[Federal Register Volume 74, Number 146 (Friday, July 31, 2009)]
[Rules and Regulations]
[Pages 38098-38102]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-18243]
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POSTAL REGULATORY COMMISSION
39 CFR Part 3020
[Docket Nos. MC2009-30 and CP2009-40; Order No. 247]
New Postal Product
AGENCY: Postal Regulatory Commission.
ACTION: Final rule.
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SUMMARY: This document informs the public that the Commission has
reviewed and approved the Postal Service's recent request to add a new
Priority Mail product to the Competitive
[[Page 38099]]
Product List, along with a related contract. It also addresses related
procedural and legal matters.
DATES: Effective July 31, 2009 and is applicable beginning July 14,
2009.
FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel,
202-789-6820 and [email protected].
SUPPLEMENTARY INFORMATION: Regulatory History, 74 FR 33482 (July 13,
2009).
I. Background
II. Comments
III. Commission Analysis
IV. Ordering Paragraphs
I. Background
The Postal Service seeks to add a new product identified as
Priority Mail Contract 14 to the Competitive Product List. For the
reasons discussed below, the Commission approves the Request.
On June 29, 2009, the Postal Service filed a formal request
pursuant to 39 U.S.C. 3642 and 39 CFR 3020.30 et seq. to add Priority
Mail Contract 14 to the Competitive Product List.\1\ The Postal Service
asserts that the Priority Mail Contract 14 product is a competitive
product ``not of general applicability'' within the meaning of 39
U.S.C. 3632(b)(3). This Request has been assigned Docket No. MC2009-30.
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\1\ Request of the United States Postal Service to Add Priority
Mail Contract 14 to Competitive Product List and Notice of Filing
(Under Seal) of Contract and Supporting Data, June 29, 2009
(Request).
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The Postal Service contemporaneously filed a contract related to
the proposed new product pursuant to 39 U.S.C. 3632(b)(3) and 39 CFR
3015.5. The contract has been assigned Docket No. CP2009-40.
In support of its Request, the Postal Service filed the following
materials: (1) A redacted version of the contract which, among other
things, provides that the contract will expire 3 years from the
effective date, which is proposed to be 1 day after the Commission
issues all regulatory approvals;\2\ (2) requested changes in the Mail
Classification Schedule product list; \3\ (3) a Statement of Supporting
Justification as required by 39 CFR 3020.32; \4\ and (4) certification
of compliance with 39 U.S.C. 3633(a).\5\ The Postal Service also
references Governors' Decision 09-6, filed in Docket No. MC2009-25, as
authorization of the new product. Id.
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\2\ Attachment A to the Request.
\3\ Attachment B to the Request.
\4\ Attachment C to the Request.
\5\ Attachment D to the Request.
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In the Statement of Supporting Justification, Mary Prince Anderson,
Acting Manager, Sales and Communications, Expedited Shipping, asserts
that the service to be provided under the contract will cover its
attributable costs, make a positive contribution to coverage of
institutional costs, and will increase contribution toward the
requisite 5.5 percent of the Postal Service's total institutional
costs. Request, Attachment C, at 1. W. Ashley Lyons, Manager,
Regulatory Reporting and Cost Analysis, Finance Department, certifies
that the contract complies with 39 U.S.C. 3633(a). See id., Attachment
D.
The Postal Service filed much of the supporting materials,
including the supporting data and the unredacted contract, under
seal.\6\ In its Request, the Postal Service maintains that the contract
and related financial information, including the customer's name and
the accompanying analyses that provide prices, terms, conditions, and
financial projections, should remain confidential. Id. at 2-3.
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\6\ The Postal Service also filed an errata of its supporting
data on July 2, 2009. See Notice of the United States Postal Service
of Filing Under Seal of Corrected Workbook Containing Cost and
Revenue Data (Errata), July 2, 2009.
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In Order No. 234, the Commission gave notice of the two dockets,
appointed a public representative, and provided the public with an
opportunity to comment.\7\ On July 1, 2009, Chairman's Information
Request No. 1 (CHIR No. 1) was issued.\8\ The Postal Service filed its
response to Question No. 4 on July 1, 2009, and its responses to
Question Nos. 1 through 3 (under seal) on July 8, 2009.\9\
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\7\ PRC Order No. 234, Notice and Order Concerning Priority Mail
Contract 14 Negotiated Service Agreement, July 1, 2009 (Order No.
