NOTE: COMMENTS REGARDING ANY FEDERAL REGISTER NOTICE MUST BE SENT TO THE ADDRESS INDICATED IN THE DOCUMENT. ANY COMMENTS ON THE RAPID INFORMATION BULLETIN BOARD SYSTEM (RIBBS) ABOUT ANY FEDERAL REGISTER NOTICES WILL NOT BE USED OR CONSIDERED IN THE COURSE OF ANY RULE MAKING. [Federal Register: April 18, 1995] ======================================================================= ----------------------------------------------------------------------- POSTAL SERVICE 39 CFR Part 111 Revisions to Standards for Use of Permit Imprints AGENCY: Postal Service. ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: This final rule amends Domestic Mail Manual (DMM) standards concerning methods of paying postage. These amendments will: Change the publishing requirements for Form 3526, Statement of Ownership, Management, and Circulation, to allow greater flexibility in selecting the issue in which the required information will appear. Relax the conditions under which a company permit imprint may be used while strengthening the ability of the Postal Service to identify the place of mailing of company permit imprint mail and to obtain information about such mailings. Generally, mailers will be allowed to use a company-style imprint without having to obtain permits at two or more post offices, but these mailers will be required to show a point of contact to obtain records of the mailing. Penalties for failure to provide records are also established. Relax the design restrictions on permit imprint indicia. Generally, the new standards allow for more creativity while retaining restrictions that ensure that the indicia content is readable and clearly identifiable as postage payment. Set a November 1, 1995, sunset date for the use of second-class key rates. EFFECTIVE DATES: June 2, 1995, except for amendments to P200 which will become effective April 18, 1995. FOR FURTHER INFORMATION CONTACT: Leo F. Raymond, (202) 268-5199. SUPPLEMENTARY INFORMATION: On May 4, 1994, the Postal Service published for public comment several proposed changes to DMM standards related to bulk and presort mailing fees and the methods of paying postage (59 FR 23038-23041). Comments on the proposed rule were initially due to the Postal Service by June 20, 1994, but the comment period was subsequently extended to July 20, 1994, as published on June 22, 1994 (59 FR 32165). The Postal Service received responses from 20 commenters, including three mailer associations, collectively offering 25 comments on specific elements of the proposed rule. Of those comments, 16 concerned the proposed rule's provisions regarding the return address on mail paid by company permit imprint; five comments spoke to the provisions regarding publication of Form 3526, Statement of Ownership, Management, and Circulation; and one comment each was offered on the provisions regarding the preparation of permit imprint mailings, the payment of annual fees, the design of company permit imprint indicia, and the termination of key rates. Discussion of these comments and the corresponding aspects of the final rule are presented below. Form 3526 The proposed rule would amend DMM E213.4.3 to change the publishing requirements for Form 3526, Statement of Ownership, Management, and Circulation. Although under current standards all publishers are required to file Form 3526 by October 1 of each year, those publishing general or requester publications are further required to publish the information on that form in the second issue of that publication after October 1. Responding to publishers' requests for a more flexible standard on the issue in which the information may appear, the Postal Service proposed to revise the standard to allow publication of Form 3526 in any issue published during the month of October. (The proposed rule incorrectly cited DMM E213.4.3 as the section being revised; the correct citation is DMM E216.4.3. This correction is reflected in the final rule.) The five commenters on this provision generally supported its objective of a more flexible rule but correctly noted that the proposed wording precluded achievement of some of what the standard would require. For instance, it would be a physical impossibility for a publication to include in the data shown on the published form information about returned or unsold copies of the issue of the publication in which the annual report appeared. Further, publications not issued in October would implicitly be required to amend their frequency or violate the proposed standard. One commenter also noted that not specifying by regulation the issue in which the form had to appear weakened its effectiveness in publicizing the data that the form contained by making it harder for an interested reader to find. Another commenter requested clarification of "issue date," whether this term referred to the cover date of the issue or to the date when the issue was produced or distributed. The Postal Service agrees that its proposal was worded at cross- purposes to the ends that it sought to accomplish. Accordingly, the final rule is amended to allow more time for complete issue data to be developed; to recognize the practical limitations of a publication's frequency of issue (by relating the publication of the form to that frequency and allowing approximately equal time for publishing the form to all publications in proportion to their frequency of issuance); and to state clearly that the date of publishing the form is related to when issues of the publication are mailed. This final rule does not take steps specifically to facilitate a reader's ability to find the published form because the proposed rule neither contemplated a problem in that regard