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: August 30, 1995 (Volume 60, Number 168)]
[Proposed Rules]
[Page 45297-45323]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[[Page 45297]]
_______________________________________________________________________

Part IV

Postal Service
_______________________________________________________________________

39 CFR Part 111

Classification Reform; Implementation Standards; Proposed Rule

[[Page 45298]]


POSTAL SERVICE

39 CFR Part 111


Classification Reform; Implementation Standards

AGENCY: Postal Service.

ACTION: Second advance notice of proposed rulemaking.

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

SUMMARY: This notice provides updated information on the rulemaking
process that the Postal Service is following to implement pending
classification reform proposals, and to obtain comments and proposals
on currently suggested implementing standards.

DATES: Comments on the implementation process or proposed standards
must be received on or before September 29, 1995.

ADDRESSES: Mail or deliver written comments to the Manager, Mailing
Standards, USPS Headquarters, 475 L'Enfant Plaza SW., Room 6800,
Washington, DC 20260-2419. Copies of all written comments will be
available at the above address for inspection and photocopying between
9 a.m. and 4 p.m., Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Leo F. Raymond, (202) 268-5199.

SUPPLEMENTARY INFORMATION: On March 24, 1995, pursuant to its authority
under 39.U.S.C. 3621, et. seq., the Postal Service filed with the
Postal Rate Commission (PRC) a request for a recommended decision on a
number of mail classification reform proposals. The PRC designated the
filing as Docket No. MC95-1, and proceedings are currently under way
before the PRC in accordance with 39 U.S.C. 3624 and the PRC's rules of
practice under 39 CFR 3001. A notice of the filing, with a description
of the Postal Service's proposals, was published on April 3, 1995, in
the Federal Register by the PRC (60 FR 16888-16893).
    On June 29, 1995, the Postal Service published for public comment
in the Federal Register an advance notice of proposed rulemaking (60 FR
34056-34069). That notice included an overview of the Postal Service's
proposals in MC95-1, the process that was used in developing them, and
the instant process being used to prepare for implementation of
classification reform and to begin development of the standards to be
used eventually in the Domestic Mail Manual (DMM). The notice also
contained detailed information about issues that had been developed for
consideration as part of the implementation process, prepared in a
format that paralleled the listing of requirements in the Domestic Mail
Classification Schedule (DMCS) portion of the MC95-1 filing. Among the
purposes for publishing the advance notice was the elicitation of
comments on the proposed criteria under consideration for inclusion in
DMM implementing standards, many of which had been developed with the
advice of four Classification Reform Implementation Advisory Groups
(IAGs), composed of appropriate Postal Service personnel and
Representatives of the mailing community, convened as part of the
process described in the notice. Readers who are unfamiliar with the
content of the Postal Service's MC95-1 filing, or the process under way
for implementation of MC95-1, are asked to review the June 29 notice
for more details.
    This second notice serves both to report a summary of the comments
received from the earlier notice and to invite further comment from
interested parties, both on the proposals shown below (that have been
updated based on comments on the first notice and recent IAG
discussions) and on the implementation process generally.
    However, readers are reminded that this implementation rulemaking
process is not a forum for dialogue about the contents of the Postal
Service's filing; the merits of testimony, data, or evidence it has
submitted in that case; or philosophical or public policy issues
related to universal postal service, rate design, or the role of
second-class mail. Those are among the issues being considered in the
classification reform case pending before the PRC. As such, comments in
those areas are beyond the scope of this rulemaking and will not be
discussed if submitted.
    Following receipt and review of comments on this second notice, the
Postal Service will revise its proposed implementation criteria as
appropriate and use them as the basis for developing the specific DMM
standards that will be proposed for adoption if the changes proposed
MC95-1 are adopted. The Postal Service plans to publish these DMM
provisions as a proposed rule for notice and comment in the Federal
Register in November.
    Pursuant to 39 U.S.C. 3624, the PRC issues a recommended decision
on the Postal Service's Request; this recommended decision is expected
in January 1996. The PRC's decision is sent to the Governors of the
Postal Service who, pursuant to 39 U.S.C. 3625, issue a final decision
on the PRC's recommendations. The Board of Governors then will set an
implementation date. Publication of a notice announcing the Governors'
decision and the issuance of final Domestic Mail Classification
Schedule and Rate Schedule changes will be made immediately after the
Governors act. After reviewing the comments received on the proposed
rule published in the November notice in light of the PRC's
recommendation and the Governors' decision, a final rule will be
published adopting the appropriate DMM implementing standards.
Publication of this notice will be either concurrent with publication
of the Governors' decision or as soon thereafter as possible.
    The succeeding section of the notice summarizes comment received on
the first notice and discussions from recent IAG meetings. This
material is organized by the subject areas represented by the IAGs
letters, flats, addressing, and publications. Miscellaneous issues are
reported thereafter.
    Finally, the remainder of this notice presents the proposed
implementation criteria in revised form to reflect changes that have
been made based on the comments as well as new material. For ease of
review, as in the first notice, this information is organized by the
classes, subclasses, and rate categories proposed by the Postal Service
in its MC95-1 filing. Each heading is followed by one or more
statements of the pertinent classification language proposed by the
Postal Service for inclusion or retention in the DMCS. A DMCS section
reference is included in parentheses at the end of each statement for
identification and reference purposes. (Readers are reminded that,
because these proposed DMCS provisions are under review before the PRC
as prescribed by 39 U.S.C. 3623, they are not subject to comment in
this rulemaking process.) Where appropriate, following each DMCS
statement, and indented under it, are statements of the mailing
standards that the Postal Service currently plans to implement through
DMM changes if the pending classification changes are adopted. As in
the earlier notice, the Postal Service has also included statements of
pending issues related to these proposals. Readers are invited to
comment on the proposed DMM provisions and the related issues that are
shown, and to identify any additional proposals or issues that warrant
inclusion in these classification reform implementation plans.
Summary of Comments From First Notice

    The Postal Service received 89 pieces of correspondence offering a
total of 538 comments on the June 29 notice.

[[Page 45299]]
Respondents included most major mailer associations, some individual
publishers, printers, presort bureaus, mailers, and one private
citizen. The comments do not lend themselves to easy categorization or
direct association with specific provisions of the first notice's
content. Rather, commenters tended to speak to general areas of
concern, such as automation issues, or to common aspects of several
proposed criteria, such as tray volumes for several different presort
levels. Although the proposals were set forth in the first notice by
class of mail or rate to which they pertained, comments tended to
aggregate these into a single response.
    The largest single area to which comments were generally directed
was the preparation of automation subclass mail (First-Class and
Standard); approximately 175 comments discussed issues in that area.
Addressing issues were the focus of 88 comments, although most
commenters mentioned addressing issues to some degree. Publications
Service was the subject of 67 comments, with 7 other speaking about
regular Periodicals as well. Nonautomation First-Class (Retail
subclass) and Standard Mail (Regular and Enhanced Carrier Route
subclasses) received a total of 25 and 87 comments, respectively.
Another 89 comments discussed general issues, including some (like the
role of second-class mail or the wisdom of classification reform) that
are beyond the scope of this rulemaking. The specific points raised in
the comments are presented below and, to the extent that changes have
been made based on the comments, are reflected in the amended proposals
that follow.

Comments Regarding Letter Mail

General

    Five comments were received that suggested changes to the minimum
volume required for mailing at presort rates. Presort minimums are a
matter before the PRC and are beyond the scope of this rulemaking.
    Four comments were received concerning preparation of letter mail
on pallets. Palletization issues (including the preparation of bundles
and trays on pallets) are being considered as part of a separate
rulemaking.

Automation Subclasses

    100% Barcoding. Twenty-seven commenters responded to the proposal
for 100% delivery point barcoded pieces within the Automation
subclasses for First-Class and Standard letters. Two commenters
supported this requirement. Seven commenters indicated that splitting
their mail lists into two separate mailstreams, one with delivery point
barcodes and one without, will increase their mail preparation expenses
and may result in more residual mail. One commenter was concerned that
this could be a bigger problem for multiline optical character reader
(MLOCR) combination/value added mailers. Three commenters were
concerned about the need to re-meter pieces that could not be barcoded
in an MLOCR environment; one indicated that the need to remeter could
result in a 1-day delay of the mail. Two commenters indicated that this
requirement would result in more single-piece rate mail, with one
further stating that this was because smaller mailers may not have
enough nonbarcoded pieces remaining after preparing the automation
mailing to meet the separate 500- or 200-piece minimum quantity
required for a separate mailing. Three commenters requested that
single-piece rate mail be allowed to be included as "residual" to an
Automation subclass mailing, thereby eliminating the need to re-meter
and submit separate mailings with separate statements. Three commenters
indicated that their organizations could not meet this requirement. Six
commenters believed that this requirement should be phased in. One
commenter recommended that the 100% requirement be revised to 95%. Two
commenters wanted an explanation of what tolerance for error would be
permitted. One commenter wanted an explanation of why this is needed
because they believe that it will be more costly to the Postal Service
to run nonbarcoded pieces through OCR equipment at origin to apply
barcodes that it would be to sort nonbarcoded mail in with barcoded
mail in destination trays and apply barcodes to nonbarcoded pieces at
destination.
    Seven commenters indicated the requirement for 100% barcoding for
Automation subclass rate qualification should be deleted because the
Postal Service cannot provide tools for customers to reach 100%
barcoding. These commenters indicated that the postal databases do not
contain information for new homes, rural addresses converted to street-
style addressing, and some rural route post office boxes; and that the
database contains uncodable addresses. One commenter was concemed that
addressing conventions in Puerto Rico do not lend themselves to
delivery point coding. The Postal Service developed and promoted the
use of Address Element Correction service for the purpose of assisting
mailers to improve uncodable addresses. The Postal Service is currently
exploring broader access to the service by licensing the address-
matching software it has developed to commercial service providers.
Recent meetings with representatives of the government of Puerto Rico
are allowing the Postal Service to develop software that deals more
easily with the unique addressing challenges found on the islands.
    When mailers mix delivery point barcoded mail and non-delivery
point barcoded mail within 3-digit and residual portions of their
barcoded rate mailings, as is currently permitted, the non-delivery
point barcoded mail is rejected from barcode sorters and must be rerun
on MLOCRs or multiposition letter sorting machines (MPLSMs). Requiring
mailers to prepare two separate mailstreams before presenting mail to
the Postal Service eliminates these extra steps in handling non-
delivery point barcoded mail and allows it to be directed properly from
the start, resulting in more efficient Postal Service processing. If
these requirements result in more nonbarcoded mail presented for OCR
processing at the origin post office, the Postal Service believes that
it has the operational capacity to process this mail. The processing
efficiencies the Postal Service will gain from a 100% barcoded
mailstream are reflected in the lower rates proposed for the Automation
subclasses. In return for these larger discounts, mailers might have to
perform the additional work of separating noncompatible mail. The
Postal Service has noted the problems indicated by the commenters such
as remetering the pieces and will work toward resolving these issues
with mailers prior to implementation of classification reform.
    "Heavy Letter Mail." Two commenters raised questions as to
whether the maximum weight limit for automation letters would be
increased to the "break point" for third-class bulk mail under
classification reform. The maximum weight for automation-compatible
letters is being studied as part of a separate program already under
way using the "break point" for special third-class bulk mail. The
results of this program will be announced separately and reflected in
the implementing standards for MC95-1 as appropriate.
    Carrier Route Rates. Nine comments were received regarding the
carrier route barcoded rate. Two commenters indicated that limiting
carrier route rates to areas where mail will be sequenced either
manually or by carrier sequence barcode sorter (CSBCS) equipment allows
some mailers an

[[Page 45300]]
unfair rate advantage over others based on geography rather than mail
quality. One commenter mistakenly believed that carrier route rates
would be unavailable to routes where the Postal Service did not have
barcode sorters. Three commenters indicated that they needed to see the
list before they could assess its impact on their operations. One
commenter indicated that requiring mail to be matched against a list to
split off pieces that cannot qualify for the carrier route rates will
increase mailer processing costs. Two commenters indicated that monthly
updates are not feasible, and that bimonthly update time frames could
be met. One commenter indicated that the 5-digit carrier routes tray
should be required to be full to limit the number of "air trays."
    This requirement limits mailer preparation of carrier route
packages of letter-size mail to those ZIP Codes where carrier route
packages still provide some benefit to the Postal Service. For an
increasing number of 5-digit ZIP Code areas, the Postal Service sorts
mail for the entire 5-digit area to carrier routes and, within carrier
routes, to the sequence that carriers use when delivering the mail,
using two passes on delivery barcode sorters. Where this takes place,
the carrier does not have to manually sort this mail into delivery or
"walk" sequence. Accordingly, for these 5-digit ZIP Code areas, it
does not make sense for the Postal Service to give mailers a discount
for preparing carrier route packages that might have to be manually
sorted to the carrier, and would always have to be manually cased by
the carrier into delivery sequence. CSBCSs sort mail to delivery
sequence, but the mail must already be sorted to the carrier route
level before it can be processed on the CSBCS. Therefore it will still
make sense for the Postal Service to offer carrier route discounts for
mail that it sorts on CSBCSs and for mail on those routes that are
sequenced manually. Over the next 2 years, the Postal Service will be
deploying both delivery barcode sorter (DBCS) and CSBCS barcode
equipment and implementing delivery point sequence (DPS) processing.
This will result in frequent changes to the ZIP Codes that are
processed by the different types of equipment. In some cases, 5-digit
ZIP Codes may change from being DPS processed on DBCSs to being DPS
processed on CSBCSs. Accordingly, during this period, frequent updating
of the areas where carrier route sortation is permissible will be
crucial to efficient postal processing of mail. However, the Postal
Service will be mindful of the constraints that frequent updates
represent for its customers, as noted in the comments. The Postal
Service can provide a list of the current 5-digit ZIP Codes where
carrier route sortation will not be permitted for planning purposes.
Due to its length, the list will not be published as part of this
notice. However, mailers may request a copy by writing to the address
at the beginning of this notice. Mailers should keep in mind that, for
the reasons explained above, this list is likely to change by the time
classification reform is implemented.
    The Postal Service limited the traying requirements for the carrier
route rate to carrier route and 5-digit carrier route trays to
eliminate sortation of carrier route packages at the mail processing
plant level. In the interest of mailer qualification levels, the Postal
Service planned to allow the 5-digit trays to be less-than-full trays.
However, the Postal Service will revisit this issue in light of the
comment concerning the number of "air trays" that could result.
    Scheme Sortation. Eight comments were received concerning scheme
sortation of Automation Subclass First-Class and Standard letters. Two
commenters requested clarification as to whether 150 pieces would be
needed for each 3-digit ZIP Code area combined in the scheme, or only
in total to all the 3-digit areas combined, in order to qualify for 3-
digit Automation (barcoded) rates. Two commenters indicated that the
proposed 5-digit and 3-digit schemes should be published for review by
mailers. Two commenters stated that 5-digit scheme sort should be done
promptly. Two commenters stated that the schemes should be available to
mailers both in hard copy and electronic form. Three commenters
believed that scheme sort should be optional; one stated that scheme
sort could not be performed for his mailings because they could contain
up to seven different thicknesses of pieces. Three commenters requested
clarification as to whether 3-digit scheme sort is optional and, if
optional, whether mailers can choose just to do scheme sort to certain
ZIP Code combinations but not all. One commenter suggested that the 3-
digit scheme sort list be the current labeling list in DMM L803.
    Although the Postal Service is beginning work on a 5-digit scheme
list for Automation subclass letters, it is not available at this time;
a preliminary 3-digit scheme list for Automation subclass letters is
provided in this notice for mailers' planning purposes. Upon
implementation of classification reform, finalized listings of 5-digit
and/or 3-digit schemes for Automation subclass letters will be
available to mailers in both electronic and hard copy form. Mailers
should note that, because the 3-digit scheme list represents 3-digit
ZIP Codes ranges that are processed simultaneously on the same incoming
primary barcode sort scheme, it does not apply to upgradable mail in
the Retail subclass, which will be initially processed on OCR equipment
rather than barcode sorting equipment. For the same reason, the current
DMM L803 AADC labeling list for ZIP+4 rate mail prepared under the
automated site option (which is also processed initially through OCR
equipment) is not appropriate as a 3-digit scheme list for the
Automation (Barcoded) subclass. Regarding the volume needed per scheme
group, because the 3-digit scheme list indicates 3-digit ZIP Code
ranges that are processed at the same time, the proposed 150-piece tray
standard for the 3-digit Automation subclass rate will be based on the
total number of pieces destined for the combined ZIP Code range rather
than on the volume to any individual 3-digit ZIP Code area.
    Because the 3-digit scheme list represents instances in which the
Postal Service always sorts a particular combination of 3-digit ZIP
Codes at the same time on an incoming primary barcode sorter, the
Postal Service prefers to require that Automation subclass letters be
sorted according to the 3-digit scheme matrix. Discussion of this issue
with the Letters IAG resulted in the interim position reflected in the
implementation provisions in the latter half of this notice, i.e., that
3-digit scheme sort would be optional, but that if mailers choose to
use it they would have to use it for all ZIP Codes. In view of the
comments received requesting that 5-digit and 3-digit scheme sort be
optional, the Postal Service hereby requests further comments from
mailers, particularly explaining why making scheme sort a requirement
would be burdensome.
    Piece Sequencing. One commenter requested clarification as to what
the sequencing requirements for pieces within mixed-AADC trays will be.
The Postal Service has published an explanation of these requirements
in the latter part of this notice, basically stating that the pieces
must be grouped by AADC, and within the AADC groups by 3-digit ZIP Code
or 3-digit scheme. In addition, a requirement to group mail in AADC
trays by 3-digit ZIP Code or 3-digit scheme has been added for mailer
comment. The required groupings within the trays do not have to be in
any required sequence, i.e., although all the pieces for the same 3-
digit ZIP Code would have to be grouped together in an

