Order No. 5151 United States Of
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Postal Regulatory Commission Submitted 7/12/2019 4:06:44 PM Filing ID: 109715 Accepted 7/12/2019 ORDER NO. 5151 UNITED STATES OF AMERICA POSTAL REGULATORY COMMISSION WASHINGTON, DC 20268-0001 Before Commissioners: Robert G. Taub, Chairman; Nanci E. Langley, Vice Chairman; Mark Acton; Tony Hammond; and Michael Kubayanda Annual Compliance Report, 2018 Docket No. ACR2018 ORDER ISSUING THE DETERMINATION TO UNSEAL LIBRARY REFERENCE PRC–LR–ACR2018–NP3 Washington, DC 20268-0001 July 12, 2019 TABLE OF CONTENTS Page I. INTRODUCTION ................................................................................................. 1 II. BACKGROUND .................................................................................................. 2 A. The Universal Postal Union ...................................................................... 2 B. Prior Related Proceedings Before the Commission .................................. 4 1. The Inbound Letter Post Product .................................................... 4 2. Docket No. R2018-1 ....................................................................... 6 3. Docket No. ACR2017 ..................................................................... 7 4. Periodic Reporting Requirements for the Inbound Letter Post Product .......................................................................................... 8 5. Classification of Inbound International Mail .................................... 9 III. PROCEDURAL HISTORY ................................................................................. 12 A. Initiation of this Proceeding and Relevant Public Participation ................ 12 B. The Commission’s Analysis and Preliminary Determination of Non-Public Treatment ............................................................................................... 13 C. Responses and Replies to Order No. 5055 ............................................. 14 IV. THE NON-PUBLIC MATERIALS ....................................................................... 15 V. SUMMARY OF ARGUMENTS .......................................................................... 17 A. The Postal Service.................................................................................. 17 1. Application for Non-Public Treatment ........................................... 17 2. Response Opposing the Unsealing of Library Reference PRC–LR– ACR2018–NP3 ............................................................................ 17 B. Other Participants ................................................................................... 21 VI. COMMISSION ANALYSIS ................................................................................ 23 A. Legal Standard ....................................................................................... 23 B. Public Interest in Maintaining Financial Transparency ............................ 27 1. The PAEA intended for the Commission to improve transparency into the finances of the Postal Service.......................................... 28 2. The Commission has recognized the importance of improving transparency for non-compensatory products. ............................. 29 3. There is a lack of adequate transparency concerning the Inbound Letter Post product’s poor financial performance. ........................ 31 4. Public disclosure of the Commission’s analysis of the financial problems with the Inbound Letter Post product furthers the public interest of maintaining transparency. ............................................ 33 5. Deferring the transparency concerns to a future rate adjustment proceeding or to the Commission’s process to access non-public materials, subject to protective conditions, is inadequate to cure the lack of transparency. .................................................................... 35 C. Nature and Extent of Alleged Injury ........................................................ 38 1. The existence of competition and product classification are not the end of the inquiry before the Commission. ................................... 39 2. The Postal Service has not met its burden of persuasion to show the nature of and extent to which disclosing aggregated historical data would be likely to result in commercial harm in the rapidly evolving market. ........................................................................... 41 3. The Postal Service has not met its burden of persuasion to show the nature of and extent to which disclosing country group data would be likely to result in commercial harm. ............................... 44 4. The Postal Service has not met its burden of persuasion to show the nature of and extent to which disclosure would be likely to result in harm to the competitive interests of the Postal Service............. 