[Federal Register Volume 75, Number 128 (Tuesday, July 6, 2010)]
[Rules and Regulations]
[Pages 38725-38745]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-16178]


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POSTAL REGULATORY COMMISSION

39 CFR Parts 3050 and 3055

[Docket No. RM2009-12; Order No. 465]


Service Performance Measurement

AGENCY: Postal Regulatory Commission.

ACTION: Final rule.

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SUMMARY: The Commission is adopting a final rule on service perfomance 
measurement and customer satisfaction. The final rule reflects the 
Commission's consideration of comments on a proposed rule. Adoption of 
the final rule helps give effect to provisions in a 2006 federal law 
which, among other things, sought to increase Postal Service 
accountability. The Commission recognizes that exceptions from, and 
temporary waivers of, some reporting requirements may be appropriate. 
The discussion makes clear that these matters may be pursued in 
separate follow-up rulemakings initiated by the Postal Service.

[[Page 38726]]


DATES: This rule is effective on August 5, 2010.

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

SUPPLEMENTARY INFORMATION: Regulatory History, 74 FR 49190 (September 
25, 2009).

Table of Contents

I. Introduction
II. Procedural History
III. Statutory Provisions
IV. General Issues
    A. Quantifying Costs and Burdens
    B. Objection to Quarterly Reports
    C. Implementation of Rules
    D. Continuing Oversight
V. Service Performance Measurements Reporting
    A. Annual Reporting
    B. Quarterly Reports
    C. Proposals to Expand the Scope of the Service Performance 
Rules
VI. Reporting of Customer Sastisfaction
    A. General Considerations
    B. Rule 3055.91--Consumer Access to Postal Services
    C. Rule 3055.92--Customer Experience Measurement Surveys
    D. Rule 3055.93--Mystery Shopper Program
    E. Suggested Data Reporting Item
VII. Ordering Paragraphs

I. Introduction

    The final rules described herein establish Postal Service reporting 
requirements for measuring the level of service and degree of customer 
satisfaction for each market dominant product. The reporting of level 
of service and customer satisfaction are required by 39 U.S.C. 
3652(a)(2)(B) as part of the Postal Service's annual report to the 
Commission; are a necessary part of the modern system of rate 
regulation for market dominant products as required by 39 U.S.C. 3622; 
and support the Commission's responsibility to report on universal 
service as required by 39 U.S.C. 3651(b)(1)(A). The Commission's 
authority to promulgate the form and content of these reporting rules 
is 39 U.S.C. 503, 3622(a), 3652(d) and (e), and 3651(c).
    Order No. 292, which provides notice of this rulemaking, describes 
each rule as proposed. The original descriptions have not been repeated 
in the final order except when necessary to add clarity to the 
discussion.\1\ They may be relied upon, except where noted, and may be 
considered as incorporated by reference. The rules adopted by the final 
order are substantially the same as those originally proposed, with 
relatively few modifications. Specific discussions in this order are 
limited to rules that are the subject of actionable comments.
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    \1\ Notice of Proposed Rulemaking on Periodic Reporting of 
Service Performance Measurements and Customer Satisfaction, 
September 2, 2009 (Order No. 292); see also 74 FR 49190 (September 
25, 2009).
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    The order contains three substantive sections: (1) General issues 
applicable to both the reporting of service performance measurements 
and customer satisfaction (section IV); (2) rules applicable to service 
performance measurement reporting (section V); and (3) rules applicable 
to reporting of customer satisfaction (section VI).
    Four issues of general applicability are addressed in section IV of 
this order.
    1. The Commission, in the notice of rulemaking, invited the Postal 
Service to identify requirements that it might view as onerous or 
costly to implement, and to quantify the associated costs. The Postal 
Service did not reply to this invitation with the level of specificity 
necessary to consider changes to the proposed rules. The Commission and 
interested parties would have benefited from this information when 
evaluating each rule. Over 3 years have passed since the enactment of 
the Postal Accountability and Enhancement Act (PAEA) of 2006. The 
Commission finds that reporting of service performance measurements and 
customer satisfaction must begin without further delay.
    2. The Commission adopted the Postal Service's general approach to 
providing both annual and quarterly reports in developing the proposed 
rules. However, the Postal Service, for the first time in its comments, 
offers a new legal argument that quarterly reporting is beyond what is 
required by the PAEA. After adopting the Postal Service's proposed 
approach, the Commission does not agree with the Postal Service's new 
argument that its approach is legally flawed. The final rule retains 
requirements for both annual and quarterly reporting.
    3. The Postal Service outlines its capabilities to comply with the 
proposed rules. The indications are that the Postal Service still faces 
a major effort to be able to report service performance as contemplated 
by the PAEA. The Commission finds it necessary to prescribe a process 
for ensuring timely compliance with the rules given the current status 
of the Postal Service's reporting capability.
    4. Finally, several commenters propose various approaches for 
continuing Commission oversight of service performance reporting. The 
Commission views service performance reporting predominately as part of 
the Annual Compliance Report/Annual Compliance Determination process, 
but may take other action as necessary.
    Section V of this order discusses specific comments concerning the 
rules for service performance measurement reporting. Annual reporting 
requirements are addressed in section V.A, quarterly reporting 
requirements are addressed in section V.B, and proposals which 
potentially expand reporting requirements are addressed in section V.C.
    For the most part, service performance reporting rules are adopted 
as proposed. Explanations are provided where comments indicate there 
could be possible confusion in the interpretation of the rules, and 
minor wording changes to add clarity to the rules have been 
incorporated. A proposal to require the Postal Service to provide 
explanations when requirements are not met is adopted in rule 
3055.2(h). This is a task required of the Postal Service in any event. 
Also, a proposal which modifies the Standard Mail service day groupings 
for reporting purposes is adopted. See rule 3055.50(a). Proposals to 
modify the proposed rules that were not adopted include elimination of 
certain documentation requirements, an alternative documentation 
methodology, expanding the categories of exceptions, raising the 
standard of review consistent with the ``analytical principles'' 
methodology, and eliminating a special study of areas with a unique 
mailing characteristic.
    Proposals also were presented which would expand the reporting 
requirements. These include proposals concerning forwarding and return 
of First-Class Mail, tail of the mail, remittance mail, critical entry 
times, and actionable raw data, among others. None of these proposals 
have been adopted at this time.
    Section VI of this order discusses the reporting of customer 
satisfaction. The reporting of customer satisfaction is a new reporting 
requirement imposed for the first time by the PAEA. This requirement is 
not well defined, and will require development through the regulatory 
rulemaking process. This rulemaking is the first step in the process of 
developing satisfactory reporting requirements. Minor terminology 
changes to provide the most recent names of Postal Service programs are 
incorporated. A requirement to provide certain Mystery Shopper Program 
information proposed as rule 3055.93 has not been adopted.
    To facilitate the interpretation of the final rules, the market 
dominant product list appears in the Appendix as Table 1-Market 
Dominant Product List as of August 10, 2009 to this rulemaking; 
illustrative examples of annual data reporting charts appear in

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the Appendix as Table 2-Illustrative Annual Report Data Reporting 
Charts; illustrative examples of quarterly data reporting charts appear 
in the Appendix as Table 3-Illustrative Quarterly Report Data Reporting 
Charts; and illustrative examples of customer satisfaction data 
reporting charts appear in the Appendix as Table 4-Illustrative 
Customer Satisfaction Data Reporting Charts. Because these charts are 
merely illustrative, they will not be published in the Federal 
Register.
    All final rules for adoption as new part 3055 of the Commission's 
rules of practice and procedure appear after the signature of this 
order. In general, reserved clauses that appeared in the proposed rules 
are eliminated in the final version.

II. Procedural History

    On September 2, 2009, the Commission established Docket No. RM2009-
11 to consider the addition of service performance and customer 
satisfaction reporting requirements to the Commission's rules of 
practice and procedure. The Commission issued Order No. 292 to 
establish this docket; propose amendments to its rules of practice and 
procedure; seek comments and reply comments from interested persons; 
and publish notice of this proceeding in the Federal Register. Order 
No. 292 also designated Emmett Rand Costich and James Callow to 
represent the interests of the general public pursuant to 39 U.S.C. 
505.
    The Commission proposed to amend its rules of practice and 
procedure by adding new part 3055--Service Performance and Customer 
Satisfaction Reporting. This part is further subdivided into Subpart 
A--Annual Reporting of Service Performance Achievements, Subpart B--
Periodic Reporting of Service Performance Achievements, and Subpart C--
Reporting of Customer Satisfaction.
    Establishing rules to report service performance (subparts A and B) 
is the final step in a four-step process for incorporating measurements 
of level of service into the modern system of rate regulation for 
market dominant products. The previous steps established service 
standards, identified service performance measurement systems, and 
established performance goals.
    The establishment of service standards is mandated by 39 U.S.C. 
3691, which requires the Postal Service, in consultation with the 
Postal Regulatory Commission, to establish by regulation a set of 
modern service standards for market dominant products. Initial 
consultations between the Commission and the Postal Service concluded 
on November 19, 2007, with the Commission providing the Postal Service 
with comments addressing the Postal Service's service standards 
proposals.\2\ The Postal Service completed this task by publishing as a 
final rule Modern Service Standards for Market Dominant Products, 
December 19, 2007 (Service Standards).\3\
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    \2\ Comments of the Postal Regulatory Commission on Modern 
Service Standards for Market Dominant Products, November 19, 2007. 
The consultations are described as ``initial'' because of the 
ongoing nature of consultations that is necessary to transition from 
a set of standards to an operational measurement system encompassing 
performance goals (see uncodified section 302(b)(1) of the PAEA) and 
reporting mechanisms (see 39 U.S.C. 3652).
    \3\ 73 FR 72216 (December 19,2007) (to be codified at 39 CFR 
parts 121 and 122).
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    In June 2008, the Postal Service identified service performance 
measurement systems by providing the Commission with a draft of its 
Service Performance Measurement plan (Plan).\4\ The Plan presents the 
various systems the Postal Service proposes to use to measure the 
standards presented in the Service Standards document.\5\ The Postal 
Service submitted the Plan for the Commission's ``review, feedback, and 
concurrence.''\6\ In response, the Commission initiated Docket No. 
PI2008-1 to consider the Plan and to solicit public comment. This 
process culminated with the Commission issuing Order No. 140.\7\ This 
order completed the second step in the process by approving the 
approaches that the Postal Service proposes to take in developing 
internal measurement systems for various classes of mail.\8\
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    \4\ The Commission published the Plan in Docket No. PI2008-1, 
Second Notice of Request for Comments on Service Performance 
Measurement Systems for Market Dominant Products, June 18, 2008 
(Order No. 83). The draft published in Order No. 83 was the final 
draft in a series of drafts provided by the Postal Service to the 
Commission.
    \5\ An objective in designing service performance standards is 
for the Postal Service to provide a ``system of objective external 
performance measurements for each market dominant product as a basis 
for measurement of Postal Service performance.'' 39 U.S.C. 
3691(b)(1)(D). Howewer, ``with the approval of the Postal Regulatory 
Commission an internal measurement system may be implemented instead 
of an external measurement system'' for individual products. 39 
U.S.C. 3691(b)(2). In the Plan the Postal Service proposes various 
internal, external, and hybrid (containing both internal and 
external elements) measurment systems to measure the performance of 
its mail products.
    \6\ Letter from Thomas G. Day, Senior Vice President, United 
States Postal Service, to Dan G. Blair, Chairman, Postal Regulatory 
Commission, June 3, 2008.
    \7\ Docket No. PI2008-1, Order Concerning Proposals for Internal 
Service Standards measurement Systems, November 25, 2008 (Order No. 
140.)
    \8\ Approval was provided with the exception of the measurement 
systems for several Special Services where the Commission directed 
the Postal Service to propose a remedial plan by June 1, 2009. The 
Postal Service submitted remedial proposals on May 15, 2009. See 
Letter from Thomas G. Day, Senior Vice President, Intelligent Mail 
and Address Quality, United States Postal Service, to Dan G. Blair, 
Chairman, Postal Regulatory Commission, May 15, 2009 (May 15, 2009 
Letter from Thomas G. Day).
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    The PAEA directed the Postal Service, in consultation with the 
Commission, to develop and submit to Congress a plan for meeting 
service standards. Congress directed, inter alia, that the plan 
establish performance goals. The Postal Service posted its FY 2009 
targets on its Rapid Information Bulletin Board System (RIBBS) Web page 
at http://www.ribbs.gov/targets/documents/tech_guides/Targets.pdf.
    The Postal Service's Plan included proposals for both annual and 
quarterly reporting of service performance measurements. The Commission 
solicited comments on service performance reporting when it considered 
the Postal Service's proposals for measurement systems. However, in 
Order No. 140, the Commission limits its considerations of those 
comments in anticipation of the instant rulemaking, which specifically 
addresses reporting requirements. The fourth and final step in the 
process, and the subject of this rulemaking, is for the Commission to 
issue rules specifying the reporting of service performance (subparts A 
and B).
    Establishing rules to report customer satisfaction (subpart C) 
previously had not been addressed by the Postal Service or the 
Commission. Proposed rules appeared for the first time in the notice of 
proposed rulemaking establishing this docket.
    In this docket, comments pertaining to all proposed rules (subparts 
A, B and C) were received from ACMA, PostCom/DMA, Bank of America, PSA, 
the Public Representative, the Postal Service, and Valpak.\9\ Reply 
comments were received from PostCom/DMA, Bank of America, DMA, MOAA, 
PSA, the Public

[[Page 38728]]

