39 C.F.R. § 3001.54 Contents of formal requests.
Title 39 - Postal Service
(a) General requirements. (1) Each formal request filed under this subpart shall include such information and data and such statements of reasons and bases as are necessary and appropriate fully to inform the Commission and the parties of the nature, scope, significance, and impact of the proposed changes or adjustments in rates or fees and to show that the changes or adjustments in rates or fees are in the public interest and in accordance with the policies of the Act and the applicable criteria of the Act. To the extent information is available or can be made available without undue burden, each formal request shall include the information specified in paragraphs (b) through (r) of this section. If a request proposes to change the cost attribution principles applied by the Commission in the most recent general rate proceeding in which its recommended rates were adopted, the Postal Service's request shall include an alternate cost presentation satisfying paragraph (h) of this section that shows what the effect on its request would be if it did not propose changes in attribution principles. (2) If any information required by paragraphs (b) through (r) of this section is not available and cannot be made available without undue burden, the request shall provide where reference is made to this paragraph, in lieu of such information, a statement explaining with particularity: (i) The information which is not available or cannot be made available without undue burden; (ii) The reason or reasons that each such item of information is not available and cannot be made available without undue burden; (iii) The steps or actions which would be needed to make each such item of information available, together with an estimate of the time and expense required therefor; (iv) Whether it is contemplated that each such item of information will be supplied in the future and, if so, at what time; and (v) Whether reliable estimates are available where such information cannot be furnished and, if so, the specifics of such estimates. (3) The provisions of paragraph (a)(2) of this section for the Postal Service to include in its formal request certain alternative information in lieu of that specified by paragraphs (b) through (r) of this section are not in derogation of the Commission's and the presiding officer's authority, pursuant to §§3001.23 through 3001.28, respecting the provision of information at a time following receipt of the formal request. (4) The Commission may request information in addition to that required by paragraphs (b) through (r) of this section. (b) Rates and standards information. (1) Every formal request shall include schedules of the then effective rate or rates of postage and fee or fees for all postal services, and, arranged in legislative format, schedules of the rate or rates of postage and fee or fees for all postal services proposed by the Postal Service, as they would appear in the Domestic Mail Classification Schedule. The schedules shall show the full rate and where applicable the phased rate under section 3626 of the Act and any proposed adjustment to such phased rates under section 3627 of the Act indicated by circumstances known at the time of filing. (2) The schedules required by paragraph (b)(1) of this section shall, for all classes and subclasses of mail and service, be in summary fashion and tariff-like form. (E.g., there shall be a specification of those rules, regulations and practices which establish the conditions of mailability and the standards of service.) As a part thereof, the schedules shall specifically be addressed to such functions as mail pickup and delivery, processing and other similar functions. (3) Subject to paragraph (a)(2) of this section, the schedules required by paragraph (b)(1) of this section shall also contain a statement identifying the degree of economic substitutability between the various classes and subclasses, e.g., a description of cross-elasticity of demand as between various classes of mail. (4) Subject to paragraph (a)(2) of this section, the schedules required by paragraph (b)(1) of this section shall be accompanied by an identification of all nonpostal services. (c) Mail characteristics. Subject to paragraph (a)(2) of this section, every formal request shall include an identification of the characteristics of the mailer and recipient, and a description of the contents of items mailed within the various classes and subclasses of mail and service. (d) Physical attributes of mail. Subject to paragraph (a)(2) of this section, every formal request shall include an identification of the physical attributes of the items mailed by class and subclass, including shape, weight, and distance. (e) Special service arrangements. Subject to paragraph (a)(2) of this section, every formal request shall contain, to the extent the following information is not expressly included under paragraph (b)(2) of this section, a summary statement describing special service arrangements provided to, or requested or required of, mailers by the Postal Service which bear upon the cost of service or the value of the mail service to both the sender and