[Federal Register Volume 84, Number 237 (Tuesday, December 10, 2019)]
[Proposed Rules]
[Pages 67402-67404]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-26488]


=======================================================================
-----------------------------------------------------------------------

POSTAL REGULATORY COMMISSION

39 CFR part 3050

[Docket No. RM2020-2; Order No. 5336]


Periodic Reporting

AGENCY: Postal Regulatory Commission.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

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 Ten). This 
document

[[Page 67403]]

informs the public of the filing, invites public comment, and takes 
other administrative steps.

DATES: Comments are due: February 28, 2020.

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. Notice and Comment
IV. Ordering Paragraphs

I. Introduction

    On November 29, 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 Ten.
---------------------------------------------------------------------------

    \1\ Petition of the United States Postal Service for the 
Initiation of a Proceeding to Consider Proposed Changes in 
Analytical Principles (Proposal Ten), November 29, 2019 (Petition). 
The Postal Service filed a notice of filing of non-public materials 
relating to Proposal Ten. Notice of Filing of USPS-RM2020-2/1 and 
USPS-RM2020-2/NP1 and Application for Nonpublic Treatment, November 
29, 2019.
---------------------------------------------------------------------------

II. Proposal Ten

    Background. Postmasters are compensated through the Workload 
Service Credit (WSC) system where pay grade is determined by credits 
earned. Petition, Proposal Ten at 1. These credits are earned in 
various ways, such as the amount of revenue flowing through a post 
office and for performing non-revenue activities like serving post 
office boxes and performing administrative functions. Id. Currently, 
the costs of Postmaster compensation are attributed to products based 
on the regression analysis presented in Docket No. R84-1, which 
measures the variability between WSCs and Postmaster costs. Id. The 
Postal Service indicates that, given the time that has passed since 
Docket No. R84-1, investigation into the Postmaster compensation costs 
was necessary. Id. at 1-2.
    Proposal. The current methodology relies upon a regression using 
only ten data points because, at the time the model was developed in 
Docket No. R84-1, the Postal Service lacked data on WSCs for individual 
post offices. Id. at 3. However, the Postal Service now routinely 
collects data on Postmaster workload for operational purposes. Id. 
Proposal Ten seeks to update and improve the variabilities for 
calculating attributable Postmaster costs based on a new study of 
Postmaster costs ``that relies upon operational Postmaster data and 
reflects the current structure of Postmaster activities and 
compensation.'' \2\ The methodology proposed by the Postal Service for 
the computation of Postmaster compensation volume-variability combines 
the shift in the number of Postmasters from one EAS grade to the next 
with changes in the resulting salary. Petition, Proposal Ten at 3-5. 
Thus, the value for Postmaster compensation volume-variability comes 
from two sources: (1) The percentage change in the number of 
Postmasters moving from one grade to the next; and (2) the percentage 
increase in the minimum salary across the two EAS grades. Id. at 5; see 
also id. at Table 1.
---------------------------------------------------------------------------

    \2\ Id. at 1. The Postal Service's Petition was accompanied by a 
study supporting its proposal. See Michael D. Bradley, Investigating 
the Variability of Postmaster Costs,* November 29, 2019.
---------------------------------------------------------------------------

    Impact. Currently, a single variability is applied to accrued 
Postmaster compensation costs. Id. at 6. Under the Postal Service's 
proposed methodology, different variabilities are estimated for each 
EAS grade. Id. The accrued cost for each grade is multiplied by its 
estimated variability, resulting in volume-variable costs for each 
grade. Id. Those grade-level volume-variable costs are summed to get 
the total volume-variable costs for Postmaster compensation. Id. The 
total volume-variable cost is then divided by total accrued cost to 
obtain the overall volume-variability. Id.
    The Postal Service states that the proposed approach results in 
lower volume-variability for Postmaster compensation costs for three 
reasons. Id. First, the volume-variability of Docket No. R84-1 was 
``overstated due to a computational error'' and correcting the error 
reduces the volume-variability to 13 percent. Id.
    Second, the Postal Services notes that Post Office Structure Plan 
(POStPlan) eliminated lower EAS grades, where movement to the next 
grade-level and salary increases occurred more rapidly, resulting in 
higher volume-variability.\3\ This is significant because, as mail 
volume increases, WSCs are earned resulting in EAS grade changes and 
salary increases that, in turn, increase Postmaster compensation costs. 
In the higher EAS grades, moving to the next grade-level requires much 
larger increases in WSCs. Thus, more typical increases in WSCs for 
these higher EAS grades are less likely to cause Postmasters to move up 
to a higher minimum salary and increase Postmaster compensation costs. 
Id. at 6. Accordingly, a given percentage increase in volume is, under 
the current structure, less likely to induce an increase in Postmaster 
compensation cost, which in turn has the effect of creating a lower 
volume-variability. Id. at 6-7.
---------------------------------------------------------------------------

    \3\ Id. The POStPlan changed the hours at smaller post offices 
and changed the Postmaster compensation structure. Id. at 2. 
Following the implementation of POStPlan, post offices that were in 
the EAS grades below EAS-18 are no longer in the EAS system. Id.
---------------------------------------------------------------------------

    Third, the Postal Services notes that the current approach measures 
how quickly salaries would rise from an overall increase in WSCs. Id. 
at 7. This is suboptimal because ``each EAS grade has a wide band of 
WSCs associated with it, and most post offices have a level of WSCs 
such that typical increases in their WSCs will keep the Postmaster in 
the same [EAS] grade.'' Id. The Postal Service states that the proposed 
approach would account for the amount of WSCs Postmasters actually earn 
and how quickly the existing complement of Postmasters would move up a 
grade if WSCs were increased, neither of which are currently measured. 
Id.
    The Postal Service acknowledges that reduced volume-variability 
causes a reduction in total volume-variable costs for Postmaster 
compensation and proportional reductions ``per piece by product.'' Id. 
However, the Postal Service notes that ``Postmaster costs per piece are 
typically quite small'' thus ``the overall impacts on volume[-]variable 
costs per piece are generally quite small.'' Id.

III. Notice and Comment

    The Commission establishes Docket No. RM2020-2 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 Ten no later 
than February 28, 2020. Pursuant to 39 U.S.C. 505, Lawrence Fenster is 
designated as an officer of the Commission (Public Representative) to 
represent the

[[Page 67404]]

interests of the general public in this proceeding.

IV. Ordering Paragraphs

    It is ordered:
    1. The Commission establishes Docket No. RM2020-2 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 Ten), filed November 29, 2019.
    2. Comments by interested persons in this proceeding are due no 
later than February 28, 2020.
    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.
Darcie S. Tokioka,
Acting Secretary.
[FR Doc. 2019-26488 Filed 12-9-19; 8:45 am]
BILLING CODE 7710-FW-P