Public Inquiry on Zone 10 Packages Pursuant to 39 U.S.C. 3642, 21545-21547 [2024-06611]
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Federal Register / Vol. 89, No. 61 / Thursday, March 28, 2024 / Notices
an average annual cost burden of
$360,000 (150 × $2,400).
Under § 4262.15(c), a plan sponsor of
a plan with benefits that were
suspended under sections 305(e)(9) or
4245(a) of ERISA must issue notices of
reinstatement to participants and
beneficiaries whose benefits were
suspended and are being reinstated.
Participants and beneficiaries need the
notice of reinstatement to better
understand the calculation and timing
of their reinstated benefits and, if
applicable, make-up payments. PBGC
estimates that over the next 3 years an
average of 2 plans per year will be
required to send notices to participants
with suspended benefits. PBGC
estimates that these notices will impose
an average annual hour burden of 4 (2
× 2) hours and average annual cost
burden of $4,000 (2 × $2,000).
Finally, under § 4262.16(d), (f), (g)
and (h) a plan sponsor must file a
request for a determination from PBGC
for approval for an exception under
certain circumstances for SFA
conditions under § 4262.16 relating to
reductions in contributions, transfers or
mergers, and withdrawal liability. PBGC
needs the information required for a
request for a determination to evaluate
whether to approve an exception from
the specified condition of receiving
SFA. PBGC estimates that over the next
3 years, PBGC will receive an average of
4.2 requests per year for determinations.
PBGC estimates an average annual hour
burden of 13.6 hours and average
annual cost burden of $33,000 ((0.2 ×
$25,000) + (2 × $12,000) + (2 × $2,000)).
The estimated aggregate average
annual hour burden for the next 3 years
for the information collection in part
4262 is 863.6 (540 + 6 + 300 + 4 + 13.6)
hours for employer and fund office
administrative, clerical, and supervisory
time. The estimated aggregate average
annual cost burden for the next 3 years
for the information collection request in
part 4262 is $1,931,800 ($1,530,000 +
$4,800 + $360,000 + $4,000 + $33,000)
for approximately 4,830 contract hours
assuming an average hourly rate of $400
for work done by outside actuaries and
attorneys. The actual hour burden and
cost burden per plan will vary
depending on plan size and other
factors.
The existing collection of information
under the regulation has been approved
by OMB under control number 1212–
0074 (expires May 31, 2024). On
December 20, 2023, PBGC published in
the Federal Register (88 FR 88138) a
notice informing the public of its intent
to request an extension of this collection
of information. No comments were
received. PBGC is requesting that OMB
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20:27 Mar 27, 2024
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extend approval of the collection of
information for 3 years. An agency may
not conduct or sponsor, and a person is
not required to respond to, a collection
of information unless it displays a
currently valid OMB control number.
Issued in Washington, DC.
Gregory Katz,
Deputy Assistant General Counsel for
Regulatory Affairs, Pension Benefit Guaranty
Corporation.
[FR Doc. 2024–06589 Filed 3–27–24; 8:45 am]
BILLING CODE 7709–02–P
POSTAL REGULATORY COMMISSION
[Docket No. PI2024–2; Order No. 7017]
Public Inquiry on Zone 10 Packages
Pursuant to 39 U.S.C. 3642
Postal Regulatory Commission.
Notice.
AGENCY:
ACTION:
The Commission is initiating
a public inquiry proceeding and appoint
a presiding officer to serve as an
investigator to explore the appropriate
classification of Zone 10 packages
pursuant to 39 U.S.C. 3642. This notice
informs the public of the filing and
takes other administrative steps.
ADDRESSES: Submit comments
electronically via the Commission’s
Filing Online system at https://
www.prc.gov. Those who cannot submit
comments electronically should contact
the person identified in the FOR FURTHER
INFORMATION CONTACT section by
telephone for advice on filing
alternatives.
SUMMARY:
FOR FURTHER INFORMATION CONTACT:
David A. Trissell, General Counsel, at
202–789–6820.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
II. Background
III. Public Inquiry
IV. Ordering Paragraphs
I. Introduction
In Order No. 7016, the Commission
stated that it would initiate a public
inquiry proceeding and appoint a
presiding officer to serve as an
investigator to explore the appropriate
classification of Zone 10 packages
pursuant to 39 U.S.C. 3642 and whether
the implementation of Zone 10 prices
raises a material issue of fact concerning
whether a violation of 39 U.S.C. 403(c)
has occurred if the Postal Service elects
to implement the Zone 10 prices.1 The
1 Docket No. CP2024–72, Order Approving Price
Adjustments and Classification Changes for
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21545
Commission establishes this docket to
facilitate examination of those issues.
