Federal Register / Vol. 74, No. 111 / Thursday, June 11, 2009 / Notices 27843 

3See PRC Order No. 86, Order Concerning Global 

Expedited Package Services Contracts, June 27, 

2008, at 7 (Order No. 86). 

4Attachment 1 to the Notice consists of a 

redacted version of the contract. Attachment 2 is a 

redacted Certification of Compliance with 39 U.S.C. 

3633. 

5Notice of United States Postal Service Filing 

(Under Seal) of Revised Information and Revised 

Certification, June 3, 2009. 

6The Postal Service states that some of the 

contracts generally provide that if all applicable 

reviews have not been completed at the time an 

older contract expires, the mailer must pay 

published prices until some alternative becomes 

available. Because in the instant contract the mailer 

is a new customer, this provision is not included. 

1United States Postal Service Notice of MarketDominant Price Adjustment, June 1, 2009 (Notice). 

initial GEPS 1 contract filed in Docket 

No. CP2008–5.3 Id. at 1. 

The instant contract. The Postal 

Service filed the instant contract 

pursuant to 39 CFR 3015.5. In addition, 

the Postal Service contends that the 

contract is in accordance with Order No. 

86. It submitted the contract and 

supporting material under seal, and 

attached a redacted copy of the contract 

and certified statement required by 39 

CFR 3015.5(c)(2) to the Notice as 

Attachments 1 and 2, respectively.4 Id. 

at 1–2. On June 3, 2009, the Post revised 

information under seal to replace 

information originally filed under seal 

and an updated Certification of 

Compliance with 39 U.S.C. 3633.5 The 

term of the contract is one year from the 

date the Postal Service notifies the 

customer that all necessary regulatory 

approvals have been received. 

The Notice addresses reasons why the 

instant GEPS 1 contract fits within the 

Mail Classification Schedule language 

for GEPS 1. The Postal Service explains 

that the instant contract is functionally 

equivalent to the GEPS 1 contracts filed 

previously because it shares similar cost 

and market characteristics and, 

therefore, the contracts should be 

classified as a single product. Id. at 3. 

It states that in Governors’ Decision No. 

08–7, a pricing formula and 

classification system was established to 

ensure that each contract meets the 

statutory and regulatory requirements of 

39 U.S.C. 3633. The Postal Service 

affirms that the instant contract 

demonstrates its functional equivalence 

with the previous GEPS 1 contracts 

because of several factors: The contract 

term of one year which applies to all 

GEPS 1 contracts, requirement of 

payment through permit imprint, and its 

total costs are volume variable as are the 

total costs associated with all GEPS 1 

contracts. Id. at 4. It explains that even 

though prices may be different based on 

volume or postage commitments made 

by the customers, these differences do 

not affect the contracts’ functional 

equivalency because the total costs 

associated with GEPS 1 contracts are 

volume variable. 

The Postal Service also states the 

instant contract has minor differences 

reflected in the language of this 

agreement compared to other GEPS 1 

contracts. Id. These differences include 

provisions which reflect differences 

between the mailers including: (1) 

Language which addresses the 

connection between completion of the 

regulatory review process and 

expiration of a previous or existing 

agreement, if applicable; 6 (2) terms 

which clarify that other Postal Service 

products are available to the customer 

subject to the same regulatory standards 

as other mailers in general; (3) exclusion 

of certain flat rate products from the 

mail qualifying for discounts; (4) 

requiring the mailer to provide notice of 

intent to mail and to conform with the 

acceptance times and scheduling 

procedures at the acceptance site; (5) 

specific liquidated damages terms 

negotiated with this mailer; (6) terms to 

explain the mailer’s volume and 

revenue commitment calculation upon 

early termination of the contract; and (7) 

clarifying language for regulatory entity 

obligations related to the contract or 

revisions to update terms or references 

from a prior agreement. Id. at 4–6. 

The Postal Service states that these 

differences related to particular mailers 

are ‘‘incidental differences’’ and do not 

change the conclusion that these 

agreements are functionally equivalent 

in a substantive aspect. Id. at 6. 

The Postal Service requests that this 

contract be included within the GEPS 1 

product. Id. 

II. Notice of Filing 

The Commission establishes Docket 

No. CP2009–35 for consideration of 

matters related to the contract identified 

in the Postal Service’s Notice. 

