[Federal Register Volume 62, Number 106 (Tuesday, June 3, 1997)]
[Rules and Regulations]
[Pages 30242-30250]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-14257]


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POSTAL RATE COMMISSION

39 CFR Part 3001

[Docket No. RM97-1; Order No. 1176]


Rules of Practice and Procedure

AGENCY: Postal Rate Commission.

ACTION: Final rule.

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SUMMARY: The Commission amends Rule 54 of its rules of practice. When 
the Postal Service files a request that proposes to change rates or 
fees and, at the same time, proposes to change established cost 
attribution principles, the amendment requires the Postal Service to 
estimate the impact of its proposed changes in rates or fees separately 
from the impact of its proposed changes in attribution principles. The 
purpose of the amendment is to give other participants and the 
Commission adequate and timely notice of the impact of the proposals 
that it contains, in order to facilitate evaluation of those proposals.

DATES: This rule will take effect on June 3, 1997.

FOR FURTHER INFORMATION CONTACT: Stephen Sharfman, Legal Advisor, (202) 
789-6820.

SUPPLEMENTARY INFORMATION: On December 17, 1996, the Commission issued 
its Notice of Proposed Rulemaking (``NPR'') in this docket. Order No. 
1146, 61 FR 67760-67763, December 24, 1996. The NPR proposed to amend 
Rule 54(a) of the Commission's Rules of Practice [39 CFR 3001.54(a)] to 
require Postal Service rate filings to include an alternate cost 
presentation that estimates what the impact of its proposed changes in 
rates would be on attributable costs and cost coverages if established 
cost attribution principles were applied. The amendment proposed in the 
NPR would not require an alternate cost presentation to show the impact 
of minor changes in the procedures by which attribution principles are 
implemented. In response to the comments received, the Commission has 
modified the amendment proposed in the NPR in one respect. Under final 
amended Rule 54(a), the Postal Service's rate request would have to 
describe proposed changes in the detailed procedures by which 
attribution principles are implemented, even though such changes would 
not require an alternate cost presentation.

I. Procedural History

    Current Rule 54(a) requires the Postal Service to include with its 
rate filings enough information to ``fully inform'' the Commission and 
the parties of the ``significance and impact'' of the proposed changes. 
The NPR observed that the basic purpose of Rule 54 is to require the 
Postal Service to accompany its requests for changes in rates with the 
threshold level of cost, volume, and revenue information necessary to 
support its direct case, so that its request can be evaluated within 
the tight deadline that the Act imposes.
    The Commission concluded that to satisfy Rule 54(a), the Postal 
Service's request must separately identify the impact that its proposed 
changes in rates and its proposed changes in attribution principles 
would have on cost coverages. It noted that in Docket No. MC96-3, the 
Postal Service's Rule 54 cost presentation did not satisfy this 
objective. It estimated only the combined effect on subclass 
attributable costs and cost coverages of its proposed changes in rates 
and its proposed changes in attribution principles. It left the task of 
distinguishing between these effects to other parties and the 
Commission.
    In its NPR, the Commission observed that it is not properly the 
parties' burden to disentangle the effects of the Postal Service's 
proposed changes in rates from the effects of its proposed changes in 
attribution principles so that they can separately evaluate these 
aspects of the Postal Service's proposals. As the proponent of change, 
the Postal Service has the burden of going forward, and the burden of 
persuasion. See 5 U.S.C. 556(d), 39 U.S.C. 3622, 39 CFR 3001.53 and 
3001.54. If the Postal Service's request confounds the effects of its 
proposals to change rates and its proposals to change cost attribution 
principles, its request does not provide timely and effective notice of 
the significance of either.
    The Commission noted that when a Postal Service request combines 
proposals to change rates with proposals to change established cost 
attribution principles, mailers and competitors are not able to 
determine from the Postal Service's request how its proposed changes in 
attribution principles would affect their interests until they 
calculate for themselves what cost coverages would be at the Postal 
Service's

[[Page 30243]]

proposed rates, under established attribution principles. The NPR noted 
that for many potential participants in Commission proceedings, 
performing this elaborate set of calculations is a formidable and time 
consuming task. It can defeat, or seriously delay, their ability to 
determine how the Postal Service's proposals would affect them, and 
whether they should intervene to support or oppose them.
    Where a Postal Service rate request proposes to simultaneously 
change rates and attribution principles, amended Rule 54(a) requires 
that the request include an alternate attributable cost presentation 
that calculates attributable costs and cost coverages at the Postal 
Service's proposed rates according to established attribution 
principles. This ensures that the Commission and potential participants 
will receive timely and effective notice of the separate impact of the 
Postal Service's proposed changes in rates and its proposed changes in 
attribution principles.

II. Comments on the Notice of Proposed Rulemaking

    The Commission received eleven sets of comments on the amendment 
proposed in the NPR. The American Business Press (ABP), Dow Jones & 
Company, Inc. (Dow Jones), the National Association of Presort Mailers 
(NAPM), and the National Federation of Nonprofits (NFN), supported the 
amendment as proposed. The American Bankers Association (ABA), the 
Major Mailers Association (MMA), McGraw-Hill Companies, Inc. (McGraw-
Hill), the Newspaper Association of America (NAA), United Parcel 
Service (UPS), and the Officer of the Consumer Advocate (OCA), proposed 
strengthening the proposed amendment. Only the Postal Service opposed 
it.

