[Federal Register Volume 80, Number 158 (Monday, August 17, 2015)]
[Proposed Rules]
[Pages 49184-49186]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-20232]
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POSTAL REGULATORY COMMISSION
39 CFR Part 3050
[Docket No. RM2015-16; Order No. 2654]
Periodic Reporting
AGENCY: Postal Regulatory Commission.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Commission is noticing a recent Postal Service filing
requesting that the Commission initiate an informal rulemaking
proceeding to consider changes to analytical principles relating to
periodic reports (Proposal Seven). This notice informs the public of
the filing, invites public comment, and takes other administrative
steps.
DATES: Comments are due: September 25, 2015. Reply Comments are due:
October 16, 2015.
ADDRESSES: Submit comments electronically via the Commission's Filing
Online system at http://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. Summary of Proposal
III. Initial Commission Action
IV. Ordering Paragraphs
I. Introduction
On August 5, 2015, the Postal Service filed a petition pursuant to
39 CFR 3050.11 requesting that the Commission initiate an informal
rulemaking proceeding to consider changes to analytical principles
relating to the Postal Service's periodic reports.\1\ Proposal Seven is
attached to the Petition and proposes an analytical method change
relating to the avoided costs for Flats Sequencing System (FSS)
workshare discounts. Petition at 1.
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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), August 5, 2015 (Petition).
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This Petition was filed in response to Order No. 2472, which
directed the Postal Service ``to file a proposed methodology for
determining the costs avoided for the Presorted FSS workshare
discounts, as described in the body of [Order No. 2472], within 90 days
of the date of [Order No. 2472].'' \2\
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\2\ Docket No. R2015-4, Order on Revised Price Adjustments for
Standard Mail, Periodicals, and Package Services Products and
Related Mail Classification Changes, May 7, 2015, at 62 (Order No.
2472).
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II. Summary of Proposal
Under Proposal Seven, the Postal Service seeks to address the
avoided costs relating to FSS mail. Petition, Proposal Seven at 1. The
Postal Service bifurcates Proposal Seven into the Mail Processing and
the Delivery elements of the avoided costs for FSS workshare discounts.
Id.
A. Section One: Proposed Method for Calculating Mail Processing Cost
Avoidances
The Postal Service seeks to modify the modeling methodology used in
the USPS-FY14-11 (Docket No. ACR2014) Standard Mail Flats Mail
Processing Cost Model to estimate the mail processing cost avoidances
of FSS presorted Standard Flats. Petition, Proposal Seven, Section One
at 1. The Postal Service expands the Standard Mail Flats Mail
Processing Cost Model to identify the unique characteristics and flows
of FSS-prepared Standard Flats. Id. As part of Library Reference USPS-
RM2015-16/1 filed with the Petition, the Postal Service provides three
models supporting this section of Proposal Seven. Id. The Postal
Service also proposes changes to the USPS-FY14-11 (Docket No. ACR2014)
Periodicals Flats Mail Processing Cost Model. Id. at 4.\3\
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\3\ The proposed changes to the Periodicals Flats Mail
Processing Cost Model were filed in Docket No. RM2015-18. See Docket
No. RM2015-18, Petition of the United States Postal Service for the
Initiation of a Proceeding to Consider Proposed Changes in
Analytical Principles (Proposal Nine), August 5, 2015, Attachment at
2.
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There are nine modifications proposed by the Postal Service in
Section One of Proposal Seven, all of which apply to the Standard Mail
Flats Cost Model. Petition, Proposal Seven, Section One at 4. Two of
the proposed modifications also apply to the Periodicals Model. Id.
1. Revision of the Methodology Used To Estimate the Proportion of Flats
Processed in Mechanized Incoming Secondary Operations (Modification
One)
The Postal Service presents a process to estimate the proportion of
flat-shaped mail processed in mechanized incoming secondary operations.
Id. at 4-8. Although over 98 percent of flats destinate in the service
territories of plants that have mechanized equipment, certain
facilities choose to perform the incoming secondary sortation manually
for a variety of reasons, including low volume, service commitments,
and
[[Page 49185]]
operating window/capacity restraints. Id. at 4-5. The Postal Service
asserts that its proposed methodology accounts for the two different
technologies performing mechanized incoming secondary sortation--the
Automated Flats Sorting Machine 100 (AFSM 100) and the FSS. Id. at 5.
The Postal Service also represents that its methodology excludes letter
shaped mail worked in flat operations, pieces entered in Carrier Route
bundles that have broken and therefore require incoming secondary
sortation, rejects from FSS operations, and pieces destinating in FSS
zones that are not sorted on the FSS. See id. at 5-8. This modification
applies to both the Standard Mail and Periodicals Flats Mail Processing
Cost Models.
2. Changes to Bundle Processing Flows To Account for Increased
Mechanized Incoming Secondary Piece Processing
The Postal Service proposes to adjust the bundle flow formulae for
consistency with the mechanized incoming secondary piece distribution
calculated under Modification One. See id. at 8-9. The Postal Service
states that bundles for mechanized incoming secondary sortation will
not incur an incoming secondary bundle sort. See id. The Postal Service
explains that bundles for zones worked manually will incur an
additional bundle sort at the delivery unit. Id. at 9. This
modification applies to the Standard Mail Flats Mail Processing Cost
Model.
