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[Federal Register Volume 83, Number 5 (Monday, January 8, 2018)]
[Notices]
[Pages 839-841]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-00082]

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POSTAL REGULATORY COMMISSION

[Docket No. ACR2017; Order No. 4323]

FY 2017 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 2017. Within 90 days, the Commission must 
evaluate that information and issue its determination as to whether 
rates were in compliance, 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: February 1, 2018. Reply Comments are due: 
February 12, 2018.

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 2017 ACR
III. Procedural Steps
IV. Ordering Paragraphs

I. Introduction

    On December 29, 2017, the United States Postal Service (Postal 
Service) filed with the Commission its Annual Compliance Report (ACR) 
for fiscal year (FY) 2017, 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 2017 Comprehensive Statement, its FY 2017 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 2017 ACR appears in 
non-public annexes.
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    \1\ United States Postal Service FY 2017 Annual Compliance 
Report, December 29, 2017 (FY 2017 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 2017 were in 
compliance with applicable title 39 requirements.

II. Overview of the Postal Service's FY 2017 ACR

    Contents of the filing. The Postal Service's FY 2017 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 Statement,\2\ Report to the Secretary of

[[Page 840]]

the Treasury, and information on the Competitive Products Fund filed in 
response to Commission rules. This material has been filed 
electronically with the Commission, and some also has been filed in 
hard copy form.
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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 2017 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 2017 ACR can be found in 
Library Reference USPS-FY17-9. 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.
    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-FY17-9 and in 
prefaces accompanying the appended folders. Id. at 4. The Postal 
Service observes that one noteworthy methodological change regarding 
product costs was discussed by the Commission in Order No. 3506.\3\ 
Going forward, the Postal Service's calculation of attributable costs 
will be changing to include a product's inframarginal costs developed 
as part of the estimation of a product's incremental costs. FY 2017 ACR 
at 4. As a consequence, the costs labeled as attributable costs in each 
row of the FY 2017 CRA are not directly comparable to costs reported 
with the same label in the CRAs filed prior to FY 2016. Id.
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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).
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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 2017 CRA 
or ICRA. Id. at 7.
    The FY 2017 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 
2017 incentive programs. Id. at 7-48.
    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 (id. at 25-31); (2) all 
costing methodology improvements made in FY 2017 and the estimated 
financial effects of such changes (id. at 31-35); and (3) a statement 
summarizing the historical and current year subsidy of the flats 
product (id. at 35). In addition, the Postal Service states that in the 
next general market dominant price change, it plans to increase the 
price of Standard Mail Flats by at least consumer price index times 
1.05. Id. at 24. In the FY 2016 ACD, the Commission directed the Postal 
Service to submit an updated report analyzing how the removal of Flats 
Sequencing System pricing in Docket No. R2017-1 impacted the cost, 
contribution, and revenue of periodicals in FY 2017, and whether the 
removal improved the efficiency of Periodicals pricing in FY 2017.\5\ 
The Postal Service provides its updated report in Library Reference 
USPS-FY17-44. FY 2017 ACR at 39.
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    \4\ Docket No. ACR2010, Annual Compliance Determination, March 
29, 2011, at 106-107 (FY 2010 ACD).
    \5\ Docket No. ACR2016, Annual Compliance Determination, March 
28, 2017, at 22 (FY 2016 ACD).
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    Market dominant negotiated service agreements. The FY 2017 ACR 
presents information on the PHI Acquisitions, Inc. negotiated service 
agreement (NSA), the only market dominant NSA in effect in FY 2017. Id. 
at 46-47.
    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-FY17-29. Id. at 49.
    Customer satisfaction. The FY 2017 ACR discusses the Postal 
Service's approach for measuring customer experience and satisfaction; 
describes the methodology; presents a table with survey results; 
compares the results from FY 2016 to FY 2017; and provides information 
regarding customer access to postal services. Id. at 54-65.
    Competitive products. The FY 2017 ACR provides costs, revenues, and 
volumes for competitive products of general applicability in the FY 
2017 CRA or ICRA. For competitive products not of general 
applicability, data are provided in non-public Library References USPS-
FY17-NP2 and USPS-FY17-NP27. Id. at 66. The FY 2017 ACR also addresses 
the competitive product pricing standards of 39 U.S.C. 3633. Id. at 66-
73. 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. FY 
2016 ACD at 83. This information is provided in USPS-FY17-NP27 (for 
domestic NSAs) and USPS-FY17-NP2 (for international NSAs). Id. at 74.
    Market tests; nonpostal services. The Postal Service discusses the 
two competitive market tests conducted during FY 2017 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 
2017 ACR and on whether any rates or fees in effect during FY 2017 (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 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 2017 ACR on its website at http://www.prc.gov.
    Comment deadlines. Comments by interested persons are due on or 
before February 1, 2018. Reply comments are

[[Page 841]]

due on or before February 12, 2018. The Commission, upon completion of 
its review of the FY 2017 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. ACR2017 to consider 
matters raised by the United States Postal Service's FY 2017 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 2017 Annual 
Compliance Report to the Commission are due on or before February 1, 
2018.
    4. Reply comments are due on or before February 12, 2018.
    5. The Secretary shall arrange for publication of this order in the 
Federal Register.

    By the Commission.
Stacy L. Ruble,
Secretary.
[FR Doc. 2018-00082 Filed 1-5-18; 8:45 am]
 BILLING CODE 7710-FW-P
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