[[Page 45301]]
AADC tray, it is not required that these 3-digit groups be placed in
the trays in ascending numerical order. These grouping requirements are
for verifying that mail was presorted to the finest extent required.
    Banding Packages. One commenter asked whether the banding of
packages was being reconsidered and indicated a belief that moving away
from banding of packages is in the best interest of both the Postal
Service and mailers. For automation subclass letter mail, banding of
packages will be required only when less-than-full trays are prepared
in order to keep the pieces in the tray faced during transit. A less-
than-full tray could result when 150 or more pieces physically fill
less than three-fourths of a 1-foot tray, or when there is overflow
from a physically full tray. However, because the banded groups in the
tray will all be for the sortation level of the tray, the Postal
Service will not need to sort the packages, just break the bands prior
to processing the pieces on automated equipment.
    Full Trays. Twenty-two comments were received concerning the full
tray requirement of 150 or more pieces to obtain 5-digit and 3-digit
Automation letter rates. Fourteen commenters indicated that the 150-
piece quantity was too high; six of them indicated that this
requirement will all but eliminate any postal discount for small
mailers. One large mailer indicated that it will hurt qualification
levels of off-cycle bills that form smaller mailings. Eleven commenters
believed that this requirement will result in mail that is less finely
presorted, thereby increasing the workload of the Postal Service. Two
commenters requested a return to package-based presort, one suggesting
uniform 50-piece package requirements for both 5-digit and 3-digit
mail. One commenter stated that the 150-piece rule seemed arbitrary.
Nine commenters indicated that the requirement should be 150 pieces or
a physically full tray. Three of these commenters indicated that if the
intent of the rule is to give discounts only for full trays of mail,
that a physically full tray of mail that contains fewer than 150 pieces
should still qualify for the rate. Four commenters indicated that
mailers should have a choice of using either 150 pieces or a physically
full tray similar to the current 125-piece/15-pound sacking rules for
third-class mail. One commenter requested clarification that even if
150 pieces of mail do not fill a tray the pieces still qualify for the
rate.
    The Postal Service believes that the 150-piece minimum full tray
requirement to qualify for Automation 5-digit and 3-digit letter
discounts will have a beneficial impact on its operations. Currently,
there are three separate methods for presorting barcoded letter mail.
When all the tray types for each of the three basic preparation methods
are taken into account, there are currently 17 different tray
configurations for barcoded letter mail. Sometimes these trays contain
a mix of 5-digit and 3-digit packages; sometimes they contain only one
or the other type of package; and sometimes they contain unpackaged
pieces. Having a single method of preparing barcoded letter mail that
requires only four tray levels for the non-carrier route portion will
simplify postal operations as well as mailer preparation requirements.
Having that method involve only handling trays of mail as a unit will
further simplify and streamline postal operations. A study shows that
currently for trays that contain packages, the packages are often not
sorted by postal personnel because it is deemed more efficient simply
to remove the packaging material and run the pieces in the tray through
the appropriate barcode sorting operation. The Postal Service estimates
that, overall, 44% of the packages in First-Class barcoded mailings are
not used. Under current rules, if mailers do not have enough mail to
fill a 2-foot tray to a particular 3-digit ZIP Code destination, the
mail is prepared in 5-digit and/or 3-digit packages and placed in an
AADC tray. A study shows that packages in First-Class AADC trays are
not used 42.2% of the time. The Postal Service believes that any loss
of presort that might result from the proposed full tray requirements
will be offset by the permitted use of 1-foot trays and by the
elimination of package sorting operations for this mail.
    The Postal Service also believes that the Automation letter
discount levels and preparation requirements will result in lower
postage bills for barcoded mailings for most mailers. A study shows
that under current Barcoded rate mailing rules, a large portion of mail
qualifying for 5-digit and 3-digit rates is already prepared in full
trays without packages. Specifically, it shows that 71.5% of First-
Class pieces sorted to 3-digit destinations are placed in 3-digit trays
that contain no packages, and 44.3% of First-Class barcoded letter mail
sorted to 5-digit destinations is currently contained in 5-digit trays
without packages. These figures are for 2-foot trays. Even more mail
should be able to be placed in full 5-digit and 3-digit trays when
preparation in 1-foot trays is allowed. Although several commenters
indicated that even with the use of 1-foot trays their 5-digit and 3-
digit qualification levels will drop, they should consider that, if
recommended by the PRC and adopted by the Governors of the Postal
Service, they will still receive a 5-cent discount for mail sorted to
AADC or mixed-AADC trays. This is only 6/10ths of a cent less than what
they currently receive for 50-piece 3-digit packages. Furthermore,
barcoded pieces in the residual portion of their current mailings that
are receiving only a 1.5-cent discount will also receive a 5-cent
discount under classification reform.
    The number 150 represents the average number of pieces that fills
three-fourths of a 1-foot tray. A number was chosen rather than use a
standard requiring the actual physical filling of trays to make it
easier for mailers using MLOCRs to process pieces of varying
thicknesses to determine how many pieces were sorted to particular tray
levels when filling out mailing statements. This method also eases
qualification problems for mailers of postcards and other thin pieces.
Under the proposal, the 150-piece average is applied uniformly both for
rate qualification purposes for the 5-digit and 3-digit Automation
letter rates, and to determine when to prepare a particular sortation
level of tray for presort purposes. The Postal Service is currently
considering the comments requesting that this requirement be revised to
either 150 pieces or a physically full tray. The result of that
deliberation will be addressed in a subsequent proposed rule.
    Use of 1- and 2-Foot Trays. Fifteen comments were received
concerning the required use of both 1-foot and 2-foot trays. The
commenters all indicated that using two different size containers in
the same mailing will cause stocking and production problems. Six
commenters requested that the rule be modified to allow use of all one
size tray or both at the mailer's discretion. One commenter asked
whether there will be a 1-foot extended managed mail (EMM) tray. One
commenter asked what the procedures would be if the appropriate size
trays are not available. Four commenters indicated that current presort
software does not offer the option of using two different size trays.
One commenter requested clarification that both sizes must be used in
the same mailing where appropriate. Another commenter asked whether
overflow from a 2-foot tray would be required to be placed in a 1-foot
tray to the same tray level. Another commenter requested clarification
as to which subclasses this requirement pertained.

[[Page 45302]]

    The Postal Service plans to allow the rate qualification levels of
Automation letters to be based on a 1-foot tray in order to make it
easier for mailers to qualify for rates and to lessen any loss of
presort. However, the Postal Service does not want to double its number
of tray handlings by allowing a mailing to be prepared entirely in 1-
foot trays. Furthermore, the Postal Service does not want to increase
transportation costs by shipping an increased number of nearly empty 2-
foot trays. Accordingly, the requirement to use both 1-foot and 2-foot
trays where appropriate is considered necessary by the Postal Service.
For example, when there is enough mail to fill a 2-foot tray, a 2-foot
must be used. Overflow from that 2-foot tray that is not sufficient to
fill another 2-foot tray must be placed in a 1-foot tray. The Postal
Service expects that software developers will be able to take this into
account when developing software for the new rules prior to
implementation. It is planned that this requirement will pertain to all
letter mail prepared in trays in all subclasses under classification
reform. Currently, it is not projected that a 1-foot EMM tray will be
available when classification reform is implemented. Accordingly, mail
prepared in EMM trays will be prepared exclusively in 2-foot trays.
Procedures will be developed at a time closer to implementation to deal
with instances in which appropriate tray sizes are not available will
be developed at a time closer to implementation. However, it is
anticipated that there will be adequate supplies of both 1-foot and 2-
foot trays at that time.
    Tray Sortation Levels. Several comments were received concerning
the tray level requirements. Two commenters suggested that the 3-digit
tray level be made optional to allow mailers to make up just basic rate
trays. Two commenters indicated that traying to AADCs is difficult. One
commenter indicated that there should be a limit on the amount of
mixed-AADC mail submitted in a mailing. A basic premise of the
classification reform proposal is to encourage mailer use of technology
and bulk bypass of postal operations. Accordingly, the Postal Service
believes that requiring 3-digit tray preparation is necessary.
Preparation of AADC trays requires sorting to a list that contains
groups of 3-digit ZIP Codes served by the same AADC. (AADC sortation is
an element of existing preparation standards.) Although this may be
difficult for some mailers, this level of tray is necessary to
facilitate consolidation of mail to points closer to destination and to
limit the number of pieces in mixed-AADC trays that must be sorted at
origin. The Postal Service does not believe that any other limits on
the number of pieces sorted to the mixed-AADC level is necessary.
    Tray Sleeving an Strapping. One commenter asked whether sleeving
and strapping will be required for all mailings, and another indicated
that he believed this should be required for all nonlocal mail. Another
commenter indicated a belief that First-Class mailers should also be
required to place air contract transportation (ACT) tags on trays of
mail. However, two commenters indicated that they are opposed to such a
requirement. Sleeving, strapping, and ACT-tagging trays have been
discussed during Letter IAG meetings, but proposed requirements were
inadvertently omitted from the June 29 notice. The Postal Service is
adding proposed requirements for sleeving of all trayed letter mail,
for both sleeving and strapping all Automation subclass letters, and
for ACt-tagging of First-Class Automation subclass letters. Comments on
these sleeving, banding, and ACT-tagging proposals are encouraged.
    Barcoded Tray and Sack Labels. Ten comments were received
concerning the planned requirement to use barcoded tray and sack labels
within the Automation subclass. Two commenters agreed with this
requirement, three encouraged phasing it in, and two disagreed with it,
indicating that it would require additional equipment purchases. One
commenter indicated he did not believe the current Postal Service
system could keep up with customer demand for barcoded labels. One
commenter requested clarification as to whether this requirement
applied to all classes of mail and wondered whether it applied to
pallets as well as to trays and sacks. The requirement applies only to
First-Class and Standard Automation subclass mail and Periodicals
Publications Service mail. It applies only to trays of letters, and
sacks of flats, not to pallets. The physical requirements for the
barcoded tray and sack labels will be those contained in current DMM
M032. The Postal Service plans to make this requirement effective at
the time when classification reform is implemented, and to specify
inclusion of the correct content identifier number (CIN) in the
barcode. Additional comment is welcome on the basic requirement for a
barcoded label, and, separately, on the inclusion of CIN information.
    Reply Envelopes. Nine comments were received concerning the
proposed requirement that courtesy and business reply mailpieces
included within pieces in a First-Class or Standard Automation subclass
mailing be physically automation compatible, bear a facing
identification mark (FIM), and bear the correct barcode for the
preprinted address. Two commenters stated that they agreed with this
proposed requirement; four commenters disagreed. One commenter
indicated that the requirement was confusing, particularly in regard to
what is a correct barcode. Two commenters indicated that this
requirement must be phased in to allow time for mailers to deplete
existing stocks of reply mailpieces. Two commenters requested that the
requirement be clarified to make it clear that the barcodes could be
printed on inserts that appear through windows. The requirement will be
clarified in this proposed rule to indicate that barcodes that appear
through inserts will qualify. The Postal Service also plans to phase-in
this requirement.

Retail and Regular Subclasses

    Upgradable Mail. Nine comments were received concerning various
requirements for Retail and Regular subclass letter mail preparation,
including the preparation option for upgradable mail. All but one of
the comments seemed to revolve around a lack of understanding about
upgradable mail and the difference between normal and optional
preparation for upgradable mail. One commenter disliked the requirement
for an AADC tray level in upgradable mail.
    A 30-cent rate is proposed for presorted mail in the First-Class
Retail subclass. This rate is the same whether mail is prepared
according to the normal preparation that involves packaging and traying
or whether the mail is prepared under the upgradable preparation
option. A 21.9 cent rate for mail trayed to 5-digit and 3-digit trays
and a 26.1-cent rate for mail trayed to other destinations is proposed
for mail in the Standard Regular subclass. Again, the rates are the
same for both normal and upgradable preparation.
    Upgradable mail is mail that meets both the current physical
preparation requirements in DMM C810 for automation compatibility and
the current requirements in DMM C830 for an OCR clear zone, a barcode
clear zone, for reflectance requirements, and for paper that will
accept water-based ink. The detailed type font requirements in DMM
C830.2 will not be required; however, the pieces must have a machine-
printed address in a nonscrip font. A ZIP+4 code is not required on an
upgradable mailpiece. In Summary, upgradable mail is mail that can be
processed on MLOCRs and that is likely

[[Page 45303]]
to be upgraded during this processing to mail that bears a delivery
point barcode. In return for preparing a piece that can be processed on
MLOCR equipment, mailers will be allowed to use a simpler method of
mail preparation--the upgradable preparation option. The upgradable
preparation option does not require presort to the 5-digit level and
does not require packaging. Because this mail will flow through an
automated mailstream, it is trayed to AADCs, not to ADCs.
    Use of Trays. Three comments were received concerning the use of
trays for Standard mail. One commenter was in favor of it, and two
commenters were against it, particularly for non-upgradable mail. In
the near future, the Postal Service will be using only trays for letter
mail in its internal operations. Accordingly, mailer preparation of
letter mail in trays will be needed at the time when classification
reform is implemented for smooth operations within postal facilities.
Comments Regarding Flat Mail

General

    Of the 89 commenters, 25 commented on issues pertaining to flats.
Comments covered such areas as copalletization of pieces in different
rate levels, the rates available for "fletters," traying
requirements, package sizes, and 3-digit and 5-digit ZIP Code schemes.
These topics are discussed in more detail below.

Copalletization and Commingling

    Nine commenters expressed their support for copalletization of
separately prepared packages of delivery point barcoded, 5-digit
barcoded, nonbarcoded, and carrier route presort pieces. One commenter
expressed a desire to have options on how to segregate packages of
flats on pallets, reacting to earlier proposals in that regard.
Questions have arisen in IAG sessions as to the combination of packages
in sacks as well as on pallets. The Postal Service is agreeable to both
pallets and sacks containing separate packages of the types described,
and that physical separation of packages by rate level would not be
required. These mixed pallets and sacks would be acceptable if prepared
to other than 5-digit destinations because their processing needs make
combination counter-productive. The proposed criteria presented later
in this notice reflect these positions.
    One commenter wanted to include trays as well as packages on
pallets. This comment is not within the scope of this rulemaking.
However, as information, the Postal Service is conducting a separate
rulemaking related to palletization, and commenters and other
interested parties are asked to review that notice as appropriate (see
60 FR 39080-39088).

"Fletters"

    "Fletters" were discussed in many comments. ("Fletters" are
mailpieces that are within the size range for both automated letter
processing and automated flats processing. The mailer must choose at
the time of mail preparation the processing category for which the
pieces will be prepared; rate eligibility is determined accordingly.
The Postal Service has generally held that the mailer's letter-or-flat
choice must be uniform for all mailings of the same piece from the same
job or list.)
    The Postal Service has previously determined that "fletters"
could be prepared on pallets if the mailer had chosen to qualify for
the Barcoded rates for flats because palletization is appropriate for
flats but not for letter-size mail. (The above discussion of comments
on mixing packagings of different rate levels on pallets applies to
"fletter" mailings as well.)
    One commenter proposed that for mailpieces in the "fletter"
range, the mailer be given the option to produce the mailing job as
flats or to produce the different subclasses as flats or letters to
obtain the lowest overall postage rates. One commenter suggested that
the Postal Service extend coverage of the palletization option to all
"fletters," whether prepared to qualify for a flats rate or not.
Another commenter wants the option to palletize both automation and
nonautomation "fletters." Several commenters want the Postal Service
to allow "fletters" to be claimed as flats in all three subclasses
(Regular, Automation, and Enhanced Carrier Route). Preparation of
"fletters" for flats-based rates (i.e., the Barcoded rates for flats
or the Enhanced Carrier Route subclass rates) would entitle them to
palletization, but that such an option would not be available for
"fletters" prepared to qualify for letter-based rates. Preparation of
letters, flats, and "fletters" remains linked to the most efficient
methods of production and processing that will yield the lowest
combined cost of mailing. Currently, the Postal Service does not find
significant benefit or an opportunity for general benefit for mailers
in allowing letter mail (or "fletters" prepared at letter-based
rates) to be packaged and palletized. Preparation of letter mail in
trays on pallets is being considered as part of the palletization
rulemaking mentioned earlier. The proposed criteria below reflect these
positions.

Definition of Flats

    One commenter stated that the Postal Service should provide a
definition of flats will allow letter-shaped catalogs that can be
processed on new flat sorting equipment (e.g., the FSM 1000) to be
eligible for the flats Automation rates, thus offering an option that
would avoid the tabbing requirement for the letter Automation rates. A
second commenter projects that catalog in the popular 6\1/8\ inch by
10\1/2\ inch size will be entered at the Automation nonletter (flat)
rate in order to avoid letter requirements and urges the Postal Service
to restudy the rules and their impact on these catalogs. The physical
mailpiece standards for Automation rates are based on the capabilities
of Postal Service automated processing equipment now in use. The
possible amendment of those standards, as new equipment is developed or
deployed, is not an issue germane to this rulemaking. The proposed
criteria presented below remain predicated on current equipment
abilities and limitations.

