83_FR_31475 83 FR 31346 - Periodic Reporting

83 FR 31346 - Periodic Reporting

POSTAL REGULATORY COMMISSION

Federal Register Volume 83, Issue 129 (July 5, 2018)

Page Range31346-31348
FR Document2018-14349

The Commission is noticing a recent filing requesting that the Commission initiate an informal rulemaking proceeding to consider changes to an analytical method for use in periodic reporting (Proposal Four). This document informs the public of the filing, invites public comment, and takes other administrative steps.

Federal Register, Volume 83 Issue 129 (Thursday, July 5, 2018)
[Federal Register Volume 83, Number 129 (Thursday, July 5, 2018)]
[Proposed Rules]
[Pages 31346-31348]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-14349]


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POSTAL REGULATORY COMMISSION

39 CFR Part 3050

[Docket No. RM2018-7; Order No. 4685]


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 an analytical method for use in periodic reporting (Proposal 
Four). This document informs the public of the filing, invites public 
comment, and takes other administrative steps.

DATES: Comments are due: July 23, 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. Proposal Four
III. Notice and Comment
IV. Ordering Paragraphs

I. Introduction

    On June 25, 2018, 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 
principles changes filed in this docket as Proposal Four.
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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 Four), June 25, 2018 (Petition).
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II. Proposal Four

    Background. Proposal Four would change the costing methodology for 
assigning expenses related to debit card transactions in the component 
named Retail Credit Card Fees (Component No. 126) in Cost Segment 13. 
Petition, Proposal Four at 1. Debit card transactions, which are 
purchases made using debit cards, incur fees that merchants pay to the 
debit card issuer.\2\ For example, when a customer purchases a product 
or service from the Postal Service using a debit card, the Postal 
Service pays the debit card issuer a fee for each transaction.
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    \2\ One type of fee that may be incurred when using a debit card 
is an interchange fee, which is the largest categorical contributor 
to total debit card processing fees for a transaction. Id. at 5. A 
merchant pays an interchange fee to the debit card issuer whenever a 
customer makes a purchase using a debit card. See 12 CFR 235.2(j) 
(defining ``interchange transaction fee'' as ``any fee established, 
charged, or received by a payment card network and paid by a 
merchant or an acquirer for the purpose of compensating an issuer 
for its involvement in an electronic debit transaction.''). The 
debit card fees referred to in the Petition and this Order are 
interchange fees.
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    In Docket No. RM2015-4, the Commission approved the current 
methodology for assigning expenses related to credit and debit card 
transactions.\3\ The current methodology treats these expenses as fully 
volume variable and assigns them to products in the same proportions as 
the Postal Service revenue realized from aggregate credit and debit 
card transactions. Petition, Proposal Four at 1. When preparing the FY 
2017 Annual Compliance Report (ACR), the Postal Service explains that 
it recognized two flaws in the current methodology. Id. First, the 
current methodology uses the total of both credit and debit card fees 
when calculating distribution factors. Id. This assumes that 
transactions made with debit and credit cards are similar, which is not 
true for every product. Id. For example, Priority Mail generates more 
revenue from credit card purchases than debit cards. Id. Conversely, 
Money Orders cannot be purchased using credit cards. Id.
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    \3\ Petition, Proposal Four at 1; see Docket No. RM2015-4, Order 
Approving Analytical Principle Used in Periodic Reporting (Proposal 
Eleven), February 9, 2015 (Order No. 2350).
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    The Postal Service asserts that when calculating a distribution 
key, the type of card used (debit or credit) becomes more important 
because total credit card fees are almost four times greater than total 
debit card fees. Id. Because of this incorrect assumption, the current 
methodology misallocates expenses related to debit and credit card 
fees, especially for products that are more heavily purchased by one 
card type. Id.
    The second flaw in the current methodology identified by the Postal 
Service is that the distribution factors do not fully align with actual 
expenses incurred from the usage of debit and credit cards. Id. at 2. 
For example, for Money Order transactions, the Postal Service charges 
the customer the face value of the Money Order plus a Special Services 
fee. Id. When calculating the Money Order share of total ``revenue'' 
for distribution purposes, the current methodology only considers the 
Special Services fee the Postal Service charges the customer. Id. The 
Postal Service asserts that this methodology is erroneous because the 
amount the Postal Service pays to the debit card provider is based on 
the entire transaction amount, including the face value of the money 
order, rather than just the Special Services fee charged. Id.
    To address these two flaws in the current methodology, the Postal 
Service made two corrections to Library Reference USPS-FY17-32, which 
was filed with the FY 2017 ACR.\4\ First, the Postal Service separated 
credit and debit card fees to develop different sets of distribution 
factors for these fees. Petition, Proposal Four at 2. Second, the set 
of distribution factors for debit cards used the aggregate face value 
of Money Orders purchased with debit cards in conjunction with the 
revenue from all other products. Id.
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    \4\ Id.; see Docket No. ACR2017, Library Reference USPS-FY17-32, 
December 29, 2017.
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    In a supplemental Chairman's Information Request (CHIR) response, 
the Postal Service proposed a model attempting to account for the 
recognized major components of debit card fees.\5\ In the FY 2017 
Annual Compliance

