International Mail Products and Special Services, 41051-41056 [E9-19366]

Download as PDF mstockstill on DSKH9S0YB1PROD with RULES Federal Register / Vol. 74, No. 156 / Friday, August 14, 2009 / Rules and Regulations 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) 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, and CP2008–13, CP2008–18, CP2008–19, CP2008–20, CP2008–21, CP2008–22, CP2008–23, and CP2008–24) Global Plus Contracts Global Plus 1 (CP2008–8, CP2008–46 and CP2009–47) Global Plus 2 (MC2008–7, CP2008–16 and CP2008–17) Inbound International Inbound Direct Entry Contracts with Foreign Postal Administrations (MC2008–6, CP2008–14 and CP2008–15) 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) VerDate Nov<24>2008 16:09 Aug 13, 2009 Jkt 217001 [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. E9–19504 Filed 8–13–09; 8:45 am] BILLING CODE 7710–FW–P POSTAL REGULATORY COMMISSION 39 CFR Part 3020 [Docket Nos. MC2009–26 and CP2009–36; Order No. 264] International Mail Products and Special Services Postal Regulatory Commission. Final rule. AGENCY: ACTION: SUMMARY: The Commission is adding Direct Entry Parcels Contracts and two related special services to the Competitive Product List. The two special services are categorized within International Ancillary Services. This action is consistent with changes in a recent law governing postal operations. Republication of the lists of market dominant and competitive products is also consistent with requirements in the new law. DATES: Effective August 14, 2009 and is applicable beginning July 31, 2009. FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman at 202–789–6820 or stephen.sharfman@prc.gov. SUPPLEMENTARY INFORMATION: Regulatory History, 74 FR 30646 (June 29, 2009). I. Introduction II. Background III. Comments PO 00000 Frm 00019 Fmt 4700 Sfmt 4700 41051 IV. Commission Analysis V. Ordering Paragraphs I. Introduction The Postal Service seeks to add Direct Entry Parcels (DEP) Contracts, International Return Service, and Harmonization Service to the Competitive Product List. For the reasons discussed below, the Commission approves adding the specific DEP contract (DEP 1) as a new product, along with International Return Service and Harmonization Service as ancillary (or special) services. II. Background On June 11, 2009, the Postal Service filed a formal request pursuant to 39 U.S.C. 3642 and 39 CFR 3020.30 et seq. to add Direct Entry Parcels Contracts, International Return Service, and Harmonization Service to the Competitive Products List.1 The Postal Service indicates that Governors’ Decision No. 09–7, dated June 10, 2009, establishes prices and classifications not of general applicability for DEP contracts and the ancillary services of International Return Service and Harmonization Service.2 The Request has been assigned Docket No. MC2009– 26. The Postal Service contemporaneously filed a DEP contract pursuant to 39 U.S.C. 3632(b)(3) and 39 CFR 3015.5. Request at 1. The contract has been assigned Docket No. CP2009– 36. The Request incorporates (1) A Statement of Supporting Justification as required by 39 CFR 3020.32; 3 (2) Governors’ Decision No. 09–7 authorizing the new product and services; 4 (3) proposed changes to the Mail Classification Schedule (MCS); 5 (4) the pricing formulas applicable to DEP contracts, International Return Service and Harmonization Service; 6 (5) an analysis of those pricing formulas; 7 (6) certification of 1 Request of the United States Postal Service to Add Direct Entry Parcels Contracts, International Return Service, and Harmonization Service to the Competitive Products List, and Notice of Filing (Under Seal) of Contract and Enabling Governors’ Decision, June 11, 2009 (Request). 2 Governors’ Decision No. 09–7, filed June 11, 2009, establishes prices and classifications not of general applicability for Direct Entry Parcels Contracts, International Return Service, and Harmonization Service Offered with Customized Agreements. Id. at 1. 3 Attachment 1 to the Request. 4 Attachment 2 to the Request. 5 Attachment 2, Attachments A–1, A–2, and A–3 to the Request. 6 Attachment 2, Attachments B–1, B–2, and B–3 to the Request. 7 Attachment 2, Attachments C–1, C–2, and C–3 to the Request. E:\FR\FM\14AUR1.SGM 14AUR1 mstockstill on DSKH9S0YB1PROD with RULES 41052 Federal Register / Vol. 74, No. 156 / Friday, August 14, 2009 / Rules and Regulations compliance with 39 U.S.C. 3633(a); 8 (7) a redacted version of the contract; 9 and (8) certification that the instant contract (DEP 1) complies with 39 U.S.C. 3633(a).10 Substantively, the Request seeks to add the DEP contract, and the ancillary services of International Return Service, and Harmonization Service to the Competitive Products List. Request at 1–2. In the Statement of Supporting Justification, Frank Cebello, Executive Director, Global Business Management, 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. Id., Attachment 1. Thus, Mr. Cebello contends there will be no issue of subsidization of competitive products by market dominant products as a result of this contract. Id. The Postal Service represents that the instant contract is consistent with 39 U.S.C. 3633(a), 39 CFR 3015.5 and 39 CFR 3015.7. See id., Attachment 2. DEP contracts include International Return Service and Harmonization Service as optional features which reflect the proposed MCS language in Attachments A–2 and A–3 of the Governors’ Decision, respectively. DEP contracts provide for mail acceptance within the United States, transportation to a receiving country of parcels bearing the appropriate foreign indicia, transportation to customs within the receiving country, and customs clearance and prepayment of customs duties and taxes to the receiving country. The Postal Service states that International Return Service provides for the return of refused or undeliverable items. It states that Harmonization Service offers review of outbound items by a licensed customs broker and the broker’s assignment of Harmonized Tariff Schedule codes to facilitate assessment of customs duties. Id. at 2–3. The Postal Service notes that the latter two services will only be available through customized agreements, in particular through DEP contracts similar to the instant contract. The contract becomes effective within 30 days after the Postal Service notifies the customer that it has received all required reviews and the Commission has provided all necessary regulatory approvals. The term of the contract is one year from the effective date. 8 Attachment 2, Attachment D to the Request. 3 to the Request. 10 Attachment 4 to the Request. 