80_FR_68694 80 FR 68480 - Periodic Reporting

80 FR 68480 - Periodic Reporting

POSTAL REGULATORY COMMISSION

Federal Register Volume 80, Issue 214 (November 5, 2015)

Page Range68480-68481
FR Document2015-28127

The Commission is noticing a recent filing requesting that the Commission initiate an informal rulemaking proceeding to consider changes to analytical principles relating to periodic reports (Proposal One Through Three). The Commission will consider Proposals One and Two at this time. Proposal Three will be held in abeyance. This notice informs the public of the filing, invites public comment, and takes other administrative steps.

Federal Register, Volume 80 Issue 214 (Thursday, November 5, 2015)
[Federal Register Volume 80, Number 214 (Thursday, November 5, 2015)]
[Proposed Rules]
[Pages 68480-68481]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-28127]



[[Page 68480]]

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POSTAL REGULATORY COMMISSION

39 CFR Part 3050

[Docket No. RM2016-2; Order No. 2793]


Periodic Reporting

AGENCY: Postal Regulatory Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Commission is noticing a recent filing requesting that the 
Commission initiate an informal rulemaking proceeding to consider 
changes to analytical principles relating to periodic reports (Proposal 
One Through Three). The Commission will consider Proposals One and Two 
at this time. Proposal Three will be held in abeyance. This notice 
informs the public of the filing, invites public comment, and takes 
other administrative steps.

DATES: Comments are due: January 20, 2016. Reply Comments are due: 
March 25, 2016.

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. Summary of Proposals
III. Initial Commission Action
IV. Ordering Paragraphs

I. Introduction

    On October 8, 2015, the United Parcel Service, Inc. (UPS) filed a 
petition pursuant to 39 CFR 3050.11 requesting that the Commission 
initiate a rulemaking proceeding in order to consider changes to how 
the Postal Service accounts for the costs of competitive products in 
its periodic reports.\1\ Proposals One, Two, and Three are attached to 
the Petition along with a report created by Dr. Kevin Neels (Dr. 
Neels), an economic consultant, which supports each Proposal. UPS 
concurrently filed a non-public library reference with its Petition.\2\
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    \1\ Petition of United Parcel Service, Inc. for the Initiation 
of Proceedings to Make Changes to Postal Service Costing 
Methodologies, October 8, 2015 (Petition).
    \2\ Notice of Filing Library Reference UPS-RM2016-2/LR-NP1, 
October 8, 2015.
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    UPS explains that the Postal Accountability and Enhancement Act 
freed the Postal Service from certain rate-making conditions so that it 
could better compete with private companies in the parcel markets. 
Petition at 3. UPS notes, however, that when regulated entities such as 
the Postal Service are allowed to compete with private companies, ``the 
regulated entity has a natural incentive to leverage the monopoly 
revenues it is making from sales to its captive customers (here, those 
purchasing letter mail services) to finance the competitive ventures.'' 
Id. at 2. UPS contends that in exchange for new pricing ``freedoms,'' 
and in recognition of the Postal Service's ``inherent incentive'' to 
expand its competitive ventures at the expense of its captive 
customers, Congress mandated that ``the Postal Service could not 
subsidize its expansion into competitive parcel delivery markets with 
revenues it enjoys from the products it sells pursuant to the letter 
monopoly.'' Id. at 3, 4. UPS cites 39 U.S.C. 3633, which prohibits the 
subsidization of competitive products by market dominant products; 
requires that each competitive product cover its own attributable 
costs; and mandates that competitive products collectively cover an 
appropriate share of the Postal Service's institutional costs.\3\
---------------------------------------------------------------------------