1. Adequacy of Notice

    The bulk of the comments received argue proposed Rule 54(a) is 
inadequate to provide the notice they need of the impact of the Postal 
Service's proposals on attributable costs and cost coverages. They 
offer numerous proposals for increasing the scope and the detail of the 
information required in the alternate attributable cost presentation 
required by the proposed rule. Out of concern for the burden on the 
Postal Service, the alternate attributable cost presentation required 
by the proposed rule is unchanged in the final rule. The final rule, 
however, incorporates a proposal that Postal Service rate requests flag 
all changes that it proposes in established attribution procedures, 
including implementation details that do not meet the definition of 
``attribution principles,'' and therefore do not trigger the alternate 
cost presentation requirement.
    As in proposed Rule 54(a), the alternate cost presentation required 
by the final rule applies to proposed changes in ``cost attribution 
principles,'' not to proposed changes in the detailed mechanics by 
which those principles are implemented. The final rule uses the phrase 
``cost attribution principles'' to describe the baseline attribution 
procedures that must be held constant in the alternative cost 
presentation that the amendment would require. ``Cost attribution 
principles'' include theories of cost causation (e.g., volume 
variability, exclusivity), models of cost causation (e.g., econometric 
models of volume variability), the identity and role of cost drivers 
(e.g., shape, coverage), and the identity and role of distribution keys 
(e.g., pieces, pound/miles). ``Cost attribution principles'' are not 
intended to encompass minor adjustments to the mechanics of 
implementing these principles if the adjustments do not conflict with 
the principles themselves. Nor are attribution principles intended to 
encompass data updates, apparent errors in arithmetic, spreadsheet 
mechanics, or documentation that do not raise issues as to the theory 
or logic by which costs are attributed to subclasses.
    UPS questions whether notice would be adequate if the Postal 
Service is excused from providing an alternate cost presentation where 
it changes only the mechanics by which established attribution 
principles are implemented. Notice of the effect of such changes is 
necessary, it argues, because they could substantially affect subclass 
attributable costs and cost coverages. UPS recognizes that the 
Commission's motive for narrowing the scope of the rule in this way is 
to reduce the burden of the alternate cost presentation requirement on 
the Postal Service. It argues that only corrections of apparent 
arithmetic, documentation, or presentation errors should be exempt from 
the rule. If proposed changes in the mechanics of implementation are 
exempt, it contends, the Postal Service would have too much discretion 
to characterize its proposed attribution changes as changes in the 
mechanics of implementation rather than in attribution principles. It 
therefore suggests that the Commission adopt a rule similar to the 
broader requirements of Federal Energy Regulatory Commission Rule 
Sec. 154.301 [18 CFR] described in the NPR. Comments of UPS in response 
to notice of proposed rulemaking, January 30, 1997, at 2-3.
    The OCA supports the NPR's proposal not to subject minor changes in 
the mechanics by which attribution principles are implemented to the 
requirements of the rule. The OCA argues, however, that the rule should 
require Postal Service rate requests to identify proposed changes in 
implementation mechanics, in order to make it easier to assess whether 
the effects of such changes are inconsequential. Comments of the Office 
of the Consumer Advocate to the Postal Rate Commission, January 31, 
1997, at 24.
    In the past, the Postal Service has made continuous, evolutionary 
changes in the mechanics by which attribution principles are 
implemented that do not rise to the level of changes in ``attribution 
principles'' as defined above. It is the Commission's observation that 
over the past decade such changes have rarely had a substantial impact 
on the relative shares of subclass attributable costs. Accordingly, it 
appears that such changes do not need to be included within the scope 
of the rule to achieve its purposes. In excluding such changes, the 
Commission is assuming that they will continue to have only 
inconsequential effects on subclass attributable costs and cost 
coverages, as in the past. If past experience turns out not to be 
representative of the future, the Commission will make appropriate 
amendments to the rule. The Commission, however, agrees with the OCA 
that the rule should require Postal Service requests to identify all 
changes that it proposes to make in the mechanics of implementing 
attribution principles to help parties and the Commission assess 
whether their effects are inconsequential. Since the Postal Service 
typically makes only a few such changes from one rate case to the next, 
this rule should have a minor effect on the Postal Service's burden of 
preparing rate requests. Accordingly, the language of amended Rule 
54(a) has been modified to include this requirement.
    McGraw-Hill makes a number of proposals for strengthening the 
notice required by proposed Rule 54(a). The most significant of its 
proposals is that alternate attributable cost presentations show the 
impact of the Postal Service's proposed changes in attribution 
principles, individually and collectively. Comments of the McGraw-Hill 
Companies, Inc., January 31, 1997, at 3. Such a requirement can be 
found in the rules of practice of other public utility commissions. 
See, for example, Sec. 200.2 of the Municipal Regulations for

[[Page 30244]]

