Federal Register, Volume 75 Issue 167 (Monday, August 30, 2010)

[Federal Register Volume 75, Number 167 (Monday, August 30, 2010)]
[Notices]
[Pages 53003-53004]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-21438]


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POSTAL REGULATORY COMMISSION

[Docket No.MC2010-36; Order No. 521]


Product List Transfer

AGENCY:  Postal Regulatory Commission.

ACTION:  Notice.

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SUMMARY:  The Commission is noticing a recently-filed Postal Service 
request to transfer commercial Standard Mail Fulfillment Parcels from 
the market dominant product list to the competitive product list. This 
notice addresses procedural steps associated with the filing.

DATES:  Comments are due September 17, 2010; reply comments are due 
October 15, 2010.

ADDRESSES:  Submit comments electronically via the Commission's Filing 
Online system at http://www.prc.gov. Commenters who cannot submit their 
views electronically should contact the person identified in the FOR 
FURTHER INFORMATION CONTACT section by telephone for advice on 
alternatives to electronic filing.

FOR FURTHER INFORMATION CONTACT:  Stephen L. Sharfman, General Counsel, 
[email protected] or 202-789-6820.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction
II. Notice of Filing
III. Ordering Paragraphs

I. Introduction

    Pursuant to 39 U.S.C. 3642 and 39 CFR 3020 et seq., on August 16, 
2010, the Postal Service filed a request to transfer its commercial 
Standard Mail Fulfillment Parcels product from the market dominant 
product list to the competitive product list in the Mail Classification 
Schedule (MCS) on file with the Commission.\1\
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    \1\ Request of the United States Postal Service to Transfer 
Commercial Standard Mail Parcels to the Competitive Product List, 
August 16, 2010 (Request).
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    The Postal Service states that, to avoid confusion, this filing is 
based on the assumption that classification changes proposed in Docket 
No. R2010-4 will be approved by the Commission prior to consideration 
of this request.\2\ Request at 1, n.1. In that docket, the Postal 
Service proposes to segment Standard Mail parcels into two main 
categories: Marketing Parcels and Fulfillment Parcels. Current 
commercial and nonprofit Standard Mail Parcels would become Standard 
Mail Fulfillment Parcels.\3\ The Postal Service does not propose to 
transfer nonprofit Standard Mail Fulfillment Parcels. Request at 1, 
n.1. The Postal Service suggests that upon their transfer to the 
competitive product list, the Standard Mail Fulfillment Parcels would 
be classified as a ``Lightweight'' subcategory of the Parcel Select 
product. Id. at 1. The minimum weight would be less than 16 ounces.\4\
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    \2\ See Docket No. R2010-4, Exigent Request of the United States 
Postal Service, July 6, 2010.
    \3\ As proposed in Docket No. R2010-4, current commercial and 
nonprofit Standard Mail NFMs would become Standard Mail Marketing 
Parcels. Because of addressing standards, some current customers 
using commercial Standard Mail NFMs for fulfillment would be 
required to use commercial Standard Mail Fulfillment Parcels. 
Request at 2-3.
    \4\ Id., Attachment C, Competitive Products, 2115.2, Size and 
Weight Limitations; see also id., 2115.6 Prices, Machinable 
Lightweight Parcels (greater than 3.3 ounces) and Irregular 
Lightweight Parcels (3.3 ounces or less) and (greater than 3.3 
ounces).
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    As required by 39 CFR 3020.31 of the Commission's rules, a copy of 
Governors' Resolution No. 10-4 is included with the Request as 
Attachment A. Attachment B to the Request contains the Statement of 
Supporting Justification required by 39 CFR 3020.32 of the Commission's 
rules. Attachment C is the proposed draft MCS language and prices 
incorporating the language proposed in Docket No. R2010-4 as if already 
approved by the Commission with proposed additions and deletions for 
this Request.
    The Postal Service summarizes the required Statement of Supporting 
Justification by noting that the current classification of parcels 
weighing less than one pound as market dominant products, and parcels 
weighing more than one pound as competitive products, produces a 
misalignment in the marketplace. Competitors make no such distinction 
and can offer seamless shipping options. The transfer would allow the 
Postal Service to offer similar comprehensive shipping solutions 
including contracts covering all parcels regardless of weight. Id. at 
3.
    The Postal Service's Statement of Supporting Justification offers 
an explanation why the transfer to the competitive product list will 
not result in violation of the standards in 39 U.S.C. 3633. Id., 
Attachment B, at 1. The Postal Service notes that in FY 2009, 
commercial Standard Mail Fulfillment Parcels and other Standard Mail 
parcel categories had a collective cost coverage of 75.23 percent. It 
requests a 23.3 percent rate increase in Docket No. R2010-4 for 
Standard Mail parcel categories which, if approved, will yield a cost 
coverage in excess of 100 percent. Thus, it contends that commercial 
Standard Mail Parcels, if treated as a subcategory of Parcel Select, 
would satisfy 39 U.S.C. 3633(a)(1) and (2). Id. at 2.
    The Statement of Supporting Justification seeks to demonstrate, 
pursuant to 39 CFR 3020.32(d), that the requested change does not 
propose to classify as competitive a product over which the Postal 
Service exercises sufficient market power that it can, without losing a 
significant level of business, set the price of the product 
substantially above costs, raise prices significantly, decrease 
quality, or decrease output. Id. at 3-7. The Statement of Justification 
also seeks to explain the limited extent Standard Mail Fulfillment 
Parcels are either covered by the postal monopoly or within the scope 
of the exceptions or suspensions to the Private Express Statutes, 
noting that normally Standard Mail Fulfillment Parcels cannot contain 
items required to be sent by First-Class Mail. The Postal Service 
indicates an intention to promulgate mailing standards in its Domestic 
Mail Manual limiting the inclusion of letters in any Lightweight Parcel 
Select parcel unless covered by an exception or suspension to the 
Private Express Statues pursuant to 39 CFR parts 310 or 320. Id. at 7-
9.
    Pursuant to 39 CFR 3032(f), the Postal Service states that the 
primary competitors to its Standard Mail Fulfillment Parcel services 
are the ground shipping services offered by UPS and FedEx and that each 
have the flexibility to price parcel products to maximize 
profitability. Id. at 9. The Postal Service states there is likely a 
distortionary effect on the marketplace because Standard Mail 
Fulfillment Parcels are priced below full cost coverage. Because of 
this market distortion, the ``[Postal Service] has attempted to 
structure profitable contracts with large shippers for lightweight 
parcels but failed because its efforts were undercut by its own 
Standard Mail parcel prices.'' Id. at 10. The Postal Service claims the 
transfer should ameliorate any distortionary effect on the current 
pricing structure. Id. The Postal Service states that it is also losing 
full network First-Class Mail package volume where its competitors

