[Federal Register Volume 75, Number 13 (Thursday, January 21, 2010)]
[Rules and Regulations]
[Pages 3383-3387]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-1055]
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POSTAL REGULATORY COMMISSION
39 CFR Part 3020
[Docket Nos. MC2010-7 and CP2010-7; Order No. 361]
New Postal Product
AGENCY: Postal Regulatory Commission.
ACTION: Final rule.
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SUMMARY: The Commission is adding Express Mail Contract 7 to the
Competitive Product List. This action is consistent with a postal
reform law. Republication of the lists of market dominant and
competitive products is also consistent with statutory requirements.
DATES: Effective January 21, 2010 and is applicable beginning December
15, 2009.
FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel,
202-789-6820 or [email protected].
SUPPLEMENTARY INFORMATION: Regulatory History, 74 FR 57538 (November 6,
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 Express
Mail
[[Page 3384]]
Contract 7 to the Competitive Product List. For the reasons discussed
below, the Commission approves the Request.
II. Background
At the end of October 2009, the Postal Service filed a formal
request and associated supporting information pursuant to 39 U.S.C.
3642 and 39 CFR 3020.30 et seq. to add Express Mail Contract 7 to the
Competitive Product List.\1\ The Postal Service asserts that the
Express Mail Contract 7 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. MC2010-7.
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\1\ Request of the United States Postal Service to Add Express
Mail Contract 7 to Competitive Product List and Notice of Filing
(Under Seal) of Contract and Supporting Data, October 28, 2009
(Request). On October 29, 2009, the Postal Service filed errata to
its Request. See Notice of the United States Postal Service of
Filing Errata to Request and Notice, October 29, 2009. Accordingly,
the filing of the entire set of documents related to this Request
was not completed until October 29, 2009.
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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. CP2010-7.
In support of its Request, the Postal Service filed the following
materials: (1) A redacted version of the Governors' Decision
authorizing certain types of Express Mail contracts;\2\ (2) a redacted
version of the contract;\3\ (3) a requested change 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 (6) an application for non-
public treatment of the materials filed under seal.\7\ The redacted
version of the contract provides that the contract is terminable on 30
days' notice by either party, but could continue for 3 years from the
effective date subject to annual price adjustments. Request, Attachment
B.
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\2\ Attachment A to the Request, reflecting Governors' Decision
No. 09-14, October 26, 2009.
\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, 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 D, 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). Id., Attachment E.
The Postal Service filed much of the supporting materials,
including the supporting data and the unredacted contract, under seal.
The Postal Service maintains that the contract and related financial
information, including the customer's name and the accompanying
analyses that provide prices, certain terms and conditions, and
financial projections, should remain confidential. Id., Attachment F,
at 2-3.\8\
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\8\ In its application for non-public treatment, the Postal
Service requests an indefinite extension of non-public treatment of
customer-identifying information. Id. at 7. For the reasons
discussed in PRC Order No. 323, that request is denied. See, e.g.,
Docket No. MC2010-1 and CP2010-1, Order Concerning Priority Mail
Contract 19 Negotiated Service Agreement, October 26, 2009 (Order
No. 323).
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In Order No. 331, the Commission gave notice of the two dockets,
appointed a public representative, and provided the public with an
opportunity to comment.\9\ On November 2, 2009, Chairman's Information
Request No. 1 (CHIR No. 1) was filed. The due date for responding to
CHIR No. 1 was set as November 9, 2009. On November 13, 2009, the
Postal Service filed a partial response to CHIR No. 1.\10\ Seeking
clarification of information contained in the Postal Service's November
13, 2009 partial response, Chairman's Information Request No. 2 (CHIR
No. 2) was filed on November 16, 2009.\11\ The Postal Service responded
to CHIR No. 2 on November 19, 2009.\12\ On December 9, 2009, the Postal
Service filed its response to the outstanding questions in CHIR No.
1.\13\
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\9\ PRC Order No. 331, Notice and Order Concerning Express Mail
Contract 7 Negotiated Service Agreement, October 30, 2009 (Order No.
331).
\10\ Notice of the United States Postal Service of Filing
Responses to Chairman's Information Request No. 1, Question 1,
Subparts (b)-(d), Under Seal, November 13, 2009 (Partial Response to
CHIR No. 1). With its Partial Response to CHIR No. 1, the Postal
Service also filed a motion for late acceptance which contained an
explanation of the reason for the delay and the issues with
responding to the remaining information requests. Motion of the
United States Postal Service for Late Acceptance of Responses to
Chairman's Information Request No. 1, November 13, 2009. The motion
is granted.
\11\ Notice of Filing of Chairman's Information Request No. 2
Under Seal, November 16, 2009.
\12\ Notice of the United States Postal Service of Filing
Response to Chairman's Information Request No. 2, Under Seal,
November 19, 2009.
\13\ Notice of the United States Postal Service of Filing
Response to Chairman's Information Request No. 1, Question 1(a),
Under Seal, December 9, 2009 (Remaining Response to CHIR No. 1).
