Notice2023-17904
New Postal Products
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
August 21, 2023
Issuing agencies
Postal Regulatory Commission
Abstract
The Commission is recognizing a recent Postal Service filing requesting the addition of a negotiated service agreement with Publisher's Clearing House to the Market Dominant product list. 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 88 Issue 160 (Monday, August 21, 2023)</title>
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[Federal Register Volume 88, Number 160 (Monday, August 21, 2023)]
[Notices]
[Pages 56887-56889]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-17904]
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POSTAL REGULATORY COMMISSION
[Docket Nos. MC2023-222 and R2023-4; Order No. 6619]
New Postal Products
AGENCY: Postal Regulatory Commission.
ACTION: Notice.
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SUMMARY: The Commission is recognizing a recent Postal Service filing
requesting the addition of a negotiated service agreement with
Publisher's Clearing House to the Market Dominant product list. This
notice informs the public of the filing, invites public comment, and
takes other administrative steps.
DATES: Comments are due: September 11, 2023.
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. Overview of the Postal Service's Filing
III. Initial Administrative Actions
IV. Ordering Paragraphs
I. Introduction
On August 11, 2023, the Postal Service filed a request to add a
negotiated service agreement (NSA) with Publisher's Clearing House
(PCH) to the Market Dominant product list.\1\ If favorably reviewed by
the Commission, the intended effective date will be in November or
December 2023. Request at 1. The Request, which was filed pursuant to
39 U.S.C. 3622 and 3642 as well as 39 CFR 3040 subparts B and G,
triggers a notice-and-comment proceeding.
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\1\ USPS Notice of Filing of Contract and Supporting Data and
Request to Add Publisher's Clearing House Negotiated Service
Agreement to the Market-Dominant Product List, with Portions Filed
Under Seal, August 11, 2023 (Request).
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II. Overview of the Postal Service's Filing
Contents of filing. The Postal Service's filing consists of its
Request, six attachments, and one set of financial workpapers:
<bullet> Attachment A--a copy of Governors' Resolution No. 23-5,
establishing price and classification changes for Market Dominant
products to implement a negotiated service agreement with PCH, which
the Postal Service asserts conforms with 39 CFR 3040.131(b);
<bullet> Attachment B--a copy of the instant contract, which the
Postal Service asserts conforms with 39 CFR 3040.221(b);
<bullet> Attachment C--proposed changes to the Mail Classification
Schedule (MCS), which the Postal Service asserts conforms with 39 CFR
3040.131(f);
<bullet> Attachment D--a proposed data collection plan, which the
Postal Service asserts conforms with 39 CFR 3040.222;
<bullet> Attachment E--a statement of supporting justification,
which the Postal Service asserts conforms with 39 CFR 3040.132 and 39
CFR 3040.221(f)-(j);
<bullet> Attachment F--an application for non-public treatment of
``certain data which reflect commercially sensitive aspects of
Publisher's Clearing House's business model, response rates, and
strategy[,]'' (id. Attachment F at 1), appearing in the Request and
financial analysis, which the Postal Service asserts conforms with 39
CFR part 3011; and
<bullet> Supporting Financial Analysis--an Excel file containing a
financial analysis, which the Postal Service asserts conforms with 39
CFR 3040.221(f) and demonstrates that the PCH NSA will improve the net
financial position of the Postal Service.
Request at 2-3, 9.
Background. The Postal Service explains that in recent years the
mailing industry has seen steady year-over-year decline in mail
volumes. Id. at 3. To compensate for industry shifts away from direct
mail, the Postal Service states that it ``has been looking to
strengthen its existing strategic partnerships and build new ones when
opportunities arise.'' Id. PCH ``is a prominent direct mail marketing
company that sends a variety of letter mail to consumers related to
sweepstakes entries, marketing materials, invoicing, and related
correspondence.'' Id. The Postal Service explains that ``PCH typically
interacts with the Postal Service in a five-stage mailing and shipping
lifecycle, which begins with promotional mailings and ends with bill
payments.'' Id. at 3-4.