the Public Service Commission of the District of Columbia [15 DCMR 
Sec. 200.2 (1991)] described in the NPR.
    Such a rule would make it much easier for the parties and the 
Commission to evaluate the significance of each proposed change if the 
impact of each were separately estimated. In the context of the Postal 
Service's rate filings, however, the Commission is concerned that such 
a requirement would impose too great a burden on the Postal Service. 
The Postal Service's attributable cost presentations are more complex 
and more detailed than those required of most public utilities. The 
Postal Service strenuously objects to the burden involved in preparing 
a single alternate cost presentation that shows the collective effect 
of its proposed changes in attribution principles. Postal Service 
Comments at 2-6. If the Postal Service had been required to prepare 
attributable cost presentations for each of its proposed changes in 
attribution principles in the most recently filed rate request (Docket 
No. MC97-2), such a rule would have required ten separate test year 
attributable cost presentations. It would have had to separately show 
the impact of its proposal to substitute volume-variable for single-
subclass access costs, to substitute the Bradley analysis of purchased 
highway transportation cost variability for the established analysis, 
to omit the Alaskan Air adjustment, the Hawaiian Air adjustment, non-
volume variable Special Delivery Messenger costs, non-volume variable 
window service costs for postal cards, the Vehicle Service Drivers 
variability adjustment, volume variable route time, special purpose 
route adjustments, as well as the collective impact of all of these 
proposals. Although such notice would be highly relevant and useful to 
those evaluating these proposals, it might add so significantly to the 
burden of documenting the Postal Service's rate requests as to be 
impractical. For this reason, McGraw-Hill's proposal is not adopted in 
the final rule.
    MMA was concerned that proposed Rule 54(a) did not specify the 
level of documentation of the alternate cost presentation that it would 
require. It urged that the Rule specify that supporting exhibits are 
required. Comments of Major Mailers Association on Notice of Proposed 
Rulemaking, January 31, 1997, at 5. Proposed Rule 54(a) contemplated 
that the Postal Service document its alternate cost presentation at the 
same level of detail that it documents its main attributable cost 
presentation. The Commission agrees with MMA that it would be helpful 
to make the required level of documentation explicit in the amended 
Rule. Accordingly, amended Rule 54(a) explicitly requires that an 
alternate attributable cost presentation comply with Rule 54(h), which 
prescribes the level of detail that the Postal Service is required to 
provide in its main attributable cost presentation. The amended Rule 
would provide parties with detailed calculations of attributable costs 
under established attribution principles and under those proposed by 
the Postal Service, both at the Postal Service's proposed rates and 
volumes. This should help parties separately assess the impact of 
proposed changes to specific attribution principles.
    McGraw-Hill proposes strengthening the notice required by proposed 
Rule 54(a) in several other respects. It proposes that the Rule makes 
it clear that the alternate attributable cost presentation include a 
base year as well as a test year presentation. McGraw-Hill Comments at 
2. Because the amended rule requires that an alternate attributable 
cost presentation satisfy Rule 54(h), it requires it to include base 
year, interim year, and test year calculations.
    Similarly, McGraw-Hill proposes that an alternate cost presentation 
be required ``whenever a cost element that had previously been treated 
as either wholly attributable or wholly non-attributable is proposed to 
be treated as attributable in part. * * *'' Id. If a proposed change 
fits the definition of a change to an ``attribution principle'' 
provided above, it will require an alternate cost presentation, 
regardless of the degree to which it alters the percent attributability 
of a particular cost component. For the same reason, an alternate cost 
presentation would be required ``whenever the Postal Service proposes 
to implement any change in cost attribution principles that had been 
suggested by the Commission on a prospective basis (but not fully 
litigated) in a prior Commission proceeding[,]'' as McGraw-Hill 
recommends. Id. The weight of precedent does not attach to prospective 
recommendations by the Commission, since they have not been litigated. 
Because parties should have an opportunity to litigate the validity of 
such principles, they need notice of their significance and impact.
    McGraw-Hill also recommends that an alternate cost presentation be 
required ``when a requested change in rates or fees is based in part on 
a significant change in data systems, or methods of extrapolating from 
cost data (particularly IOCS data). * * *'' Id. The Commission does not 
believe that it is practical to require the Postal Service to maintain 
different, parallel data collection systems in order to maintain 
consistency with prior attribution procedures unless it is necessary to 
preserve the ability to apply established attribution principles. 
Whether changes proposed by the Postal Service in ``methods of 
extrapolating from cost data,'' such as IOCS data, should come within 
the scope of the rule depends upon whether those proposed changes imply 
changes to established theories or assumptions about how costs are 
caused. If such changes are essentially mechanical, without theoretical 
implications, obtaining information about the impact of such changes is 
best left to the normal discovery process.
    McGraw-Hill also recommends that an alternate cost presentation be 
required ``whenever the Postal Service proposes to alter substantially 
its mail processing cost treatment for time not spent handling mail. * 
* *'' Id. Here, too, if the proposed change in how mail processing time 
is allocated implies a change in an established theory or assumption 
about how costs are caused, its effects should be reflected in an 
alternate cost presentation. If the proposed change is essentially 
mechanical, without theoretical implications, obtaining information 
about its impact is best left to the normal discovery process.
    The Postal Service notes that the purpose of proposed Rule 54(a) is 
to ``provide parties and the Commission with enough information from 
the outset of a proceeding to evaluate the significance and impact of 
the Postal Service's proposals,'' Postal Service Comments at 12, citing 
page 3 of the NPR. It argues that the alternate cost presentation 
contemplated by proposed Rule 54(a) is not needed to accomplish this 
purpose. In its view, it is the Commission's or the intervenors' burden 
to determine how the Postal Service's attribution procedures differ 
from established attribution principles, and to assess the impact those 
differences have on subclass attributable costs and cost coverages at 
the Postal Service's proposed rates. Postal Service Comments at 10-12. 
It contends that adequate notice of the impact of its proposed 
departures from Commission-approved attribution procedures can be 
obtained by ``simple ratios derived from a comparison of past base 
years under the Postal Service's and the Commission's methodology. * * 
*'' Id. at 10-11. Attachments A through C to the Postal Service's 
Comments on the NPR are spreadsheets that calculate such ratios for FY 
1993, the base year in R94-1. Attachment D to the Postal Service's 
Comments attempts to approximate the Commission's subclass

[[Page 30245]]

attributable costs for the test year in Docket No. MC96-3 by 
multiplying the Postal Service's subclass attributable costs for the 
test year in Docket No. MC96-3 by the percentage difference between the 
Postal Service's FY 1993 subclass attributable costs and the 
Commission's FY 1993 subclass attributable costs.
    Attachment D then compares this approximation with fully modeled 
subclass attributable costs using Commission-approved costing 
principles (a preliminary set of attributable costs provided by the 
Commission in Library Reference PRC-LR-2 in MC96-3). The Postal Service 
characterizes the error produced in this instance by its ratioing 
technique as ranging from -3.03 percent for parcel post to +2.36 
percent for Express Mail. The Postal Service contends, without further 
analysis, that this ``firmly establishe[s]'' the ``adequacy'' of its 
ratioing technique to provide the required notice in future dockets. 
Postal Service Comments at 12.
    After filing its Comments on the NPR, the Postal Service filed a 
request for changes in rates in Docket No. MC97-2. As in MC96-3, its 
request proposed changes in rates and changes in cost attribution 
principles, and estimated only their combined effect on attributable 
costs and cost coverages. As in MC96-3, the Commission ordered the 
Postal Service to separately show the effects of its proposed changes 
in rates and its proposed changes in attribution principles on cost 
coverages, so that the Commission and the parties could evaluate them 
separately. See Order No. 1165, March 12, 1997. In MC96-3, the Postal 
Service declined to calculate fully modeled costs using established 
attribution principles. In MC97-2, as a substitute for fully modeled 
costs, it offered approximations based on ratios of Postal Service and 
Commission attributable costs in the MC96-3 base year. It relied on 
Attachment D to its Comments on the NPR as having demonstrated that 
ratioing will accurately approximate what fully modeled test year 
attributable costs would be in any docket if they were calculated by 
established attribution principles. See Response of USPS to Order No. 
1165, March 24, 1997, at 1, citing LR-PCR-52.
    In MC97-2, the Commission rejected the Postal Service's offer to 
provide ratio-based approximations in lieu of fully modeled 
attributable costs using established attribution principles. It 
observed that the Postal Service had provided no statistical or 
analytical basis for concluding what set of approximation errors would 
result from a future application of its ratioing technique involving 
other base and test periods. The Commission noted that the 
approximation errors produced by the use of ratios in Attachment D 
actually range from -25.58 percent to +2.36 percent for the various 
subclasses, and that the Postal Service, with one exception, offered no 
explanation for the magnitude of these errors. Order No. 1169, April 
14, 1997, at 3-4.
    In responding to the Postal Service's offer of provided ratio-based 
approximations, the Commission focused on how ratioing measures the 
impact of proposed changes in attribution principles on percentage 
points of cost coverage--the traditional measure of impact in 
Commission proceedings. It examined the seven subclasses most affected 
by the Postal Services proposed changes in attribution principles. 
Under realistic assumptions, it concluded, ratio-based approximations 
for a majority of those subclasses have a predictive uncertainty that 
is at least 50 percent as large as the impact of the Postal Service's 
proposed changes in attribution principles. Id. at 4-7. The Commission 
concluded that where uncertainty surrounding an approximated cost 
coverage is more than half as large as the effect of proposed changes 
in attribution principles itself, ratioing substantially obscures the 
effect of which notice is required. Id. at 7.
    In Order No. 1169, the Commission discussed possible reasons that 
ratioing appears to yield inaccurate results for so many subclasses. It 
noted that because attribution analysis focuses on cost behavior at the 
segment and component level, analysis of the effect of applying 
different attribution principles tends to be more reliable, and is more 
verifiable, if it is built up by segments and components, rather than 
arrived at by gross ratioing. Id.
    The Postal Service characterizes its ratioing technique as 
``simple'' and ``straightforward,'' yet the Postal Service recognizes 
that various ad hoc adjustments are needed if key assumptions 
underlying ratioing are to hold. For ratioing to be useful, the 
differences between the attribution principles used by the Postal 
Service and the Commission in the base period must remain unchanged in 
the test period. The Postal Service recognized that ratios of Postal 
Service to Commission attributable costs in the R94-1 base year would 
not yield a useful approximation of Commission-approved MC96-3 test 
year attributable costs, because the Postal Service applied different 
attribution principles in MC96-3 than in R94-1. For that reason, 
Attachment D bases ratios on the Postal Service's FY 1993 CRA, rather 
than its R94-1 base year attributable costs.
    The Postal Service also appears to recognize that the base period 
that it used in Attachment D (its FY 1993 CRA) should have been further 
adjusted to reflect subsequent corrections in the editing of second-
class IOCS tallies, in order to make its base period attribution 
procedures consistent with the Commission's FY 1993 base year 
procedures in all respects other than in attribution principles. See 
Attachment D to Postal Service Comments, note 4. The Postal Service 
also recognizes that a detailed adjustment to the Commission's R94-1 
base year attributable costs is required to adjust costs associated 
with Alaskan Air Bypass mail if base period ratios are to approximate 
the Commission's test year attributable costs for some subclasses. See 
Docket No. MC96-3, LR-SSR-122, at 9-10.
    In Order No. 1169, the Commission discusses other assumptions 
underlying ratioing, some of which appear not to hold in the base and 
test periods used in Attachment D, and which appear to contribute to 
the substantial approximation errors that it yields for some 
subclasses. See Order No. 1169 at 7-8 and Attachment 2. The Commission 
observed that whether key assumptions underlying ratioing have been met 
is difficult to verify because the Postal Service did not provide the 
detailed analysis reflected in the cost model. Id. at 8.
    The Postal Service has not provided a statistical or analytical 
basis for concluding that ratioing will accurately, reliably, and 
verifiably predict how subclass attributable costs and cost coverages 
in a test year would look if established attribution principles were 
applied. Therefore, ratio-derived approximations of subclass 
attributable costs will not be considered adequate notice of the impact 
of its proposed changes in attribution principles under final Rule 
54(a).