234).
\8\ Chairman's Information Request No. 1 and Notice of Filing of
Question Under Seal, July 1, 2009.
\9\ Response of the United States Postal Service to Chairman's
Information Request No. 1, Question 4, July 1, 2009; Notice of the
United States Postal Service of Filing Under Seal of Responses to
Chairman's Information Request No. 1, Questions 1-3, July 8, 2009.
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II. Comments
Comments were filed by the Public Representative.\10\ No comments
were submitted by other interested parties. The Public Representative
states that the Postal Service's filing satisfies the procedural
requirements for proposing a new product and concludes that the
Priority Mail Contract 14 agreement meets the pertinent elements of
title 39. Id. at 1, 3-4. He further states that the agreement appears
to be beneficial to the general public. Id. at 4.
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\10\ Public Representative Comments in Response to United States
Postal Service Notice of Establishment of Rates and Class Not of
General Applicability (Priority Contract 14), July 10, 2009 (Public
Representative Comments).
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The Public Representative believes that ``[f]or the sake of the
general public, some mention in the text of the Notice, or a copy of
the Governors' Decision (albeit already filed with the Commission),
would be helpful.'' Id. at 4. In support of this contention, he notes
that the ``general public may only access (absent a qualified [and
granted] request to the Commission for access to confidential material)
the public materials in this docket posted online.'' Id.
III. Commission Analysis
The Commission has reviewed the Request, the contract, the
financial analysis provided under seal that accompanies it, the
responses to CHIR No. 1, and the comments filed by the Public
Representative.
Statutory requirements. The Commission's statutory responsibilities
in this instance entail assigning Priority Mail Contract 14 to either
the Market Dominant Product List or to the Competitive Product List. 39
U.S.C. 3642. As part of this responsibility, the Commission also
reviews the proposal for compliance with the Postal Accountability and
Enhancement Act (PAEA) requirements. This includes, for proposed
competitive products, a review of the provisions applicable to rates
for competitive products. 39 U.S.C. 3633.
Product list assignment. In determining whether to assign Priority
Mail Contract 14 as a product to the Market Dominant Product List or
the Competitive Product List, the Commission must consider whether the
Postal Service exercises sufficient market power that it can
effectively set the price of such product substantially above costs,
raise prices significantly, decrease quality, or decrease output,
without risk of losing a significant level of business to other firms
offering similar products. 39 U.S.C. 3642(b)(1). If so, the product
will be categorized as market dominant. The competitive category of
products shall consist of all other products.
The Commission is further required to consider the availability and
nature of enterprises in the private sector engaged in the delivery of
the product, the views of those who use the product, and the likely
impact on small business concerns. 39 U.S.C. 3642(b)(3).
The Postal Service asserts that its bargaining position is
constrained by the existence of other shippers who can provide similar
services, thus precluding it from taking unilateral action to increase
prices without the
[[Page 38100]]
risk of losing volume to private companies. Request, Attachment C,
para. (d). The Postal Service also contends that it may not decrease
quality or output without risking the loss of business to competitors
that offer similar expedited delivery services. Id. It further states
that the contract partner supports the addition of the contract to the
Competitive Product List to effectuate the negotiated contractual
terms. Id. at para. (g). Finally, the Postal Service states that the
market for expedited delivery services is highly competitive and
requires a substantial infrastructure to support a national network. It
indicates that large carriers serve this market. Accordingly, the
Postal Service states that it is unaware of any small business concerns
that could offer comparable service for this customer. Id. at para.
(h).
No commenter opposes the proposed classification of Priority Mail
Contract 14 as competitive. Having considered the statutory
requirements and the support offered by the Postal Service, the
Commission finds that Priority Mail Contract 14 is appropriately
classified as a competitive product and should be added to the
Competitive Product List.
Cost considerations. The Postal Service presents a financial
analysis showing that Priority Mail Contract 14 results in cost savings
while ensuring that the contract covers its attributable costs, does
not result in subsidization of competitive products by market dominant
products, and increases contribution from competitive products.
