[Federal Register Volume 78, Number 225 (Thursday, November 21, 2013)]
[Proposed Rules]
[Pages 69805-69806]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-27826]


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POSTAL REGULATORY COMMISSION

39 CFR Part 3050

[Docket No. RM2014-1; Order No. 1877]


Periodic Reporting (Proposals Six Through Nine)

AGENCY: Postal Regulatory Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Commission is noticing a recent Postal Service filing 
concerning the initiation of a proceeding to consider proposed changes 
in analytical principles (Proposals Six Through Nine). This notice 
informs the public of the filing, invites public comment, and takes 
other administrative steps.

DATES: Comments are due: December 2, 2013. Reply comments are due: 
December 9, 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 November 8, 2013, the Postal Service filed a petition pursuant 
to 39 CFR 3050.11 requesting the Commission initiate an informal 
rulemaking proceeding to consider three changes to analytical 
principles for use in periodic reporting.\1\ Petition at 1. The 
Petition labels the proposed analytical principle changes attached to 
its Petition filed on November 8, 2013 in this docket as Proposals Six 
through Eight. On November 12, 2013, the Postal Service filed an errata 
to its Petition to add Proposal Nine attached to its Revised 
Petition.\2\ The changes contained in Proposals Six through Nine are 
described below.
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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 through Eight), November 8, 
2013 (Petition).
    \2\ Notice of the United States Postal Service of Revision to 
Add Proposal Nine to the Petition for Rulemaking--Errata, November 
12, 2012 (Revised Petition).
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II. Proposals

A. Proposal Six: Proposed Changes in Stamp Fulfillment Services (SFS) 
Handling and Philatelic Sales Cost Estimation Models

    To address a concern raised by the Commission in the FY 2012 ACD, 
the Postal Service proposes to update its methodology for calculating 
the costs for Philatelic Sales and the handling costs of SFS in order 
to align the product description in the Mail Classification Schedule 
(MCS).
    To do so, the Postal Service proposes to update the cost model for 
SFS handling costs (StFS2012.xls) and the way handling revenue (the 
$1.25 and the $1.75 fees) is classified by not including the handling 
costs and revenue (the $1.25 and $1.75 fees) for Philatelic Sales in 
the SFS handling workpaper going forward. The handling costs of 
Philatelic Sales will be included solely in the Philatelic Sales cost 
estimation workpaper (StFS Philatelic2012.xls). Id.
    The Postal Service further states that this proposal also seeks to 
update the methodology in order to capture the window costs of 
Philatelic products sold in retail.

B. Proposal Seven: Change in Attributable Costs for Competitive Post 
Office Box Service Enhancements

    The Postal Service states Proposal Seven updates and improves the 
methodology for developing attributable costs for the enhancements to 
competitive Post Office Box service, as requested by the Commission in 
the FY 2012 ACD at 163 and 199. There are two elements of these costs: 
(1) handling of packages from third-party carriers; and (2) information 
technology costs. Id., Proposal 7 at 1.
    The Postal Service filed under seal a non-public version of 
Proposal Seven in USPS-RM2014-1/NP1 which includes material provided 
under seal in the FY 2012 Annual Compliance Report, as well as updates 
to that material.\3\
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    \3\ Notice of Filing of USPS-RM2014-1/NP1 and Application for 
Nonpublic Treatment, November 8, 2013.
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    The proposed methodology for information technology costs, (which 
is a description of the calculation done for FY 2012) entails 
consulting with Engineering to determine: (1) The

[[Page 69806]]

estimated proportion of time spent by contractor engineers on 
maintaining the Competitive PO Box service Web site and software; (2) 
any server costs; and (3) any other contractor costs related to Web 
site and software development. The estimated time proportions are 
applied to the hourly rates of the contractor engineers involved to 
determine a labor cost, which is added to the server and additional 
contractor costs. Id., Proposal 7 at 2. The Postal Service states the 
proposed methodology is a detailed description or explanation of the 
proposed calculations as requested by the Commission. Id.

