[Federal Register Volume 78, Number 162 (Wednesday, August 21, 2013)]
[Proposed Rules]
[Pages 51678-51686]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-20178]


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POSTAL REGULATORY COMMISSION

39 CFR Parts 3001 and 3035

[Docket No. RM2013-5; Order No. 1803]


Market Tests of Experimental Postal Products

AGENCY: Postal Regulatory Commission.

ACTION: Proposed rule.

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SUMMARY: The Commission is proposing a set of rules to address Postal 
Service filings concerning market tests of experimental products. The 
proposed rules address the contents of market test filings, describe 
how the filings will be reviewed, and discuss related matters. The 
Commission invites public comments on the proposed rule.

DATES: Comments are due September 20, 2013. Reply comments are due 
October 10, 2013.

ADDRESSES: Submit comments electronically via the Commission's Filing 
Online system at http://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: Stephen L. Sharfman, General Counsel, 
at 202-789-6820.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction
II. Statutory Authority
III. Discussion of the Proposed Rules
IV. Section-by-Section Analysis
V. Opportunity to Comment
VI. Ordering Paragraphs

Attachment-Summary of Market Tests

I. Introduction

    The Commission proposes to establish rules governing market tests 
of experimental products to implement the requirements of the standards 
for market tests established by Congress in 39 U.S.C. 3641.

II. Statutory Authority

    The Postal Accountability and Enhancement Act (PAEA) \1\ authorizes 
the Postal Service to conduct market tests of experimental products. 
See 39 U.S.C. 3641(a)(1). Such tests are not subject to 39 U.S.C. 3622, 
3633, or 3642, or regulations promulgated thereunder. Id. 3642(a)(2). 
An experimental product may not be tested unless it satisfies each of 
the following conditions:
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    \1\ Public Law 109-435, 120 Stat. 3198 (2006).

     Significantly different product: The product is, from 
the viewpoint of the mail users, significantly different from all 
products offered by the Postal Service within the 2-year period 
preceding the start of the test.
     Market disruption: The introduction or continued 
offering of the product will not create an unfair or otherwise 
inappropriate competitive advantage for the Postal Service or any 
mailer, particularly in regard to small business concerns.
     Correct categorization: The Postal Service identifies 
the product, for the purpose of a test, as either market-dominant or 
competitive.

39 U.S.C. 3641(b).

    The Postal Service must file notice with the Commission and publish 
the notice in the Federal Register at least 30 days before initiating a 
market test. Id. 3641(c)(1). The notice must describe the nature and 
scope of the market test and explain why the Postal Service believes 
that the market test is covered by section 3641. Id. 3641(c)(1)(A) and 
(B). The duration of a market test of an

[[Page 51679]]

experimental product may not exceed 24 months unless the Commission 
grants an extension. Id. 3641(d). The Commission may, upon written 
application from the Postal Service filed no less than 60 days prior to 
the termination of the market test, extend the market test duration up 
to an additional 12 months ``[i]f necessary in order to determine the 
feasibility or desirability of a[n] [experimental] product.'' Id. 
3641(d)(2).
    In general, an experimental product may only be tested if ``total 
revenues that are anticipated, or in fact received, by the Postal 
Service do not exceed $10,000,000 in any year,'' subject to adjustments 
for inflation. Id. 3641(e)(1). The Commission may exempt the market 
test from this $10 million amount limitation (as adjusted for 
inflation) as long as revenues from the experimental product do not 
exceed $50 million in any year, subject to adjustments for inflation. 
Id. 3641(e)(2). The exemption request shall be approved if the 
Commission determines that the experimental product is: (1) Likely to 
benefit the public and meet an expected demand; (2) likely to 
contribute to the financial stability of the Postal Service; and (3) 
not likely to result in unfair or otherwise inappropriate competition. 
Id.
    The PAEA authorizes the Commission to cancel a market test or take 
other appropriate action if it determines that the market test fails, 
with respect to any particular product, to meet one or more 
requirements of section 3641. Id. 3641(f). All dollar amounts contained 
in section 3641 must be adjusted by the change in the Consumer Price 
Index (CPI) for the applicable year, as determined under regulations of 
the Commission. Id. 3641(g). Lastly, section 3641(h) directs the 
Commission to define ``small business concern'' consistent with the 
requirements of section 3 of the Small Business Act.
    The proposed rules balance the Commission's oversight authority 
over market tests with the Postal Service's need for flexibility to 
expand the scope of its products. The proposed rules also reflect the 
lessons learned since the passage of the PAEA, during which time the 
Postal Service has conducted eight market tests of experimental 
products.\2\ The Commission reviewed and approved each one, finding 
each of them consistent with 39 U.S.C. 3641. A summary review of these 
tests is provided as an attachment to this order.
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    \2\ A ninth market test is currently pending before the 
Commission. See Docket No. MT2013-2, Order No. 1771, Notice and 
Order Concerning Market Test of Experimental Product--International 
Merchandise Return Service--Non-Published Rates, July 3, 2013.
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III. Discussion of the Proposed Rules

    In this section, the Commission describes the proposed rules, 
including what each rule seeks to accomplish. The purpose of this 
discussion is to assist commenters in determining the nature of each 
proposed regulation and the rationale behind it. The discussion of the 
proposed rules fall under nine broad categories: (1) Use of fiscal 
year, (2) notice requirements, (3) Commission review and action, (4) 
duration and extension, (5) cancellation, (6) dollar amount limitation 
and exemption, (7) adjustment for inflation, (8) data collection and 
reporting requirements, and (9) definition of ``small business 
concern.''

A. Use of Fiscal Year

    The PAEA states that except in subchapters I and IV of chapter 36, 
``year,'' as used in chapter 36, means a fiscal year. 39 U.S.C. 
102(10). 39 U.S.C. 3641 is located in subchapter III of title 39. Thus, 
the Commission interprets ``year'' in section 3641 and the proposed 
rules to mean ``fiscal year.'' This interpretation is consistent with 
the text of section 3641, which lists certain periods of time in months 
to distinguish them from fiscal years. For example, section 3641(d) 
states ``24 months'' and ``12 months'' instead of ``2 years'' and ``1 
year,'' respectively.
    Under this interpretation, ``the 2-year period preceding the start 
of the test'' in 39 U.S.C. 3641(b)(1) refers to the two fiscal years 
preceding the start of the market test. See proposed rule 3035.3(a)(1). 
For purposes of applying the $10 million and $50 million amount 
limitations in section 3641(e) and (g), revenues shall be measured for 
each fiscal year (or part thereof) following the date of implementation 
of the market test.