Based on the data submitted, the Commission finds that Priority
Mail Contract 14 should cover its attributable costs (39 U.S.C.
3633(a)(2)), should not lead to the subsidization of competitive
products by market dominant products (39 U.S.C. 3633(a)(1)), and should
have a positive effect on competitive products' contribution to
institutional costs (39 U.S.C. 3633(a)(3)). Thus, an initial review of
proposed Priority Mail Contract 14 indicates that it comports with the
provisions applicable to rates for competitive products.
Other considerations. The Postal Service shall promptly notify the
Commission of the scheduled termination date of the agreement. If the
agreement terminates earlier than anticipated, the Postal Service shall
inform the Commission prior to the new termination date. The Commission
will then remove the product from the Mail Classification Schedule at
the earliest possible opportunity.
Furthermore, the Commission agrees with the Public Representative's
suggestion that due to confidentiality concerns, each docket should be
self-contained. In the future, the Postal Service should not cross-
reference to other dockets (where documents in that referenced docket
are filed under seal) in support of a different docket. This ensures
that participants will have complete access to all information upon
which the Postal Service proposes to rely.
In conclusion, the Commission approves Priority Mail Contract 14 as
a new product. The revision to the Competitive Product List is shown
below the signature of this order and is effective upon issuance of
this order.
IV. Ordering Paragraphs
It is ordered:
1. Priority Mail Contract 14 (MC2009-30 and CP2009-40) is added to
the Competitive Product List as a new product under Negotiated Service
Agreements, Domestic.
2. The Postal Service shall notify the Commission of the scheduled
termination date and update the Commission if termination occurs prior
to that date, as discussed in this order.
3. The Secretary shall arrange for the publication of this order in
the Federal Register.
Issued: July 14, 2009.
By the Commission.
Judith M. Grady,
Acting Secretary.
List of Subjects in 39 CFR Part 3020
Administrative practice and procedure, Postal Service.
0
For the reasons stated in the preamble, under the authority at 39
U.S.C. 503, the Postal Regulatory Commission amends 39 CFR part 3020 as
follows:
PART 3020--PRODUCT LISTS
0
1. The authority citation for part 3020 continues to read as follows:
Authority: 39 U.S.C. 503; 3622; 3631; 3642; 3682.
0
2. Revise Appendix A to Subpart A of Part 3020--Mail Classification
Schedule to read as follows:
Appendix A to Subpart A of Part 3020--Mail Classification Schedule
Part A--Market Dominant Products
1000 Market Dominant Product List
First-Class Mail
Single-Piece Letters/Postcards
Bulk Letters/Postcards
Flats
Parcels
Outbound Single-Piece First-Class Mail International
Inbound Single-Piece First-Class Mail International
Standard Mail (Regular and Nonprofit)
High Density and Saturation Letters
High Density and Saturation Flats/Parcels
Carrier Route
Letters
Flats
Not Flat-Machinables (NFMs)/Parcels
Periodicals
Within County Periodicals
Outside County Periodicals
Package Services
Single-Piece Parcel Post
Inbound Surface Parcel Post (at UPU rates)
Bound Printed Matter Flats
Bound Printed Matter Parcels
Media Mail/Library Mail
Special Services
Ancillary Services
International Ancillary Services
Address List Services
Caller Service
Change-of-Address Credit Card Authentication
Confirm
International Reply Coupon Service
International Business Reply Mail Service
Money Orders
Post Office Box Service
Negotiated Service Agreements
HSBC North America Holdings Inc. Negotiated Services Agreement
Bookspan Negotiated Service Agreement
Bank of America Corporation Negotiated Service Agreement
The Bradford Group Negotiated Service Agreement
Inbound International
Canada Post--United States Postal Service Contractual Bilateral
Agreement for Inbound Market Dominant Services
Market Dominant Product Descriptions
First-Class Mail
[Reserved for Class Description]
Single-Piece Letters/Postcards
[Reserved for Product Description]
Bulk Letters/Postcards
[Reserved for Product Description]