II. Background
On November 22, 2023, the Postal
Service filed notice with the
Commission of its intent to establish a
new Zone 10 for Priority Mail Express,
Priority Mail, and USPS Ground
Advantage and proposed associated
Zone 10 rates.2 The Postal Service states
that the changes will take effect no
earlier than July 1, 2024, with a specific
date to be determined by the Postal
Service in the future. Docket No.
CP2024–72 Notice at 1.
Currently, Priority Mail Express,
Priority Mail, and USPS Ground
Advantage packages are charged prices
based on weight and zone. For packages
mailed within the United States, a
package is assigned Zone 1–8 based on
the distance the package must travel to
reach its destination. The proposed new
Zone 10 and associated prices will
apply to (1) packages originating in the
Lower 48 States and destined to Alaska,
Hawaii, or the U.S. Territories (which
include Puerto Rico, the U.S. Virgin
Islands, and territories in the Pacific,
including Guam and American Samoa);
(2) packages originating in Alaska and
destined to Hawaii or the U.S.
Territories; (3) packages originating in
Hawaii or a territory in the Pacific
Ocean and destined to Alaska, Puerto
Rico, or the U.S. Virgin Islands; and (4)
packages originating in Puerto Rico or
the U.S. Virgin Islands and destined to
Alaska, Hawaii, or a territory in the
Pacific Ocean. Id. at 2–3. The proposed
Zone 10 does not apply to packages that
originate in Alaska, Hawaii, or the U.S.
Territories and are destined to the
Lower 48 States. Id. at 4.
To explain the rationale for its
proposal, the Postal Service states that
the new Zone 10 and associated prices
‘‘will better align with the zoning
practices of [its] competitors, who
currently have separate zones for
offshore destinations.’’ Id. at 3. The
Postal Service states that its
‘‘competitors charge significantly more
for shipments from the Lower 48 states
to offshore locations than for shipments
in the reverse direction.’’ 3 The Postal
Service also states that its decision to
establish Zone 10 is ‘‘cost-based in
Domestic Competitive Products, March 22, 2024, at
3, 28, 29–31 (Order No. 7016).
2 Docket No. CP2024–72, USPS Notice of Changes
in Rates and Classifications of General Applicability
for Competitive Products, November 22, 2023
(Docket No. CP2024–72 Notice).
3 Docket No. CP2024–72, USPS Response to
Chairman’s Information Request No. 1, With
Portions Filed Under Seal, December 20, 2023,
question 2.c.
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nature’’ because ‘‘[t]he cost of transport
to offshore locations is higher on
average than it is to transport to nonoffshore destinations.’’ Docket No.
CP2024–72 Notice at 3. Specifically, the
Postal Service explains that there are
more limited transportation options to
offshore destinations, and the use of air
transportation, the mix of air
transportation providers, and the need
to use higher cost providers all
contribute to higher costs.4 The Postal
Service does not, however, provide
specific data and sources demonstrating
these cost factors or otherwise
demonstrating support for the ‘‘costbased’’ nature of the new Zone 10 prices
and has yet to undertake the effort to
disaggregate Zone 10 costs and confirm
that its cost-based assumption is
supported by its available transportation
data. See Docket No. CP2024–72
Response to CHIR No. 2, question 1.
In Order No. 7016, the Commission
acknowledged that its role in reviewing
proposed Competitive product rate and
classification changes was limited by
law. Order No. 7016 at 1–2, 32–33.
Because the proposed rate and
classification changes complied with 39
U.S.C. 3633(a), 39 CFR part 3035, and
Order Nos. 1062 and 6249,5 the
Commission approved the proposed
price and classification changes as
consistent with applicable law and
found that it had no legal basis to reject
the proposed changes. Order No. 7016 at
15–22. However, the Commission also
identified numerous concerns with the
Postal Service’s proposal and approach
and urged the Postal Service to
reconsider whether it is prudent or
necessary to implement its proposal. Id.
at 2, 22–32. The Commission also
identified two areas that were
particularly suited to further exploration
in a separate public inquiry proceeding:
(1) the question of whether Zone 10
packages are appropriately classified as
Competitive products pursuant to 39
U.S.C. 3642 and (2) the question of
whether the implementation of Zone 10
prices raises a material issue of fact
concerning whether a violation of 39
U.S.C. 403(c) has occurred if the Postal
4 Docket No. CP2024–72, USPS Response to
Chairman’s Information Request No. 2, With
Portions Filed Under Seal, January 12, 2024,
question 1.a. (Docket No. CP2024–72 Response to
CHIR No. 2).