B. Notice Requirements

    Proposed rule 3035.2 requires the Postal Service to provide advance 
notice of its intent to initiate a market test by filing notice with 
the Commission at least 30 days before the market test begins. This 
proposed rule codifies the statutory notice requirement in 39 U.S.C. 
3641(c). Proposed rule 3035.3 sets forth the contents of the notice.
    Over the past nine market tests, the Postal Service has developed 
filings that include most of the information required for the notice 
initiating a market test. For example, in Docket No. MT2013-1, the 
Postal Service submitted a notice that described the nature and scope 
of the experimental product and set forth the reasons why the market 
test was covered by section 3641.\3\ It explained how the experimental 
product was significantly different from any recent Postal Service 
offering, would not create market disruption, and was correctly 
categorized as competitive (section 3641(b)). Id. at 5-6. It also 
provided a data collection plan. Id. at 6-8.
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    \3\ Docket No. MT2013-1, Notice of the United States Postal 
Service of Market Test of Experimental Product-Metro Post-and Notice 
of Filing Material Under Seal, October 12, 2012, at 2-7.
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    The items listed above are contained in proposed rule 3035.3. In 
general, the proposed rule does not require the Postal Service to 
provide more information than it currently does for market tests. The 
only additions are rules requiring the Postal Service to identify the 
beginning and end dates of the market test and estimate, for each 
fiscal year of the market test, the total revenue that is anticipated 
by the Postal Service. Proposed rule 3035.3(b)(2), (4). The rules also 
direct the Postal Service to describe the geographic market(s) in which 
the market test will be conducted.
    These items are necessary to ensure compliance with 39 U.S.C. 
3641(d) and (e). Identifying the beginning and end dates of the market 
test ensures that the market test will not exceed 24 months in 
duration, unless a request for extension is filed. 39 U.S.C. 3641(d). 
Describing the geographic market(s) in which the market test will be 
conducted is consistent with the Commission's authority to ``limit the 
amount of revenues the Postal Service may obtain from any particular 
geographic market as necessary to prevent market disruption . . . .'' 
See id. 3641(e)(1). Providing the total revenues anticipated by the 
Postal Service for each fiscal year of the market test will ensure that 
the revenues from the market test remain within applicable statutory 
dollar amount limitations. See id. 3641(e).

C. Commission Review and Action

    Once the Postal Service files notice of a market test, the 
Commission will establish a docket, promptly publish a notice in the 
Federal Register, and post the filing on its Web site. Proposed rule 
3035.4. The Commission will then review the notice for consistency with 
section 3641 and either allow it to proceed, provide the Postal Service 
an opportunity to cure any defects, order that the market test not go 
into effect, or direct other action as the Commission considers 
appropriate. Proposed rule 3035.5.
    The Postal Service must keep the Commission apprised of any changes 
to

[[Page 51680]]

the market test to ensure continued consistency with the requirements 
of 39 U.S.C. 3641. To that end, proposed rule 3035.6(a) requires the 
Postal Service to immediately notify the Commission of any material 
changes made to the market test. These changes may include adjustments 
to prices, geographic scope, or termination date. Depending on the 
nature of the change, the Commission may, in its discretion, notice the 
filing and provide interested persons with an opportunity for comment.

D. Duration and Extension

    Proposed rules 3035.10 and 3035.11 set forth requirements regarding 
the duration of market tests. Market tests in general may not exceed 24 
months in duration. Proposed rule 3035.10. Consistent with section 
3641(d)(2), the Postal Service may request an extension for up to an 
additional 12 months, if necessary to determine the feasibility or 
desirability of a product being tested. Proposed rule 3035.11(a). A 
request for extension must be filed at least 60 days before the market 
test is scheduled to terminate. Id.; 39 U.S.C. 3641(d)(2).
    The Postal Service previously filed requests for extensions in 
Docket Nos. MT2009-1, MT2011-1, MT2011-2, and MT2013-2.\4\ In each 
case, the Postal Service failed to provide the requisite 60-day notice. 
The 60-day notice is a statutory requirement that provides time for the 
Commission to evaluate the merits of the request for extension. All 
future requests for extension must be filed in conformance with the 60-
day deadline.
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    \4\ Docket No. MT2009-1, Motion of the United States Postal 
Service for Temporary Extension of Collaborative Logistics Market 
Test, April 26, 2011; Docket No. MT2011-1, Motion of the United 
States Postal Service for Temporary Extension of Alternate Postage 
for Greeting Cards Market Test, November 21, 2012; Docket No. 
MT2011-2, Motion of the United States Postal Service for Temporary 
Extension of Gift Cards Market Test, June 18, 2013; Docket No. 
MT2013-2, IMRS-NPR Notice at 6.
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    Proposed rule 3035.11(b) sets forth the filing requirements for 
requesting an extension. A request for extension must list the new end 
date for the market test and explain why an extension is necessary to 
determine the feasibility or desirability of the experimental product. 
The request for extension must both calculate the total revenue 
received by the Postal Service from the market test and estimate the 
additional revenue anticipated by the Postal Service for each fiscal 
year (or part thereof) prior to the conclusion of the extension period 
of the market test. These proposed rules will help ensure that the 
market test does not exceed applicable dollar amount limitations in 39 
U.S.C. 3641(e).

E. Cancellation

    39 U.S.C. 3641(f) provides the Commission with statutory authority 
to cancel a market test at any time if it ``determines that a market 
test under this section [3641] fails, with respect to any particular 
product, to meet 1 or more of the requirements of this section. . . .'' 
A cancellation of a market test must ``be made in accordance with such 
procedures as the Commission shall by regulations prescribe.'' 39 
U.S.C. 3641(f). These procedures, which are set forth in proposed rule 
3035.12, require the Postal Service to demonstrate a market test's 
continued compliance with the statute and Commission's rules. The 
proposed rule recognizes that the Postal Service may cancel a market 
test.

F. Dollar Amount Limitations and Exemption

    Proposed rules 3035.15 and 3035.16 contain requirements regarding 
the dollar amount limitations for market tests set forth in 39 U.S.C. 
3641(e) and 3641(g). Under 39 U.S.C. 3641(e)(1), an experimental 
product may only be tested if total revenues that the Postal Service 
anticipates or receives do not exceed $10 million in any fiscal year, 
as adjusted for inflation ($10 Million Adjusted Limitation). Proposed 
rule 3035.15(a) codifies this requirement.
    Under 39 U.S.C. 3641(e)(2), the Commission may exempt a market test 
from the $10 Million Adjusted Limitation if total revenues anticipated 
or received do not exceed $50 million in any fiscal year, as adjusted 
for inflation ($50 Million Adjusted Limitation). Proposed rule 
3035.16(a) codifies this requirement. Section III.G, below, explains 
how the $10 Million and $50 Million Adjusted Limitations are 
calculated.
    The Postal Service previously filed requests for exemption from the 
$10 Million Adjusted Limitation in Docket Nos. MT2011-1, MT2011-3, and 
MT2013-1.\5\ To ensure that the Commission has sufficient time to 
consider the request, the Postal Service must file its request for 
exemption at least 45 days before it expects to exceed the $10 Million 
Adjusted Limitation. Proposed rule 3035.16(e).
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    \5\ Docket No. MT2011-1, Notice of the United States Postal 
Service of Market Test of Experimental Product--Alternate Postage 
Payment Method for Greeting Cards, November 8, 2010, at 12; Docket 
No. MT2011-3, Request of the United States Postal Service for 
Exemption from Revenue Limitation on Market Test of Experimental 
Product--Every Door Direct Mail Retail, November 18, 2011; Docket 
No. MT2013-1, Notice of the United States Postal Service of Market 
Test of Experimental Product--Metro Post--and Notice of Filing 
Material Under Seal, October 12, 2012, at 7.
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    Proposed rule 3035.16(f) contains the filing requirements for the 
request for exemption. Consistent with 39 U.S.C. 3641(e)(2)(A)-(C), the 
request for exemption shall explain how the experimental product is 
likely to benefit the public, meet an expected demand, contribute to 
the Postal Service's financial stability, and not result in market 
disruption. Proposed rule 3035.16(f)(1). The requirements in proposed 
rules 3035.16(f)(2) and (3) help ensure that applicable dollar amount 
limitations will not be exceeded.
    Under 39 U.S.C. 3641(e)(1), the Commission ``may limit the amount 
of revenues the Postal Service may obtain from any particular 
geographic market as necessary to prevent market disruption. . . .'' 39 
U.S.C. 3641(e)(1). This authority is codified in proposed rule 3035.17. 
To carry out this authority, proposed rule 3035.20(c) authorizes the 
Commission to require the Postal Service to report the total revenue 
anticipated or received from the market test for specified geographic 
markets.
    Proposed rule 3035.18 requires the Postal Service to file its 
request to offer the experimental product as a permanent product 
sufficiently in advance to preclude the possibility that the applicable 
Adjusted Limitation would be breached. The intent is to afford the 
Commission and interested persons sufficient time to consider the 
Postal Service's request, filed pursuant to 39 CFR 3020 subpart B, so 
that, in particular, the $50 Million Adjusted Limitation is not 
exceeded.