3. Introduction of FSS Bundle Flows
The Postal Service assumes that no FSS bundles will incur a
sortation at the delivery unit. Id. Aside from this assumption, the
Postal Service calculates the bundle flows for FSS bundles using the
same methodology used for other bundle types. Id. This modification
applies to the Standard Mail Flats Mail Processing Cost Model.
4. FSS Presort Piece Model and Costs
The Postal Service states that FSS presorted pieces flow directly
into piece sortation on the FSS, bypassing outgoing primary, outgoing
secondary, managed mail, and incoming primary operations. Id. The
Postal Service represents that it models such FSS presorted pieces
using the same basic methodology previously used to model piece flows.
Id. This modification applies to the Standard Mail Flats Mail
Processing Cost Model.
5. Updating 5-Digit Piece Model and Costs
The Postal Service represents that 5-Digit pieces do not flow into
FSS operations and proposes to update the 5-Digit piece model to
reflect this flow. Id. at 10. The Postal Service represents that the
relative incidence of manual incoming secondary sortation is higher for
5-Digit pieces by a factor of one over one minus the FSS coverage
factor. Id. This modification applies to the Standard Mail Flats Mail
Processing Cost Model.
6. Updating Mixed ADC, ADC, 3-Digit for Incoming Secondary Coverage
The Postal Service proposes to update the area distribution center
(ADC), mixed ADC, and 3-Digit models to incorporate the recalculation
of the mechanized incoming secondary sortation. Id. This modification
applies to the Standard Mail Flats Mail Processing Cost Model.
7. Explicit Modeling of Mail Preparation
The Postal Service states that the current model includes the hours
associated with mail preparation for the FSS in the calculation of the
FSS productivities. See id. at 11. However, because such AFSM 100
preparation costs are included in the calculation of the AFSM 100
productivities, the Postal Service observes that a portion of the AFSM
100 preparation costs are allocated incorrectly to FSS prepared pieces
through the Cost and Revenue Analysis (CRA) adjustment factor. See id.
The Postal Service proposes to model AFSM 100 preparation costs using
the methodology used in the Periodicals Flats Mail Processing Model.
See id. This modification applies to the Standard Mail Flats Mail
Processing Cost Model.
8. CRA Adjustment Factor Adjusted for the FSS
The Postal Service uses the CRA adjustment factor to calibrate the
model to CRA costs and to distribute non-modeled costs to the
appropriate rate category. Id. The Postal Service states that applying
the CRA adjustment factor as is done in the current methodology would
distort measured cost avoidances by overdistributing non-modeled costs
to FSS pieces. Id. at 12. The Postal Service represents that it will
calculate the CRA adjustment factor to ensure the non-modeled costs
distributed to FSS pieces are equal to those distributed to Five-Digit
pieces. Id. This modification applies to the Standard Mail Flats Mail
Processing Cost Model.
9. FSS Realization Factor
The Postal Service represents that it introduced a FSS Realization
Factor to measure the proportion of FSS eligible mail that is processed
on the FSS. Id. at 12-13. According to the Postal Service, this FSS
Realization Factor captures the fact that mail that destinates in a FSS
zone and arrives after the end of first-pass processing may be
processed on the AFSM 100 rather than the FSS to avoid delay. Id. This
modification applies to both the Standard Mail and Periodicals Flats
Mail Processing Cost Models.
B. Section Two: Proposed Method for Calculating Delivery Costs
The Postal Service proposes a method to disaggregate delivery costs
for Periodicals Flats, Bound Printed Matter Flats, Standard Flats and
Carrier Route Flats (not including High Density or Saturation) between
those destinating in FSS zones and those destinating in non-FSS zones.
Petition, Proposal Seven: Section Two at 1. This method uses
operational assumptions and models rather than data directly collected
from cost systems, and calculates separate delivery costs for the
relevant products based on whether pieces are destinating in FSS or
non-FSS zones. Id. at 3.
The proposed computing method begins with a product's component
group costs in three segments: Cost Segment 6, City Carrier In-Office
Activities; Cost Segment 7, City Carrier Street Activities; and Cost
Segment 10, Rural Carriers Office and Street Activities. Id. at 3-9.
Within each cost segment, the purpose is to disaggregate costs into FSS
zone costs and non-FSS zone costs. Id.
III. Initial Commission Action
The Commission establishes Docket No. RM2015-16 for consideration
of matters raised by the Petition. Additional information concerning
the Petition may be accessed via the Commission's Web site at http://www.prc.gov. Interested persons may submit comments on the Petition and
Proposal Seven no later than September 25, 2015. Reply comments are due
no later than October 16, 2015. Pursuant to 39 U.S.C. 505, Katalin K.
Clendenin 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. RM2015-16 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
August 5, 2015.
[[Page 49186]]
2. Comments are due no later than September 25, 2015. Reply
comments are due no later than October 16, 2015.
3. Pursuant to 39 U.S.C. 505, the Commission appoints Katalin K.
Clendenin 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.
Ruth Ann Abrams,
Acting Secretary.
[FR Doc. 2015-20232 Filed 8-14-15; 8:45 am]
BILLING CODE 7710-FW-P