[Federal Register Volume 76, Number 247 (Friday, December 23, 2011)]
[Notices]
[Pages 80412-80413]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-32900]


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POSTAL REGULATORY COMMISSION

Docket No. CP2012-4; Order No. 1057]


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 enter into an additional Inbound Competitive Multi-Service 
Agreements with Foreign Postal Operators 1 agreement. This document 
invites public comments on the request and addresses several related 
procedural steps.

DATES: Comments are due: December 27, 2011, 4:30 p.m., Eastern Time.

ADDRESSES: Submit comments electronically by accessing the ``Filing 
Online'' link in the banner at the top of the Commission's Web site 
(http://www.prc.gov) or by directly accessing the Commission's Filing 
Online system at https://www.prc.gov/prc-pages/filing-online/login.aspx. Commenters who cannot submit their views electronically 
should contact the person identified in the FOR FURTHER INFORMATION 
CONTACT section as the source for case-related information for advice 
on alternatives to electronic filing.

FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel, 
at (202) 789-6820 (case-related information) or [email protected] 
(electronic filing assistance).

SUPPLEMENTARY INFORMATION:

I. Introduction
II. Additional Matters
III. Ordering Paragraphs

I. Introduction

    On December 9, 2011, the Postal Service filed notice, pursuant to 
39 CFR 3015.5 and Order No. 546, informing the Commission that it has 
entered into a bilateral agreement with Canada Post Corporation (Canada 
Post 2012 Agreement or Agreement) and seeks to include the Agreement 
within the Inbound Competitive Multi-Service Agreement with a Foreign 
Postal Operators 1 product.\1\ The Notice concerns only the inbound 
portion of the Agreement; specifically, inbound Expedited Parcels USA 
and EMS for delivery in the United States. Id. at 4.
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    \1\ Notice of United States Postal Service of Filing 
Functionally Equivalent Inbound Competitive Multi-Service Agreement 
with a Foreign Postal Operator, December 9, 2011 (Notice).
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    Attachments to the Notice include:
     Attachment 1--a redacted copy of the 2012-2013 bilateral 
agreement with Canada Post and supporting documents;
     Attachment 2--the certified statement, required under 
Commission rules, attesting to the accuracy of supporting data and 
explaining why, after the change, competitive products in total will be 
in compliance with 39 U.S.C. 3633(a)(1) and (3); \2\
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    \2\ Commission rule 3015.5(c)(2) addresses the required 
certification. Section 3633(a)(1) includes a prohibition against the 
subsidization of competitive products by market dominant products. 
Section 3633(a)(3) includes the requirement that all competitive 
products collectively cover what the Commission determines to be an 
appropriate share of the institutional costs of the Postal Service.
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     Attachment 3--the certification of the Governors' vote in 
Governors' Decision No. 10-3; and
     Attachment 4--an application for non-public treatment of 
certain materials.
    The Postal Service also provided a redacted copy of the Agreement 
and supporting financial documentation as an Excel file. Id. at 3.
    Parent product. In Order No. 546, the Commission approved the 
Inbound Competitive Multi-Service Agreements with Foreign Operators 1 
product and included the TNT Agreement within the product at that time. 
It also acknowledged that the Postal Service proposed adding other 
functionally equivalent agreements as price categories within this 
product.\3\ The Commission, pursuant to the proposed approach, 
subsequently found it appropriate to include several other bilateral 
agreements within the parent product.\4\
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    \3\ ``TNT Agreement'' refers to Koninklijke TNT Post BV and TNT 
Post Pakketservice Benelux BV (TNT Agreement). See Order No. 546.
    \4\ The China Post Agreement was added in Order No. 859 (Docket 
No. CP2011-68). The Norway Post Agreement was added in Order No. 840 
(Docket No. CP2011-69). The Australia Post Agreement was added in 
Order No. 956 (Docket No. CP2012-1).
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    Canada Post 2012 Agreement. The Postal Service and Canada Post, the 
postal operator, are parties to the Agreement. The Agreement is to 
deliver inbound Expedited Parcels USA and EMS in the United States. The 
effective date of the rates for the items included in the Agreement is 
January 1, 2012. Notice at 4. The rates are to remain in effect for two 
years after the effective date, unless terminated sooner. Id.
    Functional equivalency. The Postal Service asserts that the inbound 
portion

