Notice2022-10899
Mail Classification Schedule
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
May 20, 2022
Issuing agencies
Postal Regulatory Commission
Abstract
The Commission is initiating a filing requesting an examination of the potential need to make modifications to the Mail Classification Schedule. This notice informs the public of the filing, invites public comment, and takes other administrative steps.
Full Text
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<title>Federal Register, Volume 87 Issue 98 (Friday, May 20, 2022)</title>
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[Federal Register Volume 87, Number 98 (Friday, May 20, 2022)]
[Notices]
[Pages 31007-31009]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-10899]
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POSTAL REGULATORY COMMISSION
[Docket No. MC2022-60; Order No. 6174]
Mail Classification Schedule
AGENCY: Postal Regulatory Commission.
ACTION: Notice.
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SUMMARY: The Commission is initiating a filing requesting an
examination of the potential need to make modifications to the Mail
Classification Schedule. This notice informs the public of the filing,
invites public comment, and takes other administrative steps.
DATES: Comments are due: June 30, 2022.
ADDRESSES: Submit comments electronically via the Commission's Filing
Online system at <a href="http://www.prc.gov">http://www.prc.gov</a>. 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. Background
III. Notice of Commission Action
IV. Ordering Paragraphs
I. Introduction
The Postal Regulatory Commission (Commission) initiates the instant
docket to examine the potential need to make a modification to the Mail
Classification Schedule (MCS) in order to fulfill the Commission's
responsibilities under the Postal Accountability and Enhancement Act
(PAEA), Public Law 109-435, 120 Stat. 3198 (2006), the Postal Service
Reform Act of 2022, Public Law 117-89, 136 Stat. 1127 (2022), and
pursuant to 39 CFR 3040 subpart D.\1\ Specifically, the Commission
seeks information on the Postal Service's recent pilot program in which
it added to the accepted payment methods, at specifically-identified
Post Offices, in order to allow postal retail customers to exchange
payroll and business checks for stored value Gift Cards (Pilot
Program). The Commission seeks the information to determine whether the
Pilot Program has changed the nature of the Competitive product at
issue (Special Services--Greeting Cards and Stationery) to the degree
that the Gift Cards price category (or an undefined sub-component) may
be categorized as a non-postal product.\2\ A finding that the price
category, product, or sub-component is a non-postal product would
require its termination.\3\
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\1\ 39 CFR 3040 subpart D contains multiple requirements for
proposals of the Commission to modify the Competitive product list,
including an indication of whether a proposal would add, move, or
remove a product, as well as providing justification supporting the
proposal. In this instance, it is not appropriate to include this
information, as the proposal is a vehicle to receive information to
make a determination of whether a concerted proposed action is
required.
\2\ As discussed further below, the Commission, in approving the
Gift Cards price category within the Greeting Cards and Stationery
product, determined that it was appropriately a postal product (as
opposed to a non-postal product).
\3\ 39 U.S.C. 404(e) details the statutory authority for
terminating non-postal products, and the statutory authority is
noted in multiple precedents, including a 2010 ruling in the United
States Court of Appeals for the District of Columbia Circuit, which
noted that ``Congress[. . .] provide[d] that the Postal Regulatory
Commission was to conduct a review of `each nonpostal service
offered by the Postal Service' . . . to determine whether it should
be terminated. . . .'' USPS v. Postal Regul. Comm'n, 599 F.3d 705,
707 (D.C. Cir. 2010). Additionally, the United States Postal Service
Office of Inspector General published a management advisory report
in 2012 that stated that the PAEA ``repealed the Postal Service's
authority to offer `non-postal services' and prohibited offering any
new non-postal services.'' United States Postal Service, Office of
Inspector General, Report No. DA-MA-12-005, 21st Century Post
Office: Non-Postal Products and Services, July 16, 2012, at 9,
available at <a href="https://www.uspsoig.gov/sites/default/files/document-library-files/2015/DA-MA-12-005.pdf">https://www.uspsoig.gov/sites/default/files/document-library-files/2015/DA-MA-12-005.pdf</a>.
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II. Background
In FY 2014, the Commission approved the Postal Service's sale of
Gift Cards \4\ as a product that was ``likely to be mailed, similar to
greeting cards and stationery'' and was often involved in the sale of
other postal retail products such as greeting cards.\5\ In the Docket
No. MC2014-26 Request, the Postal Service stated that it ``d[id] not
intend to use th[e] filing as a step into offering banking services,''
and if any Postal Service proposal should ever offer banking services,
``such proposals would be done in a separate filing.'' See Docket No.
MC2014-26, Request, Attachment B at 3 n.2.
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\4\ Gift Cards is a price category within the Gift Cards and
Stationery product. The Commission and the Postal Service have both
referred to Gift Cards as a product in multiple filings, and for the
purposes of this inquiry, the Commission will continue to do so
throughout this Order to avoid confusion.