Representative, the Postal Service, and Valpak.\10\
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    \9\ Comments of the Association for Postal Commerce and the 
Direct Marketing Association in Response to Order No. 292 (PostCom/
DMA Comments); Comments of Bank of America Corporation (Bank of 
America Comments); Comments of the Parcel Shippers Association on 
PRC Notice of Proposed Rulemaking (PSA Comments); Comments of the 
Public Representative in Response to Order No. 202 (Public 
Representative Comments); United States Postal Service Comments in 
Response to Order No. 292 (Postal Service Comments); Valpak Direct 
Marketing Systems, Inc. and Valpak Dealers' Association, Inc. 
Initial Comments on Proposed Rulemaking on Periodic Reporting 
(Valpak Comments), all filed November 2, 2009; and Comments of the 
American Catalog Mailers Association, November 3, 2009 (ACMA 
Comments).
    \10\ Valpak Direct Marketing Systems, Inc. and Valpak Dealers' 
Association, Inc. Reply Comments on Proposed Rulemaking on Periodic 
Reporting, November 24, 2009 (Valpak Reply Comments); Reply Comments 
of the Association for Postal Commerce and the Direct Marketing 
Association in Response to Order No. 292 (PostCom/DMA Reply 
Comments); Reply Comments of Bank of America Corporation (Bank of 
America Reply Comments); Additonal Reply Comments of the Direct 
Marketing Association to Commission Order No. 292 (DMA Reply 
Comments); Reply Comments of the Mail Order Association of America 
on PRC Notice of Proposed Rulemaking (MOAA Reply Comments); Reply 
Comments of the Parcel Shippers Association of PRC Notice of 
Proposed Rulemaking (PSA Reply Comments); and United States Postal 
Service Reply Comments in Response to Order No. 292, December 2, 
2009 (Public Representative Reply Comments).
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    Late in this proceeding, the Postal Service informed the Commission 
that it would provide additional material concerning forwarded mail. 
Postal Service Reply Comments at 36. This material was provided in 
response to a Commission request in Docket No. PI2008-1 to ``explore 
the cost of periodically conducting studies of service performance for 
forwarded and returned First-Class Mail and inform the Commission of 
their feasibility by the conclusion of fiscal year 2009.'' Order No. 
140 at 24. This material is attached to a Postal Service motion 
requesting that it be considered in connection with the instant docket 
(Docket No. RM2009-11).\11\ The Public Representative subsequently 
offers supplemental comments concerning this material.\12\
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    \11\ Motion of the United States Postal Service to File Report 
on Performance Measurement of Forwarded Mail, December 10, 2009 
(Postal Service Supplemental Comments); see also Order No. 364, 
Order Granting Motions Concerning Postal Service Report on 
Performance Measurement of Forwarded Mail, December 17, 2009.
    \12\ Public Representative Comments in Response to Postal 
Service Report on Performance Measurement of Forwarded Mail, 
December 16, 2009 (Public Representative Supplemental Comments).
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III. Statutory Provisions

    Section 3652(a)(2) of title 39 requires that the Postal Service 
include in an annual report to the Commission an analysis of the 
quality of service ``for each market-dominant product provided in such 
year'' by providing ``(B) measures of the quality of service afforded 
by the Postal Service in connection with such product, including--(i) 
the level of service (described in terms of speed of delivery and 
reliability) provided; and (ii) the degree of customer satisfaction 
with the service provided.'' In complying with this requirement, the 
Commission has authority to ``by regulation, prescribe the content and 
form of the public reports (and any nonpublic annex and supporting 
matter relating to the report) to be provided by the Postal Service * * 
* .'' 39 U.S.C. 3652(e)(1).\13\ The Commission also is to have access 
to ``supporting matter'' in connection with any information submitted 
under this section. 39 U.S.C. 3652(d).
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    \13\ The Commission's authority is continuing as it has further 
authority to initiate proceedings to improve the quality, accuracy 
and completeness of data whenever it shall appear that ``the quality 
of service data has become significantly inaccurate or can be 
significantly improved.'' 39 U.S.C. 3652(e)(2(B).
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    Section 3622 of title 39 provides that the Commission by regulation 
establish ``a modern system for regulating rates and classes for 
market-dominant products.'' The quality of service, and its reporting, 
forms an integral part of many of the objectives and factors set forth 
in this section. Reporting on quality of service allows assessment of 
whether the Postal Service is meeting the objective of maintaining the 
``high quality service standards established under section 3691.'' 39 
U.S.C. 3622(b)(3). It furthers the objective of increasing ``the 
transparency of the ratemaking process.'' 39 U.S.C. 3622(b)(6). It 
allows assessment of the factors addressing value of service, and by 
association with the proposed measurement systems, the value of 
intelligent mail. 39 U.S.C. 3622(c)(1), (8), and (13). Finally, it is 
important in relation to the rate cap requirements of 39 U.S.C. 
3622(d)(1)(A) when analyzing whether quality of service is impacted in 
order to comply with rate cap requirements.
    Section 3651(b)(1)(A) of title 39 requires that the Commission 
report to the President and Congress on an annual basis estimates of 
the costs incurred by the Postal Service in providing universal 
service. Describing the quality of service afforded a product, both 
anticipated and actual, is a necessary element in analyzing what 
service is being provided at a given cost. The Postal Service is to 
provide the Commission with such information that may, in the judgment 
of the Commission, be necessary in completing this report. 39 U.S.C. 
3651(c).

IV. General Issues

    The four issues addressed in this section are applicable to both 
the rules concerning service performance measurements and to the rules 
concerning reporting of customer satisfaction. They include quantifying 
costs and burdens, an objection to providing reports on a quarterly 
basis, an implementation procedure for ensuring future full compliance 
with the rules, and the continuing oversight role of the Commission.

A. Quantifying Costs and Burdens

    The Commission invited the Postal Service to identify requirements 
imposed by the proposed rules that would be particularly onerous or 
costly to comply with.

    If a new requirement in these proposed rules is viewed by the 
Postal Service as particularly onerous, or involves costly new data 
collection that does not appear to add needed transparency, the 
Postal Service is requested to identify it and attempt to quantify 
its incremental cost.

Order No. 292 at 2.

    Other than general comments addressing costs and burdens, the 
Postal Service did not reply with the specificity necessary to consider 
changes to the proposed rules.
    Several parties commented on the Postal Service's limited response. 
Bank of America states that it shares the Postal Service's interest in 
minimizing implementation costs and administrative burdens. However, it 
notes that the Postal Service had not quantified the costs associated 
with complying with burdensome requirements, nor had it proposed rule 
modifications to mitigate perceived burdens. Bank of America Reply 
Comments at 1. PostCom/DMA comments that ``in order to assess what is 
or is not reasonable, the Commission and affected mailers must be 
provided with some estimation--and not merely broad, unsupported and 
self contradictory statements--as to cost.'' PostCom/DMA Reply Comments 
at 2. PSA similarly notes that the Postal Service had not quantified 
costs or burdens. PSA Reply Comments at 1-2.
    Noting that the Postal Service had not quantified onerous costs or 
burdens, PSA urges the Commission to not make significant changes to 
the proposed rules. Id. at 3. Bank of America suggests that the Postal 
Service be provided another opportunity to identify onerous costs or 
burdens. Bank of America Reply Comments at 2.
    A more detailed response from the Postal Service would have 
benefited the Commission and other commenters in weighing the costs and 
burdens of complying with the proposed rules against the importance of 
the information that is being gathered. This would have provided an 
opportunity to consider specific alternatives at this time. As the 
Postal Service develops its plan to achieve compliance with these 
rules, it will have other opportunities to bring concerns that can be 
identified with specificity to the attention of the

[[Page 38729]]

Commission, and possibly to suggest less costly or burdensome 
alternatives.

B. Objection to Quarterly Reports

    The service performance rules incorporate a two-level system for 
reporting service performance consisting of an Annual Report provided 
at a high level of aggregation and four Quarterly Reports which provide 
information at a more detailed level.
    This two-tier approach was proposed by the Postal Service and 
adopted by the Commission. It was discussed at several Postal Service/
Commission consultative meetings, where the statutory, 39 U.S.C. 
3652(a)(2), product level reporting requirements also were reviewed 
with the Postal Service. Section 3652(a) provides that the Postal 
Service shall prepare and submit such reports as the Commission deems 
necessary to demonstrate (among other things) that the quality of 
service it provides complies with all applicable requirements of title 
39. Section 3653(b) provides that the Commission shall make a 
determination on whether service standards in effect during a year have 
been met. The rules established by this order allow for both of these 
related, but different, provisions to be met through two-tier 
reporting.
    The section 3653(b) requirement focuses on whether service 
standards are met over the course of a year. Annual reporting of 
service performance will enable the Commission to make these 
determinations. The section 3652(a) requirement is broader, focusing on 
such standards as the obligation to provide services to bind the nation 
together and to provide prompt and reliable service to all areas. See 
39 U.S.C. 101. To evaluate these requirements, the Commission has 
determined that more detailed, quarterly information is necessary.
    The Postal Service initially appeared to endorse this approach in 
its service performance Plan:

    In accordance with Sec.  3652 of the Postal Accountability and 
Enhancement Act, the Postal Service is required to report measures 
of the quality of service on an annual basis. The Postal Service's 
proposal for service measurement goes far beyond annual reporting 
and will instead provide quarterly reporting for all market-dominant 
products, almost entirely at a district level.

Plan at 12.

    The Postal Service now argues that the PAEA contemplates only 
annual reporting of service performance and customer satisfaction, and 
that the Commission is not authorized to require reports on a different 
timeframe. It states that there is no reason why the Commission needs 
quarterly service performance and customer satisfaction reports to 
effectuate its responsibilities under title 39. Furthermore, it 
contends that the Commission's authority is generally confined to 
determining the contents of the annual report, and not the timing of 
reports. The Postal Service acknowledges that the concept of quarterly 
reports arose out of Postal Service proposals, but that was when the 
Postal Service was proposing to report at the class, and not the 
product, level. Finally the Postal Service contends that the 
Commission's authority is significantly limited by 39 U.S.C. 
3652(e)(1)(B) which requires the Commission to consider unnecessary or 
unwarranted administrative effort and expense on the part of the Postal 
Service. Postal Service Comments at 12-17; Postal Service Reply 
Comments at 3-8.
    The Public Representative contends that the section 3652 statutory 
requirement to provide an annual report does not preclude the reporting 
of data on a more frequent basis. It argues that the Postal Service's 
objection to quarterly reporting of service measurements also is 
inconsistent with the Postal Service's position on the reporting of 
costs, revenues and rates under the existing periodic reporting rules. 
Public Representative Reply Comments at 4-5. In addition, the Public 
Representative argues that quarterly data are necessary for the 
Commission to carry out its regulatory functions. Id. at 5-10.
    If the Commission finds the Postal Service's arguments persuasive, 
the Public Representative proposes two alternatives: (1) Either require 
the quarterly service performance data proposed by the rules to be 
provided as part of each annual report; or (2) require a report 
encompassing the previous four quarters (annual) to be provided 4 times 
a year (quarterly). Id. at 6. Valpak supports the Postal Service 
position that neither 39 U.S.C. 503 nor 39 U.S.C. 3651 authorizes the 
Commission to require quarterly reporting. It continues that although 
the Postal Service is not prohibited from filing quarterly reports, 
this also is not required by 39 U.S.C. 3652. Valpak argues that time is 
better spent on improving the quality of reports by product on an 
annual basis. Valpak Reply Comments at 1-2.
    The Commission finds that prescribing the two-tier approach to 
reporting service performance measurements is within the Commission's 
statutory authority, provides information necessary to the Commission's 
regulatory responsibilities, and is based on sound logic and reasoning. 
The Commission has general authority to ``promulgate rules and 
regulations and establish procedures, subject to chapters 5 and 7 of 
title 5, and take any other action they deem necessary and proper to 
carry out their functions and obligations'' pursuant to 39 U.S.C. 503. 
Section III, Statutory Provisions, of this order thoroughly explains 
how the proffered rules relate to the Commission's regulatory 
responsibilities and need not be repeated at this point.
    The two-tiered approach is intended to provide the appropriate 
level of detail necessary to evaluate a product's overall service 
performance for the purpose of an annual compliance determination. Too 
great a level of detail could distract from this analysis by requiring 
focus on potential anomalies in data that might not be relevant to a 
product's overall performance.
    The more detailed information provided quarterly is intended to 
serve multiple purposes. Foremost, it will be used to verify the 
information provided in the Annual Report, and to ensure that a 
representative measurement system is in place which produces 
statistically reliable data. Additionally, it will provide the 
Commission with the level of detail necessary to carry out its other 
regulatory functions, such as examining the interaction of level of 
service with rate changes, which has rate cap implications, and in 
evaluating universal service.
    Alternatively, as proposed by the Public Representative, all annual 
and quarterly data could be provided annually, i.e., one comprehensive 
annual report providing information by quarter.\14\ This alternate 
approach was not originally proposed, nor is it desirable. With a 
single data intensive report, focus could be lost in evaluating annual 
compliance. Compliance issues easily may arise concerning what amounts 
to supporting data, rather than a product's overall performance. 
Providing a separate Annual Report at the appropriate level of detail, 
as proposed, provides a first level filter, which focuses the analysis 
on more pertinent information to complete an annual determination of 
compliance.\15\
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    \14\ This fact substantially weakens the end result of the 
Postal Service's new argument, as the rules could require the Postal 
Service to provide identical information, either on an annual, or on 
a quarterly basis.
    \15\ Although the Commission intends to focus on annual data for 
the Annual Compliance Determination, it finds no bar to using 
quarterly provided information when reviewing any compliance issue 
that may arise.
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    The once-a-year all-inclusive approach also creates timeliness of 
data

[[Page 38730]]

issues. Untimely service performance data quickly loses its relevance. 
Timely, reliable data facilitates the Commission's ability to 
effectively carry out its many regulatory functions, including review 
of periodic rate change proposals and universal service analysis. This 
information will facilitate the Commission's ability to make well-
informed decisions.
    The Postal Service also argues that the Commission's authority is 
limited, and must be balanced against the requirements discouraging 
unnecessary or unwarranted administrative effort and expense on the 
part of the Postal Service. As discussed previously, the Commission 
requested that the Postal Service quantify unreasonable costs or 
burdens when evaluating these rules. The Postal Service chose not to do 
so with any reasonable level of specificity. For this reason the 
Commission rejects this generalized and unsupported argument.
    Finally, the Postal Service argues that because 39 U.S.C. 3652 only 
specifically identifies an annual report, the Commission is without 
authority to ask for more frequent reports. The Commission finds 
nothing in the statute that prohibits the Commission from seeking more 
frequent reports, if a regulatory need can be demonstrated. The 
Commission discusses the regulatory need for quarterly reports 
throughout this order. The Postal Service's narrow interpretation of 
the statute to conclude that the Commission may seek information only 
on an annual basis ignores the other functions this information plays 
in the Commission's regulatory responsibilities under the PAEA, and 
ignores the need to validate the data that are provided on an annual 
basis.