2. Definition of Baseline

    Proposed Rule 54(a) makes the set of attribution principles that 
the Commission applied in its most recent general rate proceeding in 
which its recommended rates were adopted the baseline from which 
changes in attribution principles would be determined. The Commission 
believes that this set of attribution principles constitutes an 
appropriate baseline because it has been fully litigated, provides the 
cost basis for current rates, defines the status quo, and has the 
weight of precedent. Order No. 1146 at

[[Page 30246]]

10-11 [61 FR at 67762]. The OCA proposes that amended Rule 54(a) 
identify a particular set of appendices or workpapers of a specific 
Commission opinion as containing the established set of attribution 
principles, in order to reduce disputes as to what attribution 
principles are ``established.'' It recognizes that this aspect of the 
Rule would have to be amended periodically as the Commission adopts 
changes in attribution principles. OCA Comments at 27-28.
    NAA notes that if proposed Rule 54(a) were applied today, its 
language would refer to Docket No. R94-1, the most recent general rate 
case. It points out that in that docket there was an initial 
Recommended Decision followed by a Further Recommended Decision on 
reconsideration that corrected some inconsequential technical errors in 
the Commission's attributable cost calculations. It notes that there is 
no ambiguity as to which of those recommended decisions incorporates 
established attribution principles, since the Governors adopted the 
rates in the Further Recommended Decision on reconsideration. It 
anticipates a future situation in which a recommended decision on 
reconsideration is not accepted by the Governors. In that instance, it 
advises, the Commission should indicate which of its recommended 
decisions incorporates established attribution principles. NAA Comments 
at 3-4.
    The language of amended Rule 54(a) clearly indicates that the 
baseline set of attribution principles is the set used in the 
Commission recommended decision that forms the basis for the rates 
adopted by the Governors. Even where there is more than one recommended 
decision in a docket, it will be clear which decision provides the 
basis for the rates adopted by the Governors. It is worth noting that 
as the Commission defines ``attribution principles'' in this docket, 
there is no difference between the Commission's initial recommended 
decision and its recommended decision on reconsideration in R94-1. The 
Opinion and Further Recommended Decision in R94-1 made trivial 
corrections to the mechanics by which attribution principles were 
implemented, but it did not change the attribution principles applied 
in the initial Recommended Decision.
    The Commission believes that it would be cumbersome to try to 
specify in the rule a particular portion of the documentation of a 
particular recommended decision as containing the established set of 
attribution principles, because of the lag that would be involved in 
amending that portion of the rule when the need arises. Ambiguity is 
not likely to be a serious problem with respect to a Commission 
recommended decision in an omnibus rate proceeding. Findings and 
conclusions in such proceedings are usually intended to be definitive 
and have general applicability. Ambiguity is more likely to arise if a 
proposal to change an attribution principle were accepted in a more 
limited proceeding between general rate cases. The set of attribution 
principles used in the most recent general rate proceeding would remain 
the baseline for purposes of Rule 54(a), but the Commission would be 
receptive to a request for a waiver of Rule 54(a) with respect to 
changes in attribution principles adopted in interim cases.
    The Postal Service comments that it would be difficult to apply 
proposed Rule 54(a) if the Commission were to treat as established 
precedent attribution methods that ``have never been lawfully 
established on the record.'' It asserts that the Commission's single 
subclass stop method for attributing city delivery carrier access time 
has not been lawfully established on the record. It contends that ``the 
Commission's many single-subclass costing variants'' have not been 
defended by a witness on the record, as required by the MOAA decision. 
Postal Service Comments at 16. It argues that the single subclass stop 
method does not fall within the proposed rule because it is not among 
the methods that were ``arrived at following litigation during that or 
prior Commission proceedings and have survived any appellate review 
that might have been conducted under 39 U.S.C. Sec. 3628.'' Postal 
Service Comments at 17, quoting Order No. 1146 at 11.
    It is difficult to understand the Postal Service's continuing 
preoccupation with an approach to attributing carrier access time that 
the Commission has abandoned ever since the remanded phase of Docket 
No. R90-1. That approach is irrelevant to amended Rule 54(a) because 
the Commission did not apply it in the most recent general rate 
proceeding. As the Postal Service is well aware, and as the Commission 
has previously summarized in its Opinion and Further Recommended 
Decision in R94-1, the Commission applied a two-step approach to 
analyzing access cost causation in R87-1 and in the initial phase of 
R90-1. Step 1 attributed access costs to a subclass that were incurred 
to access a delivery point to deliver mail only of that subclass, on 
the theory that a subclass is responsible for costs that are incurred 
exclusively for its benefit. Step 2 attempted to identify and attribute 
the volume variable portion of remaining access costs. As the Postal 
Service's own witnesses have freely conceded, Step 1 unambiguously and 
validly traces causation of access costs to the responsible subclass, 
independent of any attempt to attribute remaining access costs in Step 
2. See, e.g., Docket No. R90-1 (Remand), Tr. 2/805-06 (Postal Service 
witness Panzar). The Commission's attribution of single subclass access 
costs consists only of Step 1. Step 1 was proposed, explained, and 
defended on the record by witness Chown in R87-1, by witness Sowell in 
the remanded phase of R90-1, and by witness Kolbe in R94-1. See 
discussion in the Commission's Opinion and Further Recommended Decision 
in Docket No. R94-1, paras. 221-245; NAA Comments at 2. The attribution 
principle applied in Step 1 has not varied since it was first applied 
in R87-1.
    In R87-1 and the initial phase of R90-1, the Commission first 
applied Step 1, but then tried different ways of performing Step 2. It 
is the record basis for combining Step 1 with Step 2 that was 
challenged in the MOAA case and addressed by the MOAA Court. In 
remanding Docket No. R90-1 to the Commission, the MOAA Court referred 
to the ``Commission's new double-barreled approach'' and its ``overlap 
theory'' as having been developed off the record. Mail Order 
Association of America v. USPS, 2 F.3d 408 (D.C. Cir. 1993) at 427, 
429. The Commission abandoned its ``double barreled approach'' and its 
``overlap theory'' in the remanded phase of R90-1 and has never again 
applied it. It applied only Step 1 in the remanded phase of R90-1, and 
in R94-1, after it was proposed, explained, and defended by witnesses 
on the record in each. No appeal was taken from either of these 
Commission recommended decisions. Step 1, therefore, has been fully 
litigated on the record. For these reasons, amended Rule 54(a) clearly 
encompasses the single subclass criterion that the Commission has 
consistently used to attribute access costs since R87-1.

