[Federal Register Volume 74, Number 159 (Wednesday, August 19, 2009)]
[Rules and Regulations]
[Pages 41791-41794]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-19855]


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POSTAL REGULATORY COMMISSION

39 CFR Part 3020

[Docket No. CP2009-49; Order No. 268]


International Mail

AGENCY: Postal Regulatory Commission.

ACTION: Final rule.

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SUMMARY: The Commission is making changes to the Competitive Product 
List, including adding a Global Plus 2 contract. This is consistent 
with changes in a recent law governing postal operations. Republication 
of the lists of market dominant and competitive products is also 
consistent with requirements in the new law.

DATES: Effective August 19, 2009 and is applicable beginning July 31, 
2009.

FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman at 202-789-6820 or 
[email protected].

SUPPLEMENTARY INFORMATION: Regulatory History, 74 FR 35898 (July 21, 
2009).

I. Introduction
II. Background
III. Comments
IV. Commission Analysis
V. Ordering Paragraphs

I. Introduction

    The Postal Service proposes to add a specific Global Plus 2 
contract to the Global Plus Contract product established in Docket No. 
MC2008-7. For the reasons discussed below, the Commission approves the 
Postal Service's proposal.

II. Background

    On July 13, 2009, the Postal Service filed a notice, pursuant to 39 
CFR 3015.5, announcing that it has entered into two additional Global 
Plus 2 contracts, which it states fit within the previously established 
Global Plus 2 Contracts product.\1\ The Postal Service states that each 
contract is functionally equivalent to previously submitted Global Plus 
2 contracts, are filed in accordance with Order No. 112 \2\ and are 
supported by Governors' Decision No. 08-10 filed in Docket No. MC2008-
7.\3\ Notice at 1.
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    \1\ Notice of the United States Postal Service of Filing Two 
Functionally Equivalent Global Plus 2 Negotiated Service Agreements, 
July 13, 2009 (Notice). While the Notice was filed jointly in Docket 
Nos. CP2009-48 and CP2009-49, the Commission will address the issues 
in these dockets in separate orders. The Postal Service requests 
that the two contracts be included in the Global Plus 2 product, and 
``that they be considered the new `baseline' contracts for future 
functional equivalency analyses....'' Id. at 2.
    \2\ See Docket Nos. MC2008-7, CP2008-16 and CP2008-17, Order 
Concerning Global Plus 2 Negotiated Service Agreements, October 3, 
2008 (Order No. 112).
    \3\ See Docket Nos. MC2008-7, CP2008-16 and CP2008-17, Decision 
of the Governors of the United States Postal Service on the 
Establishment of Prices and Classification for Global Direct, Global 
Bulk Economy, and Global Plus Contracts, July 16, 2008 (Governors' 
Decision 08-10).
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    The Notice also states that in Docket No. MC2008-7, the Governors 
established prices and classifications for competitive products not of 
general applicability for Global Plus Contracts. The Postal Service 
relates that the instant contract is the immediate successor contract 
to the contract in Docket No. CP2008-17, which will expire soon, and 
which the Commission found to be functionally equivalent in Order No. 
112.
    The Postal Service contends that the instant contract should be 
included within the Global Plus 2 product on the Competitive Product 
List. Id.
    In support, the Postal Service has filed a redacted version of the 
contract and related materials as Attachment 1-A. A redacted version of 
the certified statement required by 39 CFR 3015.5 is included as 
Attachment 2-A. The Postal Service states that the contract should be 
included within the Global Plus 2 product and requests that the instant 
contract be considered the ``baseline contract[s] for future functional 
equivalency analyses concerning this product.'' Id. at 2.
    The Postal Service filed the instant contract pursuant to 39 CFR 
3015.5. The contract becomes effective August 1, 2009, unless 
regulatory reviews affect that date, and have a one-year term.
    The Postal Service maintains that certain portions of each contract 
and certified statement required by 39 CFR 3015.5(c)(2), containing 
names and identifying information of the Global Plus 2 customer, 
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 3.
    The Postal Service asserts the contract is functionally equivalent 
with the contract filed in Docket No. CP2009-49 because they share 
similar cost and market characteristics. It contends that they should 
be classified as a single product. Id. It states that while the 
existing contracts filed in Docket Nos.

