[Federal Register Volume 79, Number 43 (Wednesday, March 5, 2014)]
[Rules and Regulations]
[Pages 12390-12394]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-04784]
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POSTAL SERVICE
39 CFR Part 121
Service Standards for Destination Sectional Center Facility Rate
Standard Mail
AGENCY: Postal ServiceTM.
ACTION: Final rule.
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SUMMARY: The Postal Service is revising the service standards for
Standard Mail that is eligible for Destination Sectional Center
Facility (DSCF) rates. These changes will allow a more balanced
distribution of DSCF Standard Mail across delivery days.
DATES: Effective Date: April 10, 2014.
FOR FURTHER INFORMATION CONTACT: Anthony Frost, Industry Engagement and
Outreach, at 202-268-8093; or Prathmesh Shah, Processing and
Distribution Center Operations, at 404-792-3195.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
II. Comments
III. Statutory Considerations
IV. Explanation of Final Rules
I. Introduction
On January 3, 2014, the Postal Service published a proposed rule
(the Proposed Rulemaking) in the Federal Register to solicit public
comment on a proposal to revise service standards for Standard Mail
eligible for DSCF rates.\1\ The comment period for the Proposed
Rulemaking closed on February 3, 2014. The Postal Service received 13
written comments in response to the Proposed Rulemaking.
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\1\ Service Standards for Destination Sectional Center Facility
Rate Standard Mail, 79 FR 376 (Jan. 3, 2014). Concurrent with this
rulemaking, on December 27, 2013, the Postal Service submitted a
request to the Postal Regulatory Commission (PRC) for an advisory
opinion on the service changes associated with the proposed change
in service standards for Standard Mail eligible for DSCF rates, in
accordance with 39 U.S.C. 3661(b). PRC Docket No. N2014-1, United
States Postal Service Request for an Advisory Opinion on Changes in
the Nature of Postal Services (Dec. 27, 2013). Documents pertaining
to the Request are available at the PRC Web site, http://www.prc.gov.
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After considering comments received in response to the Proposed
Rulemaking, the Postal Service has determined to issue the proposed
rule as a final rule. As described in the Proposed Rulemaking, the
final rule seeks to address the imbalance in the proportion of volume
with a Monday delivery expectation under current service standards, and
the resulting burden on resources associated with Monday delivery
operations, by adjusting the service standards applicable to DSCF
Standard Mail entered on designated days of the week. The Postal
Service believes that the initiative will help improve the efficiency
of its operations, and that it complies with all applicable statutory
requirements. This document explains the new rule.
II. Comments
In the Proposed Rulemaking, the Postal Service sought public
comment on proposed revisions to the service standards for Standard
Mail that is eligible for DSCF rates. The revisions would change the
service standard (a) from three days to four days for Standard Mail
pieces that are eligible for a DSCF rate and that are properly accepted
before the day zero Critical Entry Time on a Friday or Saturday, and
(b) from four days to five days for DSCF Standard Mail properly
accepted at the SCF in San Juan, Puerto Rico and destined to the United
States Virgin Islands, and properly accepted DSCF Standard Mail
destined to American Samoa. The DSCF Standard Mail service standard
change is aimed at leveling out the volume in the network, and reducing
the burdens and costs associated with the Monday delivery of a
disproportionate amount of volume.
A. Overview
The Postal Service received 13 written comments in response to the
Proposed Rulemaking. These responses came from a variety of sources,
including businesses, publishers, mailer trade associations, and
others. Most of the written comments received in response to the
Proposed Rulemaking opposed the service standard change proposed for
Standard Mail eligible for DSCF rates. Some commenters questioned
various aspects of the initiative but took no position on the proposed
rule.
The commenters that opposed the DSCF Standard Mail service standard
change focused on the potential negative impact of the service standard
change on service, and perceived flaws in the process of developing the
service standard change. With respect to the potential impact on
service, commenters focused primarily on the potential for the proposed
rule to reduce the
[[Page 12391]]
predictability and quality of delivery, increase costs for both mailers
and the Postal Service, and unreasonably burden many customers. In
addressing procedural issues, commenters expressed dissatisfaction with
the process leading up to the Proposed Rulemaking, including the live
testing, and identified multiple issues that, in their opinion, had not
been considered adequately.
A small minority of written comments supported aspects of the
Proposed Rulemaking, including the Postal Service's use of intelligent
mail data to identify cost savings opportunities and its industry
outreach to explain the concept.
B. Responses to Comments
This section presents the commenters' concerns by category, along
with the Postal Service's responses to these concerns.
