerning these rules are discussed in this section. They 
include a proposal to include reductions in service quality in the 
calculation of the maximum rate adjustment, a proposal to alter the 
contents of notices concerning market dominant negotiated service 
agreements, and a number of proposals concerning the treatment of 
promotions and incentives. The Commission finds that these issues 
require additional research and analysis that exceed the scope of this 
docket and will defer consideration of them to a later date.

A. Reductions in Service

    Two commenters support modifying 39 CFR part 3010 to take 
reductions in service quality into consideration when calculating the 
maximum rate adjustment for each notice. Valpak Comments at 7-11, NPPC 
Reply Comments at 9. Valpak alleges that ``[u]ntil Commission rules 
state that some reductions in service, depending upon their severity or 
egregiousness, will be given consideration when determining the maximum 
price cap adjustment in any given year, the Postal Service each year 
will have unrestrained license to increase operating profitability by 
reducing the quality of service being provided to mailers and the 
public.'' Valpak Comments at 8. Both Valpak and NPPC assert that this 
is a problem common to price cap regimes generally. Valpak Comments at 
7; NPPC Reply Comments at 9-12.
    Valpak points to three actions by the Postal Service that it 
asserts have reduced (or have the potential to reduce) quality of 
service: Post office closings, reductions in hours of operation at post 
offices, and the proposal to eliminate Saturday delivery. Valpak 
Comments at 7. Valpak also uses the conversion to Full-Service IMb as 
an example of a change the Postal Service can make to ``reduce its 
costs while increasing costs to mailers.'' Id. at 9. Valpak asserts 
that such changes should result in a reduction in the maximum rate 
adjustment that the Postal Service could make in a particular rate 
case. Id. In addition to echoing Valpak's concerns about network 
rationalization and Full-Service IMb, NPPC alleges that First-Class 
Mail service standards have already been reduced and that changes to 
Periodicals service standards are expected in the future. NPPC Reply 
Comments at 10.
    This docket has not produced the information the Commission would 
need to amend its rules to include reductions in service quality in the 
calculation of the maximum rate adjustment. For instance, it is not 
clear whether such reductions can or should be considered when 
calculating the annual limitation under Sec.  3010.21 or Sec.  3010.22, 
when calculating the percentage change in rates under Sec.  3010.23, or 
even when calculating the available amount of unused rate adjustment 
authority under Sec.  3010.26. Although Valpak provides examples of 
changes, it believes reduce the quality of service provided by the 
Postal Service, it does not suggest a definition or other framework 
that the Commission could use to determine which changes result in a 
reduction in service quality that

[[Page 52702]]

would necessitate an adjustment to the maximum rate adjustment. NPPC 
proposes that adjustments to the maximum rate adjustment be made when 
``the Postal Service makes changes that reduce service quality, raise 
mailer costs, or force mailers into higher priced products'' but does 
not specify how the Commission should determine when those conditions 
have been met. NPPC Reply Comments at 12. Additionally, as Valpak 
notes, its proposal does not address ``the issue of what data to use 
when determining the extent'' of a reduction in service quality. Id. at 
10.
    Finally, the Commission notes that neither Valpak nor NPPC 
discusses whether and how the price cap calculations might be adjusted 
to reflect improvements in service.
    The Commission, therefore, does not proceed with these suggestions.

B. NSA Notice Contents

    In addition to the change to Sec.  3010.42(f) discussed in section 
III.G above, Valpak proposes two requirements relating to market 
dominant negotiated service agreements. Valpak Comments at 12-13. The 
first would be a requirement that the Postal Service identify the 
mailers it believes to be ``similarly situated'' to the mailer that is 
a party to the proposed negotiated service agreement. Id. at 12. This 
proposal is related to the Commission's consideration of the Valassis 1 
product in Docket Nos. MC2012-14 and R2012-8. During that case, the 
Commission issued a Notice of Inquiry to obtain clarification 
concerning similarly situated mailers.
    The second proposal is a requirement that the Postal Service 
explain why it would be ``impracticable'' to establish a niche 
classification instead of entering into a negotiated service agreement. 
Id. at 13. Valpak asserts that this requirement is similar to a 
regulation in effect before the enactment of the PAEA, and that it 
would address ``systemic problems'' with negotiated service agreements, 
including ``preferences and discrimination.'' Id.
    Both proposals present potential difficulties that are not fully 
explored in the Valpak Comments. For instance, the first proposal would 
require the Postal Service to make an initial complex determination 
about the universe of similarly situated mailers. Adding such a 
requirement could make the notice requirements under 39 CFR part 3010 
subpart D unduly burdensome. Such a burden may be contrary to the goals 
of the PAEA, which requires the Commission to consider the desirability 
of the Postal Service entering into appropriate market dominant 
negotiated service agreements. See 39 U.S.C. 3622(c)(10).
    The second proposal, to require the Postal Service to justify its 
decision to enter into a negotiated service agreement rather than 
establish a niche classification, could infringe on the Postal 
Service's discretion with respect to the structure of its products. 
Nothing in 39 U.S.C. 3622(c)(10) requires the Postal Service to make 
``special classifications'' generally available to mailers that are not 
similarly situated. Title 39 permits the Postal Service to make the 
reasonable business decision to use a negotiated service agreement 
rather than a niche classification in order to better understand the 
implications of new strategies before broadening those strategies to 
affect a wide range of customers. The choice to offer a negotiated 
service agreement instead of a niche classification is a reasonable way 
to limit the potential adverse effects of an unsuccessful initiative to 
the benefit of postal customers generally. Valpak fails to offer 
sufficient justification to support adding either of these requirements 
to the subpart D rules.

