[Federal Register Volume 74, Number 134 (Wednesday, July 15, 2009)]
[Notices]
[Pages 34375-34376]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-16584]


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POSTAL REGULATORY COMMISSION

[Docket No. CP2009-41; Order No. 237]


New Competitive 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 an additional Inbound Direct Entry Contract to the 
Competitive Product List. The Postal Service has also filed a related 
contract. This notice addresses procedural steps associated with these 
filings.

DATES: Comments are due July 10, 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. Background

    On June 29, 2009, the Postal Service filed a notice, pursuant to 39 
U.S.C. 3633 and 39 CFR 3015.5, announcing that it has entered into an 
additional Inbound Direct Entry Contract (IDE), which it states fits 
within the previously established Inbound Direct Entry Contracts.\1\ 
The Postal Service states that the instant constant is functionally 
equivalent to previously submitted IDE contracts and is supported by 
the Governors' Decision 08-6 filed in Docket No. MC2008-6.\2\ Notice at 
2.
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    \1\ Notice of United States Postal Service of Filing of 
Functionally Equivalent Inbound Direct Entry Contracts, Negotiated 
Service Agreement, June 29, 2009 (Notice).
    \2\ See Docket No. MC2008-6, Decision of the Governors of the 
United States Postal Service on the Establishment of Prices and 
Classifications for Inbound Direct Entry Contracts with Foreign 
Postal Administrations (Governors' Decision No.08-6), May 6, 2008.
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    The Notice also references Order No. 105 which established the 
individual IDE contracts in Dockets Nos. CP2008-14 and CP2008-15 as 
functionally equivalent and added the contracts to the competitive 
product list as one product under the IDE classification.\3\ The IDE 
service allows the Postal Service to provide foreign postal 
administrations with the ability to ship sacks of parcels that are pre-
labeled for direct entry into the Postal Service's mail stream, in 
exchange for applicable domestic postage plus a sack handling

[[Page 34376]]

