[Federal Register Volume 68, Number 11 (Thursday, January 16, 2003)]
[Proposed Rules]
[Pages 2272-2275]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-841]


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POSTAL RATE COMMISSION

39 CFR Part 3001

[Docket No. RM2003-3; Order No. 1358]


Periodic Reporting Rules

AGENCY: Postal Rate Commission.

ACTION: Proposed rule.

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SUMMARY: The Commission proposes updating periodic reporting rules 
affecting certain Postal Service data submissions. This update entails 
deleting certain outdated requirements and adding new requirements, 
including an electronic filing requirement. These changes should 
improve the ability of the Commission and others to analyze postal 
finances and operating results.

DATES: Initial comments are due by February 10, 2003; reply comments 
are due by February 25, 2003.

ADDRESSES: Submit comments electronically via the Comission's Filing 
Online system, which may be accessed at http://www.prc.gov.

FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel, 
202-789-6818.

SUPPLEMENTATY INFORMATION: The Commission's periodic reporting rules 
(39 CFR 3001.102) require the Postal Service to provide certain 
products of its standard data reporting systems to the Commission. 
Generally, the reports required are the basic reports that the Postal 
Service routinely compiles to provide management with the means to 
monitor the Postal Service's financial condition and operating results. 
The information provided under the periodic reporting rules helps the 
Commission evaluate the cost, volume, and revenue projections that form 
the basis for the Commission's rate and classification recommendations 
pursuant to 39 U.S.C. 3624. It also enables the Commission to 
anticipate future trends in these areas, and to maintain the 
forecasting models that it employs in rate cases.
    Most of the periodic reporting rules date back at least to the mid-
1980s. The Postal Service's standard data reports have changed in 
important ways since then. There is a need to update the periodic 
reporting rules to reflect these changes. There is also a need to make 
the information provided more complete, so that trends in operating 
results can be better analyzed and evaluated. Finally, there is a need 
to make the material provided easier to use, by obtaining it in an 
electronic format.

Proposed Deletions From List of Required Reports

    The Commission proposes to eliminate certain reports from the list 
of those that the Postal Service must provide under the periodic 
reporting rules. The Commission proposes to eliminate investment income 
statements, which the Postal Service must provide under current rule 
102(b)(3). With the advent of the Postal Service's cash management plan 
in FY 1995, investment income has become a minor component of total 
revenues. Once as high as $400 million per year, it had dwindled to $35 
million by FY 2001. As a result, investment income reports are not 
routinely needed.
    Current rule 102(c)(1) requires the Postal Service to provide the 
Commission with cash flow statements. Cash flow statements, however, 
are now provided in the Summary Financial and Operating Statements, 
which the Postal Service files each accounting period with the 
Commission. Consequently, the Commission proposes to remove cash flow 
statements from the list of reports that must be periodically provided.

Proposed Additions to List of Annual Reports

    The Integrated Financial Plan is a document that is presented to 
the Governors, in public session, every year. It includes the financial 
operating plan (operating budget), the capital investment plan, and the 
capital financing plan for the coming fiscal year. The Commission 
proposes to add it to the list of annual reports required under 
proposed rule 102(a).
    The Integrated Financial Plan was filed as a library reference in 
the most recent fully litigated rate proceeding. (LR-I-489 in Docket 
No. R2000-1.) As the fiscal year progresses, the Postal Service 
typically compares its actual operating results with the results that 
were projected in its Integrated Financial Plan. Making the Integrated 
Financial Plan available to the Commission annually will enable the 
Commission to better understand financial developments as they unfold 
during the year. It will inform the Commission of the assumptions on 
which the Postal Service's financial plan is based. Comparing and 
contrasting those assumptions with actual results would give the 
Commission an additional tool for evaluating the accuracy of the 
revenue requirement information on which rate recommendations are 
based.

