E9-22862. International Mail

AGENCY:

Postal Regulatory Commission.

ACTION:

Notice

SUMMARY:

The Commission is adding Inbound International Expedited Services 2 to the Competitive Product List. This action is consistent with changes in a recent law governing postal operations.

DATES:

Effective September 23, 2009 and is applicable beginning August 19, 2009.

FOR FURTHER INFORMATION CONTACT:

Stephen L. Sharfman, General Counsel, 202-789-6820 and [e-mail].

SUPPLEMENTARY INFORMATION:

Regulatory History, 74 FR 37739 (July 29, 2009).

I. Introduction

II. Background

III. Comments

IV. Commission Analysis

V. Ordering Paragraphs

I. Introduction

The Postal Service proposes a change in rates not of general applicability for Inbound International Expedited Services 2. For the reasons discussed below, the Commission approves the Postal Service's proposal.

II. Background

On July 28, 2009, the Postal Service filed a notice announcing changes in rates not of general applicability for Inbound International Expedited Services 2 effective January 1, 2010.^[1] The Postal Service attached a redacted copy of the 2010 rates and a certified statement establishing compliance with 39 U.S.C. 3633 and 39 CFR 3015.5(c)(2) to the Notice as Attachments 1 and 2, respectively. Id. at 2. The Postal Service also submitted as Attachment 3 a listing of countries in each pricing tier and incorporated by reference the description of Inbound International Expedited Services 2 contained in its supporting documentation filed in Docket Nos. MC2009-10 and CP2009-12. The Postal Service submitted the rates, related financial information, and certified statement required by 39 CFR 3015.5(c)(2) under seal.

The Notice states that in Docket No. MC2009-10, the Governors established prices and classifications not of general applicability for Inbound Express Mail International (EMS). W. Ashley Lyons, Manager, Regulatory Reporting and Cost Analysis, Finance Department certifies that the prices are in compliance with the price floor and ceiling formulas set forth in Governors' Decision No. 08-20 and 39 U.S.C. 3633(a). See id., Attachment 2. In Order No. 162, the Commission added Inbound International Expedited Services 2 to the Competitive Product List as a new product under Express Mail, Inbound International Expedited Services.^[2] The rates took effect on January 1, 2009.

In accordance with the provisions of the EMS Cooperative of the Universal Postal Union (UPU), rates for the delivery of inbound Express Mail International must be communicated to the UPU by August 31 of the year before which they are to take effect. As a member of the EMS Cooperative, the Postal Service may not change its rates for the coming year after August 31. In Order No. 162, the Commission raised concerns with filing these rates with the Commission after August 31, even though they do not take effect until January 1 of the following year. The Commission indicated that if a product is found to violate the Postal Accountability and Enhancement Act (PAEA), e.g., does not satisfy section 3633(a)(2), the Postal Service may be without a suitable remedy until the rate change is permitted for the following year. Id. at 9. The Commission, therefore, appreciates the Postal Service's filing the 2010 rates well in advance of the August 31, 2009 UPU deadline.

In its Notice, the Postal Service indicates that the rates to take effect in 2010 are divided into two tiers.^[3] Tier one applies to postal operators with a performance level agreement, such as EMS Pay-for-Performance Plan participants and Kahala Posts Group members. Tier two applies to all other postal operators that transmit EMS to the United States. Notice at 2-3. The Postal Service provided a listing of countries in each tier, noting that this list may be subject to change on January 1, 2010. Id. at 3 and Attachment 3.

The Postal Service states that the China Post Group, whose inbound EMS rates were established by a bilateral agreement approved by the Commission in Docket Nos. CP2008-6 and CP2008-7, is expected to join Tier 1. Id. at 3. The parties have agreed that the bilateral agreement will expire at the end of the 1-year term. Id.

The Postal Service maintains that the rates, related financial information, and certain portions of the certified statement required by 39 CFR 3015.5(c)(2), should remain under seal. Id. at 4.

