[Federal Register Volume 77, Number 177 (Wednesday, September 12, 2012)]
[Proposed Rules]
[Pages 56176-56177]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-22350]


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POSTAL REGULATORY COMMISSION

39 CFR Part 3001

[Docket No. RM2012-7; Order No. 1459]


Analytical Methods Used in Periodic Reporting

AGENCY: Postal Regulatory Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Commission is noticing a recently-filed Postal Service 
petition to initiate an informal rulemaking proceeding to consider 
changes in analytical principles (Proposals Six and Seven) used in 
periodic reporting. This notice provides an opportunity for the public 
to comment on potential changes in periodic reporting rules.

DATES: 1. Initial comments are due: October 5, 2012.
    2. Reply comments are due: October 15, 2012.

ADDRESSES: Submit comments electronically by accessing the ``Filing 
Online'' link in the banner at the top of the Commission's Web site 
(http://www.prc.gov) or by directly accessing the Commission's Filing 
Online system at https://www.prc.gov/prc-pages/filing-online/login.aspx. Commenters who cannot submit their views electronically 
should contact the person identified in the FOR FURTHER INFORMATION 
CONTACT section as the source for case-related information for advice 
on alternatives to electronic filing.

FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel, 
at 202-789-6820 (case-related information) or [email protected] 
(electronic filing assistance).

SUPPLEMENTARY INFORMATION: On September 4, 2012, the Postal Service 
filed a petition pursuant to 39 CFR 3050.11 requesting that the 
Commission initiate an informal rulemaking proceeding to consider 
changes in the analytical methods approved for use in periodic 
reporting.\1\
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    \1\ Petition of the United States Postal Service for the 
Initiation of a Proceeding to Consider Proposed Changes in 
Analytical Principles (Proposals Six and Seven), September 4, 2012 
(Petition).
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    Proposal Six: Use of Foreign Postal Settlement System as Sole 
Source for Reporting of Inbound International Revenue, Pieces, and 
Weights. The Postal Service proposes to use the Foreign Postal 
Settlement (FPS) system as the sole source for the International Cost 
and Revenue Analysis's (ICRA) reporting of Inbound International 
revenue, pieces, and weight. The Postal Service states that using the 
FPS data source for the ICRA's reporting of Inbound International 
revenue, pieces, and weight would improve the consistency among the 
ICRA, RPW, and financial statements, and that it would eliminate the 
need to make separate Booked Inbound International revenue calculations 
\2\ in the ICRA. Petition at 4. Using FPS would also eliminate the need 
for the ICRA to calculate inbound volumes based on weight data from the 
St. Louis Accounting Service Center (ASC) coupled with estimated items 
per kilogram data from System for International Revenue and Volume 
Inbound (SIRVI) sampling system. However, the Postal Service also 
states that this proposal does not entirely eliminate the need for both 
the Booked and Imputed versions because it does not address the 
Outbound International calculations. Id.
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    \2\ The Postal Service has been producing two versions of the 
ICRA, an Imputed version that relies on ICRA model calculations and 
a Booked version that forces the ICRA model revenue calculations to 
agree with other financial statements.
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    The Postal Service has filed as library reference USPS-LR-RM2012-7-
NP1 a version of USPS-FY11-NP2 revised to incorporate this proposal. 
This library reference is non-public. Id. at 2. The Postal Service 
states that USPS-LR-RM2012-7-NP1 displays two impacts: (1) A comparison 
between the FY 2011 Imputed version as filed in USPS-FY11-NP2 and the 
proposed methodology; and (2) a comparison between the FY 2011 Booked 
version as filed in USPS-FY11-NP2 and the proposed methodology. In the 
two comparisons, pieces and weight based on FPS increase 2.9 percent 
and 2.0 percent, respectively, over the USPS-FY11-NP2 amounts. In the 
Imputed versus proposed comparison, revenue decreases 0.3 percent and 
volume variable costs decrease 1.2 percent due to changes in the 
distribution of volumes and weights by country under FPS. In the Booked 
versus proposed comparison, revenue decreases 0.8 percent and volume 
variable costs are essentially unchanged. Id. at 4-5.
    Proposal Seven: Methodology Change to Replace Parcel Densities in 
the Transportation Cost System Highway Subsystem. The Postal Service 
proposes a methodology change to replace the parcel densities in the 
Transportation Cost System (TRACS) Highway Subsystem. Id. at 6. These 
densities are used to develop distribution keys to assign volume-
variable costs in Cost Segment 8 (Vehicle Service Driver costs) and 
Cost Segment 14 (purchased transportation costs) to postal products. 
The Postal Service states that currently, separate study-based 
estimates of mailpiece densities by mail category and shape for 
letters, flats, and parcels are required to convert sampled weight 
information to cubic feet. Under the proposed methodology, the study-
based parcel densities would be replaced with parcel dimensional data 
now regularly captured in TRACS-Highway tests. Id.
    The Postal Service states that beginning with Quarter 1 of FY 2012, 
the TRACS-Highway Subsystem began utilizing actual, measured length, 
width and height information for parcel-shaped pieces. Id. Attachment 
at 1. As a result, the cubic foot component of the cubic foot mile 
distribution key for parcels can be determined directly from the 
product of the three dimensions. These direct measurements obviate the 
need for Density-Study information and periodic study updates for 
parcels. The Postal Service believes that this methodology is more 
reliable since cubic feet information is continuously updated 
automatically across sampling periods. Id. For the subset of parcels 
identified as irregular in shape, the Origin-Destination System and 
Revenue, Pieces, and Weight based factor of 0.785 would be applied. For 
all mail shapes, no other changes would be required or

[[Page 56177]]

made to the current TRACS-Highway processing system and methodology, 
including the development of the miles component of the cubic foot-mile 
distribution key. Id. at 1-2.
    The Postal Service states that there is a small proportion of 
sampled parcels for which useable dimensional information is 
unavailable (approximately 5 percent of sampled parcels). For these 
parcels a smoothed, composite, four-quarter density ratio would be 
developed by major mail category to convert sampled weight measures to 
cubic feet measures. The Postal Service states that a smoothed, ratio-
based density measure helps to adjust for seasonal swings as well as to 
reduce sampling variation associated with the smaller mail categories. 
Id. at 2.
    The Postal Service states that Media and Library Mail is the 
product group most affected by the proposed methodology change. That 
product group would receive a change in cost per piece of $-0.021, a 
relative change of -2 percent. Parcel Post would receive the next 
largest change in cost per piece at $-0.010, with a relative change of 
0 percent. All other product groups would have changes in cost per 
piece of less than $0.010. Petition at 7.
    It is ordered:
    1. The Petition of the United States Postal Service Requesting 
Initiation of a Proceeding to Consider Proposed Changes in Analytical 
Principles (Proposals Six and Seven), filed September 4, 2012, is 
granted.
    2. The Commission establishes Docket No. RM2012-7 to consider the 
matters raised by the Postal Service's Petition.
    3. Interested persons may submit comments on Proposals Six and 
Seven no later than October 5, 2012.
    4. Reply comments are due no later than October 15, 2012.
    5. Derrick Dennis is appointed to serve as the Public 
Representative to represent the interests of the general public in this 
proceeding.
    6. The Secretary shall arrange for publication of this notice in 
the Federal Register.

    By the Commission.
Shoshana M. Grove,
Secretary.
[FR Doc. 2012-22350 Filed 9-11-12; 8:45 am]
BILLING CODE 7710-FW-P