3. Burden

    In its Comments on the NPR, the Postal Service asserts that 
preparing the alternative cost presentation required by Rule 54(a) 
would take between 10 and 15 person-days. It observes that it takes at 
least six months to prepare the documentation required for an omnibus 
rate filing. It states that although this ``may not seem overwhelming, 
adding this to the already lengthy and time-consuming period of pre-
filing case preparation would be onerous.'' Postal

[[Page 30247]]

Service Comments at 8. It suggests that adding further to this lead 
time might ``encroach on the prerogatives of postal management to 
control the timing of rate requests. . . .'' Id. at 5. The Postal 
Service suggests that a way to mitigate the burden of proposed Rule 
54(a) would be to allow it to delay the alternate cost presentation 
required until 25 days after the filing of its request, which would 
shift the workload to a time ``characterized by relatively low 
discovery requests. . . .'' Id. at 13.
    MMA, McGraw-Hill, NAPM, and NFN argue that requiring each 
intervenor to estimate the impact on attributable costs and cost 
coverages of the Postal Service's proposed changes to established 
attribution principles is unreasonable, considering the vast inequality 
of resources and expertise between the Postal Service and most 
intervenors in the area of postal cost analysis. MMA Comments at 2, 
McGraw-Hill Comments at 2, NAPM Comments at 1, NFN Comments at 1. Where 
the Postal Service estimates that preparing the alternate cost 
presentation required by Rule 54(a) would require 10 to 15 man-days, 
MMA cites the testimony of its witness Bentley in MC96-3 that he would 
need six months and $150,000 to prepare such a presentation, despite 
his background in postal cost analysis. MMA Comments at 2. Such an 
expensive undertaking would be beyond the means of many of the 
participants in Commission proceedings, such as those represented by 
the National Federation of Nonprofits. NFN Comments at 1. Such a time 
consuming undertaking would be of little value even for intervenors who 
could afford it, since, in a typical rate proceeding, it would not be 
completed until after intevenors' cases were due.
    On balance, burden considerations tend to support, rather than 
oppose adoption of proposed Rule 54(a). Estimating the impact of its 
proposed rates on costs according to the attribution principles that 
the Commission applies imposes only a modest burden on the Postal 
Service. It has unlimited access to the relevant data, a large 
technical staff with the specialized background required to develop a 
comprehensive estimate of Postal Service attributable costs, and has 
previously demonstrated its ability to accurately attribute costs 
according to established principles. The 10 to 15 person days to which 
the Postal Service refers appears to be an estimate of the effort that 
preparing an alternate cost presentation would initially require. Once 
its data processing programs were set up to regularly produce alternate 
cost presentations, it is likely that the 10 to 15 person days of 
effort would be greatly reduced. For these reasons, complying with 
amended Rule 54(a) should add only marginally to the lead time required 
to prepare rate filings. It should be noted, however, that the need to 
accompany a rate filing with a large amount of detailed information, as 
Rule 54 requires, is largely a function of the short time allowed the 
Commission and the parties to process that information. The ten-month 
deadline under which the Commission and the parties labor is 
unprecedented in regulatory practice for filings of the inherent size 
and complexity of omnibus postal rate filings. See, e.g., remarks in 
Docket No. MC95-1 at Tr. 1/59-60. The burden on the Commission of 
processing omnibus postal rate cases within a ten-month period is 
comparable to the burden on the Postal Service of preparing omnibus 
rate filings, considering the disparity of resources available. The 
deciding factor, therefore, should be the burden on the parties.
    The comments received confirm the Commission's observation in Order 
No. 1146 at 3 [61 FR 67760], that

    [w]hen a Postal Service request combines proposals to change 
rates with proposals to change established cost attribution 
principles, mailers and competitors are not able to determine from 
the Postal Service's request how its proposed changes in attribution 
principles would affect their interests until they calculate for 
themselves what cost coverages would be at the Postal Service's 
proposed rates, under established attribution principles. For many 
potential participants in our hearings, performing this elaborate 
set of calculations is a formidable and time consuming task. It can 
defeat, or seriously delay, their ability to determine how the 
Postal Service's proposals would affect them, and whether they 
should intervene to support or oppose them.

