[Federal Register Volume 77, Number 75 (Wednesday, April 18, 2012)]
[Proposed Rules]
[Pages 23176-23178]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-9300]



39 CFR Part 3001

[Docket No. RM2012-4; Order No. 1309]

Revisions to Procedural Rules

AGENCY: Postal Regulatory Commission.

ACTION: Advance notice of proposed rulemaking.


SUMMARY: The Commission is establishing a docket to consider proposed 
changes in procedures for handling cases under 39 U.S.C. 3661. These 
cases involve changes in the nature of postal services which affect 
service on a nationwide or substantially nationwide basis. The 
Commission invites comments from interested persons on ways to improve 
and expedite its procedures, consistent with due process. Following 
review of the comments, the Commission may institute a rulemaking 
proceeding to consider adoption of updated procedures.

DATES: Comments Date: June 18, 2012.
    Reply Comment Date: July 17, 2012.

ADDRESSES: Submit comments electronically by accessing the ``Filing 
Online'' link in the banner at the top of the Commission's Web site 
(http://www.prc.gov) or by directly accessing the Commission's Filing 
Online system at https://www.prc.gov/prc-pages/filing-online/login.aspx. Commenters who cannot submit their views electronically 
should contact the person identified in the FOR FURTHER INFORMATION 
CONTACT section as the source for case-related information for advice 
on alternatives to electronic filing.

FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel, 
at 202-789-6820 (case-related information) or [email protected] 
(electronic filing assistance).


Table of Contents

I. Background
II. Legal Requirements
III. Commission's Section 701 Report
IV. Commission's Authority To Modify Procedures
V. Comment Procedures
VI. Ordering Paragraphs

I. Background

    The Commission is soliciting comments on its current procedures 
under 39 U.S.C. 3661 for reviewing proposals by the Postal Service to 
make changes in the nature of postal services. After reviewing the 
comments submitted in this proceeding, the Commission may institute 
rulemaking proceedings to consider the adoption of new, updated 
procedures for processing nature of service cases. The goal of any such 
changes would be to increase the efficiency and timely resolution of 
nature of service cases while protecting the rights of all 
participants, including affected mail users.
    In this proceeding, the Commission welcomes comments on (1) whether 
changes to the current procedures and regulations are warranted; (2) if 
so, what those changes would be; and (3) such other relevant subjects 
as commenters may wish to address.
    Nature of service proceedings conducted pursuant to 39 U.S.C. 3661 
have traditionally been referred to as ``N-cases.'' In N-cases, the 
Commission issues advisory opinions on proposals by the Postal Service 
for ``a change in the nature of postal services which will generally 
affect service on a nationwide, or substantially nationwide basis * * 
*.'' 39 U.S.C. 3661(b).
    The Commission's authority to conduct N-cases was originally 
established by the Postal Reorganization Act of 1970, Public Law 91-
375, August 12, 1970 (PRA). Five N-cases were initiated between the 
enactment of the PRA in 1970 and the passage 36 years later of the 
Postal Accountability and Enhancement Act (PAEA), Public Law 109-435, 
120 Stat. 3219 (2006).\1\ In the 5 years since passage of the PAEA, the 
Commission has docketed four N-cases.\2\

    \1\ Docket No. N75-1, Retail Analysis for Facilities Development 
Program; Docket No. N75-2, Changes in Operating Procedures Affecting 
First-Class Mail and Airmail; Docket No. N86-1, Change in Service, 
1986, Collect on Delivery Service; Docket No. N89-1, Change in 
Service, 1989, First-Class Delivery Standards Realignment; Docket 
No. N2006-1, Evolutionary Network Development Service Changes, 2006.
    \2\ Docket No. N2009-1, Station and Branch Optimization and 
Consolidation Initiative, 2009; Docket No. N2010-1, Six-Day to Five-
Day Street Delivery and Related Service Changes, 2010; Docket No. 
N2011-1, Retail Access Optimization Initiative, 2011; Docket No. 
N2012-1, Mail Processing Network Rationalization Service Changes, 

    The varying degrees of complexity presented by N-cases affects the 
time required to issue advisory opinions. Ordinarily, cases that 
present the most far-reaching implications to mailers require more 
extensive procedures and a greater time between the initial filing and 
the issuance of an advisory opinion by the Commission. To date, the 
Commission has issued advisory opinions in three of the four N-cases 
instituted since enactment of the PAEA.\3\ The length of those 
proceedings ranged from a low of 5 months in Docket No. N2011-1 to a 
high of 12 months in Docket No. N2010-1.\4\ The fourth post-PAEA 
proceeding was filed on December 5, 2011, and remains pending.

