[Federal Register Volume 79, Number 121 (Tuesday, June 24, 2014)]
[Notices]
[Pages 35819-35820]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-14445]


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POSTAL REGULATORY COMMISSION

 [Docket No. MC2014-26; Order No. 2091]


New Price Category

AGENCY: Postal Regulatory Commission.

ACTION: Notice.

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SUMMARY: The Commission is noticing a recent Postal Service filing 
requesting the addition of Gift Cards to the competitive product list 
as a price category to the Greeting Cards and Stationery product. This 
notice informs the public of the filing, invites public comment, and 
takes other administrative steps.

DATES: Comments are due: July 3, 2014. Reply Comments are due: July 17, 
2014.

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: David A. Trissell, General Counsel, at 
202-789-6820.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction
II. Postal Service Filing
III. Commission Action
IV. Ordering Paragraphs

I. Introduction

    The Postal Service is currently selling American Express gift cards 
at about 5,000 post offices throughout the United States pursuant to a 
market test extension authorized by the Commission that is scheduled to 
expire on June 27, 2014.\1\ On June 9, 2014, the Postal Service filed a 
request pursuant to 39 U.S.C. 3642 and 39 CFR 3020.30 et seq., to add 
Gift Cards to the competitive product list as a price category to the 
Greeting Cards and Stationery product.\2\ It proposes that the product 
name be changed to Greeting Cards, Gift Cards, and Stationery in the 
competitive product list. Request at 1.
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    \1\ Docket No. MT2011-2, Order Granting Extension of Gift Card 
Market Test, July 19, 2013 (Order No. 1781). The market test was 
initially authorized by Order No. 721, Order Authorizing Gift Card 
Market Test, April 28, 2011. Market tests are limited to 24 month's 
duration with a possible extension not to exceed an additional 12 
months. 39 U.S.C. 3641(d).
    \2\ Request of the United States Postal Service to Add Gift 
Cards as a New Price Category in the Greeting Cards and Stationery 
Product, June 9, 2014 (Request).
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II. Postal Service Filing

    Request for an interim order. Recognizing that the Commission may 
not be able to complete its review of the Request by the expiration of 
the market test, the Postal Service requests that the Commission issue 
an interim order before June 27, 2014, allowing the Postal Service to 
continue selling the open loop cards currently available at post 
offices until a final order is issued in this proceedings. Id. at 1-2. 
Absent such an order, the Postal Service states that requiring it ``to 
pull these gift cards from Post Offices pending a final order in this 
proceeding'' would be inefficient and harmful to customers. Id. at 
2.\3\
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    \3\ The Postal Service asserts that during such an interim 
order, it would not change the limited set of gift cards sold or the 
locations where the cards are sold. Id. at 2 n.3.
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    The Postal Service Request. The Request includes a copy of the 
Governors' Decision and Certification (Attachment A), a Statement of 
Supporting Justification to demonstrate the Request meets the criteria 
in 39 U.S.C. 3642 (Attachment B) and proposed Mail Classification 
Schedule (MCS) language (Attachment C). The Postal Service also filed 
on June 9, 2014 a notice of filing a non-public library reference with 
estimated cost coverage calculations in an Excel workbook with revenue 
and cost information together with an Application for Non-Public 
Treatment for the protection of the information as Attachment A to the 
Notice.\4\
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    \4\ Notice of Filing of Nonpublic Library Reference USPS-LR-
MC2014-26/NP1, June 9, 2014.
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    The Statement of Supporting Justification (Request, Attachment B) 
filed through Betty Y. Su, Executive Director of Brand Marketing, 
states that the Gift Cards service (as part of the Greeting Cards and 
Stationery product) will cover its attributable costs and make a 
positive contribution to institutional costs, citing to the non-public 
library reference, Estimated Cost Coverage Calculations. Id. at 1-2. 
She says the market for gift cards is highly competitive and fees must 
be kept low to compete with other retailers. Id. at 2-3. Gift cards are 
widely available from private firms and surveys of customers using the 
product found them convenient and would be bought again, although some 
customers were concerned about longer lines at the post office. Id. at 
4-5. She further states the likely impact on small business is minimal 
because small businesses tend to use the gift cards and generally 
larger retail chains compete in the sale of gift cards. Id. at 5. Also, 
the impact on the market would be considerably smaller than three 
percent of the relevant market. Id.
    Finally, she sees a nexus between the use of gift cards and the use 
of the mails for sending gift cards because a majority of gift cards 
purchased at post offices will be mailed. Id. at 6-7. The Commission's 
order authorizing the market test included the condition that the 
Postal Service report the type of gift cards sold (open or closed 
loop), within 30 days of the end of the fourth quarter of FY 2011 and 
semi-annually thereafter: The total and net revenues; volumes, 
including, separately, volumes sold with greeting cards; attributable 
costs; and an estimate of the percentage of gift cards mailed (or 
likely to be mailed). Order No. 721 at 15.\5\ The Postal Service 
complied and filed its periodic reports in support of its claim that a 
large portion of gift cards are mailed, that their sale can reasonably 
be classified as an ancillary service, and thus qualifies as a postal 
service.
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    \5\ A second condition limited the market test to the sale of 
gift cards at the Postal Service's retail facilities, including its 
Web site. Id. at 14.
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    The Statement of Supporting Justification relies on the various 
survey data collected during the market test by the Postal Service both 
at the Commission's direction and on its own volition. The Postal 
Service found that 52 percent of the purchased gift cards

