[Federal Register Volume 80, Number 162 (Friday, August 21, 2015)]
[Proposed Rules]
[Pages 50815-50816]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-20633]


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POSTAL REGULATORY COMMISSION

39 CFR part 3050

[Docket No. RM2015-19; Order No. 2666]


Periodic Reporting

AGENCY: Postal Regulatory Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Commission is noticing a recent Postal Service filing 
requesting that the Commission initiate an informal rulemaking 
proceeding to consider changes to analytical principles relating to 
periodic reports (Proposal Ten). This notice informs the public of the 
filing, invites public comment, and takes other administrative steps.

DATES: Comments are due: September 17, 2015. Reply Comments are due: 
September 28, 2015.

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: David A. Trissell, General Counsel, at 
202-789-6820.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Introduction
II. Proposal Ten
III. Initial Commission Action
IV. Ordering Paragraphs

I. Introduction

    On August 12, 2015, the Postal Service filed a petition pursuant to 
39 CFR 3050.11 requesting that the Commission initiate an informal 
rulemaking proceeding in order to consider changes in analytical 
principles relating to periodic reports.\1\ Proposal Ten is attached to 
the Petition and proposes an analytical method change related to the 
proposed merger of Cost Segments 3 and 4 for purposes of constructing 
the Cost and Revenue Analysis (CRA) Report. Petition at 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 (Proposal Ten), August 12, 2015 (Petition).
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II. Proposal Ten

A. Background

    As background, the Postal Service explains that the historical 
reason for separation of Cost Segment 4, which requires costs for small 
post offices to be isolated and transparent, occurred when decisions to 
close some small post offices were under consideration. Id. Proposal 
Ten at 1. However, where postmasters (whose costs are reflected in Cost 
Segment 1) in small post offices (identified by the Postal Service as 
``CAG K'' and ``CAG L'' offices) \2\ may be doing all of the tasks with 
no clerks, it is difficult to use Cost Segment 4 to adequately measure 
labor costs at these post offices. Proposal Ten at 1.
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    \2\ ``CAG'' refers to ``cost ascertainment group'' and is a 
method used by the Postal Service that classifies post offices based 
on volume of revenue generated. CAG K offices have 36-189 revenue 
units, and CAG L offices have less than 36. See Glossary of Postal 
Terms available at https://usps.com/publications/pub32.
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    The In-Office Cost System (IOCS) maintains a separate panel for CAG 
K finance numbers that generally have one clerk. When the clerk is no 
longer there, no IOCS readings can be obtained and, as the number of 
IOCS reading of CAG K offices declines, the sampling variation 
increases until the sample is refreshed. Data suggest product costs in 
Cost Segment 4 are not statistically different from other small 
offices. Id. at 2.
    The Postal Service further explains that the POStPlan had 
potentially confusing impacts in Cost Segments 3 and 4. The Postal 
Service indicates that Postmaster Reliefs working at POStPlan \3\ post 
offices were subject to reductions in force as a result of a September 
5, 2014, ruling on an American Postal Workers Union arbitration that 
required four-hour and six-hour post offices to be assigned to clerks. 
According to the Postal Service, the effect of the ruling is that clerk 
costs in Cost Segments 3 and 4 may complicate the analysis of the 
effects of POStPlan. Furthermore, the Postal Service explains that 
recent cost increases in Cost Segment 4 are the result of reclassifying 
postmaster positions and shifting these positions from Cost Segment 1 
to clerks in Cost Segments 3 and 4. Id. at 3.
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    \3\ The POStPlan is a Postal Service initiative to match post 
office retail hours with workload, and represents an alternative, 
namely reducing retail window hours, in lieu of closing a post 
office. See Docket No. N2012-2, Advisory Opinion on Post Office 
Structure Plan, August 23, 2012.
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B. Proposal

