Federal Register: February 23, 2010 (Volume 75, Number 35)
DOCID: fr23fe10-11 FR Doc 2010-3475
POSTAL REGULATORY COMMISSION
Postal Regulatory Commission
CFR Citation: 39 CFR Part 3020
Docket ID: [Docket Nos. MC2010-16 and CP2010-16; Order No. 379]
NOTICE: RULES
DOCID: fr23fe10-11
DOCUMENT ACTION: Final rule.
SUBJECT CATEGORY:
New Postal Product
DATES: Effective February 23, 2010 and is applicable beginning January 4, 2010.
DOCUMENT SUMMARY:
The Commission is adding Express Mail Contract 8 to the Competitive Product List. This action is consistent with a postal reform law. Republication of the Product Lists is also consistent with a statutory provision.
SUMMARY:
New Postal Product
SUPPLEMENTAL INFORMATION
Regulatory History, 74 FR 66242 (December 15, 2009).
Table of Contents
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 Contract 8 to the Competitive Product List. For the reasons discussed below, the Commission approves the Request.
II. Background
Pursuant to 39 U.S.C. 3642 and 39 CFR 3020.30 et seq., the Postal
Service filed a formal request and associated supporting information to
add Express Mail Contract 8 to the Competitive Product List.\1\ The
Postal Service asserts that Express Mail Contract 8 is a competitive
product ``not of general applicability'' within the meaning of 39
U.S.C. 3632(b)(3). The Postal Service states that prices and
classification underlying this contract are supported by Governors'
Decision No. 0914 in Docket Nos. MC20105 and CP20105. Id. at 1. The Request has been assigned Docket No. MC201016.
\1\ Request of the United States Postal Service to Add Express
Mail Contract 8 to Competitive Product List and Notice of Filing
(Under Seal) of Supporting Data, December 11, 2009 (Request).
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. CP201016.
In support of its Request, the Postal Service filed the following
materials: (1) A redacted version of the Governors' Decision,
originally filed in Docket Nos. MC20105 and CP20105, authorizing
certain Express Mail contracts, and Certification of Governors'
Vote;\2\ (2) a redacted version of the contract, and Certification of
Governors' Vote;\3\ (3) a requested change in the Competitive 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 nonpublic treatment of the materials filed under seal.\7\
\2\ Attachment A to the Request, reflecting Governors' Decision No. 0914, 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.
In the Statement of Supporting Justification, Susan M. Plonkey, Vice President, Sales, asserts that the service to be provided under the contract will cover its 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 D. Thus, Ms. Plonkey contends there will be no issue of subsidization of competitive products by market dominant products as a result of this contract. Id.
Express Mail Contract 8 is included with the Request. The contract was entered into on May 28, 2009, and will become effective as a Negotiated Service Agreement January 4, 2010. The contract provides that the Postal Service may not increase rates until after May 27, 2010. The Postal Service represents that the contract is consistent with 39 U.S.C. 3633(a). See id., Attachment D.
In its Request, the Postal Service maintains that the supporting financial information, including the analyses that provide prices, terms, conditions, cost data, and financial projections should remain under seal. Id., Attachment D.
In Order No. 359, the Commission gave notice of the two dockets,
requested supplemental information, appointed a public representative,
and provided the public with an opportunity to comment.\8\ On December
18, 2009, the Postal Service provided its response to the Commission's
request for supplemental information.\9\ On December 23, 2009,
Chairman's Information Request No. 1 was issued for response by the
Postal Service by December 28, 2009.\10\ The Postal Service filed its response on December 28, 2009.\11\
\8\ Notice and Order Concerning Express Mail Contract 8
Negotiated Service Agreement, December 15, 2009 (Order No. 359).
\9\ Supplemental Information Provided by the United States
Postal Service in Response to Order No. 359, December 18, 2009.
\10\ Chairman's Information Request No. 1, December 23, 2009 (CHIR No. 1).
\11\ Responses of the United States Postal Service to Chairman's Information Request No. 1, December 28, 2009.
III. Comments
Comments were filed by the Public Representatives.\12\ No comments were submitted by other interested parties.
[[Page 7952]]
The Public Representatives state that the Postal Service's filing meets
the pertinent provisions of title 39 and the relevant Commission rules.
