New Postal Product, 11452-11461 [2010-5212]
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column add in numerical sequence
‘‘021641’’.
Dated: March 8, 2010.
William T. Flynn,
Acting Director, Center for Veterinary
Medicine.
[FR Doc. 2010–5224 Filed 3–10–10; 8:45 am]
BILLING CODE 4160–01–S
POSTAL REGULATORY COMMISSION
39 CFR Part 3020
Docket No. MC2009–19; Order No. 391
New Postal Product
Postal Regulatory Commission.
Final rule.
AGENCY:
ACTION:
SUMMARY: The Commission is adding
special postal services to the product
lists. This action is consistent with
changes in a postal reform law.
Republication of the product lists is also
consistent with a statutory provision.
The Commission also has prepared a
supporting library reference.
DATES: Effective March 11, 2010 and is
applicable beginning January 13, 2010.
FOR FURTHER INFORMATION CONTACT:
Stephen L. Sharfman, General Counsel,
202–789–6824 or
stephen.sharfman@prc.gov.
Regulatory
History, 74 FR 15784 (April 7, 2009).
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction and Summary
II. Procedural History
III. Commission Analysis
IV. Ordering Paragraphs
I. Introduction and Summary
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In Docket No. MC2008–1, the
Commission found that six previously
stated unclassified services were postal
services.1 It directed the Postal Service
to make an appropriate filing to add
those services to the Mail Classification
Schedule (MCS) product lists. In this
proceeding, the Postal Service seeks to
add seven postal services to the product
lists. Based upon a review of the record,
the Commission approves the addition
of two products to the Market Dominant
Product List and five products to the
Competitive Product List as follows:
1 Docket No. MC2008–1, Review of Nonpostal
Services Under the Postal Accountability and
Enhancement Act, December 19, 2008, at 27–38,
63–64 and Appendix 1 (Order No. 154). Order No.
154 was issued in proceedings instituted to fulfill
the Commission’s responsibilities under 39 U.S.C.
404(e)(3) to determine which services offered by the
Postal Service were nonpostal services and which,
if any, of those nonpostal services should be
continued.
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Market Dominant Product List: Address
Management Services (to replace
Address List Services) and Customized
Postage and [to the] Competitive
Product List: Address Enhancement
Service; Greeting Cards and Stationery;
Shipping and Mailing Supplies; and
International Money Transfer ServiceOutbound and International Money
Transfer Service-Inbound (to replace
International Money Transfer Service).
The Commission also confirms its
finding in Order No. 154 that Stamp
Fulfillment Services is a postal product
and directs the Postal Service to make
an appropriate filing within 60 days to
add Stamp Fulfillment Services to the
MCS.
In addition, the Commission revises
the draft MCS product descriptions for
Greeting Cards and Stationery and for
Shipping and Mailing Supplies. Product
descriptions for these and other services
covered by the Postal Service’s request
in this proceeding are set forth in a PRC
Library Reference being filed in this
docket. PRC-MC2009–19–LR1. Subject
to further possible modifications, these
product descriptions are to be
incorporated into the draft MCS at the
time of its future publication. Finally,
the Commission directs that the Postal
Service file draft product descriptions
for eight existing items that are to be
included in Address Management
Services.
II. Procedural History
Background. In Order No. 154, the
Commission ruled that six previously
unclassified services were postal
services. Those six services were
Address Management Services;
Customized Postage; Stamp Fulfillment
Services; Greeting Cards; ReadyPost;
and International Money Transfer
Service. Because the Postal Service had
not complied with the requirements of
39 U.S.C. 3642(d) and 39 CFR 3020.30
et seq. the Commission did not address
whether these six services should be
added to the MCS product lists. Instead,
the Commission classified each of these
services as either a market dominant or
competitive product pending the
outcome of classification proceedings
that the Commission directed the Postal
Service to institute within 60 days. Id.
at 27–29, 89.
Postal Service Requests. On March 10,
2009, the Postal Service filed a request
to add seven products to the MCS
product lists: Address Management
Services; Customized Postage; Address
Enhancement Service; Greeting Cards,
Stationery, and Related Items; Shipping
and Mailing Supplies; International
Money Transfer Service-Inbound; and
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International Money Transfer ServiceOutbound.2
One of the six products classified as
a postal service by Order No. 154,
Stamp Fulfillment Services, was
intentionally omitted from the March
10, 2009 filing. That omission was based
upon the Postal Service’s view that
Stamp Fulfillment Services was no
longer a postal service because of
planned modifications to the service.
Of the remaining five services
classified as postal services by Order
No. 154, two, Address Management
Services (AMS) and International
Money Transfer Service, were split into
narrower services. Address Management
Services was subdivided into a market
dominant product called ‘‘Address
Management Services’’ and a
competitive product, ‘‘Address
Enhancement Service.’’ International
Money Transfer Service was separated
into an inbound service, ‘‘International
Money Transfer Service-Inbound’’ and
an outbound service, ‘‘International
Money Transfer Service-Outbound.’’3 As
a result of the foregoing changes, the
March 10, 2009 filing proposed the
addition of seven products to the MCS
product lists in place of the six products
discussed in Order No. 154.
Commission Order No. 198 provided
formal notice of the Request, established
the captioned docket to consider the
Request, appointed an officer of the
Commission to represent the interests of
the general public, and set April 30,
2009 as the deadline for comments.4
Thereafter, on May 8, 2009, the Postal
Service filed a notice of an amendment
to its March 10, 2009 filing.5 The
amendment was made to reflect the
manner in which one of the components
of Address Management Services would
be offered.6 Commission Order No. 215
2 Request of the United States Postal Service to
Add Postal Products to the Mail Classification
Schedule in Response to Order No. 154, March 10,
2009 (Request).
3 Supplemental information regarding
International Money Transfer Service-Inbound and
International Money Transfer Service-Outbound
was subsequently provided by the Postal Service.
See Supplemental Response of the United States
Postal Service to Order No. 154, July 15, 2009.
4 PRC Order No. 198, Notice and Order
Concerning Request to Add Seven Postal Services
to the Mail Classification Schedule Product Lists,
March 30, 2009 (Order No. 198).
5 Notice of the United States Postal Service of
Amendment to Its Request to Add Postal Products
to the Mail Classification Schedule in Response to
Order No. 154, May 8, 2009 (Amended Request).
6 More specifically, two services previously
offered as stand-alone components of Address
Management Services (i.e., FASTforward MLOCR
service and FASTforward Move Update
Notification) were being combined under the name
FASTforward MLOCR service. The charge for
FASTforward MLOCR service remained unchanged
and there was no longer to be a separate charge for
FASTforward Move Update Notification service.
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was issued on May 12, 2009, providing
formal notice of the Amended Request
and allowing additional comments.7
Comments. The following parties filed
comments in response to Order No. 198
and Order No. 215: the National
Association of Retail Ship Centers
(NARSC); United Parcel Service (UPS);
Associated Mail and Parcel Centers
(AMPC); and the Public Representative.8
The points raised in their respective
comments are addressed in section III.,
Commission Analysis, below.
Chairman’s information requests. On
May 21, 2009, the Chairman issued an
information request to the Postal
Service.9 The Postal Service submitted
its response on May 29, 2009.10
Thereafter, on August 5, 2009, the
Chairman issued a second information
request,11 to which the Postal Service
responded on August 13, 2009.12
Additional comments. Following the
Postal Service’s filing of its response to
CHIR No. 1, a series of additional
comments and responses were filed by
several parties: the Public
Representative; the Greeting Card
Association (GCA); NARSC; and the
Postal Service.13 While the rules of
practice do not provide for such filings,
the Commission will accept each of
these filings in order to ensure that all
arguments and comments of the
participants are considered.14 A
7 PRC Order No. 215, Notice and Order
Concerning Amendment to Request to Add Seven
Postal Services to the Mail Classification Schedule
Product Lists, May 12, 2009 (Order No. 215).
8 Comments of National Association of Retail
Ship Centers, April 30, 2009 (NARSC Comments);
Comments of United Parcel Service in Response to
Notice and Order Concerning Request to Add Seven
Postal Services to the Mail Classification Schedule
Product Lists, April 30, 2009 (UPS Comments);
Comments of Associated Mail and Parcel Centers,
May 1, 2009 (AMPC Comments); Comments of the
Public Representative, April 30, 2009 (Public
Representative Comments); and Supplemental
Comments of the Public Representative in Response
to Commission Order No. 215, May 19, 2009 (Public
Representative Supplemental Comments).
9 Chairman’s Information Request No. 1, May 21,
2009 (CHIR No. 1).
10 Responses of the United States Postal Service
to Chairman’s Information Request No. 1, May 29,
2009 (Response to CHIR No. 1).
11 Chairman’s Information Request No. 2, August
5, 2009 (CHIR No. 2).
12 Responses of the United States Postal Service
to Chairman’s Information Request No. 2, August
13, 2009 (Response to CHIR No. 2).
13 Comments of the Public Representative on the
Postal Service’s Legal Authority to Set Fees for
Postal Services Without Commission Approval,
June 9, 2009 (Public Representative Additional
Comments); Comments of the Greeting Card
Association, May 29, 2009 (GCA Comments);
Response of the United States Postal Service to
Intervenor and Public Representative Comments,
June 11, 2009 (Postal Service Reply Comments); and
Comments of National Association of Retail Ship
Centers, June 17, 2009 (NARSC Additional
Comments).
14 Two of the parties, GCA and the Public
Representative, sought leave to file these additional
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discussion of the points raised in these
comments can be found in section III.,
Commission Analysis, below.
III. Commission Analysis
The Postal Service requests the
addition of seven services to the product
lists specified in the MCS. For the
reasons given below, the Commission
concludes that the following seven
postal services should be included in
the MCS and, as appropriate, be added
to the product lists: Address
Management Services; Customized
Postage; Address Enhancement Service;
Greeting Cards and Stationery; Shipping
and Mailing Supplies; International
Money Transfer Services-Outbound; and
International Money Transfer ServicesInbound. For the reasons given below,
the Postal Service is directed to make an
appropriate filing within 60 days to add
Stamp Fulfillment Services to the
Market Dominant Product List.
A. Market Dominant Products
1. Address Management Services
Address Management Services (AMS)
is the new name given by the Postal
Service to the market dominant product
previously called ‘‘Address List
Services’’. See Request, Attachment A, at
1. Address List Services (ALS) was
added to the MCS product lists by Order
No. 43 and contained only four
services.15 As amended, the Postal
Service’s Request in this proceeding
would increase the number of services
from 4 to 27.16 The AMS product
consists of a number of value-added
services that enable bulk business
mailers to better manage the quality of
their mailing lists. The AMS product
also includes diagnostic and other
comments. See GCA Motion for Leave to Submit
Comments Out of Time, May 29, 2009; and Motion
for Leave to File Comments on the Postal Service’s
Legal Authority to Set Fees for Postal Services
Without Commission Approval, June 9, 2009. These
motions are granted. With respect to the remaining
filings, the Commission is persuaded that the
additional information provided by these filings
will clarify the record. Accordingly, these
additional submissions are accepted for filing. The
parties are, however, cautioned that failure to seek
leave to file future untimely submissions, or
submissions not otherwise authorized by the rules
of practice, may result in their rejection.
15 Docket No. RM2007–1, Order Establishing
Ratemaking Regulations for Market Dominant and
Competitive Products, October 29, 2007 (Order No.
43). Those services were Correction of Address
Lists; Change-of-Address Information for Election
Boards and Registration Commissions; ZIP Code
Sortation of Address Lists; and Address
Sequencing. See also Docket No. RM2007–1, United
States Postal Service Submission of Initial Mail
Classification Schedule in Response to Order No.
26, September 24, 2007, Appendix at 79.
16 Compare Request, Attachment A, at 1–12 (AMS
Product Descriptions) with Amended Request at 1–
2 (incorporation of FASTforward Move Update
Notice (FFMUN) into FASTforward MLOCR).
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services that evaluate address
management software for accuracy.17
No party opposes adding Address
Management Services to the Market
Dominant Product List within the
Special Services class. Request at 2, n.3.
However, in his initial and
supplemental comments, the Public
Representative observes that the Postal
Service’s Request fails to provide an
adequate discussion of statutory factors
and objectives.18 Id. The Postal Service
responds by providing a more complete
discussion of the following objectives
and factors: Objective No. 1
(maximization of incentives to reduce
costs and increase efficiency); Objective
No. 3 (maintenance of high quality
service standards established under
section 3691); Factor No. 5 (the degree
of mail preparation by mailers for
delivery into the postal system and its
effect on cost reduction); and Factor No.
12 (the need to increase efficiency,
reduce costs, and maintain high quality,
affordable services). Response to CHIR
No. 1, Question 4. Upon consideration
of the information provided in the
Request and in the subsequent response
to CHIR No. 1, the Commission
concludes that the AMS product should
be added to the Market Dominant
Product List.
The Public Representative also
questions whether the changes proposed
in the Amended Request to
FASTforward MLOCR and FASTforward
Move Update Notification constitute a
rate change requiring prior notice and
compliance with other applicable
provisions of 39 CFR part 3010. Public
Representative Supplemental Comments
at 2–3. Alternatively, the Public
Representative acknowledges that the
Amended Request could be construed as
a proposal to add new products to the
Market Dominant Product List and that
17 Address Management Services differs from the
competitive product, Address Enhancement
Service, discussed, infra. Whereas Address
Management Services consists of address update
services and address data files originated by the
Postal Service, such as ZIPCode + 4 data, the
competitive product, Address Enhancement
Service, consists of three address matching services
that compete with services provided by private
address management software developers.
18 The Public Representative also commented on
the absence of any financial information for the
Address Management Services product. Public
Representative Comments at 5–6; and Public
Representative Supplemental Comments at 4.
Historically, the Postal Service has not been
required to produce detailed cost data for AMS.
Consequently, financial information for this
product does not exist. However, by adding the
Address Management Services product to the MCS,
the Postal Service will be required to develop a cost
methodology for this product. See section III.B.,
Reporting Procedures for Approved Market
Dominant Products, infra, or a discussion on
reporting financial information for this product.
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without approved rates in effect, the
Amended Request would not, by
definition, produce a rate change. Id.
Under the unique circumstances
presented in this case, the Commission
finds the latter characterization more
persuasive and that the Amended
Request does not present a rate change
proposal.
