[Federal Register Volume 70, Number 19 (Monday, January 31, 2005)]
[Proposed Rules]
[Pages 4802-4803]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-1732]
=======================================================================
-----------------------------------------------------------------------
POSTAL RATE COMMISSION
39 CFR Part 3001
[Docket No. RM2005-2; Order No. 1429]
Solicitation of Comments on First Use of Rules Applicable to
Negotiated Service Agreements
AGENCY: Postal Rate Commission.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: This document addresses the solicitation of comments in a
proceeding to consider potential changes to the Commission rules for
considering functionally equivalent Negotiated Service Agreements.
These comments will be used to evaluate whether improvements should be
made to the rules to facilitate the Commission's review of future
requests predicated on functionally equivalent Negotiated Service
Agreements.
DATES: Initial comments: February 28, 2005; reply comments: March 28,
2005.
FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel,
202-789-6818.
SUPPLEMENTARY INFORMATION:
Regulatory History
68 FR 52552, September 4, 2003. 69 FR 7574, February 19, 2004.
On February 11, 2004, the Commission promulgated rules applicable
to the review of Postal Service requests predicated on baseline and
functionally equivalent Negotiated Service Agreements.\1\ The Postal
Service first invoked the rules applicable to functionally equivalent
Negotiated Service Agreements (39 CFR 3001.196) in requests filed on
June 21, 2004, for proposed Negotiated Service Agreements with Discover
Financial Services, Inc. (Discover) and Bank One Corporation (Bank
One).\2\ Both agreements were proffered as functionally equivalent to
the recently recommended Negotiated Service Agreement with Capital One
Services, Inc. (Capital One).\3\ The Postal Service has not submitted a
request for a new baseline agreement. Thus, the rules for new baseline
Negotiated Service Agreements (39 CFR 3001.195) remain untested.
---------------------------------------------------------------------------
\1\ Order Establishing Rules Applicable to Requests for Baseline
and Functionally Equivalent Negotiated Service Agreements, PRC Order
No. 1391, February 11, 2004. The rules applicable to Negotiated
Service Agreements are incorporated into the Commission's rules at
subpart L.
\2\ Request of the United States Postal Service for a
Recommended Decision on Classifications, Rates and Fees to Implement
Functionally Equivalent Negotiated Service Agreement with Discover
Financial Services, Inc., June 21, 2004; Request of the United
States Postal Service for a Recommended Decision on Classifications,
Rates and Fees to Implement Functionally Equivalent Negotiated
Service Agreement with Bank One Corporation, June 21, 2004.
\3\ PRC Op. MC2002-2, May 15, 2003.
---------------------------------------------------------------------------
PRC Order No. 1391 at 48 explains the purpose of the rules
applicable to functionally equivalent Negotiated Service Agreements:
The purpose of Sec. 3001.196 is to provide an opportunity to
expedite the review of a request for a functionally equivalent
Negotiated Service Agreement by allowing the proponents of the
agreement to rely on relevant record testimony from a previous
docket. This potentially could expedite the proceeding by avoiding
the need to re-litigate issues that were recently litigated and
resolved in a previous docket.
Once the Commission determines that it is appropriate to proceed
under rule 196, a procedural schedule is established to allow for
issuing a decision within 60 days if no hearing is scheduled, or within
120 days if a hearing is scheduled. In both the Discover and the Bank
One dockets, the participants requested hearings, the hearings were
scheduled, and schedules were initially established to allow for a
decision to be issued within 120 days.\4\
The Commission recommended that the Postal Service enter into the
Negotiated Service Agreement with Discover 72 days after making the
decision to hear the request under the rules for functionally
equivalent Negotiated Service Agreements (101 days after the filing of
the request).\5\ This was well within the 120 day time frame
contemplated by the rules. The Commission found the Discover Negotiated
Service Agreement functionally equivalent, albeit not identical, to the
Capital One Negotiated Service Agreement, and recommended the request
only with minor modification. Proceeding under the rules for
functionally equivalent Negotiated Service Agreements successfully
developed a sufficient record upon which to issue a decision and
expedited the procedural schedule as envisioned when the rules were
first developed.
---------------------------------------------------------------------------
\4\ In both instances, the requests for hearings were withdrawn
before the hearings occurred.
\5\ PRC Op. MC2004-4, September 30, 2004.
---------------------------------------------------------------------------
Application of the rules for a functionally equivalent Negotiated
Service Agreement in the Bank One docket also was successful. A
sufficient record upon which to base a decision was developed, and the
docket was expedited through reliance on record testimony from the
previous Capital One docket. However, due to the complexity of the
specific issues involved, procedural issues that arose, and more
extensive than anticipated litigation and negotiation, issuing the
decision exceeded the 120 day procedural schedule by 27 days. The
Commission recommended that the Postal Service enter into the
Negotiated Service Agreement with Bank One 147 days after making the
decision to hear the request under the rules for functionally
equivalent Negotiated Service Agreements (179 days after the filing of
the request).\6\
---------------------------------------------------------------------------
\6\ PRC Op. MC2004-3, December 17, 2004.
