[Federal Register Volume 88, Number 108 (Tuesday, June 6, 2023)]
[Proposed Rules]
[Pages 37003-37004]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-11935]


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POSTAL REGULATORY COMMISSION

39 CFR Part 3050

[Docket No. RM2023-7; Order No. 6528]


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

DATES: Comments are due: June 29, 2023.

ADDRESSES: Submit comments electronically via the Commission's Filing 
Online system at https://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 Two
III. Notice and Comment
IV. Ordering Paragraphs

I. Introduction

    On May 26, 2023, 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 Two.
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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 Two), May 26, 2023 (Petition).
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II. Proposal Two

    Background. The Postal Service Reform Act of 2022 \2\ modified and 
expanded the Postal Service's ability to enter into interagency 
agreements (IAAs) to provide property and services to, or on behalf of, 
other government agencies. Specifically, 39 U.S.C. 3703 for the first 
time authorizes the Postal Service to enter into agreements with 
agencies of any state government, local government, or tribal 
government to provide property or nonpostal services to the public on 
behalf of such agencies for non-commercial purposes. At the same time, 
with respect to the Postal Service's pre-existing authority under 39 
U.S.C. 411 to provide property and services to other Federal agencies, 
the PSRA specifies that ``[t]he Postal Service may establish a program 
to provide property and nonpostal services to other Government [i.e., 
federal] agencies within the meaning of section 411,\[3]\ but only if 
such program provides a net contribution to the Postal Service, defined 
as reimbursement that covers at least 100 percent of the costs 
attributable . . . .'' 39 U.S.C. 3704.
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    \2\ Postal Service Reform Act of 2022 (PSRA), Public Law 117-
108, 136 Stat. 1127 (2022).
    \3\ Prior to the enactment of the PSRA, the Postal Service's 
authority for these agreements was governed by 39 U.S.C. 411, which 
authorizes the Postal Service to ``furnish property and services'' 
to ``Executive agencies within the meaning of [5 U.S.C. 105] and the 
Government Publishing Office. . . .'' 39 U.S.C. 411. Section 105 of 
Title 5 of the United States Code specifies that an ```Executive 
agency' means an Executive department, a Government corporation, and 
an independent establishment'' of the U.S. Government, as those 
terms are defined in 5 U.S.C. chapter 1. 5 U.S.C. 105.
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    Under the PSRA, the Postal Service must submit a report to the 
Commission after the close of each fiscal year. See 39 U.S.C. 3705(a).
    Upon receiving the Postal Service's report and providing an 
opportunity for public comment, the Commission must make a written 
determination of compliance. 39 U.S.C. 3705(e).
    Because the PSRA was enacted on April 6, 2022 (during FY 2022 
Quarter 3), the Postal Service's first report responsive to this new 
statutory requirement was due December 29, 2022, covering FY 2022. In 
its report, the Postal Service stated that there were no agreements 
with state, local, or tribal governments pursuant to 39 U.S.C. 3703 in 
effect during FY 2022.\4\ Pursuant to 39 U.S.C. 3705(a)(1), the Postal 
Service provided non-public information on costs and revenue for 
Federal IAAs that were in effect during FY 2022.\5\ In response to 
information requests, the Postal Service also provided non-public rate 
information with respect to Federal IAAs, and publicly reported the 
number of agreements, as well as the revenue, costs, and contribution 
for the program as a whole under section 3704.\6\
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    \4\ Docket No. ACR2022, United States Postal Service FY 2022 
Annual Compliance Report, December 29, 2022, at 102 (FY 2022 ACR).
    \5\ Id. at 102. With respect to quality of service, in Docket 
No. RM2022-7, the Commission established certain reporting 
requirements for nonpostal services, including that the Postal 
Service shall provide quantitative measures of service performance 
for nonpostal services annually (or, where unavailable, qualitative 
descriptions). See 39 CFR 3055.25. Specifically for IAAs under 39 
U.S.C. 3704, the Commission mandated that the Postal Service report 
the quality of service for the IAA program as a whole. See id. 
3055.25(c). The Commission also specified that the reporting 
requirements shall not go into effect until the beginning of FY 2024 
to allow the Postal Service to set service standards and (if needed) 
file a petition for an exception from reporting pursuant to 39 CFR 
3055.3. Docket No. RM2022-7, Order Revising Rules for Periodic 
Reporting of Service Performance, February 9, 2023, at 16-17 (Order 
No. 6439).
    \6\ Docket No. ACR2022, Annual Compliance Determination Report, 
FY 2022, May 29, 2023, at 99-102 (FY 2022 ACD).
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    Because 39 U.S.C. 3704 requires that the Federal IAA program as a 
whole provide contribution to the Postal Service, i.e., reimbursement 
that covers at least 100 percent of the costs attributable to such 
agreements, the Commission sought information in order to better 
understand the underlying cost models and methodologies used by the 
Postal Service in calculating and distributing costs to IAAs. FY 2022 
ACD at 101. The Commission found that ``[b]ased on the Postal Service's 
responses, it appears that the underlying cost models and methodologies 
employed by the Postal Service are, in some instances, 
underdeveloped.'' Id. Nevertheless, the Commission found that for 
purposes of the first compliance review of the overall Federal IAA 
program under 39 U.S.C. 3705(e)(2), the record reflected that the total 
reimbursement the Postal Service received from other Federal agencies 
for services rendered pursuant to IAAs effective in FY 2022 exceeded 
the total estimated cost associated with providing such services; hence 
the Federal IAA program as a whole complied with 39 U.S.C. 3704 for FY