G. Adjustment for Inflation

    39 U.S.C. 3641(g) requires the $10 million and $50 million amount 
limitations in 39 U.S.C. 3641(e) to be adjusted for inflation. The $10 
million and $50 million amount limitations must be adjusted by the 
change in CPI ``[f]or purposes of each year following the year in which 
occurs the deadline for the Postal Service's first report to the Postal 
Regulatory Commission under section 3652(a)[.]'' 39 U.S.C. 3641(g). As 
noted in Section III.A, ``year'' is construed as ``fiscal year.'' The 
``first report to the Postal Regulatory Commission under section 
3652(a)'' refers to the Postal Service's Annual Compliance Report 
(ACR). The deadline for the first ACR was December 28, 2007, during 
fiscal year 2008.\6\ Thus, the $10 million and $50 million amount

[[Page 51681]]

limitations must be adjusted by the change in CPI for each year 
beginning after fiscal year 2008.
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    \6\ Docket No. ACR2007, United States Postal Service FY 2007 
Annual Compliance Report, December 28, 2007.
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    The steps for calculating the $10 Million Adjusted Limitation and 
$50 Million Adjusted Limitation are listed in proposed rules 3035.15(d) 
and 3035.16(c). These proposed rules model the Commission's price cap 
rules regarding the calculation of the annual limitation. See 39 CFR 
3010.21(b) and 3010.22(b). The first step in the proposed rules is to 
calculate a simple average Consumer Price Index--All Urban Consumers 
(CPI-U) index for fiscal year 2008. Fiscal year 2008 is used to meet 
the requirements of 39 U.S.C. 3641(g) as discussed above. A simple 
(moving) average is used rather than a point-to-point calculation to 
smooth out short-term fluctuations in the CPI-U. Because fiscal year 
2008 runs from October 2007 through September 2008, the CPI-U values 
for those months are added together and divided by 12 to obtain the 
Base Average of 214.5.
    The next step in proposed rules 3035.15(d) and 3035.16(c) also 
involves calculating a simple average CPI-U index for each subsequent 
fiscal year to obtain the Recent Average. For example, the simple 
average CPI-U to be applied in fiscal year 2015 would be calculated by 
summing the 12 monthly CPI-U values from October 2013 through September 
2014 and dividing the sum by 12. Finally, the annual limitation for the 
current fiscal year is calculated by multiplying either $10 million or 
$50 million by the Recent Average divided by 214.5. Because these rules 
are designed to calculate dollar amount limitations, the resulting 
number is rounded to the nearest dollar.

H. Data Collection and Reporting Requirements

    Proposed rule 3035.20 lists the data collection and reporting 
requirements for each market test. The Commission has required the 
Postal Service to report data on costs, revenues, and volumes 
periodically in each of the past eight market tests, and the Postal 
Service has suggested data collection plans in previously-submitted 
filings.\7\
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    \7\ See, e.g., Docket No. MT2013-2, IMRS-NPR Notice at 8.
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    Proposed rule 3035.20(a) requires that data collection reports 
include revenue by fiscal quarter, attributable costs incurred, and a 
quantification of start-up costs incurred. The Commission recently 
required the Postal Service to report some of this information in 
Docket Nos. MT2012-1 and MT2013-1. Order No. 1035 at 6-7; Order No. 
1539 at 12. The Commission may require the Postal Service to provide 
other information in its data collection reports as appropriate. 
Proposed rule 3035.20(b).
    39 U.S.C. 3641(e)(1) requires the Commission to ensure that total 
revenues that are anticipated or received by the Postal Service from an 
experimental product do not exceed the $10 Million Adjusted Limitation, 
unless an exemption is granted. In carrying out this responsibility, 
the Commission ``may limit the amount of revenues the Postal Service 
may obtain from any particular geographic area to prevent market 
disruption. . . .'' 39 U.S.C. 3641(e)(1). To that end, the Commission 
may require the Postal Service to report revenues for specified 
geographic markets to evaluate the potential impact of a market test in 
those areas. See proposed rule 3035.20(c).
    Proposed rule 3035.20(d) requires the results of the market test 
data collection to be filed by the Postal Service within 40 days after 
each fiscal quarter ends. This requirement, which is consistent with 
current practice, informs the Commission and the public of the status 
of the market test.\8\ Consistent with 39 U.S.C. 3652(c) and 39 CFR 
3050.21(h), information on each market test conducted during the fiscal 
year must be filed in the ACR. Proposed rule 3035.20(e).
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    \8\ See Docket No. MT2012-1, Order Approving Market Test of 
First-Class Tracer, December 9, 2012, at 6-7 (Order No. 1035); 
Docket No. MT2013-1, Order Approving Metro Post Market Test, 
November 14, 2012, at 12 (Order No. 1539).
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I. Definition of ``small business concern''