9 Attachment VerDate Nov<24>2008 16:09 Aug 13, 2009 Jkt 217001 The Postal Service filed much of the supporting materials, including Governors’ Decision 09–7, and related financial information, including analysis of the instant contract in redacted versions and 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 under seal. Id. at 3–4. The Postal Service requests that the Commission list the instant DEP contract, as well as any subsequent functionally equivalent DEP contracts, as one product on the Competitive Product List. Id. at 1–2. The Request advances reasons why DEP contracts as described in the proposed MCS language are in conformity with the requirements of 39 U.S.C. 3642 as competitive products. Among other things, the Postal Service asserts that DEP contracts are intended for merchandise exempt from the Private Express Statutes; that the Postal Accountability and Enhancement Act (PAEA) classifies bulk international mail as competitive; and that classifying DEP contracts as competitive is consistent with Commission precedent. It contends that even though the senders of DEP items may mail individual pieces, the contract customer has committed to compensate the Postal Service for a bulk volume of DEP items. The Postal Service also notes that Direct Entry Parcels, Harmonization Service, and International Return Service are contractual services not available to individual retail customers. Id. at 4–5. In Order No. 228, the Commission gave notice of the two dockets, appointed a public representative, and provided the public with an opportunity to comment.11 On June 26, 2009, Chairman’s Information Request No. 1 (CHIR No. 1) was issued. The Postal Service filed its response to CHIR No. 1 on July 2, 2009.12 The Postal Service responses provided some of the information requested in CHIR No. 1 and indicated that revised financial information in response to questions 2, 5, 8 and 9 would be filed as soon as it could be completed. On July 15, 2009, the Postal Service filed the revised 11 PRC Order No. 228, Notice and Order Concerning Direct Entry Parcels Contract, International Return Service and Harmonization Service Negotiated Service Agreements, June 22, 2009 (Order No. 228). 12 Response of the United States Postal Service to Chairman’s Information Request No. 1, July 2, 2009. PO 00000 Frm 00020 Fmt 4700 Sfmt 4700 financial information as referenced in its July 2, 2009 response.13 III. Comments Comments were filed by the Public Representative on June 29, 2009 (Public Representative Comments). No filings were submitted by any other interested parties. The Public Representative states that the Governors’ Decision authorizes DEP contracts subject to price floor and price ceiling formulas. Public Representative Comments at 1. He contends the instant contract is specifically authorized by the Governors, but any additional DEP contracts would require a separate Governors’ Decision in order to comply with the law. Id. The Public Representative contends that the price formulas in Governors’ Decision No. 09– 7 use ex ante values which will change over the life of the contract. He notes that the contract permits (but does not require) changing prices if some of the variables in the formula change. Therefore, he concludes there is some risk that a change in the variables under the contract could eliminate the contract’s profit. Id. at 2. The Public Representative also states it appears the volume under the instant contract is new to the Postal Service. Id. IV. Commission Analysis The Commission has reviewed the Request, the Agreement, the financial analysis filed under seal, supplemental information filed in response to CHIR No. 1, and the comments filed by the Public Representative. As a preliminary matter, it may be useful to outline the Request before the Commission. The Postal Service seeks to add DEP Contracts, International Return Service, and Harmonization Service to the Competitive Product List within the Mail Classification Schedule. Request at 1. While the Request characterizes these as three products (id.), it appears that International Return Service and Harmonization Service are ancillary (or special) services available only in conjunction with DEP contracts or other customized agreements. Id. at 1, n.1 and 3. More specifically, the Postal Service requests that the instant DEP contract, together with any subsequent functionally equivalent DEP contracts, be listed as one product on the Competitive Product List.14 13 Notice of the United States Postal Service Regarding the Filing of Library Reference USPS– CP2009–36NP3, July 15, 2009 and Notice of the United States Postal Service Regarding the Filing of Library Reference USPS–CP2009–36NP4. 14 Id. at 1–2. See also id. at 5 (urging the Commission to add ‘‘this product [DEP Contracts] to the competitive products list * * *.’’); and at 6 E:\FR\FM\14AUR1.SGM 14AUR1 mstockstill on DSKH9S0YB1PROD with RULES Federal Register / Vol. 74, No. 156 / Friday, August 14, 2009 / Rules and Regulations The Governors’ Decision establishes classifications and prices for DEP Contracts, a new product, and International Return Service and Harmonization Service, two special services. The proposed draft MCS language describes these classifications. The instant contract is the first DEP contract executed pursuant to the Governors’ Decision. The Commission’s consideration of the Request will thus focus on that contract and the ancillary (or special) services offered with it. As discussed below, DEP 1, International Return Service and Harmonization Service will be added to the Competitive Product List and the proposed classification language will be added to the MCS. It is premature, however, to consider the treatment of any future DEP contracts in this proceeding. Whether subsequent DEP contracts, if any, are functionally equivalent with DEP 1 can be addressed in the relevant subsequent proceeding(s). Statutory requirements. The Commission’s statutory responsibilities in this instance entail assigning DEP 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 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 DEP 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 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 states that DEP contracts are for U.S. based entities that seek a channel to send merchandise or (‘‘the Postal Service believes that this DEP Contract should be added to the competitive products list.’’) VerDate Nov<24>2008 16:09 Aug 13, 2009 Jkt 217001 other articles to their overseas customers in packaging that has the ‘‘‘look and feel’’’ of domestic items in the destination country. Request, Attachment 1, ¶ (d). It states that, generally, DEP contracts will include the use of a licensed customs broker to review items for proper Harmonized Tariff Schedule classification (Harmonization Service), and the Postal Service may arrange the return of undeliverable or refused items (International Return Service). The Postal Service indicates that because of the competitive nature of international shipping services, the market does not permit it to raise prices substantially above costs and the contract is premised on prices that provide sufficient incentive for customers to ship with the Postal Service rather than a competitor. Id. 