nor sought comment on imposing such a new requirement. The Postal Service may consider this comment for a future proposal. Company Permit Imprints The proposed rule would also amend DMM P040 to relax the conditions under which a company permit imprint may be used and to strengthen concurrently the ability of the Postal Service to identify the place of mailing of company permit imprint mail and to obtain information about such mailings. Current standards require a permit imprint indicium to contain the mailer's permit number and the name of the post office where the permit is held unless, for a mailer having permit imprint authorizations at two or more post offices, a company-style indicium is used (in which the name of the permit holder is substituted for the permit number and post office name). At the request of customers, the Postal Service proposed a relaxation of the applicable standards to let any permit holder use the company-style format. Current standards also require that company permit imprint mailpieces bear a complete domestic return address, but these standards do not specify what that address is to represent. This has permitted instances in which the permit holder has deliberately frustrated the efforts of the Postal Service to identify the point of mailing, what was mailed, and whether the correct postage was paid. Consequently, the Postal Service proposed to amend DMM P040 to require more information to document company permit imprint mailings (and mailings including company permit imprint pieces) by specifying that mailers use as the return address the location (the permit holder's or its [[Page 19356]] agent's) at which records for the mailing will be available to the Postal Service upon request; and to provide for suspension or revocation of permits if such records are not provided in a timely manner. No commenters opposed the relaxation of the current standards allowing access to use of company permit imprints, so that aspect of the proposed rule is adopted as the final rule. However, all the 16 commenters on the element of the proposed rule regarding return addresses on company permit imprint mail were unsupportive of one or more of the associated tightened standards. Two commenters objected to the period for which mailing information would have to be retained at the location shown in the return address and argued that this period discouraged use of company permit imprints. These commenters asserted that the proposed 2-year retention period should be left at 1 year or dropped. The Postal Service agrees that the current 1-year retention period for company permit imprint mailings may be adequate, and it is restored in the final rule. Twelve commenters noted that different clients' or in-house departments' mailings may need different return addresses on mail bearing the same company imprint or that a single mailer or client may have business reasons to show different return addresses on different mailpieces (such as different processing centers). Such needs make showing a single return address impossible, the commenters argued. Three commenters suggested that the return address should simply represent "the contact point at which more information about the physical location of the desired records can be obtained for USPS review." Three other commenters were sympathetic with the needs of the Postal Service to find mailing information, but these commenters noted the aforementioned concern about record management; two commenters noted the industry's sensitivity to the "local" appearance of mailpieces and how this is impeded by the presence of a "nonlocal" return address. Two of those commenters suggested the insertion of an origination code in the permit imprint indicia as an alternative to a specific return address. The Postal Service acknowledges the valid business concerns of its customers as represented in these comments. In part, however, some mailer anxiety may have arisen from an arguably reasonable misreading (or misinterpretation) of the proposed rule. Specifically, the Postal Service intended to require the mailer to show where mailing records could be made available if requested, not where they actually were generated or retained. (This is similar to the existing requirement for record availability at a "known office of publication" for second- class mail.) These commenters apparently read the proposed rule as requiring a new and elaborate recordkeeping system; this was not the case, and the final rule is amended to make this clear. Moreover, the proposed rule is amended to include an option suggested by commenters as a method of identifying where records of the mailing can be made available for Postal Service review. The final rule retains the current standard for a complete domestic return address, but on the matter of what that address represents, the final rule gives the mailer two choices: (1) To show in the return address either the place where mailing records are maintained, at which they can be made available upon request by the USPS, or at which place where records are maintained can be determined; or (2) to show in the permit indicia the five-digit ZIP Code of the post office where records are available and separately notify that postmaster where the records are kept. The Postal Service believes that these options should afford both reasonable flexibility to customers and adequate information to locate the necessary mailing records. None of the commenters differed with the proposed rule's provisions concerning adverse actions the Postal Service would take against mailers who fail or refuse to provide mailing information; those provisions are adopted in the final rule. Another