    Under the proposal, for Fiscal Year 2015, the IOCS would include 
data from CAG K and L post offices with data from CAG H and J post 
offices, and their trial balance amounts used as control totals for 
full-time and part-time clerks would be merged and treated as one 
stratum when refreshed. Id. at 3-4.
    Cost Segment 4 Trial Balance Accounts would be merged into the 
corresponding 5-digit accounts in Cost Segment 3, creating a revised 
``Cost Segment 3 & 4'' worksheet. The Cost Segment 3 account numbers 
and titles would be retained and the CRA Component would be expanded to 
``253 & 42.'' Other conforming Trial Balance worksheet changes would be 
made, but the merger will not affect the ``Outputs to CRA'' and 
``Product specific'' tabs in the Trial Balance. Id. at 4.
    In the Cost Segment 3 B workpapers, CAG K and L clerk costs would 
be incorporated into the Trial Balance control for Cost Segment 3. 
These changes would combine former Cost Segment 4 with the non-MODS 
office group in Cost Segment 3, and subject the mail processing, window 
service, and administrative activities at CAG K and L offices to the 
accepted cost methodology for each component. Id. Cost Segment 3 output 
spreadsheets and other reports would be unchanged. Id. The only change 
to the CRA Cost Model is to remove lines in the control table on sheets 
``Comp Master'' and ``DK Addends'' relating to Cost Segment 4. Id.

[[Page 50816]]

C. Rationale

    The Postal Service's rationale for Proposal Ten is that clerk costs 
in Cost Segment 4 have increased recently as clerks are appointed or 
assigned to former postmaster positions. Id. at 5. Moreover, because 
the CAG criterion using revenue amount to define Cost Segment 4 is 
sufficiently different from the transaction volumes used in POStPlan to 
designate post offices for reduction in hours, CAG K costs are not a 
valid proxy for POStPlan office costs. Id. The Postal Service further 
says the cost classification rationale for Cost Segment 4 is similar to 
Cost Segment 3 cost components because CAG K and L clerks perform a 
corresponding mix of activities such as mail processing, window 
service, and administrative components. However, Cost Segment 4 has 
limited IOCS sample data and some products have no Cost Segment 4 
tallies, which results in zero measured costs in a given year.
    The Postal Service concludes that incorporating Cost Segment 4 
costs with other post office costs would be a more reliable analysis 
for cost attribution and in line with Cost Segment 3 methodology. It 
would result in a better assessment of clerk costs and avoid 
distortions from analyzing Cost Segment 4 separately. Id.
    Proposal Ten includes a table demonstrating the impact of merging 
Cost Segment 4 costs with Cost Segment 3 costs by product. It shows a 
cost difference from a merger of $1,412,000 out of $12,945,185,000 or a 
0.01 percent difference.\4\ Id. at 6.
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    \4\ The Postal Service references files from FY 2014 Annual 
Compliance Report, USPS-FY14-32 and two additional files attached 
electronically.
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III. Initial Commission Action

    The Commission establishes Docket No. RM2015-19 for consideration 
of matters raised by the Petition. Additional information concerning 
the Petition may be accessed via the Commission's Web site at http://www.prc.gov. Interested persons may submit comments on the Petition and 
Proposal Ten no later than September 17, 2015. Reply comments are due 
no later than September 28, 2015. Pursuant to 39 U.S.C. 505, the 
Commission designates Kenneth R. Moeller to serve as an officer of the 
Commission (Public Representative) representing the interests of the 
general public in this proceeding.

IV. Ordering Paragraphs

    It is ordered:
    1. The Commission establishes Docket No. RM2015-19 for 
consideration of the matters raised by the Petition of the United 
States Postal Service Requesting Initiation of a Proceeding to Consider 
a Proposed Change in Analytical Principles (Proposal Ten), filed August 
12, 2015.
    2. Comments are due no later than September 17, 2015. Reply 
comments are due no later than September 28, 2015.
    3. Pursuant to 39 U.S.C. 505, the Commission appoints Kenneth R. 
Moeller 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.
Shoshana M. Grove,
Secretary.
[FR Doc. 2015-20633 Filed 8-20-15; 8:45 am]
 BILLING CODE 7710-FW-P