With its Remaining Response to CHIR No. 1, the Postal Service filed
a motion for late acceptance of that response. Motion of the United
States Postal Service for Late Acceptance of Response to Chairman's
Information Request No. 1, Question 1(a), December 9, 2009. The
motion is granted, although the Postal Service should be aware that
the significant delay in the Commission's decision in this case is
directly related to the delay in the Postal Service's filing of this
response.
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III. Comments
Comments were timely filed by the Public Representative on November
9, 2009.\14\ No comments were submitted by other interested parties.
The Public Representative states that the Postal Service's filing meets
the pertinent provisions of title 39 and the relevant Commission rules.
Id. at 1-3. He further states that the agreement is fair to the parties
and employs pricing terms favorable to the customer, the Postal
Service, and thereby, the public. Id. at 4-5. The Public Representative
also believes that the Postal Service has provided appropriate
justification for maintaining confidentiality in this case. Id. at 3.
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\14\ Public Representative Comments in Response to United States
Postal Service Request to Add Express Mail Contract 7 to the
Competitive Product List, November 9, 2009 (Public Representative
Comments).
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IV. Commission Analysis
The Commission has reviewed the Request, the contract, the
financial analysis provided under seal that accompanies the Request,
the responses to CHIR Nos. 1 and 2, and the comments filed by the
Public Representative.
Statutory requirements. The Commission's statutory responsibilities
in this instance entail assigning Express Mail Contract 7 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 Express
Mail Contract 7 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 consists of all other
products.
[[Page 3385]]
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, 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., 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., para. (h).
No commenter opposes the proposed classification of Express Mail
Contract 7 as competitive. Having considered the statutory requirements
and the support offered by the Postal Service, the Commission finds
that Express Mail Contract 7 is appropriately classified as a
competitive product and should be added to the Competitive Product
List.
Cost considerations. In its initial filings, the Postal Service
presented an incomplete financial analysis of Express Mail Contract 7.
The incomplete initial filings did not allow the Commission to
undertake the required analysis of Express Mail Contract 7 until the
Postal Service fully responded to CHIR Nos. 1 and 2. Because the Postal
Service did not fully respond to CHIR No. 1 until December 9, 2009, the
Commission could not begin its analysis until that time. Even then,
further informal follow-up to the Postal Service's responses to CHIR
No. 1 was necessary for a complete understanding of the data.
Based on the data and explanations submitted, the Commission finds
that Express Mail Contract 7 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 Express Mail Contract 7 indicates that it comports with the
provisions applicable to rates for competitive products. The
Commission's analysis is provided in Library Reference PRC-CP2010-7-NP-
LR1 which is being filed under seal.
Other considerations. The Postal Service shall notify the
Commission if termination occurs prior to the scheduled termination
date. Following the scheduled termination date of the agreement, the
Commission will remove the product from the Competitive Product List.
Further, while the Commission currently believes that the contract
is expected to comply with the applicable requirements of 39 U.S.C.
3633, the Commission seeks to ensure that it is provided with the
proper level of detail to make appropriate findings in the FY 2010
Annual Compliance Determination (ACD) with respect to this contract. To
that end, the Postal Service should view Library Reference PRC-CP2010-
7-NP-LR1 as illustrative of the granularity of the information to be
reported with respect to this contract.
In conclusion, the Commission approves Express Mail Contract 7 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. Express Mail Contract 7 (MC2010-7 and CP2010-7) 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 termination
occurs prior to the scheduled termination date.
3. The Postal Service shall view Library Reference PRC-CP2010-7-NP-
LR1 as illustrative of the level of detail of information that the
Commission seeks with respect to this contract in connection with its
FY 2010 Annual Compliance Determination proceeding.
4. 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 discussed in the preamble, the Postal Regulatory
Commission amends chapter III of title 39 of the Code of Federal
Regulations as follows:
PART 3020--PRODUCT LISTS
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1. The authority citation for part 3020 continues to read as follows:
Authority: 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]
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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]
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 Forward
[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 Contract 5 (MC2010-5 and CP2010-5)
Express Mail Contract 6 (MC2010--6 and CP2010-6)
Express Mail Contract 7 (MC2010--7 and CP2010-7)
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 1 (MC2009-11 and
CP2009-13)
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)
[[Page 3387]]
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)
Priority Mail Contract 18 (MC2009-42 and CP2009-63)
Priority Mail Contract 19 (MC2010-1 and CP2010-1)
Priority Mail Contract 20 (MC2010-2 and CP2010-2)
Priority Mail Contract 21 (MC2010-3 and CP2010-3)
Priority Mail Contract 22 (MC2010-4 and CP2010-4)
Priority Mail Contract 23 (MC2010-9 and CP2010-9)
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, 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
Inbound Direct Entry Contracts with Foreign Postal
Administrations (MC2008-6, CP2008-14 and MC2008-15)
Inbound Direct Entry Contracts with Foreign Postal
Administrations 1 (MC2008-6 and CP2009-62)
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
[Reserved for Group Description]
International
[Reserved for Group Description]
International Priority Airlift (IPA)
[Reserved for Product Description]
International Surface Airlift (ISAL)
[Reserved for Prduct 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. 2010-1055 Filed 1-20-10; 8:45 am]
BILLING CODE 7710-FW-S