C. Implementation of Rules

    The Postal Service's comments inform the Commission of its current 
ability to generate information as required by the rules. This includes 
both a product-by-product measurement and reporting capability status, 
and an estimate of what information may be provided in quarterly and 
annual reports in the near term. After review of these comments, it is 
evident that an implementation plan must be developed to ensure timely, 
full compliance with the service performance reporting rules.
    The Postal Service offers that the first annual report should be 
provided with the FY 2010 Annual Compliance Report, with the 
anticipation that exceptions to reporting will be necessary. It asserts 
that it currently lacks the capacity to comply with certain parts of 
the rules without modifications to its measurement systems. 
Furthermore, the Postal Service states that the first quarterly report 
likely will not be capable of reporting on large parts of the 
information required by the rules. Postal Service Comments at 9-12; 29.
    The Postal Service identifies its current abilities to comply with 
detailed service performance reporting requirements. The Postal Service 
asserts that it will be able to provide detailed annual and quarterly 
reports for all First-Class Mail products, except for Flats.\16\ Id. at 
29-30. The exception for the reporting of Flats data is due to 
limitations with the existing External First-Class (EXFC) system. The 
Postal Service asserts it will be able to report Flats at the national 
and area levels for overnight, 2-day and 3/4/5-day service standard 
groups, but it will not be able to report service performance down to 
the district level as required by the rules. Id. at 31-32.
---------------------------------------------------------------------------

    \16\ One area of First-Class Mail where the Postal Service's 
capability to report service performance exceeds the reporting 
requirements of this rulemaking is in the area of Single-Piece 
First-Class Mail International. The Postal Service reported Inbound 
Single-Piece First-Class Mail International and Outbound Single-
Piece First-Class Mail International disaggregrated by overnight, 2-
day, and 3/4/5-day groupings during the FY 2009 annual compliance 
review. This rulemaking currently requires reporting only a single 
aggregated number for Inbound Single-Piece First-Class Mail 
International and a single aggregate number for Outbound Single-
Piece First-Class Mail International. A future rulemaking will bring 
the reporting requirements up to the level of actual reporting 
capability. Until that time, the Commission requests that the Postal 
Service continue reporting at the more disaggregate level on an 
annual basis.
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    The Postal Service asserts it will not be able to provide annual or 
quarterly reports for Standard Mail by product. Id. at 29-31. This is 
due to current electronic documentation requirements for full-service 
IMb, which in some instances do not require detailed mailpiece level 
data. Id. at 33. The Postal Service also asserts that currently there 
is insufficient data to provide overall results at the national, area, 
and district levels in the entry type and service standard groups 
specified by the rules. Id. at 34.
    The Postal Service asserts it will not be able to provide annual or 
quarterly reports for Periodicals by product. Id. at 29-31. This is due 
to limitations with the Red Tag/Del-Trak measurement systems. Id. at 
35-36. However, the Postal Service may be able to separately report on 
Destination Entry and End-to-End Periodicals at the class level. Id. at 
36-37.
    The Postal Service asserts it will be able to provide annual 
Package Services reports by product, except for Bound Printed Matter 
Flats and Media Mail/Library Mail (to the extent these products do not 
utilize Delivery Confirmation), and Inbound Surface Parcel Post (at UPU 
rates). Id. at 29. It also will be able to provide quarterly reports 
for Package Services statistics by product, except for Inbound Surface 
Parcel Post (at UPU rates). Id. at 31.
    The Postal Service asserts it will be able to provide annual and 
quarterly reports for some, but not all, Special Service products. Id. 
at 30-31.
    The Postal Service adds that full-service IMb has the capability to 
provide granular data below the class level, with the limiting factor 
being customer participation. However, rule changes to the measurement 
system generally will require a 2 fiscal year time lag before 
implementation, even assuming funding, availability of resources, and 
no other competing priorities. Id. at 37-40.
    The Public Representative acknowledges the Postal Service's 
practical concerns as to the capabilities of the measurement systems to 
produce reliable and representative service performance measurement 
data in the short term. It suggests that this should be dealt with by 
granting temporary exemptions from specific reporting elements until 
such time as the measurement capabilities are more developed. Public 
Representative Reply Comments at 3.
    Mailers express an interest in having the Postal Service begin 
providing service performance data in compliance with the rules as soon 
as practicable. Bank of America suggests that the final rule contain an 
effective date on which the Postal Service must comply with the rules. 
Bank of America Comments at 6. PostCom/DMA urges the Commission to 
require the Postal Service to develop and release interim and long-term 
implementation plans for service performance measurement and reporting 
systems. PostCom/DMA Comments at 6-8. PSA urges early implementation of 
the rules for product level reporting and suggests that reporting begin 
no later than Quarter 2, 2010 based upon existing systems. PSA Comments 
at 2-3. PSA notes that the proposed rules focus on how performance 
information is to be reported, and do not require significant changes 
to the Postal Service's performance measurement approach. Id.
    PostCom/DMA and MOAA express concern with Postal Service comments 
that it may not be able to provide measurement statistics for Standard 
Mail by product at any level required by the proposed rules. PostCom/
DMA Reply Comments at 2-4; MOAA Reply Comments at 1-2. PostCom/DMA 
urges

[[Page 38731]]

the Postal Service to begin quarterly reporting at the product level to 
the extent any data is available, and include explanatory notes as the 
measurement systems continue to evolve. PostCom/DMA Reply Comments at 
4. MOAA supports PostCom/DMA's suggestion to provide the maximum data 
possible under existing systems, and argues that the Postal Service 
should provide a schedule for full reporting under a reasonably rapid 
timetable. MOAA Reply Comments at 1-2. MOAA asks the Commission to be 
sensitive to the costs of providing this data. Id. at 2. Valpak also 
suggests requiring a firm schedule for compliance with service 
performance reporting by product for Standard Mail. Valpak Reply 
Comments at 3-5. Valpak argues that if the Postal Service cannot begin 
providing some data by product within the next 12 months, it would 
endorse the PostCom/DMA suggestion that data be obtained by other 
means, such as by using an alternative measurement system. Id. at 5.
    The rules described in this rulemaking shall be effective 30 days 
after publication in the Federal Register. There is no expectation that 
the Postal Service will be able to provide service performance 
reporting in compliance with every aspect of the rules as of the 
effective date. In the case of customer satisfaction reporting, 
however, there is no apparent reason why the Postal Service cannot 
immediately comply with all customer satisfaction data reporting 
requirements. Most, if not all, customer satisfaction reporting 
requirements are based on information that the Postal Service currently 
has available.
    Because of the limited initial expectations in the area of service 
performance reporting, the Commission shall require the Postal Service 
to follow a two-step process to achieve full compliance with all 
reporting requirements by the filing date of the FY 2011 Annual 
Compliance Report (2011 ACR). The first step requires the Postal 
Service to request semi-permanent exceptions from reporting as allowed 
by rule 3055.3. These exceptions are applicable only under limited, 
specific circumstances. The second step is to request temporary, short-
term waivers from reporting in areas where measurement and reporting 
systems need additional time for development. This step further 
requires the presentation of implementation plans to achieve full 
compliance by the filing date of the 2011 ACR prior to the granting of 
a waiver.
    In the interim, the Postal Service is directed to provide the 
Commission with all available required data as performance reports are 
due. When additional data becomes available in the future, this also 
shall be provided. Pending action on waivers or exceptions shall not 
act as a stay to providing available data.
    Step 1: semi-permanent exceptions from reporting. Rule 3055.3 
allows the Postal Service to petition the Commission to request that a 
product, or component of a product, be excluded from reporting. The 
rules establish strict limits on allowable exceptions. Because of these 
limitations, most instances that warrant an exception should be readily 
identifiable and justifiable. It is anticipated that any exception 
approved will be of a semi-permanent nature, as opposed to the 
temporary, transitional waivers discussed below. Any request for 
exception that is denied under rule 3055.3 may be further addressed by 
requesting a temporary waiver until reporting can be provided. The 
Postal Service shall file initial requests for exclusions from 
measurement with the Commission no later than June 25, 2010.\17\
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    \17\ The Commission requests that the Postal Service contact the 
Comnmission's Dockets supervisor at the time of filing to establish 
a new rulemaking ``RM'' docket for this filing.
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    Public comments on the first round of requests will be accepted 
until July 16, 2010. The Commission will issue a ruling shortly 
thereafter. The public always has an opportunity to comment on any 
exception, granted or not, during the Annual Compliance Report/Annual 
Compliance Determination process.
    Step 2: temporary waivers from reporting. The Postal Service's 
recital of its immediate ability to comply with the service performance 
reporting requirements indicates that a transition period is necessary 
to allow further development of certain measurement and reporting 
systems. The Commission will provide an opportunity for the Postal 
Service to seek temporary waivers where it cannot immediately comply 
with specific reporting requirements. Waivers will be granted for a 
defined period of time, and will be applicable to any annual or 
quarterly report required to be filed in the interim. The FY 2010 
annual report and interim quarterly reports will be viewed in light of 
these waivers.
    As a condition of granting any waiver, the Commission shall require 
the Postal Service to develop and present implementation plans 
addressing each reporting requirement for which the Postal Service 
cannot provide the required information. The plans shall conform with a 
goal of achieving full compliance with all reporting requirements by 
the filing date of the 2011 ACR. The Postal Service has been working on 
its measurement systems since the passage of the PAEA in December 2006. 
Requiring full compliance by issuance of the 2011 ACR provides almost 2 
additional years for the Postal Service to implement reporting systems 
to report service performance in full compliance with the rules.
    Implementation plans at a minimum should provide an explanation of 
why a reporting requirement cannot be complied with, the steps 
necessary to come into compliance, and a timeline of events necessary 
to achieve compliance. Interim milestones shall be included in the 
plans where applicable such that both the Postal Service and the 
Commission can evaluate progress being made. The Commission needs to be 
informed of the Postal Service's plans and the progress being made, but 
intends to provide the Postal Service the flexibility to manage its 
plans without Commission interference.
    The Postal Service's request for temporary waivers shall be filed 
with the Commission no later than September 10, 2010.\18\ The Postal 
Service shall provide status reports on achieving the milestones of its 
implementation plans with the filing of quarterly performance reports.
---------------------------------------------------------------------------

    \18\ The Commission requests that the Postal Service contact the 
Comnmission's Dockets supervisor at the time of filing to establish 
a new rulemaking ``RM'' docket for this filing.
---------------------------------------------------------------------------

    The public has until October 1, 2010 to submit comments on requests 
for temporary waivers. Comments directed towards areas of the Postal 
Service's plans that are in jeopardy of not meeting the full compliance 
deadline will be most helpful.
    The Commission will issue a ruling shortly thereafter. For any 
requests that may be unjustified or implementation plans that may 
appear unreasonable, the Commission intends to direct the Postal 
Service to make improvements to its plans or the request may be denied.
    Interim reporting. This order provides illustrative examples of 
data reporting charts for annual and quarterly service performance and 
customer satisfaction reporting. The Postal Service may adopt these 
formats, or independently develop similar formats, for reporting data. 
All annual and quarterly reports shall be presented using complete data 
reporting tables. Where data are available, it shall be provided. Where 
data are not available, an appropriate notation shall be made where the 
data should have appeared indicating that the data are not

[[Page 38732]]

yet available. This will provide a clear indication of the progress 
being made towards full compliance with the reporting requirements.

D. Continuing Oversight

    Many comments address the need for some form of continuing 
oversight of service performance measurements by the Commission. Bank 
of America encourages the Commission to provide ``an ongoing and active 
role in ensuring timely, representative, and high quality reporting.'' 
Bank of America Comments at 6.
    Valpak contends that implementing a service performance system is 
an ongoing process, and suggests that the Commission revisit the 
reporting rules after experience is gained, making adjustments as 
necessary. Valpak Comments at 7-8. It further suggests planning for 
subsequent discrete service performance measurement reporting dockets, 
apart from the annual compliance review process where service 
performance may take on a minor role. Valpak Reply Comments at 6-7.
    Bank of America argues that mail prepared using full-service IMb 
may not be representative of the product as a whole. Thus, it urges the 
Commission to implement regular third-party auditing of service 
performance measurement systems using IMb to ensure accurate and 
representative measurements. Bank of America Comments at 7.
    PostCom/DMA also expresses concern with the adequacy of full-
service IMb adoption rates to provide geographically and statistically 
representative service performance measurements. They urge the 
Commission to monitor adoption rates, and evaluate the related rate 
incentive plans.\19\ PostCom/DMA Comments at 4-6.
---------------------------------------------------------------------------

    \19\ DMA believes that full-service IMb provides a low cost 
solution for service performance measurement, but current incentives 
are not high enough to elicit large enough quantities of mail for 
the system to work. It argues for increasing the discounts to 
increase volume, as opposed to funding an external measurement 
system that does not rely on full-service IMb. DMA Reply Comments at 
2. The Commission also is concerned with IMb adoption rates. 
However, potential incentive plans are beyond the scope of this 
order.
---------------------------------------------------------------------------

    Bank of America urges the Commission to review appropriate quality 
control and data cleaning procedures, specifically in the area of 
Confirm service. Bank of America Comments at 7. PostCom/DMA expresses 
similar concerns. PostCom/DMA Comments at 14.
    PostCom/DMA urges the Commission to establish a formal annual 
review of service performance standards and targets with an eye towards 
improving the standards and targets. Id. at 15-16.
    Each of these arguments expresses concerns with the ability of the 
hybrid IMb-based measurement system approved by the Commission to 
provide reliable service performance measurements. The Commission has 
an ongoing role in monitoring customer satisfaction and service 
performance. Primary oversight will be through the Annual Compliance 
Report/Annual Compliance Determination process. This is the appropriate 
time to look at customer satisfaction and service performance, 
including but not limited to all aspects of data quality, potential 
auditing of systems, adequacy of the data being provided, sufficiency 
of the measurement systems, monitoring of adoption rates, and proposals 
for improvement.
    Individual dockets may be initiated as required to consider 
improvements to the rules as implemented, or to consider innovative new 
approaches to evaluating both customer satisfaction and service 
performance. Additional, continuous visibility into the Postal 
Service's progress will be obtained through the quarterly reporting 
requirements.
    The Postal Service has established baseline service performance 
standards and targets. The Commission has limited authority to 
establish service performance standards and targets on its own, which 
is implied by the PostCom/DMA suggestion to annually review the service 
performance standards and targets with a goal of improvement. However, 
the Commission will have an indirect role in reviewing Postal Service 
initiated performance standard and target changes to these baselines as 
this may affect the nature of the underlying service, or the rates 
associated with the service in regard to the price cap.