Preparation Questions

    It was believed by one commenter that further clarification is
needed in several areas, such as the need to better define the size or
thickness of packages, citing as an example uncertainty on the handling
of 19 flat-size pieces, each /3\/4\ inch thick, for the same ZIP Code.
A second question concerned the handling of remaining pieces if all
required packages of 10 or more pieces have been prepared to 5-digit,
3-digit, and ADC destinations. Should a mixed-ADC package be prepared,
a 5-digit package, or, if the latter, should this 5-digit package be
placed in mixed-ADC container? A third question had to do with Enhanced
Carrier Route presort and whether it is required to be packaged in
full, direct trays. The Postal Service is not attempting to address
every "what-if" scenario at this point in the rulemaking and believes
that many hypothetical situations will be clarified as this process
continues. Regardless, it is the Postal Service's intention to develop
simple implementation standards that, by design, will not seek to
evaluate all conceivable applications. Accordingly, commenters are
asked to help craft basic standards that can be easily applied rather
than detailed rules tailored for a succession of specialized
situations.
    Two commenters pointed out a discrepancy between the text and
exhibit for the proposed standards for the Standard Regular subclass
Basic rate

[[Page 45304]]
category for flats. The text indicated that at least 10 pieces were
required to prepare a mixed-ADC package; the exhibit showed no minimum.
There is no minimum for mixed-ADC packages. This has been corrected in
the material below.
    One commenter questioned the rationale for the requirement that
First-Class flats must be prepared in flat trays while Standard Mail
flats must be prepared in sacks, asking whether this approach is being
adopted to differentiate between the mail classes. Another commenter
said that Standard Mail should have the option of using trays or sacks.
Packaging of fletters on pallets and within sacks should be allowed;
traying should not be required. Another commenter favored the option of
traying flats as well as letters, specifically referring to Enhanced
Carrier Route letters and flats. The Postal Service has attempted to
standardize equipment use in this rulemaking as much as practicable,
given current and expected equipment availability. Whether Standard
Mail flats will eventually be allowed use of flat trays cannot be
determined at this time. This rulemaking will continue to specify sacks
for Standard Mail flats not prepared on pallets. Pieces prepared for
Enhanced Carrier Route subclass rates are presumed to be flats, and
those rates reflect the costs for handling such pieces. Mailers who
prepare letter-size pieces or fletters for the Enhanced Carrier Route
subclass rates will not be entitled to tray such mail, notwithstanding
the availability of trays for such pieces if prepared at letter-based
rates. The proposed standards shown below reflect these positions.
    One commenter believed that the sorting requirement for flats to 5-
digit destinations is very restrictive, saying that it will be
difficult to meet the required densities to qualify for the rate and
that this should be optional for the presort or automation rates.
Without addressing the merits of the comment, the rates offered for
flats do not include separate 5- and 3-digit rates as would be
necessary to permit an optional 5-digit sortation. Because this
circumstance is part of the rate design of the Postal Service's filing
now being considered by the PRC, it is beyond the scope of this
rulemaking.
    Several commenters expressed the opinion that the Postal Service
should consider extending the option of presorting to 3-digit and 5-
digit ZIP Code schemes to flats as well as letters. The Postal Service
is currently developing a 3-digit "scheme sort" matrix for letter
mail. A 5-digit matrix is being developed as well and will be announced
at a later date. Scheme sorts are possible for barcoded letter mail
because of how such mail is processed: on sorters each having more than
of 100 separations (bins). When two or more 3-digit ZIP Code ranges
have a total number of possible 5-digit ZIP Code separations that is
less than the maximum number of available bins on the sorter, a
combined or scheme sort preparation is possible. Flat sorting equipment
is different and does not have the number of bins necessary to allow 3-
digit scheme sorts for flats. The Postal Service would be amenable to
reconsidering the restriction of scheme sorts to letter mail as the
evolution of its flat sorting equipment makes that reasonable.
    One comment was received concerning the 100% ZIP+4 or delivery
point barcode requirement for flats. This commenter wanted
clarification that a 5-digit barcode would count toward the 100%
barcoding requirement in those areas where only a 5-digit barcode could
be obtained. For purposes of this rulemaking, the Postal Service will
propose that only a ZIP+4 or delivery point barcode will be acceptable
toward fulfilling the barcode requirement.

Comments Regarding Addressing

Carrier Route Updates

    Twelve mailers responded to the proposal that carrier route
information be updated within 90 days of the mailing date. Mailers
expressed both support and opposition to the proposal. Three commenters
believed that the 90-day limit should not be relaxed, whereas seven
others questioned the need to update more frequently and cited
mailpiece production difficulties that would preclude them from meeting
a 90-day coding window. Three mailers suggested that the product cycle
for the Carrier Route Information System (CRIS) (and all other AIS
products) move from a fulfillment of four times a year to six times a
year; the Postal Service is exploring this option. Five others
suggested that coding should occur within 120 days of the date of
mailing.
    Representatives in the Addressing IAG acknowledged that the current
cycle allows route data to be up to 8-\1/2\ months old at the date of
mailing and that this can require the Postal Service to rework
significant portions of a carrier route presorted mailing. More route
adjustment activity is expected to occur from route inspection and the
required route adjustments associated with the implementation of
delivery point sequencing. Three mailers asked whether the National
ZIP+4 file could be used to apply carrier route codes instead of the
CRIS product. The National ZIP+4 or Line-of-Travel (LOT) products may
be used to update carrier route codes.

                      Carrier Route Update Proposal
------------------------------------------------------------------------
                     Beginning use                        Last mailing
File release date         date        Last coding date        date
------------------------------------------------------------------------
February 15......  April 1..........  May 31..........  August 31.
April 15.........  June 1...........  July 31.........  October 31.
June 15..........  August 1.........  September 30....  December 31.
August 15........  October 1........  November 30.....  February 28.
October 15.......  December 1.......  January 31......  April 30.
December 15......  February 1.......  March 31........  June 30.
------------------------------------------------------------------------

    Mailings must be coded using CASS-certified software within 90 days
of the mailing date. For example, if addresses are coded with carrier
route information on May 15, the mailing must be entered by August 15.

Line of Travel Requirement

    The primary reaction of mailers to the line-of-travel requirement
for Enhanced Carrier Route subclass basic carrier route rate mail
concerned the product releases. The LOT product will be released in the
same schedule as the current AIS products, e.g., ZIP+4 and CRIS. Two
mailers also favored the use of LOT as a sequencing option for the High
Density rate category in the Enhanced Carrier Route subclass. Others
commenters questioned whether true walk-sequence would meet the
sequencing requirement; the Postal

[[Page 45305]]
Service never meant to imply that it did not.
    Four commenters asked about the need for certification of software
and about documentation that might be required. The software vendor
community has several options on where the LOT information can be
placed, wrapping it into presort software or into ZIP+4 products. Final
documentation requirements will be finalized once commercial product
issues have been resolved.

Move Updates

    Thirty-five comments were received on the move-update proposal.
Overall the commenters felt the proposal would be difficult to
implement or too costly. Questions were raised over the legally of
changing address information without input from the customer
(addressee). The Postal Service has suggested that mailers could use
the update notice from the Postal Service as a mechanism to trigger a
contact with the customer for updated information; such as request
could accompany a regular mailing to the customer.
    The move-update requirement can be met now through several
established methods. These include the "Address Correction Requested"
(ACR) endorsement, where the mailpiece is returned to the mailer with
the new address included; participation in Address Change Service
(ACS), which provides an electronic notice containing the new address;
and processing the addresses from a list using the National Change of
Address (NCOA) service of a Postal Service-authorized vendor. Another
solution for some federal agencies may be the Federal Address
Correction Service, currently being tested, providing acceptable
response levels are achieved.
    Because the addresses are what must be verified, mailers who choose
to employ one of these methods may do so on a mailing in another class
of mail (e.g., using ACS on a Periodicals class or Standard class
mailing). The updated process would then qualify the addresses for use
on pieces mailed at First-Class rates.
    The ACR endorsement can be added to envelopes in a number of ways:
it can be preprinted on the envelopes, added to existing envelope stock
through the application of labels or use of a rubber stamp, or printed
on the envelope using other printers such as those found in MLOCRs and
encoding stations. Some mailers raised questions about the need for
this requirement in "non-list" mailings because the addresses would
be more current. The Postal Service believes that there is benefit in
these cases as well and notes that the use of the ACR endorsement in
these cases would cost a mailer very little because the number of
returns should be minimal. The ACR fee is charged only on pieces that
bear addresses that must be corrected.
    Five mailers commented that they have established internal address
correction centers because of the nature of their business. They
inquired whether the Postal Service could "certify" their internal
operations every 6 months instead of their adding an endorsement to
their mailpieces. Fourteen others felt that the move-update requirement
would be too costly to meet and might offset any postage savings from
qualifying for a lower rate. Another suggested that the Postal Service
cease forwarding mail and return anything that did not have the correct
address because mailers obtaining lists from outside sources should
ensure that the list has already been processed to meet this standard.

5-Digit Verification

    There were few comments on this proposed requirement. One commenter
asked whether the preparer or presenter of the mail would be held
responsible for verifying 5-digit ZIP Codes. The Postal Service would
ask the preparer of the mail to verify the accuracy of 5-digit barcodes
unless a presenter, such as a presort service bureau, chose to verify
the ZIP Codes for a client by adding the correct 5-digit barcode to the
mailpiece.
    Two others commented that the Postal Service should not allow
noncomputerized methods of verification because inexpensive technology
is readily available in the commercial marketplace. It was also
suggested that mailers obtaining lists from outside sources should
ensure that these lists have already been processed to meet this
standard.

Uniform Address Placement

    This proposed quality standard relates specifically to the bottom
two lines of the address block. It specifies that the elements in those
lines appear in a regular order. Four mailers described antiquated
internal systems and the need for expensive programming changes that
would make compliance with this standard difficult to achieve. The
Postal Service believes that there are ways to hold address information
and print routines that might prove less costly than some believe. For
example, mailers can use software print routines to identify particular
elements or fields and the order in which they should be printed. In
addition, mailers can maintain addresses in separate files from their
base customer records and extract that information at the time of
printing.
    Six commenters were concerned about the recipient's reaction to
receiving mail with an address unlike that which was supplied. The
Postal Service believes that consumers are not the sole source of
problem addresses. List compilation and data entry systems are also
sources of addressing deficiencies. Mailers obtaining lists from
outside sources should ensure that these lists have already been
processed to meet the uniform address placement standard.
    Several mailers commented that this requirement should not apply to
Standard Regular subclass mail. The Postal Service is still evaluating
this issue and will reflect its decision in a future rulemaking.

Update Barcodes Every 6 Months

    Only one mailer presented arguments against this requirement. Two
others suggested that the matching requirements be made more stringent
and coincide with the 90-day requirement that is proposed for carrier
route updates.
    For mailers with large lists, the use of Z4Change could provide a
solution. By using the Z4Change process, mailers can limit the number
of addresses that need to be reprocessed. Once a mailer has matched all
addresses in a list using currently certified software, and meets other
operational criteria to participate in the program, only new addresses
and those addresses where changes have occurred need to be rematched to
the National ZIP+4 product. More specific details on the program are
available by calling the National Customer Support Center at 1-800-238-
3150.

Comments Regarding Periodicals

General

    A total of 23 comments were received concerning the proposed
implementation procedures for Periodicals. Of that number, 12
commenters expressed disapproval of the classification reform proposal
before the Postal Rate Commission as it relates to Periodicals; those
comments are beyond the scope of this rulemaking and will not be
addressed. One commenter favored the entire proposal as written. The
comments of 10 additional parties concerned specific parts of the
proposals in the first notice.

Presort Standards

    For commenters were in favor of the proposal to align the sortation
rules for Regular Periodicals with those proposed

[[Page 45306]]
for Publications Service. Conversely, one publisher commented that the
sortation scheme proposed for Publications Service is very complicated
and should not be used for Regular Periodicals. The Postal Service has
determined that it will propose aligned sortation of Regular
Periodicals and Publications Service mail when it publishes DMM
standards for comment later this year.
    In regard to the preparation rules proposed for /3\/5\ rate
category mail, one commenter stated that the Postal Service should put
mail processing equipment in place as soon as possible to handle flats
not currently automatable (e.g., tabloids, newspapers, and heavyweight
magazines). With the exception of the requirements governing polybags,
the Postal Service is not anticipating that the regulations for
machinables will change in the near future. Although 100 new FSM 1000
machines have been purchased by the Postal Service, this is not a
sufficient quantity to cause machinability requirements to be altered.
Automation equipment is being evaluated on a site-by-site basis.
Although the Postal Service would like to be able to process all types
of flats on automated equipment, new machines will not be purchased
until the current ones have been properly positioned for optimum
utilization.
    Commenting generally, one commenter considered the requirements for
Regular Periodicals to be more stringent in certain instances that
those proposed for Publications Service. Another commenter believed
that the auditing requirements for the industry, and substantiating
compliance with the 85% barcoding and 90% presort density requirements,
will be burdensome and add increased administrative costs.

Circulation Criterion for Publications Service

    Regarding the proposed 75% circulation criterion, one commenter
believed that it would be appropriate to demand that publishers
provides certification of a publication's compliance with the 75% paid/
requested circulation on a per-issue basis. It was suggested that this
could be accomplished by the submission of a report of the number paid/
requested on file at the time of each issue's file maintenance update
or label run as part of required Centralized Postage Payment (CPP)
System documentation, and by adding a certification block for the
publisher's signature on each mailing statement. The Postal Service
will evaluate the documentation, including a publisher's certification
on mailing statements; verification could be performed on the same
frequency as circulation is verified today.
    Another commenter requested that the Postal Service stipulate that
all mailed newsstand copies (regardless of the number returned or
destroyed) be considered paid circulation for the purpose of meeting
the 75% paid requirement. The Postal Service will consider this
proposal and address it in a future rulemaking.

30% Nonadvertising Criterion

    In regard to the proposed 30% nonadvertising content requirement,
particularly if it were not met by only a minor portion of copies of an
issue, one commenter expressed the opinion that the proposed 40%
penalty should be assessed only on those copies that do not meet the
30% requirement instead of on the entire issue. The Postal Service has
concluded that such an application of the penalty would significantly
reduced its effectiveness in ensuring compliance; the proposed rule
will retain the original provision that it would apply to the entire
issue.
    One commenter expressed concern that his publication could
erroneously be assessed the 40% postage penalty because of a
miscalculation in the advertising/editorial percentage by an outside
auditor. The Postal Service is proposing that this audit be used only
to validate compliance with the proposed 75% paid/requested circulation
requirement. To ensure compliance with the proposed 30% nonadvertising
content requirement, the Postal Service is considering including on the
mailing statement a certification block for signature by the publisher,
certifying that the minimum has been met. The outside auditor will not
be responsible for confirming the advertising/editorial ratio. In the
event that the Postal Service determines that an issue is in excess of
70% advertising, the publisher will be given ample opportunity to
demonstrate compliance with the requirement before any penalty is
assessed. The same commenter suggested that the Postal Service allow
copies with advertising in excess of 70%, such as a regional edition,
to be mailed at the higher third-class or fourth-class bound printed
matter rates as an alternative to the entire issue being assessed a 40%
penalty. The current mail classification schedule restricts
publications from being mailed at third- or fourth-class rates except
under limited conditions. As a result, the Postal Service is not able
to consider such an alternative in this rulemaking.