Interested persons may submit 

comments on whether the Postal 

Service’s contract is consistent with the 

policies of 39 U.S.C. 3632, 3622 or 3642. 

Comments are due no later than June 11, 

2009. The public portions of these 

filings can be accessed via the 

Commission’s Web site (http:// 

www.prc.gov). 

The Commission appoints Paul L. 

Harrington to serve as Public 

Representative in the captioned filings. 

It is Ordered: 

1. The Commission establishes Docket 

No. CP2009–35 for consideration of the 

matters raised in this docket. 

2. Pursuant to 39 U.S.C. 505, Paul L. 

Harrington is appointed to serve as 

officer of the Commission (Public 

Representative) to represent the 

interests of the general public in these 

proceedings. 

3. Comments by interested persons in 

these proceedings are due no later than 

June 11, 2009. 

4. The Secretary shall arrange for 

publication of this Order in the Federal 

Register. 

By the Commission. 

Judith M. Grady, 

Acting Secretary. 

[FR Doc. E9–13745 Filed 6–10–09; 8:45 am] 

BILLING CODE 7710–FW–P 

POSTAL REGULATORY COMMISSION 

[Docket No. R2009–4; Order No. 220] 

Postal Service Price Changes 

AGENCY: Postal Regulatory Commission. 

ACTION: Notice. 

SUMMARY: The Commission is 

conducting a review of the Postal 

Service’s planned price adjustment for 

Standard Mail High Density flat pieces. 

This document invites public comment. 

DATES: Comments are due June 22, 2009. 

ADDRESSES: Submit comments 

electronically via the Commission’s 

Filing Online system at http:// 

www.prc.gov. 

FOR FURTHER INFORMATION CONTACT: 

Stephen L. Sharfman, General Counsel, 

202–789–6820 and 

stephen.sharfman@prc.gov. 

SUPPLEMENTARY INFORMATION: 

I. Overview 

On June 1, 2009, the Postal Service 

filed with the Commission a notice 

announcing its intention to adjust prices 

for Standard Mail High Density flat 

pieces pursuant to 39 U.S.C. 3622 and 

39 CFR Part 3010.1 The proposed 

adjustment has a planned 

implementation date of July 19, 2009. 

The Postal Service submits that this 

proposal represents a way that it can 

take advantage of its greater pricing 

flexibility for market dominant products 

under the Postal Accountability and 

Enhancement Act (PAEA), Public Law 

109–435, 120 Stat. 3218 (2006), to 

‘‘respond quickly and flexibly to 

perceived needs in the mailing 

community.’’ Id. at 3. 

II. Postal Service Filing 

Price adjustment. The proposed price 

adjustment reduces prices for the 

Standard Mail High Density flats price 

categories for both commercial and 

nonprofit mailpieces. Id. at 2. The 


jlentini on PROD1PC65 with NOTICES
27844 Federal Register / Vol. 74, No. 111 / Thursday, June 11, 2009 / Notices 

2The Postal Service submits that the unused 

price adjustment authority for Standard Mail 

should remain at 0.081 percent. Id. at 3. See Order 

No. 191, Order Reviewing Postal Service Market 

Dominant Price Adjustment, May 16, 2009. 

adjustment decreases the minimum perpiece prices for commercial and 

nonprofit High Density flats by 0.1 cent, 

and decreases the pound price element 

for commercial and nonprofit High 

Density flats to match the Standard Mail 

Saturation flats pound price element. 

The per-piece price element for pound 

rated pieces increases by 0.7 cents per 

piece to ‘‘ensure a smooth transition at 

the breakpoint,’’ according to the Postal 

Service. Id. at 3. Dropship discounts for 

High Density flats do not change under 

this proposal. 

In support of the proposal, the Postal 

Service explains that it has heard the 

concerns expressed by High Density 

flats mailers on the detrimental impact 

that the above-average price increases 

implemented on May 11, 2009 will have 

on their businesses. After taking this 

concern into consideration, the Postal 

Service determined that High Density 

flat prices that reflect an increase from 

the previous year similar to the average 

Standard Mail increase are more 

appropriate at this time. Id. at 2. 

Conformance with 39 CFR Part 3010. 

The Postal Service’s proposed schedule 

of prices appears in Appendix A as draft 

Mail Classification Schedule language, 

which is attached to the Notice. Id. at 1. 