V. Service Performance Measurements Reporting

A. Annual Reporting

    This rulemaking incorporates the rules for annual reporting of 
service performance measurements (or achievements) into new subpart A--
Annual Reporting of Service Performance Achievements, of Part 3055--
Service Performance and Customer Satisfaction Reporting. Table 2--
Illustrative Annual Report Data Reporting Charts shown in the Appendix 
provides illustrative examples of data reporting charts.
    Rules 3055.2, .3, .5 and .7 concerning the Contents of the Annual 
Report of Service Performance Achievements; Reporting Exceptions; 
Changes to Measurement Systems, Service Standards Service Goals or 
Reporting Methodologies; and Special Study are the subject of 
actionable comments, and are addressed below.\20\
---------------------------------------------------------------------------

    \20\ Order No. 292 at 14-18 describes all rules appearing in 
subpart A. The descriptions have not been repeated in the final 
order unless pertinent to the discussion.
---------------------------------------------------------------------------

1. Rule 3055.2--Contents of the Annual Report of Service Performance 
Achievements
    Rule 3055.2 describes the contents of the annual report of service 
performance achievements. Subsection (b) directs the reader to specific 
reporting requirements applicable to each product within a specific 
class or group. Subsections (c) through (g) direct the Postal Service 
to describe the service standards, performance goals, measurement 
systems, and statistical methodologies for each product. Subsection (h) 
now requires an explanation where specific service standards are not 
met. Subsection (i) requires the identification of each product, or 
component of a product, granted an exception from reporting pursuant to 
rule 3055.3, along with a certification that the rationale for 
originally granting the exception remains valid. Subsections (j) and 
(k) (proposed subsections (i) and (j)) in effect require the Postal 
Service to demonstrate how it performs each aggregation/disaggregation 
of data, both between and among the various reports, and over the 
various timeframes. This would include providing volumes and other 
weighting factors as necessary to perform the required calculations.
    Objections to documentation requirements. The Postal Service 
believes that the documentation requirements specified by rule 3055.2 
(and similarly rules 3055.31 and 3055.32) are unnecessary, in major 
respects unworkable, and should be eliminated. Postal Service Comments 
at 22-28. The Postal Service's specific comments, however, only focus 
on the description of the aggregation methodologies within and between 
various reports as required by proposed rules 3055.2(i) and (j).\21\
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    \21\ Although the Postal Service only specifically mentions the 
aggregation methodologies within and between various reports as 
required by proposed rules 3055.2(i) and (j), the Postal Service's 
comments also could be interpreted to implicate the documentation 
requirements of rules 3055.2(c) through (g). The Commission's 
conclusions apply equally to proposed rules 3055.2(i) and (j), and 
to rules 3055.2(c) through (g).
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    The Postal Service contends that the requirements of proposed rules 
3055.2(i) and (j) are akin to requirements seen under the previous 
ratemaking regime,

[[Page 38733]]

and are ``overkill'' in the context of the PAEA where interested third 
parties do not have to be provided with previous levels of due process. 
Id. at 26. It argues that the requirements will create an unwarranted 
financial burden for the documentation of some products, and for 
certain other products, the Postal Service contends that the complexity 
of the systems prevent providing documentation in the formats 
anticipated by the rules. Id. at 26-27.
    The Postal Service contends that some level of assurance should be 
provided in the analysis because many of the calculations are performed 
independent of the Postal Service by contractors. The Postal Service 
also notes that assurance should be provided because, pursuant to 39 
U.S.C. 3652(a), the Inspector General of the Postal Service is required 
to conduct regular audits of the performance measurement systems.\22\
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    \22\The Postal Service also expresses concern with public 
disclosure of certain data that otherwise potentially could have 
been packaged and sold to interested mailers, thereby depriving the 
Postal Service of an additional revenue source. Id. at 28, n.16.
---------------------------------------------------------------------------

    As an alternative, the Postal Service suggests that it is always 
available to the Commission to answer questions about the derivation of 
estimates. As a second alternative, the Postal Service proposes to 
submit a certification from a qualified auditor to attest to the 
accuracy of the estimates. Id. at 22-28.
    Bank of America and PostCom/DMA support the rules which require the 
Postal Service to describe the measurement system for each product, 
including the process used to aggregate data. Bank of America Comments 
at 3; PostCom/DMA Comments at 13-14. However, PostCom/DMA also 
expresses concern with additional costs, and suggests clarification of 
what is to be provided, including addressing massive IMb data sets and 
consideration of potentially sensitive data. Id.
    The Commission previously described the intent of proposed rules 
(i) and (j):

    Subsections (i) and (j) of this section in effect require the 
Postal Service to demonstrate how it performs each aggregation/
disaggregation of data, both between and among the various reports, 
and over the various timeframes. The goal is to provide independent 
parties the information necessary to be able to replicate the 
aggregations/disaggregations made by the Postal Service between and 
among the various reports, and over the various timeframes. For 
example, this should include the ability to aggregate the data 
provided in the quarterly reports up to the level of data provided 
in the annual reports. It also should include the ability to 
aggregate data provided at the District level, to the Postal 
Administrative Area level, and to the National level. The Commission 
expects that data will be provided in electronic format (Excel files 
are anticipated at this time), with electronic links and formulas 
that can be followed in order to duplicate the Postal Service's 
aggregation methodologies. This would include providing volumes and 
other weighting factors as necessary to perform the required 
calculations.

Order No. 292 at 15 (footnote omitted).

    The Commission finds that this requirement is a critical component 
in allowing third parties to understand the data being presented by the 
Postal Service. Without an understanding of this process, third parties 
cannot properly interpret the service performance data, which renders 
the data meaningless.\23\
---------------------------------------------------------------------------

    \23\ Bank of America provides an excellent example of the 
effects of weighting on the presentation of data and a third-party's 
ability to interpret the data. See Bank of America Comments at 3-4.
---------------------------------------------------------------------------

    The Commission assumes that the methodologies involved for service 
performance measurements, including aggregation methodologies, is 
information that the Postal Service or its subcontractors has available 
and which has been documented. Otherwise, it would be difficult to 
consistently apply these methodologies when analyzing and transforming 
raw data into presentable form. It also would not be possible for any 
third party (an independent auditor or the Inspector General of the 
Postal Service as suggested by the Postal Service) to audit and verify 
the Postal Service's systems without this documentation.
    The Commission further assumes that the Postal Service did not 
allow its contractors unconstrained latitude in developing performance 
measurement systems. For the contractors to efficiently carry out their 
tasks, they should have been provided with the parameters of the 
systems that they were expected to deliver. In return, the contractors 
should have provided documentation to the Postal Service explaining 
what they had developed for the Postal Service. For these reasons, the 
Commission concludes that documentation can be provided in compliance 
with the documentation rule with little additional burden to the Postal 
Service.
    There is no single answer as to what may be a sufficient level of 
documentation, or what level of underlying data must be presented in 
support of the data filings. The Postal Service seems to indicate that 
for certain products it is possible to provide complete documentation. 
For other products, the Postal Service indicates that it will be 
difficult, because of the complexities of the measurement systems, to 
provide complete documentation. The Commission finds that the level of 
documentation provided must be consistent with its previously stated 
goals, and to allow parties to reasonably understand and analyze the 
Postal Service performance measurement systems. The Commission only is 
interested in the Postal Service's underlying raw data sets to the 
extent necessary to understand how raw data is transformed into 
presentable form. It expects generally to examine data sets that are 
already in some aggregate form. The Commission is not asking that the 
Postal Service's raw databases be made publicly available.
    Assuming that the Postal Service is able to substantially comply 
with documentation requirements, it still may be necessary to consult 
informally with the Postal Service to understand more fully how its 
systems operate. This potentially could include a series of technical 
conferences to explain to all parties the performance measurement 
systems. The Commission will make its staff available as necessary to 
assist the Postal Service to determine how it can best comply with the 
documentation requirements.
    Alternative documentation proposal. The Public Representative 
proposes that the Postal Service only fully document its service 
performance measurement system in the first annual report after these 
rules go into effect, instead of having to fully document its service 
performance measurement system each year. He proposes that the Postal 
Service then be required to document only changes to these systems in 
future reports. He asserts this change mimics the reporting 
requirements established under the existing periodic reporting rules 
using the analytical principles concept. Public Representative Comments 
at 7-9, and Attachment A, rules 3055.1(c) and 3055.2(e).
    The Commission does not adopt the Public Representative's proposal. 
The measurement and data reporting systems are in a nascent phase and 
are currently under development. The Commission anticipates many 
potentially significant changes over the next few years. It may become 
extremely cumbersome to track these changes without establishing a new 
baseline on an annual basis. The only additional burden placed upon the 
Postal Service by this rule is the requirement to re-file, verbatim, 
previously filed material where no changes have occurred. Once the 
measurement and data reporting systems stabilize, this proposal may be 
reconsidered.
    Proposal to require explanations. Bank of America requests an 
addition to

[[Page 38734]]

rule 3055.2 which requires the Postal Service to explain, in instances 
where specific service standards are not met, why they are not met, and 
to require the Postal Service to provide a plan for meeting service 
standards in the future. Bank of America Comments at 3, n.7.
    The Postal Service opposes this suggestion arguing that this is a 
purpose of the Annual Compliance Report/Annual Compliance Determination 
process. Postal Service Reply Comments at 34. It contends that the 
Commission is authorized to seek additional information as might be 
necessary at that time.
    The Commission agrees with the Postal Service that the Annual 
Compliance Report/Annual Compliance Determination process is the most 
appropriate time for reviewing postal services that do not meet their 
service standards or goals. The Postal Service also is correct in 
recognizing that the Commission may seek this information if it is not 
provided. However, this process will be facilitated by the Postal 
Service providing explanations at the time it files its Annual 
Compliance Report, and not waiting for a Commission request. Clarifying 
rule 3055.2 to specify that providing explanations is required will 
serve as a reminder to the Postal Service to provide this information 
at the time of filing, and may eliminate the delay involved with 
issuing information requests. Because this information should be 
provided anyway, and if not it would be requested, the Commission does 
not find this to be a material change to the proposed rule.
    The following requirement will be added to rule 3055.2:

    (h) For each product that does not meet a service standard, an 
explanation of why the service standard is not met, and a plan 
describing the steps that have or will be taken to ensure that the 
product meets or exceeds the service standard in the future.

    Minor wording change. The Public Representative proposes a minor 
language change to clarify proposed rule 3055.2(i). He proposes to 
change the word ``next'' to ``preceding'' when describing related 
levels of aggregation/disaggregation. Public Representative Comments at 
11-12, and Attachment A, rule 3055.2(i).
    Although the Commission believes the intent of the rules is clear, 
it finds that the language can be improved. The wording in rules 
3055.2(j) and 3055.31(d) will be modified to read: ``Documentation 
showing how data reported at a given level of aggregation were derived 
from data reported at greater levels of disaggrgation.''
2. Rule 3055.3--Reporting Exceptions
    Rule 3055.3 provides an avenue for the Postal Service to seek 
exceptions from the general requirement to report on service 
performance in instances where reports would be cost prohibitive in 
relation to the revenue generated from the service, it defies 
meaningful measurement, or in the case of certain negotiated service 
agreements.
    Clarification of ``component'' of a product terminology. The Postal 
Service expresses several concerns with rule 3055.3 Reporting 
exceptions. It asks clarification of the terminology ``component'' of a 
product. It opines that this terminology could apply to the various 
levels of aggregation required by the rules, or to the absence of 
certain elements of required information for an entire product. Postal 
Service Comments at 19.
    Rule 3055.3 provides that ``[t]he Postal Service may petition the 
Commission to request that a product, or component of a product, be 
excluded from reporting * * * . The Commission had two applications in 
mind for the terminology ``component of a product.'' The first applies 
where ``component'' refers to a standalone service provided by the 
Postal Service that is grouped under an umbrella product for 
administrative purposes only. For example, Ancillary Services is a 
product within Special Services. Stamped Cards would be a component of 
the Ancillary Services product. The Postal Service may wish to seek an 
exception from reporting on the Stamped Cards component of Ancillary 
Services if it believes one or more of the exceptions are applicable.
    The second is where ``component'' refers to a feature or service 
provided as part of a recognized product. For example, the Single-Piece 
Letters/Postcards product within First-Class Mail includes forwarding 
and return service. Some have argued that forwarding and return service 
should be independently measured. The Commission could consider 
forwarding and return service a component of the Single-Piece Letters/
Postcards product susceptible to a request for exception from 
reporting.\24\
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    \24\ The Commission is not prejudging the success or failure of 
making any of these arguments in obtaining an exception.
---------------------------------------------------------------------------

    Proposal to expand allowable exceptions. The Postal Service also 
argues that the exceptions should be expanded in three ways: (1) To 
apply to failure to meet the documentation requirements of rules 3055.2 
and 3055.31; (2) to apply to reports on customer satisfaction; and (3) 
to encompass the transition period when the Postal Service fails to 
provide specific reports while the measurement systems are brought up 
to speed. A further suggestion is to provide an ``other reasons'' 
catchall category of exceptions for items not specifically addressed. 
Id. at 21.
    The Commission intended only limited exceptions, and has not been 
persuaded that additional exceptions should be provided. Temporary 
waivers for near term failure to meet the documentation requirements or 
events encountered during the transition period are addressed in the 
discussion of an implementation plan in section IV.C. This speaks to 
the Postal Service's immediate concern. The Commission is not aware of 
any specific reason to extend reporting exception rules to the customer 
satisfaction requirements. Most, if not all, customer satisfaction 
reporting requirements are based on Postal Service systems already in 
place, or from data that it routinely collects. The Postal Service has, 
as it has frequently done in the past, the ability to formulate 
requests for waivers in the form of a motion to address future issues 
that may not be apparent at this time. The Commission does not find a 
need to expand the exceptions rule at this time.
    Exceptions procedures. Finally, the Postal Service comments that 
the rules are silent on specific procedures for executing the exception 
mechanism. The Postal Service's view is that the exceptions procedures 
need not become a forum for any other purpose than permitting the 
Postal Service to explain why reporting requirements are not being met. 
Id. at 21-22. PSA contends that rule 3055.3 should include a provision 
allowing interested parties to comment on proposed exceptions. PSA 
Reply Comments at 3.
    The Commission has concluded that it will seek comments and issue 
an appropriate ruling on the initial round of exception requests. See 
section IV.C. The Commission will reconsider if a more formal process 
is warranted at a later date. Interested persons always have an 
opportunity to comment on exceptions during the Annual Compliance 
Report/Annual Compliance Determination process. Further opportunity for 
interested persons to seek reconsideration of exceptions is provided 
pursuant to 39 U.S.C. 3652(e)(2)(B).
3. Rule 3055.5-Changes to Measurement Systems, Service Standards, 
Service Goals or Reporting Methodologies
    Rule 3055.5 requires the Postal Service to apprise the Commission 
of all

