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Rule

New Postal Product

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Start Preamble Start Printed Page 7201

AGENCY:

Postal Regulatory Commission.

ACTION:

Final rule.

SUMMARY:

The Commission is adding Priority Mail Contract 24 to the Competitive Product List. This action is consistent with changes in a postal reform law. Republication of the lists of market dominant and competitive products is also consistent with a statutory provision.

DATES:

Effective February 18, 2010 and is applicable beginning January 4, 2010.

Start Further Info

FOR FURTHER INFORMATION CONTACT:

Stephen L. Sharfman, General Counsel, 202-789-6820 or stephen.sharfman@prc.gov.

End Further Info End Preamble Start Supplemental Information

SUPPLEMENTARY INFORMATION:

Regulatory History, 74 FR 31374 (July 1, 2009).

Table of Contents

I. Introduction

II. Background

III. Comments

IV. Commission Analysis

V. Ordering Paragraphs

I. Introduction

The Postal Service seeks to add a new product identified as Priority Mail Contract 24 to the Competitive Product List. For the reasons discussed below, the Commission approves the Request.

II. Background

Pursuant to 39 U.S.C. 3642 and 39 CFR 3020.30 et seq., the Postal Service filed a formal request and associated supporting information to add Priority Mail Contract 24 to the Competitive Product List.1 The Postal Service asserts that Priority Mail Contract 24 is a competitive product “not of general applicability” within the meaning of 39 U.S.C. 3632(b)(3). The Postal Service states that prices and classification underlying this contract are supported by Governors' Decision No. 09-06 in Docket No. MC2009-25. Id. at 1. The Request has been assigned Docket No. MC2010-15.

The Postal Service contemporaneously filed a contract related to the proposed new product pursuant to 39 U.S.C. 3632(b)(3) and 39 CFR 3015.5. The contract has been assigned Docket No. CP2010-15.

In support of its Request, the Postal Service filed the following materials: (1) A redacted version of the Governors' Decision, originally filed in Docket No. MC2009-25, authorizing certain Priority Mail contracts, and proposed Mail Classification Schedule language;2 (2) a redacted version of the contract, and Certification of Governors' Vote;3 (3) a requested change in the Competitive Product List;4 (4) a Statement of Supporting Justification as required by 39 CFR 3020.32;5 (5) a certification of compliance with 39 U.S.C. 3633(a);6 and (6) an application for non-public treatment of the materials filed under seal.7

In the Statement of Supporting Justification, Susan M. Plonkey, Vice President, Sales, asserts that the service to be provided under the contract will cover its attributable costs, make a positive contribution to institutional costs, and increase contribution toward the requisite 5.5 percent of the Postal Service's total institutional costs. Request, Attachment D. Thus, Ms. Plonkey contends there will be no issue of subsidization of competitive products by market dominant products as a result of this contract. Id.

Priority Mail Contract 24 is included with the Request. The contract was entered into on May 28, 2009, and will become effective as a Negotiated Service Agreement January 4, 2010. The contract provides that the Postal Service may not increase rates until after May 27, 2010. The Postal Service represents that the contract is consistent with 39 U.S.C. 3633(a). See id., Attachment D.

In its Request, the Postal Service maintains that the supporting financial information, including the analyses that provide prices, terms, conditions, cost data, and financial projections should remain under seal. Id., Attachment F.

In Order No. 358, the Commission gave notice of the two dockets, requested supplemental information, appointed a public representative, and provided the public with an opportunity to comment.8 On December 18, 2009, the Postal Service provided its response to the Commission's request for supplemental information.9 On December 23, 2009, Chairman's Information Request No. 1 was issued for response by the Postal Service by December 28, 2009.10 The Postal Service filed its response on December 28, 2009.11

III. Comments

Comments were filed by the Public Representatives.12 No comments were submitted by other interested parties. The Public Representatives state that the Postal Service's filing meets the pertinent provisions of title 39 and the relevant Commission rules. Id. at 3. The Public Representatives also believe that the Postal Service has provided appropriate justification for maintaining confidentiality in this case. Id. However, the Public Representatives assert that the Postal Service should have filed the instant contract with the Commission when it was executed in May of 2009. Id. at 4. As a result, the Public Representatives ask the Commission to “direct the Postal Service to file all existing Priority Mail contracts which have not been previously filed.” Id. at 5. The Public Representatives also request Start Printed Page 7202that the Commission encourage the Postal Service to submit all materials referenced in the relevant enabling Governors' Decision. Id.

IV. Commission Analysis

The Commission has reviewed the Request, the contract, the financial analysis provided under seal that accompanies it, responses to CHIR No. 1, and the comments filed by the Public Representatives.