C. Promotions and Incentive Programs

    Many of the comments filed in this docket concern the treatment of 
promotions and incentive programs. One commenter supported the rules as 
proposed. Several other commenters raised general objections to the 
idea of allowing the Postal Service to include temporary promotional 
rates in the calculation of the percentage change in rates.
    Commenters also suggested a range of possible modifications to the 
proposed rules. Several of them focused on proposed paragraph (e) of 
Sec.  3010.23, suggesting that the Commission change ``may'' to 
``shall'' in order to require the Postal Service to exclude temporary 
promotional rates from the calculation of the percentage change in 
rates. PostCom suggests several alternative methods of accounting for 
temporary promotions which generated additional reply comments. The 
Postal Service suggests two alternatives to the proposed rules as well. 
These comments indicate that the treatment of promotional rates and 
incentive programs is likely to be crucial to the Commission's 
calculation of maximum rate adjustments in future rate cases. In order 
to allow for the development of a more complete record on this 
important issue, the Commission will open a separate docket to solicit 
targeted comments from interested persons.
1. General Comments
    Alone among the commenters, the Public Representative supports 
proposed Sec.  3010.23(e) and (f) without modification. Public 
Representative Reply Comments at 4. In particular, he argues that 
allowing the Postal Service to exclude some temporary promotions and 
incentives from the calculation of the percentage change in rates is 
appropriate. Id. Some promotions (like summer sales) are more like 
negotiated service agreements: Their primary goal is to generate 
volume. Id. These promotions should be excluded from the calculation of 
percentage change in rates. Some promotions, on the other hand, are 
more like investments. In these cases, the Public Representative argues 
that the Postal Service should be permitted to include promotional 
rates in the calculation of the percentage change in rates, in order to 
generate unused rate adjustment authority that would allow it to 
``recover'' the investment from all mailers. Id.
    The Postal Service generally supports the treatment of temporary 
promotions under the proposed rules, but suggests additional 
modifications to specifically provide for the treatment of mid-year 
promotions. Postal Service Reply Comments at 3-4. Those suggestions are 
discussed below.
    Other commenters object to the inclusion of any temporary 
promotional rate in the calculation of the percentage change in rates. 
Three commenters claim that proposed Sec.  3010.23(e) represents an 
arbitrary reversal of the Commission's past practice. Valpak Comments 
at 3-5; Valpak Reply Comments at 2-3; NAPM Comments at 3-4; NPPC Reply 
Comments at 2-3. The Valpak Comments cite seven dockets that excluded 
temporary promotions from the calculation of percentage change in 
rates. Valpak Comments at 3-4; see also NAPM Comments at 3-4. Valpak 
argues that the Commission failed to provide a reasoned analysis for 
what Valpak views as the Commission's change in position in Docket No. 
R2013-1. Valpak Comments at 5; see also NAPM Comments at 5. NPPC 
further objects that in Order No. 1541, the Commission did not announce 
that its treatment of promotional discounts represented a new approach. 
NPPC Reply Comments at 3. NAPM asserts that many of the objections 
raised in Docket No. R2013-1 were due to the treatment of temporary 
promotions, which ``was a substantial departure from past practice.'' 
NAPM Comments at 4.
    Two commenters assert that Sec.  3010.23(e) and (f) are 
inequitable.

[[Page 52703]]

Valpak argues that the proposed rules are inequitable because they 
would allow the Postal Service to provide discounts to some mailers 
while increasing rates for other mailers. Valpak Comments at 5. It 
cites Docket No. R2013-6, the technology credit promotion, as an 
example of an attempt by the Postal Service to do just that. Id. at 5-
6. Pitney Bowes focuses on the ``inequitable'' effects of a failed 
promotional program, and argues that under the proposed Sec.  3010.23 
``the Postal Service is held harmless . . . but the nonparticipating 
mailers pay.'' Pitney Bowes Comments at 3. Additionally, NPPC questions 
whether ``requiring other (or future) mailers to pay higher rates to 
recover temporary promotional rates is just and reasonable under the 
PAEA . . .'' NPPC Reply Comments at 5.
    One commenter expresses concern that proposed Sec.  3010.23(e) 
could allow the Postal Service to raise rates above the maximum rate 
adjustment. NPPC Reply Comments at 5. NPPC asserts that excluding 
temporary promotional rates from the calculation of the percentage 
change in rates has, until Docket No. R2013-1, been the Commission's 
safeguard against the possibility of exceeding the maximum rate 
adjustment. Id.
2. Changing ``May'' to ``Shall''
    Proposed paragraphs (e) and (f) of Sec.  3010.23 would have 
permitted the Postal Service to exclude temporary promotional rates and 
incentive programs from the calculation of percentage change in rates 
if they resulted in an overall rate decrease. Four commenters propose 
modifying the Commission-proposed paragraph (e) to change the option to 
exclude temporary promotions into a requirement to exclude temporary 
promotions. PostCom Comments at 2-4; NAPM Comments at 4; Valpak Reply 
Comments at 2-3; NPPC Reply Comments at 6. They support substituting 
``shall'' for ``may'' in proposed paragraph (e). PostCom characterizes 
this change as a codification of the Postal Service's past approach to 
temporary promotions. PostCom Comments at 3. It also argues that the 
change will provide additional certainty for mailers by making it 
easier for small mailers to evaluate the impact of a proposed temporary 
promotion. Id. at 4. PostCom suggests that it could support a ``good 
cause'' exception to its proposed general rule that temporary 
promotional rates must be excluded from the calculation of the 
percentage change in rates. Id. at 5.
    NPPC supports the change from ``may'' to ``shall,'' without a good 
cause exception, on the basis that the Commission's approach in Docket 
No. R2013-1 was ``mistaken.'' NPPC Reply Comments at 6. Valpak and NAPM 
support this approach as well. Valpak Reply Comments at 3; NAPM 
Comments at 5. NAPM also proposes to strike paragraph (f) of Sec.  
3010.23. NAPM Comments at 5.
    Although it does not explicitly support the suggestion to change 
``may'' to ``shall,'' Pitney Bowes proposes that the Commission 
``conform proposed rule 3010.23(e) to the analogous rule for NSAs, rule 
3010.24(a).'' Pitney Bowes Comments at 4. This approach would likely 
lead to the same results as changing ``may'' to ``shall'' in proposed 
Sec.  3010.23(e) because it would require the Postal Service to exclude 
temporary promotional rates from the calculation of the percentage 
change in rates. Valpak supports this alternative approach. Valpak 
Reply Comments at 3.
3. PostCom Alternative and Additional Modifications
    PostCom suggests an alternative to proposed Sec.  3010.23(e): 
Clarifying that the Postal Service may include temporary promotional 
rates in the calculation of the percentage change in rates for a mid-
year rate case if it uses Sec.  3010.26(b) to calculate unused rate 
adjustment authority for that case. PostCom Comments at 5. This 
approach differs from the Postal Service's proposal in Docket No. 
R2013-6. In that docket, the Postal Service sought (unsuccessfully) to 
generate unused rate adjustment authority without adding it to the 
schedule of unused rate adjustment authority. Id. Valpak states that it 
prefers the change from ``may'' to ``shall'' to this alternative 
approach. Valpak Reply Comments at 2.
    In addition, PostCom proposes two modifications to the proposed 
rules. The first would be to require that any unused rate adjustment 
authority resulting from a temporary promotion be used only to adjust 
rates for the product to which the temporary promotion applied. PostCom 
Comments at 6-7. Valpak dismisses this proposal as ``an 
impossibility,'' due to the Postal Service's authority to set its own 
rates. Valpak Reply Comments at 12-13.
    The second modification would be to ``require the Postal Service to 
reconcile the volume sent at promotional rates with the adjustment 
authority it claims in its next scheduled price adjustment.'' PostCom 
Comments at 7. That is, the Commission should re-calculate the unused 
rate adjustment authority resulting from a temporary promotion once it 
receives data concerning the actual volumes associated with the 
temporary promotion.
4. Postal Service Alternatives
    The Postal Service objects to the approaches described above. 
Postal Service Reply Comments at 1. Instead, it proposes that the 
Commission ``expand its proposed rules'' to specifically address mid-
year promotions. Id. at 3. The Postal Service's preferred method to 
address mid-year promotions is essentially the approach it proposed in 
Docket No. R2013-6: Allow the Postal Service ``to forgo a full-scale 
rate adjustment authority calculation and simply calculate the 
authority resulting specifically from the promotion or rate decrease, 
and then use such authority in the next annual price adjustment, when a 
full rate adjustment authority calculation would be made.'' Id. The 
Commission rejected this approach in Order No. 1743.\32\
---------------------------------------------------------------------------