[[Page 31347]]

Determination (ACD), the Commission stated that the proposed model was 
not an approved methodology for attributing expenses related to debit 
card fees.\6\ It directed the Postal Service to continue investigating 
issues related to debit card fee attribution and update the Commission 
on its progress and any potential corresponding methodological changes 
within 90 days after the ACD was issued. FY 2017 ACD at 64. The Postal 
Service asserts that Proposal Four is a result of this investigation. 
Petition, Proposal Four at 3.
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    \5\ Id. at 2-3; see Docket No. ACR2017, Supplemental Response of 
the United States Postal Service to Question 1.b of Chairman's 
Information Request No. 2, February 23, 2018 (Response to CHIR No. 
2, Question 1.b).
    \6\ Docket No. ACR2017, Annual Compliance Determination, March 
29, 2018, at 64 (FY 2017 ACD). The Commission's rules require the 
Postal Service to use only accepted analytical principles in its 
annual periodic reports to the Commission, including the ACR. 39 CFR 
3050.10.
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    Proposal description. Proposal Four would change the methodology 
for assigning expenses related to debit card transactions (Debit Card 
Expenses). Proposal Four would disaggregate total Debit Card Expenses 
into two cost pools: Transactions and Proceeds. Id. The Transactions 
cost pool would account for Debit Card Expenses for regulated 
transactions, which have limits on debit card fee amounts based on 
Federal Reserve regulations. Id. at 3, 5. Unregulated transactions do 
not have these limits. Id. at 5.
    To calculate the amount of Debit Card Expenses allocated to the 
Transactions cost pool, the Postal Service would first determine the 
number of regulated debit card transactions. Id. at 3. This is the 
total number of debit card transactions multiplied by the proportion of 
regulated transactions. The number of regulated transactions would then 
be multiplied by the approximate per-transaction cost to calculate the 
amount of Debit Card Expenses allocated to the Transactions cost 
pool.\7\ The remaining amount would be allocated to the Proceeds cost 
pool. Petition, Proposal Four at 4.
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    \7\ Id. at 3-4. As discussed below, the ``per-transaction'' cost 
appears to refer to fixed debit card fees, which are the same for 
each transaction regardless of the transaction amount. See Response 
to CHIR No. 2, Question 1.b.
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    For example, in FY 2017, total Debit Card Expenses were 
approximately $58.6 million. Id. at 3. Proposal Four would disaggregate 
these expenses between the Transactions cost pool and Proceeds cost 
pool. There were approximately 150 million debit card transactions, 65 
percent of which were regulated. Id. at 3-4. The approximate per-
transaction cost was 22 cents. Id. at 4. Thus, the Transactions cost 
pool would equal approximately $21.3 million (150 million total debit 
card transactions x 65 percent regulated transactions x 22 cents per-
transaction cost). Id. The remaining amount of $37.3 million ($58.6 
million -$21.3 million) would be allocated to the Proceeds cost pool. 
Id.
    Under Proposal Four, Debit Card Expenses in the Transactions cost 
pool would be assigned to products proportionally based on the number 
of tenders captured from the Retail Data Mart. Id. Debit Card Expenses 
in the Proceeds cost pool would be assigned to products in proportion 
to the total proceeds realized with debit cards, which is the same 
distribution key used under the current methodology. Id. The final 
Debit Card Expenses assigned to each product would be the sum total of 
the respective amounts from each cost pool. Id.
    The Postal Service states that Proposal Four reflects the proposed 
model presented in Docket No. ACR2017. Id. However, it explains that 
Proposal Four differs by distinguishing between regulated and 
unregulated transactions. Id. By contrast, the proposed model assumed 
that all of the debit card transactions were regulated. Id.
    Rationale. The Postal Service asserts that Proposal Four would 
improve the accuracy of its costing methods by more closely reflecting 
how debit card fees are incurred. Id. at 4-5. Debit card fees generally 
have two components: A fixed fee per transaction (regardless of 
transaction amount) and a variable fee that changes based on the 
transaction amount. Response to CHIR No. 2, Question 1.b. For regulated 
transactions, the Federal Reserve limits debit card fees to 22 cents 
per transaction (fixed fee) plus 0.05 percent of the transaction 
(variable fee).\8\ Proposal Four would account for the fixed debit card 
fees in the Transactions cost pool for regulated transactions. Id. The 
Proceeds cost pool would account for the variable debit card fees along 
with other fees, including fees for unregulated debit card 
transactions. Id.
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    \8\ Petition, Proposal Four at 5. The 22 cent per-transaction 
cost includes one cent for fraud protection costs. Id.
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    The Postal Service asserts that Proposal Four would address a flaw 
in the current methodology. Id. at 6. The current methodology assigns 
all Debit Card Expenses to products in the same proportions as the 
Postal Service revenue realized from aggregate debit card transactions. 
Id. at 1. However, this methodology ignores the fixed ``per-
transaction'' component of Debit Card Expenses.\9\ The current 
methodology would be appropriate if all products had the same average 
revenue per transaction. Petition, Proposal Four at 6. Because they do 
not, products with below average revenues per transaction are assigned 
less than their appropriate share of the Debit Card Expenses related to 
the fixed fee. Id. Conversely, products with above average revenues per 
transaction are assigned more than their share of these expenses. Id.
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    \9\ Id. at 6. The ``per-transaction'' component appears to refer 
to fixed debit card fees, which are the same for each transaction 
regardless of the transaction amount. See Response to CHIR No. 2, 
Question 1.b.
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    For example, the average revenue per transaction for Money Orders 
is substantially higher than those of other products. Id. at 7. The 
Postal Service asserts that the current methodology overstated the 
Debit Card Expenses assigned to Money Orders in FY 2017. Id. at 6-7. 
The Postal Service points out that applying Proposal Four would have 
properly distinguished between the fixed per-transaction and residual 
components for regulated transactions, which would have resulted in a 
more accurate assignment of Debit Card Expenses to Money Orders. Id. at 
7. The Transactions cost pool would account for the fixed per-
transaction component of Debit Card Expenses. See id. at 4. The Postal 
Service concludes that adopting Proposal Four would improve the 
accuracy of its costing methods by more closely aligning with the way 
debit card fees are incurred. Id.
    Impact. The Petition includes a table illustrating the cost impacts 
of Proposal Four. Id. at 7-8. This table compares the Debit Card 
Expenses distribution as presented in the FY 2017 ACR with the 
distributions that would have resulted if Proposal Four had been used. 
Id. at 7. The Postal Service explains that the most significant change 
to the cost coverages filed with the FY 2017 ACR would be to Money 
Orders, which would have experienced an increase in cost coverage under 
Proposal Four from 97 percent to approximately 107 percent. On a unit 
cost basis, the impact on all other products ``would be either trivial 
or, in most instances, entirely immaterial.'' Id. at 7-8. The Postal 
Service provides further details in workpapers filed with the 
Petition.\10\
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    \10\ See Petition, Excel file 
``Prop.4.Debit.Card.Attachment.xlsx.''
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III. Notice and Comment

