[Federal Register Volume 74, Number 125 (Wednesday, July 1, 2009)]
[Rules and Regulations]
[Pages 31374-31380]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-15469]


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POSTAL REGULATORY COMMISSION

39 CFR Part 3020

[Docket Nos. MC2009-25, CP2009-30, CP2009-31, CP2009-32, CP2009-33 and 
CP2009-34; Order No. 226]


New Postal Product

AGENCY: Postal Regulatory Commission.

ACTION: Final rule.

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SUMMARY: The Commission is adding the Postal Service's Priority Mail 
Contract Group to the Competitive Product List. This action is 
consistent with changes in a recent law governing postal operations. 
Republication of the lists of market dominant and competitive products 
is also consistent with new requirements of the law.

DATES: Effective July 1, 2009 and is applicable beginning June 19, 
2009.

FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel, 
202-789-6820 and <a href="/cdn-cgi/l/email-protection#b8cbccddc8d0ddd696cbd0d9caded5d9d6f8c8cadb96dfd7ce"><span class="__cf_email__" data-cfemail="fb888f9e8b939e95d588939a899d969a95bb8b8998d59c948d">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:
    Regulatory History, 74 FR 26744 (June 3, 2009)
    The Postal Service seeks to add a new product identified as 
Priority Mail Contract Group to the Competitive Product List, or, in 
the alternative, add new products identified as Priority Mail Contract 
6 through Priority Mail Contract 10 to the Competitive Product List. 
For the reasons that follow, the Commission adds the contracts 
identified in Docket Nos. CP2009-30 through CP2009-34 to the 
Competitive Product List as separate, new products.

I. The Postal Service's Request

    On May 19, 2009, the Postal Service filed a formal request pursuant 
to 39 U.S.C. 3642 and 39 CFR 3020.30 et seq. to add a new product 
entitled Priority Mail Contract Group to the Competitive Product 
List.\1\ The Postal Service asserts that Priority Mail Contract Group 
is a competitive product ``not of general applicability'' within the 
meaning of 39 U.S.C. 3632(b)(3). Request at 1. The Request has been 
assigned Docket No. MC2009-25.
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    \1\ Docket No. MC2009-25, Request of the United States Postal 
Service to Add Priority Mail Contract Group to Competitive Product 
List, May 19, 2009 (Request). In the alternative, the Commission 
construes the Postal Service's proposal as a request to add Priority 
Mail Contract 6 through Priority Mail Contract 10 to the Competitive 
Product List. See Order No. 217, Notice and Order Concerning 
Priority Mail Contract 6 through 10 Negotiated Service Agreements, 
May 26, 2009, at 4, n.5 (Order No. 217).
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    The Postal Service contemporaneously filed five contracts

[[Page 31375]]

which it identifies as Priority Mail Contract 6, Priority Mail Contract 
7, Priority Mail Contract 8, Priority Mail Contract 9, and Priority 
Mail Contract 10. These contracts have been assigned Docket Nos. 
CP2009-30 through CP2009-34, respectively. \2\ It believes these 
contracts are related to the proposed new product in Docket No. MC2009-
25.
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    \2\ See Docket Nos. CP2009-30 through CP2009-34, Notice of 
Establishment of Rates and Class Not of General Applicability, May 
19, 2009 (collectively cited as Notices).
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    In support of its Request, the Postal Service filed the following 
materials: (1) A redacted version of the Governors' Decision 
``authorizing management to negotiate [certain] contracts for Priority 
Mail service;'' (2) requested changes in the Mail Classification 
Schedule product list and accompanying Mail Classification Schedule 
language; (3) a redacted version of the Governors' analysis of the 
Priority Mail Contract Group; (4) a statement of supporting 
justification as required by 39 CFR 3020.32; and (5) a certification of 
compliance with 39 U.S.C. 3633(a).\3\ Substantively, the Request seeks 
to add Priority Mail Contract Group to the Competitive Product List. 
Request at 1-2.
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    \3\ Attachment 1 to the Request consists of the redacted 
Decision of the Governors of the United States Postal Service on 
Establishment of Rates and Classes Not of General Applicability for 
Priority Mail Contract Group (Governors' Decision No. 09-6). The 
Governors' Decision includes two attachments. Attachment A shows the 
requested changes to the Mail Classification Schedule product list. 
Attachment B provides an analysis of the proposed Priority Mail 
Contract Group. Attachment 2 provides a statement of supporting 
justification for this Request. Attachment 3 provides the 
certification of compliance with 39 U.S.C. 3633(a).
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    Redacted versions of five specific Priority Mail contracts are also 
included with the Request. Three of the contracts are for 3 years, one 
of the contracts is for 1 year, and the final contract is for 3 months. 
Depending on the contract, the effective dates are proposed to be 
either the day the Commission provides all necessary regulatory 
approvals or the following day.\4\ W. Ashley Lyons, Regulatory 
Reporting and Cost Analysis, Finance Department, certifies that all 
five contracts comply with 39 U.S.C. 3633(a). See Notices, Attachment 
B.
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    \4\ The contracts in Docket Nos. CP2009-30, CP2009-31 and 
CP2009-34 become effective on the day the Commission issues all 
necessary regulatory approvals. The contracts in Docket Nos. CP2009-
32 and CP2009-33 become effective the day after the Commission 
issues all necessary regulatory approvals.
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    In the Statement of Supporting Justification, Mary Prince Anderson, 
Manager, Sales and Communications, Expedited Shipping, asserts that the 
services to be provided under the proposed new product will cover their 
attributable costs, make a positive contribution to institutional 
costs, and increase contribution toward the requisite 5.5 percent of 
the Postal Service's total institutional costs. Request, Attachment 2. 
Thus, Ms. Anderson contends there will be no issue of subsidization of 
competitive products by market dominant products as a result of the 
creation of this product. Id.
    The Postal Service filed much of the supporting materials, 
including the Governors' Decision and the specific Priority Mail 
contracts, under seal. In its Request, the Postal Service maintains 
that the contracts and related financial information, including the 
customer's name and the accompanying analyses that provide prices, 
terms, conditions, and financial projections should remain under seal. 
Request at 2; Notices at 2.

