Notice2023-25914
Special Study on Flats Operations
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
November 24, 2023
Issuing agencies
Postal Regulatory Commission
Abstract
The Commission is recognizing a recently filed Postal Service document with the Commission concerning its plan to remedy inefficiencies identified in the Commission's flats study. This notice 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 225 (Friday, November 24, 2023)</title>
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[Federal Register Volume 88, Number 225 (Friday, November 24, 2023)]
[Notices]
[Pages 82431-82433]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-25914]
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POSTAL REGULATORY COMMISSION
[Docket No. SS2022-1; Order No. 6803]
Special Study on Flats Operations
AGENCY: Postal Regulatory Commission.
ACTION: Notice.
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SUMMARY: The Commission is recognizing a recently filed Postal Service
document with the Commission concerning its plan to remedy
inefficiencies identified in the Commission's flats study. This notice
informs the public of the filing, invites public comment, and takes
other administrative steps.
DATES: Comments are due: January 5, 2024.
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. Background
III. Postal Service Flats Plan
IV. Motions
V. Commission Analysis
VI. Notice and Comment
VII. Ordering Paragraphs
I. Introduction
In accordance with the Postal Service Reform Act of 2022 (PSRA),\1\
the Commission submitted a report on the findings of its flats
operations study on April 6, 2023.\2\ The PSRA also required the Postal
Service to develop and implement a plan to remedy each inefficiency
identified in the Commission's flats study or provide an explanation
why remedying such inefficiency is not practicable. PSRA section
206(b)(1). On October 6, 2023, the Postal Service submitted its plan to
the Commission for approval.\3\
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\1\ Postal Service Reform Act of 2022, Public Law 117-108, 136
Stat. 1127, available at <a href="https://www.congress.gov/117/plaws/publ108/PLAW-117publ108.pdf">https://www.congress.gov/117/plaws/publ108/PLAW-117publ108.pdf</a> (PSRA).
\2\ Flats Operations Study Report, April 6, 2023 (Flats
Operations Study Report).
\3\ See Submission of the United States Postal Service Flats
Plan Pursuant to Section 206 of the Postal Service Reform Act of
2022, October 6, 2023 (Notice); see also Notice, Postal Service
Flats Plan Pursuant to Section 206 of the Postal Service Reform Act
of 2022, October 6, 2023 (Flats Plan).
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II. Background
The Postal Service has faced significant challenges in processing
and delivering flats \4\ in a cost-effective manner. For years, in
response to statutory requirements and Commission directives, the
Postal Service has been designing and implementing operational and
pricing initiatives to address these issues, but the Postal Service has
been unable to either quantify the expected impact of those initiatives
or isolate the impact to specific products.\5\
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\4\ Flats, or flat-shaped mail, refers to large envelopes,
magazines, and other flexible, rectangular mail that meet certain
criteria. See United States Postal Service, Publication 32, Glossary
of Postal Terms, July 1, 2016, at 88, available at <a href="https://postalpro.usps.com/storages/2016-04/pub32_glossary.pdf">https://postalpro.usps.com/storages/2016-04/pub32_glossary.pdf</a>.
\5\ Flats Operations Study Report at 23 (citing Docket No.
ACR2021, Annual Compliance Determination, March 29, 2022, at 31,
60).
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The PSRA required the Commission, in consultation with the
Inspector General of the United States Postal Service (USPS OIG), to
conduct a study evaluating the Postal Service's flats operations. PSRA
section 206(b)(2)(A). The statute also required the Commission to
submit a report on the findings of the study no later than 1 year after
enactment of the PSRA. Id. To carry out the study, the Commission
collected and reviewed flats data provided by the Postal Service. Flats
Operations Study Report at 1. Commission staff also visited Postal
Service facilities over a period of several months, visited mailers'
facilities, contracted with an operations expert, and consulted with
the USPS OIG. Id. On April 6, 2023, the Commission submitted its report
on the findings of the study to Congress and the Postmaster General.
In its Flats Operations Study Report, the Commission identified
multiple causes of inefficiencies in the collection, sorting,
transportation, and delivery of flats. Flats Operations Study Report at
23-133. In addition, the Commission quantified the effects of the
volume trends, certain investment decisions, excess capacity, and
operational inefficiencies of the Postal Service on costs that are
attributable to flats. Id. at 134-209. At the conclusion of the Flats
Operations Study Report, the Commission provided eight suggestions to
the Postal Service for consideration as the Postal Service develops its
plan. Id. at 210.