Finally, the Public Representative
asserts that the Postal Service has failed
to include additional value-added
services in its Request. Public
Representative Comments at 6–7. The
services referred to by the Public
Representative are: Advance
Notification and Tracking System; MAC
Batch System Certification; MAC Gold
System Certification; MAC System
Certification; Mailpiece Quality Control
Certification; PAGE System
Certification; PAVE System
Certification; and Z4INFO. The Public
Representative argues that all ‘‘postal
services’’ must be listed in the MCS
under a particular product, and that it
appears the Postal Service is attempting
to set fees for ‘‘postal services’’ without
Commission review and approval.
Public Representative Additional
Comments at 2–3.
The Postal Service argues that the
omission from its Request of the
services at issue is not an attempt to
take advantage of a regulatory ‘‘no man’s
land’’ by offering services not included
in the MCS, as alleged by the Public
Representative. Response to CHIR No. 1,
Question 2; and Postal Service Reply
Comments at 10. The Postal Service
agrees that these value-added services
are, in fact, postal services, but explains
that these services are designed to
‘‘minimize, rather than maximize’’
revenue and thus, do not necessarily
need to be added to the MCS. Response
to CHIR No.1, Question 2(b). The Postal
Service further argues that the
Commission has the authority to
‘‘forbear’’ from regulating these services
as ‘‘products’’ and thereby omit these
services from the MCS.19 Id.; and Postal
Service Reply Comments at 10–12. In
lieu of adding the services to the MCS,
the Postal Service offers to provide the
Commission with annual fee and
revenue information on these services
with the understanding that the
Commission might, in the future, decide
to regulate these services as ‘‘products’’
if the information provided by the
Postal Service were to suggest that such
regulation were necessary. CHIR No.1,
19 Initially,
the Postal Service argued that the
‘‘postal services’’ were ‘‘postal activities’’ that were
designed to ‘‘minimize, rather than maximize’’
revenue and, as such, did not need to be added to
the MCS. See id.
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Question No. 2(b). In total, AMS will
include 36 services.
As the Postal Service recognizes,
Congress has given the Commission
jurisdiction over the postal services at
issue. While the Postal Service asserts
that the Commission has the authority
to ‘‘forbear’’ from exercising that
jurisdiction, it cites no clear legal
authority for exercising such
forbearance. Instead, the Postal Service
advances several policy arguments to
support the reasonableness of
forbearance.20
The Commission is not persuaded by
these policy arguments. Without clear
authority to forbear from exercising
jurisdiction, the Commission will follow
its jurisdictional mandate from Congress
and direct that these services be added
to the Market Dominant Product List as
elements of Address Management
Services. In addition, the Postal Service
will be required to file draft MCS
language within 30 days of the date of
this order for those services.21
While the Commission is legally
obligated to exercise its jurisdiction, it
also possesses discretionary authority to
determine how that jurisdiction will be
exercised. Given the small and
intermittent revenues produced by these
services and the current lack of reliable
costing methodologies, the Commission
will not subject them to the full range
of regulatory review. Instead, the
Commission will require only that the
Postal Service report fee and revenue
information (if any) for those services
annually as part of its Annual
Compliance Report. The information to
be filed shall be in a form similar to
Appendix A to Docket No. MC2008–1,
Response of the United States Postal
20 See Response to CHIR No.1, Questions 2 and
3; and Postal Service Reply Comments at 10–12.
21 The Commission rejects the Public
Representative’s suggestion that the Postal Service
be required ‘‘to provide a full accounting of all
’postal services’ not listed on the draft MCS.’’ Public
Representative Additional Comments at 2. In Order
No. 154 at 35, the Commission recognized that ‘‘it
is possible for something to be inadvertently
omitted when attempting to compile a complete list
of activities ... [and that] ... any omitted activities
can be explored in the next phase of this case.’’ See
Docket No. MC2008–1, Review of Nonpostal
Services Under the Postal Accountability and
Enhancement Act, December 19, 2008 (Order No.
154). Accordingly, in instituting Phase II of the
proceedings in Docket No. MC2008–1, the
Commission directed the Postal Service to file a
sworn statement providing ‘‘details of each retail
program for which information may have been
inadvertently omitted in response to Order No. 74
and which the Postal Service seeks to have
classified as a postal service or, alternatively, to
continue to offer as a nonpostal service.’’ Docket No.
MC2008–1 (Phase II), Notice and Order Initiating
Phase II Proceedings, January 9, 2009, at 4. The
Postal Service made no such filing in that
proceeding. Thus, the Commission views the record
as complete in that regard.
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Service to PostCom et al. Motion to
Sever From This Proceeding the
Consideration of Those Previously
Unregulated Services That the Postal
Service Asserts are ‘‘Postal Services,’’
December 12, 2008.22 If the need for
more extensive regulatory reporting
becomes apparent, the Commission may
revisit the issue.
2. Customized Postage
The Postal Service proposes to add
the Customized Postage program to the
Market Dominant Product List as a
stand-alone Special Services product.
The Customized Postage program
authorizes vendors to provide their
customers with Postal Service
authorized postage consisting of
customer-selected images. There are
currently four vendors participating in
the Customized Postage program.23
No party objects to adding
Customized Postage to the Market
Dominant Product List. However, the
Public Representative observes that the
Postal Service’s Request provided only
a minimal discussion as to how the
proposed Customized Postage product
achieved the objectives of 39 U.S.C.
3622(b), while taking into account the
factors of 39 U.S.C. 3622(c). Public
Representative Comments at 4–5. In its
response to CHIR No. 1, the Postal
Service provided a more complete
discussion of the following objectives
and factors: Objective No. 2 (rate
predictability and stability) and
Objective No. 5 (assurance of adequate
revenues to maintain financial stability);
and Factor No. 8 (relative value to the
people of the kinds of mail matter and
the desirability and justification for
special mail classifications). Response
to CHIR No. 1, Question 4.
Upon review of the information
submitted, the Commission concludes
that the Customized Postage program
satisfies the requirements of sections
3622(b) and (c). The Commission,
therefore, approves the addition of the
Customized Postage program to the
Market Dominant Product List.
3. Stamp Fulfillment Services
Stamp Fulfillment Services (SFS)
provide shipping and handling for all
orders placed with the Stamp
Fulfillment Services office in Kansas
City, Missouri. Orders for postage
stamps, personalized stamped
envelopes, and philatelic sales can be
placed by fax, mail, online, or
telephone; orders for Officially Licensed
Retail Products (OLRP) can be placed
22 The Postal Service has stated its willingness to
provide information in this form. Response to CHIR
No. 1, Question 2.
23 See www.usps.com for information on the
respective vendors (keyword search: Customized
Postage).
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only online.24 Currently, the Postal
Service imposes a $1.00 charge for
fulfilling postage stamp, philatelic, and
stamped envelope orders. Id. at 10. The
Postal Service maintains that the $1.00
charge ‘‘is more like a handling charge
intended to recover SFS costs for
preparing orders for shipment, rather
than shipping costs.’’ Id. at 11. For
personalized stamped envelopes, the
Postal Service also imposes an
additional and higher shipping and
handling charge.
In its Request, the Postal Service
states that it ‘‘is not requesting the
addition of SFS to the MCS.’’ Id. at 10.
Instead, it plans to eliminate the $1.00
handling charge and implement an
alternative fee structure for shipping. In
doing so, the Postal Service argues that
the alternative fee structure, which
would utilize existing postage prices,
eliminates the justification for adding
SFS to the MCS. Id. at 12–13.
In conceptual terms, the Postal
Service’s alternative fee structure would
‘‘recover postage for SFS shipments
directly, while recovering handling
costs through the prices charged for the
items.’’ Id. at 11. The Postal Service
proposes this alternative pricing
structure because customers who mail
or fax their SFS orders often find it
difficult to calculate the zone and
weight for their orders, particularly
larger orders, using the existing fee
schedules. Thus, the Postal Service
wants to ensure that customers can
‘‘readily determine and pay the total
charge for an order, including shipping,
at the time the order is placed.’’ Id. at
12.
The Postal Service offers several
examples to illustrate how an
alternative fee structure might work. Id.
The four examples reference existing
market dominant and competitive
postage prices, i.e., First-Class Mail and
Priority Mail prices, as shipping charges
for hypothetical SFS orders. However,
the Postal Service states that the
shipping charge for any particular SFS
order:
would not always be the actual postage
that would otherwise be charged based on
the zone and weight for the mail piece being
shipped. Instead, existing postage prices will
be selected, for application to shipments that
fall within specified parameters.
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Id. The Postal Service states that it is
‘‘still working on the specific postage
prices that it will charge for shipments,
but plans to complete the process soon.’’
Id. at 13.
24 Request at 12, n.13. The use of customized
software enables online OLRP orders to be ‘‘shipped
at [the] actual postage rates for the zone and weight
of the shipment. Such an approach would not be
workable for mail and fax orders.’’ Id. Consequently,
shipping prices for OLRP orders are not at issue in
this proceeding.
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The Postal Service’s alternative
pricing structure for shipping SFS
orders raises concerns. More
specifically, the Public Representative
states that the four examples provided
by the Postal Service ‘‘imply that there
are situations where the Postal Service
is altering the ordinary tariff rate
postage for SFS orders.’’ Public
Representative Comments at 15. The
Public Representative further states that
if the Postal Service’s alternative pricing
structure for SFS orders alters the
ordinary tariff rate then ‘‘the Postal
Service should be required to add this
product to the Market Dominant
Product List and to obtain Commission
approval for these special rates for SFS
services.’’ Id.
Additionally, in Order No. 154, the
Commission determined that ‘‘handling
and shipping fees associated with stamp
purchases and personalized stamped
envelopes represent fees for postal
services.’’25 (Order No. 154 at 63,
emphasis added.) The planned
elimination of the handling charge
would address only one of the bases for
requiring the addition of SFS to the
MCS product list. The Postal Service’s
proposed use of ‘‘alternative’’ shipping
fees would still require the Commission
to classify SFS as a market dominant
postal product since, as the Public
Representative points out the four
pricing examples offered by the Postal
Service suggest that ‘‘the Postal Service
will not be charging tariff rates for
certain fulfillment orders ... .’’ Id. at 15.
Rather, the Postal Service intends to use
rates from a tariff schedule that are
weight- and distance-related and apply
those rates as shipping charges without
regard to the weight of the item or the
zone to which it is actually being sent.26
Id.
The Commission is sensitive to the
Postal Service’s efforts to improve the
ordering process for customers,
particularly for mail and fax customers.
A simplified fee structure derived from
existing tariff rates could achieve the
result the Postal Service desires. The
Postal Service can, if it desires, propose
simplified SFS shipping prices. In doing
so, the Postal Service has an
opportunity to develop simplified
pricing for shipping of SFS orders that
improves the likelihood customers will
25 In making this determination, the Commission
observed that if fees for handling and shipping
services ‘‘were incurred solely in connection with
philatelic sales, classifying such services as
nonpostal would be reasonable.’’ Id. However, the
Commission found that the Postal Service ‘‘often
can not distinguish philatelic from regular stamp
purchases ... ‘‘ citing the Initial Response of the
United States Postal Service to Order No. 74, June
9, 2008, at 14. Id.
26 This selective use of rates published in a tariff
schedule does not constitute the application of tariff
rates as those rates were intended to be applied.
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complete the ordering process and
increase postal revenues. Should the
Postal Service propose the use of
simplified shipping fees as an
alternative to tariff postage that would,
of course, itself require the Postal
Service to file an appropriate request to
add SFS to the MCS product lists.
Pending receipt of any such proposal,
the Commission reaffirms its findings in
Order No. 154, and the Postal Service is
authorized to continue to charge a $1.00
handling fee. The continued collection
of the handling fee, however, requires
the filing of a request to add SFS to the
Market Dominant Product List. That
filing is due within 60 days from the
date of this order.
B. Reporting Procedures for Approved
Market Dominant Products
With the exception of the eight
Address Management Services which
the Postal Service is directed to add to
the MCS as elements of Address
Management Services (section III.A.1,
Address Management Services, supra),
the Commission expects the Postal
Service to submit cost, revenue, and
volume data at the product level for all
remaining market dominant products.
Previously, the Postal Service has not
reported detailed cost data for Address
Management Services, Customized
Postage, and Stamp Fulfillment
Services. Cost methodologies were not
developed for these services, and the
Commission recognizes that the existing
data systems may not provide adequate
cost, revenue, and volume data for many
of the separate services within certain
products such as Address Management
Services. The Postal Service is currently
‘‘reviewing all its internal reporting
systems consistent with its plans to
collect and report cost, revenue, and
volume data in the next [Annual
Compliance Report]....’’ Response to
CHIR No. 1, Question 3. The Postal
Service further states that ‘‘cost
methodologies will be developed (and
submitted to the Commission for prior
review) to generate additional
information.’’ Id. The Commission
expects the Postal Service to report on
the status of its efforts prior to the next
Annual Compliance Report.
C. Competitive Products
1. Address Enhancement Service
The Postal Service proposes to add
Address Enhancement Service (AES) to
the Competitive Product List as a standalone product.27 Address Enhancement
27 The Address Enhancement Service product is
different from the market dominant Address
Management Services product. For a more detailed
discussion of Address Management Services, see
section III.A.1., Address Management Services,
supra.
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Service is the name given to several
separate services: Address Element
Correction (AEC), Address Matching
System Application Program Interface
(AMS API), and Topographical
Integrated Geographic Encoding and
Referencing (TIGER/ZIP + 4). Each
service is designed around one or more
software packages that improve address
quality and reduce undeliverable-asaddressed mail.
In its Request, the Postal Service
proposes MCS language that contains
descriptions and prices for each of the
separate services within the proposed
Address Enhancement Service product.
The Postal Service’s Request also
provides a Statement of Justification
that includes confidential FY 2008 cost
and revenue figures that were filed
under seal for the proposed product. In
response to CHIR No. 1, the Postal
Service supplemented its Request with
supporting financial worksheets that
were also filed under seal. Response to
CHIR No. 1, Question 1.
The Public Representative raised
concerns regarding the AMS API
service, contending that it appears to be
a bundle of six market dominant
Address Management Services
databases that could potentially be
priced anti-competitively, i.e., at less
than the sum of the prices for each
database in the bundle. Public
Representative Comments at 13. If
priced in this way, the Public
Representative alleges ‘‘there would be
no meaningful competition since a
competitor could not purchase the
individual unbundled market dominant
products at a price that would allow it
to repackage those services and compete
with the Postal Service’s competitive
bundled service on price.’’ ld., n.19.