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 or decrease service without the risk of losing volume to private companies in the international shipping industry. The Postal Service also contends that it may not decrease quality or output without risking the loss of business to competitors that offer similar international parcel delivery services. Id. It further states that in the proposed MCS language established by the Governors, DEP contract items consist of Parcel Post items that are not subject to the Private Express Statutes and that any letters inserted in Direct Entry Parcels would also likely be within the letter monopoly exclusion of letters under the Private Express Statutes. Id., ¶ (e). The Postal Service states that the market for international delivery services is highly competitive and the addition of DEP contracts should have minimal, if any, impact on small business concerns. It contends that large shipping companies, consolidators, and freight forwarders comprise the market represented by the customers for the instant contracts, and it is unaware of any small business that can offer comparable service for the customer’s volume. It notes that small businesses are gaining an additional option for shipping articles internationally, beyond the service offered by its competitors, resulting in a positive impact on small businesses. Therefore, the Postal Service concludes the net impact on small business should be positive. Id., ¶ (h). PO 00000 Frm 00021 Fmt 4700 Sfmt 4700 41053 The Public Representative does not oppose the proposed classification of DEP contracts as competitive. Having considered the statutory requirements, the support offered by the Postal Service, and all comments, the Commission finds that DEP 1 is appropriately classified as a competitive product and should be added to the Competitive Product List. Cost considerations. The initial supporting documentation filed by the Postal Service on June 11, 2009 did not include source contracts with thirdparty providers to substantiate certain cost factors. In addition, the rates in the supporting documentation did not match the rates in the instant contract. The Commission had to request the source contracts and additional supporting documentation and seek clarification of discrepancies between rates in the instant contract and supporting documentation in order to complete its analysis. In its response to CHIR No. 1 on July 15, 2009, the Postal Service filed supporting documentation which included two sets of rates. However, only one set of rates was included in the instant DEP contract. The Commission understands that the second set of rates is only based on projected cost increases as allowed for in the instant contract and explained below under ‘‘Pricing provisions.’’ In future filings, the Postal Service should provide all supporting source documentation, including relevant contracts with third-party providers, and ensure consistency between rates in filed contracts and supporting documentation. Postal Service requests that contain inconsistent or missing information hinder the Commissioner’s ability to review filings promptly and may delay final disposition, such as in this instance. Based on the data submitted, the Commission finds that revenue from DEP 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 instant DEP contract indicates that it comports with the provisions applicable to rates for competitive products. Pricing provisions. The instant contract includes provisions that would permit price changes during the 1-year term of the contract. The Public Representative notes that these provisions may affect results under the E:\FR\FM\14AUR1.SGM 14AUR1 mstockstill on DSKH9S0YB1PROD with RULES 41054 Federal Register / Vol. 74, No. 156 / Friday, August 14, 2009 / Rules and Regulations contract. Public Representative Comments at 2. Article 9.2 provides that the prices under the DEP contract are based on prices established by Canada Post Corporation for Xpresspost, and that if the latter change, the Postal Service reserves the right to adjust prices accordingly. The second provision, Article 9.1, is somewhat more problematic as it is not based on the destination country’s post, but rather on cost increases incurred by the Postal Service over a specified threshold. The provisions, agreed to by the parties, mitigate risks associated with the contract. Should either of these provisions be invoked during the contract year, the Postal Service shall file a notice of the price changes with the Commission. The notice, in lieu of a filing under 39 CFR 3015, shall include the new prices as well prior to their effective date. Scope of the Governors’ Decision. The Public Representative states that the instant DEP contract is authorized by Governors’ Decision No. 09–7, but that any future DEP contracts must be based on a separate Governors’ Decision. Otherwise, 39 U.S.C. 402 would be violated. Public Representative Comments at 1. The Public Representative apparently views Governors’ Decision No. 09–7 as having ‘‘effectively delegated’’ the Governors’ authority to Postal Service management. He argues that the PAEA does not provide for delegation by the Governors, as distinct from the Board of Governors. The Public Representative concludes that the instant contract has been explicitly authorized by the Governors, but that Governors’ Decision No. 09–7 could not be used to support any further DEP contracts. The Commission does not read the Governors’ Decision so narrowly. That Governors’ Decision authorizes contracts that fall within the terms of the MCS language and price formulas attached to the Governors’ Decision. The Public Representative does not explain and it is not clear to the Commission why the Governors’ Decision should be read to authorize only the instant contract, but no other. While his conclusion may be predicated on his theory of delegation, the Commission finds that it is unnecessary to address those claims for purposes of this proceeding. Other considerations. The Postal Service shall promptly notify the Commission of the effective date and termination date of the contract. If the contract terminates earlier than anticipated, the Postal Service shall inform the Commission prior to the new VerDate Nov<24>2008 16:09 Aug 13, 2009 Jkt 217001 termination date. The Commission will then remove the product from the MCS at the earliest possible opportunity. In conclusion, the Commission approves Direct Entry Parcels 1 as a new product, and International Return Service and Harmonization Service as competitive special services. 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. Direct Entry Parcels 1 (MC2009–26 and CP2009–36) is added to the Competitive Product List as a new product. 2. International Return Service and Harmonization Service are added as components of the International Ancillary Services product. 3. The Postal Service shall notify the Commission of the scheduled effective date and termination date and update the Commission if the contract terminates at an earlier date, as discussed in this order. 4. As discussed in this order, price changes pursuant to Direct Entry Parcels 1 shall be filed with the Commission. 