    The Postal Service may conduct market tests of experimental 
products as long as the product offering does not ``create an unfair or 
otherwise inappropriate competitive advantage for the Postal Service or 
any mailer, particularly in regard to small business concerns. . . .'' 
39 U.S.C. 3641(b)(2).\9\ The PAEA requires the Commission to define 
``small business concern'' in conformance with the requirements of 
section 3 of the Small Business Act. 39 U.S.C. 3641(h).
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    \9\ Likewise, in proceedings to modify the market dominant and 
competitive product lists, due regard must be given to ``the likely 
impact of the proposed action on small business concerns. . . .'' 39 
U.S.C. 3642(b)(3)(C).
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    The Small Business Act states that a small business concern ``shall 
be deemed to be one which is independently owned and operated and which 
is not dominant in its field of operation. . . .'' 15 U.S.C. 632(a)(1). 
Small Business Administration regulations define ``business concern'' 
as ``a business entity organized for profit, with a place of business 
located in the United States, and which operates primarily within the 
United States or which makes a significant contribution to the U.S. 
economy through payment of taxes or use of American products, materials 
or labor.'' 13 CFR 121.105.
    SBA regulations state that federal agencies promulgating 
regulations relating to small businesses usually use SBA size criteria. 
13 CFR 121.903(a). Consistent with this practice and section 3641(h), 
the definition in proposed rule 3001.5(v) contains the requirements of 
section 3 of the Small Business Act as well as regulations promulgated 
by the SBA.\10\ These requirements are listed in proposed rule 
3001.5(v)(1) through (5).
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    \10\ See 15 U.S.C. 632(a)(1); 13 CFR part 121.
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    To qualify as ``small,'' a business concern must, among other 
things, meet the criteria and size standards listed in the SBA's small 
business size regulations. See 13 CFR part 121. SBA's size standards 
determine whether a business concern is ``small'' based on the maximum 
number of employees or annual receipts. Id. 121.201. The SBA matches 
small business size standards to industries described in the North 
American Industry Classification System (NAICS), which classifies 
businesses according to the type of economic activity. Id. 121.101. For 
example, these industries include the Postal Service, Couriers and 
Express Delivery Services, and Local Messengers and Local Delivery. Id. 
121.201. Further guidance on the types of businesses that comprise each 
industry and their primary activities or services is available on the 
NAICS Web site at http:www.naics.com/search.htm.
    When determining the impact of a market test on small business 
concerns, the Postal Service would first identify the types of 
businesses that may be affected by the market test. Second, the Postal 
Service would determine whether these businesses qualify as ``small 
business concerns'' under proposed section 3001.5(v) based on SBA size 
standards. Third, the Postal Service would analyze the impact of the 
market test on qualifying small business concerns and provide that 
analysis in its notice initiating the market test to establish that 
``[t]he introduction or continued offering of the experimental product 
will not create an unfair or otherwise inappropriate competitive 
advantage for the Postal Service or any mailer, particularly in regard 
to small business concerns. . . .'' 39 U.S.C. 3641(b)(2); proposed rule 
3035.3(a)(2).
    This framework was followed recently in Docket No. MT2013-1 
involving the

[[Page 51682]]

Metro Post market test. Couriers and express delivery service companies 
were identified as the types of business that may be affected by the 
market test.\11\ The SBA categorizes couriers and express delivery 
companies as ``small'' if they met the criteria in proposed rule 
3001.5(v) and if they have 1,500 or fewer employees. 13 CFR 121.201. 
The Postal Service then analyzed the impact of the Metro Post market 
test on these small business concerns. See Response to CHIR No. 1 at 5.
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    \11\ Docket No. MT2013-1, Response of the United States Postal 
Service to Chairman's Information Request No. 1, October 25, 2012 
(Response to CHIR No. 1).
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IV. Section-by-Section Analysis

    The following is a section-by-section analysis of the proposed 
rules that contains brief descriptions of the contents of each rule.
    Section 3001.5 Definitions. This proposed rule creates a definition 
of ``small business concern'' consistent with the requirements of 39 
U.S.C. 3641(h).
    Section 3035.1 Applicability. This proposed rule states that the 
rules in this part apply to market tests of experimental products 
pursuant to 39 U.S.C. 3641.
    Section 3035.2 Advance notice. This proposed rule requires the 
Postal Service to provide 30 days' advanced notice of its intent to 
initiate a market test.
    Section 3035.3 Contents of notice. This proposed rule lists the 
items that must be included in the Postal Service's notice initiating a 
market test.
    Section 3035.4 Review. This proposed rule requires the Commission 
to establish a docket for each market test initiated under part 3035, 
promptly publish a notice in the Federal Register, and post the filing 
on its Web site. The proposed rule lists the items that must be 
provided in the notice.
    Section 3035.5 Commission action. This proposed rule provides for 
the Commission's review of the Postal Service notice for compliance 
with 39 U.S.C. 3641.
    Section 3035.6 Changes in market test. This proposed rule requires 
the Postal Service to immediately notify the Commission of any material 
changes made to the market test. It authorizes the Commission, in its 
discretion, to notice the filing and provide an opportunity for 
comment.
    Section 3035.10 Duration. This proposed rule states that a market 
test is limited to 24 months in duration unless the Postal Service 
requests an extension.
    Section 3035.11 Extension of test. This proposed rule enables the 
Postal Service to request an extension of the duration of a market 
test. It lists the requirements for requesting an extension and 
provides for Commission review of the request for extension for 
consistency with 39 U.S.C. 3641.
    Section 3035.12 Cancellation of market test. This proposed rule 
enables either the Postal Service or the Commission to cancel a market 
test. The proposed rule lists the options the Commission may pursue 
based upon its review.
    Section 3035.15 Dollar amount limitation. This proposed rule states 
that an experimental product may only be tested if total revenues that 
are anticipated or received by the Postal Service do not exceed the $10 
Million Adjusted Limitation in any fiscal year. The proposed rule lists 
the steps for calculating the $10 Million Adjusted Limitation.
    Section 3035.16 Exemption from dollar amount limitation. This 
proposed rule enables the Postal Service to request an exemption from 
the $10 Million Adjusted Limitation as long as it does not exceed the 
$50 Million Adjusted Limitation in any fiscal year. The proposed rule 
lists the steps for calculating the $50 Million Adjusted Limitation, as 
well as the items that must be included in the request for exemption. 
It requires the Postal Service to file the request for exemption at 
least 45 days before it expects to exceed the $10 Million Adjusted 
Limitation. It provides for Commission review of the request for 
exemption for consistency with 39 U.S.C. 3641.
    Section 3035.17 Prevention of market disruption. This proposed rule 
authorizes the Commission to limit the amount of revenues the Postal 
Service may obtain from any particular geographic market to prevent 
market disruption.
    Section 3035.18 Filing product status. This proposed rule states 
that if the Postal Service decides to make an experimental product 
permanent, it must file a notice sufficiently in advance so that the 
market test does not exceed the $10 Million Adjusted Limitation or any 
authorized adjusted limitation in any fiscal year.
    Section 3035.20 Data collection and reporting requirements. This 
proposed rule requires the Postal Service to describe plans for 
monitoring the performance of the market test. It identifies items that 
must be included in data collection reports. The proposed rule 
authorizes the Commission to request additional information or data and 
to require the Postal Service to report the revenues for specified 
geographic markets. It requires the Postal Service to file results of 
the market test data collection within 40 days (or such other time the 
Commission may prescribe) after the close of each fiscal quarter during 
which the market test is offered. Information on each market test 
conducted during the fiscal year must be filed in the ACR.

V. Opportunity to Comment

    Interested persons may comment on the Commission's proposed rules 
governing market tests of experimental products. Comments are due 
within 30 days of the date of publication of this notice in the Federal 
Register. Reply comments are due within 20 days of the date for 
submission of initial comments.
    Pursuant to 39 U.S.C. 505, Anne J. Siarnacki is designated as the 
Public Representative in this proceeding to represent the interests of 
the general public.

