83 FR 47119 - Market Tests
POSTAL REGULATORY COMMISSION Federal Register Volume 83, Issue 181 (September 18, 2018)
Federal Register Volume 83, Issue 181 (September 18, 2018)
| Page Range | 47119-47123 | |
| FR Document | 2018-20287 |
[Federal Register Volume 83, Number 181 (Tuesday, September 18, 2018)] [Proposed Rules] [Pages 47119-47123] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-20287] ======================================================================= ----------------------------------------------------------------------- POSTAL REGULATORY COMMISSION 39 CFR Part 3035 [Docket No. RM2018-12; Order No. 4822] Market Tests AGENCY: Postal Regulatory Commission. ACTION: Notice of proposed rulemaking. ----------------------------------------------------------------------- SUMMARY: The Commission is proposing revisions to its rules governing market tests of experimental products. This document informs the public of the docket's initiation, invites public comment, and takes other administrative steps. DATES: Comments are due on or before October 18, 2018. 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: David A. Trissell, General Counsel, at 202-789-6820. SUPPLEMENTARY INFORMATION: Table of Contents I. Introduction II. Proposed Amendments III. Section-by-Section Analysis IV. Administrative Actions V. Ordering Paragraphs I. Introduction Pursuant to 39 U.S.C. 503 and 3641, this order establishes a rulemaking docket that proposes amendments to the Commission's regulations governing market tests of experimental products appearing in existing 39 CFR part 3035. The proposed amendments would revise regulations concerning market test revenue limitations and requests to add a non-experimental product or price category based on an experimental product to the market dominant or competitive product list.\1\ The proposed rules reflect lessons learned through the Commission's experiences with the existing regulations and current practice before the Commission. The proposed rules appear after the signature of this order in Attachment A. --------------------------------------------------------------------------- \1\ Product lists categorize postal products as either market dominant or competitive. 39 CFR 3020.1(b). Each experimental product during a market test is identified on the applicable product list under the organizational group heading ``Market Tests'' in accordance with 39 U.S.C. 3641(b)(3) and existing Sec. Sec. 3020.4(b)(2)(ii)(D) and 3020.4(b)(3)(ii)(D) of this chapter. The intent of existing Sec. 3035.18 and the revisions proposed in this order apply only to a request to offer a proposed product or price category in non-experimental status, that is--subject to the applicable requirements of 39 U.S.C. 3622, 3633, or 3642, and the applicable regulations promulgated thereunder. --------------------------------------------------------------------------- II. Proposed Amendments Section 3641 of title 39 of the United States Code authorizes the Postal Service to conduct market tests of experimental products. In accordance with its specific authority to regulate market tests under 39 U.S.C. 3641 and its general authority under 39 U.S.C. 503 to promulgate regulations and establish procedures, the Commission codified existing 39 CFR part 3035 to establish procedures for conducting market tests of experimental products.\2\ The Commission establishes this proceeding to consider amendments to the existing market test regulations. --------------------------------------------------------------------------- \2\ See Docket No. RM2013-5, Order Adopting Final Rules for Market Tests of Experimental Products, August 28, 2014 (Order No. 2173). --------------------------------------------------------------------------- The proposed amendments are discussed below. The first set of amendments intend to revise the method for calculating applicable revenue limitations for market tests appearing in existing Sec. Sec. 3035.15 and 3035.16 to be consistent with the current level of precision used in calculating the annual limitation on the percentage change in rates for market dominant products (price cap). The second set of proposed amendments aim to clarify the process under existing Sec. 3035.18 for adding a non-experimental product or price category based on an experimental product to the market dominant or competitive product list and to emphasize the necessity of receiving specific detailed information in those instances. A. Market Test Revenue Limitations Unless the Commission grants an exemption, total revenues anticipated or in fact received by the Postal Service from an experimental product must not exceed $10 million in any year. 39 U.S.C. 3641(e)(1). Upon written application of the Postal Service, the Commission may exempt the market test from the $10 million revenue limitation if certain requirements are met. 39 U.S.C. 3641(e)(2). If the Commission grants an exemption, total revenues anticipated, or in fact received by, the Postal Service from a market test may not exceed $50 million in any year. Id. These amounts must be adjusted annually by the change in the Consumer Price Index for such year, as determined under the regulations of the Commission. 39 U.S.C. 3641(g). Existing Sec. 3035.15(a) uses the Consumer Price Index--All Urban Customers (CPI-U index), as specified by Sec. Sec. 3010.21(a) and 3010.22(a) of this chapter, to calculate these amounts. Existing Sec. 3035.15(d) explains the method for calculating the $10 million revenue limitation on a fiscal year basis, as adjusted for the change in the CPI-U index ($10 Million Adjusted Limitation). Calculating the $10 Million Adjusted Limitation involves three 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. 39 CFR 3035.15(d); see 39 U.S.C. 3641(g). The result is a Base Average of 214.5. 39 CFR 3035.15(d). Second, a second simple average CPI-U index is 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 to obtain a Recent Average. Id. Third, the revenue limitation for the current fiscal year is calculated by multiplying $10 million by the Recent Average divided by the Base Average of 214.5. Id. The result is the $10 Million Adjusted Limitation, rounded to the nearest dollar. Id. Existing Sec. 3035.16(c) sets forth corresponding steps for calculating the $50 million revenue limitation, as adjusted for the change in the CPI-U index ($50 Million Adjusted Limitation). Under existing Sec. Sec. 3035.15 and 3035.16, the Base Average for both the $10 Million and $50 Million Adjusted Limitations is calculated using one decimal place (214.5). In Order No. 303, the Commission amended the price cap rules appearing in Sec. Sec. 3010.21 and 3010.22 of this chapter to calculate the CPI-U price cap using three decimal places instead of one.