5 See 39 U.S.C. 3633(a); 39 CFR part 3035; Docket
No. CP2012–2, Order Approving Changes in Rates
of General Applicability for Competitive Products,
December 21, 2011 (Order No. 1062); Docket Nos.
CP2022–22 and CP2022–62, Order Granting in Part
the United States Postal Service’s Motions for
Clarification of Order Nos. 6071 and 6195, August
15, 2022 (Order No. 6249).
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Service elects to implement the Zone 10
prices. Id. at 28, 30–32.
Classification of Zone 10 packages.
Postal products are separated into two
distinct classifications: Market
Dominant and Competitive. 39 U.S.C.
3621, 3631, 3642. Section 3642 of Title
39 governs the addition of products to,
removal of products from, or transfer of
products (or components of a product)
between the Market Dominant and
Competitive product lists.6 The
Commission may consider a change to
a product’s classification upon request
of the Postal Service, upon request of
users of the mail, or upon its own
initiative. 39 U.S.C. 3642(a). There is
nothing to prevent transfer of only part
of a product between product lists. 39
U.S.C. 3642(c).
The criteria for assigning a product to
either the Market Dominant or
Competitive product list are described
in 39 U.S.C. 3642(b). Section 3642(b)(1)
defines a Market Dominant product as a
product over which ‘‘the Postal Service
exercises sufficient market power that it
can effectively set the price of such
product substantially above costs, raise
prices significantly, decrease quality, or
decrease output, without risk of losing
a significant level of business to other
firms offering similar products.’’ 39
U.S.C. 3642(b)(1). Competitive products
are defined as ‘‘all other products.’’ Id.
Products covered by the postal
monopoly are not subject to transfer
from the Market Dominant category. 39
U.S.C. 3642(b)(2). Additional
considerations in determining the
correct classification of a postal product
include the availability and nature of
private sector competitors, the views of
users of the product, and the likely
impact on small businesses. 39 U.S.C.
3642(b)(3).
In Docket No. CP2024–72, several
commenters raised concerns relevant to
an inquiry pursuant to 39 U.S.C. 3642,
and the Commission recognized that the
concerns raised by commenters may call
into question whether the proposed
Zone 10 volumes are correctly classified
as Competitive. Order No. 7016 at 28–
29. As a result, the Commission
determined that this issue would be
appropriate to consider in a public
inquiry proceeding. Id. The Commission
stated that it intended to appoint a
presiding officer to serve as an
investigator in the public inquiry
proceeding to further explore the
appropriate classification of these
packages and to provide analysis and
recommendations to the Commission on
that issue. Id.
6 39 U.S.C. 3642. The implementing regulations
for this section appear in 39 CFR part 3040.
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Violation of 39 U.S.C. 403(c). 39
U.S.C. 403(c) prohibits the Postal
Service from making ‘‘any undue or
unreasonable discrimination among
users of the mails’’ ‘‘in establishing
classifications, rates, and fees.’’ 39
U.S.C. 403(c). In order to find that
undue or unreasonable price
discrimination exists in violation of 39
U.S.C. 403(c), the Commission must
find that: (1) a mailer has been offered
less favorable rates or terms and
conditions than one or more other
mailers; (2) the mailer is ‘‘similarly
situated’’ to the mailer or mailers who
have been offered the more favorable
rates or terms and conditions; and (3)
there is no rational or legitimate basis
for the Postal Service to deny the more
favorable rates or terms and conditions
offered to others.7 The Commission has
the authority to take action to bring the
Postal Service into compliance with 39
U.S.C. 403(c) if it finds the Postal
Service is not operating in conformance
with that provision based on a
complaint raising such nonconformance. 39 U.S.C. 3662(a), (c). The
Commission has the authority to
appoint an officer of the Commission
representing the interests of the general
public to bring a complaint for violation
of 39 U.S.C. 403(c) or any other
provision enumerated in 39 U.S.C.
3662(a). 39 U.S.C. 3662(a).
In Order No. 7016, the Commission
noted that the Postal Service was not
required to justify its Zone 10 rates on
a cost basis beyond showing compliance
with 39 U.S.C. 3633(a). Order No. 7016
at 30–32. However, the Commission also
noted that it previously found costs are
a relevant consideration under the 39
U.S.C. 403(c) analysis and that costs
may be particularly relevant in the case
of Zone 10 because one of the Postal
Service’s rationales for its Zone 10
proposal is that it is ‘‘cost-based in
nature.’’ See id. at 30; Order No. 5491
at 8; Docket No. CP2024–72 Notice at 3.
