[Federal Register Volume 74, Number 105 (Wednesday, June 3, 2009)]
[Notices]
[Pages 26744-26745]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-12839]
[[Page 26744]]
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POSTAL REGULATORY COMMISSION
[Docket Nos. MC2009-25, CP2009-30, CP2009-31, CP2009-32, CP2009-33 and
CP2009-34; Order No. 217]
New Postal Product
AGENCY: Postal Regulatory Commission.
ACTION: Notice.
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SUMMARY: The Commission is noticing a recently-filed Postal Service
request to add Priority Mail Contract Group to the Competitive Product
List. The Postal Service has also filed five related contracts. This
notice addresses procedural steps associated with these filings.
DATES: Postal Service responses are due June 1, 2009. Comments are due
June 8, 2009.
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. Introduction
On May 19, 2009, the Postal Service filed a formal request pursuant
to 39 U.S.C. 3642 and 39 CFR 3020.30 et seq. to add a new product
entitled Priority Mail Contract Group to the Competitive Product
List.\1\ The Postal Service asserts that Priority Mail Contract Group
is a competitive product ``not of general applicability'' within the
meaning of 39 U.S.C. 3632(b)(3). Id. at 1. The Request has been
assigned Docket No. MC2009-25.
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\1\ Docket No. MC2009-25, Request of the United States Postal
Service to Add Priority Mail Contract Group to Competitive Product
List, May 19, 2009 (Request).
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Contemporaneously with Docket No. MC2009-25 and pursuant to 39
U.S.C. 3632(b)(3) and 39 CFR 3015.5, the Postal Service filed five
contracts which it identifies as Priority Mail Contract 6, Priority
Mail Contract 7, Priority Mail Contract 8, Priority Mail Contract 9,
and Priority Mail Contract 10. It believes these contracts are related
to the proposed new product in Docket No. MC2009-25. These contracts
have been assigned Docket Nos. CP2009-30 through CP2009-34.\2\
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\2\ Docket Nos. CP2009-30 through CP2009-34, Notice of
Establishment of Rates and Class Not of General Applicability, May
19, 2009 (Notices).
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Classification request. The Request incorporates (1) A redacted
version of the Governors' Decision authorizing the new product; (2)
requested changes in the Mail Classification Schedule product list; (3)
a statement of supporting justification as required by 39 CFR 3020.32;
and (4) certification of compliance with 39 U.S.C. 3633(a).\3\
Substantively, the Request seeks to add Priority Mail Contract Group to
the Competitive Product List. Id. at 1-2.
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\3\ Attachment 1 to the Request consists of the redacted
Decision of the Governors of the United States Postal Service on
Establishment of Rates and Classes Not of General Applicability for
Priority Mail Contract Group (Governors' Decision No. 09-6). The
Governors' Decision includes two attachments. Attachment A shows the
requested changes to the Mail Classification Schedule product list.
Attachment B provides an analysis of the proposed Priority Mail
Contract Group. Attachment 2 provides a statement of supporting
justification for this Request. Attachment 3 provides the
certification of compliance with 39 U.S.C. 3633(a).
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In the Statement of Supporting Justification, Mary Prince Anderson,
Manager, Sales and Communications, Expedited Shipping, asserts that the
services to be provided will cover their attributable costs, make a
positive contribution to institutional costs, and increase contribution
toward the requisite 5.5 percent of the Postal Service's total
institutional costs. Id., Attachment 2. Thus, Ms. Anderson contends
there will be no issue of subsidization of competitive products by
market dominant products as a result of this product. Id.
Related contracts. Redacted versions of five specific Priority Mail
contracts are included with the Request. Three of the contracts are for
3 years, one of the contracts is for 1 year, and the final contract is
for 3 months. Depending on the contract, the effective dates are
proposed to be either the day on which the Commission provides all
necessary regulatory approvals or the following day.\4\ The Postal
Service represents that all these contracts are consistent with 39
U.S.C. 3633(a). See Notices, Attachment B.
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\4\ The contracts in Docket Nos. CP2009-30, CP2009-31 and
CP2009-34 become effective on the day the Commission issues all
necessary regulatory approvals. The contracts in Docket Nos. CP2009-
32 and CP2009-33 become effective the day after the Commission
issues all necessary regulatory approvals.
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The Postal Service filed much of the supporting materials,
including the Governors' Decision and the specific Priority Mail
contracts, under seal. In its Request, the Postal Service maintains
that the contracts and related financial information, including the
customer's name and the accompanying analyses that provide prices,
terms, conditions, and financial projections should remain under seal.
Request at 2; Notices at 2.
II. Preliminary Observations
The Postal Service's filings in these cases differ from previous
NSA cases in several ways. In the typical negotiated service agreement
approval scenario, the Postal Service requests that the Commission list
a new competitive negotiated service agreement-type product on the
Competitive Product List. Contemporaneously, it typically requests
approval of a particular contract or group of contracts under 39 U.S.C.