VI. Ordering Paragraphs

    It is ordered:
    1. Docket No. RM2013-5 is established for the purpose of receiving 
comments on the Commission's proposed rules governing market tests of 
experimental products.
    2. Interested persons may submit comments no later than 30 days 
from the date of publication of this notice in the Federal Register.
    3. Interested persons may submit reply comments no later than 20 
days from the date for submission of initial comments.
    4. Pursuant to 39 U.S.C. 505, Anne J. Siarnacki is appointed to 
serve as Public Representative in this proceeding.
    5. The Secretary shall arrange for publication of this order in the 
Federal Register.

Attachment--Summary of Market Tests

A. Docket No. MT2009-1

    In Docket No. MT2009-1, the Commission authorized a market test of 
Collaborative Logistics, an experimental product.\1\ Collaborative 
Logistics involves the `` `transportation of an article or multiple 
articles on a pallet or other unit load, on a space-available basis, in 
postal transportation.' '' Id. at 3. The market test began on May 6, 
2009 and was set to expire on May 6, 2011.
---------------------------------------------------------------------------

    \1\ Docket No. MT2009-1, Order No. 211, Order Concerning 
Collaborative Logistics Market Test, May 7, 2009.
---------------------------------------------------------------------------

    On April 26, 2011, the Postal Service filed a motion for temporary 
extension.\2\

[[Page 51683]]

The Commission granted in part the Postal Service's request to extend 
the Collaborative Logistics market test until September 2011, when the 
Postal Service would file a request to make Collaborative Logistics a 
permanent product.\3\ Ultimately, the Postal Service did not file this 
request due to its financial condition, operations concerns, and 
changes in organizational structure.\4\ It terminated the market test 
effective September 19, 2011. Id.
---------------------------------------------------------------------------

    \2\ Docket No. MT2009-1, Motion of the United States Postal 
Service for Temporary Extension of Collaborative Logistics Market 
Test, April 26, 2011, at 1.
    \3\ Docket No. MT2009-1, Order No. 742, Order Granting In Part 
Temporary Extension of Collaborative Logistics Market Test, June 3, 
2011, at 2, 5.
    \4\ Docket No. MT2009-1, Notice of the United States Postal 
Service of Termination of Market Test, August 19, 2011, at 1.
---------------------------------------------------------------------------

B. Docket No. MT2010-1

    In Docket No. MT2010-1, the Commission approved the Samples Co-Op 
Box market test on May 5, 2010.\5\ The Samples Co-Op Box is a parcel 
box containing an assortment of product samples from multiple consumer 
packaged goods companies. Id. at 2. The Postal Service partnered with a 
company that would prepare Samples Co-Op Boxes for mailing, execute the 
mailing, and conduct market research. Id. The Postal Service did not 
charge a fee for delivering the co-op boxes. Id. The market test 
consisted of ``one mailing of several hundred thousand co-op boxes to 
consumers in two test markets.'' Id. The market test was completed 
within one week. Id.
---------------------------------------------------------------------------

    \5\ Docket No. MT2010-1, Order No. 452, Order Approving Samples 
Co-Op Box Market Test, May 5, 2010, at 2.
---------------------------------------------------------------------------

    On December 23, 2010, the Postal Service filed a request to modify 
the Mail Classification Schedule by adding Parcel Select Contract 1 
with StartSampling, Inc. to the competitive product list.\6\ Parcel 
Select Contract 1 was for the licensing and distribution of the 
``Sample Showcase'' co-op box, which was a follow up to the Samples Co-
Op market test. Id. at 1. The Commission approved the request on March 
1, 2011.\7\
---------------------------------------------------------------------------

    \6\ Docket No. MC2011-16 and CP2011-53, Request of the United 
States Postal Service to Add Parcel Select Contract 1 to Competitive 
Product List and Notice of Filing (Under Seal) of Contract and 
Supporting Data, December 23, 2010.
    \7\ Docket No. MC2011-16 and CP2011-53, Order No. 686, Order 
Approving Parcel Select Contract 1 Negotiated Service Agreement, 
March 1, 2011. The Commission also approved an amendment to the 
prices for Parcel Select Contract 1. Docket No. MC2011-16 and 
CP2011-53, Order No. 699, Order Approving Amendment to Parcel Select 
Contract 1 Negotiated Service Agreement, March 18, 2011.
---------------------------------------------------------------------------

C. Docket No. MT2011-1

    In Docket No. MT2011-1, the Commission authorized a 24-month market 
test for Alternate Postage Payment Method for Greeting Cards.\8\ This 
product enables individuals to mail greeting cards without affixing 
postage. Id. at 2. The Commission also granted the Postal Service an 
exemption from the $10 million amount limitation, as adjusted for 
inflation. Id. at 7.
---------------------------------------------------------------------------

    \8\ Docket No. MT2011-1, Order No. 617, Order Approving Market 
Test of Alternate Postage Payment Method for Greeting Cards, 
December 21, 2010.
---------------------------------------------------------------------------

    The Alternate Postage Payment Method for Greeting Cards market test 
began on January 2, 2011 and was set to expire on January 2, 2013.\9\ 
On November 21, 2012, the Postal Service moved to extend the market 
test for an additional 12 months.\10\ The Commission granted the motion 
on December 13, 2012. Id. at 4.
---------------------------------------------------------------------------

    \9\ Docket No. MT2011-1, Motion of the United States Postal 
Service for Temporary Extension of Alternate Postage for Greeting 
Cards Market Test, November 21, 2012, at 1.
    \10\ Docket No. MT2011-1, Order No. 1577, Order Granting Motion 
Concerning Market Test, December 13, 2012, at 2.
---------------------------------------------------------------------------

D. Docket No. MT2011-2

    In Docket No. MT2011-2, the Commission conditionally approved the 
Gift Cards market test on April 28, 2011.\11\ The market test enabled 
customers to purchase a gift card loaded with a specified sum of money 
that may be sent through the mail. Id. at 1. The Commission authorized 
the market test to proceed subject to the condition that the sale of 
gift cards be limited to Postal Service retail facilities, including 
its Web site. Id. at 2.
---------------------------------------------------------------------------

    \11\ Docket No. MT2011-2, Order No. 721, Order Authorizing Gift 
Card Market Test, April 28, 2011.
---------------------------------------------------------------------------

    The market test began on June 27, 2011, and was set to expire on 
June 27, 2013.\12\ On June 18, 2013, the Postal Service moved to extend 
the market test through the end of January 2014. Id. The Commission 
granted the motion on July 19, 2013.\13\
---------------------------------------------------------------------------

    \12\ Docket No. MT2011-2, Motion of the United States Postal 
Service for Temporary Extension of Gift Cards Market Test, June 18, 
2013.
    \13\ Docket No. MT2011-2, Order No. 1781, Order Granting 
Extension of Gift Card Market Test, July 19, 2013.
---------------------------------------------------------------------------

