Market Dominant Postal Products

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background

II. Basis for Proposed Rule Change

III. Proposed Rule

I. Background

In its general Market Dominant rate adjustment filings, the Postal Service routinely proposes to offer rate incentives in the form of promotions that reduce rates by providing discounts, rebates, or credits to participating mailers of certain types of mailpieces. Typically, such promotions are offered for several months during a particular calendar year for certain mailpieces in the First-Class Mail and USPS Marketing Mail classes. If the Commission approves, then the promotion may be offered again, with or without modifications, in the next calendar year.

Each rate incentive offered by the Postal Service is either a rate of general applicability or a rate not of general applicability. A rate incentive of general applicability may be eligible for inclusion in the percentage change in rates calculation (provided that it satisfies all the applicable criteria under the Commission's rules), which will allow for the Postal Service to generate price cap authority for the applicable class of mail. By contrast, a rate incentive not of general applicability has been ineligible for inclusion in the percentage change in rates calculation.

The Commission previously adopted regulations concerning rate incentives for Market Dominant products. However, in connection with an appeal, the Commission stated that it would reconsider Order No. 5510 and that it “does not intend to enforce Order No. 5510 during the reconsideration period.” In Order No. 6325, the Commission proposed modifying its rules and sought comments on its proposal. Subsequently, the Commission sought supplemental comments. Having considered the comments that it received, the Commission proposes further changes to its rules.

II. Basis for Proposed Rule Change

The Commission proposes to modify its rules by revising the criteria that a rate incentive must satisfy to be included in the percentage change in rates calculation; revising the definition of “rate of general applicability”; and revising filing and reporting requirements.

First, the Commission proposes to create a mechanism allowing certain rate incentives that are not rates of general applicability to be included in the percentage change in rates calculation. Second, the Commission proposes to remove the currently-not-enforced requirement that a rate incentive must be made available to all mailers equally on the same terms and conditions to be included in the percentage change in rates calculation. Third, the Commission proposes to revise the definition of “rate of general applicability” at § 3030.101(j). This revision would clarify a potential ambiguity. The Commission also continues to propose to revise § 3030.101(j) as initially proposed in Order No. 6325 to clarify that to qualify as a rate of general applicability, a rate incentive cannot have eligibility criteria based on historical mail volumes or prior participation in a rate incentive or promotion. Fourth, the Commission proposes to revise filing requirements to ensure that the Postal Service provides sufficient information at the outset of a Market Dominant rate adjustment proceeding. Fifth, the Commission proposes to add a provision authorizing it to require the submission of information to ensure that rate incentives included in the percentage change in rates calculation comply with applicable requirements.

The proposed mechanism allowing certain rate incentives that are not rates of general applicability to be included in the percentage change in rates calculation would allow a rate incentive for which a mailer's eligibility depends on the mailer increasing its volumes of a product (or multiple products) to be included in the percentage change in rates calculation. The Commission proposes this mechanism to encourage the Postal Service to develop and offer such rate incentives, with the goal of combatting volume decline.

The Commission also proposes to remove the currently-not-enforced requirement that a rate incentive must be made available to all mailers equally on the same terms and conditions to be included in the percentage change in rates calculation. The Commission proposes to remove this requirement because fairness concerns can be addressed through other means and because this requirement has the potential to cause confusion.

The Commission proposes revising the definition of “rate of general applicability” in § 3030.101(j) by adding the word “only” to the sentence addressing rates benefiting a single mailer so that the sentence reads as follows: “A rate is not a rate of general applicability if it benefits only a single mailer.” This change removes a potential ambiguity in the sentence and ensures that the sentence reflects the Commission's intent in adding the sentence to the definition.

The Commission also continues to propose the changes to § 3030.101(j) that it proposed in Order No. 6325. See Order No. 6325 at 26-34. These proposed changes to the definition of “rate of general applicability” in § 3030.101(j) are designed to clarify what rate incentives may qualify for inclusion in the percentage change in rates calculation as rates of general applicability. Under the Commission's existing rules “[a] rate is not a rate of general applicability if eligibility for the rate is dependent on factors other than the characteristics of the mail to which the rate applies[.]” 39 CFR 3030.101(j). As initially proposed in Order No. 6325, the proposed changes add an additional sentence to clarify that a rate incentive is not a rate of general applicability if eligibility for the rate is dependent in whole or in part on the volume of mail sent by a mailer in a past year or years or on the participation by a mailer in a rate incentive or promotion in a past year or years.

The Commission proposes to modify its rules for the technical documentation required to support proposed rate incentives. These proposed changes would implement changes conforming to the Commission's proposed changes to its rules for including rate incentives in the percentage change in rates calculation. Thus, under the proposed revision, the Commission's rules would require a statement describing the purpose of the rate incentive. Similarly, and to conform with the proposed change to the definition of “rate of general applicability,” under the proposed revision, the rule would require a statement affirming that a rate incentive proposed to be included in the percentage change in rate calculation will not benefit only a single mailer.

In addition, the Commission proposes requiring each request to include a rate incentive in the percentage change in rates calculation to include an estimate of the effect of the rate incentive on mailers in the affected class that do not participate in the rate incentive, as well as all information and calculations relied upon to develop such estimate. The Commission proposes this change for transparency. This proposed change would ensure that the public is provided notice of the estimated effect of the proposed rate incentive on non-participating mailers in the affected class. The Commission requires the information and calculations relied upon to develop the estimate to ensure that it understands the basis for the estimate and to provide transparency to the public and affected stakeholders.

The Commission also proposes adding a provision authorizing it to require the submission of information to ensure that rate incentives included in the percentage change in rates calculation comply with applicable requirements. In the Commission's experience, reporting requirements are important to ensure that the Commission understands how rate incentives operate in practice. The Commission's revised proposal codifies the Commission's authority to impose such reporting requirements.

III. Proposed Rule

For the reasons stated in the preamble, the Commission proposes to amend 39 CFR part 3030 as follows:

1. The authority citation for part 3030 continues to read as follows:

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

2. Amend § 3030.101 by revising paragraph (j) to read as follows:

3. Amend § 3030.123 by revising paragraph (j) to read as follows:

4. Amend § 3030.128 by:

a. Revising paragraph (f)(2);

b. Adding paragraph (f)(3); and

c. Revising paragraph (g)(1).

The addition and revisions read as follows:

[FR Doc. 2024-22125 Filed 9-27-24; 8:45 am]

BILLING CODE 7710-FW-P