[[Page 53004]]

offer products with the last mile service through the Postal Service. 
Id.
    The Postal Service states that the views of those who use the 
product are mainly concerned that the transfer will lead to price 
increases. In response, the Postal Service claims prices will need to 
be increased even absent a transfer to the competitive product list. It 
further states that one large customer supports transfer which offers 
the possibility of contracts for the product. The Postal Service states 
the transfer will allow contracts for complete shipping solutions and 
create mutually beneficial comprehensive solutions for shipping needs. 
Id. at 11. The Postal Service is not aware of any small business that 
offers products competing with commercial Standard Mail Fulfillment 
Parcels. Id. at 11-12.

II. Notice of Filings

    The Commission establishes Docket No. MC2010-36 to consider the 
Postal Service's proposal to transfer commercial Standard Mail 
Fulfillment Parcels to the competitive product list.
    Interested persons may submit comments on whether the Postal 
Service's filing in the captioned docket is consistent with the 
policies of 39 U.S.C. 3633, 39 U.S.C. 3642, and 39 CFR 3020 subpart B. 
Comments are due no later than September 17, 2010. Reply comments, if 
any, are due October 15, 2010. The Postal Service's filing can be 
accessed via the Commission's Web site (http://www.prc.gov.)
    The Commission appoints James Waclawski to serve as Public 
Representative in this docket.

III. Ordering Paragraphs

    It is ordered:
    1. The Commission establishes Docket No. MC2010-36 for 
consideration of the matters raised in this docket.
    2. Pursuant to 39 U.S.C. 505, James Waclawski is appointed to serve 
as officer of the Commission (Public Representative) to represent the 
interests of the general public in this proceeding.
    3. Comments by interested persons in these proceedings are due no 
later than September 17, 2010.
    4. Reply comments by interested persons in this proceeding are due 
no later than October 15, 2010.
    5. The Secretary shall arrange for publication of this order in the 
Federal Register.

    By the Commission.
Shoshana M. Grove,
Secretary.
[FR Doc. 2010-21438 Filed 8-27-2010; 8:45 am]
BILLING CODE 7710-FW-S