[Federal Register Volume 85, Number 230 (Monday, November 30, 2020)]
[Proposed Rules]
[Pages 76504-76505]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-25825]


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POSTAL REGULATORY COMMISSION

39 CFR Part 3050

[Docket No. RM2021-1; Order No. 5756]


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

DATES: Comments are due: February 26, 2021.

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 Seven
III. Notice and Comment
IV. Ordering Paragraphs

I. Introduction

    On November 9, 2020, 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 Seven.
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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 Seven), November 9, 2020 (Petition). 
The Postal Service also filed a notice of non-public materials 
relating to Proposal Seven. Notice of Filing of USPS-RM2021-1-1 and 
RM2021-1-NP1 and Application for Nonpublic Treatment, November 9, 
2020.
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II. Proposal Seven

    Background. Proposal Seven relates to updating the variabilities 
for certain types of purchased highway transportation contracts. 
Petition at 1. In recent years, the Postal Service has made two major 
operational changes to its highway transportation network: Increased 
reliance on additional highway transportation during the seasonal 
volume peak, and the introduction of Dynamic Route Optimization (DRO) 
contracts. Id. The Postal Service characterizes both operational 
changes as large enough to qualify as major structural reorganizations 
which, in keeping with Commission guidance, require updating its 
variabilities. Id. Along with the Petition, the Postal Service filed a 
report by Professor Michael D. Bradley supporting the proposal.\2\ The 
Postal Service additionally filed operational data, econometric 
programs and results, and additional under-seal materials providing 
detail on competitive products.\3\
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    \2\ Professor Michael D. Bradley (Department of Economics, 
George Washington University), Research on Updating Purchased 
Highway Transportation Variabilities to Account for Structural 
Changes (Bradley Study).
    \3\ See Library Reference USPS-RM2021-1-1 (showing operational 
data, programs, and results); Library Reference USPS-RM2021-1-NP1 
(showing detail for competitive products).
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    Proposal. The Postal Service's proposal seeks to update its cost-
to-capacity variability estimates for Christmas routes based on data 
from the Transportation Contract Support System, the same data source 
that was used to estimate the established cost-to-capacity 
variabilities for regular transportation. Petition at 2. The Postal 
Service has provided estimates for four variability equations relating 
to the seasonal peak: Christmas Intra sectional center facility (SCF) 
van transportation, Christmas Intra SCF tractor trailer transportation, 
Christmas Inter SCF transportation, and Christmas network distribution 
center transportation. Id. The Postal Service states that the provided 
variability estimates follow established methodology, and that in all 
four instances, estimated variability has increased over the current 
estimates. Id. at 2-3.
    With regards to the DRO contracts, the Postal Service notes 
differences from traditional purchased highway

[[Page 76505]]

transportation: They do not have fixed routes and are paid at a per-
mile rate in lieu of annual contract awards. Id. at 3. Noting a 
substantial increase in DRO transportation costs from FY 2018 to FY 
2019, the Postal Service states that the differences between DRO and 
traditional purchased highway transportation have become material, 
making it appropriate to investigate whether DRO contracts have a 
different variability than traditional contracts. Id. at 3-4. The 
Postal Service provided estimates of three DRO variabilities: Van, 
tractor-trailer, and both. Id. at 4. The Postal Service additionally 
reestimated variabilities for traditional van, tractor-trailer, and 
intra-city transportation. Id. at 4-5. The Postal Service states that 
all variabilities were estimated using established methodology. Id. at 
4-5.
    Rationale and impact. The Postal Service notes that the new 
variability estimates are all higher than the existing estimates. Id. 
at 6. It notes that the absolute dollar increase in competitive 
attributable cost is larger than the same increase in market dominant 
attributable cost, but that the percentage increases are about the 
same. Id. The Postal Service states that the impact on the attributable 
costs of each product will vary based on the proportion of the costs of 
each product that are highway costs. Id. at 7. The Postal Service 
provides a table that shows the change in unit transportation cost for 
different products. Id. at 8.

III. Notice and Comment

    The Commission establishes Docket No. RM2021-1 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 Seven no later 
than February 26, 2021. 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. RM2021-1 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 Seven), filed November 9, 2020.
    2. Comments by interested persons in this proceeding are due no 
later than February 26, 2021.\4\
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    \4\ The Commission reminds interested persons that its revised 
and reorganized Rules of Practice and Procedure became effective 
April 20, 2020, and should be used in filings with the Commission 
after April 20, 2020. The new rules are available on the 
Commission's website and can be found in Order No. 5407. Docket No. 
RM2019-13, Order Reorganizing Commission Regulations and Amending 
Rules of Practice, January 16, 2020 (Order No. 5407).
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    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.
Erica A. Barker,
Secretary.
[FR Doc. 2020-25825 Filed 11-27-20; 8:45 am]
BILLING CODE 7710-FW-P