Administrative Practice and Procedure, Postal Service, 71935-71940 [E8-28100]
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Federal Register / Vol. 73, No. 229 / Wednesday, November 26, 2008 / Rules and Regulations
Benefits Form should be filed after the
15th consecutive day that the member is
in the coma, for which $25,000 is
payable. If the member remains in a
coma for another 15 days, another
completed Application for TSGLI
Benefits Form should be submitted and
another $25,000 will be paid.
*
*
*
*
*
(j) Who will be paid the traumatic
injury protection benefit? The injured
member who suffered a scheduled loss
will be paid the traumatic injury
protection benefit in accordance with
title 38 U.S.C. 1980A except under the
following circumstances:
(1) If a member is legally
incapacitated, the member’s guardian or
agent or attorney acting under a valid
Power of Attorney will be paid the
benefit on behalf of the member.
(2) If no guardian, agent, or attorney
is authorized to act as the member’s
legal representative, a military trustee
who has been appointed under the
authority of 37 U.S.C. 602 will be paid
the benefit on behalf of the member. The
military trustee will report the receipt of
the traumatic injury benefit payment
and any disbursements from that
payment to the Department of Defense.
*
*
*
*
*
(Authority: 37 U.S.C. 602, 603; 38 U.S.C.
501(a), 1980A)
[FR Doc. E8–28114 Filed 11–25–08; 8:45 am]
BILLING CODE 8320–01–P
POSTAL REGULATORY COMMISSION
39 CFR Part 3020
[Docket Nos. MC2009–6 and CP2009–7;
Order No. 138]
Administrative Practice and Procedure,
Postal Service
mstockstill on PROD1PC66 with RULES
AGENCY: Postal Regulatory Commission.
ACTION: Final rule.
SUMMARY: The Commission is adding
Express Mail & Priority Mail to the
Competitive Product List. This action is
consistent with changes in a recent law
governing postal operations and a recent
Postal Service request. Republication of
the lists of market dominant and
competitive products is also consistent
with new requirements in the law.
DATES: Effective November 26, 2008.
ADDRESSES: Submit comments
electronically via the Commission’s
Filing Online system at https://
www.prc.gov.
FOR FURTHER INFORMATION CONTACT:
Stephen L. Sharfman, General Counsel,
202–789–6820 and
stephen.sharfman@prc.gov.
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SUPPLEMENTARY INFORMATION: Regulatory
History, 73 FR 66077 (November 6,
2008).
The Postal Service seeks to add a new
product identified as Express Mail &
Priority Mail Contract 1 to the
Competitive Product List. For the
reasons discussed below, the
Commission approves the Request.
I. Background
On October 27, 2008, the Postal
Service filed a formal request pursuant
to 39 U.S.C. 3642 and 39 CFR 3020.30
et seq. to add Express Mail & Priority
Mail Contract 1 to the Competitive
Product List.1 The Postal Service asserts
that the Express Mail & Priority Mail
Contract 1 product is a competitive
product ‘‘not of general applicability’’
within the meaning of 39 U.S.C.
3632(b)(3). This Request has been
assigned Docket No. MC2009–6.
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. CP2009–7.
In support of its Request, the Postal
Service filed the following materials: (1)
A redacted version of the Governors’
Decision authorizing the new product
which also includes an analysis of
Express Mail & Priority Mail Contract 1
and certification of the Governors’
vote; 2 (2) a redacted version of the
contract which, among other things,
provides that the contract will expire 3
years from the effective date, which is
proposed to be 1 day after the
Commission issues all regulatory
approvals; 3 (3) requested changes in the
Mail Classification Schedule product
list; 4 (4) a Statement of Supporting
Justification as required by 39 CFR
3020.32; 5 and (5) certification of
compliance with 39 U.S.C. 3633(a).6
In the Statement of Supporting
Justification, Kim Parks, Manager, Sales
and Communications, Expedited
Shipping, asserts that the service to be
provided under the contract will cover
its attributable costs, make a positive
contribution to coverage of institutional
costs, and will increase contribution
toward the requisite 5.5 percent of the
1 Request of the United States Postal Service to
Add Express Mail & Priority Mail Contract 1 to
Competitive Product List and Notice of
Establishment of Rates and Class Not of General
Applicability, October 27, 2008 (Request).