[[Page 38735]]

changes to measurement systems, service standards, service goals, and 
reporting methodologies. The Commission may institute a proceeding to 
consider change proposals if it appears that the changes might have a 
material impact on the accuracy, reliability, or utility of the 
reported measurement, or if the changes might have a material impact on 
the characteristics of the underlying product.
    Bank of America and PostCom/DMA voice general support for these 
rules. Bank of America Comments at 3; PostCom/DMA Comments at 15.
    Standard of review. The Public Representative contends that 39 
U.S.C. 3652 requires the same standard of review for service 
performance as it does for costs, revenues and rates. He equates 
internal (including hybrid) service performance measurement systems and 
methodologies for data reporting (including the use of proxies) with 
analytical principles as defined in rule 3050.1 of the periodic 
reporting rules. As such, the Public Representative proposes to 
incorporate the more restrictive rules for changes in accepted 
analytical principles into the rules for service performance. See 39 
CFR 3050 et seq. The Public Representative also would extend the Postal 
Service's advance notification requirement from 30 to 60 days, and 
differentiate between internal and external measurement systems. Public 
Representative Comments at 3-6, 9-11, and Attachment A, rules 3055.1(b) 
and 3055.5.
    The Postal Service opposes the Public Representative's proposal 
arguing that the Commission's approach is both adequate and 
appropriate. Postal Service Reply Comments at 15-18.
    The periodic reporting rules, along with the concept of 
``analytical principles,'' are intended for reporting on technical 
areas of rate analysis which have evolved over 30 years. Over this time 
the associated data measurement systems, analytical methodologies, and 
forms of data presentation have matured and become fairly stable. 
Recent changes to analytical principles typically account for recent 
changes in the data reporting systems, or are meant to incorporate new 
ways of looking at information generated through these systems.
    By contrast, the periodic reporting of service performance is a new 
requirement of the PAEA. The data measurement systems, analytical 
methodologies, and forms of data presentation are currently under 
development and are, for practical purposes, untested. Many adjustments 
are anticipated before these systems become mature. At this early 
stage, the Postal Service must have the flexibility to take the lead in 
developing these systems. While the Commission does not intend to 
insert itself into the day-to-day development decisions, it still must 
be kept apprised of changes to proposed systems to ensure that they 
produce and report reliable, useful information. 39 U.S.C. 3652(a)(1). 
The Commission finds that the rules as proposed serve this function. 
Thus, the Commission does not adopt the proposal to impose the more 
restrictive periodic cost reporting procedures in the case of service 
performance measurements at this time.
    Commission oversight of service standards and service goals. The 
Postal Service opposes the portions of rule 3055.5 which imply that the 
Commission has limited oversight over service standards and service 
goals. By statute, it argues that 39 U.S.C. 3691 reserves to postal 
management all authority over the establishment or revision of service 
standards, and uncodified section 302 provides postal management 
authority to establish service goals. It asserts that these areas are 
core management functions. Id. at 18-22.
    The Commission does not intend to specify service standards or 
service goals for new products, or, on its own, to initiate review of 
existing products with the purpose of requiring changes to established 
service standards or service goals. However, the Postal Service's 
authority in this area is not without limit. Accurate, up-to-date 
information is necessary for the Commission to carry out its 
responsibilities to monitor and report on quality of service under the 
PAEA. This only can be accomplished if the Postal Service provides 
notice and continuously keeps the Commission apprised of all changes.
    The Commission also finds that service performance standard or goal 
changes that might have a material impact on the characteristics of an 
underlying product must be reviewed for possible product classification 
change issues. They also must be reviewed for rate and rate cap 
implications. For example, a reduction in service without a reduction 
in price may imply that customers are getting less for their money, 
i.e., experiencing a de facto rate increase. The review of rate changes 
and establishing rules that delineate how such cases are to be 
considered by the Commission are well within the purview of the 
Commission. See 39 U.S.C. 3622. The Commission's rules of practice are 
clear when the Postal Service directly proposes rate changes, but may 
be less clear when rates that are in effect are changed indirectly. 
Providing (1) a notice requirement, and (2) establishing the 
possibility of a proceeding in rule 3055.5 to remove any ambiguity that 
the Postal Service must officially notify the Commission of Postal 
Service actions that may indirectly affect rates.\25\
---------------------------------------------------------------------------

    \25\ A parallel argument can be made for when a service goal or 
service standard changes the nature of a product, that effectively 
amounts to a classification change.
---------------------------------------------------------------------------

    Minor wording change. Upon review of the wording of rule 3055.5, 
the Commission determined that it may be unclear as to when the 
Commission may initiate a proceeding. For clarity, the Commission will 
add the words ``at any time'' to the rule. This is consistent with 
Commission authority to initiate proceedings at any time pursuant to 39 
U.S.C. 3652(e)(2), and authority to establish modern rate regulation 
pursuant to 39 U.S.C. 3622.\26\ In some instances, it parallels a 
customer's ability to file a complaint pursuant to 39 U.S.C. 3662, 
request a proceeding pursuant to 39 U.S.C. 3652(e)(2), or provide 
comment pursuant to 39 U.S.C. 3653(a). In some instances, it parallels 
the Postal Service's obligation to file a nature of service case 
pursuant to 39 U.S.C. 3661. However, the Commission's intent is to make 
a preliminary determination of whether or not a proceeding is warranted 
within the 30-day notification period, and notify the Postal Service 
immediately of any determinations to initiate a proceeding.
---------------------------------------------------------------------------

    \26\ The Commission views service standard and service goal 
changes as potentially affecting the value of a service to the 
customer. Thus, service standard or service goal changes may be 
equated wtih rate changes.
---------------------------------------------------------------------------

4. Rule 3055.7-Special Study
    The measurement systems that the Postal Service propose do not 
appear to capture certain information on delivery performance; for 
example, from the processing facility in Anchorage, Alaska to the outer 
reaches of Alaska; from Honolulu to the neighbor islands of Hawaii; or 
from San Juan to more distant locations in the Caribbean district.
    Proposed rule 3055.7 contemplates the Postal Service conducting a 
special study, every 2 years, to evaluate final delivery service 
performance in these remote locations.
    The Postal Service contends that a special study is not necessary 
because transit time measurements already include single-piece, bulk, 
and international First-Class Mail, Standard Mail, and Package Services 
to and from

[[Page 38736]]

all ZIP Codes in these areas. Parcels having Delivery Confirmation are 
currently measured from start-the-clock through delivery to final 
destination. Finally, Periodicals measurements will be extended to 
these areas when the hybrid measurement approach replaces the Red Tag/
Del-Trak measurement system. Postal Service Comments at 44-45.
    The intent of obtaining special studies is to allow evaluation of 
the unique aspects of providing service to the less populous/more 
remote areas of these districts, and compare how this service differs 
from the districts as a whole. Beyond the service performance 
implications, this will add to the understanding of universal service 
in these areas. The Postal Service states it now is able to measure all 
ZIP Codes in these areas. This may provide the necessary information 
for the special study. However, if the intent of the Postal Service was 
only to aggregate information obtained from these ZIP Codes to obtain a 
district level result, this would not provide the insight as required 
into the unique aspects of service to the less populous/more remote 
areas.
    The special study shall remain in the final rule. If the result of 
the special study indicates that the more remote/less populous areas of 
these districts receive essentially the same service as the less 
remote/more populous areas of these districts, the Postal Service may, 
in the future, petition the Commission to eliminate this requirement 
from future reports.

B. Quarterly Reports

    This rulemaking incorporates the rules for quarterly reporting of 
service performance measurements into a new Subpart B--Periodic 
Reporting of Service Performance Achievements, of Part 3055--Service 
Performance and Customer Satisfaction Reporting. Table 3--Illustrative 
Quarterly Report Data Reporting Charts shown in the Appendix provides a 
visualization of the quarterly data reporting elements specified by the 
rules through illustrative examples of data reporting charts.
    Rules 3055.31, .32 and .50 concerning the Contents of the Quarterly 
Report of Service Performance Achievements; Measurement Systems Using a 
Delivery Factor; and Standard Mail are the subject of actionable 
comments, and are addressed below.\27\
---------------------------------------------------------------------------

    \27\ Order No. 292 at 19-23 describes all rules appearing in 
subpart B. The descriptions have not been repeated in the final 
order unless pertinent to the discussion.
---------------------------------------------------------------------------

1. Rule 3055.31--Contents of the Quarterly Report of Service 
Performance Achievements
    Rule 3055.31 specifies the contents of each quarterly report. 
Subsection (b) directs the reader to specific reporting requirements 
applicable to each product within a specific class or group. Subsection 
(c) requires identification of each product, or component of a product, 
granted an exception from reporting pursuant to rule 3055.3, along with 
a certification that the rationale for originally granting the 
exception remains valid. Finally, subsections (d) and (e) direct the 
Postal Service to demonstrate how it aggregates/disaggregates data to 
different reporting levels.
    Aggregation of data. Bank of America supports the demonstration of 
the aggregation of data, rule 3055.31(d)-(e). Specifically, Bank of 
America stresses the importance of weighting to allow meaningful 
analysis of data, and the impact that weighting has on reported 
performance. Bank of America Comments at 3-4.
    The Postal Service contends that the documentation requirements 
specified by rule 3055.31 should be eliminated, arguing that it is 
unnecessary and in major respects unworkable.\28\ See Postal Service 
Comments at 22-28.
---------------------------------------------------------------------------

    \28\ The Postal Service's specific arguments objecting to rule 
3055.31 are incorporated into its arguments objecting to rule 3055.2 
and are addressed in the discussion of rule 3055.2.
---------------------------------------------------------------------------

    The Commission previously addressed this issue when discussing rule 
3055.2 and did not find the Postal Service's arguments persuasive. The 
rule shall not be modified based on the Postal Service's arguments.
    Minor wording change. The Public Representative proposes the same 
minor language change to add clarity to rule 3055.31(d), as he proposed 
for rule 3055.2(j). In both places, he proposes to change the word 
``next'' to ``preceding'' when describing related levels of 
aggregation/disaggregation. Public Representative Comments at 11-13, 
and Attachment A, rules 3055.2(j) and 3055.31(d).
    The Commission previously found that the clarity of these rules can 
be improved. Consistent with the wording modifications to rule 
3055.2(j), the Commission also modifies rule 3055.31(d) to read:

    Documentation showing how data reported at a given level of 
aggregation were derived from data reported at greater levels of 
disaggregation. Such documentation shall be in electronic format 
with all data links preserved. It shall show all formulas used, 
including volumes and other weighting factors.

2. Rule 3055.32--Measurement Systems Using a Delivery Factor
    Rule 3055.32 requires the Postal Service to independently report 
delivery factors when used in computing End-to-End service performance.
    The Postal Service contends that the documentation requirements 
specified by rule 3055.32 should be eliminated arguing that it is 
unnecessary and in major respects unworkable.\29\ See Postal Service 
Comments at 22-28.
---------------------------------------------------------------------------

    \29\ The Postal Service's specific arguments objecting to rule 
3055.32 are incorporated into is arguments objecting to rule 3055.2 
and are addressed in the discussion of rule 3055.2.
---------------------------------------------------------------------------

    The Commission previously addressed this issue when discussing rule 
3055.2 and did not find the Postal Service's arguments persuasive. The 
rule shall not be modified based upon the Postal Service's arguments.
3. Rule 3055.50--Standard Mail
    Rule 3055.50 specifies the quarterly reporting requirements for all 
products within the Standard Mail class.
    Destination Entry service standard day groupings. The Postal 
Service established 2-day through 10-day service standards for 
Destination Entry Standard Mail. The proposed rule separates 
Destination Entry mail into two groups for reporting purposes. It 
proposes reporting an aggregation of mail subject to the 2-day through 
4-day service standards and an aggregation of mail subject to the 5--
day through 10-day service standards. Destination Entry 2-day through 
4-day service standard mail roughly coincides with destination delivery 
units (DDU) and destination sectional center facility (DSCF) entered 
mail. Destination Entry 5-day through 10-day service standard mail 
roughly coincides with destination bulk mail center (DBMC) and bulk 
mail center (BMC) entered mail.
    Valpak proposes slightly different Standard Mail day aggregations 
for Destination Entry mail. It contends that its proposal makes the 
reporting of Destination Entry mail more meaningful. It proposes 
separate reporting of 2-day mail which roughly reflects DDU-entered 
mail, aggregating 3- to 4-day mail which roughly reflects DSCF-entered 
mail, and aggregating 5- to 10-day mail which roughly reflects DBMC- 
and BMC-entered mail.
    Valpak also proposes an alternative in case its preferred 
aggregations prove impossible or too costly to implement. It proposes 
aggregating 2- to 3-day mail which reflects all DDU-entered mail and 
over 99 percent of all DSCF-entered mail, and aggregating 4- to 10-day 
mail which reflects DBMC and remote

[[Page 38737]]

destinating mail entered at the appropriate BMC, plus any DSCF Virgin 
Islands mail. Valpak Comments at 6-7.
    PostCom/DMA also proposes different Standard Mail day aggregations 
for Destination Entry mail. It proposes aggregating the 2- to 5-day 
mail and aggregating the 6- to 10-day mail. PostCom/DMA Comments at 12.
    The Postal Service appears to support the rule as proposed. It 
contends that increasing the number of reporting groups could have a 
negative effect on the representativeness of the underlying data, and 
the statistical validity of the reported result. Postal Service Reply 
Comments at 27-29.
    The Commission adopts Valpak's proposal which separates reporting 
of 2-day mail, 3- to 4-day mail, and 5- to 10-day mail. Valpak's 
proposal improves upon the Commission's proposal in the notice of 
rulemaking by effectively providing separate reporting for BMC (now 
network distribution center (NDC))- and DSFC-entered mail. The 
Commission acknowledges the Postal Service's concerns about the 
representativeness of data and statistical validity. However, this is a 
concern regardless of which proposal is adopted, and a final resolution 
of appropriate aggregations will not be possible until measurement and 
reporting systems are further developed, and actual mail volumes are 
considered.
    End-to-End service standard day groupings. The Postal Service 
established 3-day through 22-day service standards for End-to-End 
Standard Mail. The proposed rule separates End-to-End mail into two 
groups for reporting purposes. It proposes reporting an aggregation of 
mail subject to the 3-day through 5-day service standards and an 
aggregation of mail subject to the 6-day through 22-day service 
standards. End-to-End 3-day through 5-day service standard mail roughly 
coincides with sectional center facility turnaround, area distribution 
center turnaround, and intra-BMC area mail. End-to-End 6-day through 
22-day service standard mail roughly coincides with all other End-to-
End mail subject to greater transportation needs.
    PostCom/DMA proposes slightly different End-to-End Standard Mail 
day aggregations. It proposes aggregating 3- to 5-day mail, aggregating 
6- to 10-day mail, and aggregating 11- to 22-day mail. This is designed 
to improve the visibility of non-contiguous United States mail, monitor 
performance due to NDC changes, and monitor the broader Postal Service 
network through the four Tier 3 NDCs. PostCom/DMA Comments at 12.
    The Postal Service's comments presented above for Destination Entry 
mail apply equally to End-to-End mail. Postal Service Reply Comments at 
27-29.
    The Commission adopts the PostCom/DMA proposal which separates 
reporting of 3- to 5-day mail, 6- to 10-day mail, and 10- to 22-day 
mail. This proposal effectively provides increased visibility for mail 
coming to and going from the contiguous United States, and is an 
improvement over the aggregations proposed in the notice of rulemaking. 
The same caveats apply concerning the representativeness of data, and 
statistical validity of the service performance measurement process.
    Aggregating service standard days. PostCom/DMA and Valpak ask the 
Commission to clarify which service standards are applicable to the 
data that is being aggregated. PostCom/DMA Comments at 12; Valpak 
Comments at 4-5.
    PostCom/DMA correctly assumes that when aggregating a range of days 
for reporting purposes, mail for each individual day will be measured 
against that day's standard, and not against the maximum standard of 
the group. See PostCom/DMA Comments at 12. For example, a single number 
will be reported for 3- to 4-day service standard Destination Entry 
mail. All 3-day service standard mail will be measured individually and 
compared with respect to the 3-day service standard. All 4-day service 
standard mail will be measured individually and compared with respect 
to the 4-day service standard. The 3-day result then will be combined 
with the 4-day result, weighted by an appropriate factor, and reported 
as the result for 3- to 4-day service standard Destination Entry mail. 
Three-day service standard mail will not be measured with respect to a 
4-day service standard.
    A similar process will be used for reporting on all products that 
have multiple service standard days. The process is applicable to both 
on-time service performance measurements and mail service variance 
reports. If reported using the illustrative data tables appearing in 
the Appendix, this single number would be reported in the ``% 
On-Time'' column. For annual reports, this number will be compared 
against the ``Target,'' which is the service goal, not the service 
standard. See Valpak Comments at 9.
4. Rule 3055.65--Special Services
    In Order No. 292, the Commission proposed an approach to measuring 
the service performance of green card Return Receipt service within the 
Special Services, Ancillary Services product. Order No. 292 at 26-28. 
Requirements specifying the form for reporting these measurements were 
incorporated into proposed rule 3055.65(b). The Postal Service was 
directed to respond to these proposals.
    The Postal Service's response informs the Commission that it will 
incorporate the requirements proposed by the Commission into a special 
study concerning green card Return Receipt service that it intends to 
undertake in FY 2010. Postal Service Comments at 43-44.
    The Commission will review the Postal Service's special study 
methodology and initial results during the FY 2010 Annual Compliance 
Report/Annual Compliance Determination process.