E. Docket No. MT2011-3

    The Postal Service began offering Every Door Direct Mail--Retail 
(EDDM-R) as an experimental product once the Commission authorized the 
market test in Docket No. MT2011-3.\14\ EDDM is a Standard Mail product 
that removes barriers to entry for small- and medium-size businesses 
that would otherwise use the mail. Order No. 687 at 2. It includes, 
among other things, local entry and payment, a maximum number of 5,000 
pieces per delivery unit, a waiver of all permit and mailing fees, and 
simplified qualification and preparation requirements. Id. at 1-2. 
Pieces are priced using the Standard Mail Commercial Saturation Flats 
pricing schedules. Id. at 2.
---------------------------------------------------------------------------

    \14\ Docket No. MT2011-3, Order Approving Market Test of 
Experimental Product--Marketing Mail Made Easy, March 1, 2011 (Order 
No. 687). On April 1, 2011, the Postal Service notified the 
Commission that it changed the name of the experimental product to 
EDDM-R. Docket No. MT2011-3, Notice of Market Test Name Change from 
Marketing Mail Made Easy to Every Door Direct Mail Retail or EDDM 
Retail, April 1, 2011.
---------------------------------------------------------------------------

    The EDDM-R market test began on March 31, 2011. Notice at 1. In 
January 2012, the Commission granted the Postal Service's request for 
an exemption from the $10 million amount limitation, as adjusted for 
inflation.\15\ On July 10, 2012, the Postal Service filed a request to 
modify the Mail Classification Schedule by adding EDDM-R to the market 
dominant product list.\16\ The Commission found that the Postal 
Service's request met the statutory requirements in 39 U.S.C. 3642 and 
approved the request on September 7, 2012.\17\ The market test ended on 
January 26, 2013.\18\
---------------------------------------------------------------------------

    \15\ Docket No. MT2011-3, Order No. 1164, Order Granting Request 
for Exemption from Annual Revenue Limitation, January 23, 2012.
    \16\ Docket No. MC2012-31, Request of the United States Postal 
Service to Add Every Door Direct Mail--Retail to the Mail 
Classification Schedule, July 10, 2012. On July 18, 2012, the Postal 
Service filed a correction to its request. United States Postal 
Service Notice of Errata to Request of the United States Postal 
Service to Add Every Door Direct Mail--Retail to the Mail 
Classification Schedule, July 18, 2012.
    \17\ Docket No. MC2012-31, Order No. 1460, Order Approving 
Addition of Postal Services to the Mail Classification Schedule 
Product Lists, September 7, 2012.
    \18\ Docket No. MT2011-3, EDDM-R Data Collection Report Fiscal 
Year 2013, Quarter 1 and Quarter 2 (through January 26, 2013), March 
15, 2013 (EDDM-R FY 2013 Data Collection Report).
---------------------------------------------------------------------------

F. Docket No. MT2011-4

    In Docket No. MT2011-4, the Commission authorized the Mail Works 
Guarantee market test on May 16, 2011.\19\ For this market test, the 
Postal Service and each participant jointly develop a unique set of 
metrics to measure the effectiveness of a particular direct mail 
campaign. Id. at 3. The Postal Service plans to provide assistance to 
the mailer in developing its direct mail and in benchmarking and 
measuring the test metric. Id. To safeguard participants, the Postal 
Service offers a postage back guarantee of up to $250,000 per 
participant if a campaign fails to achieve the pre-established metric, 
as verified by the Postal Service. Id.
---------------------------------------------------------------------------

    \19\ Docket No. MT2011-4, Order No. 730, Order Approving Mail 
Works Guarantee Market Test, May 16, 2011.

---------------------------------------------------------------------------

[[Page 51684]]

    The market test began on June 14, 2011.\20\ During the first year 
of the test, no customers committed to using the mail in a way that 
would qualify for the market test guarantee. Id. at 1. The market test 
terminated effective January 8, 2013. Id.
---------------------------------------------------------------------------

    \20\ Docket No. MT2011-4, Notice of the United States Postal 
Service of Termination of the Market Test, January 8, 2013.
---------------------------------------------------------------------------

G. Docket No. MT2012-1

    The Commission approved the proposed experimental product 
identified as First-Class Tracer on December 9, 2011.\21\ The market 
test consists of providing customers a means to track the 
transportation and processing of single-piece First-Class Mail. Id. at 
1. The First-Class Tracer is a barcode that the mailer affixes to a 
single-piece of First-Class Mail. Id. at 3. The mailer keeps a portion 
of the label that includes a tracking number and a QR code. Id. This 
enables the mailer to check the status of the mail piece by either 
entering the tracking number on the USPS.com Web site or by scanning 
the QR code with a mobile device. Id. The market test began on December 
10, 2011 with 50 test locations, and is ongoing.\22\
---------------------------------------------------------------------------

    \21\ Docket No. MT2012-1, Order No. 1035, Order Approving Market 
Test of First-Class Tracer, December 9, 2011.
    \22\ Docket No. MT2012-1, First-Class Tracer Data Collection 
Report FY12, Q1-4 and FY13, Q1-2, April 19, 2013.
---------------------------------------------------------------------------

H. Docket No. MT2013-1

    In Docket No. MT2013-1, the Commission approved the market test of 
the experimental product Metro Post on November 14, 2012.\23\ Metro 
Post is ``a package delivery service that will provide customers with 
same-day delivery from participating locations within a defined 
metropolitan area.'' Id. at 1. The Postal Service plans to enter into 
relationships with up to ten qualifying online e-commerce companies to 
offer same-day local delivery. Id. at 2. Buyers may request same-day 
delivery by using a qualifying online e-commerce platform, purchasing 
items at participating retail stores, or visiting a participant's Web 
site to purchase items. Id. at 3. The daily cut-off times for making 
purchases will occur between 2:00 p.m. and 3:00 p.m., and same-day 
delivery will occur between 4:00 p.m. and 8:00 p.m. Id.
---------------------------------------------------------------------------

    \23\ Docket No. MT2013-1, Order No. 1539, Order Approving Metro 
Post Market Test, November 14, 2012.
---------------------------------------------------------------------------

    The Commission also granted the Postal Service an exemption from 
the $10 Million Adjusted Limitation. Id. at 10. The market test began 
on December 12, 2012 and is ongoing.

I. Docket No. MT2013-2

    On July 1, 2013, the Postal Service filed a notice announcing its 
intent to conduct a market test of a competitive experimental product 
called International Merchandise Return Service--Non-Published Rates 
(IMRS-NPR).\24\ IMRS-NPR items consist of returned merchandise that 
consumers purchased through online retailers in the United States. Id. 
at 2. IMRS-NPR will enable foreign consumers to create return labels 
and postage payment to return products back to the United States. Id. 
The consumer can create his or her own shipping label and send it to 
the merchant through the consumer's postal channel. Id. The market test 
proposal is currently pending before the Commission.
---------------------------------------------------------------------------

    \24\ Docket No. MT2013-2, Notice of the United States Postal 
Service of Market Test of Experimental Product--International 
Merchandise Return Service--Non-Published Rates (IMRS-NPR) and 
Notice of Filing IMRS-NPR Model Contract and Application for Non-
Public Treatment of Materials Filed Under Seal, July 1, 2013.