II. Procedural History

    In Order No. 217, the Commission gave notice of the above-captioned 
dockets, offered certain preliminary observations on the Request and 
Notices, appointed a public representative, requested supplemental 
information, and provided the public with an opportunity to comment. 
Significantly, the Commission indicated that, in its view, Governors' 
Decision 09-6 could be used to satisfy the requirements of 39 CFR 
3020.31(b) and 39 U.S.C. 3642 with regard to authorizing future 
Priority Mail contracts that might or might not be functionally 
equivalent to existing products. Order No. 217 at 4.
    On June 1, 2009, the Postal Service filed the supplemental 
information requested in Order No. 217.\5\ On June 5, 2009, the Public 
Representative filed comments.\6\ On June 8, 2009, the Postal Service 
and United Parcel Service (UPS) filed comments.\7\
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    \5\ Notice of the United States Postal Service of Filing Under 
Seal of Response to Request for Supplemental Information in Order 
No. 217, June 1, 2009 (Response).
    \6\ Public Representative Comments in Response to Order No. 217, 
June 5, 2009 (Public Representative Comments).
    \7\ Comments of the United States Postal Service in Response to 
Order No. 217 (Postal Service Comments), and Comments of United 
Parcel Service in Response to Commission Order No. 217 (UPS 
Comments), both filed on June 8, 2009.
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III. Comments

    UPS comments. UPS argues that the proposed Priority Mail Contract 
Group product does not meet the Postal Accountability and Enhancement 
Act (PAEA) definition of the term ``product,'' and is inconsistent with 
Order No. 43's finding that every negotiated service agreement is a 
separate product unless the agreements are functionally equivalent to 
one another.\8\ It submits that for products to be functionally 
equivalent, they must have similar cost and market characteristics and 
be alike in all material respects. UPS Comments at 1-2.
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    \8\ Docket No. RM2007-1, Order Establishing Ratemaking 
Regulations for Market Dominant and Competitive Products, October 
29, 2007 (Order No. 43).
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    UPS believes that the proposed Priority Mail Contract Group product 
is not limited to agreements that share the same cost and market 
characteristics. It believes that the length of time of the contract, 
whether the mailer or the Postal Service provides packaging as well as 
entry and preparation requirements, means that these contracts have 
very different cost characteristics. Moreover, because the shell 
classification only requires the cost coverage to fall within a 
specified range, shippers can qualify for contracts under the proposed 
product without regard to market similarities. Id. at 2-3.
    UPS also has a concern that the proposed Priority Mail Contract 
Group would undermine the effectiveness of the PAEA's safeguards--
grouping NSAs too broadly not only would diminish the Annual Compliance 
Report's value as a tool for achieving transparency, but also would 
undermine substantive ratemaking requirements, such as the requirement 
that each competitive product cover its attributable costs. It also 
believes that the effectiveness of pre-implementation review would be 
diminished due to the shortened timeframe for consideration of 
functionally equivalent agreements. In support of its position, UPS 
cites to Commission Order No. 26 in Docket No. RM2007-1.\9\ UPS 
Comments at 3-4.
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    \9\ Docket No. RM2007-1, Order Proposing Regulations to 
Establish a System of Ratemaking, August 15, 2007 (Order No. 26).
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    Public Representative Comments. The Public Representative's 
Comments focus on (1) the breadth of the proposed shell classification 
in Docket No. MC2009-25; (2) a concern that the Governors may be 
delegating too much of their authority to management with respect to 
the proposed shell classification in Docket No. MC2009-25; and (3) a 
concern about the lack of transparency and accountability with respect 
to the voting records of the Governors. Public Representative Comments 
at 2-9. He believes that creating a broad product category seemingly 
without functional constraint is contrary to the public interest and 
the intent of the PAEA. Id. at 10.

