[Federal Register Volume 73, Number 231 (Monday, December 1, 2008)]
[Proposed Rules]
[Pages 72754-72756]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-28396]


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POSTAL REGULATORY COMMISSION

39 CFR Part 3001

[Docket No. RM2009-2; Order No. 139]


Periodic Reporting Rules

AGENCY: Postal Regulatory Commission.

ACTION: Proposed rule; availability of rulemaking petition.

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SUMMARY: Under a new law, the Postal Service must file an annual 
compliance report on costs, revenues, rates, and quality of service 
associated with its products. It recently filed documents with the 
Commission to change some of the methods it uses to compile the fiscal 
year 2008 report. In the Commission's view, these documents constitute 
a rulemaking petition. Therefore, this document provides notice of the 
Service's filing and an opportunity for public comment.

DATES: 1. Initial comments: December 5, 2008.
    2. Reply comments: December 12, 2008.

ADDRESSES: Submit comments electronically via the Commission's Filing 
Online system at http://www.prc.gov.

FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel, 
202-789-6820 and [email protected].

SUPPLEMENTARY INFORMATION: Regulatory History. 73 FR 51983 (September 
8, 2008); 73 FR 55464 (September 25, 2008); 73 FR 67455 (November 14, 
2008).
    On November 19, 2008, the Postal Service filed a petition to 
initiate an informal rulemaking proceeding to change accepted costing 
methods for purposes of periodic reporting.\1\ The

[[Page 72755]]

informal rulemaking procedures proposed would be comparable to those 
followed in Docket Nos. RM2008-2 and RM2008-6, and RM2009-1. In Docket 
No. RM2008-2, nine numbered proposals were the subject of notice and 
comment rulemaking procedures. In Docket No. RM2008-6, the Postal 
Service proposed two additional proposals to change costing methods, 
numbered ten and eleven. The Postal Service offered an additional 
proposal (numbered twelve) in Docket No. RM2009-1. Proposals one 
through nine, and ten through eleven were evaluated in PRC Order No. 
115, October 10, 2008 and PRC Order No. 118, October 22, 2008, 
respectively. Proposal Twelve is pending. See PRC Order No. 130, 
November 7, 2008. The Postal Service refers to the change in accepted 
costing methods that it proposes in this docket as Proposal Thirteen. 
Labeling it Proposal Thirteen indicates that the proposal is sequential 
to, but distinguishable from, the proposals in Docket Nos. RM2008-2, 
RM2008-6, and RM2009-1. See Petition at 1.
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    \1\ Petition of the United States Postal Service Requesting 
Initiation of a Proceeding to Consider Further Proposed Methodology 
Changes for the FY 2008 ACR (Proposal Thirteen), November 19, 2008 
(Petition).
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    Substance of the Postal Service's proposal. Single-piece Parcel 
Post was separated from competitive Parcel Post products in the FY 2007 
Annual Compliance Report (FY 2007 ACR) without the benefit of input 
cost data that directly reflected the distinction. The FY 2007 ACR 
employed a cost model for single-piece Parcel Post that included mail 
processing and transportation cost avoidance estimates for Inter-BMC 
and Intra-BMC Parcel Post to support the discounts charged for those 
categories. See USPS-FY07-15 and USPS-FY07-16. In Docket No. RM2008-6, 
for FY 2008, the Commission approved the collection of ``bottom up'' 
costs separately for single-piece Parcel Post and for the various 
competitive Parcel Post products in the Postal Service's basic data 
collection systems (In-Office Cost System, Carrier Cost System, and 
Transportation Cost System). See Order No. 118, October 22, 2008, 
Proposal Ten. Because new input data will be used in the FY 2008 Annual 
Compliance Report (FY 2008 ACR) to obtain single-piece Parcel Post 
costs, adjustments need to be made to the models that estimate the 
costs associated with inter-BMC and intra-BMC single-piece parcels.
    The Postal Service provides electronic spreadsheets showing where 
the FY 2008 data will go when it is received. Id. at 3. Those 
spreadsheets are briefly described below.

    Parcel Post Single-Piece Trans.xls: Cost model showing 
transportation costs allocated to Inter- and Intra-BMC single-piece 
Parcel Post (replacing portions of USPS-FY07-16).
    Parcel Post Single-Piece MP.xls: Cost model showing mail 
processing costs allocated to Inter- and Intra-BMC single-piece 
Parcel Post (replacing portions of USPS-FY07-15).
    Parcel Post Cost Model Modifications.doc: Document describing 
modifications made to the Parcel Post mail processing and 
transportation cost models (formerly portions of USPS-FY07-15 and 
USPS-FY07-16) to accommodate new reporting methods in the [Cost and 
Revenue Analysis] CRA for single-piece Parcel Post.