    \3\ Docket No. N2009-1, Station and Branch Optimization and 
Consolidation Initiative, 2009; Docket No. N2010-1, Six-Day to Five-
Day Street Delivery and Related Service Changes, 2010; Docket No. 
N2011-1, Retail Access Optimization Initiative, 2011.
    \4\ In Docket No. N2009-1, the Postal Service filed its request 
on July 2, 2009, and the Commission issued its advisory opinion 8 
months later on March 10, 2010. In Docket No. N2010-1, the Postal 
Service filed its request on March 30, 2010, and the Commission 
issued its advisory opinion nearly 12 months later on March 24, 
2011. In Docket No. N2011-1, the Postal Service filed its request on 
July 27, 2011, and the Commission issued its advisory opinion almost 
5 months later on December 23, 2011.

    Recently, the Postal Service has found itself in an extremely 
challenging financial situation, and is seeking to act quickly to 
remedy its financial difficulties. The Postal Service has expressed a 
need for a more expeditious hearing process for N-cases in light of its 
present financial situation. Thus, the Commission is soliciting 
comments on the advisability of adjusting N-case procedures in ways 
that allow more timely and relevant advisory opinions.

II. Legal Requirements

A. 39 U.S.C. 3661

    If the Postal Service determines that a change in the nature of its 
services that will affect mail users on a nationwide or substantially 
nationwide basis may be called for, it must, prior to implementation, 
submit a proposal to the Commission requesting an advisory opinion on 
the proposed changes. 39 U.S.C. 3661(b). After the request is 
submitted, the Postal Service, mail users, and an officer of the 
Commission required to represent the interests of the general public 
must be afforded an opportunity for a hearing on the record in 
accordance with the provisions of 5

[[Page 23177]]

U.S.C. 556 and 5 U.S.C. 557. 39 U.S.C. 3661(c). Those two statutory 
sections--section 556 and section 557--are part of the federal 
Administrative Procedure Act. Section 556 sets forth the procedures by 
which administrative agencies must conduct evidentiary hearings. 
Section 557 establishes requirements for decisions issued in those 
administrative hearings. At the conclusion of an N-Case proceeding, the 
Commission must issue a decision in the form of a written opinion and 
must include a certification by each Commissioner stating that, in the 
Commissioner's judgment, the opinion conforms to the appropriate 
statutory requirements. 39 U.S.C. 3661(c).

B. Current Procedural Regulations

    The Commission's procedural rules implementing the requirements of 
section 3661 can be found in 39 CFR 3001.71 through 3001.75. These 
procedural rules were first written in 1973 and last updated nearly 20 
years ago. Procedural rules of general applicability in subpart A of 39 
CFR part 3001 also apply.

III. Commission's Section 701 Report

    On September 22, 2011, the Commission presented an analysis to 
Congress and the President discussing how the PAEA is operating and 
recommending measures to improve the effectiveness and efficiency of 
postal laws.\5\ In the 701 Report, the Commission recommends that 
Congress consider adding statutory language allowing the Postal Service 
to request expedited consideration for time-sensitive N-cases and 
requiring the Postal Service to provide a written response to 
Commission advisory opinions as well as submitting its response to 
Congress prior to implementing such changes in service. Id. at 71-85.

    \5\ Section 701 Report Analysis of the Postal Accountability and 
Enhancement Act of 2006, September 22, 2011 (701 Report). The report 
draws its name from section 701 of the PAEA.

    Attached to the 701 Report was a Postal Service response to the 
Commission's recommendations, including legislative changes to N-case 
procedures.\6\ In its response, the Postal Service stated its 
preference for a pending legislative proposal which, if adopted, would 
require the Commission to issue advisory opinions on Postal Service 
requests within 90 days of filing and would remove the formal hearing 
requirement from N-case procedural rules.\7\ Postal Service Response to 
701 Report at 24. The Postal Service reiterated the need for expedition 
in handling such cases, while acknowledging that the level of 
Commission analysis should be consistent with its work in other areas. 

    \6\ United States Postal Service Response to Commission's Draft 
Section 701 Report, September 16, 2011 (Postal Service Response to 
701 Report).
    \7\ The proposed legislation referred to by the Postal Service 
is contained in S.1010, 112th Cong. Sec.  206. The bill discussed by 
the Postal Service is one of several currently pending before 

IV. Commission's Authority To Modify Procedures

    The Commission has historically conducted N-case hearings as 
formal, trial-type proceedings. The Commission recently elaborated on 
this historic approach in an order denying a Postal Service request for 
reconsideration of the procedural schedule in Docket No. N2012-1: \8\

    \8\ Docket No. N2012-1, Order Denying Motion for Reconsideration 
of Ruling Establishing Procedural Schedule, January 31, 2012 (Order 
No. 1183).