    \32\ Docket No. R2013-6, Order Approving Technology Credit 
Promotion, June 10, 2013 (Order No. 1743).
---------------------------------------------------------------------------

    As an alternative, the Postal Service proposes that the Commission 
modify its proposed rules to allow it ``to convert revenue foregone in 
promotions as well as any other rate decreases into unused rate 
adjustment authority, without conducting a full-scale calculation of 
all the rate adjustment authority that has accrued since the last 
annual price adjustment.'' Postal Service Reply Comments at 4.
    The Postal Service also notes the difficulty in isolating the 
effects of temporary promotions from the effects of other rate 
adjustments in the context of an ``annual price change,'' where rates 
are adjusted for many products, often in several classes at once. Id.
5. Conclusion
    The comments received in this docket indicate that the treatment of 
promotional rates and incentive programs is likely to continue to be a 
point of contention in future rate cases. The Commission recognizes the 
need for certainty for the mailing community and the Postal Service in 
this regard. In order to allow for the development of a complete record 
on this important issue, the Commission will open a separate docket to 
consider the treatment of promotional rates and incentive programs. 
Consequently, proposed paragraphs (e) and (f) will not be included in 
Sec.  3010.23. Section 3010.23(b) is revised to remove the reference to 
paragraph (f).

[[Page 52704]]

V. Ordering Paragraphs

    It is ordered:
    1. Part 3010 of title 39, Code of Federal Regulations, is revised 
as set forth below the signature of this order, effective 30 days after 
publication in the Federal Register.
    2. The Secretary shall arrange for publication of this order in the 
Federal Register.

List of Subjects in 39 CFR Part 3010

    Administrative practice and procedure; Postal Service.

    By the Commission.
Shoshana M. Grove,
Acting Secretary.

    For the reasons stated above, the Postal Regulatory Commission 
amends 39 CFR chapter III by revising part 3010 to read as follows:

PART 3010--REGULATION OF RATES FOR MARKET DOMINANT PRODUCTS

Subpart A--General Provisions
Sec.
3010.1 Definitions in this subpart.
3010.2 Applicability.
3010.3 Types of rate adjustments for market dominant products.
3010.4 Type 1-A rate adjustment--in general.
3010.5 Type 1-B rate adjustment--in general.
3010.6 Type 2 rate adjustment--in general.
3010.7 Type 3 rate adjustment--in general.
3010.8 Schedule for Regular and Predictable Rate Adjustments.
Subpart B--Rules for Rate Adjustments for Rates of General 
Applicability (Type 1-A and 1-B Rate Adjustments)
3010.10 Notice.
3010.11 Proceedings for Type 1-A and Type 1-B rate adjustment 
filings.
3010.12 Contents of notice of rate adjustment.
Subpart C--Rules for Determining the Maximum Rate Adjustment
3010.20 Calculation of maximum rate adjustment.
3010.21 Calculation of annual limitation when notices of rate 
adjustment are 12 or more months apart.
3010.22 Calculation of annual limitation when notices of rate 
adjustment are less than 12 months apart.
3010.23 Calculation of percentage change in rates.
3010.24 Treatment of volume associated with negotiated service 
agreements.
3010.25 Limitation on application of unused rate adjustment 
authority.
3010.26 Calculation of unused rate adjustment authority.
3010.27 Application of unused rate adjustment authority.
3010.28 Maximum size of rate adjustments.
Subpart D--Rules for Rate Adjustments for Negotiated Service Agreements 
(Type 2 Rate Adjustments)
3010.40 Negotiated service agreements.
3010.41 Notice.
3010.42 Contents of notice of agreement in support of a Type 2 rate 
adjustment.
3010.43 Data collection plan and report.
3010.44 Proceedings for Type 2 rate adjustments.
Subpart E--Rules for Rate Adjustments in Extraordinary and Exceptional 
Circumstances (Type 3 Rate Adjustments)
3010.60 Applicability.
3010.61 Contents of exigent requests.
3010.62 Supplemental information.
3010.63 Treatment of unused rate adjustment authority.
3010.64 Expeditious treatment of exigent requests.
3010.65 Special procedures applicable to exigent requests.
3010.66 Deadline for Commission decision.

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

PART 3010--REGULATION OF RATES FOR MARKET DOMINANT PRODUCTS

Subpart A--General Provisions


Sec.  3010.1  Definitions in this subpart.

    (a) Annual limitation means:
    (1) In the case of a notice of a Type 1-A or Type 1-B rate 
adjustment filed 12 or more months after the last Type 1-A or Type 1-B 
notice of rate adjustment, the full year limitation on the size of rate 
adjustments calculated pursuant to Sec.  3010.21; and
    (2) In the case of a notice of a Type 1-A or Type 1-B rate 
adjustment filed less than 12 months after the last Type 1-A or Type 1-
B notice of rate adjustment, the partial year limitation on the size of 
rate adjustments calculated pursuant to Sec.  3010.22.
    (b) Class means a class of market dominant postal products.
    (c) Maximum rate adjustment means the maximum rate adjustment that 
the Postal Service may make for a class pursuant to a notice of Type 1-
A or Type 1-B rate adjustment. The maximum rate adjustment is 
calculated in accordance with Sec.  3010.20.
    (d) Type 1-A rate adjustment means a rate adjustment described in 
Sec.  3010.4.
    (e) Type 1-B rate adjustment means a rate adjustment described in 
Sec.  3010.5.
    (f) Type 2 rate adjustment means a rate adjustment described in 
Sec.  3010.6.
    (g) Type 3 rate adjustment means a rate adjustment described in 
Sec.  3010.7.
    (h) Unused rate adjustment authority means the percentage 
calculated pursuant to Sec.  3010.26.


Sec.  3010.2  Applicability.

