[Federal Register Volume 75, Number 7 (Tuesday, January 12, 2010)]
[Notices]
[Pages 1658-1660]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-295]
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POSTAL REGULATORY COMMISSION
[Docket No. ACR2009; Order No. 380]
FY 2009 Annual Compliance Report; Comment Request
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 2009. Within 90 days, the Commission must
evaluate that information and issue its determination as to whether
rates were in compliance with title 39, chapter 36 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, 2010. Reply comments are due:
February 16, 2010.
ADDRESSES: Submit comments electronically via the Commission's Filing
Online system at http://www.prc.gov. Commenters who cannot submit their
views electronically should contact the person identified in ``FOR
FURTHER INFORMATION CONTACT'' by telephone for advice on alternatives
to electronic filing.
FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel,
202-789-6820 or [email protected].
SUPPLEMENTARY INFORMATION: Section 3652 of title 39 of the United
States Code requires the Postal Service to file several reports with
the Postal Regulatory Commission. Section 3652(a)(1) requires a report
on the costs, revenues, rates, and quality of service associated with
its products within 90 days after the close of each fiscal year. That
section requires that the Postal Service's annual report be
sufficiently detailed to allow the Commission and the public to
determine whether the rates charged and the service provided comply
with all of the requirements of title 39.
The Postal Service filed annual reports to the Commission in
compliance with 39 U.S.C. 3652 on December 29, 2009, referred to
comprehensively as the Annual Compliance Report (ACR) FY 2009. Appended
to it are four basic data reports: (1) The Cost and Revenue Analysis
(CRA); (2) the International Cost and Revenue Analysis (ICRA); (3) the
models of costs avoided by worksharing; and (4) billing determinant
information.\1\ A full list of materials supporting the FY 2009 ACR
[[Page 1659]]
accompanies the report as Attachment One.
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\1\ United States Postal Service FY 2009 Annual Compliance
Report, December 29, 2009 (FY 2009 ACR). Public portions of the
Postal Service's filing are available at the Commission's Web site,
http://www.prc.gov.
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The Postal Service observes that all four basic data reports (CRA,
ICRA, avoided cost studies, and billing determinants) have
traditionally been filed with the Commission on an annual basis, and
therefore are familiar to the Commission, both from prior rate cases
and the previous two ACRs. It notes that there has been a significant
change in the format of some of these materials. Where the CRA formerly
presented financial data for competitive products as a single line
item, it now presents data for five competitive product groups,
consistent with the new format in which the Postal Service presents the
public version of the Revenue, Pieces, and Weight report. In addition,
the non-public annex filed by the Postal Service for the first time
presents detailed financial data for competitive product NSAs. The
supporting documentation for this new level of detail in these areas
also remains in its non-public annex. Id. at 83-85. Finally, the Postal
Service has filed a public and a non-public version of its Cost
Segments and Components Reconciliation to Financial Statements and
Account Reallocations report. Financial accounts relating to
competitive products have been redacted from the public version. In the
FY 2008 ACR, this was filed as an unredacted public document.
Section 3652(g) of title 39 requires that the Comprehensive
Statement of Postal Operations mandated by 39 U.S.C. 2401(e) and
performance and program plans mandated by sections 2803 and 2804 be
included as a part of the Postal Service's annual compliance report.
The Postal Service's Comprehensive Statement is filed as USPS-FY09-17
and is also available on its Web site: http://www.usps.com/strategicplanning/cs09/CSPO_09.pdf.
After receiving the FY 2009 ACR, the Commission is required under
39 U.S.C. 3653 to provide interested persons with an opportunity to
comment on these reports and to appoint a Public Representative to
represent the interests of the general public. Kenneth E. Richardson
serves as the Public Representative in this docket.\2\
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\2\ See Notice of Appointment of Public Representative, October
28, 2009.