5. The Secretary shall arrange for the publication of this Order in the Federal Register. List of Subjects in 39 CFR Part 3020 Admininistrative practice and procedure, Postal Service. Issued: July 31, 2009. By the Commission. Judith M. Grady, Acting 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: ■ 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 Schedule 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 PO 00000 Frm 00022 Fmt 4700 Sfmt 4700 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 Inbound International Canada Post—United States Postal Service Contractual Bilateral Agreement for Inbound Market Dominant Services 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] E:\FR\FM\14AUR1.SGM 14AUR1 mstockstill on DSKH9S0YB1PROD with RULES Federal Register / Vol. 74, No. 156 / Friday, August 14, 2009 / Rules and Regulations 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 [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] VerDate Nov<24>2008 16:09 Aug 13, 2009 Jkt 217001 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) Priority Mail Priority Mail Outbound Priority Mail International Inbound Air Parcel Post Royal Mail Group Inbound Air Parcel Post Agreement 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 (MC2009– 8 and CP2009–9) 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 & 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) PO 00000 Frm 00023 Fmt 4700 Sfmt 4700 41055 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 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) 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, 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 International Inbound Direct Entry Contracts with Foreign Postal Administrations (MC2008–6, CP2008–14 and CP2008–15) 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] E:\FR\FM\14AUR1.SGM 14AUR1 41056 Federal Register / Vol. 74, No. 156 / Friday, August 14, 2009 / Rules and Regulations 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. E9–19366 Filed 8–13–09; 8:45 am] BILLING CODE 7710–FW–P DEPARTMENT OF HOMELAND SECURITY Federal Emergency Management Agency 44 CFR Part 64 [Docket ID FEMA–2008–0020; Internal Agency Docket No. FEMA–8087] Suspension of Community Eligibility mstockstill on DSKH9S0YB1PROD with RULES AGENCY: Federal Emergency Management Agency, DHS. ACTION: Final rule. SUMMARY: This rule identifies communities, where the sale of flood insurance has been authorized under the National Flood Insurance Program (NFIP), that are scheduled for suspension on the effective dates listed within this rule because of VerDate Nov<24>2008 16:09 Aug 13, 2009 Jkt 217001 noncompliance with the floodplain management requirements of the program. If the Federal Emergency Management Agency (FEMA) receives documentation that the community has adopted the required floodplain management measures prior to the effective suspension date given in this rule, the suspension will not occur and a notice of this will be provided by publication in the Federal Register on a subsequent date. DATES: Effective Dates: The effective date of each community’s scheduled suspension is the third date (‘‘Susp.’’) listed in the third column of the following tables. FOR FURTHER INFORMATION CONTACT: If you want to determine whether a particular community was suspended on the suspension date or for further information, contact David Stearrett, Mitigation Directorate, Federal Emergency Management Agency, 500 C Street, SW., Washington, DC 20472, (202) 646–2953. SUPPLEMENTARY INFORMATION: The NFIP enables property owners to purchase flood insurance which is generally not otherwise available. In return, communities agree to adopt and administer local floodplain management aimed at protecting lives and new construction from future flooding. Section 1315 of the National Flood Insurance Act of 1968, as amended, 42 U.S.C. 4022, prohibits flood insurance coverage as authorized under the NFIP, 42 U.S.C. 4001 et seq.; unless an appropriate public body adopts adequate floodplain management measures with effective enforcement measures. The communities listed in this document no longer meet that statutory requirement for compliance with program regulations, 44 CFR part 59. Accordingly, the communities will be suspended on the effective date in the third column. As of that date, flood insurance will no longer be available in the community. However, some of these communities may adopt and submit the required documentation of legally enforceable floodplain management measures after this rule is published but prior to the actual suspension date. These communities will not be suspended and will continue their eligibility for the sale of insurance. A notice withdrawing the suspension of the communities will be published in the Federal Register. In addition, FEMA has identified the Special Flood Hazard Areas (SFHAs) in these communities by publishing a Flood Insurance Rate Map (FIRM). The date of the FIRM, if one has been published, is indicated in the fourth PO 00000 Frm 00024 Fmt 4700 Sfmt 4700 column of the table. No direct Federal financial assistance (except assistance pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act not in connection with a flood) may legally be provided for construction or acquisition of buildings in identified SFHAs for communities not participating in the NFIP and identified for more than a year, on FEMA’s initial flood insurance map of the community as having flood-prone areas (section 202(a) of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4106(a), as amended). This prohibition against certain types of Federal assistance becomes effective for the communities listed on the date shown in the last column. The Administrator finds that notice and public comment under 5 U.S.C. 553(b) are impracticable and unnecessary because communities listed in this final rule have been adequately notified. Each community receives 6-month, 90-day, and 30-day notification letters addressed to the Chief Executive Officer stating that the community will be suspended unless the required floodplain management measures are met prior to the effective suspension date. Since these notifications were made, this final rule may take effect within less than 30 days. National Environmental Policy Act. This rule is categorically excluded from the requirements of 44 CFR part 10, Environmental Considerations. No environmental impact assessment has been prepared. Regulatory Flexibility Act. The Administrator has determined that this rule is exempt from the requirements of the Regulatory Flexibility Act because the National Flood Insurance Act of 1968, as amended, 42 U.S.C. 4022, prohibits flood insurance coverage unless an appropriate public body adopts adequate floodplain management measures with effective enforcement measures. The communities listed no longer comply with the statutory requirements, and after the effective date, flood insurance will no longer be available in the communities unless remedial action takes place. Regulatory Classification. This final rule is not a significant regulatory action under the criteria of section 3(f) of Executive Order 12866 of September 30, 1993, Regulatory Planning and Review, 58 FR 51735. Executive Order 13132, Federalism. This rule involves no policies that have federalism implications under Executive Order 13132. Executive Order 12988, Civil Justice Reform. This rule meets the applicable standards of Executive Order 12988. E:\FR\FM\14AUR1.SGM 14AUR1