\3\ The Commission [[Page 47120]] explained that rounding to three decimal places was appropriate for several reasons. The Postal Service previously proposed small rate adjustments that required a greater degree of precision when calculating the price cap. Order No. 246 at 2; Order No. 303 at 1. Available data allowed the price cap to be calculated to three decimal places, which was not possible when the Commission established its regulations governing rates and classes for market dominant and competitive products.\4\ Calculating the price cap to three decimal places was also consistent with how the Commission calculated the Postal Service's unused rate adjustment authority.\5\ --------------------------------------------------------------------------- \3\ Docket No. RM2009-8, Order Amending the Cap Calculation in the System of Ratemaking, September 22, 2009, at 1-2 (Order No. 303); see Docket No. RM2009-8, Notice of Proposed Rulemaking to Amend the Cap Calculation in the System of Ratemaking, July 10, 2009 (Order No. 246). \4\ Order No. 246 at 2; Order No. 303 at 1-2; see Docket No. RM2007-1, Order Establishing Ratemaking Regulations for Market Dominant and Competitive Products, October 29, 2007 (Order No. 43). \5\ Order No. 246 at 2; Order No. 303 at 1-2; see 39 CFR 3010.26 and 3010.27. --------------------------------------------------------------------------- Consistent with the price cap rules, the proposed amendments would calculate the Base Average for the $10 Million Adjusted Limitation and $50 Million Adjusted Limitation using three decimal places (214.463). The proposed amendments would replace ``214.5'' with ``214.463'' in paragraphs (d) and (e) of existing Sec. 3035.15 and in paragraphs (c) and (d) of existing Sec. 3035.16. This change would slightly increase the current $10 Million and $50 Million Adjusted Limitations, which were calculated using one decimal place.\6\ For FY 2018, the $10 Million Adjusted Limitation would increase from $11,365,967 to $11,367,928, and the $50 Million Adjusted Limitation would increase from $56,829,837 to $56,839,641. Thus, the proposed amendments would have limited substantive effect, but would enhance consistency across the Commission's rules. --------------------------------------------------------------------------- \6\ The market test revenue limitations for the fiscal year are published on the Commission's website available at http://www.prc.gov; hover over ``References'' and follow ``CPI Figures'' hyperlink. --------------------------------------------------------------------------- B. Request To Add a Non-Experimental Product or Price Category Based on an Experimental Product to the Product List 1. Background Generally, each product offered by the Postal Service must comply with 39 U.S.C. 3622 (governing market dominant products), 39 U.S.C. 3633 (governing competitive products), or 39 U.S.C. 3642 (governing changes to the lists of market dominant and competitive products), and applicable regulations. Experimental products, however, are not subject to 39 U.S.C. 3622, 3633 or 3642, or the associated regulations. 39 U.S.C. 3641(a)(2). The Postal Service may decide to add a non-experimental product or price category to the product list based on its performance or other factors. Accordingly, existing Sec. 3035.18 sets forth procedures for filing a request to add a current or former experimental product to the market dominant or competitive product list in non-experimental status, that is--subject to the applicable requirements of 39 U.S.C. 3622, 3633, or 3642, and the applicable regulations promulgated thereunder. See Order No. 2173 at 24. Existing Sec. 3035.18 uses the term ``permanent'' to describe the non-experimental status of the proposed product or price category. See id. Existing Sec. 3035.18(a) states that if the Postal Service decides to make an experimental product permanent, it must file a request under 39 U.S.C. 3642 and part 3020, subpart B of this chapter to add a new product or price category to the market dominant or competitive product list. Existing Sec. 3035.18(a) requires the Postal Service to file such requests at least 60 days before the market test expires or the market test exceeds any authorized adjusted limitation in any fiscal year, whichever is earlier. Under existing Sec. 3035.18(b), requests must quantify the product specific costs associated with developing the market test, which are the costs incurred before the market test was implemented. Under existing Sec. 3035.18(c), the Postal Service must also file a notice of the request in the market test proceeding's docket that includes the applicable docket number(s) for the proceeding evaluating the request. Since the market test rules were implemented, the Postal Service has filed requests for the Customized Delivery and Metro Post experimental products.\7\ Customized Delivery was a package delivery service offering that provided customers with delivery of groceries and other prepackaged goods within a customized delivery window.\8\ Metro Post was a package delivery service that provided customers with same- day delivery within a defined metropolitan area.\9\ The Postal Service proposed to add non-experimental products based on both the Customized Delivery and Metro Post experimental products to the competitive product list as NSAs, which are written contracts between the Postal Service and a mailer for customer-specific rates and fees that are effective for a defined period of time. 39 CFR 3001.5(r). The Customized Delivery and Metro Post Requests raised issues about the applicability of existing Sec. 3035.18, as well as the information necessary for the Commission to evaluate such requests. The proposed amendments are intended to address these issues by clarifying when existing Sec. 3035.18 applies and what information a request must include. Each issue is discussed below, along with the proposed amendments to existing Sec. 3035.18. --------------------------------------------------------------------------- \7\ Docket Nos. MC2018-13 and CP2018-26, USPS Request to Add Parcel Select Contract 24 to Competitive Product List and Notice of Filing Materials Under Seal, October 18, 2017 (Customized Delivery Request). The requests to add Metro Post to the competitive product list (Metro Post Requests) were filed as separate proposed negotiated service agreements (NSAs). Docket Nos. MC2016-39 and CP2016-48, Request of the United States Postal Service to Add Priority Mail Contract 165 to Competitive Product List and Notice of Filing (Under Seal) of Unredacted Governors' Decision, Contract, and Supporting Data, December 15, 2015; Docket Nos. MC2016-40 and CP2016-49, Request of the United States Postal Service to Add Priority Mail Contract 166 to Competitive Product List and Notice of Filing (Under Seal) of Unredacted Governors' Decision, Contract, and Supporting Data, December 15, 2015; Docket Nos. MC2016-41 and CP2016-50, Request of the United States Postal Service to Add Priority Mail Contract 167 to Competitive Product List and Notice of Filing (Under Seal) of Unredacted