2 Attachment A to the Request. The analysis that
accompanies the Governors’ Decision notes, among
other things, that the contract is not risk free, but
concludes that the risks are manageable.
3 Attachment B to the Request.
4 Attachment C to the Request.
5 Attachment D to the Request.
6 Attachment E to the Request.
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71935
Postal Service’s total institutional costs.
Request, Attachment D, at 1. W. Ashley
Lyons, Manager, Corporate Financial
Planning, Finance Department, certifies
that the contract complies with 39
U.S.C. 3633(a). See id. Attachment E.
The Postal Service filed much of the
supporting materials, including the
unredacted Governors’ Decision and the
unredacted Express Mail & Priority Mail
contract, under seal. In its Request, the
Postal Service maintains that the
contract and related financial
information, including the customer’s
name and the accompanying analyses
that provide prices, terms, conditions,
and financial projections, should remain
confidential. Id. at 2–3.
In Order No. 125, the Commission
gave notice of the two dockets,
appointed a public representative, and
provided the public with an opportunity
to comment.7 The Postal Service filed
supplemental materials on November
19, 2008.8
II. Comments
Comments were filed by the Public
Representative.9 No filings were
submitted by other interested parties.
The Public Representative Comments
focus principally on the adequacy of
cost coverage, appropriate classification
of the product, and overall
transparency.10 Public Representative
Comments at 2–3.
The Public Representative does not
see a substantial risk for this particular
contract, but does raise concerns
regarding mailing profiles that he says
warrant close attention when evaluating
this and similar agreements.11 The
Public Representative believes that the
proposed Express Mail & Priority Mail
Contract 1 product is appropriately
classified as competitive. After
reviewing the cost savings measures
underlying this contract, the Public
Representative determines that the
7 PRC Order No. 125, Notice and Order
Concerning Express Mail & Priority Mail Contract
1 Negotiated Service Agreement, October 31, 2008
(Order No. 125).
8 United States Postal Service Notice of Filing
Under Seal of Additional Information Regarding
Financial Analysis, November 19, 2008.
9 Public Representative Comments in Response to
Order No. 125, November 10, 2008 (Public
Representative Comments).
10 With respect to transparency, the Public
Representative concludes that ‘‘[t]he Postal Service
should be commended for proceeding diligently
toward accommodating transparency concerns.’’ Id.
at 10.
11 Id. at 3–4. The specific areas of concern
identified by the Public Representative are whether
mailer-specific projected volumes are sufficiently
reliable, whether cost impacts of mailer-specific
shape and weight profiles are sufficiently
acknowledged, whether seasonal effects are taken
into account, and whether package density has been
considered. Id. at 7–9.
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contract is advantageous to the Postal
Service and beneficial to the general
public. Id. at 6. He concludes, inter alia,
that the contract should generate
sufficient revenue to cover the product’s
attributable costs and contribute to the
recovery of total institutional costs
assigned to competitive products. Id. at
3–4.
III. Commission Analysis
The Commission has reviewed the
Request, the contract, the financial
analysis provided under seal that
accompanies it, and the comments filed
by the Public Representative.
Statutory requirements. The
Commission’s statutory responsibilities
in this instance entail assigning Express
Mail & Priority Mail Contract 1 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 Express
Mail & Priority Mail Contract 1 as a
product to the Market Dominant
Product List or the Competitive Product
List, the Commission must consider
whether
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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 or 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
shall consist 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, at
2–3. 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.
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at 2. It further states that the contract
partner supports the addition of the
contract to the product list to effectuate
the negotiated contractual terms. Id. at
3. 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.
No commenter opposes the proposed
classification of Express Mail & Priority
Mail Contract 1 as competitive. Having
considered the statutory requirements
and the support offered by the Postal
Service, the Commission finds that
Express Mail & Priority Mail Contract 1
is appropriately classified as a
competitive product and should be
added to the Competitive Product List.
Cost considerations. The Postal
Service’s filing seeks to establish a new
domestic Express Mail and Priority Mail
product. The contract is predicated on
unit costs for major mail functions, e.g.,
window service, mail processing, and
transportation, based on the shipper’s
mail characteristics.
The Postal Service contends that
adding the Express Mail & Priority Mail
Contract 1 product will result in
processing Express Mail and Priority
Mail pieces that are less costly for the
Postal Service than the average
respective Express Mail and Priority
Mail mailpiece. See id. Attachment A. It
believes that its financial analysis shows
that these cost savings can be
accomplished 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.
