Public Inquiry, 81527-81530 [2020-27635]

Download as PDF Federal Register / Vol. 85, No. 242 / Wednesday, December 16, 2020 / Notices Cylinders will be downsized to eliminate void space prior to packaging for shipment offsite for disposal. While emptied and cleaned, the UF6 Cylinders are still internally contaminated with SNM. The UF6 Cylinders will be transported to the USEI site by trucks, separate from the aggregated waste shipments described above. III. Discussion Pursuant to 10 CFR 70.17 and 10 CFR 30.11, the Commission may, upon application of any interested person or upon its own initiative, grant such exemptions from the requirements of 10 CFR part 70 and part 30 respectively, as it determines are authorized by law and will not endanger life or property or the common defense and security and are otherwise in the public interest. khammond on DSKJM1Z7X2PROD with NOTICES The Exemption Is Authorized by Law The proposal provides that the material described above would be transported in compliance with U.S. Department of Transportation regulations to USEI in Idaho, which is a Subtitle C RCRA hazardous waste disposal facility permitted by the State of Idaho. As such, the material will be removed per State and local regulations, will be shipped per existing Federal regulations to a location approved by the State of Idaho to receive the material, and such disposal is not otherwise contrary to NRC requirements, and is therefore authorized by law. The Exemption Will Not Endanger Life, Property and Is Consistent With the Common Defense and Security NRC staff reviewed the information provided by WEC to support their 10 CFR 20.2002 alternate disposal request and for the specific exemptions from 10 CFR 30.3 and 10 CFR 70.3 and associated license amendment in order to dispose of aggregated waste and UF6 Cylinders at USEI. As documented in the Safety Evaluation Report, the NRC staff concludes that, consistent with 10 CFR 20.2002, WEC provided an adequate description of the materials and the proposed manner and conditions of waste disposal. The NRC staff also concluded that the use of the site-specific dose assessment methodology to evaluate the projected doses associated with the transportation and disposal of the waste streams at USEI are acceptable. The NRC staff reviewed the input parameters included in this modeling and found that they are appropriate for the scenarios considered. The NRC staff also evaluated the potential doses associated VerDate Sep<11>2014 17:32 Dec 15, 2020 Jkt 253001 with transportation, waste handling, and disposal and found that the projected doses have been appropriately estimated and are demonstrated to meet the NRC’s alternate disposal standard of contributing a dose of not more than ‘‘a few millirem per year’’ to any member of the public and are as low as is reasonably achievable. The NRC staff also concluded that the projected doses from the post-closure and intruder scenarios at USEI are also within ‘‘a few millirem per year’’ over a period of 1,000 years. Lastly, because of the presence of SNM, the NRC evaluated potential criticality in its SER, and found no concerns. Therefore, the NRC concludes that issuance of the exemption is will not endanger life, property, and is consistent with the common defense and security. The Exemption Is in the Public Interest Issuance of the exemptions to WEC and USEI is in the public interest because it would provide for the efficient and safe disposal for the subject waste material, would facilitate the decommissioning of the East Lagoon at the CFFF site consistent with the consent agreement between CFFF and SCDHEC, and would conserve low-level radioactive waste disposal capacity at licensed low-level radioactive disposal sites, while ensuring that the material being considered is disposed of safely in a regulated facility. Therefore, based upon the evaluation above, an exemption is appropriate pursuant to 10 CFR 30.11 and 10 CFR 70.17. IV. Environmental Considerations As required by 10 CFR 51.21, the NRC performed an environmental assessment (EA) that analyzes the environmental impacts of the proposed exemption in accordance with the National Environmental Policy Act of 1969 and NRC implementing regulations in 10 CFR part 51. Based on that EA, the NRC staff has determined not to prepare an environmental impact statement for the proposed exemption and has issued a finding of no significant impact (FONSI). The EA and FONSI were published in the Federal Register on December 9, 2020 (85 FR 79228). V. Conclusions Accordingly, the Commission has determined that, pursuant to 10 CFR 70.17 and 10 CFR 30.11, the exemptions for WEC and USEI and associated WEC license amendment are authorized by law, will not present an undue risk to the public health and safety, is consistent with the common defense and security, and is in the public interest. Therefore, the Commission PO 00000 Frm 00086 Fmt 4703 Sfmt 4703 81527 hereby grants WEC and USEI exemptions from 10 CFR 70.3 and 10 CFR 30.3 to allow WEC to transfer the specifically identified byproduct material and SNM waste described above from the WEC CFFF for disposal at the USEI disposal facility located near Grand View, Idaho, and issues WEC a conforming license amendment. Dated: December 10, 2020. For the Nuclear Regulatory Commission. Damaris Marcano, Acting Chief, Fuel Facility Licensing Branch, Division of Fuel Management, Office of Nuclear Material Safety and Safeguards. [FR Doc. 2020–27608 Filed 12–15–20; 8:45 am] BILLING CODE 7590–01–P POSTAL REGULATORY COMMISSION [Docket No. PI2021–1; Order No. 5777] Public Inquiry Postal Regulatory Commission. Notice. AGENCY: ACTION: The Commission is revisiting the methodology it uses to estimate the value of the Postal Service’s universal service obligation (USO), which the Commission last considered in 2008. This document informs the public of this proceeding and the technical conference, invites public comment, and takes other administrative steps. DATES: Comments are due: March 15, 2021. SUMMARY: Submit comments electronically via the Commission’s Filing Online system at https:// 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. ADDRESSES: FOR FURTHER INFORMATION CONTACT: David A. Trissell, General Counsel, at 202–789–6820. SUPPLEMENTARY INFORMATION: Table of Contents I. Introduction II. Background III. Discussion IV. Comments V. Ordering Paragraphs I. Introduction In this docket, the Commission intends to revisit the methodology it uses to estimate the cost of the Postal Service’s universal service obligation (USO), which the Commission last E:\FR\FM\16DEN1.SGM 16DEN1 81528 Federal Register / Vol. 85, No. 242 / Wednesday, December 16, 2020 / Notices considered in 2008.1 In particular, the Commission seeks to determine whether all of the assumptions underlying that methodology remain valid in light of changed conditions over the intervening twelve years. To that end, the Commission seeks public comment with respect to the current USO valuation methodology, including any suggested modifications or enhancements. khammond on DSKJM1Z7X2PROD with NOTICES II. Background Section 702 of the Postal Accountability and Enhancement Act (PAEA), Public Law 109–435, 120 Stat. 3198 (2006), required the Commission to submit a report to the president and Congress on ‘‘universal postal service and the postal monopoly in the United States. . . .’’ This report was required to include ‘‘a comprehensive review of the history and development of universal service . . .,’’ as well as ‘‘the scope and standards of universal service . . . provided under current law . . .’’ PAEA, Pulic Law 109–435, 702(a)(2), 120 Stat. 3198 (2006). The Commission released the report on December 19, 2008. See 2008 USO Report. The Commission found that the USO consisted of seven different attributes: Geographic scope; product range; access; delivery; pricing; service quality; and an enforcement mechanism. Id. at 18–33. In completing the report, the Commission was also required to estimate the costs of the USO. Id. at 101. Generally speaking, these costs are calculated as the difference between the amount of profit the Postal Service earns while fulfilling its USO and the amount of profit the Postal Service could theoretically earn if it were not required to provide universal service, or any specific component thereof. Id. at 101– 102. The Commission identified various USO elements based on statutory requirements or on what Congress might be expected to include if it were to specifically define a postal USO. For each element, the Commission determined what level of service a theoretical profit-maximizing Postal Service without a USO would provide. Id. at 119–143. The difference in profit between the former and the latter can be thought of as the cost of providing universal service. Id. The Commission updates its estimate of the cost of the USO each year in its Annual Report to the President and Congress based on the methodological approach adopted in the 2008 USO 1 See Report on Universal Postal Service and the Postal Monopoly, December 19, 2008 (2008 USO Report). VerDate Sep<11>2014 17:32 Dec 15, 2020 Jkt 253001 Report.2 That methodological approach is dependent on assumptions concerning what a profit-maximizing Postal Service would do absent a particular USO mandate. 2008 USO Report at 121. Such assumptions are necessarily based on economic, technological, legislative, and societal considerations at the time they are made. The assumptions underlying the 2008 USO Report were thoroughly debated at that time, with contractors retained by both the Commission and the Postal Service presenting differing assumptions and the Commission ultimately exercising its judgment as to which assumptions it found to be the most reasonable. Id. at 119–143. In Docket No. PI2014–1, the Commission interpreted ‘‘other public services or activities’’ under 39 U.S.C. 3651(b)(1)(C) to include statutorilyrequired offerings and ‘‘public facing’’ actions by the Postal Service.3 Applying the framework developed in that docket, the Commission in the FY 2019 Annual Report clarified its interpretation of the scope of the USO, determining that it should include the net cost of the Postal Inspection Service. FY 2019 Annual Report at 49. The methodologies used to estimate the cost of all other elements of the USO have remained essentially unchanged from the 2008 USO Report.4 Much has changed in the United States since 2008—economically, technologically, and societally. Consequently, revisiting the assumptions underlying the 2008 USO Report is appropriate in order to ensure that the Commission’s valuation of the USO continues to reflect the environment in which the Postal Service operates. III. Discussion The Commission invites comment with respect to any and all aspects of the current USO valuation methodology. The Commission has also identified two USO components in particular with valuation assumptions that appear to be 2 See 39 U.S.C. 3651(b); see, e.g., Postal Regulatory Commission, FY 2019 Annual Report to the President and Congress, January 21, 2020, at 41– 51 (FY 2019 Annual Report). The most recent estimate of the USO’s cost was $5.21 billion. See FY 2019 Annual Report at 42, Table IV–1. 3 Docket No. PI2014–1, Order Interpreting 39 U.S.C. 3651(b)(1)(C), November 17, 2015, at 24 (Order No. 2820). 