    \3\ Id. at 4-5. See also 39 U.S.C. 3633(a).
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    UPS states that it is filing this Petition after an ``exhaustive 
analysis'' of the Postal Service's cost methodologies. Id. at 5. UPS 
asserts that its analysis reveals that the Postal Service is ``failing 
to ensure that its competitive products business is recovering all 
costs fairly attributable to that business'' and that the Postal 
Service ``is not accounting fully for the true costs'' of its 
competitive products. Id. at 5-6. UPS states that its analysis shows 
the Postal Service is misclassifying a significant amount of variable 
costs; \4\ therefore, ``competitive products are not bearing the full 
scope of the variable costs attributable to them.'' Id. at 7. 
Accordingly, UPS presents three proposals to change the Postal 
Service's current costing methodologies. Id. at 1.
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    \4\ The term variable cost is a relatively new term for 
Commission proceedings. It is not the same as volume variable cost, 
which is based on marginal cost. Each piece of mail that enters the 
postal system imposes an additional cost. As mail pieces continue to 
be entered into the postal system, these additional costs increase 
in total. Thus these costs vary with volume. The cost imposed on the 
postal system by the last piece entered into the system is the 
marginal cost. The additional costs imposed by previous pieces 
entered into the postal system are called inframarginal costs. The 
sum of all of these additional costs, including the cost of the last 
piece, is called variable costs.
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    In Proposal One, UPS recommends that the Postal Service incorporate 
all the variable costs, including the inframarginal costs attributable 
to individual products.\5\ In Proposal Two, UPS recommends that certain 
costs currently identified as fixed be reclassified as fully or 
partially variable and subsequently attributed to individual products. 
Petition, Proposal Two at 1. In Proposal Three, UPS recommends that the 
Commission increase the ``appropriate share'' pursuant to 39 U.S.C. 
3633(a)(3), from 5.5 percent \6\ to 24.6 percent, which is the 
competitive products' 3-year trailing average of the share of total 
attributable costs. Petition, Proposal Three at 1.
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    \5\ Petition, Proposal One at 1. UPS refers to the marginal 
costs associated with every preceding piece of mail as 
``inframarginal costs.'' Id.
    \6\ See 39 CFR 3015.7(c). The Commission most recently retained 
this share at 5.5 percent. See generally, Docket No. RM2012-3, Order 
Reviewing Competitive Products' Appropriate Share Contribution to 
Institutional Costs, August 23, 2012 (Order No. 1449).
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II. Summary of Proposals

A. Proposal One

    In Proposal One, UPS explains that in order to attribute costs to 
products, the Postal Service first estimates the marginal cost of 
various cost segments. Petition, Proposal One at 1-2. UPS notes, 
however, that the Postal Service's cost attribution method 
``effectively assumes that the cost associated with adding the last 
unit of mail is identical to the cost associated with adding each and 
every unit of mail.'' Id. at 4 (emphasis omitted).
    UPS argues that this is only a reasonable assumption when marginal 
costs are consistent throughout all volume levels. Id. UPS claims that 
when marginal costs decline as the level of volume increases, the cost 
associated with the last mail piece is lower than the marginal cost 
associated with producing each preceding piece. Id. Thus, it argues 
that by attributing only the marginal cost of the last piece of mail, 
the Postal Service is failing to attribute the higher marginal costs 
associated with producing every preceding piece in those cost 
components that exhibit declining marginal costs. Id.
    UPS recommends that the Postal Service include the inframarginal 
costs of individual products in its calculation of the costs 
attributable to those products. Petition at 1. It argues that 
distribution keys, which are currently used to calculate ``volume 
variable'' costs, can be used to distribute inframarginal costs to 
products. Id. Proposal One at 19, 20. UPS states that

[[Page 68481]]

``[a]ttributing inframarginal costs to products using the existing 
distribution keys is just as reliable as attributing marginal costs to 
products using those distribution keys. Id. at 20.

B. Proposal Two

    In Proposal Two, UPS contends that the Postal Service has a 
``systematic tendency to misclassify costs as fixed.'' Petition at 10. 
Such fixed costs, which are a major component of institutional costs, 
are not attributed to specific products.\7\ UPS asserts that the Postal 
Service's misclassification of certain costs as fixed allows it to 
``largely ignore'' such costs when setting the prices for its 
competitive products. Petition at 10. Based on UPS's belief that fixed 
and institutional costs are ``borne disproportionately'' by market 
dominant products, it concludes that the Postal Service's systemic 
misclassification of costs as fixed results in the improper 
subsidization of competitive products by market dominant products, in 
violation of 39 U.S.C. 3633(a)(1). Id. Proposal Two at 5.
---------------------------------------------------------------------------

    \7\ Id. Proposal Two at 2. 39 U.S.C. 3633(a)(3) requires that 
competitive products cover an ``appropriate share'' of institutional 
costs.
---------------------------------------------------------------------------

    Relying on Dr. Neels' analysis, UPS identifies 37 cost pools that 
it believes should be reclassified as wholly or partially variable. Id. 
at 1. UPS contends that Dr. Neels' analysis reveals that over $3 
billion in costs have been misclassified as fixed, and thus, have not 
been properly attributed to products. Id. at 8. UPS requests that the 
Commission attribute these reclassified costs to specific products 
based on their respective shares of overall attributable costs in the 
prior fiscal year. Id. at 10. Using this methodology, UPS estimates 
that over $700 million of costs have not been properly attributed to 
the Postal Service's competitive products. Id. at 8.

