Market Dominant Postal Products

<RULE> POSTAL REGULATORY COMMISSION <CFR>39 CFR Part 3030</CFR> <DEPDOC>[Docket No. RM2020-5; Order No. 8708]</DEPDOC> <RIN>RIN 3211-AA27</RIN> <SUBJECT>Market Dominant Postal Products</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Postal Regulatory Commission. <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Commission is adopting amendments to its rules concerning rate incentives for Market Dominant products. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> <E T="03">Effective:</E> March 28, 2025. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> David A. Trissell, General Counsel, at 202-789-6820. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">Table of Contents</HD> <EXTRACT> <FP SOURCE="FP-2">I. Background</FP> <FP SOURCE="FP-2">II. Basis for Final Rules</FP> <FP SOURCE="FP-2">III. Final Rules</FP> </EXTRACT> <HD SOURCE="HD1">I. Background</HD> In its general Market Dominant rate adjustment filings, the Postal Service routinely proposes to offer rate incentives in the form of promotions that reduce rates by providing discounts, rebates, or credits to participating mailers of certain types of mailpieces. Typically, such promotions are offered for several months during a particular calendar year for certain mailpieces in the First-Class Mail and USPS Marketing Mail classes. If the Commission approves, then the promotion may be offered again, with or without modifications, in the next calendar year. Each rate incentive offered by the Postal Service is either a rate of general applicability or a rate not of general applicability. A rate incentive of general applicability may be eligible for inclusion in the percentage change in rates calculation (provided that it satisfies all the applicable criteria under the Commission's rules), which will allow for the Postal Service to generate price cap authority for the applicable class of mail. By contrast, a rate incentive not of general applicability has been ineligible for inclusion in the percentage change in rates calculation, unless mail volumes sent under it are included as though they paid the appropriate rates of general applicability. The Commission previously adopted regulations concerning rate incentives for Market Dominant products. <SU>1</SU> <FTREF/> However, in connection with an appeal, the Commission stated that it would reconsider Order No. 5510 and that it “does not intend to enforce Order No. 5510 during the reconsideration period.”  <SU>2</SU> <FTREF/> In Order No. 6325, the Commission proposed modifying its rules and sought comments on its proposal. <SU>3</SU> <FTREF/> Subsequently, the Commission sought supplemental comments. <SU>4</SU> <FTREF/> Having considered the comments that it received, the Commission proposed further changes to its rules in Order No. 7559. <SU>5</SU> <FTREF/> <FTNT> <SU>1</SU>  Docket No. RM2020-5, Order Adopting Final Rules Regarding Rate Incentives for Market Dominant Products, May 15, 2020 (Order No. 5510). </FTNT> <FTNT> <SU>2</SU>  Docket No. RM2020-5, Notice of Intent to Reconsider, August 26, 2020, at 2 (Order No. 5655); <E T="03">see U.S. Postal Serv.</E> v. <E T="03">Postal Reg. Comm'n,</E> Joint Motion for Voluntary Dismissal and Vacatur, No. 20-1208 (D.C. Cir. Sept. 11, 2020). </FTNT> <FTNT> <SU>3</SU>  Docket No. RM2020-5, Notice of Proposed Rulemaking to Amend Rules Regarding Rate Incentives for Market Dominant Products, November 14, 2022 (Order No. 6325). </FTNT> <FTNT> <SU>4</SU>  Docket No. RM2020-5, Supplemental Notice of Proposed Rulemaking to Amend Rules Regarding Rate Incentives for Market Dominant Products, November 17, 2023 (Order No. 6801). </FTNT> <FTNT> <SU>5</SU>  Docket No. RM2020-5, Second Supplemental Notice of Proposed Rulemaking to Amend Rules Regarding Rate Incentives for Market Dominant Products, September 20, 2024 (Order No. 7559). </FTNT> <HD SOURCE="HD1">II. Basis for Rule Change</HD> The Commission modifies its rules by revising the criteria that a rate incentive must satisfy to be included in the percentage change in rates calculation; revises the definition of “rate of general applicability;” and revises filing and reporting requirements. First, the Commission creates a mechanism allowing certain rate incentives that are not rates of general applicability to be included in the percentage change in rates calculation. Second, the Commission removes the not-enforced requirement that a rate incentive must be made available to all mailers equally on the same terms and conditions to be included in the percentage change in rates calculation. Third, the Commission revises the definition of “rate of general applicability” in § 3030.101. This revision clarifies a potential ambiguity. The Commission also revises the definition of “rate of general applicability” as initially proposed in Order No. 6325 to clarify that to qualify as a rate of general applicability, a rate incentive cannot have eligibility