[Federal Register Volume 74, Number 189 (Thursday, October 1, 2009)]
[Rules and Regulations]
[Pages 50708-50712]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-23687]
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POSTAL REGULATORY COMMISSION
39 CFR Part 3020
[Docket Nos. MC2009-40 and CP2009-61; Order No. 295]
New Postal Product
AGENCY: Postal Regulatory Commission.
ACTION: Final rule.
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SUMMARY: The Commission is adding Parcel Select & Parcel Return Service
Contract 2 to the Competitive Product List. This action is consistent
with changes in a recent law governing postal operations. Republication
of the lists of market dominant and competitive products is also
consistent with new requirements in the law.
DATES: Effective October 1, 2009 and is applicable beginning September
4, 2009.
FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel,
202-789-6820 or [email protected].
SUPPLEMENTARY INFORMATION:
Regulatory History, 74 FR 44881 (August 31, 2009).
I. Introduction
II. Background
III. Comments
IV. Commission Analysis
V. Ordering Paragraphs
I. Introduction
The Postal Service seeks to add a new product identified as Parcel
Select & Parcel Return Service Contract 2 to the Competitive Product
List. For the reasons discussed below, the Commission approves the
Request.
II. Background
On August 21, 2009, the Postal Service filed a formal request
pursuant to 39 U.S.C. 3642 and 39 CFR 3020.30, et seq., to add Parcel
Select & Parcel Return Service Contract 2 to the Competitive Product
List.\1\ The Postal Service asserts that the Parcel Select & Parcel
Return Service Contract 2 product 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. MC2009-40.
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\1\ Request of the United States Postal Service to Add Parcel
Select & Parcel Return Service Contract 2 to Competitive Product
List and Notice of Establishment of Rates and Class Not of General
Applicability, August 21, 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. Id. The contract has been assigned Docket No. CP2009-61.
[[Page 50709]]
In support of its Request, the Postal Service filed the following
materials: (1) A redacted version of the Governors' Decision
authorizing the new product which also includes an analysis of Parcel
Select & Parcel Return Service Contract 2 and certification of the
Governors' vote; \2\ (2) a redacted version of the contract which,
among other things, provides (a) that the effective date of the
contract is the day after the date on which the Commission issues all
regulatory approvals, and (b) that the contract will expire on May 31,
2011, unless it is extended for an additional year; \3\ (3) requested
changes in the Mail Classification Schedule product list; \4\ (4) a
Statement of Supporting Justification as required by 39 CFR 3020.32;
\5\ (5) a certification of compliance with 39 U.S.C. 3633(a); \6\ and
(7) an application for non-public treatment of materials.\7\
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\2\ Attachment A to the Request. The analysis that accompanies
the Governors' Decision notes, among other things, that the contract
will result in new and more profitable volume for the Postal
Service.
\3\ Attachment B to the Request.
\4\ Attachment C to the Request.
\5\ Attachment D to the Request.
\6\ Attachment E to the Request.
\7\ Attachment F to the Request.
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In the Statement of Supporting Justification, Daniel J. Barrett,
Manager, Sales Strategy and Customer Support, Ground Shipping Services,
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 increase contribution toward the requisite 5.5
percent of the Postal Service's total institutional costs. Id.,
Attachment D. Thus, Mr. Barrett contends there will be no issue of
subsidization of competitive products by market dominant products as a
result of this contract. Id. 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 E.
The Postal Service filed much of the supporting materials,
including the unredacted Governors' Decision, the unredacted contract,
and supporting financial analysis,\8\ under seal. In its application
for non-public treatment of materials, 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., Attachment F.
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\8\ The Commission appreciates the Postal Service's efforts to
ensure its financial analysis is complete and thorough. The
financial analysis filed in this docket should serve as a model for
future requests.
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In Order No. 288, the Commission gave notice of the two dockets,
appointed a public representative, requested supplemental information,
and provided the public with an opportunity to comment.\9\ On August
27, 2009, the Postal Service filed a response to the Commission's
request for supplemental information.\10\
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\9\ PRC Order No. 288, Notice and Order Concerning Parcel Select
& Parcel Return Service Contract 2 Negotiated Service Agreement,
August 25, 2009 (Order No. 288).
\10\ Response of the United States Postal Service to Request for
Supplemental Information in Order No. 288, August 27, 2009.
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III. Comments
Comments were filed by the Public Representative.\11\ No filings
were submitted by other interested parties. The Public Representative
states that the Postal Service's filing and the Parcel Select & Parcel
Return Service Contract 2 agreement comply with applicable Commission
rules of practice. Id. at 3. He also addresses the relationship between
the data systems used to calculate costs in this case and the Postal
Service's proposal to change that established methodology as ``proposal
fourteen'' in Commission Docket No. RM2009-10. Specifically, he notes
that ``the Commission's determination on the costing methodology might
impact the data supplied for the instant contract.'' Id. at 4. However,
the Public Representative ``concede[s] that pricing for this PS&PRS NSA
appears to fully comply with the three-pronged requirements of 39
U.S.C. 3633(a), and with the other pricing, cost coverage, and
contribution provisions of title 39.'' Id.
