[Federal Register Volume 79, Number 83 (Wednesday, April 30, 2014)]
[Rules and Regulations]
[Pages 24335-24336]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-09770]


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POSTAL REGULATORY COMMISSION

39 CFR Part 3050

[Docket No. RM2014-2; Order No. 2061]


Periodic Reporting

AGENCY: Postal Regulatory Commission.

ACTION: Final rule.

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SUMMARY: The Commission is eliminating a requirement that the Postal 
Service prepare the annual cost and revenue analysis report in an 
alternative format. The reason for the change is that the alternative 
format's usefulness as an analytical tool has been overtaken by 
developments since passage of postal reform legislation in 2006. 
Adoption of this change means the Postal Service will prepare and 
submit only one version of this report.

DATES: Effective May 30, 2014.

FOR FURTHER INFORMATION CONTACT: David A. Trissell, General Counsel, at 
202-789-6820.

SUPPLEMENTARY INFORMATION:

Regulatory History

73 FR 53324, September 15, 2008
74 FR 20834 May 5, 2009
78 FR 70904 November 27, 2013

Table of Contents

I. Introduction
II. Proposal
III. Ordering Paragraphs

I. Introduction

    On November 21, 2013, the Commission established this rulemaking 
docket to evaluate the Postal Service's petition \1\ to eliminate that 
part of 39 CFR 3050.14 requiring the production and submission of an 
Alternate CRA (Cost and Revenue Analysis Report) as part of the Postal 
Service's Annual Compliance Report (ACR).\2\
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    \1\ Petition of the United States Postal Service for the 
Initiation of a Proceeding to Eliminate the Requirement for an 
Alternative Format CRA Report, November 15, 2013, at 1 (Petition).
    \2\ Order No. 1891, Notice of Petition for the Initiation of a 
Proceeding to Eliminate the Alternative Format CRA Report, November 
21, 2013 (Notice).
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    Rule 3050.14 establishes the format for the CRA which reports 
costs, revenues, volumes, contribution, and other information 
reflecting the classification structure in the Mail Classification 
Schedule (MCS). 39 CFR 3050.14. The rule also requires an alternative, 
more disaggregated format (Alternate CRA) capable of reflecting the 
classification structure in effect prior to the adoption of the Postal 
Accountability and Enhancement Act (PAEA). Id. The Postal Service 
proposes striking the second sentence of rule 3050.14.
    This order grants the Petition and, accordingly, amends rule 
3050.14.\3\
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    \3\ The Petition also requested a waiver of the requirement to 
file the FY 2013 Alternate CRA Report if the Commission anticipated 
that it might not be able to complete the rulemaking prior to the 
time by which preparation of the FY 2013 ACR was to be finalized. On 
December 18, 2013, the Commission granted the waiver request in 
order to fully evaluate amendment of Rule 3050.14 and any comments 
of interested persons. Order No. 1913, Order Granting Waiver of 
Filing FY 2013 Alternate CRA, December 18, 2013.
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II. Proposal