    The Commission establishes Docket No. RM2018-7 to consider 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 Four no later 
than July 23, 2018. Pursuant to 39 U.S.C. 505, Jennaca D. Upperman is 
designated as an officer

[[Page 31348]]

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. RM2018-7 to consider 
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 Four), filed June 25, 2018.
    2. Comments by interested persons in this proceeding are due no 
later than July 23, 2018.
    3. Pursuant to 39 U.S.C. 505, the Commission appoints Jennaca D. 
Upperman to serve as an 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.
Stacy L. Ruble,
Secretary.
[FR Doc. 2018-14349 Filed 7-3-18; 8:45 am]
 BILLING CODE 7710-FW-P



                                                31346                     Federal Register / Vol. 83, No. 129 / Thursday, July 5, 2018 / Proposed Rules

                                                interests of the general public in this                  Table of Contents                                       when calculating distribution factors.
                                                proceeding.                                              I. Introduction                                         Id. This assumes that transactions made
                                                                                                         II. Proposal Four                                       with debit and credit cards are similar,
                                                IV. Ordering Paragraphs
                                                                                                         III. Notice and Comment                                 which is not true for every product. Id.
                                                  It is ordered:                                         IV. Ordering Paragraphs                                 For example, Priority Mail generates
                                                  1. The Commission establishes Docket                                                                           more revenue from credit card
                                                No. RM2018–8 for consideration of the                    I. Introduction                                         purchases than debit cards. Id.
                                                matters raised by the Petition of the                       On June 25, 2018, the Postal Service                 Conversely, Money Orders cannot be
                                                United States Postal Service for the                     filed a petition pursuant to 39 CFR                     purchased using credit cards. Id.
                                                Initiation of a Proceeding to Consider                   3050.11, requesting that the                               The Postal Service asserts that when
                                                Proposed Changes in Analytical                           Commission initiate a rulemaking                        calculating a distribution key, the type
                                                Principles (Proposal Five), filed June 26,               proceeding to consider changes to                       of card used (debit or credit) becomes
                                                2018.                                                    analytical principles relating to periodic              more important because total credit card
                                                  2. Comments by interested persons in                   reports.1 The Petition identifies the                   fees are almost four times greater than
                                                this proceeding are due no later than                    proposed analytical principles changes                  total debit card fees. Id. Because of this
                                                August 22, 2018.                                         filed in this docket as Proposal Four.                  incorrect assumption, the current
                                                  3. Pursuant to 39 U.S.C. 505, the                                                                              methodology misallocates expenses
                                                                                                         II. Proposal Four
                                                Commission appoints Katalin K.                                                                                   related to debit and credit card fees,
                                                Clendenin to serve as an officer of the                     Background. Proposal Four would                      especially for products that are more
                                                Commission (Public Representative) to                    change the costing methodology for                      heavily purchased by one card type. Id.
                                                                                                         assigning expenses related to debit card                   The second flaw in the current
                                                represent the interests of the general
                                                                                                         transactions in the component named                     methodology identified by the Postal
                                                public in this docket.
                                                                                                         Retail Credit Card Fees (Component No.                  Service is that the distribution factors
                                                  4. The Secretary shall arrange for
                                                                                                         126) in Cost Segment 13. Petition,                      do not fully align with actual expenses
                                                publication of this Order in the Federal
                                                                                                         Proposal Four at 1. Debit card                          incurred from the usage of debit and
                                                Register.
                                                                                                         transactions, which are purchases made                  credit cards. Id. at 2. For example, for
                                                  By the Commission.                                     using debit cards, incur fees that                      Money Order transactions, the Postal
                                                Stacy L. Ruble,                                          merchants pay to the debit card issuer.2                Service charges the customer the face
                                                Secretary.                                               For example, when a customer                            value of the Money Order plus a Special
                                                [FR Doc. 2018–14367 Filed 7–3–18; 8:45 am]               purchases a product or service from the                 Services fee. Id. When calculating the
                                                BILLING CODE 7710–FW–P                                   Postal Service using a debit card, the                  Money Order share of total ‘‘revenue’’
                                                                                                         Postal Service pays the debit card issuer               for distribution purposes, the current
                                                                                                         a fee for each transaction.                             methodology only considers the Special
                                                POSTAL REGULATORY COMMISSION                                In Docket No. RM2015–4, the                          Services fee the Postal Service charges
                                                                                                         Commission approved the current                         the customer. Id. The Postal Service
                                                39 CFR Part 3050                                         methodology for assigning expenses                      asserts that this methodology is
                                                                                                         related to credit and debit card                        erroneous because the amount the
                                                [Docket No. RM2018–7; Order No. 4685]                    transactions.3 The current methodology                  Postal Service pays to the debit card
                                                                                                         treats these expenses as fully volume                   provider is based on the entire
                                                Periodic Reporting                                       variable and assigns them to products in                transaction amount, including the face
                                                                                                         the same proportions as the Postal                      value of the money order, rather than
                                                AGENCY:   Postal Regulatory Commission.                  Service revenue realized from aggregate                 just the Special Services fee charged. Id.
                                                ACTION:   Notice of proposed rulemaking.                 credit and debit card transactions.                        To address these two flaws in the
                                                                                                         Petition, Proposal Four at 1. When                      current methodology, the Postal Service
                                                SUMMARY:    The Commission is noticing a                 preparing the FY 2017 Annual                            made two corrections to Library
                                                recent filing requesting that the                        Compliance Report (ACR), the Postal                     Reference USPS–FY17–32, which was
                                                Commission initiate an informal                          Service explains that it recognized two                 filed with the FY 2017 ACR.4 First, the
                                                rulemaking proceeding to consider                        flaws in the current methodology. Id.                   Postal Service separated credit and debit
                                                changes to an analytical method for use                  First, the current methodology uses the                 card fees to develop different sets of
                                                in periodic reporting (Proposal Four).                   total of both credit and debit card fees                distribution factors for these fees.
                                                This document informs the public of the
                                                                                                                                                                 Petition, Proposal Four at 2. Second, the
                                                filing, invites public comment, and                         1 Petition of the United States Postal Service for
                                                                                                                                                                 set of distribution factors for debit cards
                                                takes other administrative steps.                        the Initiation of a Proceeding to Consider Proposed
                                                                                                         Changes in Analytical Principles (Proposal Four),
                                                                                                                                                                 used the aggregate face value of Money
                                                DATES: Comments are due: July 23,                                                                                Orders purchased with debit cards in
                                                                                                         June 25, 2018 (Petition).
                                                2018.                                                       2 One type of fee that may be incurred when using    conjunction with the revenue from all
                                                ADDRESSES:   Submit comments                             a debit card is an interchange fee, which is the        other products. Id.
                                                                                                         largest categorical contributor to total debit card        In a supplemental Chairman’s
                                                electronically via the Commission’s                      processing fees for a transaction. Id. at 5. A
                                                Filing Online system at http://                          merchant pays an interchange fee to the debit card      Information Request (CHIR) response,
                                                www.prc.gov. Those who cannot submit                     issuer whenever a customer makes a purchase using       the Postal Service proposed a model
                                                comments electronically should contact                   a debit card. See 12 CFR 235.2(j) (defining             attempting to account for the recognized
                                                                                                         ‘‘interchange transaction fee’’ as ‘‘any fee            major components of debit card fees.5 In
                                                the person identified in the FOR FURTHER
amozie on DSK3GDR082PROD with PROPOSALS1




