[Federal Register Volume 77, Number 228 (Tuesday, November 27, 2012)]
[Notices]
[Pages 70852-70853]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-28660]


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POSTAL REGULATORY COMMISSION

[Docket No. R2013-3; Order No.1551]


International Mail Contract

AGENCY: Postal Regulatory Commission.

ACTION: Notice.

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SUMMARY: The Commission is noticing a recent Postal Service filing 
concerning a Type 2 rate adjustment in conjunction with a mail contract 
with Hongkong Post. This notice informs the public of the filing, 
invites public comment, and takes other administrative steps.

DATES: Comments are due: November 29, 2012.

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

FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel, 
at 202-789-6820.

SUPPLEMENTARY INFORMATION: 

Table of Contents

    I. Introduction
    II. Notice of Filing
    III. Ordering Paragraphs

I. Introduction

    Background. On November 15, 2012, the Postal Service filed a 
notice, pursuant to 39 CFR 3010.40 et seq., announcing a Type 2 rate 
adjustment in conjunction with a new negotiated service agreement.\1\ 
The Notice concerns the inbound portion of a bilateral agreement with 
Hongkong Post (Agreement), which the Postal Service seeks to include 
within the existing Inbound Market Dominant Multi-Service Agreements 
with Foreign Postal Operators 1 product. Notice at 1.
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    \1\ Notice of United States Postal Service of Type 2 Rate 
Adjustment, and Notice of Filing Functionally Equivalent Agreement, 
November 15, 2012 (Notice).
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    Contract history and scope. The Agreement is a successor to the 
existing Hongkong Post 2012 Agreement, which was included within 
Inbound Market Dominant Multi-Service Agreement with Foreign Postal 
Operators 1 by operation of Order No. 1058. Id. at 2. Rates under the 
Agreement are intended to take effect January 1, 2013 following 
expiration, on December 31, 2012, of rates now in effect under the 
Hongkong Post 2012 Agreement. Id. at 3. The Agreement pertains only to 
inbound market dominant rates; rates paid by the Postal Service to 
Hongkong Post for outbound delivery of Postal Service products in Hong 
Kong are not included. Id. at 6.
    Applicable rules. 39 CFR 3010 subpart D addresses rate adjustments 
for negotiated service agreements (Type 2 rate adjustments). The rules 
in this subpart specify, among other things, the scope and nature of 
the data, information, and explanations the Postal Service is to 
provide in a notice of Type 2 rate adjustment; the action the 
Commission is to take upon receipt of such Notice; and the nature of 
Commission review. See 39 CFR 3010.42 through 3010.44.

II. Notice of Filing

    Compliance with filing requirements. The Postal Service's filing 
consists of the Notice, two attachments, and a public Excel file. 
Attachment 1 to the Notice is an application for non-public treatment 
of material filed under seal with the Commission (Application).\2\ This 
material consists of the unredacted text of the Agreement and 
unredacted supporting financial documentation. Id. at 2. Attachment 2 
is a redacted copy of the Agreement. The public Excel file is a 
redacted version of the supporting financial documentation. Id.
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    \2\ The Application was filed pursuant to 39 CFR 3007.21. See 
Notice at 12.
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    The Postal Service identifies January 1, 2013 as the effective 
date; asserts that the requisite 45 days' advance notice is being 
provided; and identifies a Postal Service official as a contact for 
further information. Id. at 3. It identifies the parties to the 
Agreement as the United States Postal Service and Hongkong Post, the 
postal operator for Hongkong. Id. at 4. It states that the Agreement 
includes inbound Letter Post, including letters, flats, small packets, 
bags and International Registered Mail service for Letter Post. Id. It 
also includes an ancillary service for delivery confirmation scanning 
for Letter Post small packets.\3\
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    \3\ The ancillary service included in the Agreement was also 
included in the China Post 2010 Agreement, the Hongkong Post 2011 
Agreement, and the China Post 2011 Agreement. Id.
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    The Postal Service states that information about expected financial 
improvements, costs, volumes, and revenues in financial workpapers has 
been filed with the Commission under seal. Id. It identifies two 
components of the Agreement that are expected to enhance operational 
performance: continuation of delivery confirmation service for Letter 
Post small packets; and simplification of the display of Letter Post 
mailstreams. Id. at 5.
    The Postal Service presents several reasons why the instant 
Agreement will not result in unreasonable harm to the marketplace, 
including Hongkong Post's status as the only entity in a position to 
avail itself of an agreement of this type and the role of the Postal 
Service and Hongkong Post as their countries' designated operators for 
exchange of mail. Id. at 5-6.
    Rule 3010.43--data collection plan. Rule 3010.43 requires the 
Postal Service to submit a detailed data collection plan. In lieu of a 
special data collection for the Agreement, the Postal Service states 
that it intends to provide information via the Annual Compliance Report 
and, pursuant to this alternative,