1. Effect on Volume
Some commenters stated that the DSCF Standard Mail service standard
change might lead to accelerated volume declines. In response to these
commenters, the Postal Service notes that the initiative is limited to
Standard Mail, and will not impact other classes of mail. Some of the
commenters asserted that the volume declines would result from the
combination of Postal Service initiatives, including rate increases
resulting from the exigency filing and other rate changes, and facility
closings that occurred independent of the DSCF Standard Mail service
standard change. However, no commenter offered any empirical basis for
the belief that the service change, by itself or in conjunction with
recent price increases, could precipitate an accelerated decline in
DSCF Standard Mail volumes. It is worth noting that no evidence in
support of such belief was presented to the Postal Regulatory
Commission during its review of the proposed service change in Docket
No. N2014-1.
In contrast to concerns about the potential negative impact on
volume that could result from the DSCF Standard Mail service standard
change, at least one commenter explained that its members preferred
different delivery days for their mail and their competitors' mail,
suggesting that load leveling could make DSCF Standard Mail more
valuable for some mailers. The Postal Service shares the view that this
change, with its consequent effect on leveling volume at the beginning
of the week, could create the benefit of reducing the proportion of
Standard Mail delivered on the heaviest delivery day of the week, and
decreasing the likelihood of an individual piece being overlooked by
the recipient because it arrived as part of a disproportionately heavy
batch of mail on a given day.
2. Effect on Mailers
Some commenters criticize the service change proposal as imposing
on affected mailers an unfair share of the burden of cost containment
necessary to improve postal financial stability, and question whether
the Postal Service understands the mailing industry's desire for
predictability, reliability, transparency, and competitive rates. The
potential sources of the additional burden identified by commenters
include increased logistical costs necessary to meet in-home dates and
accommodate customer delivery requirements that will not change in
response to the DSCF Standard Mail service standard change, and reduced
opportunities for discounts achieved through comingling and
copalletization. The Postal Service plans to work with the mailing
industry in helping mailers adapt to the DSCF Standard Mail service
standard change and continue their effective use of the mail, through
the IMb Planning Tool and other channels offered by the Postal Service.
It should be noted that during the months of April, May, and June in
2014, the Postal Service will offer a Premium Advertising Mail
promotion, which offers an upfront discount on First-Class Mail presort
postage on mailpieces composed entirely of marketing or advertising
content. But the significance of any burdens resulting from the DSCF
Standard Mail service standard change is unclear because despite the
concerns raised in response to the Proposed Rulemaking, the Postal
Service has observed no change in mailer behavior and experienced no
increase in customer complaints in locations affected by testing
associated with the DSCF Standard Mail service standard change.
Some mailers expressed concerns about the difficulty in obtaining
Facility Access and Shipment Tracking (FAST) appointments at favorable
times, and the potential for the new rule to condense mailers' internal
operating schedules. The Postal Service acknowledges that some mailers
may need to adjust their mail entry patterns. Accordingly, in response
to these concerns, the Postal Service will work with mailers to provide
FAST appointments that better suit their needs. At the same time, to
enhance the availability of FAST appointments, mailers must take
corrective action to address the fact that, for more than half of the
time slots reserved via the FAST system, no one shows up to present
mail for acceptance. The scheduling of excessive, unused appointments
causes the FAST system to report as unavailable mail acceptance
opportunities at facilities that actually are available.
One commenter requested that the service standard change preserve
and incorporate postal policy regarding in-home delivery dates
requested for non-machinable, non-barcoded Standard Mail entered as
Saturation Mail. Under current policy, local postal managers are
expected to respond to properly submitted in-home delivery date
requests by exploring whether, in the normal course of operations,
opportunities exist to process and deliver mail in a manner that is
consistent with applicable service standards and requested in-home
dates. The DSCF Standard Mail service change is not intended to affect
the current procedures through which mailers may request delivery on or
by a specific date within the applicable service standard. However,
such requests do not establish new service standards. Accordingly,
there is no basis for referencing them in the regulations published at
39 CFR part 121.
3. Alternatives
Commenters offered suggestions for alternative operational changes.
For example, some commenters cited their utilization of a flexible work
force to meet customer needs as a model available to the Postal Service
that would enable the preservation of current service standards. The
Postal Service has increased its use of a flexible workforce, but this
increased flexibility alone will not resolve the issues targeted by the
DSCF Standard Mail service standard change. The continued delivery of
the disproportionate amount of Monday delivery volume under current
service standards would require the acquisition of a significant number
of additional vehicles and deployment of employees who would be
necessary only for Monday delivery operations. Although the Postal
Service continues its pursuit of even more flexibility in its
workforce, it is limited by restrictions in its current collective
bargaining agreements that do not permit implementation of various
commenter suggestions for workforce flexibility as alternatives to the
DSCF Standard Mail service standard change.