49 5. The Postal Service has not met its burden of persuasion to show the nature of and extent to which disclosure would be likely to result in harm to the negotiation interests of the Postal Service. ............ 51 6. The Postal Service has not met its burden of persuasion to show the nature of and extent to which disclosure would be likely to result in harm to the competitive or negotiation interests of the Postal Service’s business partners. ........................................................ 55 VII. REVIEW OF PRECEDENT REFERENCED BY THE POSTAL SERVICE ......... 58 A. Judicial Precedent .................................................................................. 58 B. Commission Precedent ........................................................................... 60 VIII. ADMINISTRATIVE ACTIONS ........................................................................... 68 IX. CONCLUSION .................................................................................................. 69 X. ORDERING PARAGRAPH ................................................................................ 70 Concurrence in Part, Dissent in Part of Commissioner Michael Kubayanda and Vice Chairman Nanci E. Langley - ii - ORDER NO. 5151 UNITED STATES OF AMERICA POSTAL REGULATORY COMMISSION WASHINGTON, DC 20268-0001 Before Commissioners: Robert G. Taub, Chairman; Nanci E. Langley, Vice Chairman; Mark Acton; Tony Hammond; and Michael Kubayanda Annual Compliance Report, 2018 Docket No. ACR2018 ORDER ISSUING THE DETERMINATION TO UNSEAL LIBRARY REFERENCE PRC–LR–ACR2018–NP3 (Issued July 12, 2019) I. INTRODUCTION In accordance with 39 U.S.C. §§ 3652(f)(2) and 504(g)(3) and 39 C.F.R. § 3007.103(c), the Commission has determined the appropriate degree of confidentiality to accord to Library Reference PRC–LR–ACR2018–NP3. Library Reference PRC–LR– ACR2018–NP3 contains the Commission analysis of Inbound Letter Post1 data, which 1 The term “Inbound Letter Post” refers to the product offered by the Postal Service. See Postal Regulatory Commission, Mail Classification Schedule (MCS) (posted March 31, 2019), § 1130, available at http://www.prc.gov/mail-classification-schedule. This Postal Service product is a subset of a broader category of mailpieces referred to as “UPU letter post.” See Universal Postal Convention, Article 17 (adopted by the 2016 Universal Postal Union Congress), available at http://www.upu.int/uploads/tx_sbdownloader/actsActsOfThe26ThCongressIstanbul2016En.pdf (UPU Convention). UPU letter post includes inbound and outbound items, single-piece and bulk items, and priority and non-priority items. UPU Convention, Article 17. Accordingly, the term “UPU letter post” refers to several Postal Service products, in addition to Inbound Letter Post. Docket No. ACR2018 - 2 - Order No. 5151 were filed by the Postal Service under seal.2 For the reasons discussed below, the Commission determines that it is not appropriate to accord non-public treatment to the data and analysis appearing in Library Reference PRC–LR–ACR2018–NP3 and that these materials should be unsealed. II. BACKGROUND A. The Universal Postal Union The Universal Postal Union (UPU) is a United Nations specialized agency comprising 192 member countries, including the United States.3 Member countries negotiate international agreements governing the exchange of international mail, including applicable rates for the delivery of international mail. The UPU identifies three types of international mail: Letter Post, Parcel Post, and Express Mail Service (EMS).4 The data at issue in this proceeding involve a subset of UPU letter post. UPU letter post consists of letters, postcards, printed papers, and small packets weighing up to 2 kilograms.5 The UPU divides letter post into three shapes: small letters and cards (format P); large letters or “flats” (format G); and bulky letters and small packets (format E). Id. Article 17.5. In January 2018, the UPU Convention began differentiating UPU 2 See Library Reference PRC–LR–ACR2018–NP3, April 12, 2019; see Library Reference USPS– FY18–NP9, December 28, 2018, Excel file “IB LP Shape by UPU Group FY18.xlsx,” tab “Summary.” 3 The UPU website, available at http://www.upu.int/en/the-upu/the-upu.html. The full list of UPU member countries is available at http:/www.upu.int/en/the-upu/member-countries.html. 4 UPU Convention, Article 1. EMS mail is an express service for documents and merchandise, which member countries have the option of providing. MCS § 2515.6.1. EMS prices are set through bilateral or multilateral negotiations. Id. §§ 2515.6.4., 2515.6.6. 5 UPU Convention, Article 17.5. UPU letter post also consists of literature for the blind weighing up to 7 kilograms and M-bags weighing up to 30 kilograms. Id.