Proposed Rule2022-16879
Periodic Reporting
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
August 8, 2022
Issuing agencies
Postal Regulatory Commission
Abstract
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 Five). This document informs the public of the filing, invites public comment, and takes other administrative steps.
Full Text
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<title>Federal Register, Volume 87 Issue 151 (Monday, August 8, 2022)</title>
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[Federal Register Volume 87, Number 151 (Monday, August 8, 2022)]
[Proposed Rules]
[Pages 48127-48128]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-16879]
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POSTAL REGULATORY COMMISSION
39 CFR Part 3050
[Docket No. RM2022-11; Order No. 6242]
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 Five).
This document informs the public of the filing, invites public comment,
and takes other administrative steps.
DATES: Comments are due: September 20, 2022.
ADDRESSES: Submit comments electronically via the Commission's Filing
Online system at <a href="http://www.prc.gov">http://www.prc.gov</a>. 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 Five
III. Notice and Comment
IV. Ordering Paragraphs
I. Introduction
On July 29, 2022, 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 Five.
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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 Five), July 29, 2022 (Petition). The
Petition was accompanied by a report supporting its proposal. See
Report on Contract Delivery Service Cost Attribution Accrued Cost
and Distribution Key, July 29, 2022. The Postal Service also filed a
notice of filing of public and non-public materials relating to
Proposal Five. Notice of Filing of USPS-RM2022-11-1 and USPS-RM2022-
11-NP1 and Application for Nonpublic Treatment, July 29, 2022.
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II. Proposal Five
Background. Contract Delivery Services (CDS) suppliers are
independent contractors who provide delivery on specific routes that
are not serviced by city or rural carriers. Petition, Proposal Five at
1. The Postal Service initiated research into the estimation of accrued
costs and product costs of CDS in response to USPS Office of Inspector
General (OIG) Report No. 20-313-R21. Id. That report recommended that
the Postal Service: (1) reevaluate the cost proportion percentages used
to estimate accrued CDS costs and assess the possibility of using
actual CDS payment data to calculate product costs; and (2) conduct a
study to whether the mail volumes delivered on CDS and rural routes are
similar and consider an update to the distribution keys used to
attribute CDS costs. Id. at 1-2.
CDS costs are not separately identified in the Postal Service's
general ledger (GL). Id. at 2. Instead, CDS accrued costs are included
as a portion of different GL expense accounts contained in cost segment
14 (purchased transportation), components 143 (Highway) and 145
(Domestic Water) and reported in GL Account No. 53605--Intra-CSD
Regular (Intra-District)--and Account No. 53601--Intra-processing &
distribution center (P&DC) Regular. Id. The Postal Service states that
costs in these two accounts ``comprise the overwhelming majority of all
CDS costs and have a distinct treatment.'' Id.
Currently, the Postal Service calculates the CDS volume variability
by developing a cost-to-capacity variability and a capacity-to-volume
variability and then multiplying these variabilities together to
produce an overall volume variability for the contract costs. Id. at 2-
3. The calculation of volume variable Intra-sectional center facility
(SCF) costs relies upon two econometric analyses, approved in Docket
Nos. RM2016-12 and RM2021-1, which updated the capacity-to-volume and
cost-to-capacity variabilities, respectively. Id. at 3.
The Intra-P&DC and Intra-District account categories are made up of
four transportation technologies and route types, including box, city,
van, and tractor trailer. Id. Within each type, the costs are summed to
form the account category's cost proportions. Id. The Postal Service
individually estimates the cost-to-capacity volume variabilities for
the Intra-District and the Intra-P&DC accounts as the cost-weighted
averages of the variabilities of the four transportation/route types.
Id.
The CDS costs in Intra-SCF accounts are distributed based on the
Intra-SCF distribution factors estimated by the Transportation Cost
System (TRACS) on a quarterly basis as a proxy because CDS routes are
not sampled in TRACS. Id.
Proposal. The Postal Service proposes two revisions to analytical
principles related to CDS costs based on its investigation into the
OIG's recommendations.
First, the Postal Service proposes to update the Intra-P&DC and
Intra-District cost proportions annually using Transportation Contract
Support System (TCSS) data. More specifically, to update the cost
proportions used for the GL accounts that it states comprise the
majority of CDS costs, GL Account Nos. 53605 and 53601, using TCSS
data. Id. at 4.
The Postal Service states that it assessed the feasibility of using
CDS
[[Page 48128]]
payment data from the Accounts Payable Excellence System (APEX) to form
the cost proportions for the Intra-P&DC and Intra-District account
categories, as the OIG recommended, but determined that APEX data does
not contain the information necessary on vehicle capacity necessary to
apportion payments between the four transportation/route types. Id.
Second, the Postal Service proposes using the rural cost
distribution key (CS10, component 260) to attribute CDS costs to
products. Id. at 6. The Postal Service states ``that both operational
protocols and field observations support the hypothesis that similar
mail volumes are delivered on CDS routes and rural routes.'' Id.
Furthermore, the Postal Service contends that ``support for the
similarities between CDS contractors and rural carriers is found in the
process that exists for the conversion of CDS routes to rural routes in
comparable offices.'' Id. at 7.
Impact. The Postal Service states that applying an initial update
to the Intra-P&DC and Intra-District cost proportions, the first
proposed revision, would result in an increase in volume variable
highway costs by 0.03 percent. Id. at 9. The Postal Service reports
that applying the rural cost distribution key to CDS costs, the second
proposed change, would result in an increase ``by $33.7 M, or 0.9
percent'' in volume variable highway costs. Id.
The Postal Service states that implementing both of the proposed
revisions would have resulted ``in a shift of $42.6 M, or 1.2 percent,
in highway costs from institutional to volume variable costs'' using FY
2021 data. Id. at 11. The Postal Service reports that Competitive
highway costs would decrease by 0.02 percent under this proposal while
Market Dominant costs would increase by 2.5 percent. Id. The Postal
Service acknowledges that highway costs for High Density and Saturation
Flats/Parcels increase ``significantly'' on a percentage basis but
states that the proposed changes result in less than a $0.01 increase
on a unit cost basis. Id. The Postal Service states that the proposed
methodology would result in approximately 0.2 percent of the volume
variable costs for highway transportation being attributed to Total
Domestic Market Dominant Services. Id.
III. Notice and Comment
The Commission establishes Docket No. RM2022-11 for consideration
of matters raised by the Petition. More information on the Petition may
be accessed via the Commission's website at <a href="http://www.prc.gov">http://www.prc.gov</a>.
Interested persons may submit comments on the Petition and Proposal
Five no later than September 20, 2022. 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. RM2022-11 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 Five), filed July
29, 2022.
2. Comments by interested persons in this proceeding are due no
later than September 20, 2022.
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.
Jennie L. Jbara,
Alternate Certifying Officer.
[FR Doc. 2022-16879 Filed 8-5-22; 8:45 am]
BILLING CODE 7710-FW-P
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