6. Repositionable Notes Market Test:
Docket No. MC2004-5

On July 16, 2004, the Postal Service filed a request for a 1-year market test of Repositionable Notes (RPNs). RPNs are self-adhesive notes affixed to the exterior of letters or flats (large envelopes, catalogs, or magazines). Because RPNs are mechanically applied using air pressure, and have an adhesive strip wider than on notes used in typical office settings, tests have shown that they are unlikely to become detached from the mailpiece during handling. The Postal Service proposed to test RPNs further, after a period of testing and gradual introduction, by permitting their use on all letters and flats. Attachment of RPNs to mailpieces does not appear to cause the Postal Service to incur any additional handling costs. Based on the value of the RPN to senders and recipients, the Postal Service proposed RPN rates of 1.5 cents on Standard Mail and Periodicals and 0.5 cents on First-Class Mail.

The PRC determined that the case should be considered as a provisional service case, rather than a market test. In December 2004 the PRC issued an Opinion and Recommended Decision, which the Governors approved on January 11, 2005. The experiment was implemented on April 3, 2005, with the rates as proposed.

7. Complaint of Time-Warner, Inc. et al.,
Concerning Periodicals Rates:
Docket No. C2004-1

On January 12, 2004, the PRC received a pleading from Time Warner, Inc., and other publishers, styled as a rate complaint. Under 39 U.S.C. 3662, a party can file a complaint with the PRC alleging that a particular rate or postal service does not conform to statutory policies governing the Postal Service. The complainants alleged that the existing Periodicals rates could be improved by adoption of an alternative rate structure. They further alleged that proposed changes would bring Periodicals rates into greater conformity with the policies of the Postal Reorganization Act of 1970. The proposed alternative rate structure was designed to tighten the relationship between the cost-causing characteristics of a publication and the Periodicals rates paid by the publication. The complainants urged the PRC to hold hearings on their complaint and recommend their proposals to the Governors.

The Postal Service responded on February 11, 2004, and opposed the mailers' request for relief on several grounds. First, the Postal Service argued that the mailers did not allege that the existing rates fail to conform to the policies of the act, which, under both the relevant provisions of the PRC's rules and the statutory language of 39 U.S.C. 3662, is a prerequisite for initiation of a rate complaint. Second, the Postal Service argued that the mailers' efforts to challenge a rate structure, which they previously had the opportunity to challenge in the most recent omnibus rate case, constituted an improper attempt to circumvent the exclusive review provision of 39 U.S.C. 3628.

Lastly, the Postal Service noted that even if the filing were treated as a request to initiate a mail classification case without rate consequences, there were ample policy grounds to postpone consideration of the underlying classification issues until a more balanced proposal was available.

On March 26, 2004, the PRC went forward with a proceeding but acknowledged its intent to limit any resulting recommendations to the classification structure, and to refrain from recommending changes in rates. In April the complainants filed four pieces of testimony supporting their proposals. In September 2004, testimony was filed by a number of parties, including the Postal Service, opposing the complainants' specific classification proposals.

On October 21, 2005, the PRC disposed of the complaint. The PRC declined to issue an Opinion and Recommended Decision and found that the existing rate structure for Periodicals does not conflict with statutory policies and requirements. It found, however, that many of the suggestions for changing Periodicals rates embodied in the complaint and testimony had merit. It proposed that the Postal Service evaluate the suggestions in light of the record and propose revised Periodicals rates in the future. The PRC specifically suggested that the Postal Service consider a bifurcated, opt-in rate structure that would allow mailers to take advantage of efficiencies in mailing practices and pay modified rates that were more cost-based. Customers mailing above a predetermined volume threshold would pay the modified rates; mailers below the threshold would pay rates under the current structure, or could elect to pay the modified rates.

8. Complaint on Electronic Postmark:
Docket No. C2004-2

On February 25, 2004, a complaint proceeding was filed on the subject of United States Postal Service Electronic Postmark (EPM). The fundamental basis for the complaint was the allegation that the Postal Service is acting unlawfully by offering this purely electronic service without first submitting to the PRC a request for an Opinion and Recommended Decision on classification provisions and rates associated with this service. In its responsive pleadings filed on April 26, 2004, the Postal Service argued that complaint proceedings before the PRC were not intended and are not appropriate to resolve issues as to whether the Postal Service is acting beyond its lawful authority.

The Postal Service moved that the complaint should be dismissed. The Postal Service's motion to dismiss is still pending, because the Postal Service's EPM is clearly not a postal service, and the PRC lacks jurisdiction over nonpostal services such as EPM.