[Federal Register Volume 79, Number 3 (Monday, January 6, 2014)]
[Notices]
[Pages 669-671]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-31512]


=======================================================================
-----------------------------------------------------------------------

POSTAL REGULATORY COMMISSION

[Docket No. ACR2013; Order No. 1935]


FY 2012 Annual Compliance Report

AGENCY: Postal Regulatory Commission.

ACTION: Notice.

-----------------------------------------------------------------------

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 2013. 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: January 31, 2014.
    Reply Comments are due: February 14, 2014.

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. Overview of the Postal Service's FY 2013 ACR
III. Procedural Steps
IV. Ordering Paragraphs

I. Introduction

    On December 27, 2013, 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) 2013.\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 2013 Comprehensive Statement, its FY 2013 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 2013 ACR 
appears in non-public annexes.
---------------------------------------------------------------------------

    \1\ United States Postal Service FY 2013 Annual Compliance 
Report, December 27, 2013 (FY 2013 ACR). Public portions of the 
Postal Service's filing are available on the Commission's Web site 
at http://www.prc.gov.
---------------------------------------------------------------------------

    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 2013 are in 
compliance with applicable title 39 requirements.

II. Overview of the Postal Service's FY 2013 ACR

    Contents of the filing. The Postal Service's FY 2013 ACR consists 
of a 56-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 supporting 
rationale, filed as Attachment Two. The filing also

[[Page 670]]

includes the Comprehensive Statement,\2\ 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.
---------------------------------------------------------------------------

    \2\ In the past, the Commission has reviewed the Postal 
Service's reports prepared pursuant to 39 U.S.C. 2803 and 39 U.S.C. 
2804 (filed as the Comprehensive Statement by the Postal Service) in 
its Annual Compliance Determination. To allow for more thorough 
review of the issues involved, the Commission intends to review 
these issues in a separate docket going forward.
---------------------------------------------------------------------------

    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. FY 2013 ACR at 2-3. 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 2013 ACR appears as 
Library Reference USPS-FY13-9. 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 a discussion of obsolescence, as required by 
Commission rule 3050.12. Id. at 3-4.
    Methodology. The Postal Service states that it has adhered to the 
methodologies applied by the Commission in the FY 2012 ACD, except in 
instances where the Commission approved methodology changes subsequent 
to the FY 2012 ACD. Those changes are identified in a separate section 
of the roadmap document as well as the prefaces accompanying the 
appended folders. Id. at 4. One exception to this is the incorporation 
of the methodology in Proposals One through Three.\3\ The Postal 
Service states that although the Commission's review of Proposals One 
through Three is still pending, it was not practical for it to prepare 
the FY 2013 ACR without employing these principles. Id. at 6.
---------------------------------------------------------------------------

    \3\ These proposals, along with Proposals Four and Five, are 
pending in Docket No. RM2013-6.
---------------------------------------------------------------------------

    Proposals for which the Postal Service has filed to change 
analytical principles since the filing of the FY 2012 ACR are 
identified and summarized in a table. Id. at 4-5.
    Market dominant product-by-product costs, revenues, and volumes. 
Comprehensive cost, revenue, and volume data for all market dominant 
products of general applicability are shown directly in the FY 2013 CRA 
or ICRA. Id. at 9.
    The FY 2013 ACR includes a discussion by class of each market 
dominant product, including costs, revenues, and volumes, workshare 
discounts and passthroughs responsive to 39 U.S.C. 3652(b), and FY 2013 
incentive programs. Id. at 9-39. In addition, in response to Order No. 
1427,\4\ the Postal Service also provides a schedule of future price 
increases for Standard Mail Flats. Id. at 19-20.
---------------------------------------------------------------------------

    \4\ Docket No. ACR2010, Order No. 1427, Order on Remand, August 
9, 2012.
---------------------------------------------------------------------------

