[Federal Register Volume 76, Number 6 (Monday, January 10, 2011)]
[Notices]
[Pages 1471-1472]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-157]


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POSTAL REGULATORY COMMISSION

[Docket No. ACR2010; Order No. 636]


FY 2010 Annual Compliance Report; Comment Request

AGENCY: Postal Regulatory Commission.

ACTION: Notice.

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SUMMARY: The Postal Service has filed an Annual Compliance Report on 
the costs, revenues, rates, and quality of service associated with its 
products in fiscal year 2010. Within 90 days, the Commission must 
evaluate that information and issue its determination as to whether 
rates were in compliance with title 39, chapter 36 and whether service 
standards in effect were met. To assist in this, the Commission seeks 
public comments on the Postal Service's Annual Compliance Report.

DATES: Comments are due: February 2, 2011. Reply comments are due: 
February 17, 2011.

ADDRESSES: Submit comments electronically via the Commission's Filing 
Online system at http://www.prc.gov. Commenters who cannot submit their 
views electronically should contact the person identified in FOR 
FURTHER INFORMATION CONTACT by telephone for advice on alternatives to 
electronic filing.

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

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Introduction
II. Overview of the Postal Service's FY 2010 ACR Filing
III. Procedural Steps
IV. Ordering Paragraphs

I. Introduction

    On December 29, 2010, the United States Postal Service (Postal 
Service) filed with the Commission, pursuant to 39 U.S.C. 3652, its 
Annual Compliance Report (ACR) for fiscal year 2010. Section 3652 
requires submission of data and information on the costs, revenues, 
rates, and quality of service associated with postal products within 90 
days of the closing of each fiscal year. In conformance with other 
statutory provisions and Commission rules, the ACR filing includes the 
Postal Service's FY 2010 Comprehensive Statement, its FY 2010 annual 
report to the Secretary of the Treasury on the Competitive Products 
Fund, and certain related Competitive Products Fund material. See, 
respectively, 39 U.S.C. 3652(g), 39 U.S.C. 2011(i), and 39 CFR 3060.20-
23. In line with past practice, some of the material in the FY 2010 ACR 
appears in non-public annexes.
    The filing triggers a statutory review process culminating in the 
Commission's issuance of an Annual Compliance Determination (ACD) 
assessing compliance of Postal Service products offered during FY 2010 
with applicable title 39 requirements.
    The instant filing marks the fourth time since passage of the 
Postal Accountability and Enhancement Act (PAEA) of 2006 that this 
reporting and oversight process has been used. This means, as the 
Postal Service observes in its current filing, that many of the 
transitional issues associated with earlier filings have been overtaken 
by full implementation of other PAEA provisions or have diminished in 
significance. However, the Postal Service notes that some transitional 
issues remain, including incorporating financial results for certain 
activities formerly considered ``nonpostal'' into the Cost and Revenue 
Analysis (CRA) report in accordance with Commission Order No. 391. FY 
2010 ACR at 1-2.\1\ It also suggests that new issues have arisen, 
citing its uncertainty over Commission interpretation of the cost 
coverage provision (for products at less than full coverage) and the 
related question of Commission options for addressing shortfalls. Id. 
at 7-10.
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    \1\ United States Postal Service FY 2010 Annual Compliance 
Report, December 29, 2010 (FY 2010 ACR). Public portions of the 
Postal Service's filing are available at the Commission's Web site, 
http://www.prc.gov.
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II. Overview of the Postal Service's FY 2010 ACR Filing