90% Density Criterion

    Regarding the 90% density criterion, one commenter specifically
welcomed and endorsed the definition presented in the proposal.
Although supporting the proposed 90% criterion in general, another
commenter suggested that the wording be changed to allow different
treatment "when the main file of an issue meets the 90% presortation
requirement but supplemental mailings result in the issue falling below
the 90% requirement, but not below 85%." This proposal relates to
classification proposals under consideration in the case pending before
the PRC and, as such, is beyond the scope of this rulemaking.
    Three commenters favored the proposal's treatment of copies in firm
packages. Four commenters expressed the view that interpretation of an
"issue window" for administering the 90% criterion would be difficult
and costly for both the Postal Service and the publisher. A second
commenter supported this view, believing that the window requires
publishers to main two different sets of data. This commenter suggested
that the same set of data should be used to determine eligibility for
all three primary criteria for Publications Service. Another commenter
suggested that the Postal Service consider only a publication's "main
run" for the purposes of the 90% criterion. Finally, an association
commented that the proposed definition is too restrictive and suggested
that the exact dates of the mailing window should be negotiated between
a publisher and the Postal Service at the time of the publication's
application for Publications Service. The Postal Service intends to ask
publishers who apply for Publications Service to describe the window
that makes sense for each respective publication. The Postal Service
will be flexible in working with publishers in a reasonable manner to
ensure that all publications have windows that are appropriately
relevant to their frequencies of issuance (e.g., monthlies would each
have 12 approximately equal windows).
    Responding to a Postal Service proposal, one commenter specifically
endorsed the provision that Publications Service preparation rules
would apply if Publications Service and Regular preparation rules are
not aligned and Regular and Publications Service publications were
comailed.
    Concerning the application of penalties to a comailed publication,
one commenter observed that, because publications unable to meet the
90% density requirement on their own may

[[Page 45307]]
be comailed with other periodicals, publishers, together with their
printers and/or fulfillment houses, will need to evaluate each
publication individually, based on frequency, address list, etc., to
determine whether comailing is a viable option. Two commenters
mentioned that comailing can be difficult to achieve because publishers
do not know from issue to issue which titles can be prepared in this
manner because of magazine makeup. A concern was also raised that
comailing might cause delays in serving subscription orders and thus
violate Federal Trade Commission requirements.
100% Barcoding of Machinable Pieces

    Regarding the issue of barcoding machinable mailpieces, one
commenter observed that, because a machinable Publications Service
publication must have a barcode unless it is a flat that is sorted to
carrier route, and because carrier route mail is highly efficient, it
would be counter-productive for mailers to choose to prepare this mail
as barcoded mail just to achieve the 85% barcoding level. In response,
the Postal Service will amend its proposal to allow the flat-size
carrier route portion of Publications Service mail to qualify toward
the 85% criterion, whether nonbarcoded or delivery point or ZIP+4
barcoded.
    One commenter fully endorsed the 85% requirement but requested that
the wording be adjusted to say "85% of the copies must be [ZIP+4] or
delivery point barcoded" to ensure that the individual pieces in firm
packages will be counted toward the 90% presortation requirement.
Another commenter proposed that the Postal Service allow copies in firm
bundles of flats to count toward the 85% barcoding requirement. The
objective of the 85% criterion is to optimize the proportion of pieces
that can be given automated processing. To the extent firm packages are
amenable to such handling, it would not be relevant to the objectives
of the 85% criterion if the component copies inside the firm package
were barcoded. Therefore, the 85% criterion will be applied to consider
the number of addressed pieces in the mailing, not the total number of
copies.
    One other commenter suggested that the 85% minimum be based on the
entire mailed volume of an issue as opposed to only the carrier route
portion of the mail. Still another commenter asked whether the
barcoding requirement applies to nonautomation rate mailings. The
Postal Service would like to clarify that the requirement pertains only
to machinable mail, i.e., mail that meets all the standards in DMM C810
and C820. Nonmachinable and carrier route flat mail does not have to
bear a barcode.
    Another commenter mentioned that it will be difficult to determine
qualification with the 85% requirement because the mailing of an entire
issue of many publications will be split between vendors (e.g.,
printers, fulfillment houses, publishers). Providing and consolidating
documentation to support accumulation of barcode counts for these
multiple mailings could prove to be a hardship. Clarification was
requested on how this requirement will be measured, i.e., will the
Postal Service review a single mailing or determine qualification based
on the entire mailed volume of an issue or per edition? Compliance with
the 85% criterion will be based on the entire mailed volume of the
issue, encompassing all editions from all sources. Publishers will be
responsible for having the supporting information available if
requested by the Postal Service.

Other Issues

    Regarding the proposal that "deposit times [for Publication
Service mailings] must be scheduled," one commenter asked whether
actual appointments will be required. The Postal Service has not
determined that a formal appointment process is necessary at this time.
    Concerning the required use of Presort Accuracy Verification and
Evaluation (PAVE) software, one commenter suggested that presort
software be required to produce a qualification report for multiple
jobs (included in the mailing of an issue) as part of PAVE-certified
output. The Postal Service will not consider this suggestion because it
goes beyond the scope of this rulemaking.
    On the proposal that computer-based postage payment systems must be
used as they are developed, a commenter inquired whether this
electronic payment system will use Graphic Communication Association's
Publisher's Electronic Payment System (PEPS) file format. That
determination cannot be made at this time.
    Regarding the Publications Service pound-rate category, one
commenter mentioned that zoning the full weight of a publication will
prompt mailers to open more sectional center facility (SCF) entry
points, thus creating a logistics problem by building ADC or AADC
pallets/sacks destined to an SCF level. To overcome this, it was
suggested that "residual" pallets be allowed at SCF entries. Pallet
preparation is being discussed in a separate rulemaking and will be
resolved accordingly.
    Concerning the requirement that Publications Service carrier route
mail be prepared in line-of-travel sequence, one commenter suggested
that examples are needed showing what "line-of-travel" means so that
mailers can better understand this proposal. The Postal Service's
proposal regarding Publications Service carrier route rate mail
preparation is similar to that for Standard Mail Enhanced Carrier Route
subclass basic carrier route rate mail. Pieces are arranged by the
mailer in the approximate order that they are delivered by the carrier.
This format is essentially identical to walk-sequence in most cases,
differing for instance in how apartments and separately ZIP+4 coded
buildings are treated.
    A commenter also asked about mixed classes and attachments or
enclosures. Currently, second-class publications that include
attachments or enclosures not eligible for mailing at second-class
rates must be paid as a combination rate piece, i.e., second-class
rates on the periodical and the applicable First- or third-class rates
for the attachment(s) or enclosure(s). If a host piece qualifies for an
automation rate, a First- or third-class enclosure or attachment is
eligible for the comparable First- or third-class rate; the attachment
or enclosure need not meet the volume standards that would apply if
mailed separately. An automation rate may not be claimed for an
enclosure or attachment, unless a similar automation rate is claimed
for the host piece. One commenter inquired about how this rule would
apply to enclosures and attachments paid at First-Class or Standard
Mail rates in periodicals mailed at Publications Service rates. The
Postal Service proposes no changes for rate eligibility in this regard.
Publications Service rates are considered to be automation rates;
therefore, even if a nonmachinable piece is enclosed in a Publications
Service periodical (and claimed at either First-Class or Standard Mail
rates), the enclosure or attachment will be charged the automation rate
equivalent to the host piece.
    Commenters also asked about commingling packages on pallets and in
sacks. Currently, packages of carrier route, nonbarcoded, and barcoded
mail may be mixed on the same pallet. Packages must contain all the
same type of pieces, i.e., all barcoded or carrier route mail. One
commenter asked whether mailers will be required to physically separate
such packages under classification reform implementation, whether
regular rate and Publications Service periodicals could be copalletized
and, if so, would separations be required. The Postal

[[Page 45308]]
Service has generally decided to allow commingling on pallets and in
sacks to other than 5-digit destinations; see the discussion under
Flats. Two commenters asked whether 5-digit barcoded pieces and ZIP+4
barcoded pieces will be allowed to be sorted within the same package.
The Postal Service would prefer to have 5-digit barcoded and ZIP+4
barcoded mail separately packaged because the 5-digit barcoded mail
requires more handling. However, the Postal Service is currently
studying this issue to determine how much mail is involved. If it is
determined that only a small amount of mail is at issue, the Postal
Service will consider allowing mailers to package 5-digit barcoded and
ZIP+4 barcoded mail in the same package.
    Regarding subclass identification, one commenter suggested that, if
a feasible method could be found, the Postal Service should require
Publications Service mailpieces to carry such information. This
commenter further suggested that this type of identification may lead
the Postal Service to consider permitting Publications Service mailers
to elect to mail supplemental mailings at Regular Periodicals rates
rather than risk a penalty on the entire Publications Service issue.
The Postal Service appreciates the suggestion regarding subclass
identification but has not found such an endorsement to be useful or
necessary at this time. The question of allowing periodicals to mail at
both Publications Service and Regular rates is beyond the scope of this
filing.
    Two Postal Service and industry committees have been formed: one to
detail circulation audit procedures for Publications Service by outside
auditors and the other to develop specific application procedures for
obtaining authorization to mail at Publications Service rates. The
results of these groups' work will be considered in future rulemaking
notices.
Comments Regarding Other Topics

Destination Entry

    Seven commenters spoke to issues concerning destination entry and
destination entry discounts. (Although it has been proposed that the
value of these discounts be reduced as part of MC95-1, no change in
their eligibility standards has been proposed.)
    One commenter noted that differences exist in presort requirements
for different rate categories and urged that these do not carry over
into inconsistency in destination entry rules.
    Another commenter noted that language in the June 29 notice implied
that destination entry would be required for the basic carrier route
rate. This language has been reworded below to make it clear that
destination entry is not required for any rate.
    Citing a belief that trailers can hold more bedloaded mail than
palletized mail, one commenter questioned the cost-effectiveness of
destination entry if bedloaded sacks are not allowed. The commenter
stated that the destination entry discount would not cover the cost of
dropshipping palletized loads in some cases. Therefore, to discourage
origin entry of this mail (at greater cost to the Postal Service), the
commenter urged that different destination entry rates be allowed for
palletized and bedloaded shipments. Another commenter questioned
whether lowering the value of destination entry discounts made sense,
given the record in Docket R90-1. A third commenter believed that the
100% barcoding criterion, 150-piece tray minimums, and required uses of
1- and 2-foot trays being proposed for some rate categories will drain
mail away from destination entry by making it less cost-effective for
customers. The proposed rule does not seek to disallow bedloaded
shipments; palletization (including palletization of trays) is being
discussed in a separate rulemaking. The design of discounts (including
their relative values) is being reviewed by the PRC as part of MC95-1
and is beyond the scope of this rulemaking.
    Another commenter offered support for redefining the quantity of
pieces that represents a mailing for purposes of destination entry,
especially when deposits are made at low-volume destinations. The
Postal Service is reviewing this matter administratively (not as part
of this rulemaking) and will announce its decision accordingly.

Designated Points of Entry

    Four comments were received concerning the proposed requirement in
First-Class and Standard Mail that mail "must be deposited at places
and times designated by the Postal Service." That language reflects
existing standards based on existing authority (e.g., DMM D300.2.0 and
D400.2.0, based on DMCS 300.050 and 400.051, respectively). By
repeating similar provisions in the June 29 notice, the Postal Service
is not signaling an intent to propose significantly different standards
for mail deposit in implementing MC95-1.

PAVE

    Twenty-two comments were received concerning the requirement for
Presort Accuracy Verification and Evaluation (PAVE) or standardized
documentation. Three commenters expressed support for this proposed
requirement; one thought that it should be implemented only after a 6-
month deferral; two thought that it should be imposed only on
Automation subclass mail; six thought that it should be eliminated; and
10 others stated a need to know what was meant by "standardized
documentation" before they could submit adequate comments.
    One commenter indicated that the Postal Service should provide only
broad guidelines concerning documentation format. Another commenter
thought that tray labels should be required to be numbered and
supported by an accompanying manifest. A third commenter requested
clarification as to whether the proposed requirement would apply to
small hand-sorted mailings that currently are weight-verified and do
not require documentation. The Postal Service currently is not
proposing significant new informational content in mailing
documentation nor is it proposing documentation requirements for
mailings that can be weight-verified (e.g., mailings of identical-
weight pieces each bearing the full correct postage).
    Of those who objected to the proposed requirement, four felt
mandating use of PAVE-certified software would be an obstacle for small
mailers. Another argued that the PAVE proposal should be dropped
because it did not eliminate the need to verify mailings. A third
commenter believed that PAVE would duplicate what CASS and move-updates
would provide. The Postal Service's proposal is predicated on the
belief that using consistent forms of mailing documentation will ease
burdens on mailers and facilitate (without seeking to eliminate) postal
verification and acceptance processes. As mail preparation becomes more
automated and mailings become more complex, the need for documentation
is expected to remain and the need to make its production simple will
increase. At this point in the rulemaking, the Postal Service's
proposal for PAVE remains focused on its ability to generate
standardized documentation, while affording customers the choice of
generating that documentation otherwise if possible.

Machinable Parcels

    Seven comments were received concerning Standard Regular machinable
parcel preparation requirements. Five commenters indicated that
machinable parcels should have the option of being palletized in
addition to being sacked. Five commenters requested that rates for
machinable parcels be extended to

[[Page 45309]]
preparation in `'gaylords" or other containers. Generally, machinable
parcel preparation is not being affected by this rulemaking;
palletization (and the use of equivalent containers) is being discussed
in a separate rulemaking. The current provisions for palletizing third-
class machinable parcels will be applied to Standard Regular machinable
parcels at the time when classification reform is implemented.
Exceptions to substitute one container type for another are
administrative matters not germane to this rulemaking.
Stanley F. Mires,
Chief Counsel, Legislative.
I. First-Class Mail

A. General

    - Any matter eligible for mailing (6000) may, at the
mailer's option, be mailed as First-Class Mail (210).
    - First-Class Mail may not exceed 70 pounds or 108 inches in
length and girth combined (231).
    - Certain matter must be sent as First-Class Mail (210).
    - Postage for First-Class Mail must be paid in accordance
with 240 (240).
    - First-Class Mail must be deposited at places and times
designated by the Postal Service (251).

B. Retail Subclass (221)

1. General
    - Each piece must weigh 11 ounces or less (221.1).
2. Single-Piece Rate Category
    - All mailable matter may be mailed at the single-piece
rates (210, 221.2).
3. Presort Rate Category
    - Must be prepared in a mailing of at least 500 pieces
(221.3a).
    - Must be presorted, marked, and presented as prescribed by
the Postal Service (221.3b).

--Letters not prepared under the ungraded option, and all flats and
parcels, must be packaged if there are 10 or more pieces to a 5-digit
area, to a 3-digit area, or to an ADC; all remaining mail must be in
mixed-ADC packages. Packages must be placed in 5-digit, 3-digit, ADC,
and mixed-ADC trays (letters and flats) or sacks (parcels). All
possible finer presort packages must be prepared before packages to the
next level are prepared.
--Optional preparation for upgradable letters is full trays (minimum
150 pieces) to 5-digit (optional), 3-digit, AADC, and mixed-AADC (no
minimum) destinations. All possible finer presort packages must be
prepared where required before packages to the next level are prepared.
Pieces in AADC trays must be grouped by 3-digit ZIP Code; overflow
trays are not permitted. Pieces within mixed-AADC trays must be grouped
by AADC and, within each, by 3-digit ZIP Code.
--Letter mail must be prepared in letter trays. Both 1- and 2-foot
trays must be used within a single mailing, as appropriate, to generate
the fewest trays and to ensure optimum tray utilization. Trays must be
sleeved by the mailer.
--Flats must be prepared in flat trays. A full tray is defined as one
that contains at least a single stack of pieces lying flat that reaches
the bottom of the hand-holds, but no more than can be contained in the
tray with the cover secured in place. Trays of flats must be secured
with two straps.
--Parcels must be prepared in sacks.
--Presort Accuracy Verification and Evaluation (PAVE) software must be
used or standardized documentation must be provided. Unresolved issues
include whether PAVE will be mandatory for those categories where it is
available, whether standardized documentation may be used instead, and
what time period will be allowed for compliance when PAVE does become
available.
--Mailing must be entered at an acceptance point designated by the
Postal Service.
--Presort rates applies to all pieces in the mailing.

    - Must meet the machinability, addressing, and other
preparation requirements prescribed by the Postal Service (221.3c).

--Upgraded letters must be letter-size and meet both the current
physical preparation requirements in DMM C810 for automation
compatibility and the current requirements in DMM C830 for an OCR clear
zone and a barcode clear zone, for reflectance, and for paper that will
accept water-based ink. The detailed type font requirements in DMM
C830.2 are not required; however, the pieces must have a machine-
printed address in a nonscript font. A ZIP+4 code is not required to be
considered an upgradable mailpiece.
--Customer moves must be updated at least every 6 months (permissible
methods are expected to include National Change of Address (NCOA)
verification, Address Correction Service, and Address Change Service).
The vendor community has developed several other ideas that could be
used to meet this requirement. The Postal Service anticipates that
formal proposals will be offered soon for evaluation.
--A certified process must be used at least once a year to ensure the
accuracy of 5-digit ZIP Codes.
--A recommended checklist of possible ZIP Code verification options for
address lists that are not computerized could be signed as a part of
the verification process. Items to appear on the checklist might
include manual verification using the most recent ZIP Code directory, a
survey of the addressees currently in the address list to inquire about
changes to ZIP Code information, participation in the current manual
list correction service, turning the list over to someone else to
verify, and use of approved software.
--Uniform address element placement must be used. Uniform address
element placement does not refer to guidelines in USPS Publication 28,
Postal Addressing Standards. Rather, uniform address element placement
means that the city name, state name, and ZIP Code or ZIP+4 are each
elements of an address and must appear as the bottom line in the
address block, in that order. The delivery address line must appear on
the line immediately above the city, state, and ZIP Code line. For
city-style addresses, the order of elements should be street number,
predirectional (e.g., N, S, SW), street name, suffix (e.g., ST, AVE,
RD), postdirectional (e.g., W, S, NE), and any necessary secondary unit
designator (e.g., APT, STE, RM, UNIT) and number. For rural route or
highway contract routes with box numbers in the address, the delivery
address must contain the route number and box number in that order.
With post office box addresses, the box number must follow the
designation "PO BOX" or "POST OFFICE BOX." When any delivery
address line information exceeds the space allowed, secondary
information must be placed on the line above. This overflow information
may not be placed on the line below the delivery address line. Uniform
address element placement also means that the delivery address line
elements should appear in the correct order. These conditions also
apply to use of uniform address element placement.
--"Prestigious" city names and may be used if associated with the
correct ZIP Code.
--A state name may be fully spelled out or abbreviated according to the


[[Page 45310]]
abbreviations in the USPS City State File.
--A city name must be spelled correctly enough not to create a
duplicate within the state.
--Missing elements (e.g., directional or suffix) are not required if
their omission does not create an ambiguous match.
--Street names must be spelled correctly enough not to create an
ambiguous match.
--Abbreviations of words in street names may be used. (For recommended
abbreviations, see USPS Publication 28, Postal Addressing Standards.)
4. Retail Discounts and Surcharges
a. Postal Card and Postcard Discount
    - Matter must be a postal card or postcard (221.4) (232).
    - Postal card or postcard must be of uniform thickness and
must not exceed any of these dimensions: 6 inches long; 4.250 inches
wide; 0.016 inch thick (232.1).
b. Nonstandard-Size Surcharge (221.5)
    - If the mailpiece weighs 1 ounce or less and its aspect
ratio (length of the mailpiece divided by its height) is less than 1.3
or more than 2.5; or if the mailpiece exceeds any of these dimensions:
11.500 inches long; 6.125 inches wide; or 0.250 inch thick (233).
c. Additional Presort Discount
    - Applies to each piece weighing more than 2 ounces (221.6).

