[Federal Register Volume 84, Number 126 (Monday, July 1, 2019)]
[Proposed Rules]
[Pages 31277-31278]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-13930]
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POSTAL REGULATORY COMMISSION
39 CFR Part 3050
[Docket No. RM2019-6; Order No. 5133]
Periodic Reporting
AGENCY: Postal Regulatory Commission.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Commission is acknowledging a recent filing requesting the
Commission initiate a rulemaking proceeding to consider changes to
analytical principles relating to periodic reports (Proposal One). This
document informs the public of the filing, invites public comment, and
takes other administrative steps.
DATES: Comments are due: August 20, 2019.
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 One
III. Notice and Comment
IV. Ordering Paragraphs
I. Introduction
On June 21, 2019, the Postal Service filed a petition pursuant to
39 CFR 3050.11 requesting that the Commission initiate a rulemaking
proceeding to consider changes to analytical principles relating to
periodic reports.\1\ The Petition identifies the proposed analytical
changes filed in this docket as Proposal One.
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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 One), June 21, 2019 (Petition).
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II. Proposal One
Background. Proposal One relates to the methodology used to
calculate attributable Special Purpose Route (SPR) city carrier costs.
Carriers on SPRs ``deliver packages to addresses across a designated
geographic area and collect mail from specified collection points.''
Petition, Proposal One at 1. The SPR carriers ``perform some or all of
a number of different activities: Organize their mail in the office,
load their vehicles, drive to the first delivery or collection spot,
drive between delivery and collection spots, effect delivery or
collection while out of the office, return to the office from the last
delivery or collection spot, and unload their vehicles. These
activities take place within three operations[:] regular Monday through
Saturday delivery, Sunday delivery, and collection.'' Id. The specific
activities performed by each carrier depend on the operation. Id.
The current methodology used to attribute the SPR city carrier
costs is based on a study that was presented by the Postal Service in
Docket No. R97-1. Id. The Postal Service contends that the Docket No.
R97-1 study should be updated because there have been ``substantial
changes'' in the activities performed by SPR carriers. Id.
Specifically, the Postal Service states that ``[a]s package volume
has grown, the focus on SPR activities has shifted toward delivery and
away from collection.'' Id. at 1-2. The Postal Service comments that
the ``development of Sunday package delivery has also shifted SPR
activities toward delivery.'' Id. at 2. The Postal Service contends
that these changes provide ``motivation for an update and refinement''
of the Docket No. R97-1 study. Id. at 1.
Proposal. The Postal Service's proposal seeks to revise the
methodology used to attribute SPR city carrier costs by replacing the
study currently used by the Postal Service's model with a proposed
study that the Postal Service believes more accurately reflects SPR
carrier activities and cost drivers.\2\
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\2\ A New Study of Special Purpose Route Carrier Costs,
Professor Michael D. Bradley, June, 21, 2019 (Proposed Study).
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The Postal Service's proposed study estimates separate variability
models for regular delivery, Sunday delivery, and collection. Petition,
Proposal One at 3. It uses the total hours involved in each activity as
the dependent variables in these regressions to ensure that ``any
connection [of these associated times] to volume [is] incorporated into
the estimated variability.'' Id.
The explanatory variables in the proposed models include the cost
drivers and characteristic variables that control for non-volume
variations in hours. Id. The Postal Service states that a ``number of
different functional forms are estimated, and a variety of different
econometric techniques are investigated.'' Id. at 3-4.
The proposed study calculates separate cost pools for regular
delivery, Sunday delivery, and collection. Id. at 4. The Postal Service
states that ``[e]ach cost pool is based upon the hours required to
complete the included activities and the wages associated with the
types of carrier accruing the hours''. Id.
Rationale and impact. The Postal Service states that the
``objective of this proposal is to update and improve the methodology
for calculating attributable Special Purpose Route (SPR) city carrier
costs.'' Id. at 1. The Postal Service contends that Proposal One would
improve the analysis of SPR costs ``in a number of ways.'' Id. at 3.
First, the Postal Service avers that the proposed study's structure
``reflects current operational practice and management.'' Id. Second,
the Postal Service states that it ``makes use of ongoing operational
databases'' to gather data from every SPR location, ``greatly expanding
the scope of the analysis.'' Id. Third, the Postal Service claims that
the proposed study ``explicitly accounts for the December peak in
package volumes in determining product costs and allows for other
seasonal variation throughout the year.'' Id. Fourth, the Postal
Service states that the proposed study ``incorporates the differences
in wages for different types of SPR carriers when forming cost pools.''
Id. Fifth, the Postal Service asserts that the proposed study
``explicitly models Sunday package delivery costs based upon the actual
packages delivered.'' Id.
In terms of impact, the Postal Service's proposed study produces a
higher overall variability than the existing study. Id. at 4. The
Postal Service calculates the FY 2018 variability for SPRs as 56.3
percent. Id. Under the proposed study, the overall variability would
rise to 61.4 percent. Id. The Postal Service explains that this
increase is a result of a ``higher regular delivery variability
offsetting a slightly lower collection variability and the estimation
of an actual Sunday variability in place of the assumption of 100
percent variability.'' Id.
[[Page 31278]]
The Postal Service has observed two major cost shifts under the
proposed study: (1) A shift from letter and flat shaped mail to
packages; and (2) a shift from market dominant products to competitive
products. Id. at 5. The Postal Service asserts that these effects
result from ``the updated data that underlie the new study capture the
shift in SPR activities from collection to delivery that has taken
place as package volumes have increased.'' Id. The Postal Service notes
that ``SPR delivery is a package-related cost, whereas collection
includes both letters and flats.'' Id. The Postal Service concludes
that ``[t]he activity shift toward delivery also underlies the cost
shift from market dominant to competitive products.'' Id.
III. Notice and Comment
The Commission establishes Docket No. RM2019-6 for consideration of
matters raised by the Petition. More information on the Petition may be
accessed via the Commission's website at http://www.prc.gov. Interested
persons may submit comments on the Petition and Proposal One no later
than August 20, 2019. Pursuant to 39 U.S.C. 505, Lawrence Fenster 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. RM2019-6 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 One), filed June 21, 2019.
2. Comments by interested persons in this proceeding are due no
later than August 20, 2019.
3. Pursuant to 39 U.S.C. 505, the Commission appoints Lawrence
Fenster 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.
Stacy L. Ruble,
Secretary.
[FR Doc. 2019-13930 Filed 6-28-19; 8:45 am]
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