Federal Register / Vol. 75, No. 226 / Wednesday, November 24, 2010 / Proposed Rules 71643 

USPS further deletes the reference to 

‘‘out-of-bounds delivery receptacles’’ in 

favor of language recognizing that Group 

E PO Box service is not available when 

a physical address receives any form of 

USPS carrier delivery. Confusion over 

the intent of the meaning of ‘‘out-ofbounds’’ obscured the larger context 

wherein Group E service should never 

supplement a physical location’s carrier 

delivery service. Clarifying the intent 

and eliminating this confusion may 

cause existing Group E customers to 

lose Group E eligibility for their 

physical addresses, while others whose 

physical locations the USPS chooses not 

to provide carrier service to may become 

eligible for Group E service. 

The Postal Service also revises DMM 

508.4.6.3 to acknowledge carrier 

delivery service, once established to a 

particular physical address, eliminates 

Group E eligibility. Improved language 

in this section illustrates situations 

where no eligibility for Group E arises 

either because carrier delivery is 

available or because action (or inaction) 

by third parties precludes USPS from 

extending carrier delivery. 

Although we are exempt from the 

notice and comment requirements of the 

Administrative Procedure Act [5 U.S.C. 

of 553 (b), (c)] regarding proposed 

rulemaking by 39 U.S.C. 410(a), we 

invite public comments on the 

following proposed revisions to Mailing 

Standards of the United States Postal 

Service, Domestic Mail Manual (DMM), 

incorporated by reference in the Code of 

Federal Regulations. See 39 CFR 111.1. 

List of Subjects in 39 CFR Part 111 

Administrative practice and 

procedure, Postal Service. 

Accordingly, 39 CFR part 111 is 

proposed to be amended as follows: 

PART 111—[AMENDED] 

1. The authority citation for 39 CFR 

part 111 continues to read as follows: 

Authority: 5 U.S.C. 552(a); 13 U.S.C. 301– 

307; 18 U.S.C. 1692–1737; 39 U.S.C. 101, 

401, 403, 404, 414, 416, 3001–3011, 3201– 

3219, 3403–3406, 3621, 3622, 3626, 3632, 

3633, and 5001. 

2. Revise the following sections of 

Mailing Standards of the United States 

Postal Service, Domestic Mail Manual 

(DMM) as follows: 

Mailing Standards of the United States 

Postal Service, Domestic Mail Manual 

(DMM) 

* * * * * 

500 Additional Mailing Services 

* * * * * 

508 Recipient Services 

* * * * * 

4.0 Post Office Box Service 

* * * * * 

4.6 Fee Group Assignments 

* * * * * 

[Revise title, introductory text and items 

4.6.2a, b and c, and eliminate item d in 

its entirety as follows:] 

4.6.2 Free PO Box Service (Group E) 

Customers may qualify for Group E 

(free) PO Box service at a Post Office 

location if their physical address 

location meets all of the following 

criteria: 

a. The physical address is within the 

geographic delivery ZIP Code 

boundaries administered by a Post 

Office. 

b. The physical address constitutes a 

potential carrier delivery point of 

service. 

c. USPS does not provide carrier 

delivery to a mail receptacle at or near 

that physical address for reasons other 

than the conditions in 4.6.3b. 

[Revise title and introductory text of 

4.6.3 and add new items a through d as 

follows:] 

4.6.3 Additional Standards for Free PO 

Box Service 

Only one Group E (free) PO Box may 

be obtained for each potential carrier 

delivery point of service, under the 

following conditions: 

a. Group E PO Box customers are 

assigned the smallest available box that 

reasonably accommodates their daily 

mail volume. 

b. Eligibility for Group E PO Boxes 

does not extend to: 

1. Individual tenants, contractors, 

employees, or other individuals 

receiving or eligible to receive singlepoint delivery to a location such as a 

hotel, college, military installation, 

campground, or transient trailer park. 

2. Locations served, or eligible to be 

served, by centralized delivery or 

grouped receptacles such as cluster box 

units, apartment style receptacles, 

mailrooms, or clusters of roadside 

receptacles. 

3. Locations where town ordinances, 

private roads, gated communities, 

unimproved or poorly maintained 

roadways, unsafe conditions, or other 

conditions preclude extension of carrier 

delivery. 