[[Page 31376]]

    The Public Representative offers two recommendations to alleviate 
these concerns. First, he suggests that the Commission work with the 
Postal Service to define shell classifications in a ``somewhat narrower 
fashion'' so that there is some common element among the included 
contracts. Second, he recommends that broad shell classifications 
should be set to expire after a specified period of time. Id. at 9-10.
    Postal Service comments. The Postal Service claims that all five 
contracts share the cost and market characteristics of large, 
commercial Priority Mail customers. As such, it believes the agreements 
are functionally equivalent. The Postal Service references its Notices 
that identify the differences between the five agreements. For example, 
it states that proposed Priority Mail Contract 7 differs from Priority 
Mail Contract 6 only in regards to the negotiated prices, the postage 
payment method, and the provision of Priority Mail packaging. Postal 
Service Comments at 2. It characterizes these differences as ``minor,'' 
and argues that they do not rise to the level of differences in cost or 
market characteristics that would be expected at the product level. Id. 
at 1-2.
    The Postal Service does not believe that the scope of the 
classification established by the Governors is problematic, noting that 
it is less broad than Priority Mail service as a whole, which is one 
product. It contends that while the concept of functional equivalency 
was originally applied to negotiated service agreements to ensure 
similarly situated customers would be entitled to similar agreements 
with the Postal Service, those concerns are reduced significantly in 
the context of competitive products. Id. at 3-4.
    As a practical matter, the Postal Service explains that it has 
encountered difficulties in implementing contracts and maintaining 
customers in light of various uncertainties, including the lack of a 
statutory or regulatory timeline for proceedings filed under section 
3642. It notes that ``even after negotiation, signature, and filing, 
the implementation date is not known when a section 3642 proceeding is 
required.'' Id. at 4. On the other hand, it argues that adding Priority 
Mail Contract Group to the product list will improve the ability of the 
Postal Service to plan with the customer for a smooth initiation and 
implementation of the contract terms on a known date. Id. at 4-5.

IV. Commission Analysis

    The Commission has reviewed the Postal Service's filings in Docket 
Nos. MC2009-25 and CP2009-30 through CP2009-34, the financial analysis 
provided under seal that accompanies it, the supplemental information 
filed by the Postal Service, and the comments filed by the Public 
Representative, the Postal Service, and UPS.
    Statutory requirements. The Commission's statutory responsibilities 
with respect to 39 U.S.C. 3642 in this instance entail (1) determining 
the appropriate scope of the proposed new product or products, and (2) 
assigning the proposed contracts to either the Market Dominant Product 
List or to the Competitive Product List. As part of this 
responsibility, the Commission also reviews the proposal for compliance 
with PAEA requirements. This includes, for proposed competitive 
products, a review of the provisions applicable to rates for 
competitive products. 39 U.S.C. 3633.
    Scope of the proposed product. The Postal Service is seeking to 
place on the Competitive Product List a product that would encompass 
all mailer-specific agreements for Priority Mail. The proposed 
requirements for that negotiated service agreement product entitled 
``Priority Mail Contract Group'' are as follows: (1) The agreement must 
be for Priority Mail service, and (2) the cost coverage for the 
particular contract must fall within a specified, broad range. Request, 
Attachment 1 and Attachment A. The Public Representative and UPS argue 
that the scope of this proposed new product is too broad, and that 
classifying all five Priority Mail contracts at issue in this case (and 
future Priority Mail contracts satisfying the above criteria) as a 
single product is inappropriate.
    39 U.S.C. 102(6) defines the term ``product'' as ``a postal service 
with a distinct cost or market characteristic for which a rate or rates 
are, or may reasonably be, applied[.]'' In Order No. 43, the Commission 
found, after providing the public with several rounds of notice and 
comment in a rulemaking proceeding, that each negotiated service 
agreement would be treated as a separate product except in very limited 
circumstances. Order No. 43, paras. 1003, 2177. With respect to these 
limited circumstances, the Commission stated that ``it may be 
appropriate to group functionally equivalent negotiated service 
agreements as a single product if it can be shown that they have 
similar cost and market characteristics.'' Id. para. 2177. After 
consideration of conflicting arguments from several commenters, the 
Commission found that this method of treating negotiated service 
agreements as separate products was an appropriate way to balance the 
PAEA's competing goals. The Commission noted:

    This treatment affords the Postal Service flexibility to enter 
into any special classification it wishes, but provides the 
necessary transparency to satisfy relevant business and regulatory 
needs. Absent the discipline that such accountability imposes, both 
the Postal Service and the Commission roles under the PAEA may be 
compromised. For example, the Postal Service may lack agreement-
specific details on profitability of the agreement, while the 
Commission would be unable to assess whether the agreement complied 
with the statute.

Order No. 26, para. 3079. Allowing negotiated service agreements to be 
placed into only a few products ``forfeits transparency and serves no 
legitimate business or regulatory need * * *[and] it will not provide 
for accountability, a bedrock principle underlying the PAEA.'' Id. 
para. 3070. In particular, as UPS notes, too broadly defining a product 
would diminish the effectiveness of the Commission's review of the 
Postal Service's annual compliance report since the Commission's annual 
compliance determination focuses on compliance at the product level. 
See 39 U.S.C. 3652(a)(1), 3653(b)(1).
    Negotiated service agreements may be treated as part of the same 
product, but only when they have similar cost and market 
characteristics. Although the Postal Service characterizes the 
differences between the contracts and contractual partner profiles as 
``minor,'' the Commission is not persuaded that the differences are 
sufficiently minor as to allow treatment as a single product. The 
proposed ``Priority Mail Contract Group'' is too encompassing to ensure 
that the contracts have similar cost and market characteristics. The 
proposed Priority Mail Contract Group product would treat all Priority 
Mail contracts as one product so long as the anticipated cost coverage 
of each contract falls within a given, broad range. As UPS notes, no 
other qualifications apply.
    The proposed draft Mail Classification Schedule language states 
that:

    Each individual contract will specify the applicable rates, any 
postage payment methods required, whether any volume minimums apply, 
whether packaging is provided by the Postal Service, the length of 
the contract and any price adjustment mechanism, and any other 
customized terms or conditions applicable to the provision of 
Priority Mail service at the negotiated rates.

Request at Attachment 1, Attachment A. Each of the five characteristics 
listed have potential cost and/or market implications. For example, as 
UPS points out, ``[a] contract that will be in effect for only the 
summer of 2009

[[Page 31377]]

