Periodic Reporting

Issuing agencies

Abstract

The Commission is acknowledging a recent Postal Service filing requesting the Commission initiate a rulemaking proceeding to consider changes to analytical principles relating to periodic reports. 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 91 Issue 197 (Wednesday, October 14, 2026)</title>
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[Federal Register Volume 91, Number 197 (Wednesday, October 14, 2026)]
[Proposed Rules]
[Pages 65147-65148]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-21000]


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POSTAL REGULATORY COMMISSION

39 CFR Part 3050

[Docket No. RM2027-1; Order No. 9764]


Periodic Reporting

AGENCY: Postal Regulatory Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Commission is acknowledging a recent Postal Service filing 
requesting the Commission initiate a rulemaking proceeding to consider 
changes to analytical principles relating to periodic reports. This 
document informs the public of the filing, invites public comment, and 
takes other administrative steps.

DATES: Comments are due: November 19, 2026.

ADDRESSES: Submit comments electronically via the Commission's Filing 
Online system at <a href="https://www.prc.gov">https://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
III. Notice and Comment
IV. Ordering Paragraphs

I. Introduction

    On October 7, 2026, 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 presents a proposal to establish a 
methodology for the treatment of expenses for current retiree health 
benefits (RHB) top-up payments required under the Postal Service Reform 
Act (PSRA) that must be paid into the Postal Service Retiree Health 
Benefits Fund (PSRHBF). Petition at 1.
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    \1\ Petition of the United States Postal Service to Initiate a 
Proceeding to Change Analytical Principles, October 7, 2026 
(Petition).
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II. Proposal

    Background. Under the PSRA, the Postal Service must make payments 
into the PSRHBF that are equal to `` `the amount (if any) that 
Government contributions required to be paid from the Fund under 
section 8906(g)(2)(A) exceeded the estimated net claims costs under the 
enrollment of the individuals described in section 8906(g)(2)(A).''' 
Petition, Proposal at 1. The Office of Personnel Management (OPM) 
calculates these payments, referred to as top-up payments, ``based on 
current retirees' estimated healthcare claims costs, their health 
insurance premiums and contribution shares, and administrative 
expenses[,]'' and they ``begin accruing in FY 2026.'' Id.
    Historically, RHB expenses ``were treated as variable to the same 
degree and distributed in the same manner as all postal service 
labor,'' which the Postal Service calls the `` `composite labor 
approach.' '' Id. at 2. The Postal Accountability and Enhancement Act 
(PAEA) altered this approach because the Postal Service began accruing 
RHB ``in two parts: (1) RHB expenses for current retirees (a 
continuation of `pay-as-you-go' expenses) and (2) annual prefunding 
payments for future retirees.'' Id. Costs were therefore divided 
between current-year costs, which were ``treated using the composite 
labor approach,'' and prior-year costs, which were ``treated as 
institutional.'' Id. at 3. After FY 2017, when RHB for future retirees 
should have been fully prefunded pursuant to PAEA and ``the statutorily 
mandated prefunding payments were no longer required[,]'' the Postal 
Service began to accrue normal costs, which were ``treated using the 
composite labor approach[,]'' and ``amortization expenses associated 
with the unfunded portion of the PSRHBF obligation[,]'' which were 
``treated as unrelated to current-year volumes and therefore treated as 
institutional.'' Id.
    After the PSRA repealed the prefunding requirement and ``cancelled 
the past due (amortization) payments[,]'' ``[t]he only RHB expenses to 
be incurred by the Postal Service going forward are payments associated 
with current retirees.'' Id. at 3-4. And these payments were only ``set 
to begin once OPM determined if a `top-up' payment was due (expected no 
later than June 30, 2026) or if the PSRHBF [was] exhausted.'' Id. at 4. 
Thus, ``[b]eginning in FY 2026, the Postal Service began accruing 
expenses associated with the RHB top-up payments for current 
retirees.'' Id. OPM determined that these expenses totaled $726 million 
for FY 2026. Id.
    Proposal. The Postal Service proposes to treat current RHB top-up 
payments as ``variable to the same degree and distributed in the same 
manner as all labor.'' Id. at 6. It states that there are ``two key 
aspects to examine when considering the treatment of the top-up payment 
expenses: The relationship between the payment schedule and the cost 
accrual, and the past treatment of both the funds currently in the 
[PSRHBF] and the RHB expenses for current retirees prior to the PAEA.'' 
Id.
    Regarding the first aspect, the Postal Service states that prior to 
the PAEA, there was a ``time disparity between the accrual of RHB 
expenses and the payment schedule[ ]'' because ``RHB expenses for 
current retirees were