C. Proposal Three

    Unlike Proposals One and Two, Proposal Three does not involve 
issues related to the proper attribution of variable costs to the 
Postal Service's products. Rather, in Proposal Three, UPS requests that 
the Commission reconsider the ``appropriate share'' of institutional 
costs that must be covered by competitive products. Petition, Proposal 
Three at 1. Pursuant to 39 U.S.C. 3633(b), the Commission is required 
to review the appropriate share requirement at least every 5 years to 
determine if the percentage should be ``retained in its current form, 
modified, or eliminated.'' The current appropriate share, set by the 
Commission in CY 2012, is 5.5 percent. See Order 1449 at 27.
    In light of competitive products' volume growth in recent years, 
along with the Postal Service's significant investments in its 
competitive business, UPS believes that the current appropriate share 
percentage does not reflect current market conditions. Petition, 
Proposal Three at 6-14. To ensure that the Postal Service competes 
fairly, UPS asserts that the appropriate share percentage should be set 
at a level that approximates the fixed costs that a private competitor 
must bear. Id. at 14. Accordingly, UPS recommends that the appropriate 
share percentage be set at 24.6 percent. Id. UPS states that this 
percentage is equal to the average of the ``previous three years of 
attributable cost shares'' for competitive products. Id. UPS also 
encourages the Commission to adopt a mechanism that would adjust the 
appropriate share percentage each year in order to account for the 
fluctuation of postal cost and market realities. Id. at 14-15.

III. Initial Commission Action

    The Commission establishes Docket No. RM2016-2 for consideration of 
Proposals One and Two as raised by the Petition. The Commission holds 
Proposal Three in abeyance until it has completed its review of 
Proposals One and Two. As discussed above, Proposals One and Two both 
relate to the proper attribution of all variable costs to the Postal 
Service's products. Given the interrelatedness of these two proposals, 
the Commission finds that it is appropriate to consider them together 
in this docket. However, as UPS itself discussed in its Petition, if 
Proposals One and Two are adopted, unattributed costs will decline from 
$34.2 billion in FY 2014 to approximately $17 billion. Petition at 11-
12.
    Given the potentially significant impact that Proposals One and Two 
could have on the size of the Postal Service's unattributed costs, and 
given that Proposal Three relates to the portion of these costs that 
should be covered by competitive products, the Commission finds that 
consideration of Proposal Three should be delayed until the impact of 
Proposals One and Two are known. Both the Commission and the mailing 
community will benefit from having this information before evaluating 
UPS's proposed adjustments to the appropriate share requirement. 
Further, the Commission must allocate its finite resources across 
multiple priorities. Simultaneously considering all three proposals may 
result in the Commission having insufficient resources to bring to bear 
on other critical responsibilities.
    Additional information concerning the Petition may be accessed via 
the Commission's Web site at http://www.prc.gov. Interested persons may 
submit comments on Proposals One and Two in the Petition no later than 
January 20, 2016. Reply comments are due no later than March 25, 2016. 
Pursuant to 39 U.S.C. 505, Kenneth E. Richardson 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. RM2016-2 for consideration 
of Proposals One and Two from the Petition of United Parcel Service, 
Inc. for the Initiation of Proceedings to Make Changes to Postal 
Service Costing Methodologies, filed October 8, 2015.
    2. Consideration of Proposal Three from the Petition is held in 
abeyance until the Commission has completed its review of Proposals One 
and Two.
    3. Comments are due no later than January 20, 2016. Reply comments 
are due no later than March 25, 2016.
    4. Pursuant to 39 U.S.C. 505, the Commission appoints Kenneth E. 
Richardson to serve as an officer of the Commission (Public 
Representative) to represent the interests of the general public in 
this docket.
    5. The Secretary shall arrange for publication of this order in the 
Federal Register.