    This part implements provisions in 39 U.S.C. of chapter 36, 
subchapter I establishing ratesetting policies and procedures for 
market dominant products. With the exception of Type 3 rate 
adjustments, these procedures allow a minimum of 45 days for advance 
public notice of the Postal Service's planned rate adjustments. Type 3 
rate adjustments require the Postal Service to file a formal request 
with the Commission and are subject to special procedures.


Sec.  3010.3  Types of rate adjustments for market dominant products.

    (a) There are four types of rate adjustments for market dominant 
products. A Type 1-A rate adjustment is authorized under 39 U.S.C. 
3622(d)(1)(D). A Type 1-B rate adjustment is authorized under 39 U.S.C. 
3622(d)(2)(C). A Type 2 rate adjustment is authorized under 39 U.S.C. 
3622(c)(10). A Type 3 rate adjustment is authorized under 39 U.S.C. 
3622(d)(1)(E).
    (b) The Postal Service may combine Type 1-A, Type 1-B, and Type 2 
rate adjustments for purposes of filing with the Commission.


Sec.  3010.4  Type 1-A rate adjustment--in general.

    (a) A Type 1-A rate adjustment is a rate adjustment based on the 
annual limitation.
    (b) A Type 1-A rate adjustment may result in a rate adjustment that 
is less than or equal to the annual limitation, but may not exceed the 
annual limitation.
    (c) A Type 1-A rate adjustment for any class that is less than the 
applicable annual limitation results in unused rate adjustment 
authority associated with that class. Part or all of the unused rate 
adjustment authority may be used in a subsequent rate adjustment for 
that class, subject to the expiration terms in Sec.  3010.26(e).


Sec.  3010.5  Type 1-B rate adjustment--in general.

    A Type 1-B rate adjustment is a rate adjustment which uses unused 
rate adjustment authority in whole or in part.


Sec.  3010.6  Type 2 rate adjustment--in general.

    A Type 2 rate adjustment is based on a negotiated service 
agreement. A negotiated service agreement entails a rate adjustment 
negotiated between the Postal Service and a customer or group of 
customers.


Sec.  3010.7  Type 3 rate adjustment--in general.

    (a) A Type 3 rate adjustment is a rate adjustment that is 
authorized only when

[[Page 52705]]

justified by exceptional or extraordinary circumstances.
    (b) A Type 3 rate adjustment is not subject to the annual 
limitation or the restrictions on the use of unused rate adjustment 
authority, and does not implement a negotiated service agreement.
    (c) A Postal Service request for a Type 3 rate adjustment is 
subject to public participation and Commission review within 90 days.


Sec.  3010.8  Schedule for Regular and Predictable Rate Adjustments.

    (a) The Postal Service shall maintain on file with the Commission a 
Schedule for Regular and Predictable Rate Adjustments. The Commission 
shall display the Schedule for Regular and Predictable Rate Adjustments 
on the Commission Web site, https://www.prc.gov.
    (b) The Schedule for Regular and Predictable Rate Adjustments shall 
provide mailers with estimated implementation dates for future Type 1-A 
rate adjustments for each separate class of mail, should such 
adjustments be necessary and appropriate. Rate adjustments will be 
scheduled at specified regular intervals.
    (c) The Schedule for Regular and Predictable Rate Adjustments shall 
provide an explanation that will allow mailers to predict with 
reasonable accuracy the amounts of future scheduled rate adjustments.
    (d) The Postal Service should balance its financial and operational 
needs with the convenience of mailers of each class of mail in 
developing the Schedule for Regular and Predictable Rate Adjustments.
    (e) Whenever the Postal Service deems it appropriate to change the 
Schedule for Regular and Predictable Rate Adjustments, it shall file a 
revised schedule and explanation with the Commission.
    (f) The Postal Service may, for good cause shown, vary rate 
adjustments from those estimated by the Schedule for Regular and 
Predictable Rate Adjustments. In such case, the Postal Service shall 
provide a succinct explanation for such variation with its Type 1-A 
filing. No explanation is required for variations involving smaller 
than predicted rate adjustments.

Subpart B--Rules for Rate Adjustments for Rates of General 
Applicability (Type 1-A and 1-B Rate Adjustments)


Sec.  3010.10  Notice.

    (a) The Postal Service, in every instance in which it determines to 
exercise its statutory authority to make a Type 1-A or Type 1-B rate 
adjustment for a class shall:
    (1) Provide public notice in a manner reasonably designed to inform 
the mailing community and the general public that it intends to adjust 
rates no later than 45 days prior to the intended implementation date 
of the rate adjustment; and
    (2) Transmit a notice of rate adjustment to the Commission no later 
than 45 days prior to the intended implementation date of the rate 
adjustment.
    (b) The Postal Service is encouraged to provide public notice and 
to submit its notice of rate adjustment as far in advance of the 45-day 
minimum as practicable, especially in instances where the intended rate 
adjustments include classification changes or operations changes likely 
to have a material impact on mailers.


Sec.  3010.11  Proceedings for Type 1-A and Type 1-B rate adjustment 
filings.

    (a) The Commission will establish a docket for each notice of Type 
1-A or Type 1-B rate adjustment filing, promptly publish notice of the 
filing in the Federal Register, and post the filing on its Web site. 
The notice shall include:
    (1) The general nature of the proceeding;
    (2) A reference to legal authority under which the proceeding is to 
be conducted;
    (3) A concise description of the planned changes in rates, fees, 
and the Mail Classification Schedule;
    (4) The identification of an officer of the Commission to represent 
the interests of the general public in the docket;
    (5) A period of 20 days from the date of the filing for public 
comment; and
    (6) Such other information as the Commission deems appropriate.
    (b) Public comments should focus primarily on whether planned rate 
adjustments comply with the following mandatory requirements of 39 
U.S.C. chapter 36, subchapter I:
    (1) Whether the planned rate adjustments measured using the formula 
established in Sec.  3010.23(c) are at or below the annual limitation 
calculated under Sec. Sec.  3010.21 or 3010.22, as applicable; and
    (2) Whether the planned rate adjustments measured using the formula 
established in Sec.  3010.23(c) are at or below the limitations 
established in Sec.  3010.28.
    (c) Public comments may also address other relevant statutory 
provisions and applicable Commission orders and directives.
    (d) Within 14 days of the conclusion of the public comment period 
the Commission will determine, at a minimum, whether the planned rate 
adjustments are consistent with the annual limitation calculated under 
Sec. Sec.  3010.21 or 3010.22, as applicable, the limitations set forth 
in Sec.  3010.28, and 39 U.S.C. 3626, 3627, and 3629 and issue an order 
announcing its findings.
    (e) If the planned rate adjustments are found consistent with 
applicable law by the Commission, they may take effect pursuant to 
appropriate action by the Governors.
    (f) If planned rate adjustments are found inconsistent with 
applicable law by the Commission, the Postal Service will submit an 
amended notice of rate adjustment that describes the modifications to 
its planned rate adjustments that will bring its rate adjustments into 
compliance. An amended notice of rate adjustment shall be accompanied 
by sufficient explanatory information to show that all deficiencies 
identified by the Commission have been corrected.
    (g) The Commission will post any amended notice of rate adjustment 
filing on its Web site and allow a period of 7 days from the date of 
the filing for public comment. Comments in the amended notice of rate 
adjustment should address the subjects identified in paragraph (b) of 
this section and may address the subjects identified in paragraph (c) 
of this section.
    (h) The Commission will review any amended notice of rate 
adjustment together with any comments filed for compliance and within 
14 days issue an order announcing its findings.
    (i) If the planned rate adjustments as amended are found to be 
consistent with applicable law, they may take effect pursuant to 
appropriate action by the Governors. However, no rate shall take effect 
until 45 days after the Postal Service files a notice of rate 
adjustment specifying that rate.
    (j) If the planned rate adjustments in an amended notice of rate 
adjustment are found to be inconsistent with applicable law, the 
Commission shall explain the basis of its determination and suggest an 
appropriate remedy.
    (k) A Commission finding that a planned Type 1-A or Type 1-B rate 
adjustment is in compliance with the annual limitation calculated under 
Sec. Sec.  3010.21 or 3010.22, as applicable; the limitations set forth 
in Sec.  3010.28; and 39 U.S.C. 3626, 3627, and 3629 is decided on the 
merits. A Commission finding that a planned Type 1-A or Type 1-B rate 
adjustment does not contravene other policies of 39 U.S.C. chapter 36,

