83 FR 52154 - Mail Preparation Changes

POSTAL REGULATORY COMMISSION

Federal Register Volume 83, Issue 200 (October 16, 2018)

The Commission adopts a final rule concerning mail preparation changes. The rule as adopted removes reference to procedures relying on the existence of a substantive standard for mail preparation changes in response to the recent decision in United States Postal Serv. v. Postal Reg. Comm'n, 886 F.3d 1253 (D.C. Cir. 2018).

[Federal Register Volume 83, Number 200 (Tuesday, October 16, 2018)]
[Rules and Regulations]
[Pages 52154-52157]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-22477]


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POSTAL REGULATORY COMMISSION

39 CFR Part 3010

[Docket No. RM2016-6; Order No. 4850]


Mail Preparation Changes

AGENCY: Postal Regulatory Commission.

ACTION: Final rule.

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SUMMARY: The Commission adopts a final rule concerning mail preparation 
changes. The rule as adopted removes reference to procedures relying on 
the existence of a substantive standard for mail preparation changes in 
response to the recent decision in United States Postal Serv. v. Postal 
Reg. Comm'n, 886 F.3d 1253 (D.C. Cir. 2018).

DATES: Effective November 15, 2018.

FOR FURTHER INFORMATION CONTACT: David A. Trissell, General Counsel, at 
202-789-6820.

SUPPLEMENTARY INFORMATION:

[[Page 52155]]

Table of Contents

I. Introduction
II. Background
III. Review of Comments
IV. Commission Analysis
V. Regulatory Flexibility Act Analysis
VI. Ordering Paragraphs

I. Introduction

    In this Order, the Commission adopts a final rule concerning mail 
preparation changes. The final rule partially rescinds an existing 
Commission rule and is located at 39 CFR part 3010. The rule as adopted 
removes reference to procedures relying on the existence of a 
substantive standard for mail preparation changes in response to the 
recent decision in United States Postal Serv. v. Postal Reg. Comm'n, 
886 F.3d 1253 (D.C. Cir. 2018).

II. Background

    In Order No. 3047, the Commission developed a substantive standard 
to determine when a mail preparation change would constitute a ``change 
in rates'' under 39 U.S.C. 3622.\1\ The standard established by the 
Commission in Order No. 3047 provided that mail preparation changes 
could have rate effects when they resulted in the deletion or 
redefinition of a rate cell as set forth by Sec.  3010.23(d)(2).
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    \1\ The standard in Order No. 3047 was developed in response to 
remand from the United States Court of Appeals for the District of 
Columbia (the Court) in United States Postal Serv. v. Postal Reg. 
Comm'n, 785 F.3d 740 (D.C. Cir. 2015). For a complete history of the 
proceedings underlying the Commission's promulgation of a standard 
for mail preparation changes, see Docket No. R2013-10, Order on 
Price Adjustments for Market Dominant Products and Related Mail 
Classification Changes, November 21, 2013, at 5-35 (Order No. 1890); 
Docket No. R2013-10R, Order Resolving Issues on Remand, January 22, 
2016 (Order No. 3047); Docket No. R2013-10R, Order Resolving Motion 
for Reconsideration of Commission Order No. 3047, July 20, 2016 
(Order No. 3441).
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    In conjunction with Order No. 3047, the Commission initiated a 
rulemaking proceeding to develop procedures to ensure that the Postal 
Service properly applies the Commission's standard when making a 
determination of whether a mail preparation change has a rate 
effect.\2\ The final rule created a process that required the Postal 
Service to: (1) Provide public notice of all mail preparation changes 
in a single source; (2) affirmatively designate whether or not a change 
to a mail preparation requirement implicates the price cap; and (3) 
show by a preponderance of the evidence, if the designation is 
challenged, that the price cap does not apply to the change.\3\ The 
Postal Service filed petitions for review challenging the Commission's 
standard in Order No. 3047 and the final rule in Order No. 4393.
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    \2\ Order Adopting Final Procedural Rule for Mail Preparation 
Changes, January 25, 2018, at 22-23 (Order No. 4393). The Order 
Adopting Final Procedural Rule for Mail Preparation Changes was 
published in the Federal Register on February 1, 2018. See 83 FR 
4585 (Feb. 1, 2018).
    \3\ See Petition for Review, United States Postal Serv. v. 
Postal Reg. Comm'n, 886 F.3d 1253 (D.C. Cir. 2018); Petition for 
Review, United States Postal Serv. v. Postal Reg. Comm'n, No. 18-
1059 (D.C. Cir. Feb. 26, 2018).
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    Shortly after the Commission adopted the final rule in this docket, 
the Court issued its decision in United States Postal Serv. v. Postal 
Reg. Comm'n, 886 F.3d 1253 (D.C. Cir. 2018) vacating the Commission's 
standard in Order No. 3047. In response to the Court's decision, the 
Commission and the Postal Service filed a joint motion to remand the 
petition for review of the final rule back to the Commission for 
further proceedings.\4\
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    \4\ See Unopposed Motion to Remand Case, United States Postal 
Serv. v. Postal Reg. Comm'n, No. 18-1059 (D.C. Cir. May 10, 2018).
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    On August 9, 2018, the Commission issued the notice of proposed 
rulemaking (NPR), setting forth a proposed rescission to the rule set 
forth in Sec.  3010.23(d)(5) that created procedures concerning mail 
preparation changes.\5\ The NPR also provided an opportunity for public 
comment. Order No. 4751 at 5. The Commission proposed removing the 
components of the rule that require existence of a standard in order to 
be enforced, specifically: (1) The affirmative designation requirement; 
and (2) the evidentiary standard. Id. at 4. As explained in the NPR, 
both the affirmative designation and evidentiary burden parts of the 
rule were predicated on the existence of a substantive standard. Id. As 
that standard was vacated and a new standard does not yet exist, the 
proposed rule removed the affirmative designation requirement and 
evidentiary burden component from paragraph (d)(5) of this section. In 
the NPR, the Commission proposed to retain the publication requirement 
of the rule as it would remain independent of any standard. Id.
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    \5\ Notice of Proposed Rulemaking, August 9, 2018 (Order No. 
4751). On the same day, the Commission filed an advance notice of 
proposed rulemaking (ANPR) to seek proposals for a new standard and 
process to determine when a mail preparation change requires price 
cap compliance in accordance with the Court's decision vacating the 
standard. Docket No. RM2018-11, Advance Notice of Proposed 
Rulemaking, August 9, 2018 (Order No. 4750). The ANPR was published 
in the Federal Register, see 83 FR 40485 (Aug. 15, 2018).
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III. Review of Comments