    By the Commission.
Stacy L. Ruble,
Secretary.
[FR Doc. 2015-28127 Filed 11-4-15; 8:45 am]
BILLING CODE 7710-FW-P



                                                    68480                Federal Register / Vol. 80, No. 214 / Thursday, November 5, 2015 / Proposed Rules

                                                    POSTAL REGULATORY COMMISSION                               UPS explains that the Postal                             In Proposal One, UPS recommends
                                                                                                            Accountability and Enhancement Act                        that the Postal Service incorporate all
                                                    39 CFR Part 3050                                        freed the Postal Service from certain                     the variable costs, including the
                                                    [Docket No. RM2016–2; Order No. 2793]                   rate-making conditions so that it could                   inframarginal costs attributable to
                                                                                                            better compete with private companies                     individual products.5 In Proposal Two,
                                                    Periodic Reporting                                      in the parcel markets. Petition at 3. UPS                 UPS recommends that certain costs
                                                                                                            notes, however, that when regulated                       currently identified as fixed be
                                                    AGENCY:   Postal Regulatory Commission.                 entities such as the Postal Service are                   reclassified as fully or partially variable
                                                    ACTION:   Notice of proposed rulemaking.                allowed to compete with private                           and subsequently attributed to
                                                                                                            companies, ‘‘the regulated entity has a                   individual products. Petition, Proposal
                                                    SUMMARY:   The Commission is noticing a                 natural incentive to leverage the                         Two at 1. In Proposal Three, UPS
                                                    recent filing requesting that the                       monopoly revenues it is making from                       recommends that the Commission
                                                    Commission initiate an informal                         sales to its captive customers (here,                     increase the ‘‘appropriate share’’
                                                    rulemaking proceeding to consider                       those purchasing letter mail services) to                 pursuant to 39 U.S.C. 3633(a)(3), from
                                                    changes to analytical principles relating               finance the competitive ventures.’’ Id. at                5.5 percent 6 to 24.6 percent, which is
                                                    to periodic reports (Proposal One                       2. UPS contends that in exchange for                      the competitive products’ 3-year trailing
                                                    Through Three). The Commission will                     new pricing ‘‘freedoms,’’ and in                          average of the share of total attributable
                                                    consider Proposals One and Two at this                  recognition of the Postal Service’s                       costs. Petition, Proposal Three at 1.
                                                    time. Proposal Three will be held in                    ‘‘inherent incentive’’ to expand its
                                                    abeyance. This notice informs the                                                                                 II. Summary of Proposals
                                                                                                            competitive ventures at the expense of
                                                    public of the filing, invites public                    its captive customers, Congress                           A. Proposal One
                                                    comment, and takes other                                mandated that ‘‘the Postal Service could                     In Proposal One, UPS explains that in
                                                    administrative steps.                                   not subsidize its expansion into                          order to attribute costs to products, the
                                                    DATES: Comments are due: January 20,                    competitive parcel delivery markets                       Postal Service first estimates the
                                                    2016. Reply Comments are due: March                     with revenues it enjoys from the                          marginal cost of various cost segments.
                                                    25, 2016.                                               products it sells pursuant to the letter                  Petition, Proposal One at 1–2. UPS
                                                    ADDRESSES: Submit comments                              monopoly.’’ Id. at 3, 4. UPS cites 39                     notes, however, that the Postal Service’s
                                                    electronically via the Commission’s                     U.S.C. 3633, which prohibits the                          cost attribution method ‘‘effectively
                                                    Filing Online system at http://                         subsidization of competitive products                     assumes that the cost associated with
                                                    www.prc.gov. Those who cannot submit                    by market dominant products; requires                     adding the last unit of mail is identical
                                                    comments electronically should contact                  that each competitive product cover its                   to the cost associated with adding each
                                                    the person identified in the FOR FURTHER                own attributable costs; and mandates                      and every unit of mail.’’ Id. at 4
                                                    INFORMATION CONTACT section by                          that competitive products collectively                    (emphasis omitted).
                                                    telephone for advice on filing                          cover an appropriate share of the Postal                     UPS argues that this is only a
                                                    alternatives.                                           Service’s institutional costs.3                           reasonable assumption when marginal
                                                                                                               UPS states that it is filing this Petition             costs are consistent throughout all
                                                    FOR FURTHER INFORMATION CONTACT:
                                                                                                            after an ‘‘exhaustive analysis’’ of the                   volume levels. Id. UPS claims that when
                                                    David A. Trissell, General Counsel, at                                                                            marginal costs decline as the level of
                                                                                                            Postal Service’s cost methodologies. Id.
                                                    202–789–6820.                                                                                                     volume increases, the cost associated
                                                                                                            at 5. UPS asserts that its analysis reveals
                                                    SUPPLEMENTARY INFORMATION:                              that the Postal Service is ‘‘failing to                   with the last mail piece is lower than
                                                    Table of Contents                                       ensure that its competitive products                      the marginal cost associated with
                                                                                                            business is recovering all costs fairly                   producing each preceding piece. Id.
                                                    I. Introduction                                                                                                   Thus, it argues that by attributing only
                                                                                                            attributable to that business’’ and that
                                                    II. Summary of Proposals                                                                                          the marginal cost of the last piece of
                                                    III. Initial Commission Action                          the Postal Service ‘‘is not accounting
                                                    IV. Ordering Paragraphs                                 fully for the true costs’’ of its                         mail, the Postal Service is failing to
                                                                                                            competitive products. Id. at 5–6. UPS                     attribute the higher marginal costs
                                                    I. Introduction                                         states that its analysis shows the Postal                 associated with producing every
                                                       On October 8, 2015, the United Parcel                Service is misclassifying a significant                   preceding piece in those cost
                                                    Service, Inc. (UPS) filed a petition                    amount of variable costs; 4 therefore,                    components that exhibit declining
                                                    pursuant to 39 CFR 3050.11 requesting                   ‘‘competitive products are not bearing                    marginal costs. Id.
                                                    that the Commission initiate a                          the full scope of the variable costs                         UPS recommends that the Postal
                                                    rulemaking proceeding in order to                       attributable to them.’’ Id. at 7.                         Service include the inframarginal costs
                                                    consider changes to how the Postal                      Accordingly, UPS presents three                           of individual products in its calculation
                                                    Service accounts for the costs of                       proposals to change the Postal Service’s                  of the costs attributable to those
                                                    competitive products in its periodic                    current costing methodologies. Id. at 1.                  products. Petition at 1. It argues that
                                                    reports.1 Proposals One, Two, and Three                                                                           distribution keys, which are currently
                                                    are attached to the Petition along with                   3 Id. at 4–5. See also 39 U.S.C. 3633(a).               used to calculate ‘‘volume variable’’
                                                    a report created by Dr. Kevin Neels (Dr.
                                                                                                              4 The  term variable cost is a relatively new term      costs, can be used to distribute
                                                                                                            for Commission proceedings. It is not the same as         inframarginal costs to products. Id.
                                                    Neels), an economic consultant, which                   volume variable cost, which is based on marginal
                                                    supports each Proposal. UPS                             cost. Each piece of mail that enters the postal
                                                                                                                                                                      Proposal One at 19, 20. UPS states that
jstallworth on DSK7TPTVN1PROD with PROPOSALS




