[Federal Register Volume 80, Number 229 (Monday, November 30, 2015)]
[Proposed Rules]
[Pages 74741-74742]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-30319]


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POSTAL REGULATORY COMMISSION

39 CFR Part 3050

[Docket No. RM2016-3; Order No. 2836]


Periodic Reporting

AGENCY: Postal Regulatory Commission.

ACTION: Notice of proposed rulemaking.

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

DATES: Comments are due: December 4, 2015. Reply Comments are due: 
December 9, 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. Summary of Proposals
III. Initial Commission Action
IV. Ordering Paragraphs

I. Introduction

    On November 20, 2015, the Postal Service filed a petition pursuant 
to 39 CFR 3050.11 requesting that the Commission initiate an informal 
rulemaking proceeding to consider changes to analytical principles 
relating to the Postal Service's periodic reports.\1\ Proposal Twelve 
is attached to the Petition and identifies the proposed analytical 
method change that relates to the treatment of costs for vehicles used 
on city carrier letter routes within various cost components of the 
Cost and Revenue Analysis (CRA) report. Id. The Postal Service 
concurrently filed two library references, along with an application 
for non-public treatment for one.\2\
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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 Twelve), November 20, 2015, at 1 
(Petition).
    \2\ Notice of Filing of USPS-RM2016-3/1, USPS-RM2016-3/NP1, and 
Application for Nonpublic Treatment, November 20, 2015 (Notice). 
Library Reference USPS-RM2016-3/1 contains workbooks displaying the 
calculation and cost impacts of implementing the proposed 
methodology. Library Reference USPS-RM2016-3/NP1 contains supporting 
non-public material. The Notice incorporates by reference the 
Application for Non-Public Treatment of Materials contained in 
Attachment Two to the December 29, 2014, United States Postal 
Service Fiscal Year 2014 Annual Compliance Report. Notice at 1. See 
39 CFR part 3007 for information on access to non-public material.
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II. Summary of Proposal

    The Postal Service requests this rulemaking to re-align certain 
calculations within the CRA report to be consistent with the 
methodology approved by the Commission in Proposal Thirteen.\3\ 
Petition at 1. Acknowledging that the Postal Service will soon submit 
the FY 2015 Annual Compliance Report, the Postal Service emphasizes 
that immediate consideration of Proposal Twelve is necessary to avoid a 
mismatch between the current methodology for the treatment of ancillary 
vehicle cost matters and the framework approved in Proposal Thirteen. 
Id. at 1-2. Under Proposal Twelve, the Postal Service proposes two 
methodological changes:

[[Page 74742]]

Attribution of city carrier letter route vehicle costs and calculation 
of office and street proportions that are used in the calculation of 
costs relating to city carrier labor. Petition, Proposal Twelve at 1.
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    \3\ Docket No. RM2015-7, Order No. 2792, Order Approving 
Analytical Principles Used in Periodic Reporting (Proposal 
Thirteen), October 29, 2015.
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A. Attributing City Carrier Letter Route Vehicle Costs

