[Federal Register Volume 86, Number 197 (Friday, October 15, 2021)]
[Proposed Rules]
[Pages 57385-57388]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-22476]


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POSTAL REGULATORY COMMISSION

39 CFR Part 3055

[Docket No. RM2022-1; Order No. 6004]


Service Performance and Customer Satisfaction Reporting

AGENCY: Postal Regulatory Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Commission is considering possible improvements to the 
quality, accuracy, or completeness of data provided by the Postal 
Service in its annual compliance reports. This notice informs the 
public of the filing, invites public comment, and takes other 
administrative steps.

DATES: Comments are due: March 25, 2022.

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. Background
II. Developments Since the Conclusion of the Docket No. RM2011-3 
Rulemaking
III. Procedures To Be Followed in This Proceeding
IV. Ordering Paragraphs

    Pursuant to 39 U.S.C. 3652(e), the Commission is establishing this 
proceeding to consider possible improvements to the quality, accuracy, 
or completeness of data provided by the Postal Service in its annual 
compliance reports.\1\
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    \1\ Sections 3652 (a) through (c) of title 39 of the United 
States Code describes reports that the Postal Service is required to 
provide to the Commission to enable the evaluation of Postal Service 
compliance with the requirements and standards of the Postal 
Accountability and Enhancement Act (PAEA). Section 3652(e) 
authorizes the Commission to prescribe the form and content of the 
Postal Service's reports and to initiate proceedings to improve the 
quality, accuracy and completeness of the data provided.
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I. Background

    This is the second such proceeding initiated by the Commission.\2\ 
In the first proceeding, the Commission identified four study areas as 
near-term priorities for further research.\3\ Those four study areas 
were: The reestimation of volume variability of city carrier street 
time; the recalculation of the cost elasticity of purchased highway 
transportation capacity; the recalculation of postmaster cost 
variability; and the reestimation of product shares of window service 
costs.\4\
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    \2\ See Docket No. RM2011-3, Notice and Order of Proposed 
Rulemaking on Periodic Reporting, November 18, 2010 (Order No. 589). 
The Notice and Order of Proposed Rulemaking on Periodic Reporting 
was published in the Federal Register on November 24, 2010. See 79 
FR 71643 (November 24, 2010).
    \3\ See Docket No. RM2011-3, Order Setting Near-Term Priorities 
and Requesting Related Reports, January 18, 2013 (Order No. 1626).
    \4\ Order No. 1626 at 3. Within those four study areas, the 
Commission identified specific issues that were more appropriately 
considered in the medium-term or long-term. See, e.g., id. at 7 
(whether the regression model of purchased transportation cost 
variability would benefit from further refinement).
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    Two of the four study areas produced changes to the analytical 
principles being used by the Postal Service. The first of those changes 
involved city carrier street time and consisted of an update of the 
city carrier letter route street time model.\5\ The second change 
involved purchased highway transportation and consisted of an update of 
the estimated variabilities of purchased highway transportation 
costs.\6\ By the time Docket No. RM2011-3 was closed, two of the study 
areas (those involving postmaster cost variabilities and window service 
costs) had produced no changes to existing analytical principles.\7\
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    \5\ See Docket No. RM2015-7, Order Approving Analytical 
Principles Used in Periodic Reporting (Proposal Thirteen), October 
29, 2015 (Order No. 2792). A second proposed change to city carrier 
street time analytical principles was rejected. See Docket No. 
RM2015-2, Order Denying Changes in Analytical Principles Used in 
Periodic Reporting (Proposal Nine), September 22, 2016 (Order No. 
3526).
    \6\ See Docket No. RM2014-6, Order on Analytical Principles Used 
in Periodic Reporting (Proposals Three through Eight), September 10, 
2014, at 15, 27 (Order No. 2180).
    \7\ See Docket No. RM2011-3, Order Closing Docket, November 3, 
2015, at 5 (Order No. 2798). At the time it closed the docket, the 
Commission stated its anticipation that studies of cost attribution 
of postmaster and window service time might be revisited in future 
dockets after full implementation of the Postal Service's POStPlan. 
Order No. 2798 at 5. POStPlan was an initiative by the Postal 
Service ``to match post office retail hours with workload.'' Docket 
No. N2012-2, Advisory Opinion on Post Office Structure Plan, August 
23, 2012. The Postal Service subsequently submitted a proposal to 
change the analytical principles involving postmaster cost 
variabilities. See Docket No. RM2020-2, 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. That proposal is discussed infra.
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II. Developments Since the Conclusion of the Docket No. RM2011-3 
Rulemaking