A. Postal Service Proposal

    In support of its proposal, the Postal Service states that since 
passage of the PAEA, mail classifications have been combined and data 
systems no longer gather data for many of the Alternate CRA categories. 
Current data systems cannot always track data by the pre-PAEA 
categories, particularly cost data for many categories in the Alternate 
CRA. For example, the current methodology does not separate First-Class 
Package Service into Single-Piece and Presort parcels. Revenue, Pieces, 
and Weight (RPW) volumes are used and unit costs are assumed to be 
identical, which is not intuitive and not supported by actual data. 
Petition at 3.
    According to the Postal Service, methods to estimate the data for 
the Alternate CRA were developed by disaggregating existing mail 
categories in order to reassemble the pre-PAEA classification results 
in estimation methodologies that vary by category. Id. As a result, the 
aggregation of cost data may not always match those developed via 
different estimation techniques, and data for some categories may not 
exist at all. Id. at 3-4.
    The Postal Service further states that public and non-public 
versions of the Alternate CRA were filed initially, but as more parts 
of products have shifted to competitive products, of necessity only a 
non-public version has been filed. Id. at 2. Otherwise, a comparison of 
the market dominant information in the CRA with that in the Alternate 
CRA would make it possible to derive information about competitive 
products. For instance, the revenue, costs, and volume of First-Class 
Package Service and Lightweight Parcel Select in the Alternate CRA 
could be discerned when returned to and combined with existing data for 
First-Class Mail and Standard Mail. Also, the Alternate CRA has 
separate lines for negotiated service agreements (NSAs) that isolate 
the NSA data for First-Class Package Service. Id.
    The Postal Service points out that the Alternate CRA provided a 
bridge for maintaining trend data through the transition so that no 
pre-PAEA categories were omitted and the integrity of the data 
reporting was maintained. Id. at 4. The Postal Service asserts that 
usefulness of the Alternate CRA is questionable because the information 
reported is the result of ratio analysis and guesstimates. Id. The 
Postal Service argues that the report is no longer relevant. Id.
    The Postal Service also claims that the burden to produce the 
Alternate CRA is substantial and dependent on completion of all other 
ACR work. Id. at 4-5. The Postal Service is concerned that the 
relatively weak quality of the Alternate CRA material may reflect upon 
the quality of other ACR material. Id. at 5.

B. Public Representative Comments

    Only the Public Representative filed comments.\4\ The Public 
Representative points out that the CRA involves separating the Postal 
Service's accrued costs reported in its general ledger into cost 
segments which are further segregated into cost pools and distributed 
to products based on factors derived from data collection systems. PR 
Comments at 2-3. The Public Representative asserts that the Commission 
has noted the Alternate CRA format provided a helpful reference point 
as product lists were frequently refined in the first few years after 
passage of the PAEA. Id. at 3. As products are combined or morphed into 
new products, the link between

[[Page 24336]]

historical and current classification is stretched and ultimately 
broken, making invalid the use of the initial factors to distribute 
costs. Id. The Public Representative notes that the Commission foresaw 
this possibility and allowed products with volumes insufficient to 
estimate costs to be footnoted with the reasons supporting the lack of 
a suitable proxy. However, the Public Representative notes that after 7 
years, the reclassification of categories of products has not 
stabilized and has continued in fiscal years 2012 and 2013.
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    \4\ Initial Comments of the Public Representative, January 7, 
2014 (PR Comments). The order establishing this rulemaking provided 
for comments by interested parties no later than January 9, 2014 and 
reply comments no later than January 23, 2014. Notice at 4. No reply 
comments were filed.
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    The Public Representative supports eliminating the Alternate CRA as 
having outlived its initial usefulness, but is concerned that the 
changing MCS will disrupt continuity of the data to calculate trends 
and analyze aberrations. Id. at 4. The Public Representative urges the 
Commission to consider whether the MCS remains in a state of flux and 
then decide upon the usefulness of the Alternate CRA in the longer run. 
Id.

