[Federal Register Volume 77, Number 12 (Thursday, January 19, 2012)]
[Proposed Rules]
[Pages 2676-2677]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-851]
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POSTAL REGULATORY COMMISSION
39 CFR Part 3015
[Docket No. RM2012-3; Order No. 1108]
Competitive Postal Products
AGENCY: Postal Regulatory Commission.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Commission is initiating a review to determine whether
competitive products provide the appropriate minimum contribution to
the Postal Service's institutional costs. This document invites
comments to facilitate examination of this question.
DATES: Comments are due: March 5, 2012. Reply comments are due: April
2, 2012.
ADDRESSES: Submit comments electronically via the Commission's Filing
Online system at http://www.prc.gov. Commenters who cannot submit their
views electronically should contact the person identified in FOR
FURTHER INFORMATION CONTACT by telephone for advice on alternatives to
electronic filing.
FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel,
at stephen.sharfman@prc.gov or (202) 789-6820.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
II. Invitation To Comment
III. Ordering Paragraphs
I. Introduction
The Postal Accountability and Enhancement Act (PAEA), Public Law
109-435, 120 Stat. 3218 (2006), directs the Commission to promulgate
regulations to ensure that competitive products, collectively, bear an
``appropriate share'' of the Postal Service's institutional costs. See
39 U.S.C. 3633(a)(3).
The initial Commission review of this issue determined that
competitive products, collectively, annually should contribute a
minimum of 5.5 percent of the institutional costs of the Postal
Service. Order No. 43, October 29, 2007, paras. 3040-47. The PAEA
further directs the Commission to revisit this question every 5 years.
See 39 U.S.C. 3633(b).\1\
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\1\ REVIEW OF MINIMUM CONTRIBUTION.--Five years after the date
of enactment of this section, and every 5 years thereafter, the
Postal Regulatory Commission shall conduct a review to determine
whether the institutional costs contribution requirement under
subsection (a)(3) should be retained in its current form, modified,
or eliminated. In making its determination, the Commission shall
consider all relevant circumstances, including the prevailing
competitive conditions in the market, and the degree to which any
costs are uniquely or disproportionately associated with any
competitive products.
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Five years has passed since enactment of the PAEA. The Commission
initiates Docket No. RM2012-3 to evaluate how to ensure that the
appropriate minimum contribution to the Postal Service's institutional
costs is provided by competitive products. The Commission will decide
whether its rule 3015.7(c), established in Order No. 43, which sets the
5.5 percent minimum contribution, should be retained in its current
form, modified, or eliminated.
When establishing the initial level of appropriate contribution
from competitive products, the Commission tried to balance the risk of
setting the contribution level too high with the risk of setting it too
low. Given a very competitive marketplace where the Postal Service's
market share is relatively small, setting the contribution level too
high could adversely affect the Postal Service's ability to compete. On
the other hand, establishing a markup that is too low could give the
Postal Service an artificial competitive advantage. The Commission gave
considerable weight to the historical contribution made by items
categorized as competitive products by the PAEA. The Commission set the
minimum contribution level at 5.5 percent of total institutional costs,
in line with the competitive products' estimated contribution to
institutional costs of 5.4 percent in FY 2005 and 5.7 percent in FY
2006.
Since rule 3015.7(c) has been in place, the Postal Service's
competitive products collectively have covered more than 5.5 percent of
the Postal Service's institutional costs. For FY 2007, the revenue from
competitive products minus their attributable costs equaled 5.66
percent of total institutional costs.\2\ For FY 2008, the contribution
from
[[Page 2677]]
competitive products represented 5.54 percent of total institutional
costs.\3\ The contribution from competitive products to the recovery of
the Postal Service's institutional costs was 6.78 percent in FY 2009
and 7.12 percent in FY 2010.\4\ In FY 2009 and FY 2010, institutional
costs were reduced compared with previous years, due in part to the
congressionally mandated reductions of the required annual contribution
to the Retirement Health Benefits Fund. The Postal Service also has
increasingly exercised its flexibility to transfer mail volume from
market dominant products to competitive products. See 39 U.S.C. 3642.
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\2\ FY 2007 Annual Compliance Determination, March 28, 2008, at
113.
\3\ FY 2008 Annual Compliance Determination, March 30, 2009, at
87.
\4\ FY 2009 Annual Compliance Determination, March 29, 2010, at
117; FY 2010 Annual Compliance Determination, March 29, 2011, at
138.
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On December 29, 2011, the Postal Service filed its 2011 Annual
Compliance Report with the Commission. That report indicates that in FY
2011 competitive products collectively contributed 7.84 percent of the
Postal Service's institutional costs.\5\
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\5\ See Docket No. ACR2011, FY 2011 Annual Compliance Report,
December 29, 2011, at 64. Competitive products contribution, $2.317
billion, divided by total institutional costs, $29.554 billion.
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II. Invitation To Comment
The Commission invites comments to facilitate its examination of
the appropriateness of the current contribution level. To inform its
deliberations, the Commission requests comments from interested members
of the public on whether and how changes in competitive market
conditions, the allocation of costs to competitive products, the number
and volume of competitive products, or any other changes should impact
the minimum appropriate share of institutional costs of the Postal
Service that should be provided by competitive products. As required by
the statute, the Commission in making its determination must consider
all relevant circumstances, including the prevailing competitive
conditions in the market, and the degree to which any costs are
uniquely or disproportionately associated with any competitive
products. Comments also are welcome on any issues relevant to the
reasonableness of the current 5.5 percent contribution requirement and
retaining, modifying, or eliminating it.
Comments are due March 5, 2012. Reply comments may be submitted on
or before April 2, 2012.
Pursuant to 39 U.S.C. 505, R. Kevin Harle is designated as the
officer of the Commission to represent the interests of the general
public (Public Representative). The Public Representative will direct
the activities of Commission personnel assigned to him and, upon
request, will provide their names for the record. Neither the Public
Representative nor any of the assigned personnel will participate in or
provide advice on any Commission decision in this proceeding.
III. Ordering Paragraphs
It is ordered:
1. The Commission establishes Docket No. RM2012-3, in compliance
with 39 U.S.C. 3633(b).
2. The Commission designates R. Kevin Harle as the Public
Representative representing the interests of the general public in this
proceeding.
3. Comments are due March 5, 2012.
4. Reply comments are due April 2, 2012.
5. The Secretary shall arrange for publication of this notice in
the Federal Register.
By the Commission.
Shoshana M. Grove,
Secretary.
[FR Doc. 2012-851 Filed 1-18-12; 8:45 am]
BILLING CODE 7710-FW-P