[Federal Register Volume 78, Number 165 (Monday, August 26, 2013)]
[Notices]
[Pages 52806-52807]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-20734]


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POSTAL REGULATORY COMMISSION

[Docket No. RM2013-6; Order No. 1814]


Periodic Reporting (Proposals One Through Five)

AGENCY: Postal Regulatory Commission.

ACTION: Notice.

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SUMMARY: The Commission is noticing a recent Postal Service filing 
requesting an informal proceeding to consider changes in four 
analytical method changes for use in periodic reporting. This notice 
informs the public of the filing, invites public comment, and takes 
other administrative steps.

DATES: Comments are due: September 9, 2013. Reply comments are due: 
September 19, 2013.

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

FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel, 
at 202-789-6820.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction
II. Proposals
III. Notice and Comment
IV. Ordering Paragraphs

I. Introduction

    On August 16, 2013, 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 four analytical methods 
for use in periodic reporting.\1\ The Petition labels the proposed 
analytical method changes filed in this docket as Proposals One through 
Four. In addition, the Petition requests clarification concerning the 
status of a proposal that the Postal Service filed in response to a 
Commission directive in Docket No. ACR2012 regarding distribution of 
settlement costs within certain Global Plus Negotiated Service 
Agreement (NSA) products.\2\ This request for clarification will be 
treated as a petition pursuant to 39 CFR 3050.11 requesting that the 
Commission initiate an informal rulemaking proceeding to consider the 
changes identified in response to the Commission directive in Docket 
No. ACR2012, Item 3. Id. This request will be labeled as Proposal Five 
and reviewed as part of this docket.
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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 One through Four), August 16, 2013 
(Petition).
    \2\ Id. at 1; see also Docket No. ACR2012, Responses of the 
United States Postal Service to Commission Requests for Additional 
Information in FY 2012 Annual Compliance Determination, Item 3, June 
26, 2013 (Proposal Five).
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II. Proposals

A. Proposal One: New Formula and Location for Alaska Air Adjustment 
Factor

    The Postal Service proposes a simpler method for calculating the 
Alaska Air Adjustment Factor. In addition, the Postal Service proposes 
to implement the Alaska Air Adjustment Factor within the Cost Segment 
14 model, rather than with the Cost and Revenue Analysis (CRA) model. 
It asserts that the current method for calculating the Alaska Air 
Adjustment Factor is unnecessarily complex, and since the current 
method was established, postal operational data have improved 
significantly. Thus, it contends, that the proposal is a more accurate 
and more easily updateable ratio of highway to air costs. It also 
believes that implementing the proposed change in the Cost Segment 14 
workbook, rather than in the CRA model where it is currently located, 
would help increase transparency. See Petition at 2-3.

B. Proposal Two: New Set of Distribution Factors for Alaska Non-
Preferential, Alaska Preferential, Hawaii, and Air Taxi Cost Pools in 
Cost Segment 14

    The Postal Service proposes a single set of distribution factors to 
assign relevant costs from the Non-Preferential

[[Page 52807]]

Alaska Air, Preferential Alaska Air, Hawaii Air, and Air Taxi cost 
pools to products. The proposed distribution factors rely on current 
operations data from Surface Air Management Systems--Alaska regularly 
collected by the Transportation Cost System. The proposal is also 
designed to remedy an inaccuracy in the distribution of Air Taxi costs. 
The Postal Service asserts that the primary advantage of the proposal 
over the existing method is that it uses current data, and therefore 
computes distribution factors that align with current product lists. 
See id. at 4-7.

C. Proposal Three: New Set of Distribution Factors for Highway and 
Plant Load Cost Pools in Cost Segment 14

    The Postal Service proposes a proxy set of distribution factors to 
assign relevant costs to products from the Highway Plant Load and Rail 
Plant Load cost pools in Cost Segment 14. The Postal Service asserts 
that the product lists have undergone significant changes since Docket 
No. R2005-1 and the corresponding attributable costs have decreased 
dramatically. It believes that rather than replicating expensive 
special studies, it is more sensible to use its proposed proxy set of 
distribution factors that can be updated quarterly to assign relevant 
costs to products. See id. at 8-10.