Governors' Decision, Contract, and Supporting Data, December 15, 2015; Docket Nos. MC2016-42 and CP2016-51, Request of the United States Postal Service to Add Priority Mail Contract 168 to Competitive Product List and Notice of Filing (Under Seal) of Unredacted Governors' Decision, Contract, and Supporting Data, December 15, 2015; Docket Nos. MC2016-43 and CP2016-52, Request of the United States Postal Service to Add Priority Mail Contract 169 to Competitive Product List and Notice of Filing (Under Seal) of Unredacted Governors' Decision, Contract, and Supporting Data, December 15, 2015; Docket Nos. MC2016-52 and CP2016-67, Request of the United States Postal Service to Add Priority Mail Contract 174 to Competitive Product List and Notice of Filing (Under Seal) of Unredacted Governors' Decision, Contract, and Supporting Data, December 23, 2015. \8\ Docket No. MT2014-1, Order Authorizing Customized Delivery Market Test, October 23, 2014, at 1 (Order No. 2224). \9\ Docket No. MT2013-1, Order Approving Metro Post Market Test, November 14, 2012, at 1 (Order No. 1539). --------------------------------------------------------------------------- 2. Applicability of Existing Sec. 3035.18 The Customized Delivery and Metro Post Requests raised questions about the applicability of existing Sec. 3035.18. The Postal Service filed both of these requests under regulations applicable to new competitive NSAs \10\ rather than under existing Sec. 3035.18. Existing Sec. 3035.18 is ambiguous as to whether it applies to proposed NSAs in light of the fact that it refers to ``permanent'' products, and NSAs, as defined by existing Sec. 3001.5(r) of this chapter, are not permanent but rather are in effect for a defined period of time. --------------------------------------------------------------------------- \10\ See 39 U.S.C. 3642; 39 CFR part 3020, subpart B; and 39 CFR 3015.5. --------------------------------------------------------------------------- These filings were problematic because the Postal Service did not [[Page 47121]] provide 60 days' notice of the Customized Delivery and Metro Post Requests as required by existing Sec. 3035.18(a). Instead, the Postal Service filed the Metro Post Requests under provisions applicable to new competitive NSAs, which are generally reviewed within 15 days. See 39 U.S.C. 3632(b)(3). The Postal Service filed the Customized Delivery Request on October 18, 2017, two weeks before the market test expired. Customized Delivery Request at 1. The Postal Service noted that the Customized Delivery market test would expire on October 31, 2017, but asked the Commission to expedite its review and issue a decision before November 1, 2017. Id. The Postal Service acknowledged that ``it is seeking the Commission's approval on a shorter timeline than provided for in the statute and the Commission's rules[]'' because of the complexity of the contract. Id. at 1 n.1. The Commission conditionally approved the Customized Delivery Request.\11\ However, the Commission expressed concern that the timing of the request ``frustrates the purpose of the Commission's rules for making experimental products permanent'' and could be interpreted as disregarding the requirements of existing Sec. 3035.18. Order No. 4196 at 7. The Commission stated that it will review the existing market test regulations and revise them as necessary. Id. --------------------------------------------------------------------------- \11\ Docket Nos. MC2018-13 and CP2018-26, Order Conditionally Adding Parcel Select Contract 24 to the Competitive Product List, October 31, 2017 (Order No. 4196). --------------------------------------------------------------------------- The 60-day notice requirement in existing Sec. 3035.18(a) ensures that both the Commission and interested persons have adequate time to evaluate and respond to a request. See Order No. 2173 at 27. Failing to provide adequate notice frustrates the intent of this rule. The Postal Service also failed to file notices of the Customized Delivery and Metro Post Requests in the applicable market test proceeding's docket as required by existing Sec. 3035.18(c). These notices are important for providing transparency into the Commission's review of requests by helping mailers and the general public track a market test's progress from an experimental product to a non- experimental market dominant or competitive product. See id. at 25-26. Failing to file notices in the applicable market test proceeding's docket hinders transparency and the public's ability to comment on the request. To address these issues, the proposed amendments would clarify that existing Sec. 3035.18 applies to any non-experimental product or price category based on a former or current experimental product that the Postal Service seeks to add to the market dominant or competitive product list, whether permanent or temporary. The proposed amendments would remove the word ``permanent'' from existing Sec. 3035.18 and instead refer to a request to add a non-experimental product or price category based on an experimental product to the applicable product list. The proposed amendments would clarify that existing Sec. 3035.18 applies to the addition of all non-experimental products or price categories that were based on an experimental product. To ensure that the Postal Service files under the appropriate regulation, the proposed amendments would identify specific instances when the Postal Service must file a request under existing Sec. 3035.18. Proposed Sec. 3035.18(b) would require the Postal Service to file a request if the proposed non-experimental product or price category: offers the same (or similar) service as a former or current experimental product; has the same distinct cost or market characteristic as a former or current experimental product; or uses (or is based on) data or assumptions from a former or current market test proceeding. The proposed rules would also require the Postal Service to provide advance notice of requests. If the Postal Service seeks a Commission decision by a certain date, the Postal Service must provide adequate notice to ensure the Commission and interested persons have sufficient time to obtain necessary information and evaluate the request. Proposed Sec. 3035.18(d) would require the Postal Service to file a request at least 60 days before the requested decision date. For example, for the Customized Delivery and Metro Post Requests, the Postal Service asked the Commission to issue its decision before or when the market test ends to ensure continuity between the market test and proposed NSAs. In those cases, proposed Sec. 3035.18(d) would require the Postal Service to file the request at least 60 days before the applicable market test ends. The Commission retains the substance of existing Sec. 3035.18(c), but the proposed amendments would move paragraph (c) to proposed Sec. 3035.18(e). Proposed Sec. 3035.18(e) would delete the