rather than in sacks. The filing principally addressed smaller publications (and less dense portions of other publications), which are still prepared in sacks, because they lack the delivery density needed to form pallets as individual publications.

     The proposed incentives would encourage different publications to combine volumes so that there would be enough volume to form "co-pallets." The proposed discounts would be available only for drop-shipped mail. Since the preparation of co-pallets is typically more onerous than the preparation of single-publication pallets, an additional rate incentive was believed to be needed to encourage mailer participation. Two discount levels were proposed, distinguished by the depth of drop-shipping.

     Prior to filing its request, the Postal Service conferred with a wide variety of Periodicals mail customers to develop its proposal. As a result, the case settled, and the PRC recommended the Postal Service proposal on December 20, 2002. The experiment, implemented on April 20, 2003, will test how much co-palletization and drop-shipping the co-palletization discounts will produce. So far the response from printers and publishers has been encouraging.

     On March 14, 2003, the Postal Service filed with the PRC a request for a recommended decision on Customized MarketMail (CMM) Minor Classification Changes. The Postal Service's request asked the PRC to recommend classification changes that would enable advertising mailers to send thin, non-rectangular-shaped mail, which under current rules is not mailable. CMM service would offer customers the new option of sending uniquely-shaped advertising pieces targeting specific customer groups by interest, sales potential, or product. The unique nature of these pieces would likely make it of greatest interest to advertisers who wish to send targeted, promotional messages to a selected audience.

     Such mailpieces would be subject to the Standard Mail basic tier nonletter Regular or Nonprofit rate, plus the residual shape surcharge. The Postal Service designated the request as one involving a minor classification change, thereby requesting that the Commission apply its expedited minor classification case rules of practice and procedure. The Commission established an expedited schedule for consideration of the proposal and established procedures for settlement negotiations.

     On April 30, 2003, the Postal Service moved to have the Commission accept a Stipulation and Agreement, signed by 11 participants in addition to the Postal Service. Only three participants opposed. On June 6, the Commission issued a recommended decision accepting the non-unanimous Stipulation and Agreement as the basis of its recommended decision. The Commission concluded that the CMM proposal satisfied the classification criteria of the Postal Reorganization Act. In a decision dated June 27, the governors of the Postal Service approved the Commission's recommendations. The Board set an implementation date of August 10, 2003.

     On May 28, 2003, the Postal Service filed a request with the PRC to recommend proposed experimental Parcel Return Services (PRS), also known as merchandise return service. The experiment was intended to respond to the rapidly evolving market of Internet and catalog sales, in which merchandise sales inevitably lead to returns. Many consumers, as well as Internet and catalog retailers, rely on the Postal Service for return of merchandise. By taking advantage of new ways of handling returned parcels, the proposed PRS could provide convenience to consumers and competitive prices for retailers.

     Under the current Parcel Select service, commercial shippers generally enter their parcels in bulk at Postal Service facilities near