In response to the Public
Representative’s comments, the Postal
Service further describes the features of
the AMS API service and its proposed
pricing. Postal Service Reply Comments
at 6. According to the Postal Service, the
AMS API service is not merely six
bundled market dominant Address
Management databases. ¥The AMS API
service provides a ‘‘core set of compiled
address-matching software instructions
(computer code), developed by the
Postal Service’’ that interpret data from
the six market dominant Address
Management databases.28 Id. at 5. The
AMS API address-matching software
package is offered to address
management vendors to incorporate in
and thereby enhance their Address
28 AMS API includes the following six market
dominant databases within the Address
Management Services product: City State, Delivery
Point Validation, eLot, LACSLink, Five-Digit ZIP,
and ZIP+4.
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Management software when applied to
the data from the market dominant
databases. Id.
The Postal Service also explains that
the price for AMS API is greater than
the sum of the prices for the six market
dominant databases combined. Address
Management software vendors who
want to incorporate AMS API into their
own Address Management software
must pay a reseller license fee of
$16,700, as well as separate annual fees
for additional licenses in order to
distribute the databases to multiple
customers along with their software.
Consequently, the reseller license fee
plus the annual fees for additional
database licenses are greater than the
sum of the individual price of each of
the six market dominant databases. Id.
The Postal Service has submitted
revised MCS language to clarify the
pricing of the AMS API service. See id.
at 6.
The Commission approves the
addition of Address Enhancement
Service to the Competitive Product List
based upon the revised MCS language
provided by the Postal Service. The
Postal Service’s further explanation of
the AMS API service and the six market
dominant Address Management
databases clarifies that the price
relationships would not have an anticompetitive effect.
2. Greeting Cards and Stationery
In Order No. 154, the Commission
concluded that the sale of greeting cards
and stationery (Greeting Cards) was a
postal service and directed the Postal
Service to file a request to add Greeting
Cards to the MCS. Order No. 154 at 89.29
In Attachment A to its Request, the
Postal Service proposes the following
classification language:
2XXX Greeting Cards, Stationery, and
Related Items
2XXX.1 Description
Greeting Cards, Stationery, and Related
Items include items designed to be used
to mail personal messages.
Greeting cards—Greeting cards include
cards with envelopesand may be sold
individually or as sets.
Stationery—Stationery includes paper,
envelopes, postcards, note cards, and
note pads and are sometimes packaged
as sets[.]
Parties’ comments. NARSC objects to
any and all retail sales of greeting cards,
29 The Commission’s ruling in ordering paragraph
1 refers solely to ‘‘Greeting Cards.’’ However, it is
clear from the Commission’s discussion of the
greeting card status issue that the Commission used
the term ‘‘Greeting Cards’’ to refer not only to
greeting cards, per se, but to other stationery items.
Id. at 34–35. One of the purposes of the instant
proceeding is to determine the appropriate scope of
the product.
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stationery, and related items by the
Postal Service on several grounds,
including the following: that these
products are nonpostal products; that
the Postal Service enjoys a competitive
advantage due to its size, purchasing
power, and exemption from local sales
tax laws; that the addition of 32,000
Postal Service retail outlets to the
existing 64,000 retail outlets of private
firms would overburden an already
crowded marketplace; that the Postal
Service has failed to document
projected expenses and revenues; and
that the sale of such items will interfere
with the performance of core Postal
Service responsibilities. See NARSC
Comments and NARSC Additional
Comments.
AMPC takes issue with the scope of
the ‘‘Greeting Card’’ description in the
Postal Service’s proposed MCS
language, alleging that the sale of a full
line of greeting cards would constitute
a nonpostal service and should be
precluded. See AMPC Comments.
Instead, AMPC requests that the
definition of ‘‘greeting cards’’ in the MCS
be limited to ‘‘those cards which relate
directly to specific stamps or Official
Licensed Retail Product programs.’’ Id.
The Public Representative supports
adding Greeting Cards, Stationery, and
Related Items to the MCS as a
competitive product, subject to certain
limitations. Public Representative
Comments at 10. First, the Public
Representative notes that the term
‘‘Related Items’’ had no definition and
that it should either be defined or
excluded from the MCS. Id., n.12.
Second, the Public Representative
submits that the availability of all of
these items should be limited to postal
retail locations. Id. at 10–11. Third, the
Public Representative takes the position
that the Postal Service should be
required to provide adequate financial
data to support the addition of these
products to the MCS, or should be
required to incorporate into the MCS its
pricing policies with respect to these
items. Id. at 11–12.
In its June 11, 2009 response to the
comments of NARSC, AMPC, and the
Public Representative, the Postal
Service argues that the Commission
already found greeting cards and
stationery to be postal services in Order
No. 154; these products will be a
valuable addition to the market; the sale
of these products is not a ‘‘non-core’’
activity; all greeting cards, not just
postal themed cards, foster use of the
mails; and the fact that the sales of these
products will compete with sales by
others does not provide a basis for
rejecting the proposed addition of these
products to the Competitive Product
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List. Postal Service Reply Comments at
2–3. The Postal Service also takes issue
with the Public Representative’s
proposal to prohibit the availability of
greeting cards at nonpostal retail
locations. Id. at 3–4. Notwithstanding
this opposition to the Public
Representative, the Postal Service
suggests that the issue need not be
decided at this time since the Postal
Service’s current plan is to offer greeting
card products only through Postal
Service retail channels. Id. at 4.
On May 29, 2009, GCA filed
comments supporting the proposed
addition of greeting cards, stationery,
and related items to the MCS. GCA
Comments at 2. GCA asserts that the
proposal will benefit its members,
consumers, and the Postal Service by
giving consumers convenient and
additional opportunities to purchase
greeting cards that will be sent through
the mail. Id. at 1. GCA claims that the
effect of the Postal Service’s proposal
will be to increase the total use of
greeting cards, not to simply reallocate
greeting card sales among retail outlets.
Id.30
Commission analysis. While the
Postal Service is correct that Order No.
154 determined that greeting cards and
stationery were postal services, the issue
of whether to add them to the
Competitive Product List was not before
the Commission in that proceeding. The
issue is now pending, and section
3642(b)(3) requires the Commission to
give due consideration to ‘‘the
availability and nature of enterprises in
the private sector engaged in the
delivery of the product involved’ and to
‘‘the likely impact of the proposed
action on small business concerns ....’’
NARSC’s argument that the Postal
Service enjoys certain competitive
advantages is countered, in part, by the
Postal Service’s response that it has
been selling greeting cards and
stationery as a part of its retail product
mix for over a decade. Request,
Attachment E, at 4. As NARSC itself
points out, there are already other large
retail outlets that sell greeting cards and
stationery. NARSC Comments at 1.
Against this history, NARSC’s general
allegations of harm are not persuasive,
particularly, as discussed below, given
the limitations imposed on the sale of
such items. Furthermore, the
Commission can not simply assume that
sales of greeting cards and stationery by
the Postal Service will necessarily
decrease sales by other retailers, large or
small. See GCA Comments at 1.
A related, but separate, aspect of
NARSC’s allegation of unfair
competitive advantage relates to the
Postal Service’s pricing of greeting cards
and stationery. NARSC suggests that in
selling such items, the Postal Service
may not have been recovering its costs.
NARSC Comments at 1–2. In that
connection, NARSC questions whether
the Postal Service has adequately
determined the costs attributable to the
sale of these items. NARSC Additional
Comments at 1. The Public
Representative raises similar concerns,
arguing that the Postal Service should
either file adequate financial data to
support the addition of greeting cards
and stationery to the MCS, or
alternatively, file a narrative description
of its pricing policies. Public
Representative Comments at 12.
The Postal Service argues that any
danger that these items will not cover
their costs or will unfairly compete in
the marketplace has been eliminated
because they are now subject to
regulation by the Commission. Postal
Service Reply Comments at 2. In that
connection, the Postal Service states
that its policy will, in general, be to
price greeting cards and stationery with
‘‘at least a 50 percent mark-up over the
wholesale price’’ and that as part of its
effort to comply with the PAEA, it has
already begun to track costs of greeting
cards and stationery products.31
Request, Attachment E, at 2. The Postal
Service therefore believes that this
product will be able to generate
revenues that cover its attributable costs
and will not undermine the contribution
of competitive products to the coverage
of institutional costs. Id. at 2–3. The
Postal Service’s contentions are
supported by information provided
under seal in response to CHIR No.1.32
The information provided by the Postal
Service convinces the Commission that
the proposed sale of greeting cards and
30 NARSC responded to GCA’s comments by
filing additional comments on June 17, 2009, in
which it opposed Commission acceptance of GCA’s
comments because of their untimeliness; challenged
the adequacy of the Postal Service’s response to
CHIR No.1 regarding costs and cost coverage; and
elaborated further on the points raised in its initial
comments. As stated in n.14, supra, and
accompanying text, the Commission is granting
GCA’s motion for leave to file out of time and is
accepting all additional comments not otherwise
authorized by the Commission’s rules of practice,
including the NARSC Additional Comments.
31 This cost information must be presented in the
Postal Service’s Annual Compliance Report as
required by 39 U.S.C. 3652, and is reviewed by the
Commission in issuing its Annual Compliance
Determination, as required by 39 U.S.C. 3653.
32 See library reference USPS-MC2009–19/NP–2,
Nonpublic Supporting Materials Filed in Response
to CHIR No.1, Relating to Competitive Products.
This information was on file at the time the NARSC
Additional Comments were filed. NARSC
incorrectly states that the Postal Service failed to
address the Commission’s request for this
information. NARSC Additional Comments at 1.
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11457
stationery is likely to cover attributable
costs and should not undermine the
ability of competitive products overall
to contribute to the coverage of
institutional costs.
AMPC suggests that the sale of
greeting cards be limited to those
‘‘which relate directly to specific stamps
or Official Licensed Retail Product
programs.’’ AMPC Comments. In Order
154, however, the Commission
expressly recognized that not all
greeting cards identified by the Postal
Service in its response to Order No. 74
were directly related to specific stamps
or OLRP programs, when it stated that
‘‘[i]ntellectual property, however, is not
featured on every card.’’ Order No. 154
at 34, n.72.
Nevertheless, AMPC is correct in
stating that the activities determined to
be postal services were those described
by the Postal Service in its response to
Order No. 74. Id. at 35. That response
included a representation that the Postal
Service had no plans to offer a full line
of greeting cards. Id. at 34. By contrast,
the Request in this proceeding includes
the broadly worded MCS product
description quoted above that could be
read as encompassing a full line of
greeting cards.
To obtain a more current statement of
the Postal Service’s intentions, CHIR
No. 2 requested that the Postal Service
provide information regarding its future
plans to sell greeting cards. CHIR No. 2,
Question 2(d).33 In its response, the
Postal Service describes the range of
greeting card formats that it anticipates
offering. Response to CHIR No. 2,
Questions 2(a).34 In addition, the Postal
Service, once again, states that it does
not intend to offer a full line of greeting
cards. Id. This commitment confirms
the Postal Service’s previous position in
Docket No. MC2008–1 and appears to be
responsive to AMPC’s concerns.
The Public Representative suggests
that the sale of greeting cards and
stationery be limited to retail postal
locations. The Public Representative
33 CHIR No. 2 was prompted, in part, by a Postal
Service solicitation issued as part of an
investigation of the possibility of offering an
expanded line of greeting cards. Federal Business
Opportunities (FedBizOpps.com), Solicitation
Number 2B–09–A–0018, posted May 21, 2009
(Solicitation).
34 For example, the Postal Service states that it
‘‘does not intend to offer a ’full line’ of greeting
cards’’ and that a ‘‘full line’’ at standard greeting
card stores ‘‘ is ‘‘displayed on well over 200 linear
feet of fixtures with additional space allocated for
Stationery and Related items,’’ whereas the Postal
Service intends to provide ‘‘an average of 4–8 feet
of display space’’ and that a ‘‘full line’’ of greeting
cards ‘‘includes all seasonal cards and various
specialty lines to target ethnic and geographic
patterns,’’ whereas the Postal Service could offer
only ‘‘a very limited holiday selection’’ of cards.
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states that the availability of these
products at such retail locations was
understood to be the basis on which
Order No. 154 was issued. Public
Representative Comments at 10–11. The
Postal Service opposes the suggestion,
but indicates that the issue need not be
addressed because it has no plans to
offer these items through any other
retail channels and does not object to
the limitation requested by the Public
Representative. Postal Service Reply
Comments at 4.
The Postal Service’s proposed MCS
language includes the term ‘‘Related
Items.’’ The term is not defined. The
Public Representative objects to its
inclusion in the MCS. Public
Representative Comments at 10, n.12. In
its response to CHIR No. 2, the Postal
Service offers a possible definition of
‘‘Related Items,’’ 35 but notes that it was
‘‘in the process of discontinuing all
’related items’ in both retail channels
[i.e., retail lobbies and usps.com].’’ Id.,
Question 1(b). The Postal Service also
states that it ‘‘might offer boxed
stationery or note cards to promote the
use of First-Class Mail, but has not
developed plans to do so at this time.’’
Id., Question 1(c). (Emphasis added.).
The Commission approves adding
sales of Greeting Cards and Stationery to
the Competitive Product List. However,
the proposed draft MCS language will
be revised to limit the availability of this
product to retail postal locations and the
Postal Service’s Web site. In view of the
uncertain status of, and future for,
Related Items, it will not be included in
the MCS at this time. If the Postal
Service wishes to offer Related Items, it
must make an appropriate filing with
the Commission.
3. Shipping and Mailing Supplies
The Postal Service proposes to add
Shipping and Mailing Supplies to the
Competitive Product List as a standalone product. Shipping and Mailing
Supplies consist of packaging materials
that are used to package, seal, protect,
and label items for mailing, including
mailing cartons, specialty boxes,
mailing tubes, mailing envelopes, a
variety of packaging tapes, and other
shipping accessories. Request,
Attachment F, at 1. The Postal Service
offers these packaging supplies through
its retail channels. See id. at 1 and 4.
In Docket No. MC2008–1, the
Commission reviewed the Postal
Service’s request to classify ReadyPosta Postal Service-branded line of
packaging supplies, as a postal service.
35 ‘‘Related items could include boxed note cards,
stationery sets, and boxed greeting cards for
everyday occasions or holidays.’’ Response to CHIR
No. 2, Question 1(a).