[[Page 52706]]

subchapter I is provisional and subject to subsequent review.


Sec.  3010.12  Contents of notice of rate adjustment.

    (a). A Type 1-A or Type 1-B notice of rate adjustment must include 
the following information:
    (1) A schedule of the planned rates;
    (2) The planned effective date(s) of the planned rates;
    (3) A representation or evidence that public notice of the planned 
changes has been issued or will be issued at least 45 days before the 
effective date(s) for the planned rates; and
    (4) The identity of a responsible Postal Service official who will 
be available to provide prompt responses to requests for clarification 
from the Commission.
    (b) The notice of rate adjustment shall be accompanied by the 
following information:
    (1) The annual limitation calculated as required by Sec.  3010.21 
or Sec.  3010.22, as appropriate. This information must be supported by 
workpapers in which all calculations are shown and all input values, 
including all relevant CPI-U values, are listed with citations to the 
original sources.
    (2) A schedule showing unused rate adjustment authority available 
for each class of mail displayed by class and available amount for each 
of the preceding 5 years. This information must be supported by 
workpapers in which all calculations are shown.
    (3) The percentage change in rates for each class of mail 
calculated as required by Sec.  3010.23. This information must be 
supported by workpapers in which all calculations are shown and all 
input values, including current rates, new rates, and billing 
determinants, are listed with citations to the original sources.
    (4) The amount of new unused rate adjustment authority, if any, 
that will be generated by the rate adjustment calculated as required by 
Sec.  3010.26. All calculations are to be shown with citations to the 
original sources. If new unused rate adjustment authority will be 
generated for a class of mail that is not expected to cover its 
attributable costs, the Postal Service must provide the rationale 
underlying this rate adjustment.
    (5) A schedule of the workshare discounts included in the planned 
rates, and a companion schedule listing the avoided costs that underlie 
each such discount. This information must be supported by workpapers in 
which all calculations are shown and all input values are listed with 
citations to the original sources.
    (6) Separate justification for all proposed workshare discounts 
that exceed avoided costs. Each such justification shall reference 
applicable reasons identified in 39 U.S.C. 3622(e)(2) or (3). The 
Postal Service shall also identify and explain discounts that are set 
substantially below avoided costs and explain any relationship between 
discounts that are above and those that are below avoided costs.
    (7) A discussion that demonstrates how the planned rate adjustments 
are designed to help achieve the objectives listed in 39 U.S.C. 3622(b) 
and properly take into account the factors listed in 39 U.S.C. 3622(c).
    (8) A discussion that demonstrates the planned rate adjustments are 
consistent with 39 U.S.C. 3626, 3627, and 3629.
    (9) A schedule identifying every change to the Mail Classification 
Schedule that will be necessary to implement the planned rate 
adjustments.
    (10) Such other information as the Postal Service believes will 
assist the Commission to issue a timely determination of whether the 
planned rate adjustments are consistent with applicable statutory 
policies.
    (c) Whenever the Postal Service establishes a new workshare 
discount rate, it must include with its filing:
    (1) A statement explaining its reasons for establishing the 
discount;
    (2) All data, economic analyses, and other information relied on to 
justify the discount; and
    (3) A certification based on comprehensive, competent analyses that 
the discount will not adversely affect either the rates or the service 
levels of users of postal services who do not take advantage of the 
discount.
    (d) Whenever the Postal Service establishes a new discount or 
surcharge it does not believe is a workshare discount, it must include 
with its filing:
    (1) An explanation of the basis for its belief that the discount or 
surcharge is not a workshare discount; and
    (2) A certification that the Postal Service applied approved 
analytical principles to the discount or surcharge.
    (e) The notice of rate adjustment shall identify for each affected 
class how much existing unused rate adjustment authority is used in the 
planned rates calculated as required by Sec.  3010.27. All calculations 
are to be shown, including citations to the original sources.
    (f) All cost, avoided cost, volume, and revenue figures submitted 
with the notice of rate adjustment shall be developed from the most 
recent applicable Commission approved analytical principles.

Subpart C--Rules for Determining the Maximum Rate Adjustment


Sec.  3010.20  Calculation of maximum rate adjustment.

    (a) Rate adjustments for each class of market dominant products in 
any 12-month period are limited.
    (b) Rates of general applicability are subject to an inflation-
based annual limitation computed using CPI-U values as detailed in 
Sec. Sec.  3010.21(a) and 3010.22(a).
    (c) An exception to the annual limitation allows a limited annual 
recapture of unused rate adjustment authority. The amount of unused 
rate adjustment authority is measured separately for each class.
    (d) In any 12-month period the maximum rate adjustment applicable 
to a class is:
    (1) For a Type 1-A notice of rate adjustment, the annual limitation 
for the class; and
    (2) For a combined Type 1-A and Type 1-B notice of rate adjustment, 
the annual limitation for the class plus the unused rate adjustment 
authority for the class that the Postal Service elects to use, subject 
to the limitation under Sec.  3010.28.


Sec.  3010.21  Calculation of annual limitation when notices of rate 
adjustment are 12 or more months apart.