                                                    concurrently filed a non-public library                 system imposes an additional cost. As mail pieces
                                                                                                                                                                        5 Petition, Proposal One at 1. UPS refers to the
                                                                                                            continue to be entered into the postal system, these
                                                    reference with its Petition.2                           additional costs increase in total. Thus these costs      marginal costs associated with every preceding
                                                                                                            vary with volume. The cost imposed on the postal          piece of mail as ‘‘inframarginal costs.’’ Id.
                                                      1 Petition of United Parcel Service, Inc. for the
                                                                                                            system by the last piece entered into the system is         6 See 39 CFR 3015.7(c). The Commission most
                                                    Initiation of Proceedings to Make Changes to Postal     the marginal cost. The additional costs imposed by        recently retained this share at 5.5 percent. See
                                                    Service Costing Methodologies, October 8, 2015          previous pieces entered into the postal system are        generally, Docket No. RM2012–3, Order Reviewing
                                                    (Petition).                                             called inframarginal costs. The sum of all of these       Competitive Products’ Appropriate Share
                                                      2 Notice of Filing Library Reference UPS–             additional costs, including the cost of the last piece,   Contribution to Institutional Costs, August 23, 2012
                                                    RM2016–2/LR–NP1, October 8, 2015.                       is called variable costs.                                 (Order No. 1449).