                                                                                                         established, charged, or received by a payment card
                                                INFORMATION CONTACT section by                           network and paid by a merchant or an acquirer for       the FY 2017 Annual Compliance
                                                telephone for advice on filing                           the purpose of compensating an issuer for its
                                                                                                         involvement in an electronic debit transaction.’’).       4 Id.; see Docket No. ACR2017, Library Reference
                                                alternatives.
                                                                                                         The debit card fees referred to in the Petition and     USPS–FY17–32, December 29, 2017.
                                                FOR FURTHER INFORMATION CONTACT:                         this Order are interchange fees.                          5 Id. at 2–3; see Docket No. ACR2017,
                                                                                                            3 Petition, Proposal Four at 1; see Docket No.       Supplemental Response of the United States Postal
                                                David A. Trissell, General Counsel, at
                                                                                                         RM2015–4, Order Approving Analytical Principle          Service to Question 1.b of Chairman’s Information
                                                202–789–6820.                                            Used in Periodic Reporting (Proposal Eleven),           Request No. 2, February 23, 2018 (Response to CHIR
                                                SUPPLEMENTARY INFORMATION:                               February 9, 2015 (Order No. 2350).                      No. 2, Question 1.b).



                                           VerDate Sep<11>2014   16:03 Jul 03, 2018   Jkt 244001   PO 00000   Frm 00004   Fmt 4702   Sfmt 4702   E:\FR\FM\05JYP1.SGM   05JYP1


                                                                           Federal Register / Vol. 83, No. 129 / Thursday, July 5, 2018 / Proposed Rules                                                  31347