Statutory requirements. The Commission's statutory responsibilities in this instance entail assigning Priority Mail Contract 24 to either the Market Dominant Product List or to the Competitive Product List. 39 U.S.C. 3642. As part of this responsibility, the Commission also reviews the proposal for compliance with the Postal Accountability and Enhancement Act (PAEA) requirements. This includes, for proposed competitive products, a review of the provisions applicable to rates for competitive products. 39 U.S.C. 3633.

Product list assignment. In determining whether to assign Priority Mail Contract 24 as a product to the Market Dominant Product List or the Competitive Product List, the Commission must consider whether

the Postal Service exercises sufficient market power that it can effectively set the price of such product substantially above costs, raise prices significantly, decrease quality, or decrease output, without risk of losing a significant level of business to other firms offering similar products.

39 U.S.C. 3642(b)(1). If so, the product will be categorized as market dominant. The competitive category of products consists of all other products.

The Commission is further required to consider the availability and nature of enterprises in the private sector engaged in the delivery of the product, the views of those who use the product, and the likely impact on small business concerns. 39 U.S.C. 3642(b)(3).

The Postal Service asserts that its bargaining position is constrained by the existence of other shippers who can provide similar services, thus precluding it from taking unilateral action to increase prices without the risk of losing volume to private companies. Request, Attachment D, para. (d). The Postal Service also contends that it may not decrease quality or output without risking the loss of business to competitors that offer similar expedited delivery services. Id. It further states that the contract partner supports the addition of the contract to the Competitive Product List to effectuate the negotiated contractual terms. Id., para. (g). Finally, the Postal Service states that the market for expedited delivery services is highly competitive and requires a substantial infrastructure to support a national network. It indicates that large carriers serve this market. Accordingly, the Postal Service states that it is unaware of any small business concerns that could offer comparable service for this customer. Id., para. (h).

No commenter opposes the proposed classification of Priority Mail Contract 24 as competitive. Having considered the statutory requirements and the support offered by the Postal Service, the Commission finds that Priority Mail Contract 24 is appropriately classified as a competitive product and should be added to the Competitive Product List.

Cost considerations. The Postal Service presents a financial analysis showing that Priority Mail Contract 24 results in cost savings while ensuring that the contract covers its attributable costs, does not result in subsidization of competitive products by market dominant products, and increases contribution from competitive products.

Based on the data submitted, the Commission finds that Priority Mail Contract 24 should cover its attributable costs (39 U.S.C. 3633(a)(2)), should not lead to the subsidization of competitive products by market dominant products (39 U.S.C. 3633(a)(1)), and should have a positive effect on competitive products' contribution to institutional costs (39 U.S.C. 3633(a)(3)). Thus, an initial review of proposed Priority Mail Contract 24 indicates that it comports with the provisions applicable to rates for competitive products.

Other considerations. The Commission agrees with the Public Representatives that the instant contract could have been filed with the Commission for approval at an earlier date. The Commission also shares the Public Representatives' concern that other, similar contracts might exist. Accordingly, the Commission directs the Postal Service to file, by January 15, 2010, any outstanding Priority Mail contract that may be categorized as a negotiated service agreement because its prices are not subject to change with the general competitive rate increase scheduled to take effect January 4, 2010.

In conclusion, the Commission approves Priority Mail Contract 24 as a new product. The revision to the Competitive Product List is shown below the signature of this Order and is effective upon issuance of this Order.

V. Ordering Paragraphs

It is ordered:

1. Priority Mail Contract 24 (MC2010-15 and CP2010-15) is added to the Competitive Product List as a new product under Negotiated Service Agreements, Domestic.

2. The Commission directs the Postal Service to file, by January 15, 2010, any outstanding Priority Mail contract that may be categorized as having competitive rates not of general applicability because its prices are not subject to change with the general competitive rate increase scheduled to take effect January 4, 2010.

3. The Postal Service shall notify the Commission if termination occurs prior to the scheduled termination date.

4. The Secretary shall arrange for the publication of this order in the Federal Register.

Start List of Subjects

List of Subjects in 39 CFR Part 3020

End List of Subjects Start Signature

By the Commission.

Shoshana M. Grove,

Secretary.

End Signature Start Amendment Part

For the reasons discussed in the preamble, the Postal Regulatory Commission amends chapter III of title 39 of the Code of Federal Regulations as follows:

End Amendment Part Start Part

PART 3020—PRODUCT LISTS

End Part Start Amendment Part

1. The authority citation for part 3020 continues to read as follows:

End Amendment Part Start Authority

Authority: Authority: 39 U.S.C. 503; 3622; 3631; 3642; 3682.