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Order No. 154 at 27. Based upon that
review, the Commission found
ReadyPost to be a postal service. Id. at
34. In this proceeding, however, the
Postal Service combines ReadyPost with
other packaging supplies to form
Shipping and Mailing Supplies.
Request, Attachment F, at 1.
With its Request in this proceeding,
the Postal Service proposes MCS
language that contains descriptions and
prices for Shipping and Mailing
Supplies. The Postal Service also
provides a Statement of Justification
that includes confidential FY 2008 cost
and revenue figures that were filed
under seal for the proposed product.
The Public Representative argues that
the Request fails to include any
financial information or spreadsheets to
determine whether the new product
complies with 39 U.S.C. 3633(a), 39
U.S.C. 3642(d)(1), or 39 CFR 3015.7.
Public Representative Comments at 10–
11. The Commission concludes, upon
review, that the financial information
concerning Shipping and Mailing
Supplies, provided under seal in
Response to CHIR No. 1, Question 1,
satisfies the applicable statutory and
regulatory requirements.
The Public Representative supports
the addition of Shipping and Mailing
Supplies to the Competitive Product
List ‘‘with appropriate constraints.’’ Id.
at 10. In this regard, the Public
Representative asserts that the Postal
Service’s proposed MCS language
appears to permit the sale of Shipping
and Mailing Supplies at retail locations
other than postal retail locations, such
as department stores and mass
merchandisers. Id. The sale of Shipping
and Mailing Supplies at other retail
locations ‘‘does not foster the use of the
mails and is not a ‘function ancillary’ ’’
to the delivery of mailable matter. Id. at
10–11. Accordingly, the Public
Representative argues that availability of
Shipping and Mailing Supplies should
be limited to postal retail locations and
the Postal Service’s Web sites. Id. at 11.
The Postal Service opposes this
limitation, but suggests that this issue
does not need to be decided in this
docket. The Postal Service’s ‘‘current
plans with regard to the Shipping and
Mailing Supplies product (as well as,
incidentally, the Greeting Cards
product), is to sell such materials
through Postal Service retail channels.’’
Postal Service Reply Comments at 4.
The Commission approves the
addition of Shipping and Mailing
Supplies to the Competitive Product
List. However, the proposed MCS
language does not accurately describe
what the Postal Service is selling as
Shipping and Mailing Supplies or in
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what retail channels. In this regard,
‘‘related material’’ offered for sale as
shipping supplies and the sales
channels in which Shipping and
Mailing Supplies may be offered must
be clarified. Accordingly, in recognition
of the positions of both the Public
Representative and the Postal Service,
the draft MCS language will be revised
to limit the sale of Shipping and Mailing
Supplies to postal retail locations and
the Postal Service’s Web site. The draft
MCS language will also be revised to
change ‘‘related material’’ to ‘‘related
packaging materials used to prepare
items for entry into the mailstream’’ to
clarify the limited nature of the related
materials.
4. International Money Transfer
Services
In Docket No. MC2008–1, the Postal
Service sought to have International
Money Transfer Service (IMTS)
classified as a postal service. In this
proceeding, the Postal Service proposes
to bifurcate IMTS into an outbound
product (IMTS-Outbound) and an
inbound product (IMTS-Inbound).
Request at 6–10; Attachment A at 12;
and Attachment G. The IMTS-Outbound
product features prices of ‘‘general
applicability’’ for postal money orders
and the electronic transfer of money that
can be cashed or accessed, respectively,
in a number of foreign countries. The
separate IMTS-Inbound product consists
of 10 agreements with foreign postal
administrations that govern Postal
Service payment of foreign money
orders presented to post offices in the
United States. Request at 6. The Postal
Service states that the agreements are
‘‘functionally equivalent’’ having many
similar cost and market characteristics.
Id. at 9. As part of its Request, the Postal
Service proposes MCS text consisting of
descriptive information concerning the
IMTS-Outbound and IMTS-Inbound
products. Request, Attachment A, at 13–
15.
The Public Representative raises two
concerns with respect to the addition of
IMTS-Outbound and IMTS-Inbound to
the Competitive Product List. First, the
Postal Service failed to provide any
financial information in support of its
Request, thereby precluding any
determination as to whether IMTSOutbound and IMTS-Inbound comply
with various provisions of the PAEA.
Public Representative Comments at 7.
Second, the Public Representative
reports the Commission’s finding, in its
FY 2008 Annual Compliance
Determination (ACD) that IMTSOutbound and IMTS-Inbound combined
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did not cover its attributable costs.36 Id.
at 8. The Public Representative suggests
that until accurate cost and revenue data
are provided, the Commission should
defer action on these products or,
alternatively, add them as experimental
products. Id. at 9. If, however, the
Commission decides to add IMTSOutbound and IMTS-Inbound to the
Competitive Product List, the Public
Representative recommends that the
Commission require a greater
commitment from the Postal Service to
produce reliable cost estimates with
sufficient time to review any new
methodologies. Id.
The Public Representative’s concerns
are well founded. At the time of its
Request in this proceeding, the Postal
Service stated ‘‘it is not possible to say
with confidence that either IMTSOutbound or IMTS-Inbound is or is not
covering its attributable costs.’’ Request,
Attachment G, at 3. Moreover, the Postal
Service further acknowledged it was
without ‘‘sufficiently reliable
information upon which [to] draw
conclusions concerning the corrections
that would be required properly to
address the shortfall in cost coverage.’’
Id. at 2. Consequently, during FY 2009,
the Postal Service proposed to further
study the ‘‘basic information needed to
analyze the cost coverage of both IMTS
products and to report again to the
Commission by July 15, 2009l.’’ Id. at
3. The Postal Service’s subsequent
report detailed recent efforts and
difficulties associated with obtaining
data to estimate IMTS costs and stated
that the Postal Service was returning to
the ‘‘task of accumulating enough
observations of IMTS transactions to
determine more reliably the costs
attributable to them.’’37 However, the
July 15, 2009 report does not indicate
when the Postal Service intends to
complete its ‘‘further study.’’
The Postal Service’s request to add
IMTS-Outbound and IMTS-Inbound as
separate products to the Competitive
Product List is approved. However, it is
imperative that the Postal Service
continue its work to develop reliable
cost estimates for both products.38
36 In this regard, the Postal Service’s FY 2008
Annual Compliance Report (ACR) stated that IMTS
as a whole did not cover its attributable costs. In
addition, the Postal Service was unable to report the
financial results of IMTS-Outbound and IMTSInbound separately. FY 2008 International Cost and
Revenue Analysis (ICRA) Report (Non-Public), A
Pages (c), at page A–2, n.5.
37 Supplemental Response of the United States
Postal Service to Order No. 154, July 15, 2009,
Attachment A, Statement of Supporting
Justification, at 6.
38 In Docket No. RM2010–4, filed during the
pendency of the instant proceeding, the Postal
Service proposed to change the volume variability
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D. Miscellaneous Issues
UPS states that the Commission
should consider the impact of adding
products to the Competitive Product
List on the overall contribution of
competitive products to the Postal
Service’s institutional costs. UPS
Comments at 2. UPS does not oppose
the addition of any product to the
Competitive Product List, but urges the
impact of adding new competitive
products to the list be evaluated,
particularly as regards their contribution
to institutional costs.
The Commission agrees with UPS that
the cumulative impact of adding
products to the Competitive Product
List must be evaluated. The next
opportunity for that evaluation will be
in the 2010 ACD proceedings.
In conclusion, the Commission
approves the Postal Service’s Request to
add products to the Market Dominant
Product List and Competitive Product
List as discussed in this order.39 The
revisions to the Market Dominant and
Competitive Product Lists are shown
below the signature on this order and
are effective upon issuance of the order.
IV. Ordering Paragraphs
It is ordered:
1. The Postal Service’s request to add
postal products to the Market Dominant
Product List and Competitive Product
List is approved as set forth in the body
of this order.
2. Address Management Services and
Customized Postage are added to the
Market Dominant Product List as
products under Special Services.
Address List Services is replaced by
Address Management Services.
3. Address Management Services shall
contain the following elements: Address
Sequencing; Advance Notification and
Tracking System; AEC II (Address
Element Correction II) Service; AIS
(Address Information Service) Viewer;
Barcode Certification; CRIS (Carrier
Route Information Service); CASS
(Coding Accuracy Support System)
Certification; Change-of-Address
Information for Election Boards and
Registration Commissions; City State;
CDS (Computerized Delivery Sequence);
Correction of Address Lists; Delivery
of window service costs for IMTS. This change only
applies to the combined inbound and outbound
services and does not address the development of
separate costs for the IMTS-Inbound and IMTSOutbound products requested by the Postal Service
in this proceeding.
39 Bracketed text in previous Product Lists, which
has been used to reserve entries for class, product
and group descriptions, is being eliminated to
improve readability, foster consistency of
presentation, conform the Lists more closely to
long-term expectations about format, and to reduce
costs associated with publication.
PO 00000
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Statistics; Delivery Type; DMM
(Domestic Mail Manual) Labeling Lists;
DPV (Domestic Point Validation)
System; DSF2 (Delivery Sequence File–
2nd Generation) Service; eLOT
(enhanced Line of Travel) Service;
FASTforward MLOCR (Multi-line
Optical Character Reader); Five-Digit
ZIP; LACSLink (Locatable Address
Conversion Service); Mailpiece Quality
Control Certification; MAC (Manifest
Analysis and Certification) Batch
System Certification; MAC Gold System
Certification; MAC System Certification;
MASS (Multiline Accuracy Support
System) Certification; NCOALINK
(National Change of Address) Service;
NCOALINK (National Change of Address)
Service-ANKLink (Addressee Not
Known) Service Option; Official
National Zone Charts; PAGE (Presort
Accuracy, Grading, and Evaluation)
System Certification; PAVE (Presort
Accuracy, Validation, and Evaluation)
System Certification; RDI (Residential
Delivery Indicator) Service;
Z4CHANGE; Z4INFO; ZIP+4 Service;
ZIPMove; and ZIP Code Sortation of
Address Lists.
4. The Postal Service shall within 30
days of the date of this order file
appropriate draft product descriptions
for the following: Address Management
Services: Advance Notification and
Tracking System; Mailpiece Quality
Control Certification; MACTM Batch
System Certification; MACTM Gold
System Certification; MACTM System
Certification; PAGE System
Certification; PAVETM System
Certification; and Z4INFO.
5. The Postal Service shall file an
appropriate request to add Stamp
Fulfillment Services to the Mail
Classification Schedule Market
Dominant Product List within 60 days
of the date of this order, as discussed in
the body of this order.
6. Address Enhancement Service is
added to the Competitive Product List.
Address Enhancement Service shall
contain the following elements: AEC
(Address Element Correction); AMS API
(Address Matching System Application
Program Interface); TIGER/ZIP + 4
(topological Integrated Geographic
Encoding and Referencing).
7. Greeting Cards and Stationery and
Shipping and Mailing Supplies are
added to the Competitive Product List.
8. International Money Transfer
Service is replaced by International
Money Transfer Service-Outbound and
International Money Transfer ServiceInbound as products on the Competitive
Product List.
9. The Secretary shall arrange for
publication of this order in the Federal
Register.
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Federal Register / Vol. 75, No. 47 / Thursday, March 11, 2010 / Rules and Regulations
List of Subjects in 39 CFR Part 3020
Administrative practice and
procedure; Postal Service.
By the Commission.
Shoshana M. Grove,
Secretary.