The Commission stated that the Postal
Service’s cost-based rationale for its
proposal appeared reasonable on its face
given the Postal Service’s
representations regarding transportation
costs to offshore areas; however, it also
raised concern that the Postal Service
failed to undertake the effort to
disaggregate Zone 10 costs and confirm
that its assumption regarding higher
transportation costs for Zone 10
packages was supported by its available
transportation data. Order No. 7016 at
31–32. The Commission directed the
7 Docket No. C2020–2, Order Granting the Postal
Service’s Motion to Dismiss Complaint with
Prejudice, April 28, 2020, at 8 (Order No. 5491)
(citing Docket No. C2009–1, Order on Complaint,
April 20, 2011, at 28 (Order No. 718)).
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Postal Service to file a rulemaking
proceeding proposing and supporting
the methodological changes necessary to
derive separate Zone 10 transportation
costs for Priority Mail and USPS Ground
Advantage within 90 days of the date of
Order No. 7016. Id. at 27.
The Commission was concerned that
if the Postal Service’s actual cost data
differed from the Postal Service’s
assumptions, the Postal Service’s costbased justification for the Zone 10 rates
could be invalid and concerns of
violation of 39 U.S.C. 403(c) could arise.
Id. at 30–32. As a result, the
Commission stated that it intended to
appoint a presiding officer to serve as an
investigator to gather information and
explore whether the Postal Service
would be in violation of 39 U.S.C.
403(c) if the Postal Service elects to
implement the new Zone 10 and related
prices. Id. The Commission also stated
that the investigator may also consider
whether violation of any other provision
enumerated in 39 U.S.C. 3662(a) has
occurred. Id. at 32. The Commission
further stated that after gathering
applicable information, the investigator
shall issue a public, written report to the
Commission as to whether the
implementation of Zone 10 raises a
material issue of fact concerning
whether a violation of 39 U.S.C. 403(c)
or any other provision enumerated in 39
U.S.C. 3662(a) has occurred. Id.
III. Public Inquiry
The Commission establishes this
proceeding to appoint and direct a
presiding officer to serve as an
investigator to explore the appropriate
classification of Zone 10 packages
pursuant to 39 U.S.C. 3642 and whether
the implementation of Zone 10 prices
raises a material issue of fact concerning
whether a violation of 39 U.S.C. 403(c)
has occurred if the Postal Service elects
to implement the Zone 10 prices.
Pursuant to 39 CFR 3010.106, the
Commission appoints John Avila to
serve as presiding officer in this docket.
In that role, the Commission expects the
presiding officer to serve an
investigatory role similar to the one
envisioned by 39 CFR 3022.21 to
procure applicable information,
examine issues, and report back to the
Commission with his analysis and
recommendations.8
In addition to consideration of 39
U.S.C. 403(c) and 3642, the underlying
regulations, Commission precedent, the
record of Docket No. CP2024–72, and
8 See 39 CFR 3022.21. 39 CFR 3022.21
contemplates the appointment of an investigator in
the context of procuring information and examining
issues before reporting back to the Commission
during a complaint proceeding.
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Jkt 262001
the disaggregated costs the Postal
Service has been directed to file within
90 days, the Commission anticipates
that the presiding officer may need
additional information from the Postal
Service prior to conducting analysis and
reaching any conclusions and expects
him to issue presiding officer
information requests as he deems
appropriate to gather such information.
39 CFR 3010.106(c).
Once the presiding officer serving as
investigator has sufficient information
to analyze and assess whether Zone 10
packages should remain classified as
Competitive pursuant to 39 U.S.C. 3642,
the underlying regulations, and
Commission precedent, the presiding
officer shall file a public, written report
to the Commission in this proceeding
detailing his analysis and
recommendations to the Commission on
that issue. Once the presiding officer
serving as investigator has sufficient
information to assess whether the
implementation of Zone 10 raises a
material issue of fact concerning
whether a violation of 39 U.S.C. 403(c)
has occurred, the presiding officer shall
issue a public, written report to the
Commission as to whether the
implementation of Zone 10 raises a
material issue of fact concerning
whether a violation of 39 U.S.C. 403(c)
has occurred. The investigator may also
consider whether violation of any other
provision enumerated in 39 U.S.C.
3662(a) has occurred. Upon receipt of
these reports, the Commission will
consider if further action in this docket
or separate proceedings is appropriate.
Materials filed in this proceeding will
be available for review on the
Commission’s website unless the
information contained therein is subject
to an application for non-public
treatment. The Commission’s rules on
non-public materials (including access
to documents filed under seal) appear in
39 CFR part 3011. Additional
information may be accessed via the
Commission’s website at https://
www.prc.gov.