C. Automation Subclass (222)

1. General
    - Must be prepared in a mailing of at least 500 pieces
(222.01).
    - Each piece must weigh 11 ounces or less (222.1).
    - Must be presorted, marked, and presented as specified by
the Postal Service (222.1).

--All mailings must be presorted and presented in trays as described
under the appropriate rate categories.
--Sleeving, strapping, and ACT-tagging are required for all letter
trays and flat trays.
--Presort Accuracy Verification and Evaluation (PAVE) software must be
used or standardized documentation provided.
--Mailings must be entered at an acceptance point designated by the
Postal Service.
--For flats, a full tray is defined as one that contains at least a
single stack of pieces lying flat that reaches the bottom of the hand-
holds, but no more than can be contained in the tray with the cover
secured in place. Trays of flats must be secured with two straps.

    - Must bear a barcode representing no more than 11 digits
(not including correction digits) as prescribed by the Postal Service
(222.1).

--For letters, the mailing must be 100% delivery point barcoded.
Production of 100% delivery point barcode (DPBC) mailstream requires
resolving such issues as preprinted envelopes with less than a DPBC and
the coding of destinations assigned a unique 5-digit ZIP Code or ZIP+4.
A pure DPBC mailstream is needed to eliminate costly backflow of
uncoded or non-DPBC pieces.
--For flats, the mailing must be 100% ZIP+4 or delivery point barcoded.
For flats, the delivery point barcode will be optional; the ZIP+4
barcode, required. 100% barcoding for flats requires that each piece in
a mailing (or segment or other subunit of a job) bear a ZIP+4 or DPBC.

    - Must meet the machinability, addressing, barcoding, and
other preparation requirements prescribed by the Postal Service
(222.1).

--The current machinability requirements in DMM C810 must be met for
letters, and those in DMM C820 must be met for flats. The Postal
Service may consider amending its standards for physical automation
compatibility for flats when appropriate, based on changes in sortation
equipment.
--Coding Accuracy Support System (CASS)-certified software must be used
within 6 months of the mailing date or Multiline Accuracy Support
System (MASS)-certified equipment must be used to apply the barcode.
This simply changes the current requirement for use of such software
from within 1 year of mailing to within 6 months of mailing.
--Certified software used must match addresses to current CRIS file
within 90 days of mailing date for letter-size carrier route rate mail.
The "within 90 days of mailing" standard may require some mailers to
update the carrier route codes in their address lists more frequently
than every 90 days. This condition is influenced by the mailers'
production schedule and when, during that cycle, they would normally
update carrier route codes.
--Customer moves must be updated at least every 6 months (permissible
methods are expected to include National Change of Address (NCOA)
verification, Address Correction Service, and Address Change Service).
The vendor community has developed several other ideas that could meet
this requirement. The Postal Service anticipates that formal proposals
will be offered soon for evaluation.
--Barcoded tray or sack labels (as specified in DMM M032) must be used.
The Postal Service plans to make this requirement effective at the time
when classification reform is implemented.
--Barcoding must meet the current requirements in DMM C840.
--Courtesy or business reply envelope or card included in an Automation
subclass mailing must be automation-compatible and bear a facing
identification mark and a correct barcode for the return address. The
barcode may appear on an insert that appears through a window. This
will be phased in, in the future.
2. Basic Rate Category (Letters) (222.2)
    - Must be letter-size mail (222.2).

--Must be presorted first to all possible full and overflow AADC trays,
then to mixed-AADC in trays. For purposes of presort verification,
pieces in AADC trays must be grouped by 3-digit ZIP Code or 3-digit
scheme; pieces in mixed-AADC trays must be grouped by AADC and, within
each, by 3-digit ZIP Code or 3-digit scheme.
3. Three-Digit Rate Category (Letters) (222.3)
    - Must be letter-size mail (222.3).
    - Must be presorted to single or multiple 3-digit ZIP Code
destinations as prescribed by the Postal Service (222.3).

--The Postal Service will allow 3-digit scheme sortation (i.e.,
combined preparation of two or more 3-digit ZIP Code areas processed
together in Postal Service schemes). A preliminary 3-digit scheme list
appears at the end of this document. This list is subject to further
revision but is provided as a guide to assist mailers in assessing the
impact of this manner of preparation on their mailings. The Postal
Service proposes to make sortation to the 3-digit scheme list mandatory
to parallel internal postal processing schemes. Such sortation could
also result in greater discount qualification for mailers because the
150-piece minimum for the 3-digit Automation rate would apply to the
combination of 3-digit ZIP Codes shown on the scheme list rather than
to each 3-digit ZIP Code.
--Preparation of full trays (minimum 150 pieces) is required to 3-digit
ZIP Code or, where applicable, 3-digit

[[Page 45311]]
scheme destinations. Overflow trays are permitted when a full tray for
the same destination is already prepared.
4. Five-Digit Rate Category (Letters) (222.4)
    - Must be letter-size mail (222.4).
    - Must be presorted to single or multiple 5-digit ZIP Code
destinations as prescribed by the Postal Service (222.4).

--Minimum of 150 pieces is required per 5-digit destination.
--Overflow trays are permitted when a full tray for the same
destination is already prepared.
--A 5-digit scheme sort might be developed at a later date.
--A 5-digit make-up is optional.
5. Carrier Route Rate Category (Letters) (222.5)
    - Must be letter-size mail (222.5).
    - Must be presorted to carrier routes prescribed by the
Postal Service (222.5).

--Preparation of carrier route rate mail is optional.
--At least 10 pieces are required per route within 5-digit ZIP Code
areas that are manually sorted to walk sequence by letter carrier or
are processed on CSBCS equipment to delivery point sequence.
--A system is being developed to allow mailers access to the list of
ZIP Codes for which carrier route presort will be allowed; monthly
updates are proposed.
--The Postal Service will examine the number of routes that have fewer
than 10 possible deliveries and determine whether to allow carrier
route rates when pieces are prepared for all stops on such routes.
--Preparation in carrier route and 5-digit carrier routes trays is
required.
--Carrier route mail must be prepared in line-of-travel sequence. This
is not exact walk-sequence arrangement of the mailpieces. For line-of-
travel sequence, the mailpieces are first sorted into the sequence in
which the ZIP+4 codes are delivered by the carrier. They are further
sorted into ascending or descending numerical sequence within the
number range associated with the ZIP+4 code.
6. Basic Flats Rate Category (222.6)
    - Must be flat-size mail (222.6).

--Mail must be presorted to ADC and mixed-ADC destinations.
--At least 10 pieces per ADC destination must be prepared in packages;
all remaining pieces must be placed in mixed-ADC packages.
--Flats trays must be used. For flats, a full tray is defined as one
that contains at least a single stack of pieces lying flat that reaches
the bottom of the hand-holds, but no more than can be contained in the
tray with the cover secured in place. Trays of flats must be secured
with two straps.
7. /3\/5\-Digit Flats Rate Category (222.7)
    - Must be flat-size mail (222.7).
    - Must be presorted to single or multiple 3- and 5-digit ZIP
Code destinations as specified by the Postal Service (222.7).

--At least 10 pieces per destination must be prepared in packages,
first to all possible 5-digit destinations, then to all possible 3-
digit destinations. A 3-digit "scheme sort" will not be offered for
flats at this time.
--Flats trays must be used. For flats, a full tray is defined as one
that contains at least a single stack of pieces lying flat that reaches
the bottom of the hand-holds, but no more than can be contained in the
tray with the cover secured in place. Trays of flats must be secured
with two straps.
8. Automation Discounts
a. Postal Card and Postcard Discount
    - Must be a postal card or postcard (222.8).
    - Must be of uniform thickness and must not exceed any of
these dimensions: 6 inches long; 4.250 inches wide; 0.016 inch thick
(232).
b. Additional Presort Discount
    - Applies to each piece weighing more than 2 ounces (222.9).

       I-1.--First-Class Mail Automation Subclass--Letters and Cards
-----------------------------------------------------------------------------
Sort level          Optional/  Rate               Tray level     Rates  Rates
                    required   qualification
                    required   minimun                          letter  cards
                                                               (cents) (cents)
----------------------------------------------------------\1\----------------
Carrier Route \2\...Optional..10 pieces per route..Carrier Route
                                                   (full, no
                                                   overflow)      23.2  13.7
Carrier Route \2\...Optional..10 pieces per route..5-Digit Carrier 
                                                   Routes
                                                   (no minimum)   23.2  13.7
5-Digit.............Optional..150 pieces...........5-Digit (full,
                                                   overflow
                                                   allowed)       23.5  14.0
3-Digit/Scheme......Required..150 pieces...........3-Digit/Scheme
                                                   (full, overflow
                                                   allowed)       25.0  15.5
AADC................Required..N/A..................AADC (full,
by 3-digit/scheme).                                overflow 
                                                   allowed,
                                                   grouped        27.0  17.5

Mixed AADC..........Required..N/A..................Mixed AADC
and, within each,                                 (no minimum,
by 3-digit/scheme).                                grouped by
                                                   AADC           27.0  17.5
-----------------------------------------------------------------------------

\1\ First-ounce rate. Each additional ounce is 23 cents. An additional
    presort discount of 4.6 cents applies to each piece weighing more than 2
    ounces.

\2\ Carrier route sortation and rates limited to nonautomated and CSBCS-
    sorted ZIP Codes.


                I-2.--First-Class Mail Automation Subclass--Flats
-----------------------------------------------------------------------------
                         Package/rate
Sort level   Optional/   qualification
             required    minimum \1\               Tray level        Rate \2\
                                                                     (cents)
-----------------------------------------------------------------------------
5-Digit.....  Required..  10 pieces...  5-Digit (full, no overflow)    27.0
3-Digit.....  Required..  10 pieces...  3-Digit (full, no overflow)    27.0
ADC.........  Required..  10 pieces...  ADC (full, no overflow)....    29.0
Mixed ADC...  Required..  No minimum..  Mixed ADC (no minimum).....    29.0
-----------------------------------------------------------------------------

\1\ Rate based on package without regard to the tray in which it is placed.
[[Page 45312]]

\2\ First-ounce rate. An additional 5-cent surcharge for nonstandard-size
    mail applies to each piece weighing 1 ounce or less that falls outside
    the standard letter dimensions. Each additional ounce is 23 cents. An
    additional presort discount of 4.6 cents applies to each piece weighing
    more than 2 ounces.



    I-3.--First-Class Mail Retail Subclass--Presort Letters and Cards
-----------------------------------------------------------------------------
Sort         Optional/       Package        Tray level         Rate \1\ Rate 
Level        required        minimum                           letter   card
                                                              (cents)  (cents)
-----------------------------------------------------------------------------
5-Digit....  Required.....  10 pieces....  5-Digit (full, no      30.0   19.0
                                           overflow).
3-Digit....  Required.....  10 pieces....  3-Digit (full, no      30.0   19.0
                                           overflow).
ADC........  Required.....  10 pieces....  ADC (full, no          30.0   19.0
                                           overflow).
Mixed ADC..  Required.....  No minimum...  Mixed ADC (no minimum) 30.0   19.0
-----------------------------------------------------------------------------

\1\ First-ounce rate. Each additional ounce is 23 cents. An additional
    presort discount of 4.6 cents applies to each piece weighing more than 2
    ounces.



             Optional Preparation for Upgradable Letters and Cards
-----------------------------------------------------------------------------

                                                                         
Sort level    Optional/  Package          Tray              Rate \1\   Rate
              required   minimum          level             letter     card
                                                           (cents)    (cents)
-----------------------------------------------------------------------------
5-Digit....  Optional...  N/A.....  5-Digit (full, no        30.0       19.0
                                    overflow).
3-Digit....  Required...  N/A.....  3-Digit (full, no        30.0       19.0
                                    overflow).          
AADC.......  Required...  N/A.....  AADC (full, grouped by   30.0       19.0
                                    3-digit ZIP Code; no
                                    overflow).
Mixed AADC.  Required...  N/A.....  Mixed AADC (no           30.0       19.0
                                    minimum, grouped by
                                    AADC and, within
                                    each, by 3-digit ZIP
                                    Code).

-----------------------------------------------------------------------------
\1\ First-ounce rate. Each additional ounce is 23 cents. An additional
    presort discount of 4.6 cents applies to each piece weighing more than 2
    ounces. Single-Piece Rates: No presort or minimum.



                    I-4.--First-Class Mail Retail Subclass--
            Presort Flats and Parcels Under 11 Ounces Presort Rate

-----------------------------------------------------------------------------
Sort level    Optional/      Package             Tray                 Rate \1\
              required       minimum             level                (cents)
                                          (sack level for parcels)
-----------------------------------------------------------------------------
5-Digit.....  Required....  10 pieces...  5-Digit (full, no overflow)   30.0
3-Digit.....  Required....  10 pieces...  3-Digit (full, no overflow)   30.0
ADC.........  Required....  10 pieces...  ADC (full, overflow           30.0
                                           allowed).
Mixed ADC...  Required....  No minimum..  Mixed ADC (no minimum,        30.0
                                           grouped by 3-digit ZIP
                                           Code).
-----------------------------------------------------------------------------

\1\ First-ounce rate. An additional 5-cent surcharge for nonstandard-size
    mail applies to each piece weighing 1 ounce or less that falls outside
    the standard letter dimensions. Each additional ounce is 23 cents. An
    additional presort discount of 4.6 cents applies to each piece weighing
    more than 2 ounces. Single-Piece Rates: No presort or minimum.


II. Standard Mail

A. General

    - Any matter eligible for mailing (6000) may, at the
mailer's option, be mailed as Standard Mail except certain matter
required to be sent First-Class Mail or Periodicals class (311).
    - May include printed matter not having the character of
actual or personal correspondence (312).
    - May have certain written additions (313).
    - May not exceed 70 pounds (332).
    - Postage must be paid in accordance with 340 (340).
    - Must be deposited at places and times designated by the
Postal Service (351).

B. Regular Subclass

1. General
    - Each piece must weigh less than 16 ounces (321.31).
    - Must be prepared in a mailing of at least 200 addressed
pieces or 50 pounds of addressed pieces (321.31a).
    - Must be presorted, marked, and presented as prescribed by
the Postal Service (321.31b).

--Letters not prepared under the upgradable option, and all flats and
irregular parcels, must be packaged if there are 10 or more pieces to a
5-digit area, to a 3-digit area, or to an ADC, in that order, all
remaining mail must be in mixed-ADC packages. Packages must be placed
in 5-digit, 3-digit, ADC, and mixed-ADC trays (letters) or sacks (flats
and irregular parcels). All possible finer presort packages must be
prepared before packages to the next level are prepared. Current
exceptions to packaging of irregular parcels in DMM M306.2a and M306.2b
apply.
--Optional preparation for upgradable letters is full trays (minimum
150 pieces) to 5-digit (optional), 3-digit, AADC, and mixed-AADC (no
minimum) destinations. All possible finer presort packages must be
prepared where required before packages to the next level are prepared.
Pieces in AADC trays must be grouped by 3-digit ZIP Code; overflow
trays are not permitted. Pieces within mixed-AADC trays must be grouped
by AADC and, within each, by 3-digit ZIP Code.

[[Page 45313]]

--Letter mail must be prepared in letter trays. Both 1- and 2-foot
trays must be used within a single mailing, as appropriate, to generate
the fewest trays and to ensure optimum tray utilization. Trays must be
sleeved by the mailer.
--Flats and parcels must be prepared in sacks (unless palletized).
--Machinable parcels must be sacked to 5-digit destinations (optional
if \3/5\ rates are not claimed) and destination BMCs when there are 10
or more pounds of mail for a sack destination, with remaining parcels
sacked to the origin BMC. This does not represent a change in the
current preparation standards for machinable third-class parcels.
--Palletization of flats and machinable parcels is permitted and
preferred.
--Commingled packages of carrier route, 5-digit barcoded, and ZIP+4/
delivery point barcoded flats will be permitted to all sack/pallet
destinations except to 5-digit destinations. Physical separation of
packages at different presort or rate levels is not required within a
pallet or sack. The Postal Service will develop optional endorsements
to provide the necessary identification of rate categories. Commingled
packages may be reported together on mailing statements and supporting
documentation.
--"Fletters" (larger letter-size pieces that are barcoded and claimed
at the Barcoded rates for flats or at the Enhanced Carrier Route rates)
may be prepared in packages on pallets. To qualify for palletization,
the "fletter" must be prepared to qualify for a flats-based rate
(e.g., Barcoded rates for flats or Enhanced Carrier Route rates). The
same mailpiece must be prepared uniformly as a letter or flat for the
same job.
--Presort Accuracy Vertification and Evaluation (PAVE) software must be
used or standardized documentation must be provided. Unresolved issues
include whether PAVE will be mandatory for those categories where it is
available, whether standardized documentation may be used instead, and
what time period will be allowed for compliance when PAVE does become
available.
--Mailings must be entered at an acceptance point designated by the
Postal Service.

    - Must meet machinability, addressing, and other preparation
requirements prescribed by the Postal Service (321.31c).