                                                Determination (ACD), the Commission                       cost). Id. The remaining amount of $37.3               would be appropriate if all products had
                                                stated that the proposed model was not                    million ($58.6 million ¥$21.3 million)                 the same average revenue per
                                                an approved methodology for attributing                   would be allocated to the Proceeds cost                transaction. Petition, Proposal Four at 6.
                                                expenses related to debit card fees.6 It                  pool. Id.                                              Because they do not, products with
                                                directed the Postal Service to continue                      Under Proposal Four, Debit Card                     below average revenues per transaction
                                                investigating issues related to debit card                Expenses in the Transactions cost pool                 are assigned less than their appropriate
                                                fee attribution and update the                            would be assigned to products                          share of the Debit Card Expenses related
                                                Commission on its progress and any                        proportionally based on the number of                  to the fixed fee. Id. Conversely, products
                                                potential corresponding methodological                    tenders captured from the Retail Data                  with above average revenues per
                                                changes within 90 days after the ACD                      Mart. Id. Debit Card Expenses in the                   transaction are assigned more than their
                                                was issued. FY 2017 ACD at 64. The                        Proceeds cost pool would be assigned to                share of these expenses. Id.
                                                Postal Service asserts that Proposal Four                 products in proportion to the total                       For example, the average revenue per
                                                is a result of this investigation. Petition,              proceeds realized with debit cards,                    transaction for Money Orders is
                                                Proposal Four at 3.                                       which is the same distribution key used                substantially higher than those of other
                                                   Proposal description. Proposal Four                    under the current methodology. Id. The                 products. Id. at 7. The Postal Service
                                                would change the methodology for                          final Debit Card Expenses assigned to                  asserts that the current methodology
                                                assigning expenses related to debit card                  each product would be the sum total of                 overstated the Debit Card Expenses
                                                transactions (Debit Card Expenses).                       the respective amounts from each cost                  assigned to Money Orders in FY 2017.
                                                Proposal Four would disaggregate total                    pool. Id.                                              Id. at 6–7. The Postal Service points out
                                                Debit Card Expenses into two cost                            The Postal Service states that Proposal             that applying Proposal Four would have
                                                pools: Transactions and Proceeds. Id.                     Four reflects the proposed model                       properly distinguished between the
                                                The Transactions cost pool would                          presented in Docket No. ACR2017. Id.                   fixed per-transaction and residual
                                                account for Debit Card Expenses for                       However, it explains that Proposal Four                components for regulated transactions,
                                                regulated transactions, which have                        differs by distinguishing between                      which would have resulted in a more
                                                limits on debit card fee amounts based                    regulated and unregulated transactions.                accurate assignment of Debit Card
                                                on Federal Reserve regulations. Id. at 3,                 Id. By contrast, the proposed model                    Expenses to Money Orders. Id. at 7. The
                                                5. Unregulated transactions do not have                   assumed that all of the debit card                     Transactions cost pool would account
                                                these limits. Id. at 5.                                   transactions were regulated. Id.                       for the fixed per-transaction component
                                                   To calculate the amount of Debit Card                     Rationale. The Postal Service asserts               of Debit Card Expenses. See id. at 4. The
                                                Expenses allocated to the Transactions                    that Proposal Four would improve the                   Postal Service concludes that adopting
                                                cost pool, the Postal Service would first                 accuracy of its costing methods by more                Proposal Four would improve the
                                                determine the number of regulated debit                   closely reflecting how debit card fees                 accuracy of its costing methods by more
                                                card transactions. Id. at 3. This is the                  are incurred. Id. at 4–5. Debit card fees              closely aligning with the way debit card
                                                total number of debit card transactions                   generally have two components: A fixed                 fees are incurred. Id.
                                                multiplied by the proportion of                           fee per transaction (regardless of                        Impact. The Petition includes a table
