[Federal Register Volume 73, Number 235 (Friday, December 5, 2008)]
[Notices]
[Pages 74212-74213]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-28816]
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POSTAL REGULATORY COMMISSION
[Docket Nos. MC2009-10 and CP2009-12; Order No. 141]
International Mail
AGENCY: Postal Regulatory Commission.
ACTION: Notice.
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SUMMARY: The Commission is noticing a recently-filed Postal Service
request to add Inbound Express Mail International (EMS) Originating
from Foreign Posts to the Competitive Product List. The Postal Service
has also filed one related contract. This notice addresses procedural
steps associated with these filings.
DATES: Comments due December 5, 2008.
ADDRESSES: Submit comments electronically via the Commission's Filing
Online system at http://www.prc.gov.
FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel,
202-789-6820 and [email protected].
SUPPLEMENTARY INFORMATION:
I. Background
On November 19, 2008, the Postal Service filed a request pursuant
to 39 U.S.C. 3642 and 39 CFR 3020.30 et seq. to add Inbound
International Expedited Services 2 to the Competitive Product List.\1\
The Postal Service asserts that Inbound International Expedited
Services 2 is a competitive product within the meaning of 39 U.S.C.
3632(b)(3). This Request has been assigned Docket No. MC2009-10.
The Postal Service contemporaneously filed notice, pursuant to 39
U.S.C. 3632(b)(3) and 39 CFR 3015.5, that the Governors have
established prices and classifications not of general applicability for
inbound Express Mail International (EMS) originating from foreign
posts. More specifically, the Governors' Decision defines three price
tiers for Inbound Express Mail originating from foreign posts and
proposes that the Commission permit the three price tiers applicable to
EMS from foreign posts that have prices set using the Universal Postal
Union (UPU) process to be classified as a single product, Inbound
International Expedited Services 2. Request at 4.\2\
EMS prices have been established for these agreements by the Postal
Service in accordance with the UPU,\3\ which authorizes each
participating destination postal administration to set its prices for
inbound Express Mail with notification to partners directly or through
the UPU's International Bureau by August 31 of the year prior to the
effective date. Request at 2. The Postal Service generally makes
notification of prices established through the UPU International
Bureau, but also sends letters directly to foreign postal
administrations. Governors' Decision at 1, n.2. The Postal Service
asserts that the EMS Cooperative process allows the destination
administration to set pieces and weight prices according to a three-
tier system.\4\ The tiers consist of:
1. Pay-for-performance. Available to members of the Kahala Post
Group and EMS Cooperative members who elect to comply with pay-for-
performance provisions;
2. EMS Cooperative. EMS Cooperative members who elect not to comply
with pay-for-performance provisions; and
[[Page 74213]]
3. All Others. International posts who choose not to be members of
the EMS Cooperative.
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\1\ Request of the United States Postal Service Regarding
Inbound Express Mail International (EMS) from Foreign Posts to Add
Inbound International Expedited Services 2 to Competitive Product
List; and Notice of Establishment of Rates and Classifications Not
of General Applicability, November 19, 2008 (Request).
\2\ The Governors' Decision states that the Mail Classification
Schedule (MCS) language which sets forth three EMS price tiers
addresses the Commission recommendation that a consistent approach
be used for ``organizing competitive product negotiated agreements
within the Mail Classification Schedule.'' PRC Order No. 84, Order
Concerning the China Post Group Inbound EMS Agreement, Docket No.
CP2008-7, June 27, 2008, at 6.
\3\ See Attachment 4 to the Request, Certification of Prices for
Inbound Express Mail International (EMS), which states prices were
established by letter dated August 28, 2008, to the International
Bureau of the UPU.
\4\ The Postal Service states that at the time of Governors'
Decision No. 08-20 in this proceeding, EMS prices met all
requirements of the financial model which is reflected in the
decision. The financial model filed under seal in the instant case
provides inputs that became available subsequent to the Governors'
vote. This model as filed has an anomaly because the margin is
slightly below the threshold set by the Governors. However, the
Postal Service contends that this difference should not impact the
Commission's approval of the prices that were established in August
2008 and that the cost coverage presented in the model as filed is
above 100 percent and satisfies the statutory pricing criteria for
competitive products.
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Request at 2.