The Postal Service continues its pursuit of other efficiency-
enhancing initiatives simultaneously with the final rule, but neither
the DSCF Standard Mail service standard change nor any of the other
initiatives are sufficient by
[[Page 12392]]
themselves to achieve the level of efficiency targeted by the Postal
Service. Rather, they are all necessary. From the outset, the Postal
Service has made clear that the impetus for the DSCF Standard Mail
service change is the improvement of operations by leveling the
delivery workload across the days of the week. Although the resulting
efficiencies are expected to generate cost reductions, such cost
reductions are a consequence of the initiative, not its goal.
Accordingly, the load leveling initiative should not be viewed as a
centerpiece of the Postal Service's ongoing efforts to align its
overall cost and revenues.
4. Scope of Change
Focusing on the scope of the DSCF Standard Mail service standard
change, some mailers questioned the justification for including
Standard Mail parcels and letters in the service standard change. These
mailers view the issues targeted by the DSCF Standard Mail service
standard change as limited only to operations concerning Standard Mail
flats. However, the Postal Service needs the same flexibility for
letter operations as well. Accordingly, the DSCF Standard Mail service
standard change applies to both letters and flats. Parcels comprise
only a very small proportion of all DSCF Standard Mail. In the interest
of minimizing mail processing operational complexity and in the absence
of any compelling reason for treating parcels differently, the service
change applies to all DSCF Standard Mail.
One commenter questioned whether the issues targeted by DSCF
Standard Mail service standard change resulted from Standard Mail
volume, suggesting instead that the increase in Monday overtime hours
resulted from route consolidation, network consolidation, parcel volume
increases, extended casing time, and later carrier arrival at the
office. Although a variety of events and conditions could have caused
the current situation of a disproportionate amount of mail volume with
a Monday delivery expectation, the process associated with the Proposed
Rulemaking focused on solutions, rather than on the causes of the
current situation.
5. Effect on Election Mail
One commenter expressed a concern about the potential impact of the
DSCF Standard Mail service standard change on the reliability and
security of election mail delivery. As is the case today, local postal
managers will work closely with elections board and political campaign
organization mailers to ensure that DSCF Standard Mail continues as a
reliable and secure medium of communication. The Postal Service will
continue to provide mailers exploring the differences between DSCF
Standard Mail and First-Class Mail with information explaining their
respective service standards and the long-standing priority of dispatch
and processing accorded to First-Class Mail. In addition, the Postal
Service will provide information to local elections boards and campaign
mailers through multiple channels, including local Postal Customer
Councils, its Business Services Network, its online Rapid Information
Bulletin Board System, and local Business Mail Entry Units.
6. Rate Cap Implications
One commenter questioned whether the DSCF Standard Mail service
standard change might represent an additional price increase with rate
cap implications. The Postal Service does not anticipate that the DSCF
Standard Mail service standard change will have any rate cap
implications.
7. Testing
With respect to the implementation process for the DSCF Standard
Mail service standard change, some commenters questioned the adequacy
of the South Jersey Operations Test, and encouraged the Postal Service
to conduct additional testing before implementation. Consistent with
this concern, the Postal Service has scheduled additional testing in
the service areas of approximately 30 mail processing facilities
nationwide, and intends to incorporate the results of these tests into
the national implementation of the DSCF Standard Mail service standard
change.
The performance of live testing before implementation is not
customary for service standard changes. Under common practice, the
Postal Service relies on modeling. Accordingly, the use of live testing
at multiple sites should provide the Postal Service with helpful
experience that can facilitate successful implementation of the DSCF
Standard Mail service standard change.
8. Nonstandard Delivery Weeks
Some commenters expressed a concern regarding the alleged failure
of the Postal Service to consider the potential effects on delivery
after a three-day weekend or in a five-day delivery environment. On a
regular basis, the Postal Service manages the delivery of increased
volumes of mail after a three-day weekend, and the DSCF Standard Mail
service standard change will not make the challenge presented by that
situation more difficult. In the absence of legislative change, the
Postal Service has no current plans to implement a five-day delivery
environment. However, assuming that mailers would drop ship mail in a
five-day environment on the same days as in the present environment, it
is expected that the implementation of load leveling would reduce the
impact to delivery operations in making the transition to a situation
where Standard Mail is delivered five days per week to street
addresses.
