[Federal Register Volume 87, Number 10 (Friday, January 14, 2022)]
[Proposed Rules]
[Pages 2384-2385]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-00654]


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POSTAL REGULATORY COMMISSION

39 CFR Part 3050

[Docket No. RM2022-3; Order No. 6090]


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 a rulemaking proceeding to consider changes to 
analytical principles relating to periodic reports (Proposal One). This 
document informs the public of the filing, invites public comment, and 
takes other administrative steps.

DATES: 
    Comments are due: March 14, 2022.
    Reply comments are due: March 28, 2022.

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 One
III. Notice and Comment
IV. Ordering Paragraphs

I. Introduction

    On January 5, 2022, 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 One.
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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 One), January 5, 2022 (Petition). 
The Petition was accompanied by a study supporting its proposal. See 
Michael D. Bradley (Bradley), On the Estimation of a Top-Down Model 
for City Carrier Street Time *, January 5, 2022. The Postal Service 
also filed a notice of filing of public and non-public materials 
relating to Proposal One. Notice of Filing of USPS-RM2022-3-1 and 
USPS-RM2022-3-NP1 and Application for Nonpublic Treatment, January 
5, 2022.
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II. Proposal One

    Background. In Docket No. RM2015-7,\2\ the Postal Service proposed, 
and the Commission accepted, an approach to estimating variabilities 
for city carrier street time that relied upon three separate 
econometric equations, one for letters and flats, one for in-receptacle 
parcels, and one for deviation parcels and accounts. Petition, Proposal 
One at 1. The Commission directed the Postal Service to undertake an 
effort to investigate what data would be needed to estimate a unified, 
or ``top-down,'' model. Id. Subsequent to Docket No. RM2015-7, the 
Commission opened a public inquiry case, Docket No. PI2017-1,\3\ to 
follow the Postal Service's progress in updating its data capabilities 
and modeling efforts for city carrier street time and specified the 
type and structure of the data set that would be appropriate to 
estimate a top-down model. Id. at 2. In response to the Commission's 
directives, the Postal Service compiled the appropriate data, 
investigated alternative methods of estimating a top-down model, and 
specified a model that includes an estimation of new variabilities for 
city carrier, letter route, and street time. Id. at 2-3.
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    \2\ See Docket No. RM2015-7, Order Approving Analytical 
Principles Used in Periodic Reporting (Proposal Thirteen), October 
29, 2015, at 66 (Order No. 2792).
    \3\ See Docket No. PI2017-1, Interim Order, November 2, 2018, at 
16 (Order No. 4869).
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    Proposal. Proposal One would update the methodology for calculating 
attributable city carrier, letter route, street time costs by employing 
an overall top-down model that replies upon expanded operational 
carrier data. Id. at 1, 3. The Postal Service proposes that the new 
top-down study would improve the previous analysis of letter route 
street time by making use of ongoing operation data systems; 
incorporating seasonality effects and controls for day-of-week effects; 
including new characteristic variables that help control for non-volume 
variations in hours across ZIP Codes; relying upon a new econometric 
technique, called a correlated random effects model, that controls for 
unobserved differences across ZIP Codes while explicitly recognizing 
those differences are correlated with volume; taking a holistic 
approach to analyzing city street time; and producing marginal delivery 
and collection times that comport with current carrier street time 
operational practice. Id. at 3-4.
    The overall levels of variabilities produced by the top-down model 
is lower than the current model because a

[[Page 2385]]

reduction in the variabilities for the volume types associated with 
market dominant letter and flat mail is only partially offset by an 
increase in the parcel variabilities. The overall changes in the 
variabilities result in lower costs for letters and flats and higher 
costs for parcels. Id. at 6.
    Impact. The following table presents the impact of Proposal One on 
city carrier street unit costs, including indirect costs.

                              Table 1--City Carrier Costs Including Indirect Costs
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                                                  Current unit                    Change in city    % Change in
                    Product                       city carrier    New unit city    carrier unit    city carrier
                                                      costs       carrier costs        costs        unit costs
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Total First-Class Mail.........................          $0.063           $0.041         -$0.022          -34.98
Total USPS Marketing Mail......................           0.063            0.043          -0.020          -32.28
Total Periodicals..............................           0.145            0.113          -0.033          -22.58
Bound Printed Matter Flats.....................           0.216            0.173          -0.043          -19.90
Bound Printed Matter Parcels...................           0.365            0.452           0.088           24.02
Media/Library Mail.............................           0.421            0.506           0.085           20.07
Total Package Services.........................           0.324            0.365           0.041           12.74
Total Domestic Market Dominant Mail............           0.067            0.046          -0.021          -31.63
Total Competitive Mail and Services............           0.453            0.528           0.075           16.52
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Source: Excel file ``FY21 Proposal One Cost Impact.xlsx,'' tab ``Unit Costs.''

    Under the new top-down model, the unit costs for market dominant 
products fall while the unit costs for competitive products rise, 
reflecting the changes in variabilities. Id. at 7.

III. Notice and Comment

    The Commission establishes Docket No. RM2022-3 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 One no later 
than March 14, 2022. Reply comments on the Petition and Proposal One 
are due no later than March 28, 2022. Pursuant to 39 U.S.C. 505, Philip 
T. Abraham is designated as 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. RM2022-3 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 One), filed January 5, 2022.
    2. Comments by interested persons in this proceeding are due no 
later than March 14, 2022. Reply comments on the Petition and Proposal 
One are due no later than March 28, 2022.
    3. Pursuant to 39 U.S.C. 505, the Commission appoints Philip T. 
Abraham to serve as 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.
[FR Doc. 2022-00654 Filed 1-13-22; 8:45 am]
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