D. Proposal Four: Change in Canada Air Transportation Costing 
Methodology

    The Postal Service proposes revising its costing methodology for 
Air Transportation of outbound products to Canada. This is expected to 
impact primarily Canada's Air Transportation costs and measured 
contribution in both the ``Booked Version'' and ``Imputed Version'' of 
reports. Specifically, the proposal benchmarks changes to ``Imputed 
Reports.xls'' and ``Reports (Booked).xls'' to bring the reported 
International Transportation costs by Product and Country into 
agreement between the two versions. The proposed changes will preserve 
the calculation of diversion of Outbound Canada Air Mail to Highway 
Transportation and eliminate the shift in costs between Canada and the 
rest of the world during the ``Booking'' process. In essence, the 
Postal Service is proposing to change the Imputed Reports so that 
Canada's combined Air and Air Diverted to Highway costs, together with 
Air Transportation costs for the rest of the word, are benchmarked to a 
combination of General Ledger Air and Surface Purchased Transportation 
Accounts. Such results would then be used by ``Reports (Booked).xls'' 
without further change. The Postal Service asserts that Canada's 
International Transportation costs for Outbound Air Mail that is 
diverted to Highway Transportation, once obscured by International 
Surface Transportation costs associated with Outbound Surface Mail, 
have become discernible with the elimination of Outbound Surface Mail 
Products. Thus, the proposal intends to make use of this information to 
enhance the International CRA. See id. at 11-22.

E. Proposal Five: Change in Methodology for Distributing Settlement 
Costs for Certain Negotiated Service Agreements

    In its Annual Compliance Determination (ACD), the Commission 
directed the Postal Service to more accurately develop costs or 
increase the contingency factor to accommodate costs that cannot be 
modeled for its Global Plus NSA products. See 2012 ACD at 169-70. The 
Postal Service filed its response to the Commission's directive on June 
26, 2013. See Proposal Five at 8-14. It notes that the Global Plus NSAs 
at issue relate to mailpieces going to Canada, and, pursuant to 
agreement, the Canada Post Corporation (CPC) bills the Postal Service 
for services rendered relating to the total product. Accordingly, the 
Postal Service asserts that it needs an improved methodology for 
distributing settlement costs to each NSA contract within a particular 
product. In its FY 2012 Annual Compliance Report, the Postal Service 
used a pound distribution key to distribute costs to each NSA within a 
product. In its response to the ACD directive, the Postal Service 
proposes changing the pound distribution key methodology for 
distributing settlement costs to a revenue distribution key methodology 
in order to distribute costs to each NSA within a product.
    The Postal Service observes that the overall product revenues 
exceed the overall attributable costs and that each Global Plus NSA 
within the 2B and 2C products should cover costs. However, it also 
notes that the CPC settlement rates are more complex than a uniform 
pound rate. For this reason, the Postal Service asserts that a revenue 
key is better suited for distributing settlement costs to NSA contracts 
in the Global Plus 2B and 2C products. Accordingly, the Commission will 
consider the Postal Service's proposed change from a pound distribution 
key methodology for distributing settlement costs within certain Global 
Plus NSA products to a revenue distribution key methodology for 
distributing settlement costs as Proposal Five in this docket.

III. Notice and Comment

    The Commission establishes Docket No. RM2013-6 for consideration of 
matters raised by the Petition and Proposal Five. More information on 
the Petition and Proposal Five may be accessed via the Commission's Web 
site at http://www.prc.gov. The Postal Service filed portions of its 
supporting documentation under seal as part of a non-public annex. 
Information concerning access to these non-public materials is located 
in 39 CFR part 3007.
    Interested persons may submit comments on the Petition and Proposal 
Five no later than September 9, 2013. Reply comments are due no later 
than September 19, 2013. Pursuant to 39 U.S.C. 505, Kenneth E. 
Richardson is designated as officer of the Commission (Public 
Representative) to represent the interests of the general public in 
this proceeding.

IV. Ordering Paragraphs

    It is ordered:
    1. The Commission establishes Docket No. RM2013-6 for consideration 
of the matters raised by the Petition of the United States Postal 
Service for the Initiation of a Proceeding to Consider Proposed Changes 
in Analytical Principles (Proposals One through Four), filed August 16, 
2013.
    2. The Commission will also consider in this docket matters raised 
by the United States Postal Service in its Responses of the United 
States Postal Service to Commission Requests for Additional Information 
in FY 2012 Annual Compliance Determination, Item 3, filed June 26, 2013 
(Proposal Five), in this docket.
    3. Comments by interested persons in this proceeding are due no 
later than September 9, 2013. Reply comments are due no later than 
September 19, 2013.
    4. Pursuant to 39 U.S.C. 505, the Commission appoints Kenneth E 
Richardson to serve as an officer of the Commission (Public 
Representative) to represent the interests of the general public in 
this docket.
    5. The Secretary shall arrange for publication of this order in the 
Federal Register.

    By the Commission.
Shoshana M. Grove,
Secretary.
[FR Doc. 2013-20734 Filed 8-23-13; 8:45 am]
BILLING CODE 7710-FW-P