                                               VerDate Sep<11>2014   14:36 Nov 04, 2015   Jkt 238001   PO 00000   Frm 00008   Fmt 4702   Sfmt 4702   E:\FR\FM\05NOP1.SGM      05NOP1


                                                                          Federal Register / Vol. 80, No. 214 / Thursday, November 5, 2015 / Proposed Rules                                               68481

                                                    ‘‘[a]ttributing inframarginal costs to                  2012, is 5.5 percent. See Order 1449 at               resources to bring to bear on other
                                                    products using the existing distribution                27.                                                   critical responsibilities.
                                                    keys is just as reliable as attributing                    In light of competitive products’                    Additional information concerning
                                                    marginal costs to products using those                  volume growth in recent years, along                  the Petition may be accessed via the
                                                    distribution keys. Id. at 20.                           with the Postal Service’s significant                 Commission’s Web site at http://
                                                                                                            investments in its competitive business,              www.prc.gov. Interested persons may
                                                    B. Proposal Two
                                                                                                            UPS believes that the current                         submit comments on Proposals One and
                                                       In Proposal Two, UPS contends that                   appropriate share percentage does not                 Two in the Petition no later than
                                                    the Postal Service has a ‘‘systematic                   reflect current market conditions.                    January 20, 2016. Reply comments are
                                                    tendency to misclassify costs as fixed.’’               Petition, Proposal Three at 6–14. To                  due no later than March 25, 2016.
                                                    Petition at 10. Such fixed costs, which                 ensure that the Postal Service competes               Pursuant to 39 U.S.C. 505, Kenneth E.
                                                    are a major component of institutional                  fairly, UPS asserts that the appropriate              Richardson is designated as an officer of
                                                    costs, are not attributed to specific                   share percentage should be set at a level             the Commission (Public Representative)
                                                    products.7 UPS asserts that the Postal                  that approximates the fixed costs that a              to represent the interests of the general
                                                    Service’s misclassification of certain                  private competitor must bear. Id. at 14.              public in this proceeding.
                                                    costs as fixed allows it to ‘‘largely                   Accordingly, UPS recommends that the                  IV. Ordering Paragraphs
                                                    ignore’’ such costs when setting the                    appropriate share percentage be set at
                                                    prices for its competitive products.                    24.6 percent. Id. UPS states that this                   It is ordered:
                                                    Petition at 10. Based on UPS’s belief                   percentage is equal to the average of the                1. The Commission establishes Docket
                                                    that fixed and institutional costs are                  ‘‘previous three years of attributable cost           No. RM2016–2 for consideration of
                                                    ‘‘borne disproportionately’’ by market                  shares’’ for competitive products. Id.                Proposals One and Two from the
                                                    dominant products, it concludes that                    UPS also encourages the Commission to                 Petition of United Parcel Service, Inc.
                                                    the Postal Service’s systemic                           adopt a mechanism that would adjust                   for the Initiation of Proceedings to Make
                                                    misclassification of costs as fixed results             the appropriate share percentage each                 Changes to Postal Service Costing
                                                    in the improper subsidization of                        year in order to account for the                      Methodologies, filed October 8, 2015.
                                                    competitive products by market                          fluctuation of postal cost and market                    2. Consideration of Proposal Three
                                                    dominant products, in violation of 39                   realities. Id. at 14–15.                              from the Petition is held in abeyance
                                                    U.S.C. 3633(a)(1). Id. Proposal Two at 5.                                                                     until the Commission has completed its
                                                                                                            III. Initial Commission Action                        review of Proposals One and Two.
                                                       Relying on Dr. Neels’ analysis, UPS
                                                                                                               The Commission establishes Docket                     3. Comments are due no later than
                                                    identifies 37 cost pools that it believes
                                                                                                            No. RM2016–2 for consideration of                     January 20, 2016. Reply comments are
                                                    should be reclassified as wholly or
                                                                                                            Proposals One and Two as raised by the                due no later than March 25, 2016.
                                                    partially variable. Id. at 1. UPS contends
                                                                                                            Petition. The Commission holds                           4. Pursuant to 39 U.S.C. 505, the
                                                    that Dr. Neels’ analysis reveals that over
                                                                                                            Proposal Three in abeyance until it has               Commission appoints Kenneth E.
                                                    $3 billion in costs have been
                                                                                                            completed its review of Proposals One                 Richardson to serve as an officer of the
                                                    misclassified as fixed, and thus, have
                                                                                                            and Two. As discussed above, Proposals                Commission (Public Representative) to
                                                    not been properly attributed to
                                                                                                            One and Two both relate to the proper                 represent the interests of the general
                                                    products. Id. at 8. UPS requests that the
                                                                                                            attribution of all variable costs to the              public in this docket.
                                                    Commission attribute these reclassified
                                                                                                            Postal Service’s products. Given the                     5. The Secretary shall arrange for
                                                    costs to specific products based on their
                                                                                                            interrelatedness of these two proposals,              publication of this order in the Federal
                                                    respective shares of overall attributable
                                                                                                            the Commission finds that it is                       Register.
                                                    costs in the prior fiscal year. Id. at 10.
                                                    Using this methodology, UPS estimates                   appropriate to consider them together in                By the Commission.
                                                    that over $700 million of costs have not                this docket. However, as UPS itself                   Stacy L. Ruble,
                                                    been properly attributed to the Postal                  discussed in its Petition, if Proposals               Secretary.
                                                    Service’s competitive products. Id. at 8.               One and Two are adopted, unattributed                 [FR Doc. 2015–28127 Filed 11–4–15; 8:45 am]
                                                                                                            costs will decline from $34.2 billion in
                                                    C. Proposal Three                                                                                             BILLING CODE 7710–FW–P
                                                                                                            FY 2014 to approximately $17 billion.
                                                       Unlike Proposals One and Two,                        Petition at 11–12.
                                                    Proposal Three does not involve issues                     Given the potentially significant
                                                                                                                                                                  ENVIRONMENTAL PROTECTION
                                                    related to the proper attribution of                    impact that Proposals One and Two
                                                                                                                                                                  AGENCY
                                                    variable costs to the Postal Service’s                  could have on the size of the Postal
                                                    products. Rather, in Proposal Three,                    Service’s unattributed costs, and given               40 CFR Part 52
                                                    UPS requests that the Commission                        that Proposal Three relates to the
                                                                                                            portion of these costs that should be                 [EPA–R06–OAR–2012–0434; FRL–9936–61–
                                                    reconsider the ‘‘appropriate share’’ of                                                                       Region 6]
                                                    institutional costs that must be covered                covered by competitive products, the
                                                    by competitive products. Petition,                      Commission finds that consideration of
                                                                                                                                                                  Approval and Promulgation of State
                                                    Proposal Three at 1. Pursuant to 39                     Proposal Three should be delayed until
                                                                                                                                                                  Implementation Plans, Louisiana
                                                    U.S.C. 3633(b), the Commission is                       the impact of Proposals One and Two
                                                    required to review the appropriate share                are known. Both the Commission and                    AGENCY:  Environmental Protection
                                                                                                            the mailing community will benefit                    Agency (EPA).
jstallworth on DSK7TPTVN1PROD with PROPOSALS