[[Page 35820]]

were, or were expected, to be mailed and concluded that every 100 gift 
cards sold can be expected to generate more than 98 pieces of mail. 
Request, Attachment B at 8. A separate survey found that 67 percent of 
purchasers of gift cards believed it would be more convenient to mail 
gift cards purchased at the post office rather than from another 
retailer. Id. Also, as an alternative to sending cash through the mail, 
the Statement of Supporting Justification notes the sale of gift cards 
is very similar to the sale of money orders, long regarded as a postal 
service. Id. at 9. The Statement of Supporting Justification concludes 
that the selling of gift cards at post offices qualifies as a postal 
service since sales are ancillary to the delivery of letters and 
mailable packages. 39 U.S.C. 102(5). Id. at 10.

III. Commission Action

    Conditional authorization to continue sales. Market tests may be 
authorized for a total of up to 36 months including a one year 
extension. 39 U.S.C. 3641(d). Absent an order extending the market 
test, it must terminate June 27, 2014.\6\ The Postal Service indicates 
that discontinuance of the market test during the pendency of this 
proceeding would be inefficient as well as inconvenient to gift card 
customers. To avoid the disruption of service and inconvenience if 
service is discontinued pending the Commission's review of the Request, 
the Commission will conditionally approve the addition of Gift Cards to 
the competitive product list as a price category of the Greeting Cards, 
Gift Cards, and Stationery competitive product.\7\ This interim Order 
merely preserves the status quo pending the completion of this 
proceeding. Ample opportunity to submit comments on the Request is 
being provided. Thus, no person will be prejudiced by this result. 
Accordingly, any interested person will have an opportunity to be heard 
and have his/her comments considered by the Commission as part of the 
record in this proceeding.
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    \6\ The Postal Service recognizes that its June 9 Request was 
not filed sufficiently in advance of the market test expiration date 
to provide adequate time for public input and Commission review of 
its Request. By filing its Request so close to the expiration date 
of the market test, the Postal Service jeopardizes the continuation 
of the service. That risk is unnecessary and is easily cured by a 
timelier filing, a point the Commission has previously made. See 
Order No. 1781, supra, at 3.
    \7\ The prices for Gift Cards currently charged by the Postal 
Service will apply during the pendency of this proceeding.
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    Notice of filing. The Commission establishes Docket No. MC2014-26 
for consideration of matters raised by the Request. 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, 
3633, or 3642, 39 CFR parts 3015 or 3020, subpart B. Comments are due 
no later than July 3, 2014. Reply comments are due no later than July 
17, 2014. The public portions of these filings can be accessed via the 
Commission's Web site (http://www.prc.gov).
    The Commission appoints Tracy N. Ferguson to represent the 
interests of the general public (Public Representative) in this case.

IV. Ordering Paragraphs

    It is ordered:
    1. The Commission establishes Docket No. MC2014-26 for 
consideration of matters raised by the Postal Service's Request.
    2. Pending completion of this proceeding, the Commission 
conditionally authorizes the proposed product Greeting Cards, Gift 
Cards, and Stationery as an addition to the competitive product list.
    3. Comments of interested persons are due no later than July 3, 
2014. Reply comments are due no later than July 17, 2014.
    4. Pursuant to 39 U.S.C. 505, Tracy N. Ferguson is appointed to 
serve as an officer of the Commission (Public Representative) to 
represent the interests of the general public in this proceeding.
    5. The Secretary shall arrange for publication of this order in the 
Federal Register.

    By the Commission.
Ruth Ann Abrams,
Acting Secretary.
[FR Doc. 2014-14445 Filed 6-23-14; 8:45 am]
BILLING CODE 7710-FW-P