End Authority Start Amendment Part

2. Revise Appendix A to Subpart A of Part 3020-Mail Classification Schedule to read as follows:

End Amendment Part Start Appendix

Appendix A to Subpart A of Part 3020—Mail Classification Schedule

Part A—Market Dominant Products
1000 Market Dominant Product List
First-Class Mail
Single-Piece Letters/Postcards
Bulk Letters/Postcards
Flats
Parcels
Outbound Single-Piece First-Class Mail International
Inbound Single-Piece First-Class Mail International
Standard Mail (Regular and Nonprofit)
High Density and Saturation Letters
High Density and Saturation Flats/Parcels
Carrier Route
Letters
Flats
Not Flat-Machinables (NFMs)/Parcels
Periodicals
Within County Periodicals
Outside County Periodicals
Package Services
Single-Piece Parcel Post
Inbound Surface Parcel Post (at UPU rates)
Bound Printed Matter Flats
Bound Printed Matter Parcels
Start Printed Page 7203
Media Mail/Library Mail
Special Services
Ancillary Services
International Ancillary Services
Address List Services
Caller Service
Change-of-Address Credit Card Authentication
Confirm
International Reply Coupon Service
International Business Reply Mail Service
Money Orders
Post Office Box Service
Negotiated Service Agreements
HSBC North America Holdings Inc. Negotiated Service Agreement
Bookspan Negotiated Service Agreement
Bank of America Corporation Negotiated Service Agreement
The Bradford Group Negotiated Service Agreement
Inbound International
Canada Post—United States Postal Service Contractual Bilateral Agreement for Inbound Market Dominant Services (MC2010-12 and R2010-2)
Market Dominant Product Descriptions
First-Class Mail
[Reserved for Class Description]
Single-Piece Letters/Postcards
[Reserved for Product Description]
Bulk Letters/Postcards
[Reserved for Product Description]
Flats
[Reserved for Product Description]
Parcels
[Reserved for Product Description]
Outbound Single-Piece First-Class Mail International
[Reserved for Product Description]
Inbound Single-Piece First-Class Mail International
[Reserved for Product Description]
Standard Mail (Regular and Nonprofit)
[Reserved for Class Description]
High Density and Saturation Letters
[Reserved for Product Description]
High Density and Saturation Flats/Parcels
[Reserved for Product Description]
Carrier Route
[Reserved for Product Description]
Letters
[Reserved for Product Description]
Flats
[Reserved for Product Description]
Not Flat-Machinables (NFMs)/Parcels
[Reserved for Product Description]
Periodicals
[Reserved for Class Description]
Within County Periodicals
[Reserved for Product Description]
Outside County Periodicals
[Reserved for Product Description]
Package Services
[Reserved for Class Description]
Single-Piece Parcel Post
[Reserved for Product Description]
Inbound Surface Parcel Post (at UPU rates)
[Reserved for Product Description]
Bound Printed Matter Flats
[Reserved for Product Description]
Bound Printed Matter Parcels
[Reserved for Product Description]
Media Mail/Library Mail
[Reserved for Product Description]
Special Services
[Reserved for Class Description]
Ancillary Services
[Reserved for Product Description]
Address Correction Service
[Reserved for Product Description]
Applications and Mailing Permits
[Reserved for Product Description]
Business Reply Mail
[Reserved for Product Description]
Bulk Parcel Return Service
[Reserved for Product Description]
Certified Mail
[Reserved for Product Description]
Certificate of Mailing
[Reserved for Product Description]
Collect on Delivery
[Reserved for Product Description]
Delivery Confirmation
[Reserved for Product Description]
Insurance
[Reserved for Product Description]
Merchandise Return Service
[Reserved for Product Description]
Parcel Airlift (PAL)
[Reserved for Product Description]
Registered Mail
[Reserved for Product Description]
Return Receipt
[Reserved for Product Description]
Return Receipt for Merchandise
[Reserved for Product Description]
Restricted Delivery
[Reserved for Product Description]
Shipper-Paid Forward
[Reserved for Product Description]
Signature Confirmation
[Reserved for Product Description]
Special Handling
[Reserved for Product Description]
Stamped Envelopes
[Reserved for Product Description]
Stamped Cards
[Reserved for Product Description]
Premium Stamped Stationery
[Reserved for Product Description]
Premium Stamped Cards
[Reserved for Product Description]
International Ancillary Services
[Reserved for Product Description]
International Certificate of Mailing
