[Federal Register Volume 74, Number 235 (Wednesday, December 9, 2009)]
[Notices]
[Pages 65170-65171]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-29307]


-----------------------------------------------------------------------

POSTAL REGULATORY COMMISSION

[Docket Nos. MC2010-13 and CP2010-12; Order No. 347]


New Postal Product

AGENCY:  Postal Regulatory Commission.

ACTION:  Notice.

-----------------------------------------------------------------------

SUMMARY:  The Commission is noticing a recently-filed Postal Service 
request to add Inbound International Expedited Services 1 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: December 10, 2009.

ADDRESSES:  Submit comments electronically via the Commission's Filing 
Online system at http://www.prc.gov. Commenters who cannot submit their 
views electronically should contact the person identified in ``FOR 
FURTHER INFORMATION CONTACT'' by telephone for advice on alternatives 
to electronic filing.

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

SUPPLEMENTARY INFORMATION:
I. Introduction
II. Notice of Filings
III. Ordering Paragraphs

I. Introduction

    On November 20, 2009, the Postal Service filed a request pursuant 
to 39 U.S.C. 3642 and 39 CFR 3020.30 et seq. to add Inbound 
International Expedited Services 1 to the Competitive Product List.\1\ 
The Postal Service asserts that Inbound International Expedited 
Services 1 is a competitive product within the meaning of 39 U.S.C. 
3632(b)(3).
---------------------------------------------------------------------------

    \1\ Request to Add Inbound International Expedited Services 1 to 
the Competitive Product List, and Notice of United States Postal 
Service of Filing China Post Group-United States Postal Service 
Contractual Bilateral Agreement (Under Seal), November 20, 2009 
(Request).
---------------------------------------------------------------------------

    The Postal Service states that prices and classifications 
underlying these rates are supported by Governors' Decision No. 08-
5.\2\ Id. at 1-2. This Request has been assigned Docket No. MC2010-13.
---------------------------------------------------------------------------

    \2\ Governors' Decision No. 08-5, April 1, 2008, established 
prices for the inbound services offered under Express Mail 
International bilateral/multilateral agreements.
---------------------------------------------------------------------------

    The Postal Service states that Governors' Decision No. 08-5 
establishes the prices for Inbound International Expedited Services 1 
and the changes in classification ``not of general applicability'' 
necessary to implement those prices. Id. at 1.
    The Postal Service contemporaneously filed notice, pursuant to 39 
U.S.C. 3632(b)(3) and 39 CFR 3015.5, that it has entered into a 
contractual bilateral agreement governing bilateral rates for Express 
Mail Service (EMS) with China Post Group, the public postal operator in 
the People's Republic of China. The Postal Service states that the 
supporting financial materials included in this

[[Page 65171]]

filing indicate that the inbound EMS rates comply with the requirements 
of 39 U.S.C. 3633(a). Id. at 2. The rates as established in the 
bilateral agreement are assigned Docket No. CP2010-12.
    Request. In support of its Request, the Postal Service filed the 
following materials: (1) An application for non-public treatment of 
pricing and supporting documents filed under seal;\3\ (2) a redacted 
version of Governors' Decision No. 08-5 establishing prices and 
classifications for services offered under EMS bilateral/multilateral 
agreements; Mail Classification Schedule (MCS) language applicable to 
Inbound EMS bilateral /multilateral agreements; formulas for inbound 
prices under EMS bilateral/multilateral agreements; and an analysis of 
the formulas, certification of the Governors' vote, and certification 
of compliance with 39 U.S.C. 3633(3)(a);\4\ (3) a redacted version of 
the China Post Group bilateral agreement;\5\ (4) certification of 
prices for the bilateral agreement;\6\ and (5) a Statement of 
Supporting Justification as required by 39 CFR 3020.32.\7\
---------------------------------------------------------------------------

    \3\ Attachment 1 to the Request.
    \4\ Attachment 2 to the Request.
    \5\ Attachment 3 to the Request.
    \6\ Attachment 4 to the Request.
    \7\ Attachment 5 to the Request.
---------------------------------------------------------------------------

    On June 1, 2008, the Postal Service filed notice of Governors' 
Decision No. 08-5 in Docket Nos. CP2008-6 and CP2008-7.\8\ Those 
dockets gave notice of a competitive negotiated service agreement with 
China Post Group covering EMS prices.\9\ In Order No. 84, the 
Commission added the China Post Agreement as a product not of general 
applicability to the competitive product list as Inbound International 
Expedited Services 1.\10\ The Postal Service states the agreement 
became effective on July 15, 2008, and continued in effect until July 
14, 2009. Request at 3. The Postal Service entered into a new agreement 
with the China Post Group on November 16, 2009. The Postal Service now 
requests to restore the Inbound International Expedited Services 1 
product to the Competitive Product List.
---------------------------------------------------------------------------