As the Postal Service implements the final rule, it will remain
mindful of the concerns expressed by commenters and will work to
minimize those concerns.
III. Statutory Considerations
In addition to considering comments, the Postal Service has
considered the requirements of 39 U.S.C. 3691 and other applicable
provisions of title 39. Section 3691(b) sets forth objectives that the
Postal Service's market-dominant service standards must serve, and
section 3691(c) sets forth factors that the Postal Service must take
into account when revising the service standards. The Postal Service
believes that it has properly considered the subsection (c) factors,
and that the revised service standards achieve the subsection (b)
objectives.
Since the passage of the Postal Reorganization Act (PRA), the
Postal Service has been required to be largely self-supporting. The PRA
established a cost-of-service system, which allowed the Postal Service
to set prices at levels necessary to fully cover its costs. This system
was dramatically altered in 2006 with the passage of the Postal
Accountability and Enhancement Act (PAEA). In contrast to the PRA, the
PAEA established a price cap system, with strict limitations on price
increases for market-dominant product classes. As the PRC has observed,
a primary goal of the price cap system is ``to incent the Postal
Service to reduce costs and improve efficiency.'' \2\
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\2\ PRC Docket No. R2010-4, Order No. 547 (Sept. 30, 2010), at
80.
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Section 3691 is situated within this larger context of inducing
efficiency gains, and the subsection (c) factors are aligned with that
goal in that, taken together, they balance levels of service for
customers with the Postal Service's operational and business needs.
From the formal rulemaking comments that the Postal Service has
received, it is clear that some customers view the current service
standards as vitally important, and that some customers would
experience difficulties if service standards are changed. On a broader
[[Page 12393]]
level, however, the Postal Service has received no indication that the
public as a whole views the current service standards as an essential
element of the mail.
In regard to the subsection (c) factors that relate to the Postal
Service's operational and business needs, the Postal Service has
already set forth, in the Proposed Rulemaking, the mail volume and
financial realities that necessitate the DSCF Standard Mail service
standard change. The Postal Service faces an uneven workload for postal
delivery operations and a disproportionate allocation of resources to
meet Monday delivery expectations, based on current service standards.
Specifically, the high volume of Standard Mail with a service standard
that creates a Monday delivery expectation contributes to the
significant challenge faced by the Postal Service in seeking to achieve
efficient and timely completion of delivery operations on Monday, and
to make dispatch of collection mail picked up by carriers to mail
processing plants for timely cancellation. This general imbalance in
the proportion of volume with a Monday delivery expectation contributes
significantly to increased overtime workhours in delivery operations at
a time when the Postal Service is faced with increased costs while
revenues decline as a result of the overall reduction in mail volumes.
It is imperative, then, for the Postal Service to achieve a more
balanced distribution of DSCF Standard Mail across delivery days.
The Postal Service believes that the revised service standards are
designed to achieve the section 3691(b) objectives. Standard Mail
should continue to retain its value to customers. The change applies
only to mail entered on Fridays and Saturdays and the Postal Service
will work with mailers to help them adjust to the new standards and
preserve Standard Mail as an attractive and viable medium for the
delivery of messages and parcels.
The DSCF Standard Mail service standard change will also help
improve the Postal Service's performance in meeting service standards,
by achieving a more balanced distribution of DSCF Standard Mail across
delivery days.
IV. Final Revisions to Service Standards
The Postal Service's DSCF Standard Mail service standards are
contained in 39 CFR part 121. The new version of 39 CFR part 121
appears at the end of this document. The following is a summary of the
revisions.
Before describing how service standards will be revised, it is
important to explain how service standards are structured. Service
standards are comprised of two components: (1) A delivery day range
within which all mail in a given product is expected to be delivered;
and (2) business rules that determine, within a product's applicable
day range, the specific number of delivery days after acceptance of a
mail piece by which a customer can expect that piece to be delivered,
based on the 3-digit ZIP Code prefixes associated with the piece's
point of entry into the mail stream and its delivery address.
Business rules are based on the Critical Entry Time (CET). The CET
is the latest time on a particular day that a mail piece can be entered
into the postal network and still have its service standard calculated
based on that day (this day is termed ``day-zero''). In other words, if
a mail piece is entered before the CET, the mail piece's service
standard is calculated from the day of entry, whereas if the mail piece
is entered after the CET, its service standard is calculated from the
following day. For example, if the applicable CET is 4:00 p.m., and a
letter is entered at 3:00 p.m. on a Tuesday, its service standard will
be calculated from Tuesday, whereas if the letter is entered at 5:00
p.m. on a Tuesday, its service standard will be calculated from
Wednesday.