Id. at 3. The Public Representatives also believe that the Postal
Service has provided appropriate justification for maintaining
confidentiality in this case. Id. However, the Public Representatives
assert that the Postal Service should have filed the instant contract
with the Commission when it was executed in May of 2009. Id. at 4. As a
result, the Public Representatives ask the Commission to ``direct the
Postal Service to file all existing Express Mail contracts which have
not been previously filed.'' Id. The Public Representatives also
request that the Commission encourage the Postal Service to submit all
materials referenced in the relevant enabling Governors' Decision. Id. at 45.
\12\ Comments of Public Representatives in Response to PRC Order No. 359, December 23, 2009.
IV. Commission Analysis
The Commission has reviewed the Request, the contract, the financial analysis provided under seal that accompanies it, 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 Express Mail Contract 8 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 8 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.
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 8 as competitive. Having considered the statutory requirements and the support offered by the Postal Service, the Commission finds that Express Mail Contract 8 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 Express Mail Contract 8 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 Express Mail Contract 8 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 8 indicates that it comports with the provisions applicable to rates for competitive products.
Other considerations. The Commission agrees with the Public Representatives that the instant contract could have been filed with the Commission for approval at a much earlier date. The Commission also shares the Public Representatives' concern that other, similar contracts might exist. Accordingly, the Commission directs the Postal Service to file, by January 15, 2010, any outstanding Express Mail contract that may be categorized as a negotiated service agreement because its prices are not subject to change with the general competitive rate increase scheduled to take effect January 4, 2010.
In conclusion, the Commission approves Express Mail Contract 8 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 8 (MC201016 and CP201016) is added to the Competitive Product List as a new product under Negotiated Service Agreements, Domestic.
2. The Commission directs the Postal Service to file, by January 15, 2010, any outstanding Express Mail contract that may be categorized as having competitive rates not of general applicability because its prices are not subject to change with the general competitive rate increase scheduled to take effect January 4, 2010.
3. The Postal Service shall notify the Commission if termination occurs prior to the scheduled termination date.
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.
Shoshana M. Grove,
Secretary.
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 3020PRODUCT LISTS
1. The authority citation for part 3020 continues to read as follows:
Authority: Authority: 39 U.S.C. 503; 3622; 3631; 3642; 3682.
2. Revise Appendix A to Subpart A of Part 3020Mail Classification Schedule to read as follows:
Appendix A to Subpart A of Part 3020Mail Classification Schedule Part AMarket Dominant Products
1000 Market Dominant Product List
FirstClass Mail
SinglePiece Letters/Postcards
Bulk Letters/Postcards
[[Page 7953]]
Flats
Parcels
Outbound SinglePiece FirstClass Mail International
Inbound SinglePiece FirstClass Mail International Standard Mail (Regular and Nonprofit)
High Density and Saturation Letters
High Density and Saturation Flats/Parcels
Carrier Route
Letters
Flats
Not FlatMachinables (NFMs)/Parcels
Periodicals
Within County Periodicals
Outside County Periodicals
Package Services
SinglePiece 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
ChangeofAddress 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 PostUnited States Postal Service Contractual Bilateral
Agreement for Inbound Market Dominant Services (MC201012 and R20102)
Market Dominant Product Descriptions
FirstClass Mail
[Reserved for Class Description]
SinglePiece Letters/Postcards
[Reserved for Product Description]
Bulk Letters/Postcards
[Reserved for Product Description]
Flats
[Reserved for Product Description]
Parcels
[Reserved for Product Description]
Outbound SinglePiece FirstClass Mail International [Reserved for Product Description]
Inbound SinglePiece FirstClass 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 FlatMachinables (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]
SinglePiece 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]
ShipperPaid 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]