Id., Attachment E, at 1.
The Postal Service’s supplemental
filing of November 19, 2008 modifies
data it submitted in support of the
Request.12 The Commission’s analysis
of the proposed contract is based on the
updated information and alternate cost
estimates of certain mail functions.13
The Commission employed the latter to
determine whether changed cost inputs
would materially affect the contract’s
12 The Postal Service is encouraged to exercise
greater care in reviewing supporting materials for
accuracy. The Commission’s efforts to review
negotiated service agreements expeditiously is
hampered if the underlying data are incomplete,
erroneous, or otherwise not adequately supported.
13 The Commission’s analysis is set forth in
Library Reference PRC–CP2009–7–NP–LR–1 which,
because it contains confidential information, is
being filed under seal.
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financial analysis. Based on that
analysis, the Commission concludes
that the changed inputs do not have a
material affect on the underlying
financial analysis of the contract. In
evaluating costs under a prospective
contract compared to the average, the
Postal Service should take into account
all departures from average cost that
may be due to services provided under
the contract.
Based on the data submitted and the
Commission’s analysis shown in Library
Reference PRC–CP2009–7–NP–LR–1,
the Commission finds that Express Mail
& Priority Mail Contract 1 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 the proposed Express Mail &
Priority Mail Contract 1 indicates that it
comports with the provisions applicable
to rates for competitive products.
The Postal Service shall promptly
notify the Commission when the
contract terminates, but no later than
the actual termination date. The
Commission will then remove the
contract from the Mail Classification
Schedule at the earliest possible
opportunity.
In conclusion, the Commission
approves Express Mail & Priority Mail
Contract 1 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.
IV. Ordering Paragraphs
It is Ordered:
1. Express Mail & Priority Mail
Contract 1 (MC2009–6 and CP2009–7) is
added to the Competitive Product List
as a new product under Negotiated
Service Agreements, Domestic.
2. The Postal Service shall notify the
Commission of the termination date of
the contract as discussed in this order.
3. The Secretary shall arrange for the
publication of this Order in the Federal
Register.
List of Subjects in 39 CFR Part 3020
Administrative practice and
procedure; Postal Service.
By the Commission.
Steven W. Williams,
Secretary.
For the reasons stated in the preamble,
under the authority at 39 U.S.C. 503, the
Postal Regulatory Commission amends
39 CFR part 3020 as follows:
■
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Federal Register / Vol. 73, No. 229 / Wednesday, November 26, 2008 / Rules and Regulations
PART 3020—PRODUCT LISTS
1. The authority citation for part 3020
continues to read as follows:
■
Authority: 39 U.S.C. 503; 3622; 3631; 3642;
3682.
2. Revise Appendix A to subpart A of
part 3020—Mail Classification to read as
follows:
■
APPENDIX A TO SUBPART A OF PART 3020—MAIL CLASSIFICATION
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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
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
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
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Federal Register / Vol. 73, No. 229 / Wednesday, November 26, 2008 / Rules and Regulations
APPENDIX A TO SUBPART A OF PART 3020—MAIL CLASSIFICATION—Continued
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Schedule
[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 Forwarding
[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
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Federal Register / Vol. 73, No. 229 / Wednesday, November 26, 2008 / Rules and Regulations
71939
APPENDIX A TO SUBPART A OF PART 3020—MAIL CLASSIFICATION—Continued
mstockstill on PROD1PC66 with RULES
Schedule
[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.
Competitive Product List:
Express Mail:
Express Mail
Outbound International Expedited Services
Inbound International Expedited Services
Inbound International Expedited Services 1 (CP2008–7)
Priority Mail:
Priority Mail
Outbound Priority Mail International
Inbound Air Parcel Post
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)
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 & Priority Mail Contract 1 (MC2009–6 and CP2009–7)
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)
Outbound International
Global Expedited Package Services (GEPS) Contracts GEPS 1 (CP2008–5, CP2008–11, CP2008–12, and CP2008–13,
CP2008–18, CP2008–19, CP2008–20, CP2008–21, CP2008–22, CP2008–23, and CP2008–24)
Global Plus Contracts Global Plus 1 (CP2008–9 and CP2008–10) Global Plus 2 (MC2008–7, CP2008–16 and CP2008–17)
Inbound Direct Entry Contracts with Foreign Postal Administrations (MC2008–6, CP2008–14 and CP2008–15)
Competitive Product Descriptions
Express Mail
[Reserved for Group Description]
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Federal Register / Vol. 73, No. 229 / Wednesday, November 26, 2008 / Rules and Regulations
APPENDIX A TO SUBPART A OF PART 3020—MAIL CLASSIFICATION—Continued
Schedule
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]
BILLING CODE 7710–FW–P
ENVIRONMENTAL PROTECTION
AGENCY
ACTION: Partial withdrawal of direct
final rule.
