New Postal Product

Federal Register: December 21, 2009 (Volume 74, Number 243)

Rules and Regulations

Page 67816-67819

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

DOCID:fr21de09-7

POSTAL REGULATORY COMMISSION 39 CFR Part 3020

Docket Nos. MC2010-9 and CP2010-9; Order No. 344

New Postal Product

AGENCY: Postal Regulatory Commission.

ACTION: Final rule.

SUMMARY: The Commission is adding Priority Mail Contract 23 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 December 21, 2009 and is applicable beginning October 28, 2009.

FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel, 202-789-6820 or stephen.sharfman@prc.gov.

SUPPLEMENTARY INFORMATION: Regulatory History, 74 FR 59015 (November 16, 2009).

1. Introduction

2. Background

3. Comments

4. Commission Analysis

5. Ordering Paragraphs

1. Introduction

   The Postal Service seeks to add a new product identified as

   Priority Mail Contract 23 to the Competitive Product List. For the reasons discussed below, the Commission approves the Request.

2. 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 Priority Mail Contract 23 to the Competitive Product List.\1\ The

   Postal Service asserts that Priority Mail Contract 23 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. 09-06 in Docket No. MC2009-25. Id. at 1. The Request has been assigned Docket No. MC2010-9.

   \1\ Request of the United States Postal Service to Add Priority

   Mail Contract 23 to Competitive Product List and Notice of Filing

   (Under Seal) of Contract and Supporting Data, November 5, 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. CP2010-9.

   In support of its Request, the Postal Service filed the following materials: (1) A redacted version of the Governors' Decision, originally filed in Docket No. MC2010-25, authorizing certain Priority

   Mail contracts; \2\ (2) a redacted version of the contract; \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 non-public treatment of the materials filed under seal.\7\

   \2\ Attachment A to the Request, reflecting Governors' Decision

   No. 09-06, April 27, 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, Mary Prince Anderson,

   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 institutional costs, and increase contribution toward the requisite 5.5 percent of the Postal

   Service's total institutional costs. Id., Attachment D. Thus, Ms.

   Anderson contends there will be no issue of subsidization of competitive products by market dominant products as a result of this contract. Id.

   A redacted version of the specific Priority Mail Contract 23 is included with the Request. The contract will become effective on the day that the Commission provides all necessary regulatory approvals. It is terminable upon 30 days' notice by either party, but could continue for up to one year. The Postal Service represents that the contract is consistent with 39 U.S.C. 3633(a). See id., Attachment D. The Postal

   Service will provide Priority Mail packaging for items mailed by the shipper.

   The Postal Service filed much of the supporting materials, including the specific Priority Mail Contract 23, under seal. In its

   Request, the Postal Service maintains that the contract and related financial information, including the customer's name and the accompanying

   Page 67817

   analyses that provide prices, terms, conditions, cost data, and financial projections should remain under seal. Id. at 2. It also requests that the Commission order that the duration of such treatment of all customer identifying information be extended indefinitely, instead of ending after 10 years. Id., Attachment F, at 1 and 7.

   In Order No. 336, 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 November 13, 2009, the Postal Service provided its response to the Commission's request for supplemental information. On November 16, 2009, Chairman's

   Information Request No. 1 was issued for response by the Postal Service by November 19, 2009. The Postal Service filed its response on November 19, 2009.

   \8\ PRC Order No. 336, Notice and Order Concerning Priority Mail

   Contract 23 Negotiated Service Agreement, November 9, 2009 (Order

   No. 336).

3. Comments

   Comments were filed by the Public Representative.\9\ 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 employs pricing terms favorable to the customer, the Postal Service, and thereby, the public. Id. at 3. The

   Public Representative also believes that the Postal Service has provided appropriate justification for maintaining confidentiality in this case. Id. at 2-3.

   \9\ Public Representative Comments in Response to United States

   Postal Service Request to Add Priority Mail Contract 23 Negotiated

   Service Agreement to the Competitive Products List, November 18, 2009 (Public Representative Comments). This filing was accompanied by a Motion of the Public Representative for Late Acceptance of

   Comments in Response to United States Postal Service Request to Add

   Priority Mail Contract 23 Negotiated Service Agreement to the

   Competitive Products List, November 18, 2009. The motion is granted.

4. Commission Analysis

   The Commission has reviewed the Request, the contract, the financial analysis provided under seal that accompanies it, and the comments filed by the Public Representative.

   Statutory requirements. The Commission's statutory responsibilities in this instance entail assigning Priority Mail Contract 23 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 23 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, ] (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., ] (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., ] (h).

   No commenter opposes the proposed classification of Priority Mail

   Contract 23 as competitive. Having considered the statutory requirements and the support offered by the Postal Service, the

   Commission finds that Priority Mail Contract 23 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 23 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 23 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 23 indicates that it comports with the provisions applicable to rates for competitive products.

   Other considerations. The Postal Service indicates that the instant contract supersedes the current contract, approved in Docket Nos.

   MC2009-2 and CP2009-3, and which was extended at the Postal Service's request.\10\ Given that, the Postal Service shall no later than 30 days after the effective date of the new contract, provide cost, revenue and volume data associated with the current contract to be filed in Docket

   No. MC2009-2 and CP2009-3.

   \10\ Docket Nos. MC2009-2 and CP2009-3, PRC Order No. 332, Order

   Granting Motion for Temporary Relief, November 5, 2009.

   In conclusion, the Commission approves Priority Mail Contract 23 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.

5. Ordering Paragraphs

   It is ordered: 1. Priority Mail Contract 23 (MC2010-9 and CP2010-9) 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 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. 0

   For the reasons discussed in the preamble, the Postal Regulatory

   Commission amends chapter III of title

   Page 67818

   39 of the Code of Federal Regulations 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

   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)

   Page 67819

   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 & 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)

   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, 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

   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 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. E9-30230 Filed 12-18-09; 8:45 am

   BILLING CODE 7710-FW-P