IV. Ordering Paragraphs
It is ordered:
1. The Commission establishes Docket
No. PI2024–2 to review issues related to
the appropriate classification of Zone 10
packages pursuant to 39 U.S.C. 3642
and whether the implementation of
Zone 10 prices raises a material issue of
fact concerning whether a violation of
39 U.S.C. 403(c) has occurred if the
Postal Service elects to implement the
Zone 10 prices.
2. Pursuant to 39 CFR 3010.106, the
Commission appoints John Avila to
serve as presiding officer in this docket.
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21547
The presiding officer shall serve in an
investigatory role and make filings in
this docket as described in the body of
this Order.
3. The Secretary shall arrange for
publication of this notice in the Federal
Register.
By the Commission.
Erica A. Barker,
Secretary.
[FR Doc. 2024–06611 Filed 3–27–24; 8:45 am]
BILLING CODE 7710–FW–P
POSTAL SERVICE
Product Change—Priority Mail
Express, Priority Mail, and USPS
Ground Advantage® Negotiated
Service Agreement
Postal ServiceTM.
ACTION: Notice.
AGENCY:
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
DATES: Date of required notice: March
28, 2024.
FOR FURTHER INFORMATION CONTACT:
Sean C. Robinson, 202–268–8405.
SUPPLEMENTARY INFORMATION: The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on March 25, 2024,
it filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail Express, Priority Mail &
USPS Ground Advantage® Contract 51
to Competitive Product List. Documents
are available at www.prc.gov, Docket
Nos. MC2024–212, CP2024–218.
SUMMARY:
Sean C. Robinson,
Attorney, Corporate and Postal Business Law.
[FR Doc. 2024–06571 Filed 3–27–24; 8:45 am]
BILLING CODE 7710–12–P
POSTAL SERVICE
Product Change—Priority Mail and
USPS Ground Advantage® Negotiated
Service Agreement
Postal ServiceTM.
Notice.
AGENCY:
ACTION:
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
SUMMARY:
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]]>Agencies
[Federal Register Volume 89, Number 61 (Thursday, March 28, 2024)]
[Notices]
[Pages 21545-21547]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-06611]
=======================================================================
-----------------------------------------------------------------------
POSTAL REGULATORY COMMISSION
[Docket No. PI2024-2; Order No. 7017]
Public Inquiry on Zone 10 Packages Pursuant to 39 U.S.C. 3642
AGENCY: Postal Regulatory Commission.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: The Commission is initiating a public inquiry proceeding and
appoint a presiding officer to serve as an investigator to explore the
appropriate classification of Zone 10 packages pursuant to 39 U.S.C.
3642. This notice informs the public of the filing and takes other
administrative steps.
ADDRESSES: Submit comments electronically via the Commission's Filing
Online system at https://www.prc.gov. Those who cannot submit comments
electronically should contact the person identified in the FOR FURTHER
INFORMATION CONTACT section by telephone for advice on filing
alternatives.
FOR FURTHER INFORMATION CONTACT: David A. Trissell, General Counsel, at
202-789-6820.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
II. Background
III. Public Inquiry
IV. Ordering Paragraphs
I. Introduction
In Order No. 7016, the Commission stated that it would initiate a
public inquiry proceeding and appoint a presiding officer to serve as
an investigator to explore the appropriate classification of Zone 10
packages pursuant to 39 U.S.C. 3642 and whether the implementation of
Zone 10 prices raises a material issue of fact concerning whether a
violation of 39 U.S.C. 403(c) has occurred if the Postal Service elects
to implement the Zone 10 prices.\1\ The Commission establishes this
docket to facilitate examination of those issues.
---------------------------------------------------------------------------
\1\ Docket No. CP2024-72, Order Approving Price Adjustments and
Classification Changes for Domestic Competitive Products, March 22,
2024, at 3, 28, 29-31 (Order No. 7016).
---------------------------------------------------------------------------
II. Background
On November 22, 2023, the Postal Service filed notice with the
Commission of its intent to establish a new Zone 10 for Priority Mail
Express, Priority Mail, and USPS Ground Advantage and proposed
associated Zone 10 rates.\2\ The Postal Service states that the changes
will take effect no earlier than July 1, 2024, with a specific date to
be determined by the Postal Service in the future. Docket No. CP2024-72
Notice at 1.
---------------------------------------------------------------------------
\2\ Docket No. CP2024-72, USPS Notice of Changes in Rates and
Classifications of General Applicability for Competitive Products,
November 22, 2023 (Docket No. CP2024-72 Notice).