40 CFR Part 80
[FR Doc. E8–28100 Filed 11–25–08; 8:45 am]
SUMMARY: Because EPA received
adverse comment, we are withdrawing
several provisions of the direct final rule
to amend the Renewable Fuel Standard
program requirements, published on
October 2, 2008.
[EPA–HQ–OAR–2005–0161; FRL–8745–2]
mstockstill on PROD1PC66 with RULES
RIN 2060–AO80
Regulation of Fuels and Fuel
Additives: Modifications to Renewable
Fuel Standard Program Requirements
AGENCY: Environmental Protection
Agency (EPA).
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16:53 Nov 25, 2008
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DATES: Effective November 26, 2008,
EPA withdraws the amendments to 40
CFR 80.1129(b)(1), 80.1129(b)(4),
80.1129(b)(8), 80.1131(a)(8), and
80.1131(b)(4) published at 73 FR 57248
on October 2, 2008.
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]]>Agencies
[Federal Register Volume 73, Number 229 (Wednesday, November 26, 2008)]
[Rules and Regulations]
[Pages 71935-71940]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-28100]
=======================================================================
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POSTAL REGULATORY COMMISSION
39 CFR Part 3020
[Docket Nos. MC2009-6 and CP2009-7; Order No. 138]
Administrative Practice and Procedure, Postal Service
AGENCY: Postal Regulatory Commission.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Commission is adding Express Mail & Priority Mail to the
Competitive Product List. This action is consistent with changes in a
recent law governing postal operations and a recent Postal Service
request. Republication of the lists of market dominant and competitive
products is also consistent with new requirements in the law.
DATES: Effective November 26, 2008.
ADDRESSES: Submit comments electronically via the Commission's Filing
Online system at https://www.prc.gov.
FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel,
202-789-6820 and stephen.sharfman@prc.gov.
SUPPLEMENTARY INFORMATION: Regulatory History, 73 FR 66077 (November 6,
2008).
The Postal Service seeks to add a new product identified as Express
Mail & Priority Mail Contract 1 to the Competitive Product List. For
the reasons discussed below, the Commission approves the Request.
I. Background
On October 27, 2008, the Postal Service filed a formal request
pursuant to 39 U.S.C. 3642 and 39 CFR 3020.30 et seq. to add Express
Mail & Priority Mail Contract 1 to the Competitive Product List.\1\ The
Postal Service asserts that the Express Mail & Priority Mail Contract 1
product is a competitive product ``not of general applicability''
within the meaning of 39 U.S.C. 3632(b)(3). This Request has been
assigned Docket No. MC2009-6.
---------------------------------------------------------------------------
\1\ Request of the United States Postal Service to Add Express
Mail & Priority Mail Contract 1 to Competitive Product List and
Notice of Establishment of Rates and Class Not of General
Applicability, October 27, 2008 (Request).
---------------------------------------------------------------------------
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. CP2009-7.
In support of its Request, the Postal Service filed the following
materials: (1) A redacted version of the Governors' Decision
authorizing the new product which also includes an analysis of Express
Mail & Priority Mail Contract 1 and certification of the Governors'
vote; \2\ (2) a redacted version of the contract which, among other
things, provides that the contract will expire 3 years from the
effective date, which is proposed to be 1 day after the Commission
issues all regulatory approvals; \3\ (3) requested changes in the Mail
Classification Schedule product list; \4\ (4) a Statement of Supporting
Justification as required by 39 CFR 3020.32; \5\ and (5) certification
of compliance with 39 U.S.C. 3633(a).\6\
---------------------------------------------------------------------------
\2\ Attachment A to the Request. The analysis that accompanies
the Governors' Decision notes, among other things, that the contract
is not risk free, but concludes that the risks are manageable.