\5\ See Docket No. MC2014-26, Request of the United States
Postal Service to Add Gift Cards as a New Price Category in the
Greeting Cards and Stationery Product, June 9, 2014, Attachment B at
7 (Docket No. MC2014-26 Request). See also Docket No. MC2014-26,
Order Granting Request to Add Gift Cards to the Competitive Product
List, August 8, 2014 (Order No. 2145).
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Following the Postal Service's publication of the FY 2021 Annual
Compliance Report (ACR), the Commission submitted an information
request for the Postal Service to provide additional insight regarding
a pilot program to allow postal retail customers to cash payroll and
business checks in exchange for stored value Gift Cards.\6\
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\6\ See Docket No. ACR2021, Commission Information Request No.
1, January 7, 2022 (Docket No. ACR2021, CIR No. 1). See also Docket
No. ACR2021, Responses of the United States Postal Service to
Questions 1-7 of Commission Information Request No. 2, PowerPoint
file ``CIR.2.Q.4.Pictures of Promo Items.pptx,'' February 4, 2022
(Docket No. ACR2021, Response to CIR No. 2).
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[[Page 31008]]
The Postal Service provided a response to Docket No. ACR2021, CIR
No. 1 detailing that in FY 2021, the Postal Service initiated such a
Pilot Program, stating that it was ``merely testing a new form of
payment for an established postal product--gift cards.'' \7\
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\7\ See Docket No. ACR2021, Responses of the United States
Postal Service to Questions 1-2 of Commission Information Request
No. 1, January 14, 2022, question 1.c. (Docket No. ACR2021, Response
to CIR No. 1).
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The Postal Service initiated the Pilot Program on September 13,
2021, at four Post Office retail locations in response to a request
from a stakeholder that identified the program as ``an initiative that
could potentially be useful for a segment of consumers.'' \8\ The
Postal Service stated that in order to gain insight into this market,
it considered secondary research, including a 2019 survey by the
Federal Deposit Insurance Corporation called ``How America Banks:
Household Use of Banking and Financial Services'' as well as USPS
Office of Inspector General reports on potential postal financial
services. Id. question 1.b.
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\8\ See Docket No. ACR2021, Response to CIR No. 1, questions
1.a.-1.b. The four locations are: Baychester Post Office, 1525 E Gun
Hill Road, Bronx, NY 10469; Bailey Crossroads Post Office, 6021
Leesburg Pike, Falls Church, VA 22041; National Capitol (Dorothy
Height) Post Office, 2 Massachusetts Ave. NE, Washington, DC 20002;
and Baltimore Post Office, 900 E Fayette Street, Baltimore, MD
21233. Id. question 1.a. Since all four locations already offered
Gift Cards, the Postal Service asserts that minimal training was
necessary for the 28 clerks and 8 management staff to allow for the
additional form of payment. Id. questions 1.o.-1.p. The training was
``[i]n partnership with a major postal union'' and ``consisted of
content providing a background of the pilot, . . . discussions of
check handling processes, standard work instruction for the
transaction including Point-of-Sale workflow, and FAQs.'' Id.
question 1.p.
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Under the Pilot Program, the additional forms of payment accepted
for Gift Cards at the four test sites are payroll or business checks,
defined as a printed check with a company's name pre-printed, made
payable to the customer, and accepted in accordance with Handbook F-
101. See Docket No. ACR2021, Response to CIR No. 1, questions 1.a.-
1.q.; see also Docket No. ACR2021, Response to CIR No. 2, question 5.
The customer is charged a fee of $5.95 for a variable Gift Card up to
$500 (or $5.95 per Gift Card, if the customer elects to put the value
on multiple cards), the total amount loaded on the Gift Card(s) cannot
exceed $500 per day per customer, and no cash is disbursed to the
customer. As with the policy for all Gift Card purchases, once the Gift
Card is activated it cannot be returned for a refund or credit. See
Docket No. ACR2021, Response to CIR No. 1, questions 1.a.-1.q.
While the Pilot Program only accepts business and payroll checks
made payable to the customer in connection with the sale of Gift Cards
at the four test sites, the Postal Service noted that for many years it
has cashed or redeemed salary checks or Money Orders in a limited
number of circumstances. See Docket No. ACR2021, Response to CIR No. 2,
question 5. Specifically, the Postal Service has been issuing Money
Orders since the Civil War, and for the past 50 years, the Postal
Service has been cashing Postal Service-issued salary checks and Money
Orders at no additional charge. Id. The Postal Service also noted that
in the last 10 years, and ``in cooperation with the United States
Treasury, the Postal Service has cashed Treasury checks for a nominal
fee.'' Id. It further noted that ``[c]ommerical checks have long been
accepted as payment for purchase of postage.'' Id.
The Postal Service stated in Docket No. ACR2021, Response to CIR
No. 2 that ``no new products or services are involved,'' but the market
research referred to in Docket No. ACR2021, Response to CIR No. 1
suggested that the new payment option is targeted specifically at a
market looking for financial services. Compare Docket No. ACR2021,
Response to CIR No. 2, question 6, with Docket No. ACR2021, Response to
CIR No. 1, question 1.b. The Postal Service's own promotional materials
market the product using the language, ``Need to `cash' a check?'' \9\
The Postal Service's payment change coupled with changes in the
marketing and planned usage of the product have the potential to change
the nature of the product, thereby necessitating the examination of the
impact of the Pilot Program to the underlying Gift Cards product.