C. Commission Analysis

    Commission Order No. 104, which established the proposed rules for 
data reporting, noted that the Alternate CRA proposal should help 
ensure analytical consistency over time and give the Commission and 
interested parties the ability to track trends in the financial data 
and make it easier to identify and analyze anomalies.\5\ The order also 
stated that the Alternate CRA should provide a particularly helpful 
reference point if the product lists under the PAEA undergo frequent 
refinement in the first few years of the new regulatory regime. Id. at 
17.
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    \5\ Docket No. RM2008-4, Notice of Proposed Rulemaking 
Prescribing Form and Content of Periodic Reports, August 22, 2008, 
at 16-17 (Order No. 104).
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    In adopting rule 3050.14, the Commission noted that the purpose of 
the Alternate CRA was to report data in a way that can serve as 
building blocks to facilitate analysis of trends in postal finances and 
operations.\6\
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    \6\ Docket No. RM2008-4, Notice of Final Rule Prescribing Form 
and Content of Periodic Reports, April 16, 2009, at 24-25 (Order No. 
203).
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    The first filing of the Alternate CRA, both public and non-public 
versions, was included in the FY 2009 ACR. Beginning with the FY 2012 
ACR, the Postal Service only filed a non-public version of the 
Alternate CRA, noting that the transfer of multiple market dominant 
products to the competitive product list would make it possible to use 
the Alternate CRA to derive information about competitive products.\7\
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    \7\ Docket No. ACR2012, Library Reference USPS-FY12-9, at 87.
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    As noted above, the Postal Service cites several different reasons 
for the elimination of the Alternate CRA, including the inability of 
the data systems, especially the cost data systems, to develop data for 
several categories in the Alternate CRA listing, use of creative 
disaggregation of existing categories and classifications to reassemble 
the pre-PAEA classifications, and the substantial burden on the Postal 
Service to produce the Alternate CRA at the end of the ACR preparation 
time. See Petition at 3-5.
    The Public Representative agrees that the existing lines between 
the historical and the current mail classifications are stretched thin 
and have probably reached their breaking point. PR Comments at 3. She 
recommends the Alternate CRA's elimination, noting that the format has 
outlived its usefulness but also cautions that, as the MCS continues to 
change, the ability to calculate trends and analyze aberrations is 
threatened. Id. at 4.
    As more changes are made to mail classifications, the more 
difficult it is to realign volumes, revenues, and costs from the pre- 
and post-PAEA product offerings. In Order No. 104, the Commission 
recognized that there could be obstacles in disaggregating information 
and allowed the Postal Service to footnote where those obstacles might 
be. Order No. 104 at 17. The Commission also implied that there may be 
a finite time for the presentation of the Alternate CRA, indicating 
that the report would be useful for the first several years under the 
PAEA. Id. at 16.
    As the Postal Service notes, the Alternate CRA served as a means 
for maintaining mail classification/rate category trend data during the 
transition to post-PAEA reporting requirements. Petition at 4. Over 
time, the increasing number of mail classification changes and product 
transfers has rendered the utility of Alternate CRA reported data 
problematic.\8\ The Postal Service contends that the data reported are 
``increasingly the result of ratio analyses, guesstimates and splits 
tied to shares from seven years ago.'' Id. at 4. Accordingly, the 
Postal Service argues that the Alternate CRA is no longer relevant. Id.
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    \8\ The transfer of market dominant products to the competitive 
product list also caused the Postal Service to eliminate the public 
version of the Alternate CRA to preserve the confidentiality of 
competitive product data. Id. at 2. Questions about the relevance of 
the data reported aside, this development further diminishes the 
utility of the Alternate CRA.
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    The Commission agrees. The relationship between pre- and post-PAEA 
rate categories and products has become tenuous at best. As a 
consequence, as argued by the Postal Service and the Public 
Representative, the Alternate CRA's usefulness as an analytical tool 
has been eclipsed. Therefore, the Commission will no longer require it 
to be filed with the ACR. Rule 3050.14 is modified accordingly.

III. Ordering Paragraphs

    It is ordered:
    1. The Postal Service's Petition is granted as set forth in the 
body of this order.
    2. The Commission adopts the amendment to part 3050 of title 39, 
CFR that follows the Secretary's signature.
    3. The amendment is effective 30 days after publication of this 
order in the Federal Register.
    4. The Secretary shall arrange for publication of this order in the 
Federal Register.

List of Subjects in 39 CFR Part 3050

    Administrative practice and procedure, Postal Service, 
Recordkeeping and reporting requirements.

    By the Commission.
Shoshana M. Grove,
Secretary.
    For the reasons stated in the preamble, under the authority at 39 
U.S.C. 503, the Postal Regulatory Commission amends 39 CFR part 3050 as 
follows:

PART 3050--PERIODIC REPORTING

0
1. The authority citation for part 3050 continues to read as follows:

    Authority: 39 U.S.C. 503, 3651, 3652, 3653.


0
2. Section 3050.14 is revised to read as follows:


Sec.  3050.14  Format of the Postal Service's section 3652 report.

    The Postal Service's Cost and Revenue Analysis (CRA) report shall 
be presented in a format reflecting the classification structure in the 
Mail Classification Schedule.

[FR Doc. 2014-09770 Filed 4-29-14; 8:45 am]
BILLING CODE 7710-FW-P