It also represents, in conformance with 

the notice requirements of 39 CFR 

3010.14(a)(3), that it will issue public 

notice of the price changes at least 45 

days before the effective date via several 

additional means, including issuing 

notice of the price changes on the Postal 

Service’s Web site (http:// 

www.usps.com), the Postal Explorer 

Web site (http://www.pe.usps.com), the 

DMM [Domestic Mail Manual] Advisory, 

and the P&C [Producers and 

Consumers] Weekly, and a press release 

announcing the changes. The Postal 

Service identifies Joseph Moeller, 

Manager, Pricing, as the official 

available to provide prompt responses 

to requests for clarification from the 

Commission. Id. at 2. 

Impact on the price cap. Because the 

proposed High Density flat price 

adjustments are decreases and not part 

of the annual CPI cap price change, the 

Postal Service considers this price 

adjustment to be outside the 

Commission’s current rules. Id. at 3. The 

Postal Service ‘‘proposes that the 

adjustments have no impact on price 

cap issues, but would welcome other 

views.’’ Id. Accordingly, the Postal 

Service has made no calculation of cap 

or price changes described in 

Commission rule 3010.14(b)(1) through 

(4). The Postal Service ‘‘is not claiming 

any new unused rate adjustment 

authority as a result of this price 

decrease.’’ Id.2

Objectives and factors. The Postal 

Service lists and discusses what it 

considers the relevant objectives and 

factors of 39 U.S.C. 3622 as to their 

relationship to the proposed price 

adjustment. Id. at 4–8. It believes at 

most, the price reductions will cause 

only a modest decrease in Postal Service 

revenues, and could potentially avoid 

diversion of large volumes of mail 

currently paying High Density flats 

prices to non-postal delivery. 

Workshare discounts. The Postal 

Service maintains its view that the price 

differences between the High Density 

categories and the Saturation and 

Carrier Route categories are not 

workshare discounts. It recognizes that 

the Commission has instituted Docket 

No. RM2009–3 to consider that issue. In 

this case, the Postal Service provides in 

Appendix B (and an associated Excel 

file) a table showing the cost and price 

differences, as well as passthroughs for 

Carrier Route, High Density, and 

Saturation flats (both commercial and 

nonprofit) following the adjustments to 

the prices of High Density flats. The 

Postal Service notes that none of the 

passthroughs exceeds 100 percent, so 

the limitations of section 3622(e) do not 

apply. It explains that all of the 

passthroughs for the High Density/ 

Carrier Route relationship are slightly 

higher, and the passthroughs for the 

High Density/Saturation relationship are 

slightly lower than those reported in 

Docket No. R2009–2 due to the instant 

proposed High Density flats price 

reduction. 

Preferred rates. The Postal Service 

explains that nonprofit High Density 

flats receive the same price reductions 

as commercial flats. Due to the fact that 

the proposed price changes apply to 

both commercial and nonprofit flats and 

due to the small volumes of High 

Density nonprofit flats, the Postal 

Service submits that the required 60 

percent ratio, required under 39 U.S.C. 

3626, between commercial and 

nonprofit prices is not altered as a result 

of the proposed price adjustment. 

III. Commission Action 

The Commission establishes Docket 

No. R2009–4 to consider all matters 

related to the Notice as required by 39 

U.S.C. 3622. 

Comments. The Commission’s rules 

provide for a 20-day comment period 

starting from the date of the filing of the 

Notice. See 39 CFR 3010.13(a)(5). 

Interested persons may express views 

and offer comments on whether the 

planned changes are consistent with the 

policies of 39 U.S.C. 3622 and 39 CFR 

part 3010. In particular, the Commission 

requests that interested parties 

(including the Postal Service) address 

the following topics: 

1. This is the first Postal Service 

request for a permanent rate decrease in 

rates of general applicability. The Postal 

Service states that it ‘‘proposes that the 

adjustments have no impact on price 

cap issues, but would welcome other 

views.’’ Id. at 3. Title 39 U.S.C. 

3622(d)(1)(A) states that the 

Commission’s system of rate regulation 

must include regulations that include an 

annual limitation calculation from the 

last date that ‘‘the Postal Service files its 

notice of its intention to increase rates.’’ 

39 U.S.C. 3622(d)(1)(A) (emphasis 

added). Does this provision suggest that 

permanent rate decreases in rates of 

general applicability do not require an 

analysis under section 3622(d)(1)(A)? 