\3\ Attachment B to the Request.
\4\ Attachment C to the Request.
\5\ Attachment D to the Request.
\6\ Attachment E to the Request.
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In the Statement of Supporting Justification, Kim Parks, Manager,
Sales and Communications, Expedited Shipping, asserts that the service
to be provided under the contract will cover its attributable costs,
make a positive contribution to coverage of institutional costs, and
will increase contribution toward the requisite 5.5 percent of the
Postal Service's total institutional costs. Request, Attachment D, at
1. W. Ashley Lyons, Manager, Corporate Financial Planning, Finance
Department, certifies that the contract complies with 39 U.S.C.
3633(a). See id. Attachment E.
The Postal Service filed much of the supporting materials,
including the unredacted Governors' Decision and the unredacted Express
Mail & Priority Mail contract, under seal. In its Request, the Postal
Service maintains that the contract and related financial information,
including the customer's name and the accompanying analyses that
provide prices, terms, conditions, and financial projections, should
remain confidential. Id. at 2-3.
In Order No. 125, the Commission gave notice of the two dockets,
appointed a public representative, and provided the public with an
opportunity to comment.\7\ The Postal Service filed supplemental
materials on November 19, 2008.\8\
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\7\ PRC Order No. 125, Notice and Order Concerning Express Mail
& Priority Mail Contract 1 Negotiated Service Agreement, October 31,
2008 (Order No. 125).
\8\ United States Postal Service Notice of Filing Under Seal of
Additional Information Regarding Financial Analysis, November 19,
2008.
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II. Comments
Comments were filed by the Public Representative.\9\ No filings
were submitted by other interested parties. The Public Representative
Comments focus principally on the adequacy of cost coverage,
appropriate classification of the product, and overall
transparency.\10\ Public Representative Comments at 2-3.
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\9\ Public Representative Comments in Response to Order No. 125,
November 10, 2008 (Public Representative Comments).
\10\ With respect to transparency, the Public Representative
concludes that ``[t]he Postal Service should be commended for
proceeding diligently toward accommodating transparency concerns.''
Id. at 10.
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The Public Representative does not see a substantial risk for this
particular contract, but does raise concerns regarding mailing profiles
that he says warrant close attention when evaluating this and similar
agreements.\11\ The Public Representative believes that the proposed
Express Mail & Priority Mail Contract 1 product is appropriately
classified as competitive. After reviewing the cost savings measures
underlying this contract, the Public Representative determines that the
[[Page 71936]]
contract is advantageous to the Postal Service and beneficial to the
general public. Id. at 6. He concludes, inter alia, that the contract
should generate sufficient revenue to cover the product's attributable
costs and contribute to the recovery of total institutional costs
assigned to competitive products. Id. at 3-4.
---------------------------------------------------------------------------
\11\ Id. at 3-4. The specific areas of concern identified by the
Public Representative are whether mailer-specific projected volumes
are sufficiently reliable, whether cost impacts of mailer-specific
shape and weight profiles are sufficiently acknowledged, whether
seasonal effects are taken into account, and whether package density
has been considered. Id. at 7-9.
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III. Commission Analysis
The Commission has reviewed the Request, the contract, the
financial analysis provided under seal that accompanies it, and the
comments filed by the Public Representative.
Statutory requirements. The Commission's statutory responsibilities
in this instance entail assigning Express Mail & Priority Mail Contract
1 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 Express
Mail & Priority Mail Contract 1 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 or 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 shall consist 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, at 2-3. 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. at 2.
It further states that the contract partner supports the addition of
the contract to the product list to effectuate the negotiated
contractual terms. Id. at 3. 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.
No commenter opposes the proposed classification of Express Mail &
Priority Mail Contract 1 as competitive. Having considered the
statutory requirements and the support offered by the Postal Service,
the Commission finds that Express Mail & Priority Mail Contract 1 is
appropriately classified as a competitive product and should be added
to the Competitive Product List.
Cost considerations. The Postal Service's filing seeks to establish
a new domestic Express Mail and Priority Mail product. The contract is
predicated on unit costs for major mail functions, e.g., window
service, mail processing, and transportation, based on the shipper's
mail characteristics.