the recipient, e.g., services relating to mailer preparations in excess of requirements specified by the Postal Service Manual, pick-up and delivery, expedited or deferred processing, and other similar activities performed. (f) Total functionalized accrued costs. (1) Subject to paragraph (a)(2) of this section, every formal request shall set forth the total actual accrued costs during the most recent fiscal year for which they are reasonably available. In the event final total actual accrued costs are not yet available for the fiscal year immediately preceding the fiscal year in which the filing is made, a preliminary or pro forma statement of such actual accrued costs shall be furnished. Any preliminary statement shall use, as appropriate, quarterly or accounting period reports for the preceding fiscal year. A final complete statement shall be substituted for any preliminary statement when the former becomes available. (2) Subject to paragraph (a)(2) of this section, every formal request shall also set forth (i) the estimated total accrued costs of the Postal Service for the fiscal year in which the filing is made and (ii) the estimated total accrued costs of the Postal Service as specified in section 3621 of the Act which form the basis for proposed change in rates or fees. Estimated accrued costs referred to in paragraph (f)(2)(ii) of this section shall be for a fiscal year beginning not more than 24 months subsequent to the filing date of the formal request. These two estimates of accrued costs shall be calculated on two bases: First, assuming the prefiling rates and fees and, second, assuming the suggested rates and fees. Estimated accrued costs shall be accompanied by an explanation of the methods and procedures used for cost projections. The analyses of estimated costs shall include, but need not be limited to: (a) An explanation of the projection of total volumes; (b) An explanation of the effect of the projected volume levels on estimated total costs; (c) The specification of the cost savings which will be realized from gains and improvements in total productivity, indicating such factors as operational and technological advances and innovations; and (d) The identification of abnormal costs which are expected to be incurred in the forecasted test period. (3) Each cost presentation required by paragraphs (f)(1) and (2) of this section shall, subject to paragraph (a)(2) of this section: (i) Show operating costs in sufficient detail as to the accounting and functional classifications and with such reasonable explanation so that the actual or estimated amount for each item of expense may be readily understood; (ii) State and fully explain the amounts included for: (a) Depreciation on capital facilities and equipment; (b) Debt service; (c) Contingencies; and (d) Extraordinary or nonrecurring expenses; (iii) Assign and distribute costs to each of the functions comprising the mail process. Such presentations shall include: (a) An itemization of costs by the major accounts as reflected by the Service's books of accounts for all cost segments, such as postmasters, supervisors, etc.; (b) An itemization of costs by functions such as collection, acceptance, general overheads, etc.; (c) An assignment and distribution of the costs by account, exemplified in paragraph (f)(3)(iii) (a) of this section, together with related mail volumes, to the functions exemplified in paragraph (f)(3)(iii) (b) of this section; (d) An assignment and distribution of the costs by account, together with related mail volumes, to such subfunctions within each category for which information is available or can be developed; and (e) An explanation of the method by which the costs by accounts are assigned and distributed to functions. (g) Costs of prior fiscal years. Subject to paragraph (a)(2) of this section, every formal request shall present the total actual accrued costs for each fiscal year since the last filing pursuant to this section. Such submission should be in a form as nearly consistent as possible with the filing under paragraph (f) of this section, together with explanations of any departures from such form and the effect of such departures. (h) Separation, attribution, and assignment of certain costs. (1) Every formalrequestshallseparatethe Service's actual and estimated total costs, for the fiscal years specified in paragraph (f) of this section, as between postal services (including international mail) and nonpostal services. The presentation shall show the methodology for separating postal costs as between postal services and nonpostal services, and shall be in sufficient detail to allow a determination that no nonpostal costs have been assigned or allocated to postal services. (2) Subject to paragraph (a)(2) of this section, the costs for postal services, as set forth by functions pursuant to paragraph (f), shall be separated as between: (i) Those direct costs which can be attributed to each class of mail or type of mail service; (ii) Those indirect costs which can be attributed to each class of mail or type of mail service; (iii) Any other costs of the Service which can be reasonably assigned to each class of mail or type of mail serv- ice; and (iv) Any costs