    (a) The monthly CPI-U values needed for the calculation of the full 
year limitation under this section shall be obtained from the Bureau of 
Labor Statistics (BLS) Consumer Price Index--All Urban Consumers, U.S. 
All Items, Not Seasonally Adjusted, Base Period 1982-84 = 100. The 
current Series ID for the index is ``CUUR0000SA0.''
    (b) If a notice of a Type 1-A or Type 1-B rate adjustment is filed 
12 or more months after the last Type 1-A or Type 1-B notice of rate 
adjustment applicable to a class, then the calculation of an annual 
limitation for the class (referred to as the full year limitation) 
involves three steps. First, a simple average CPI-U index is calculated 
by summing the most recently available 12 monthly CPI-U values from the 
date the Postal Service files its notice of rate adjustment and 
dividing the sum by 12 (Recent Average). Then, a second simple average 
CPI-U index is similarly calculated by summing the 12 monthly CPI-U 
values immediately preceding the Recent Average and dividing the sum by 
12 (Base Average). Finally, the full year limitation is calculated by 
dividing the Recent Average by the Base Average and subtracting 1 from 
the quotient. The result is expressed as a percentage, rounded to three 
decimal places.

[[Page 52707]]

    (c) The formula for calculating a full year limitation for a notice 
of rate adjustment filed 12 or more months after the last notice is as 
follows: Full Year Limitation = (Recent Average/Base Average)-1.


Sec.  3010.22  Calculation of annual limitation when notices of rate 
adjustment are less than 12 months apart.

    (a) The monthly CPI-U values needed for the calculation of the 
partial year limitation of this section shall be obtained from the 
Bureau of Labor Statistics (BLS) Consumer Price Index--All Urban 
Consumers, U.S. All Items, Not Seasonally Adjusted, Base Period 1982-84 
= 100. The current Series ID for the index is ``CUUR0000SA0.''
    (b) If a notice of a Type 1-A or Type 1-B rate adjustment is filed 
less than 12 months after the last Type 1-A or Type 1-B notice of rate 
adjustment applicable to a class, then the annual limitation for the 
class (referred to as the partial year limitation) will recognize the 
rate increases that have occurred during the preceding 12 months. When 
the effects of those increases are removed, the remaining partial year 
limitation is the applicable restriction on rate increases.
    (c) The applicable partial year limitation is calculated in two 
steps. First, a simple average CPI-U index is calculated by summing the 
12 most recently available monthly CPI-U values from the date the 
Postal Service files its notice of rate adjustment and dividing the sum 
by 12 (Recent Average). The partial year limitation is then calculated 
by dividing the Recent Average by the Recent Average from the most 
recent previous notice of rate adjustment (Previous Recent Average) 
applicable to each affected class of mail and subtracting 1 from the 
quotient. The result is expressed as a percentage, rounded to three 
decimal places.
    (d) The formula for calculating the partial year limitation for a 
notice of rate adjustment filed less than 12 months after the last 
notice is as follows: Partial Year Limitation = (Recent Average/
Previous Recent Average) - 1.


Sec.  3010.23  Calculation of percentage change in rates.

    (a) In this section, the term rate cell means each and every 
separate rate identified in any applicable notice of rate adjustment 
for rates of general applicability. A seasonal or temporary rate shall 
be identified and treated as a rate cell separate and distinct from the 
corresponding non-seasonal or permanent rate.
    (b) For each class of mail and product within the class, the 
percentage change in rates is calculated in three steps. First, the 
volume of each rate cell in the class is multiplied by the planned rate 
for the respective cell and the resulting products are summed. Then, 
the same set of rate cell volumes are multiplied by the corresponding 
current rate for each cell and the resulting products are summed. 
Finally, the percentage change in rates is calculated by dividing the 
results of the first step by the results of the second step and 
subtracting 1 from the quotient. The result is expressed as a 
percentage.
    (c) The formula for calculating the percentage change in rates for 
a class described in paragraph (b) of this section is as follows:
    Percentage change in rates =
    [GRAPHIC] [TIFF OMITTED] TR26AU13.001
    
Where,

N = number of rate cells in the class
i = denotes a rate cell (i = 1, 2, ..., N)
Ri,n = planned rate of rate cell i
Ri,c = current rate of rate cell i
Vi = volume of rate cell i

    (d) The volumes for each rate cell shall be obtained from the most 
recent available 12 months of Postal Service billing determinants. The 
Postal Service shall make reasonable adjustments to the billing 
determinants to account for the effects of classification changes such 
as the introduction, deletion, or redefinition of rate cells. 
Adjustments shall be based on known mail characteristics or historic 
volume data, as opposed to forecasts of mailer behavior. The Postal 
Service shall identify and explain all adjustments. All information and 
calculations relied upon to develop the adjustments shall be provided 
together with an explanation of why the adjustments are appropriate.


Sec.  3010.24  Treatment of volume associated with negotiated service 
agreements.

    (a) Mail volumes sent at rates under negotiated service agreements 
are to be included in the calculation of percentage change in rates 
under Sec.  3010.23 as though they paid the appropriate rates of 
general applicability. 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 shall be excluded from the 
calculation of percentage change in rates.
    (b) The Postal Service shall identify and explain all assumptions 
it makes with respect to the treatment of negotiated service agreements 
in the calculation of the percentage change in rates and provide the 
rationale for its assumptions.


Sec.  3010.25  Limitation on application of unused rate adjustment 
authority.

    Unused rate adjustment authority may only be applied after applying 
the annual limitation calculated pursuant to Sec.  3010.21 or Sec.  
3010.22.


Sec.  3010.26  Calculation of unused rate adjustment authority.

    (a) Unused rate adjustment authority accrues during the entire 
period between notices of Type 1-A and Type 1-B rate adjustments. When 
notices of Type 1-A or Type 1-B rate adjustments are filed 12 months 
apart or less, the unused rate adjustment authority is the annual 
unused rate adjustment authority calculated under paragraph (b) of this 
section. When notices of Type 1-A or Type 1-B rate adjustments are 
filed more than 12 months apart, unused rate adjustment authority is 
the sum of the annual unused rate adjustment calculated under paragraph 
(b) of this section plus the interim unused rate adjustment authority 
calculated under paragraph (c)(2) of this section, less any interim 
unused rate adjustment authority used in accordance with paragraph (d) 
of this section.
    (b) When notices of Type 1-A or Type 1-B rate adjustments are filed 
12 months apart or less, annual unused rate adjustment authority will 
be calculated. Annual unused rate adjustment authority for a class is 
equal to the difference between the annual limitation calculated 
pursuant to Sec. Sec.  3010.21 or 3010.22 and the actual percentage 
change in rates for the class.
    (c)(1) When notices of Type 1-A or Type 1-B rate adjustments are 
filed more than 12 months apart, annual unused rate adjustment 
authority will be calculated for the 12-month period ending on the date 
on which the second notice is filed and interim unused rate adjustment 
authority will be calculated for the period beginning on the date the 
first notice is filed and ending on the day before the date that is 12 
months before the second notice is filed.
    (2) Interim unused rate adjustment authority is equal to the Base 
Average applicable to the second notice of rate adjustment (as 
developed pursuant to Sec.  3010.21(b)) divided by the Recent Average 
utilized in the first notice of rate adjustment (as developed pursuant 
to Sec.  3010.21(b)) and subtracting 1 from the quotient. The result is 
expressed as a percentage.