    On September 13, 2018, the Commission received comments in response 
to the NPR from the Association for Postal Commerce (PostCom), the 
Postal Service, and the Public Representative.\6\
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    \6\ Comments of the Association for Postal Commerce, September 
13, 2018 (PostCom Comments); United States Postal Service Comments 
on Notice of Proposed Rulemaking, September 13, 2018 (Postal Service 
Comments); Public Representative Comments on Notice of Proposed 
Rulemaking, September 13, 2018 (PR Comments).
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    PostCom Comments. PostCom supports the premise behind partial 
rescission of the rule, acknowledging that the rule referencing a 
standard ``cannot be enforced in the absence of a standard.'' PostCom 
Comments at 1. However, PostCom does not support rescission of the rule 
at this time. Id. Instead, PostCom suggests the Commission 
``temporarily suspend enforcement of the portion of the rule that the 
Commission is proposing to eliminate.'' Id.
    To support its request for the Commission to temporarily suspend 
enforcement of the rule as opposed to rescission through rulemaking, 
PostCom points to the Commission's intention to develop an appropriate 
standard in a separate rulemaking.\7\ PostCom submits that elimination 
of the portion of the rule relying on a substantive standard is 
unnecessary because the current procedures ``will apply equally well to 
the final standard established by the Commission.'' PostCom Comments at 
2. PostCom states that the procedures only rely on the ``existence of'' 
a substantive standard and not the contents of that substantive 
standard. Id. at 3. PostCom points to the fact that the Commission 
itself indicated the separation between the substantive standard and 
the applicability of the final procedural rule, noting that the 
Commission stated that the Court's disagreement with the substantive 
standard would not affect the final rule. Id. As a result, PostCom 
submits that it is ``imprudent to eliminate these procedures at this 
time'' and that elimination of the rule now will only require more 
rulemaking in the future should the Commission set a new standard. Id.
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    \7\ Id. at 2 (citing Order No. 4751 at 4; Order No. 4750).
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    Postal Service Comments. The Postal Service supports partial 
rescission of the rule that relies on existence of a substantive 
standard. Postal Service Comments at 1-3. In the Postal Service's view, 
``compliance with the procedural rule necessarily would require 
application of the substantive standard'' for mail preparation changes. 
Id. at 2. The Postal Service agrees with the Commission's proposal to 
rescind the portion of the rule that ``requires the

[[Page 52156]]

Postal Service affirmatively to designate whether a given mail 
preparation change requires compliance with the price cap rules'' and 
the portion concerning the evidentiary burden. Id.
    The Postal Service also indicates that it has already complied with 
the publication requirement that the Commission proposes to retain in 
the rule. Id. at 3.
    Public Representative Comments. The Public Representative supports 
the Commission's proposal to rescind portions of the procedural rule 
concerning mail preparation changes ``subject to reinstatement 
depending upon the outcome of the Commission's review of the applicable 
standard for determining whether a rate increase is in compliance with 
Sec.  3010.23(d)(2).'' PR Comments at 1-2.
    He notes that it would be futile to require the Postal Service to 
affirmatively designate whether a change requires compliance with Sec.  
3010.23(d)(2) when there is no standard to measure compliance. Id. at 
7. With respect to the evidentiary portion of the rule, requiring the 
Postal Service to provide by a preponderance of the evidence that a 
mail preparation change does not require compliance with Sec.  
3010.23(d)(2), he contends that compliance with this provision would be 
``a very difficult proposition without any standard to serve as a 
target.'' Id. at 8. Further, parties would be ``unable to determine the 
information needed to rebut the Postal Service's determination'' 
without an operative standard. Id.
    The Public Representative also supports the Commission's retention 
of the single source reporting requirement. Id. at 5-6.