In Order No. 271, the Commission gave notice of the docket, appointed a Public Representative, requested supplemental information pursuant to 39 CFR 3015.6, and provided the public an opportunity to comment.^[4]

The Postal Service submitted responses to the Commission's request for supplemental information on August 10, 2009.^[5] In Order No. 271, among other things, the Commission requested the Postal Service to provide supplemental information including the 2010 EMS Pay-for-Performance Plan. The Postal Service response indicated this information was not yet available. On August 12, 2009, Chairman's Information Request No. 1 (CHIR No. 1) was issued requesting the 2009 EMS Pay-for-Performance Plan by August 14, 2009. On August 13, 2009, the Postal Service provided its response to CHIR No. 1 under seal.

III. Comments

Comments were filed by the Public Representative.^[6] No other interested parties submitted comments. The Public Representative states that each element of 39 U.S.C. 3633(a) appears to be met by the proposed Inbound International Expedited Services 2 rate proposal. Id. at 2. He further states that the Postal Service has provided adequate justification for maintaining confidentiality in this case. Id. at 2-3. The Public Representative observes that the rates have been filed in a timely manner for the Commission's review and to permit notification to the UPU prior to the effective date. Additionally, he notes that the instant notice provides a current projection based upon the most recent information available and that the participation of the other postal administrations in the pricing structure may be subject to change. Id. at 4-5. The Public Representative concludes that the Notice comports with 39 CFR 3015, 39 U.S.C. 3632 and 3642.

IV. Commission Analysis

The Commission has reviewed the Notice, the supplemental information, and the comments filed by the Public Representative.

Statutory requirements. Planned price changes for competitive products are reviewed pursuant to 39 U.S.C. 3633(a) and Commission regulations under 39 CFR 3015, which implements section 3633. In brief, these statutory and regulatory provisions require each competitive product to cover its attributable costs (39 U.S.C. 3633(a)(2)), prohibit the subsidization of competitive products by market dominant products (39 U.S.C. 3633(a)(1)), and require that competitive products collectively make an appropriate contribution to the recovery of the Postal Service's total institutional costs.

Based on the information provided, the Commission finds that the proposed rates cover attributable costs, 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, a preliminary review of the proposed rates indicate that the rates comport with the provisions applicable to rates for competitive products.

Other considerations. The Postal Service is directed to provide the Commission with the 2010 EMS Pay-for-Performance Plan once it is approved by the EMS Cooperative of the UPU.

Based on the record in this proceeding, the Commission finds that the proposed rates for Inbound International Expedited Services 2 are in accord with the relevant statutory and regulatory requirements of 39 U.S.C. 3633(a) and 39 CFR 3015.7.

V. Ordering Paragraphs

It is ordered:

1. The proposed rates for Inbound International Expedited Services 2 will take effect January 1, 2010 are in accordance with the relevant statutory and regulatory requirements of 39 U.S.C. 3633(a) and 39 CFR 3015.7.

2. The Postal Service is directed to provide the Commission the 2010 EMS Pay-for-Performance Plan as discussed in this order within 30 days after adoption by the EMS Cooperative of the Universal Postal Union.

3. The Secretary shall arrange for publication of this order in the Federal Register.

Issued: August 19, 2009.

By the Commission.

Shoshana M. Grove,

Secretary.

Footnotes

1.  Notice of the United States Postal Service of Filing Changes in Rates Not of General Applicability, July 28, 2009 (Notice).

2.  See Docket Nos. MC2009-10 and CP2009-12, Order Adding Inbound International Expedited Services 2 to Competitive Product List, December 31, 2008 (Order No. 162).

3.  The Postal Service states it expects that all members of the EMS Cooperative will participate in the Pay-for-Performance Plan. Therefore, the former three-tier rate structure is now consolidated into two tiers.

4.  Notice and Order Concerning Filing of Changes in Rates for Inbound International Expedited Services 2, August 4, 2009 (Order No. 271).

5.  Response of the United States Postal Service to Order No. 271, Notice of Filing Requested Materials Filed Under Seal, August 10, 2009.

6.  Public Representative Comments in Response to United States Postal Service Notice of Filing Changes for Inbound International Expedited Services 2, August 13, 2009 (Public Representative Comments). The Public Representative filed an accompanying Motion of the Public Representative for Late Acceptance of Comments in Response to United States Postal Service Notice of Filing Changes for Inbound International Expedited Services 2, August 13, 2009. The motion is granted.