[Federal Register: July 23, 1998 (Volume 63, Number 141)]
[Notices]
[Page 39600-39603]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23jy98-108]
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POSTAL RATE COMMISSION
[Docket No. MC98-1; Order No. 1216]
Mail Classification Proceeding
(Authority: 39 U.S.C. 3623)
AGENCY: Postal Rate Commission.
ACTION: Notice and Order Concerning Request for Experimental Online
Mailing Service and Fees, including Market Test.
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SUMMARY: This notice and order addresses legal and administrative
matters related to the Postal Service's request for expedited
consideration of an experimental mail classification and fee schedule
for an online mailing special service. The Service proposes that a
market test of the proposed service precede introduction. The proposed
duration of the experiment is 2 years.
DATES: See SUPPLEMENTARY INFORMATION section for dates.
ADDRESSES: See Supplementary Information section for address to which
communications concerning this notice and order should be sent.
FOR MORE INFORMATION CONTACT: Stephen L. Sharfman, General Counsel,
1333 H St., NW, Washington, DC 20268-0001, 202-789-6820.
SUPPLEMENTARY INFORMATION: Notice is hereby given that on July 15,
1998, the United States Postal Service filed a Request with the Postal
Rate Commission pursuant to sec. 3623 of the Postal Reorganization Act,
39 U.S.C. 101 et seq., for a recommended decision on proposed additions
to the Domestic Mail Classification Schedule (DMCS) on an experimental
basis. The request also incorporates a proposal for the establishment
of associated new fees. The request includes attachments and is
supported by the testimony of eight witnesses and four library
references. It is on file in the Commission docket room and is
available for inspection during the Commission's regular business
hours. For interested persons who have access to the internet, the
request and related documents are available on the Commission's home
page at http://www.prc.gov/wsdocs/MC98-1/MC98-1.htm.
Proposed market test preceding establishment of experimental mail
classification and fees.
The Postal Service indicates that it desires to conduct a market
test of the proposed online mailing service prior to its introduction
as an experimental mail classification. The Service proposes to
conclude a current operations test 1 and
[[Page 39601]]
begin a more extensive market test of the service, at interim fees to
be recommended by the Commission, in early September of this year.
Postal Service Request at 2-3.
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\1\ According to the request, the Postal Service currently is
conducting an operations test of the proposed Mailing Online service
with one postal web server, one printer contractor, and a maximum of
200 customers located in Tampa, FL and Hartford, CT. Test customers
currently pay the single-piece First-Class rate for mailing, but no
additional fee for production of the mailpiece entered into the
postal system. Request at 2.
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Under the Service's proposal, the market test would be conducted
while the Commission considers its request to establish Mailing Online
as an experimental service. The interim market test fees would remain
in effect pending the Commission's issuance of a recommended decision
on the proposed experimental mail classification, and would expire upon
implementation of the requested experimental service, or within 3
months of a decision rejecting the latter proposal. In a separate
motion filed by the Postal Service, which is described in more detail
below, the Service states that its ``preferred objective for this
experiment is to have it recommended by the Commission by the end of
November, 1998.'' 2 In the event the Commission recommends
the experimental classification and associated fees, the Service
anticipates that they will be implemented together with the new rates
and fees that the Governors of the Postal Service have resolved to put
into effect on January 10, 1999, in connection with Docket No. R97-1.
The Service proposes that the experimental service have a duration of 2
years.
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\2\ Motion of the United States Postal Service for expedition
and for waiver of certain provisions of rule 161 and certain
provisions of rule 64(h), July 15, 1998, at 1.
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Description of Request
The proposed Mailing Online service would enable individuals and
organizations with access to a personal computer and an internet
connection to transmit documents created on their computers to the
Postal Service in digital form for printing and entry as mail, paying
online in a single transaction. Users would transmit digital document
files generated in any of several selected word processing and desktop
publishing applications, together with recipient information and other
data, to a designated Postal Service site on the world wide web. The
Service would offer users a number of choices regarding printing and
finishing specifications, customization of output by recipient
variables in the user's database, and scheduling of a specific mailing
date.
Users of the proposed Mailing Online service would be charged
existing postage rates for mailing, plus a fee for production and other
pre-mailing services. Depending upon the character of the material
being sent and the user's service preference, mail pieces generated by
the Mailing Online service would be charged postage at either the
First-Class or standard mail automation basic rates applicable to the
finished mail piece.3
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\3\ In addition to offering Mailing Online users the opportunity
to use First-Class Mail or standard mail regular rates, a witness
for the Postal Service states in part of its pre-filed testimony
that the Service is developing a means for verifying the eligibility
of mailers with standard nonprofit permits, so that they may use the
service to mail at standard nonprofit rates.