The Postal Service represents that PCH has found that certain
dormant prospects (i.e., individuals not mailed to in at least 3
months) ``are no longer profitable for PCH to send promotional mail to,
because the lifetime value of these prospects falls below the cost of
mailing . . . .'' Id. at 4. The Postal Service asserts that an up-front
discount on an initial USPS Marketing Mail promotional mailing would
allow PCH to inject reactivation volume into the
[[Page 56888]]
cycle that it would not have mailed under normal business practices.
Id. The Postal Service avers that the resulting proportional increases
in final mail volume is anticipated to be two times greater than if the
dormant prospect mailing list were never reactivated. Id. Accordingly,
the Postal Service states that it engaged in discussions with PCH ``to
determine whether an NSA could help PCH make these dormant prospecting
mailings economically feasible,'' while at the same time providing the
Postal Service ``with a needed boost in volume, revenue, and
contribution from additional follow-on mailings.'' Id.
The Postal Service's position. The Postal Service asserts that the
PCH NSA conforms to the policies embodied in the Postal Accountability
and Enhancement Act (PAEA),\2\ the statutory standards supporting the
desirability of special classifications (39 U.S.C. 3622(c)(10)), and
associated regulations. Id. at 3. The Postal Service provides a
statement of supporting justification from Mr. Steven E. Mills,
Director of Product Management, Mailing Services, which reviews the
objectives and factors appearing in 39 U.S.C. 3622(b) and (c) and
asserts, inter alia, that the PCH NSA will provide an incentive for
profitable new mail; will enhance the financial position of the Postal
Service; will encourage increased mail volume; and will not imperil the
ability of USPS Marketing Mail (or the PCH NSA) to cover its
attributable costs. See id. at 2; id. Attachment E at 1-3. The Postal
Service states that the PCH NSA would also align with a core mission of
the Delivering for America plan, as it would allow the Postal Service
``to build and set new rational pricing strategies with long-standing
partners.''
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\2\ Public Law 109-435, 120 Stat. 3198 (2006).
Request at 4.
PCH NSA. The Postal Service states that the PCH NSA is designed to
give PCH a discounted initial mailing of 1 million pieces of USPS
Marketing Mail letters, mailed at cost. Id. at 5. This initial mailing
would be limited to 1 million dormant prospecting customer addresses,
which PCH has not mailed to within the past 3 months. Id. In exchange
for these discounts, the Postal Service represents that PCH has
committed to certain performance targets for follow-on mailings (both
from PCH to the addresses of the million-piece mailing and to PCH from
the addresses of the million-piece mailing) that are expected to result
from the initial mailing, also known as the ``multiplier effect.'' Id.
PCH expects that 2 million pieces will result from the initial mailing,
mailed at published rates, within 9 months of the date of the initial
mailing. Id. If the parties deem the initial mailing and performance
satisfactory, an additional second prospecting mailing could be
authorized at least 6 months after the initial mailing. Id. The Postal
Service represents that ``[t]he same performance period and targets
would apply to the second mailing.'' Id.
The parties intend for the PCH NSA to take effect in November or
December 2023, assuming favorable review by the Commission. Id. The
Postal Service states that the initial mailing date would then be
established at least 30 calendar days after the effective date of the
contract, expected to be in January 2024 or shortly thereafter. Id. at
5-6. The contract term would be for 1 year from the date of the initial
mailing. Id. at 6. If the parties were to agree to a second mailing,
then the NSA term would conclude 1 year from the date of the second
mailing. Id.
The contract contains a termination for convenience provision,
which allows either party to terminate the NSA without penalty upon 30
days' written notice to the other party, provided that no termination
by the Postal Service would be effective during the 15-week period
prior to either the initial mailing or the potential subsequent
mailing. Id. Additionally, either party may immediately terminate the
NSA for breach of any material term of the contact, if the breaching
party fails to cure such breach within 5 business days after receiving
written notice from the non-breaching party describing the breach. Id.
Similarly situated mailers. The Postal Service states that if the
NSA were to prove successful at improving the financial position of the
Postal Service as expected, then the Postal Service ``stands ready to
consider NSAs on comparable terms to similarly situated mailers,
provided that [they] can provide a similar `multiplier effect' and are
willing to commit to performance targets that mitigate the financial
risk to the Postal Service.'' Id.
