New Postal Product
Federal Register: October 7, 2009 (Volume 74, Number 193)
Rules and Regulations
Page 51467-51470
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
DOCID:fr07oc09-5
POSTAL REGULATORY COMMISSION 39 CFR Part 3020
Docket Nos. MC2009-42 and CP2009-63; Order No. 305
New Postal Product
AGENCY: Postal Regulatory Commission.
ACTION: Final rule.
SUMMARY: The Commission is adding the Priority Mail Contract 18 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 October 7, 2009 and is applicable beginning September 28, 2009.
FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel, at 202-789-6820 or stephen.sharfman@prc.gov.
SUPPLEMENTARY INFORMATION: Regulatory History, 74 FR 48323 (September 22, 2009).
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Introduction
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Background
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Comments
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Commission Analysis
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Ordering Paragraphs
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Introduction
The Postal Service seeks to add a new product identified as
Priority Mail Contract 18 to the Competitive Product List. For the reasons discussed below, the Commission approves the Request.
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Background
On September 11, 2009, 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 18 to the Competitive Product List.\1\ The Postal Service asserts that the Priority Mail Contract 18 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. MC2009-42.
\1\ Request of the United States Postal Service to Add Priority
Mail Contract 18 to Competitive Product List, September 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. CP2009-63.
In support of its Request, the Postal Service filed the following materials: (1) A redacted version of the Governors' Decision, filed in
Docket No MC2009-25, authorizing the Priority Mail Contract Group; \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 nonpublic 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 until March 11, 2012 without modification except as to price adjustments. Request, Attachment B, Article III.
\2\ Attachment A to the Request, reflecting Governors' Decision
No. 09-6, 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,
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.
In Order No. 298, the Commission gave notice of the two dockets, appointed a public representative, sought supplemental information, and provided the public with an opportunity to comment.\8\ The Postal
Service filed its Response for supplemental information pertaining to the sufficiency of spreadsheets of the partially superseded agreement, and related data.\9\
\8\ PRC Order No. 298, Notice and Order Concerning Priority Mail
Contract 18 Negotiated Service Agreement, September 15, 2009 (Order
No. 298).
\9\ Response of the United States Postal Service to Request for
Supplemental Information in Order No. 298 (Questions 1 and 2),
September 21, 2009 (Response).
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Comments
Comments were filed by the Public Representative.\10\ No comments were submitted by other interested parties. The Public Representative states that the Postal Service's filing comports with title 39 and the relevant Commission rules. Public Representative Comments at 1. He further states that the agreement
Page 51468
appears to be beneficial to the general public since ``[i]n addition to having the mailer prepare mailings for less costly handling by the
Postal Service, the contract employs pricing incentives favorable to the Postal Service and thereby, the public.'' Id. at 4. The Public
Representative notes that the Postal Service has provided adequate justification for maintaining confidentiality in this case. Id. at 3.
\10\ Public Representative Comments in Response to United States
Postal Service Request to Add Priority Mail Contract 18 Negotiated
Service Agreement to the Competitive Product List, September 25, 2009 (Public Representative Comments). The Public Representative also filed a Motion of the Public Representative for Late Acceptance of Comments in Response to United States Postal Service Request to
Add Priority Mail Contract 18 to the Competitive Products List,
September 25, 2009. That motion is granted.
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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 18 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 18 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 shall consist 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 Priority Mail
Contract 18 as competitive. Having considered the statutory requirements and the support offered by the Postal Service, the
Commission finds that Priority Mail Contract 18 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 18 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 18 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 18 indicates that it comports with the provisions applicable to rates for competitive products.
Agreements amending previous negotiated service agreements. In its
Request, the Postal Service did not clearly identify the existing contract that the new one effectively modifies. The new contract supersedes, in part, a contract for Express Mail and Priority Mail, only with respect to Priority Mail terms.\11\ In the future, if it is amending or changing an existing contract in a new filing, the Postal
Service shall identify the contract and docket number of the contract being amended or changed in the new filing and describe the changes. In addition, assuming the existing contract is to continue, in part, as modified, the Postal Service must also certify, as part of its filing, that the amended contract still complies with the requirements of 39
U.S.C. 3633(a).
\11\ The existing contract became effective March 11, 2009.
Request, Attachment B, at 1.
Application for non-public treatment. The Postal Service believes that the 10-year period of non-public treatment, as specified in 39
U.S.C. 3007.30, is insufficient to protect customer-identifying information. Request, Attachment F, at 7. It asserts that such information should be protected permanently and requests that the
Commission enter an order extending that duration indefinitely.
The request is premature. Should the need for non-public treatment remain due to ongoing business relationships, the Postal Service may submit a motion to the Commission to extend the duration at the appropriate time.\12\
\12\ See Docket Nos. MC2009-40 and CP2009-61, Order Concerning
Parcel Select & Parcel Return Service Contract 2 Negotiated Service
Agreement, September 4, 2009, at 7.
Other considerations. Following the scheduled termination date of the agreement, the Commission will remove the product from the
Competitive Product List.
In conclusion, the Commission approves Priority Mail Contract 18 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.
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Ordering Paragraphs
It is ordered: 1. Priority Mail Contract 18 (MC2009-42 and CP2009-63) 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 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
Schedule to read as follows:
Page 51469
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)
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)
Page 51470
Express Mail Contract 3 (MC2009-15 and CP2009-21)
Express Mail Contract 4 (MC2009-34 and CP2009-45)
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 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)
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. E9-24237 Filed 10-6-09; 8:45 am
BILLING CODE 7710-FW-P