    \8\ See Docket Nos. CP2008-6 and CP2008-7, Notice and Order 
Concerning Prices Under Express Mail International Bilateral/
Multilateral Agreements, June 3, 2008. The Commission consolidated 
Docket No. CP2008-6 with Docket No. CP2008-7 in this order.
    \9\ See Docket No. CP2008-7, Notice of United States Postal 
Service of Filing an Agreement for Inbound Express Mail 
International (EMS) Prices, May 20, 2008.
    \10\ Docket No. CP2008-7, Order Concerning the China Post Group 
Inbound EMS Agreement, June 27, 2008 (Order No. 84).
---------------------------------------------------------------------------

    Related contract. The bilateral agreement establishes alternative, 
negotiated rates to China Post Group for inbound EMS, instead of the 
EMS 2 product rates that would otherwise be applicable.\11\ The Postal 
Service notes that the inbound portion of the bilateral agreement fits 
within the MCS language included as Attachment A to Governors' Decision 
No. 08-5. The agreement becomes effective upon completion of all 
necessary regulatory reviews, but in no case earlier than January 1, 
2010. The agreement continues in effect until terminated, which may 
occur upon 30 days' notice by either party. The negotiated prices are 
subject to change based upon contingencies included in the agreement. 
Request at 4. If rates change, the Postal Service will offer China Post 
Group EMS rates reflecting an adjusted rate. Id.
---------------------------------------------------------------------------

    \11\ The Postal Service states that in absence of this 
negotiated agreement, EMS rates for calendar year 2010 as reviewed 
by the Commission in Docket No. CP2009-57 would apply. See Docket 
No. CP2009-57, PRC Order No. 281, Order Concerning Filing of Changes 
in Rates for Inbound International Expedited Services 2, August 19, 
2009.
---------------------------------------------------------------------------

    The Postal Service states that the new agreement is functionally 
similar to the prior contract reviewed by the Commission except for 
different rates that may be applicable to certain flows in the new 
agreement. Id. at 5. It notes the instant agreement exhibits the same 
cost and market characteristics as the previous agreement. The Postal 
Service describes minor changes in the instant agreement which include 
changes in standard clauses due to the Commission's confidentiality 
rules and other internal issues. Id.
    In the Statement of Supporting Justification, Kang Zhang, General 
Manager, Business Development, Asia/Pacific, Global Business 
Development, asserts that ``[t]he addition of the [Bilateral] Agreement 
as a competitive product will enable the Commission to verify that each 
contract covers its attributable costs and enables competitive 
products, as a whole, to make a positive contribution to coverage of 
institutional costs.'' He further states that as a result, ``no issue 
of subsidization of competitive products by market dominant products 
arises.'' Id., Attachment 5.
    Joseph Moeller, Manager, Regulatory Reporting and Cost Analysis, 
Finance Department, certifies that the contract complies with 39 U.S.C. 
3633(a). Id., Attachment 4. He asserts that the prices for the China 
Post Group bilateral agreement ``should cover its attributable costs 
and preclude the subsidization of competitive products by market 
dominant products.'' Id. The Postal Service filed much of the 
supporting materials, including the specific bilateral agreement, under 
seal. Id. at 5. In its Request, the Postal Service maintains that 
certain portions of the contract, the rates, descriptions of the rates, 
and related financial information should remain under seal. Id., 
Attachment 1.

II. Notice of Filings

    The Commission establishes Docket Nos. MC2010-13 and CP2010-12 for 
consideration of the Request pertaining to the proposed Inbound 
International Expedited Services 1 product, the China Post Group 
bilateral agreement, and the related rates and classifications, 
respectively. In keeping with practice, these dockets are addressed on 
a consolidated basis for purposes of this order; however, future 
filings should be made in the specific docket in which issues being 
addressed 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, 39 CFR part 3015, and 39 CFR 
3020 subpart B. Comments are due no later than December 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 these dockets.

III. Ordering Paragraphs

    It is ordered:
    1. The Commission establishes Docket Nos. MC2010-13 and CP2010-12 
for consideration of the matters raised in each docket.
    2. 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.
    3. Comments by interested persons in these proceedings are due no 
later than December 10, 2009.
    4. The Secretary shall arrange for publication of this order in the 
Federal Register.

    By the Commission.
Judith M. Grady,
Acting Secretary.
[FR Doc. E9-29307 Filed 12-8-09; 8:45 am]
BILLING CODE 7710-FW-S