would not have the same market or cost characteristics as contracts 
that will be in effect for all seasons of the year.'' UPS Comments at 
2. Other criteria not identified in the proposed product description 
language that may have distinct cost and/or market characteristics 
include shape, weight, and dropshipping.
    The proposed catch-all provision allowing future contracts to 
contain ``any other customized terms or conditions'' is also 
problematic. It is so expansive as to be unknowable, but presumably 
would justify any Priority Mail piece meeting the cost coverage range 
to fall within the proposed product. This catch-all approach is far too 
wide-ranging to allow the Commission to conclude that there are similar 
cost characteristics in the potential contractual partners' mailing 
profiles.
    Additionally, if the Postal Service is suggesting that all 
contractual partners that use Priority Mail exhibit similar market 
characteristics, that contention has no support.\10\ The Commission 
does not view mailings with significantly different costs or mailings 
sent by mailers with different market characteristics as functionally 
equivalent, notwithstanding that their cost coverages are within a 
wide, given range.
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    \10\ The Postal Service correctly points out that Priority Mail 
(dealing with rates of general applicability) is a broad, distinct 
product. However, a broad Priority Mail product of general 
applicability does not raise the same concerns, discussed above and 
in Order Nos. 26 and 43, as multiple mailer specific contracts 
``expected'' to achieve a cost coverage target.
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    For the reasons discussed above, the Postal Service's proposed 
Priority Mail Contract Group is too broad to be considered a single 
product. Below, the Commission addresses the contracts filed in Docket 
Nos. CP2009-30 through 34 to determine if the agreement should be 
placed on the product list as a separate product or if several of the 
agreements can be placed on the product list as one product on the 
basis of functional equivalency.
    Functional equivalence. The Postal Service contends that the four 
contracts are functionally equivalent to the one submitted in Docket 
No. CP2009-30 and that, accordingly, all should be grouped under the 
same product. Notices at 1; Postal Service Comments at 2. It appears to 
be implicitly arguing that the contracts share the same cost and market 
characteristics as the one submitted in Docket No. CP2009-30. See 
Postal Service Comments at 1-2. It points out that the differences 
between the contracts relate to negotiated prices, the postage payment 
method, the provision of packaging, the term of the contract, and mail 
entry requirements. Id. at 2 (citing Notices at 1). It characterizes 
these differences as ``minor.'' Id. The Commission has reviewed the 
five contracts and, for the same reasons that it found the Priority 
Mail Contract Group proposed product to be overbroad, finds that none 
of these contracts may be appropriately classified within the same 
product. Accordingly, these contracts will be treated as separate 
products (Priority Mail Contract 6 through Priority Mail Contract 
10).\11\
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    \11\ In contrast, the Commission has approved the grouping of 
several similar contracts within the same product in the 
international arena (although there may be distinctions between 
domestic and international services provided by the Postal Service 
which need to be taken into account). See, e.g., Docket Nos. CP2008-
11, 12, 13, 18-21, 23, 25; CP2009-1, 15, 16 (GEPS 1 Product); Docket 
Nos. CP2009-10, 11, 29 (Global Direct Product); Docket No. CP2009-10 
(Global Plus 1 Product); and Docket No. CP2009-17 (Global Plus 2 
Product).
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    Timelines for review under 39 U.S.C. 3642. The Postal Service 
implies that the absence of a statutory or regulatory timeline for the 
Commission's review under 39 U.S.C. 3642 has contributed to 
``difficulties in implementing contracts and maintaining customers[.]'' 
\12\ The Postal Service correctly notes that proceedings under 39 CFR 
3015.5 require at least 15 days' notice prior to the effective date, 
while 39 CFR 3020 subpart B proceedings do not have a definite 
timeframe. However, the Commission has consistently processed 39 CFR 
3020 subpart B filings expeditiously. Since the first post-PAEA 
domestic competitive rate contract was filed, the Commission has issued 
its final decision in 39 CFR 3020 subpart B proceedings in an average 
of 21 days. Overall, the Commission's average review period for 
competitive contracts in section 3642 proceedings is 27 days. These 
timeframes undoubtedly could be shortened if the initial filings were 
fully supported by all relevant information. See, e.g., Docket Nos. 
MC2009-21 and CP2009-26, Order Concerning Priority Mail Contract 5 
Negotiated Service Agreement, March 30, 2009, at 6. (``The electronic 
files submitted in support of the Request did not include all 
supporting data. Future requests must provide all electronic files 
showing calculations in support of the financial models associated with 
the request. A failure to provide such information may delay resolution 
of requests in the future.'')
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    \12\ Postal Service Comments at 4. The Postal Service does not 
contend that the absence of a statutory or regulatory timeline is 
the primary or even a significant factor in causing difficulties in 
implementing contracts and maintaining customers; instead it states 
that its difficulties are due to ``various uncertainties.'' Id.
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    Taking into account these filings represent new products and that 
the public is entitled to a reasonable opportunity to comment on these 
proposals, the Commission's record demonstrates that it acts quickly on 
Postal Service requests to add new competitive negotiated service 
agreement products to the Competitive Product List. Moreover, while the 
Commission appreciates the Postal Service's desire to move quickly, it 
would appear that delay in implementation is often not due to 
Commission proceedings.
    For example, three of the five contracts filed in this case in May 
2009 were countersigned by the Postal Service in February of 2009.\13\ 
Additionally, the Governors' Decision associated with these agreements 
was issued at the end of April 2009, yet the contracts were not filed 
with the Commission for approval until 22 days later. Request, 
Attachment 1.
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    \13\ Docket No. CP2009-30, Notice, Attachment A at 5 (signed by 
the Postal Service on February 17, 2009); Docket No. CP2009-31, 
Notice, Attachment A at 5 (signed by the Postal Service on February 
25, 2009); and Docket No. CP2009-33, Notice, Attachment A at 5 
(signed by the Postal Service on February 4, 2009).
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    As has been discussed in other contexts, the Commission and the 
Governors have different, complementary responsibilities. The 
Commission does recognize the Board of Governors' concerns in 
administering such agreements. As stated in Order No. 217, it is the 
Commission's view that Governors' Decision 09-6 may be used to 
authorize future Priority Mail agreements that satisfy the broad 
parameters set out in Governors' Decision 09-6. Based on the parameters 
of Governors' Decision 09-6, the Postal Service may seek to add future 
non-functionally equivalent Priority Mail contracts to the Competitive 
Product List by filing new, joint ``MC'' and ``CP'' dockets. Governors' 
Decision 09-6 would then satisfy the requirements of 39 CFR 3020.31(b) 
and 39 U.S.C. 3642. In those cases, however, the Postal Service still 
should file supporting justification as required by 39 CFR 3020.32 to 
justify the particular contract or group of contracts for that narrower 
product grouping.
    Product list assignment. In determining whether to assign Priority 
Mail Contract 6 through Priority Mail Contract 10 as products to the 
Market Dominant Product List or the Competitive Product List, the 
Commission must consider whether:


[[Page 31378]]


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

39 U.S.C. 3642(b)(1). If so, the particular product will be categorized 
as market dominant. The competitive category of products shall consist 
of all other products.
    The Commission is further required to consider the availability and 
nature of enterprises in the private sector engaged in the delivery of 
the product, the views of those who use the product, and the likely 
impact on small business concerns. 39 U.S.C. 3642(b)(3).
    The Postal Service asserts that, for these contracts, its 
bargaining position is constrained by the existence of other shippers 
who can provide similar services, thus precluding it from taking 
unilateral action to increase prices without the risk of losing volume 
to private companies. Request, Attachment 2, at 2. The Postal Service 
also contends that it may not decrease quality or output without 
risking the loss of business to competitors that offer similar 
expedited delivery services. Id. It further states that shippers 
typically support the addition of their agreements to the product list 
to effectuate the negotiated contractual terms. Id. at 3. Finally, the 
Postal Service states that the market for expedited delivery services 
is highly competitive and requires a substantial infrastructure to 
support a national network. It indicates that large carriers serve this 
market. Accordingly, the Postal Service states that it is unaware of 
any small business concerns that could offer comparable service for 
this customer. Id.
    No commenter opposes the proposed classification of Priority Mail 
Contract 6 through Priority Mail Contract 10 as competitive. Having 
considered the statutory requirement and the support offered by the 
Postal Service, the Commission finds that Priority Mail Contract 6, 
Priority Mail Contract 7, Priority Mail Contract 8, Priority Mail 
Contract 9, and Priority Mail Contract 10 are appropriately classified 
as competitive products and should be added to the Competitive Product 
List.
    Cost considerations. The Postal Service's filings seek to establish 
new domestic negotiated service agreement products using Priority Mail. 
The contracts are predicated on unit costs for major mail functions, 
e.g., window service, mail processing, and transportation, based on the 
shipper's mail characteristics. Governors' Decision, Attachment B.
    The Postal Service contends that its financial analysis shows that 
each of these five contracts cover its attributable costs, do not 
result in subsidization of competitive products by market dominant 
products, and increases contribution from competitive products. See 
Notices, Attachment B.
    Based on the data submitted and the comments received, the 
Commission finds that each of the five proposed Priority Mail contracts 
at issue in this case should cover its respective attributable costs 
(39 U.S.C. 3633(a)(2)), should not lead to the subsidization of 
competitive products by market dominant products (39 U.S.C. 
3633(a)(1)), and should have a positive effect on competitive products' 
contribution to institutional costs (39 U.S.C. 3633(a)(3)). Thus, an 
initial review of the five proposed Priority Mail contracts at issue in 
this case indicates that each comports with the provisions applicable 
to rates for competitive products.
    Termination dates. The Postal Service shall promptly notify the 
Commission when each contract terminates, but no later than the actual 
termination date. The Commission will then remove the contract from the 
Mail Classification Schedule at the earliest possible opportunity.
    In conclusion, the Commission approves 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), and Priority Mail 
Contract 10 (MC2009-25 and CP2009-34) as new products. The revision to 
the Competitive Product List is shown below the signature of this Order 
and is effective upon issuance of the order.

V. Ordering Paragraphs

    It is Ordered:
    1. 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), and Priority Mail Contract 10 (MC2009-25 and CP2009-34) are 
added to the Competitive Product List as new products under Negotiated 
Service Agreements, Domestic.
    2. The Postal Service shall notify the Commission of the 
termination date of each contract filed in Docket Nos. CP2009-30, 
CP2009-31, CP2009-32, CP2009-33, and CP2009-34 as discussed in this 
order.
    3. The Secretary shall arrange for the publication of this order in 
the Federal Register.

List of Subjects in 39 CFR Part 3020

    Administrative practice and procedure; Postal Service.

    By the Commission.
Steven W. Williams,
Secretary.