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\11\ Public Representative Comments in Response to United States
Postal Service Request to Add Parcel Select & Parcel Return Service
Contract 2 to Competitive Product List and Notice of Establishment
of Rates and Class Not of General Applicability, September 2, 2009
(Public Representative Comments).
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The Public Representative believes that the Postal Service has
provided adequate justification for maintaining confidentiality in this
case. Id. at 2. He also believes that because the contract is designed
to help acquire new volume, the contract appears to benefit the general
public. Id. at 5.
IV. Commission Analysis
The Commission has reviewed the Request, the contract, the
financial analysis provided under seal, the supplemental information
filed by the Postal Service, and the comments filed by the Public
Representative.
Statutory requirements. The Commission's statutory responsibilities
in this instance entail assigning Parcel Select & Parcel Return Service
Contract 2 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 Parcel
Select & Parcel Return Service Contract 2 as a product to the Market
Dominant Product List or the Competitive Product List, the Commission
must consider whether
[T]he 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 risk of losing volume to private companies. Request,
Attachment D, at 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 ground shipping 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 ground shipping 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 Parcel Select &
Parcel Return Service Contract 2 as
[[Page 50710]]
competitive. Having considered the statutory requirements and the
support offered by the Postal Service, the Commission finds that Parcel
Select & Parcel Return Service Contract 2 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 Parcel Select & Parcel Return Service Contract 2
ensures 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 Parcel
Select & Parcel Return Service Contract 2 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 Parcel Select & Parcel Return Service
Contract 2 indicates that it comports with the provisions applicable to
rates for competitive products.
In his comments, the Public Representative raises the issue of the
pending Parcel Select and Parcel Return Service methodological changes.
See Docket No. RM2009-10, Proposal Fourteen. In the instant filing, the
Postal Service correctly uses the current approved methodology
concerning Parcel Select and Parcel Return Service Transportation and
Mail Processing costs. Nevertheless, the Commission believes the
changes presented in Proposal Fourteen, if approved, would not harm the
potential profitability of this contract.
Application for non-public treatment. The Postal Service believes
that the 10-year period of non-public treatment, as specified in 39
U.S.C. 3007.30, is insufficient to protect customer identifying
information. Notice, Attachment F, at 6. It asserts that such
information should be protected permanently and requests that the
Commission enter an order extending that duration indefinitely.
The request is premature. Should the need for non-public treatment
remain due to ongoing business relationships, the Postal Service may
submit a motion to the Commission to extend the duration at the
appropriate time.
Other considerations. The Postal Service shall notify the
Commission if the contract is extended for an additional year. 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 Competitive Product List.
In conclusion, the Commission approves Parcel Select & Parcel
Return Service Contract 2 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.
V. Ordering Paragraphs
It is ordered:
1. Parcel Select & Parcel Return Service Contract 2 (MC2009-40 and
CP2009-61) is added to the Competitive Product List as a new product
under Negotiated Service Agreements, Domestic.
2. The Postal Service shall notify the Commission if the contract
is extended for an additional year 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.
List of Subjects in 39 CFR Part 3020
Administrative practice and procedure; Postal Service.
By the Commission.
Judith M. Grady,
Acting Secretary.
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 Service 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
[Reserved for Product Description]
Outside County Periodicals
[Reserved for Product Description]
Package Services
[Reserved for Class Description]
[[Page 50711]]
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
2000 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 Contract 4 (MC2009-34 and CP2009-45)
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)
Express Mail & Priority Mail Contract 6 (MC2009-31 and CP2009-
42)
Express Mail & Priority Mail Contract 7 (MC2009-32 and CP2009-
43)
Express Mail & Priority Mail Contract 8 (MC2009-33 and CP2009-
44)
Parcel Select & Parcel Return Service Contract 2 (MC2009-40 and
CP2009-61)
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)
Priority Mail Contract 15 (MC2009-35 and CP2009-54)
Priority Mail Contract 16 (MC2009-36 and CP2009-55)
Priority Mail Contract 17 (MC2009-37 and CP2009-56)
Outbound International
Direct Entry Parcels Contracts
Direct Entry Parcels 1 (MC2009-26 and CP2009-36)
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 Expedited Package Services 2 (CP2009-50)
Global Plus Contracts
Global Plus 1 (CP2008-8, CP2008-46 and CP2009-47)
Global Plus 2 (MC2008-7, CP2008-48 and CP2008-49)
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
[[Page 50712]]
[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
[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. E9-23687 Filed 9-30-09; 8:45 am]
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