2. If the price cap under section 

3622(d)(1)(A) does not apply to this 

case, is an analysis under section 

3622(d)(2)(C) (relating to unused rate 

adjustment authority) also not required? 

3. Notwithstanding the potential 

application of section 3622(d)(2)(C) to 

this case, can the Postal Service waive 

some or part of its unused rate 

adjustment authority? Can the 

Commission enforce such a waiver? 

4. The Notice states that ‘‘the Postal 

Service is not claiming any new unused 

rate adjustment authority as a result of 

this price decrease.’’ Id. at 3. Should 

this statement be construed as an 

intention by the Postal Service to waive 

any resulting additional unused rate 

adjustment authority that may result 

due to the rate decreases from the 

instant rate adjustment? 

Comments are due no later than June 

22, 2009. 

Public representative. The 

Commission appoints Kenneth E. 

Richardson to represent the interests of 

the general public in this proceeding. 

See 39 U.S.C. 505. Pursuant to rule 

3010.13(c), the Commission will issue 

its determination in this proceeding by 

July 6, 2009. 

IV. Ordering Paragraphs 

It is ordered: 

1. The Commission establishes Docket 

No. R2009–4 to consider matters raised 

by the Postal Service’s June 1, 2009 

filing. 

2. Interested persons may submit 

comments on the planned price 

adjustments. Comments are due June 22, 

2009. 


jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 74, No. 111 / Thursday, June 11, 2009 / Notices 27845 

1United States Postal Service Notice of MarketDominant Price Adjustment, May 1, 2009 (Notice). 

2PRC Order No. 209, Notice and Order 

Concerning Standard Mail Volume Incentive 

Pricing Program, May 4, 2009; located at 74 FR 

21837 (May 11, 2009). 

3Much of the justification for the proposal was 

submitted in response to Chairman’s Information 

Request No. 1, May 8, 2009 (CHIR No. 1). Any such 

future proposals must be accompanied by the 

requisite financial (cost, revenue, and volume) data 

underlying them. 

4The threshold is calculated by comparing 

average volumes over distinct periods to determine 

a trend in the mailer’s volume. That trend is 

applied to the average expected mail volume over 

the Summer Sale program months, and any volume 

above the trend adjusted average is eligible for the 

discount. 

5To quantify this possibility, the Postal Service 

will measure each mailer’s October 2009 volumes 

using a trend analysis based on the mailer’s prior 

years’ volumes for that month. Id. at 4. 

6The pages to the Postal Service’s response to 

CHIR No. 1 are not numbered. For the convenience 

of the parties, the Commission has numbered the 

pages for purposes of citation. If the normal citation 

practice was followed (citing just the relevant 

question being answered), parties may have 

difficulty in finding the specific reference as some 

of the responses are lengthy. 

3. Pursuant to 39 U.S.C. 505, the 

Commission appoints Kenneth E. 

Richardson to represent the interests of 

the general public in this proceeding. 

4. The Commission directs the 

Secretary of the Commission to arrange 

for prompt publication of this Notice in 

the Federal Register. 

By the Commission. 

Judith M. Grady, 

Acting Secretary. 

[FR Doc. E9–13744 Filed 6–10–09; 8:45 am] 

BILLING CODE 7710–FW–P 

POSTAL REGULATORY COMMISSION 

[Docket No. R2009–3; Order No. 219] 

Special Summer Postal Rate Program 

AGENCY: Postal Regulatory Commission. 

ACTION: Notice. 

SUMMARY: The Postal Service has 

prepared, and the Commission has 

approved, a special program offering 

reduced rates for Standard mailers this 

summer. This document addresses 

related issues and provides pertinent 

details. 

DATES: Effective June 11, 2009. 

FOR FURTHER INFORMATION CONTACT: 

Stephen L. Sharfman, General Counsel, 

202–789–6820 and 

stephen.sharfman@prc.gov. 

SUPPLEMENTARY INFORMATION: 

I. Introduction 

On May 1, 2009, the Postal Service 

filed with the Commission a notice 

announcing its intention to adjust prices 

for Standard Mail letters and flats 

pursuant to 39 U.S.C. 3622 and 39 CFR 

part 3010.1 The proposed adjustment is 

in the form of a ‘‘Standard Mail Volume 

Incentive Pricing Program’’ (Summer 

Sale program) with a planned 

implementation date of July 1, 2009 and 

a planned expiration date of September 

30, 2009. The Summer Sale program 

represents a reasoned approach by the 

Postal Service to exercise its flexibility 

in market dominant pricing under the 

Postal Accountability and Enhancement 

Act (PAEA), Public Law 109–435, 120 

Stat. 3218 (2006). 