phrase ``to make an experimental product permanent.'' This proposed rule works in conjunction with proposed Sec. 3035.18(c)(1), discussed in more detail below, which would require a request to identify the market test and docket number that the proposed non-experimental product or price category is based on. D3>3. Contents of Request Existing Sec. 3035.18(a) requires the Postal Service to file a request under 39 U.S.C. 3642 and part 3020, subpart B of this chapter. Because of the unique nature of market tests and experimental products, existing Sec. 3035.18(b) requires the Postal Service to include additional information to help facilitate the Commission's review of requests. As a result of the Commission's review of the Metro Post and Customized Delivery Requests, the Commission has identified additional information that should be provided with a request. The public versions of the Metro Post Requests did not reveal the connection between the proposed NSAs and the Metro Post experimental product. The proposed NSAs offered same-day delivery service just like the Metro Post experimental product. However, the Metro Post Requests redacted information stating that the proposed NSAs allow for same-day delivery of packages and were developed from Metro Post market test data.\12\ The Commission found that redacting this information delayed the proceeding and the public's ability to prepare comments. Order No. 3069 at 6. The Commission also stated that the redactions hindered transparency because interested persons reviewing the requests lacked important information that would inform their comments: that the NSAs offered the same service as the Metro Post experimental product. Id. --------------------------------------------------------------------------- \12\ See, e.g., Docket Nos. MC2016-39 and CP2016-48, Order Adding Priority Mail Contract 165 to the Competitive Product List, February 12, 2016, at 6 (Order No. 3069). --------------------------------------------------------------------------- To address this issue, proposed Sec. 3035.18(c)(1) would require a request to identify the market test and docket number that the proposed non-experimental product or price category is based on. Proposed Sec. 3035.18(c)(2) would require a request to explain how the proposed non- experimental product or price category relates to a market test or an experimental product. For example, the Customized Delivery Request clearly stated that the proposed NSA ``is modeled off the Customized Delivery market test. . . .'' Customized Delivery Request at 1. Proposed Sec. 3035.18(c)(2) would require the Postal Service to provide a similar statement in future requests. Another issue with the Metro Post and Customized Delivery Requests was that the requests did not include all of the information necessary for the Commission to evaluate them. During a market test, the Postal Service collects [[Page 47122]] and reports information for each quarter in data collection reports. See 39 CFR 3035.20. Data collection reports are intended to form the basis upon which the Postal Service may file a request to add a non- experimental product or price category based on an experimental product to the product list. Essentially, the data generated from the market test should minimize the reliance on proxy data and untested assumptions in the financial model used to support the request. However, the financial models for the Metro Post and Customized Delivery Requests were based on data and assumptions that deviated from the applicable market test data collection reports. This necessitated the issuance of several information requests, which prolonged the proceedings and the Commission's review. To address this issue, proposed Sec. 3035.18(c)(3) would require a request to identify any assumptions from the market test that the request uses or is based on. Proposed Sec. 3035.18(c)(4) would require financial models supporting the request to include all data from data collection reports or separately identify and explain any differences between the data collection reports and the data provided in the requests. Existing Sec. 3035.18(b) requires the request to quantify the product specific costs associated with developing the market test, which refers to the costs incurred before the market test was implemented. The Commission retains the substance of this rule, but the proposed amendments would make clarifying edits and move it to proposed Sec. 3035.18(c)(5). III. Section-by-Section Analysis Proposed Authority Citation in part 3035. The Commission proposes to add a cross-reference to 39 U.S.C. 503 in the existing authority citation for part 3035. This proposed change aims to clarify the statutory provisions granting the Commission authority to promulgate regulations concerning market tests. Proposed Sec. 3035.15(d). Proposed Sec. 3035.15(d) replaces ``214.5'' with ``214.463'' in two places. Proposed Sec. 3035.15(e). Proposed Sec. 3035.15(e) replaces ``214.5'' with ``214.463.'' Proposed Sec. 3035.16(c). Proposed Sec. 3035.16(c) replaces ``214.5'' with ``214.463'' in two places. Proposed Sec. 3035.16(d). Proposed Sec. 3035.16(d) replaces ``214.5'' with ``214.463.'' Proposed Sec. 3035.18. The Commission proposes to change the heading of existing Sec. 3035.18 to ``Request to add a non- experimental product or price category based on an experimental product to the product list.'' This change reflects the proposed amendments to the regulatory text. Proposed Sec. 3035.18(a). Proposed Sec. 3035.18(a) contains the substance of the first sentence of existing Sec. 3035.18(a), but replaces the word ``permanent'' with general language about adding a non-experimental product or price category based on an experimental product to the applicable product list. Proposed Sec. 3035.18(b). Proposed Sec. 3035.18(b) identifies instances when the Postal Service must file a request compliant with the remaining paragraphs of the section. Proposed Sec. 3035.18(c). Proposed Sec. 3035.18(c) lists the information that the Postal Service must include in a request. Proposed Sec. 3035.18(d). The second sentence of existing Sec. 3035.18(a) is revised and moved to proposed Sec. 3035.18(d). If the Postal Service seeks a Commission decision by a certain date, proposed Sec. 3035.18(d) requires that the Postal Service file a request at least 60 days before the requested decision date. Proposed Sec. 3035.18(e). Existing Sec. 3035.18(c) is moved to proposed Sec. 3035.18(e), but deletes the phrase ``to make an experimental product permanent.'' IV. Administrative Actions The Regulatory Flexibility Act requires federal agencies, in promulgating rules, to consider the impact of those rules on small entities. See 5 U.S.C. 601, et seq. (1980). If the proposed or final rules will not, if promulgated, have a significant economic impact on a substantial number of small entities, the head of the agency may certify that the initial and final