    Before the Commission is permitted to issue an advisory opinion, 
it is required to provide an opportunity for hearing on the record * 
* *. Participants [in this proceeding have] justified requests for 
hearings on the record. The Commission has procedures in place, both 
by precedent and rule, to implement these [statutory] requirements, 
which provide due process to all participants. The procedures are 
flexible enough to accommodate various complexities of cases, and 
levels of controversy, but also include procedural steps that once 
triggered require somewhat rigid increments of time * * *. A 
reasonable amount of time, consistent with the complexity of the 
case, must be provided for each step to ensure due process.

Order No. 1183 at 2-3.
    The proceedings in Docket No. N2012-1, currently under 
consideration by the Commission, highlight the challenges that the 
Commission can face in N-cases. In this case, the Commission has been 
presented with a multifaceted proposal by the Postal Service with far-
reaching implications for mail users. Parties have urged the Commission 
to permit extensive discovery and sufficient time to allow preparation 
of technical rebuttal evidence. The Postal Service has emphasized its 
need for expedition. The Commission has had to balance the competing 
concerns for due process against the need for expedition.
    In light of the increasing frequency of N-cases and their varying 
degrees of complexity, it is appropriate for the Commission to re-
examine its historic practice of conducting N-cases as trial-type 
proceedings, according participants extensive discovery and oral cross-
examination opportunities in all cases. The authority of regulatory 
agencies like the Commission to revise their regulations to place 
limits on the use of formal litigation procedures in certain types of 
cases has been judicially recognized. In Citizens Awareness Network v. 
U.S., 391 F.3d 338 (1st Cir. 2004), the court held that it was a valid 
exercise of agency discretion for the Nuclear Regulatory Commission to 
expedite nuclear reactor licensing proceedings by changing its long-
standing procedural regulations to eliminate discovery and restrict 

    The APA [Administrative Procedure Act] lays out only the most 
skeletal framework for conducting agency adjudications, leaving 
broad discretion to the affected agencies in formulating detailed 
procedural rules (citation omitted)* * * short of constitutional 
constraints, a court may not impose procedural requirements * * * 
beyond those mandated by statute * * *. (Citation omitted).

Citizens Awareness at 349.
    While procedures differ from agency to agency and while changes in 
those procedures require careful consideration in the specific 
statutory and regulatory contexts presented, the Citizens Awareness 
decision supports the general proposition that agencies have 
flexibility to tailor their procedures to make hearing processes more 
efficient. As the court in that case recognized: ``An agency's rules, 
once adopted, are not frozen in place. The opposite is true: an agency 
may alter its rules in light of its accumulated experience in 
administering them (citation omitted).'' Id. at 351.
    Commenters are encouraged to address what form any new procedures 
might take, and what procedural safeguards must be preserved to assure 
that meaningful public participation and the Commission's decisions are 
helpful to the Postal Service's decision making process as required by 

V. Comment Procedures

    Pursuant to 39 U.S.C. 505, Patricia Gallagher is designated as the 
Public Representative in this proceeding to represent the interests of 
the general public.
    Interested persons are invited to provide written comments and 
suggestions as to how the Commission can best fulfill its statutory 
obligations. Comments are due within 60 days of the date of publication 
of this notice in the Federal Register. All comments and suggestions 
received will be available for review on the Commission's Web site, 
http://www.prc.gov. Interested persons are further invited to review 
these submissions and provide follow-up comments and suggestions within 

[[Page 23178]]

additional days of the due date for initial comments.

VI. Ordering Paragraphs

    It is ordered:
    1. Docket No. RM2012-4 is established for the purpose of receiving 
comments in advance of developing regulations regarding new rules of 
procedure for evaluating requests for advisory opinions under 39 U.S.C. 
    2. Interested parties may submit comments no later than 60 days 
from the date of publication of this notice in the Federal Register.
    3. Reply comments may be filed no later than 30 days from the due 
date for initial comments.
    4. Pursuant to 39 U.S.C. 505, Patricia Gallagher is appointed to 
serve as an officer of the Commission (Public Representative) to 
represent the interests of the general public in this proceeding.
    5. The Secretary shall arrange for publication of this document in 
the Federal Register.

    By the Commission.
Shoshana M. Grove,
[FR Doc. 2012-9300 Filed 4-17-12; 8:45 am]