criteria based on historical mail volumes or prior participation in a rate incentive or promotion. Fourth, the Commission revises filing requirements to ensure that the Postal Service provides sufficient information at the outset of a Market Dominant rate adjustment proceeding. Fifth, the Commission adds a provision authorizing it to require the submission of information to ensure that rate incentives included in the percentage change in rates calculation comply with applicable requirements. The mechanism allowing certain rate incentives that are not rates of general applicability to be included in the percentage change in rates calculation allows a rate incentive for which a mailer's eligibility depends on the mailer's increasing its volumes of a product (or multiple products) to be included in the percentage change in rates calculation. The Commission creates this mechanism to encourage the Postal Service to develop and offer such rate incentives, with the goal of combatting volume decline. The Commission also removes the not-enforced requirement that a rate incentive must be made available to all mailers equally on the same terms and conditions to be included in the percentage change in rates calculation. The Commission removes this requirement because fairness concerns can be addressed through other means and because this requirement has the potential to cause confusion. The Commission revises the definition of “rate of general applicability” in § 3030.101 by adding the word “only” to the sentence addressing rates benefiting a single mailer so that the sentence reads as follows: “A rate is not a rate of general applicability if it benefits only a single mailer.” This change removes a potential ambiguity in the sentence and ensures that the sentence reflects the Commission's intent in adding the sentence to the definition. The Commission also adopts the changes to the definition of “rate of general applicability” that it proposed in Order No. 6325. <E T="03">See</E> Order No. 6325 at 26-34. These changes to the definition of “rate of general applicability” in § 3030.101 clarify what rate incentives may qualify for inclusion in the percentage change in rates calculation as rates of general applicability. Under the Commission's existing rules “[a] rate is not a rate of general applicability if eligibility for the rate is dependent on factors other than the characteristics of the mail to which the rate applies[.]” 39 CFR 3030.101(j). As initially proposed in Order No. 6325, the changes add an additional sentence to clarify that a rate incentive is not a rate of general applicability if eligibility for the rate is dependent wholly or partially on the volume of mail sent by a mailer in a past year or years or on the participation by a mailer in a rate incentive or promotion in a past year or years. The Commission modifies its rules for the technical documentation required to support proposed rate incentives. These changes implement changes conforming to the Commission's changes to its rules for including rate incentives in the percentage change in rates calculation. Thus, under the revision, the Commission's rules require a statement describing the purpose of the rate incentive. Similarly, and to conform with the change to the definition of “rate of general applicability,” under the revision, the rule requires a statement affirming that a rate incentive proposed to be included in the percentage change in rate calculation will not benefit only a single mailer. In addition, the Commission requires each request to include a rate incentive in the percentage change in rates calculation to include an estimate of the effect of the rate incentive on mailers in the affected class that do not participate in the rate incentive, as well as all information and calculations relied upon to develop such estimate. The Commission makes this change for transparency. This change ensures that the public is provided notice of the estimated effect of the proposed rate incentive on non-participating mailers in the affected class. The Commission requires the information and calculations relied upon to develop the estimate to ensure that it understands the basis for the estimate and to provide transparency to the public and affected stakeholders. The Commission also adds a provision authorizing it to require the submission of information to ensure that rate incentives included in the percentage change in rates calculation comply with applicable requirements. In the Commission's experience, reporting requirements are important to ensure that the Commission understands how rate incentives operate in practice. The Commission codifies its authority to impose such reporting requirements. <HD SOURCE="HD1">III. Final Rules</HD> <LSTSUB> <HD SOURCE="HED">List of Subjects in 39 CFR Part 303 ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 17k characters. 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