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In lieu of specific unit fees for the Mailing Online special
service, the Postal Service proposes what might be described as a
``cost plus'' approach to fee calculation. For the duration of the
market test, the Service proposes that fee elements be set at the unit
contract cost of the respective service feature to the Postal Service,
multiplied by a factor of 1.25 to provide a resulting cost coverage of
125 percent. According to the Service, these various costs will be
established in the Mailing Online printer contract to be awarded during
August 1998. For the subsequent experimental service phase, the Service
proposes fees to be calculated by multiplying the sum of printer
contractual costs for the particular mailing 4 by the same
125 percent cost coverage, then adding 0.1 cent per impression to
recover other Postal Service costs. Postal Service Request, Attachment
B1, page 2; Attachment B2, page 1.
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\4\ The Postal Service anticipates that printing costs may vary
substantially by region because of differing levels of labor and
real estate costs. Thus, a Mailing Online user whose documents are
sent to a printing site located in a higher-cost area would likely
pay higher fees than if the same services were performed by a
printer in a lower-cost area.
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Expedited Consideration of the Request
The Service's request invokes the operation of two independent
portions of the Commission's rules of practice and procedure which
provide for expedited consideration of requests for particular types of
mail classification changes. The first of these, encompassing rules 67
through 67d (39 CFR 3001.67 through 3001.67d), applies to requests for
new services or mail classification changes that are experimental in
character. These rules provide for the adoption of streamlined
procedures for considering such requests, and require participants to
identify the genuine issues of material fact raised by the Postal
Service proposal in order to limit formal hearings to those issues. 39
CFR 3001.67a. They also provide for establishment of a procedural
schedule that will allow issuance of a recommended decision within 150
days from any favorable determination the Commission may make as to the
propriety of treating the Postal Service proposal as experimental. 39
CFR 3001.67d.
In connection with the proposed interim market test, the Postal
Service also invokes the operation of subpart I of the rules of
practice, 39 CFR 3001.161 through 3001.166. The purpose of these
expedited procedures, as stated in 39 CFR 3001.164, ``is to allow for
consideration of proposed market tests within 90 days, consistent with
the procedural due process rights of interested persons.'' Section
3001.163(e) requires any participant who wishes to dispute a genuine
issue of material fact presented by the Service's request to identify
facts it will controvert with specificity, and provides for formal
hearings only when the Commission determines that there is a genuine
and material factual issue to be resolved, and that a hearing is needed
for that purpose.
According to the Service, its request is suitable for consideration
under both the experimental service and market test rules. Mailing
Online service qualifies for consideration under the market test rules,
the Service states, because the proposed test would be modest in scope,
scale, duration, and potential impact, and because it is being
conducted ``as a stepping stone to a more permanent service offering.''
Request at 5. (Footnote omitted.) The proposed service also qualifies
for consideration as an experiment, the Service submits, in view of its
novelty as an electronic means of presenting documents for entry into
the mail; the modest anticipated magnitude of its impact upon postal
costs and revenues, and the mailing costs and practices of mail users;
the need to gather information suitable for supporting a request for a
permanent mail classification change; and the desirability of a two-
year experiment to generate cost and volume information, as well as to
demonstrate the viability of the service. Id. at 6-7.
In a separate notice dated July 15, 1998, a copy of which was filed
with its request, the Postal Service certifies that it has complied
with the early notification requirement specified for requested market
tests in 39 CFR 3001.163(d).
Motion for Expedition and Waiver of Certain Provisions
The Postal Service's request was also accompanied by a pleading
captioned, ``Motion of the United States Postal Service for expedition,
and for waiver of certain provisions of rule 161 and
[[Page 39602]]
certain provisions of rule 64(h).'' In this pleading, the Service asks
the Commission to accelerate the expedited consideration of its request
provided by the experimental service rules to achieve the Postal
Service's preferred objective of issuance of a decision by the end of
November 1998. According to the Service, the accelerated procedural
schedule it seeks is required to allow it ``to explore the possibility
that major software developers could integrate Mailing Online into
impending updates of software in order to make the service widely and
easily available to individual, small-office, and home-office
mailers.'' Motion at 2. Additionally, the Service notes, a Commission
decision no later than the end of November would accommodate the
Service's planned deployment schedule that calls for nationwide
customer access to Mailing Online service in January 1999. Ibid.
The Service's motion also requests that portions of Commission
rules 161 and 64(h) be waived in this case. To the extent that rule
161(a) could be read to require the filing of a contemporaneous request
for a permanent classification change as a prerequisite for a market
test, the Postal Service requests a waiver of that requirement so that
it may go forward with the market test at interim fees to be
recommended by the Commission. Id. at 2-3. Pursuant to rule 64(h)(3),
the Service also asks to be relieved of the obligation to produce
certain information regarding cost and revenue effects of its proposal,
on the grounds that its proposal would not change any existing rates or
fee, or produce a significant impact upon the cost-revenue
relationships of existing postal services. Id. at 5-7. Specifically,
the Service seeks waiver of rules 54(b)(3) in part, 54(f)(2), 54(f)(3),
54(h), 54(j), and 54(l) in part. Id. at 8-9.