[Reserved for Product Description]
International Registered Mail
[Reserved for Product Description]
International Return Receipt
[Reserved for Product Description]
International Restricted Delivery
[Reserved for Product Description]
Address List Services
[Reserved for Product Description]
Caller Service
[Reserved for Product Description]
Change-of-Address Credit Card Authentication
[Reserved for Product Description]
Confirm
[Reserved for Product Description]
International Reply Coupon Service
[Reserved for Product Description]
International Business Reply Mail Service
[Reserved for Product Description]
Money Orders
[Reserved for Product Description]
Post Office Box Service
[Reserved for Product Description]
Negotiated Service Agreements
[Reserved for Class Description]
HSBC North America Holdings Inc. Negotiated Service Agreement
[Reserved for Product Description]
Bookspan Negotiated Service Agreement
[Reserved for Product Description]
Bank of America Corporation Negotiated Service Agreement
The Bradford Group Negotiated Service Agreement
Part B—Competitive Products
2000 Competitive Product List
Express Mail
Express Mail
Outbound International Expedited Services
Inbound International Expedited Services
Inbound International Expedited Services 1 (CP2008-7)
Inbound International Expedited Services 2 (MC2009-10 and CP2009-12)
Inbound International Expedited Services 3 (MC2010-13 and CP2010-12)
Priority Mail
Priority Mail
Outbound Priority Mail International
Inbound Air Parcel Post (at non-UPU rates)
Royal Mail Group Inbound Air Parcel Post Agreement
Inbound Air Parcel Post (at UPU rates)
Parcel Select
Parcel Return Service
International
International Priority Airlift (IPA)
International Surface Airlift (ISAL)
International Direct Sacks—M—Bags
Global Customized Shipping Services
Inbound Surface Parcel Post (at non-UPU rates)
Canada Post—United States Postal Service Contractual Bilateral Agreement for Inbound Competitive Services (MC2010-14 and CP2010-13—Inbound Surface Parcel post at Non-UPU Rates and Xpresspost-USA)
International Money Transfer Service
International Ancillary Services
Special Services
Premium Forwarding Service
Negotiated Service Agreements
Domestic
Express Mail Contract 1 (MC2008-5)
Express Mail Contract 2 (MC2009-3 and CP2009-4)
Express Mail Contract 3 (MC2009-15 and CP2009-21)
Express Mail Contract 4 (MC2009-34 and CP2009-45)
Express Mail Contract 5 (MC2010-5 and CP2010-5)
Express Mail Contract 6 (MC2010--6 and CP2010-6)
Express Mail Contract 7 (MC2010--7 and CP2010-7)
Start Printed Page 7204
Express Mail & Priority Mail Contract 1 (MC2009-6 and CP2009-7)
Express Mail & Priority Mail Contract 2 (MC2009-12 and CP2009-14)
Express Mail & Priority Mail Contract 3 (MC2009-13 and CP2009-17)
Express Mail & Priority Mail Contract 4 (MC2009-17 and CP2009-24)
Express Mail & Priority Mail Contract 5 (MC2009-18 and CP2009-25)
Express Mail & Priority Mail Contract 6 (MC2009-31 and CP2009-42)
Express Mail & Priority Mail Contract 7 (MC2009-32 and CP2009-43)
Express Mail & Priority Mail Contract 8 (MC2009-33 and CP2009-44)
Parcel Select & Parcel Return Service Contract 1 (MC2009-11 and CP2009-13)
Parcel Select & Parcel Return Service Contract 2 (MC2009-40 and CP2009-61)
Parcel Return Service Contract 1 (MC2009-1 and CP2009-2)
Priority Mail Contract 1 (MC2008-8 and CP2008-26)
Priority Mail Contract 2 (MC2009-2 and CP2009-3)
Priority Mail Contract 3 (MC2009-4 and CP2009-5)
Priority Mail Contract 4 (MC2009-5 and CP2009-6)
Priority Mail Contract 5 (MC2009-21 and CP2009-26)
Priority Mail Contract 6 (MC2009-25 and CP2009-30)
Priority Mail Contract 7 (MC2009-25 and CP2009-31)
Priority Mail Contract 8 (MC2009-25 and CP2009-32)
Priority Mail Contract 9 (MC2009-25 and CP2009-33)
Priority Mail Contract 10 (MC2009-25 and CP2009-34)
Priority Mail Contract 11 (MC2009-27 and CP2009-37)
Priority Mail Contract 12 (MC2009-28 and CP2009-38)
Priority Mail Contract 13 (MC2009-29 and CP2009-39)
Priority Mail Contract 14 (MC2009-30 and CP2009-40)
Priority Mail Contract 15 (MC2009-35 and CP2009-54)
Priority Mail Contract 16 (MC2009-36 and CP2009-55)
Priority Mail Contract 17 (MC2009-37 and CP2009-56)
Priority Mail Contract 18 (MC2009-42 and CP2009-63)
Priority Mail Contract 19 (MC2010-1 and CP2010-1)
Priority Mail Contract 20 (MC2010-2 and CP2010-2)
Priority Mail Contract 21 (MC2010-3 and CP2010-3)
Priority Mail Contract 22 (MC2010-4 and CP2010-4)
Priority Mail Contract 23 (MC2010-9 and CP2010-9)
