[Federal Register Volume 77, Number 228 (Tuesday, November 27, 2012)]
[Notices]
[Pages 70850-70852]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-28661]


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

POSTAL REGULATORY COMMISSION

[Docket No. R2013-4; Order No.1552]


International Mail Contract

AGENCY: Postal Regulatory Commission.

ACTION: Notice.

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

SUMMARY: The Commission is noticing a recent Postal Service filing 
concerning a Type 2 rate adjustment in conjunction with a mail contract 
with the postal operator of the Netherlands. 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. Notice of Proceeding
IV. 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 
Royal PostNL BV (PostNL) (Agreement), which the Postal Service seeks to 
include within the Inbound Market Dominant Multi-Service Agreements 
with Foreign Postal Operators (Docket Nos. MC2010-35, R2010-5 and 
R2010-6) product. Notice at 1.
---------------------------------------------------------------------------

    \1\ Notice of United States Postal Service of Type 2 Rate 
Adjustment, and Notice of Filing Functionally Equivalent Agreement, 
November 15, 2012 (Notice).
---------------------------------------------------------------------------

    Rates under the Agreement are intended to take effect January 1, 
2013 following expiration of rates in the existing TNT Agreement. Id. 
at 3.
    Contract history. The Agreement is a successor to the TNT 
Agreement, which was added by operation of Order No. 549 in Docket Nos. 
MC2010-35, R2010-5, and R2010-6. Both the instant Agreement and the TNT 
Agreement are with the postal operator of the Netherlands, however, the 
Postal Service's contracting partner in the TNT Agreement was TNT Post, 
a subsidiary of the postal operator for the Netherlands, while the 
instant Agreement is with PostNL, the current postal operator of the 
Netherlands. Id. at 10.
    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,

[[Page 70851]]

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 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.
---------------------------------------------------------------------------

    \2\ The Application was filed pursuant to 39 CFR 3007.21. See 
Notice at 12.
---------------------------------------------------------------------------

    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 PostNL, the postal 
operator for the Netherlands. Id. at 4. It states that the Agreement 
includes inbound Letter Post in the form of letters, flats, small 
packets, bags, and International Registered Mail service for Letter 
Post.
    The Postal Service states that workpapers filed with the Commission 
under seal provide information about expected financial improvements, 
costs, volumes, and revenues. Id. It identifies three aspects of the 
Agreement expected to enhance performance: an anticipated revision to 
accounting business rules related to changes in settlement; 
encouragement of incentives for optional activities, such as sortation 
or separation changes; and identification of suggested Office of 
Exchange Routing Details and information about the Offices of Exchange 
for entry of Registered Mail. Id. at 4-5.
    The Postal Service cites several reasons why the Agreement will not 
result in unreasonable harm to the marketplace. These include, among 
others, PostNL's dominant position in the market for Letter Post 
originating in its home country; Private Express Statutes (in the 
United States) that generally prohibit entities other than the Postal 
Service from carrying inbound international letters commercially after 
entry at a United States port, at least below certain price and weight 
thresholds; and the parties' status as their respective countries' 
designated operators for the exchange of mail, including Letter Post, 
under rules set by the Universal Postal Union. 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, to provide any necessary information 
about mail flows from PostNL 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) on grounds that the Agreement 
covers ``merely a grouping of other products already being measured.'' 
Id. It notes that the Commission has granted such exceptions for 
similar agreements.\3\
---------------------------------------------------------------------------

    \3\ The Postal Service cites exceptions granted for the China 
Post 2010 Agreement, the TNT Agreement, the Hongkong Post 2011 
Agreement, and the China Post 2011 Agreement. Id.
---------------------------------------------------------------------------

    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 entities 
similarly situated to PostNL in terms of their ability to tender broad-
based Letter Post flows from the Netherlands. Id.
    Functional equivalency. The Postal Service asserts that the 
Agreement is functionally equivalent to the China Post 2010 Agreement, 
TNT Agreement, Hongkong Post 2011 Agreement, and 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 
asserts that the Agreement and the four other 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; involve 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; uses the TNT 
Agreement as a basis for comparison for identifying new and revised 
elements; and briefly describes the nature of the changes.\4\ Id. at 9-
11. However, it asserts that the Agreement is nevertheless functionally 
equivalent to the previously-approved agreements, and that the 
differences do not affect either the fundamental service being offered 
or the fundamental structure of the contracts. Id. at 11-12.
---------------------------------------------------------------------------

    \4\ In addition to the difference in the identity of the Postal 
Service's contracting partner in this Agreement, affected elements 
of the Agreement include Articles 1, 3, 8 through 10, 12, 14, and 22 
through 24; the signatories; and Annexes 1 through 3. Changes 
include, for example, inclusion of addresses for the Postal Service 
and PostNL; the period the Agreement will remain in effect; and 
rates. Article 8 is new. Subsequent articles have been renumbered.
---------------------------------------------------------------------------

    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 for 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 12.

III. Notice of Proceeding

    The Commission, in conformance with rule 3010.44, hereby 
establishes Docket No. R2013-4 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 a blanket 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.

[[Page 70852]]

MC2010-35, R2010-5, and R2010-6) product.
    Comments are due no later than November 29, 2012.\5\
---------------------------------------------------------------------------

    \5\ 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.
---------------------------------------------------------------------------

    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. R2013-4 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. 2012-28661 Filed 11-26-12; 8:45 am]
BILLING CODE 7710-FW-P