    The Postal Service proposes to change the methodology for 
attributing costs relating to vehicles used on city carrier letter 
routes, including Motor Vehicle Service (MVS) Labor in Cost Segment 
12.1, MVS Supplies and Materials in Cost Segment 12.2, and Vehicle 
Depreciation in Cost Segment 20. Id.
    Current methodology: The Postal Service explains that currently 
city carrier letter route vehicle costs are divided into two pools: 
Delivery Activities and Network Travel for motorized letter routes. Id. 
at 2. The Postal Service reports that ``[i]n FY 2014, these respective 
proportions were approximately 42 and 58 percent.'' Id. The Postal 
Service states that the current methodology multiplies each cost pool 
by the appropriate variability to determine attributable costs and that 
these ``attributable costs are assigned to products in the same 
proportions as Cost Segment 7 letter route Delivery Activities costs.'' 
Id.
    Proposed Methodology: Building upon the new methodology approved by 
the Commission in Proposal Thirteen for the treatment of labor costs on 
city delivery letter routes, the Postal Service proposes to ``calculate 
the attributable vehicle costs by multiplying the letter route vehicle 
costs by the new overall letter route street variability'' and to 
assign the attributable costs to products using the proportions based 
on all letter route street costs. Id. The Postal Service represents 
that Proposal Twelve would also change the component structure of the 
CRA for Cost Segments 12 and 20. Id. at 4. Specifically, in Cost 
Segment 12, the Network Travel components 86 and 95 would be removed 
and components 83 and 92, currently named Delivery Activities, would be 
renamed City Delivery Letter Routes. Id. In Cost Segment 20, components 
222 and 225 for Delivery Activities and Network Travel would be 
removed. Id. Component 223 would be established as City Delivery 
Special Purpose Routes (SPR) to assign SPR vehicle depreciation costs. 
Id. Finally, component 221 would be reactivated and named City Delivery 
Letter Routes. Id.
    Rationale: The Postal Service represents that Proposal Twelve would 
align the calculation of vehicle use costs with the new street time 
methodology. Id. at 5. The Postal Service claims that this treatment of 
city carrier vehicle costs is consistent with the long-standing 
practice of linking the treatment with the direct labor that uses these 
vehicles. Id. The Postal Service asserts that the ``proposed 
methodology for vehicle use cost[s] recognizes that letter route 
carriers use their vehicles throughout their time on the street, while 
delivering mail, traversing the route, and while traveling to and from 
the route.'' Id.
    Impact: The Postal Service anticipates that under Proposal Twelve 
higher proportions of MVS Labor, MVS Supplies, and Vehicle Depreciation 
costs for city carriers will be attributed to products. Id. The Postal 
Service states that currently ``Network Travel is not attributed and 
letter route Delivery Activities costs has a variability of 43 percent, 
which results in a combined variability of 18 percent.'' Id. Under 
Proposal Twelve, the Postal Service represents that ``the city carrier 
letter route costs for MVS Labor, MVS Supplies, and Vehicle 
Depreciation costs are attributed in the same proportion as all letter 
route street activities in Cost Segment 7, which results in an 
attribution level of 36 percent.'' Id. at 5-6. For FY 2014, the Postal 
Service projects that Proposal Twelve would increase attributable costs 
by $185 million. Id. at 6. The Postal Service illustrates the cost 
impact by product for Proposal Twelve in Table 1. Id. at 7.

B. Calculating Office and Street Proportions

    The Postal Service proposes a minor change to the methodology for 
calculating office and street proportions that are used in the 
calculation of costs relating to city carrier labor for Vehicle Hire in 
Cost Segment 12.3 and Carfare and Driveout in Cost Segment 13.2. Id. at 
1.
    Current methodology: The Postal Service explains that it currently 
``develops office and street proportions for foot and motorized routes 
using [In-Office Cost System] IOCS office costs by route type and 
street costs by delivery mode.'' Id. at 2.
    Proposed Methodology: Building upon the new methodology approved by 
the Commission in Proposal Thirteen, the Postal Service proposes to 
develop office and street proportions for foot and motorized routes 
using Delivery Operations Information System workhours. Id. The Postal 
Service would also use city carrier costs for Delivery Activities and 
Network Travel to further divide the street proportions among these 
components. Id. at 4.
    Rationale: The Postal Service claims that ``Proposal Twelve would 
also align the calculation of office and street proportions with the 
new street time methodology.'' Id. at 5.
    Impact: The Postal Service illustrates the change in office and 
street proportions for Proposal Twelve in Table 2. Id. at 8.

III. Initial Commission Action

    The Commission establishes Docket No. RM2016-3 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 Twelve no later than December 4, 2015. Reply comments are due 
no later than December 9, 2015. Pursuant to 39 U.S.C. 505, Jennaca D. 
Upperman 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. RM2016-3 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 (Proposal Twelve), filed November 20, 2015.
    2. Comments are due no later than December 4, 2015. Reply comments 
are due no later than December 9, 2015.
    3. Pursuant to 39 U.S.C. 505, the Commission appoints Jennaca D. 
Upperman to serve as 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.
Stacy L. Ruble,
Secretary.
[FR Doc. 2015-30319 Filed 11-27-15; 8:45 am]
 BILLING CODE 7710-FW-P