[Federal Register Volume 74, Number 10 (Thursday, January 15, 2009)]
[Notices]
[Pages 2636-2637]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-771]


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POSTAL REGULATORY COMMISSION

[Docket No. MC2008-1 (Phase II); Order No. 168]


Review of Nonpostal Services

AGENCY: Postal Regulatory Commission.

ACTION: Notice.

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SUMMARY: The Commission is establishing a docket to develop a complete 
record on three matters that were not resolved in a recent docket. This 
will allow the Postal Service and others an opportunity to present 
their views prior to final Commission decision on the status of the 
underlying services.

DATES: January 29, 2009: Deadline for the Postal Service and other 
participants to file supporting evidence. February 10, 2009: Deadline 
for new interventions. February 11, 2009: Prehearing conference will be 
held on at 10 a.m. in the Commission's hearing room.

ADDRESSES: Submit filings 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, 72 FR 73909 (December 
28, 2007).
    In Order No. 154, the Commission authorized 14 nonpostal services 
to continue.\1\ Finding the record insufficient in certain respects, 
the Commission deferred ruling on three issues more fully addressed 
below, involving licensing, the warranty repair program, and sales of 
music compact discs. This order establishes procedures to develop a 
more complete record on these issues beginning with an opportunity for 
the Postal Service to present its case on these issues and followed by 
an opportunity for interested persons to respond.\2\
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    \1\ PRC Order No. 154, Review of Nonpostal Services Under the 
Postal Accountability and Enhancement Act, December 19, 2008 (Order 
No. 154).
    \2\ The Commission also indicated a separate docket would be 
established to develop regulations applicable to authorized 
nonpostal services. That docket will be initiated shortly.
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    Licensing. In Order No. 154, the Commission generally authorized 
the licensing of the Postal Service's intellectual property to continue 
as a nonpostal service. Id. at 73. As an interim measure, however, the 
Commission grandfathered the licenses of the Postal Service's brands on 
products relating to the Postal Service's operations, categorized by 
the Postal Service as Mailing & Shipping, pending the outcome of Phase 
II. This issue was brought to the forefront late in the first phase of 
this proceeding by Pitney Bowes upon learning that Postal Service-
branded postage meter ink cartridges were being sold.\3\ The Commission 
found that the record on licenses related to Postal Service operations 
to be insufficiently developed for it to determine whether those 
licenses should be terminated or authorized to continue.\4\
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    \3\ Pitney Bowes Inc. Motion to Compel United States Postal 
Service to File a Complete List of Nonpostal Services, October 15, 
2008. Pitney Bowes' motion, supported by pleadings responsive to the 
matter, challenged the appropriateness of the Postal Service 
licensing its trademark for products related to Postal Service 
operations. See also PRC Order No. 126, Order Granting, In Part, 
Pitney Bowes Inc. Motion to Compel, November 4, 2008.
    \4\ Order No. 154 at 76. Order No. 154 directed the Postal 
Service to ``promptly notify the Commission of any other such 
licenses [that relate to postal operations] that may exist.'' Id., 
n.146. This order is not intended to modify that directive. The 
Postal Service indicates five vendors are licensed to sell Mailing & 
Shipping products bearing the Postal Service's intellectual 
property. Initial Response of the United States Postal Service to 
Order No. 74, June 9, 2008, at 22. See also Response of the United 
States Postal Service to Order No. 126 Regarding Licensing 
Agreements and Notice of Filing of Sworn Statement, November 17, 
2008; and Errata to Response of the United States Postal Service to 
Order No. 126 Regarding Licensing Agreements, November 19, 2008.
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    Further proceedings in this Phase II are needed to develop a more 
complete record regarding licensing programs for products related to 
Postal Service operations generally, as well as the

[[Page 2637]]