                                                regulated transactions. The number of                     transaction amount) and a variable fee                 illustrating the cost impacts of Proposal
                                                regulated transactions would then be                      that changes based on the transaction                  Four. Id. at 7–8. This table compares the
                                                multiplied by the approximate per-                        amount. Response to CHIR No. 2,                        Debit Card Expenses distribution as
                                                transaction cost to calculate the amount                  Question 1.b. For regulated transactions,              presented in the FY 2017 ACR with the
                                                of Debit Card Expenses allocated to the                   the Federal Reserve limits debit card                  distributions that would have resulted if
                                                Transactions cost pool.7 The remaining                    fees to 22 cents per transaction (fixed                Proposal Four had been used. Id. at 7.
                                                amount would be allocated to the                          fee) plus 0.05 percent of the transaction              The Postal Service explains that the
                                                Proceeds cost pool. Petition, Proposal                    (variable fee).8 Proposal Four would                   most significant change to the cost
                                                Four at 4.                                                account for the fixed debit card fees in               coverages filed with the FY 2017 ACR
                                                   For example, in FY 2017, total Debit                   the Transactions cost pool for regulated               would be to Money Orders, which
                                                Card Expenses were approximately                          transactions. Id. The Proceeds cost pool               would have experienced an increase in
                                                $58.6 million. Id. at 3. Proposal Four                    would account for the variable debit                   cost coverage under Proposal Four from
                                                would disaggregate these expenses                         card fees along with other fees,                       97 percent to approximately 107
                                                between the Transactions cost pool and                    including fees for unregulated debit                   percent. On a unit cost basis, the impact
                                                Proceeds cost pool. There were                            card transactions. Id.                                 on all other products ‘‘would be either
                                                approximately 150 million debit card                         The Postal Service asserts that                     trivial or, in most instances, entirely
                                                transactions, 65 percent of which were                    Proposal Four would address a flaw in                  immaterial.’’ Id. at 7–8. The Postal
                                                regulated. Id. at 3–4. The approximate                    the current methodology. Id. at 6. The                 Service provides further details in
                                                per-transaction cost was 22 cents. Id. at                 current methodology assigns all Debit                  workpapers filed with the Petition.10
                                                4. Thus, the Transactions cost pool                       Card Expenses to products in the same
                                                would equal approximately $21.3                           proportions as the Postal Service                      III. Notice and Comment
                                                million (150 million total debit card                     revenue realized from aggregate debit                     The Commission establishes Docket
                                                transactions × 65 percent regulated                       card transactions. Id. at 1. However, this             No. RM2018–7 to consider matters
                                                transactions × 22 cents per-transaction                   methodology ignores the fixed ‘‘per-                   raised by the Petition. More information
                                                                                                          transaction’’ component of Debit Card                  on the Petition may be accessed via the
                                                   6 Docket No. ACR2017, Annual Compliance
                                                                                                          Expenses.9 The current methodology                     Commission’s website at http://
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                                                Determination, March 29, 2018, at 64 (FY 2017
                                                ACD). The Commission’s rules require the Postal                                                                  www.prc.gov. Interested persons may
                                                Service to use only accepted analytical principles           8 Petition, Proposal Four at 5. The 22 cent per-    submit comments on the Petition and
                                                in its annual periodic reports to the Commission,         transaction cost includes one cent for fraud           Proposal Four no later than July 23,
                                                including the ACR. 39 CFR 3050.10.                        protection costs. Id.
                                                   7 Id. at 3–4. As discussed below, the ‘‘per-              9 Id. at 6. The ‘‘per-transaction’’ component
                                                                                                                                                                 2018. Pursuant to 39 U.S.C. 505, Jennaca
                                                transaction’’ cost appears to refer to fixed debit card   appears to refer to fixed debit card fees, which are   D. Upperman is designated as an officer
                                                fees, which are the same for each transaction             the same for each transaction regardless of the
                                                regardless of the transaction amount. See Response        transaction amount. See Response to CHIR No. 2,           10 See Petition, Excel file