3633 that relate to the new negotiated service agreement competitive
product. See Docket No. MC2009-9, Order Concerning Global Direct
Contracts Negotiated Service Agreements, December 19, 2008; see
generally Docket No. MC2009-9. If future or concurrent agreements are
``functionally equivalent'' to the initial proposed agreement, those
contracts are typically listed as part of the prior negotiated service
agreement product. See e.g., Docket No. CP2009-19, Order Concerning
Additional Global Expedited Package Services 1 Negotiated Service
Agreement, January 9, 2009, at 4-6.
Here, the Postal Service is seeking to place a broadly defined
negotiated service agreement-type product on the Competitive Product
List which has very few requirements or limitations. The proposed
requirements for that negotiated service agreement product are as
follows: (1) The agreement must be for Priority Mail service, and (2)
the cost coverage for the particular contract must fall within a
specified range. Request, Attachment 1 and Attachment A.
The Postal Service provides no arguments or evidence attempting to
show that the five contracts at issue in the above captioned ``CP''
cases are functionally equivalent. Additionally, the Commission is
concerned that if functionally equivalent is intended to apply broadly,
it may be problematic in many respects. See generally Docket No. C2008-
3. In lieu of initiating separate ``MC'' dockets for each of the
proposed contracts, the Commission will, for purposes of this notice,
treat the filing on a consolidated basis and provide interested persons
(including the Postal Service) an opportunity to address the proper
classification of these contracts, i.e., as separate products or
functionally equivalent (in whole or in part).\5\ Those commenting
should provide the support for their position.
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\5\ In the alternative, the Commission construes the Postal
Service's Request as a proposal to add five separate products to the
Competitive Product List.
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The broad parameters in the Governors' Decision appear designed to
accommodate a variety of Priority Mail contracts. The Commission
appreciates the underlying intent. Regardless of the
[[Page 26745]]
outcome of this proceeding, it is the Commission's view that Governors'
Decision 09-6 may be used to authorize future Priority Mail agreements
that satisfy the broad parameters set out in Governors' Decision 09-6.
Thus, for example, if, based on the parameters of Governors' Decision
09-6, the Postal Service seeks to add a future non-functionally
equivalent Priority Mail contract to the Competitive Product List, it
may file a new joint ``MC'' and ``CP'' docket that relies on Governors'
Decision 09-6 to satisfy the requirements of 39 CFR 3020.31(b) and 39
U.S.C. 3642.
III. Supplemental Information
Pursuant to 39 CFR 3015.6, the Commission requests the Postal
Service to provide the following supplemental information by June 1,
2009:
1. Please explain the cost adjustments present within each
contract. Explain what mailer activities or characteristics result in
the cost savings, or result in any additional costs for the Postal
Service. Please address every instance where an NSA partner's cost
differs from the average cost.
2. Please provide a timeframe of when NSA partner volumes and cubic
feet measurements were collected for each contract. Also provide a unit
of analysis for volumes in each contract, e.g., whole numbers,
thousands, etc.
3. In the Excel files accompanying all five contracts, unit
transportation costs are hard coded (See tab: ``Partner Unit Cost''
rows 21 and 22). Please provide up-to-date sources and show all
calculations.
IV. Notice of Filings
The Commission establishes Docket No. MC2009-25 for consideration
of the Postal Service's classification request and Docket Nos. CP2009-
30 through CP2009-34 for consideration of the five proposed contracts.
In keeping with practice, these dockets are addressed on a consolidated
basis for purposes of this order.
Filing instructions. For administrative convenience, future filings
addressing the issues raised in this notice and order should be filed
in Docket No. MC2009-25. However, if interested parties identify issues
relating only to one of the contracts at issue in Docket No. CP2009-30
through CP2009-34, such filings should be made in the specific docket
in which those issues 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 and 39 CFR part 3015 and 39
CFR part 3020, subpart B. Additionally, the Commission welcomes
comments on the issues discussed above. Comments are due no later than
June 8, 2009. The public portions of these filings can be accessed via
the Commission's Web site (http://www.prc.gov).
The Commission appoints Michael J. Ravnitzky to serve as Public
Representative in these dockets.
V. Ordering Paragraphs
It is Ordered:
1. The Commission establishes Docket No. MC2009-25 for
consideration of the issues raised in this order. The Commission
establishes Docket Nos. CP2009-30, CP2009-31, CP2009-32, CP2009-33 and
CP2009-34 to address specific issues raised by those individual
contracts.
2. Future filings addressing the issues raised in this notice and
order should be filed in Docket No. MC2009-25. However, if interested
parties identify issues relating only to one of the contracts at issue
in Docket Nos. CP2009-30 through CP2009-34, such filings should be made
in the specific docket in which those issues pertain.
3. Pursuant to 39 U.S.C. 505, Michael J. Ravnitzky is appointed to
serve as officer of the Commission (Public Representative) to represent
the interests of the general public in these proceedings.
4. The Postal Service is to provide the information requested in
section III of this order no later than June 1, 2009.
5. Comments by interested persons in these proceedings are due no
later than June 8, 2009.
6. The Secretary shall arrange for publication of this order in the
Federal Register.
By the Commission.
Steven W. Williams,
Secretary.
[FR Doc. E9-12839 Filed 6-2-09; 8:45 am]
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