Proposed Revisions to Annual Reports

    Current rule 102(a)(1) requires the Postal Service to provide the 
Commission each year with the Cost and Revenue Analysis Report (CRA), 
the portion of the LIOCATT used to produce the CRA, and transportation 
workpapers 31 and 57. The objective of the rule is to provide the 
Commission with an annual update of the cost information upon which the 
most recent recommended rates were based. The current rule, however, 
reflects cost attribution methods in use prior to 1987. Since then, 
there have been major changes in the methods that the Postal Service 
and the Commission use to attribute costs. The CRA documentation 
required under the rule needs to be updated to reflect those changes.
    Attributable mail processing costs, for example, are no longer 
distributed to subclasses using the LIOCATT. Their distribution is now 
based on MODS pools and a complex set of shape, item, and container-
based proxy rules. The Commission needs workpapers that show how these 
rules have been applied to interim-year data, in order to evaluate 
developments in mail processing costs between rate proceedings.
    To adequately track cost developments in interim years, to see 
where they differ from cost projections that underlie its rate 
recommendations, and to identify the sources of the difference, the 
Commission needs a comprehensive set of spreadsheet workpapers that 
show the calculation of attributable costs by cost component. The 
documentation required is the equivalent of the ``B'' workpapers that 
the Postal Service provides in a general rate proceeding. To evaluate 
developments in Segment 3 costs, for example, the Commission needs the 
equivalent of Library Reference J-55 that the Postal Service provided 
in Docket No. R2001-1. The Commission also needs the updated factors 
and data from the data systems on which the ``B'' workpapers are based, 
including the In-Office Cost System (IOCS), the Management Operating 
Data System (MODS), the City Carrier Cost System (CCCS), the Rural 
Carrier Cost System (RCCS), and the Rural Mail Count. To evaluate 
developments in Segment 3 costs, the Commission needs the equivalent of 
Library Reference J-10 that the Postal Service provided in Docket No. 
R2001-1. Similarly, to evaluate Segment 7 costs, the Commission needs 
the equivalent of

[[Page 2273]]