The Postal Service is revising the Standard Mail service standards
for pieces that qualify for a DSCF rate and are accepted before the day
zero CET at the proper DSCF on Friday or Saturday, to enable a more
balanced distribution of Standard Mail volume across delivery days. For
these Standard Mail pieces entered on Friday or Saturday at the DSCF
rate, the Postal Service is changing the current three-day delivery
expectation to a four-day delivery expectation. And for pieces entered
at the SCF in San Juan, PR and destined for the U.S. Virgin Islands, as
well as all DSCF entry pieces destined for American Samoa, the delivery
expectation for pieces entered on Friday or Saturday changes from four
days to five days.
The Postal Service has not made other revisions to its service
standards in this document.
List of Subjects in 39 CFR Part 121
Market-dominant mail products, Service standards.
For the reasons set out in the preamble, 39 CFR part 121 is amended
as set forth below.
PART 121--SERVICE STANDARDS FOR MARKET DOMINANT MAIL PRODUCTS
0
1. The authority citation for 39 CFR part 121 continues to read as
follows:
Authority: 39 U.S.C. 101, 401, 403, 404, 1001, 3691.
0
2. In Sec. 121.3, revise paragraphs (b)(2) and (b)(3) to read as
follows:
Sec. 121.3 Standard Mail.
* * * * *
(b) * * *
(2) Standard Mail pieces that qualify for a DSCF rate and that are
accepted before the day-zero Critical Entry Time at the proper DSCF
have a 3-day service standard when accepted on Sunday through Thursday
and a 4-day service standard when accepted on Friday or Saturday,
except for mail dropped at the SCF in the territory of Puerto Rico and
destined to the territory of the U.S. Virgin Islands, or mail destined
to American Samoa.
(3) Standard Mail pieces that qualify for a Destination Sectional
Center Facility (DSCF) rate and that are accepted before the day zero
Critical Entry Time at the SCF in the territory of Puerto Rico and
destined for the territory of the U.S. Virgin Islands, or are destined
to American Samoa, have a 4-day service standard when accepted on
Sunday through Thursday and a 5-day service standard when accepted on
Friday or Saturday.
* * * * *
0
3. In Appendix A to part 121, revise Tables 5 and 6 to read as follows:
Appendix A to Part 121--Tables Depicting Service Standard Day Ranges
* * * * *
[[Page 12394]]
Table 5--Destination Entry Service Standard Day Ranges for Mail to the Contiguous 48 States and the District of
Columbia
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Contiguous United States
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Mail class Destination entry (at appropriate facility)
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DDU (Days) SCF (Days) ADC (Days) NDC (Days)
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Periodicals..................................... 1 1 1-2 1-2
Standard Mail................................... 2 3-4 .............. 5
Package Services................................ 1 2 .............. 3
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Table 6--Destination Entry Service Standard Day Ranges for Mail to Non-Contiguous States and Territories
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Destination entry (at appropriate facility)
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SCF (days) ADC (days) NDC (days)
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Mail class DDU Hawaii, Hawaii, Hawaii,
(days) Guam, & Puerto Guam, & Puerto Guam, & Puerto
Alaska American Rico & Alaska American Rico & Alaska American Rico &
Samoa USVI Samoa USVI Samoa USVI
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Periodicals............................... 1 1-2 1 1-2 1-3 (AK) 1 (HI) 1-2 10-11 10 8-10
......... ......... ......... ......... 11 (JNU) 2 (GU) ......... ......... ......... .........
......... ......... ......... ......... 11 (KTN) ......... ......... ......... ......... .........
Standard Mail............................. 2 3-4 3-5 3-5 ......... ......... ......... 14 13 12
Package Services.......................... 1 2 2 2-3 ......... ......... ......... 12 11 11
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AK = Alaska 3-digit ZIP Codes 995-997; JNU = Juneau AK 3-digit ZIP Code 998; KTN = Ketchikan AK 3-digit
ZIP Code 999; HI = Hawaii 3-digit ZIP Codes 967 and 968; GU = Guam 3-digit ZIP Code 969.
Stanley F. Mires,
Attorney, Legal Policy & Legislative Advice.
[FR Doc. 2014-04784 Filed 3-4-14; 8:45 am]
BILLING CODE 7710-12-P