regulatory flexibility analysis requirements of 5 U.S.C. 603 and 604 do not apply. See 5 U.S.C. 605(b). In the context of this rulemaking, the Commission's primary responsibility is in the regulatory oversight of the United States Postal Service. The rules that are the subject of this rulemaking have a regulatory impact on the Postal Service, but do not impose any regulatory obligation upon any other entity. Based on these findings, the Chairman of the Commission certifies that the rules that are the subject of this rulemaking will not have a significant economic impact on a substantial number of small entities. Therefore, pursuant to 5 U.S.C. 605(b), this rulemaking is exempt from the initial and final regulatory flexibility analysis requirements of 5 U.S.C. 603 and 604. Interested persons are invited to provide written comments concerning the proposed amendments to the market test regulations in 39 CFR part 3035. Comments are due no later than 30 days after 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 website, http://www.prc.gov. Pursuant to 39 U.S.C. 505, Katharine L. Primosch is appointed to serve as an officer of the Commission (Public Representative) to represent the interests of the general public in this docket. V. Ordering Paragraphs It is ordered: 1. Docket No. RM2018-12 is established for the purpose of receiving comments on the proposed amendments to 39 CFR part 3035, as discussed in this order. 2. Interested persons may submit comments no later than 30 days from the date of publication of this notice in the Federal Register. 3. Pursuant to 39 U.S.C. 505, Katharine L. Primosch is appointed to serve as Public Representative in this proceeding. 4. The Secretary shall arrange for publication of this order in the Federal Register. By the Commission. Stacy L. Ruble, Secretary. List of Subjects in 39 CFR Part 3035 Administrative practice and procedure, Postal Service. For the reasons stated in the preamble, the Commission proposes to amend 39 CFR part 3035 as follows: PART 3035--RULES FOR MARKET TESTS OF EXPERIMENTAL PRODUCTS 0 1. The authority citation for part 3035 is revised to read as follows: Authority: 39 U.S.C. 503; 3641. 0 2. Amend Sec. 3035.15 by revising paragraphs (d) and (e) to read as follows: Sec. 3035.15 Dollar amount limitation. * * * * * (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 214.463. Then, [[Page 47123]] 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 $10,000,000 by the Recent Average divided by 214.463. 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/214.463). 0 3. Amend Sec. 3035.16 by revising paragraphs (c) and (d) to read as follows: Sec. 3035.16 Exemption from dollar amount limitation. * * * * * (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 214.463. 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 214.463. 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/214.463). 0 4. Revise Sec. 3035.18 to read as follows: Sec. 3035.18 Request to add a non-experimental product or price category based on an experimental product to the product list. (a) If the Postal Service seeks to add a non-experimental product or price category based on a former or current experimental product to the market dominant or competitive product list, the Postal Service shall file a request, pursuant to 39 U.S.C. 3642 and part 3020, subpart B of this chapter, to add a non-experimental product or price category to the applicable product list. (b) The Postal Service shall comply with the requirements specified in paragraphs (c) through (e) of this section of this section if the proposed non-experimental product or price category: (1) Offers the same (or similar) service as a former or current experimental product; (2) Has the same distinct cost or market characteristic as a former or current experimental product; or (3) Uses (or is based on) data or assumptions from a former or current market test proceeding. (c) A request filed under this section shall: (1) Identify the market test and docket number that the proposed non-experimental product or price category is based on; (2) Explain the relationship between the proposed non-experimental product or price category and market test or experimental product; (3) Identify any assumptions from the market test that the request uses or is based on; (4) Include all data from data collection reports in the financial model, or separately identify and explain any differences between the data collection reports and the data used to support the financial model; and (5) Quantify the product specific costs associated with the development of the market test; that is, costs incurred before the market test was implemented. (d) If the Postal Service seeks a Commission decision by a certain date, the Postal Service shall file a request under this section at least 60 days before the requested decision date. (e) The Postal Service shall also file a notice of its request under this section in the market test proceeding's docket. This notice shall include the applicable docket number(s) for the proceeding evaluating the request. [FR Doc. 2018-20287 Filed 9-17-18; 8:45 am] BILLING CODE 7710-FW-P
![Federal Register / Vol. 83, No. 181 / Tuesday, September 18, 2018 / Proposed Rules 47119
FDA determines a categorical exclusion product to the market dominant or Commission may exempt the market test
applies, neither an environmental competitive product list.1 The proposed from the $10 million revenue limitation
assessment nor an environmental rules reflect lessons learned through the if certain requirements are met. 39
impact statement is required. If FDA Commission’s experiences with the U.S.C. 3641(e)(2). If the Commission
determines a categorical exclusion does existing regulations and current practice grants an exemption, total revenues
not apply, we will request an before the Commission. The proposed anticipated, or in fact received by, the
environmental assessment and make it rules appear after the signature of this Postal Service from a market test may
available for public inspection. order in Attachment A. not exceed $50 million in any year. Id.
Dated: September 12, 2018. II. Proposed Amendments These amounts must be adjusted
Leslie Kux,
annually by the change in the Consumer
Section 3641 of title 39 of the United Price Index for such year, as determined
Associate Commissioner for Policy. States Code authorizes the Postal under the regulations of the
[FR Doc. 2018–20217 Filed 9–17–18; 8:45 am] Service to conduct market tests of Commission. 39 U.S.C. 3641(g). Existing
BILLING CODE 4164–01–P experimental products. In accordance § 3035.15(a) uses the Consumer Price
with its specific authority to regulate Index—All Urban Customers (CPI–U
market tests under 39 U.S.C. 3641 and index), as specified by §§ 3010.21(a) and
POSTAL REGULATORY COMMISSION its general authority under 39 U.S.C. 3010.22(a) of this chapter, to calculate
503 to promulgate regulations and these amounts.