---------------------------------------------------------------------------
Currently, Priority Mail Express, Priority Mail, and USPS Ground
Advantage packages are charged prices based on weight and zone. For
packages mailed within the United States, a package is assigned Zone 1-
8 based on the distance the package must travel to reach its
destination. The proposed new Zone 10 and associated prices will apply
to (1) packages originating in the Lower 48 States and destined to
Alaska, Hawaii, or the U.S. Territories (which include Puerto Rico, the
U.S. Virgin Islands, and territories in the Pacific, including Guam and
American Samoa); (2) packages originating in Alaska and destined to
Hawaii or the U.S. Territories; (3) packages originating in Hawaii or a
territory in the Pacific Ocean and destined to Alaska, Puerto Rico, or
the U.S. Virgin Islands; and (4) packages originating in Puerto Rico or
the U.S. Virgin Islands and destined to Alaska, Hawaii, or a territory
in the Pacific Ocean. Id. at 2-3. The proposed Zone 10 does not apply
to packages that originate in Alaska, Hawaii, or the U.S. Territories
and are destined to the Lower 48 States. Id. at 4.
To explain the rationale for its proposal, the Postal Service
states that the new Zone 10 and associated prices ``will better align
with the zoning practices of [its] competitors, who currently have
separate zones for offshore destinations.'' Id. at 3. The Postal
Service states that its ``competitors charge significantly more for
shipments from the Lower 48 states to offshore locations than for
shipments in the reverse direction.'' \3\ The Postal Service also
states that its decision to establish Zone 10 is ``cost-based in
[[Page 21546]]
nature'' because ``[t]he cost of transport to offshore locations is
higher on average than it is to transport to non-offshore
destinations.'' Docket No. CP2024-72 Notice at 3. Specifically, the
Postal Service explains that there are more limited transportation
options to offshore destinations, and the use of air transportation,
the mix of air transportation providers, and the need to use higher
cost providers all contribute to higher costs.\4\ The Postal Service
does not, however, provide specific data and sources demonstrating
these cost factors or otherwise demonstrating support for the ``cost-
based'' nature of the new Zone 10 prices and has yet to undertake the
effort to disaggregate Zone 10 costs and confirm that its cost-based
assumption is supported by its available transportation data. See
Docket No. CP2024-72 Response to CHIR No. 2, question 1.
---------------------------------------------------------------------------
\3\ Docket No. CP2024-72, USPS Response to Chairman's
Information Request No. 1, With Portions Filed Under Seal, December
20, 2023, question 2.c.
\4\ Docket No. CP2024-72, USPS Response to Chairman's
Information Request No. 2, With Portions Filed Under Seal, January
12, 2024, question 1.a. (Docket No. CP2024-72 Response to CHIR No.
2).
---------------------------------------------------------------------------
In Order No. 7016, the Commission acknowledged that its role in
reviewing proposed Competitive product rate and classification changes
was limited by law. Order No. 7016 at 1-2, 32-33. Because the proposed
rate and classification changes complied with 39 U.S.C. 3633(a), 39 CFR
part 3035, and Order Nos. 1062 and 6249,\5\ the Commission approved the
proposed price and classification changes as consistent with applicable
law and found that it had no legal basis to reject the proposed
changes. Order No. 7016 at 15-22. However, the Commission also
identified numerous concerns with the Postal Service's proposal and
approach and urged the Postal Service to reconsider whether it is
prudent or necessary to implement its proposal. Id. at 2, 22-32. The
Commission also identified two areas that were particularly suited to
further exploration in a separate public inquiry proceeding: (1) the
question of whether Zone 10 packages are appropriately classified as
Competitive products pursuant to 39 U.S.C. 3642 and (2) the question of
whether the implementation of Zone 10 prices raises a material issue of
fact concerning whether a violation of 39 U.S.C. 403(c) has occurred if
the Postal Service elects to implement the Zone 10 prices. Id. at 28,
30-32.
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\5\ See 39 U.S.C. 3633(a); 39 CFR part 3035; Docket No. CP2012-
2, Order Approving Changes in Rates of General Applicability for
Competitive Products, December 21, 2011 (Order No. 1062); Docket
Nos. CP2022-22 and CP2022-62, Order Granting in Part the United
States Postal Service's Motions for Clarification of Order Nos. 6071
and 6195, August 15, 2022 (Order No. 6249).
