[Federal Register Volume 73, Number 202 (Friday, October 17, 2008)]
[Rules and Regulations]
[Pages 62184-62186]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-24581]



[[Page 62183]]

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Part VI





Postal Regulatory Commission





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39 CFR Part 3020



Administrative Practice and Procedure, Postal Service; Final Rule

  Federal Register / Vol. 73, No. 202 / Friday, October 17, 2008 / 
Rules and Regulations  

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POSTAL REGULATORY COMMISSION

39 CFR Part 3020

[Docket Nos. CP2008-18, CP2008-19, CP2008-20, CP2008-21, CP2008-22, 
CP2008-23 and CP2008-24; Order No. 107]


Administrative Practice and Procedure, Postal Service

AGENCY: Postal Regulatory Commission.

ACTION: Final rule.

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SUMMARY: The Commission is adding several recently-negotiated Global 
Expedited Package Service contracts to the competitive product list. 
This action is consistent with changes in a recent law governing postal 
operations. Re-publication of the lists of market dominant and 
competitive products is also consistent with new requirements in the 
law.

DATES: Effective October 17, 2008.

ADDRESSES: Submit comments electronically via the Commission's Filing 
Online system at http://www.prc.gov.

FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel, 
202-789-6820 and [email protected].

SUPPLEMENTARY INFORMATION: Regulatory History, 73 FR 50374 (August 26, 
2008).
    In these dockets, the Postal Service proposes to add seven 
individual negotiated service agreements, namely, specific Global 
Expedited Package Service (GEPS) contracts, to the Global Expedited 
Package Services 1 (GEPS 1) product established in Docket No. CP2008-5. 
For the reasons discussed below, the Commission grants the Postal 
Service's proposals.

I. Background

    On August 14, 2008, the Postal Service filed seven identical 
notices, which have been assigned to Docket Nos. CP2008-18, CP2008-19, 
CP2008-20, CP2008-21, CP2008-22, CP2008-23 and CP2008-24, announcing 
price and classification changes for competitive products not of 
general applicability.\1\ These notices announce individual negotiated 
service agreements and specific GEPS contracts which the Postal Service 
has executed with individual mailers. The Postal Service believes each 
is functionally equivalent to the GEPS 1 product established in Docket 
No. CP2008-5.
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    \1\ Notice of United States Postal Service of Filing of 
Functionally Equivalent Global Expedited Package Services 1 
Negotiated Service Agreement, August 14, 2008, filed in Docket Nos. 
CP2008-18, CP2008-19, CP2008-20, CP2008-21, CP2008-22, CP2008-23, 
and CP2008-24 (Notices).
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    These dockets have been filed pursuant to 39 U.S.C. 3633 and 39 CFR 
3015.5. In addition, the Postal Service contends that the contracts are 
in accord with Order No. 86.\2\ In Order No. 86, the Commission found 
that additional contracts may be included as part of the GEPS 1 product 
if they meet the requirements of 39 U.S.C. 3633 and if they are 
substantially equivalent to the initial GEPS 1 contract.\3\
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    \2\ Docket No. CP2008-5, Order Concerning Global Expedited 
Package Services Contracts, June 27, 2008 (Order No. 86).
    \3\ Order No. 86 at 7.
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    In support of each of these dockets, the Postal Service also filed 
the contract and supporting materials under seal. The Governors' 
Decision supporting the GEPS 1 product was filed in consolidated Docket 
No. CP2008-5.\4\ The Notices also contain the Postal Service's 
arguments that these agreements are substantially equivalent and that 
they exhibit similar cost and market characteristics to the GEPS 1 
product. Notices at 3-5.
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    \4\ Docket No. CP2008-5, United States Postal Service Notice of 
Filing Redacted Copy of Governors' Decision No. 08-7, July 23, 2008.
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    In Order No. 100, the Commission gave notice of the seven dockets, 
appointed a Public Representative, and provided the public with an 
opportunity to comment.\5\
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    \5\ PRC Order No. 100, Notice and Order Concerning Filing of 
Additional Global Expedited Package Services 1 Negotiated Service 
Agreements, August 19, 2008 (Order No. 100).
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II. Comments

    Comments were filed by the Public Representative.\6\ The Public 
Representative's comments focus on five areas: (1) Cost coverage; (2) 
appropriate classification; (3) increased access to U.S. goods by 
consumers; (4) volume projections; and (5) selection of economic 
adjustment factors. The Public Representative concludes that the seven 
contracts at issue satisfy the requirements of 39 U.S.C. 3633 regarding 
cost coverage, the lack of cross-subsidization, and contribution to 
institutional costs. Public Representative Comments at 3-4. The Public 
Representative also believes that the contracts are substantially 
similar and any differences between them and the original GEPS 1 
contract are immaterial. Id. at 5. Accordingly, the Public 
Representative contends that these contracts should be included as part 
of the GEPS 1 product category. Id.
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    \6\ Public Representative Comments in Response to United States 
Postal Service Notice of Global Expedited Package Services Contract, 
September 3, 2008 (Public Representative Comments). On September 3, 
2008, the Public Representative also filed a Motion for Late 
Acceptance of Comments by the Public Representative. The motion is 
granted.
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    The remainder of the Public Representative's comments focuses on 
the benefits of the contracts to U.S. consumers, the sufficiency of 
volume projections, and the need to exercise special care in selecting 
economic adjustment factors. Id. at 5-8.

