[Federal Register Volume 73, Number 221 (Friday, November 14, 2008)]
[Rules and Regulations]
[Pages 67393-67396]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-26960]
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POSTAL REGULATORY COMMISSION
39 CFR Part 3020
[Docket Nos. MC2009-1 and CP2009-2; Order No. 128]
Administrative Practice and Procedure, Postal Service
AGENCY: Postal Regulatory Commission.
ACTION: Final rule.
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SUMMARY: The Commission is adding Parcel Return Service Contract 1 to
the Competitive Product List. This action is consistent with changes in
a recent law governing postal operations and a recent Postal request.
Republication of the lists of market dominant and competitive products
is also consistent with new requirements in the law.
DATES: Effective November 14, 2008.
FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel,
202-789-6820 and [email protected].
SUPPLEMENTARY INFORMATION: Regulatory History, 73 FR 64370 (October 29,
2008).
The Postal Service seeks to add a new product identified as Parcel
Return Service Contract 1 to the Competitive Product List. For the
reasons discussed
[[Page 67394]]
below, the Commission approves the request.
I. Background
On October 15, 2008, the Postal Service filed a formal request
pursuant to 39 U.S.C. 3642 and 39 CFR 3020.30 et seq. to add Parcel
Return Service Contract 1 to the Competitive Product List. The Postal
Service asserts that the Parcel Return Service Contract 1 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.
MC2009-1.\1\
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\1\ Request of the United States Postal Service to Add Parcel
Return Service Contract to Competitive Product List and Notice of
Establishment of Rates and Class Not of General Applicability,
October 15, 2008 (Request).
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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. CP2009-2. 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
authorizing the new product which also includes an analysis of the
Parcel Return Service 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\
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\2\ Attachment A to the Request. The analysis that accompanies
the Governor's Decision notes, among other things, that the cost
estimates may vary but the risks reviewed and evaluated are limited.
\3\ Attachment B to the Request.
\4\ Attachment C to the Request.
\5\ Attachment D to the Request.
\6\ Attachment E to the Request.
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In the Statement of Supporting Justification, Daniel J. Barrett,
Acting Manager, Product & Business Development, Ground Shipping
Services, 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, 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). See id., Attachment E.
The Postal Service filed much of the supporting materials,
including the Governors' Decision and the specific Parcel Return
Service 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. Id. at 2.
In Order No. 119, the Commission gave notice of the two dockets,
appointed a public representative, and provided the public with an
opportunity to comment. In addition, the Commission posed questions to
the Postal Service seeking supplemental information.
II. Comments
Comments were filed by the Public Representative.\7\ No filings
were submitted by other interested parties. The Public Representative's
comments focus principally on confidentiality and pricing under the
contract. Public Representative Comments at 2-4.
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\7\ Public Representative Comments in Response to United States
Postal Service Request to Add Parcel Return Service Contract to
Competitive Product List, October 29, 2008.
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The Public Representative states that a sufficient rationale for
maintaining the confidentiality of the documents under seal has been
provided by the Postal Service. Also, based upon a review of materials
filed by the Postal Service in this proceeding, the Public
Representative concludes that the contract reduces costs for both
parties. Id. at 2-3.
The Public Representative notes that the contract is intended to
promote new volumes for the Postal Service and provide incentives for
the shipper. He concludes, inter alia, that the contract should
generate sufficient revenue to cover the product's attributable costs,
and contribute to the recovery of total institutional costs assigned to
competitive products. Id. at 4.
III. Commission Analysis
The Commission's statutory responsibilities in this instance entail
assigning Parcel Service Return Contract 1 to either the Market
Dominant Product List or the Competitive Product List. 39 U.S.C. 3642.
As part of this responsibility, the Commission also reviews the
proposals 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. 39 U.S.C. 3642 governs the assignment of
new products to the Market Dominant or Competitive Product List. In
this case, Parcel Return Service Contract 1 is being proposed by the
Postal Service to be added to the Competitive Product List.
The statutory standard that the Commission must consider is 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 must 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 that 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, the market precludes the Postal Service from taking
unilateral action to increase prices without the risk of losing volume
to private companies. Request, Attachment D, at 2-3. The Postal Service
also contends that the Postal Service may not decrease quality or
output without risking the loss of business to competitors that offer
similar expedited delivery services. Id. at 2. It further states that
the contract partner supports the addition of the contract to the
product list to effectuate the negotiated contractual terms. Id. at 3.
Finally, the Postal Service states that due to the fact that the market
for ground shipping services requires a substantial infrastructure to
support a national network, only large shippers serve the market under
consideration. Accordingly, the Postal Service is unaware of any small
business concerns that could offer comparable service for this
customer. Id.
No commenter opposes the proposed classification of Parcel Return
Service Contract 1 as competitive. Having considered the statutory
requirements and the support offered by the Postal Service and the
public comment, the Commission finds that Parcel Return Service
Contract 1 is appropriately classified as a competitive product and
[[Page 67395]]
should be added to the Competitive Product List.
Cost considerations. The Commission has reviewed the contract, the
financial analysis provided under seal that accompanies the agreement
including the responses to the questions posed in PRC Order No. 119, as
well as the comments by the Public Representative. Based on an analysis
of the information submitted, the cost accounting methods proposed in
Docket No. RM2008-6 are to be used for updating costs for subsequent
years of the contract.\8\ The analysis of the Commission is included as
part of the record of these proceedings in Library Reference PRC-
CP2009-2-NP-LR-1.
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\8\ In its supplemental filing, the Postal Service indicated its
intent to do so. See Response of the United States Postal Service to
Commission's Inquiries in Order No. 119, section IV, October 27,
2008.
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Library Reference PRC-CP2009-2-NP-LR-1 is the analysis of the
Postal Service data which updates the original data with the
supplemental data filed by the Postal Service on October 27, 2008, and
provides calculations for revenue per piece for each of the negotiated
service agreement's rate categories. The analysis finds that the
updated data do not cause financial results to vary significantly.
Based on the data submitted, the Commission finds that Parcel
Return Service 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, a preliminary review
of the proposed Parcel Return Service Contract 1 indicates that it
comports with the provisions applicable to rates for competitive
products.
The Postal Service shall promptly notify the Commission when the
contract terminates, but 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 Parcel Return Service
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. Parcel Return Service Contract 1 (MC2009-1 and CP2009-2) 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
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.
Steven W. Williams,
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
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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]
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]
[[Page 67396]]
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)
Express Mail Contract 2 (MC2009-3 and CP2009-4)
Parcel Return Service Contract 1 (MC2009-1 and CP2009-2)
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, 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, 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. E8-26960 Filed 11-13-08; 8:45 am]
BILLING CODE 7710-FW-P