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###### Postal Regulatory Commission

          - 39 CFR Part 3050
          - [Docket No. RM2023-10; Order No. 6673]

# AGENCY:

Postal Regulatory Commission.

# ACTION:

Notice of proposed rulemaking.

# SUMMARY:

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

# DATES:

*Comments are due:*                         October 10, 2023.                    

# ADDRESSES:

                        Submit comments electronically via the Commission's Filing Online system at                         *https://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 September 5, 2023, 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.                

## II. Proposal Five

*Background.*                     Proposal Five relates to modifications to the Parcel Select (PS)/Parcel Return Service (PRS) mail processing and transportation cost models. Petition, Proposal Five at 1. The cost models were last presented in Docket No. ACR2022, Library References USPS-FY22-NP15 and USPS-FY22-NP16, respectively.                     *Id.*                     The proposed modifications to the mail processing and transportation cost models underlie recent operational and price structure changes.                     *Id.*

                    Previously, USPS Retail Ground (RG), First-Class Package Service (FCPS), and Parcel Select were listed as separate Competitive products within the Mail Classification Schedule (MCS) with Parcel Select Ground (PSG) as a price category within the PS product.                     *Id.*                     In order to improve service standards for RG and PSG, the Postal Service implemented operational changes to process and transport RG and PSG mail along with FCPS mail in the contiguous United States beginning FY 2022, Quarter 4.[2] 

                    In addition, classification changes were made to the products on the MCS by removing RG from the Competitive product list, removing PSG as a price category from PS, and expanding the FCPS price structure to include mailpieces weighing up to 70 pounds thus subsuming the RG and PSG price categories under FCPS.[3] 

                    In Docket Nos. CP2023-113 and CP2023-114, the Commission approved additional proposed classification changes to rename FCPS to USPS Ground Advantage and several changes to the PS price structure including: (1) eliminating the distinction of machinable and nonmachinable prices for Parcel Select Heavy Weight (PSHW), (2) establishing a Destination Hub (DHUB) price category for PSHW, (3) establishing a DHUB price category for Parcel Select Lightweight (PSLW), and                           ( print page 63046)                        (4) revising the PSLW price structure that focused on destination entry only.[4] 

*Proposal.*                     The Postal Service proposes that the PS/PRS mail processing and transportation cost models be modified to accommodate both the previous price structure and the new price structure. Petition, Proposal Five at 2-3. The Postal Service confirms that both price structures were in place for portions of FY 2023.                     *Id.*                     at 3.                

*Rationale and impact.*                     The Postal Service provided a modified mail processing cost model in the Excel file “USPS-FY22-NP15.PROP.FIVE.xls” and a modified transportation cost model in the Excel file “USPS-FY22-NP16.PROP.FIVE.xls” under seal in Library Reference USPS-RM2023-10-NP1.                     *Id.*                     at 3, 11.                

                    The Postal Service states that the Docket No. ACR2022 Cost and Revenue Analysis (CRA) proportional adjustment factor is incorporated in the model as a value so that the factor does not recalculate based on proposed FY 2023 modifications and the CRA proportional adjustment factor will be calculated as usual when the Docket No. ACR2023 cost model input data become available.                     *Id.*                     at 3.                

                    The Postal Service has incorporated DHUB cost estimates for machinable, nonmachinable, oversize PSHW, and PSLW mailpieces into the summary worksheet of the modified mail processing cost model.                     *Id.*                     The new price structure consists of four destination entry levels: destination network distribution center, destination sectional center facility, DHUB, and destination delivery unit (DDU).                     *Id.*                     at 4. There are numerous other changes to other pages in the workbook described.                     *Id.*                     at 4-11.                

                    The Postal Service states that the transportation cost model has been expanded to include both DHUB and DDU transportation cost estimates.                     *Id.*                     However, since there is no DHUB data currently available the Postal Service used intermediate and long distance PSLW DDU costs as proxies for PSLW DHUB costs.                     *Id.*                     The Postal Service states that the current methodology used to develop the DHUB cost estimates in the transportation cost model is a temporary solution.                     *Id.*                     at 13. The Postal Service assures that the cost model will be modified so that the DHUB transportation costs will be estimated using the same methodology as other price categories once DHUB volume and cubic feet data become available.                     *Id.*

                    Finally, the Postal Service has provided the mail processing unit cost estimates and the transportation cost estimate impacts under seal in an Excel file in Library Reference USPS-RM2023-10-NP1.                     *Id.*                     The Postal Service asserts that adoption of the proposed cost models would have no impact on the FY 2022 CRA-level costs.                     *Id.*

## III. Notice and Comment

                    The Commission establishes Docket No. RM2023-10 for consideration of matters raised by the Petition. More information on the Petition may be accessed via the Commission's website at                     *https://www.prc.gov.*                     Interested persons may submit comments on the Petition and Proposal Five no later than October 10, 2023. Pursuant to 39 U.S.C. 505, Philip T. Abraham 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. RM2023-10 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 September 5, 2023.

2. Comments by interested persons in this proceeding are due no later than October 10, 2023.

3. Pursuant to 39 U.S.C. 505, the Commission appoints Philip T. Abraham 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.

Erica A. Barker,

Secretary.

# Footnotes

1.                             Petition of the United States Postal Service for the Initiation of a Proceeding to Consider Proposed Changes in Analytical Principles (Proposal Five), September 5, 2023 (Petition). The Postal Service filed a notice of filing of non-public materials relating to Proposal Five. Notice of Filing of USPS-RM2023-10-NP1 and Application for Nonpublic Treatment, September 5, 2023.                    
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2.                                                     *Id.; see*                         Docket No. N2022-1, United States Postal Service's Request for an Advisory Opinion on Changes in the Nature of Postal Services, March 21, 2022, at 3.                    
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3.                             Petition, Proposal Five at 1-2;                         *see*                         Docket Nos. MC2022-81 and MC2022-82, Order Removing USPS Retail Ground from the Competitive Product List and Approving Competitive Classification Changes to First-Class Package Service and Parcel Select, October 28, 2022, at 1-2 (Order No. 6318).                    
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4.                             Docket Nos. CP2023-113 and CP2023-114, Order Concerning Changes in Rates of General Applicability and Classifications for First-Class Package Service and Parcel Select, June 7, 2023, at 1 (Order No. 6536).                    
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[FR Doc. 2023-19854 Filed 9-13-23; 8:45 am]

BILLING CODE 7710-FW-P