4. Locations served by a delivery 

receptacle that a customer chooses to 

locate along a carrier’s line of travel, and 

to which the Postal Service makes 

delivery. 

c. A customer must pay the applicable 

fee for each PO Box requested in 

addition to the initial free Group E PO 

Box. 

d. The online application tools 

described in 4.3.1b cannot be used for 

free PO Box service. 

* * * * * 

We will publish an appropriate 

amendment to 39 CFR part 111 to reflect 

these changes if our proposal is 

adopted. 

Stanley F. Mires, 

Chief Counsel, Legislative. 

[FR Doc. 2010–29537 Filed 11–23–10; 8:45 am] 

BILLING CODE 7710–12–P 

POSTAL REGULATORY COMMISSION 

39 CFR Part 3050 

[Docket No. RM2011–3; Order No. 589] 

Periodic Reporting Rules 

AGENCY: Postal Regulatory Commission. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Commission is initiating 

the first strategic rulemaking since 

enactment of a postal reform law in 

2006. The broad focus is on product cost 

estimation. This document provides 

background information on the scope of 

a strategic rulemaking, identifies several 

potential areas for study, and seeks 

suggestions for additional topics. It also 

notes that a public forum, conducted as 

a technical conference, may be held in 

the future. 

DATES: Comments are due: February 18, 

2011. 

ADDRESSES: Submit comments 

electronically via the Commission’s 

Filing Online system. Commenters who 

cannot submit filings electronically 

should contact the person identified in 

the FOR FURTHER INFORMATION CONTACT

section for advice on alternatives. 

FOR FURTHER INFORMATION CONTACT: 

Stephen L. Sharfman, General Counsel, 

at stephen.sharfman@prc.gov or 202– 

789–6820. 

SUPPLEMENTARY INFORMATION: 39 U.S.C. 

3652(a) through (c) describe the reports 

that the Postal Service is to provide to 

the Commission to enable it to evaluate 

the Postal Service’s compliance with the 

various requirements and standards of 

the Postal Accountability and 

Enhancement Act (PAEA). Section 

3652(e) provides that the Commission 

shall prescribe the form and content of 

those reports. Section 3652(e)(2) 

authorizes the Commission to initiate 

proceedings to improve the quality, 

accuracy, or completeness of the data 


jdjones on DSK8KYBLC1PROD with PROPOSALS-1
71644 Federal Register / Vol. 75, No. 226 / Wednesday, November 24, 2010 / Proposed Rules 

1 Docket No. RM2008–4, Notice of Proposed 

Rulemaking Prescribing Form and Content of 

Periodic Reports, August 22, 2008 (Order No. 104). 

2With respect to recognizing shape differences in 

the first-ounce rate for First-Class Mail, see 2008 

Annual Compliance Determination, March 30, 

2009, at 54 (2008 ACD) and 2009 Annual 

Compliance Determination, March 29, 2010, at 73 

(2009 ACD). With respect to Periodicals, estimating 

what portion receives an automated incoming sort 

is discussed in Docket No. RM2010–6, Order No. 

400, January 28, 2010; how the cost models should 

treat allied costs is discussed in the 2008 ACD at 

57–58; and calculating the proper percentage of 5- 

digit bundles, analyzing weight-related cost pools, 

and gathering Periodicals-specific field data is 

discussed in Docket No. RM2009–1, Order No. 170, 

January 12, 2009. With respect to Standard Mail, 

properly allocating the costs of letters ineligible for 

the letter rate is discussed in the 2008 ACD at 64– 

65; negative cost avoidances between Basic and 

High Density parcels is discussed in the 2007 ACD 

at 96–97, the 2008 ACD at 66–67, and the 2009 ACD 

at 88–90; and reconciling the costs estimated for 

nonprofit Standard Mail with total Standard Mail 

costs is discussed in USPS–27 FY 2008 Nonprofit 

Mail Cost Approximations, December 29, 2008, and 

the 2008 Annual Compliance Report (ACR). With 

respect to Bound Printed Matter, the need for new 

methods for estimating the costs avoided by 

presorting is discussed in the 2008 ACD at 75–76, 

and the 2009 ACD at 100. The need to develop 

methods for estimating the costs of new stand-alone 

Special Services is discussed in the 2009 ACD at 

106; the need for distinguishing the costs of Stamp 

Fulfillment Services from Philatelic Services is 

discussed in Docket No. MC2009–19, Order No. 