--Upgradable letters must be letter-size and meet both the current
physical preparation requirements in DMM C810 for automation
compatibility and the current requirements in DMM C830 for an OCR clear
zone and a barcode clear zone, for reflectance, and for paper that will
accept water-based ink. The detailed type front requirements in DMM
C830.2 are not required; however, the pieces must have a machine-
printed address in a nonscript font. A ZIP+4 code is not required to be
considered an ungradable mailpiece.

--A certified process must be used to ensure the accuracy of 5-digit
ZIP Codes at least once a year.

--A recommended checklist of possible ZIP Code verification options for
address lists that are not computerized could be a signed as a part of
the verification process. Items to appear on the checklist might
include manual verification using the most recent ZIP Code directory, a
survey of the addressees currently in the address list to inquire about
changes to ZIP Code information, participation in the current manual
list correction service, and turning the list over to someone else to
verify use of approved software.

--Uniform address element placement must be used. Uniform address
element placement does not refer to guidelines in USPS Publication,
Postal Addressing Standards. Rather, uniform address element placement
means that the city name, state name, and ZIP Code or ZIP+4 are each
elements of an address and must appear as the bottom line in the
address block, in that order. The delivery address line must appear on
the line immediately above the city, state, and ZIP Code line. For
city-style addresses, the order of elements should be street number,
predirectional (e.g., N, S, SW), street name, suffix (e.g., ST, AVE,
RD), postdirectional (e.g., W, S, NE), and any necessary secondary unit
designator (e.g, APT, STE, RM, UNIT) and number. For rural route or
highway contract routes with box numbers in the address, the delivery
address must contain the route number and box number in that order.
With post office box addresses, the box number must follow the
designation "PO BOX" or "POST OFFICE BOX." When any delivery
address line information exceeds the space allowed, secondary
information must be placed on the line above. This overflow information
may not be placed on the line below the delivery address line. Uniform
address element placement also means that the delivery address line
elements should appear in the correct order. These conditions also
apply to use of uniform address element placement:
--"Prestigious" city names may be used if associated with the correct
ZIP Code.
--A state name may be fully spelled out or abbreviated according to the
abbreviations in the USPS City State File.
--A city name must be spelled correctly enough not to create a
duplicate within the state.
--Missing elements (e.g., directional or suffix) are not required if
their omission does not create an ambiguous match.
--Street names must be spelled correctly enough not to create an
ambiguous match.
--Abbreviations of words in street names may be used. (For recommended
abbreviations, see USPS Publication 28, Postal Addressing Standards.)
2. Basic Rate Category (321.22)
    - Must be presorted to ADC or mixed-ADC trays (letters) or
sacks (flats and irregular parcels), except that, under the optional
sortation for upgradable letters, letters must be presorted to AADC and
mixed-AADC trays. No change in the current preparation or eligibility
standards for machinable parcels.
3. \3/5\-Digit Rate Category (321.23)
    - Must be presorted to single or multiple 3- and 5-digit ZIP
Code destinations, as prescribed by the Postal Service (321.23).

--Must be presorted to 5-digit and 3-digit trays (letters) or sacks
(flats and irregular parcels) and to 5-digit and destination BMC sacks
(machinable parcels). No change in the current preparation or
eligibility standards for machinable parcels.
--For palletized mail, flats must be in a 5-digit or 3-digit package
correctly sorted to the appropriate pallet destination. No change in
the current preparation or eligibility standards for machinable
parcels.
4. Destination Entry Discounts (321.24)
    - Applies to mail prepared as prescribed by the Postal
Service and entered at the destinating BMC or SCF (321.24).

C. Automation Subclass (321.3)

1. General
    - Each piece must weigh less than 16 ounces (321.3).
    - Must be prepared in a mailing of at least 200 addressed
pieces or 50 pounds of addressed pieces (321.3a).

[[Page 45314]]

    - Must be presorted, marked, and presented as prescribed by
the Postal Service (321.3b).

--Presort must conform to that specified under rate categories.
--Sleeving and strapping is required for all letter trays.
--Presort Accuracy Verification and Evaluation (PAVE) software must be
used or standardized documentation must be provided.
--Mailings must be entered at an acceptance point designated by the
Postal Service.
--Separately prepared packages of ZIP+4/delivery point barcoded, 5-
digit/nonbarcoded, and carrier route presort flats may be sacked or
palletized together and reported together on mailing statements and
supporting documentation. Commingling will be permitted to all sack/
pallet destinations except to 5-digit destinations. Physical separation
of packages at different presort or rate levels is not required within
a pallet or sack. The Postal Service will develop optional endorsements
to provide the necessary identification of rate categories. The pieces
in all commingled packages will count toward a single container minimum
(e.g., 125 pieces or 15 pounds per sack).

    - Must bear a barcode representing no more than 11 digits
(not including correction digits) as prescribed by the Postal Service
(321.3c).

--For letters, mail must be 100% delivery point barcoded.
--For flats, mail must be 100% ZIP+4 or delivery point barcoded. The
delivery point barcode will be optional, but the ZIP+4 barcode will be
required. This standard requires that each piece in a mailing (or
segment or other subunit of a job) bear a ZIP+4 or delivery point
barcode.

    - Must be letter-size or flat-size as defined by the Postal
Service and must meet the machinability, addressing, barcoding, and
other preparation requirements prescribed by the Postal Service
(321.3d) and 321.3e).

--The current machinability requirements in DMM C810 must be met for
letters, and those in DMM C820 must be met for flats. The Postal
Service may consider amending its standards for physical automation
compatibility for flats when appropriate, based on changes in sortation
equipment.
--Barcoded tray or sack labels (as specified in DMM M032) must be used.
The Postal Service plans to make this requirement effective at the time
classification reform is implemented.
--Barcoding must meet the current requirements in DMM C840.
--Courtesy or business reply envelope or card included in an Automation
subclass mailing must be automation-compatible and bear a facing
identification mark and a correct barcode for the return address. The
barcode may appear on an insert that appears through a window. This
will be phased in, in the future.
--Coding Accuracy Support System (CASS)-Certified software must be used
within 6 months of the mailing date or Multiline Accuracy Support
System (MASS)-certified equipment must be used to apply the barcode.
(This simply changes the current requirement for use of such software
from within 1 year of mailing to within 6 months of mailing.)
--Certified software used must match addresses to current CRIS file
within 90 days of the mailing date for letter-size carrier route rate
mail. Updating carrier route information within 90 days of the mailing
date may require some mailers to update carrier route codes monthly
because of the length of their mail production cycles.
2. Basic Rate Category (Letters)
    - Must be letter-size mail (321.32).

--Must be presorted first to all possible full and overflow AADC trays,
then to mixed-AADC in trays. For purposes of presort verification,
pieces in AADC trays must be grouped by 3-digit ZIP Code or 3-digit
scheme; pieces in mixed-AADC trays must be grouped by AADC and, within
each, by 3-digit ZIP Code or 3-digit scheme.
3. Three-Digit Rate Category (Letters)
    - Must be letter-size mail (321.33).
    - Must be presorted to single or multiple 3-digit ZIP Code
destinations as prescribed by the Postal Service (321.33).

--The Postal Service will allow 3-digit scheme sortation (i.e.,
combined preparation of two or more 3-digit ZIP Code areas processed
together in Postal Service schemes). A preliminary 3-digit scheme list
appears at the end of this document. This list is subject to further
revision but is provided as a guide to assist mailers in assessing the
impact of this manner of preparation on their mailings. The Postal
Service proposes to make sortation to the 3-digit scheme list mandatory
to parallel internal postal processing schemes. Such sortation could
also result in greater discount qualification for mailers because the
150-piece minimum for the 3-digit Automation rate would apply to the
combination of 3-digit ZIP Codes shown on the scheme list rather than
to each 3-digit ZIP Code.
--Preparation of full trays (minimum 150 pieces) is required to 3-digit
ZIP Code or, where applicable, 3-digit scheme destinations. Overflow
trays are allowed when a full tray for the same destination is already
prepared.
4. Five-Digit Rate Category (Letters)
    - Must be letter-size mail (321.34).
    - Must be presorted to single or multiple 5-digit ZIP Code
destinations as prescribed by the Postal Service (321.34).

--A minimum of 150 pieces is required per 5-digit destination.
--Overflow trays will be allowed when a full tray for the same
destination is already prepared.
--A 5-digit scheme sort may be developed at a later date.
--A 5-digit make-up is optional.
5. Carrier Route Rate Category (Letters)
    - Must be letter-size mail (321.35).
    - Must be presorted to carrier routes prescribed by the
Postal Service (321.35).

--Preparation of carrier route rate mail is optional.
--Must have at least 10 pieces per route within 5-digit ZIP Code areas
that are manually sorted to walk sequence or are processed on CSBCS
equipment to delivery point sequence.
--A system is being developed to allow mailers access to the list of
ZIP Codes for which carrier route presort is allowed; monthly updates
are proposed.
--The Postal Service will examine the number of routes that have fewer
than 10 possible deliveries and determine whether to allow carrier
route rates when pieces are prepared for all stops on such routes.
--Mail must be prepared in carrier route and 5-digit carrier route
trays.
--Carrier route mail must be prepared in line-of-travel sequence. This
is not exact walk-sequence arrangement of the mailpieces. For line-of-
travel sequence, the mailpieces are first sorted into the sequence in
which the ZIP+4 codes are delivered by the carrier. They are further
sorted into ascending or descending numerical sequence within the
number range associated with the ZIP+4 code.
6. Basic Flats Rate Category
    - Must be flat-size mail (321.36).

--Mail must be presorted to ADC and mixed-ADC destinations. At least 10


[[Page 45315]]
pieces per package for each ADC destination must be prepared; all
remaining pieces must be placed in mixed-ADC packages.
7. 3/5-Digit Flats Rate Category
    - Must be flat-size mail (321.37).
    - Must be presorted to single or multiple 3- and 5-digit ZIP
Code destinations as specified by the Postal Service (321.37).

--At least 10 pieces per destination must be prepared in packages.
8. Destination Entry Discounts
    - Applies to mail prepared as prescribed by the Postal
Service and addressed for delivery within the service area of the
destination BMC (or ASF), SCF, or DDU. The DDU discount applies only to
Carrier Route rate category mail (321.28).

D. Enhanced Carrier Route Subclass

1. General
    - Each piece must weigh less than 16 ounces (321.3).
    - Must be prepared in a mailing of at least 200 addressed
pieces or 50 pounds of addressed pieces (321.3a).
    - Must be prepared, marked, and presented as prescribed by
the Postal Service (321.3b).

--Mailing must be entered at an acceptance point designated by the
Postal Service.

    - Must be presorted to carrier routes as prescribed by the
Postal Service (321.3c).

--Mail must be packaged if there are 10 or more pieces to a carrier
route.
--Enhanced Carrier Route rates are allowed for routes having fewer than
10 possible deliveries only as described under the saturation rate
category.
--Packages of flat-size pieces must be placed in carrier route sacks
when 125-piece or 15-pound minimum per carrier route is met; remaining
packages must be placed in 5-digit carrier routes sacks. Palletization
of flats is preferred.
--Separately prepared packages of ZIP+4/delivery point barcoded, 5-
digit/nonbarcoded, and carrier route presort flats may be sacked or
palletized together and reported together on mailing statements and
supporting documentation. Commingling will be permitted to all sack/
pallet destinations except to 5-digit destinations. Physical separation
of packages at different presort or rate levels is not required within
a pallet or sack. The Postal Service will develop optional endorsements
to provide the necessary identification of rate categories. The pieces
in all commingled packages will count toward a single container minimum
(e.g., 125 pieces of 15 pounds per sack).
--The Postal Service will carry forward the current provisions
applicable to 125-piece walk-sequence rates and allow the high-density
rates when pieces are prepared for all possible deliveries on those
routes that have fewer than 125 stops.
--Presort Accuracy Verification and Evaluation (PAVE) software must be
used or standardized documentation must be provided.

    - Must be sequenced as prescribed by the Postal Service
(321.3d).
    - Must meet the machinability, addressing, and other
preparation requirements prescribed by the Postal Service (321.3e).

--Certified software used must match addresses to current CRIS file
within 90 days of the mailing date for carrier route rate mail.
Updating carrier route information within 90 days of the mailing date
may require some mailers to update carrier route codes monthly due to
the lengths of their mail production cycles.
--Uniform address element placement must be used. Uniform address
element placement does not refer to guidelines in USPS Publication 28,
Postal Addressing Standards. Rather, uniform address element placement
means that the city name, state name, and ZIP Code or ZIP+4 are each
elements of an address and must appear as the bottom line in the
address block, in that order. The delivery address line must appear on
the line immediately above the city, state, and ZIP Code line. For
city-style addresses, the order of elements should be street number,
predirectional (e.g., N, S, SW), street name, suffix (e.g., ST, AVE,
RD), postdirectional (e.g., W, S, NE), and any necessary secondary unit
designator (e.g., APT, STE, RM, UNIT) and number. For rural route or
highway contract routes with box numbers in the address, the delivery
address must contain the route number and box number in that order.
With post office box addresses, the box number must follow the
designation "PO BOX" or "POST OFFICE BOX." When any delivery
address line information exceeds the space allowed, secondary
information must be placed on the line above. This overflow information
may not be placed on the line below the delivery address line. Uniform
address element placement also means that the delivery address line
elements should appear in the correct order. These conditions also
apply to use of uniform address element placement:
--"Prestigious" city names may be used if associated with the correct
ZIP Code.
--A state name may be fully spelled out or abbreviated according to the
abbreviations in the USPS City State File.
--A city name must be spelled correctly enough not to create a
duplicate within the state.
--Missing elements (e.g., directional or suffix) are not required if
their omission does not create an ambiguous match.
--Street names must be spelled correctly enough not to create an
ambiguous match.
--Abbreviations of words in street names may be used. (For recommended
abbreviations, see USPS Publication 28, Postal Addressing Standards.)
2. Basic Rate Category
--Mailings must be in line-of-travel sequence.
--This is not exact walk-sequence arrangement of the mailpieces. For
line-of-travel sequence, the mailpieces are first sorted into the
sequence in which the ZIP+4s are delivered by the carrier. The
mailpieces are further sorted into ascending or descending numerical
sequence within the number range associated with the ZIP+4.
3. High-Density Rate Category
    - Applies to mail presented in walk-sequence order and
meeting high-density requirements prescribed by the Postal Service
(321.43).

--Mail must be at least 125 pieces per carrier route sorted to carrier
walk-sequence.
--The current methods for walk-sequencing address lists in DMM M304.5
may be used.
--It has been suggested that the Postal Service use line-of-travel
sequence as an alternative to exact walk-sequence.
4. Saturation Rate Category
    - Applies to mail presented in walk-sequence order and
meeting the saturation requirements prescribed by the Postal Service
(321.44).

--There must be addressed pieces for at least 90% of the total active
residential deliveries per route, or for at least 75% of the total
active deliveries per route. 100% saturation is required for simplified
address mailings, as required by current standards. The Postal Service

[[Page 45316]]
proposes allowing saturation rates when the quantity of pieces per
route reaches the applicable 75/90/100% threshold, regardless of the
actual number of stops.
--The current methods for walk-sequencing address lists in DMM M304.5
must be used.
--Further instructions will be developed for the preparation of letter-
size pieces in this rate category (for example, use of sacks or trays).
5. Destination Entry Discounts
    - Applies to mail prepared as prescribed by the Postal
Service and addressed for delivery within service area of destination
BMC (or ASF), SCF, or DDU (321.45).

--The Postal Service is working to align SCF, ADC, and BMC service area
boundaries.
--Destination entry will not be required to mail at high-density or
saturation walk-sequence rates.


      II-1.--Standard Mail (Third-Class) Automation Subclass--Letters
-----------------------------------------------------------------------------
Sort level          Optional/    Rate                               Rate \1\
                    required  qualification     Tray level          (cents)
                                minimum
-----------------------------------------------------------------------------
Carrier Route \2\.. Optional... 10 pieces
                                per route... Carrier Route (full,      14.1
                                no overflow).
Carrier Route \2\.. Optional... 10 pieces 
                                per route... 5-Digit Carrier Routes    14.1
                                             (no minimum).
5-Digit............ Optional... 150 pieces.. 5-Digit (full,            15.0
                                             overflow allowed).
3-Digit/Scheme..... Required... 150 pieces.. 3-Digit/Scheme (full,     16.8
                                             overflow allowed).
AADC............... Required... N/A......... AADC (full, overflow      17.5
                                             allowed, grouped by 3-
                                             digit/scheme).
Mixed AADC......... Required... N/A......... Mixed AADC (no            17.5
                                             minimum, grouped by
                                             AADC and, within
                                             each, by 3-digit/
                                             scheme).
-----------------------------------------------------------------------------

\1\ Destination discounts also available.

\2\ Carrier route sortation and rates limited to nonautomated and CSBCS-
    sorted ZIP Codes.


      II-2.--Standard Mail (Third-Class) Automation Subclass--Flats
-----------------------------------------------------------------------------
Sort        Optional/    Package          Sack level \1\           Rate \2\
level       required     minimum                                  (cents)
-----------------------------------------------------------------------------
5-Digit.... Required..  10 pieces...  5-Digit (minimum 125 pieces  19.0
                                       or 15 pounds).
3-Digit.... Required..  10 pieces..   3-Digit (minimum 125 pieces  19.0
                                       or 15 pounds).
ADC........ Required..  10 pieces..   ADC (minimum 125 pieces or   23.7
                                       15 pounds).
Mixed ADC.. Required..  No minimum..  Mixed ADC (no minimum).....  23.7
-----------------------------------------------------------------------------

\1\ Palletization preferred. Pallet destinations might not be same as sack
    levels shown.