[[Page 41792]]

CP2008-16 and CP2008-17 exhibited minor distinctions, the new contracts 
are identical to one another. Id. at 4.
    The instant contract is with the same Postal Qualified Wholesalers 
(PQW) as in Docket No. CP2008-17. Even though some terms and conditions 
of the contract have changed, the Postal Service states that the 
essence of the service to the PQW customers is offering price-based 
incentives to commit large amounts of mail volume or postage revenue 
for Global Bulk Economy (GBE) and Global Direct (GD).\4\
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    \4\ The Postal Service states the commitments also account for 
International Priority Airmail (IPA), International Surface Air Lift 
(ISAL), Express Mail International (EMI), and Priority Mail 
International (PMI) items mailed under a separate but related Global 
Plus 1 contract with each customer. The Global Plus 1 contracts are 
the subject of a separate competitive products proceeding.
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    The Postal Service indicates that the instant contract has material 
differences which include removal of retroactivity provisions; 
explanations of price modification as a result of currency rate 
fluctuations or postal administration fees; removal of language on 
enforcement of mailing requirements; and restructuring of price 
incentives, commitments, penalties and clarification of continuing 
contractual obligations in the event of termination.
    The Postal Service maintains these differences only add detail or 
amplify processes included in prior Global Plus 2 contracts. It 
contends because the instant contract has the same cost attributes and 
methodology as well as similar cost and market characteristics, the 
differences do not affect the fundamental service being offered or the 
essential structure of the contract. Id. at 8. Therefore, it asserts 
these contracts are ``functionally equivalent in all pertinent 
respects.'' Id. at 8.
    In Order No. 250, the Commission gave notice of the filing, 
appointed a Public Representative, and provided the public with an 
opportunity to comment.\5\
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    \5\ Notice of Filing of Two Functionally Equivalent Global Plus 
2 Negotiated Service Agreements, July 16, 2009 (Order No. 250).
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    On July 23, 2009, Chairman's Information Request No. 1 (CHIR No. 1) 
was issued with responses due by July 28, 2009. On July 28, 2009, the 
Postal Service provided its responses to CHIR No. 1.

III. Comments

    Comments were filed by the Public Representative.\6\ No other 
interested parties submitted comments. The Public Representative states 
the contract appears to satisfy the statutory criteria, but because he 
believes there are ambiguities in the cost methodology, his response is 
not an unqualified recommendation in support of the contract's 
approval. Id. at 2. He notes that relevant provisions of 39 U.S.C. 
3632, 3633 and 3642 appear to be met by these additional Global Plus 2 
contracts. Id. The Public Representative states that he believes the 
contracts are functionally equivalent to the existing Global Plus 
Contracts product. He also determines that the Postal Service has 
provided greater transparency and accessibility in its filings. Id. at 
3.
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    \6\ Public Representative Comments in Response to Order No. 250, 
July 23, 2009 (Public Representative Comments).
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    The Public Representative notes that the general public benefits 
from the availability of these contracts in several ways: Well prepared 
international mail adds increased efficiency in the mailstream, 
enhanced volume results in timeliness in outbound shipments to all 
countries including those with small volume, and the addition of 
shipping options may result in expansion of mail volumes, particularly 
with the incentives for PQWs to promote the use of outbound 
international shipping resulting in expansion of these services for the 
Postal Service. Id. at 4.
    Finally, he discusses the need for self-contained docket filings. 
In particular, he notes that the instant contract relies on data from 
the most recent International Cost and Revenue Analysis (ICRA), which 
was filed in another docket. He suggest that the Postal Service 
identify the location of the ICRA utilized and cited in that docket. 
Id. at 6.

