[Federal Register Volume 83, Number 129 (Thursday, July 5, 2018)]
[Proposed Rules]
[Pages 31344-31346]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-14367]


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POSTAL REGULATORY COMMISSION

39 CFR Part 3050

[Docket No. RM2018-8; Order No. 4689]


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 an informal rulemaking proceeding to consider 
changes to an analytical method for use in periodic reporting (Proposal 
Five). This document informs the public of the filing, invites public 
comment, and takes other administrative steps.

DATES: Comments are due: August 22, 2018.

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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. Proposal Five
III. Notice and Comment
IV. Ordering Paragraphs

I. Introduction

    On June 26, 2018, 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), June 26, 2018 (Petition). The 
Postal Service filed a non-public library reference with Proposal 
Five. Library Reference USPS-RM2018-8/NP1, Nonpublic Material 
Relating to Proposal Five, June 26, 2018; Notice of Filing of USPS-
RM2018-8/NP1 and Application for Nonpublic Treatment, June 26, 2018.
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II. Proposal Five

    Background. The Postal Service states that it considered three 
related concerns when drafting Proposal Five. Petition, Proposal Five 
at 1. First, the Postal Service notes that, beginning January 1, 2018, 
the Universal Postal Union (UPU) \2\ implemented ``format'' or shape 
based terminal dues.\3\ The UPU separates its letter post mailpieces 
into three formats: Small letters (format Petit (P)), large letters, 
also called ``flats,'' (format Grand (G)), and bulky letters and small 
packets (format Encombrant (E)). Id. at 1-2. The recent change to the 
UPU terminal dues system applies separate terminal dues for the 
combined letter and flat (formats P and G) dispatches, format E 
dispatches, and for dispatches that contain mailpieces from all three 
formats (Mixed).\4\
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    \2\ The UPU is a United Nations specialized agency comprising 
192 member countries, including the United States. Member countries 
negotiate international agreements governing the exchange of 
international mail, including applicable rates for the delivery of 
international mail.
    \3\ Petition, Proposal Five at 1. Terminal dues are also 
referred to as default UPU rates, because they apply in the absence 
of an agreement between or among postal operators establishing other 
rates.
    \4\ Id. at 2. The UPU separates its member countries into four 
country groups (Groups I-IV) based on each member country's Gross 
National Income and the development of its postal system. Decisions 
of the 26th Congress other than those amending the Acts 
(resolutions, decisions, recommendations, formal opinions, etc.) 
(2017), Annex 2, Classification of countries and territories for 
terminal dues and Quality of Service Fund (QSF) purposes available 
at http://www.upu.int/uploads/tx_sbdownloader/actsLastCongressActsEn.pdf. Then the UPU separates these country 
groups into two systems (Target and Transition). Designated postal 
operators of Target System member countries that send large volumes 
of UPU Letter Post mailpieces are required to sort their UPU Letter 
Post mailpieces by shape (formats P and G dispatches and format E 
dispatches). Designated postal operators of smaller volume Target 
System member countries and Transition System member countries may 
opt to separate their UPU Letter Post mailpieces by shape.
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    Second, the Postal Service states that Proposal Five addresses 
issues raised in the Postal Service's response to Chairman's 
Information Request No. 10, question 6 in Docket No. ACR2017.\5\ CHIR 
No. 10, question 6 requested the Postal Service to ``identify and 
discuss the factors that increased processing, delivery, and other 
costs for Inbound Letter Post in [Fiscal Year (FY)] 2017.'' \6\ In its 
response to CHIR No. 10, question 6, the Postal Service discussed 
shape-based cost trends for a market dominant negotiated service 
agreement, Inbound Market Dominant PRIME Tracked Service Agreement, to 
explain the increased Inbound Letter Post cost. Responses to CHIR No. 
10, question 6. CHIR No. 18 asked why the Postal Service did not 
incorporate the shape-based information into the Domestic Processing 