0
For the reasons stated in the preamble, under the authority at 39 
U.S.C. 503, the Postal Regulatory Commission amends 39 CFR part 3020 as 
follows:

PART 3020--PRODUCT LISTS

0
1. The authority citation for part 3020 continues to read as follows:


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


0
2. Revise Appendix A to Subpart A of Part 3020--Mail Classification to 
read as follows:

Appendix A to Subpart A of Part 3020--Mail Classification

Schedule

Part A--Market Dominant Products

1000 Market Dominant Product List

First-Class Mail
    Single-Piece Letters/Postcards
    Bulk Letters/Postcards
    Flats
    Parcels
    Outbound Single-Piece First-Class Mail International
    Inbound Single-Piece First-Class Mail International
Standard Mail (Regular and Nonprofit)
    High Density and Saturation Letters
    High Density and Saturation Flats/Parcels
    Carrier Route
    Letters
    Flats
    Not Flat-Machinables (NFMs)/Parcels
Periodicals
    Within County Periodicals
    Outside County Periodicals
Package Services
    Single-Piece Parcel Post
    Inbound Surface Parcel Post (at UPU rates)
    Bound Printed Matter Flats
    Bound Printed Matter Parcels
    Media Mail/Library Mail
Special Services
    Ancillary Services
    International Ancillary Services
    Address List Services
    Caller Service
    Change-of-Address Credit Card Authentication
    Confirm
    International Reply Coupon Service
    International Business Reply Mail Service
    Money Orders
    Post Office Box Service
Negotiated Service Agreements
    HSBC North America Holdings Inc. Negotiated Service Agreement
    Bookspan Negotiated Service Agreement

[[Page 31379]]

    Bank of America corporation Negotiated Service Agreement
    The Bradford Group Negotiated Service Agreement
    Inbound International
    Canada Post--United States Postal Service Contractual Bilateral 
Agreement for Inbound Market Dominant Services
Market Dominant Product Descriptions
First-Class Mail
[Reserved for Class Description]
    Single-Piece Letters/Postcards
    [Reserved for Product Description]
    Bulk Letters/Postcards
    [Reserved for Product Description]
    Flats
    [Reserved for Product Description]
    Parcels
    [Reserved for Product Description]
    Outbound Single-Piece First-Class Mail International
    [Reserved for Product Description]
    Inbound Single-Piece First-Class Mail International
    [Reserved for Product Description]
Standard Mail (Regular and Nonprofit)
[Reserved for Class Description]
    High Density and Saturation Letters
    [Reserved for Product Description]
    High Density and Saturation Flats/Parcels
    [Reserved for Product Description]
    Carrier Route
    [Reserved for Product Description]
    Letters
    [Reserved for Product Description]
    Flats
    [Reserved for Product Description]
    Not Flat-Machinables (NFMs)/Parcels
    [Reserved for Product Description]
Periodicals
[Reserved for Class Description]
    Within County Periodicals
    [Reserved for Product Description]
    Outside County Periodicals
    [Reserved for Product Description]
Package Services
[Reserved for Class Description]
    Single-Piece Parcel Post
    [Reserved for Product Description]
    Inbound Surface Parcel Post (at UPU rates)
    [Reserved for Product Description]
    Bound Printed Matter Flats
    [Reserved for Product Description]
    Bound Printed Matter Parcels
    [Reserved for Product Description]
    Media Mail/Library Mail
    [Reserved for Product Description]
Special Services
[Reserved for Class Description]
    Ancillary Services
    [Reserved for Product Description]
    Address Correction Service
    [Reserved for Product Description]
    Applications and Mailing Permits
    [Reserved for Product Description]
    Business Reply Mail
    [Reserved for Product Description]
    Bulk Parcel Return Service
    [Reserved for Product Description]
    Certified Mail
    [Reserved for Product Description]
    Certificate of Mailing
    [Reserved for Product Description]
    Collect on Delivery
    [Reserved for Product Description]
    Delivery Confirmation
    [Reserved for Product Description]
    Insurance
    [Reserved for Product Description]
    Merchandise Return Service
    [Reserved for Product Description]
    Parcel Airlift (PAL)
    [Reserved for Product Description]
    Registered Mail
    [Reserved for Product Description]
    Return Receipt
    [Reserved for Product Description]
    Return Receipt for Merchandise
    [Reserved for Product Description]
    Restricted Delivery
    [Reserved for Product Description]
    Shipper-Paid Forwarding
    [Reserved for Product Description]
    Signature Confirmation
    [Reserved for Product Description]
    Special Handling
    [Reserved for Product Description]
    Stamped Envelopes
    [Reserved for Product Description]
    Stamped Cards
    [Reserved for Product Description]
    Premium Stamped Stationery
    [Reserved for Product Description]
    Premium Stamped Cards
    [Reserved for Product Description]
    International Ancillary Services
    [Reserved for Product Description]
    International Certificate of Mailing
    [Reserved for Product Description]
    International Registered Mail
    [Reserved for Product Description]
    International Return Receipt
    [Reserved for Product Description]
    International Restricted Delivery
    [Reserved for Product Description]
    Address List Services
    [Reserved for Product Description]
    Caller Service
    [Reserved for Product Description]
    Change-of-Address Credit Card Authentication
    [Reserved for Product Description]
    Confirm
    [Reserved for Product Description]
    International Reply Coupon Service
    [Reserved for Product Description]
    International Business Reply Mail Service
    [Reserved for Product Description]
    Money Orders
    [Reserved for Product Description]
    Post Office Box Service
    [Reserved for Product Description]
Negotiated Service Agreements
[Reserved for Class Description]
    HSBC North America Holdings Inc. Negotiated Service Agreement
    [Reserved for Product Description]
    Bookspan Negotiated Service Agreement
    [Reserved for Product Description]
    Bank of America Corporation Negotiated Service Agreement
    The Bradford Group Negotiated Service Agreement

