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[Federal Register Volume 90, Number 12 (Tuesday, January 21, 2025)]
[Proposed Rules]
[Pages 6927-6928]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-00153]

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POSTAL REGULATORY COMMISSION

39 CFR Part 3050

[Docket No. RM2025-6; Order No. 8459]

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: February 27, 2025.

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
III. Notice and Comment
IV. Information Request
V. Ordering Paragraphs

I. Introduction

    On December 19, 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 an updated facility rental 
analysis used to distribute space provision costs to individual 
products in the Annual Compliance Report. 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, December 19, 2024 (Petition). The proposed change 
is attached to the Petition (Proposal).
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II. Proposal

    Background. The Postal Service explains that the recent facility 
rental analysis, which was completed in 1992, was based on Facility 
Management System (FMS) data. Id. Proposal at 1 (citing Docket No. R94-
1, USPS LR-G-120, Section IV.). This analysis relied on a sampling 
approach to estimate rental values for 18 facility groupings over a 
study period of November 30, 1981, to November 30, 1991. Petition, 
Proposal at 2. The Postal Service notes that the adjusted results from 
this analysis were last used to distribute space provision costs in 
Docket No. ACR2023, Library Reference USPS-FY23-8. Id. at 1. The Postal 
Service explains that there are two analyses in the facility portion of 
Library Reference USPS-FY23-8. Id.
    The first consists of the results from an updated Facility Space 
Usage Study (FSUS), which was approved by the Commission via Proposal 
Nine in August 2020.\2\ The results from that analysis are used to 
distribute both space support and space provision costs. Petition, 
Proposal at 2.
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    \2\ Id. at 1-2 (citing Docket No. RM2020-1, Order on Analytical 
Principles Used in Periodic Reporting (Proposal Nine), August 17, 
2020 (Order No. 5637)).
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    The second analysis concerns rental costs and was listed as a near-
term study in response to the Commission's request for possible data 
improvements.\3\ The results from this analysis are used to distribute 
the space provision costs only. Petition, Proposal at 2. The Postal 
Service identifies the affected cost segments in Table 1. Id.
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    \3\ Id. (citing Docket No. RM2022-1, Notice and Order of 
Proposed Rulemaking on Periodic Reporting, October 8, 2021 (Order 
No. 6004); Docket No. RM2022-1, Initial Comments of the United 
States Postal Service, March 25, 2022, at 10).
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    The Postal Service identifies three key limitations of the 1992 
rental value analysis. Id. at 4-5. First, the Postal Service observes 
the apparent absence of a definitive source for nationwide cap rates, 
which are used to evaluate real estate investments that can be 
calculated by dividing the net income from a property (i.e., rent) by 
its current market value. Id. at 4. Second, the Postal Service notes 
that the FMS ``building cost'' (construction costs for the facility at 
the time the facility was built or the acquisition costs at the time 
the facility was acquired) and ``land cost'' (purchase price for the 
land at the time the property was acquired) fields contain cost data 
that were incurred at different points in time. Id. at 4-5. Third, the 
Postal Service explains that the definition of ``new'' buildings 
covered a 10-year period (over which fair market value can change 
significantly) and that ``new owned'' data were used to impute rental 
values for ``old owned'' facilities and were applied to all ``old'' 
properties even though some facilities were decades older than other 
facilities. Id. at 5.
    Proposal. Based on the discussion above, the Postal Service states 
that it proposes a simplified and more representative analysis in which 
the rental cost distribution by operation and function is estimated 
using Fiscal Year (FY) 2019 eFMS rental cost data for all active 
facilities included in Proposal Nine. Id. This proposal does not use 
sampling methods. Id. The Postal Service describes the proposed data 
sources, organization of the inputs and outputs, methodology, and 
modifications to the facility file appearing in Library Reference USPS-
FY23-8. Id. at 6-10.
    Impact. The Postal Service asserts that using postal data rather 
than sampling would mean that ``subjective inputs, such as 
capitalization rates and rent change factors, are no longer needed.'' 
Id. at 1. The Postal Service contends that its proposal would ``more 
accurately represent[ ] market value rental rates for each operation 
and function.'' Id. at 10. The Postal Service states that the 
``previous methodology may have overstated the market value rental 
rates for plants . . . .'' Id. The Postal Service presents Table 2, 
which summarizes the 2019 rental cost distribution by operation and 
function (component) that would be generated by adopting the proposal. 
Id. at 10, 12. The Postal Service presents Table 3, which summarizes 
the impact that applying this proposal would have had on the overall 
(i.e., across all cost segments) volume-variable and product-specific 
costs for each product in FY 2023.\4\ Under the proposal, the Postal 
Service estimates that attributable costs for Market Dominant products 
and Competitive products would decrease

[[Page 6928]]

2.12 percent and 1.53 percent, respectively. Id.
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    \4\ Id. at 10, 13. The Postal Service states that a more 
comprehensive version of Table 3, which includes disaggregated rows 
for individual Competitive Products, is provided under seal. Id. at 
11.
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III. Notice and Comment

    The Commission establishes Docket No. RM2025-6 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 February 27, 2025. Pursuant to 39 U.S.C. 505, Almaroof Agoro is 
designated as an officer of the Commission (Public Representative) to 
represent the interests of the general public in this proceeding.

IV. Information Request

    On December 23, 2024, Pitney Bowes filed a motion seeking issuance 
of an information request to the Postal Service.\5\ Because the 
response to the proposed question is likely to aid evaluation of the 
Petition, the Motion is granted. The Postal Service shall respond to 
the following question by January 7, 2025: Please provide modified 
versions of Library Reference USPS-FY23-24: FY 2023 Non-Operation 
Specific Piggyback Factors (Public Portion) and Library Reference USPS-
FY23-25: FY 2023 Mail Processing Piggyback Factors (Operation Specific) 
that incorporate the impact of the proposed changes to analytical 
principles.
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    \5\ Motion of Pitney Bowes Inc. for Issuance of Information 
Request, December 23, 2024 (Motion).
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V. Ordering Paragraphs

    It is ordered:
    1. The Commission establishes Docket No. RM2025-6 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 December 19, 2024.
    2. Comments by interested persons in this proceeding are due 
February 27, 2025.
    3. The Motion of Pitney Bowes Inc. for Issuance of Information 
Request, filed December 23, 2024, is granted.
    4. The Postal Service shall respond to the following question by 
January 7, 2025, and provide modified versions of Library Reference 
USPS-FY23-24: FY 2023 Non-Operation Specific Piggyback Factors (Public 
Portion) and Library Reference USPS-FY23-25: FY 2023 Mail Processing 
Piggyback Factors (Operation Specific) that incorporate the impact of 
the proposed changes to analytical principles.
    5. Pursuant to 39 U.S.C. 505, the Commission appoints Almaroof 
Agoro to serve as an officer of the Commission (Public Representative) 
to represent the interests of the general public in this docket.
    6. The Secretary shall arrange for the publication of this order in 
the Federal Register.

    By the Commission.
Erica A. Barker,
Secretary.
[FR Doc. 2025-00153 Filed 1-17-25; 8:45 am]
BILLING CODE 7710-FW-P
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