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Classification of Zone 10 packages. Postal products are separated
into two distinct classifications: Market Dominant and Competitive. 39
U.S.C. 3621, 3631, 3642. Section 3642 of Title 39 governs the addition
of products to, removal of products from, or transfer of products (or
components of a product) between the Market Dominant and Competitive
product lists.\6\ The Commission may consider a change to a product's
classification upon request of the Postal Service, upon request of
users of the mail, or upon its own initiative. 39 U.S.C. 3642(a). There
is nothing to prevent transfer of only part of a product between
product lists. 39 U.S.C. 3642(c).
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\6\ 39 U.S.C. 3642. The implementing regulations for this
section appear in 39 CFR part 3040.
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The criteria for assigning a product to either the Market Dominant
or Competitive product list are described in 39 U.S.C. 3642(b). Section
3642(b)(1) defines a Market Dominant product as a product over which
``the Postal Service exercises sufficient market power that it can
effectively set the price of such product substantially above costs,
raise prices significantly, decrease quality, or decrease output,
without risk of losing a significant level of business to other firms
offering similar products.'' 39 U.S.C. 3642(b)(1). Competitive products
are defined as ``all other products.'' Id. Products covered by the
postal monopoly are not subject to transfer from the Market Dominant
category. 39 U.S.C. 3642(b)(2). Additional considerations in
determining the correct classification of a postal product include the
availability and nature of private sector competitors, the views of
users of the product, and the likely impact on small businesses. 39
U.S.C. 3642(b)(3).
In Docket No. CP2024-72, several commenters raised concerns
relevant to an inquiry pursuant to 39 U.S.C. 3642, and the Commission
recognized that the concerns raised by commenters may call into
question whether the proposed Zone 10 volumes are correctly classified
as Competitive. Order No. 7016 at 28-29. As a result, the Commission
determined that this issue would be appropriate to consider in a public
inquiry proceeding. Id. The Commission stated that it intended to
appoint a presiding officer to serve as an investigator in the public
inquiry proceeding to further explore the appropriate classification of
these packages and to provide analysis and recommendations to the
Commission on that issue. Id.
Violation of 39 U.S.C. 403(c). 39 U.S.C. 403(c) prohibits the
Postal Service from making ``any undue or unreasonable discrimination
among users of the mails'' ``in establishing classifications, rates,
and fees.'' 39 U.S.C. 403(c). In order to find that undue or
unreasonable price discrimination exists in violation of 39 U.S.C.
403(c), the Commission must find that: (1) a mailer has been offered
less favorable rates or terms and conditions than one or more other
mailers; (2) the mailer is ``similarly situated'' to the mailer or
mailers who have been offered the more favorable rates or terms and
conditions; and (3) there is no rational or legitimate basis for the
Postal Service to deny the more favorable rates or terms and conditions
offered to others.\7\ The Commission has the authority to take action
to bring the Postal Service into compliance with 39 U.S.C. 403(c) if it
finds the Postal Service is not operating in conformance with that
provision based on a complaint raising such non-conformance. 39 U.S.C.
3662(a), (c). The Commission has the authority to appoint an officer of
the Commission representing the interests of the general public to
bring a complaint for violation of 39 U.S.C. 403(c) or any other
provision enumerated in 39 U.S.C. 3662(a). 39 U.S.C. 3662(a).
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\7\ Docket No. C2020-2, Order Granting the Postal Service's
Motion to Dismiss Complaint with Prejudice, April 28, 2020, at 8
(Order No. 5491) (citing Docket No. C2009-1, Order on Complaint,
April 20, 2011, at 28 (Order No. 718)).
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In Order No. 7016, the Commission noted that the Postal Service was
not required to justify its Zone 10 rates on a cost basis beyond
showing compliance with 39 U.S.C. 3633(a). Order No. 7016 at 30-32.
However, the Commission also noted that it previously found costs are a
relevant consideration under the 39 U.S.C. 403(c) analysis and that
costs may be particularly relevant in the case of Zone 10 because one
of the Postal Service's rationales for its Zone 10 proposal is that it
is ``cost-based in nature.'' See id. at 30; Order No. 5491 at 8; Docket
No. CP2024-72 Notice at 3.
The Commission stated that the Postal Service's cost-based
rationale for its proposal appeared reasonable on its face given the
Postal Service's representations regarding transportation costs to
offshore areas; however, it also raised concern that the Postal Service
failed to undertake the effort to disaggregate Zone 10 costs and
confirm that its assumption regarding higher transportation costs for
Zone 10 packages was supported by its available transportation data.
Order No. 7016 at 31-32. The Commission directed the
[[Page 21547]]
Postal Service to file a rulemaking proceeding proposing and supporting
the methodological changes necessary to derive separate Zone 10
transportation costs for Priority Mail and USPS Ground Advantage within
90 days of the date of Order No. 7016. Id. at 27.
