[Federal Register Volume 88, Number 116 (Friday, June 16, 2023)]
[Proposed Rules]
[Pages 39388-39390]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-12895]


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POSTAL REGULATORY COMMISSION

39 CFR Part 3050

[Docket No. RM2023-8; Order No. 6538]


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

DATES: Comments are due: July 12, 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 Three
III. Notice and Comment
IV. Ordering Paragraphs

I. Introduction

    On June 7, 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 Three.
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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 Three), June 7, 2023 (Petition). 
Proposal Three is attached to the Petition. The Postal Service also 
filed a notice of filing of non-public material relating to Proposal 
Three. Notice of Filing of USPS-RM2023-8-NP1 and Application for 
Nonpublic Treatment, June 7, 2023.
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II. Proposal Three

    Background. The International Cost and Revenue Analysis (ICRA) 
model develops estimated settlement and international transportation 
costs for the various categories of outbound international Negotiated 
Service Agreement (NSA) mail by using NSA

[[Page 39389]]

activity to calculate product pricing group average rates. Petition, 
Proposal Three at 4-5. In Docket No. RM2022-9, the Commission approved 
changes in analytical principles to allow for more precise reporting of 
Revenue, Pieces, and Weight (RPW) data used in the ICRA.\2\ As relevant 
here, the System for International Revenue and Volume, Outbound-
International Origin-Destination Information System (SIRVO) data, which 
the Postal Service uses in its RPW methodology, includes fields at the 
destination-country level, a ``Tracked'' indicator for First-Class 
Package International Service (FCPIS), and gross weights for outbound 
international NSA mailpieces. Petition, Proposal Three at 5.
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    \2\ Docket No. RM2022-9, Order on Analytical Principles Used in 
Periodic Reporting (Proposal Three), September 12, 2022 (Order No. 
6272).
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    In addition, in January 2023, the Commission approved the Postal 
Service's proposal to collapse zoned prices based on origin ZIP Code 
for Priority Mail International (PMI) destined to Canada into uniform 
rates as a single country group.\3\ In the Fiscal Year 2022 Annual 
Compliance Determination (ACD), the Commission noted that the Postal 
Service had included a file in a Library Reference that altered ICRA 
unit costs used as input to the financial models for NSAs as a result 
of the pricing changes for PMI destined to Canada, but did not mention 
the relevant computational change in the preface.\4\ Although the new 
file did not alter the results of the FY 2022 ACD, the Commission 
reminded the Postal Service of its obligations to identify any input 
data or quantification techniques that changed in the prior year and to 
request changes to analytical principles as appropriate. FY 2022 ACD at 
86-87.
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    \3\ Docket No. CP2023-42, Order Approving Price Adjustments for 
Competitive Products, December 22, 2022 (Order No. 6384).
    \4\ Docket No. ACR2022, Annual Compliance Determination, March 
29, 2023, at 86 (FY 2022 ACD).
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    Proposal. The Postal Service proposes five revisions to analytical 
principles related to the ICRA. Three of those five revisions pertain 
to the use of Outbound International NSA SIRVO data.
    First, the Postal Service proposes to use Outbound International 
NSA SIRVO data to attribute outbound settlement expenses and 
international transportation costs to international NSA products at the 
country-level. Petition, Proposal Three at 1. Currently, Outbound 
International NSA data used in the ICRA are reported by pricing group 
only. Id. at 11. Following the approval of Docket No. RM2022-9, 
Proposal Three, the underlying report data used in the ICRA contains 
more granularity, including NSA country-level detail. Id. Thus, the 
Postal Service proposes to assign settlement and international 
transportation rates to International NSA products using actual 
country-level International NSA data rather than product average 
pricing group rates. Id. at 5.
    Second, the Postal Service proposes to use the Outbound 
International NSA SIRVO data ``Tracked'' indicator to attribute 
settlement expenses more accurately to NSA FCPIS. Id. at 2. The Postal 
Service explains that Outbound FCPIS tracking remuneration is included 
for some countries in settlement costs, but data used in the ICRA do 
not distinguish between tracked and un-tracked NSA FCPIS. Id. at 13. As 
a result, the ICRA applies a higher tracked per-piece settlement rate 
to all countries to calculate NSA FCPIS settlement expenses. Id. The 
Postal Service proposes to incorporate the ``Tracked'' indicator to 
apply the tracked per-piece settlement rate only to countries that 
include FCPIS tracking remuneration in settlements. Id.
    Third, the Postal Service proposes to use Outbound International 
NSA SIRVO gross weight data to attribute settlement expenses and 
domestic and international transportation costs to outbound 
International NSA products. Id. at 2. Previously, data for outbound 
International NSA products included only net weights, so the ICRA 
applied gross-to-net-weight conversion factors using non-NSA product 
data. Id. at 2, 14. Following the Commission's approval of Docket No. 
RM2022-9, Proposal Three, NSA gross weight is now included in the 
underlying data used in the ICRA. Id. at 14. Accordingly, the Postal 
Service proposes to incorporate the gross weights for outbound 
International NSA products to refine its calculations of settlement 
expenses and domestic and international transportation costs, and to 
make the International NSA approach consistent with the non-NSA 
approach. Id.
    Fourth, beginning with Postal Quarter 2 of FY 2023, the Postal 
Service proposes to apply PMI average domestic transportation unit cost 
to calculate the domestic transportation costs for NSA PMI destined to 
Canada. Id. at 3. Currently, the Postal Service applies PMI zone-based 
domestic transportation unit costs to zone profile data for NSA PMI 
destined to Canada. Id. However, in Docket No. CP2023-42, the 
Commission approved the Postal Service's request to collapse zone-based 
prices for PMI destined to Canada into a single country group. See 
Order No. 6384. Consequently, the Postal Service explains that the 
estimated zone-based unit costs that are developed in the ICRA are no 
longer useful for PMI destined to Canada. Petition, Proposal Three at 
6.
    Finally, the Postal Service proposes several ``maintenance and 
aesthetic changes that clarify and streamline the ICRA model'' in 
advance of the FY 2023 Annual Compliance Report (ACR). Id. at 4. For 
instance, the Postal Service proposes to remove sections of the ICRA 
model that are redundant or no longer used, refresh nomenclature used 
in the model, update product labels to align with the Mail 
Classification Schedule (MCS), and modify or eliminate certain 
workbooks to promote clarity and efficiency. Id. at 7.
    Impact. According to the Postal Service, the proposed changes are 
``relatively minor, because, in total, they have a percentage impact of 
less than one percent.'' Id. at 1. Specifically, the Postal Service 
asserts that if this proposal had been in effect in FY 2022, the net 
impact on total costs of Market Dominant products and Competitive 
products would have been zero. Id. at 8. Further, with respect to 
International NSAs, the Postal Service represents that there would have 
been no impact on Inbound International NSAs, all positive contribution 
Outbound International NSAs would have remained positive, and all 
negative contribution Outbound International NSAs would have remained 
negative. Id.

III. Notice and Comment

    The Commission establishes Docket No. RM2023-8 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 
Three no later than July 12, 2023. Pursuant to 39 U.S.C. 505, Samuel 
Koroma 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. RM2023-8 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 Three), filed June 7, 2023.

[[Page 39390]]

    2. Comments by interested persons in this proceeding are due no 
later than July 12, 2023.
    3. Pursuant to 39 U.S.C. 505, the Commission appoints Samuel Koroma 
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. 2023-12895 Filed 6-15-23; 8:45 am]
BILLING CODE 7710-FW-P