Agencies

[Federal Register Volume 74, Number 156 (Friday, August 14, 2009)]
[Rules and Regulations]
[Pages 41051-41056]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-19366]


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

POSTAL REGULATORY COMMISSION

39 CFR Part 3020

[Docket Nos. MC2009-26 and CP2009-36; Order No. 264]


International Mail Products and Special Services

AGENCY: Postal Regulatory Commission.

ACTION: Final rule.

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

SUMMARY: The Commission is adding Direct Entry Parcels Contracts and 
two related special services to the Competitive Product List. The two 
special services are categorized within International Ancillary 
Services. This action is consistent with changes in a recent law 
governing postal operations.
    Republication of the lists of market dominant and competitive 
products is also consistent with requirements in the new law.

DATES: Effective August 14, 2009 and is applicable beginning July 31, 
2009.

FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman at 202-789-6820 or 
stephen.sharfman@prc.gov.

SUPPLEMENTARY INFORMATION: Regulatory History, 74 FR 30646 (June 29, 
2009).

I. Introduction
II. Background
III. Comments
IV. Commission Analysis
V. Ordering Paragraphs

I. Introduction

    The Postal Service seeks to add Direct Entry Parcels (DEP) 
Contracts, International Return Service, and Harmonization Service to 
the Competitive Product List. For the reasons discussed below, the 
Commission approves adding the specific DEP contract (DEP 1) as a new 
product, along with International Return Service and Harmonization 
Service as ancillary (or special) services.

II. Background

    On June 11, 2009, the Postal Service filed a formal request 
pursuant to 39 U.S.C. 3642 and 39 CFR 3020.30 et seq. to add Direct 
Entry Parcels Contracts, International Return Service, and 
Harmonization Service to the Competitive Products List.\1\ The Postal 
Service indicates that Governors' Decision No. 09-7, dated June 10, 
2009, establishes prices and classifications not of general 
applicability for DEP contracts and the ancillary services of 
International Return Service and Harmonization Service.\2\ The Request 
has been assigned Docket No. MC2009-26.
---------------------------------------------------------------------------

    \1\ Request of the United States Postal Service to Add Direct 
Entry Parcels Contracts, International Return Service, and 
Harmonization Service to the Competitive Products List, and Notice 
of Filing (Under Seal) of Contract and Enabling Governors' Decision, 
June 11, 2009 (Request).
    \2\ Governors' Decision No. 09-7, filed June 11, 2009, 
establishes prices and classifications not of general applicability 
for Direct Entry Parcels Contracts, International Return Service, 
and Harmonization Service Offered with Customized Agreements. Id. at 
1.
---------------------------------------------------------------------------