[[Page 52708]]

    (d) Interim unused rate adjustment authority may be used to make a 
rate adjustment pursuant to the notice of rate adjustment that led to 
its calculation. If interim unused rate adjustment authority is used to 
make such a rate adjustment, the interim unused rate adjustment 
authority generated pursuant to the notice shall first be added to the 
schedule of unused rate adjustment authority devised and maintained 
under paragraph (f) of this section as the most recent entry. Then, any 
interim unused rate adjustment authority used in accordance with this 
paragraph shall be subtracted from the existing unused rate adjustment 
authority using a first-in, first-out (FIFO) method, beginning 5 years 
before the instant notice.
    (e) Unused rate adjustment authority lapses 5 years after the date 
of filing of the notice of rate adjustment leading to its calculation.
    (f) Upon the establishment of unused rate adjustment authority in 
any class, the Postal Service shall devise and maintain a schedule that 
tracks the establishment and subsequent use of unused rate adjustment 
authority for that class.


Sec.  3010.27  Application of unused rate adjustment authority.

    When the percentage change in rates for a class is greater than the 
applicable annual limitation, then the difference between the 
percentage change in rates for the class and the annual limitation 
shall be subtracted from the existing unused rate adjustment authority 
for the class, using a first-in, first-out (FIFO) method, beginning 5 
years before the instant notice.


Sec.  3010.28  Maximum size of rate adjustments.

    Unused rate adjustment authority used to make a Type 1-B rate 
adjustment for any class in any 12-month period may not exceed 2 
percentage points.

Subpart D--Rules for Rate Adjustments for Negotiated Service 
Agreements (Type 2 Rate Adjustments)


Sec.  3010.40  Negotiated service agreements.

    (a) In administering this subpart, it shall be the objective of the 
Commission to allow implementation of negotiated service agreements 
that satisfy the statutory requirements of 39 U.S.C. 3622(c)(10). 
Negotiated service agreements must either:
    (1) Improve the net financial position of the Postal Service (39 
U.S.C. 3622(c)(10)(A)(i)); or
    (2) Enhance the performance of operational functions (39 U.S.C. 
3622(c)(10)(A)(ii)).
    (b) Negotiated service agreements may not cause unreasonable harm 
to the marketplace (39 U.S.C. 3622(c)(10)(B)).
    (c) Negotiated service agreements must be available on public and 
reasonable terms to similarly situated mailers.


Sec.  3010.41  Notice.

    The Postal Service, in every instance in which it determines to 
exercise its statutory authority to make a Type 2 rate adjustment for a 
market dominant postal product shall provide public notice in a manner 
reasonably designed to inform the mailing community and the general 
public that it intends to change rates not later than 45 days prior to 
the intended implementation date; and transmit a notice of agreement to 
the Commission no later than 45 days prior to the intended 
implementation date.


Sec.  3010.42  Contents of notice of agreement in support of a Type 2 
rate adjustment.

    Whenever the Postal Service proposes to establish or change rates, 
fees, or the Mail Classification Schedule based on a negotiated service 
agreement, the Postal Service shall file with the Commission a notice 
of agreement that shall include at a minimum the following information:
    (a) A copy of the negotiated service agreement;
    (b) The planned effective date(s) of the planned rates;
    (c) A representation or evidence that public notice of the planned 
rate adjustments has been issued or will be issued at least 45 days 
before the effective date(s) for the planned rates;
    (d) The identity of a responsible Postal Service official who will 
be available to provide prompt responses to requests for clarification 
from the Commission;
    (e) A statement identifying all parties to the agreement and a 
description clearly explaining the operative components of the 
agreement;
    (f) Details regarding the expected improvements in the net 
financial position or operations of the Postal Service. The projection 
of change in net financial position as a result of the agreement shall 
be based on accepted analytical principles:
    (1) The estimated mailer-specific costs, volumes, and revenues of 
the Postal Service absent the implementation of the negotiated service 
agreement;
    (2) The estimated mailer-specific costs, volumes, and revenues of 
the Postal Service which result from implementation of the negotiated 
service agreement;
    (3) An analysis of the effects of the negotiated service agreement 
on the contribution to institutional costs from mailers not party to 
the agreement;
    (4) If mailer-specific costs are not available, the source and 
derivation of the costs that are used shall be provided, together with 
a discussion of the currency and reliability of those costs and their 
suitability as a proxy for the mailer-specific costs; and
    (5) If the Postal Service believes the Commission's accepted 
analytical principles are not the most accurate and reliable 
methodology available--
    (i) An explanation of the basis for that belief; and
    (ii) A projection of the change in net financial position resulting 
from the agreement made using the Postal Service's alternative 
methodology.
    (g) An identification of each component of the agreement expected 
to enhance the performance of mail preparation, processing, 
transportation, or other functions in each year of the agreement, and a 
discussion of the nature and expected impact of each such enhancement;
    (h) Details regarding any and all actions (performed or to be 
performed) to assure that the agreement will not result in unreasonable 
harm to the marketplace; and
    (i) Such other information as the Postal Service believes will 
assist the Commission to issue a timely determination of whether the 
requested changes are consistent with applicable statutory policies.


Sec.  3010.43  Data collection plan and report.

    (a) The Postal Service shall include with any notice of agreement a 
detailed plan for providing data or information on actual experience 
under the agreement sufficient to allow evaluation of whether the 
negotiated service agreement operates in compliance with 39 U.S.C. 
3622(c)(10).
    (b) A data report under the plan is due 60 days after each 
anniversary date of implementation and shall include, at a minimum, the 
following information for each 12-month period the agreement has been 
in effect:
    (1) The change in net financial position of the Postal Service as a 
result of the agreement. This calculation shall include for each year 
of the agreement:
    (i) The actual mailer-specific costs, volumes, and revenues of the 
Postal Service;
    (ii) An analysis of the effects of the negotiated service agreement 
on the net overall contribution to the institutional costs of the 
Postal Service; and

[[Page 52709]]

    (iii) If mailer-specific costs are not available, the source and 
derivation of the costs that are used shall be provided, including a 
discussion of the currency and reliability of those costs, and their 
suitability as a proxy for the mailer-specific costs.
    (2) A discussion of the changes in operations of the Postal Service 
that have resulted from the agreement. This shall include, for each 
year of the agreement, identification of each component of the 
agreement known to enhance the performance of mail preparation, 
processing, transportation, or other functions in each year of the 
agreement.
    (3) An analysis of the impact of the negotiated service agreement 
on the marketplace, including a discussion of any and all actions taken 
to protect the marketplace from unreasonable harm.