Flats
[Reserved for Product Description]
Parcels
[Reserved for Product Description]
Outbound Single-Piece First-Class Mail International
[Reserved for Product Description]
Inbound Single-Piece First-Class Mail International
[Reserved for Product Description]
Standard Mail (Regular and Nonprofit)
[Reserved for Class Description]
High Density and Saturation Letters
[Reserved for Product Description]
High Density and Saturation Flats/Parcels
[Reserved for Product Description]
Carrier Route
[Reserved for Product Description]
Letters
[Reserved for Product Description]
Flats
[Reserved for Product Description]
Not Flat-Machinables (NFMs)/Parcels
[Reserved for Product Description]
Periodicals
[Reserved for Class Description]
Within County Periodicals
[[Page 38101]]
[Reserved for Product Description]
Outside County Periodicals
[Reserved for Product Description]
Package Services
[Reserved for Class Description]
Single-Piece Parcel Post
[Reserved for Product Description]
Inbound Surface Parcel Post (at UPU rates)
[Reserved for Product Description]
Bound Printed Matter Flats
[Reserved for Product Description]
Bound Printed Matter Parcels
[Reserved for Product Description]
Media Mail/Library Mail
[Reserved for Product Description]
Special Services
[Reserved for Class Description]
Ancillary Services
[Reserved for Product Description]
Address Correction Service
[Reserved for Product Description]
Applications and Mailing Permits
[Reserved for Product Description]
Business Reply Mail
[Reserved for Product Description]
Bulk Parcel Return Service
[Reserved for Product Description]
Certified Mail
[Reserved for Product Description]
Certificate of Mailing
[Reserved for Product Description]
Collect on Delivery
[Reserved for Product Description]
Delivery Confirmation
[Reserved for Product Description]
Insurance
[Reserved for Product Description]
Merchandise Return Service
[Reserved for Product Description]
Parcel Airlift (PAL)
[Reserved for Product Description]
Registered Mail
[Reserved for Product Description]
Return Receipt
[Reserved for Product Description]
Return Receipt for Merchandise
[Reserved for Product Description]
Restricted Delivery
[Reserved for Product Description]
Shipper-Paid Forwarding
[Reserved for Product Description]
Signature Confirmation
[Reserved for Product Description]
Special Handling
[Reserved for Product Description]
Stamped Envelopes
[Reserved for Product Description]
Stamped Cards
[Reserved for Product Description]
Premium Stamped Stationery
[Reserved for Product Description]
Premium Stamped Cards
[Reserved for Product Description]
International Ancillary Services
[Reserved for Product Description]
International Certificate of Mailing
[Reserved for Product Description]
International Registered Mail
[Reserved for Product Description]
International Return Receipt
[Reserved for Product Description]
International Restricted Delivery
[Reserved for Product Description]
Address List Services
[Reserved for Product Description]
Caller Service
[Reserved for Product Description]
Change-of-Address Credit Card Authentication
[Reserved for Product Description]
Confirm
[Reserved for Product Description]
International Reply Coupon Service
[Reserved for Product Description]
International Business Reply Mail Service
[Reserved for Product Description]
Money Orders
[Reserved for Product Description]
Post Office Box Service
[Reserved for Product Description]
Negotiated Service Agreements
[Reserved for Class Description]
HSBC North America Holdings Inc. Negotiated Service Agreement
[Reserved for Product Description]
Bookspan Negotiated Service Agreement
[Reserved for Product Description]
Bank of America Corporation Negotiated Service Agreement
The Bradford Group Negotiated Service Agreement
Part B--Competitive Products
Competitive Product List
Express Mail
Express Mail
Outbound International Expedited Services
Inbound International Expedited Services
Inbound International Expedited Services 1 (CP2008-7)
Inbound International Expedited Services 2 (MC2009-10 and
CP2009-12)
Priority Mail
Priority Mail
Outbound Priority Mail International
Inbound Air Parcel Post
Royal Mail Group Inbound Air Parcel Post Agreement
Parcel Select
Parcel Return Service
