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[Federal Register Volume 89, Number 226 (Friday, November 22, 2024)]
[Proposed Rules]
[Pages 92614-92616]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-27284]

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POSTAL REGULATORY COMMISSION

39 CFR Part 3050

[Docket No. RM2025-4; Order No. 8002]

Periodic Reporting

AGENCY: Postal Regulatory Commission.

ACTION: Notice of proposed rulemaking.

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

DATES: Comments are due: December 10, 2024.

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
III. Notice and Comment
IV. Ordering Paragraphs

I. Introduction

    On November 13, 2024, 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 presents a methodology for developing 
shape-specific labor productivity data for non-MODS manual distribution 
activities using eFlash volumes and workhours derived from costs for 
the corresponding In-Office Cost System (IOCS)-based non-MODS cost 
pools. Petition at 1.
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    \1\ Petition of the United States Postal Service to Initiate a 
Proceeding to Change Analytical Principles and Notice of Filing Non-
Public Materials, November 13, 2024 (Petition). The proposed change 
is attached to the Petition (Proposal).
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II. Proposal

    Background. The Postal Service states that measuring labor 
productivity associated with manual letter and flat distribution 
operations ``is a longstanding challenge for modeling the

[[Page 92615]]

costs of mail processing flows in the development of avoided costs for 
worksharing.'' Id. Proposal at 1. The Postal Service notes that 
directly measuring the number of manually processed pieces is 
``costly'' in the absence of passive data collection, which is possible 
in automated operations. Id. Additionally, the reliability of measuring 
productivity depends on accurately measuring workhours. Id.
    The Postal Service notes that MODS workhours ``have long been used 
both to develop labor costs by cost pool and in labor productivity 
statistics for mail processing plants,'' but operation-level workhour 
data have not been used to develop costs for non-MODS operations. Id. 
The Postal Services states that manual productivities' volume inputs 
use either indirect volume measurements or special studies of 
distribution productivity, which are limited in frequency and scope. 
Id. at 2. The Postal Service notes that, currently, the projection of 
manually processed mail volumes is determined as fractions of 
automation piece counts, which has not been updated since Fiscal Year 
(FY) 2015 ``due to concerns regarding the reliability of those 
conversion methods.'' Id. It also notes that manual productivity for 
incoming secondary letter distribution dates to Docket No. MC95-1, when 
plants conducted significant amounts of manual incoming secondary 
sortation for letters and flats.\2\ Although manual productivity has 
focused on plant and Network Distribution Center (NDC) operations, 
manual distribution work is ``concentrated at non-MODS post offices, 
stations, and branches'' making productivities applicable to non-MODS 
operations an important aspect for modeling manual mail processing 
costs. Id.
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    \2\ Id. However, manual processing volume for parcels is 
generated as a ``byproduct of tracking scans taken during proceeding 
activities.'' Id.
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    The Postal Service asserts that the eFlash system can be used as a 
source of manual processing volumes for non-MODS operations and covers 
letters, flats, and parcels distribution. Id. at 3. These volumes are 
obtained by converting linear measurements (in inches) of pieces staged 
for processing into piece counts and is standard operating procedure 
for both larger and smaller post offices. Id. Additionally, the Postal 
Service states that eFlash data also includes workhours for letter, 
flat, and parcel operations in Labor Distribution Code (LDC) 43. Id.
    The Postal Service explains that, to determine whether eFlash 
workhours could be used in productivity calculations, it investigated 
``both the extent to which the eFlash workhours covered the 
corresponding mail processing cost pools and the extent to which the 
eFlash workhours included activities other than the expected shape-
related processing work.'' Id. The Postal Service notes that the 
concerns are ``post office activities may be relatively fluid over the 
course of the workday, such that actual and clocked work activities may 
systematically differ, and relatedly that a substantial amount of post 
office distribution labor may be clocked into non-shape-specific mail 
processing operations.'' Id. at 3-4. The Postal Service's investigation 
indicated that eFlash workhours underestimate total labor used in the 
shape-related cost pools and that, as a result, the use of eFlash 
workhours will overstate labor productivities. Id. at 4-6.
    Proposal. Based on the discussion above, the Postal Service states 
that its proposed productivities would use ``eFlash-based aggregate 
volumes for letters, flats, and parcels, from the L43L, L43F, and L43P 
lines, respectively, for the numerator of the productivity (pieces per 
workhour).'' Id. at 6-7. The Postal Service also states that, to obtain 
corresponding workhour estimates, the proposed methodology would 
convert the total cost for the non-MODS manual letters, flats, and 
parcels cost pools into hours using the mail processing wage rate, and 
the resulting workhours would then be used as the denominator of the 
productivity calculation. Id. at 7. Table 4 of the Proposal 
demonstrates the proposed conversion of costs to workhours for FY 2023. 
See id. table 4. The Postal Service then combines the eFlash volumes 
with the converted workhours, which results in the productivities 
presented in table 5 of the Proposal. See id. at 8, table 5.
    The Postal Service maintains that the proposed changes are an 
improvement to the currently used productivity data. Id. at 8. It 
states that the proposed changes ``employ[ ] current data collected in 
ongoing systems that directly represent post office distribution 
operations and can be updated annually.'' Id. The proposed changes 
would also eliminate the use of ``stale'' data. Id. at 8-9; see 
generally supra.
    Impact. The Postal Service explains that ``the new [labor] 
productivity will (other things equal) decrease model costs if the new 
productivity is higher or increase them if the new productivity is 
lower.'' Petition, Proposal at 10. ``The change in model costs will 
then affect the model's proportional adjustment factor in the opposite 
direction. . . .'' Id.
    The Postal Service then explains that the magnitude of the effect 
of the productivity change will depend upon the extent to which various 
categories of mail require manual processing in Function 4 operations. 
Id. The Postal Service again notes that most parcel volume receives 
Function 4 sorts whereas most letter and flat volumes bypass it, either 
because of automation or presorting to carrier route. Id.
    The Postal Service presents the impact of Function 4 letter 
productivity on the letter cost model results in USPS-FY23-10 (table 
7), the impact of Function 4 flat productivity on the First-Class and 
USPS Marketing Mail flat cost model in USPS-FY23-11 (table 8), and the 
impact of Function 4 flat productivity on the piece costs in the 
Periodicals model in USPS-FY23-11 (table 9). See id. at 11-12. In 
addition, the impact of Function 4 parcel productivity on the Parcel 
Select mail processing cost model are filed under seal. Id. at 12.

III. Notice and Comment

    The Commission establishes Docket No. RM2025-4 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 the Proposal 
by December 10, 2024. Pursuant to 39 U.S.C. 505, Nikki Brendemuehl 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. RM2025-4 for consideration 
of the matters raised by the Petition of the United States Postal 
Service to Initiate a Proceeding to Change Analytical Principles and 
Notice of Filing Non-Public Materials, filed November 13, 2024.

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    2. Comments by interested persons in this proceeding are due 
December 10, 2024.
    3. Pursuant to 39 U.S.C. 505, the Commission appoints Nikki 
Brendemuehl 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 the publication of this order in 
the Federal Register.

    By the Commission.
Erica A. Barker,
Secretary.
[FR Doc. 2024-27284 Filed 11-21-24; 8:45 am]
BILLING CODE 7710-FW-P
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