For the reasons discussed in the
preamble, the Postal Regulatory
Commission amends chapter III of title
39 of the Code of Federal Regulations as
follows:
■
PART 3020—PRODUCT LISTS
1. The authority citation for part 3020
continues to read as follows:
■
Authority: 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:
■
jlentini on DSKJ8SOYB1PROD with RULES
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 Management Services
Caller Service
Change-of-Address Credit Card Authentication
Confirm
Customized Postage
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
VerDate Nov<24>2008
16:21 Mar 10, 2010
Jkt 220001
Bank of America Corporation Negotiated Service Agreement
The Bradford Group Negotiated Service
Agreement
Inbound International
Canada Post—United States Postal
Service Contractual Bilateral
Agreement for Inbound Market
Dominant Services (MC2010-12
and R2010-2)
Market Dominant Product Descriptions
First-Class Mail
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
Address Correction Service
Applications and Mailing Permits
Business Reply Mail
Bulk Parcel Return Service
Certified Mail
Certificate of Mailing
Collect on Delivery
Delivery Confirmation
Insurance
Merchandise Return Service
Parcel Airlift (PAL)
Registered Mail
Return Receipt
Return Receipt for Merchandise
Restricted Delivery
Shipper-Paid Forward
Signature Confirmation
Special Handling
Stamped Envelopes
Stamped Cards
Premium Stamped Stationery
Premium Stamped Cards
International Ancillary Services
International Certificate of Mailing
International Registered Mail
International Return Receipt
International Restricted Delivery
Address List Services
Caller Service
Change-of-Address Credit Card Authentication
Confirm
International Reply Coupon Service
International Business Reply Mail
Service
Money Orders
PO 00000
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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
Part B—Competitive Products
2000 Competitive Product List
Express Mail
Express Mail
Outbound
International
Expedited
Services
Inbound International Expedited Services
Inbound International Expedited
Services 1 (CP2008–7)
Inbound International Expedited
Services 2 (MC2009–10 and
CP2009–12)
Inbound International Expedited
Services 3 (MC2010–13 and
CP2010–12)
Priority Mail
Priority Mail
Outbound Priority Mail International
Inbound Air Parcel Post (at non-UPU
rates)
Royal Mail Group Inbound Air
Parcel Post Agreement
Inbound Air Parcel Post (at UPU rates)
Parcel Select
Parcel Return Service
International
International Priority Airlift (IPA)
International Surface Airlift (ISAL)
International Direct Sacks—M—Bags
Global Customized Shipping Services
Inbound Surface Parcel Post (at nonUPU rates)
Canada Post—United States Postal
Service Contractual Bilateral
Agreement for Inbound Competitive Services (MC2010–14 and
CP2010–13—Inbound
Surface
Parcel post at Non-UPU Rates
and Xpresspost-USA)
International Money Transfer Service—
Outbound
International Money Transfer Service—
Inbound
International Ancillary Services
Special Services
Address Enhancement Service
Greeting Cards and Stationery
Premium Forwarding Service
Shipping and Mailing Services
Negotiated Service Agreements
Domestic
Express Mail Contract 1 (MC2008–
5)
Express Mail Contract 2 (MC2009–
3 and CP2009–4)
Express Mail Contract 3 (MC2009–
15 and CP2009–21)
Express Mail Contract 4 (MC2009–
34 and CP2009–45)
Express Mail Contract 5 (MC2010–
5 and CP2010–5)
Express Mail Contract 6 (MC2010–6 and CP2010–6)
Express Mail Contract 7 (MC2010–7 and CP2010–7)
E:\FR\FM\11MRR1.SGM
11MRR1
jlentini on DSKJ8SOYB1PROD with RULES
Federal Register / Vol. 75, No. 47 / Thursday, March 11, 2010 / Rules and Regulations
Express Mail Contract 8 (MC2010–16 and CP2010–16)
Express Mail & Priority Mail Contract 1 (MC2009–6 and CP2009–
7)
Express Mail & Priority Mail Contract
2
(MC2009–12
and
CP2009–14)
Express Mail & Priority Mail Contract
3
(MC2009–13
and
CP2009–17)
Express Mail & Priority Mail Contract
4
(MC2009–17
and
CP2009–24)
Express Mail & Priority Mail Contract
5
(MC2009–18
and
CP2009–25)
Express Mail & Priority Mail Contract
6
(MC2009–31
and
CP2009–42)
Express Mail & Priority Mail Contract
7
(MC2009–32
and
CP2009–43)
Express Mail & Priority Mail Contract
8
(MC2009–33
and
CP2009–44)
Parcel Select & Parcel Return Service Contract 1 (MC2009–11 and
CP2009–13)
Parcel Select & Parcel Return Service Contract 2 (MC2009–40 and
CP2009–61)
Parcel Return Service Contract 1
(MC2009–1 and CP2009–2)
Priority Mail Contract 1 (MC2008–
8 and CP2008–26)
Priority Mail Contract 2 (MC2009–
2 and CP2009–3)
Priority Mail Contract 3 (MC2009–
4 and CP2009–5)
Priority Mail Contract 4 (MC2009–
5 and CP2009–6)
Priority Mail Contract 5 (MC2009–
21 and CP2009–26)
Priority Mail Contract 6 (MC2009–
25 and CP2009–30)
Priority Mail Contract 7 (MC2009–
25 and CP2009–31)
Priority Mail Contract 8 (MC2009–
25 and CP2009–32)
Priority Mail Contract 9 (MC2009–
25 and CP2009–33)
Priority
Mail
Contract
10
(MC2009–25 and CP2009–34)
Priority
Mail
Contract
11
(MC2009–27 and CP2009–37)
Priority
Mail
Contract
12
(MC2009–28 and CP2009–38)
Priority
Mail
Contract
13
(MC2009–29 and CP2009–39)
Priority
Mail
Contract
14
(MC2009–30 and CP2009–40)
Priority
Mail
Contract
15
(MC2009–35 and CP2009–54)
Priority
Mail
Contract
16
(MC2009–36 and CP2009–55)
Priority
Mail
Contract
17
(MC2009–37 and CP2009–56)
Priority
Mail
Contract
18
(MC2009–42 and CP2009–63)
Priority
Mail
Contract
19
(MC2010–1 and CP2010–1)
Priority
Mail
Contract
20
(MC2010–2 and CP2010–2)
Priority
Mail
Contract
21
(MC2010–3 and CP2010–3)
VerDate Nov<24>2008
18:08 Mar 10, 2010
Jkt 220001
PO 00000
Priority
Mail
Contract
22
(MC2010–4 and CP2010–4)
Priority
Mail
Contract
23
(MC2010–9 and CP2010–9)
Priority
Mail
Contract
24
(MC2010–15 and CP2010–15)
Outbound International
Direct Entry Parcels Contracts
Direct
Entry
Parcels
1
(MC2009–26 and CP2009–
36)
Global Direct Contracts (MC2009–
9, CP2009–10, and CP2009–11)
Global
Direct
Contracts
1
(MC2010–17 and CP2010–18)
Global Expedited Package Services
(GEPS) Contracts
GEPS 1 (CP2008–5, CP2008–
11, CP2008–12, CP2008–13,
CP2008–18,
CP2008–19,
CP2008–20,
CP2008–21,
CP2008–22, CP2008–23, and
CP2008–24)
Global
Expedited
Package
Services 2 (CP2009–50)
Global Plus Contracts
Global Plus 1 (CP2008–8,
CP2008–46 and CP2009–47)
Global Plus 2 (MC2008–7,
CP2008–48 and CP2008–49)
Inbound International
Inbound Direct Entry Contracts
with Foreign Postal Administrations
Inbound Direct Entry Contracts with Foreign Postal
Administrations (MC2008–6,
CP2008–14 and MC2008–15)
Inbound Direct Entry Contracts with Foreign Postal
Administrations 1 (MC2008–
6 and CP2009–62)
International Business Reply Service Competitive Contract 1
(MC2009–14 and CP2009–20)
Competitive Product Descriptions
Express Mail
Express Mail
Outbound International Expedited
Services
Inbound International Expedited
Services
Priority
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
International Money Transfer Service
Inbound Surface Parcel Post (at
non-UPU rates)
International Ancillary Services
International Certificate of Mailing
International Registered Mail
International Return Receipt
International Restricted Delivery
International Insurance
Frm 00043
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11461
Negotiated Service Agreements
Domestic
Outbound International
Part C—Glossary of Terms and Conditions
[Reserved]
Part D—Country Price Lists for International Mail [Reserved]
[FR Doc. 2010–5212 Filed 3–10–10; 8:45 am]
BILLING CODE 7710–FW–S
ENVIRONMENTAL PROTECTION
AGENCY
40 CFR Part 52
[EPA–R05–OAR–2009–0369; FRL–9125–3]
Approval and Promulgation of Air
Quality Implementation Plans;
Minnesota
AGENCY: Environmental Protection
Agency (EPA).
ACTION: Direct final rule.
SUMMARY: EPA is approving a sitespecific revision to the Minnesota State
Implementation Plan (SIP) for
particulate matter less than 10 microns
(PM10) for Aggregate Industries Yard A
Facility in Saint Paul, Ramsey County,
Minnesota. On May 19, 2009, the
Minnesota Pollution Control Agency
(MPCA) requested that EPA approve
certain portions of a joint Title I/Title V
document into the Minnesota PM10 SIP
for this facility. The State is also
requesting in this submittal that EPA
rescind the Administrative Order (AO)
issued to J.L. Shiely Company which is
currently included in Minnesota’s SIP
for PM10. The emissions units
previously owned by J.L. Shiely
Company are now owned by Aggregate
Industries. Because the PM10 emission
limits are being reduced, the air quality
of Ramsey County will be protected.
DATES: This direct final rule will be
effective May 10, 2010, unless EPA
receives adverse comments by April 12,
2010. If adverse comments are received,
EPA will publish a timely withdrawal of
the direct final rule in the Federal
Register informing the public that the
rule will not take effect.
ADDRESSES: Submit your comments,
identified by Docket ID No. EPA–R05–
OAR–2009–0369, by one of the
following methods:
1. https://www.regulations.gov: Follow
the on-line instructions for submitting
comments.
2. E-mail: damico.genevieve@epa.gov.
3. Fax: (312) 385–5501.
4. Mail: Genevieve Damico, Acting
Chief, Criteria Pollutant Section, Air
Programs Branch (AR–18J), U.S.
Environmental Protection Agency, 77
E:\FR\FM\11MRR1.SGM
11MRR1
]]>Agencies
[Federal Register Volume 75, Number 47 (Thursday, March 11, 2010)]
[Rules and Regulations]
[Pages 11452-11461]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-5212]
=======================================================================
-----------------------------------------------------------------------
POSTAL REGULATORY COMMISSION
39 CFR Part 3020
Docket No. MC2009-19; Order No. 391
New Postal Product
AGENCY: Postal Regulatory Commission.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Commission is adding special postal services to the
product lists. This action is consistent with changes in a postal
reform law. Republication of the product lists is also consistent with
a statutory provision. The Commission also has prepared a supporting
library reference.
DATES: Effective March 11, 2010 and is applicable beginning January
13, 2010.
FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel,
202-789-6824 or stephen.sharfman@prc.gov.
SUPPLEMENTARY INFORMATION: Regulatory History, 74 FR 15784 (April 7,
2009).
Table of Contents
I. Introduction and Summary
II. Procedural History
III. Commission Analysis
IV. Ordering Paragraphs
I. Introduction and Summary
In Docket No. MC2008-1, the Commission found that six previously
stated unclassified services were postal services.\1\ It directed the
Postal Service to make an appropriate filing to add those services to
the Mail Classification Schedule (MCS) product lists. In this
proceeding, the Postal Service seeks to add seven postal services to
the product lists. Based upon a review of the record, the Commission
approves the addition of two products to the Market Dominant Product
List and five products to the Competitive Product List as follows:
Market Dominant Product List: Address Management Services (to replace
Address List Services) and Customized Postage and [to the] Competitive
Product List: Address Enhancement Service; Greeting Cards and
Stationery; Shipping and Mailing Supplies; and International Money
Transfer Service-Outbound and International Money Transfer Service-
Inbound (to replace International Money Transfer Service).
---------------------------------------------------------------------------
\1\ Docket No. MC2008-1, Review of Nonpostal Services Under the
Postal Accountability and Enhancement Act, December 19, 2008, at 27-
38, 63-64 and Appendix 1 (Order No. 154). Order No. 154 was issued
in proceedings instituted to fulfill the Commission's
responsibilities under 39 U.S.C. 404(e)(3) to determine which
services offered by the Postal Service were nonpostal services and
which, if any, of those nonpostal services should be continued.
---------------------------------------------------------------------------
The Commission also confirms its finding in Order No. 154 that
Stamp Fulfillment Services is a postal product and directs the Postal
Service to make an appropriate filing within 60 days to add Stamp
Fulfillment Services to the MCS.
In addition, the Commission revises the draft MCS product
descriptions for Greeting Cards and Stationery and for Shipping and
Mailing Supplies. Product descriptions for these and other services
covered by the Postal Service's request in this proceeding are set
forth in a PRC Library Reference being filed in this docket. PRC-
MC2009-19-LR1. Subject to further possible modifications, these product
descriptions are to be incorporated into the draft MCS at the time of
its future publication. Finally, the Commission directs that the Postal
Service file draft product descriptions for eight existing items that
are to be included in Address Management Services.
II. Procedural History
Background. In Order No. 154, the Commission ruled that six
previously unclassified services were postal services. Those six
services were Address Management Services; Customized Postage; Stamp
Fulfillment Services; Greeting Cards; ReadyPost; and International
Money Transfer Service. Because the Postal Service had not complied
with the requirements of 39 U.S.C. 3642(d) and 39 CFR 3020.30 et seq.
the Commission did not address whether these six services should be
added to the MCS product lists. Instead, the Commission classified each
of these services as either a market dominant or competitive product
pending the outcome of classification proceedings that the Commission
directed the Postal Service to institute within 60 days. Id. at 27-29,
89.
Postal Service Requests. On March 10, 2009, the Postal Service
filed a request to add seven products to the MCS product lists: Address
Management Services; Customized Postage; Address Enhancement Service;
Greeting Cards, Stationery, and Related Items; Shipping and Mailing
Supplies; International Money Transfer Service-Inbound; and
International Money Transfer Service-Outbound.\2\
---------------------------------------------------------------------------
\2\ Request of the United States Postal Service to Add Postal
Products to the Mail Classification Schedule in Response to Order
No. 154, March 10, 2009 (Request).
---------------------------------------------------------------------------
One of the six products classified as a postal service by Order No.
154, Stamp Fulfillment Services, was intentionally omitted from the
March 10, 2009 filing. That omission was based upon the Postal
Service's view that Stamp Fulfillment Services was no longer a postal
service because of planned modifications to the service.
Of the remaining five services classified as postal services by
Order No. 154, two, Address Management Services (AMS) and International
Money Transfer Service, were split into narrower services. Address
Management Services was subdivided into a market dominant product
called ``Address Management Services'' and a competitive product,
``Address Enhancement Service.'' International Money Transfer Service
was separated into an inbound service, ``International Money Transfer
Service-Inbound'' and an outbound service, ``International Money
Transfer Service-Outbound.''\3\ As a result of the foregoing changes,
the March 10, 2009 filing proposed the addition of seven products to
the MCS product lists in place of the six products discussed in Order
No. 154.
---------------------------------------------------------------------------
\3\ Supplemental information regarding International Money
Transfer Service-Inbound and International Money Transfer Service-
Outbound was subsequently provided by the Postal Service. See
Supplemental Response of the United States Postal Service to Order
No. 154, July 15, 2009.
---------------------------------------------------------------------------
Commission Order No. 198 provided formal notice of the Request,
established the captioned docket to consider the Request, appointed an
officer of the Commission to represent the interests of the general
public, and set April 30, 2009 as the deadline for comments.\4\
---------------------------------------------------------------------------
\4\ PRC Order No. 198, Notice and Order Concerning Request to
Add Seven Postal Services to the Mail Classification Schedule
Product Lists, March 30, 2009 (Order No. 198).
---------------------------------------------------------------------------
Thereafter, on May 8, 2009, the Postal Service filed a notice of an
amendment to its March 10, 2009 filing.\5\ The amendment was made to
reflect the manner in which one of the components of Address Management
Services would be offered.\6\ Commission Order No. 215
[[Page 11453]]
was issued on May 12, 2009, providing formal notice of the Amended
Request and allowing additional comments.\7\
---------------------------------------------------------------------------
\5\ Notice of the United States Postal Service of Amendment to
Its Request to Add Postal Products to the Mail Classification
Schedule in Response to Order No. 154, May 8, 2009 (Amended
Request).
\6\ More specifically, two services previously offered as stand-
alone components of Address Management Services (i.e., FASTforward
MLOCR service and FASTforward Move Update Notification) were being
combined under the name FASTforward MLOCR service. The charge for
FASTforward MLOCR service remained unchanged and there was no longer
to be a separate charge for FASTforward Move Update Notification
service.
\7\ PRC Order No. 215, Notice and Order Concerning Amendment to
Request to Add Seven Postal Services to the Mail Classification
Schedule Product Lists, May 12, 2009 (Order No. 215).
---------------------------------------------------------------------------
Comments. The following parties filed comments in response to Order
No. 198 and Order No. 215: the National Association of Retail Ship
Centers (NARSC); United Parcel Service (UPS); Associated Mail and
Parcel Centers (AMPC); and the Public Representative.\8\ The points
raised in their respective comments are addressed in section III.,
Commission Analysis, below.