[[Page 70853]]

to provide any necessary information about mail flows from Hongkong 
Post in the course of the annual review process. Id. at 7. The Postal 
Service further asks that the Commission except the Agreement from the 
separate performance reporting requirement under 39 CFR 3055.3(a)(3). 
Id. It notes that the Commission has granted such exceptions for 
similar agreements.\4\
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    \4\ The Postal Service cites exceptions granted for the China 
Post 2010 Agreement, the TNT Agreement, the Hongkong Post 2011 
Agreement, the China Post 2011 Agreement, and the Hongkong Post 2012 
Agreement. Notice at 7.
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    Consistency with applicable statutory criteria. The Postal Service 
observes that Commission review of a negotiated service agreement 
addresses three statutory criteria: whether the agreement (1) improves 
the Postal Service's net financial position or enhances the performance 
of operational functions; (2) will not cause unreasonable harm to the 
marketplace; and (3) will be available on public and reasonable terms 
to similarly-situated mailers. Id. at 8 (citing 39 U.S.C. 3622(c)(10). 
The Postal Service asserts that it addresses the first two criteria in 
its Notice and that the third is inapplicable, as there are no 
similarly situated mailers. Id.
    Functional equivalency. The Postal Service asserts that the 
Agreement is functionally equivalent to the China Post 2010 Agreement, 
the TNT Agreement, Hongkong Post 2011 Agreement, and the China Post 
2011 Agreement because its terms fit within the proposed Mail 
Classification Schedule (MCS) language for Inbound Market Dominant 
Multi-Service Agreements with Foreign Postal Operators 1. Id. at 8-9. 
It therefore states that the Agreement, along with the referenced 
agreements, conform to a common description. Id. at 9. The Postal 
Service also asserts that all five agreements are constructed from a 
similar template; contain many similar terms and conditions; provide 
rates for Letter Post tendered to the Postal Service from each foreign 
operator's territory, along with ancillary services to accompany 
inbound Letter Post; are with a foreign postal operator; and provide 
comparable benefits. Id. It therefore claims that because the 
agreements incorporate the same attributes and methodology, the 
relevant characteristics are similar, if not the same. Id.
    The Postal Service acknowledges the existence of differences that 
distinguish the Agreement from previous agreements, identifies new and 
revised elements with specificity, and briefly describes the nature of 
the changes.\5\ Id. at 10-12. However, it asserts that the Agreement is 
nevertheless functionally equivalent to the previously approved 
agreements referenced in its Notice, and that the differences do not 
affect either the fundamental service being offered or the fundamental 
structure of the contracts. Id. at 12.
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    \5\ Affected elements include the deletion of ``Letter Post'' in 
the Agreement's title, names of the signatories, revised portions of 
Articles 1, 11, 13, 15, 19, 20, 21, 22, and Annexes 1, 2 and 5. 
Changes include, for example, a revision of the Agreement's purpose, 
contact information, clarification of certain requirements under 
U.S. law related to the Agreement, and rate revisions.
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    Additional matter--blanket performance reporting exception for 
future contracts. In addition to seeking an exception from the separate 
performance reporting requirements in rule 3055.3(a)(3) for this 
Agreement, the Postal Service also asks that the Commission approve a 
blanket exception from such reporting for all contracts added to the 
MCS as Inbound Market Dominant Multi-Service Agreements with Foreign 
Postal Operators on grounds that the performance of the products 
covered by those agreements is already included in the measurement of 
other products. Id. at 13.

III. Notice of Proceeding

    The Commission, in conformance with rule 3010.44, hereby 
establishes Docket No. R2013-3 to consider issues raised by the Notice. 
The Commission invites public comments on whether the Postal Service's 
filing in the captioned docket is consistent with the policies of 39 
U.S.C. 3622 and 39 CFR part 3010.40. The Commission also invites 
comments on the Postal Service's request for an exception from 
performance reporting requirements in 39 CFR 3055.3(a)(3) for all 
future contracts added to the Inbound Market Dominant Multi-Service 
Agreements with Foreign Postal Operators 1 (Docket Nos. MC2010-35, 
R2010-5, and R2010-6) product. Comments are due no later than November 
29, 2012.\6\
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    \6\ To provide sufficient time for interested persons to comment 
in these proceedings, the Commission finds it appropriate to modify 
the 10-day comment period specified in 39 CFR 3010.44(a)(5). The 
modest extension will not prejudice either party to the agreement, 
given that 45 days' advance notice is provided in Type 2 rate 
adjustments.
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    The public portions of the Postal Service's filing have been posted 
on the Commission's Web site. They can be accessed at http://www.prc.gov. Information on how to obtain access to non-public material 
is available at 39 CFR 3007.40.
    The Commission appoints James F. Callow to serve as Public 
Representative in this docket.

IV. Ordering Paragraphs

    It is ordered:
    1. The Commission establishes Docket No. R2013-3 to consider 
matters raised by the Notice of United States Postal Service of Type 2 
Rate Adjustment, and Notice of Filing Functionally Equivalent 
Agreement, filed November 15, 2012.
    2. Pursuant to 39 U.S.C. 505, James F. Callow is appointed to serve 
as an officer of the Commission (Public Representative) to represent 
the interests of the general public in this proceeding.
    3. Comments by interested persons in this proceeding are due no 
later than November 29, 2012.
    4. The Secretary shall arrange for publication of this Order in the 
Federal Register.

    By the Commission.
Shoshana M. Grove,
Secretary.
[FR Doc. 2012-28660 Filed 11-26-12; 8:45 am]
BILLING CODE 7710-FW-P