[[Page 80413]]

of the Canada Post Agreement is substantially similar to the inbound 
portion of the TNT and Australia Post Agreement in terms of the 
products being offered under the contract and the contract's cost 
characteristics. Id. at 5. It claims that like those agreements, the 
Canada Post Agreement fits within the parameters outlined by Governors' 
Decision No. 10-3, which establishes the rates for Inbound Competitive 
Multi-Service Agreements with Foreign Operators. Id. It also identifies 
some differences, but says most are immaterial to the Commission's 
functional equivalency analysis. The differences include more detailed 
provisions concerning the consequences of early termination and the 
processes to be used to protect Canada Post's confidential information 
when filed in regulatory or other proceedings in the United States. Id. 
The Postal Service says it is possible that the more detailed 
information could have an impact on the cost characteristics of this 
Agreement in comparison to others in the product grouping, but asserts 
the difference would be a positive one because the more detailed 
termination clause eliminates substantial risks concerning the rates 
following termination that would otherwise apply. Id. at 5-6. It also 
says the more detailed provision concerning procedures to be followed 
in the event of certain regulatory filings does not affect either the 
market or cost characteristics of the Agreement. Id.
    Relevant cost and market characteristics. The Postal Service 
asserts that because the Canada Post 2012 Agreement and the Australia 
and TNT Post Agreements incorporate the same cost attributes and 
methodology, the relevant cost and market characteristics are similar, 
if not the same, for the Canada Post 2012 Agreement and the TNT and 
Australia Post Agreements. Id. at 6. The Postal Service says it does 
not consider that the specified differences affect either the 
fundamental service the Postal Service is offering or the fundamental 
structure of the agreements. It claims that nothing detracts from the 
conclusion that these agreements are functionally equivalent in all 
pertinent respects. Id.
    Postal Service's position. The Postal Service therefore maintains, 
based on the reasons discussed in the Notice and as demonstrated by the 
financial data filed under seal, it has established that the Canada 
Post 2012 Agreement is in compliance with the requirements of 39 U.S.C. 
3633 and is functionally equivalent to the TNT and Australia Post 
Agreements within the Inbound Competitive Multi-Service Agreements with 
Foreign Postal Operators 1 (MC2010-34) product. Id.
    The Agreement's status as a ``draft.'' The text of the Agreement is 
marked ``Draft'' because the parties continue to exchange drafts 
concerning the exact wording of the terms and conditions. Id. at 1 n.2. 
The Postal Service does not expect any substantive changes to the 
rates, the operational terms, or the financial liability provisions of 
the Agreement because those negotiations have been successfully 
concluded. Id. It anticipates filing a final signed version of the 
Agreement with the Commission and the Department of State prior to 
December 31, 2011. Id.
    The Commission considers the draft version acceptable for purposes 
of issuing notice of the Postal Service's filing; however, it cannot 
base its final order in this proceeding on the draft version. To avoid 
delay in issuance of the final order, the Commission urges the Postal 
Service to file the final executed Agreement as soon as possible. At 
that time, the Postal Service should identify all changes between the 
draft version and the Agreement as executed.

II. Additional Matters

    Interested persons may submit comments on whether the Postal 
Service's filing in the captioned docket is consistent with the 
policies of 39 U.S.C. 3632 and 3633 and 39 CFR part 3015. Comments are 
due no later than December 27, 2011.
    The public portions of the Postal Service filing can be accessed 
via the Commission's Web site (http://www.prc.gov).
    The Commission appoints James F. Callow to serve as Public 
Representative in this docket.

III. Ordering Paragraphs

    It is Ordered
    1. The Commission establishes Docket No. CP2012-4 to consider 
matters raised by the Postal Service's Notice.
    2. Pursuant to 39 U.S.C. 505, James F. Callow is appointed to serve 
as officer of the Commission (Public Representative) to represent the 
interests of the general public.
    3. Comments by interested persons in this proceeding are due no 
later than December 27, 2011.
    4. The Secretary shall arrange for publication of this order in the 
Federal Register.

    By the Commission.
Shoshana M. Grove,
Secretary.
[FR Doc. 2011-32900 Filed 12-22-11; 8:45 am]
BILLING CODE 7710-FW-P