Financial analysis. The Postal Service states that to both incent
PCH to meet certain performance targets and protect the financial
interests of the Postal Service, the financial terms of the PCH NSA
consist of three primary components:
<bullet> The Postal Service would provide PCH with an initial 1-
million-piece mailing priced at the Postal Service's attributable cost,
which the Postal Service asserts would result in approximately $128,000
in revenue. To maintain this discount, PCH would need to achieve at
least 50 percent of its forecasted total multiplier volume.
<bullet> If PCH were to not achieve at least 50 percent of the
forecasted multiplier volume, PCH would lose the discount on the
initial mailing, which would be paid back to the Postal Service. The
Postal Service asserts that this would result in approximately $299,000
in total postage and $171,000 in contribution from the initial mailing,
plus however much multiplier percentage PCH were able to achieve.
<bullet> If PCH were to achieve 90 percent of more of the
multiplier volume, the Postal Service would provide an additional
discount to PCH of the price paid for the initial mailing in the form
of a postage credit of approximately $128,000.
Id. at 6-7. The Postal Service maintains that under any scenario, it
would see an improvement in its financial position. Id. at 8.
Possibility of harm to the marketplace. Pursuant to 39 U.S.C.
3622(c)(10)(B), a Market Dominant NSA may not ``cause unreasonable harm
to the marketplace.'' The Postal Service maintains that the PCH NSA
will not cause any such harm. Id. at 10. The Postal Service states that
the NSA will cover its attributable costs in all cases, and to the
extent the Postal Service might have overestimated the multiplier
effect, risk mitigation provisions have been agreed to, in which PCH
must pay back the amount of the discounted mailing if specified
performance metrics are not achieved. Id. The Postal Service notes that
the Commission has previously found ``unreasonable harm to the
marketplace'' to consist of anticompetitive pricing, i.e., pricing
below cost,\3\ and the Postal Service states that since the terms of
the contract would price the postage of the initial mailing and the
potential subsequent mailing at cost, the proposed rates would be
neither anticompetitive nor unreasonably harmful to the marketplace.
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\3\ See Docket Nos. MC2012-14 and R2012-8, Order Approving
Addition of Valassis Direct Mail, Inc. Negotiated Service Agreement
to the Market Dominant Product List, August 23, 2012, at 27 (Order
No. 1448); see also Newspaper Ass'n of America v. Postal Regul.
Comm'n, 734 F.3d 1208 (D.C. Cir. 2013) (denying petition for review
of Order No. 1448).
Request at 10-11.
Notice. The Postal Service represents that it will inform customers
of the new proposed classification changes and associated price effects
through publication in the Federal Register. Id. at 2.
[[Page 56889]]
III. Initial Administrative Actions
The Commission establishes Docket No. MC2023-222 and Docket No.
R2023-4 for consideration of the Request pertaining to the proposed new
product and the related contract, respectively.
Interested persons may submit comments on whether the Postal
Service's filings in the captioned dockets are consistent with the
policies of 39 U.S.C. 3622 and 3642, as well as 39 CFR part 3040.
Comments are due September 11, 2023. The public portions of the Postal
Service's filing are available for review on the Commission's website
(<a href="https://www.prc.gov">https://www.prc.gov</a>). Comments and other material filed in this
proceeding will be available for review on the Commission's website
unless the information contained therein is subject to an application
for non-public treatment. The Commission's rules on non-public
materials (including access to documents filed under seal) appear in 39
CFR part 3011.
Pursuant to 39 U.S.C. 505, the Commission appoints Stephanie A.
Quick to represent the interests of the general public (Public
Representative) in these dockets.
IV. Ordering Paragraphs
It is ordered:
1. The Commission establishes Docket No. MC2023-222 and Docket No.
R2023-4 for consideration of the matters raised in each docket.
2. Pursuant to 39 U.S.C. 505, Stephanie A. Quick is appointed to
serve as an officer of the Commission (Public Representative) to
represent the interests of the general public in these proceedings.
3. Comments are due September 11, 2023.
4. The Commission directs the Secretary of the Commission to
arrange for publication of this order in the Federal Register.
By the Commission.
Mallory Richards,
Attorney-Adviser.
[FR Doc. 2023-17904 Filed 8-18-23; 8:45 am]
BILLING CODE 7710-FW-P
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</html>Indexed from Federal Register on August 21, 2023.
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