                                                    requirement at least every 5 years to
                                                    determine if the percentage should be                   from having this information before                   ACTION: Proposed rule.
                                                    ‘‘retained in its current form, modified,               evaluating UPS’s proposed adjustments
                                                    or eliminated.’’ The current appropriate                to the appropriate share requirement.                 SUMMARY:   The Environmental Protection
                                                    share, set by the Commission in CY                      Further, the Commission must allocate                 Agency (EPA) is proposing to approve
                                                                                                            its finite resources across multiple                  revisions to the State Implementation
                                                       7 Id. Proposal Two at 2. 39 U.S.C. 3633(a)(3)        priorities. Simultaneously considering                Plan (SIP) for Louisiana. These rule
                                                    requires that competitive products cover an             all three proposals may result in the                 revisions are the 2007 General
                                                    ‘‘appropriate share’’ of institutional costs.           Commission having insufficient                        Revisions, and 2008–2010


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Document Created: 2015-12-14 15:03:08
Document Modified: 2015-12-14 15:03:08
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionProposed Rules
ActionNotice of proposed rulemaking.
DatesComments are due: January 20, 2016. Reply Comments are due: March 25, 2016.
ContactDavid A. Trissell, General Counsel, at 202-789-6820.
FR Citation80 FR 68480 

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