[Federal Register Volume 74, Number 193 (Wednesday, October 7, 2009)]
[Rules and Regulations]
[Pages 51467-51470]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-24237]


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POSTAL REGULATORY COMMISSION

39 CFR Part 3020

 [Docket Nos. MC2009-42 and CP2009-63; Order No. 305]


New Postal Product

AGENCY: Postal Regulatory Commission.

ACTION: Final rule.

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SUMMARY: The Commission is adding the Priority Mail Contract 18 to the 
Competitive Product List. This action 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 new 
requirements in the law.

DATES: Effective October 7, 2009 and is applicable beginning September 
28, 2009.

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

SUPPLEMENTARY INFORMATION: Regulatory History, 74 FR 48323 (September 
22, 2009).

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

I. Introduction

    The Postal Service seeks to add a new product identified as 
Priority Mail Contract 18 to the Competitive Product List. For the 
reasons discussed below, the Commission approves the Request.

II. Background

    On September 11, 2009, the Postal Service filed a formal request 
pursuant to 39 U.S.C. 3642 and 39 CFR 3020.30 et seq. to add Priority 
Mail Contract 18 to the Competitive Product List.\1\ The Postal Service 
asserts that the Priority Mail Contract 18 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. MC2009-42.
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    \1\ Request of the United States Postal Service to Add Priority 
Mail Contract 18 to Competitive Product List, September 11, 2009 
(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. CP2009-63.
    In support of its Request, the Postal Service filed the following 
materials: (1) A redacted version of the Governors' Decision, filed in 
Docket No MC2009-25, authorizing the Priority Mail Contract Group; \2\ 
(2) a redacted version of the contract; \3\ (3) a requested change in 
the Mail Classification Schedule product list; \4\ (4) a Statement of 
Supporting Justification as required by 39 CFR 3020.32;\5\ (5) a 
certification of compliance with 39 U.S.C. 3633(a); \6\ and (6) an 
application for nonpublic treatment of the materials filed under 
seal.\7\ The redacted version of the contract provides that the 
contract is terminable on 30 days' notice by either party, but could 
continue until March 11, 2012 without modification except as to price 
adjustments. Request, Attachment B, Article III.
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    \2\ Attachment A to the Request, reflecting Governors' Decision 
No. 09-6, April 27, 2009.
    \3\ Attachment B to the Request.
    \4\ Attachment C to the Request.
    \5\ Attachment D to the Request.
    \6\ Attachment E to the Request.
    \7\ Attachment F to the Request.
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    In the Statement of Supporting Justification, Mary Prince Anderson, 
Acting Manager, Sales and Communications, Expedited Shipping, 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, 
Regulatory Reporting and Cost Analysis, Finance Department, certifies 
that the contract complies with 39 U.S.C. 3633(a). Id., Attachment E.
    The Postal Service filed much of the supporting materials, 
including the supporting data and the unredacted contract, under seal. 
The Postal Service maintains that the contract and related financial 
information, including the customer's name and the accompanying 
analyses that provide prices, certain terms and conditions, and 
financial projections, should remain confidential. Id., Attachment F at 
2-3.
    In Order No. 298, the Commission gave notice of the two dockets, 
appointed a public representative, sought supplemental information, and 
provided the public with an opportunity to comment.\8\ The Postal 
Service filed its Response for supplemental information pertaining to 
the sufficiency of spreadsheets of the partially superseded agreement, 
and related data.\9\
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    \8\ PRC Order No. 298, Notice and Order Concerning Priority Mail 
Contract 18 Negotiated Service Agreement, September 15, 2009 (Order 
No. 298).
    \9\ Response of the United States Postal Service to Request for 
Supplemental Information in Order No. 298 (Questions 1 and 2), 
September 21, 2009 (Response).
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III. Comments

    Comments were filed by the Public Representative.\10\ No comments 
were submitted by other interested parties. The Public Representative 
states that the Postal Service's filing comports with title 39 and the 
relevant Commission rules. Public Representative Comments at 1. He 
further states that the agreement

[[Page 51468]]

appears to be beneficial to the general public since ``[i]n addition to 
having the mailer prepare mailings for less costly handling by the 
Postal Service, the contract employs pricing incentives favorable to 
the Postal Service and thereby, the public.'' Id. at 4. The Public 
Representative notes that the Postal Service has provided adequate 
justification for maintaining confidentiality in this case. Id. at 3.
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    \10\ Public Representative Comments in Response to United States 
Postal Service Request to Add Priority Mail Contract 18 Negotiated 
Service Agreement to the Competitive Product List, September 25, 
2009 (Public Representative Comments). The Public Representative 
also filed a Motion of the Public Representative for Late Acceptance 
of Comments in Response to United States Postal Service Request to 
Add Priority Mail Contract 18 to the Competitive Products List, 
September 25, 2009. That motion is granted.
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IV. Commission Analysis