In support of its Request, the Postal Service filed a redacted
version of the Governors' Decision establishing prices and
classifications for Inbound Express Mail International.\5\ The Postal
Service also filed a Statement of Supporting Justification as required
by 39 CFR 3020.32,\6\ certification of the Governors' vote,\7\ and
certification of compliance with 39 U.S.C. 3633(a).\8\ In addition, the
Postal Service indicates that it filed an unredacted copy of the
Governors' Decision, the agreements with foreign posts and other
supporting documents designed to establish compliance with 39 CFR
3015.5 under seal. Request at 1, n.2.
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\5\ See Attachment 1 to the Request.
\6\ See Attachment 2 to the Request.
\7\ See Attachment 3 to the Request.
\8\ See Attachment 4 to the Request.
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In the Statement of Supporting Justification, Brian T. Hutchins,
Manager, International Postal Relations, explains that in the instant
case, the Postal Service has considered that the new product could have
been requested to be merged with the existing product Inbound
International Expedited Services 1. He observes, however, the Postal
Service only deals with inbound EMS from foreign posts which have one
set of demand and market characteristics and a single set of pricing
formulas approved by the Governors. He also states that the prices are
established through negotiation as with the China Post Group \9\ or
unilaterally pursuant to the UPU EMS Cooperative.
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\9\ See Docket No. CP2008-7, PRC Order No. 84, Order Concerning
the China Post Group Inbound EMS Agreement, June 27, 2008.
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He notes the rationale for the Postal Service's submission of a
separate request is because the pricing formula for EMS was finalized
through the UPU in August 2008 with the knowledge that the pricing
would be established before the Commission had an opportunity to review
the pricing formula for the first time under the Postal Accountability
and Enhancement Act (PAEA). The decision was made to submit this
Request as a second product for inbound EMS rather than as an addition
to the existing product (Inbound International Expedited Services 1).
The Postal Service views this as a method to simplify the process of
adding the product. Request, Attachment 2, at 2. He observes that the
Commission could determine that inbound EMS from foreign posts with the
established UPU prices should be included with the existing inbound EMS
product (Inbound International Expedited Services 1). However, he
states that with either approach, approval of the product will
``improve the Postal Service's competitive posture, while enabling the
Commission to verify that prices set according to EMS Cooperative
procedures cover their attributable costs and make a positive
contribution * * * toward the requisite 5.5 percent of the Postal
Service's total institutional costs paid for by competitive products.''
Id. at 2-3.
W. Ashley Lyons, Manager, Corporate Financial Planning, Finance
Department, certifies that the contract complies with 39 U.S.C.
3633(a). Request, Attachment 4. He asserts that the EMS agreement
``prices demonstrate that EMS should cover its attributable costs and
preclude the subsidization of competitive products by market dominant
products.'' Id.
The Postal Service filed much of the supporting materials,
including the Governors' Decision and the EMS agreements with foreign
posts, under seal. It maintains that the EMS agreements with foreign
posts, related financial information, and the Governors' Decision
should remain under seal as they contain pricing, cost, and other
information that are highly confidential. Request at 5.
The Postal Service's existing EMS agreements with the proposed
pricing and classification changes established in the Governors'
Decision are scheduled to take effect January 1, 2009 after review by
the Commission. Governors' Decision at 3.
II. Notice of Filings
The Commission establishes Docket Nos. MC2009-10 and CP2009-12 for
consideration of the Request pertaining to the proposed Inbound
International Expedited Services 2 product and the related agreements,
respectively. In keeping with practice, these dockets are addressed on
a consolidated basis for purposes of this Order; however, future
filings should be made in the specific docket in which issues being
addressed pertain.
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. 3632, 3633, or 3642, 39 CFR part 3015, and 39 CFR
3020 subpart B. Comments are due no later than December 5, 2008. The
public portions of these filings can be accessed via the Commission's
Web site (www.prc.gov).
The Commission appoints Paul L. Harrington to serve as Public
Representative in these dockets.
It is Ordered:
The Commission establishes Docket Nos. MC2009-10 and CP2009-12 for
consideration of the matters raised in each docket.
1. Pursuant to 39 U.S.C. 505, Paul L. Harrington is appointed to
serve as officer of the Commission (Public Representative) to represent
the interests of the general public in these proceedings.
2. Comments by interested persons in these proceedings are due no
later than December 5, 2008.
3. The Secretary shall arrange for the publication of this Order in
the Federal Register.
By the Commission.
Steven W. Williams,
Secretary.
[FR Doc. E8-28816 Filed 12-4-08; 8:45 am]
BILLING CODE 7710-FW-P