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\9\ See Docket No. ACR2021, Response to CIR No. 2, PowerPoint
file ``CIR.2.Q.4.Pictures of Promo Items.pptx.''
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Additionally, although the Postal Service asserts that the Gift
Cards product was already approved by the Commission, the approval of
the product was based on the premise that the availability of Gift
Cards ``stimulates demand for postal services'' and ``enhances the use
of the mail.'' See Order No. 2145 at 4. The Postal Service's evidence
in Docket No. MC2014-26 demonstrated at the time that the majority of
Gift Cards sales not only involved the purchase of other postal items
but were more likely to be mailed than Gift Cards purchased elsewhere.
Id. at 5-6. From September 13, 2021, to January 12, 2022, a total of
six Gift Cards were purchased under the Pilot Program (using the
business or payroll check payment method) generating a total fee
revenue of $35.70. See Docket No. ACR2021, Response to CIR No. 1,
questions 1.d., 1.g., 1.h. Additionally, the Postal Service provided
the total fee revenue for the Gift Cards associated with business
checks in Quarter 2 of $5.95, representing one single transaction.\10\
The Commission notes that under the current Pilot Program, none of the
transactions have involved the sale of other postal products.
Furthermore, the Postal Service does not track whether Gift Cards are
mailed (regardless of the method of purchase) and has not made an
attempt as of yet to determine via surveys or other tools whether
customers are likely to mail the Gift Cards purchased under the Pilot
Program. See Docket No. ACR2021, Response to CIR No. 2, questions 2-3.
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\10\ See Docket No. ACR2021, Second Response of the United
States Postal Service to Commission Requests for Additional
Information in the FY 2021 Annual Compliance Determination, May 10,
2022, at 11.
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In its FY 2021 Annual Compliance Determination (ACD), the
Commission directed the Postal Service to report quarterly information
on the Pilot Program, including updates on volume and revenue, as well
as future plans for the Pilot Program as long as it remains in
effect.\11\ In addition, the Commission directed the Postal Service to
file a notice of termination with the Commission when the Pilot Program
ends, including notification no later than 14 days after the
publication of the ACD of whether the Postal Service is continuing the
program past its initially anticipated end date of March 2022. Id.
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\11\ Docket No. ACR2021, Annual Compliance Determination, March
29, 2022, at 103.
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The Postal Service provided a response to the Pilot Program ACD
directive, stating that ``the Postal Service has continued the pilot
program,'' and ``[n]o final determinations have been reached with
regard to ending the pilot, or with regard to any other potential steps
that might be taken to modify the pilot.'' \12\ The Postal Service
further stated that it ``remains of the view that the pilot program is
an appropriate and limited test of an alternative payment method for
the established gift card product, which does not implicate the current
Mail Classification Schedule, and that
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no further regulatory action is warranted at this time.'' Id.
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\12\ Docket No. ACR2021, First Response of the United States
Postal Service to Commission Requests for Additional Information in
the FY 2021 Annual Compliance Determination, April 12, 2022, at 2.
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The Commission noted in the ACD that should the Pilot Program
remain in effect after March 2022, the Commission would initiate this
Mail Classification proceeding pursuant to 39 CFR 3040 to explore and
review the issues discussed in the ACD. During this Mail Classification
proceeding, the Commission will conduct information gathering to
explore and review the product at issue and may determine in the course
of this proceeding whether the product at issue, or a defined sub-unit
of that product, must be categorized as non-postal and therefore
terminate.
III. Notice of Commission Action
Pursuant to 39 CFR 3040.173, the Commission establishes Docket No.
MC2022-60 to gather information to determine appropriate classification
action and invites comments on whether the Postal Service's Pilot
Program comports with 39 CFR 3035, 39 CFR 3040, 39 CFR 3045, 39 U.S.C.
404, 39 U.S.C. 3632, 39 U.S.C. 3633, and 39 U.S.C. 3641. Comments are
due no later than June 30, 2022. The filing can be accessed via the
Commission's website (<a href="https://www.prc.gov">https://www.prc.gov</a>).
The Commission appoints Kenneth E. Richardson to represent the
interests of the general public (Public Representative) in this docket.
IV. Ordering Paragraphs
It is ordered:
1. The Commission establishes Docket No. MC2022-60 to consider
matters raised by this Notice.
2. Comments are due no later than June 30, 2022.
3. Pursuant to 39 U.S.C. 505, the Commission appoints Kenneth E.
Richardson to serve as an officer of the Commission (Public
Representative) to represent the interests of the general public in
this proceeding.
4. The Commission directs the Secretary of the Commission to
arrange for prompt publication of this Notice in the Federal Register.
By the Commission.
Erica A. Barker,
Secretary.
[FR Doc. 2022-10899 Filed 5-19-22; 8:45 am]
BILLING CODE 7710-FW-P
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