    The Postal Service contemporane ously filed a DEP contract pursuant 
to 39 U.S.C. 3632(b)(3) and 39 CFR 3015.5. Request at 1. The contract 
has been assigned Docket No. CP2009-36.
    The Request incorporates (1) A Statement of Supporting 
Justification as required by 39 CFR 3020.32; \3\ (2) Governors' 
Decision No. 09-7 authorizing the new product and services; \4\ (3) 
proposed changes to the Mail Classification Schedule (MCS); \5\ (4) the 
pricing formulas applicable to DEP contracts, International Return 
Service and Harmonization Service; \6\ (5) an analysis of those pricing 
formulas; \7\ (6) certification of

[[Page 41052]]

compliance with 39 U.S.C. 3633(a); \8\ (7) a redacted version of the 
contract; \9\ and (8) certification that the instant contract (DEP 1) 
complies with 39 U.S.C. 3633(a).\10\ Substantively, the Request seeks 
to add the DEP contract, and the ancillary services of International 
Return Service, and Harmonization Service to the Competitive Products 
List. Request at 1-2.
---------------------------------------------------------------------------

    \3\ Attachment 1 to the Request.
    \4\ Attachment 2 to the Request.
    \5\ Attachment 2, Attachments A-1, A-2, and A-3 to the Request.
    \6\ Attachment 2, Attachments B-1, B-2, and B-3 to the Request.
    \7\ Attachment 2, Attachments C-1, C-2, and C-3 to the Request.
    \8\ Attachment 2, Attachment D to the Request.
    \9\ Attachment 3 to the Request.
    \10\ Attachment 4 to the Request.
---------------------------------------------------------------------------

    In the Statement of Supporting Justification, Frank Cebello, 
Executive Director, Global Business Management, 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. Id., Attachment 1. Thus, Mr. 
Cebello contends there will be no issue of subsidization of competitive 
products by market dominant products as a result of this contract. Id.
    The Postal Service represents that the instant contract is 
consistent with 39 U.S.C. 3633(a), 39 CFR 3015.5 and 39 CFR 3015.7. See 
id., Attachment 2. DEP contracts include International Return Service 
and Harmonization Service as optional features which reflect the 
proposed MCS language in Attachments A-2 and A-3 of the Governors' 
Decision, respectively. DEP contracts provide for mail acceptance 
within the United States, transportation to a receiving country of 
parcels bearing the appropriate foreign indicia, transportation to 
customs within the receiving country, and customs clearance and 
prepayment of customs duties and taxes to the receiving country. The 
Postal Service states that International Return Service provides for 
the return of refused or undeliverable items. It states that 
Harmonization Service offers review of outbound items by a licensed 
customs broker and the broker's assignment of Harmonized Tariff 
Schedule codes to facilitate assessment of customs duties. Id. at 2-3. 
The Postal Service notes that the latter two services will only be 
available through customized agreements, in particular through DEP 
contracts similar to the instant contract.
    The contract becomes effective within 30 days after the Postal 
Service notifies the customer that it has received all required reviews 
and the Commission has provided all necessary regulatory approvals. The 
term of the contract is one year from the effective date.
    The Postal Service filed much of the supporting materials, 
including Governors' Decision 09-7, and related financial information, 
including analysis of the instant contract in redacted versions and 
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 under seal. Id. at 
3-4.
    The Postal Service requests that the Commission list the instant 
DEP contract, as well as any subsequent functionally equivalent DEP 
contracts, as one product on the Competitive Product List. Id. at 1-2. 
The Request advances reasons why DEP contracts as described in the 
proposed MCS language are in conformity with the requirements of 39 
U.S.C. 3642 as competitive products. Among other things, the Postal 
Service asserts that DEP contracts are intended for merchandise exempt 
from the Private Express Statutes; that the Postal Accountability and 
Enhancement Act (PAEA) classifies bulk international mail as 
competitive; and that classifying DEP contracts as competitive is 
consistent with Commission precedent. It contends that even though the 
senders of DEP items may mail individual pieces, the contract customer 
has committed to compensate the Postal Service for a bulk volume of DEP 
items. The Postal Service also notes that Direct Entry Parcels, 
Harmonization Service, and International Return Service are contractual 
services not available to individual retail customers. Id. at 4-5.
    In Order No. 228, the Commission gave notice of the two dockets, 
appointed a public representative, and provided the public with an 
opportunity to comment.\11\ On June 26, 2009, Chairman's Information 
Request No. 1 (CHIR No. 1) was issued. The Postal Service filed its 
response to CHIR No. 1 on July 2, 2009.\12\ The Postal Service 
responses provided some of the information requested in CHIR No. 1 and 
indicated that revised financial information in response to questions 
2, 5, 8 and 9 would be filed as soon as it could be completed. On July 
15, 2009, the Postal Service filed the revised financial information as 
referenced in its July 2, 2009 response.\13\
---------------------------------------------------------------------------

    \11\ PRC Order No. 228, Notice and Order Concerning Direct Entry 
Parcels Contract, International Return Service and Harmonization 
Service Negotiated Service Agreements, June 22, 2009 (Order No. 
228).
    \12\ Response of the United States Postal Service to Chairman's 
Information Request No. 1, July 2, 2009.
    \13\ Notice of the United States Postal Service Regarding the 
Filing of Library Reference USPS-CP2009-36NP3, July 15, 2009 and 
Notice of the United States Postal Service Regarding the Filing of 
Library Reference USPS-CP2009-36NP4.
---------------------------------------------------------------------------