487, July 13, 2010, at 5–6; and the need for 

distinguishing the costs of IMTS-outbound from 

IMTS-inbound is discussed in the 2009 ACD at 120. 

Estimating mailer-specific costs by indirect means 

is discussed in the 2009 ACR in USPS–FY–09 at 

109, and the need for improvements is discussed in 

the 2009 ACD. 

provided in the Postal Service’s annual 

compliance reports. 

In Docket No. RM2008–4, the 

Commission described the framework 

that it contemplated for assuring that 

appropriate changes or additions are 

made both to the methods for collecting 

and reporting data, and to the methods 

for analyzing or modeling those data to 

develop the estimates that are reported 

to the Commission under section 3652. 

Order No. 104, issued August 22, 2008,1

observed that 

A strategic rulemaking would be designed 

to make the ongoing development of analysis 

in cost causation or other areas of analysis as 

orderly and efficient as possible. It would 

take an inventory of longer-term data 

collection and analysis needs. It is likely to 

involve plans to meet those needs over a 

horizon longer than a year. It might focus on 

existing data collection systems that need to 

be improved or new data collection programs 

that need to be established. It might list 

existing analytical studies that need to be 

updated, or new analytical studies that need 

to be undertaken. The scope of a strategic 

rulemaking would be broad, since one of its 

purposes would be to compare the likely cost 

and benefits of improved data or analysis in 

different areas of research, and the lead time 

required to conduct the research. The 

purpose would be to prioritize research 

projects and draw up a tentative schedule for 

conducting them. 

A strategic rulemaking is likely to be 

general in focus and exploratory in nature in 

its early stages. Accordingly, the procedures 

followed would be quite flexible. They might 

begin with the equivalent of a prehearing 

conference in which interested parties 

identify areas in which research is most 

needed and most likely to bear fruit. Once a 

strategic rulemaking has identified and 

prioritized areas of needed research, it would 

then narrow its focus to specific data to be 

gathered or studies to be performed. The 

Notice of Proposed Rulemaking would be 

expected to culminate in Commission 

approval of a list of research projects to be 

undertaken and a preliminary projected time 

table for their completion. 

Id. at 32–33. 

Order No. 104 contemplated that a 

strategic rulemaking would develop an 

inventory of longer-term data collection 

and analysis needs, comprehensively 

evaluate these needs, and devise a plan 

for meeting these needs, with input 

from mailers, the interested public, the 

Postal Service and Commission staff. Id. 

This proceeding is the Commission’s 

first strategic rulemaking. The 

Commission is aware that it comes at a 

time when the Postal Service is under 

considerable financial pressure. At the 

same time, the Commission is aware 

that it is necessary to have accurate 

estimates of product costs in order to 

understand the net revenue 

consequences of the rates and discounts 

that the Postal Service selects. For this 

reason, the benefits of obtaining 

accurate estimates of product costs can 

far outweigh the expense of properly 

designed data collection systems and 

properly executed analysis. 

Existing cost systems can become 

inaccurate or lose their relevance due to 

changes in operations or product 

offerings. Also, opportunities to develop 

more accurate estimates can arise if new 

sources of information, such as the 

Intelligent Mail barcode (IMb), become 

available. The Commission is mindful 

that modifications or improvements to 

cost estimation methods should only be 

undertaken when there is substantial 

reason to believe that existing systems 

are obsolete or otherwise inaccurate. For 

a publicly-owned entity like the Postal 

Service, changes to the level and quality 

of the business information that guides 

its operations should be based on 

understanding among the Postal 

Service, its stakeholders, and the 

regulator, about the need for, and the 

value of the changes. The Commission 

hopes that the postal community will 

weigh both the costs and benefits of any 

proposed changes and provide input on 

what improvements in data collection 

and analysis warrant attention in the 

near term and what improvements 

would be warranted over a longer time 

horizon. Of those that are considered to 

be warranted over the near term, 

comments are requested concerning 

which research topics should be given 

priority, and what time frame should be 

considered feasible for completing the 

research. 