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The Commission hereby solicits public comment on these reports, and
on whether any rates or fees in effect during FY 2009 (for products
individually or collectively) were not in compliance with applicable
provisions of chapter 36 of title 39 (or regulations promulgated
thereunder). Commenters addressing market dominant products are
referred in particular to applicable requirements (39 U.S.C. 3622(d),
(e) and 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 solicits public comment on whether any service
standards in effect during FY 2009 were not met. Commenters addressing
the achievement of service standards for products within the market
dominant classes of mail or special services are referred to 39 CFR
parts 121 and 122, adopted 72 FR 72216 et seq., December 19, 2007.
Additionally, the Commission solicits public comment on whether the
Postal Service has met the goals established in the annual
Comprehensive Statement and program and performance plans included in
the Comprehensive Statement, which will assist the Commission in
developing appropriate recommendations to the Postal Service related to
the protection or promotion of the public policy objectives of title
39.
Comments by interested persons are due on or before February 1,
2010. Reply comments are due on or before February 16, 2010. After
completing its review of the FY 2009 ACR, public comments, and any
other information submitted in this proceeding, the Commission will
issue an Annual Compliance Determination (ACD).
This is the third compliance report filed by the Postal Service
since passage of the Postal Accountability and Enhancement Act (PAEA).
Some of the issues raised by transitioning from the Postal
Reorganization Act to the PAEA were resolved in FY 2009, easing the
task of the Postal Service in preparing its report, and the task of the
Commission and the public in evaluating it. The Commission has adopted
rules prescribing the form and content of the Postal Service's periodic
reports, including its annual compliance report.\3\ In its FY 2009 ACR,
the Postal Service presents costs and revenues aligned (for the most
part) with the market dominant and competitive product lists in the
Mail Classification Schedule.
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\3\ See Docket No. RM2008-4, Notice of Final Rule Prescribing
Form and Content of Periodic Reports, April 16, 2009.
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In FY 2009, the Commission also adopted rules governing the
treatment of commercially sensitive information. Those rules require
the Postal Service to apply for non-public treatment of information
required in periodic reports. Its application must specify its reasons
for concluding the particular information is commercially sensitive and
in need of non-public treatment, and describe with particularity the
nature of the competitive harm that public disclosure is likely to
cause.\4\ Accordingly, the Postal Service has accompanied its FY 2009
ACR with an application for non-public treatment of certain competitive
product information, including its supporting rationale in Attachment
Two. There, the Postal Service argues that costs at the level of
individual competitive products and below are generally commercially
sensitive, and that volume and revenue at the level of billing
determinants are commercially sensitive. In its domestic CRA, the
Postal Service has aggregated competitive products into five groups
that it views as appropriate for public disclosure--Total Express Mail,
Total Priority Mail, Total Ground, Total International Competitive, and
Competitive Services. In its FY 2008 domestic CRA, it had presented
comparable data in a single competitive products line item.
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\4\ See Docket No. RM2008-1, Final Rule Establishing Appropriate
Confidentiality Procedures, June 19, 2009.
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Among the materials submitted by the Postal Service as part of its
filing is a document identified as USPS-FY09-9, which serves as a
roadmap summarizing other materials submitted as part of the FY 2009
ACR and discussing changes in methodologies from those used in the FY
2008 ACD. The Postal Service explains that methodological changes are
discussed in general terms in a separate section of the roadmap
document (USPS-FY09-9), and in more detail in the narrative preface
accompanying each of the appended materials. The Postal Service
explains that to the extent feasible it has adhered to the
methodologies used in the FY 2008 ACD or approved by the Commission in
informal rulemakings subsequent to the FY 2008 ACD. On pages 5 and 6 of
the FY 2009 ACR, the Postal Service provides a list of dockets in which
it has proposed changes to analytical principles used in periodic
reporting, and identifies those rulemakings that have been completed
and those that are still pending. With respect to those that are still
pending, the Postal Service observes that in some instances, use of a
changed analytical principle was necessary to reflect changed
circumstances. In all other instances, the Postal Service explains that
it has provided ``toggle switches'' in the documentation to allow the
impact of the proposed change to be separately identified and reversed,
if necessary. FY 2009 ACR at 6.
