[Federal Register Volume 84, Number 103 (Wednesday, May 29, 2019)]
[Notices]
[Pages 24828-24829]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-11085]


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POSTAL REGULATORY COMMISSION

[Docket No. CP2019-155; Order No. 5102]


Competitive Postal Products

AGENCY: Postal Regulatory Commission.

ACTION: Notice.

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SUMMARY: The Commission is acknowledging a recent filing by the Postal 
Service of its intention to change prices not of general applicability 
to reflect a range of prices to take effect on a date determined by the 
Postal Service Governors. This notice informs the public of the filing, 
invites public comment, and takes other administrative steps.

DATES: Comments are due: June 21, 2019.

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. Background
III. Proposed Rates
IV. Initial Administrative Actions
V. Ordering Paragraphs

I. Introduction

    On May 20, 2019, the Postal Service filed a notice of a proposed 
range of prices for Inbound Letter Post Small Packets and Bulky Letters 
(E format), and for associated Inbound Registered Service.\1\ The 
Postal Service intends for the prices to take effect on a date to be 
determined by the Postal Service Governors. Notice at 1. The Postal 
Service concurrently filed a notice of filing of non-public library 
references.\2\ The Postal Service's Notice requests the Commission's 
review and approval of new rates for Inbound E format Letter Post, but 
does so in a unique and unprecedented manner. As described further 
below, the Postal Service, in lieu of providing specific rates, has 
proposed a range of rates for both the piece and weight components of 
the proposed pricing structure.
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    \1\ Notice of the United States Postal Service of Rates Not of 
General Applicability for Inbound E-Format Letter Post, and 
Application for Non-Public Treatment, May 20, 2019 (Notice).
    \2\ Notice of the United States Postal Service of Filing of Non-
Public Library References, May 20, 2019 (Non-Public LR Notice).
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II. Background

    Current Inbound E format Letter Post prices, known as terminal 
dues, were set through the Universal Postal Union (UPU). Notice at 2. 
The UPU terminal dues system has long been a concern of the Commission, 
and the Commission has noted that the current pricing regime results in 
noncompensatory terminal dues.\3\ The Commission has described UPU 
terminal dues as discriminatory because they are not equivalent to 
domestic postage rates in the destination country. Order No. 4980 at 3.
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    \3\ Docket No. MC2019-17, Order Conditionally Approving 
Transfer, January 9, 2019, at 3 (Order No. 4980).
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    On August 23, 2018, President Donald J. Trump issued a presidential 
memorandum to the Postmaster General and the Chairman of the 
Commission, among others, entitled ``Modernizing the Monetary 
Reimbursement Model for the Delivery of Goods Through the International 
Postal System and Enhancing the Security and Safety of International 
Mail.'' \4\ The Postal Service states that the Presidential Memorandum 
identifies economic distortion as a result of foreign merchants 
receiving the benefit of lower distribution costs in the United States 
compared to domestic vendors. Notice at 3.
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    \4\ Presidential Memorandum for the Secretary of State, 
Secretary of the Treasury, Secretary of Homeland Security, 
Postmaster General, and Chairman of the Postal Regulatory 
Commission, August 23, 2018 (Presidential Memorandum), available at: 
https://www.whitehouse.gov/presidential-actions/presidential-memorandum-secretary-state-secretary-treasury-secretary-homeland-security-postmaster-general-chairman-postal-regulatory-commission/.
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    Consistent with the policy objectives outlined in the Presidential 
Memorandum, the Secretary of State gave notice to the UPU on October 
17, 2018, that the United States would withdraw as a member country, 
effective one year from the announcement.\5\ The White House Press 
Secretary issued a statement indicating that the President concurred 
with the recommendation from the Department of State that the United 
States should adopt self-declared rates for terminal dues as soon as 
practical, but no later than January 1, 2020.\6\
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    \5\ See Statement from the Press Secretary, October 17, 2018, 
available at: https://www.whitehouse.gov/briefings-statements/statement-press-secretary-38/.
    \6\ Id.; see Order No. 4980 at 4.
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    Since issuing its notice to withdraw from the UPU, the United 
States has continued to negotiate with other UPU member countries to 
``reach a mutually acceptable solution to satisfy the aims of the 
Presidential Memorandum.'' Notice at 5. The Postal Service states that 
because it does not yet know the result of current State Department 
negotiations on achieving ``the President's stated goal to remain 
within the UPU following elimination of the economic distortion'' in 
the current system, it posits that a range of rates for E format items 
that accommodates those negotiations is ``in the best interests of the 
United States and the Postal Service.'' Id. The Postal Service states 
that this range allows the Postal Service to preserve flexibility, 
enabling it to institute rates for E format Letter Post whether the 
United States is in or out of the UPU. Id.
    In Order No. 4980, the Commission conditionally approved the 
transfer of Inbound E format Letter Post items from the market dominant 
to competitive products list. Order No. 4980 at 23.