Library Reference J-12 that the Postal Service provided in Docket No. 
R2001-1 (specifically, the data contained in the ``Z'' file).
    The Commission needs this level of documentation for both the CRA-
PRC Version and the CRA-USPS Version. Since rule 102(a)(1) was last 
revised, significant differences have emerged in Cost Segments 3 and 7 
between the attribution methods that the Postal Service advocates, and 
those that the Commission applies. In rate cases, in order to comply 
with the Commission's filing rules, the Postal Service typically 
provides a version of the CRA that is consistent with its preferred 
methods, and one that is consistent with the methods last approved by 
the Commission. In addition, as part of its reporting duties under rule 
103, the Postal Service each March 15 provides a domestic CRA 
calculated according to the Commission's attribution methods. The CRA-
PRC Version that the Postal Service provides contains detailed 
documentation for Cost Segments 3, 6, and 7 (the equivalent of the 
``B'' workpapers for those segments).\1\ Rule 103 requires the Postal 
Service to follow this up with an audited CRA-PRC Version when it 
becomes available. The Postal Service's current practice is to meet 
this obligation by providing an audited domestic CRA that is calculated 
according to its preferred attribution methods.
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    \1\ The Postal Service does not annually provide a CRA-PRC 
Version that documents the remaining cost segments in as much 
detail, but its data and reporting systems are set up in a way that 
allows it to do so with minor additional effort.
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    The Commission is primarily interested in obtaining a CRA-PRC 
Version, since it typically provides the cost basis for recommended 
rates. It should be audited in the sense that it is based on audited 
accrued costs, and should include any corrections to the various 
factors (such as equipment and maintenance facility factors) that are 
made to the audited CRA-USPS Version. The Commission's experience under 
rule 103, however, confirms the value of having a CRA-USPS Version to 
compare it with. The estimates produced by the two versions of the CRA 
have a predictable historical relationship that can be used to test 
their accuracy. Accordingly, proposed rule 102(a) requires that the 
Postal Service provide both versions of the CRA. The audited CRA-USPS 
Version should be provided within two weeks of its presentation for use 
by postal management. The final, corrected CRA-PRC Version should be 
filed within two weeks of the filing of the audited CRA-USPS Version. 
If the CRA is prepared and presented to postal management more 
frequently than annually, it should be provided under rule 102 with the 
same frequency.
    Under current costing methods, documentation of the CRA should 
include, but not be limited to, the following:
    (1) Spreadsheets supporting the CRA. (The ``B'' workpapers found in 
USPS-LR-J-57 in Docket No. R2001-1.)
    (2) The CRA Model. (Filed as UPSP-LR-J-6 in Docket No. R2001-1.)
    (3) Output data file and a description of the file structure for 
the In-Office Cost System (IOCS). (Found in USPS-LR-J-10 in Docket No. 
R2001-1.)
    (4) The MODS-based costing spreadsheets, and SAS mail processing 
attribution and distribution programs needed to produce output for the 
``B'' workpapers. (USPS-LR-J-55 in Docket No. R2001-1.)
    (5) Spreadsheets that develop equipment and facility-related costs. 
(USPS-LR-J-54 in Docket No. R2001-1.)
    (6) Output data file and a description of the file structure for 
the City Carrier Cost System (CCCS). (The ``Z'' file, found in USPS-LR-
J-12 in Docket No. R2001-1.)
    (7) Supporting material, including spreadsheets, programs, and 
documentation for load time variabilities.
    (8) The underlying route-type data needed to produce the in-office 
worksheets in the ``B'' workpapers.
    (9) Ouput data file and a description of the file structure for the 
Rural Carrier Cost System (RCCS), and the Rural Mail Count. (USPS-LR-J-
71 in Docket No. R2001-1.)
    (10) The fiscal-year reconciliation of statement of revenue and 
expenses to audited financial statements and reallocation of expenses 
by component. (USPS-LR-J-8 in Docket No. R2001-1.)
    (11) Transportation workpapers 31 and 57.
    The Postal Service typically prepares all of this documentation as 
support for its base-year costs in rate cases. It also produces most of 
it routinely each year, either in the preparation of the CRA-USPS 
Version, or in the preparation of the material required by rule 103. 
Therefore, the revisions that the Commission proposes to rule 102(a)(1) 
should not impose a significant additional burden on the Postal 
Service.

Format of Reports

    The CRA and Cost Segments and Components report and the underlying 
data have been provided electronically in omnibus rate filings. See 
USPS-LR-I-6 in Docket No. R2001-1. The Postal Service, however, does 
not provide them in electronic form when submitting them as filings 
under rule 102. In order to better search, archive, and manipulate 
these submissions, the Commission undergoes a cumbersome and time 
consuming process of manually converting them from hard copy to 
electronic form. This burden is unnecessary, since all of these 
materials originate in electronic form. For this reason, the 
Commission's proposed revisions to rule 102 include a requirement that 
rule 102 reports be submitted as electronic files that can be read by 
publicly available PC software. Output files should be submitted in a 
form that can be read by a PC-based text editor, or that uses 
commercially available spreadsheet software. If a processing program 
was developed specifically to produce a workpaper that accompanies a 
report, that program must be provided in a form that can be executed by 
publicly available PC software.\2\
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    \2\ Requiring material submitted under rule 102 to be in 
electronic form will bring rule 102 into general conformity with the 
Commission's decision to make electronic filing the standard method 
of filing documents with the Commission. See Order No. 1349, issued 
October 21, 2002.
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    It appears that most, if not all, of the material required by rule 
102 can be presented in this form without undue burden. Most of this 
material consists of output of data systems and programs that can be 
presented in an ASCII flat file with an accompanying description of the 
file format. This will satisfy the requirement. This is the format in 
which the Postal Service provides the cost matrix that it uses to 
develop its Base Year CRA and the cost matrices that it uses in its 
roll-forward model in omnibus rate cases. Many of these reports are 
prepared using the standard mainframe SAS statistical language. With 
minor additional effort, the Postal Service can convert them to a PC-
readable format. Even though the Postal Service's accounting system 
uses a mainframe-based computing language, the Commission sees no 
current need to be able to manipulate the Postal Service's accounting 
information. These systems need not be affected by the proposed format 
requirement as long as the output of these systems is submitted in an 
ASCII flat file form. Under the proposed rule, it would not be 
necessary for the Postal Service to submit existing COBOL programs for 
the IOCS, the CRA Model, or for other reports that are COBOL based in a 
PC executable format. Nor would it be necessary to submit existing 
processing programs for the CCCS, the RCCS, or the RPW in that format. 
It would, however, be necessary

