[Federal Register Volume 84, Number 21 (Thursday, January 31, 2019)]
[Notices]
[Pages 826-828]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-00396]


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POSTAL REGULATORY COMMISSION

[Docket No. ACR2018; Order No. 4960]


FY 2018 Annual Compliance Report

AGENCY: Postal Regulatory Commission.

ACTION: Notice.

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SUMMARY: The Postal Service has filed an Annual Compliance Report on 
the costs, revenues, rates, and quality of service associated with its 
products in fiscal year 2018. Within 90 days, the Commission must 
evaluate that information and issue its determination as to whether 
rates were in compliance with title 39, chapter 36, and whether service 
standards in effect were met. To assist in this, the Commission seeks 
public comments on the Postal Service's Annual Compliance Report.

DATES: Comments are due: January 31, 2019. Reply Comments are due: 
February 11, 2019.

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. Overview of the Postal Service's FY 2018 ACR
III. Procedural Steps
IV. Ordering Paragraphs

I. Introduction

    On December 28, 2018, the United States Postal Service (Postal 
Service) filed with the Commission its Annual Compliance Report (ACR) 
for fiscal year (FY) 2018, pursuant to 39 U.S.C. 3652.\1\ Section 3652 
requires submission of data and information on the costs, revenues, 
rates, and quality of service associated with postal products within 90 
days of the closing of each fiscal year. In conformance with other 
statutory provisions and Commission rules, the ACR includes the Postal 
Service's FY 2018 Comprehensive Statement, its FY 2018 annual report to 
the Secretary of the Treasury on the Competitive Products Fund, and 
certain related Competitive Products Fund material. See respectively, 
39 U.S.C. 3652(g), 39 U.S.C. 2011(i), and 39 CFR 3060.20-23. In line 
with past practice, some of the material in the FY 2018 ACR appears in 
non-public annexes.
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    \1\ United States Postal Service FY 2018 Annual Compliance 
Report, December 28, 2018 (FY 2018 ACR). Public portions of the 
Postal Service's filing are available on the Commission's website at 
http://www.prc.gov.
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    The filing begins a review process that results in an Annual 
Compliance Determination (ACD) issued by the Commission to determine 
whether Postal Service products offered during FY 2018 were in 
compliance with applicable title 39 requirements.

II. Overview of the Postal Service's FY 2018 ACR

    Contents of the filing. The Postal Service's FY 2018 ACR consists 
of a 77-page narrative; extensive additional material appended as 
separate folders and identified in Attachment One; and an application 
for non-public treatment of certain materials, along with supporting 
rationale, filed as Attachment Two. The filing also includes the 
Comprehensive

[[Page 827]]