    By the Commission.
Shoshana M. Grove,
Secretary.

List of Subjects

39 CFR Part 3001

    Administrative practice and procedure, Freedom of information, 
Postal Service, Sunshine Act.

39 CFR Part 3035

    Administrative practice and procedure, Postal Service.
    For the reasons discussed in the preamble, the Commission proposes 
to amend chapter III of title 39 of the Code of Federal Regulations as 
follows:

PART 3001--RULES OF PRACTICE AND PROCEDURE

0
1. The authority citation for 39 CFR part 3001 continues to read as 
follows:

    Authority:  39 U.S.C. 404(d); 503; 504; 3661.

0
2. In Sec.  3001.5, add new paragraph (v) to read as follows:


Sec.  3001.5  Definitions.

* * * * *
    (v) Small business concern means a for-profit business entity that:
    (1) Is independently owned and operated;
    (2) Is not dominant in its field of operation;
    (3) Has a place of business located in the United States;
    (4) Operates primarily within the United States or makes a 
significant contribution to the United States economy by paying taxes 
or using American products, materials, or labor; and
    (5) Together with its affiliates, qualifies as ``small'' in its 
primary industry under the criteria and size standards established by 
the Small Business Administration in 13 CFR 121.201, as amended, based 
on annual receipts or number of employees.
0
3. Add part 3035 to read as follows:

PART 3035--RULES FOR MARKET TESTS OF EXPERIMENTAL PRODUCTS

Sec.
3035.1 Applicability.
3035.2 Advance notice.
3035.3 Contents of notice.
3035.4 Review.
3035.5 Commission action.
3035.6 Changes in market test.
3035.7-3035.9 [Reserved]
3035.10 Duration.
3035.11 Extension of test.
3035.12 Cancellation of market test.
3035.13-3035.14 [Reserved]
3035.15 Dollar amount limitation.
3035.16 Exemption from dollar amount limitation.
3035.17 Prevention of market disruption.
3035.18 Filing for permanent product status.
3035.19 [Reserved]
3035.20 Data collection and reporting requirements.

    Authority:  39 U.S.C. 3641.


Sec.  3035.1  Applicability.

    The rules in this part apply to market tests of experimental 
products pursuant to 39 U.S.C. 3641.


Sec.  3035.2  Advance notice.

    The Postal Service shall file notice with the Commission of its 
determination to initiate a market test at least 30 days before 
initiating the market test.


Sec.  3035.3  Contents of notice.

    Notices of proposed market tests shall include:
    (a) The basis for the Postal Service's determination that the 
market test is governed by 39 U.S.C. 3641, which shall:
    (1) Describe, from the viewpoint of mail users, how the 
experimental product is significantly different from all products 
offered by the Postal Service within the 2 fiscal years preceding the 
start of the market test;
    (2) Establish that the introduction or continued offering of the 
experimental product will not create an unfair or otherwise 
inappropriate competitive advantage for the Postal Service or any 
mailer, particularly in regard to small business concerns; and

[[Page 51685]]

    (3) Identify the experimental product as either market dominant or 
competitive for purposes of the market test.
    (b) A description of the nature and the scope of the market test 
that:
    (1) Demonstrates why the market test is not inconsistent with the 
requirements of 39 U.S.C. 3641;
    (2) Identify the beginning and ending dates of the market test;
    (3) Describes the geographic market(s) where the market test may be 
conducted;
    (4) Estimates the total revenue that is anticipated by the Postal 
Service for each fiscal year of the market test, including available 
supporting documentation;
    (5) Provides proposed Mail Classification Schedule Language; and
    (6) Includes a plan for monitoring the performance of the market 
test, including a description of the specific data items to be 
collected, as required by Sec.  3035.20.


Sec.  3035.4  Review.

    The Commission will establish a docket for each market test 
initiated under this part, promptly publish a notice in the Federal 
Register, and post the filing on its Web site. The notice shall:
    (a) Describe the general nature of the proceeding;
    (b) Refer to the legal authority under which the proceeding is to 
be conducted;
    (c) Identify an officer of the Commission to represent the 
interests of the general public in the docket;
    (d) Specify a period for public comment; and
    (e) Include such other information as the Commission deems 
appropriate.


Sec.  3035.5  Commission action.

    The Commission shall review the Postal Service notice together with 
any comments for initial compliance with the statutory requirements of 
39 U.S.C. 3641, and:
    (a) Find that the market test is consistent with the requirements 
of 39 U.S.C. 3641; or
    (b) Find that the market test is inconsistent with the requirements 
of 39 U.S.C. 3641 and provide an opportunity to correct the identified 
deficiencies; or
    (c) Find that the market test is inconsistent with the requirements 
of 39 U.S.C. 3641 and order that the market test not go into effect; or
    (d) Direct other action as the Commission may consider appropriate.


Sec.  3035.6  Changes in market test.

    (a) The Postal Service shall immediately notify the Commission of 
any material changes made to the market test, including, without 
limitation, adjustments to prices, geographic scope, or termination 
date.
    (b) The Commission may, in its discretion, notice the filing and 
provide an opportunity for comment.


Sec.  3035.7-3035.9  [Reserved]


Sec.  3035.10  Duration.

    A market test may not exceed 24 months in duration unless the 
Postal Service requests an extension under Sec.  3035.11.


Sec.  3035.11  Extension of test.

    (a) The Postal Service may request an extension of the duration of 
a market test, not to exceed an additional 12 months, if necessary to 
determine the feasibility or desirability of a product being tested. 
The Postal Service must file a written request for extension with the 
Commission at least 60 days before the market test is scheduled to 
terminate.
    (b) The request for extension shall:
    (1) Explain why an extension is necessary to determine the 
feasibility or desirability of the experimental product;
    (2) List the new end date for the market test;
    (3) Calculate the total revenue received by the Postal Service from 
the market test for each fiscal year the market test has been in 
operation;
    (4) Estimate the additional revenue that is anticipated by the 
Postal Service for each fiscal year prior to the conclusion of the 
extension period of the market test, including available supporting 
documentation; and
    (5) Provide any additional information necessary for the Commission 
to evaluate the continued consistency with the requirements of 39 
U.S.C. 3641.
    (c) The Commission shall review the Postal Service request for 
extension to ensure that an extension is necessary in order to 
determine the feasibility or desirability of the experimental product 
and:
    (1) Find that the extension is consistent with the requirements of 
39 U.S.C. 3641; or
    (2) Find that the extension is inconsistent with the requirements 
of 39 U.S.C. 3641 and provide an opportunity to correct the identified 
deficiencies;
    (3) Find that the extension is inconsistent with the requirements 
of 39 U.S.C. 3641 and deny the extension; or
    (4) Direct other action as the Commission considers appropriate.


Sec.  3035.12  Cancellation of market test.