A. City Carrier Street Time

    On May 31, 2017, the Commission established Docket No. PI2017-1 to 
evaluate the Postal Service's progress in its ongoing efforts to update 
its city carrier cost models and data collection capabilities.\8\ The 
proceedings in this docket focused on the feasibility of a top-down, 
single-equation model to improve the Postal Service's variability 
estimates of city carrier cost drivers. On November 2, 2018, the 
Commission issued an interim order directing the Postal Service to 
provide an expanded dataset of city carrier delivery data and to report 
quarterly on the status of developing the expanded dataset.\9\ On 
February 27, 2020, the Postal Service filed its fifth and final report 
on the status of its efforts to develop an

[[Page 57386]]

expanded data set.\10\ On March 1, 2021, Docket No. PI2017-1 was 
closed.\11\
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    \8\ See Docket No. PI2017-1, Notice and Order Establishing 
Docket Concerning City Carrier Special Purpose and Letter Route 
Costs and to Seek Public Comment, May 31, 2017, at 65-66 (Order No. 
3926). The Notice and Order Establishing Docket Concerning City 
Carrier Special Purpose and Letter Route Costs and to Seek Public 
Comment was published in the Federal Register on June 6, 2017. See 
82 FR 26146 (June 6, 2017).
    \9\ Docket No. PI2017-1, Interim Order, November 2, 2018 (Order 
No. 4869).
    \10\ Docket No. PI2017-1, Fifth Status Report of the United 
States Postal Service in Response to Order No. 4869, February 27, 
2020.
    \11\ See Dockets Subject to Automatic Closure in October 2021, 
available at https://www.prc.gov/sites/default/files/DocketsPAC/AutoclosurePlaceholder.pdf.
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    While Docket No. PI2017-1 was pending, the Commission considered 
several Postal Service proposals to change various accepted analytical 
principles related to city carrier costing:
    Docket No. RM2017-8. On December 1, 2017, the Commission approved a 
Postal Service proposal to establish a procedure for annually updating 
the estimated proportion of city carrier letter route time spent 
delivering parcels.\12\
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    \12\ Docket No. RM2017-8, Order on Analytical Principles Used in 
Periodic Reporting (Proposal Four), December 1, 2017 (Order No. 
4259). In this connection, the Commission directed the Postal 
Service to provide supporting materials in its Annual Compliance 
Report to help ensure that the Postal Service reports accurate data 
concerning city carrier letter route street time evaluations. Order 
No. 4259 at 21-22.
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    Docket No. RM2017-9. On February 6, 2018, the Commission approved a 
modified version of a Postal Service proposal to update the methodology 
for dividing accrued city carrier costs between the letter route and 
special purpose route groups in the In-Office Cost System (IOCS).\13\
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    \13\ Docket No. RM2017-9, Order on Analytical Principles Used in 
Periodic Reporting (Proposal Five), February 6, 2018 (Order No. 
4399).
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    Docket No. RM2017-13. On December 15, 2017, the Commission approved 
a Postal Service proposal to change the current City Carrier Cost 
System methodology for estimating Delivery Point Sequence volume 
proportions.\14\
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    \14\ Docket No. RM2017-13, Order on Analytical Principles Used 
in Periodic Reporting (Proposal Nine), December 15, 2017 (Order No. 
4278).
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    Docket No. RM2018-5. On January 8, 2019, the Commission approved 
the use of workhours from the Postal Service's Time and Attendance 
Collection System (TACS) to develop Sunday and holiday city carrier 
costs and the use of the Postal Service's Product Tracking and 
Reporting scan data as a distribution key for Sunday/holiday city 
carrier costs and the city carrier sampling mode 2 (morning readings in 
small zones).\15\ However, the Commission denied the proposed city 
carrier supervisor methodology component of Proposal Two because the 
completeness of the overall city carrier supervisor data would likely 