Priority Mail Contract 24 (MC2010-15 and CP2010-15)
Outbound International
Direct Entry Parcels Contracts
Direct Entry Parcels 1 (MC2009-26 and CP2009-36)
Global Direct Contracts (MC2009-9, CP2009-10, and CP2009-11)
Global Expedited Package Services (GEPS) Contracts
GEPS 1 (CP2008-5, CP2008-11, CP2008-12, CP2008-13, CP2008-18, CP2008-19, CP2008-20, CP2008-21, CP2008-22, CP2008-23, and CP2008-24)
Global Expedited Package Services 2 (CP2009-50)
Global Plus Contracts
Global Plus 1 (CP2008-8, CP2008-46 and CP2009-47)
Global Plus 2 (MC2008-7, CP2008-48 and CP2008-49)
Inbound International
Inbound Direct Entry Contracts with Foreign Postal Administrations
Inbound Direct Entry Contracts with Foreign Postal Administrations (MC2008-6, CP2008-14 and MC2008-15)
Inbound Direct Entry Contracts with Foreign Postal Administrations 1 (MC2008-6 and CP2009-62)
International Business Reply Service Competitive Contract 1 (MC2009-14 and CP2009-20)
Competitive Product Descriptions
Express Mail
[Reserved for Group Description]
Express Mail
[Reserved for Product Description]
Outbound International Expedited Services
[Reserved for Product Description]
Inbound International Expedited Services
[Reserved for Product Description]
Priority
[Reserved for Product Description]
Priority Mail
[Reserved for Product Description]
Outbound Priority Mail International
[Reserved for Product Description]
Inbound Air Parcel Post
[Reserved for Product Description]
Parcel Select
[Reserved for Group Description]
Parcel Return Service
[Reserved for Group Description]
International
[Reserved for Group Description]
International Priority Airlift (IPA)
[Reserved for Product Description]
International Surface Airlift (ISAL)
[Reserved for Product Description]
International Direct Sacks—M-Bags
[Reserved for Product Description]
Global Customized Shipping Services
[Reserved for Product Description]
International Money Transfer Service
[Reserved for Product Description]
Inbound Surface Parcel Post (at non-UPU rates)
[Reserved for Product Description]
International Ancillary Services
[Reserved for Product Description]
International Certificate of Mailing
[Reserved for Product Description]
International Registered Mail
[Reserved for Product Description]
International Return Receipt
[Reserved for Product Description]
International Restricted Delivery
[Reserved for Product Description]
International Insurance
[Reserved for Product Description]
Negotiated Service Agreements
[Reserved for Group Description]
Domestic
[Reserved for Product Description]
Outbound International
[Reserved for Group Description]
Part C—Glossary of Terms and Conditions [Reserved]
Part D—Country Price Lists for International Mail [Reserved]
End Appendix End Supplemental Information

Footnotes

1.  Request of the United States Postal Service to Add Priority Mail Contract 24 to Competitive Product List and Notice of Filing (Under Seal) of Supporting Data, December 11, 2009 (Request).

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2.  Attachment A to the Request, reflecting Governors' Decision No. 09-06, April 27, 2009.

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3.  Attachment B to the Request.

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4.  Attachment C to the Request.

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5.  Attachment D to the Request.

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6.  Attachment E to the Request.

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7.  Attachment F to the Request.

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8.  Notice and Order Concerning Priority Mail Contract 24 Negotiated Service Agreement, December 15, 2009 (Order No. 358).

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9.  Supplemental Information Provided by the United States Postal Service in Response to Order No. 358, December 18, 2009.

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10.  Chairman's Information Request No. 1, December 23, 2009 (CHIR No. 1).

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11.  Responses of the United States Postal Service to Chairman's Information Request No. 1, December 28, 2009.

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12.  Comments of Public Representatives in Response to PRC Order No. 358, December 23, 2009.

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[FR Doc. 2010-3034 Filed 2-17-10; 8:45 am]

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