commenter noted that some of the current standards for government official mail would be directly opposed by the proposed standards for placement of the mailer's return address. The final rule is amended to except official mail from the proposed standards insofar as they are reflected in the final rule. This exception would be available only to mail constituting "Official Business" of the federal government and the mail preparation rules peculiar to it. Permit Imprint Indicia Design The proposed rule would also amend DMM P040 to relax the design restrictions on permit imprint indicia. While allowing greater flexibility in the preparation of permit imprint indicia, the proposed standard would reinforce the distinctiveness of an indicium by allowing its incorporation into a design of the mailer's choice. The combined design would be subject to broad location and appearance standards that balance design flexibility and the Postal Service's legitimate interest in maintaining recognizable permit indicia. Two commenters spoke to this matter. One noted an anomalous interpretation of the existing preparation requirement that permit imprint mail be "faced," stating that some post offices are taking the literal definition of "facing" (mail oriented with the addresses facing in the same direction) as prohibiting the counterstacking of flats (as permitted by current standards in DMM module M). The final rule is amended to clarify this point. The other commenter raised several issues: (1) The compatibility of the minimum dimensions in proposed DMM P040.4.2d with the placement of an indicia on a paper address label; (2) the definition of "address area"; (3) the impact of proposed DMM P040.4.2d (i.e., that no printing appears above or to the right of the permit information); and (4) the inability to use 4- point type for permits placed on paper address labels. The Postal Service does not have a fixed definition of "address area," deferring to the self-definition inherent in the relatively specific space on a mailpiece left open by some mailers for the printing of an address or the placement of an address label. Although the absence of a specific definition of "address area" may leave room for occasional differences in interpretation, the Postal Service does not believe that sufficient benefit would be derived from the added standards needed to present a definition, given the varied ways customers design mail. Therefore, no change is made in the final rule in this regard. As the commenter detected, the proposed rule failed to contemplate fully permit imprints appearing on paper address labels. Accordingly, DMM P040.4.2b, P040.4.2d, and P040.4.2e of the final rule are amended. Rather than seeking to impose specific detailed standards for various types of address labels, the final rule simply requires that an area be allowed in the upper right corner of the address label that is sufficient to separate the indicium content from other information on the label, and to allow that content to be printed in a type size legible at normal reading distance. The Postal Service realizes that "normal reading distance" is a subjective term but believes that a more specific measurement would be excessive and unnecessary. The commenter also appeared to be confused by the proposed rule regarding the presence of printing above and to [[Page 19357]] the right of the permit indicia. The final rule is amended to clarify that this prohibition is applied relatively depending on whether the indicia appears on the mailpiece, on a label, or in an address area. In the latter two cases, printing is allowed on the mailpiece itself beyond the address label or address area. Otherwise, if located directly on the mailpiece in the location specified in the proposed rule, little space remains for further printing without diminishing the visibility of the indicia; no change in the proposed rule is made in this regard. The final rule also adds a minor revision to DMM P040.1.9 to clarify that permit imprints may be printed on permanently affixed adhesive labels. Key Rates The proposed rule would amend DMM P200 to set a sunset date for the use of key rates. Key rates basically represent a simplified method of computing zone-rate postage on issues of second-class publications having a stable distribution pattern. The proposed rule stated that no new users of key rate would be authorized after September 30, 1994, or upon adoption of a final rule, whichever is later, and, to allow for an orderly transition for remaining key rate users, termination of key rates would be deferred until March 31, 1995, or 6 months after adoption of a final rule, whichever is later. The one comment on this element of the proposed rule supported it, but questioned whether 6 months was sufficient time to allow for systems adjustments by current key rate mailers. The Postal Service recognizes the need for an orderly transition and believes that the proposed period is sufficient. This belief is buoyed by the absence of opposing comments and by the presumption that 6 months is a relatively generous timeframe in the context of the daily or weekly mailing frequency of typical key rate mailers. Accordingly, the final rule terminating key rates is adopted without change, except that fixed dates will be adopted to ensure adequate notice and compliance. Key rates will no longer be authorized for new customers after April 30, 1995; use of key rates will no longer be permitted for current key rate mailers after October 31, 1995. Mailing Fees Finally, the proposed rule also sought comments on changes to DMM E110.6.1, DMM E312.2.6, and DMM E411.4.0 that would have standardized the assessment of bulk or