---------------------------------------------------------------------------
\8\ Comments of National Association of Retail Ship Centers,
April 30, 2009 (NARSC Comments); Comments of United Parcel Service
in Response to Notice and Order Concerning Request to Add Seven
Postal Services to the Mail Classification Schedule Product Lists,
April 30, 2009 (UPS Comments); Comments of Associated Mail and
Parcel Centers, May 1, 2009 (AMPC Comments); Comments of the Public
Representative, April 30, 2009 (Public Representative Comments); and
Supplemental Comments of the Public Representative in Response to
Commission Order No. 215, May 19, 2009 (Public Representative
Supplemental Comments).
---------------------------------------------------------------------------
Chairman's information requests. On May 21, 2009, the Chairman
issued an information request to the Postal Service.\9\ The Postal
Service submitted its response on May 29, 2009.\10\ Thereafter, on
August 5, 2009, the Chairman issued a second information request,\11\
to which the Postal Service responded on August 13, 2009.\12\
---------------------------------------------------------------------------
\9\ Chairman's Information Request No. 1, May 21, 2009 (CHIR No.
1).
\10\ Responses of the United States Postal Service to Chairman's
Information Request No. 1, May 29, 2009 (Response to CHIR No. 1).
\11\ Chairman's Information Request No. 2, August 5, 2009 (CHIR
No. 2).
\12\ Responses of the United States Postal Service to Chairman's
Information Request No. 2, August 13, 2009 (Response to CHIR No. 2).
---------------------------------------------------------------------------
Additional comments. Following the Postal Service's filing of its
response to CHIR No. 1, a series of additional comments and responses
were filed by several parties: the Public Representative; the Greeting
Card Association (GCA); NARSC; and the Postal Service.\13\ While the
rules of practice do not provide for such filings, the Commission will
accept each of these filings in order to ensure that all arguments and
comments of the participants are considered.\14\ A discussion of the
points raised in these comments can be found in section III.,
Commission Analysis, below.
---------------------------------------------------------------------------
\13\ Comments of the Public Representative on the Postal
Service's Legal Authority to Set Fees for Postal Services Without
Commission Approval, June 9, 2009 (Public Representative Additional
Comments); Comments of the Greeting Card Association, May 29, 2009
(GCA Comments); Response of the United States Postal Service to
Intervenor and Public Representative Comments, June 11, 2009 (Postal
Service Reply Comments); and Comments of National Association of
Retail Ship Centers, June 17, 2009 (NARSC Additional Comments).
\14\ Two of the parties, GCA and the Public Representative,
sought leave to file these additional comments. See GCA Motion for
Leave to Submit Comments Out of Time, May 29, 2009; and Motion for
Leave to File Comments on the Postal Service's Legal Authority to
Set Fees for Postal Services Without Commission Approval, June 9,
2009. These motions are granted. With respect to the remaining
filings, the Commission is persuaded that the additional information
provided by these filings will clarify the record. Accordingly,
these additional submissions are accepted for filing. The parties
are, however, cautioned that failure to seek leave to file future
untimely submissions, or submissions not otherwise authorized by the
rules of practice, may result in their rejection.
---------------------------------------------------------------------------
III. Commission Analysis
The Postal Service requests the addition of seven services to the
product lists specified in the MCS. For the reasons given below, the
Commission concludes that the following seven postal services should be
included in the MCS and, as appropriate, be added to the product lists:
Address Management Services; Customized Postage; Address Enhancement
Service; Greeting Cards and Stationery; Shipping and Mailing Supplies;
International Money Transfer Services-Outbound; and International Money
Transfer Services-Inbound. For the reasons given below, the Postal
Service is directed to make an appropriate filing within 60 days to add
Stamp Fulfillment Services to the Market Dominant Product List.
A. Market Dominant Products
1. Address Management Services
Address Management Services (AMS) is the new name given by the
Postal Service to the market dominant product previously called
``Address List Services''. See Request, Attachment A, at 1. Address
List Services (ALS) was added to the MCS product lists by Order No. 43
and contained only four services.\15\ As amended, the Postal Service's
Request in this proceeding would increase the number of services from 4
to 27.\16\ The AMS product consists of a number of value-added services
that enable bulk business mailers to better manage the quality of their
mailing lists. The AMS product also includes diagnostic and other
services that evaluate address management software for accuracy.\17\
---------------------------------------------------------------------------
\15\ Docket No. RM2007-1, Order Establishing Ratemaking
Regulations for Market Dominant and Competitive Products, October
29, 2007 (Order No. 43). Those services were Correction of Address
Lists; Change-of-Address Information for Election Boards and
Registration Commissions; ZIP Code Sortation of Address Lists; and
Address Sequencing. See also Docket No. RM2007-1, United States
Postal Service Submission of Initial Mail Classification Schedule in
Response to Order No. 26, September 24, 2007, Appendix at 79.
\16\ Compare Request, Attachment A, at 1-12 (AMS Product
Descriptions) with Amended Request at 1-2 (incorporation of
FASTforward Move Update Notice (FFMUN) into FASTforward MLOCR).
\17\ Address Management Services differs from the competitive
product, Address Enhancement Service, discussed, infra. Whereas
Address Management Services consists of address update services and
address data files originated by the Postal Service, such as ZIPCode
+ 4 data, the competitive product, Address Enhancement Service,
consists of three address matching services that compete with
services provided by private address management software developers.
---------------------------------------------------------------------------
No party opposes adding Address Management Services to the Market
Dominant Product List within the Special Services class. Request at 2,
n.3. However, in his initial and supplemental comments, the Public
Representative observes that the Postal Service's Request fails to
provide an adequate discussion of statutory factors and objectives.\18\
Id. The Postal Service responds by providing a more complete discussion
of the following objectives and factors: Objective No. 1 (maximization
of incentives to reduce costs and increase efficiency); Objective No. 3
(maintenance of high quality service standards established under
section 3691); Factor No. 5 (the degree of mail preparation by mailers
for delivery into the postal system and its effect on cost reduction);
and Factor No. 12 (the need to increase efficiency, reduce costs, and
maintain high quality, affordable services). Response to CHIR No. 1,
Question 4. Upon consideration of the information provided in the
Request and in the subsequent response to CHIR No. 1, the Commission
concludes that the AMS product should be added to the Market Dominant
Product List.
---------------------------------------------------------------------------
\18\ The Public Representative also commented on the absence of
any financial information for the Address Management Services
product. Public Representative Comments at 5-6; and Public
Representative Supplemental Comments at 4. Historically, the Postal
Service has not been required to produce detailed cost data for AMS.
Consequently, financial information for this product does not exist.
However, by adding the Address Management Services product to the
MCS, the Postal Service will be required to develop a cost
methodology for this product. See section III.B., Reporting
Procedures for Approved Market Dominant Products, infra, or a
discussion on reporting financial information for this product.
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The Public Representative also questions whether the changes
proposed in the Amended Request to FASTforward MLOCR and FASTforward
Move Update Notification constitute a rate change requiring prior
notice and compliance with other applicable provisions of 39 CFR part
3010. Public Representative Supplemental Comments at 2-3.
Alternatively, the Public Representative acknowledges that the Amended
Request could be construed as a proposal to add new products to the
Market Dominant Product List and that
[[Page 11454]]
without approved rates in effect, the Amended Request would not, by
definition, produce a rate change. Id. Under the unique circumstances
presented in this case, the Commission finds the latter
characterization more persuasive and that the Amended Request does not
present a rate change proposal.
Finally, the Public Representative asserts that the Postal Service
has failed to include additional value-added services in its Request.
Public Representative Comments at 6-7. The services referred to by the
Public Representative are: Advance Notification and Tracking System;
MAC Batch System Certification; MAC Gold System Certification; MAC
System Certification; Mailpiece Quality Control Certification; PAGE
System Certification; PAVE System Certification; and Z4INFO. The Public
Representative argues that all ``postal services'' must be listed in
the MCS under a particular product, and that it appears the Postal
Service is attempting to set fees for ``postal services'' without
Commission review and approval. Public Representative Additional
Comments at 2-3.
The Postal Service argues that the omission from its Request of the
services at issue is not an attempt to take advantage of a regulatory
``no man's land'' by offering services not included in the MCS, as
alleged by the Public Representative. Response to CHIR No. 1, Question
2; and Postal Service Reply Comments at 10. The Postal Service agrees
that these value-added services are, in fact, postal services, but
explains that these services are designed to ``minimize, rather than
maximize'' revenue and thus, do not necessarily need to be added to the
MCS. Response to CHIR No.1, Question 2(b). The Postal Service further
argues that the Commission has the authority to ``forbear'' from
regulating these services as ``products'' and thereby omit these
services from the MCS.\19\ Id.; and Postal Service Reply Comments at
10-12. In lieu of adding the services to the MCS, the Postal Service
offers to provide the Commission with annual fee and revenue
information on these services with the understanding that the
Commission might, in the future, decide to regulate these services as
``products'' if the information provided by the Postal Service were to
suggest that such regulation were necessary. CHIR No.1, Question No.
2(b). In total, AMS will include 36 services.
---------------------------------------------------------------------------
\19\ Initially, the Postal Service argued that the ``postal
services'' were ``postal activities'' that were designed to
``minimize, rather than maximize'' revenue and, as such, did not
need to be added to the MCS. See id.
---------------------------------------------------------------------------
As the Postal Service recognizes, Congress has given the Commission
jurisdiction over the postal services at issue. While the Postal
Service asserts that the Commission has the authority to ``forbear''
from exercising that jurisdiction, it cites no clear legal authority
for exercising such forbearance. Instead, the Postal Service advances
several policy arguments to support the reasonableness of
forbearance.\20\
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\20\ See Response to CHIR No.1, Questions 2 and 3; and Postal
Service Reply Comments at 10-12.
---------------------------------------------------------------------------
The Commission is not persuaded by these policy arguments. Without
clear authority to forbear from exercising jurisdiction, the Commission
will follow its jurisdictional mandate from Congress and direct that
these services be added to the Market Dominant Product List as elements
of Address Management Services. In addition, the Postal Service will be
required to file draft MCS language within 30 days of the date of this
order for those services.\21\
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\21\ The Commission rejects the Public Representative's
suggestion that the Postal Service be required ``to provide a full
accounting of all 'postal services' not listed on the draft MCS.''
Public Representative Additional Comments at 2. In Order No. 154 at
35, the Commission recognized that ``it is possible for something to
be inadvertently omitted when attempting to compile a complete list
of activities ... [and that] ... any omitted activities can be
explored in the next phase of this case.'' See Docket No. MC2008-1,
Review of Nonpostal Services Under the Postal Accountability and
Enhancement Act, December 19, 2008 (Order No. 154). Accordingly, in
instituting Phase II of the proceedings in Docket No. MC2008-1, the
Commission directed the Postal Service to file a sworn statement
providing ``details of each retail program for which information may
have been inadvertently omitted in response to Order No. 74 and
which the Postal Service seeks to have classified as a postal
service or, alternatively, to continue to offer as a nonpostal
service.'' Docket No. MC2008-1 (Phase II), Notice and Order
Initiating Phase II Proceedings, January 9, 2009, at 4. The Postal
Service made no such filing in that proceeding. Thus, the Commission
views the record as complete in that regard.
---------------------------------------------------------------------------
While the Commission is legally obligated to exercise its
jurisdiction, it also possesses discretionary authority to determine
how that jurisdiction will be exercised. Given the small and
intermittent revenues produced by these services and the current lack
of reliable costing methodologies, the Commission will not subject them
to the full range of regulatory review. Instead, the Commission will
require only that the Postal Service report fee and revenue information
(if any) for those services annually as part of its Annual Compliance
Report. The information to be filed shall be in a form similar to
Appendix A to Docket No. MC2008-1, Response of the United States Postal
Service to PostCom et al. Motion to Sever From This Proceeding the
Consideration of Those Previously Unregulated Services That the Postal
Service Asserts are ``Postal Services,'' December 12, 2008.\22\ If the
need for more extensive regulatory reporting becomes apparent, the
Commission may revisit the issue.
---------------------------------------------------------------------------
\22\ The Postal Service has stated its willingness to provide
information in this form. Response to CHIR No. 1, Question 2.
---------------------------------------------------------------------------
2. Customized Postage
The Postal Service proposes to add the Customized Postage program
to the Market Dominant Product List as a stand-alone Special Services
product. The Customized Postage program authorizes vendors to provide
their customers with Postal Service authorized postage consisting of
customer-selected images. There are currently four vendors
participating in the Customized Postage program.\23\
---------------------------------------------------------------------------
\23\ See www.usps.com for information on the respective vendors
(keyword search: Customized Postage).
---------------------------------------------------------------------------
No party objects to adding Customized Postage to the Market
Dominant Product List. However, the Public Representative observes that
the Postal Service's Request provided only a minimal discussion as to
how the proposed Customized Postage product achieved the objectives of
39 U.S.C. 3622(b), while taking into account the factors of 39 U.S.C.
3622(c). Public Representative Comments at 4-5. In its response to CHIR
No. 1, the Postal Service provided a more complete discussion of the
following objectives and factors: Objective No. 2 (rate predictability
and stability) and Objective No. 5 (assurance of adequate revenues to
maintain financial stability); and Factor No. 8 (relative value to the
people of the kinds of mail matter and the desirability and
justification for special mail classifications). Response to CHIR No.
1, Question 4.
Upon review of the information submitted, the Commission concludes
that the Customized Postage program satisfies the requirements of
sections 3622(b) and (c). The Commission, therefore, approves the
addition of the Customized Postage program to the Market Dominant
Product List.
3. Stamp Fulfillment Services
Stamp Fulfillment Services (SFS) provide shipping and handling for
all orders placed with the Stamp Fulfillment Services office in Kansas
City, Missouri. Orders for postage stamps, personalized stamped
envelopes, and philatelic sales can be placed by fax, mail, online, or
telephone; orders for Officially Licensed Retail Products (OLRP) can be
placed
[[Page 11455]]
only online.\24\ Currently, the Postal Service imposes a $1.00 charge
for fulfilling postage stamp, philatelic, and stamped envelope orders.
Id. at 10. The Postal Service maintains that the $1.00 charge ``is more
like a handling charge intended to recover SFS costs for preparing
orders for shipment, rather than shipping costs.'' Id. at 11. For
personalized stamped envelopes, the Postal Service also imposes an
additional and higher shipping and handling charge.