III. Commission Analysis

    The Postal Service proposes to add additional contracts under the 
GEPS 1 product that was created by Docket No. CP2008-5. In Order No. 
86, the Commission noted that:

    If the Postal Service determines that it has entered into an 
agreement substantially equivalent to GEPS 1 with another mailer, it 
may file such a contract under rule 3015.5. In each case, the 
individual contract must be filed with the Commission, and each 
contract must meet the requirements of 39 U.S.C. 3633. The Postal 
Service shall identify all significant differences between the new 
contract and the pre-existing product group, GEPS 1. Such 
differences would include terms and conditions that impose new 
obligations or new requirements on any party to the contract. The 
Commission will verify whether or not any subsequent contract is in 
fact substantially equivalent. Contracts not having substantially 
the same terms and conditions as the GEPS 1 contract must be filed 
under 39 CFR part 3020, subpart B.

Order No. 86 at 7. First, the Commission reviews the contracts to 
ensure that they are substantially equivalent to the pre-existing 
contract classified as part of the GEPS 1 product and thus belong as 
part of that product. Second, the Commission must ensure that the 
contracts at issue in this proceeding independently satisfy the 
requirements of rule 3015.5 and 39 U.S.C. 3633.
    Here, the Postal Service has filed seven additional contracts 
(Docket Nos. CP2008-18, CP2008-19, CP2008-20, CP2008-21, CP2008-22, 
CP2008-23 and CP2008-24) that it contends are substantially similar to 
the one submitted in Docket No. CP2008-5 and accordingly should be 
grouped under the GEPS 1 product. Notices at 3-5. It argues these 
contracts share the same cost and market characteristics as the 
previously classified GEPS 1 contract, in particular, those of small or 
medium-sized businesses that mail their products directly to foreign 
destinations using either Express Mail International, Priority Mail 
International, or both. Id. at 4.
    The Postal Service also identifies what it terms ``incidental'' and 
``minor'' differences between the proposed new contracts and the pre-
existing product group, GEPS 1. Id. at 4-5. In particular, it notes 
that the contracts may differ in minor respects, for example, prices 
may

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vary due to volume commitments, signing dates of the agreements, 
existence of previous agreements, and other case specific and 
negotiation related factors. Id. at 4-5.
    The Commission has reviewed the contracts in Docket Nos. CP2008-18, 
CP2008-19, CP2008-20, CP2008-21, CP2008-22, CP2008-23 and CP2008-24 and 
finds those agreements to be substantially equivalent in all pertinent 
respects to the GEPS 1 product.\7\
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    \7\ The differences between the contracts and the originally 
classified GEPS 1 contract do not appear to be substantial. However, 
this finding does not preclude the Commission from revisiting this 
issue at a future date if circumstances warrant.
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    Additionally, the Commission reviews the filings to ensure that 
they meet the requirements of rules 3015.5 and 3015.7 and of 39 U.S.C. 
3633. The Commission has reviewed the financial analysis provided under 
seal that accompanies the agreements in all seven dockets as well as 
the comments filed in this proceeding.
    The Public Representative ``sees no specific cause for concern 
about the accuracy of the volume projections associated with these 
contracts,'' but recommends that ``the Postal Service * * * in its 
sealed filings identify the nature and source of these volume 
projections, in general terms, so that the Commission might properly 
evaluate the significance of possible vulnerabilities or weaknesses 
underlying those projections.'' Public Representative Comments at 7. 
The recommendation is not unreasonable. However, for purposes of the 
Commission's preliminary analysis with regard to the contracts at issue 
herein, it does not appear that a detailed analysis of the nature and 
sources of these volume projections would be warranted at this time. 
If, as a result of the Commission's Annual Compliance Determination, 
the volume projections are shown to be unreliable, appropriate remedial 
action may be taken.
    The Public Representative also recommends that the Postal Service 
should take particular care to ensure that it selects proper economic 
adjustment factors. Id. at 7-8. The contracts at issue have a 
relatively short duration, one year. See Notices at 2. Thus, the risk 
associated with such factors, e.g., that the Postal Service may fail to 
meet its statutory cost coverage requirements, appears to be minimal.
    Based on the information provided, the Commission finds that all 
seven proposed contracts submitted should cover their 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, a 
preliminary review of the proposed contracts indicates that they 
comport with the provisions applicable to rates for competitive 
products.
    The revisions to the competitive product list are shown below the 
signature of this Order, and shall become effective upon publication in 
the Federal Register.

IV. Ordering Paragraphs

    It is Ordered:
    1. The contracts filed in Docket Nos. CP2008-18, CP2008-19, CP2008-
20, CP2008-21, CP2008-22, CP2008-23 and CP2008-24 are added to the 
product category Global Expedited Package Services 1 (CP2008-5).
    2. The Secretary shall arrange for publication of this order in the 
Federal Register.

    By the Commission.
Steven W. Williams,
Secretary.

List of Subjects in 39 CFR Part 3020

    Administrative practice and procedure, Postal Service.

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:
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:

PART 3020--PRODUCT LISTS

Appendix A to Subpart A of Part 3020--Mail Classification Schedule

Part A--Market Dominant Products
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]
    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]

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    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)
    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 and CP2008-24)
        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)
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]
 

[FR Doc. E8-24581 Filed 10-16-08; 8:45 am]
BILLING CODE 7710-FW-P