C. Proposals to Expand the Scope of the Service Performance Rules

    Forwarding and return of First-Class Mail. In Order No. 140, the 
Commission asks the Postal Service to explore the cost of periodically 
conducting studies of service performance for forwarded and returned 
First-Class Mail, and to consider whether it is possible to incorporate 
pieces delivered to post office boxes and pieces requiring forwarding 
and return into its current EXFC measurement system design. Order No. 
140 at 21, 24.
    In response, the Postal Service concludes that it is not feasible 
to use EXFC, and that estimated costs and challenges stand as 
compelling barriers to the development of special studies to measure 
forwarding and return performance.\30\ See Postal Service Supplemental 
Comments.
---------------------------------------------------------------------------

    \30\ Additionally, the Postal Service contends it ``does not 
consider that section 3691 can fairly be read to impose any 
obligation to establish service standards of measurement reporting 
for mail within a product on the basis of it being subject to one or 
a variety of applicable mail flows or processing technologies, or 
whether such mail is forwarded, returned to sender or subject to 
different modes address correction.'' Postal Service Supplemental 
Comments, Attachment at 1, n.1. The Commission respectfully 
disagrees with the Postal Service's interpretation. It might lead to 
the conclusion that only one performance characteristic could be 
measured for each product. The Postal Service itself recognized that 
this is not the case. It proposes separate reporting within Standard 
Mail for destination entry and End-to-End mail due to differences in 
mail flows. Within First-Class Mail, rational arguments can be made 
for measuring forwarded and returned mail separately from properly 
addressed mail, as opposed to the Postal Service's approach of 
excluding this segment of First-Class Mail from measurement or 
alternatively to include this mail in overall First-Class Mail 
product reporting.
---------------------------------------------------------------------------

    In the instant docket, the Public Representative again suggests 
including service performance reporting of forwarded First-Class Mail. 
Public

[[Page 38738]]

Representative Comments at 15-17. He submits that the Postal Service 
has a statutory obligation to measure the service performance of this 
mail. He further requests that the Postal Service be directed to 
measure service performance using EXFC, special studies, or a 
combination of the two. Alternatively, the Public Representative asks 
that the Postal Service provide partial measurements by capturing 
existing operational data. Public Representative Supplemental Comments 
at 2.
    At this time, the Commission will not require reporting on 
forwarded or returned mail. The Commission likely will revisit this in 
the future because forwarding and return is an important characteristic 
of First-Class Mail which affects the service performance of each 
product within that class. At that time, the Commission will find it 
helpful for the Postal Service to attempt to develop ideas for 
attaining meaningful measurements instead of focusing on potential 
impediments to doing so.
    Tail of the Mail. Bank of America and PostCom/DMA suggest reporting 
mail service variances as a cumulative percentage of mail delivered 
each day for mail exceeding their respective service standards until 99 
percent of the mail entering the system is accounted for. Bank of 
America Comments at 3, n.5; PostCom/DMA Comments at 9-10. The variance 
reports as proposed generally only provide data on the percentages of 
mail delivered within 1 day, 2 days or 3 days of the applicable service 
performance standard.
    The Commission addressed this issue in Order No. 140 at 43-44, 
where it did not recommend expanding variance reporting beyond the 1-
day, 2-day, and 3-day reporting as proposed by the Postal Service. 
Although the Commission recognizes potential benefits to mailers of 
more detailed reporting, the Commission remains unconvinced of a need 
to provide variance reporting beyond the proposed 3 days to fulfill its 
regulatory functions. Reporting at the 1-day, 2-day, and 3-day level 
should provide an indication of the Postal Service's consistency in 
meeting its service performance requirements, and provide an indication 
of potential tail of the mail problems. However, this issue is subject 
to re-evaluation once measurement systems begin generating actual data 
and specific problems are identified.
    Remittance mail. Bank of America argues that the Postal Service 
should measure and report service performance for remittance mail 
containing payments separately from other First-Class Mail. Bank of 
America Comments at 4-5.
    The Postal Service opposes this suggestion arguing that neither the 
statute nor the proposed rules require reporting of service performance 
at a subproduct level. The Postal Service also agrees with the 
Commission's position expressed in Order No. 140 which does not require 
the separate reporting of remittance mail. Postal Service Reply 
Comments at 34-35.
    The Commission expressed its position in Order No. 140.

    The Commission distinguishes separate reporting of remittance 
mail from treating remittance mail as a distinct category of First-
Class Mail. The Postal Service has indicated to the Commission in 
consultations that it is considering ways to separately measure the 
performance of remittance mail, which indicates a future potential 
for separate reporting of remittance mail. However, treating 
remittance mail as a distinct category of First-Class Mail raises 
classification issues that are beyond the scope of this discussion.

Order No. 140 at 146.

    The rules will not be modified at this time to require the separate 
reporting of remittance mail from other First-Class Mail.
    Critical Entry Times (CETs). Bank of America suggests expanding 
rule 3055.2 to report on CETs, and to subject CETs to the change notice 
provisions of rule 3055.5. Bank of America Comments at 3, n.7.
    The Postal Service approves of the Commission's conclusions reached 
in Order No. 140 at 17. It believes that requiring reporting of CETs 
would amount to an inappropriate and unauthorized intrusion on the 
management function. Postal Service Reply Comments at 33.
    The Commission expressed its position in Order No. 140.

    The Commission perceives start-the-clock as a detailed and 
difficult issue, and urges the Postal Service to continue working 
with the mailing community in developing a working, user friendly, 
information system. The Commission supports the Postal Service's 
proposal to document CETs and encourages it to develop systems to 
make this information publicly available in the very near future.

Order No. 140 at 17.

    The Commission accepts the Postal Service's representation that it 
will document CETs on a facility-by-facility basis in a central 
location. Unless it is shown that CETs are being unreasonably 
manipulated to influence the performance measurement system, the Postal 
Service needs the flexibility to establish CETs based on its business 
requirements. Subjecting CETs to the notice provisions of rule 3055.5 
now would needlessly restrict this flexibility. Individual CETs do not 
have to be reported to the Commission.
    Actionable, raw data. Bank of America and PostCom/DMA argue that 
they have business needs for service performance reporting beyond what 
the Commission requires to perform its regulatory function. Bank of 
America suggests that the Commission encourage the Postal Service to 
provide mailers access to aggregate raw data. Bank of America Comments 
at 2. PostCom/DMA also contends that customers have a need for access 
to actionable service performance data. PostCom/DMA Comments at 8-9.
    The Commission is not persuaded to modify its previous position on 
this topic.

    The Commission observes that business needs of some mailers may 
vastly exceed the needs of the regulator to perform its functions. 
Although the Commission may well specify reporting in a greater 
level of detail over time, it is not anticipated that the level of 
reporting will reach the provision of near real time data envisioned 
by some mailers. The Postal Service should be allowed time to 
explore the business needs of its customers and propose information 
products to meet those needs outside the context of the regulatory 
requirements.

Order No. 140 at 42.

    Year-to-year comparisons. Valpak suggests a requirement for the 
Postal Service to provide year-to-year comparisons of data. For 
example, percentage on-time (last year) data could be compared with 
percentage on-time (current year) and a percentage on-time change could 
be calculated. Valpak Comments at 10.
    All data will be available for interested persons to make 
comparisons of their own choosing. The Postal Service may choose to 
make comparisons in its reports to the Commission if it finds a 
comparison style format helpful. However, until experience is gained 
with the reporting of service measurement data, the Commission will not 
require the Postal Service to provide year-to-year comparisons.
    Improving the transparency of service performance information. 
PostCom/DMA express frustration with the form and content of service 
performance information the Postal Service posts on its Web site. They 
ask the Commission to work with the Postal Service to improve the 
transparency and accessibility of service standards, service 
performance targets, and service performance reports. PostCom/DMA 
Comments at 16-17.
    The Postal Service controls what it posts to its Web site. The 
Commission can only suggest that the Postal Service

[[Page 38739]]

work with its customers in improving the quality and usefulness of the 
information it posts. The Commission, however, will post all public 
sections of both annual and quarterly service performance and customer 
satisfaction reports to its Web site as they are filed by the Postal 
Service. This will improve the transparency of the reporting systems 
and will provide more detailed information than what currently is 
posted on the Postal Service's Web site.
    Including variance reports in the Annual Report. Valpak contends 
that 39 U.S.C. 3652(a)(2)(B)(i) requires annual variance reports as a 
measure of a product's reliability. It asserts that providing this 
information is a Postal Service statutory requirement that the 
Commission cannot waive even though the Commission is capable of 
compiling this report using information obtained through quarterly 
reports. Valpak Comments at 14-17.
    The Postal Service suggests that this information potentially could 
be provided as part of the annual report. Postal Service Reply Comments 
at 27.
    The rules as adopted require the provision of variance reports as 
part of each quarterly report, but not as part of the annual report. 
The proposed quarterly reporting rules also require the Postal Service 
to aggregate quarterly reports up to an annual level. Thus, Valpak will 
have access to the information it seeks under the rules as proposed. 
Both quarterly reports and the annual report will be available for 
analysis under the Annual Compliance Determination process. Under these 
circumstances there is no reason to require the separate entry Valpak 
seeks.

VI. Reporting of Customer Satisfaction

A. General Considerations

    This rulemaking incorporates the rules for reporting customer 
satisfaction into new Subpart C--Annual Reporting of Customer 
Satisfaction, of Part 3055--Service Performance and Customer 
Satisfaction Reporting. Table 4--Illustrative Customer Satisfaction 
Data Reporting Charts shown in the Appendix provides a visualization of 
the annual data reporting elements specified by the rules through 
illustrative examples of data reporting charts.\31\
---------------------------------------------------------------------------

    \31\ Order No. 292 at 29-34 describes all rules appearing in 
subpart C. The descriptions have not been repeated in this order 
unless pertinent to the discussion.
---------------------------------------------------------------------------

    Rule 3055.90 specifies the general requirement for the Postal 
Service to file a report on customer satisfaction as part of its Annual 
Compliance Report unless more frequent reporting is specifically 
requested. See 39 U.S.C. 3652(a)(2)(B)(ii).
    The Postal Service comments generally that 39 U.S.C. 
3652(a)(2)(B)(ii) provides little guidance on Congressional intent 
regarding what would constitute appropriate reports on customer 
satisfaction. Nevertheless, the Postal Service contends that the rules 
as proposed go further than necessary, intrude upon matters more 
appropriately left to postal management, and may exceed the intended 
statutory authority for the Commission to specify such reporting. 
Postal Service Comments at 45-47.
    The Commission also recognizes that little guidance is provided by 
statute concerning the measurement of customer satisfaction and the 
relationship of customer satisfaction to other aspects of the statute. 
However, the Commission disagrees that the rules go further than 
necessary or intrude upon postal management. Congress clearly intended 
the Commission to have a role in both considering and improving 
visibility into customer satisfaction, as evidenced by Congress 
including the statutory provisions concerning customer satisfaction in 
the PAEA. This includes the development of reporting requirements 
concerning this new and relatively unexplored area through the current 
rulemaking process.

B. Rule 3055.91--Consumer Access to Postal Services

    Rule 3055.91 requires the Postal Service to provide information 
encompassing four areas of customer access. First, it requests 
information on the number, type, and status of post offices servicing 
the public. Second, it seeks information pertaining to the number and 
type of delivery points accessed by the Postal Service. Third, it 
requests information pertaining to the number of collection boxes 
accessed by the Postal Service. Finally, it seeks information on 
customer wait time in line for retail services.
    The Postal Service contends that reporting of consumer access as 
required by rule 3055.91 does not provide direct evidence of customer 
satisfaction, falls outside the scope of information Congress intended 
the Postal Service to report, and is outside the scope of information 
the Commission is authorized to require in reports on quality of 
service. Thus, it contends that the provisions specified in rule 
3055.91 should be eliminated. Id. at 50-51.
    Valpak contends that requiring the Postal Service to report on 
consumer access to postal services as part of measuring the degree of 
customer satisfaction lacks statutory basis and should be 
withdrawn.\32\ It argues that the information sought does not relate to 
how customers feel about postal services and can only be used by the 
Commission to ``attempt to determine how the Commission feels that 
consumers might feel.'' Valpak Comments at 17-18.
---------------------------------------------------------------------------

    \32\ Its argument is directed at the requirements to report on 
post offices, delivery points, and collection boxes, but not towards 
the requirement to report wait time in line.
---------------------------------------------------------------------------

    The Public Representative contends that data on customer access and 
Mystery Shopper Program information are important measures of customer 
satisfaction and service quality, even if they are indirect measures. 
He argues that the requirement to report on consumer access to postal 
services is directly responsive to Congressional intent in establishing 
modern service standards to ``preserve regular and effective access to 
postal services in all communities, including those in rural areas or 
where post offices are not self-sustaining.'' See 39 U.S.C. 
3691(b)(1)(B). Public Representative Reply Comments at 10-12.
    The Commission agrees with the Postal Service that the data 
required by the customer access rule does not provide a direct 
indication of customer satisfaction. However, it finds that several of 
these reporting requirements are relevant to an analysis of customer 
satisfaction. For example, if a customer cannot access a needed postal 
service, that customer cannot be satisfied with that service. At some 
point, access may become so limited that service is effectively 
unavailable. Quantifying specific modes of customer access is a first 
step in the analysis, which asks what level of access is available. 
Information quantifying post offices, delivery points, and collection 
boxes should be readily available to management and can be provided 
with little burden. Changes in the levels of access over time then can 
be correlated with customer satisfaction. The Commission finds that 
measuring customer access to postal services is likely to be an 
important aspect of customer satisfaction, as well as a critical aspect 
of evaluating universal service. Thus, the Commission shall retain the 
customer access provisions in the final rule.
    In Docket No. N2009-1, the Postal Service provided information on 
alternative access channels for obtaining postage and certain postal 
services. The Postal Service provided percentages of revenues obtained 
through various ``brick and mortar'' and alternative

[[Page 38740]]

access channels,\33\ and a comparison of products that can be purchased 
in brick and mortar facilities and products that can be purchased 
online.\34\
---------------------------------------------------------------------------