    Contents of the filing. The Postal Service's FY 2010 ACR filing 
consists of a 77-page narrative; extensive additional material appended 
as separate folders and identified in Attachment One; and an 
application for non-public treatment of certain materials, along with a 
supporting rationale filed as Attachment Two. The filing also includes 
the Comprehensive Statement, Report to the Secretary of the Treasury, 
and information on the Competitive Products Fund filed in response to 
Commission rules. This material has been filed electronically with the 
Commission, and some also has been filed in hard-copy form.
    Scope of filing. The material appended to the narrative consists 
of: (1) Domestic product costing material filed on an annual basis, 
summarized in the CRA; (2) comparable international costing material, 
summarized in the International Cost and Revenue Analysis (ICRA); (3) 
worksharing-related cost studies; and (4) billing determinant 
information for both domestic and international mail. Id. at 2. 
Inclusion of these four data sets is consistent with the Postal 
Service's past ACR filing practices. Consistent with its FY 2009 ACR 
filing, the Postal Service has split certain materials into public and 
non-public versions. Id. at 3.
    ``Roadmap'' document. A roadmap to the FY 2010 ACR filing appears 
in the form of USPS-FY10-9. This document provides brief descriptions 
of the materials submitted, as well as the flow of inputs and outputs 
among them; a discussion of differences in methodology relative to 
Commission methodologies in last year's ACD; a list of special studies; 
and, as required by Commission rule 3050.2, a discussion of 
obsolescence. Id. at 4.
    Methodology. The Postal Service says the scope of new methodologies 
has been minimized because it has placed heavy reliance on replicating 
the methodologies used most recently by the Commission. However, it 
observes that postal operations and data collection are not entirely 
static, so there are some minor changes. These are identified and 
discussed in a separate section of the roadmap document and in the 
prefaces to each of the appended materials. Id. at 4-5.
    Proposals the Postal Service has filed to change analytical 
principles since the filing of the FY 2009 ACR are identified and 
summarized in a table. Id. at 5-6. Generally, proposed changes that 
were pending resolution as of the date of the filing have been 
incorporated into this ACR. Id. at 6.
    Market dominant products. The Postal Service notes that certain 
transitional issues that were present in previous ACR filings no longer 
pertain, but maintains that a significant question about the 
requirements of title 39 with respect to cost coverage shortfalls has 
arisen. It notes that the Commission characterized cost coverage 
shortfalls as so pervasive as to be a systemic problem in the FY 2009 
ACD, and directed the Postal Service to develop and present a plan to 
address the problem. Id. at 7. The Postal Service says it presented its 
plan in its exigency request, but no longer considers that plan 
workable, given the Commission's disposition of

[[Page 1472]]

the exigency request. Id. at 7-8. It says results in its current ACR 
filing show that the cost coverage problem continues to exist and 
remains systemic. Id. at 8. It also says that even if it achieves its 
most optimistic efficiency enhancements, it does not foresee that such 
enhancements, combined with annual rate increases within the statutory 
price cap, will result in Periodicals, Standard Mail Flats, and 
Standard Mail NFMs/Parcels reaching full attributable cost coverage. 
Id.
    Product-by-product costs, revenues, and volumes. With limited 
exceptions, cost, revenues, and volumes for all market dominant 
products of general applicability are shown directly in the FY 2010 CRA 
or ICRA. The exceptions are International Reply Coupon Service, 
International Business Reply Mail Service, and Negotiated Service 
Agreements. Id. at 10.
    Service performance. The Postal Service notes that the Commission 
issued rules on periodic reporting of service performance measurement 
and customer satisfaction in FY 2010. Responsive information appears in 
USPS-FY10-29. Id. at 11-12. The Postal Service says it set aggressive 
on-time targets of 90 percent or above for all market dominant products 
and, overall, has been successful in continuously improving these 
scores. It asserts that its targets have already been met or exceeded 
for some products and in some districts, but says there are several 
instances where target scores have not yet been met at the national 
level. Specific reasons for these results are discussed in USPS-FY10-
29. Id. at 12.
    Customer satisfaction. The FY 2010 ACR discusses the Postal 
Service's transition to a new system for assessing customer experience; 
describes the new methodology and changes in reporting categories; 
presents a table with survey results; and addresses why the FY 2010 
scores cannot be compared to previous years. Id. at 12-16.
    Product analysis and other information. The FY 2010 ACR includes a 
detailed analysis of each market dominant product, including domestic 
Negotiated Service Agreements entered into during FY 2010. Id. at 16-
50. It also presents information responsive to 39 U.S.C. 3652(b) on 
worksharing discounts. Id. at 50-63.
    Competitive products. The Postal Service says that transitional 
issues that pertained in FY 2007 and FY 2008 with respect to the 
applicable requirements of title 39 no longer existed in FY 2009, and 
none affect this filing. Id. at 63. It generally addresses product-by-
product analysis, noting where detailed information can be found, and 
discusses available FY 2010 data with reference to the competitive 
product pricing standards of 39 U.S.C. 3633. Id. at 63-64.
    Market tests; nonpostal services. The Postal Service also addresses 
the two market tests conducted during FY 2010 and nonpostal services. 
Id. at 68-72. With respect to the latter, it notes that the Commission 
rule requiring the ACR to include information on costs, volumes, and 
revenues was not adopted until late in FY 2009. The Postal Service was 
limited in what it could provide in the FY 2009 ACR, and it says it has 
attempted to improve its reporting in this ACR, but it considers the 
information it is providing as generally comparable to what it 
previously provided. Id. at 70-71.

