[Federal Register Volume 76, Number 248 (Tuesday, December 27, 2011)]
[Notices]
[Pages 80985-80986]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-33061]


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POSTAL REGULATORY COMMISSION

[Docket No. CP2012-5; Order No. 1060]


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 outstanding International Business Reply 
Service competitive agreement. This document invites public comments on 
the request and addresses several related procedural steps.

DATES: Comments are due: December 28, 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 15, 2011, the Postal Service filed notice, pursuant to 
39 CFR 3015.5, of contingency prices under an outstanding International 
Business Reply Service (IBRS) competitive contract.\1\ The prices cover 
calendar year 2012 postage on certain postage-prepaid items returned 
from overseas locations to a U.S.-based entity. The Postal Service 
expects the prices to apply to an extremely small number of postal 
items due to the mailer's profile and the passage of time since the 
expiration of the contract. Id. at 4.
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    \1\ Notice of United States Postal Service of Prices under 
Functionally Equivalent International Business Reply Service 
Competitive Contract 1 Negotiated Service Agreement, December 15, 
2011 (Notice).
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    Supporting documentation. Attachments to the Notice include:
     Attachment 1--a redacted copy of a notice to the customer, 
including enclosures consisting of a disclosure statement and price 
table;
     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. 08-24, a redacted copy of the referenced 
Governors' Decision, revised and redacted Mail Classification language, 
redacted copies of price formulas and a related analysis, and a 
redacted certification.
     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 5.
    IBRS contracts. The Commission added the parent product--
International Business Reply Service Contract 1--to the Competitive 
Products in Order No. 178, following consideration in two baseline 
cases.\3\ The controlling Governors' Decision is No. 08-24. Id. at 1-2.
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    \3\ Docket Nos. M2009-14 and CP2009-20.
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    IBRS competitive contracts are for U.S.-based entities that seek a 
channel for returned merchandise or other articles from their overseas 
customers. These entities typically supply preprinted, prepaid IBRS 
packaging in which overseas customers can place used or defective 
consumer items and enter them in the mailstream at no direct cost. Id. 
at 1. Thus, IBRS is a return service for overseas customers. Id. at 2. 
The contract customer is the recipient of IBRS items, not the mailer; 
therefore, the customer has no control over the contingency that 
extraneous IBRS items might be tendered after expiration of the 
contract. Id. Given that costs are incurred in accepting and delivering 
these items, the Postal Service and its IBRS customers have agreed to 
let the Postal Service set prices to cover costs and potentially 
incentivize customers to enter into new arrangements. Id.
    The Postal Service notes that the contract underlying the instant 
contingency prices was executed before the Commission's current rules 
for competitive and market dominant products took effect. Id. It says 
the contract expired March 31, 2008; no successor contract has been 
executed; and the instant prices therefore occur under a surviving 
contractual term. Id. at 2.
    The Postal Service explains that contingency arrangements like the 
one presented here consist of (1) a provision in each IBRS contract to 
govern the contingency that a new agreement might not be concluded and 
approved before expiration and, in the case of this customer, (2) 
subsequent communication with the customer to update the contingency 
prices. Id.
    The Postal Service has filed two notices of changes in contingency 
prices under the underlying expired contract: one for calendar year 
2010 and the other for calendar year 2011. Id. at 3. Both notices 
expressed the Postal Service's view that the contingency pricing 
arrangement for the next calendar year was functionally equivalent to 
the IBRS contracts considered in Docket Nos. CP2009-20 and CP2009-22, 
and include a request that the Commission include each of the 
contingency pricing arrangements within the IBRS Competitive Contracts 
1 designation on the Competitive Products List. Id. The Commission, as 
requested, added both contingency pricing arrangements to the 
Competitive Product List under the IBRS Competitive Contract 1 product. 
Id. at 4, n.8.
    The Postal Service addresses several points about the status of the 
underlying contract under Commission rules, but concludes that filing 
materials under 39 CFR 3015.5, as it has done here, resolves any 
inconsistency. Id. at 4. It therefore requests the Commission to 
include the instant contingency arrangement within the IBRS Competitive 
Contract 1 designation on the Competitive Products List based on its 
functional equivalence to the IBRS contracts in Docket Nos. CP2009-20 
and CP2009-22.
    Functional equivalency. The Postal Service asserts that the instant 
IBRS contingency arrangement is essentially identical to those 
envisioned in the contracts the Commission included in the IBRS 
Competitive Contract 1 product in Docket Nos. CP2009-20 and CP2009-22, 
with minor procedural variations due to different negotiation outcomes. 
Id. at 5. It says the nature of the IBRS service provided in all three 
contracts is essentially the same, and

[[Page 80986]]

the instant IBRS contingency arrangement bears similar market 
characteristics to the two other IBRS Competitive Contract 1 
agreements. Id. at 5-6. The Postal Service also incorporates by 
reference its arguments about functional equivalence in Docket No. 
CP2009-22. Id. at 6.
    Postal Service's position. The Postal Service maintains that, based 
on the reasons provided in its Notice and the financial data filed 
under seal, it has established that the instant contingency prices 
under an expired IBRS contract are in compliance with the requirements 
of 39 U.S.C. 3633. Id. It further asserts that the contingency 
arrangement is also functionally equivalent to those contemplated by 
the IBRS contracts filed in Docket Nos. CP2009-20 and CP2009-22. Id. 
The Postal Service therefore asserts that this arrangement should be 
added to the IBRS Competitive Contract 1 product on the Competitive 
Products List. Id.

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 28, 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. CP2012-5 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 28, 2011.
    4. The Secretary shall arrange for publication of this order in the 
Federal Register.


    By the Commission.
Shoshana M. Grove,
Secretary.
[FR Doc. 2011-33061 Filed 12-23-11; 8:45 am]
BILLING CODE 7710-FW-P