    The objective, background, rationale, and impact of Proposal 
Thirteen is described in an attachment to the Postal Service's 
Petition. It is reproduced below.

I. Procedural Expedition

    The same factors that led the Commission to expedite review of the 
11 proposals disposed of in Docket Nos. RM2008-2, RM2008-6, and RM2009-
1 apply here. Proposal Thirteen appears to be a relatively 
straightforward proposal to adapt the cost avoidance models for single-
piece Parcel Post to use the new CRA inputs that will soon become 
available. The Postal Service states that compared to the models 
employed in its FY 2007 ACR, these models are essentially unchanged in 
their conceptual approach, the mechanical relationships of the data 
elements, the assumptions used, and the analytical techniques applied. 
Id. at 2. Accordingly, public comments, if any, will be due on December 
5, 2008, and reply comments will be due on or before December 12, 2008.

II. Substance of Postal Service Proposals

    The Postal Service proposal, see Petition at 3, is described below.
    Proposal Thirteen. Development of Single-Piece Parcel Post Mail 
Processing and Transportation cost Models.
    Objective. Develop single-piece Parcel Post mail processing and 
transportation cost models that contain cost estimates for the Inter-
BMC and Intra-BMC price categories.
    Background. Parcel Post mail processing (USPS-FY07-15) and 
transportation (USPS-FY07-16) cost models were filed in Docket No. 
ACR2007. These cost models were used to derive cost estimates for all 
the Parcel Post price categories using a single set of cost model 
parameters. This methodology was relied upon because some parameters 
were only available in aggregate form. For example, an aggregate mail 
processing unit cost by shape estimate (USPS-FY07-26) was all that was 
available at that time.
    Rationale. As the Commission discussed in Order No. 118, the Postal 
Service is now able to provide separate mail processing and 
transportation cost data for single-piece Parcel Post, Parcel Select, 
and Parcel Return Service for Fiscal Year 2008. It is therefore now 
possible to develop separate single-piece Parcel Post mail processing 
and transportation cost models. The document titled ``Parcel Post Cost 
Model Modifications'' lists the modifications required to develop 
single-piece Parcel Post mail processing and transportation cost models 
using the cost models that were filed in USPS-FY07-15 and USPS-FY07-16, 
respectively, as starting points.
    Impact. In Docket No. ACR2007, single-piece Parcel Post mail 
processing and transportation cost estimates for the Inter-BMC and 
Intra-BMC price categories were not developed for the reasons described 
above. The fact that several cells on page 1 of the proposed mail 
processing model contain values of zero is not an indication that there 
is a problem with the model. These values merely indicate that the 
USPS-FY07-15 aggregate cost by shape estimate was removed from the 
model, given that it is not comparable to the single-piece estimate 
that should be used and is not yet available. The results that appear 
on page 1 of the proposed transportation cost model are also not 
meaningful as they were calculated using cost segment 8 and 14 data 
that represent all of Parcel Post, rather than the more narrowly 
defined category of single-piece Parcel Post. The single-piece 
transportation cost data are not yet available. Once all the Fiscal 
Year 2008 cost data are available and incorporated into the proposed 
cost models, it will only be possible to compare the single-piece 
Inter-BMC and Intra-BMC mail processing and transportation cost 
estimates to the aggregate (single-piece and bulk-entered) Inter-BMC 
and Intra-BMC cost estimates derived in USPS-FY07-15 and USPS-FY07-16, 
respectively.

III. Ordering Paragraphs

    It is Ordered:
    1. The Commission establishes Docket No. RM2009-2 to consider the 
Petition of the United States Postal Service Requesting Initiation of a 
Proceeding to Consider Further Proposed Methodology Changes for the FY 
2008 ACR (Proposal Thirteen), filed November 19, 2008.
    2. Interested persons may submit initial comments on or before 
December 5, 2008.

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    3. Reply comments may be submitted on or before December 12, 2008.
    4. William C. Miller is designated as the Public Representative 
representing the interests of the general public in this proceeding.
    5. The Secretary shall arrange for publication of this notice in 
the Federal Register.

    By the Commission.

    Authority: 39 U.S.C 3652.

Steven W. Williams,
Secretary.
[FR Doc. E8-28396 Filed 11-28-08; 8:45 am]
BILLING CODE 7710-FW-P