[[Page 65148]]

recognized at the time of the cash outlay . . . as opposed to when 
those benefits were earned during the now-retired beneficiaries' 
employment.'' Id. Regardless of this fact, these ``payments were 
attributed to products on the basis of all labor.'' Id. The Postal 
Service states that this was similar to how the Commission had 
historically treated attributing payments to the Civil Service 
Retirement and Disability Fund (CSRDF) deficit, where the Commission 
approved a methodology that attributed ``the current-year first 
installment in the amortization schedule . . . using the composite 
labor approach.'' Id. at 6-7. Subsequent amortization schedule payments 
were similarly ``attributed using the same current-year composite labor 
approach[ ]'' despite stemming from prior years. Id. at 7.
    Regarding the second aspect, the Postal Service states that top-up 
funds are one of several sources that make up the PSRHBF, and the 
relevant sources also include: (1) a surplus from the CSRDF, which 
contained multiple funding sources, including ``employer matching 
contributions, payments for unfunded liabilities associated with 
general pay increases, and payments for unfunded liabilities associated 
with annuitant [cost of living adjustments (COLAs)]'' that were 
attributed as they accrued and, in the case of employer matching 
contributions were ``included as employee benefit costs in the relevant 
Cost Segments[ ]'' while the ``unfunded liability payments associated 
with general pay raises and annuitant COLAs'' were ``partitioned into 
current- and prior-year expenses[ ]'' that were ``variable to the same 
degree and distributed in the same manner as all labor[;]'' (2) an 
escrow account containing the ``savings'' that resulted ``from changing 
the pension funding assumptions before and after the Postal Civil 
Service Retirement System Funding Reform Act of 2003[,]'' the expenses 
of which were treated as institutional; and (3) ``the prefunding 
payments required by the PAEA[,]'' which ``were attributed at the time 
of payment using the mixed approach'' discussed above. Id. at 7-8.
    Under this backdrop, the Postal Service proposes that top-up 
payments be treated similarly to ``[n]early all funds'' within the 
PSRHBF. Id. at 9. According to the Postal Service, ``it is sensible'' 
to treat top-up payments as attributable to products, which the Postal 
Service states is ``consistent with past contributions such as the 
unfunded liability payments and prefunding payments[ ]'' as well as 
consistent with ``the treatment of RHB expenses for current retirees 
under the `pay-as-you-go' system.'' Id. According to the Postal 
Service, ``[t]reating the top-up payments as unrelated to products, or 
as institutional costs, would reverse nearly three decades of 
[precedents] pertaining to the treatment of RHB expenses for current 
retirees'' and would be ``inappropriate'' because ``[t]he payments for 
current retirees reflect benefits earned during their employment[ ]'' 
and treating them as institutional would lead ``to under-attribution of 
expenses associated with mail classes and services[,]'' which would 
negatively impact its ability to accurately cost and price its 
``products, services, and worksharing discounts.'' Id. at 9-10.
    Thus, according to the Postal Service, its ``preferred approach'' 
for top-up payments is the composite labor methodology because it 
reflects prior Commission precedent ``for attributing servicewide 
expenses with similar characteristics[,]'' is ``consistent with past 
treatment and the treatment of other funds in the PSRHBF[,]'' and 
because ``attribution based on past volumes or labor usage is wholly 
inappropriate under the Postal Service's Commission-approved costing 
methodologies.'' Id. at 10. It proposes that the Commission ``approve 
the attribution of the top-up payments under the composite labor 
approach.'' Id. at 13.
    Rationale. The Postal Service proposes returning to ``the composite 
labor approach for expenses associated with retiree health benefits for 
current retirees, thereby treating the top-up payment expenses as 
variable to the same degree and distributed in the same manner as all 
labor.'' Id. at 6. The Postal Service represents that this is ``a 
return to the Commission-approved methodology used between FY 1988 and 
FY 2006,'' as well as ``a continuation of the attribution of RHB 
expenses for current retirees generally employed between FY 1988 and FY 
2016.'' Id.
    Impact. Using a FY 2026 top-up payment of $726 million, the Postal 
Service provided the impact of the proposal on FY 2025 unit costs. See 
id. at 11-12, Table 4. The Postal Service represents that overall, the 
proposal will result in a 0.8 percent increase in total costs and a 
0.85 percent increase in total volume variable and product specific 
costs. Id.

III. Notice and Comment

    The Commission establishes Docket No. RM2027-1 for consideration of 
matters raised by the Petition. More information on the Petition may be 
accessed via the Commission's website at <a href="https://www.prc.gov">https://www.prc.gov</a>. 
Interested persons may submit comments on the Petition and Proposal no 
later than November 19, 2026. Pursuant to 39 U.S.C. 505, Cassie D'Souza 
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. RM2027-1 for consideration 
of the matters raised by the Petition of the United States Postal 
Service to Initiate a Proceeding to Change Analytical Principles, filed 
October 7, 2026.
    2. Comments by interested persons in this proceeding are due no 
later than November 19, 2026.
    3. Pursuant to 39 U.S.C. 505, the Commission appoints Cassie 
D'Souza to serve as an officer of the Commission (Public 
Representative) to represent the interests of the general public in 
this docket.
    4. This Order, or abstract thereof, shall be published in the 
Federal Register.

    By the Commission.
Danielle LeFlore,
Legal Assistant.
[FR Doc. 2026-21000 Filed 10-13-26; 8:45 am]
BILLING CODE 7710-FW-P


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