[[Page 1660]]
The Postal Service's FY 2009 ACR discusses the evolution of its
measurement of service standards to meet the mandate of 39 U.S.C.
3652(a)(2)(B)(i). The Postal Service reports that its hybrid IMb-based
system for obtaining service performance results for bulk market
dominant products is still under development. The Postal Service
intends to use data from this system to measure service performance of
its bulk mail products in the future. Id. at 9-10. Also of interest is
the expansion of the coverage of the Postal Service's EXFC system for
measuring the service performance of single-piece First-Class Mail from
463 3-digit ZIP Code areas to 892 3-digit ZIP Code areas. It notes that
on-time performance in the expansion ZIP Codes initially lagged the on-
time performance of the legacy ZIP Codes by 13.5 percent, but that
management initiatives reduced that gap to less than 1 percent by the
end of FY 2009. Id. at 12-13.
In its most recent compliance determination, the Commission raised
concerns about the customer satisfaction measurement survey used by the
Postal Service in its FY 2008 ACR. The Postal Service describes new
modifications it made to improve that system, id. at 16-17, and
customer satisfaction measurement instruments it has developed and is
implementing for use in its FY 2010 ACR. Id. at 19.
Generally, market dominant products that were flat shaped or parcel
shaped failed to cover their attributable costs in FY 2009. For
example, Periodicals lost $642 million, earning revenues that were only
76 percent of attributable costs. Id. at 40, Table 3. Standard Regular
flats, and Standard Regular parcels and NFMs together lost $830
million. Flats were roughly 82 percent of attributable costs, and
revenues for parcels and NFMs were roughly 75 percent of attributable
costs. Id. at 26, Table 2. Package Services, as a class, lost $53
million. Among package services products, only Bound Printed Matter
flats and Inbound Surface Parcel Post covered their attributable costs.
Id. at 42-43, Table 4. Four Special Services failed to recover their
attributable costs--Registered Mail, Stamped Cards, International
Ancillary Services, and Confirm. Id. at 52-53, Table 5. Finally,
International Inbound Single-Piece First-Class Mail failed to cover its
costs, earning revenues that were approximately 60 percent of
attributable costs. Id. at 22. Additionally, the Postal Service
provides a discussion of the competing policy considerations that
impact workshare discounts and the reasons a substantial number of
workshare discounts may have exceeded avoided costs in FY 2009. Id. at
58-73.
With respect to competitive products, seven international products
failed to recover their attributable costs--Inbound International
Expedited Services 1 and 2; Inbound Surface Parcel Post at Non-UPU
Rates; International Money Transfer Service; Competitive Registered
Mail; Competitive Insurance; Competitive Return Receipt; and
Competitive International Business Reply Service negotiated service
agreement contracts. Id. at 77-79.
The Postal Service estimates that competitive products as a whole
covered their incremental costs, calculated two alternative ways, and
therefore pass the test for identifying cross-subsidy of competitive
products by market dominant products. It, therefore, concludes
competitive products were in compliance with 39 U.S.C. 3633(a)(1).
It is ordered:
1. The Commission establishes Docket No. ACR2009 to consider
matters raised by the Postal Service's FY 2009 Annual Compliance
Report.
2. Comments on the United States Postal Service FY 2009 Annual
Compliance Report to the Commission, including the Comprehensive
Statement of Postal Operations and other reports, are due on or before
February 1, 2010.
3. Reply comments are due on or before February 16, 2010.
4. The Secretary shall arrange for publication of this order in the
Federal Register.
By the Commission.
Shoshana M. Grove,
Secretary.
[FR Doc. 2010-295 Filed 1-11-10; 8:45 am]
BILLING CODE 7710-FW-S