New Postal Product
Federal Register: February 23, 2010 (Volume 75, Number 35)
Rules and Regulations
Page 7951-7954
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
DOCID:fr23fe10-11
POSTAL REGULATORY COMMISSION 39 CFR Part 3020
Docket Nos. MC2010-16 and CP2010-16; Order No. 379
New Postal Product
AGENCY: Postal Regulatory Commission.
ACTION: Final rule.
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.
DATES: Effective February 23, 2010 and is applicable beginning January 4, 2010.
FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel, 202-789-6824 or stephen.sharfman@prc.gov.
SUPPLEMENTARY INFORMATION: Regulatory History, 74 FR 66242 (December 15, 2009).
Table of Contents
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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 Express
Mail Contract 8 to the Competitive Product List. For the reasons discussed below, the Commission approves the Request.
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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. 09-14 in Docket Nos. MC2010-5 and CP2010-5. Id. at 1. The
Request has been assigned Docket No. MC2010-16.
\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. CP2010-16.
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. MC2010-5 and CP2010-5, 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 non-public treatment of the materials filed under seal.\7\
\2\ Attachment A to the Request, reflecting Governors' Decision
No. 09-14, 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.
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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 4-5.
\12\ Comments of Public Representatives in Response to PRC Order
No. 359, December 23, 2009.
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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.
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Ordering Paragraphs
It is ordered: 1. Express Mail Contract 8 (MC2010-16 and CP2010-16) 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. 0
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 3020--PRODUCT LISTS 0 1. The authority citation for part 3020 continues to read as follows:
Authority: 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
Page 7953
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 (MC2010-12 and
R2010-2)
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 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
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)
Inbound International Expedited Services 3 (MC2010-13 and CP2010- 12)
Priority Mail
Priority Mail
Outbound Priority Mail International
Inbound Air Parcel Post (at non-UPU 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 Sacks--M--Bags
Global Customized Shipping Services
Inbound Surface Parcel Post (at non-UPU rates)
Page 7954
Canada Post--United States Postal Service Contractual Bilateral
Agreement for Inbound Competitive Services (MC2010-14 and
CP2010-13--Inbound Surface Parcel post at Non-UPU Rates and
Xpresspost-USA)
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 Contract 6 (MC2010--6 and CP2010-6)
Express Mail Contract 7 (MC2010--7 and CP2010-7)
Express Mail Contract 8 (MC2010--16 and CP2010-16)
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)
Priority Mail Contract 24 (MC2010-15 and CP2010-15)
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, 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 Prduct 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. 2010-3475 Filed 2-22-10; 8:45 am
BILLING CODE 7710-FW-S