International
International Priority Airlift (IPA)
International Surface Airlift (ISAL)
International Direct Sacks--M-Bags
Global Customized Shipping Services
Inbound Surface Parcel Post (at non-UPU rates)
Canada Post--United States Postal Service Contractual Bilateral
Agreement for Inbound Competitive Services (MC2009-8 and CP2009-9)
International Money Transfer Service
International Ancillary Services
Special Services
Premium Forwarding Service
Negotiated Service Agreements
Domestic
Express Mail Contract 1 (MC2008-5)
Express Mail Contract 2 (MC2009-3 and CP2009-4)
Express Mail Contract 3 (MC2009-15 and CP2009-21)
Express Mail & Priority Mail Contract 1 (MC2009-6 and CP2009-7)
Express Mail & Priority Mail Contract 2 (MC2009-12 and CP2009-
14)
Express Mail & Priority Mail Contract 3 (MC2009-13 and CP2009-
17)
Express Mail & Priority Mail Contract 4 (MC2009-17 and CP2009-
24)
Express Mail & Priority Mail Contract 5 (MC2009-18 and CP2009-
25)
Parcel Return Service Contract 1 (MC2009-1 and CP2009-2)
Priority Mail Contract 1 (MC2008-8 and CP2008-26)
Priority Mail Contract 2 (MC2009-2 and CP2009-3)
Priority Mail Contract 3 (MC2009-4 and CP2009-5)
Priority Mail Contract 4 (MC2009-5 and CP2009-6)
Priority Mail Contract 5 (MC2009-21 and CP2009-26)
Priority Mail Contract 6 (MC2009-25 and CP2009-30)
Priority Mail Contract 7 (MC2009-25 and CP2009-31)
Priority Mail Contract 8 (MC2009-25 and CP2009-32)
Priority Mail Contract 9 (MC2009-25 and CP2009-33)
Priority Mail Contract 10 (MC2009-25 and CP2009-34)
Priority Mail Contract 11 (MC2009-27 and CP2009-37)
Priority Mail Contract 12 (MC2009-28 and CP2009-38)
Priority Mail Contract 13 (MC2009-29 and CP2009-39)
Priority Mail Contract 14 (MC2009-30 and CP2009-40)
Outbound International
Global Direct Contracts (MC2009-9, CP2009-10, and CP2009-11)
Global Expedited Package Services (GEPS) Contracts
GEPS 1 (CP2008-5, CP2008-11, CP2008-12, and CP2008-13, CP2008-
18, CP2008-19, CP2008-20, CP2008-21, CP2008-22, CP2008-23, and
CP2008-24)
Global Plus Contracts
Global Plus 1 (CP2008-9 and CP2008-10)
Global Plus 2 (MC2008-7, CP2008-16 and CP2008-17)
Inbound International
Inbound Direct Entry Contracts with Foreign Postal
Administrations (MC2008-6, CP2008-14 and CP2008-15)
International Business Reply Service Competitive Contract 1
(MC2009-14 and CP2009-20)
Competitive Product Descriptions
Express Mail
[Reserved for Group Description]
Express Mail
[Reserved for Product Description]
Outbound International Expedited Services
[Reserved for Product Description]
Inbound International Expedited Services
[Reserved for Product Description]
Priority
[Reserved for Product Description]
Priority Mail
[Reserved for Product Description]
Outbound Priority Mail International
[Reserved for Product Description]
Inbound Air Parcel Post
[Reserved for Product Description]
Parcel Select
[Reserved for Group Description]
Parcel Return Service
[[Page 38102]]
[Reserved for Group Description]
International
[Reserved for Group Description]
International Priority Airlift (IPA)
[Reserved for Product Description]
International Surface Airlift (ISAL)
[Reserved for Product Description]
International Direct Sacks--M-Bags
[Reserved for Product Description]
Global Customized Shipping Services
[Reserved for Product Description]
International Money Transfer Service
[Reserved for Product Description]
Inbound Surface Parcel Post (at non-UPU rates)
[Reserved for Product Description]
International Ancillary Services
[Reserved for Product Description]
International Certificate of Mailing
[Reserved for Product Description]
International Registered Mail
[Reserved for Product Description]
International Return Receipt
[Reserved for Product Description]
International Restricted Delivery
[Reserved for Product Description]
International Insurance
[Reserved for Product Description]
Negotiated Service Agreements
[Reserved for Group Description]
Domestic
[Reserved for Product Description]
Outbound International
[Reserved for Group Description]
Part C--Glossary of Terms and Conditions [Reserved]
Part D--Country Price Lists for International Mail [Reserved]
[FR Doc. E9-18243 Filed 7-30-09; 8:45 am]
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