Statement,\2\ Report to the Secretary of the Treasury, and information 
on the Competitive Products Fund filed in response to Commission rules. 
This material has been filed electronically with the Commission.
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    \2\ In years prior to 2013, the Commission reviewed the Postal 
Service's reports prepared pursuant to 39 U.S.C. 2803 and 39 U.S.C. 
2804 (filed as the Comprehensive Statement by the Postal Service) in 
its ACD. However, as it has for the past several years, the 
Commission intends to issue a separate notice soliciting comments on 
the comprehensive statement and provide its related analysis in a 
separate report from the ACD.
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    Scope of the filing. The material appended to the narrative 
consists of: (1) Domestic product costing material filed on an annual 
basis summarized in the Cost and Revenue Analysis (CRA); (2) comparable 
international costing material summarized in the International Cost and 
Revenue Analysis (ICRA); (3) worksharing-related cost studies; and (4) 
billing determinant information for both domestic and international 
mail. FY 2018 ACR at 2-3. Inclusion of these four data sets is 
consistent with the Postal Service's past ACR practices. As with past 
ACRs, the Postal Service has split certain materials into public and 
non-public versions. Id. at 3.
    ``Roadmap'' document. A roadmap to the FY 2018 ACR can be found in 
Library Reference USPS-FY18-9. This document provides brief 
descriptions of the materials submitted, as well as the flow of inputs 
and outputs among them; a discussion of differences in methodology 
relative to Commission methodologies in last year's ACD; and a list of 
special studies and a discussion of obsolescence, as required by 
Commission rule 3050.12. Id. at 3-4.
    Methodology. The Postal Service states that it has adhered to the 
methodologies historically used by the Commission subject to changes 
identified and discussed in Library Reference USPS-FY18-9 and in 
prefaces accompanying the appended folders. Id. at 4. The Postal 
Service observes that one noteworthy methodological change regarding 
product costs was discussed in response to Commission Order No. 3506 
and approach for reporting of group incremental cost estimates used by 
the Commission in the FY 2017 ACD.\3\ As a result, the Postal Service's 
FY 2018 CRA reports group incremental cost estimates when available as 
the attributable costs of combinations of products, including for the 
market dominant classes. FY 2018 ACR at 5. As a consequence, the costs 
labeled as attributable costs in each row of the FY 2018 CRA are not 
directly comparable to costs reported with the same label in the CRAs 
filed prior to FY 2017. Id. at 6.
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    \3\ Id.; see Docket No. RM2016-2, Order Concerning United Parcel 
Service, Inc.'s Proposed Changes to Postal Service Costing 
Methodologies (UPS Proposals One, Two, and Three), September 9, 2016 
(Order No. 3506). Docket No. ACR 2017, Annual Compliance 
Determination, March 29, 2018, at 8-10 (FY 2017 ACD).
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    Market dominant product-by-product costs, revenues, and volumes. 
Comprehensive cost, revenue, and volume data for all market dominant 
products of general applicability are shown directly in the FY 2018 CRA 
or ICRA. Id. at 8.
    The FY 2018 ACR includes a discussion by class of each market 
dominant product, including costs, revenues, and volumes, workshare 
discounts, and passthroughs responsive to 39 U.S.C. 3652(b), and FY 
2018 promotions. Id. at 8-45.
    In response to the Commission's FY 2010 ACD directives,\4\ the 
Postal Service states that it is providing information regarding: (1) 
All operational changes designed to reduce flats costs and the 
estimated financial effects of such changes (FY 2018 ACR at 24-32); (2) 
all costing methodology improvements made in FY 2018 and the estimated 
financial effects of such changes (id. at 32-36); and (3) a statement 
summarizing the current year subsidy of the flats product (id. at 35). 
In addition, the Postal Service presented its schedule of above-average 
price increases for Flats which provides planned price increases for 
Flats by the consumer price index times 1.05. Id. at 25.
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    \4\ Docket No. ACR2010, Annual Compliance Determination, March 
29, 2011, at 106-107 (FY 2010 ACD).
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    Market dominant negotiated service agreements. The FY 2018 ACR 
presents information on the PHI Acquisitions, Inc. negotiated service 
agreement (NSA), the only market dominant NSA in effect in FY 2018. Id. 
at 43-44. The agreement was terminated effective June 30, 2018. Id. at 
43.
    Service performance. The Postal Service notes that the Commission 
issued rules on periodic reporting of service performance measurement 
and customer satisfaction in FY 2010. Responsive information appears in 
Library Reference USPS-FY18-29. Id. at 46.
    Customer satisfaction. The FY 2018 ACR discusses the Postal 
Service's approach for measuring customer experience and satisfaction; 
discusses survey modifications; describes the methodology; presents a 
table with survey results; compares the results from FY 2017 to FY 
2018; and provides information regarding customer access to postal 
services. Id. at 48-65.
    Competitive products. The FY 2018 ACR provides costs, revenues, and 
volumes for competitive products of general applicability in the FY 
2018 CRA or ICRA. For competitive products not of general 
applicability, data are provided in non-public Library References USPS-
FY18-NP2 and USPS-FY18-NP27. Id. at 66. The FY 2018 ACR also addresses 
the competitive product pricing standards of 39 U.S.C. 3633. Id. at 66-
74. The Postal Service also provides a response to the Commission's 
Directive in Order No. 4792 and reports separately the revenue, pieces, 
and weight of ECOMPRO pieces for each country in USPS-FY18-NP9.\5\ 
Additionally, the Postal Service responds to the Commission's Directive 
in the FY 2016 ACD requiring it to identify each NSA product that had 
no mailpieces shipped under its contract in future ACRs.\6\ This 
information is provided in USPS-FY18-NP27 (for domestic NSAs) and USPS-
FY18-NP2 (for international NSAs). FY 2018 ACR at 74.
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    \5\ Docket No. CP2018-286, Order Approving Changes in Prices Not 
of General Applicability for Certain Inbound Parcel Post (at UPU 
Rates), August 23, 2018, at 7 (Order No. 4792).
    \6\ Docket No. ACR 2016, Annual Compliance Determination, March 
28, 2017, at 83 (FY 2016 ACD).
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    Market tests; nonpostal services. The Postal Service discusses the 
two competitive market tests conducted during FY 2018 and nonpostal 
services. Id. at 75.