\2\ Rate based on type of package, regardless of sack in which, or pallet on
    which, placed. Destination discounts also available.



       II-3.--Standard Mail (Third-Class) Regular Subclass--Letters
-----------------------------------------------------------------------------
                                                                              
Sort        Optional/   Package       Tray                           Rate \1\
level       required    minimumn      level                         (cents) \2\
-----------------------------------------------------------------------------
5-Digit...  Required..  10 pieces...  5-Digit (full, no overflow)      21.9
3-Digit...  Required..  10 pieces...  3-Digit (full, overflow          21.9
                                             allowed).
ADC.......  Required..  10 pieces...  ADC (full, no overflow)....      26.1
Mixed ADC.  Required..  No minimum..  Mixed ADC (no minimum).....      26.1
-----------------------------------------------------------------------------

\1\ Rates based on tray preparation in which package placed.
\2\ Destination discounts also available.



-----------------------------------------------------------------------------
                                   Package
                                                                  Rate \1\
Sort level    Optional/            minimum
Tray level    required                                            (cents)
-----------------------------------------------------------------------------
5-Digit.....  Optional..  N/A  5-Digit (full, no overflow)......   21.9
3-Digit.....  Required..  N/A  3-Digit (full, overflow allowed).   21.9
AADC........  Required..  N/A  AADC (full, no overflow, grouped    26.1
                                by 3-digit ZIP Code).
Mixed AADC..  Required..  N/A  Mixed AADC (no minimum, grouped     26.1
                                by AADC and, within each, by 3-
                                digit ZIP Code).
-----------------------------------------------------------------------------

\1\ Destination discounts also available.



           II-4.--Standard Mail (Third-Class) Regular Subclass--
                        Flats and Irregular Parcels
-----------------------------------------------------------------------------

                                                                               
                                                                    Minimum
Sort        Optional/         Package       Sack                   piece rate
level       required          minimum \1\   level \1\ \2\            \3\ \4\
                                                                     (cents)
-----------------------------------------------------------------------------
5-Digit... Required.........  10 pieces   5-Digit (minimum 125 pieces  23.7
                                           or 15 pounds).
3-Digit... Required.........  10 pieces   3-Digit (minimum 125 pieces  23.7
                                           or 15 pounds).
ADC....... Required.........  10 pieces   ADC (minimum 125 pieces or   30.5
                                           15 pounds).
[[Page 45317]]

Mixed ADC..Required.........  No minimum  Mixed ADC (no minimum).....  30.5
-----------------------------------------------------------------------------

\1\ No packaging required for machinable parcels. Standards for machinable
    parcel preparation and rate eligibility not covered by this rulemaking.

\2\ Palletization permitted and preferred. Pallet destinations different from
    sack destinations shown.
    
\3\ Rate based on sack level for sacked mail. For packages on pallets, rate
    based on package level.
    
\4\ Destination discounts also available.




     II-5.--Standard Mail (Third-Class) Enhanced Carrier Route Subclass
-----------------------------------------------------------------------------
                                                                Minimum
Sort      Optional/      Package                Sack            per-piece
level     required       minimum                level\1\        rate
                                                                (cents)
-----------------------------------------------------------------------------
                                 Saturation
-----------------------------------------------------------------------------
Carrier.. Required..   90% total active          Carrier Route    13.5
Route                   residential deliveries   (minimum  125
                        or 75% total active      pieces or 15 
                        deliveries possible      pound.
                        per route (100% if
                        simplified address).


                                                 5-Digit Carrier  13.5
                                                 Routes (no
                                                 minimum).


-----------------------------------------------------------------------------
                                High Density
-----------------------------------------------------------------------------
Carrier..  Required.. 125 pieces per route.....  Carrier Route    14.8
Route                                            (minimum 125
                                                 pieces or 15        
                                                 pounds.

                                                 5-Digit Carrier  14.8
                                                 Routes  (no
                                                 minimum).
-----------------------------------------------------------------------------
                                   Basic
-----------------------------------------------------------------------------
Carrier..  Required.. 10 pieces per route.....  Carrier Route     15.5
Route                                           (minimum 125
                                                pieces or 15
                                                pounds).

                                                5-Digit Carrier   15.5
                                                Routes (no
                                                minimum).
-----------------------------------------------------------------------------
\1\ Trays preferred for letters. Palletization preferred for flats. No
    residual.


                  Proposed 3 Digit "Scheme Sort" Combinations
-----------------------------------------------------------------------------
Plant name      Proposed 3-digit Zip code   3-digit Zip codes served
-----------------------------------------------------------------------------
Great Lakes Area 

Rockford, IL..............  610-611...............  610-611
Peoria, IL................  615-616...............  615-616
Champaign, IL.............  618-619...............  618-619
Royal Oak, MI.............  480,483...............  480,483
Kalamazoo, MI.............  490-491...............  490-491
Flint, MI.................  484-485...............  484-485
Saginaw, MI...............  486-487...............  486-487
Indianapolis, IN..........  460-462...............  460-462
Gary, IN..................  463-464...............  463-464
South Bend, IN............  465-466...............  465-466
Fort Wayne, IN............  467-468...............  467-468
Carol Stream, IL..........  601,603...............  601,603
Lansing, MI...............  488-499...............  488-489
Palatine, IL..............  600,602...............  600,602
                           
Mid-Atlantic Area  

Baltimore, MD.............  210-211,219...........  210-211, 212, 214, 219
Suburban, MD..............  208-209...............  208-209
Greenville, SC............  293,296...............  293, 296
Charleston, WV............  250-252...............  250-253
Washington, DC............  202-205...............  200, 202-205
Roanoke, VA...............  240-241...............  240-243
Louisville, KY............  400-401,471...........  400-402, 471
Charlotte, NC.............  280-281, 297..........  280-282, 297

Pacific Area  

San Francisco, CA (A).....  940,943-944...........  940-941, 943-944
San Francisco, CA (B).....  962-966...............  962-966, 987
Industry, CA..............  917-918...............  917-918
[Page 45318]]
San Diego, CA.............  919-921...............  919-921
Santa Clarita, CA.........  913-914...............  913-914, 915-916
Honolulu, HI..............  967-969...............  967-969
Santa Ana, CA.............  926-927...............  926-928
Marina, CA................  902-905...............  902-905
Oakland, CA (A)...........  945,948...............  945-948
Oakland, CA (B)...........  946,947...............  945-948
Long Beach, CA............  906-908...............  906-908
Stockton, CA..............  952-953...............  952-953
San Bernardino, CA........  923-925...............  923-925
Sacramento, CA............  956-957...............  956-957, 958
                                                   
Southeast Area 

Tampa, FL.................  335,346...............  325-336,346
Macon, GA.................  310,312...............  310,312,315-317
Columbus, GA..............  318-319...............  318-319
Atlanta, GA...............  303,311,399...........  303,311,399
North Metro, GA...........  300-301...............  300-302
Jackson, MS (A)...........  390-391...............  369,390-393
Jackson, MS (B)...........  369,393...............  369,390-393
W Palm Beach, FL..........  334,349...............  334,349
Chattanooga, TN...........  307,374...............  307,373-374
Knoxville, TN.............  377-379...............  377-379
                                                   
Southwest Area 

Shreveport, LA (A)........  710-711...............  710-714
Shreveport, LA (B)........  713-714...............  710-714
Dallas, TX................  752-753...............  751-753
Austin, TX................  786,789...............  786-787, 789
                                                   
Western Area                                       
                                                   
Albuquerque, NM...........  873,877-878,            870,874,877-878,
                            881,883-884             880-884
Billings, MT..............  590-599,821...........  590-599, 821
Colorado Springs, CO......  808-809...............  808-810
Las Vegas, NV.............  889-891...............  889-891
Reno, NV..................  861, 894-895, 897.....  861, 894-895, 897
Salt Lake City, UT........  840-844...............  840-844
                                                   
Midwest Area                                       
                                                   
Des Moines, IA (A)........  500-502...............  500-503, 509
Des Moines, IA (B)........  503,509...............  500-503, 509
Cedar Rapids, IA..........  522-523...............  522-524
Madison, WI...............  535-538...............  535, 537-538
Green Bay, WI.............  541-542...............  541-543
St. Paul, MN..............  540,550...............  540, 550-551
St. Louis, MO.............  620,622,630,633.......  620, 622, 630-633
Springfield, MO (A).......  654-655...............  648, 654-658
Springfield, MO (A).......  656-657...............  648, 654-658
Wichita, KS...............  670-671...............  670-672
Omaha, NE.................  515-516,680...........  515-516, 680-681
                                                   
Northeast Area                                     
                                                   
Brockton, MA..............  020,023-024...........  020, 023-024
Boston, MA................  021-022...............  021-022
Middlesex-Essex, MA.......  018-019,055...........  018-019, 055
Central Mass, MPC.........  014-015,017...........  014-017
Springfield, MA...........  010-011, 013..........  010-013
Buffalo, NY...............  140-143...............  140-143, 147
Stamford, CT..............  068-069...............  068-069
Portland, ME..............  043, 045..............  040-043, 045
Burlington, VT............  054, 056..............  054, 056
Utica, NY.................  133-134...............  133-135
Providence, RI............  027-028...............  027-029
Portsmouth, NH............  038-039...............  038-039
Albany, NY................  120-123...............  120-123, 128-129
Cape Cod, MA P&DF.........  025-026...............  025-026
Binghamton, NY............  137-139...............  137-139
Syracuse, NY..............  130-132...............  130-132, 136
White River Jct, VT (A)...  057-058...............  035-037, 050-054, 056-059
White River Jct, VT (B)...  054, 056..............  .................
White River Jct, VT (C)...  035-036,051-053, 059..  .................
White River Jct, VT (D)...  037,050...............  .................

Allegheny Area

South Jersey, NJ (A)......  080-081...............   080-081, 082-083
South Jersey, NJ (B)......  082-084...............   080-081, 082-083
Johnstown, PA.............  155,157...............   155, 157, 159
Erie, PA..................  164-165...............   164-165
Williamsport, PA..........  169,177...............   169, 177
Lehigh Valley, PA.........  180-181,183...........   180-181, 183
Philadelphia, PA..........  191-192...............   190-192
Southeastern, PA..........  193-194...............   189, 193-194
Wilmington, DE............  197-199...............   197-199
Columbus, OH (A)..........  430-431,433...........   430-433, 437-438
[[Page 45319]]                                     
Columbus, OH (B)..........  437-438...............   430-433, 437-438
Toledo, OH................  434-436...............   434-436
Akron, OH.................  442-443...............   442-443
Youngstown, OH............  444-445...............   444-445
Canton, OH................  446-447...............   446-447
Cincinnati, OH (A)........  410,470...............   410, 450-452, 470
Cincinnati, OH (B)........  450-451...............   410, 450-452, 470
                                                   
New York Metro Area               

San Juan, PR..............  006-009...............   006-009
Hackensack, NJ............  074,076...............   074, 076
West Jersey, NJ...........  078-079...............   078-079
Trenton, NJ...............  085-087...............   085-087
Kilmer, NJ................  077,088...............   077,088-089
Queens, NY................  110,113-114,116.......   110,113-114,116
Mid-Hudson, NY............  124-124,127...........   124-127
-----------------------------------------------------------------------------

Total Reduction in Separations From Combined 3-Digit Destinations: 166.



III. Periodicals

    The classification reform proposal changes the name for second-
class mail to Periodicals. Second-class regular rate mail will be split
into two subclasses: Publications Service and Regular Periodicals.
Preferred second-class mail preparation rules and rates, including
those for in-county mail, will not change as a result of the pending
classification reform case.

A. General

1. Basic Requirements
    The requirements listed below represent no change to current
standards governing eligibility for second-class rates.
    - Must qualify as General Publication, Requester
Publication, Publication of Institution and Society, or Publication of
State Department of Agriculture (411.1).
    - Must be mailable matter consisting of newspapers and other
periodical publications (411.2).
    - Must be regularly issued at stated intervals at least four
times a year, bear a date of issue, and be numbered consecutively
(411.3).
    - Must have a known office of publication (411.4).
    - Must be formed of printed sheets (411.5).
    - No size or weight limits (430).
    - Postage must be paid in accordance with (441).
    - Must be presorted as prescribed by the Postal Service
(442).
    - Must be identified as prescribed by the Postal Service
(444).
    - May have certain attachments and enclosures (443).
    - Must file certain information (445).
    - May contain enclosures/supplements as prescribed by the
Postal Service (446).
    - Must be deposited at places and times designated by the
Postal Service (451).
2. General Publications
    These requirements are the same as current standards for second-
class mail:
    - Must be for the purpose of disseminating information of a
public character, or devoted to literature, the sciences, art, or some
special industry (412.2).
    - Must have at least 50% paid circulation (412.31).
    - Must have a legitimate list of subscribers (412.32).
    - Must meet tests to ensure that it is not designed
primarily for advertising purposes, including may not have advertising
in excess of 75% in more than one-half of its issues during any 12-
month period (412.4).
3. Requester Publications
    These requirements are the same as current standards for second-
class mail:
    - Must contain at least 24 pages (413.2).
    - Must contain at least 25% nonadvertising (413.31).
    - Must meet ownership and control test for advertising
purposes (413.32).
    - Must have a legitimate list of requesters and at least 50%
distribution to requesters (413.41).
4. Publications of Institutions and Societies
    These requirements are the same as current standards for second-
class mail:
    - Must meet General Publications advertising requirements
(414.1).
    - No non-publisher advertising unless certain conditions
meet (414.1, 414.2).
    - Published by an institution or society (414.1).
5. Publications of State Departments of Agriculture
    These requirements are the same as current standards for second-
class mail:
    - Issued by a state department of agriculture (415).
    - Contains no advertising and further the objectives of the
department (415).
6. Foreign Publications
    The requirements are the same as current standards for second-class
mail including the following:
    - Must have same character as domestic periodicals (416).

B. Regular Subclass

1. General Requirements
    With the exception of the change in the description of rate
categories and the alignment of presort rules with those for
Publications Service, as explained below, the requirements for the
Regular Periodicals subclass have not changed from those currently
applicable to regular second-class mail.
    - Must be presorted, marked, and presented as prescribed by
the Postal Service (421.1).

--Must meet current requirements in DMM M010, M020, M030, M041, M042,
M200, M800, and D200.

    - Must meet machinability, addressing, and other preparation
requirements prescribed by the Postal Service (421.1).

--Must meet current requirements in DMM A200, A800, C200, and C800.
2. Regular Subclass Pound Rate Category
    These requirements are the same as current standards for second-
class mail:
    - An unzoned pound rate applies to the nonadvertising
portion of the publication (421.2).
    - A zoned pound rate applies to the advertising portion
(421.2).


[[Page 45320]]

--Rates are based on nine zones.
3. Regular Piece Rate Categories (421.3)
--Regular piece rate categories include basic, 3- and 5-digit, and
carrier route. These proposed categories eliminate the rate levels A,
B, and C, making the presortation structure for Periodicals more
consistent with other classes. The new 3- and 5-digit rate category
replaces the current B3 and B5 rates. Mail presorted to all 3-digit
destinations (not just to unique 3-digit destinations) will qualify for
the 3- and 5-digit rate. This proposal represents a change from today's
regular second-class rate structure.
--Based on industry suggestions, the presort requirements for Regular
and Publications Service rates will be aligned, including the
elimination of the optional city, SCF, state, and SDC sortations
levels. See the Publications Service chart below for additional
information on the proposed sortation scheme.
4. Basic Rate Category (421.31)
a. Three- and Five-Digit Rate Category
    - Must be presorted to single or multiple 3- and 5-digit ZIP
Code destinations as prescribed by the Postal Service (421.32).

--In nonautomation rate mailings, rates apply to pieces in 5-digit and
3-digit packages of six or more addressed pieces each that are
correctly sorted to 5-digit or 3-digit sacks.
--In packaged-based automation-rate letter-size mailings, rates apply
to pieces in 5-digit packages of 10 or more pieces, and in 3-digit
packages of 50 or more pieces that are placed in 5-digit, 3-digit, or
AADC trays.
--In barcoded rate flat-size mailings, rates apply to pieces in 5-digit
and 3-digit packages of six or more addressed pieces that are sorted to
5-digit, 3-digit, ADC, or SDC sacks.
b. Carrier Route Rate Category
    These requirements are the same as current standards for second-
class mail:
    - Must be presorted to carrier routes as prescribed by the
Postal Service (421.33).