III. Proposed Rates

    The Postal Service's Notice includes an application for non-public 
treatment of materials filed under seal (Attachment 1), a Statement of 
Explanation and Justification for the proposed rate range (Attachment 
2), and a certification of prices (Attachment 3). Notice, Attachments 
1-3. The Postal Service filed the proposed rates and underlying 
workpapers under seal in this docket. See Notice at 2. The Postal 
Service states that the price range and workpapers include 
``commercially sensitive information, such as price, volume, cost, and 
revenue data, certain non-published rates, negotiated contract data, 
and underlying calculations.'' Non-Public LR Notice at 2. The Postal

[[Page 24829]]

Service further explains its request for non-public treatment of the 
price range in its application for non-public treatment, filed pursuant 
to 39 CFR 3007. Notice, Attachment 1 at 1.
    The Postal Service states that the proposed range of prices would 
conform to the requirements for competitive products under 39 U.S.C. 
3633. Notice at 12. The Postal Service states that the proposed prices 
cover attributable costs, avoid cross-subsidization, and do not impede 
competitive products' collective ability to cover the appropriate share 
of institutional costs. Id.
    The Postal Service states that the proposed prices will be 
available only to postal operators, citing fundamental differences 
between postal operators and private carriers. Id. at 13. The Postal 
Service states that the risk of ``cream-skimming'' and operational 
concerns dictate that the rates be not of general applicability, but 
notes that private carriers can receive similar service through 
negotiated service agreements. Id. at 14.
    The Postal Service addresses concerns regarding Private Express 
Statutes (PES). Id. at 15. The Postal Service states that most Inbound 
E format Letter Post containing letter content would fall under 
exceptions for letters relating to goods, or suspensions for certain 
advertising. Id. The Postal Service states that absent exceptions or 
suspensions, proposed maximum rates exceed the price test even at the 
lowest rate increment, and the minimum rates satisfy the price test at 
the average weight per piece. Id. at 15-16. The Postal Service states 
that for minimum rates evaluated at individual weight steps, whose 
prices do not alone satisfy the price test, the total postage paid 
(including foreign postal operators' costs for legs 1 and 2), would 
likely exceed the PES price test. Id. at 17.
    The Postal Service states that in addition to satisfying all 
statutory requirements, the proposed prices are consistent with the 
policies and reforms outlined in the Presidential Memorandum. Id. at 
18. The Postal Service states that the proposal fully reimburses the 
Postal Service for its costs, avoids a preference for foreign postal 
operators over private carriers, and avoids a preference for foreign 
mailers over domestic mailers. Id. at 18-19. Although Inbound E format 
Letter Post prices would not be identical to domestic retail and 
commercial rates, the proposed range is justified under domestic 
equivalent principles. Id. at 19. The Postal Service notes one 
particular exception. The Postal Service states that E format volume 
dispatched by countries in UPU Group IV will be subject to lower 
prices, of which the Postal Service will provide notice at a later 
time. Id. at 10-11. The Postal Service states that the proposal 
achieves rate ``parity'' and would eliminate the economic distortion 
identified in the Presidential Memorandum. Id. at 19.

IV. Initial Administrative Actions

    The Commission establishes Docket No. CP2019-155 to consider the 
Postal Service's Notice. Interested persons may express views and offer 
comments on whether the planned changes are consistent with 39 U.S.C. 
3632 and 3633 and 39 CFR part 3015. The Commission also invites 
comments on whether the proposed prices are consistent with the 
policies outlined in the Presidential Memorandum.\7\ Comments are due 
no later than June 21, 2019. Pursuant to 39 U.S.C. 505, Katalin K. 
Clendenin is appointed to serve as Public Representative to represent 
the interests of the general public in this docket.
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    \7\ See Order No. 4980 at 20.
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V. Ordering Paragraphs

    It is ordered:
    1. The Commission establishes Docket No. CP2019-155 to provide 
interested persons an opportunity to express views and offer comments 
on whether the planned changes are consistent with 39 U.S.C. 3632 and 
3633 and 39 CFR part 3015.
    2. The Commission also invites interested persons to express views 
and offer comments on whether the proposed prices are consistent with 
the policies outlined in the Presidential Memorandum.
    3. Comments are due no later than June 21, 2019.
    4. Pursuant to 39 U.S.C. 505, the Commission appoints Katalin K. 
Clendenin to serve as an officer of the Commission (Public 
Representative) to represent the interests of the general public in 
this docket.
    5. The Secretary shall arrange for publication of this order in the 
Federal Register.

    By the Commission.
Stacy L. Ruble,
Secretary.
[FR Doc. 2019-11085 Filed 5-28-19; 8:45 am]
 BILLING CODE 7710-FW-P