Part B--Competitive Products

Competitive Product List

Express Mail
    Express Mail
    Outbound International Expedited Services
    Inbound International Expedited Services
    Inbound International Expedited Services 1 (CP2008-7)
    Inbound International Expedited Services 2 (MC2009-10 and 
CP2009-12)
Priority Mail
    Priority Mail
    Outbound Priority Mail International
    Inbound Air Parcel Post
    Royal Mail Group Inbound Air Parcel Post Agreement
Parcel Select
Parcel Return Service
International
    International Priority Airlift (IPA)
    International Surface Airlift (ISAL)
    International Direct Sacks--M-Bags
    Global Customized Shipping Services
    Inbound Surface Parcel Post (at non-UPU rates)
    Canada Post--United States Postal service Contractual Bilateral 
Agreement for Inbound Competitive Services (MC2009-8 and CP2009-9)
    International Money Transfer Service
    International Ancillary Services
Special Services
    Premium Forwarding Service
Negotiated Service Agreements
    Domestic
    Express Mail Contract 1 (MC2008-5)
    Express Mail Contract 2 (MC2009-3 and CP2009-4)
    Express Mail Contract 3 (MC2009-15 and CP2009-21)
    Express Mail & 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)
    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
    Outbound International
    Global Direct Contracts (MC2009-9, CP2009-10, and CP2009-11)
    Global Expedited Package Services (GEPS) Contracts
    GEPS 1 (CP2008-5, CP2008-11, CP2008-12, and CP2008-13, CP2008-
18, CP2008-19, CP2008-20, CP2008-21, CP2008-22, CP2008-23, and 
CP2008-24)
    Global Plus Contracts
    Global Plus 1 (CP2008-9 and CP2008-10)
    Global Plus 2 (MC2008-7, CP2008-16 and CP2008-17)

[[Page 31380]]

    Inbound International
    Inbound Direct Entry Contracts with Foreign Postal 
Administrations (MC2008-6, CP2008-14 and CP2008-15)
    International Business Reply Service Competitive Contract 1 
(MC2009-14 and CP2009-20)
Competitive Product Descriptions
    Express Mail
    [Reserved for Group Description]
    Express Mail
    [Reserved for Product Description]
    Outbound International Expedited Services
    [Reserved for Product Description]
    Inbound International Expedited Services
    [Reserved for Product Description]
    Priority
    [Reserved for Product Description]
    Priority Mail
    [Reserved for Product Description]
    Outbound Priority Mail International
    [Reserved for Product Description]
    Inbound Air Parcel Post
    [Reserved for Product Description]
    Parcel Select
    [Reserved for Group Description]
    Parcel Return Service
    [Reserved for Group Description]
    International
    [Reserved for Group Description]
    International Priority Airlift (IPA)
    [Reserved for Product Description]
    International Surface Airlift (ISAL)
    [Reserved for Product Description]
    International Direct Sacks--M-Bags
    [Reserved for Product Description]
    Global Customized Shipping Services
    [Reserved for Product Description]
    International Money Transfer Service
    [Reserved for Product Description]
    Inbound Surface Parcel Post (at non-UPU rates)
    [Reserved for Product Description]
    International Ancillary Services
    [Reserved for Product Description]
    International Certificate of Mailing
    [Reserved for Product Description]
    International Registered Mail
    [Reserved for Product Description]
    International Return Receipt
    [Reserved for Product Description]
    International Restricted Delivery
    [Reserved for Product Description]
    International Insurance
    [Reserved for Product Description]
    Negotiated Service Agreements
    [Reserved for Group Description]
    Domestic
    [Reserved for Product Description]
    Outbound International
    [Reserved for Group Description]

Part C--Glossary of Terms and Conditions [Reserved]

Part D--Country Price Lists for International Mail [Reserved]

[FR Doc. E9-15469 Filed 6-30-09; 8:45 am]
BILLING CODE 7710-FW-P


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