IV. Commission Analysis

    The comments reflect general support for the removal of portions of 
the procedural rule concerning mail preparation changes that rely on 
the existence of a substantive standard. PostCom suggests an 
alternative procedure to temporarily suspend enforcement of the rule as 
opposed to formally rescinding portions of this rulemaking.
    When promulgating the final rule concerning mail preparation 
changes, the Commission intended for it to apply regardless of how the 
Court modified the standard. Order No. 4393 at 14. However, the Court 
did not modify the standard, it vacated it in its entirety. The 
components of the procedural rule in Sec.  3010.23(d)(5) requiring the 
Postal Service to provide an affirmative designation of compliance and 
setting an evidentiary burden require the existence of a standard. 
While the Commission has initiated an advance notice of proposed 
rulemaking to gather proposals for a new standard, the Commission 
cannot predict the outcome of those proceedings. See Order No. 4750.
    Although PostCom may be correct that a temporary suspension of a 
procedural rule is within the Commission's authority, a rulemaking is 
more appropriate for the present situation. As this procedural rule was 
promulgated via notice and comment rulemaking, the Commission will use 
the same process to rescind a major portion of the rule.\8\
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    \8\ See Perez v. Mortgage Bankers Ass'n, 135 S.Ct. 1199, 1206 
(2015) (citing F.C.C. v. Fox Television Stations, Inc., 556 U.S. 
502, 515 (2009) (Section 1 of the Administrative Procedure Act 
mandates that ``agencies use the same procedures when they amend or 
repeal a rule as they used to issue the rule in the first 
instance.'')).
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    Accordingly, the Commission adopts a final rule that rescinds two 
components of the rule requiring an affirmative designation and 
evidentiary burden. For the affirmative designation portion of the 
rule, the Postal Service would be unable to designate whether a 
particular mail preparation change requires compliance with Sec.  
3010.23(d)(2) because it no longer has a standard to apply to determine 
compliance. Similarly, the Postal Service could not show it made a 
correct determination by a preponderance of the evidence without having 
a standard. Parties would also be unable to rebut the Postal Service's 
determination with information absent a standard. For these reasons, 
removing those portions of the rule is appropriate.
    The remaining part of the rule requires the Postal Service to 
provide published notice of all mail preparation changes in a single 
source. The Commission retains this portion of the rule because it 
provides notice and transparency for all mail preparation changes and 
does not rely on existence of a standard.\9\ As noted in the NPR, the 
Postal Service has complied with this requirement and the Postal 
Service states in its comments that it will continue to comply with 
this portion of the rule. Accordingly, the Commission revises Sec.  
3010.23(d)(5) to require the Postal Service to publish notice of all 
mail preparation changes in a single, publically available source.
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    \9\ See also Order No. 4393 at 8-10 (justification for the 
reporting requirement).
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V. Regulatory Flexibility Act Analysis

    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).
    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 an impact on participation in 
Commission proceedings, but impose no further financial obligation upon 
any entity. For entities other than the United Stated Postal Service, 
participation is strictly voluntary. 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.

VI. Ordering Paragraphs

    It is ordered:
    1. Part 3010 of title 39, Code of Federal Regulations, is revised 
as set forth below the signature of this Order, effective 30 days after 
publication in the Federal Register.
    2. 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 3010

    Administrative practice and procedure, Postal Service.

    For the reasons discussed in the preamble, the Commission amends 
chapter III of title 39 of the Code of Federal Regulations as follows:

Part 3010--REGULATION OF RATES FOR MARKET DOMINANT PRODUCTS

0
1. The authority citation of part 3010 continues to read as follows:

    Authority: 39 U.S.C. 503; 3662.


0
2. Amend Sec.  3010.23 by revising paragraph (d)(5) to read as follows:


Sec.  3010.23   Calculation of percentage change in rates.

* * * * *
    (d) * * *
    (5) Procedures for mail preparation changes. The Postal Service 
shall

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provide published notice of all mail preparation changes in a single, 
publicly available source. The Postal Service shall file notice with 
the Commission of the single source it will use to provide published 
notice of all mail preparation changes.
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[FR Doc. 2018-22477 Filed 10-15-18; 8:45 am]
BILLING CODE 7710-FW-P