The need for this information at the outset of the proceeding is clear, 
and the burden of preparing an alternate cost presentation of the kind 
required by proposed Rule 54(a) is vastly greater on many of the 
intervenors than on the Postal Service. While delaying the alternate 
cost presentation required by the proposed rule by 25 days would 
marginally ease the Postal Service's burden of preparing rate filings, 
it would substantially reduce the value of the notice it would provide, 
since a large proportion of the time available to the parties for 
discovery and preparation of their cases would have expired.

4. Due Process

    Many of the comments responding to the NPR assert that the rights 
of intervenors in postal rate proceedings to due process are violated 
if the Postal Service fails to inform them of the impact of its 
proposed changes in cost attribution principles on attributable costs 
and cost coverages. Dow Jones Comments at 1, ABP Comments at 5, MMA 
Comments at 1, McGraw-Hill Comments at 1-2, NAPM Comments at 1, OCA 
Comments at 4. The Postal Service argues that requiring it to provide 
this information violates its rights to due process, if it requires 
estimating what the impact of its proposed rates would be using 
attribution principles it does not espouse. Postal Service Comments at 
14-20. The Postal Service contends that comments that the Commission 
made in Docket No. RM83-2 confirm that its due process rights could be 
violated by such a requirement. Id. at 15. Because of key differences 
in the context of the proposals made in RM83-2 and proposed Rule 54(a), 
and key differences in the substance of those proposals, the due 
process concerns that the Commission expressed in connection with the 
RM83-2 proposals are avoided by amended Rule 54(a).
    In RM83-2, the United Parcel Service (UPS) proposed to require 
Postal Service rate requests to provide an alternate attributable cost 
presentation that replicated the attribution procedures most recently 
applied by the Commission. UPS argued that the alternate cost 
presentation should be as detailed and as comprehensive as the Postal 
Service's main attributable cost presentation, integrating proposed and 
alternate base year cost segment attributions, working through all 
ripple effects, and rolling them forward to the test year.
    The Commission did not adopt the UPS proposal. RM83-2 was 
instituted fourteen years ago when basic approaches to postal cost data 
collection and analysis were still unresolved. Extensive changes were 
being made to the In Office Cost System which provides the basic data 
for attributing mail processing costs, and the basic data collection 
systems underlying current transportation and delivery cost 
attributions were not yet in place. Basic issues in attribution theory 
were still unresolved. Whether a third tier of costs (``assignable 
costs'') should continue to be analyzed for causation, and whether it 
should include ``service related costs'' was still unresolved, how to 
treat specific fixed costs and peak load costs were still being 
vigorously litigated; and the Postal Service's analysis of 
transportation and delivery costs had been rapidly evolving from one 
rate case to the next.
    Because of the widespread changes being made to postal cost data 
collection

[[Page 30248]]

and analysis, the Commission was concerned that unforeseen problems 
could arise if the Postal Service were required to apply all of the 
detailed base year and test year attribution procedures used by the 
Commission in R80-1 to new data and circumstances in subsequent cases. 
If the Postal Service were required to speculate as to what solutions 
the Commission might have applied to unforeseen attribution issues, and 
were required to affirm such speculations under oath, it appeared to 
the Commission that there was a significant risk that the Postal 
Service might have to adopt a litigating position with which it did not 
agree, in violation of its right to due process. Order No. 478, January 
21, 1983, at 6-7. The Commission did not adopt the UPS proposal, 
primarily to avoid this potential infringement on the Postal Service's 
right to determine its own litigating positions.
    In RM83-2, the Commission proposed that the Postal Service's rate 
requests include alternative cost presentations for individual cost 
segments that were consistent with Commission-recommended procedures. 
The Commission believed that limiting the alternate cost presentation 
to individual cost segments would make this task sufficiently simple 
and straightforward to avoid due process problems that might be 
presented by the broader UPS proposal. In preparing supplemental cost 
segment presentations, the Commission assumed that the Postal Service 
would be able to apply the same method, and employ the same judgments 
that the Commission had outlined in its most recent recommended 
decision. Therefore, it was the Commission's view that under its more 
limited proposal, the Postal Service would not be required to exercise 
a significant degree of discretionary judgment. Id.
    The Commission ultimately decided not to adopt the alternate cost 
presentation requirement that it initially proposed in RM83-2. It found 
some merit in the Postal Service's contention that reconstructing 
detailed attributable cost presentations consistent with those used in 
prior rate cases, even ones limited to individual cost segments, would 
be difficult, given the extensive changes taking place in the 
collection, editing, and analysis of postal cost data. In Docket No. 
RM83-6, which was instituted to examine this issue, the Postal Service 
provided plausible examples of how changes in the way cost data had 
been collected since the completion of R80-1 made it impractical to 
attempt a detailed reconstruction either of Commission-approved 
attribution procedures or its own proposed attribution procedures in 
that case. The Postal Service asserted that costs could not be 
attributed according to either its or the Commission's R80-1 procedures 
unless obsolete data collection forms and systems were reconstructed, 
at a cost that it estimated to be from $60 to $120 million. See 
Prepared Testimony of Postal Service witnesses Alenier and Alepa, filed 
February 22, 1983, in Docket No. RM86-3.
    Circumstances have changed since RM83-2. The Postal Service has not 
materially changed its systems for collecting basic mail processing, 
transportation, and delivery cost data since R90-1. Although 
refinements have been made since then, they have not affected the 
ability of the Postal Service or the Commission to apply established 
attribution principles, as they have been defined in this docket. 
Similarly, the basic approaches taken by the Postal Service and the 
Commission to analyzing cost responsibility for mail processing, 
transportation, and delivery costs have remained unchanged since R90-1, 
with rare exceptions.
    Because the collection and analysis of cost data has matured and 
stabilized since R83-2, it is less likely that the Postal Service will 
encounter unforeseen problems implementing established attribution 
principles, and less likely that it will need to speculate as to what 
procedures the Commission would have used to solve them. Accordingly, 
there is little risk that requiring the Postal Service to provide an 
alternate cost presentation consistent with established attribution 
principles would infringe on its right to due process.
    Differences in substance between amended Rule 54(a) and the 
proposals considered in RM83-2 provide an even more important reason 
why amended Rule 54(a) will not require the Postal Service to adopt a 
litigation position with which it does not agree. The Postal Service 
understood the proposals in RM83-2 to require it to apply procedures 
that were identical in every detail with the procedures used by the 
Commission to attribute costs in the previous rate case, either 
overall, or for individual segments. The Postal Service assumed that an 
approved attribution method applied in a prior rate case could not be 
considered to have been applied in a subsequent rate case unless the 
process began with identical data collection forms, used identically 
labeled cost accounts and subaccounts, and used identical mathematical 
formulae at every step of every calculation. See, e.g., Docket No. 
RM83-2, Initial Comments of USPS on the Notice of Inquiry, December 16, 
1982, at 5, 10.
    Proposed Rule 54(a) does not require alternate attributable cost 
presentations to be identical in every detail with the attribution 
procedures used by the Commission in the most recent general rate case. 
It requires that an alternate cost presentation show the impact of 
applying established attribution principles. Attribution principles 
refer to a theories of cost causation (e.g., volume variability, 
exclusivity), models of cost causation (e.g., econometric models of 
volume variability), the identity and role of cost drivers (e.g., 
shape, coverage), and the identity and role of distribution keys (e.g., 
pieces, pound/miles). Attribution principles are not intended to 
encompass the detailed mechanics by which they are implemented, as long 
as they are not inconsistent with the principle itself. See Order No. 
1146 at 4 [61 FR at 67761].
    In RM83-2 the Postal Service assumed that the attribution 
procedures with which the Commission was concerned were inseparable 
from the details of data collection. See Docket No. RM83-2, Initial 
Comments of USPS at 10. This assumption cannot be validly applied to 
alternate cost presentations under amended Rule 54(a). Under the 
amended rule, the Postal Service will not have to follow the detailed 
mechanics by which the Commission implemented attribution principles in 
the previous general rate case because refinements in such things as 
data collection systems, cost account organization, and roll forward 
techniques will generally not conflict with the basic logic of cost 
causation by which a given cost component is associated with subclasses 
of mail.
    The Postal Service might perceive a need to alter the detailed 
procedures by which the Commission implemented a particular attribution 
principle in the most recent general rate case to accommodate new data 
or changed circumstances. If it does, the Postal Service might be asked 
by a Presiding Officers Information Request to explain why it believes 
there is such a need, and why it chose one solution over another. But 
its good faith judgments as to any needed innovations in detailed 
implementation procedures would not be considered in violation of 
amended Rule 54(a). However, if the Postal Service perceived a need to 
alter an established attribution principle (i.e., established causation 
theory, model, cost driver, or distribution key), to accommodate new 
data or changed circumstances, it should explain the