4 One notable exception is that the methodology for estimating the cost of 6-day delivery reflects refined and more comprehensive costs based on the Commission’s findings in its Advisory Opinion on Elimination of Saturday Delivery. See Docket No. N2010–1, Advisory Opinion on Elimination of Saturday Delivery, March 24, 2011; Postal Regulatory Commission, FY 2011 Annual Report to the President and Congress, December 21, 2011, at 41 (FY 2011 Annual Report). PO 00000 Frm 00087 Fmt 4703 Sfmt 4703 ripe for revisiting—frequency of delivery and maintaining small post offices. It is important to note that the Commission is not proposing or recommending changes to these or any other USO components at this time. Rather, the Commission is seeking input into whether the level of service that a theoretical profit-maximizing Postal Service without a USO would provide has changed since 2008. This is necessary in order to place an accurate value on the cost of the USO, and to evaluate that cost through a transparent process. A. Frequency of Delivery In the 2008 USO Report, the Commission noted that in every year since 1984 Congress has inserted language into postal appropriation legislation requiring that 6-day delivery shall continue ‘‘at the 1983 level.’’ 2008 USO Report at 20, 22, 29, 123. The insertion of this language into appropriation legislation has continued since 2008, and thus 6-day delivery continues to constitute the current USO requirement for frequency of delivery. In terms of valuing this USO component, the Commission sought in the 2008 USO Report to determine what the minimum frequency of delivery would be for a theoretical profitmaximizing Postal Service without a USO. Id. at 123–131. The Commission considered assumptions by the two separate contractors. The contractor hired by the Commission concluded that the minimum frequency of delivery would be 3 days per week. Id. at 124. The contractor hired by the Postal Service concluded that the Postal Service would theoretically maximize profits by varying frequency of delivery to equalize volume across 3-digit ZIP Codes, or potentially even 5-Digit ZIP Codes or mail routes. Id. at 131. The two contractors reached different conclusions with regard to what the cost savings associated with reducing delivery frequency would be. Id. at 124– 131. The Commission determined that the minimum frequency of delivery for a theoretical profit-maximizing Postal Service without a USO would be 5 days per week. Id. at 123. It based this conclusion on the fact that ‘‘frequency of delivery is generally a priority for businesses,’’ and ‘‘bills, remittances, and date-specific advertising remain major sources of revenue.’’ Id. (footnote omitted). The Commission found that ‘‘[w]ithout at least 5-day delivery, it would be difficult for the mail to remain an attractive channel for communications of this kind.’’ Id. This conclusion did not make any E:\FR\FM\16DEN1.SGM 16DEN1 Federal Register / Vol. 85, No. 242 / Wednesday, December 16, 2020 / Notices khammond on DSKJM1Z7X2PROD with NOTICES differentiation between mail types or mail destinations. The Commission accepted as most reasonable an estimate that reducing delivery frequency from 6 to 5 days would have increased the Postal Service’s FY 2007 net income by $1.930 billion (2 percent of the Postal Service’s total costs). Id. at 123–124. Since FY 2007, the mail mix has changed significantly. According to the Postal Service, it has lost about a third of First-Class Mail and USPS Marketing Mail volume.5 At the same time, package volumes have nearly doubled and have become the Postal Service’s primary source of revenue growth, although the Postal Service reports that growth has begun to slow since FY 2017 as commercial customers have begun insourcing more of their last mile deliveries. Postal Service Five-Year Strategic Plan at 8. In the time since the 2008 USO Report, the Postal Service has also begun delivering some packages on Sundays, thereby in some circumstances providing greater delivery frequency than what is required by the USO.6 A theoretical profit-maximizing Postal Service without a USO might differentiate the frequency of delivery of letters and flats from that of packages. The Commission therefore seeks input as to whether, in the absence of a requirement for 6-day delivery, the Postal Service would be likely to provide different frequency of delivery for different types of mail. The Commission also seeks input as to what the minimum frequency of delivery would be for each type of mail (e.g., letters, flats, or packages). A theoretical profit-maximizing Postal Service without a USO might also provide different levels of service to high-density, as opposed to low-density, areas.7 It could deliver more frequently to high-density areas, and less frequently to low-density areas. Alternatively, it could implement a surcharge for delivery to low-density areas. The Commission seeks input as to how a theoretical profit-maximizing Postal Service without a USO would be 5 See United States Postal Service, The U.S. Postal Service Five-Year Strategic Plan FY2020–FY2024, available at: https://about.usps.com/strategicplanning/five-year-strategic-plan-2020-2024.pdf, at 8 (Postal Service Five-Year Strategic Plan). 6 See Docket Nos. MC2014–1 and CP2014–1, Order Adding Parcel Select and Parcel Return Service Contract 5 to the Competitive Product List, October 29, 2013 (Order No. 1863). 