III. Comments

    Comments were filed by the Public Representative on June 29, 2009 
(Public Representative Comments). No filings were submitted by any 
other interested parties.
    The Public Representative states that the Governors' Decision 
authorizes DEP contracts subject to price floor and price ceiling 
formulas. Public Representative Comments at 1. He contends the instant 
contract is specifically authorized by the Governors, but any 
additional DEP contracts would require a separate Governors' Decision 
in order to comply with the law. Id. The Public Representative contends 
that the price formulas in Governors' Decision No. 09-7 use ex ante 
values which will change over the life of the contract. He notes that 
the contract permits (but does not require) changing prices if some of 
the variables in the formula change. Therefore, he concludes there is 
some risk that a change in the variables under the contract could 
eliminate the contract's profit. Id. at 2. The Public Representative 
also states it appears the volume under the instant contract is new to 
the Postal Service. Id.

IV. Commission Analysis

    The Commission has reviewed the Request, the Agreement, the 
financial analysis filed under seal, supplemental information filed in 
response to CHIR No. 1, and the comments filed by the Public 
Representative.
    As a preliminary matter, it may be useful to outline the Request 
before the Commission. The Postal Service seeks to add DEP Contracts, 
International Return Service, and Harmonization Service to the 
Competitive Product List within the Mail Classification Schedule. 
Request at 1. While the Request characterizes these as three products 
(id.), it appears that International Return Service and Harmonization 
Service are ancillary (or special) services available only in 
conjunction with DEP contracts or other customized agreements. Id. at 
1, n.1 and 3. More specifically, the Postal Service requests that the 
instant DEP contract, together with any subsequent functionally 
equivalent DEP contracts, be listed as one product on the Competitive 
Product List.\14\
---------------------------------------------------------------------------

    \14\ Id. at 1-2. See also id. at 5 (urging the Commission to add 
``this product [DEP Contracts] to the competitive products list * * 
*.''); and at 6 (``the Postal Service believes that this DEP 
Contract should be added to the competitive products list.'')

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

[[Page 41053]]

    The Governors' Decision establishes classifications and prices for 
DEP Contracts, a new product, and International Return Service and 
Harmonization Service, two special services. The proposed draft MCS 
language describes these classifications. The instant contract is the 
first DEP contract executed pursuant to the Governors' Decision. The 
Commission's consideration of the Request will thus focus on that 
contract and the ancillary (or special) services offered with it. As 
discussed below, DEP 1, International Return Service and Harmonization 
Service will be added to the Competitive Product List and the proposed 
classification language will be added to the MCS. It is premature, 
however, to consider the treatment of any future DEP contracts in this 
proceeding. Whether subsequent DEP contracts, if any, are functionally 
equivalent with DEP 1 can be addressed in the relevant subsequent 
proceeding(s).
    Statutory requirements. The Commission's statutory responsibilities 
in this instance entail assigning DEP 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 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 DEP 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 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 states that DEP contracts are for U.S. based 
entities that seek a channel to send merchandise or other articles to 
their overseas customers in packaging that has the ```look and feel''' 
of domestic items in the destination country. Request, Attachment 1, ] 
(d). It states that, generally, DEP contracts will include the use of a 
licensed customs broker to review items for proper Harmonized Tariff 
Schedule classification (Harmonization Service), and the Postal Service 
may arrange the return of undeliverable or refused items (International 
Return Service). The Postal Service indicates that because of the 
competitive nature of international shipping services, the market does 
not permit it to raise prices substantially above costs and the 
contract is premised on prices that provide sufficient incentive for 
customers to ship with the Postal Service rather than a competitor. Id.
    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 or decrease service without the risk of losing volume to private 
companies in the international shipping industry. The Postal Service 
also contends that it may not decrease quality or output without 
risking the loss of business to competitors that offer similar 
international parcel delivery services. Id. It further states that in 
the proposed MCS language established by the Governors, DEP contract 
items consist of Parcel Post items that are not subject to the Private 
Express Statutes and that any letters inserted in Direct Entry Parcels 
would also likely be within the letter monopoly exclusion of letters 
under the Private Express Statutes. Id., ] (e).
    The Postal Service states that the market for international 
delivery services is highly competitive and the addition of DEP 
contracts should have minimal, if any, impact on small business 
concerns. It contends that large shipping companies, consolidators, and 
freight forwarders comprise the market represented by the customers for 
the instant contracts, and it is unaware of any small business that can 
offer comparable service for the customer's volume. It notes that small 
businesses are gaining an additional option for shipping articles 
internationally, beyond the service offered by its competitors, 
resulting in a positive impact on small businesses. Therefore, the 
Postal Service concludes the net impact on small business should be 
positive. Id., ] (h).
    The Public Representative does not oppose the proposed 
classification of DEP contracts as competitive.
    Having considered the statutory requirements, the support offered 
by the Postal Service, and all comments, the Commission finds that DEP 
1 is appropriately classified as a competitive product and should be 
added to the Competitive Product List.
    Cost considerations. The initial supporting documentation filed by 
the Postal Service on June 11, 2009 did not include source contracts 
with third-party providers to substantiate certain cost factors. In 
addition, the rates in the supporting documentation did not match the 
rates in the instant contract. The Commission had to request the source 
contracts and additional supporting documentation and seek 
clarification of discrepancies between rates in the instant contract 
and supporting documentation in order to complete its analysis.
    In its response to CHIR No. 1 on July 15, 2009, the Postal Service 
filed supporting documentation which included two sets of rates. 
However, only one set of rates was included in the instant DEP 
contract. The Commission understands that the second set of rates is 
only based on projected cost increases as allowed for in the instant 
contract and explained below under ``Pricing provisions.''
    In future filings, the Postal Service should provide all supporting 
source documentation, including relevant contracts with third-party 
providers, and ensure consistency between rates in filed contracts and 
supporting documentation. Postal Service requests that contain 
inconsistent or missing information hinder the Commissioner's ability 
to review filings promptly and may delay final disposition, such as in 
this instance.
    Based on the data submitted, the Commission finds that revenue from 
DEP 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 instant DEP contract 
indicates that it comports with the provisions applicable to rates for 
competitive products.
    Pricing provisions. The instant contract includes provisions that 
would permit price changes during the 1-year term of the contract. The 
Public Representative notes that these provisions may affect results 
under the