Further Procedures; Filing Address
Rule 163(b) provides that interested persons may intervene in
proceedings to consider Postal Service requests to conduct a market
test within 28 days after the Service's filing. Accordingly, anyone
wishing to be heard in this matter is directed to file a written notice
of intervention with Margaret P. Crenshaw, secretary of the Commission,
1333 H Street NW, Suite 300, Washington, DC 20268-0001, on or before
August 12, 1998. Intended participants should indicate whether they
request formal intervention or limited participator status. See 39 CFR
3001.20 and 3001.20a.
Rule 163(e) [39 CFR 3001.163(e)] states that the Commission will
hold hearings on a Postal Service request for a market test ``when it
determines that there is a genuine issue of material fact to be
resolved, and that a hearing is needed to resolve that issue.'' To
assist that determination, the same subsection directs parties who wish
to dispute a genuine issue of material fact to file a request for a
hearing, which:
shall state with specificity the fact or facts set forth in the
Postal Service's filing that the party disputes, and when possible,
what the party believes to be the true fact or facts and the
evidence it intends to provide in support of its position.
Ibid.
Any participant who wishes to dispute a genuine issue of material
fact to be resolved with regard to the Postal Service's proposed market
test in this proceeding shall file a request for a hearing as specified
in rule 163(e) by August 12, 1998. In order to assist the Commission's
determination of whether a hearing is necessary, should any written
discovery be directed to the Postal Service by a participant before
August 12, 1997, the Postal Service shall respond within 10 days.
With regard to the Service's longer-term request to establish
Mailing Online service as an experimental mail classification, rule
67(c) provides that the Commission will entertain representations by
participants that the proposal should not be considered as an
experiment, and should follow the normal mail classification change
procedures. Any participant intending to make such a representation
shall do so by pleading no later than August 12, 1998.
In addition, rule 67a(b) requires parties to proceedings in which
the Postal Service seeks a classification change it denominates as
experimental in character to file statements of the issues they
perceive in the case at the earliest possible time following the filing
of the Service's request, or following a determination that the
proposed change is experimental in character. In view of the Service's
motion for extraordinarily expeditious consideration of its proposal,
participants' statements of issues shall also be due no later than
August 12, 1998.
A prehearing conference will be held in this proceeding on Friday,
August 14, 1998, at 9:30 a.m. in the Commission's hearing room.
Participants should be prepared to discuss what formal procedures,
including hearings, may be necessary and appropriate in this docket. In
addressing the issue of appropriate procedures in this docket,
participants should also be prepared to address the potentially
different procedural requirements presented by the Postal Service's
market test proposal and its request for establishment of Mailing
Online as an experimental service. If the Commission determines that
formal hearings to resolve genuine issues of material fact are required
for either or both, hearings to evaluate the supporting evidence
presented by the Postal Service may be scheduled to begin as soon as
August 26, 1998. The presiding officer will establish subsequent
procedural dates.
Representation of the General Public
In conformance with 39 U.S.C. 3624(a), the Commission designates W.
Gail Willette, acting Director of the Commission's office of the
consumer advocate (OCA), to represent the interests of the general
public in this proceeding. Pursuant to this designation, Ms. Willette
will direct the activities of Commission personnel assigned to assist
her and, when requested, will supply their names for the record.
Neither Ms. Willette nor any of the assigned personnel will participate
in or provide advice on any Commission decision in this proceeding. The
OCA shall be separately served with three copies of all filings, in
addition to and contemporaneous with, service on the Commission of the
24 copies required by rule 10(c) (39 CFR 3001.10(c)).
It is ordered:
1. The Commission will sit en banc in this proceeding.
2. Notices of intervention shall be filed no later than August 12,
1998.
3. Participants who wish to request a hearing on the Postal
Service's request in this docket to conduct a market test shall submit
such a request, together with statements in conformance with 39 CFR
3001.163(e), no later than August 12, 1998.
4. Statements of issues presented by the Postal Service's request
in this docket to establish a Mailing Online experimental mail
classification in conformance with 39 CFR 3001.67a(b) shall be filed no
later than August 12, 1998.
5. Answers to the Postal Service's motion for expedition and for
waiver of certain provisions of rule 161 and certain provisions of rule
64(h) are to be submitted no later than August 12, 1998.
6. The Postal Service shall provide, within 10 days, responses to
any written discovery requests submitted to it before August 12, 1998.
7. W. Gail Willette, acting director of the Commission's OCA, is
designated to represent the general public.
[[Page 39603]]
8. A prehearing conference in this docket shall be held on Friday,
August 14, 1998, at 9:30 a.m. in the Commission's hearing room.
9. The Secretary shall cause this notice and order to be published
in the Federal Register.
Dated: July 20, 1998.
By the Commission.
Cyril J. Pittack,
Acting Secretary.
[FR Doc. 98-19666 Filed 7-22-98; 8:45 am]
BILLING CODE 7710-FW-P