The Postal Service contends that adding the Express Mail & Priority
Mail Contract 1 product will result in processing Express Mail and
Priority Mail pieces that are less costly for the Postal Service than
the average respective Express Mail and Priority Mail mailpiece. See
id. Attachment A. It believes that its financial analysis shows that
these cost savings can be accomplished 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. Id., Attachment E, at 1.
The Postal Service's supplemental filing of November 19, 2008
modifies data it submitted in support of the Request.\12\ The
Commission's analysis of the proposed contract is based on the updated
information and alternate cost estimates of certain mail functions.\13\
The Commission employed the latter to determine whether changed cost
inputs would materially affect the contract's financial analysis. Based
on that analysis, the Commission concludes that the changed inputs do
not have a material affect on the underlying financial analysis of the
contract. In evaluating costs under a prospective contract compared to
the average, the Postal Service should take into account all departures
from average cost that may be due to services provided under the
contract.
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\12\ The Postal Service is encouraged to exercise greater care
in reviewing supporting materials for accuracy. The Commission's
efforts to review negotiated service agreements expeditiously is
hampered if the underlying data are incomplete, erroneous, or
otherwise not adequately supported.
\13\ The Commission's analysis is set forth in Library Reference
PRC-CP2009-7-NP-LR-1 which, because it contains confidential
information, is being filed under seal.
---------------------------------------------------------------------------
Based on the data submitted and the Commission's analysis shown in
Library Reference PRC-CP2009-7-NP-LR-1, the Commission finds that
Express Mail & Priority Mail Contract 1 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 the proposed Express Mail & Priority Mail Contract 1
indicates that it comports with the provisions applicable to rates for
competitive products.
The Postal Service shall promptly notify the Commission when the
contract terminates, but no later than the actual termination date. The
Commission will then remove the contract from the Mail Classification
Schedule at the earliest possible opportunity.
In conclusion, the Commission approves Express Mail & Priority Mail
Contract 1 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.
IV. Ordering Paragraphs
It is Ordered:
1. Express Mail & Priority Mail Contract 1 (MC2009-6 and CP2009-7)
is added to the Competitive Product List as a new product under
Negotiated Service Agreements, Domestic.
2. The Postal Service shall notify the Commission of the
termination date of the contract as discussed in this order.
3. The Secretary shall arrange for the publication of this Order in
the Federal Register.
List of Subjects in 39 CFR Part 3020
Administrative practice and procedure; Postal Service.
By the Commission.
Steven W. Williams,
Secretary.
0
For the reasons stated in the preamble, under the authority at 39
U.S.C. 503, the Postal Regulatory Commission amends 39 CFR part 3020 as
follows:
[[Page 71937]]
PART 3020--PRODUCT LISTS
0
1. The authority citation for part 3020 continues to read as follows:
Authority: 39 U.S.C. 503; 3622; 3631; 3642; 3682.
0
2. Revise Appendix A to subpart A of part 3020--Mail Classification to
read as follows:
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
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
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
[[Page 71938]]
[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 Forwarding
[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
[[Page 71939]]
[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.
Competitive Product List:
Express Mail:
Express Mail
Outbound International Expedited Services
Inbound International Expedited Services
Inbound International Expedited Services 1 (CP2008-7)
Priority Mail:
Priority Mail
Outbound Priority Mail International
Inbound Air Parcel Post
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)
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 & Priority Mail Contract 1 (MC2009-6 and
CP2009-7)
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)
Outbound International
Global Expedited Package Services (GEPS) Contracts GEPS
1 (CP2008-5, CP2008-11, CP2008-12, and CP2008-13,
CP2008-18, CP2008-19, CP2008-20, CP2008-21, CP2008-22,
CP2008-23, and CP2008-24)
Global Plus Contracts Global Plus 1 (CP2008-9 and CP2008-
10) Global Plus 2 (MC2008-7, CP2008-16 and CP2008-17)
Inbound Direct Entry Contracts with Foreign Postal
Administrations (MC2008-6, CP2008-14 and CP2008-15)
Competitive Product Descriptions
Express Mail
[Reserved for Group Description]
[[Page 71940]]
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]
------------------------------------------------------------------------
[FR Doc. E8-28100 Filed 11-25-08; 8:45 am]
BILLING CODE 7710-FW-P
