[Federal Register Volume 84, Number 139 (Friday, July 19, 2019)]
[Proposed Rules]
[Pages 34838-34839]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-15333]


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POSTAL REGULATORY COMMISSION

39 CFR Part 3050

[Docket No. RM2019-10; Order No. 5153]


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 Five). 
This document informs the public of the filing, invites public comment, 
and takes other administrative steps.

DATES: Comments are due: August 26, 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 Five
III. Notice and Comment
IV. Ordering Paragraphs

I. Introduction

    On July 12, 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 the 
Postal Service's periodic reports.\1\ The Petition identifies the 
proposed analytical changes filed in this docket as Proposal Five.
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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 Five), July 12, 2019 (Petition). The 
Postal Service also filed a notice of filing non-public material 
relating to Proposal Five. Notice of Filing of USPS-RM2019-10/NP1 
and Application for Nonpublic Treatment, July 12, 2019.
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II. Proposal Five

    Background. Proposal Five relates to the methodology used to 
calculate indemnity costs for both Domestic and International 
Indemnities. Petition, Proposal Five at 1-2.
    The Postal Service previously submitted a proposal to change the 
treatment of International Indemnities in response to the Commission's 
FY 2017 Annual Compliance Determination (ACD).\2\ In the FY 2018 ACD, 
the Commission found that, despite the change in the treatment of 
International Indemnities, Outbound International Insurance costs 
exceeded revenue during FY 2018.\3\ The Commission noted that ``[w]hen 
additional insurance is purchased for a mailpiece, all of the 
associated indemnity is assigned to the Outbound International 
Insurance product, rather than the amount of the indemnity greater than 
the value of the built-in insurance.'' FY 2018 ACD at 108. The 
Commission also found that ``the data the Postal Service provided 
concerning Outbound International Insurance raises concerns about the 
accuracy of the revenue data, as discrepancies exist between published 
rates and reported revenue per piece.'' Id. Accordingly, the Commission 
directed the Postal Service to investigate the discrepancies between 
``published rates and reported revenue per piece[ ]'' and file a report 
within 120 days of issuance of the ACD ``on the results of this 
investigation and on the feasibility of disaggregating indemnities 
between insurance included in the product and additional insurance 
purchased for the mailpiece.'' Id.
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    \2\ Id.; see Docket No. RM2018-9, Petition of the United States 
Postal Service for the Initiation of a Proceeding to Consider 
Proposed Changes in Analytical Principles (Proposal Six), June 26, 
2018; Docket No. RM2018-9, Order on Analytical Principles Used in 
Periodic Reporting (Proposal Six), August 28, 2018 (Order No. 4798).
    \3\ Docket No. ACD2018, Annual Compliance Determination, April 
12, 2019, at 108 (FY 2018 ACD).
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    In response, the Postal Service indicates that it has 
``investigated the feasibility of disaggregating indemnities between 
insurance included in the product and additional insurance purchased 
for the mailpiece, and has developed the methodology presented in this 
proposal'' for both Domestic and International Indemnities. Petition, 
Proposal Five at 2.
    Proposal. The Postal Service's proposal seeks to revise the 
methodology used to calculate costs for both Domestic and International 
Indemnities ``to more accurately account for indemnity coverage that is 
included in the base price of a product, versus indemnity coverage that 
is purchased in addition to the base price.'' Id. at 1. The proposal 
would modify the decision rule that currently ``ignores the insurance 
included with the product when the indemnity exceeds the predetermined 
amount ($50, $100, or $200, depending on the product).'' Id. at 2. 
Under the existing methodology, ``any additional insurance purchased 
beyond that included with the product was responsible for the 
incurrence of the entire insurance indemnity.'' Id. The proposal would 
revise the costing of indemnities by attributing the portion of an 
indemnity up to the predetermined base amount to the product. Id.

[[Page 34839]]

    Rationale and impact. As a result of its investigation of the 
available data, the Postal Service states that ``it is possible to 
distinguish between the product portion of the indemnity and the 
insurance portion of the indemnity for indemnities over the included 
amount.'' Id. The Postal Service concludes that Proposal Five will 
``more properly align indemnity costs with the parent product and the 
insurance service.'' Id. at 3.
    The Postal Service states that Proposal Five would change Indemnity 
costs in Cost Segment 20 of the Cost and Revenue Analysis and the 
International Cost and Revenue Analysis. Id. The Postal Service reports 
that the domestic impact on every mail class would be less than 1 
percent and the ``biggest impact is to shift 26 percent of Indemnities 
costs from Insurance to the other products and mail classes.'' Id. The 
Postal Service states that only two domestic competitive product-types 
(Priority Mail Express and Priority Mail) would have received 
``additional indemnity costs in FY 2018'' under Proposal Five. Id. at 
3-4. The Postal Service states that the ``most extreme possible impacts 
of the proposal would be immaterial changes affecting either the non-
[negotiated service agreement] NSA portion or the NSA portion of these 
product types.'' Id. at 4.
    The Postal Service reports that the international impact of 
Proposal Five ``shifts costs from Outbound Insurance to Priority Mail 
International, Global Express Guaranteed and Priority Mail Express 
International.'' Id. at 5. The Postal Service claims that ``Outbound 
insurance would have had positive contribution in FY 2018'' under 
Proposal Five and that ``contribution from each of the three affected 
international mail categories would have remained positive.'' Id.

III. Notice and Comment

    The Commission establishes Docket No. RM2019-10 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 
Five no later than August 26, 2019. Pursuant to 39 U.S.C. 505, the 
Commission designates Natalie R. Ward 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. RM2019-10 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 Five), filed July 
12, 2019.
    2. Comments by interested persons in this proceeding are due no 
later than August 26, 2019.
    3. Pursuant to 39 U.S.C. 505, the Commission appoints Natalie R. 
Ward 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.
Ruth Ann Abrams,
Acting Secretary.
[FR Doc. 2019-15333 Filed 7-18-19; 8:45 am]
BILLING CODE 7710-FW-P