[[Page 2274]]

to submit in the required format the processing programs that calculate 
and distribute attributable mail processing costs.
    If the Postal Service foresees substantial obstacles to complying 
with this proposed format requirement, it is urged to request a 
conference with the Commission's technical staff to explore the nature 
of these obstacles and ways to overcome them prior to the adoption of a 
final amended rule 102.

Billing Determinants

    Current rule 102(a)(10) requires the Postal Service to provide the 
Commission with billing determinants within two weeks of providing them 
for use by postal management. Recently, the delay in the provision of 
billing determinants in response to the rule has been considerable. 
Since FY 1995, it has ranged from nine to 16 months after the close of 
the fiscal year. The current rule allows the Postal Service to delay 
the filing of billing determinant information for Express Mail, 
Priority Mail, and parcel post for up to one year from the time that it 
provides billing determinants for other categories of mail. 
Consequently, billing determinants for Express, Priority, and parcel 
post mail have been from 21 to 28 months out of date at the time they 
were provided. The Commission believes that it would be useful to 
reexamine the rationale for the current rule whose effect is to allow 
billing determinants for these three categories of mail to be well over 
two years out of date when submitted. As a starting point for that 
reexamination, the Commission proposes to revise rule 102(a)(10) to 
require the Postal Service to submit billing determinants for these 
three mail categories no later than 12 months after the close of the 
fiscal year.
    Comments on the revisions to rule 102 proposed in this notice 
should be submitted on or before February 10, 2003, and any reply 
comments by February 25, 2003.
    It is ordered:
    1. Interested persons are invited to submit comments on the 
Commission's notice of proposed rulemaking on or before February 10, 
2003. Any reply comments should be submitted by February 25, 2003.
    2. The Secretary shall cause this notice of proposed rulemaking to 
be published in the Federal Register.

    Issued January 8, 2003.
    By the Commission.
Steven W. Williams,
Secretary.

List of Subjects in 39 CFR Part 3001

    Administrative practice and procedure, Postal Service.
    For the reasons stated in the accompanying Order, the Commission 
proposes the following amendments to 39 CFR part 3001.

PART 3001--RULES OF PRACTICE AND PROCEDURE

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

    Authority: 39 U.S.C. 404(b); 3603; 3622-24; 3661; 3662; 3663.

Subpart G--Rules Applicable to the Filing of Reports by the U.S. 
Postal Service

    2. Revise Sec.  3001.102 to read as follows:


Sec.  3001.102  Filing of reports.