which cannot be attributed or reasonably assigned.a a In his initial decision in Docket R71–1 the presiding officer noted two possible interpretations of 39 U.S.C. 3622(b)(3)—first, that all costs are either “attributable” or “reasonably assignable” and, second, that there are some “remaining costs which cannot be attributed or reasonably assigned to classes of mail”. See Docket R71–1, Vol. I, 1–9. If the first interpretation is deemed to be correct, no costs would be reported in the category denominated by §3001.54(h)(2)(iv). The Commission was cognizant in writing the rules of the presiding officer's belief that it was not necessary to adopt either reading as exclusive. (3) The methodology used to derive the costs requested in paragraphs (h)(2) (i) through (iv) of this section shall be set forth in detail. (4) The attributable and other costs reasonably assignable as provided in paragraphs (h)(2) (i) through (iii) of this section shall separately be attributed to mail classes, subclasses, special services, and, to the extent practical, rate categories of mail service. The submission shall identify the methodology used to attribute or assign each type of such costs and, subject to paragraph (a)(2) of this section, shall also include an analysis of the effect on costs of: (i) Volume; (ii) Peaking patterns; (iii) Priority of handling; (iv) Mailer preparations; (v) Quality of service; (vi) The physical nature of the item mailed; (vii) Expected gains in total productivity, indicating such factors as operational and technological advances and innovations; and (viii) Any other factor affecting costs. (5) The cost forecasting or “roll-forward” model shall be provided. It shall include the following items: (i) For each cost segment component, a listing of all forecasting factors used in the cost level, mail volume, nonvolume workload, additional workday, productivity and other programs effects. (ii) For each “ripple-affected” cost segment component, a listing of those segments and components that determine its level of attribution or its distribution to mail class, subclass, rate category and service. (iii) For each longer-run cost segment component: (a) A listing of all factors used in determining its overall level of attribution, and (b) A listing of the specific cost segment components used in determining its level of attribution, and its distribution to mail class, subclass, rate category and service. (iv) Workpapers showing the application of the forecasting factors and procedures to each cost segment component for each time period used in the forecasting process. Such workpapers shall include the quantification, and distribution to mail class, subclass, rate category, and service, of each cost segment component, separating the short-run from the longer-run portions. Such workpapers shall conform to the requirements of paragraph (o) of this section. Compliance with the citation requirements of paragraph (o)(4) of this section shall be achieved by providing citations in “roll-forward” workpapers in the following cases: (a) Workpapers showing the application of the forecasting factors and computational procedures (i.e., computer subroutines described in paragraph (h)(5)(iv)(b) of this section) to representative short-run cost segment components and to representative longer run cost segment components for representative time periods used in the forecasting process. (b) Workpapers showing the application of a computational procedure to a cost segment component, if the application of a forecasting factor or computational procedure to a particular cost segment component deviates from the application of that forecasting factor or computational procedure as presented in the workpapers required by paragraph (h)(5)(iv)(a) of this section. (v) If the “roll forward” model is submitted in the form of a computer-generated model, it shall include: (a) An annotated glossary of input data files, to include, for each time period: (1) The name of each input data file, (2) A general description of each file in relation to the “roll forward” process, (3) The format for each kind of data record in the file, (4) For each distinct format type used in the file, a brief description of each data item included in the format. (b) A hard-copy description, in the form of a mathematical equation, of each subroutine in the program. (c) A copy of the Base Year attibutable cost matrix on a 5-inch floppy diskette in MS–DOS format. (6) Attributable cost final adjustments by mail class, subclass, rate category and service, details of the development of those adjustments, and an explanation of each adjustment shall be provided. (7) “Other services” adjustments by mail class, subclass, rate category and service, details of the development of those adjustments, and an explanation of each adjustment shall be provided. (8) An overall summary cost table shall be provided. It shall show by mail class, subclass, rate category and service, short-run attributable costs, longer-run attributable costs, assignable costs by category, and all adjustments made to each of the foregoing. (9) For each cost segment, base-year amounts for each included account and subaccount shall be provided. (10) The minimum