IV. Commission Analysis

    The Postal Service proposes to add an additional contract under the 
Global Plus Contracts product that was created in Docket No. MC2008-7. 
As filed, this docket presents two issues for the Commission to 
consider: (1) Whether the contract satisfies 39 U.S.C. 3633, and (2) 
whether the contract is functionally equivalent to previously reviewed 
Global Plus 2 contracts. In reaching its conclusions, the Commission 
has reviewed the Notice, the contract and the financial analyses 
provided under seal, supplemental information, and the Public 
Representative's comments.
    Statutory requirements. The Postal Service contends that the 
instant contract and supporting documents filed in this docket 
establish compliance with the statutory provisions applicable to rates 
for competitive products (39 U.S.C. 3633). Notice at 2.
    J. Ron Poland, Manager, Statistical Programs, Finance Department 
asserts Governors' Decision No. 08-10 for Global Plus Contracts 
establishes price floor and ceiling formulas issued on July 16, 2008. 
He certifies that the pricing in the instant contract meets the 
Governors' pricing formula and meets the criteria of 39 U.S.C. 
3633(a)(1), (2) and (3). He further states that the prices demonstrate 
that the contract and the included ancillary services should cover 
their attributable costs, preclude the subsidization of competitive 
products by market dominant products, and should not impair the ability 
of competitive products on the whole to cover an appropriate share of 
institutional costs. Notice, Attachment 2-A.
    For his part, the Public Representative indicates that the contract 
appears to satisfy 39 U.S.C. 3633. Public Representative Comments at 1-
3.
    Based on the data submitted, including the supplemental 
information, the Commission finds that the contract 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, an initial review of the contract indicates that it comports with 
the provisions applicable to rates for competitive products.
    Functional equivalence. The Postal Service asserts that the instant 
contract is functionally equivalent to the contract filed in the 
companion proceeding, Docket No. CP2009-49, as well as with Global Plus 
2 contracts filed previously because they share similar cost and market 
characteristics. Notice at 4. The Postal Service states that the 
customers under the existing and proposed contracts are the same. In 
addition, it notes that existing contracts exhibited some differences, 
the contracts proposed in Docket Nos. CP2009-48 and CP2009-49 are 
identical. Id.
    Having reviewed the contracts filed in the instant proceeding and 
in Docket No. CP2009-49, and the Postal Service's justification, the 
Commission finds that the two contracts may be treated as functionally 
equivalent.
    New baseline. The Postal Service requests that the contracts filed 
in Docket Nos. CP2009-48 and 2009-49 be included in the Global Plus 2 
product and ``considered the new `baseline' contracts for purposes of 
future functional equivalency analyses concerning this product.'' Id. 
at 2. Currently, the Global Plus 2 product consists of two existing 
contracts that will be superseded by the contracts in Docket Nos. 
CP2009-48 and CP2009-49.

[[Page 41793]]

Under those circumstances, the new contracts need not be designated as 
a new product. Accordingly, the new contracts in Docket Nos. CP2009-48 
and CP2009-49 will be included in the Global Plus 2 product and become 
the ``baseline'' for future functional equivalency analyses regarding 
that product.
    Other considerations. If the agreement terminates earlier than 
anticipated, the Postal Service shall promptly inform the Commission of 
the new termination date.
    In conclusion, the Commission finds that the negotiated service 
agreement submitted in Docket No. CP2009-49 is appropriately included 
within the Global Plus 2 product.

V. Ordering Paragraphs

    It is ordered:
    1. The contract filed in Docket No. CP2009-49 is included within 
the Global Plus 2 product (MC2008-7 and CP2009-49).
    2. The existing Global Plus 2 product (MC2008-7, CP2008-16 and 
CP2008-17) is removed from the product list.
    3. As discussed in the body of this order, future contract filings 
which rely on materials filed under seal in other dockets should be 
self contained.
    4. The Postal Service shall notify the Commission if the 
termination date changes as discussed in this order.