7 In this context, density can be interpreted as geographic density of delivery points (delivery points per square mile), or alternatively as ‘‘mail density’’ (volume per delivery point). Commenters who address this topic are requested to specify how they would define density as used to determine the provision of different frequency of delivery to different areas. VerDate Sep<11>2014 17:32 Dec 15, 2020 Jkt 253001 most likely to address delivering to areas that differ in density. In sum, the Commission seeks to better understand whether a theoretical profit-maximizing Postal Service without a USO in today’s operating environment would maintain uniform 5day delivery as previously assumed, or whether it might differentiate delivery frequency either between different types of mail, or between high-density and low-density areas, or both. B. Maintaining Small Post Offices The Postal Service is required to ‘‘establish and maintain postal facilities of such character and in such locations, that postal patrons throughout the Nation will, consistent with reasonable economies of postal operations, have ready access to essential postal services.’’ 39 U.S.C. 403(b)(3). In the 2008 USO Report, the Commission noted that in developing rural free delivery services in the early 20th century, Congress substituted rural carrier services for the services of small post offices in many rural areas. 2008 USO Report at 136. The Commission also noted that since FY 1985, Congress had added language to annual appropriations bills that prohibited the Postal Service from using appropriated funds to close or consolidate small rural and other small post offices, but the Commission acknowledged that this did not appear to bar the Postal Service from using other funds to close or consolidate small post offices because the Postal Service had closed or consolidated hundreds of small post offices since 1985. Id. Two contractors addressed this issue in the 2008 USO Report. They differed as to how many small post offices would be closed in the absence of a USO—the contractor hired by the Commission concluded that a theoretical profit-maximizing Postal Service without a USO would close all post offices in Cost Ascertainment Groups (CAGs) K and L, while the contractor hired by the Postal Service concluded that it would close post offices in CAGs H through L.8 The Commission found the first scenario (CAGs K and L) to be more plausible, and accepted a valuation based on adjusting the gross savings from closing such post offices with the cost of 8 Id. at 137–138. CAGs classify post offices based on revenue units. A revenue unit is the average amount of revenue per fiscal year from postal rates and fees for 1,000 pieces of originating mail and Special Service transactions. CAG H–J offices have 190–949 revenue units; CAG K offices have 36–189 revenue units; and CAG L offices have less than 36 revenue units. See United States Postal Service, Glossary of Postal Terms, available at: https:// usps.com/publications/pub32 (Publication 32). PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 81529 replacement services and the amount of lost revenue, which came to $0.586 billion. Id. at 138. In accepting this valuation, the Commission also adopted the assumption of one of the two contractors that rural carrier services could be substituted for small post offices in the absence of a USO. Id. at 137. The Commission invites interested persons to comment on whether a theoretical profit-maximizing Postal Service without a USO would utilize other alternatives besides rural carrier services in place of CAGs K and L, and whether additional post offices besides CAGs K and L would be eliminated. Since postal customers can access products and services online and at grocery stores, office supply chains, pharmacies, and other retail outlets, it is unclear whether the assumption that only CAGs K and L would be replaced or consolidated still holds. It is also possible that post offices could be replaced by Contract Postal Units (CPUs) 9 or Automated Postal Centers (APCs).10 Therefore, the Commission seeks input from interested persons on whether to revise the assumptions regarding which post offices would be closed by a theoretical profitmaximizing Postal Service without a USO and what replacement services would be utilized. IV. Comments The Commission invites interested persons to identify components of the current USO valuation methodology where the underlying assumptions about how a theoretical profitmaximizing Postal Service without a USO would behave are no longer compelling. The Commission further seeks suggestions concerning how to revise any outdated assumptions, as well as what data and analytical methods would be necessary to incorporate any suggested changes into the calculation of the USO’s cost. Comments are due March 15, 2021. Material filed in this docket will be available for review on the Commission’s website, https:// www.prc.gov. Pursuant to 39 U.S.C. 505, Kenneth R. Moeller is appointed to serve as an officer of the Commission (Public 9 A CPU is a supplier-owned or supplier-leased site operated by the supplier, under contract with the Postal Service to provide postal products and services to the public at Postal Service prices. See Publication 32. 10 An APC is a self-service kiosk that allows customers to mail letters, flats, and packages; buy stamps and some Special Services; and mail international letters. It also offers ZIP Code and tracking lookup and provides information on different services. See Publication 32. E:\FR\FM\16DEN1.SGM 16DEN1 81530 Federal Register / Vol. 85, No. 242 / Wednesday, December 16, 2020 / Notices Representative) to represent the interests of the general public in this docket. V. Ordering Paragraphs It is ordered: 1. The Commission establishes Docket No. PI2021–1 for the purpose of considering potential changes to the Commission’s valuation methodology for the Universal Service Obligation. 