    Market dominant negotiated service agreements. The FY 2013 ACR 
presents information on market dominant negotiated service agreements 
(NSAs). Id. at 38. Although there were two market dominant NSAs in 
effect for FY 2013, Discover Financial Services and Valassis, 2013 
mailings were only made under the Discover Financial Services NSA. 
Valassis did not send enough NSA-eligible volume to qualify for volume 
discounts, and therefore paid published rates during FY 2013. Id.
    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 
Library Reference USPS-FY13-29. Id. at 40. 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-FY13-29. Id. at 40.
    Customer satisfaction. The FY 2013 ACR discusses the Postal 
Service's approach for measuring customer experience and satisfaction; 
describes the methodology; presents a table with survey results; and 
compares the results from FY 2012 to FY 2013. Id. at 41-44.
    Competitive products. The FY 2013 ACR provides costs, revenues, and 
volumes for competitive products of general applicability in the FY 
2013 CRA or ICRA. For competitive products not of general 
applicability, data are provided in non-public Library References USPS-
FY13-NP2 and USPS-FY13-NP27. The FY 2013 ACR also addresses the 
competitive product pricing standards of 39 U.S.C. 3633. Id. at 45-51.
    Market tests; nonpostal services. The Postal Service also addresses 
the two market dominant market tests conducted during FY 2013, the two 
competitive market tests conducted during FY 2013, and nonpostal 
services. Id. at 52-54. With respect to the latter, it notes that on 
December 11, 2012, the Commission issued Order No. 1575 approving Mail 
Classification Schedule (MCS) descriptions and prices for nonpostal 
service products.\5\ The approved MCS includes 11 nonpostal service 
products, two of which are market dominant and nine of which are 
competitive. Request at 53. It has provided revenue, cost, and volume 
data for the two market dominant nonpostal service products. Id. The 
Postal Service states that for the other market dominant nonpostal 
service, Philatelic Sales, it filed Proposal Six (Docket No. RM2014-1) 
on November 8, 2013, seeking to update the methodology for calculating 
the costs of Philatelic Sales and handling costs of Stamp Fulfillment 
Services.\6\ Because Proposal Six is still pending before the 
Commission, the Postal Service provides revenue, costs, and volumes 
under both the current methodology and the methodology proposed in 
Proposal Six. Request at 54.
---------------------------------------------------------------------------

    \5\ Id. at 53; see also Docket No. MC2010-24, Order Approving 
Mail Classification Descriptions and Prices for Nonpostal Service 
Products, December 11, 2012 (Order No. 1575).
    \6\ Docket No. RM2014-1, Petition of the United States Postal 
for the Initiation of a Proceeding to Consider Proposed Change in 
Analytical Principles (Proposals Six Through Eight), November 8, 
2013.
---------------------------------------------------------------------------

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 an officer of the Commission (Public 
Representative) to represent the interests of the general public. The 
Commission hereby solicits public comment on the Postal Service's FY 
2013 ACR and on whether any rates or fees in effect during FY 2013 (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)

[[Page 671]]

and 3626); objectives (39 U.S.C. 3622(b)); and factors (39 U.S.C. 
3622(c)). Commenters addressing competitive products are referred to 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; 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 2013 ACR on its Web site at http://www.prc.gov.
    Comment deadlines. Comments by interested persons are due on or 
before January 31, 2014. Reply comments are due on or before February 
14, 2014. The Commission, upon completion of its review of the FY 2013 
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. 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. ACR2013 to consider 
matters raised by the United States Postal Service's FY 2013 Annual 
Compliance Report.
    2. Pursuant to 39 U.S.C. 505, the Commission appoints Kenneth E. 
Richardson as an 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 2013 Annual 
Compliance Report to the Commission, including the Comprehensive 
Statement of Postal Operations and other reports, are due on or before 
January 31, 2014.
    4. Reply comments are due on or before February 14, 2014.
    5. The Secretary shall arrange for publication of this order in the 
Federal Register.

    By the Commission.
Shoshana M. Grove,
Secretary.
[FR Doc. 2013-31512 Filed 1-3-14; 8:45 am]
BILLING CODE 7710-FW-P