List of Subjects in 39 CFR Part 3020

    Administrative practice and procedure; Postal Service.

    Issued: July 31, 2009.

    By the Commission.
Judith M. Grady,
Acting 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

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:

Appendix 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
    Inbound International
    Canada Post--United States Postal Service Contractual Bilateral 
Agreement for Inbound Market Dominant Services
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]
    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

[[Page 41794]]

    [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

2000 Competitive Product List

Express Mail
    Express Mail
    Outbound International Expedited Services
    Inbound International Expedited Services
    Inbound International Expedited Services 1 (CP2008-7)
    Inbound International Expedited Services 2 (MC2009-10 and 
CP2009-12)
Priority Mail
    Priority Mail
    Outbound Priority Mail International
    Inbound Air Parcel Post
    Royal Mail Group Inbound Air Parcel Post Agreement
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)
    Canada Post--United States Postal Service Contractual Bilateral 
Agreement for Inbound Competitive Services (MC2009-8 and CP2009-9)
    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)
    Express Mail Contract 3 (MC2009-15 and CP2009-21)
    Express Mail Contract 4 (MC2009-34 and CP2009-45)
    Express Mail & Priority Mail Contract 1 (MC2009-6 and CP2009-7)
    Express Mail & Priority Mail Contract 2 (MC2009-12 and CP2009-
14)
    Express Mail & Priority Mail Contract 3 (MC2009-13 and CP2009-
17)
    Express Mail & Priority Mail Contract 4 (MC2009-17 and CP2009-
24)
    Express Mail & Priority Mail Contract 5 (MC2009-18 and CP2009-
25)
    Express Mail & Priority Mail Contract 6 (MC2009-31 and CP2009-
42)
    Express Mail & Priority Mail Contract 7 (MC2009-32 and CP2009-
43)
    Express Mail & Priority Mail Contract 8 (MC2009-33 and CP2009-
44)
    Parcel Return Service Contract 1 (MC2009-1 and CP2009-2)
    Priority Mail Contract 1 (MC2008-8 and CP2008-26)
    Priority Mail Contract 2 (MC2009-2 and CP2009-3)
    Priority Mail Contract 3 (MC2009-4 and CP2009-5)
    Priority Mail Contract 4 (MC2009-5 and CP2009-6)
    Priority Mail Contract 5 (MC2009-21 and CP2009-26)
    Priority Mail Contract 6 (MC2009-25 and CP2009-30)
    Priority Mail Contract 7 (MC2009-25 and CP2009-31)
    Priority Mail Contract 8 (MC2009-25 and CP2009-32)
    Priority Mail Contract 9 (MC2009-25 and CP2009-33)
    Priority Mail Contract 10 (MC2009-25 and CP2009-34)
    Priority Mail Contract 11 (MC2009-27 and CP2009-37)
    Priority Mail Contract 12 (MC2009-28 and CP2009-38)
    Priority Mail Contract 13 (MC2009-29 and CP2009-39)
    Priority Mail Contract 14 (MC2009-30 and CP2009-40)
    Outbound International
    Direct Entry Parcels Contracts
    Direct Entry Parcels 1 (MC2009-26 and CP2009-36)
    Global Direct Contracts (MC2009-9, CP2009-10, and CP2009-11)
    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 (CP2008-8, CP2008-46 and CP2009-47)
    Global Plus 2 (MC2008-7, CP2009-48 and CP2009-49)
    Inbound International
    Inbound Direct Entry Contracts with Foreign Postal 
Administrations (MC2008-6, CP2008-14 and CP2008-15)
    International Business Reply Service Competitive Contract 1 
(MC2009-14 and CP2009-20)

[FR Doc. E9-19855 Filed 8-18-09; 8:45 am]
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