2. Interested persons may submit written comments on any or all aspects of the Universal Service Obligation valuation methodology no later than March 15, 2021. 3. Pursuant to 39 U.S.C. 505, Kenneth R. Moeller is appointed to serve as Public Representative in this proceeding. 4. The Secretary shall arrange for publication of this Notice in the Federal Register. By the Commission. Erica A. Barker, Secretary. [FR Doc. 2020–27635 Filed 12–15–20; 8:45 am] BILLING CODE 7710–FW–P POSTAL REGULATORY COMMISSION [Docket Nos. CP2020–194; CP2020–197; CP2020–200; CP2020–201] New Postal Products Postal Regulatory Commission. Notice. AGENCY: ACTION: The Commission is noticing a recent Postal Service filing for the Commission’s consideration concerning a negotiated service agreement. This notice informs the public of the filing, invites public comment, and takes other administrative steps. DATES: Comments are due: December 18, 2020. ADDRESSES: Submit comments electronically via the Commission’s Filing Online system at https:// 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: khammond on DSKJM1Z7X2PROD with NOTICES SUMMARY: Table of Contents I. Introduction II. Docketed Proceeding(s) I. Introduction The Commission gives notice that the Postal Service filed request(s) for the VerDate Sep<11>2014 17:32 Dec 15, 2020 Jkt 253001 Commission to consider matters related to negotiated service agreement(s). The request(s) may propose the addition or removal of a negotiated service agreement from the market dominant or the competitive product list, or the modification of an existing product currently appearing on the market dominant or the competitive product list. Section II identifies the docket number(s) associated with each Postal Service request, the title of each Postal Service request, the request’s acceptance date, and the authority cited by the Postal Service for each request. For each request, the Commission appoints an officer of the Commission to represent the interests of the general public in the proceeding, pursuant to 39 U.S.C. 505 (Public Representative). Section II also establishes comment deadline(s) pertaining to each request. The public portions of the Postal Service’s request(s) can be accessed via the Commission’s website (https:// www.prc.gov). Non-public portions of the Postal Service’s request(s), if any, can be accessed through compliance with the requirements of 39 CFR 3011.301.1 The Commission invites comments on whether the Postal Service’s request(s) in the captioned docket(s) are consistent with the policies of title 39. For request(s) that the Postal Service states concern market dominant product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3622, 39 U.S.C. 3642, 39 CFR part 3030, and 39 CFR part 3040, subpart B. For request(s) that the Postal Service states concern competitive product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3632, 39 U.S.C. 3633, 39 U.S.C. 3642, 39 CFR part 3035, and 39 CFR part 3040, subpart B. Comment deadline(s) for each request appear in section II. 1. Docket No(s).: CP2020–194; Filing Title: Notice of the United States Postal Service of Filing Modification One to International Priority Airmail, Commercial ePacket, Priority Mail Express International, Priority Mail International & First-Class Package International Service Contract 8 Negotiated Service Agreement; Filing Acceptance Date: December 10, 2020; Filing Authority: 39 U.S.C. 3642, 39 CFR 3040.130 through 3040.135, and 39 CFR 3035.105; Public Representative: Gregory S. Stanton; Comments Due: December 18, 2020. 2. Docket No(s).: CP2020–197; Filing Title: Notice of the United States Postal Service of Filing Modification One to Priority Mail Express International, Priority Mail International, First-Class Package International Service & Commercial ePacket Contract 6 Negotiated Service Agreement; Filing Acceptance Date: December 10, 2020; Filing Authority: 39 U.S.C. 3642, 39 CFR 3040.130 through 3040.135, and 39 CFR 3035.105; Public Representative: Gregory S. Stanton; Comments Due: December 18, 2020. 3. Docket No(s).: CP2020–200; Filing Title: Notice of the United States Postal Service of Filing Modification One to International Priority Airmail, Commercial ePacket, Priority Mail Express International, Priority Mail International & First-Class Package International Service with Reseller Contract 3 Negotiated Service Agreement; Filing Acceptance Date: December 10, 2020; Filing Authority: 39 U.S.C. 3642, 39 CFR 3040.130 through 3040.135, and 39 CFR 3035.105; Public Representative: Gregory S. Stanton; Comments Due: December 18, 2020. 4. Docket No(s).: CP2020–201; Filing Title: Notice of the United States Postal Service of Filing Modification One to International Priority Airmail, Commercial ePacket, Priority Mail Express International, Priority Mail International & First-Class Package International Service with Reseller Contract 4 Negotiated Service Agreement; Filing Acceptance Date: December 10, 2020; Filing Authority: 39 U.S.C. 3642, 39 CFR 3040.130 through 3040.135, and 39 CFR 3035.105; Public Representative: Gregory S. Stanton; Comments Due: December 18, 2020. This Notice will be published in the Federal Register. Erica A. Barker, Secretary. [FR Doc. 2020–27647 Filed 12–15–20; 8:45 am] BILLING CODE 7710–FW–P 1 See Docket No. RM2018–3, Order Adopting Final Rules Relating to Non-Public Information, June 27, 2018, Attachment A at 19–22 (Order No. 4679). PO 00000 Frm 00089 Fmt 4703 Sfmt 9990 E:\FR\FM\16DEN1.SGM 16DEN1

