04-23997. Discontinuance of Volume Discount Availability for IPA and ISAL Mailers

AGENCY:

Postal Service.

ACTION:

Final rule.

SUMMARY:

This final rule deletes International Mail Manual (IMM) 292.212, 292.213, and 293.75, which authorized mailers who spent $2 million or more combined on International Priority Airmail (IPA) and International Surface Air Lift (ISAL) in the preceding Postal Service fiscal year to receive discounted postage rates.

EFFECTIVE DATE:

November 3, 2004.

FOR FURTHER INFORMATION CONTACT:

Rick Klutts, 202-268-7268.

SUPPLEMENTARY INFORMATION:

On July 28, 2004, the Postal Service published for comment in the Federal Register (69 FR 45002-45003) a proposed rule to delete standards that authorize postage discounts for mailers who spend $2 million or more combined on International Priority Airmail (IPA) and International Surface Air Lift (ISAL) in the preceding Postal Service fiscal year. The Postal Service proposed to discontinue these discounts due to recent Postal Service reviews of costs for providing these services. These cost reviews identified increases in transportation, terminal dues, and other costs that have all risen while published rates for IPA and ISAL have remained static since 2001. When costs rise above the rate we are charging, we are obliged to adjust prices and discounts (in this case IPA and ISAL) so they are not subsidized by other domestic or international product offerings. These changes do not affect the standards for existing or prospective customers who use IPA or ISAL mail and participate or would like to participate in the International Customized Mail (ICM) service agreement program as defined in IMM 297.

The Postal Service requested comments on the proposed rule by August 18, 2004. Comments were received from two parties, one who voiced opposition to the proposal, and one whose comment was outside the scope of the proposed rule.

An industry organization respondent questioned the rationale for the proposal and requested a more detailed cost analysis; this commenter also cited a 1998 report to Congress that states there is adequate cost coverage for these products. In addition, the commenter suggested a correlation between the proposed discontinuance of volume discounts and International Customized Mail (ICM) agreements. As pointed out in the supplementary information, the Postal Service is obligated to offer its services at a rate that covers both average attributable cost and institutional cost. When costs rise above the rate we are charging, adjustments to prices and discounts (in this case IPA and ISAL) are required so they are not subsidized by other domestic or international product offerings. Moreover, since 1998, transportation costs, terminal dues costs, and other costs have risen while published rates for IPA and ISAL have remained static since 2001.

The other comment was made by an international mailer who enters mail under an ICM agreement. The mailer stated that IPA was a very good service and they did not want to lose their current discount. Since this proposed rule does not address ICMs, this comment falls outside the scope of this rulemaking and therefore will not be addressed at this time. Additionally, nothing in this change precludes this mailer from entering IPA and ISAL mailings under their existing ICM agreement.

For the reasons discussed above, the Postal Service adopts the following amendments to the International Mail Manual, which is incorporated by reference in the Code of Federal Regulations. See 39 CFR Part 20.1.

List of Subjects in 39 CFR Part 20

• International postal service
• Foreign relations

PART 20—[AMENDED]

1. The authority citation for 39 CFR part 20 continues to read as follows:

Authority: 5 U.S.C. 552(a); 39 U.S.C. 401, 404, 407 and 408.

2. Amend the International Mail Manual as set forth below:

International Mail Manual (IMM)

* * * * *

2 Conditions for Mailing

* * * * *

290 Commercial Services

* * * * *

292 International Priority Airmail Service

* * * * *

292.2 Postage

292.21 Rates

* * * * *

(Delete 292.212 and 292.213; renumber current 292.214 through 292.217 as new 292.212 through 292.215.)

* * * * *

293 International Surface Air Lift (ISAL) Service

* * * * *

293.7 Postage

* * * * *

(Delete 293.75; renumber current 293.76 as new 293.75.)

* * * * *

Neva R. Watson,

Attorney, Legislative.