Interested persons may propose areas 

of research that they think are needed, 

and may use the list of possible 

candidates in the attachment to this 

order as a starting point. In doing so, 

they should consider the magnitude of 

the candidate’s potential impact on 

estimated volumes, costs or revenues; 

the time and expense likely to be 

required to resolve it; and its potential 

relevance to determining compliance 

with the standards of the PAEA or 

supporting the various studies and 

reports that the PAEA requires the 

Commission to prepare. 

To begin the discussion, the 

Commission identifies several candidate 

areas for study in the attachment. There 

are a number of narrower cost and 

revenue estimation issues that have 

been identified in the Commission’s 

recent Annual Compliance 

Determinations and not yet resolved.2

Commenters may wish to express an 

opinion on which of these data 

reporting topics and estimation issues 

should be included in this strategic 

rulemaking planning process, and 

which are better left to the traditional 

rulemaking procedure in which 

petitions are filed to request that the 

Commission make specific changes or 

additions to established analytical 

principles. Finally, the Commission’s 

periodic data reporting rules currently 

have placeholders for data required to 

calculate the cost of the Postal Service’s 

Universal Service Obligation (see 39 

CFR 3050.30) and data required to 

estimate the quality of service (see 39 

CFR 3050.53). These topics will be 

addressed in separate dockets. 

Following the submission of initial 

comments, the Commission will select 

an appropriate time to host a public 

forum. The public forum will function 

as a technical conference. Subject matter 

experts from the Postal Service, 

interested participants, and Commission 

staff will have an opportunity to 

interactively discuss matters, such as 

feasibility and cost, which would bear 

on the priority that should be assigned 

to the various research topics that are in 

need of further study. Proposed 

modifications to the list of topics and 

tentative prioritization of them will be 


jdjones on DSK8KYBLC1PROD with PROPOSALS-1
Federal Register / Vol. 75, No. 226 / Wednesday, November 24, 2010 / Proposed Rules 71645 

3See PRC Op. R2006–1, ¶¶ 85–122. 

4See Docket No. RM2008–2, Order No. 115, 

Order Accepting Certain Analytical Principles for 

Use in the Postal Service’s Periodic Reports, 

October 10, 2008, at 11–13. 

5See Docket No. ACR2009, USPS–FY09–9—FY 

2009 ACR Roadmap Document, December 29, 2009, 

at 112. 

6United States Postal Service, Office of Inspector 

General (OIG), Audit Report—Management of 

Special Studies (Report Number CRR–AR–10– 

0002), March 19, 2010, at 2 (OIG Report). 

7The 1984 study was based on postmaster 

salaries EAS–22 and below, which has since 

changed to include EAS–23. 

8The Commission accepted the Postmaster 

Variability Study in 1984. At that time, the 

Commission recommended the Postal Service 

update the study with current salary and WSC data 

in subsequent rate cases. According to the OIG, in 

1997 and again in 2007, the Postal Service 

considered conducting a new study; however, 

management set aside the study due to higher 

priority work. The OIG says that Postal Service 

personnel stated they are awaiting Commission 

guidance to prioritize updating the Postmaster 

Variability Study. See OIG Report, Appendix B, for 

detailed analysis of this topic. 

addressed at the forum. Participants at 

the public forum may also discuss a 

protocol whereby the Postal Service or 

outside contractor conducting a study 

growing out of this proceeding would 

afford an opportunity for outside review 

and input at interim stages. Additional 

technical conferences may be scheduled 

to discuss a particular research item or 

set of items in greater depth. 

The Commission will balance the 

urgency and importance of resolving 

each issue with the practical 

considerations of time, cost, and other 

resource limitations. A schedule with 

target dates for beginning data collection 

efforts or completing an initial group of 

analytical studies will be developed. 

Formal proposals to change or 

supplement current analytical 

principles are expected to grow out of 

the research completed in response to 

this proceeding. Such proposals will be 

vetted as they are now in informal 

rulemakings devoted to specific detailed 

changes. 

Topics in attachment. [This material 

appears as an attachment to Order No. 

589 as published on the Commission 

Web site]. Some candidate areas for 

improvements in data collection and 

analysis [include:] 

1. The data underlying the current 

estimates of the variability of City 

Carrier street time were collected in 

2002, and the subsequent update of the 

input data in 2004 produced 

substantially different results which 

have not been fully examined in public. 