In Order No. 209, the Commission 

established Docket No. R2009–3 to 

consider matters raised by the Postal 

Service’s filing, appoint public 

representatives, and afford interested 

persons an opportunity to comment.2 By 

this order, the Commission approves the 

proposed Standard Mail Volume 

Incentive Pricing Program. 

The Commission finds the proposal to 

be a judicious exercise of the Postal 

Service’s pricing flexibility under the 

PAEA. The Postal Service is to be 

commended for its response to current 

market conditions. Much can be learned 

from what, in essence, is a short-term 

pricing experiment. However, the 

program is not without risks. Thus, 

development and use of appropriate 

metrics in evaluating the program are 

critical in determining whether the 

program is successful, and also for 

assessing the long-term implications of 

such an approach. 

II. Standard Mail Volume Incentive 

Pricing Program 

A. Postal Service Filing 

The Postal Service notes that the 

Summer Sale program is necessary to 

counteract the dramatic volume 

reduction due to the economy, support 

a struggling mailing industry, and 

increase volume during a typically low 

volume period in which there is excess 

capacity; and secondarily to improve 

customer relations, to fine tune future 

programs, to gather feedback from 

customers, and to gather data which 

may improve postal data systems. 

Notice at 2–3. The Postal Service’s 

Notice provides a high level overview of 

the Summer Sale program, identifying 

its salient features as follows.3

Under the proposed Summer Sale 

program, eligible mailers will receive a 

30 percent rebate of postage paid on the 

volume of Standard Mail letters and 

flats mailed from July 1, 2009 to 

September 30, 2009 that exceeds mailerspecific thresholds.4 The rebate may be 

reduced for volumes shifted from 

October 2009 into the sales period.5

Notice at 3–4. 

Eligibility for the Summer Sale 

program is limited to mailers who are 

permit holders who have a 

demonstrable volume of at least 1 

million Standard Mail letters and flats 

between October 1, 2007 and March 31, 

2008 for one or more permit imprint 

advance deposit accounts, pre-canceled 

stamp permits, or postage meter 

permits. Id. at 4. 

Mail service providers are excluded 

from the program to help ensure that the 

Summer Sale program generates new 

volumes, rather than shifts existing 

volumes. However, individual mailers 

who meet the above criteria but use a 

mail service provider may participate if 

they meet certain conditions. Id. at 4– 

5. 

B. Chairman’s Information Request No. 

1 (CHIR No. 1) 

CHIR No. 1 was designed to clarify 

the Postal Service’s proposal. The 

responses substantially expand on the 

Postal Service initial filing and provide 

essential details regarding the scope of 

the program and its underlying basis. 

CHIR No. 1 sought information on 

metrics to measure the success of the 

Summer Sale program, including 

complete cost analyses and volume 

migration from other classes or time 

periods, the definition of short-run 

excess capacity, eligibility for the 

program, contribution level for Standard 

Mail flats, and documentation of cost 

and revenue estimates. See CHIR No. 1. 

The Commission expects the Postal 

Service to provide this level of detail in 

future initial filings. 

The Postal Service defines the 

primary measure of success for the 

Summer Sale program as ‘‘incremental 

revenue and volume growth over the 

threshold for the universe of eligible 

participants[.]’’ See Response of the 

United States Postal Service to 

Chairman’s Information Request No. 1, 

May 15, 2009, at 2 (Response to CHIR 

No. 1).6 The Postal Service also 

anticipates monitoring customer 

feedback and the efficacy and efficiency 

of its administration of the program. Id. 

The Postal Service does not believe 

the additional incentive of the Summer 

Sale program will induce any First-Class 

advertising mail to migrate to the 

program, due to different demand 

characteristics and the significant gap in 

price which already exists. Id. at 4. 

Further, the Postal Service does not 

believe that mailers have enough lead 

time to shift volume from June or earlier 

into the program. Id. In addition, the 

Postal Service cites precautions it has 


jlentini on PROD1PC65 with NOTICES