level of disaggregation required for presenting evidence on a cost segment or component is that employed by the Commission in its most recently completed section 3624 proceeding establishing a methodological precedent for that segment or component. This requirement shall not apply: (i) To presentations that propose to define, attribute, assign, or distribute to mail classes segment or component costs by a method not employed or recommended by the Commission in such proceeding, and the Postal Service has demonstrated that the proposed methodological departure makes the level of disaggregation most recently employed or recommended by the Commission inappropriate. (ii) Where the Postal Service has demonstrated that changes in mail operations make the level of disaggregation most recently employed or recommended by the Commission inappropriate. (11) Any nonattributed or unassigned costs specified in paragraph (h)(2)(iv) of this section shall be clearly and separately identified. An explanation shall be furnished as to why such costs cannot be attributed or assigned. To the extent possible, the presentation shall identify all such costs which benefit more than one class of mail or type of service (but not all classes or types), together with the mail classes or types of services so benefited. (12) The Service shall furnish the data relevant to its analysis of the effect on costs of the factors specified in paragraphs (h)(4) (i) through (viii) of this section. (i) Criteria for rate schedule. There shall be included in every formal request a statement of the criteria employed in constructing the proposed rate schedule. The submission shall include: (1) The identification of the relationship between the revenues derived from the rates and fees for a particular class and subclass of mail or service and the costs attributed or assigned to that class and subclass or service; (2) The identification of the procedures and methods used to apportion (to postal services) that part of the total revenue requirement, if any, which is in excess of costs attributed or assigned.b b See footnote a, supra. (3) Such other studies, information and data relevant to the criteria established by section 3622 of the Act with appropriate explanations as will assist the Commission in determining whether or not the proposed rates or fees are in accordance with such criteria. (j) Revenues and volumes. (1) Subject to paragraph (a)(2) of this section, every formal request shall set forth the actual and estimated revenues of the Postal Service from the then effective postal rates and fees for the fiscal years selected for the presentation of cost information submitted pursuant to paragraphs (f) and (g) of this section. (2) Subject to paragraph (a)(2) of this section, every formal request shall set forth the estimated revenues based on the suggested rates and fees for the fiscal years selected for the presentation of cost information submitted pursuant to paragraph (f)(2) of this section. (3) Subject to paragraph (a)(2) of this section, the actual and estimated revenues referred to in paragraphs (j) (1) and (2) of this section shall be shown in total and separately for each class and subclass of mail and postal service and for all other sources of revenue. Revenues derived from classes and subclasses of mail shall be disaggregated to each unique rate element. (4) Each revenue presentation required by paragraphs (j)(1), (j)(2), and (j)(3) of this section shall, subject to paragraph (a)(2) of this section, be documented in sufficient detail to allow independent replication. Revenue estimates shall be supported by exhibits or workpapers that reference the source of all data used, including volume levels, billing determinants, and adjustment factors. References may be to published documents, library references, or companion testimony, and shall include document identity, page, and line, as appropriate. All assumptions used to estimate revenue for new or redesigned rate elements shall be identified and explained. (5) Subject to paragraph (a)(2) of this section, there shall be furnished in every formal request, for each class and subclass of mail and postal service, the following: (i) An econometric demand study relating postal volumes to their economic and noneconomic determinants including postal rates, discounts and fees, personal income, business conditions, competitive and complementary postal services, competitive and complementary nonpostal activities, population, trend, seasonal patterns and other factors. (ii) The actual or estimated volume of mail at the prefiled rates for each postal quarter beginning with the first quarter of the most recent complete fiscal year and ending one year beyond the last quarter of the future fiscal year. (iii) The estimated volume of mail assuming the effectiveness of the suggested rates for each postal quarter beginning with the quarter in which the rates are assumed to become effective and ending one year beyond the last quarter of the future fiscal year. (6) The estimated volumes and revenues referred to in paragraphs (j)(2), (j)(3), and (j)(5) of this section shall be derived from the econometric demand study referred to in paragraph (j)(5)(i) of this