---------------------------------------------------------------------------
A large number of unusual issues delayed a decision on the Bank One
Negotiated Service Agreement. The testimony of Bank One witness Buc was
filed seven days late, with no indication in the initial request that
additional testimony was forthcoming. Potential intervenors were not
alerted to important differences between the baseline and the proffered
functionally equivalent agreement by less than full compliance with
rule 196(b)(2). Within two weeks of the filing of the request, Bank One
merged with J. P. Morgan Chase, requiring additional discovery efforts,
and creating uncertainty over how to analyze the initial request. The
Bank One Negotiated Service Agreement as proposed was not functionally
equivalent to the Capital One Negotiated Service Agreement.\7\
Participants
[[Page 4803]]
litigated and negotiated issues that were not present in the baseline
docket. This culminated in the submission of two proposed Stipulations
and Agreements late in the proceeding addressing risks identified by
the participants.\8\ Finally, the details of the Bank One agreement and
the specific facts presented in this docket were more complex than what
was presented in the baseline docket. The Commission believes it
unlikely that this many complicating factors are likely to be present
in future requests for functionally equivalent Negotiated Service
Agreements. Thus, the anticipated time for the Commission to review a
request and render a recommendation still appears to be realistic.
---------------------------------------------------------------------------
\7\ Significantly, the request did not provide for adequate
protection of mailers not party to the agreement (for example, an
equivalent to the stop-loss cap as recommended in the Capital One
docket was not proposed even though similar risks were apparent). As
recommended, after modification, the Bank One Negotiated Service
Agreement is functionally equivalent to the Capital One Negotiated
Service Agreement.
\8\ The rules for functionally equivalent Negotiated Service
Agreements should provide adequate expedition without the need to
file Stipulations and Agreements. Stipulations and Agreements should
not be used as a procedural mechanism to expeditiously conclude a
docket. In this docket, the Stipulations and Agreements were
properly used to resolve issues unique to the request.
---------------------------------------------------------------------------
The Presiding Officer decided to proceed under the rules for
functionally equivalent Negotiated Service Agreements to lend structure
to the Bank One proceeding. He recognized that future revelations might
require a change in direction.\9\ Although there were unanticipated
complications in the Bank One docket, the rules for functionally
equivalent Negotiated Service Agreements proved flexible and sufficient
to hear the request and render a recommended decision.
---------------------------------------------------------------------------
\9\ An alternative could have been to reject the request as
submitted, with directions to supplement testimony where necessary
and refile as a new baseline docket. This would have considerably
added to the length of the procedural schedule.
---------------------------------------------------------------------------
The Commission indicated in the Discover and the Bank One
recommendations that it would solicit comments on the first use of the
new rules. The comments will be used to evaluate whether improvements
should be made to the rules to facilitate the Commission's review of
future requests predicated on functionally equivalent Negotiated
Service Agreements. Comments are welcome of a general nature, or that
address specific procedural or data requirement issues. By this order,
the Commission hereby gives notice that comments from interested
persons concerning the first use of the rules applicable to Negotiated
Service Agreements are due February 28, 2005. Reply comments may also
be filed and are due March 28, 2005.
In conformance with section 3624(a) of title 39, the Commission
designates Shelley S. Dreifuss, director of the Commission's Office of
the Consumer Advocate, to represent the interests of the general public
in this proceeding. Pursuant to this designation, Ms. Dreifuss will
direct the activities of Commission personnel assigned to assist her
and, upon request, will supply their names for the record. Neither Ms.
Dreifuss nor any of the assigned personnel will participate in or
provide advice on any Commission decision in this proceeding.
Ordering Paragraphs
It is ordered:
1. Docket No. RM2005-2 is established to solicit comments on
possible improvements to the Commission's rules applicable to
Negotiated Service Agreements.
2. Interested persons may submit comments no later than February
28, 2005.
3. Reply comments also may be filed and are due March 28, 2005.
4. Shelley S. Dreifuss, director of the Office of the Consumer
Advocate, is designated to represent the interests of the general
public in this docket.
5. The Secretary shall arrange for publication of this Notice of
Proposed Rulemaking in the Federal Register.
Issued: January 25, 2005.
By the Commission.
Steven W. Williams,
Secretary.
[FR Doc. 05-1732 Filed 1-28-05; 8:45 am]
BILLING CODE 7710-FW-P