C. Proposal Eight: Changes to MODS Operation Groups for Productivity 
Calculations

    The Postal Service states that Proposal Eight would modify the MODS 
operation groups reported in Docket No. ACR2013 folder USPS-FY13-23 to 
reflect operational changes and other cost modeling requirements. In 
Docket No. ACR2012, folder USPS-FY12-23 provided MODS productivity data 
(TPF or TPH per workhour) for a variety of operation groups related to 
letter, flat, parcel, and bundle sorting. The MODS productivity data 
are used to parameterize a number of cost models presented in the ACR, 
which are used to compute disaggregated product costs for purposes 
including measurement of worksharing cost avoidances. Id., Proposal 8 
at 1.
    The Postal Service further states that operational changes such as 
introduction and retirement of mail processing equipment periodically 
require conforming changes to MODS data reporting, as cost model 
structures are modified to reflect currently active operations. When 
equipment and associated operations are withdrawn from service, there 
may be no data, or insufficient data, for reliable productivity 
reporting. Less frequently, changes to MODS methodology may affect the 
validity of MODS data. Id.
    The Petition includes a table of the twelve USPS-FY12-23 Group(s) 
and their respective Proposed Group for USPS-FY13-23. The Postal 
Service says that the productivity calculations for the new groups 
would continue to use the methods from USPS-FY12-23. As applicable, the 
mailflow models would employ productivities from the consolidated 
operation groups in place of the previous disaggregated groups. Id. at 
2.
    The Postal Service has filed modified versions of the USPS-FY12-10 
and USPS-FY12-11 models with proposed changes highlighted in the 
models. The Postal Service notes that the productivity changes affect 
the non-machinable categories of mail as the manual letter 
productivities affect those categories the most. Changes to machinable/
automation rate categories are because of the change in the CRA 
adjustment factor. Id. at 4.

D. Proposal Nine: Changes in In-Office Cost System (IOCS) Encirclement 
Rules

    In Proposal Nine, the Postal Service proposes to update the 
encirclement rules for Delivery Confirmation to reflect changes in 
products. In the In-Office Cost System (IOCS), encirclement is the 
process of assigning the cost of handling a mailpiece with an Extra 
Service to the Extra Service rather than to the host mailpiece. The 
Postal Service states that encirclement is warranted when an Extra 
Service is the primary reason that an employee has to handle a 
mailpiece. Revised Petition, Proposal 9 at 1.
    Specifically, the Postal Service proposes to stop encircling costs 
at acceptance to Delivery Confirmation for IOCS tallies after January 
27, 2013 for Priority Mail (retail), Standard Post (retail), Parcel 
Select Lightweight, and First-Class Package Service. The Postal Service 
reasons that beginning January 27, 2013, the products began to include 
Tracking (Delivery Confirmation) as a free service. Therefore, after 
that date, costs should no longer be encircled to the Delivery 
Confirmation service, but instead should be assigned to the host 
product. Id.

III. Notice and Comment

    The Commission establishes Docket No. RM2014-1 for consideration of 
matters raised by the Petition and the Revised Petition. For specific 
details on each of the proposals, interested persons are encouraged to 
review the Petition and Revised Petition, which are available via the 
Commission's Web site at http://www.prc.gov. The Postal Service filed 
portions of its supporting documentation relating to Proposal Seven 
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 no later 
than December 2, 2013. Reply comments are due no later than December 9, 
2013. Pursuant to 39 U.S.C. 505, John P. Klingenberg is designated as 
an 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. RM2014-1 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 Six through Eight), filed November 
8, 2013 and the Revised Petition of the United States Postal Service 
for the Initiation of a Proceeding to Consider Proposed Changes in 
Analytical Principles (Proposals Six through Nine), filed November 12, 
2013.
    2. Comments by interested persons in this proceeding are due no 
later than December 2, 2013. Reply comments are due no later than 
December 9, 2013.
    3. Pursuant to 39 U.S.C. 505, the Commission appoints John P. 
Klingenberg to serve as an officer of the Commission (Public 
Representative) to represent the interests of the general public in 
this docket.
    4. The Secretary shall arrange for publication of this order in the 
Federal Register.

    By the Commission.
Ruth Ann Abrams,
Acting Secretary.
[FR Doc. 2013-27826 Filed 11-20-13; 8:45 am]
BILLING CODE 7710-FW-P