not be improved. Order No. 4972 at 26-29. The Commission also denied 
the city carrier afternoon readings and morning readings in large zones 
because it was unable to determine the impact of these changes. Id. at 
18-23.
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    \15\ Docket No. RM2018-5, Order Approving in Part Proposal Two, 
January 8, 2019 (Order No. 4972).
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    Docket No. RM2019-6. On January 14, 2020, the Commission approved, 
with modifications, a Postal Service proposal to update and improve the 
methodology for calculating attributable Special Purpose Route (SPR) 
city carrier costs.\16\ This was to be accomplished through ``a new 
study of SPR costs that uses operational carrier data to reflect the 
current structure of SPR activities.'' Id. at 1-2 (footnote omitted).
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    \16\ Docket No. RM2019-6, Order on Analytical Principles Used in 
Periodic Reporting (Proposal One), January 14, 2020 (Order No. 
5405).
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    Docket No. RM2020-7. On July 9, 2020, the Commission approved a 
Postal Service proposal for updating city carrier regular letter and 
flat street delivery time variabilities annually to reflect changes in 
the relative volumes of letter and flat mail.\17\
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    \17\ Docket No. RM2020-7, Order on Analytical Principles Used in 
Periodic Reporting (Proposal Two), July 9, 2020 (Order No. 5583); 
Docket No. RM2020-7, Notice of Errata, July 14, 2020.
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    Docket No. RM2020-9. On May 29, 2020, United Parcel Service, Inc. 
(UPS) filed a petition requesting the Commission to initiate a 
proceeding to change how the Postal Service determines incremental 
costs and how it accounts for peak-season costs in its periodic 
reports.\18\ UPS alleges that the Postal Service's current costing 
models for City Carrier Street Time, SPRs, and Highway Transportation 
do not fully account for the increase in peak-season costs driven by 
package shipments.\19\ On July 13, 2020, the Commission instituted a 
proceeding to consider UPS's allegations.\20\ That proceeding is 
pending before the Commission.
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    \18\ Docket No. RM2020-9, Petition of United Parcel Service, 
Inc. for the Initiation of Proceedings to Make Changes to Postal 
Service Costing Methodologies, May 29, 2020 (Docket No. RM2020-9 
Petition). UPS also filed a library reference in support of the 
Petition. See Docket No. RM2020-9, Notice of Filing of Library 
Reference UPS-LR-RM2020-9/1, May 29, 2020.
    \19\ Docket No. RM2020-9 Petition at 29-35. To avoid 
duplication, this docket is not included in the discussion of 
purchased highway transportation costs below.
    \20\ See Docket No. RM2020-9, Notice and Order Establishing 
Docket to Obtain Information Regarding Proposed Changes to Cost 
Methodologies and Scheduling Technical Conference, July 13, 2020 
(Order No. 5586). The Notice and Order Establishing Docket to Obtain 
Information Regarding Proposed Changes to Cost Methodologies and 
Scheduling Technical Conference was published in the Federal 
Register on July 31, 2020. See 85 FR 46044 (July 31, 2020).
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    Docket No. RM2021-7. On September 30, 2021, the Commission approved 
a Postal Service proposal to replace the system used to distribute 
delivery costs for SPRs with a revised system, the Special Purpose 
Carrier Cost System (SPCCS), which replaces manual sampling with 
Product Tracking and Reporting (PTR) scan data.\21\ The Commission 
found that the proposal would improve the accuracy of data, reduce data 
collection costs, and allow the Postal Service to develop separate 
distribution factors for peak and non-peak periods and to separate 
estimates by carrier subcategory. Order No. 5991 at 15.
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    \21\ See Docket No. RM2021-7, Order on Analytical Principles 
Used in Periodic Reporting (Proposal Four), September 30, 2021 
(Order No. 5991).
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B. Purchased Highway Transportation

