use of incremental costs allocates those inframarginal costs that have reliably identified causal relationships to products, the Commission finds that the use of incremental costs represents a significant improvement over the existing methodology pursuant to section 3652(e)(2). Application of Legal Standard to Proposal One Statutory Requirements As discussed in multiple instances above, section 3622(c)(2) requires that costs be attributed through identified causal relationships.” See 39 U.S.C. “reliably § 3622(c)(2). Further, section 3652(e)(2) requires that the Commission also find that a proposed methodology remedies a significant inaccuracy or significantly improves the quality, accuracy, or completeness of Postal Service data or the attribution of costs or revenues to products, or, in the judgment of the Commission, is otherwise necessitated by the public interest. 39 U.S.C. § 3652(e)(2). As discussed above, the first issue concerning the acceptance of Proposal One is whether the relationship between inframarginal costs and products is both causal and reliably identifiable. The issue of causality is a question in the abstract about relationships but may be answered with both logical and empirical arguments. The question of reliable identification is one that can only be answered empirically. The second issue concerning the acceptance of Proposal One is whether it meets the criteria of section 3652(e)(2). For Proposal One to meet these criteria, it must, at a minimum, be an improvement to the established methodology. Commission Analysis of the Reliably Identified Causal Relationships Several commenters argue against the idea that inframarginal costs have a reliably identified causal relationship with products. Amazon and Panzar maintain that
use of incremental costs allocates those inframarginal costs that have reliably identified causal relationships to products, the Commission finds that the use of incremental costs represents a significant improvement over the existing methodology pursuant to section 3652(e)(2). Application of Legal Standard to Proposal One Statutory Requirements As discussed in multiple instances above, section 3622(c)(2) requires that costs be attributed through “reliably identified causal relationships.” See 39 U.S.C. § 3622(c)(2). Further, section 3652(e)(2) requires that the Commission also find that a proposed methodology remedies a significant inaccuracy or significantly improves the quality, accuracy, or completeness of Postal Service data or the attribution of costs or revenues to products, or, in the judgment of the Commission, is otherwise necessitated by the public interest. 39 U.S.C. § 3652(e)(2). As discussed above, the first issue concerning the acceptance of Proposal One is whether the relationship between inframarginal costs and products is both causal and reliably identifiable. The issue of causality is a question in the abstract about relationships but may be answered with both logical and empirical arguments. The question of reliable identification is one that can only be answered empirically. The second issue concerning the acceptance of Proposal One is whether it meets the criteria of section 3652(e)(2). For Proposal One to meet these criteria, it must, at a minimum, be an improvement to the established methodology. Commission Analysis of the Reliably Identified Causal Relationships Several commenters argue against the idea that inframarginal costs have a reliably identified causal relationship with products. Amazon and Panzar maintain that
Order3506.docx