39 CFR Part 3035 establish procedures, the Commission
Existing § 3035.15(d) explains the
[Docket No. RM2018–12; Order No. 4822] codified existing 39 CFR part 3035 to
method for calculating the $10 million
establish procedures for conducting
revenue limitation on a fiscal year basis,
Market Tests market tests of experimental products.2
as adjusted for the change in the CPI–
The Commission establishes this
AGENCY: Postal Regulatory Commission. U index ($10 Million Adjusted
proceeding to consider amendments to
ACTION: Notice of proposed rulemaking. Limitation). Calculating the $10 Million
the existing market test regulations.
The proposed amendments are Adjusted Limitation involves three
SUMMARY: The Commission is proposing discussed below. The first set of steps. First, a simple average CPI–U
revisions to its rules governing market amendments intend to revise the index was calculated for Fiscal Year
tests of experimental products. This method for calculating applicable 2008 by summing the monthly CPI–U
document informs the public of the revenue limitations for market tests values from October 2007 through
docket’s initiation, invites public appearing in existing §§ 3035.15 and September 2008 and dividing the sum
comment, and takes other 3035.16 to be consistent with the by 12. 39 CFR 3035.15(d); see 39 U.S.C.
administrative steps. current level of precision used in 3641(g). The result is a Base Average of
DATES: Comments are due on or before calculating the annual limitation on the 214.5. 39 CFR 3035.15(d). Second, a
October 18, 2018. percentage change in rates for market second simple average CPI–U index is
ADDRESSES: Submit comments dominant products (price cap). The calculated for each subsequent fiscal
electronically via the Commission’s second set of proposed amendments aim year by summing the 12 monthly CPI–
Filing Online system at http:// to clarify the process under existing U values for the previous fiscal year and
www.prc.gov. Those who cannot submit § 3035.18 for adding a non-experimental dividing the sum by 12 to obtain a
comments electronically should contact product or price category based on an Recent Average. Id. Third, the revenue
the person identified in the FOR FURTHER experimental product to the market limitation for the current fiscal year is
INFORMATION CONTACT section by dominant or competitive product list calculated by multiplying $10 million
telephone for advice on filing and to emphasize the necessity of by the Recent Average divided by the
alternatives. receiving specific detailed information Base Average of 214.5. Id. The result is
in those instances. the $10 Million Adjusted Limitation,
FOR FURTHER INFORMATION CONTACT: rounded to the nearest dollar. Id.
David A. Trissell, General Counsel, at A. Market Test Revenue Limitations Existing § 3035.16(c) sets forth
202–789–6820. corresponding steps for calculating the
Unless the Commission grants an
SUPPLEMENTARY INFORMATION: exemption, total revenues anticipated or $50 million revenue limitation, as
Table of Contents in fact received by the Postal Service adjusted for the change in the CPI–U
from an experimental product must not index ($50 Million Adjusted
I. Introduction exceed $10 million in any year. 39 Limitation).
II. Proposed Amendments U.S.C. 3641(e)(1). Upon written Under existing §§ 3035.15 and
III. Section-by-Section Analysis application of the Postal Service, the 3035.16, the Base Average for both the
IV. Administrative Actions $10 Million and $50 Million Adjusted
V. Ordering Paragraphs 1 Product lists categorize postal products as either Limitations is calculated using one
market dominant or competitive. 39 CFR 3020.1(b). decimal place (214.5). In Order No. 303,
I. Introduction Each experimental product during a market test is
identified on the applicable product list under the
the Commission amended the price cap
Pursuant to 39 U.S.C. 503 and 3641, organizational group heading ‘‘Market Tests’’ in rules appearing in §§ 3010.21 and
this order establishes a rulemaking accordance with 39 U.S.C. 3641(b)(3) and existing 3010.22 of this chapter to calculate the
docket that proposes amendments to the §§ 3020.4(b)(2)(ii)(D) and 3020.4(b)(3)(ii)(D) of this CPI–U price cap using three decimal
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Commission’s regulations governing chapter. The intent of existing § 3035.18 and the
revisions proposed in this order apply only to a
places instead of one.3 The Commission
market tests of experimental products request to offer a proposed product or price
appearing in existing 39 CFR part 3035. category in non-experimental status, that is— 3 Docket No. RM2009–8, Order Amending the Cap
The proposed amendments would subject to the applicable requirements of 39 U.S.C. Calculation in the System of Ratemaking,
revise regulations concerning market 3622, 3633, or 3642, and the applicable regulations September 22, 2009, at 1–2 (Order No. 303); see
promulgated thereunder. Docket No. RM2009–8, Notice of Proposed
test revenue limitations and requests to 2 See Docket No. RM2013–5, Order Adopting Rulemaking to Amend the Cap Calculation in the
add a non-experimental product or price Final Rules for Market Tests of Experimental System of Ratemaking, July 10, 2009 (Order No.
category based on an experimental Products, August 28, 2014 (Order No. 2173). 246).
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![Federal Register / Vol. 83, No. 181 / Tuesday, September 18, 2018 / Proposed Rules 47121
provide 60 days’ notice of the § 3035.18 applies to any non- number that the proposed non-
Customized Delivery and Metro Post experimental product or price category experimental product or price category
Requests as required by existing based on a former or current is based on.