    \33\ Docket No. N2009-1, Responses of United States Postal 
Service Witness VanGorder to Public Representative Interrogatories 
PR/USPS-T1-1-5, and 7(c-d), 8, July 27, 2009.
    \34\ Docket No. N2009-1, United States Postal Servce Notice of 
Errata in Filing of Response of Witness VanGorder to Public 
Representative Interrogatory PR/USPS-T1-1(a) [Errata], July 28, 
2009.
---------------------------------------------------------------------------

    In Order No. 292, the Commission concluded that the Postal Service 
may find that reporting of information on alternative access channels 
will provide a more balanced view of the current status of customer 
access to postal services, and that such reports also may provide 
another avenue to promote the use of alternative access channels. The 
Commission sought comments on the benefits of reporting this aspect of 
customer access and any proposal that the Postal Service may have on 
what and how any related data items can be reported.
    The Commission did not receive responsive comments addressing this 
subject. The Commission eventually may want to expand evaluation of 
different types of access to postal services, but it shall not 
establish reporting requirements on alternative access channels in this 
rulemaking.
    The Postal Service specifically asks the Commission to delete the 
requirement to report wait time in line as required by rule 3055.91(d). 
It contends that this measurement would not necessarily allow one to 
draw particular conclusions about customer satisfaction. Furthermore, 
wait time in line (as a component of the Mystery Shopper Program) 
should remain within the purview of the Postal Service as an internal 
management diagnostic tool. Postal Service Comments at 56-57.
    If the Postal Service's concern is with the confidentiality of the 
Mystery Shopper Program data, the Commission is not requiring the 
Postal Service to use data from this program to develop wait time in 
line statistics. The Postal Service may develop an independent system 
for generating data. However, the Commission is of the opinion that 
using Mystery Shopper Program data as the basis for reporting wait time 
in line would be the most economical for the Postal Service.
    The Commission infers from previous Postal Service presentations 
that the Postal Service has determined an acceptable wait time in line 
is less than 5 minutes. If the Postal Service has any studies that it 
could share with the Commission which sheds light on a customer's 
perception of wait time in line, the Commission would find those 
studies most helpful. This will help the qualitative aspect of 
analyzing wait time in line as it relates to customer satisfaction.
    The Postal Service asks for clarification of rule 3055.91(a) 
pertaining to reporting the number of post offices. The explanatory 
note contained in Order No. 292 specifies that the responsive 
information must be ``disaggregated by the types of post offices as 
appearing in the Postal Service's Annual Report.'' Order No. 292 at 30. 
The Postal Service explains that the disaggregation in the annual 
report is by facility type, not by types of post offices. These are 
Post Offices, Classified Stations, Branches and Carrier Annexes; 
Contract Postal Units; and Community Post Offices. The Postal Service 
argues that if the intent is to reflect the locations at which 
customers may access retail services, it would seem unnecessary to 
include Carrier Annexes. Postal Service Comments at 47-48.
    The Commission's intent is to encompass both retail and commercial 
customer access points. The Commission's understanding is that some 
Carrier Annex locations accept mail from commercial customers. The term 
``post office'' is used in the generic sense in the rule to indicate 
customer access points. In this instance, it is consistent with the 
Postal Service characterization of reporting on facility types. Thus, 
Carrier Annexes are to be included in reporting.
    Customer access is to be reported annually. In Order No. 292, the 
Commission asked that for the immediate future the Postal Service 
voluntarily provide these reports on a quarterly basis. Order No. 292 
at 30-31. The Commission again requests that this information be 
provided voluntarily.

C. Rule 3055.92--Customer Experience Measurement Surveys

    Rule 3055.92 requires the Postal Service to file with the 
Commission a copy of each type of Customer Experience Measurement 
Survey instrument used in the preceding fiscal year, and to report a 
summary of the information obtained on an annual basis. Where the 
Postal Service solicits information through multiple choice questions, 
it is required to provide additional detail by providing the number of 
responses obtained for each possible response. The summary of 
information obtained also must include a description of the customer 
type targeted by each distinct type of survey instrument, statistics on 
the number of surveys initiated, and the number of surveys returned to 
the Postal Service.
    The Postal Service previously informed the Commission that it 
intends to redesign its Customer Satisfaction Measurement Survey to 
meet the requirements of the PAEA and to generate customer satisfaction 
data on a product-by-product basis.\35\ The Postal Service anticipated 
that it will be transitioning from the former Customer Satisfaction 
Measurement system to a newly named Customer Experience Measurement 
system during FY 2010. The Postal Service recently informed the 
Commission that the transition to the new Customer Experience 
Measurement system is complete. The final rule has been updated to 
reflect this name change, and to account for potential future name 
changes.
---------------------------------------------------------------------------

    \35\ Docket No. PI2008-1, Reply Comments of the United States 
Postal Service, February 1, 2008, at 11.
---------------------------------------------------------------------------

    The Public Representative states that the Customer Experience 
Measurement program was developed without Commission consultation. 
Thus, it argues that the Commission is currently unable to determine 
whether the Customer Experience Measurement program will satisfy the 
statutory requirements. The Public Representative asks the Commission 
to conclude that the Customer Experience Measurement program is an 
internal measurement system that has not been approved by the 
Commission pursuant to 39 U.S.C. 3691(B)(2). He then asks that the 
Commission request public comment on the information that should be 
included in this program for measuring customer satisfaction. Public 
Representative Reply Comments at 12-15.
    The Customer Experience Measurement survey is an internal Postal 
Service management tool, which also may be of use for reporting 
customer satisfaction. The Postal Service may develop internal 
management tools with or without Commission approval. The Commission 
provided guidance during the consultation process to increase the 
likelihood that future consumer surveys, including the Customer 
Experience Measurement survey, would produce reliable and meaningful 
information. Order No. 292 at 32. The Postal Service did not believe 
that the Commission should be involved in the actual survey process. 
Postal Service Comments at 51-53.
    As a starting point in developing a customer satisfaction 
measurement system, the Commission defers to the Postal Service's 
expertise in developing this form of survey. After experience is

[[Page 38741]]

gained, the Commission may identify topics on which additional 
information is needed. The Postal Service will be responsible for 
developing appropriate means for producing this information. The 
Commission does not adopt the Public Representative's proposal.

D. Rule 3055.93--Mystery Shopper Program

    Proposed rule 3055.93 seeks information obtained from the Mystery 
Shopper Program. It requires the Postal Service to file a copy of the 
National Executive Summary Report (which summarizes data from the 
Mystery Shopper Program) on a quarterly basis, along with each type of 
survey instrument used in preparing each report. The Commission 
understands that the Mystery Shopper Program is a management tool for 
developing proprietary information and is aware of the necessity that 
the ``mystery'' of the program be maintained.
    The Postal Service argues that the requirement to file copies of 
the National Executive Summary Report generated by the Mystery Shopper 
Program is unwarranted and should be eliminated. The Postal Service 
explains that the program is primarily designed to help local retail 
managers retain business in a competitive marketplace. The Postal 
Service contends that the information generated by this program is 
commercially sensitive and proprietary in nature. Furthermore, the 
program consists of objective observations about the conditions in 
postal facilities and operational practices, and does not provide 
direct evidence of customer satisfaction within the meaning of the 
statute. Id. at 53-56.
    The usefulness of using Mystery Shopper Program data in the 
evaluation of customer satisfaction is best explained by example. The 
Commission finds the effect of wait time in line to mail a parcel 
requiring counter service relevant to customer satisfaction with the 
overall product. If mailers have to wait an excessively long time to 
enter parcels into the system, they will become dissatisfied and place 
less value on using the product.
    Nonetheless, the Commission agrees that the detailed operational 
information gathered by the Mystery Shopper Program is designed to 
assist local managers to identify and correct problems rather than to 
capture the attitudes of customers. Therefore, the Commission will 
eliminate proposed rule 3055.93 from the final rules on service 
performance measurement.

E. Suggested Data Reporting Item

    The Public Representative proposes that customer satisfaction 
reporting can be improved by requiring the reporting of Call Center and 
other customer inquiry data. Public Representative Comments at 17-20. 
The Postal Service opposes incorporating requirements to include Call 
Center and other customer inquiry data. It argues that this data is 
compiled for management and diagnostic purposes and should not be 
reported. Postal Service Reply Comments at 36-37.
    The Commission will not accept the Public Representative's 
proposal. The potential benefits and limitations of this type of 
information have not been sufficiently explored in this docket for an 
informed decision to be made.

Concurring Opinion of Commissioner Dan G. Blair and Vice Chairman Tony 
L. Hammond

    We concur with the regulations establishing reporting requirements 
for measuring the level of service performance for market dominant 
products as required by 39 U.S.C. 3652. We do not, however, agree that 
section VI of this order meets the intent and spirit of the Postal 
Accountability and Enhancement Act (PAEA), Pub. L. 109-143, 120 Stat. 
3218 (2006).
    Section 3652 requires that the Postal Service include in an annual 
report to the Commission an analysis of the quality of service ``for 
each market-dominant product provided in such year'' by providing ``(B) 
measures of the quality of service afforded by the Postal Service in 
connection with such product, including--(i) the level of service 
(described in terms of speed of delivery and reliability) provided; and 
(ii) the degree of customer satisfaction with the service provided.''
    Section VI of this order includes reporting rules on customer 
satisfaction. However, this reporting is not tied to any specific 
market dominant product. Rather, these reporting requirements focus on 
the number, type, and status of post offices serving the public; the 
number and type of delivery points accessed by the Postal Service; and 
the number of collection boxes provided by the Postal Service. Access 
to postal services are provided through means beyond brick and mortar 
facilities such as those on the internet, at retail stores, or at 
kiosks, just to name a few. While this information has relevance in a 
broader context of postal operations, see 39 U.S.C. 3651, the reporting 
requirements are not related to specific market dominant products.
    In addition, the rules require the submission of data compiled from 
Customer Experience Measurement surveys. We recognize such surveys are 
a useful management tool. However, the information sought is not 
directly tied to market dominant service level performance. We find it 
significant that while 39 U.S.C. 3652 requires that the Annual 
Compliance Report include information on the degree of customer 
satisfaction, 39 U.S.C. 3653 does not specify customer satisfaction as 
a topic on which a finding of compliance or noncompliance must be made. 
These reporting requirements may place an unnecessary burden on the 
Postal Service at a time when it has limited resources.

VII. Ordering Paragraphs

    It is ordered:
    1. The Commission amends its rules of practice and procedure by 
adding new part 3055--Service Performance Measurement and Customer 
Satisfaction Reporting. This part is subdivided into Subpart A--Annual 
Reporting of Service Performance Achievements, Subpart B--Periodic 
Reporting of Service Performance Achievements, and Subpart C--Reporting 
of Customer Satisfaction.
    2. The Postal Service's initial request for semi-permanent 
exceptions from reporting shall be filed with the Commission no later 
than June 25, 2010. Interested persons may file comments concerning 
this request until July 16, 2010.
    3. The Postal Service's request for temporary waivers from 
reporting, including its implementation plans, shall be filed with the 
Commission no later than September 10, 2010. Interested persons may 
file comments concerning this request until October 1, 2010.
    4. The Secretary shall arrange for publication of this notice in 
the Federal Register.

List of Subjects

39 CFR Part 3050

    Administrative practice and procedure, Postal Service, Reporting 
and recordkeeping requirements.

39 CFR Part 3055

    Administrative practice and procedure, Postal Service, Reporting 
and recordkeeping requirements.

    By the Commission.
Shoshana M. Grove,
Secretary.

0
For the reasons discussed in the preamble, the Postal Regulatory 
Commission amends chapter III of title 39 of the Code of Federal 
Regulations as follows:

[[Page 38742]]

PART 3050--PERIODIC REPORTING

0
1. The authority citation for part 3050 continues to read as follows:

    Authority: 39 U.S.C. 503; 3651, 3652.


Sec.  Sec.  3050.50 through 3050.53  [Removed]

0
2. Remove reserved Sec. Sec.  3050.50 through 3050.53.

0
3. Add part 3055 to read as follows:

PART 3055--SERVICE PERFORMANCE AND CUSTOMER SATISFACTION REPORTING

Subpart A--Annual Reporting of Service Performance Achievements

Sec.
3055.1 Annual reporting of service performance achievements.
3055.2 Contents of the annual report of service performance 
achievements.
3055.3 Reporting exceptions.
3055.4 Internal measurement systems.
3055.5 Changes to measurement systems, service standards, service 
goals or reporting methodologies.
3055.6 Addition of new market dominant products or changes to 
existing market dominant products.
3055.7 Special study.
3055.20 First-Class Mail.
3055.21 Standard Mail.
3055.22 Periodicals.
3055.23 Package Services.
3055.24 Special Services.
3055.25 [Reserved]
Subpart B--Periodic Reporting of Service Performance Achievements
Sec.
3055.30 Periodic reporting of service performance achievements.
3055.31 Contents of the Quarterly Report of service performance 
achievements.
3055.32 Measurement systems using a delivery factor.
3055.45 First-Class Mail.
3055.50 Standard Mail.
3055.55 Periodicals.
3055.60 Package Services.
3055.65 Special Services.
3055.70 [Reserved]
Subpart C-Reporting of Customer Satisfaction
Sec.
3055.90 Reporting of customer satisfaction.
3055.91 Consumer access to postal services.
3055.92 Customer Experience Measurement Surveys.

    Authority:  39 U.S.C. 503, 3622(a), 3652(d) and (e); 3657(c).

Subpart A-- Annual Reporting of Service Performance Achievements


Sec.  3055.1  Annual reporting of service performance achievements.

    For each market dominant product specified in the Mail 
Classification Schedule in part 3020, appendix A to subpart A of part 
3020 of this chapter, the Postal Service shall file a report as part of 
the section 3652 report addressing service performance achievements for 
the preceding fiscal year.


Sec.  3055.2  Contents of the annual report of service performance 
achievements.

    (a) The items in paragraphs (b) through (k) of this section shall 
be included in the annual report of service performance achievements.
    (b) The class or group-specific reporting requirements specified in 
Sec. Sec.  3055.20 through 3055.25.
    (c) The applicable service standard(s) for each product.
    (d) The applicable service goal(s) for each product.
    (e) A description of the measurement system for each product, 
including:
    (1) A description of what is being measured;
    (2) A description of the system used to obtain each measurement;
    (3) A description of the methodology used to develop reported data 
from measured data;
    (4) A description of any changes to the measurement system or data 
reporting methodology implemented within the reported fiscal year; and
    (5) Where proxies are used, a description of and justification for 
the use of each proxy.
    (f) A description of the statistical validity and reliability of 
the results for each measured product.
    (g) A description of how the sampled data represents the national 
geographic mail characteristics or behavior of the product.
    (h) For each product that does not meet a service standard, an 
explanation of why the service standard is not met, and a plan 
describing the steps that have or will be taken to ensure that the 
product meets or exceeds the service standard in the future.
    (i) The identification of each product, or component of a product, 
granted an exception from reporting pursuant to Sec.  3055.3, and a 
certification that the rationale for originally granting the exception 
remains valid.
    (j) Documentation showing how data reported at a given level of 
aggregation were derived from data reported at greater levels of 
disaggregation. Such documentation shall be in electronic format with 
all data links preserved. It shall show all formulas used, including 
volumes and other weighting factors.
    (k) For each product, documentation showing how the reports 
required by subpart A of this part were derived from the reports 
required by subpart B of this part. Such documentation shall be in 
electronic format with all data links preserved. It shall show all 
formulas used, including volumes and other weighting factors.