[[Page 41054]]

contract. Public Representative Comments at 2.
    Article 9.2 provides that the prices under the DEP contract are 
based on prices established by Canada Post Corporation for Xpresspost, 
and that if the latter change, the Postal Service reserves the right to 
adjust prices accordingly. The second provision, Article 9.1, is 
somewhat more problematic as it is not based on the destination 
country's post, but rather on cost increases incurred by the Postal 
Service over a specified threshold.
    The provisions, agreed to by the parties, mitigate risks associated 
with the contract. Should either of these provisions be invoked during 
the contract year, the Postal Service shall file a notice of the price 
changes with the Commission. The notice, in lieu of a filing under 39 
CFR 3015, shall include the new prices as well prior to their effective 
date.
    Scope of the Governors' Decision. The Public Representative states 
that the instant DEP contract is authorized by Governors' Decision No. 
09-7, but that any future DEP contracts must be based on a separate 
Governors' Decision. Otherwise, 39 U.S.C. 402 would be violated. Public 
Representative Comments at 1.
    The Public Representative apparently views Governors' Decision No. 
09-7 as having ``effectively delegated'' the Governors' authority to 
Postal Service management. He argues that the PAEA does not provide for 
delegation by the Governors, as distinct from the Board of Governors. 
The Public Representative concludes that the instant contract has been 
explicitly authorized by the Governors, but that Governors' Decision 
No. 09-7 could not be used to support any further DEP contracts. The 
Commission does not read the Governors' Decision so narrowly. That 
Governors' Decision authorizes contracts that fall within the terms of 
the MCS language and price formulas attached to the Governors' 
Decision. The Public Representative does not explain and it is not 
clear to the Commission why the Governors' Decision should be read to 
authorize only the instant contract, but no other. While his conclusion 
may be predicated on his theory of delegation, the Commission finds 
that it is unnecessary to address those claims for purposes of this 
proceeding.
    Other considerations. The Postal Service shall promptly notify the 
Commission of the effective date and termination date of the contract. 
If the contract terminates earlier than anticipated, the Postal Service 
shall inform the Commission prior to the new termination date. The 
Commission will then remove the product from the MCS at the earliest 
possible opportunity.
    In conclusion, the Commission approves Direct Entry Parcels 1 as a 
new product, and International Return Service and Harmonization Service 
as competitive special services. 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. Direct Entry Parcels 1 (MC2009-26 and CP2009-36) is added to the 
Competitive Product List as a new product.
    2. International Return Service and Harmonization Service are added 
as components of the International Ancillary Services product.
    3. The Postal Service shall notify the Commission of the scheduled 
effective date and termination date and update the Commission if the 
contract terminates at an earlier date, as discussed in this order.
    4. As discussed in this order, price changes pursuant to Direct 
Entry Parcels 1 shall be filed with the Commission.
    5. The Secretary shall arrange for the publication of this Order in 
the Federal Register.

List of Subjects in 39 CFR Part 3020

    Admininistrative practice and procedure, Postal Service.

    Issued: July 31, 2009.

    By the Commission.
Judith M. Grady,
Acting 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:

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 
Schedule 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
    Inbound International
    Canada Post--United States Postal Service Contractual Bilateral
    Agreement for Inbound Market Dominant Services
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]

[[Page 41055]]

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
    [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)
Priority Mail
    Priority Mail
    Outbound Priority Mail International
    Inbound Air Parcel Post
    Royal Mail Group Inbound Air Parcel Post Agreement
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 (MC2009-8 and CP2009-9)
    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 & 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 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)
    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, 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 International
    Inbound Direct Entry Contracts with Foreign Postal 
Administrations (MC2008-6, CP2008-14 and CP2008-15)
    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]

[[Page 41056]]

    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. E9-19366 Filed 8-13-09; 8:45 am]
BILLING CODE 7710-FW-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.