Model and the International Cost and Revenue Analysis (ICRA) report.\7\ 
In its response, the Postal Service explained that it could not apply 
the shape-based ratios developed for the financial workpapers for 
inbound international negotiated service agreements to the Domestic 
Processing Model or the ICRA report without additional data and 
development.\8\ The Postal Service indicated that it was investigating 
a shape-based approach to the Domestic Processing Model and planned to 
complete its investigation and file a proposal to incorporate a shape-
based approach into the Domestic Processing Model and the ICRA report 
in FY 2018.\9\
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    \5\ Id. See Docket No. ACR2017, Responses of the United States 
Postal Service to Questions 1-7 of Chairman's Information Request 
No. 10, question 6, February 2, 2018 (Responses to CHIR No. 10).
    \6\ Docket No. ACR2017, Chairman's Information Request No. 10 
and Notice of Filing Under Seal, question 6, January 26, 2018 (CHIR 
No. 10).
    \7\ Chairman's Information Request No. 18, question 1, February 
13, 2018.
    \8\ Responses of the United States Postal Service to Questions 
1-2 of Chairman's Information Request No. 18, question 1, February 
20, 2018 (Response to CHIR No. 18).
    \9\ Petition, Proposal Five at 2-3; see Response to CHIR No. 18, 
questions 1.a., 1.c.
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    Third, the Postal Service contends that Proposal Five responds to a 
directive in the FY 2017 Annual Compliance Determination report (ACD). 
Petition, Proposal Five at 3. In the FY 2017 ACD, the Commission 
directed the Postal Service to file an update on its investigation of 
using shape-based data to develop Inbound Letter Post costs within 90 
days of the FY 2017 ACD, if the Postal Service had not yet filed a 
``rulemaking proposal to implement shape-based costing for Inbound 
Letter Post in the Domestic Processing Model and the ICRA.'' \10\
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    \10\ Id. See Annual Compliance Determination Report, Fiscal Year 
2017, March 29, 2018, at 69 (FY 2017 ACD).
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    Proposal. The Postal Service states that Proposal Five will replace 
the current methodology with the development of separate inbound costs 
for letter and flats (formats P and G) and for bulky letters and small 
packets (format E). Petition, Proposal Five at 3. The Postal Service 
states that the ICRA report format will not change, but ``the 
aggregated costs shown on the individual ICRA lines would be the sum of 
the separately-developed letter/flat-shape and packet-shaped costs.'' 
Id.
    Rationale and impact. The Postal Service states that the current 
methodology does not align with what is now the UPU terminal dues 
structure. Id. Additionally, the Postal Service explains that the 
proposed methodology will provide better data from which the Commission 
may analyze the new UPU terminal dues rate structure and analyze the 
various components of the Inbound Letter Post product. Id. at 4. The 
Postal Service identifies the likely effects of Proposal Five on the 
development of the ICRA report in non-public Excel file 
``Attachment1.xls.'' The Postal Service provides cell-by-cell 
differences between the proposed methodology and the data provided in 
the ICRA as part of the Postal Service's annual compliance report for 
FY 2017. Id.

III. Notice and Comment

    The Commission establishes Docket No. RM2018-8 for consideration of 
matters raised by the Petition. More information on the Petition may be 
accessed via the Commission's website at http://www.prc.gov. Interested 
persons may submit comments on the Petition and Proposal Five no later 
than August 22, 2018. Pursuant to 39 U.S.C. 505, Katalin K. Clendenin 
is designated as an officer of the Commission (Public Representative) 
to represent the

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interests of the general public in this proceeding.

IV. Ordering Paragraphs

    It is ordered:
    1. The Commission establishes Docket No. RM2018-8 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 June 26, 2018.
    2. Comments by interested persons in this proceeding are due no 
later than August 22, 2018.
    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.
Stacy L. Ruble,
Secretary.
[FR Doc. 2018-14367 Filed 7-3-18; 8:45 am]
 BILLING CODE 7710-FW-P