                                                to CHIR No. 2, Question 1.b.                              Question 1.b.                                          ‘‘Prop.4.Debit.Card.Attachment.xlsx.’’



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                                                31348                     Federal Register / Vol. 83, No. 129 / Thursday, July 5, 2018 / Proposed Rules

                                                of the Commission (Public                                comments. Once submitted, comments                      Virginia’s 2012 and 2014 submittals,
                                                Representative) to represent the                         cannot be edited or removed from                        and that there are no outstanding issues
                                                interests of the general public in this                  Regulations.gov. For either manner of                   related to WVDEP’s regulation of fine
                                                proceeding.                                              submission, EPA may publish any                         particulate matter (PM2.5). See 81 FR
                                                                                                         comment received to its public docket.                  53008 (August 11, 2016).
                                                IV. Ordering Paragraphs                                  Do not submit electronically any                           In a June 3, 2010 final rulemaking
                                                  It is ordered:                                         information you consider to be                          action, EPA promulgated regulations
                                                  1. The Commission establishes Docket                   confidential business information (CBI)
                                                No. RM2018–7 to consider matters                                                                                 known as ‘‘the Tailoring Rule,’’ which
                                                                                                         or other information whose disclosure is
                                                raised by the Petition of the United                                                                             phased in permitting requirements for
                                                                                                         restricted by statute. Multimedia
                                                States Postal Service for the Initiation of                                                                      GHG emissions from stationary sources
                                                                                                         submissions (audio, video, etc.) must be
                                                a Proceeding to Consider Proposed                                                                                under the CAA PSD and title V
                                                                                                         accompanied by a written comment.
                                                Changes in Analytical Principles                                                                                 permitting programs. See 75 FR 31514.
                                                                                                         The written comment is considered the
                                                (Proposal Four), filed June 25, 2018.                    official comment and should include                     For Step 1 of the Tailoring Rule, which
                                                  2. Comments by interested persons in                   discussion of all points you wish to                    began on January 2, 2011, PSD or title
                                                this proceeding are due no later than                    make. EPA will generally not consider                   V requirements applied to sources of
                                                July 23, 2018.                                           comments or comment contents located                    GHG emissions only if the sources were
                                                  3. Pursuant to 39 U.S.C. 505, the                      outside of the primary submission (i.e.,                subject to PSD or title V ‘‘anyway’’ due
                                                Commission appoints Jennaca D.                           on the web, cloud, or other file sharing                to their emissions of non-GHG
                                                Upperman to serve as an officer of the                   system). For additional submission                      pollutants. These sources are referred to
                                                Commission (Public Representative) to                    methods, please contact the person                      as ‘‘anyway sources.’’ Step 2 of the
                                                represent the interests of the general                   identified in the FOR FURTHER                           Tailoring Rule, which began on July 1,
                                                public in this docket.                                   INFORMATION CONTACT section. For the                    2011, applied the PSD and title V
                                                  4. The Secretary shall arrange for                     full EPA public comment policy,                         permitting requirements under the CAA
                                                publication of this Order in the Federal                 information about CBI or multimedia                     to sources that were classified as major,
                                                Register.                                                submissions, and general guidance on                    and, thus, required to obtain a permit,
                                                                                                         making effective comments, please visit                 based solely on their potential GHG
                                                  By the Commission.
                                                                                                         http://www2.epa.gov/dockets/                            emissions. Step 2 also applied to
                                                Stacy L. Ruble,                                                                                                  modifications of otherwise major
                                                                                                         commenting-epa-dockets.
                                                Secretary.                                                                                                       sources that required a PSD permit
                                                                                                         FOR FURTHER INFORMATION CONTACT:
                                                [FR Doc. 2018–14349 Filed 7–3–18; 8:45 am]                                                                       because they increased only GHGs
                                                                                                         David Talley, (215) 814–2117, or by
                                                BILLING CODE 7710–FW–P
                                                                                                         email at talley.david@epa.gov.                          above applicable levels in the EPA
                                                                                                                                                                 regulations.
                                                                                                         SUPPLEMENTARY INFORMATION: On June 6,
                                                                                                         2017, the West Virginia Department of                      On June 23, 2014, the United States
                                                ENVIRONMENTAL PROTECTION                                 Environmental Protection (WVDEP), on                    Supreme Court, in Utility Air Regulatory
                                                AGENCY                                                   behalf of the State of West Virginia,                   Group (UARG) v. Environmental
                                                                                                         submitted a revision to its PSD                         Protection Agency,3 issued a decision
                                                40 CFR Part 52
                                                                                                         regulations found at title 45, chapter 14               addressing the Tailoring Rule and the
                                                [EPA–R03–OAR–2017–0502; FRL–9980–                        of the Code of State Rules (CSR) as a                   application of PSD permitting
                                                32—Region 3]                                             revision to the West Virginia SIP.                      requirements to GHG emissions. The
                                                                                                                                                                 Supreme Court said that the EPA may
                                                Approval and Promulgation of Air                         I. Background                                           not treat GHGs as an air pollutant for
                                                Quality Implementation Plans; West                          WVDEP’s June 6, 2017 SIP submittal                   purposes of determining whether a
                                                Virginia; Permits for Construction and                   included a number of revisions to West                  source is a major source required to
                                                Major Modification of Major Stationary                   Virginia’s PSD regulations under                        obtain a PSD permit. The Court also said
                                                Sources for the Prevention of                            45CSR14. The revisions were largely                     that the EPA could continue to require
                                                Significant Deterioration of Air Quality                 non-substantive and administrative in                   that PSD permits, otherwise required
                                                AGENCY:  Environmental Protection                        nature. However, as discussed in                        based on emissions of pollutants other
                                                Agency (EPA).                                            subsequent sections of this notice,                     than GHGs, contain limitations on GHG
                                                                                                         WVDEP’s SIP submittal also contained                    emissions based on the application of
                                                ACTION: Proposed rule.
                                                                                                         revisions to PSD provisions relating to                 Best Available Control Technology
                                                SUMMARY:   The Environmental Protection                  the regulation of greenhouse gases                      (BACT). The Supreme Court decision
                                                Agency (EPA) is proposing to approve a                   (GHGs). Additionally, WVDEP’s June 6,                   effectively upheld PSD permitting
                                                state implementation plan (SIP) revision                 2017 submittal letter references EPA’s                  requirements for GHG emissions under
                                                submitted by the State of West Virginia.                 conditional approval 1 of two SIP                       Step 1 of the Tailoring Rule for ‘‘anyway
                                                This revision pertains to West Virginia’s                submittals (June 6, 2012 and July 1,                    sources’’ and invalidated PSD
                                                Prevention of Significant Deterioration                  2014), related to the regulation of fine                permitting requirements for Step 2
                                                (PSD) program. This action is being                      particulate matter (PM2.5). Specifically,               sources.
                                                taken under the Clean Air Act (CAA).                     the letter states, ‘‘. . .EPA may
                                                                                                                                                                    In accordance with the Supreme
                                                                                                         subsequently issue a final rule in which
                                                DATES: Written comments must be                                                                                  Court decision, on April 10, 2015, the
                                                                                                         West Virginia’s conditional approval of
amozie on DSK3GDR082PROD with PROPOSALS1




