[Federal Register Volume 77, Number 6 (Tuesday, January 10, 2012)]
[Notices]
[Pages 1521-1523]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-164]


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POSTAL REGULATORY COMMISSION

[Docket No. ACR2011; Order No. 1095]


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 2011. Within 90 days, the Commission must 
evaluate that information and issue its determination

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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 3, 2012.
    Reply comments are due: February 17, 2012.

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 2011 ACR
III. Procedural Steps
IV. Ordering Paragraphs

    On December 29, 2011, 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 (FY) 2011.\1\ 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 includes the 
Postal Service's FY 2011 Comprehensive Statement, its FY 2011 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 2011 ACR 
appears in non-public annexes.
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    \1\ United States Postal Service FY 2011 Annual Compliance 
Report, December 29, 2011 (FY 2011 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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    The filing begins a review process that results in an Annual 
Compliance Determination (ACD) issued by the Commission to determine 
whether Postal Service products offered during FY 2011 are in 
compliance with applicable title 39 requirements.

II. Overview of the Postal Service's FY 2011 ACR

    Contents of the filing. The Postal Service's FY 2011 ACR consists 
of a 72-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 Cost and Revenue Analysis (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 practices. As with past ACRs, the Postal 
Service has split certain materials into public and non-public 
versions. Id. at 3.
    ``Roadmap'' document. A roadmap to the FY 2011 ACR appears in the 
form of library reference USPS-FY11-9. 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 3-4.
    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 5.
    Proposals for which the Postal Service has filed to change 
analytical principles since the filing of the FY 2010 ACR are 
identified and summarized in a table. Id. at 4-6. Generally, with 
respect to proposed changes that were pending resolution as of the date 
of the filing, the Postal Service prepared two versions of the 
materials for its ACR. Id. at 6.\2\
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    \2\ The three exceptions to this practice are with respect to 
Proposals Ten, Eleven, and Eighteen. Id. at 6-7. The Postal Service 
also identifies the reasons why it did not prepare two versions for 
these proposals in its ACR and requests that the Commission waive 
the requirements of 39 CFR 3050.10 with respect to these three 
proposals. Id. at 7.
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    Market dominant product-by-product costs, revenues, and volumes. 
With one exception, costs, revenues, and volumes for all market 
dominant products of general applicability are shown directly in the FY 
2011 CRA or ICRA. The one exception is International Reply Coupon 
Service. Id. at 8.
    Market dominant negotiated service agreements. The FY 2011 ACR 
presents information on market dominant negotiated service agreements 
(NSAs) in two ways. Id. at 9. First, on a fiscal year basis, it 
extracts revenue, cost, and volume data from the relevant CRA lines. 
These data are further disaggregated by individual NSA in library 
reference USPS-FY11-30. Second, library reference USPS-FY11-30 also 
presents similar data for the NSAs by contract year. Id. This latter 
method is required by 39 CFR 3020.21(1) to allow net benefit 
calculations for NSAs that have discounts based on volume thresholds 
reached during a contract year. Id. Such net benefit calculations also 
appear in library reference USPS-FY11-30.\3\
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    \3\ The Postal Service notes that there is a distinction between 
the ``net benefit calculations'' and the data reported in the CRA 
line item for NSAs. The net benefit calculations are intended to 
isolate the incremental benefit of the NSA while the CRA reports the 
entire volume to the NSA, regardless of whether it is deemed 
``incremental.'' Id. at 9.
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    Service performance. The Postal Service notes that the Commission 
issued rules on periodic reporting of service performance measurement 
and customer satisfaction in FY 2011. Responsive information appears in 
library reference USPS-FY11-29. Id. at 10-11. 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 
library reference USPS-FY11-29. Id. at 12.
    Customer satisfaction. The FY 2011 ACR discusses the Postal 
Service's new approach for measuring customer experience and 
satisfaction; describes the new methodology and other

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changes; presents a table with survey results; and compares the results 
from FY 2010 to FY 2011. Id. at 10-13.
    Product analysis and other information. The FY 2011 ACR includes a 
detailed analysis of each market dominant product, including domestic 
NSAs in effect during FY 2011. Id. at 14-48. It also presents 
information responsive to 39 U.S.C. 3652(b) on worksharing discounts. 
Id. at 50-60.
    Competitive products. The FY 2011 ACR provides costs, revenues, and 
volumes for competitive products of general applicability in the FY 
2011 CRA (or ICRA). For competitive products not of general 
applicability, data are provided in non-public library references USPS-
FY11-NP2 and USPS-FY11-NP27. The FY 2011 ACR also addresses the 
competitive product pricing standards of 39 U.S.C. 3633. Id. at 60-64.
    Market tests; nonpostal services. The Postal Service also addresses 
the three market dominant market tests conducted during FY 2011, the 
two competitive market tests conducted during FY 2011, and nonpostal 
services. Id. at 64-68. With respect to the latter, it notes that in 
the last ACD, the Commission linked further reporting on nonpostal 
services to the approval of classification language in Docket No. 
MC2010-24, and that docket was still pending as of the end of FY 2011. 
The Postal Service states that it has attempted to improve its 
nonpostal services reporting in this ACR, but it considers the 
information it is providing as generally comparable to what it 
previously provided. Id. at 67.

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 2011 ACR and on whether any rates or 
fees in effect during FY 2011 (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 Statement; 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 2011 ACR on its Web site, http://www.prc.doc.
    Comment deadlines. Comments by interested persons are due on or 
before February 3, 2012. Reply comments are due on or before February 
17, 2012. The Commission, upon completion of its review of the FY 2011 
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 email at [email protected]. Inquiries about access to 
non-public materials should also be directed to the Docket Section.
    Public representative. Kenneth E. Richardson is designated to serve 
as the Public Representative to represent the interests of the general 
public in this proceeding, assisted by Lawrence Fenster and Elena 
Patel. Neither the Public Representative nor any additional persons 
assigned to assist him shall participate in or advise as to any 
Commission decision in this proceeding other than in their designated 
capacity.

IV. Ordering Paragraphs

    It is ordered:
    1. The Commission establishes Docket No. ACR2011 to consider 
matters raised by the United States Postal Service's FY 2011 Annual 
Compliance Report.
    2. Pursuant to 35 U.S.C. 505, the Commission appoints Kenneth E. 
Richardson 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 2011 Annual 
Compliance Report to the Commission, including the Comprehensive 
Statement of Postal Operations and other reports, are due on or before 
February 3, 2012.
    4. Reply comments are due on or before February 17, 2012.
    5. The Secretary shall arrange for publication of this order in the 
Federal Register.

    By the Commission.
Shoshana M. Grove,
Secretary.
[FR Doc. 2012-164 Filed 1-9-12; 8:45 am]
BILLING CODE 7710-FW-P