In response to the report, the Postal Service was required to
develop and implement a plan to remedy each
[[Page 82432]]
inefficiency identified in the Commission's flats study or provide an
explanation why remedying such inefficiency is not practicable. PSRA
section 206(b)(1). Prior to implementing the plan, the Postal Service
must give the public an opportunity to comment on the plan and the
Commission must approve the plan. Id. On August 16, 2023, the Postal
Service published a draft plan and sought public comments on the
plan.\6\ On October 6, 2023, the Postal Service submitted its Flats
Plan to the Commission for approval.
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\6\ See Notice of Availability of Draft Plan for Flat-Shaped
Mail, 88 FR 55740 (August 16, 2023); see also Postal Service Flats
Plan Pursuant to Section 206 of the Postal Service Reform Act of
2022, August 15, 2023, available at <a href="https://about.usps.com/psra-flats-study/usps-flats-plan.pdf">https://about.usps.com/psra-flats-study/usps-flats-plan.pdf</a> (Draft Flats Plan). Interested
parties were invited to submit written comments during a 30-day
period, terminating on September 15, 2023. Notice at 2.
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III. Postal Service Flats Plan
The Postal Service asserts that its plan conforms to the relevant
statutory requirements and should be approved by the Commission. Notice
at 2. In addition to considering public comments, the Postal Service
states that it considered the Commission's suggestions, and the
findings that inform those suggestions. Id. It notes that the Flats
Plan incorporates the majority of the Commission's recommendations. Id.
The Postal Service asserts that where it was unable to accept a
Commission recommendation fully, the Flats Plan details how such
recommendations may in the future become practicable. Id.
At the beginning of its Flats Plan, the Postal Service describes
how the implementation of the Delivering for America (DFA) plan will
enable it to increase revenue from flats, while also reducing costs by
addressing the inefficiencies that currently exist in the processing,
transporting, and delivery of flats. Flats Plan at 2. The Postal
Service claims that since enactment of the DFA Plan in March 2021, it
has made significant progress.\7\ In addressing the Commission's
suggestions from the Flats Operations Study Report, the Postal Service
discusses specific initiatives relating to flats, and explains that
these initiatives are part of the DFA plan. Flats Plan at 2-3. The
initiatives include pricing to increase flats revenue, redesigning the
network, improving the data quality, and pursuing initiatives to reduce
bundle breakage. Id. at 4-17. The Postal Service also addresses the
relationship between mail volume and productivity, and provides
analysis to support its view that productivity declines and therefore
increased costs, are due in part to volume declines. Id. at 17-24.
Finally, the Postal Service addresses comments from the public received
on its Draft Flats Plan, and ``clarif[ies] certain aspects of the flats
plan in response to those comments.'' Id. at 24-27.
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\7\ Id. at 1-2 (referring to United States Postal Service,
Delivering for America, Second-Year Progress Report (April 2023),
available at <a href="https://about.usps.com/what/strategic-plans/delivering-for-america/assets/usps-dfa-two-year-report.pdf">https://about.usps.com/what/strategic-plans/delivering-for-america/assets/usps-dfa-two-year-report.pdf</a>).
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IV. Motions
After the Postal Service filed its Flats Plan, the Commission
received motions for leave to provide comments on the Flats Plan from
the News Media Alliance (NMA) and the Association for Postal Commerce
(PostCom).\8\
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\8\ Motion for Acceptance of Comments, October 16, 2023 (NMA
Motion); Motion for Leave to File Comments, October 18, 2023
(PostCom Motion).
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NMA and PostCom both state that acceptance of their comments on the
Flats Plan would be in the public interest and assist in the
Commission's decision whether to approve or reject the Flats Plan. NMA
Motion at 1; PostCom Motion at 1. PostCom also provides examples of
where the Commission has accepted pleadings in other dockets where such
pleadings were not specifically authorized but would assist the
Commission in its deliberations. PostCom Motion at 1. These motions are
granted.
In its comments, NMA states the Flats Plan ``lacks the
comprehensiveness, metrics, and accountability'' needed to remedy well-
established flats inefficiencies.\9\ NMA recommends that the Commission
reject the plan and direct the Postal Service to address the
deficiencies identified by NMA. NMA Comments at 1.