                                                received on or before August 6, 2018.                                                                            U.S. Court of Appeals for the District of
                                                                                                         the 2012 and 2014 SIP revisions of
                                                ADDRESSES: Submit your comments,                                                                                 Columbia Circuit (D.C. Circuit) issued
                                                                                                         45CSR14 will become final approvals.’’ 2
                                                identified by Docket ID No. EPA–R03–                                                                             an amended judgment vacating the
                                                                                                         EPA notes that full and final approval
                                                OAR–2017–0502 at http://                                                                                         regulations that implemented Step 2 of
                                                                                                         has already been granted to West
                                                www.regulations.gov, or via email to                                                                             the Tailoring Rule, but not the
                                                duke.gerallyn@epa.gov. For comments                           1 See
                                                                                                                80 FR 36483 (June 25, 2015).
                                                                                                                                                                 regulations that implement Step 1 of the
                                                submitted at Regulations.gov, follow the                      2 See
                                                                                                                WVDEP’s June 6, 2017 submittal letter,
                                                online instructions for submitting                       included in the docket for this action.                   3 See   134 S.Ct. 2427.



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Document Created: 2018-07-03 23:40:15
Document Modified: 2018-07-03 23:40:15
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: July 23, 2018.
ContactDavid A. Trissell, General Counsel, at 202-789-6820.
FR Citation83 FR 31346 

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