presort mailing fees on First-, third- and special fourth-class mail. On further consideration, the Postal Service has determined to retain the current provisions for the present time. The distinctions among these fees are based on historical differences and on assumptions about the amount of revenue that will be produced by those fees. Absent strong mailer desire for change (no supporting or objecting comments were received), the Postal Service will retain the current standards. (The sole commenter on this proposal did not address the change but asked for clarification regarding applications for bulk mailing permits (and the application fees), particularly whether those would be affected by the proposed rule; they would not.) List of Subjects in 39 CFR Part 111 Postal Service. For the reasons discussed above, the Postal Service hereby adopts the following amendments to the Domestic Mail Manual, which is incorporated by reference in the Code of Federal Regulations (see 39 CFR part 111). PART 111--[AMENDED] 1. The authority citation for 39 CFR part 111 continues to read as follows: Authority: 5 U.S.C. 552(a); 39 U.S.C. 101, 401, 403, 404, 3001- 3011, 3201-3219, 3403-3406, 3621, 3626, 5001. 2. The following sections of the Domestic Mail Manual are revised as noted below: E216 Publisher Records * * * * * 4.0 Statement of Ownership, Management, and Circulation * * * * * 4.3 Publication The publisher of each publication authorized second-class mail privileges as a general or requester publication must publish a complete statement of ownership, containing all information required by Form 3526, in an issue of the publication to which that statement relates; other publications are not required to publish this statement. A reproduction of the Form 3526 submitted to the USPS may be used. The required information must appear in an issue whose primary mailed distribution begins not later than October 10 for publications issued more frequently than weekly, or not later than October 31 for publications issued weekly or less frequently but more frequently than monthly; or in the first issue whose primary mailed distribution begins after October 1 for all other publications. * * * * * P040 Permit Imprints 1.0 Basic Information * * * * * [Renumber existing 1.6 and 1.7 as 1.8 and 1.9; add new 1.6 and 1.7 and revise renumbered 1.8 and 1.9 as follows:] 1.6 Information Upon request by the USPS, a permit holder (and its agent, if applicable) must provide in a timely manner complete information (as specified in 3.5) about mailings or mailpieces for which postage was paid using its company permit imprint. 1.7 Suspension The USPS may immediately suspend the authorization to use a permit imprint if the permit holder or its agent refuses or fails to provide information as specified in 1.6. 1.8 Revocation A permit may be revoked for use in operating any unlawful scheme or enterprise, for nonuse for any 12-month period, for refusal to provide information about permit imprint use or mailings, or for any noncompliance with the standards applicable to using permit imprints. The permit holder may appeal a revocation in writing to the postmaster within 10 days of receipt of the notice. If revocation is initiated for nonuse and the permit holder states in writing that it plans to resume mailings within a 90-day period, the permit will be continued for 90 days. Further appeal may be made through the postmaster to the district manager, customer service and sales, if the initial decision was made by the postmaster; or to the RCSC if the initial decision was made at the district level. 1.9 Use [Revise the first sentence as follows:] Permit imprints may be printed directly on mailpieces, on labels (including address labels) permanently affixed to mailpieces, or on mailpiece wrappers, envelopes, and other containers. * * * 2.0 Preparing Permit Imprints * * * * * 2.4 Placement The entire permit imprint indicium must be aligned parallel with the address of the mailpiece and placed in the upper right corner of the address side, of the address area, or of the address label, subject to these conditions: a. The indicium must not encroach on reserved space on the mailpiece (e.g., [[Page 19358]] the OCR read area) if such a standard applies. b. The position (but not the format) of the indicium may be varied so that data processing equipment can simultaneously print the address, imprint, and other postal information. * * * * * 3.0 Permit Imprint Content * * * * * 3.5 Company Permit Imprint A company permit imprint is one in which the exact name of the company or individual holding the permit is shown in the permit imprint indicium in place of the city, state, and permit number. A customer may use a company permit imprint indicium if: a. For 1 year from the date of mailing, the permit holder or its agent keeps records for each mailing paid by company permit imprint and makes these available for USPS review on request. These records include (for each version of what was mailed, if applicable) the weight of a single piece; the total number of pieces mailed; the total postage; the date(s) and post office(s) of mailing, and other records required by the rate of postage claimed or the method of payment used. A complete sample mailpiece must be included for each identical-weight mailing, or each commingled or combined version in a nonidentical-weight mailing. Sample mailpieces are not required for nonidentical-piece third- or fourth-class machinable or irregular parcel mailings (e.g., merchandise and other fulfillment mailings). b. Each mailpiece bears a complete domestic return address. The return address on official mail is subject to the corresponding standards. On other unendorsed bulk third-class mail, the return address may be below the permit imprint. Except for official mail, if the return address is not the physical location at which the USPS may review the records listed in 3.5a (i.e., where they are either retained or can be made available) or is not a point of contact from which such a physical location can be readily determined, the mailer must: (1) Include in the indicia the 5-digit ZIP Code of the physical location at which the records listed in 3.5a are either retained or can be made available for USPS review; and (2) Provide the postmaster of that post office with a complete sample mailpiece (except as noted above); the date(s) and post office(s) of mailing; and the name and local address of the party from whom the records listed in 3.5a may be obtained. 