section. Supporting rationale shall be provided for any departure from the assumptions and specifications in the demand study made in estimating volumes of any class, subclass, or rate category of mail. Supporting rationale shall be provided for using billing determinants to estimate revenues for any class, subclass, or rate category of mail that differ from the billing determinants implicit in the estimate of volumes for that class, subclass, or rate category. (i) Subject to paragraph (a)(2) of this section, there shall be furnished in every formal request a detailed explanation of the methodology employed to forecast volumes for each class and subclass of mail and postal service. Representative derivations of these forecasts from the econometric demand study shall be presented in detail for two major mail classes, showing each intermediate value or factor employed. For remaining classes and subclasses of mail, such derivations may be summarized, except where their derivations depart from the representative methods presented. (ii) Subject to paragraph (a)(2) of this section, there shall be furnished in every formal request a detailed explanation of the methodology employed to forecast changes in revenues for each class and subclass of mail and postal service resulting from changes in rates and fees. (iii) Subject to paragraph (a)(2) of this section, there shall be furnished in every formal request a computer implementation of the methodology employed to forecast volumes and revenues for each class and subclass of mail and postal service. (iv) The computer implementation described in paragraph (j)(6)(iii) of this section shall be able to compute forecasts of volumes and revenues compatible with those referred to in paragraphs (j)(2), (j)(3), and (j)(5) of this section for: (a) Any set of rates and fees within a reasonable range of the prefiled and suggested rates, (b) any date of implementation within the range spanned by the assumed date and the start of the future fiscal year, (c) alternative forecasts of the economic determinants of postal volumes other than postal rates and fees, and (d) alternative values of any parameters with assigned values that are based upon unverifiable judgments. (v) The computer implementation described in paragraph (j)(6)(iii) of this section shall comply with §3001.31(k)(3). (7) Subject to paragraph (a)(2) of this section, there shall be made available at the offices of the Commission with every formal request, in a form that can be read directly by a standard digital computer, the following: (i) All of the input files and programs needed to replicate the econometric demand study referred to in paragraph (j)(5)(i) of this section; (ii) Any input files and programs employed to derive a price index for any class or subclass of mail or postal service from postal rates, discounts and fees; (iii) Any input files and programs used to prepare data for use in the econometric demand study referred to in paragraph (j)(5)(i) of this section. (k) Financial statements and related information. (1) Subject to paragraph (k)(3) of this section, every formal request shall include, for the 2 fiscal years immediately preceding the fiscal year in which the date of formal filing occurs, the Balance Sheet, the Statement of Income and Expense, basic statistical information and the Statement of Income and Expense by budget categories of the Postal Service. This information shall include data with respect to: (i) Balance Sheet and a supporting schedule for each item appearing thereon; (ii) Statement of Income and Expense and a supporting schedule for each item appearing thereon; (iii) As appropriate, statistical data with respect to revenue, pieces (by physical attributes, showing separately amounts of mail identified as stamped, metered, and imprinted, or other), weight, distance, postal employees (number, total payroll, productivity, etc.), postal space, post offices (number, classes, etc.), and any other pertinent factors which have been utilized in the development of the suggested rate schedule; (iv) Statement of Income and Expense by cost segment. (2) A reconciliation of the budgetary information with actual accrued costs shall be provided for the most recent fiscal year. (3) If the fiscal information for the immediately preceding fiscal year is not fully available on the date of filing, a preliminary or pro forma submittal shall be made and upon final completion an updated report shall be filed in substitution therefor. (l)(1) Billing determinants. A statement, which can be in workpaper form, indicating for each class and subclass of mail and postal service the relevant billing determinants (e.g., the volume of mail related to each rate element in determining revenues) separately for the current rates and the proposed rates. Proposed changes in rate design and the related adjustments of billing determinants should be explained in detail. (2) For third-class bulk mail, subject to paragraph (a)(2) of this section, every formal request shall set forth separately for regular and preferred, by presort level, the base year volume by ounce increment for each shape (letter-size, flat, irregular parcels, parcels). (m) Continuing and phasing