Agencies

POSTAL REGULATORY COMMISSION

[Federal Register Volume 85, Number 242 (Wednesday, December 16, 2020)]
[Notices]
[Pages 81527-81530]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-27635]

=======================================================================
-----------------------------------------------------------------------

POSTAL REGULATORY COMMISSION

[Docket No. PI2021-1; Order No. 5777]

Public Inquiry

AGENCY: Postal Regulatory Commission.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: The Commission is revisiting the methodology it uses to
estimate the value of the Postal Service's universal service obligation
(USO), which the Commission last considered in 2008. This document
informs the public of this proceeding and the technical conference,
invites public comment, and takes other administrative steps.

DATES: Comments are due: March 15, 2021.

ADDRESSES: Submit comments electronically via the Commission's Filing
Online system at https://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. Background
III. Discussion
IV. Comments
V. Ordering Paragraphs

I. Introduction

In this docket, the Commission intends to revisit the methodology
it uses to estimate the cost of the Postal Service's universal service
obligation (USO), which the Commission last

[[Page 81528]]

considered in 2008.\1\ In particular, the Commission seeks to determine
whether all of the assumptions underlying that methodology remain valid
in light of changed conditions over the intervening twelve years. To
that end, the Commission seeks public comment with respect to the
current USO valuation methodology, including any suggested
modifications or enhancements.
---------------------------------------------------------------------------

\1\ See Report on Universal Postal Service and the Postal
Monopoly, December 19, 2008 (2008 USO Report).
---------------------------------------------------------------------------

II. Background

Section 702 of the Postal Accountability and Enhancement Act
(PAEA), Public Law 109-435, 120 Stat. 3198 (2006), required the
Commission to submit a report to the president and Congress on
``universal postal service and the postal monopoly in the United
States. . . .'' This report was required to include ``a comprehensive
review of the history and development of universal service . . .,'' as
well as ``the scope and standards of universal service . . . provided
under current law . . .'' PAEA, Pulic Law 109-435, 702(a)(2), 120 Stat.
3198 (2006). The Commission released the report on December 19, 2008.
See 2008 USO Report. The Commission found that the USO consisted of
seven different attributes: Geographic scope; product range; access;
delivery; pricing; service quality; and an enforcement mechanism. Id.
at 18-33.
In completing the report, the Commission was also required to
estimate the costs of the USO. Id. at 101. Generally speaking, these
costs are calculated as the difference between the amount of profit the
Postal Service earns while fulfilling its USO and the amount of profit
the Postal Service could theoretically earn if it were not required to
provide universal service, or any specific component thereof. Id. at
101-102. The Commission identified various USO elements based on
statutory requirements or on what Congress might be expected to include
if it were to specifically define a postal USO. For each element, the
Commission determined what level of service a theoretical profit-
maximizing Postal Service without a USO would provide. Id. at 119-143.
The difference in profit between the former and the latter can be
thought of as the cost of providing universal service. Id.
The Commission updates its estimate of the cost of the USO each
year in its Annual Report to the President and Congress based on the
methodological approach adopted in the 2008 USO Report.\2\ That
methodological approach is dependent on assumptions concerning what a
profit-maximizing Postal Service would do absent a particular USO
mandate. 2008 USO Report at 121. Such assumptions are necessarily based
on economic, technological, legislative, and societal considerations at
the time they are made. The assumptions underlying the 2008 USO Report
were thoroughly debated at that time, with contractors retained by both
the Commission and the Postal Service presenting differing assumptions
and the Commission ultimately exercising its judgment as to which
assumptions it found to be the most reasonable. Id. at 119-143.
---------------------------------------------------------------------------

\2\ See 39 U.S.C. 3651(b); see, e.g., Postal Regulatory
Commission, FY 2019 Annual Report to the President and Congress,
January 21, 2020, at 41-51 (FY 2019 Annual Report). The most recent
estimate of the USO's cost was $5.21 billion. See FY 2019 Annual
Report at 42, Table IV-1.
---------------------------------------------------------------------------

In Docket No. PI2014-1, the Commission interpreted ``other public
services or activities'' under 39 U.S.C. 3651(b)(1)(C) to include
statutorily-required offerings and ``public facing'' actions by the
Postal Service.\3\ Applying the framework developed in that docket, the
Commission in the FY 2019 Annual Report clarified its interpretation of
the scope of the USO, determining that it should include the net cost
of the Postal Inspection Service. FY 2019 Annual Report at 49. The
methodologies used to estimate the cost of all other elements of the
USO have remained essentially unchanged from the 2008 USO Report.\4\
---------------------------------------------------------------------------

\3\ Docket No. PI2014-1, Order Interpreting 39 U.S.C.
3651(b)(1)(C), November 17, 2015, at 24 (Order No. 2820).
\4\ One notable exception is that the methodology for estimating
the cost of 6-day delivery reflects refined and more comprehensive
costs based on the Commission's findings in its Advisory Opinion on
Elimination of Saturday Delivery. See Docket No. N2010-1, Advisory
Opinion on Elimination of Saturday Delivery, March 24, 2011; Postal
Regulatory Commission, FY 2011 Annual Report to the President and
Congress, December 21, 2011, at 41 (FY 2011 Annual Report).
---------------------------------------------------------------------------

Much has changed in the United States since 2008--economically,
technologically, and societally. Consequently, revisiting the
assumptions underlying the 2008 USO Report is appropriate in order to
ensure that the Commission's valuation of the USO continues to reflect
the environment in which the Postal Service operates.