--Must prepare packages of six or more addressed pieces each.
5. Regular Subclass Discounts (421.4)
a. Barcoded Letter Discount
    These requirements are the same as current standards for second-
class mail:
    - Must bear a barcode representing not more than 11 digits
(not including correction digits) as prescribed by the Postal Service
(421.41).
    - Must meet the machinability, addressing, and barcoding
specifications and other preparation requirements prescribed by the
Postal Service (421.41).
b. Barcoded Flats Discounts
    These requirements are the same as current standards for second-
class mail:
    - Must bear a barcode representing not more than 11 digits
(not including correction digits) as prescribed by the Postal Service
(421.42).
    - Must meet flats machinability, addressing, and barcoding
specifications and other preparation requirements prescribed by the
Postal Service (421.42).
c. High-Density Discount
    High density refers to the current 125-piece walk-sequence category
as follows:
    - Must be presented in walk-sequence order (421.43).
    - Must meet high-density and preparation requirements
prescribed by the Postal Service (421.43).
d. Saturation Discount
    These requirements are the same as current standards for second-
class mail:
    - Must be presented in walk-sequence order (421.44).
    - Must meet the saturation and preparation requirements
prescribed by the Postal Service (421.44)
e. Destination Entry Discounts
    These requirements are the same as current standards for second-
class mail:
    - Must be entered at the destinating SCF or DDU (421.45).
    - DDU discount applies only to Carrier Route mail (421.45).
f. Nonadvertising Discount
    These requirements are the same as current standards for second-
class mail including the following:
    - A discount applies based on the proportion of
nonadvertising content (421.46).
C. Publications Service Subclass

1. General Requirements
    There are three primary criteria that must be met in order to mail
under Publications Service:
    (1) At least 75% of the mailed volume must be paid (for General
Publications) or requested (for Requester circulation);
    (2) At least 30% of the content in each issue must be
nonadvertising matter; and
    (3) At least 90% of each issue must be presorted to carrier route,
5-digit, or 3-digit destinations.
    Each of these is explained further below. The requirements that
periodicals must meet to be eligible to mail at Publications Service
rates are based on the entire mailed volume of the publication rather
than the entire circulated volume of the publication (circulated volume
is that which must be accounted for when a publication is audited for
eligibility as Periodicals).
    This change was made in response to publishers' requests that the
Postal Service concern itself with only the mailed portion of a
publication's circulation. "Mailed volume" for the purposes of these
proposals includes all mailed copies (including mailed newsstand
copies) except for those claimed at in-county, foreign, First-Class,
Priority Mail, or Express Mail rates.
2. Seventy-Five Percent Paid or Requested Circulation
    - At least 75% of the mailed volume must be paid or
requested (422.1).

--This differs from current second-class requirements in two ways; it
is an increase in the paid/requested requirement from 50% to 75% and it
is applied against the mailed volume, not total circulation. Comments
on the June 29 notice proposed that publishers provide certification of
a publication's compliance with the 75% paid/requested circulation
criterion on a per-issue basis. It was suggested that this could be
accomplished by the submission of a report of the number of paid/
requested recipients on file at the time of the issue's file
maintenance update or label run as part of required CPP documentation
and a certification block for publisher signature added on each mailing
statement. The Postal Service also wants additional comments on a
proposal that all mailed newsstand copies (regardless of the number
returned or destroyed) be considered paid circulation for the purpose
of meeting the 75% criterion. Failure to meet this requirement will
result in revocation of Publications Service eligibility.
3. Thirty Percent Nonadvertising Content
    - Must have at least 30% nonadvertising content in each
issue (mailed volume except in-county rate volume) (422.1).

--The 30% nonadvertising criterion applies to all mailed copies in the
mailed volume (this does not include copies mailed at the in-county,
foreign, First-class, Priority Mail, or Express Mail rates. Failure to
meet the 30% nonadvertising requirement will result in a 40% postage
penalty

[[Page 45321]]
assessment on the non-complying issue. Despite comments on the June 29
notice, the Postal Service believes that the penalty is more effective
if applied to the entire issue rather than only to those copies that
fail to meet the 30% requirement. Concerns that a publication could
erroneously be assessed the 40% postage penalty due to a miscalculation
in the advertising percentage by an outside auditor are obviated by
noting that the Postal Service is proposing that an audit be used only
to validate compliance with the 75% circulation requirement; the
outside auditor will not be responsible for confirming the advertising/
editorial ratio. To monitor compliance with the 30% nonadvertising
requirement, the Postal Service is considering including on the mailing
statement a certification block for signature by publishers, validating
that the minimum has been met. If the Postal Service believes that an
issue is in excess of 70% advertising, the publisher will be given
ample opportunity to demonstrate compliance with the requirement before
any postage penalty is assessed. Despite suggestions that the Postal
Service allow copies with advertising in excess of 70% to be mailed at
the higher third-class or fourth-class bound printed matter rates as an
alternative to the entire issue being assessed a 40% penalty, the
Postal Service is without authority to consider such options. Current
second-class standards restrict publications from being mailed at
third- or fourth-class rates, except under limited conditions, and no
proposal is being considered to amend this prohibition.
4. Ninety Percent Presorted to Three-Digit Destinations or Finer
    - Must have at least 90% of each issue presorted to 3-digit
or 5-digit destinations or to carrier routes (mailed volume except in-
county rate volume) (422.1).

--Copies count toward the 90% density criterion if they are part of a
minimum of 24 pieces to a 3-digit destination all of which are properly
presorted in packages of six or more to carrier-route, 5-digit or 3-
digit, as appropriate. Failure to meet the 90% presortation requirement
will result in a 40% postage penalty assessment on the noncomplying
issue. In response to the June 29 notice, it was suggested that the
penalty be applied to only those pieces in supplemental mailings that
cause the issue's presort percentage to fall below 90%, but not lower
than 85%. Although the Postal Service acknowledges publishers' needs
for flexibility in distribution, it believes that the currently
proposed method for calculating the 90% standard is adequately
flexible. Moreover, the implementation of a conditioned percentage adds
an additional level of administrative complexity where the opposite is
sought. The following chart further explains this requirement.

-----------------------------------------------------------------------------
                         Publications 90% criterion
-----------------------------------------------------------------------------
Sort level                           Zip codes
                          
-----------------------------------------------------------------------------
                     102     202     302     402     502     602      Total
-----------------------------------------------------------------------------
Carrier Route........  6       0      18      12       6     124       166
5-Digit..............  6       6      34      40      56     124       266
3-Digit.............. 18      17      28       2       8      75       148
-----------------------------------------------------------------------------
Total..........       30      23      80      54      70     323       580
Quantity Toward 90%.. 30       0      80      52      70     323       555

                                                                      95.69
-----------------------------------------------------------------------------
In this example the 23 pieces to ZIP 202 do not count toward the 90%
requirement because there are fewer than 24 pieces to the 3-digit destination.
Two of the pieces to ZIP Code 402 do not count because they are not part of
a package of six or more. Note that, because carrier route is an optional
sortation level, the customer may choose to move four pieces from the carrier
route qualifying portion to the 3-digit level to meet the six-piece minimum
(this assumes that the finest level of sort for those four pieces is 3-digit
and not part of the 5-digit).


--Although firm packages will continue to be considered a single
addressed piece for presort and postage purposes all copies in firm
packages of six or more and all copies in firm packages of fewer than
six that are included in packages of six or more will count toward
meeting the 90% presortation criterion.
--For the purposes of the 90% criterion, an "issue" is considered to
consist of all copies in the mailed volume that are mailed with that
"window" of time during which the main file and most supplemental
mailings for a particular title are deposited with the Postal Service.
The mailing "window" includes all copies, regardless of cover date,
which are mailed between cover dates. To ensure that the entire mailed
volume of a publication is considered, the Postal Service continues to
believe that all mailings, including "supplementals," be counted.
Moreover, to avoid inequitable situations, the same basic definition of
a "window" will be applied to all publications and not "negotiated"
with the publisher as one commenter on the June 29 notice suggested.
--For example, the first copy of the January cover date of XYZ Monthly
mails on January 1st, and the first copy of the February cover date
mails on February 1st. During January the "issue" might include the
full main file of the January cover date, at least one supplemental run
of the January cover date, at least one supplemental run of the
December cover date, and possibly even a supplemental run of the
November cover date. (See the chart in the June 29 notice for an
illustration.)
--In a comailing situation--for administering the 90% criterion, the
Postal Service proposes to look at what happened to the individual
title within the comailing. In other words, the qualifying pieces in
the comailing are added to the qualifying pieces in the main file and
any qualifying pieces in supplemental runs that were not comailed and
the final qualifying percentage is derived by dividing the total number
of qualifying pieces by the total number of mailed pieces. The group of
pieces reported on each individual PS Form 3541 will not have to meet
the 90% criterion.
--Publications Service titles may be comailed with Regular Periodicals.
If a decision is made not to align the presort requirements in Regular
Periodicals with that of Publications Service, if Publications Service
and Regular Periodicals are comailed, the

[[Page 45322]]
entire comailing is to be prepared using the Publications Service
sortation criteria.
--In a comailing, penalties apply to the publication that fails to meet
the requirements, not to those with which it is comailed.

    - Must be presorted, marked, and presented as prescribed by
the Postal Service (422.1).

--Barcoded letter mail must be prepared in trays.
--Flats must be packaged if there are six or more pieces to a 5-digit
area, to a 3-digit area, or to an ADC; with remaining mail in mixed-ADC
packages. Packages may be placed on pallets or in 5-digit, 3-digit,
ADC, and mixed-ADC sacks. Flats may be optionally packaged to carrier
route when there are six or more pieces per carrier route. Carrier
route packages may be placed on pallets or in carrier route sacks or in
5-digit carrier route sacks.
--The charts at the end of this section further describe the presort
requirements:
--Barcoded tray or sack labels (as specified in DMM M032) must be used.
The Postal Service plans to make this requirement effective at the time
when classification reform is implemented.
--Scheduling of deposit times is required. The Postal Service does not
intend this to mean a specific appointment will be required unless
under an existing program.
--Must use Presort Accuracy Verification and Evaluation (PAVE) software
or provide standardized documentation. Regardless of future
capabilities of PAVE, the current proposal applies to only to use in
producing standardized documentation in support of the mailing
statement.
--Mailings must be entered at an acceptance point designated by the
Postal Service. This requirement is the same as current standards for
second-class mail.

    - Must meet the machinability, addressing, barcoding,
postage payment, containerization, and other preparation requirements
prescribed by the Postal Service (422.1).

--For non-automation compatible, non-carrier route rate mail, must use
a certified process to verify the accuracy of mailing lists against
USPS 5-digit ZIP Code file at least once a year.
--A recommended checklist of possible ZIP Code verification options for
address lists that are not computerized could be signed as a part of
the verification process. Items to appear on the checklist might
include manual verification, using the most recent ZIP Code directory,
a survey of the people currently in the address list to inquire about
changes to ZIP Code information, participation in the current manual
list correction service, and turning the list over to someone else to
verify, and use of approved software.
--For automation-compatible pieces other than carrier route rate flats,
must use Coding Accuracy Support System (CASS)-certified software
within 6 months of date of mailing or use Multiline Accuracy Support
System (MASS)-certified equipment to apply the barcode. This simply
changes the current requirement for use of such software from within 1
year of mailing to within 6 months of mailing.
--Must match addresses to current CRIS file using certified software
within 90 days of mailing for carrier route rate mail.
--Must use uniform address element placement. Uniform address element
placement refers to the positioning of elements within the address
block, not the placement of the address on the piece itself. Although
this requirement will apply to non-barcoded pieces only, the Postal
Service strongly recommends that all mailpieces contain an address that
meets these standards.
--Must use Address Change Service (ACS).
--Must use computer-based electronic payment systems when those systems
are developed. Electronic payment systems will not be required in the
final rule but will be strongly recommended. These systems or their
data exchange formats have not yet been defined.
--New containerization requirements will be developed with mailers. For
the purposes of this rulemaking, palletized sacks or packages
(palletized trays for letter mail) will be the preferred method of
containerization; sacks may also be used.

    - Must bear a barcode representing not more than 11 digits
(not including correction digits) on automation-compatible pieces other
than carrier-route rate flats as prescribed by the Postal Service
(422.1).

--If a mailpiece meets all machinable requirements, every piece (other
than the carrier route flat qualifying portion) must be barcoded. All
pieces must bear at least a 5-digit barcode, and no less than 85% of
the pieces must bear a ZIP+4 or delivery point barcode. If a piece is
not machinable, barcoding is not required. The Postal Service will
include the carrier route portion of Publications Service mail when
determining compliance with the 85% criterion. The criterion will be
determined based on addressed pieces, not copies. The barcoding
requirement pertains only to machinable mail, i.e., mail that meets all
the current DMM standards for automation compatibility (see DMM C810
and C820); nonmachinable pieces and carrier route rate mail do not have
to bear barcodes. The 85% criterion will be applied to the entire
mailed volume of the issue, regardless of the source(s) of that volume.
Documentation can be required to support compliance.
--Barcodes are defined by the current requirements in DMM C840.
--Automation-compatibility is defined by the current requirements in
DMM C810 for letters, and those in DMM C820 for flats.
--Must use a certified system or software to determine and document
advertising and editorial percentages in each edition/issue when
available.
--The Postal Service does not plan to require use of a certified system
to audit advertising/nonadvertising percentages in these implementation
rules. When such systems are developed in the future, and the Postal
Service has reason to believe that they will be, the Postal Service
expects to propose their use in a future rulemaking.

    - Must have a legitimate list of subscribers or requesters
(422.1). (This requirement is the same as the current standard for
second-class mail.)
    - Must be audited by a CPA or a national circulation audit
service as prescribed by the Postal Service (422.1).
    - Must be authorized to mail at Publications Service rates
and, if so authorized, may mail only at Publications Service and in-
county rates (483).

--There will be an application process for authorization to mail in
Publications Service with a proposed application fee of $305. The
application process has yet to be developed; however, it is expected to
be similar to the current second-class procedures. A publisher will
first have to show that the basic requirements for entry into
Periodicals have been met (such as frequency of issue etc.). Then,
compliance with the additional Publications Service criteria must be
shown.


[[Page 45323]]

    - If a Publications Service authorization is withdrawn or
revoked, a new authorization may not be issued for 1 year (483).
5. Publications Service Pound Rate Category
    - A zoned pound rate applies to the entire publication
(422.3). (This differs from current second-class because only the
advertising content of the publication is zone rated.)
    - Rates apply to five zones. (This differs in that current
second-class and Regular Periodicals have nine zones.)
6. Publications Service Piece Rate Categories (422.4)
7. Basic Rate Category (422.41)
8. Carrier Route Rate Category
    - Applies to mail prepared and presorted to carrier routes
as prescribed by the Postal Service (422.42).

--Carrier route mail must be prepared in line-of-travel sequence.
--This is not exact walk-sequence arrangement of the mailpieces. For
line-of-travel sequence, the mailpieces are first sorted into the
sequence in which the ZIP+4 codes are delivered by the carrier. They
are further sorted into ascending or descending numerical sequence
within the number range associated with the ZIP+4 code.
9. Destination Entry Discounts
    - Applies to mail entered at the destination SCF or DDU
(422.5).
    - DDU discount applies only to Carrier Route mail (422.5).

III-1.--Periodicals (Regular and Publications Service Subclasses)--Letters
-----------------------------------------------------------------------------

                                                             Publications
Sort             Optional/    Package             Tray     Regular    Service
level            required     minimum             level    rate         rate
-----------------------------------------------------------------------------
Carrier Route Optional     10 pieces per  Carrier Route  Carrier  Carrier
     .                                    (full, no      Route    Route
                                          overflow).              Service
                                                                  Publication

Carrier Route Optional.... 10 pieces per  5-Digit       Carrier  Carrier 
                           route.         Route(no      Route    Route
                                          minimum).              Service
                                                                 Publication

5-Digit...... Optional.....N/A..........  5-Digit(full,  3/5     Publications
                                          no overflow    Digit   Carrier Route
                                          Services
                                          allowed).


3-Digit...... Required.....N/A.......... 3-Digit(full,   3/5     Publications
                                         overflow        Digit
                                         Service.
                                         allowed).

AADC......... Required.....N/A.......... AADC (full,     Basic   Publications
                                         overflow
                                         Services.
                                         allowed).

Mixed AADC... Required.....No minimum    Mixed AADC(no   Basic   Publications
                           AADC          Sequence  
                                         (with mimimum).
                                         Service.
                                         separations).

-----------------------------------------------------------------------------
                       III-2.--Periodicals (Regular and
                  Publications Service Subclasses)--Flats
-----------------------------------------------------------------------------
                                                      Publications
Sort      Optional/     Package       Sack          Regular   Service
level     required      minimum       level         rate       rate
-----------------------------------------------------------------------------
Firm....  Optional..... 2 copies  Carrier Route               Publications 
                                                              Service or
                                                              Publications 
                                                              Service Carrier
                                                              Route, based 
                                                              on further
                                                              packaging
                                                              and sacking. 

Carrier   Optional....  6 pieces  Carrier Route     Carrier   Publications
Route                   per       (minimum one      Route     Service
                        Carrier   6-piece package             Carrier
                        Route     required if 24              Route.   
                                  or more pieces).

Carrier   Optional....  6 pieces  5-Digit Carrier   Carrier   Publications
Route                   per route Routes (no        Route     Service
                                  minimum).                   Carrier 
                                                              Route

5-Digit   Required....  6 pieces  5-Digit           3/5 Digit Publications 
                                  (minimum one                Service     
                                  6-piece 
                                  package                            
                                  required if 24
                                  or more pieces).

3-Digit   Required      6 pieces 3-Digit            3/5 digit Publications 
                                 (minimum one 6-              Service.
                                 piece package 
                                 required if 24 
                                 or more pieces).                         

ADC       Required      6        ADC (minimum       Basic     Publications 
                        pieces   one 6-piece                  Service.
                        (fewer   package required  
                     permitted). if 24 or more
                                 pieces
                                                                 
Mixed ADC Required   No minimum  Mixed ADC          Basic Publications
                                 (no minimum)             Service.
-----------------------------------------------------------------------------

[FR Doc. 95-21522 Filed 8-28-95; 9:15 am]
BILLING CODE 7710-12-M