ChangeofAddress 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 BCompetitive Products
2000 Competitive Product List
Express Mail
Express Mail
Outbound International Expedited Services
Inbound International Expedited Services
Inbound International Expedited Services 1 (CP20087)
Inbound International Expedited Services 2 (MC200910 and CP2009 12)
Inbound International Expedited Services 3 (MC201013 and CP2010 12)
Priority Mail
Priority Mail
Outbound Priority Mail International
Inbound Air Parcel Post (at nonUPU rates)
Royal Mail Group Inbound Air Parcel Post Agreement
Inbound Air Parcel Post (at UPU rates)
Parcel Select
Parcel Return Service
International
International Priority Airlift (IPA)
International Surface Airlift (ISAL)
International Direct SacksMBags
Global Customized Shipping Services
Inbound Surface Parcel Post (at nonUPU rates)
[[Page 7954]]
Canada PostUnited States Postal Service Contractual Bilateral
Agreement for Inbound Competitive Services (MC201014 and
CP201013Inbound Surface Parcel post at NonUPU Rates and XpresspostUSA)
International Money Transfer Service
International Ancillary Services
Special Services
Premium Forwarding Service
Negotiated Service Agreements
Domestic
Express Mail Contract 1 (MC20085)
Express Mail Contract 2 (MC20093 and CP20094)
Express Mail Contract 3 (MC200915 and CP200921)
Express Mail Contract 4 (MC200934 and CP200945)
Express Mail Contract 5 (MC20105 and CP20105)
Express Mail Contract 6 (MC20106 and CP20106)
Express Mail Contract 7 (MC20107 and CP20107)
Express Mail Contract 8 (MC201016 and CP201016)
Express Mail & Priority Mail Contract 1 (MC20096 and CP20097)
Express Mail & Priority Mail Contract 2 (MC200912 and CP2009 14)
Express Mail & Priority Mail Contract 3 (MC200913 and CP2009 17)
Express Mail & Priority Mail Contract 4 (MC200917 and CP2009 24)
Express Mail & Priority Mail Contract 5 (MC200918 and CP2009 25)
Express Mail & Priority Mail Contract 6 (MC200931 and CP2009 42)
Express Mail & Priority Mail Contract 7 (MC200932 and CP2009 43)
Express Mail & Priority Mail Contract 8 (MC200933 and CP2009 44)
Parcel Select & Parcel Return Service Contract 1 (MC200911 and CP200913)
Parcel Select & Parcel Return Service Contract 2 (MC200940 and CP200961)
Parcel Return Service Contract 1 (MC20091 and CP20092) Priority Mail Contract 1 (MC20088 and CP200826)
Priority Mail Contract 2 (MC20092 and CP20093)
Priority Mail Contract 3 (MC20094 and CP20095)
Priority Mail Contract 4 (MC20095 and CP20096)
Priority Mail Contract 5 (MC200921 and CP200926)
Priority Mail Contract 6 (MC200925 and CP200930)
Priority Mail Contract 7 (MC200925 and CP200931)
Priority Mail Contract 8 (MC200925 and CP200932)
Priority Mail Contract 9 (MC200925 and CP200933)
Priority Mail Contract 10 (MC200925 and CP200934)
Priority Mail Contract 11 (MC200927 and CP200937)
Priority Mail Contract 12 (MC200928 and CP200938)
Priority Mail Contract 13 (MC200929 and CP200939)
Priority Mail Contract 14 (MC200930 and CP200940)
Priority Mail Contract 15 (MC200935 and CP200954)
Priority Mail Contract 16 (MC200936 and CP200955)
Priority Mail Contract 17 (MC200937 and CP200956)
Priority Mail Contract 18 (MC200942 and CP200963)
Priority Mail Contract 19 (MC20101 and CP20101)
Priority Mail Contract 20 (MC20102 and CP20102)
Priority Mail Contract 21 (MC20103 and CP20103)
Priority Mail Contract 22 (MC20104 and CP20104)
Priority Mail Contract 23 (MC20109 and CP20109)
Priority Mail Contract 24 (MC201015 and CP201015)
Outbound International
Direct Entry Parcels Contracts
Direct Entry Parcels 1 (MC200926 and CP200936)
Global Direct Contracts (MC20099, CP200910, and CP200911) Global Expedited Package Services (GEPS) Contracts
GEPS 1 (CP20085, CP200811, CP200812, CP200813, CP2008
18, CP200819, CP200820, CP200821, CP200822, CP200823, and CP200824)
Global Expedited Package Services 2 (CP200950)
Global Plus Contracts
Global Plus 1 (CP20088, CP200846 and CP200947)
Global Plus 2 (MC20087, CP200848 and CP200849)
Inbound International
Inbound Direct Entry Contracts with Foreign Postal
Administrations
Inbound Direct Entry Contracts with Foreign Postal
Administrations (MC20086, CP200814 and MC200815)
Inbound Direct Entry Contracts with Foreign Postal Administrations 1 (MC20086 and CP200962)
International Business Reply Service Competitive Contract 1 (MC200914 and CP200920)
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 SacksMBags
[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 nonUPU 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 CGlossary of Terms and Conditions [Reserved]
Part DCountry Price Lists for International Mail [Reserved] [FR Doc. 20103475 Filed 22210; 8:45 am]
BILLING CODE 7710FWS
FOR FURTHER INFORMATION CONTACT
Stephen L. Sharfman, General Counsel, 2027896824 or stephen.sharfman@prc.gov.