III. Procedural Steps

    Statutory requirements. Section 3653 of title 39 requires the 
Commission to provide interested persons with an opportunity to comment 
on the ACR and to appoint an officer of the Commission (Public 
Representative) to represent the interests of the general public. The 
Commission hereby solicits public comment on the Postal Service's FY 
2018 ACR and on whether any rates or fees in effect during FY 2018 (for 
products individually or collectively) were not in compliance with 
applicable provisions of chapter 36 of title 39 or Commission 
regulations promulgated thereunder. Commenters addressing market 
dominant products are referred in particular to the applicable 
requirements (39 U.S.C. 3622(d) and (e) and 39 U.S.C. 3626); objectives 
(39 U.S.C. 3622(b)); and factors (39 U.S.C. 3622(c)). Commenters 
addressing competitive products are referred to 39 U.S.C. 3633.
    The Commission also invites public comment on the cost coverage 
matters the Postal Service addresses in its filing; service performance 
results; levels of

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customer satisfaction achieved; and such other matters that may be 
relevant to the Commission's review.
    Access to filing. The Commission has posted the publicly available 
portions of the FY 2018 ACR on its website at http://www.prc.gov.
    Comment deadlines. Comments by interested persons are due on or 
before January 31, 2019. Reply comments are due on or before February 
11, 2019. The Commission, upon completion of its review of the FY 2018 
ACR, comments, and other data and information submitted in this 
proceeding, will issue its ACD.
    Public Representative. Mallory L. Smith is designated to serve as 
the Public Representative to represent the interests of the general 
public in this proceeding. Neither the Public Representative nor any 
additional persons assigned to assist her shall participate in or 
advise as to any Commission decision in this proceeding other than in 
his or her designated capacity.

IV. Ordering Paragraphs

    It is ordered:
    1. The Commission establishes Docket No. ACR2018 to consider 
matters raised by the United States Postal Service's FY 2018 Annual 
Compliance Report.
    2. Pursuant to 39 U.S.C. 505, the Commission appoints Mallory L. 
Smith as an officer of the Commission (Public Representative) in this 
proceeding to represent the interests of the general public.
    3. Comments on the United States Postal Service's FY 2018 Annual 
Compliance Report to the Commission are due on or before January 31, 
2019.
    4. Reply comments are due on or before February 11, 2019.
    5. The Secretary shall arrange for publication of this Order in the 
Federal Register. Due to its funding lapse, the Federal Register is not 
being supported and this Order's publication will be delayed. The delay 
in publication in the Federal Register will not affect comment 
deadlines.

    By the Commission.
Stacy L. Ruble,
Secretary.
[FR Doc. 2019-00396 Filed 1-30-19; 8:45 am]
 BILLING CODE 7710-FW-P