---------------------------------------------------------------------------
\24\ Request at 12, n.13. The use of customized software enables
online OLRP orders to be ``shipped at [the] actual postage rates for
the zone and weight of the shipment. Such an approach would not be
workable for mail and fax orders.'' Id. Consequently, shipping
prices for OLRP orders are not at issue in this proceeding.
---------------------------------------------------------------------------
In its Request, the Postal Service states that it ``is not
requesting the addition of SFS to the MCS.'' Id. at 10. Instead, it
plans to eliminate the $1.00 handling charge and implement an
alternative fee structure for shipping. In doing so, the Postal Service
argues that the alternative fee structure, which would utilize existing
postage prices, eliminates the justification for adding SFS to the MCS.
Id. at 12-13.
In conceptual terms, the Postal Service's alternative fee structure
would ``recover postage for SFS shipments directly, while recovering
handling costs through the prices charged for the items.'' Id. at 11.
The Postal Service proposes this alternative pricing structure because
customers who mail or fax their SFS orders often find it difficult to
calculate the zone and weight for their orders, particularly larger
orders, using the existing fee schedules. Thus, the Postal Service
wants to ensure that customers can ``readily determine and pay the
total charge for an order, including shipping, at the time the order is
placed.'' Id. at 12.
The Postal Service offers several examples to illustrate how an
alternative fee structure might work. Id. The four examples reference
existing market dominant and competitive postage prices, i.e., First-
Class Mail and Priority Mail prices, as shipping charges for
hypothetical SFS orders. However, the Postal Service states that the
shipping charge for any particular SFS order:
would not always be the actual postage that would otherwise be
charged based on the zone and weight for the mail piece being
shipped. Instead, existing postage prices will be selected, for
application to shipments that fall within specified parameters.
Id. The Postal Service states that it is ``still working on the
specific postage prices that it will charge for shipments, but plans to
complete the process soon.'' Id. at 13.
The Postal Service's alternative pricing structure for shipping SFS
orders raises concerns. More specifically, the Public Representative
states that the four examples provided by the Postal Service ``imply
that there are situations where the Postal Service is altering the
ordinary tariff rate postage for SFS orders.'' Public Representative
Comments at 15. The Public Representative further states that if the
Postal Service's alternative pricing structure for SFS orders alters
the ordinary tariff rate then ``the Postal Service should be required
to add this product to the Market Dominant Product List and to obtain
Commission approval for these special rates for SFS services.'' Id.
Additionally, in Order No. 154, the Commission determined that
``handling and shipping fees associated with stamp purchases and
personalized stamped envelopes represent fees for postal
services.''\25\ (Order No. 154 at 63, emphasis added.) The planned
elimination of the handling charge would address only one of the bases
for requiring the addition of SFS to the MCS product list. The Postal
Service's proposed use of ``alternative'' shipping fees would still
require the Commission to classify SFS as a market dominant postal
product since, as the Public Representative points out the four pricing
examples offered by the Postal Service suggest that ``the Postal
Service will not be charging tariff rates for certain fulfillment
orders ... .'' Id. at 15. Rather, the Postal Service intends to use
rates from a tariff schedule that are weight- and distance-related and
apply those rates as shipping charges without regard to the weight of
the item or the zone to which it is actually being sent.\26\ Id.
---------------------------------------------------------------------------
\25\ In making this determination, the Commission observed that
if fees for handling and shipping services ``were incurred solely in
connection with philatelic sales, classifying such services as
nonpostal would be reasonable.'' Id. However, the Commission found
that the Postal Service ``often can not distinguish philatelic from
regular stamp purchases ... `` citing the Initial Response of the
United States Postal Service to Order No. 74, June 9, 2008, at 14.
Id.
\26\ This selective use of rates published in a tariff schedule
does not constitute the application of tariff rates as those rates
were intended to be applied.
---------------------------------------------------------------------------
The Commission is sensitive to the Postal Service's efforts to
improve the ordering process for customers, particularly for mail and
fax customers. A simplified fee structure derived from existing tariff
rates could achieve the result the Postal Service desires. The Postal
Service can, if it desires, propose simplified SFS shipping prices. In
doing so, the Postal Service has an opportunity to develop simplified
pricing for shipping of SFS orders that improves the likelihood
customers will complete the ordering process and increase postal
revenues. Should the Postal Service propose the use of simplified
shipping fees as an alternative to tariff postage that would, of
course, itself require the Postal Service to file an appropriate
request to add SFS to the MCS product lists. Pending receipt of any
such proposal, the Commission reaffirms its findings in Order No. 154,
and the Postal Service is authorized to continue to charge a $1.00
handling fee. The continued collection of the handling fee, however,
requires the filing of a request to add SFS to the Market Dominant
Product List. That filing is due within 60 days from the date of this
order.
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\27\ The Address Enhancement Service product is different from
the market dominant Address Management Services product. For a more
detailed discussion of Address Management Services, see section
III.A.1., Address Management Services, supra.
---------------------------------------------------------------------------
B. Reporting Procedures for Approved Market Dominant Products
With the exception of the eight Address Management Services which
the Postal Service is directed to add to the MCS as elements of Address
Management Services (section III.A.1, Address Management Services,
supra), the Commission expects the Postal Service to submit cost,
revenue, and volume data at the product level for all remaining market
dominant products. Previously, the Postal Service has not reported
detailed cost data for Address Management Services, Customized Postage,
and Stamp Fulfillment Services. Cost methodologies were not developed
for these services, and the Commission recognizes that the existing
data systems may not provide adequate cost, revenue, and volume data
for many of the separate services within certain products such as
Address Management Services. The Postal Service is currently
``reviewing all its internal reporting systems consistent with its
plans to collect and report cost, revenue, and volume data in the next
[Annual Compliance Report]....'' Response to CHIR No. 1, Question 3.
The Postal Service further states that ``cost methodologies will be
developed (and submitted to the Commission for prior review) to
generate additional information.'' Id. The Commission expects the
Postal Service to report on the status of its efforts prior to the next
Annual Compliance Report.
C. Competitive Products
1. Address Enhancement Service
The Postal Service proposes to add Address Enhancement Service
(AES) to the Competitive Product List as a stand-alone product.\27\
Address Enhancement
[[Page 11456]]
Service is the name given to several separate services: Address Element
Correction (AEC), Address Matching System Application Program Interface
(AMS API), and Topographical Integrated Geographic Encoding and
Referencing (TIGER/ZIP + 4). Each service is designed around one or
more software packages that improve address quality and reduce
undeliverable-as-addressed mail.
In its Request, the Postal Service proposes MCS language that
contains descriptions and prices for each of the separate services
within the proposed Address Enhancement Service product. The Postal
Service's Request also provides a Statement of Justification that
includes confidential FY 2008 cost and revenue figures that were filed
under seal for the proposed product. In response to CHIR No. 1, the
Postal Service supplemented its Request with supporting financial
worksheets that were also filed under seal. Response to CHIR No. 1,
Question 1.
The Public Representative raised concerns regarding the AMS API
service, contending that it appears to be a bundle of six market
dominant Address Management Services databases that could potentially
be priced anti-competitively, i.e., at less than the sum of the prices
for each database in the bundle. Public Representative Comments at 13.
If priced in this way, the Public Representative alleges ``there would
be no meaningful competition since a competitor could not purchase the
individual unbundled market dominant products at a price that would
allow it to repackage those services and compete with the Postal
Service's competitive bundled service on price.'' ld., n.19.
In response to the Public Representative's comments, the Postal
Service further describes the features of the AMS API service and its
proposed pricing. Postal Service Reply Comments at 6. According to the
Postal Service, the AMS API service is not merely six bundled market
dominant Address Management databases. -The AMS API service provides a
``core set of compiled address-matching software instructions (computer
code), developed by the Postal Service'' that interpret data from the
six market dominant Address Management databases.\28\ Id. at 5. The AMS
API address-matching software package is offered to address management
vendors to incorporate in and thereby enhance their Address Management
software when applied to the data from the market dominant databases.
Id.
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\28\ AMS API includes the following six market dominant
databases within the Address Management Services product: City
State, Delivery Point Validation, eLot, LACS\Link\, Five-Digit ZIP,
and ZIP+4.
---------------------------------------------------------------------------
The Postal Service also explains that the price for AMS API is
greater than the sum of the prices for the six market dominant
databases combined. Address Management software vendors who want to
incorporate AMS API into their own Address Management software must pay
a reseller license fee of $16,700, as well as separate annual fees for
additional licenses in order to distribute the databases to multiple
customers along with their software. Consequently, the reseller license
fee plus the annual fees for additional database licenses are greater
than the sum of the individual price of each of the six market dominant
databases. Id. The Postal Service has submitted revised MCS language to
clarify the pricing of the AMS API service. See id. at 6.
The Commission approves the addition of Address Enhancement Service
to the Competitive Product List based upon the revised MCS language
provided by the Postal Service. The Postal Service's further
explanation of the AMS API service and the six market dominant Address
Management databases clarifies that the price relationships would not
have an anti-competitive effect.
2. Greeting Cards and Stationery
In Order No. 154, the Commission concluded that the sale of
greeting cards and stationery (Greeting Cards) was a postal service and
directed the Postal Service to file a request to add Greeting Cards to
the MCS. Order No. 154 at 89.\29\ In Attachment A to its Request, the
Postal Service proposes the following classification language:
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\29\ The Commission's ruling in ordering paragraph 1 refers
solely to ``Greeting Cards.'' However, it is clear from the
Commission's discussion of the greeting card status issue that the
Commission used the term ``Greeting Cards'' to refer not only to
greeting cards, per se, but to other stationery items. Id. at 34-35.
One of the purposes of the instant proceeding is to determine the
appropriate scope of the product.
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2XXX Greeting Cards, Stationery, and Related Items
2XXX.1 Description
Greeting Cards, Stationery, and Related Items include items designed to
be used to mail personal messages.
Greeting cards--Greeting cards include cards with envelopesand may be
sold individually or as sets.
Stationery--Stationery includes paper, envelopes, postcards, note
cards, and note pads and are sometimes packaged as sets[.]
Parties' comments. NARSC objects to any and all retail sales of
greeting cards, stationery, and related items by the Postal Service on
several grounds, including the following: that these products are
nonpostal products; that the Postal Service enjoys a competitive
advantage due to its size, purchasing power, and exemption from local
sales tax laws; that the addition of 32,000 Postal Service retail
outlets to the existing 64,000 retail outlets of private firms would
overburden an already crowded marketplace; that the Postal Service has
failed to document projected expenses and revenues; and that the sale
of such items will interfere with the performance of core Postal
Service responsibilities. See NARSC Comments and NARSC Additional
Comments.
AMPC takes issue with the scope of the ``Greeting Card''
description in the Postal Service's proposed MCS language, alleging
that the sale of a full line of greeting cards would constitute a
nonpostal service and should be precluded. See AMPC Comments. Instead,
AMPC requests that the definition of ``greeting cards'' in the MCS be
limited to ``those cards which relate directly to specific stamps or
Official Licensed Retail Product programs.'' Id.
The Public Representative supports adding Greeting Cards,
Stationery, and Related Items to the MCS as a competitive product,
subject to certain limitations. Public Representative Comments at 10.
First, the Public Representative notes that the term ``Related Items''
had no definition and that it should either be defined or excluded from
the MCS. Id., n.12. Second, the Public Representative submits that the
availability of all of these items should be limited to postal retail
locations. Id. at 10-11. Third, the Public Representative takes the
position that the Postal Service should be required to provide adequate
financial data to support the addition of these products to the MCS, or
should be required to incorporate into the MCS its pricing policies
with respect to these items. Id. at 11-12.
In its June 11, 2009 response to the comments of NARSC, AMPC, and
the Public Representative, the Postal Service argues that the
Commission already found greeting cards and stationery to be postal
services in Order No. 154; these products will be a valuable addition
to the market; the sale of these products is not a ``non-core''
activity; all greeting cards, not just postal themed cards, foster use
of the mails; and the fact that the sales of these products will
compete with sales by others does not provide a basis for rejecting the
proposed addition of these products to the Competitive Product
[[Page 11457]]
List. Postal Service Reply Comments at 2-3. The Postal Service also
takes issue with the Public Representative's proposal to prohibit the
availability of greeting cards at nonpostal retail locations. Id. at 3-
4. Notwithstanding this opposition to the Public Representative, the
Postal Service suggests that the issue need not be decided at this time
since the Postal Service's current plan is to offer greeting card
products only through Postal Service retail channels. Id. at 4.
On May 29, 2009, GCA filed comments supporting the proposed
addition of greeting cards, stationery, and related items to the MCS.
GCA Comments at 2. GCA asserts that the proposal will benefit its
members, consumers, and the Postal Service by giving consumers
convenient and additional opportunities to purchase greeting cards that
will be sent through the mail. Id. at 1. GCA claims that the effect of
the Postal Service's proposal will be to increase the total use of
greeting cards, not to simply reallocate greeting card sales among
retail outlets. Id.\30\
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\30\ NARSC responded to GCA's comments by filing additional
comments on June 17, 2009, in which it opposed Commission acceptance
of GCA's comments because of their untimeliness; challenged the
adequacy of the Postal Service's response to CHIR No.1 regarding
costs and cost coverage; and elaborated further on the points raised
in its initial comments. As stated in n.14, supra, and accompanying
text, the Commission is granting GCA's motion for leave to file out
of time and is accepting all additional comments not otherwise
authorized by the Commission's rules of practice, including the
NARSC Additional Comments.
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Commission analysis. While the Postal Service is correct that Order
No. 154 determined that greeting cards and stationery were postal
services, the issue of whether to add them to the Competitive Product
List was not before the Commission in that proceeding. The issue is now
pending, and section 3642(b)(3) requires the Commission to give due
consideration to ``the availability and nature of enterprises in the
private sector engaged in the delivery of the product involved' and to
``the likely impact of the proposed action on small business concerns
....''
NARSC's argument that the Postal Service enjoys certain competitive
advantages is countered, in part, by the Postal Service's response that
it has been selling greeting cards and stationery as a part of its
retail product mix for over a decade. Request, Attachment E, at 4. As
NARSC itself points out, there are already other large retail outlets
that sell greeting cards and stationery. NARSC Comments at 1. Against
this history, NARSC's general allegations of harm are not persuasive,
particularly, as discussed below, given the limitations imposed on the
sale of such items. Furthermore, the Commission can not simply assume
that sales of greeting cards and stationery by the Postal Service will
necessarily decrease sales by other retailers, large or small. See GCA
Comments at 1.