fee. The core of the service is the sack handling and entry as domestic 
mail and it is not dependent on the underlying domestic mail services. 
The Postal Service states that the instant contract is functionally 
equivalent to the IDE contracts previously submitted, fits within the 
Mail Classification Schedule (MCS) language included as Attachment A to 
Governors' Decision No. 08-6 and should be included within the IDE 
Contracts product. Notice at 2.
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    \3\ See PRC Order No. 105, Order Concerning Prices Under Inbound 
Direct Entry Contracts with Certain Foreign Postal Administrations, 
September 4, 2008, at 8 (Order 105).
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    The instant contract. The Postal Service filed the instant contract 
pursuant to 39 CFR 3015.5. The contract is with P&T Express Mail 
Service Joint Stock Company (VNPE). VNPE is established under the 
auspices of the Vietnam Post and Telecommunications Group, the public 
postal administration for Vietnam, responsible for Vietnam's compliance 
with international obligations relative to Express Mail Service. The 
Postal Service submitted the contract and supporting material under 
seal and attached a redacted copy of the contract and certified 
statement required by 39 CFR 3015.5(c)(2) to the Notice. Id., 
Attachments 1 and 2 respectively.\4\
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    \4\ Attachment 1 was revised by Notice of United States Postal 
Service of Filing Erratum to Attachment 1 to Notice of United States 
Postal Service of Filing Functionally Equivalent Inbound Direct 
Entry Contracts Negotiated Service Agreement, June 30, 2009.
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    The Postal Service will notify the customer of the effective date 
of the contract within 30 days after receiving all regulatory 
approvals. The contract term is 1 year from the effective date. The 
contract is subject to automatic renewal after the 1 year term unless 
the parties determine otherwise. Id., Attachment 1.
    The Notice advances reasons why the instant IDE contract fits 
within the Mail Classification Schedule language for IDE contracts. The 
Postal Service states that the instant contract is functionally 
equivalent to the IDE contracts filed previously because it shares 
similar cost and market characteristics and therefore, the contracts 
should be classified as a single product. Id. at 3-4. It states that in 
Governors' Decision No. 08-6, a pricing formula and classification 
system were established to ensure that each contract meets the 
statutory and regulatory requirements of 39 U.S.C. 3633. The Postal 
Service states that the costs of each contract must conform to a common 
description and the contract language of the MCS prescribes that each 
IDE contract must cover its attributable costs. Id.
    The Postal Service reports that the instant contract covers the 
same domestic services as those in Docket Nos. CP2008-14 and CP2008-15 
except for the addition of the Priority Mail small flat rate box. It 
asserts that in ``almost all substantive respects,'' the instant IDE 
contract resembles the contracts in CP2008-14 and CP2008-15. Id. at 4. 
The Postal Service contends that even though fees or the underlying 
domestic services offered may be different, these distinctions do not 
affect the contracts' functional equivalence because the total costs 
associated with IDE Contracts are volume variable and the basic service 
offered of handling inbound sacks in the domestic mail stream is the 
same. Id. Other changes include language to update changes in policies 
and product structures and terms to clarify the applicability of Postal 
Service export requirements. Id.
    The Postal Service also affirms the instant contract has material 
differences reflected in the language of this agreement compared to 
other IDE contracts. Id. These differences include: (1) The 1 year term 
of the instant contract is subject to automatic renewal which differs 
from the contracts in CP2008-14 and CP2008-15 which are automatically 
renewed unless terminated; (2) Priority Mail small flat rate box has 
been added as a domestic mail type which Vietnam Post can access via 
IDE service while other included domestic mail services included are 
the same as in previous contracts but have updated rate structures; \5\ 
(3) terms are included which express the parties' wish to explore 
future opportunities for volume based discounts which the Postal 
Service states does not represent a new commitment; (4) terms that 
clarify charges for non-conforming size or weight items, and Delivery 
Confirmation charges for First-Class Mail parcel items; (5) language 
which explains the need for a permit application fee; (6) terms which 
address changes to IDE customer payment requirements upon detention or 
seizure of mail by Customs and Border Protection; and (7) terms to 
explain the use of the Centralized Trust Account payment method as 
applicable to Vietnam's financial regulatory requirements which were 
not offered in the contract for CP2008-14. Id. at 5-6.
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    \5\ The Postal Service states that the other domestic mail 
services are the same as in Docket Nos. CP2008-14 and CP2008-15, but 
the instant contract reflects the updated Priority Mail rate 
structure based on the price adjustments for competitive products in 
Docket CP2009-8.
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    The Postal Service maintains that these differences only add detail 
or amplify processes included in previous IDE contracts and do not 
affect the fundamental service being offered or the essential structure 
of the contracts. Id. at 7. It asserts that the contracts are 
substantially equivalent in all pertinent respects. Id.
    The Postal Service maintains that certain portions of the contract 
and certified statement required by 39 CFR 3015.5(c)(2), related 
financial information, portions of the certified statement which 
contain costs and pricing as well as the accompanying analyses that 
provide prices, terms, conditions, and financial projections should 
remain under seal. Id. at 2-3.

II. Notice of Filing

    The Commission establishes Docket No. CP2009-41 for consideration 
of the matters related to the contract identified in the Postal 
Service's Notice.
    Interested persons may submit comments on whether the instant 
contract is consistent with the policies of 39 U.S.C. 3632, 3622, or 
3642. Comments are due no later than July 10, 2009.
    The public portions of these filings can be accessed via the 
Commission's Web site (http://www.prc.gov).
    The Commission appoints Paul L. Harrington to serve as Public 
Representative in this docket.

III. Ordering Paragraphs

    It is Ordered:
    1. The Commission establishes Docket No. CP2009-41 for 
consideration of the issues raised in this docket.
    2. Comments by interested persons in these proceedings are due no 
later than July 10, 2009.
    3. Pursuant to 39 U.S.C. 505, Paul L. Harrington is appointed to 
serve as officer of the Commission (Public Representative) to represent 
the interests of the general public in these proceedings.
    4. The Secretary shall arrange for publication of this order in the 
Federal Register.

    Dated: July 1, 2009.

    By the Commission.
Judith M. Grady,
Acting Secretary.
[FR Doc. E9-16584 Filed 7-14-09; 8:45 am]
BILLING CODE 7710-FW-P