Sec.  3055.3  Reporting exceptions.

    (a) The Postal Service may petition the Commission to request that 
a product, or component of a product, be excluded from reporting, 
provided the Postal Service demonstrates that:
    (1) The cost of implementing a measurement system would be 
prohibitive in relation to the revenue generated by the product, or 
component of a product;
    (2) The product, or component of a product, defies meaningful 
measurement; or
    (3) The product, or component of a product, is in the form of a 
negotiated service agreement with substantially all components of the 
agreement included in the measurement of other products.
    (b) The Postal Service shall identify each product or component of 
a product granted an exception in each report required under subparts A 
or B of this part, and certify that the rationale for originally 
granting the exception remains valid.


Sec.  3055.4  Internal measurement systems.

    Service performance measurements obtained from internal measurement 
systems or hybrid measurement systems (which are defined as systems 
that rely on both an internal and an external measurement component) 
shall not be used to comply with any reporting requirement under 
subparts A or B of this part without prior Commission approval.


Sec.  3055.5  Changes to measurement systems, service standards, 
service goals, or reporting methodologies.

    The Postal Service shall file notice with the Commission describing 
all changes to measurement systems, service standards, service goals or 
reporting methodologies, including the use of proxies for reporting 
service performance, 30 days prior to planned implementation. The 
Commission may initiate a proceeding at any time to consider such 
changes if it appears that the changes might have a material impact on 
the accuracy, reliability, or utility of the reported measurement, or 
if the changes might have a material impact on the characteristics of 
the underlying product.


Sec.  3055.6  Addition of new market dominant products or changes to 
existing market dominant products.

    Whenever the Postal Service proposes the addition of a new market 
dominant product or a change to an existing

[[Page 38743]]

market dominant product, it also shall propose new or revised (as 
necessary) service performance measurement systems, service standards, 
service goals, data reporting elements, and data reporting 
methodologies.


Sec.  3055.7  Special study.

    Included in the second section 3652 report due after this rule 
becomes final, and every 2 years thereafter, the Postal Service shall 
provide a report, by class of mail, on delivery performance to remote 
areas of the Alaska, Caribbean, and Honolulu districts.


Sec.  3055.20  First-Class Mail.

    (a) Single-Piece Letters/Postcards, Bulk Letters/Postcards, Flats, 
and Parcels. For each of the Single-Piece Letters/Postcards, Bulk 
Letters/Postcards, Flats, and Parcels products within the First-Class 
Mail class, report the on-time service performance (as a percentage 
rounded to one decimal place), disaggregated by mail subject to the 
overnight, 2-day, and 3/4/5-day service standards.
    (b) Outbound Single-Piece First-Class Mail International and 
Inbound Single-Piece First-Class Mail International. For each of the 
Outbound Single-Piece First-Class Mail International and Inbound 
Single-Piece First-Class Mail International products within the First-
Class Mail class, report the on-time service performance (as a 
percentage rounded to one decimal place).


Sec.  3055.21  Standard Mail.

    For each product within the Standard Mail class, report the on-time 
service performance (as a percentage rounded to one decimal place).


Sec.  3055.22  Periodicals.

    For each product within the Periodicals class, report the on-time 
service performance (as a percentage rounded to one decimal place).


Sec.  3055.23  Package Services.

    For each product within the Package Services class, report the on-
time service performance (as a percentage rounded to one decimal 
place).


Sec.  3055.24  Special Services.

    For each product within the Special Services group, report the 
percentage of time (rounded to one decimal place) that each product 
meets or exceeds its service standard.


Sec.  3055.25  Nonpostal products [Reserved]

Subpart B--Periodic Reporting of Service Performance Achievements


Sec.  3055.30  Periodic reporting of service performance achievements.

    For each market dominant product specified in the Mail 
Classification Schedule in part 3020, appendix A to subpart A of part 
3020 of this chapter, the Postal Service shall file a Quarterly Report 
with the Commission addressing service performance achievements for the 
preceding fiscal quarter (within 40 days of the close of each fiscal 
quarter).


Sec.  3055.31  Contents of the Quarterly Report of service performance 
achievements.

    (a) The items in paragraphs (b) through (e) of this section shall 
be included in the quarterly report of service performance 
achievements.
    (b) The class or group-specific reporting items specified in 
Sec. Sec.  3055.45 through 3055.70.
    (c) The identification of each product, or component of a product, 
granted an exception from reporting pursuant to Sec.  3055.3, and a 
certification that the rationale for originally granting the exception 
remains valid.
    (d) Documentation showing how data reported at a given level of 
aggregation were derived from data reported at greater levels of 
disaggregation. Such documentation shall be in electronic format with 
all data links preserved. It shall show all formulas used, including 
volumes and other weighting factors.
    (e) A year-to-date aggregation of each data item provided in each 
Quarterly Report due for the reported fiscal year, where applicable, 
including volumes and other weighting factors provided in electronic 
format, with formulas shown and data links preserved to allow 
traceability to individual Quarterly Reports.


Sec.  3055.32   Measurement systems using a delivery factor.

    For measurements that include a delivery factor, the duration of 
the delivery factor also shall be presented independent of the total 
measurement.


Sec.  3055.45  First-Class Mail.

    (a) Single-Piece Letters/Postcards, Bulk Letters/Postcards, Flats, 
and Parcels. For each of the Single-Piece Letters/Postcards, Bulk 
Letters/Postcards, Flats, and Parcels products within the First-Class 
Mail class, report the:
    (1) On-time service performance (as a percentage rounded to one 
decimal place), disaggregated by mail subject to the overnight, 2-day, 
and 3/4/5-day service standards, provided at the District, Postal 
Administrative Area, and National levels; and
    (2) Service variance (as a percentage rounded to one decimal place) 
for mail delivered within +1 day, +2 days, and +3 days of its 
applicable service standard, disaggregated by mail subject to the 
overnight, 2-day, and 3/4/5-day service standards, provided at the 
District, Postal Administrative Area, and National levels.
    (b) Outbound Single-Piece First-Class Mail International and 
Inbound Single-Piece First-Class Mail International. For each of the 
Outbound Single-Piece First-Class Mail International and Inbound 
Single-Piece First-Class Mail International products within the First-
Class Mail class, report the:
    (1) On-time service performance (as a percentage rounded to one 
decimal place), provided at the Postal Administrative Area and National 
levels; and
    (2) Service variance (as a percentage rounded to one decimal place) 
for mail delivered within +1 day, +2 days, and +3 days of its 
applicable service standard, provided at the Postal Administrative Area 
and National levels.


Sec.  3055.50  Standard Mail.

    (a) For each product within the Standard Mail class, report the on-
time service performance (as a percentage rounded to one decimal 
place), disaggregated by the Destination Entry (2-day), Destination 
Entry (3-day through 4-day), Destination Entry (5-day through 10-day), 
End-to-End (3-day through 5-day), End-to-End (6-day through 10-day), 
and End-to-End (11-day through 22-day) entry mail/service standards, 
provided at the District, Postal Administrative Area, and National 
levels.
    (b) For each product within the Standard Mail class, report the 
service variance (as a percentage rounded to one decimal place) for 
mail delivered within +1 day, +2 days, and +3 days of its applicable 
service standard, disaggregated by the Destination Entry (2-day), 
Destination Entry (3-day through 4-day), Destination Entry (5-day 
through 10-day), End-to-End (3-day through 5-day), End-to-End (6-day 
through 10-day), and End-to-End (11-day through 22-day) entry mail/
service standards, provided at the District, Postal Administrative 
Area, and National levels.


Sec.  3055.55  Periodicals.

    (a) Within County Periodicals. For the Within County Periodicals 
product within the Periodicals class, report the:

[[Page 38744]]

    (1) On-time service performance (as a percentage rounded to one 
decimal place), provided at the Postal Administrative Area and National 
levels; and
    (2) Service variance (as a percentage rounded to one decimal place) 
for mail delivered within +1 day, +2 days, and +3 days of its 
applicable service standard, provided at the Postal Administrative Area 
and National levels.
    (b) Outside County Periodicals. For the Outside County Periodicals 
product within the Periodicals class, report the:
    (1) On-time service performance (as a percentage rounded to one 
decimal place), disaggregated by the Destination Entry and End-to-End 
entry mail, provided at the Postal Administrative Area and National 
levels; and
    (2) Service variance (as a percentage rounded to one decimal place) 
for mail delivered within +1 day, +2 days, and +3 days of its 
applicable service standard, disaggregated by the Destination Entry and 
End-to-End entry mail, provided at the Postal Administrative Area and 
National levels.


Sec.  3055.60  Package Services.

    (a) Single-Piece Parcel Post. For the Single-Piece Parcel Post 
product within the Package Services class, report the:
    (1) On-time service performance (as a percentage rounded to one 
decimal place), disaggregated by mail subject to the 2-day through 4-
day and 5-day through 20-day service standards, provided at the 
District, Postal Administrative Area, and National levels; and
    (2) Service variance (as a percentage rounded to one decimal place) 
for mail delivered within +1 day, +2 days, and +3 days of its 
applicable service standard, disaggregated by mail subject to the 2-day 
through 4-day and 5-day through 20-day service standards, provided at 
the District, Postal Administrative Area, and National levels.
    (b) Bound Printed Matter Flats, Bound Printed Matter Parcels, and 
Media Mail/Library Mail. For each of the Bound Printed Matter Flats, 
Bound Printed Matter Parcels, and Media Mail/Library Mail products 
within the Package Services class, report the:
    (1) On-time service performance (as a percentage rounded to one 
decimal place), disaggregated by the Destination Entry and End-to-End 
entry mail, provided at the District, Postal Administrative Area, and 
National levels; and
    (2) Service variance (as a percentage rounded to one decimal place) 
for mail delivered within +1 day, +2 days, and +3 days of its 
applicable service standard, disaggregated by the Destination Entry and 
End-to-End entry mail, provided at the District, Postal Administrative 
Area, and National levels.
    (c) Inbound Surface Parcel Post (at UPU rates). For the Inbound 
Surface Parcel Post (at UPU rates) product within the Package Services 
class, report the:
    (1) On-time service performance (as a percentage rounded to one 
decimal place), provided at the Postal Administrative Area and National 
levels; and
    (2) Service variance (as a percentage rounded to one decimal place) 
for mail delivered within +1 day, +2 days, and +3 days of its 
applicable service standard, provided at the Postal Administrative Area 
and National levels.


Sec.  3055.65  Special Services.

    (a) For each product within the Special Services group, report the 
percentage of time (rounded to one decimal place) that each product 
meets or exceeds its service standard, provided at the National level.
    (b) Additional reporting for Ancillary Services. For the Certified 
Mail, electronic Return Receipt, Delivery Confirmation, Insurance, and 
an aggregation of all other services within the Ancillary Services 
product, individually report the percentage of time (rounded to one 
decimal place) that each service meets or exceeds its service standard. 
For green card Return Receipt report:
    (1) The number of EXFC seed mailpieces sent;
    (2) The percentage of green cards properly completed and returned;
    (3) The percentage of green cards not properly completed, but 
returned;
    (4) The percentage of mailpieces returned without a green card 
signature; and
    (5) The percentage of the time the service meets or exceeds its 
overall service standard.
    (c) Additional reporting for Post Office Box Service. For Post 
Office Box Service, report the percentage of time (rounded to one 
decimal place) that the product meets or exceeds its service standard, 
provided at the District and Postal Administrative Area levels.


Sec.  3055.70  Nonpostal products [Reserved]

Subpart C--Reporting of Customer Satisfaction


Sec.  3055.90  Reporting of customer satisfaction.

    For each market dominant product specified in the Mail 
Classification Schedule in part 3020, appendix A to subpart A of part 
3020 of this chapter, the Postal Service shall file a report as part of 
the section 3652 report, unless a more frequent filing is specifically 
indicated, addressing customer satisfaction achievements for the 
preceding fiscal year. The report shall include, at a minimum, the 
specific reporting requirements presented in Sec. Sec.  3055.91 through 
3055.92.


Sec.  3055.91  Consumer access to postal services.

    (a) The following information pertaining to post offices shall be 
reported, disaggregated by type of post office facility, and provided 
at the Postal Administrative Area and National levels:
    (1) The number of post offices at the beginning of the reported 
fiscal year;
    (2) The number of post offices at the end of the reported fiscal 
year;
    (3) The number of post office closings in the reported fiscal year;
    (4) The number of post office emergency suspensions in effect at 
the beginning of the reported fiscal year;
    (5) The number of post office emergency suspensions in the reported 
fiscal year; and
    (6) The number of post office emergency suspensions in effect at 
the end of the reported fiscal year.
    (b) The following information pertaining to delivery points shall 
be reported, disaggregated by delivery point type, provided at the 
Postal Administrative Area and National levels:
    (1) The number of residential delivery points at the beginning of 
the reported fiscal year;
    (2) The number of residential delivery points at the end of the 
reported fiscal year;
    (3) The number of business delivery points at the beginning of the 
reported fiscal year; and
    (4) The number of business delivery points at the end of the 
reported fiscal year.
    (c) The following information pertaining to collection boxes shall 
be reported, provided at the Postal Administrative Area and National 
levels:
    (1) The number of collection boxes at the beginning of the reported 
fiscal year;

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    (2) The number of collection boxes at the end of the reported 
fiscal year;
    (3) The number of collection boxes removed during the reported 
fiscal year; and
    (4) The number of collection boxes added to new locations during 
the reported fiscal year.
    (d) The average customer wait time in line for retail service shall 
be reported. Data shall be provided for the beginning of the reported 
fiscal year and for the close of each successive fiscal quarter at the 
Postal Administrative Area and National levels.


Sec.  3055.92  Customer Experience Measurement Surveys.

    (a) The report shall include a copy of each type of Customer 
Experience Measurement instrument, or any similar instrument that may 
supersede the Customer Experience Measurement instrument used in the 
preceding fiscal year.
    (b) The report shall include information obtained from each type of 
Customer Experience Measurement instrument, or any similar instrument 
that may supersede the Customer Experience Measurement instrument 
including:
    (1) A description of the customer type targeted by the survey;
    (2) The number of surveys initiated and the number of surveys 
received; and
    (3) Where the question asked is subject to a multiple choice 
response, the number of responses received for each question, 
disaggregated by each of the possible responses.
[FR Doc. 2010-16178 Filed 7-2-10; 8:45 am]
BILLING CODE 7710-FW-S