[Federal Register Volume 74, Number 105 (Wednesday, June 3, 2009)]
[Notices]
[Pages 26744-26745]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-12839]



[[Page 26744]]

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POSTAL REGULATORY COMMISSION

[Docket Nos. MC2009-25, CP2009-30, CP2009-31, CP2009-32, CP2009-33 and 
CP2009-34; Order No. 217]


New Postal Product

AGENCY: Postal Regulatory Commission.

ACTION: Notice.

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SUMMARY: The Commission is noticing a recently-filed Postal Service 
request to add Priority Mail Contract Group to the Competitive Product 
List. The Postal Service has also filed five related contracts. This 
notice addresses procedural steps associated with these filings.

DATES: Postal Service responses are due June 1, 2009. Comments are due 
June 8, 2009.

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:

I. Introduction

    On May 19, 2009, the Postal Service filed a formal request pursuant 
to 39 U.S.C. 3642 and 39 CFR 3020.30 et seq. to add a new product 
entitled Priority Mail Contract Group to the Competitive Product 
List.\1\ The Postal Service asserts that Priority Mail Contract Group 
is a competitive product ``not of general applicability'' within the 
meaning of 39 U.S.C. 3632(b)(3). Id. at 1. The Request has been 
assigned Docket No. MC2009-25.
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    \1\ Docket No. MC2009-25, Request of the United States Postal 
Service to Add Priority Mail Contract Group to Competitive Product 
List, May 19, 2009 (Request).
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    Contemporaneously with Docket No. MC2009-25 and pursuant to 39 
U.S.C. 3632(b)(3) and 39 CFR 3015.5, the Postal Service filed five 
contracts which it identifies as Priority Mail Contract 6, Priority 
Mail Contract 7, Priority Mail Contract 8, Priority Mail Contract 9, 
and Priority Mail Contract 10. It believes these contracts are related 
to the proposed new product in Docket No. MC2009-25. These contracts 
have been assigned Docket Nos. CP2009-30 through CP2009-34.\2\
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    \2\ Docket Nos. CP2009-30 through CP2009-34, Notice of 
Establishment of Rates and Class Not of General Applicability, May 
19, 2009 (Notices).
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    Classification request. The Request incorporates (1) A redacted 
version of the Governors' Decision authorizing the new product; (2) 
requested changes in the Mail Classification Schedule product list; (3) 
a statement of supporting justification as required by 39 CFR 3020.32; 
and (4) certification of compliance with 39 U.S.C. 3633(a).\3\ 
Substantively, the Request seeks to add Priority Mail Contract Group to 
the Competitive Product List. Id. at 1-2.
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    \3\ Attachment 1 to the Request consists of the redacted 
Decision of the Governors of the United States Postal Service on 
Establishment of Rates and Classes Not of General Applicability for 
Priority Mail Contract Group (Governors' Decision No. 09-6). The 
Governors' Decision includes two attachments. Attachment A shows the 
requested changes to the Mail Classification Schedule product list. 
Attachment B provides an analysis of the proposed Priority Mail 
Contract Group. Attachment 2 provides a statement of supporting 
justification for this Request. Attachment 3 provides the 
certification of compliance with 39 U.S.C. 3633(a).
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    In the Statement of Supporting Justification, Mary Prince Anderson, 
Manager, Sales and Communications, Expedited Shipping, asserts that the 
services to be provided will cover their 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 2. Thus, Ms. Anderson contends 
there will be no issue of subsidization of competitive products by 
market dominant products as a result of this product. Id.
    Related contracts. Redacted versions of five specific Priority Mail 
contracts are included with the Request. Three of the contracts are for 
3 years, one of the contracts is for 1 year, and the final contract is 
for 3 months. Depending on the contract, the effective dates are 
proposed to be either the day on which the Commission provides all 
necessary regulatory approvals or the following day.\4\ The Postal 
Service represents that all these contracts are consistent with 39 
U.S.C. 3633(a). See Notices, Attachment B.
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    \4\ The contracts in Docket Nos. CP2009-30, CP2009-31 and 
CP2009-34 become effective on the day the Commission issues all 
necessary regulatory approvals. The contracts in Docket Nos. CP2009-
32 and CP2009-33 become effective the day after the Commission 
issues all necessary regulatory approvals.
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    The Postal Service filed much of the supporting materials, 
including the Governors' Decision and the specific Priority Mail 
contracts, under seal. In its Request, the Postal Service maintains 
that the contracts 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. 
Request at 2; Notices at 2.