[[Page 37004]]

2022. Id. The Commission directed the Postal Service to develop a 
proposed methodology (or methodologies) for calculating and attributing 
costs and revenue to IAAs authorized under 39 U.S.C. 3703 and 3704, and 
to initiate a rulemaking proceeding to establish such methodology (or 
methodologies) in accordance with 39 CFR 3050.11 by no later than May 
31, 2023. Id. at 102. As directed, the Postal Service initiated the 
instant proceeding.
    Proposal. The Postal Service proposes a categorical approach to 
calculating and attributing costs and revenue to similar types, or 
groupings, of IAAs. Petition, Proposal Two at 2-3. In its Petition, the 
Postal Service has applied this categorical approach to the field of 
currently-existing Federal IAAs, but states that ``the creation of new 
categories as needed in the future is certainly not precluded[,]'' and 
``[l]ikewise, categories can be omitted if all relevant IAAs have 
expired, and no new agreements replace them.'' Id. at 3, 7. The Postal 
Service proposes the following categories and corresponding cost 
attribution methodologies for the Federal IAAs currently in existence:
     Retail Services: The Postal Service defines this category 
as ``encompass[ing] services conducted at the retail counter such as 
identity verification or Passport acceptance.'' Id. at 3. For IAAs in 
this category, the Postal Service proposes multiplying the average 
length of transactions by an appropriate wage rate to determine the 
cost-per-transaction. Id. at 4. Piggyback, wait time, and miscellaneous 
time factors would then also be applied, and the unit costs would be 
multiplied by the total number of transactions to obtain total window 
service costs. Id. Any additional costs, such as advertising, training, 
and administrative costs, would be included in whole since they are not 
related to the per-transaction cost (although the Postal Service states 
that the total number of hours spent training would be estimated and 
the appropriate wage rate applied). Id. The Postal Service states that 
revenues within this category can either be a fixed fee or on a per-
transaction basis. Id.
     COVID Test Kits: The Postal Service defines this category 
as ``includ[ing] the total revenue and cost for COVID test kit 
fulfillment and delivery; including picking, packing, and delivery of 
the kits.'' Id. The Postal Service states that this category is unique 
in having a two-part structure for fulfillment and delivery. Id. The 
Postal Service proposes that times and resources used for fulfillment 
be ``tracked to determine reimbursement through various postal 
functions,'' and that the delivery portion of cost and revenue by 
captured through regular Postal Service processes in the Cost and 
Revenue Analysis (CRA) and Revenue, Pieces, and Weight (RPW) reports. 
Id.
     Addressing and Geospatial Technology Services: The Postal 
Service defines this category as including agreements to ``provide 
reports from Postal Service operational data systems, such as ZIP Code 
or route book information, for use by other agencies.'' Id. at 4-5. The 
Postal Service states that the costs attributed to these reports are 
related to times to initiate, process, review, and disseminate the 
reports, and that given that these reports are already captured for 
operational purposes, no time or technology costs for the collection or 
storage of these reports are proposed to be attributed to these IAAs. 
Id. at 5. The Postal Service states that these reports are automated 
and incur minimal costs. Id.
     Short Term Rental/Conference and Training Center Services: 
The Postal Service defines this category as encompassing agreements 
that ``allow[ ] other agencies to use space in postal facilities for a 
few hours to a few days. . . .'' Id. at 5. The Postal Service states 
that the costs associated with these agreements are direct costs, which 
may include expenses for labor for room turnover, food, goods and 
supplies, and transportation. Id. The Postal Service proposes to 
calculate the revenue associated with these agreements by summing the 
rates and fees charged for services rendered. Id.
     Lease Agreements: The Postal Service defines this category 
as ``longer term agreements with agencies to occupy space in postal 
facilities.'' Id. The Postal Services states that costs for lease 
agreements include mainly utilities and maintenance for which the 
Postal Service is responsible as identified in the agreement. Id. at 6. 
Where the leased space is shared between the lessee and the Postal 
Service, the utility and maintenance costs are proportional to the 
number of square feet occupied by the lessee. Id. Rental revenue is 
proposed to be derived from the individual lease agreements. Id.
     Contracting Services: The Postal Service defines this 
category as ``encompass[ing] those services where the Postal Service 
provides services to other agencies, largely using Postal Service 
contractors, with a small amount of work being performed by postal 
employees.'' Id. The Postal Service states that many agreements falling 
into this category are for the provision of Equal Employment 
Opportunity (EEO) services. Id. The Postal Service proposes that the 
revenues associated with these agreements be derived as outlined in the 
individual agreements.

III. Notice and Comment

    The Commission establishes Docket No. RM2023-7 for consideration of 
matters raised by the Petition. More information on the Petition may be 
accessed via the Commission's website at https://www.prc.gov. 
Interested persons may submit comments on the Petition and Proposal Two 
no later than June 29, 2023. Pursuant to 39 U.S.C. 505, Manon A. 
Boudreault 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. RM2023-7 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 Two), filed May 26, 2023.
    2. Comments by interested persons in this proceeding are due no 
later than June 29, 2023.
    3. Pursuant to 39 U.S.C. 505, the Commission appoints Manon A. 
Boudreault 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. 2023-11935 Filed 6-5-23; 8:45 am]
BILLING CODE 7710-FW-P