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\9\ Comments of the News/Media Alliance on the Postal Service's
Flats Plan, October 16, 2023, at 1 (NMA Comments).
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PostCom also urges the Commission to reject the Flats Plan and
direct the Postal Service to revise the plan to respond to PSRA
directives.\10\ PostCom attaches its comments submitted to the Postal
Service on the Draft Flats Plan, where PostCom asserts the draft plan
lacked, among other things, targets toward cost coverage improvement,
and did not consider the diseconomies of scale that result from
declining flats volume. PostCom Comments at 1. PostCom states that
despite its comments, the Postal Service submitted the final plan that
is ``essentially unchanged'' from its draft plan. Id.
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\10\ Comments of the Association for Postal Commerce, October
18, 2023, at 1 (PostCom Comments).
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V. Commission Analysis
Upon consideration of the Flats Plan, the Commission finds that, as
submitted, this plan presents a high-level proposal that lacks both
important details and analytical support needed to evaluate the plan
and determine whether it sufficiently and effectively addresses the
inefficiencies identified by the Commission and described in the Flats
Operations Study Report. The Commission suggested in the Flats
Operations Study Report that the Postal Service quantify the impact of
any initiatives on cost to ensure its efforts are effective. Flats
Operations Study Report at 3. While the Postal Service explains that
there are processes to validate potential net financial benefits of
initiatives and methodologies for calculating and tracking the results,
it does not provide any quantifiable metrics for potential benefits or
cost impact results as it describes the initiatives throughout the
Flats Plan. See Flats Plan at 17.
Furthermore, the Postal Service does not provide a clear timeline
for implementing the initiatives, with some initiatives seemingly
already implemented and others in various stages of implementation. See
Flats Plan at 7, 9-14. Additionally, while some initiatives appear to
have been implemented as early as FY 2021, there is no timeline for
when quantifiable impacts of these initiatives will be available.
In its response to public comments, the Postal Service references
technology updates to the Automated Flats Sorting Machine. See id. at
26. This effort is well-advised and further details of these plans,
including timelines, would improve the Commission's ability to evaluate
the plan. Similarly, it is important for the Commission to understand
the plan and timeline for other technology improvements, including to
the equipment used to process bundles as a means to reduce bundle
breakage.
In addition, to thoroughly evaluate the Flats Plan, it is important
for the Commission to learn more about the improved data-collection
tools developed to enhance the reporting and tracking of bundle
irregularities and bundle breakage. See id. at 7-9. The discussion of
these tools highlights their capability to link images and other
evidence of mail irregularities to the Mailer Scorecard but does not
clearly specify whether the tools also resolve the other bundle
breakage data quality issues the Commission set out in the Flats
Operations Study Report. Id.; see also Flats Operations Study Report at
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85-87. These data quality issues include missing data in the bundle
breakage dataset for bundles without a full-service Intelligent Mail
barcode (IMb) and the lack of ability to identify where in the mail
processing flow a bundle breakage occurs. See Flats Operations Study
Report at 85-87. Addressing these additional issues would allow the
Postal Service to identify trends and causes of bundle breakage within
the handling and processing of bundles, which were previously lacking
in the data. Accordingly, the Commission will seek more information
from the Postal Service to enable evaluation of the Flats Plan prior to
issuing its approval. The Commission also will invite comments from
other interested persons on whether the Flats Plan is consistent with
applicable statutory requirements.
VI. Notice and Comment
Interested persons may submit comments on the Flats Plan no later
than January 5, 2024. 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.
VII. Ordering Paragraphs
It is ordered:
1. The News Media Alliance's Motion for Acceptance of Comments,
filed October 16, 2023, is granted.
2. The Association for Postal Commerce's Motion for Leave to File
Comments, filed October 18, 2023, is granted.
3. Comments on the Flats Plan are due no later than January 5,
2024.
4. Pursuant to 39 U.S.C. 505, Manon A. Boudreault is appointed to
serve as an officer of the Commission (Public Representative) to
represent the interests of the general public in this proceeding.
5. The Secretary shall arrange for publication of this notice in
the Federal Register.
By the Commission.
Erica A. Barker,
Secretary.
[FR Doc. 2023-25914 Filed 11-22-23; 8:45 am]
BILLING CODE 7710-FW-P
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</html>Indexed from Federal Register on November 24, 2023.
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