III. Discussion

The Commission invites comment with respect to any and all aspects
of the current USO valuation methodology. The Commission has also
identified two USO components in particular with valuation assumptions
that appear to be ripe for revisiting--frequency of delivery and
maintaining small post offices. It is important to note that the
Commission is not proposing or recommending changes to these or any
other USO components at this time. Rather, the Commission is seeking
input into whether the level of service that a theoretical profit-
maximizing Postal Service without a USO would provide has changed since
2008. This is necessary in order to place an accurate value on the cost
of the USO, and to evaluate that cost through a transparent process.

A. Frequency of Delivery

In the 2008 USO Report, the Commission noted that in every year
since 1984 Congress has inserted language into postal appropriation
legislation requiring that 6-day delivery shall continue ``at the 1983
level.'' 2008 USO Report at 20, 22, 29, 123. The insertion of this
language into appropriation legislation has continued since 2008, and
thus 6-day delivery continues to constitute the current USO requirement
for frequency of delivery.
In terms of valuing this USO component, the Commission sought in
the 2008 USO Report to determine what the minimum frequency of delivery
would be for a theoretical profit-maximizing Postal Service without a
USO. Id. at 123-131. The Commission considered assumptions by the two
separate contractors. The contractor hired by the Commission concluded
that the minimum frequency of delivery would be 3 days per week. Id. at
124. The contractor hired by the Postal Service concluded that the
Postal Service would theoretically maximize profits by varying
frequency of delivery to equalize volume across 3-digit ZIP Codes, or
potentially even 5-Digit ZIP Codes or mail routes. Id. at 131. The two
contractors reached different conclusions with regard to what the cost
savings associated with reducing delivery frequency would be. Id. at
124-131.
The Commission determined that the minimum frequency of delivery
for a theoretical profit-maximizing Postal Service without a USO would
be 5 days per week. Id. at 123. It based this conclusion on the fact
that ``frequency of delivery is generally a priority for businesses,''
and ``bills, remittances, and date-specific advertising remain major
sources of revenue.'' Id. (footnote omitted). The Commission found that
``[w]ithout at least 5-day delivery, it would be difficult for the mail
to remain an attractive channel for communications of this kind.'' Id.
This conclusion did not make any

[[Page 81529]]

differentiation between mail types or mail destinations. The Commission
accepted as most reasonable an estimate that reducing delivery
frequency from 6 to 5 days would have increased the Postal Service's FY
2007 net income by $1.930 billion (2 percent of the Postal Service's
total costs). Id. at 123-124.
Since FY 2007, the mail mix has changed significantly. According to
the Postal Service, it has lost about a third of First-Class Mail and
USPS Marketing Mail volume.\5\ At the same time, package volumes have
nearly doubled and have become the Postal Service's primary source of
revenue growth, although the Postal Service reports that growth has
begun to slow since FY 2017 as commercial customers have begun
insourcing more of their last mile deliveries. Postal Service Five-Year
Strategic Plan at 8. In the time since the 2008 USO Report, the Postal
Service has also begun delivering some packages on Sundays, thereby in
some circumstances providing greater delivery frequency than what is
required by the USO.\6\
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\5\ See United States Postal Service, The U.S. Postal Service
Five-Year Strategic Plan FY2020-FY2024, available at: https://about.usps.com/strategic-planning/five-year-strategic-plan-2020-2024.pdf, at 8 (Postal Service Five-Year Strategic Plan).
\6\ See Docket Nos. MC2014-1 and CP2014-1, Order Adding Parcel
Select and Parcel Return Service Contract 5 to the Competitive
Product List, October 29, 2013 (Order No. 1863).
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A theoretical profit-maximizing Postal Service without a USO might
differentiate the frequency of delivery of letters and flats from that
of packages. The Commission therefore seeks input as to whether, in the
absence of a requirement for 6-day delivery, the Postal Service would
be likely to provide different frequency of delivery for different
types of mail. The Commission also seeks input as to what the minimum
frequency of delivery would be for each type of mail (e.g., letters,
flats, or packages).
A theoretical profit-maximizing Postal Service without a USO might
also provide different levels of service to high-density, as opposed to
low-density, areas.\7\ It could deliver more frequently to high-density
areas, and less frequently to low-density areas. Alternatively, it
could implement a surcharge for delivery to low-density areas. The
Commission seeks input as to how a theoretical profit-maximizing Postal
Service without a USO would be most likely to address delivering to
areas that differ in density.
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\7\ In this context, density can be interpreted as geographic
density of delivery points (delivery points per square mile), or
alternatively as ``mail density'' (volume per delivery point).
Commenters who address this topic are requested to specify how they
would define density as used to determine the provision of different
frequency of delivery to different areas.
---------------------------------------------------------------------------

In sum, the Commission seeks to better understand whether a
theoretical profit-maximizing Postal Service without a USO in today's
operating environment would maintain uniform 5-day delivery as
previously assumed, or whether it might differentiate delivery
frequency either between different types of mail, or between high-
density and low-density areas, or both.