Current (and future) operations may 

differ from those measured in 2002 due 

to volume declines, route adjustments, 

and the introduction of FSS. The 

expense of an appropriate study and its 

potential to broadly impact attributable 

cost estimates are likely to be 

substantial. Therefore, it would be 

preferable to develop a consensus as to 

the general design and scope of a study 

before beginning any data collection. It 

may also be appropriate to investigate 

the suitability of data from existing 

collection systems (e.g., Delivery 

Operations Information System) to 

reduce the need for reliance on one-time 

studies. 

2. Mail processing is the largest 

source of volume-variable costs in the 

postal system. Despite its prominence, 

its volume variability has never been 

successfully modeled. The Commission 

currently uses a general assumption that 

mail processing costs vary in proportion 

to volume with the exception of a few 

minor operations. Mail processing might 

not vary in proportion to volume in 

certain processing environments. 

Considerable progress has been made in 

developing a valid theoretical approach 

to modeling volume-variable mail 

processing costs. However, lack of data 

on volumes finalized at processing 

plants that are reasonably free of 

measurement error has remained an 

obstacle to implementing a theoretically 

sound approach.3 An important area of 

investigation is whether this obstacle 

could be overcome through ubiquitous 

use of an IMb that tracks each piece of 

bulk-entered mail through the mail 

processing network, coupled with the 

use of mail history data that tracks each 

individually-entered piece of mail 

through that network. Id. at ¶ 92, n.15, 

and ¶ 102, n.20. If comprehensive 

tracking of plant-level volumes is not 

realistic anytime soon, the potential 

value of modeling mail processing costs 

with the aid of plant-specific piece 

handling and other data should be 

evaluated. Plant-specific data might 

furnish instrumental variables capable 

of overcoming the problem of 

measurement error in what is supposed 

to serve as the volume variable (id., 

¶¶ 148–156) and might provide valuable 

control variables that would make 

successful modeling of mail processing 

cost variability more feasible. 

3. In Docket No. ACR2008, the Postal 

Service identified group-specific costs 

for competitive products in Cost 

Segment 18 (Administration and 

Regional Operations) that are incurred 

for only one product group. The Postal 

Service identified these costs through a 

management questionnaire sent to all 

Headquarter’s finance number groups 

asking whether the work conducted 

within that finance number was for the 

support of one specific product or a 

group of products. Additional work in 

this area would include the expansion 

of this exercise to other cost segments, 

as well as the possible development of 

decision rules to designate mixed group 

activity costs as group specific.4

4. The study underlying the 

variability of Cost Segment 8, Vehicle 

Service Drivers (VSDs), was adopted in 

Docket No. R97–1 and has not been 

revised. Changes in operations are likely 

to have altered the behavior of VSD 

costs since this study, and therefore the 

need for an updated study should be 

assessed. Also, when the Commission 

recently approved the short-term use of 

the Intra-SCF cubic-foot-miles proxy as 

the VSD distribution key, it instructed 

the Postal Service to move away from 

the use of proxies. Id. at 39. In the 2009 

ACR, the Postal Service indicated that it 

planned to sample VSD in FY 2010, but 

that it had no current plans to review 

the variability.5 The Postal Service’s 

schedule for these efforts could be 

reviewed in this docket. 

5. The Postmaster Variability Study 

was completed in 1984. It has not been 

updated and may no longer be 

representative of current variability of 

postmaster costs.6 Specifically, 

according to the OIG, the analysis used 

FY 1979 postmaster salaries and FY 

1978 Workload Service Credit (WSC) 

Index data to determine that the 

estimated postmaster variability was 

18.23 percent. For example, the 

minimum postmaster salary for 

Executive and Administrative Schedule 

(EAS)–23 increased from $22,500 in 

1979 to $52,433 in 2008.7 The difficulty 

of developing an up-to-date analysis of 

postmaster variability could be 

explored.8

It is ordered: 

1. Initial comments are due on or 

before February 18, 2011. 

2. Pursuant to 39 U.S.C. 505, Robert 

N. Sidman is designated as the Public 

Representative in this proceeding to 

represent the interests of the general 

public. 

3. The Secretary shall arrange for 

publication of this order in the Federal 

Register. 

By the Commission. 

Ruth Ann Abrams, 

Acting Secretary. 

[FR Doc. 2010–29558 Filed 11–23–10; 8:45 am] 

BILLING CODE 7710–FW–P 


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