§ 3035.18(a). Instead, the Postal Service experimental product that the Postal Existing § 3035.18(a) requires the
filed the Metro Post Requests under Service seeks to add to the market Postal Service to file a request under 39
provisions applicable to new dominant or competitive product list, U.S.C. 3642 and part 3020, subpart B of
competitive NSAs, which are generally whether permanent or temporary. The this chapter. Because of the unique
reviewed within 15 days. See 39 U.S.C. proposed amendments would remove nature of market tests and experimental
3632(b)(3). The Postal Service filed the the word ‘‘permanent’’ from existing products, existing § 3035.18(b) requires
Customized Delivery Request on § 3035.18 and instead refer to a request the Postal Service to include additional
October 18, 2017, two weeks before the to add a non-experimental product or information to help facilitate the
market test expired. Customized price category based on an experimental Commission’s review of requests. As a
Delivery Request at 1. The Postal product to the applicable product list. result of the Commission’s review of the
Service noted that the Customized The proposed amendments would Metro Post and Customized Delivery
Delivery market test would expire on clarify that existing § 3035.18 applies to Requests, the Commission has identified
October 31, 2017, but asked the the addition of all non-experimental additional information that should be
Commission to expedite its review and products or price categories that were provided with a request. The public
issue a decision before November 1, based on an experimental product. versions of the Metro Post Requests did
2017. Id. The Postal Service To ensure that the Postal Service files not reveal the connection between the
acknowledged that ‘‘it is seeking the under the appropriate regulation, the proposed NSAs and the Metro Post
Commission’s approval on a shorter proposed amendments would identify experimental product. The proposed
timeline than provided for in the statute specific instances when the Postal NSAs offered same-day delivery service
and the Commission’s rules[]’’ because Service must file a request under just like the Metro Post experimental
of the complexity of the contract. Id. at existing § 3035.18. Proposed product. However, the Metro Post
1 n.1. § 3035.18(b) would require the Postal Requests redacted information stating
The Commission conditionally Service to file a request if the proposed that the proposed NSAs allow for same-
approved the Customized Delivery non-experimental product or price day delivery of packages and were
Request.11 However, the Commission category: offers the same (or similar) developed from Metro Post market test
expressed concern that the timing of the service as a former or current data.12 The Commission found that
request ‘‘frustrates the purpose of the experimental product; has the same redacting this information delayed the
Commission’s rules for making distinct cost or market characteristic as proceeding and the public’s ability to
experimental products permanent’’ and a former or current experimental prepare comments. Order No. 3069 at 6.
could be interpreted as disregarding the product; or uses (or is based on) data or The Commission also stated that the
requirements of existing § 3035.18. assumptions from a former or current redactions hindered transparency
Order No. 4196 at 7. The Commission market test proceeding. because interested persons reviewing
The proposed rules would also the requests lacked important
stated that it will review the existing
require the Postal Service to provide
market test regulations and revise them information that would inform their
advance notice of requests. If the Postal
as necessary. Id. comments: that the NSAs offered the
The 60-day notice requirement in Service seeks a Commission decision by
same service as the Metro Post
a certain date, the Postal Service must
existing § 3035.18(a) ensures that both experimental product. Id.
provide adequate notice to ensure the To address this issue, proposed
the Commission and interested persons
Commission and interested persons
have adequate time to evaluate and § 3035.18(c)(1) would require a request
have sufficient time to obtain necessary
respond to a request. See Order No. to identify the market test and docket
information and evaluate the request.
2173 at 27. Failing to provide adequate number that the proposed non-
Proposed § 3035.18(d) would require the
notice frustrates the intent of this rule. experimental product or price category
Postal Service to file a request at least
The Postal Service also failed to file is based on. Proposed § 3035.18(c)(2)
60 days before the requested decision
notices of the Customized Delivery and would require a request to explain how
date. For example, for the Customized
Metro Post Requests in the applicable the proposed non-experimental product
Delivery and Metro Post Requests, the
market test proceeding’s docket as or price category relates to a market test
Postal Service asked the Commission to
required by existing § 3035.18(c). These or an experimental product. For
issue its decision before or when the
notices are important for providing example, the Customized Delivery
market test ends to ensure continuity
transparency into the Commission’s Request clearly stated that the proposed
between the market test and proposed
review of requests by helping mailers NSAs. In those cases, proposed NSA ‘‘is modeled off the Customized
and the general public track a market § 3035.18(d) would require the Postal Delivery market test. . . .’’ Customized
test’s progress from an experimental Service to file the request at least 60 Delivery Request at 1. Proposed
product to a non-experimental market days before the applicable market test § 3035.18(c)(2) would require the Postal
dominant or competitive product. See ends. Service to provide a similar statement in
id. at 25–26. Failing to file notices in the The Commission retains the substance future requests.
applicable market test proceeding’s of existing § 3035.18(c), but the Another issue with the Metro Post
docket hinders transparency and the proposed amendments would move and Customized Delivery Requests was
daltland on DSKBBV9HB2PROD with PROPOSALS
public’s ability to comment on the paragraph (c) to proposed § 3035.18(e). that the requests did not include all of
request. Proposed § 3035.18(e) would delete the the information necessary for the
To address these issues, the proposed phrase ‘‘to make an experimental Commission to evaluate them. During a
amendments would clarify that existing product permanent.’’ This proposed rule market test, the Postal Service collects
11 Docket Nos. MC2018–13 and CP2018–26, Order
works in conjunction with proposed 12 See, e.g., Docket Nos. MC2016–39 and CP2016–
Conditionally Adding Parcel Select Contract 24 to
§ 3035.18(c)(1), discussed in more detail 48, Order Adding Priority Mail Contract 165 to the
the Competitive Product List, October 31, 2017 below, which would require a request to Competitive Product List, February 12, 2016, at 6
(Order No. 4196). identify the market test and docket (Order No. 3069).
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![Federal Register / Vol. 83, No. 181 / Tuesday, September 18, 2018 / Proposed Rules 47123
a second simple average CPI–U index is (1) Offers the same (or similar) service Commission for the initiation of a
similarly calculated for each subsequent as a former or current experimental rulemaking proceeding to amend its
fiscal year by summing the 12 monthly product; service contract regulations set forth at
CPI–U values for the previous fiscal year (2) Has the same distinct cost or 46 CFR part 530 in a manner consistent
and dividing the sum by 12 (Recent market characteristic as a former or with the requested exemption.’’