B. Maintaining Small Post Offices

The Postal Service is required to ``establish and maintain postal
facilities of such character and in such locations, that postal patrons
throughout the Nation will, consistent with reasonable economies of
postal operations, have ready access to essential postal services.'' 39
U.S.C. 403(b)(3). In the 2008 USO Report, the Commission noted that in
developing rural free delivery services in the early 20th century,
Congress substituted rural carrier services for the services of small
post offices in many rural areas. 2008 USO Report at 136. The
Commission also noted that since FY 1985, Congress had added language
to annual appropriations bills that prohibited the Postal Service from
using appropriated funds to close or consolidate small rural and other
small post offices, but the Commission acknowledged that this did not
appear to bar the Postal Service from using other funds to close or
consolidate small post offices because the Postal Service had closed or
consolidated hundreds of small post offices since 1985. Id.
Two contractors addressed this issue in the 2008 USO Report. They
differed as to how many small post offices would be closed in the
absence of a USO--the contractor hired by the Commission concluded that
a theoretical profit-maximizing Postal Service without a USO would
close all post offices in Cost Ascertainment Groups (CAGs) K and L,
while the contractor hired by the Postal Service concluded that it
would close post offices in CAGs H through L.\8\ The Commission found
the first scenario (CAGs K and L) to be more plausible, and accepted a
valuation based on adjusting the gross savings from closing such post
offices with the cost of replacement services and the amount of lost
revenue, which came to $0.586 billion. Id. at 138. In accepting this
valuation, the Commission also adopted the assumption of one of the two
contractors that rural carrier services could be substituted for small
post offices in the absence of a USO. Id. at 137.
---------------------------------------------------------------------------

\8\ Id. at 137-138. CAGs classify post offices based on revenue
units. A revenue unit is the average amount of revenue per fiscal
year from postal rates and fees for 1,000 pieces of originating mail
and Special Service transactions. CAG H-J offices have 190-949
revenue units; CAG K offices have 36-189 revenue units; and CAG L
offices have less than 36 revenue units. See United States Postal
Service, Glossary of Postal Terms, available at: https://usps.com/publications/pub32 (Publication 32).
---------------------------------------------------------------------------

The Commission invites interested persons to comment on whether a
theoretical profit-maximizing Postal Service without a USO would
utilize other alternatives besides rural carrier services in place of
CAGs K and L, and whether additional post offices besides CAGs K and L
would be eliminated. Since postal customers can access products and
services online and at grocery stores, office supply chains,
pharmacies, and other retail outlets, it is unclear whether the
assumption that only CAGs K and L would be replaced or consolidated
still holds. It is also possible that post offices could be replaced by
Contract Postal Units (CPUs) \9\ or Automated Postal Centers
(APCs).\10\ Therefore, the Commission seeks input from interested
persons on whether to revise the assumptions regarding which post
offices would be closed by a theoretical profit-maximizing Postal
Service without a USO and what replacement services would be utilized.
---------------------------------------------------------------------------

\9\ A CPU is a supplier-owned or supplier-leased site operated
by the supplier, under contract with the Postal Service to provide
postal products and services to the public at Postal Service prices.
See Publication 32.
\10\ An APC is a self-service kiosk that allows customers to
mail letters, flats, and packages; buy stamps and some Special
Services; and mail international letters. It also offers ZIP Code
and tracking lookup and provides information on different services.
See Publication 32.
---------------------------------------------------------------------------

IV. Comments

The Commission invites interested persons to identify components of
the current USO valuation methodology where the underlying assumptions
about how a theoretical profit-maximizing Postal Service without a USO
would behave are no longer compelling. The Commission further seeks
suggestions concerning how to revise any outdated assumptions, as well
as what data and analytical methods would be necessary to incorporate
any suggested changes into the calculation of the USO's cost. Comments
are due March 15, 2021. Material filed in this docket will be available
for review on the Commission's website, https://www.prc.gov.
Pursuant to 39 U.S.C. 505, Kenneth R. Moeller is appointed to serve
as an officer of the Commission (Public

[[Page 81530]]

Representative) to represent the interests of the general public in
this docket.

V. Ordering Paragraphs

It is ordered:
1. The Commission establishes Docket No. PI2021-1 for the purpose
of considering potential changes to the Commission's valuation
methodology for the Universal Service Obligation.
2. Interested persons may submit written comments on any or all
aspects of the Universal Service Obligation valuation methodology no
later than March 15, 2021.
3. Pursuant to 39 U.S.C. 505, Kenneth R. Moeller is appointed to
serve as Public Representative in this proceeding.
4. The Secretary shall arrange for publication of this Notice in
the Federal Register.

By the Commission.
Erica A. Barker,
Secretary.
[FR Doc. 2020-27635 Filed 12-15-20; 8:45 am]
BILLING CODE 7710-FW-P

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