Administrative Practice and Procedure: Postal Service
Federal Register: October 22, 2008 (Volume 73, Number 205)
Rules and Regulations
Page 62886-62888
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
DOCID:fr22oc08-12
POSTAL REGULATORY COMMISSION 39 CFR Part 3020
Docket Nos. MC2008-8 and CP2008-26
Administrative Practice and Procedure; Postal Service
AGENCY: Postal Regulatory Commission.
ACTION: Final rule.
SUMMARY: The Commission is adding a new product identified as Priority
Mail Contract 1 Negotiated Service Agreement to the Mail Classification
Schedule Competitive Product List, pursuant to a Postal Service request. The request incorporates notice of the Postal Service's execution of a related contract. The Commission is also re-publishing the lists of market dominant and competitive products. The Commission's actions are consistent with changes in a recent law governing postal operations.
DATES: Effective October 22, 2008.
FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel, 202-789-6820 or stephen.sharfman@prc.gov.
SUPPLEMENTARY INFORMATION:
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Background
On September 23, 2008, the Postal Service filed a formal request pursuant to 39 U.S.C. 3642 and 39 CFR 3020.30 et seq. to add Priority
Mail Contract 1 to the competitive product list. The Postal Service asserts that Priority Mail Contract 1 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. MC2008-8.\1\
\1\ Request of the United States Postal Service to Add Priority
Mail Contract to Competitive Product List and Notice of
Establishment of Rates and Class Not of General Applicability,
September 23, 2008 (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 is assigned Docket No. CP2008-26. The Postal
Service represents that the contract fits within the proposed Mail
Classification Schedule (MCS) language.
In support of its Request, the Postal Service filed the following materials: (1) A redacted version of the Governors' Decision, which also includes an analysis of the Priority Mail Contract 1; \2\ (2) a redacted version of the contract; which, among other things, provides that the contract will expire 2 years from the effective date, which is proposed to be 1 day after the Commission issues all regulatory approvals; \3\ (3) requested changes in the MCS product list; \4\ (4) a
Statement of Supporting Justification as required by 39 CFR 3020.32;
\5\ and (5) certification of compliance with 39 U.S.C. 3633(a).\6\
\2\ Attachment A to the Request. The analysis that accompanies the Governors' Decision notes, among other things, that the contract is not risk free, but concludes that the risks are manageable.
\3\ Attachment B to the Request.
\4\ Attachment C to the Request.
\5\ Attachment D to the Request.
\6\ Attachment E to the Request.
In the Statement of Supporting Justification, Kim Parks, 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. Attachment D at 1. Ashley
Lyons, Manager, Corporate Financial Planning, Finance Department, certifies, based on the financial analysis provided by the Postal
Service, that the contract complies with 39 U.S.C. 3633(a). Attachment
E.
The Postal Service filed much of the supporting materials, including the Governors' Decision and the specific Priority Mail
Contract 1, under seal. In its Request, 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 under seal.
Request at 2.
In Order No. 111, the Commission gave notice of the two dockets,
Page 62887
appointed a public representative, and provided the public with an opportunity to comment.
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Comments
Comments were filed by the Public Representative.\7\ No filings were submitted by other interested parties. The Public Representative's comments focus on several aspects of the negotiated Priority Mail
Contract 1: Adequate cost coverage for the product, identification of the source and basis for projected volume figures; and use of reliable adjustment factors. Public Representative Comments at 3-4. In addition, the Public Representative comments on the public interest in ensuring that the proposed competitive negotiated service agreements have been considered by the Governors and that such agreements provide increased options for consumers. Id. at 4-5.
\7\ Public Representative Comments in Response to Order No. 111,
October 8, 2008 (Public Representative Comments).
Based on a review of materials filed under seal, the Public
Representative concludes that the contract comports with 39 U.S.C. 3633(a). Id. at 4. The Public Representative comments on the projected contract volumes recommending that in future filings the Postal Service should provide in general terms the nature and source of the volume projections for evaluation and review by the Commission. Id. at 5-6.
Finally, the Public Representative comments that the contract's economic adjustment factors appear to be reasonable and provide adequate revenue protection for the Postal Service. Id. at 6.
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Commission Analysis
The Commission has reviewed the contract and the financial analysis provided under seal that accompanies the agreement as well as the comments by the Public Representative.
The Postal Service's filing is distinguishable from previously filed negotiated service agreements. It seeks to establish a new domestic Priority Mail product, but not as a shell classification.
Rather, the contract is predicated on unit costs for major mail functions, e.g., window service, mail processing, and transportation, based on the shipper's mail characteristics.
The Commission's review of the supporting data uncovered certain inconsistencies which, on further inspection, do not substantially alter the financial results, but which nonetheless merit comment. Some of the underlying cost figures were developed from the Postal Service's
FY2007 Annual Report to the Commission instead of from the Commission's
FY2007 Annual Compliance Determination. The latter, representing the latest available information, is to be used in future filings.\8\ With respect to volume mix, the Postal Service relies on two different sources of information, namely, an existing special study and data reported by Origin Destination Information System (ODIS). While the use of these two sources of data does not cause the financial results to vary significantly (compared to using only one source), any future similar contracts should employ a single source to derive volume distributions, or alternatively, provide adequate justification for using more than one source.
\8\ Modifications, if any, to such data to reflect changed circumstances would need to be fully supported.
Based on the data submitted, the Commission finds that the Priority
Mail Contract 1 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 the proposed Priority Mail Contract 1 indicates that it comports with the provisions applicable to rates for competitive products.
The Postal Service shall notify the Commission of the effective date of the instant contract. In addition, the Postal Service shall promptly notify the Commission when the contract terminates no later than the actual termination date. The Commission will then remove the contract from the Mail Classification Schedule at the earliest possible opportunity.
In conclusion, the Commission approves Priority Mail Contract 1 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.
It Is Ordered: 1. Priority Mail Contract 1 (MC2008-8 and CP2008-26) is added to the competitive product list as a new product under Negotiated Service
Agreement, Domestic. 2. The Postal Service shall notify the Commission of the effective date and the termination date of the contract 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.
Issued October 15, 2008.
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 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
Market Dominant Product Descriptions
First-Class Mail [Reserved for Class Description]
Single-Piece Letters/Postcards [Reserved for Product
Description]
Page 62888
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
Competitive Product List
Express Mail
Express Mail
Outbound International Expedited Services
Inbound International Expedited Services
Inbound International Expedited Services 1 (CP2008-7)
Priority Mail
Priority Mail
Outbound Priority Mail International
Inbound Air Parcel Post
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)
International Money Transfer Service
International Ancillary Services
Special Services
Premium Forwarding Service
Negotiated Service Agreements
Domestic
Express Mail Contract 1 (MC2008-5)
Priority Mail Contract 1 (MC2008-8 and CP2008-26)
Outbound International
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, CP2008- 24, and CP2008-25)
Global Plus Contracts
Global Plus 1 (CP2008-9 and CP2008-10)
Global Plus 2 (MC2008-7, CP2008-16 and CP2008-17)
Inbound Direct Entry Contracts with Foreign Postal
Administrations (MC2008-6, CP2008-14 and CP2008-15)
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. E8-25130 Filed 10-21-08; 8:45 am
BILLING CODE 7710-FW-P