appropriations. A statement, which can be in workpaper form, presenting detailed calculations of continuing appropriations according to 39 U.S.C. 2401(c) and phasing appropriations under 39 U.S.C. 3626 and any proposed adjustment to such phased rates under 39 U.S.C. 3627 indicated by circumstances known at the time of the filing. Calculation of all the phased rates for the entire applicable phasing period should be explained in detail. (n) Performance goals. (1) Every formal request shall identify any performance goals which have been established for the classes and subclasses of mail. (2) Subject to paragraph (a)(2) of this section, the request shall identify the achieved levels of service for those classes and subclasses of mail and mail services for which performance goals have been set. This information may be provided by reference to published documents or otherwise. (o) Workpapers. (1) Whenever the Service files a formal request it shall accompany the request with seven sets of workpapers, five for use by the Commission staff and two which shall be available for use by the public at the Commission's offices. (2) Workpapers shall contain: (i) Detailed information underlying the data and submissions for paragraphs (b) through (n) of this section in such fashion and content so as to permit independent analysis of each cost component and an independent attribution or assignment of costs to classes and subclasses and the assignment of nonattributed or unassigned costs to classes and subclasses; (ii) A description of the methods used in collecting, summarizing and expanding the data used in the various submissions; (iii) Summaries of sample data, allocation factors and other data used for the various submissions; (iv) The expansion ratios used (where applicable); and (v) The results of any special studies used to modify, expand, project, or audit routinely collected data. (3) Workpapers shall be neat and legible and shall indicate how they relate to the data and submissions supplied in response to paragraphs (b) through (n) of this section. (4) Workpapers shall include citations sufficient to enable a reviewer to trace any number used but not derived in the associated testimony back to published documents or, if not obtained from published documents, to primary data sources. Citations shall be sufficiently detailed to enable a reviewer to identify and locate the specific data used, e.g., by reference to document, page, line, column, etc. With the exception of workpapers that follow a standardized and repetitive format, the required citations themselves, or a cross-reference to a specific page, line, and column of a table of citations, shall appear on each page of each workpaper. Workpapers that follow a standardized and repetitive format shall include the citations described in this paragraph for a sufficient number of representative examples to enable a reviewer to trace numbers directly or by analogy. (p) Certification by officials. (1) Every formal request shall include one or more certifications stating that the cost statements and supporting data submitted as a part of the formal request, as well as the accompanying workpapers, which purport to reflect the books of the Postal Service, accurately set forth the results shown by such books. (2) The certificates required by paragraph (p)(1) of this section shall be signed by one or more representatives of the Postal Service authorized to make such certification. The signature of the official signing the document constitutes a representation that the official has read the document and that, to the best of his/her knowledge, information and belief, every statement contained in the instrument is proper. (q) Opinion of independent public accountant. Every formal request shall include an opinion from an independent public accountant to the extent and as required by 39 U.S.C. 2008(e). (r) Special waiver provision for minor rate cases. The Commission may, upon the filing of a proper motion by the Postal Service, together with a showing of good cause therefor, waive certain of the filing requirements of paragraphs (b) through (q) of this section if in the Commission's judgment it has been demonstrated that the proposed change in a rate or rates of postage and a fee or fees for postal service does not significantly change the then effective rates and fees or alter the cost-revenue relationships of the various classes and types of postal services. (s) Rejection of requests. The Commission may reject any request under this subpart that patently fails to substantially comply with any requirements of this subpart. [38 FR 7532, Mar. 22, 1973, as amended at 42 FR 8143, Feb. 9, 1977; 42 FR 18076, Apr. 5, 1977; 44 FR 26075, May 4, 1979; 45 FR 65575 and 65580, Oct. 3, 1980; 48 FR 3733, Jan. 27, 1983; 48 FR 50717, Nov. 3, 1983; 50 FR 43392, Oct. 25, 1985; 51 FR 8827, Mar. 14, 1986; 51 FR 14993, Apr. 22, 1986; 54 FR 35495, Aug. 28, 1989; 58 FR 38976, 38977, July 21, 1993; 59 FR 8542, Feb. 23, 1994; 62 FR 30250, June 3, 1997; 68 FR 48299, Aug. 13, 2003]
Title 39: Postal Service
PART 3001—RULES OF PRACTICE AND PROCEDURE
Subpart B—Rules Applicable to Requests for Changes in Rates or Fees
§ 3001.54 Contents of formal requests.