4.0 Formats [Renumber existing 4.0 as 4.1, and Exhibits 4.0a-c as 4.1a-c; amend and add new 4.2 as follows:] 4.1 Basic Standard Unless prepared under the option in 4.2, permit imprint indicia for ordinary mail, official mail, and Mailgrams must be prepared in one of the formats shown in Exhibit 4.1a, Exhibit 4.1b, and Exhibit 4.1c, as applicable to the rate claimed or type of mail. 4.2 Optional Format Permit imprint indicia may be prepared in a format other than the basic format described in 4.1 subject to these conditions: a. The rule that forms a box around the content of the indicium may be omitted if the content remains as specified in 3.0 and Exhibits 4.1a-c. b. Unless printed directly on an address label, the indicium content specified in 3.0 is placed within a clear area no smaller than \1/2\ inch high and \1/2\ inch wide, no more than 1\1/2\ inches below or left from the upper right corner of the mailpiece or of the address area when oriented to read the address, regardless of the processing category or the postage rate claimed. If printed on an address label (including paper, adhesive, and multilayer sandwich labels), the space allowed for the indicium content in 3.0 must be rectangular, large enough to ensure legibility of that content from a normal reading distance and to clearly separate it from other information on the label, and located in the upper right corner of the label when oriented to read the address. c. No printing appears in the indicium area other than that required or allowed under 3.0. d. Except as required to enclose the permit information, no printing appears either on the mailpiece above or to the right of the permit information when the indicium is printed directly on the mailpiece, or within the address area or on the address label above or to the right of the permit information when the indicium appears there. e. Except for indicia printed on address labels, the permit information is printed in no smaller than 4-point type. In indicia printed on address labels under 4.2b, the permit information must be legible from a normal reading distance. f. Except as required to enclose the permit information, any decorative designs intended to be part of the permit imprint indicium design appear below or to the left of the permit information in an area extending no farther than 4\1/2\ inches to the left of the right edge, and 1\1/2\ inches below the top edge of the mailpiece, address area, or address label, as applicable. Such designs must not resemble or imitate a postage meter imprint, postage stamp, postcard postage, or other method of postage payment; and must not include words, symbols, or designs used by the USPS to identify a class of mail, rate of postage, or level of service, unless such elements are correctly used under the applicable standards for the mailpiece on which they appear and the corresponding postage and fees have been paid. g. All other applicable standards in 1.0 through 5.0 are met. * * * * * 5.0 Mailings * * * * * 5.3 Preparation of Mailing All pieces in a permit imprint mailing must be faced (i.e., have the address facing in the same direction, unless counterstacked under the applicable standards) and meet the preparation standards applicable to the rate claimed. Mail claimed at a rate where postage varies by zone must be separated by zone when mailed unless authorized by the USPS. 5.4 Place of Mailing Mail must be deposited and accepted at the post office that issued the permit, at a time and place designated by the postmaster, except as otherwise provided for plant-verified drop shipments. * * * * * 5.6 Prepayment Payment must be made for each mailing, either in cash or through an advance deposit account, before the mailing can be released for processing. Funds to pay postage must be deposited as prescribed by the USPS. If the funds paid or on deposit are less than that necessary to pay for a mailing, the difference must be paid or deposited before it or other permit imprint mailings can be accepted. Credit for postage is not allowed. Postage may not be paid partly in money and partly by postage stamps unless permitted by standard. * * * * * P200 Second-Class Mail * * * * * 3.0 Key Rate * * * * * [[Page 19359]] 3.5 Termination of Key Rate Option New authorizations to use key rates will not be granted after April 30, 1995. Publications already authorized key rates may continue to use them until October 31, 1995. Effective November 1, 1995, use of key rates is eliminated. [Delete 3.0 as of 11/1/95.] * * * * * A transmittal letter making these changes in the pages of the Domestic Mail Manual will be published and will be transmitted to subscribers automatically. Notice of issuance will be published in the Federal Register as provided by 39 CFR 111.3. Stanley F. Mires, Chief Counsel, Legislative. [FR Doc. 95-9146 Filed 4-17-95; 8:45 am] BILLING CODE 7710-12-P