[Federal Register Volume 88, Number 221 (Friday, November 17, 2023)]
[Proposed Rules]
[Pages 80219-80220]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-25430]
[[Page 80219]]
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POSTAL REGULATORY COMMISSION
39 CFR Part 3050
[Docket No. RM2024-1; Order No. 6784]
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: December 18, 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 Seven
III. Notice and Comment
IV. Ordering Paragraphs
I. Introduction
On November 8, 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 related 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 8, 2023 (Petition).
The Postal Service also filed a notice of filing of public and non-
public material relating to Proposal Seven. Notice of Filing of
USPS-RM2024-1-1 and USPS-RM2024-1-NP1 and Application for Nonpublic
Treatment, November 8, 2023.
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II. Proposal Seven
Background. Proposal Seven is a request to change the methodology
for developing, attributing, and distributing Cost Segment 2 costs
related to supervisors and technical personnel. Petition at 1. Proposal
Seven stems from the Postal Service's identification of supervisors and
technicians costs as a medium-term area in need of study and is the
result of that study.\2\ Cost Segment 2 includes salaries, benefits,
and other related costs of supervisors (except those associated with
supervising vehicle maintenance and custodial employees) and technical
personnel. Petition, Proposal Seven at 1. Cost Segment 2 also includes
expenses associated with non-supervisory employees who work in the
district offices such as customer service representatives and address
management personnel. Id. at 1-2. Supervisors direct the activities for
those employees that process, deliver, and transport the mail. Id. at
1. Technical personnel work to improve the efficiency of activities
performed by postal employees and include industrial engineers,
accountants, and human resources personnel and include staff working in
district offices. Id.
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\2\ Docket No. RM2022-1, Initial Comments of the United States
Postal Service, March 25, 2022, at 7, 24-26, 38.
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Currently, accrued supervisor costs are apportioned to supervisor
activities through In-Office Cost Systems (IOCS) observations and
assignment of corresponding activity codes. Id. at 2. The costs
associated with these activities are classified and distributed as
variable to the same degree as the work activities supervised. Id. The
Postal Service represents that in FY 2022, approximately 39,000 IOCS
readings were used in determining the supervisors and technicians cost
components for FY 2022. Id. According to the Postal Service, the IOCS
readings are costly, consume valuable resources, and ``by their nature
do not yield measurements that supply product level detail.'' Id.
Proposal. The Postal Service's proposal seeks to replace its use of
IOCS readings with operational payroll data and ``reasonable
assumptions'' in determining cost component totals. Id. at 3-4.
According to the Postal Service, this would result in a set of eight
cost components. Id. The current IOCS measurements divide the accrued
costs in Segment 2 into sixteen cost components. Id. at 2-3. More
specifically, the Postal Service proposes to use system payment data by
Labor Distribution Code (LDC) to form these cost components, which
would significantly reduce reliance on IOCS measurements. Id. at 1, 3-
4. Under the proposed methodology, supervisor cost components would be
formed by utilizing the ratio of total payroll salary and benefits by
supervisor LDC and facility type and, for some LDCs, the portion of
labor costs for the employee craft type supervised. Id. at 7.
Additionally, the proposal seeks to tie Professional and Technical
total costs to the Trial Balance total rather than relying on IOCS
readings and modeling. Id. at 4. Currently, technician costs are
categorized within the cost component for ``Product Specific and Other
S & T.'' Id. The Postal Service proposes that these costs instead be
separated into their own cost components based on the General Ledger
amounts. Id. The Postal Service proposes to separate the remaining
supervisor costs even further according to function (using the ratio of
payroll data cost according to their function), including the following
LDCs: function 1 (mail processing); function 2 (carriers); function 3
(vehicle service); and function 4 (customer service). Id. at 5. All
remaining supervisor LDCs would be allocated to the Other Supervisors
cost component. Id.
The Postal Service proposes further dividing function 1 costs into
International Service Centers, Network Distribution Centers, and other
costs based on the ratio of payroll costs by location (facility) and
applying ``more detailed support costs variabilities and distribution
keys.'' Id. at 5, 7. For supervisors that oversee activities of both
function 2 and 4 employees (carriers, window clerks and back-office
clerks), the Postal Service proposes summing the payroll costs of
function 2 and function 4 and then using the underlying direct labor
costs to reallocate the functional costs between the two functions. Id.
at 6. Function 2 delivery costs will then further be separated into
rural and city carrier supervision costs based on the nationwide
proportions of routes by type of delivery. Id. Function 4 costs will
then be further allocated to cost pools for Window and Non-MODS clerk
supervision using direct labor cost proportions within function 4. Id.
Rationale. The Postal Service justifies the proposed changes as
improving efficiency by using ``passively available operational data,''
to form cost components rather than costly IOCS measurements. Id. at 7.
Additionally, the Postal Service justifies the change as an improvement
because it would increase ``the accuracy and efficiency of product cost
estimation in Cost Segment 2.'' Id. at 10. For instance, the Postal
Service asserts that one significant improvement with this model is the
increase in the rural delivery supervision cost component, which will
result in a cost ratio ``more aligned with operational reality.'' Id.
at 8-9. The Postal Service indicates that the current methodology's
``extreme ratio'' might be
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the result of the difficulty in IOCS sampling in rural areas. Id. at 9-
10.
Impact. The Postal Service asserts that its proposal will result in
``an overall decrease of approximately $163 million in attributable
costs due to the reformulation of the cost components,'' mostly ``due
to the new Other Supervisors costs component, which if implemented
would be classified as institutional.'' Id. at 10. Overall, the
proposal will result in a decrease in unit costs for most product
classes, except for Market Dominant Services. Id. at 10-11.
III. Notice and Comment
The Commission establishes Docket No. RM2024-1 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
Seven no later than December 18, 2023. Pursuant to 39 U.S.C. 505,
Almaroof Agoro 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. RM2024-1 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 8, 2023.
2. Comments by interested persons in this proceeding are due no
later than December 18, 2023.
3. Pursuant to 39 U.S.C. 505, the Commission appoints Almaroof
Agoro 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. 2023-25430 Filed 11-16-23; 8:45 am]
BILLING CODE 7710-FW-P