III. Procedural Steps

    Statutory requirements. Section 3653 of title 39 requires the 
Commission to provide interested persons with an opportunity to comment 
on the ACR and to appoint a Public Representative to represent the 
interests of the general public. The Commission hereby solicits public 
comment on the Postal Service's FY 2010 ACR and on whether any rates or 
fees in effect during FY 2010 (for products individually or 
collectively) were not in compliance with applicable provisions of 
chapter 36 of title 39 (or regulations promulgated thereunder). 
Commenters addressing market dominant products are referred in 
particular to the applicable requirements (39 U.S.C. 3622(d) and (e) 
and 3626); objectives (39 U.S.C. 3622(b)); and factors (39 U.S.C. 
3622(c)). Commenters addressing competitive products are referred to in 
39 U.S.C. 3633.
    The Commission also invites public comment on the cost coverage 
matters the Postal Service addresses in its filing; service performance 
results; levels of customer satisfaction achieved; progress toward 
goals established in the annual Comprehensive Report; and such other 
matters that may be relevant to the Commission's review. Comments on 
these topics will, inter alia, assist the Commission in developing 
appropriate recommendations to the Postal Service related to the 
protection or promotion of the public policy objectives of title 39.
    Access to filing. The Commission has posted the publicly available 
portions of the FY 2010 ACR filing on its Web site (http://www.prc.doc).
    Comment deadlines. Comments by interested persons are due on or 
before February 2, 2011. Reply comments are due on or before February 
17, 2011. The Commission, upon completion of its review of the FY 2010 
ACR, public comments, and other data and information submitted in this 
proceeding, will issue its ACD. Those needing assistance filing 
electronically may contact the Docket Section supervisor at 202-789-
6846 or via e-mail at [email protected]. Inquiries about access to 
non-public materials should also be directed to the Docket Section.
    Public representative. The Commission appoints Emmett Rand Costich 
as the public representative in this proceeding. Kenneth R. Moeller and 
Diane K. Monaco, of the Commission's Office of Accountability and 
Compliance, will provide technical assistance.

IV. Ordering Paragraphs

    It is ordered:
    1. The Commission establishes Docket No. ACR2010 to consider 
matters raised by the United States Postal Service's FY 2010 Annual 
Compliance Report.
    2. Pursuant to 35 U.S.C. 505, the Commission appoints Emmett Rand 
Costich as officer of the Commission (Public Representative) in this 
proceeding to represent the interests of the general public.
    3. Comments on the United States Postal Service's FY 2010 Annual 
Compliance Report to the Commission, including the Comprehensive 
Statement of Postal Operations and other reports, are due on or before 
February 2, 2011.
    4. Reply comments are due on or before February 17, 2011.
    5. The Secretary shall arrange for publication of this order in the 
Federal Register.

    By the Commission.
Shoshana M. Grove,
Secretary.
[FR Doc. 2011-157 Filed 1-7-11; 8:45 am]
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