specific meter ink cartridge license cited by Pitney Bowes. Other 
related issues may also be explored.\5\ The Postal Service shall file a 
sworn statement(s) by a knowledgeable individual(s) on or before 
January 29, 2009, providing details of each Mailing & Shipping services 
license and any additional information and evidence deemed relevant in 
support of its continuing the commercial licensing of products related 
to Postal Service operations.\6\ The sworn statement shall also address 
the requirements of section 404(e)(3) of title 39. Interested persons, 
including any licensees, who support continuing Postal Service branding 
of such products may also submit relevant evidence by January 29, 2009. 
Such sworn statements shall address the requirements of section 
404(e)(3) of title 39 and may address any other matter deemed relevant 
to issues before the Commission in this Phase II. As discussed below, 
interested persons will be afforded an opportunity to respond to these 
submissions.
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    \5\ See Order No. 154 at 75, n.145. The relevant market and the 
Postal Service's regulatory role in the production and distribution 
of postage evidencing systems may be addressed.
    \6\ Sworn statements submitted in Phase II are subject to the 
Commission's Rules of Practice and Procedure. 39 CFR 3001.1 et seq.
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    Warranty repair program. In Order No. 154, the Commission concluded 
that the warranty repair program, under which the Postal Service is 
compensated by the original equipment manufacturer (OEM) for repairs by 
the Postal Service of the OEM's equipment still under warranty was, 
with one possible exception, not subject to review under 39 U.S.C. 
404(e). Id. at 84-85. The exception concerns plans (which may already 
be implemented) by the Postal Service to expand the activity to other 
customers of the OEM.\7\ Order No. 154 deferred a determination on this 
issue to Phase II.
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    \7\ Statement of Patrick R. Donahoe on Behalf of United States 
Postal Service (Donahoe Statement), June 23, 2008, at 15. See also 
Initial Response of the United States Postal Service to Order No. 
74, June 9, 2008, at 28-29.
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    Assuming it wishes to offer the expanded warranty repair service, 
the Postal Service shall provide details of this service in the form of 
a sworn statement(s) by a knowledgeable individual(s). The statement(s) 
shall also identify the commencement date of such service, provide 
annual revenues for fiscal years 2006 through 2008, address the 
requirements of section 404(e) of title 39, and any other matter the 
Postal Service believes is relevant to the issue before the Commission. 
Interested persons who support the Postal Service providing such 
services may also submit sworn statements by January 29, 2009, that 
address any matter deemed relevant to issues before the Commission.
    Sales of CDs. In Order No. 154, the Commission addressed the Postal 
Service's proposal to classify greeting cards and other stationery 
items as postal services. Order No. 154 at 34-35. While the Commission 
found that greeting cards and stationery may be classified as a 
competitive postal service, it expressed reservations about the sale of 
compact discs (CDs) featuring various recording artists, specifically 
noting that they ``are not authorized as `greeting cards'.'' Id. at 35. 
Recognizing the scale of the Postal Service operations, the Commission 
observed that details of certain activities may have been overlooked in 
response to Order No. 74.\8\ Thus, the Commission suggested that the 
Postal Service review its various retail programs and provide details 
of any omissions, including those related to CD sales, for 
consideration in Phase II of this proceeding.
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    \8\ PRC Order No. 74, Order Granting Motion to Compel and 
Revising the Procedural Schedule, April 29, 2008 (Order No. 74).
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    To the extent it wishes to pursue this issue, the Postal Service 
shall file by January 29, 2009, a sworn statement(s) by a knowledgeable 
individual(s) which provides complete details of each retail program 
for which information may have been inadvertently omitted in response 
to Order No. 74 and which the Postal Service seeks to have classified 
as a postal service or, alternatively, to continue to offer as a 
nonpostal service. In either case, the Postal Service should provide 
sufficient justification to support its proposed treatment, i.e., that 
it may be appropriately classified as a postal service or, 
alternatively, that it satisfies section 404(e)(3). In addition, the 
Postal Service should also provide the commencement date of each 
program (product or service) and the annual revenues for fiscal years 
2006 through 2008. Interested persons who support the Postal Service 
providing such services may also submit sworn statements by January 29, 
2009, that address any matter deemed relevant to issues before the 
Commission.
    Prehearing conference and additional procedures. Phase II is 
designed to provide the Postal Service and interested persons an 
opportunity to present evidence and arguments in support of their 
respective positions.\9\ Following the submission of the sworn 
statements discussed above, the Commission will convene a prehearing 
conference on February 11, 2009, to discuss the balance of the 
procedural schedule. This shall include the need for hearings, the due 
dates for responses to the statements due January 29, 2009, the 
opportunity for rebuttal thereto, and briefing dates.
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    \9\ The record already compiled in the first part of this 
proceeding may be incorporated by reference or adopted as part of a 
separate statement. If the Postal Service continues to rely upon the 
information in that record, it shall be subject to written and oral 
cross-examination in this Phase II proceeding.
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    It is Ordered:
    1. Docket No. MC2008-1, Phase II, is established to develop a more 
complete record on the activities discussed in the body of this order 
concerning Postal Service branding of Mailing & Shipping products, the 
warranty repair program, the retail sale of recorded music, and any 
other retail activities which, upon further consideration, may be 
identified by the Postal Service for review in this proceeding.
    2. The Commission will sit en banc in this proceeding.
    3. The Postal Service and other participants that support 
continuation of such services shall file supporting evidence as 
provided in the body of this order on or before January 29, 2009.
    4. Any interested persons may file a notice of intervention 
pursuant to rule 20 or 20a of the Commission's Rules of Practice and 
Procedure, 39 CFR 3001.20 and 3001.20a, no later than February 10, 
2009. The notice shall state whether the intervenor requests a hearing. 
Any person who submitted a filing in the initial phase of this 
proceeding will be deemed to be a participant in Phase II and need not 
submit a notice of intervention.
    5. A prehearing conference will be held in the Commission's hearing 
room on February 11, 2009, at 10 a.m., to establish dates, as 
necessary, for the completion of discovery, need for hearings, filing 
of rebuttal evidence, and other matters related to this proceeding as 
set forth in the body of this order.
    6. Robert Sidman is designated as Public Representative to 
represent the interests of the general public in this proceeding.
    7. The Secretary shall arrange for publication of this notice and 
order in the Federal Register.

    By the Commission.
Steven W. Williams,
Secretary.
 [FR Doc. E9-771 Filed 1-14-09; 8:45 am]
BILLING CODE 7710-FW-P