Proposed Rule2023-19361
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
September 8, 2023
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 Four). 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 88 Issue 173 (Friday, September 8, 2023)</title>
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[Federal Register Volume 88, Number 173 (Friday, September 8, 2023)]
[Proposed Rules]
[Pages 62024-62025]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-19361]
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POSTAL REGULATORY COMMISSION
39 CFR Part 3050
[Docket No. RM2023-9; Order No. 6652]
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 Four).
This document informs the public of the filing, invites public comment,
and takes other administrative steps.
DATES: Comments are due: September 29, 2023.
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 Four
III. Notice and Comment
IV. Ordering Paragraphs
I. Introduction
On August 28, 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 Four.
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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 Four), August 28, 2023 (Petition).
Proposal Four is attached to the Petition. The Postal Service also
filed a notice of filing of non-public material relating to Proposal
Four. Notice of Filing of USPS-RM2023-9-NP1 and Application for
Nonpublic Treatment, August 28, 2023.
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II. Proposal Four
Background. The Priority Mail Transportation Cost Model is used in
financial projections of the expected cost coverage for negotiated
service agreements (NSAs). Petition, Proposal Four at 1. The current
model was introduced in Docket No. R2006-1 and is updated annually in
the Annual Compliance Review (ACR), most recently in Docket No.
ACR2022.\2\ The Postal Service states that the model disaggregates the
product-level transportation costs by zone and the resulting cost per
cube and cost per pound by zone are applied to a customer's weight and
zone profile in order to generate forward-looking cost projections for
Priority Mail included in any NSA. Petition, Proposal Four at 1. These
projections rely on prior fiscal year's costs with inflation factors
applied to reflect the expected changes in costs due to broader
economic conditions during the first full year of the NSA. Id. The
Postal Service states that, however, these projections do not reflect
expected changes in costs due to Postal Service's changing operational
conditions during the first full year of the NSA. Id. Thus, the Postal
Service proposes several changes to the Priority Mail Transportation
Cost Model in Proposal Four to reflect these types of changes more
accurately in Priority Mail transportation costs.
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\2\ Id. (citing Docket No. ACR2022, Library Reference USPS-FY22-
NP27, December 29, 2022).
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Proposal. The Postal Service proposes several changes to the
Priority Mail Transportation Cost Model.
First, the Postal Service proposes a correction to the base year
model to reflect that a portion of zone 6 pieces utilized distance-
related surface transportation during fiscal year (FY) 2022. Id. at 2.
The Postal Service states that the current model assumes that zone 6
pieces are transported entirely by air. Id. The Postal Service states
that the correction is made by extending the existing methodology used
for zones 1-5 up to zone 6. Id.
Second, once the correction to the base year model has been made,
the Postal Service proposes the following sequence of actions to adjust
the transportation costs by zone to reflect changes in the split
between air and surface transportation occurring in the subsequent year
due to Postal Service's network change. Id.
A. Collect the proportions of priority mail on air and surface
transportation by zone from the Product Tracking and Reporting (PTR)
system, for both the base year and the month most recently ended. Id.
B. Compare the base year's data with the most recent month's data
and calculate the change in the percentage of Priority Mail transported
on air vis-[agrave]-vis surface for each zone. Id. at 3.
1. If the absolute change from the base year percentage is less
than five percentage points for a zone, then no adjustment to the base
year costs is made. Id.
2. If the absolute change from the base year percentage is more
than five percentage points for a zone, then the air and surface costs
for that zone are adjusted by the following method:
a. The cube-related costs are divided into air-related, distance-
related surface, and non-distance-related surface. Id. The Postal
Service states that air-related costs include both the air costs and
the surface costs associated with a connection to air. Id.
b. The weight-related costs are fully air-related. Id.
c. The non-distance-related surface costs are excluded from the
adjustment and remain unchanged. Id. The Postal Service states that
these are generally
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local transportation costs, which would not be affected by a change in
the long-distance transportation costs. Id.
d. The air-related costs (for both cube-related and weight-related
costs) are adjusted based on the percentage change in the proportion of
Priority Mail transported on air for that zone. Id.
e. The distance-related surface costs are adjusted based on the
percentage change in the proportion of Priority Mail transported on
surface for that zone. Id. at 4.
The Postal Service states that this methodology can be updated and
applied monthly to ensure that the transportation costs reflect the
most recent operational conditions as operational changes occur
throughout the year. Id.
The Postal Service also states that there are two exceptions to
this methodology. First, for any NSAs filed during January, the
transportation adjustment from November will be used instead of the
adjustment from December. Id. The Postal Service explains that this is
because the air and surface proportions during peak season are
considerably different from the rest of the fiscal year and would not
be predictive of the costs that would be incurred during the first full
year of the NSA. Id. Second, for Priority Mail Non-Published Rates
agreements filed in Docket No. CP2020-170, instead of applying the
adjustment every month, the adjustment will only be applied when the
price floors are updated every year. Id.
The Postal Service notes that this methodology would only be used
for forward-looking financial projections, and NSA cost coverage
reported during the ACR would still be calculated using the average
costs for the FY. Id. at 4-5.
Rationale. The Postal Service explains that due to the changes in
transportation network in FY 2023, the FY 2022 costs for Priority Mail
may no longer be predictive of the expected costs for Priority Mail
NSAs being negotiated through the end of calendar year 2023. Id. at 5.
The Postal Service states that similarly, the FY 2023 costs may also
not be predictive of the costs for Priority Mail NSAs being negotiated
during calendar year 2024, because of network changes scheduled to take
place throughout FY 2024. Id. The Postal Service asserts that Proposal
Four provides a methodology that uses current census data from PTR to
adjust the base FY transportation costs to reflect the most recent
operational changes, which will be an improvement in the accuracy of
the projected cost coverage of NSAs. Id.
Impact. According to the Postal Service, the proposed changes have
no impact on any product-level costs such as those that would have been
reported in the FY 2022 Public Cost and Revenue Analysis Report,
because the proposal concerns only the reporting of Priority Mail
transportation costs by zone. Id. at 5-6. The Postal Service provides
the impact for each component by zone and the combined impact in
Library Reference USPS-RM2023-9-NP1 under seal. Id. at 5.
III. Notice and Comment
The Commission establishes Docket No. RM2023-9 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 Four no later
than September 29, 2023. Pursuant to 39 U.S.C. 505, Madison
Lichtenstein 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. RM2023-9 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 Four), filed August 28, 2023.
2. Comments by interested persons in this proceeding are due no
later than September 29, 2023.
3. Pursuant to 39 U.S.C. 505, the Commission appoints Madison
Lichtenstein 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. 2023-19361 Filed 9-7-23; 8:45 am]
BILLING CODE 7710-FW-P
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