Sec.  3010.44  Proceedings for Type 2 rate adjustments.

    (a) The Commission will establish a docket for each notice of Type 
2 rate adjustment filed, promptly publish notice of the filing in the 
Federal Register, and post the filing on its Web site. The notice shall 
include:
    (1) The general nature of the proceeding;
    (2) A reference to legal authority under which the proceeding is to 
be conducted;
    (3) A concise description of the planned changes in rates, fees, 
and the Mail Classification Schedule;
    (4) The identification of an officer of the Commission to represent 
the interests of the general public in the docket;
    (5) A period of 10 days from the date of the filing for public 
comment; and
    (6) Such other information as the Commission deems appropriate.
    (b) The Commission shall review the planned Type 2 rate adjustments 
and the comments thereon, and issue an order announcing its findings. 
So long as such adjustments are not inconsistent with 39 U.S.C. 3622, 
they may take effect pursuant to appropriate action by the Governors. 
However, no rate shall take effect until 45 days after the Postal 
Service files a notice of rate adjustment specifying that rate.
    (c) Commission findings that a planned Type 2 rate adjustment is 
not inconsistent with 39 U.S.C. 3622 are provisional and subject to 
subsequent review.

Subpart E--Rules for Rate Adjustments in Extraordinary and 
Exceptional Circumstances (Type 3 Rate Adjustments)


Sec.  3010.60  Applicability.

    The Postal Service may request to adjust rates for market dominant 
products in excess of the maximum rate adjustment due to extraordinary 
or exceptional circumstances. In this subpart, such requests are 
referred to as exigent requests.


Sec.  3010.61  Contents of exigent requests.

    (a) Each exigent request shall include the following:
    (1) A schedule of the proposed rates;
    (2) Calculations quantifying the increase for each affected product 
and class;
    (3) A full discussion of the extraordinary or exceptional 
circumstances giving rise to the request, and a complete explanation of 
how both the requested overall increase and the specific rate 
adjustments requested relate to those circumstances;
    (4) A full discussion of why the requested rate adjustments are 
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;
    (5) A full discussion of why the requested rate adjustments are 
reasonable and equitable as among types of users of market dominant 
products;
    (6) An explanation of when, or under what circumstances, the Postal 
Service expects to be able to rescind the exigent rate adjustments in 
whole or in part;
    (7) An analysis of the circumstances giving rise to the exigent 
request, which should, if applicable, include a discussion of whether 
the circumstances were foreseeable or could have been avoided by 
reasonable prior action; and
    (8) Such other information as the Postal Service believes will 
assist the Commission to issue a timely determination of whether the 
requested rate adjustments are consistent with applicable statutory 
policies.
    (b) The Postal Service shall identify one or more knowledgeable 
Postal Service official(s) who will be available to provide prompt 
responses to Commission requests for clarification related to each 
topic specified in paragraph (a) of this section.


Sec.  3010.62  Supplemental information.

    The Commission may require the Postal Service to provide 
clarification of its request or to provide information in addition to 
that called for by Sec.  3010.61 in order to gain a better 
understanding of the circumstances leading to the request or the 
justification for the specific rate adjustments requested.


Sec.  3010.63  Treatment of unused rate adjustment authority.

    (a) Each exigent request will identify the unused rate adjustment 
authority available as of the date of the request for each class of 
mail and the available amount for each of the preceding 5 years.
    (b) Pursuant to an exigent request, rate adjustments may use 
existing unused rate adjustment authority in amounts greater than the 
limitation described in Sec.  3010.28 of this subpart.
    (c) Exigent increases will exhaust all unused rate adjustment 
authority for each class of mail before imposing additional rate 
adjustments in excess of the maximum rate adjustment for any class of 
mail.


Sec.  3010.64  Expeditious treatment of exigent requests.

    Requests under this subpart seek rate relief required by 
extraordinary or exceptional circumstances and will be treated with 
expedition at every stage. It is Commission policy to provide 
appropriate relief as quickly as possible consistent with statutory 
requirements and procedural fairness.


Sec.  3010.65  Special procedures applicable to exigent requests.

    (a) The Commission will establish a docket for each exigent 
request, promptly publish notice of the request in the Federal 
Register, and post the filing on its Web site. The notice shall 
include:
    (1) The general nature of the proceeding;
    (2) A reference to legal authority under which the proceeding is to 
be conducted;
    (3) A concise description of the proposals for changes in rates, 
fees, and the Mail Classification Schedule;
    (4) The identification of an officer of the Commission to represent 
the interests of the general public in the docket;
    (5) A specified period for public comment; and
    (6) Such other information as the Commission deems appropriate.
    (b) The Commission will hold a public hearing on the Postal Service 
request. During the public hearing, responsible Postal Service 
officials will appear and respond under oath to questions from the 
Commissioners or their designees addressing previously identified 
aspects of the Postal Service's request and the supporting information

[[Page 52710]]

provided in response to the topics specified in Sec.  3010.61(a).
    (c) Interested persons will be given an opportunity to submit to 
the Commission suggested relevant questions that might be posed during 
the public hearing. Such questions, and any explanatory materials 
submitted to clarify the purpose of the questions, should be filed in 
accordance with Sec.  3001.9 of this chapter, and will become part of 
the administrative record of the proceeding.
    (d) The timing and length of the public hearing will depend on the 
nature of the circumstances giving rise to the request and the clarity 
and completeness of the supporting materials provided with the request.
    (e) If the Postal Service is unable to provide adequate 
explanations during the public hearing, supplementary written or oral 
responses may be required.
    (f) Following the conclusion of the public hearings and submission 
of any supplementary materials interested persons will be given the 
opportunity to submit written comments on:
    (1) The sufficiency of the justification for an exigent rate 
adjustment;
    (2) The adequacy of the justification for adjustments in the 
amounts requested by the Postal Service; and
    (3) Whether the specific rate adjustments requested are reasonable 
and equitable.
    (g) An opportunity to submit written reply comments will be given 
to the Postal Service and other interested persons.


Sec.  3010.66  Deadline for Commission decision.

    The Commission will act expeditiously on the Postal Service 
request, taking into account all written comments. In every instance a 
Commission decision will be issued within 90 days of the filing of an 
exigent request.

[FR Doc. 2013-20583 Filed 8-23-13; 8:45 am]
BILLING CODE 7710-FW-P