    Since the conclusion of Docket No. RM2011-3, the Commission has 
considered several proposals for changes to the methodology for 
calculating purchased highway transportation costs:
    Docket No. RM2016-12. On June 22, 2017 the Commission accepted, in 
part, a Postal Service proposal that uses a newly developed econometric 
model to calculate the variability of purchased highway transportation 
capacity with respect to volume.\22\ The Commission found that, in 
general, the Transportation Cost System (TRACS) database provides a 
reliable source for estimating capacity-to-volume variabilities of 
purchased highway transportation. Order No. 3973 at 12-15. However, the 
Commission concluded that the TRACS database is not suitable for the 
proposed variability analysis for Christmas and emergency routes and 
therefore instructed the Postal Service to continue applying the 
current assumption regarding proportionality between capacity and 
volume pending further research. Id. at 16-19.
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    \22\ Docket No. RM2016-12, Order on Analytical Principles Used 
in Periodic Reporting (Proposal Four), June 22, 2017 (Order No. 
3973).
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    Docket No. RM2021-1. Subject to a minor modification, the 
Commission on October 6, 2021, approved the Postal Service's proposed 
update of econometric estimates of variabilities for specific types of 
purchased highway transportation as an improvement over estimated 
variabilities produced by the current methodology.\23\ The Commission 
also urged the Postal Service to econometrically estimate peak-season 
capacity-to-volume variabilities; \24\ to conduct research on 
distribution keys for peak-season costs; \25\ and to address certain 
mistakes

[[Page 57387]]

and discrepancies in the Postal Service's initial data analysis. Id. at 
39-40.
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    \23\ Docket No. RM2021-1, Order on Analytical Principles Used in 
Periodic Reporting (Proposal Seven), October 6, 2021 (Order No. 
5999).
    \24\ Order No. 5999 at 36.
    \25\ Id. at 37-38.
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C. Postmaster Cost Variability

    Docket No. RM2020-2. In this proceeding, the Commission denied a 
Postal Service request to implement a new model to calculate Postmaster 
cost variability.\26\ The Commission made suggestions as to how this 
proposal could be improved and possibly accepted in the future. Order 
No. 5932 at 47-49.
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    \26\ Docket No. RM2020-2, Order on Analytical Principles Used in 
Periodic Reporting (Proposal Ten), July 8, 2021 (Order No. 5932).
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D. Window Service Costs

    Docket No. RM2011-3. In closing this docket, the Commission 
determined that it was prudent to delay consideration of this study 
area until the Postal Service's POStPlan had been fully implemented 
because it might materially impact the volume variability of window 
costs. See Order No. 2798. Although POStPlan has been implemented, the 
Postal Service has taken no further action to investigate Window 
Service Time or Window Service Costs.

E. Space-Related Costs

    Docket No. RM2020-1. On August 17, 2020, the Commission approved a 
Postal Service proposal to update inputs into the analysis used for the 
allocation of facility-related costs to products.\27\ Proposal Nine was 
based on a new Facility Space Usage Study (FSUS) conducted in 2018 and 
2019. The prior methodology had relied upon data from a FSUS conducted 
in 1999 and presented in Docket No. R2005-1. Order No. 5637 at 2.
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    \27\ Docket No. RM2020-1, Order on Analytical Principles Used in 
Periodic Reporting (Proposal Nine), August 17, 2020 (Order No. 
5637).
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F. Supervisor Costs

    Docket No. RM2019-12. In this proceeding, the Commission approved a 
Postal Service proposal to use TACS data to determine the share of 
costs for supervisors at delivery units on Sundays and holidays and 
then distribute those costs using the same distribution key used for 
city carriers delivering packages on Sundays and holidays.\28\
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    \28\ Docket No. RM2019-12, Order on Analytical Principles Used 
in Periodic Reporting (Proposal Seven), January 6, 2020 (Order No. 
5395).
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G. Mail Processing Time

    Docket No. RM2020-13. In this docket, the Postal Service proposes 
to establish a new methodology to determine the volume variability 
factors for the mail processing cost pools representing automated 
letter and flat sorting operations.\29\ This proceeding is currently 
pending before the Commission.
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    \29\ Docket No. RM2020-13, Notice of Proposed Rulemaking on 
Analytical Principles Used in Periodic Reporting (Proposal Six), 
September 23, 2020 (Order No. 5694). The Notice of Proposed 
Rulemaking on Analytical Principles Used in Periodic Reporting 
(Proposal Six) was published in the Federal Register on October 8, 
2020. See 85 FR 63473.
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III. Procedures To Be Followed in This Proceeding