    (a) The Postal Service may cancel a market test at any time. It 
shall file notice of cancellation with the Commission within 10 days of 
cancelling the market test.
    (b) Pursuant to 39 U.S.C. 3641(f), the Commission may direct the 
Postal Service to demonstrate that the market test continues to meet 
the requirements of 39 U.S.C. 3641 and the Commission's rules. The 
Commission, in its discretion, may provide an opportunity for comments.
    (c) Based upon its review, the Commission may:
    (1) Find that the market test is consistent with the requirements 
of 39 U.S.C. 3641; or
    (2) Find that the market test is inconsistent with the requirements 
of 39 U.S.C. 3641 and provide an opportunity to correct the identified 
deficiencies; or
    (3) Find that the market test is inconsistent with the requirements 
of 39 U.S.C. 3641 and cancel the market test; or
    (4) Direct other action as the Commission may consider appropriate.


Sec. Sec.  3035.13-3035.14   [Reserved]


Sec.  3035.15  Dollar amount limitation.

    (a) An experimental product may only be tested if total revenues 
that are anticipated or received by the Postal Service do not exceed 
$10,000,000 in any fiscal year, as adjusted for the change in the 
Consumer Price Index, as specified in paragraph (d) of this section 
($10 Million Adjusted Limitation). Total revenues anticipated or 
received may exceed the $10 Million Adjusted Limitation in any fiscal 
year if an exemption is granted pursuant to Sec.  3035.16.
    (b) The Consumer Price Index, as specified in Sec. Sec.  3010.21(a) 
and 3010.22(a) of this chapter, is applicable for calculations under 
this part.
    (c) For each fiscal year, the $10 Million Adjusted Limitation shall 
reflect the average CPI result during the previous fiscal year 
calculated as described in paragraph (d) of this section. The 
Commission shall publish this figure on its Web site at http://www.prc.gov.
    (d) The calculation of the $10 Million Adjusted Limitation involves 
the following steps. First, a simple average CPI-U index was calculated 
for fiscal year 2008 by summing the monthly CPI-U values from October 
2007 through September 2008 and dividing the sum by 12 (Base Average). 
The resulting Base Average is 214.5. Then, a second simple average CPI-
U index is similarly calculated for each subsequent fiscal year by 
summing the 12 monthly CPI-U values for the previous fiscal year and 
dividing the sum by 12 (Recent

[[Page 51686]]

Average). Finally, the annual limitation for the current fiscal year is 
calculated by multiplying $10,000,000 by the Recent Average divided by 
214.5. The result is expressed as a number, rounded to the nearest 
dollar.
    (e) The formula for calculating the $10 Million Adjusted Limitation 
is as follows: $10 Million Adjusted Limitation = $10,000,000 * (Recent 
Average/214.5).


Sec.  3035.16  Exemption from dollar amount limitation.

    (a) The Postal Service may request an exemption from the $10 
Million Adjusted Limitation by filing a written request with the 
Commission. In no instance shall the request for exemption exceed the 
market test dollar amount limitation of $50,000,000 in any fiscal year, 
as adjusted for the change in the Consumer Price Index, as specified in 
paragraph (c) of this section ($50 Million Adjusted Limitation).
    (b) For each fiscal year, the $50 Million Adjusted Limitation shall 
reflect the average CPI result during the previous fiscal year 
calculated as described in 39 CFR 3035.16(c). The Commission shall 
publish this figure on its Web site at http://www.prc.gov.
    (c) The calculation of the $50 Million Adjusted Limitation involves 
the following steps. First, a simple average CPI-U index was calculated 
for fiscal year 2008 by summing the monthly CPI-U values from October 
2007 through September 2008 and dividing the sum by 12 (Base Average). 
The Resulting Base Average is 214.5. Then, a second simple average CPI-
U index is similarly calculated for each subsequent fiscal year by 
summing the 12 monthly CPI-U values for the previous fiscal year and 
dividing the sum by 12 (Recent Average). Finally, the annual limitation 
for the current fiscal year is calculated by multiplying $50,000,000 by 
the Recent Average divided by 214.5. The result is expressed as a 
number, rounded to the nearest dollar.
    (d) The formula for calculating the $50 Million Adjusted Limitation 
is as follows: $50 Million Adjusted Limitation = $50,000,000 * (Recent 
Average/214.5).
    (e) The Postal Service shall file its request for exemption at 
least 45 days before it expects to exceed the $10 Million Adjusted 
Limitation.
    (f) The request for exemption shall:
    (1) Explain how the experimental product will:
    (i) Benefit the public and meet an expected demand;
    (ii) Contribute to the financial stability of the Postal Service; 
and
    (iii) Not result in unfair or otherwise inappropriate competition.
    (2) Calculate the total revenue received by the Postal Service from 
the market test for each fiscal year the market test has been in 
operation; and
    (3) Estimate the additional revenue that is anticipated by the 
Postal Service for each fiscal year prior to the conclusion of the 
extension period of the market test, including available supporting 
documentation;
    (g) The Commission shall review the request for exemption for 
consistency with the statutory requirements of 39 U.S.C. 3641 and:
    (1) Find that the exemption is consistent with the requirements of 
39 U.S.C. 3641;
    (2) Find that the exemption is inconsistent with the requirements 
of 39 U.S.C. 3641 and provide an opportunity to correct the identified 
deficiencies;
    (3) Find that the exemption is inconsistent with the requirements 
of 39 U.S.C. 3641 and deny the exemption; or
    (4) Direct other action as the Commission may consider appropriate.


Sec.  3035.17  Prevention of market disruption.

    Notwithstanding the $10 Million Adjusted Limitation or any 
adjustment granted pursuant to Sec.  3035.16, the Commission may limit 
the amount of revenues the Postal Service may obtain from any 
particular geographic market as necessary to prevent market disruption 
as defined in 39 U.S.C. 3641 (b)(2).


Sec.  3035.18  Filing for permanent product status.

    If the Postal Service determines to make an experimental product 
permanent, it shall file a notice, pursuant to Sec.  3020.30 of this 
chapter, sufficiently in advance so that the market test does not 
exceed the $10 Million Adjusted Limitation or any authorized adjusted 
limitation in any fiscal year.


Sec. Sec.  3035.19  [Reserved]


Sec.  3035.20  Data collection and reporting requirements.

    (a) A notice of a market test shall describe plans for monitoring 
the performance of the market test, including plans to collect volume, 
revenue, and other data. Data collection reports shall include, at a 
minimum:
    (1) The revenue by fiscal quarter received to date by the Postal 
Service from the market test;
    (2) Attributable costs incurred in conducting the market test, 
including administrative and ancillary costs;
    (3) A quantification of start-up costs incurred to date associated 
with the market test.
    (b) The Commission may request additional information or data as it 
deems appropriate.
    (c) To assess the potential impact of a market test in a particular 
geographic market, the Commission may require the Postal Service to 
report the revenues from the market test for specified geographic 
markets.
    (d) The Postal Service shall file the results of the market test 
data collection within 40 days after the close of each fiscal quarter 
during which the market test is offered, or such other period as the 
Commission may prescribe.
    (e) The Postal Service shall file in its Annual Compliance Report 
information on each market test conducted during the fiscal year 
pursuant to Sec.  3050.21(h) of this chapter.
[FR Doc. 2013-20178 Filed 8-20-13; 8:45 am]
BILLING CODE 7710-FW-P