    Each report listed in this section shall be filed with the 
Secretary of the Commission within two weeks of its presentation for 
use by postal management, unless otherwise noted. Each report should be 
provided in a form that can be read by publicly available PC software. 
A processing program that was developed specifically to produce an 
accompanying workpaper must be provided in a form that can be executed 
by publicly available PC software. COBOL processing programs in use 
prior to FY 2003 are exempt from this requirement. The reports and 
information required to be provided by this subpart need not include 
matters that are exempt from disclosure by law. Whenever a specific 
source is cited in this section, that citation includes any successor 
or substituted source.
    (a) Annual reports. The following information will be filed by the 
Postal Service annually. If it is presented for use by postal 
management at more frequent intervals, it shall be filed at those 
intervals:
    (1) All input data, all processing programs that have changed since 
the most recently completed general rate proceeding, and all computer 
programs used to attribute mail processing costs to subclasses, if they 
are used to produce the Cost and Revenue Analysis Report (CRA). Each 
change in attribution principles or methods from the previous report 
will be identified. The Postal Service shall submit a CRA-USPS Version, 
followed within two weeks by a CRA-PRC Version. Documentation of the 
CRA shall include, but not be limited to, the following:
    (i) Spreadsheet workpapers underlying the development of segment 
costs by cost component. These workpapers should include all of the 
updated factors and data from the supporting data systems used, 
including the In-Office Cost System (IOCS), the Management Operating 
Data System (MODS), the City Carrier Cost System (CCCS), the Rural 
Carrier Cost System (RCCS), and the Rural Mail Count.
    (ii) Cost segments and components reconciliation to financial 
statements and account reallocations.
    (2) Cost Segments and Components Report. Documentation shall 
include, but not be limited to, the following:
    (i) The Manual Input Requirement, the ``A'' report, and the ``B'' 
report;
    (ii) The control string commands for the ``A'' report, the ``B'' 
report (including the PESSA factor calculations), and the ``C'' report;
    (iii) The master list of cost segment components, including the 
components used as distribution keys in the development of the ``B'' 
report and the ``C'' report.
    (3) City delivery information, including the number of routes by 
type, the number of possible deliveries by type, the number of 
collection boxes, and the number of businesses served (120 days from 
the close of the fiscal year).
    (4) Rural carrier information, including the number of routes by 
type and miles, stops, boxes served, and mail pieces by route type (120 
days from the close of the fiscal year).
    (5) Civil Service Retirement Fund Deficit Report (two weeks after 
release of the Annual Report of the Postmaster General).
    (6) Worker's Compensation Report, including summary workpapers (two 
weeks after release of the Annual Report of the Postmaster General).
    (7) Annual Report of the Postmaster General.
    (8) Congressional Budget Submission, including workpapers. The 
Postal Service will also file concurrently Summary Tables SE 1, 2, and 
6 (coinciding with their submission to Congress).
    (9) Audit Adjustment Vouchers, if any.
    (10) Billing Determinants, at the level of detail employed in the 
most recent formal request for a change in rates or fees. The provision 
of billing determinants for Express Mail, Priority Mail, and parcel 
post may be delayed up to 12 months from the close of the fiscal year 
to which they apply.
    (11) USPS Integrated Financial Plan.

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    (b) Quarterly reports. The following information will be filed by 
the Postal Service quarterly:
    (1) Revenue, Pieces, and Weight, by rate category and special 
service.
    (2) Origin/Destination Information Report National Service Index.
    (c) Accounting period reports. The following information will be 
filed by the Postal Service each accounting period:
    (1) Summary Financial and Operating Report.
    (2) National Consolidated Trial Balances and the Revenue and 
Expense Summary.
    (3) National Payroll Hours Summary.
    (4) On-Roll and Paid Employee Statistics (OPRES).
    (5) Postal Service Active Employee Statistical Summary (HAT 
report).
    (d) Miscellaneous reports. The following information will be filed 
by the Postal Service:
    (1) Before/After Pay Increase Reports.
    (2) Before/After COLA Cost Reports.
    (3) A master list of publications and handbooks including those 
related to internal information procedures, when changed.
    (4) Data collection forms and corresponding training handbooks, 
when changed.
    (5) Notice of changes in data reporting systems, 90 days before 
those changes are implemented.

[FR Doc. 03-841 Filed 1-15-03; 8:45 am]
BILLING CODE 7710-FW-P