A related, but separate, aspect of NARSC's allegation of unfair
competitive advantage relates to the Postal Service's pricing of
greeting cards and stationery. NARSC suggests that in selling such
items, the Postal Service may not have been recovering its costs. NARSC
Comments at 1-2. In that connection, NARSC questions whether the Postal
Service has adequately determined the costs attributable to the sale of
these items. NARSC Additional Comments at 1. The Public Representative
raises similar concerns, arguing that the Postal Service should either
file adequate financial data to support the addition of greeting cards
and stationery to the MCS, or alternatively, file a narrative
description of its pricing policies. Public Representative Comments at
12.
The Postal Service argues that any danger that these items will not
cover their costs or will unfairly compete in the marketplace has been
eliminated because they are now subject to regulation by the
Commission. Postal Service Reply Comments at 2. In that connection, the
Postal Service states that its policy will, in general, be to price
greeting cards and stationery with ``at least a 50 percent mark-up over
the wholesale price'' and that as part of its effort to comply with the
PAEA, it has already begun to track costs of greeting cards and
stationery products.\31\ Request, Attachment E, at 2. The Postal
Service therefore believes that this product will be able to generate
revenues that cover its attributable costs and will not undermine the
contribution of competitive products to the coverage of institutional
costs. Id. at 2-3. The Postal Service's contentions are supported by
information provided under seal in response to CHIR No.1.\32\ The
information provided by the Postal Service convinces the Commission
that the proposed sale of greeting cards and stationery is likely to
cover attributable costs and should not undermine the ability of
competitive products overall to contribute to the coverage of
institutional costs.
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\31\ This cost information must be presented in the Postal
Service's Annual Compliance Report as required by 39 U.S.C. 3652,
and is reviewed by the Commission in issuing its Annual Compliance
Determination, as required by 39 U.S.C. 3653.
\32\ See library reference USPS-MC2009-19/NP-2, Nonpublic
Supporting Materials Filed in Response to CHIR No.1, Relating to
Competitive Products. This information was on file at the time the
NARSC Additional Comments were filed. NARSC incorrectly states that
the Postal Service failed to address the Commission's request for
this information. NARSC Additional Comments at 1.
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AMPC suggests that the sale of greeting cards be limited to those
``which relate directly to specific stamps or Official Licensed Retail
Product programs.'' AMPC Comments. In Order 154, however, the
Commission expressly recognized that not all greeting cards identified
by the Postal Service in its response to Order No. 74 were directly
related to specific stamps or OLRP programs, when it stated that
``[i]ntellectual property, however, is not featured on every card.''
Order No. 154 at 34, n.72.
Nevertheless, AMPC is correct in stating that the activities
determined to be postal services were those described by the Postal
Service in its response to Order No. 74. Id. at 35. That response
included a representation that the Postal Service had no plans to offer
a full line of greeting cards. Id. at 34. By contrast, the Request in
this proceeding includes the broadly worded MCS product description
quoted above that could be read as encompassing a full line of greeting
cards.
To obtain a more current statement of the Postal Service's
intentions, CHIR No. 2 requested that the Postal Service provide
information regarding its future plans to sell greeting cards. CHIR No.
2, Question 2(d).\33\ In its response, the Postal Service describes the
range of greeting card formats that it anticipates offering. Response
to CHIR No. 2, Questions 2(a).\34\ In addition, the Postal Service,
once again, states that it does not intend to offer a full line of
greeting cards. Id. This commitment confirms the Postal Service's
previous position in Docket No. MC2008-1 and appears to be responsive
to AMPC's concerns.
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\33\ CHIR No. 2 was prompted, in part, by a Postal Service
solicitation issued as part of an investigation of the possibility
of offering an expanded line of greeting cards. Federal Business
Opportunities (FedBizOpps.com), Solicitation Number 2B-09-A-0018,
posted May 21, 2009 (Solicitation).
\34\ For example, the Postal Service states that it ``does not
intend to offer a 'full line' of greeting cards'' and that a ``full
line'' at standard greeting card stores `` is ``displayed on well
over 200 linear feet of fixtures with additional space allocated for
Stationery and Related items,'' whereas the Postal Service intends
to provide ``an average of 4-8 feet of display space'' and that a
``full line'' of greeting cards ``includes all seasonal cards and
various specialty lines to target ethnic and geographic patterns,''
whereas the Postal Service could offer only ``a very limited holiday
selection'' of cards.
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The Public Representative suggests that the sale of greeting cards
and stationery be limited to retail postal locations. The Public
Representative
[[Page 11458]]
states that the availability of these products at such retail locations
was understood to be the basis on which Order No. 154 was issued.
Public Representative Comments at 10-11. The Postal Service opposes the
suggestion, but indicates that the issue need not be addressed because
it has no plans to offer these items through any other retail channels
and does not object to the limitation requested by the Public
Representative. Postal Service Reply Comments at 4.
The Postal Service's proposed MCS language includes the term
``Related Items.'' The term is not defined. The Public Representative
objects to its inclusion in the MCS. Public Representative Comments at
10, n.12. In its response to CHIR No. 2, the Postal Service offers a
possible definition of ``Related Items,'' \35\ but notes that it was
``in the process of discontinuing all 'related items' in both retail
channels [i.e., retail lobbies and usps.com].'' Id., Question 1(b). The
Postal Service also states that it ``might offer boxed stationery or
note cards to promote the use of First-Class Mail, but has not
developed plans to do so at this time.'' Id., Question 1(c). (Emphasis
added.).
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\35\ ``Related items could include boxed note cards, stationery
sets, and boxed greeting cards for everyday occasions or holidays.''
Response to CHIR No. 2, Question 1(a).
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The Commission approves adding sales of Greeting Cards and
Stationery to the Competitive Product List. However, the proposed draft
MCS language will be revised to limit the availability of this product
to retail postal locations and the Postal Service's Web site. In view
of the uncertain status of, and future for, Related Items, it will not
be included in the MCS at this time. If the Postal Service wishes to
offer Related Items, it must make an appropriate filing with the
Commission.
3. Shipping and Mailing Supplies
The Postal Service proposes to add Shipping and Mailing Supplies to
the Competitive Product List as a stand-alone product. Shipping and
Mailing Supplies consist of packaging materials that are used to
package, seal, protect, and label items for mailing, including mailing
cartons, specialty boxes, mailing tubes, mailing envelopes, a variety
of packaging tapes, and other shipping accessories. Request, Attachment
F, at 1. The Postal Service offers these packaging supplies through its
retail channels. See id. at 1 and 4.
In Docket No. MC2008-1, the Commission reviewed the Postal
Service's request to classify ReadyPost-a Postal Service-branded line
of packaging supplies, as a postal service. Order No. 154 at 27. Based
upon that review, the Commission found ReadyPost to be a postal
service. Id. at 34. In this proceeding, however, the Postal Service
combines ReadyPost with other packaging supplies to form Shipping and
Mailing Supplies. Request, Attachment F, at 1.
With its Request in this proceeding, the Postal Service proposes
MCS language that contains descriptions and prices for Shipping and
Mailing Supplies. The Postal Service also provides a Statement of
Justification that includes confidential FY 2008 cost and revenue
figures that were filed under seal for the proposed product.
The Public Representative argues that the Request fails to include
any financial information or spreadsheets to determine whether the new
product complies with 39 U.S.C. 3633(a), 39 U.S.C. 3642(d)(1), or 39
CFR 3015.7. Public Representative Comments at 10-11. The Commission
concludes, upon review, that the financial information concerning
Shipping and Mailing Supplies, provided under seal in Response to CHIR
No. 1, Question 1, satisfies the applicable statutory and regulatory
requirements.
The Public Representative supports the addition of Shipping and
Mailing Supplies to the Competitive Product List ``with appropriate
constraints.'' Id. at 10. In this regard, the Public Representative
asserts that the Postal Service's proposed MCS language appears to
permit the sale of Shipping and Mailing Supplies at retail locations
other than postal retail locations, such as department stores and mass
merchandisers. Id. The sale of Shipping and Mailing Supplies at other
retail locations ``does not foster the use of the mails and is not a
`function ancillary' '' to the delivery of mailable matter. Id. at 10-
11. Accordingly, the Public Representative argues that availability of
Shipping and Mailing Supplies should be limited to postal retail
locations and the Postal Service's Web sites. Id. at 11.
The Postal Service opposes this limitation, but suggests that this
issue does not need to be decided in this docket. The Postal Service's
``current plans with regard to the Shipping and Mailing Supplies
product (as well as, incidentally, the Greeting Cards product), is to
sell such materials through Postal Service retail channels.'' Postal
Service Reply Comments at 4.
The Commission approves the addition of Shipping and Mailing
Supplies to the Competitive Product List. However, the proposed MCS
language does not accurately describe what the Postal Service is
selling as Shipping and Mailing Supplies or in what retail channels. In
this regard, ``related material'' offered for sale as shipping supplies
and the sales channels in which Shipping and Mailing Supplies may be
offered must be clarified. Accordingly, in recognition of the positions
of both the Public Representative and the Postal Service, the draft MCS
language will be revised to limit the sale of Shipping and Mailing
Supplies to postal retail locations and the Postal Service's Web site.
The draft MCS language will also be revised to change ``related
material'' to ``related packaging materials used to prepare items for
entry into the mailstream'' to clarify the limited nature of the
related materials.
4. International Money Transfer Services
In Docket No. MC2008-1, the Postal Service sought to have
International Money Transfer Service (IMTS) classified as a postal
service. In this proceeding, the Postal Service proposes to bifurcate
IMTS into an outbound product (IMTS-Outbound) and an inbound product
(IMTS-Inbound). Request at 6-10; Attachment A at 12; and Attachment G.
The IMTS-Outbound product features prices of ``general applicability''
for postal money orders and the electronic transfer of money that can
be cashed or accessed, respectively, in a number of foreign countries.
The separate IMTS-Inbound product consists of 10 agreements with
foreign postal administrations that govern Postal Service payment of
foreign money orders presented to post offices in the United States.
Request at 6. The Postal Service states that the agreements are
``functionally equivalent'' having many similar cost and market
characteristics. Id. at 9. As part of its Request, the Postal Service
proposes MCS text consisting of descriptive information concerning the
IMTS-Outbound and IMTS-Inbound products. Request, Attachment A, at 13-
15.
The Public Representative raises two concerns with respect to the
addition of IMTS-Outbound and IMTS-Inbound to the Competitive Product
List. First, the Postal Service failed to provide any financial
information in support of its Request, thereby precluding any
determination as to whether IMTS-Outbound and IMTS-Inbound comply with
various provisions of the PAEA. Public Representative Comments at 7.
Second, the Public Representative reports the Commission's finding, in
its FY 2008 Annual Compliance Determination (ACD) that IMTS-Outbound
and IMTS-Inbound combined
[[Page 11459]]
did not cover its attributable costs.\36\ Id. at 8. The Public
Representative suggests that until accurate cost and revenue data are
provided, the Commission should defer action on these products or,
alternatively, add them as experimental products. Id. at 9. If,
however, the Commission decides to add IMTS-Outbound and IMTS-Inbound
to the Competitive Product List, the Public Representative recommends
that the Commission require a greater commitment from the Postal
Service to produce reliable cost estimates with sufficient time to
review any new methodologies. Id.
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\36\ In this regard, the Postal Service's FY 2008 Annual
Compliance Report (ACR) stated that IMTS as a whole did not cover
its attributable costs. In addition, the Postal Service was unable
to report the financial results of IMTS-Outbound and IMTS-Inbound
separately. FY 2008 International Cost and Revenue Analysis (ICRA)
Report (Non-Public), A Pages (c), at page A-2, n.5.
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The Public Representative's concerns are well founded. At the time
of its Request in this proceeding, the Postal Service stated ``it is
not possible to say with confidence that either IMTS-Outbound or IMTS-
Inbound is or is not covering its attributable costs.'' Request,
Attachment G, at 3. Moreover, the Postal Service further acknowledged
it was without ``sufficiently reliable information upon which [to] draw
conclusions concerning the corrections that would be required properly
to address the shortfall in cost coverage.'' Id. at 2. Consequently,
during FY 2009, the Postal Service proposed to further study the
``basic information needed to analyze the cost coverage of both IMTS
products and to report again to the Commission by July 15, 2009--.''
Id. at 3. The Postal Service's subsequent report detailed recent
efforts and difficulties associated with obtaining data to estimate
IMTS costs and stated that the Postal Service was returning to the
``task of accumulating enough observations of IMTS transactions to
determine more reliably the costs attributable to them.''\37\ However,
the July 15, 2009 report does not indicate when the Postal Service
intends to complete its ``further study.''
The Postal Service's request to add IMTS-Outbound and IMTS-Inbound
as separate products to the Competitive Product List is approved.
However, it is imperative that the Postal Service continue its work to
develop reliable cost estimates for both products.\38\
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\37\ Supplemental Response of the United States Postal Service
to Order No. 154, July 15, 2009, Attachment A, Statement of
Supporting Justification, at 6.
\38\ In Docket No. RM2010-4, filed during the pendency of the
instant proceeding, the Postal Service proposed to change the volume
variability of window service costs for IMTS. This change only
applies to the combined inbound and outbound services and does not
address the development of separate costs for the IMTS-Inbound and
IMTS-Outbound products requested by the Postal Service in this
proceeding.
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D. Miscellaneous Issues
UPS states that the Commission should consider the impact of adding
products to the Competitive Product List on the overall contribution of
competitive products to the Postal Service's institutional costs. UPS
Comments at 2. UPS does not oppose the addition of any product to the
Competitive Product List, but urges the impact of adding new
competitive products to the list be evaluated, particularly as regards
their contribution to institutional costs.
The Commission agrees with UPS that the cumulative impact of adding
products to the Competitive Product List must be evaluated. The next
opportunity for that evaluation will be in the 2010 ACD proceedings.
In conclusion, the Commission approves the Postal Service's Request
to add products to the Market Dominant Product List and Competitive
Product List as discussed in this order.\39\ The revisions to the
Market Dominant and Competitive Product Lists are shown below the
signature on this order and are effective upon issuance of the order.
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\39\ Bracketed text in previous Product Lists, which has been
used to reserve entries for class, product and group descriptions,
is being eliminated to improve readability, foster consistency of
presentation, conform the Lists more closely to long-term
expectations about format,