Average). Finally, the annual limitation current experimental product; or Petitioner alleges that ‘‘[t]he filing of
for the current fiscal year is calculated (3) Uses (or is based on) data or service contracts and amendments, and
by multiplying $10,000,000 by the assumptions from a former or current the publication of essential terms,
Recent Average divided by 214.463. The market test proceeding. represent a substantial administrative
result is expressed as a number, (c) A request filed under this section and regulatory burden’’ to its ‘‘ocean
rounded to the nearest dollar. shall: common carrier members.’’
(e) The formula for calculating the $10 (1) Identify the market test and docket
number that the proposed non- In order for the Commission to make
Million Adjusted Limitation is as
experimental product or price category a thorough evaluation of the requested
follows: $10 Million Adjusted
is based on; exemption and rulemaking presented in
Limitation = $10,000,000 * (Recent
Average/214.463). (2) Explain the relationship between the Petition, pursuant to 46 CFR 502.92,
the proposed non-experimental product interested parties are requested to
■ 3. Amend § 3035.16 by revising
or price category and market test or submit views or arguments in reply to
paragraphs (c) and (d) to read as follows:
experimental product; the Petition no later than November 19,
§ 3035.16 Exemption from dollar amount (3) Identify any assumptions from the 2018. Replies shall be sent to the
limitation. market test that the request uses or is Secretary by email to Secretary@fmc.gov
* * * * * based on; or by mail to Federal Maritime
(c) The calculation of the $50 Million (4) Include all data from data Commission, 800 North Capitol Street
Adjusted Limitation involves the collection reports in the financial NW, Washington, DC 20573–0001, and
following steps. First, a simple average model, or separately identify and replies shall be served on Petitioner’s
CPI–U index was calculated for fiscal explain any differences between the counsel, Wayne R. Rhode, Cozen O’
year 2008 by summing the monthly data collection reports and the data used Connor, 1200 19th St. NW, Suite 300,
CPI–U values from October 2007 to support the financial model; and Washington, DC 20036, wrohde@
through September 2008 and dividing (5) Quantify the product specific costs cozen.com.
the sum by 12 (Base Average). The associated with the development of the Non-confidential filings may be
resulting Base Average is 214.463. Then, market test; that is, costs incurred before
submitted in hard copy to the Secretary
a second simple average CPI–U index is the market test was implemented.
at the above address or by email as a
similarly calculated for each subsequent (d) If the Postal Service seeks a
PDF attachment to Secretary@fmc.gov
fiscal year by summing the 12 monthly Commission decision by a certain date,
and include in the subject line: P3–18
CPI–U values for the previous fiscal year the Postal Service shall file a request
under this section at least 60 days before (Commenter/Company). Confidential
and dividing the sum by 12 (Recent
the requested decision date. filings should not be filed by email. A
Average). Finally, the annual limitation
(e) The Postal Service shall also file a confidential filing must be filed with the
for the current fiscal year is calculated
notice of its request under this section Secretary in hard copy only, and be
by multiplying $50,000,000 by the
in the market test proceeding’s docket. accompanied by a transmittal letter that
Recent Average divided by 214.463. The
result is expressed as a number, This notice shall include the applicable identifies the filing as ‘‘Confidential-
rounded to the nearest dollar. docket number(s) for the proceeding Restricted’’ and describes the nature and
evaluating the request. extent of the confidential treatment
(d) The formula for calculating the
requested. The Commission will
$50 Million Adjusted Limitation is as [FR Doc. 2018–20287 Filed 9–17–18; 8:45 am]
provide confidential treatment to the
follows: $50 Million Adjusted BILLING CODE 7710–FW–P
extent allowed by law for confidential
Limitation = $50,000,000 * (Recent
Average/214.463). submissions, or parts of submissions, for
which confidentiality has been
■ 4. Revise § 3035.18 to read as follows: FEDERAL MARITIME COMMISSION requested. When a confidential filing is
§ 3035.18 Request to add a non- 46 CFR Part 530 submitted, there must also be submitted
experimental product or price category a public version of the filing. Such
based on an experimental product to the [Petition No. P3–18] public filing version shall exclude
product list. confidential materials, and shall
Petition of the World Shipping Council indicate on the cover page and on each
(a) If the Postal Service seeks to add
for an Exemption From Certain affected page ‘‘Confidential materials
a non-experimental product or price
Provisions of the Shipping Act of 1984, excluded.’’ Public versions of
category based on a former or current
as Amended, and for a Rulemaking confidential filings may be submitted by
experimental product to the market
Proceeding; Notice of Filing and email. The Petition will be posted on
dominant or competitive product list,
Request for Comments
the Postal Service shall file a request, the Commission’s website at http://
pursuant to 39 U.S.C. 3642 and part Notice is hereby given that the World www.fmc.gov/P3-18. Replies filed in
daltland on DSKBBV9HB2PROD with PROPOSALS
3020, subpart B of this chapter, to add Shipping Council (‘‘Petitioner’’) has response to the Petition will also be
a non-experimental product or price petitioned the Commission pursuant to posted on the Commission’s website at
category to the applicable product list. 46 CFR 502.92 ‘‘. . . for an exemption this location.
(b) The Postal Service shall comply from the service contract filing and
Rachel E. Dickon,
with the requirements specified in essential terms publication
paragraphs (c) through (e) of this section requirements set forth at 46 U.S.C. Secretary.
of this section if the proposed non- 40502(b) and (d), respectively . . .’’ [FR Doc. 2018–20167 Filed 9–17–18; 8:45 am]
experimental product or price category: Petitioner ‘‘. . . further petitions the BILLING CODE 6731–AA–P
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Document Created: 2018-09-18 01:19:00
Document Modified: 2018-09-18 01:19:00
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Proposed Rules | |
| Action | Notice of proposed rulemaking. | |
| Dates | Comments are due on or before October 18, 2018. | |
| Contact | David A. Trissell, General Counsel, at 202-789-6820. | |
| FR Citation | 83 FR 47119 | |
| CFR Associated | Administrative Practice and Procedure and Postal Service |
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