[Federal Register Volume 74, Number 152 (Monday, August 10, 2009)]
[Proposed Rules]
[Pages 39909-39910]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-19025]



39 CFR Part 3050

[Docket No. RM2009-10; Order No. 269]

Periodic Reporting Rules; Postal Regulatory Commission

ACTION: Proposed rulemaking; availability of rulemaking petition.


SUMMARY: This document announces a proposed rulemaking in response to a 
recent Postal Service petition involving periodic reporting rules. The 
petition, which is the third in a recent series, addresses seventeen 
potential changes. These changes cover matters such as correction of 
certain errors, updates based on operational changes or data system 
improvements, and the calculation of Periodicals bundle costs. If 
adopted, some of the proposed changes would affect certain cost models 
and revenue and volume reporting. Two other proposals affecting 
periodic reporting are under consideration in pending dockets.

DATES: Comments are due August 20, 2009.

ADDRESSES: Submit comments electronically via the Commission's Filing 
Online system.

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


Regulatory History

    74 FR 31386 (Jul. 1, 2009).
    74 FR 35837 (Jul. 21, 2009).
    On July 28, 2009, the Postal Service filed a petition to initiate 
an informal rulemaking proceeding to consider changes in the analytical 
methods approved for use in periodic reporting.\1\

    \1\ Petition of the United States Postal Service Requesting 
Initiation of a Proceeding to Consider Proposed Changes in Analytic 
Principles (Proposals Three-Nineteen), July 28, 2009 (Petition).

    The proposals described by the Petition fall into several groups. 
The Postal Service describes Proposals Three through Seven as ``errors 
detected in some of the programs and spreadsheets used to prepare the 
ACR filing * * *.'' Id. at 1. The Petition notes that providing advance 
notice of such corrections is not mandatory but observes that it is 
potentially beneficial to the compliance review process, and for that 
reason the Postal Service voluntarily provides such notice. Id. at 1.
    The Postal Service describes Proposals Eight through Ten and 
Eighteen as ``updates based on operational changes or data system 
improvements.'' Proposal Eight involves new distribution factors for 
Special Purpose Routes; Proposal Nine involves new items in Rural 
Evaluation Factors; and Proposal Ten involves a new Rural distribution 
for DPS/Sector Segment (letters). Proposal Eighteen involves a 
disaggregation of TRACS data to distribute Surface CP costs between 
Canada and the rest of the world. Id. at 2.
    Proposal Eleven concerns the use of booked versus imputed values 
for certain international mail costs and revenues. The Petition notes 
that in preparing its FY 2008 Annual Compliance Determination (ACD), 
the Commission relied on booked values and adjusted the Postal 
Service's FY 2008 International Cost and Revenue Analysis (ICRA) to be 
consistent with that approach. The Petition observes that ``if the 
[Commission's] intent is to consistently use booked values in place of 
imputed values, the methodology underlying the FY08 ACD needs to be 
improved.'' Id. The Postal Service offers what it regards as a suitable 
improved method of applying booked values which applies booked values 
for attributable costs as well as for revenues. The Postal Service, 
however, asserts that providing an ICRA that relies on imputed values 
continues to have value. Therefore, it requests permission to file an 
alternative ICRA with its periodic reports that applies imputed values 
to the costs and revenues in question. It notes that in FY 2010, it 
will institute a new Foreign Payment System that will use an ``accrual 
methodology that is more similar to the imputed methodology * * *.'' 
See id. at 2-3, and Proposal Eleven at 1-2, attached to the Petition. 
The alternative ICRAs are provided under seal. See Library Reference 
USPS-RM2009-10/NP1, FY 2008 ICRA Report for Imputed and Booked 
    Proposals Twelve through Fourteen concern special studies for 
Periodicals, Standard Mail, and Parcels, respectively. Proposal Twelve 
is premised on the belief that the Commission's FY 2008 ACD estimate of 
the percent of Incoming Secondary Periodicals flats sorted mechanically 
is contrary to the logic of the Periodicals cost model accepted in 
Docket No. RM2009-1. See supporting rationale for Proposal Twelve 
attached to the Petition, at 1-3. Proposal Thirteen exploits the fact 
that with respect to Standard Mail, the FY 2008 CRA report was expanded 
by adding separate line items for letters, flats, and NFMs/parcels. The 
Postal Service proposes to use these estimates to develop separate 
destination entry cost avoidance estimates for Standard Mail letters, 
flats, and NFMs/parcels.
    Proposal Fourteen takes advantage of the fact that FY 2008 mail 
processing and transportation cost data are separately available for 
single-piece Parcel Post, Parcel Select, and Parcel Return Service. 
This makes it possible

[[Page 39910]]

to develop mail processing and transportation cost models for each 
product that separates costs by point of entry. The proposed cost 
models are presented in library references under seal. See Library 
Reference USPS-RM2009-10/NP2, Nonpublic Materials Relating to Proposals 
Fourteen and Eighteen.
    Proposals Fifteen through Seventeen are proposals to make 
refinements to volume and revenue reporting. Proposal Fifteen would 
expand the use of Point of Sale (POS) data from retail terminals to 
report revenue and associated attributes from pieces to which a PVS 
strip has been applied at the window. Proposal Sixteen would establish 
a new set of distribution factors for allocating Certificate of Mailing 
fee revenue back to products. Proposal Seventeen would improve revenue, 
piece, and weight reporting for Free Military Mail. Petition at 3.
    Proposal Nineteen \2\ relates to the calculation of bundle costs in 
the Periodicals ``Bundle Passthrough'' worksheet. The Petition notes 
that in the FY 2008 ACD, the Commission used the costs of bundles in 
sacks, rather than the weighted average costs of bundles in both sacks 
and pallets, to estimate the costs avoided by Periodicals. Proposal 
Nineteen seeks to explore whether this change was intended or 

    \2\ The Petition, at 3, inadvertently refers to Proposal 
Nineteen as ``Proposal Twenty.''

    The attachment to the Postal Service's Petition explains its 
proposals in more detail, including the background, objective, 
rationale, and estimated impact of each.
    It is ordered:
    1. The Petition of the United States Postal Service Requesting 
Initiation of a Proceeding to Consider Proposed Changes in Analytic 
Principles (Proposals Three-Nineteen), filed July 28, 2009, is granted.
    2. The Commission establishes Docket No. RM2009-10 to consider the 
matters raised by the Postal Service's Petition.
    3. Interested persons may submit initial comments on or before 
August 20, 2009.
    4. The Commission will determine the need for reply comments after 
review of the initial comments.
    5. Kenneth R. Moeller is designated to serve as the Public 
Representative representing the interests of the general public in this 
    6. The Secretary shall arrange for publication of this Notice in 
the Federal Register.

    Authority:  39 U.S.C. 3652.

    Issued: July 31, 2009.

    By the Commission.
Judith M. Grady,
Acting Secretary.
[FR Doc. E9-19025 Filed 8-7-09; 8:45 am]