The Commission was concerned that if the Postal Service's actual
cost data differed from the Postal Service's assumptions, the Postal
Service's cost-based justification for the Zone 10 rates could be
invalid and concerns of violation of 39 U.S.C. 403(c) could arise. Id.
at 30-32. As a result, the Commission stated that it intended to
appoint a presiding officer to serve as an investigator to gather
information and explore whether the Postal Service would be in
violation of 39 U.S.C. 403(c) if the Postal Service elects to implement
the new Zone 10 and related prices. Id. The Commission also stated that
the investigator may also consider whether violation of any other
provision enumerated in 39 U.S.C. 3662(a) has occurred. Id. at 32. The
Commission further stated that after gathering applicable information,
the investigator shall issue a public, written report to the Commission
as to whether the implementation of Zone 10 raises a material issue of
fact concerning whether a violation of 39 U.S.C. 403(c) or any other
provision enumerated in 39 U.S.C. 3662(a) has occurred. Id.
III. Public Inquiry
The Commission establishes this proceeding to appoint and direct a
presiding officer to serve as an investigator to explore the
appropriate classification of Zone 10 packages pursuant to 39 U.S.C.
3642 and whether the implementation of Zone 10 prices raises a material
issue of fact concerning whether a violation of 39 U.S.C. 403(c) has
occurred if the Postal Service elects to implement the Zone 10 prices.
Pursuant to 39 CFR 3010.106, the Commission appoints John Avila to
serve as presiding officer in this docket. In that role, the Commission
expects the presiding officer to serve an investigatory role similar to
the one envisioned by 39 CFR 3022.21 to procure applicable information,
examine issues, and report back to the Commission with his analysis and
recommendations.\8\
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\8\ See 39 CFR 3022.21. 39 CFR 3022.21 contemplates the
appointment of an investigator in the context of procuring
information and examining issues before reporting back to the
Commission during a complaint proceeding.
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In addition to consideration of 39 U.S.C. 403(c) and 3642, the
underlying regulations, Commission precedent, the record of Docket No.
CP2024-72, and the disaggregated costs the Postal Service has been
directed to file within 90 days, the Commission anticipates that the
presiding officer may need additional information from the Postal
Service prior to conducting analysis and reaching any conclusions and
expects him to issue presiding officer information requests as he deems
appropriate to gather such information. 39 CFR 3010.106(c).
Once the presiding officer serving as investigator has sufficient
information to analyze and assess whether Zone 10 packages should
remain classified as Competitive pursuant to 39 U.S.C. 3642, the
underlying regulations, and Commission precedent, the presiding officer
shall file a public, written report to the Commission in this
proceeding detailing his analysis and recommendations to the Commission
on that issue. Once the presiding officer serving as investigator has
sufficient information to assess whether the implementation of Zone 10
raises a material issue of fact concerning whether a violation of 39
U.S.C. 403(c) has occurred, the presiding officer shall issue a public,
written report to the Commission as to whether the implementation of
Zone 10 raises a material issue of fact concerning whether a violation
of 39 U.S.C. 403(c) has occurred. The investigator may also consider
whether violation of any other provision enumerated in 39 U.S.C.
3662(a) has occurred. Upon receipt of these reports, the Commission
will consider if further action in this docket or separate proceedings
is appropriate.
Materials filed in this proceeding will be available for review on
the Commission's website unless the information contained therein is
subject to an application for non-public treatment. The Commission's
rules on non-public materials (including access to documents filed
under seal) appear in 39 CFR part 3011. Additional information may be
accessed via the Commission's website at https://www.prc.gov.
IV. Ordering Paragraphs
It is ordered:
1. The Commission establishes Docket No. PI2024-2 to review issues
related to the appropriate classification of Zone 10 packages pursuant
to 39 U.S.C. 3642 and whether the implementation of Zone 10 prices
raises a material issue of fact concerning whether a violation of 39
U.S.C. 403(c) has occurred if the Postal Service elects to implement
the Zone 10 prices.
2. Pursuant to 39 CFR 3010.106, the Commission appoints John Avila
to serve as presiding officer in this docket. The presiding officer
shall serve in an investigatory role and make filings in this docket as
described in the body of this Order.
3. The Secretary shall arrange for publication of this notice in
the Federal Register.
By the Commission.
Erica A. Barker,
Secretary.
[FR Doc. 2024-06611 Filed 3-27-24; 8:45 am]
BILLING CODE 7710-FW-P