[[Page 30249]]

need for such a change in a request for a waiver of Rule 54(a) with 
respect to that principle.
    There is a final distinction between the proposals made in RM83-2 
and amended Rule 54(a) in this docket that essentially eliminates the 
risk that the Postal Service would have to adopt a litigation position 
with which it does not agree. The Postal Service assumed that the 
primary purpose of the proposals in RM83-2 was to require an alternate 
cost presentation that would provide an independent evidentiary basis 
for the Commission recommended decisions. It assumed this because, 
throughout RM83-2, the Commission emphasized its need to preserve 
access to record cost data that it considered necessary to apply 
Commission-approved attribution methods.
    The primary purpose of proposed Rule 54(a) is not to preserve 
access to record cost data. This concern has eased since RM83-2 as the 
Postal Service's basic cost data collection systems have matured and 
stabilized. The purpose of Rule 54(a) is to ensure that parties and the 
Commission have timely notice of the effect that the Postal Service's 
proposed changes in rates and in attribution principles would have on 
cost coverages. Since the Commission is free to apply attribution 
principles litigated and approved in prior dockets to new data 
submitted in subsequent dockets, the alternate cost presentation 
required by amended Rule 54(a) is not needed to provide an evidentiary 
basis for applying those principles. Because the alternate cost 
presentation required by Rule 54(a) is not needed to supply an 
evidentiary basis for applying established attribution principles, the 
alternate cost presentation may be provided in the form of either a 
library reference or sworn testimony.
    The NPR emphasized that the Postal Service would not be required to 
affirm either the theoretical or the practical merits of established 
attribution principles. It is merely required to affirm that it has 
made a good faith effort to give notice of what the impact would be of 
its proposed departures from established attribution principles. Order 
No. 1146 at 10 [61 FR at 67762]. Such an affirmation would not require 
the Postal Service to adopt a litigation position against it will, 
except to the extent that any proponent must carry the burden of going 
forward, and the burden of persuasion, if its proposals are to prevail.
    The Postal Service criticizes the Commission's ``present attempt to 
impose on the Postal Service significant judgmental decisionmaking with 
respect to'' attribution methods that the Commission has applied. 
Postal Service Comments at 19. Amended Rule 54(a) is not an attempt to 
impose on the Postal Service significant judgmental decisionmaking with 
respect to replicating previously applied attribution principles. 
Although Rule 54(a) would allow the Postal Service's judgment to be 
applied with respect to implementation details if changed circumstances 
require it, the Commission expects that this would rarely be necessary. 
Further, applying those attribution principles to a current rate case 
would require the Postal Service to exercise judgment in only trivial 
respects that have inconsequential effects on subclass attributable 
costs and cost coverages. Cf. Docket No. MC95-1, Answer of Richard 
Patelunas to Request During Oral Cross Examination, Tr. 28/13221-23.
    In the NPR, the Commission indicated that exercising judgment that 
does not conflict with established attribution principles will not be 
considered a violation of the Rule. It did so because recent experience 
indicates that the need for exercising judgment would be rare and the 
consequences of exercising it would be exceedingly minor under most 
circumstances. There are unusual circumstances in which it is 
reasonably foreseeable that an alternate cost presentation might 
require a significant exercise of judgment. An example would be if the 
Postal Service were to file a rate case that involved a major 
restructuring of mail classes. In that context, a waiver of proposed 
Rule 54(a) might be appropriate if the cost characteristics of the 
proposed new services are expected to differ substantially from 
existing services.
    The Postal Service asks what use participants and the Commission 
could make of an alternate attributable cost presentation that is not 
submitted in the form of sworn testimony. Postal Service Comments at 
19. One use is to provide participants with a timely basis for deciding 
whether to intervene and litigate a particular issue. Additionally, 
participants may treat the impacts shown in the alternate cost 
presentation as hypothetically correct, and submit testimony that 
discusses what the ramifications would be for the Postal Service's 
proposals if that hypothesis were correct. The weight that the 
Commission ultimately would give such testimony would depend on how 
consistent the alternate cost presentation turns out to be with 
established attribution principles, as determined by the Commission 
after it has analyzed the record.
    As with participants, the Commission may use the alternate cost 
presentation required by amended Rule 54(a) to identify particular 
issues in time to examine them during the discovery phase. If the 
Commission were to observe flaws, inconsistencies, or unexplained 
judgmental choices in the Postal Service's alternate cost presentation, 
it could take steps to have them examined on the record, for example, 
as topics of Presiding Officer Information Requests. What the impact of 
the Postal Service's proposals actually would be is something that the 
Commission would ultimately determine, based on record evidence.
    The Postal Service argues that if the Commission considers adequate 
notice to be important to the due process rights of participants, that 
it issue an ``initial decision prior to the close of hearings * * *'' 
if it recommends methodological changes after the close of the 
evidentiary record. Id. at 20. The Commission intends only to recommend 
changes in attribution principles that are grounded in the record. As 
long as they are, the parties have been afforded adequate notice. 
Providing advance notice of the conclusions that the Commission 
tentatively draws from the record prior to the time that it closes 
might be helpful in hearings without deadlines. The record must close 
at some point, however, so that the Commission can analyze and make 
findings on the whole record. As the Postal Service is aware, there is 
no realistic opportunity to further compress the 10-month statutory 
deadline for processing general rate cases, given their size and 
complexity. Therefore, there is no realistic opportunity for the 
Commission to issue tentative decisions.