    The Commission has reviewed the Request, the contract, the 
financial analysis provided under seal that accompanies it, and the 
comments filed by the Public Representative.
    Statutory requirements. The Commission's statutory responsibilities 
in this instance entail assigning Priority Mail Contract 18 to either 
the Market Dominant Product List or to the Competitive Product List. 39 
U.S.C. 3642. As part of this responsibility, the Commission also 
reviews the proposal 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. In determining whether to assign Priority 
Mail Contract 18 as a product to the Market Dominant Product List or 
the Competitive Product List, the Commission must consider 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 will 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 who 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 precluding it from taking unilateral action to increase 
prices without the risk of losing volume to private companies. Request, 
Attachment D, para. (d). The Postal Service also contends that it may 
not decrease quality or output without risking the loss of business to 
competitors that offer similar expedited delivery services. Id. It 
further states that the contract partner supports the addition of the 
contract to the Competitive Product List to effectuate the negotiated 
contractual terms. Id., para. (g). Finally, the Postal Service states 
that the market for expedited delivery services is highly competitive 
and requires a substantial infrastructure to support a national 
network. It indicates that large carriers serve this market. 
Accordingly, the Postal Service states that it is unaware of any small 
business concerns that could offer comparable service for this 
customer. Id., para. (h).
    No commenter opposes the proposed classification of Priority Mail 
Contract 18 as competitive. Having considered the statutory 
requirements and the support offered by the Postal Service, the 
Commission finds that Priority Mail Contract 18 is appropriately 
classified as a competitive product and should be added to the 
Competitive Product List.
    Cost considerations. The Postal Service presents a financial 
analysis showing that Priority Mail Contract 18 results in cost savings 
while ensuring that the contract covers its attributable costs, does 
not result in subsidization of competitive products by market dominant 
products, and increases contribution from competitive products.
    Based on the data submitted, the Commission finds that Priority 
Mail Contract 18 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 
proposed Priority Mail Contract 18 indicates that it comports with the 
provisions applicable to rates for competitive products.
    Agreements amending previous negotiated service agreements. In its 
Request, the Postal Service did not clearly identify the existing 
contract that the new one effectively modifies. The new contract 
supersedes, in part, a contract for Express Mail and Priority Mail, 
only with respect to Priority Mail terms.\11\ In the future, if it is 
amending or changing an existing contract in a new filing, the Postal 
Service shall identify the contract and docket number of the contract 
being amended or changed in the new filing and describe the changes. In 
addition, assuming the existing contract is to continue, in part, as 
modified, the Postal Service must also certify, as part of its filing, 
that the amended contract still complies with the requirements of 39 
U.S.C. 3633(a).
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    \11\ The existing contract became effective March 11, 2009. 
Request, Attachment B, at 1.
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    Application for non-public treatment. The Postal Service believes 
that the 10-year period of non-public treatment, as specified in 39 
U.S.C. 3007.30, is insufficient to protect customer-identifying 
information. Request, Attachment F, at 7. It asserts that such 
information should be protected permanently and requests that the 
Commission enter an order extending that duration indefinitely.
    The request is premature. Should the need for non-public treatment 
remain due to ongoing business relationships, the Postal Service may 
submit a motion to the Commission to extend the duration at the 
appropriate time.\12\
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    \12\ See Docket Nos. MC2009-40 and CP2009-61, Order Concerning 
Parcel Select & Parcel Return Service Contract 2 Negotiated Service 
Agreement, September 4, 2009, at 7.
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    Other considerations. Following the scheduled termination date of 
the agreement, the Commission will remove the product from the 
Competitive Product List.
    In conclusion, the Commission approves Priority Mail Contract 18 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.

V. Ordering Paragraphs

    It is ordered:
    1. Priority Mail Contract 18 (MC2009-42 and CP2009-63) is added to 
the Competitive Product List as a new product under Negotiated Service 
Agreements, Domestic.
    2. The Postal Service shall notify the Commission if termination 
occurs prior to the scheduled termination date.
    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.
Shoshana M. Grove,
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:

[[Page 51469]]

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
    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
    [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)

[[Page 51470]]

    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 Select & Parcel Return Service Contract 2 (MC2009-40 and 
CP2009-61)
    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)
    Priority Mail Contract 15 (MC2009-35 and CP2009-54)
    Priority Mail Contract 16 (MC2009-36 and CP2009-55)
    Priority Mail Contract 17 (MC2009-37 and CP2009-56)
    Priority Mail Contract 18 (MC2009-42 and CP2009-63)
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 Expedited Package Services 2 (CP2009-50)
    Global Plus Contracts
    Global Plus 1 (CP2008-8, CP2008-46 and CP2009-47)
    Global Plus 2 (MC2008-7, CP2008-48 and CP2008-49)
Inbound International
    Inbound Direct Entry Contracts with Foreign Postal 
Administrations
    Inbound Direct Entry Contracts with Foreign Postal 
Administrations
    (MC2008-6, CP2008-14 and MC2008-15)
    Inbound Direct Entry Contracts with Foreign Postal 
Administrations
    1 (MC2008-6 and CP2009-62)
    International Business Reply Service Competitive Contract 1 
(MC2009-14 and CP2009-20)
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. E9-24237 Filed 10-6-09; 8:45 am]
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