    In Order No. 589, the Commission adopted the approach described in 
Docket No. RM2008-4 for assuring that appropriate changes or additions 
would be made to the methods for collecting and reporting data and for 
analyzing or modeling data to develop the estimates reported to the 
Commission under section 3652.\30\ Under that approach, a strategic 
rulemaking would consider longer-term data collection and analysis 
needs and could focus on updating existing data collection systems or 
analytical studies or establishing new ones. Order No. 104 at 32-33. 
Additionally, a strategic rulemaking would be exploratory in nature, 
with potential prehearing conferences and flexible procedures. Id.
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    \30\ Docket No. RM2008-4, Notice of Proposed Rulemaking 
Prescribing Form and Content of Periodic Reports, August 22, 2008 
(Order No. 104). The Notice of Proposed Rulemaking Prescribing Form 
and Content of Periodic Reports was published in the Federal 
Register on September 15, 2008. See 73 FR 53324.
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    In this proceeding, the Commission will once again develop an 
inventory of data collection and analysis needs, comprehensively 
evaluate these needs, and devise a plan for meeting these needs, with 
input from mailers, the interested public, the Postal Service and 
Commission staff. Id. At a time when the Postal Service remains under 
considerable financial pressure, it continues to be important to have 
accurate estimates of product costs in order to understand the net 
revenue consequences of the rates and discounts that the Postal Service 
selects.
    For a publicly-owned entity like the Postal Service, changes to the 
level and quality of the business information that guides its 
operations should be based on understanding among the Postal Service, 
its stakeholders, and the regulator, about the need for, and the value 
of the changes. The Commission hopes that the postal community will 
weigh both the costs and benefits of any proposed changes and provide 
input on what improvements in data collection and analysis warrant 
attention in the near term and what improvements would be warranted 
over a longer time horizon. Of those that are considered to be 
warranted over the near term, comments are requested concerning which 
research topics should be given priority, and what time frame should be 
considered feasible for completing the research.
    Interested persons may propose areas of research that they think 
are needed, and may use the list of possible candidates in this Order 
as a starting point. In doing so, they should consider the magnitude of 
the candidate's potential impact on estimated volumes, costs or 
revenues; the time and expense likely to be required to resolve it; and 
its potential relevance to determining compliance with the standards of 
the PAEA or supporting the various studies and reports that the PAEA 
requires the Commission to prepare.
    Following the submission of initial comments, the Commission will 
select an appropriate time to host a public forum. The public forum 
will function as a technical conference. Subject matter experts from 
the Postal Service, interested participants, and Commission staff will 
have an opportunity to interactively discuss matters, such as 
feasibility and cost, which would bear on the priority that should be 
assigned to the various research topics that are in need of further 
study. Proposed modifications to the list of topics and tentative 
prioritization of them will be addressed at the forum. Participants at 
the public forum may also discuss a protocol whereby the Postal Service 
or outside contractor conducting a study growing out of this proceeding 
would afford an opportunity for outside review and input at interim 
stages. Additional technical conferences may be scheduled to discuss a 
particular research item or set of items in greater depth. The 
Commission intends to permit interested persons to participate in any 
technical conference held in this proceeding using a virtual meeting 
platform.
    The Commission will balance the urgency and importance of resolving 
each issue with the practical considerations of time, cost, and other 
resource limitations. A schedule with target dates for beginning data 
collection efforts or completing an initial group of analytical studies 
will be developed. Formal proposals to change or supplement current 
analytical principles are expected to grow out of the research 
completed in response to this proceeding. Such proposals will be vetted 
as they are now in informal rulemakings devoted to specific detailed 
changes.

IV. Ordering Paragraphs

    It is ordered:

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    1. Initial comments are due on or before March 25, 2022.
    2. Pursuant to 39 U.S.C. 505, Katalin K. Clendenin is designated as 
the Public Representative in this proceeding to represent the interests 
of the general public.
    3. The Secretary shall arrange for publication of this order in the 
Federal Register.

    By the Commission.
Erica A. Barker,
Secretary.
[FR Doc. 2021-22476 Filed 10-14-21; 8:45 am]
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