5. Enforcement

    MMA argues that the major weakness of proposed Rule 54(a) is that 
it does not provide any sanction for noncompliance. MMA notes that in 
R94-1 and MC96-3, the Commission ordered the Postal Service to provide 
an alternate cost presentation that is consistent with established 
attribution principles and the Postal Service refused to comply. MMA 
warns that the Postal Service will likely continue to resist complying 
with such a requirement, and that there is a likelihood that requests 
for waivers and other motion practice will drag out the controversy 
past the time that the information could serve its intended purpose. 
MMA Comments at 3-4.
    39 U.S.C. Sec. 3624(c)(2) enables the Commission to extend the 10-
month deadline for issuing its final decision on a rate request if the 
Postal Service fails to provide the information requested in a lawful 
Commission order. MMA

[[Page 30250]]

proposes that Rule 54(a) be amended to automatically invoke 
Sec. 3624(c)(2) if the required alternate cost presentation does not 
accompany a Postal Service rate request. Id. at 3-4. As an alternate 
means of enforcement, MMA proposes that the Commission adopt a rule 
modeled upon the Federal Energy Regulatory Commission's rule 385.2001 
[18 CFR], which authorizes that agency to reject filings that do not 
comply with its rules. Id. at 4-5.
    Like MMA, NAA comments that proposed Rule 54(a) will have to be 
resolutely enforced, either through invocation Sec. 3624(c)(2) or 
dismissal of the Postal Service's filing, if it is to be effective. NAA 
Comments at 3-4. ABA also urges that failures to comply with Rule 54(a) 
automatically invoke Sec. 3624(c)(2), although it recommends that 
waivers be available in exceptional circumstances. ABA Comments at 1-2. 
The OCA asks that the sanctions for noncompliance with proposed Rule 
54(a) be clarified and strengthened. It urges that noncompliance with 
proposed Rule 54(a) be treated as the equivalent of failure to respond 
to discovery and that the sanctions available in 39 CFR Sec. 3001.28 be 
applied. OCA Comments at 25-27.
    It is understandable that the comments on proposed Rule 54(a) have 
emphasized the need for sanctions, since the Postal Service has not 
complied with orders to provide alternate cost presentations in recent 
dockets. In doing so, the Postal Service has relied heavily on the fact 
that current Rule 54 does not explicitly require it to give parties and 
the Commission the notice that proposed Rule 54(a) would require. With 
amended Rule 54(a) in place, the Commission is optimistic that the 
Postal Service will comply with its requirements. Appropriate sanctions 
for noncompliance with amended Rule 54(a) will be determined as the 
need arises.

Regulatory Evaluation

    It has been determined pursuant to 5 U.S.C. 605(b) that this 
amended rule will apply exclusively to the Postal Service in 
proceedings conducted by the Postal Rate Commission. Therefore, it is 
certified that this amendment will not have a significant economic 
impact on a substantial number of small entities under the terms of the 
Regulatory Flexibility Act, 5 U.S.C. 501 et seq. Because this rule will 
only apply to the Postal Service in Commission proceedings, it has also 
been determined that it does not have sufficient federalism 
implications to warrant the preparation of a Federalism Assessment 
pursuant to Executive Order 12612. Inasmuch as the rule imposes 
information reporting requirements exclusively upon the United States 
Postal Service for the purpose of conducting postal rate proceedings, 
it does not contain any information collection requirements as defined 
in the Paperwork Reduction Act [44 U.S.C. 3502(4)], and consequently 
the review provisions of 44 U.S.C. 3507 and the implementing 
regulations in 5 CFR part 1320 do not apply.

List of Subjects in 39 CFR Part 3001

    Administrative practices and procedure.

    For the reasons set out in the preamble, 39 CFR part 3001 is 
amended as follows:

PART 3001--RULES OF PRACTICE AND PROCEDURE

    1. The authority citation for 39 CFR part 3001 continues to read as 
follows:

    T4Authority: 39 U.S.C. 404(b), 3603, 3622-24, 3661, 3662.

    2. In Sec. 3001.54, paragraph (a)(1) is revised to read as follows:


Sec. 3001.54  Contents of formal requests.

    (a) General requirements. (1) Each formal request filed under this 
subpart shall include such information and data and such statements of 
reasons and bases as are necessary and appropriate fully to inform the 
Commission and the parties of the nature, scope, significance, and 
impact of the proposed changes or adjustments in rates or fees and to 
show that the changes or adjustments in rates or fees are in the public 
interest and in accordance with the policies of the Act and the 
applicable criteria of the Act. To the extent information is available 
or can be made available without undue burden, each formal request 
shall include the information specified in paragraphs (b) through (r) 
of this section. The request shall describe any changes that it 
proposes in the attribution procedures applied by the Commission in the 
most recent general rate proceeding in which its recommended rates or 
fees were adopted. If a request proposes to change the cost attribution 
principles applied by the Commission in the most recent general rate 
proceeding in which its recommended rates were adopted, the Postal 
Service's request shall include an alternate cost presentation 
satisfying paragraph (h) of this section that shows what the effect on 
its request would be if it did not propose changes in attribution 
principles. If the required information is set forth in the Postal 
Service's prepared direct evidence, it shall be deemed to be part of 
the formal request without restatement.
* * * * *
    Issued by the Commission on May 27, 1997.
Margaret P. Crenshaw,
Secretary.
[FR Doc. 97-14257 Filed 6-2-97; 8:45 am]
BILLING CODE 7710-FW-P