II. Preliminary Observations

    The Postal Service's filings in these cases differ from previous 
NSA cases in several ways. In the typical negotiated service agreement 
approval scenario, the Postal Service requests that the Commission list 
a new competitive negotiated service agreement-type product on the 
Competitive Product List. Contemporaneously, it typically requests 
approval of a particular contract or group of contracts under 39 U.S.C. 
3633 that relate to the new negotiated service agreement competitive 
product. See Docket No. MC2009-9, Order Concerning Global Direct 
Contracts Negotiated Service Agreements, December 19, 2008; see 
generally Docket No. MC2009-9. If future or concurrent agreements are 
``functionally equivalent'' to the initial proposed agreement, those 
contracts are typically listed as part of the prior negotiated service 
agreement product. See e.g., Docket No. CP2009-19, Order Concerning 
Additional Global Expedited Package Services 1 Negotiated Service 
Agreement, January 9, 2009, at 4-6.
    Here, the Postal Service is seeking to place a broadly defined 
negotiated service agreement-type product on the Competitive Product 
List which has very few requirements or limitations. The proposed 
requirements for that negotiated service agreement product are as 
follows: (1) The agreement must be for Priority Mail service, and (2) 
the cost coverage for the particular contract must fall within a 
specified range. Request, Attachment 1 and Attachment A.
    The Postal Service provides no arguments or evidence attempting to 
show that the five contracts at issue in the above captioned ``CP'' 
cases are functionally equivalent. Additionally, the Commission is 
concerned that if functionally equivalent is intended to apply broadly, 
it may be problematic in many respects. See generally Docket No. C2008-
3. In lieu of initiating separate ``MC'' dockets for each of the 
proposed contracts, the Commission will, for purposes of this notice, 
treat the filing on a consolidated basis and provide interested persons 
(including the Postal Service) an opportunity to address the proper 
classification of these contracts, i.e., as separate products or 
functionally equivalent (in whole or in part).\5\ Those commenting 
should provide the support for their position.
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    \5\ In the alternative, the Commission construes the Postal 
Service's Request as a proposal to add five separate products to the 
Competitive Product List.
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    The broad parameters in the Governors' Decision appear designed to 
accommodate a variety of Priority Mail contracts. The Commission 
appreciates the underlying intent. Regardless of the

[[Page 26745]]

outcome of this proceeding, it is the Commission's view that Governors' 
Decision 09-6 may be used to authorize future Priority Mail agreements 
that satisfy the broad parameters set out in Governors' Decision 09-6. 
Thus, for example, if, based on the parameters of Governors' Decision 
09-6, the Postal Service seeks to add a future non-functionally 
equivalent Priority Mail contract to the Competitive Product List, it 
may file a new joint ``MC'' and ``CP'' docket that relies on Governors' 
Decision 09-6 to satisfy the requirements of 39 CFR 3020.31(b) and 39 
U.S.C. 3642.

III. Supplemental Information

    Pursuant to 39 CFR 3015.6, the Commission requests the Postal 
Service to provide the following supplemental information by June 1, 
2009:
    1. Please explain the cost adjustments present within each 
contract. Explain what mailer activities or characteristics result in 
the cost savings, or result in any additional costs for the Postal 
Service. Please address every instance where an NSA partner's cost 
differs from the average cost.
    2. Please provide a timeframe of when NSA partner volumes and cubic 
feet measurements were collected for each contract. Also provide a unit 
of analysis for volumes in each contract, e.g., whole numbers, 
thousands, etc.
    3. In the Excel files accompanying all five contracts, unit 
transportation costs are hard coded (See tab: ``Partner Unit Cost'' 
rows 21 and 22). Please provide up-to-date sources and show all 
calculations.

IV. Notice of Filings

    The Commission establishes Docket No. MC2009-25 for consideration 
of the Postal Service's classification request and Docket Nos. CP2009-
30 through CP2009-34 for consideration of the five proposed contracts. 
In keeping with practice, these dockets are addressed on a consolidated 
basis for purposes of this order.
    Filing instructions. For administrative convenience, future filings 
addressing the issues raised in this notice and order should be filed 
in Docket No. MC2009-25. However, if interested parties identify issues 
relating only to one of the contracts at issue in Docket No. CP2009-30 
through CP2009-34, such filings should be made in the specific docket 
in which those issues pertain.
    Interested persons may submit comments on whether the Postal 
Service's filings in the captioned dockets are consistent with the 
policies of 39 U.S.C. 3632, 3633, or 3642 and 39 CFR part 3015 and 39 
CFR part 3020, subpart B. Additionally, the Commission welcomes 
comments on the issues discussed above. Comments are due no later than 
June 8, 2009. The public portions of these filings can be accessed via 
the Commission's Web site (http://www.prc.gov).
    The Commission appoints Michael J. Ravnitzky to serve as Public 
Representative in these dockets.

V. Ordering Paragraphs

    It is Ordered:
    1. The Commission establishes Docket No. MC2009-25 for 
consideration of the issues raised in this order. The Commission 
establishes Docket Nos. CP2009-30, CP2009-31, CP2009-32, CP2009-33 and 
CP2009-34 to address specific issues raised by those individual 
contracts.
    2. Future filings addressing the issues raised in this notice and 
order should be filed in Docket No. MC2009-25. However, if interested 
parties identify issues relating only to one of the contracts at issue 
in Docket Nos. CP2009-30 through CP2009-34, such filings should be made 
in the specific docket in which those issues pertain.
    3. Pursuant to 39 U.S.C. 505, Michael J. Ravnitzky is appointed to 
serve as officer of the Commission (Public Representative) to represent 
the interests of the general public in these proceedings.
    4. The Postal Service is to provide the information requested in 
section III of this order no later than June 1, 2009.
    5. Comments by interested persons in these proceedings are due no 
later than June 8, 2009.
    6. The Secretary shall arrange for publication of this order in the 
Federal Register.

By the Commission.
Steven W. Williams,
Secretary.
[FR Doc. E9-12839 Filed 6-2-09; 8:45 am]
BILLING CODE 7710-FW-P