[Federal Register Volume 60, Number 147 (Tuesday, August 1, 1995)]
[Notices]
[Pages 39196-39198]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-18761]



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POSTAL SERVICE


Verification Procedures for Second-Class Publications

AGENCY: Postal Service.

ACTION: Notice of revised procedures.

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SUMMARY: On January 20, 1995, the Postal Service published a notice for 
public comment in the Federal Register (60 FR 4207-4208) concerning 
revised procedures for conducting verifications of publications 
authorized for mailing at second-class postage rates. Under the revised 
procedures, the Postal Service will separate the verification process 
into two reviews, one for validating correct postage payment and one 
for determining continued eligibility for second-class authorizations. 
A postage payment review will be conducted at least once a year for 
each authorized second-class publication. An eligibility review will be 
conducted as determined by the Postal Service from circulation data 
provided by the publisher of an authorized second-class publication.

EFFECTIVE DATE: August 31, 1995.

FOR FURTHER INFORMATION CONTACT: Edward J. Mayhew, (212) 613-8747.

SUPPLEMENTARY INFORMATION: In accordance with its statutory 
responsibilities, the Postal Service must ensure that authorized 
second-class publications meet all applicable second-class eligibility 
requirements and that the proper amount of postage is paid on mailings 
of those second-class publications. See 39 U.S.C. 404, 3685.
    The physical inspection of mailings of second-class publications 
and the examination of records and documentation related to those 
mailings have been the principal means used by the Postal Service to 
carry out its statutory responsibilities. A long-standing goal of the 
Postal Service has been to review all publications on an annual basis. 
An annual review of every publication, however, has not always been 
possible at all post offices, particularly those offices where large 
numbers of different publications are entered at second-class rates.

1. Background

    Currently, the Postal Service schedules a second-class publication 
for review every 1 to 3 years, depending on the number of second-class 
publications authorized original entry at the post office conducting 
the review. For the issue of the publication to be examined, the review 
centers on these two activities:
    a. Substantiating that the publication meets second-class 
eligibility requirements, particularly circulation requirements.
    b. Verifying that the mailing statement submitted with the mailing 
of the publication is complete and the postage payment correct.
    After a careful analysis of its review procedures for second-class 
publications, the Postal Service determined that the current procedures 
no longer promote the most efficient use of postal resources. On one 
hand, the Postal Service believes that, for some publications, 
eligibility reviews do not serve a significant purpose. Where other 
evidence provides assurance that a publication remains eligible for 
second-class mailing privileges, an on-site review simply confirms a 
fact already known. On the other hand, the Postal Service believes that 
annual postage payment reviews for all publications not only confirm 
the accuracy of postage payment but also prevent a potential for long-
term accumulations of any revenue deficiency that might be discovered 
during the reviews.
    Accordingly, the Postal Service proposed revising its review 
procedures for second-class publications by separating the procedures 
along the lines of the two review activities, each 

[[Page 39197]]
with different scheduling criteria as follows:
    a. For the eligibility review, an annual review is to be conducted 
only for publications with a confirmed legitimate circulation of 60 
percent or less on randomly selected issues.
    b. For the postage payment review, an annual review is to be 
conducted for all publications, regardless of the percentage of 
confirmed legitimate circulation.
    The proposed changes sought to shift postal personnel and other 
resources from verifications that serve limited purposes (that is, 
eligibility reviews that only confirm independent assurances of 
continued second-class eligibility) to verifications that respond to 
concerns about revenue protection (that is, postage payment reviews 
that uncover potential revenue deficiencies).

2. Revised Procedures

    The revised review procedures will separate the postage payment 
review from the eligibility review. Each second-class publication will 
receive an annual postage payment review at each post office where 
second-class postage is paid. This review will be conducted at the time 
of mailing. Publishers claiming automation and presort rates will also 
be required, at the time of the postage payment review, to submit 
documentation substantiating eligibility for those rates. This 
documentation consists of the same documentation already required under 
current procedures.
    For those publications subject to circulation standards (general, 
requester, institutions and societies, and some foreign), the Postal 
Service will determine whether to conduct an eligibility review by 
using the data provided by the publisher on PS Form 3526, Statement of 
Ownership, Management, and Circulation (that is, a review will be 
scheduled according to the percentage of paid or requested circulation 
shown on the form). The Postal Service still retains its right, 
however, to review a publication if a question arises about the 
eligibility of that publication for second-class mailing privileges, 
regardless of the data provided on PS Form 3526.
    When a second-class publication is selected for an eligibility 
review, the publisher will be notified by the post office serving the 
known office of publication. The publisher will be advised of the issue 
to be verified. To conduct the review as quickly and efficiently as 
possible, the Postal Service will ask the publisher to provide 
circulation information before the review date. For this purpose, the 
Postal Service has revised PS Form 3548, Review and Verification of 
Circulation.
    Accordingly, the original entry post office will mail the publisher 
a blank PS Form 3548 with a cover letter asking the publisher to 
complete the unshaded parts of the form for a specified publication 
issue. The publisher will have 15 days from the receipt of the form to 
complete and return the form to the postmaster of the original entry 
office.
    The unshaded parts of PS Form 3548 filled in by the publisher will 
contain information about the total distribution of the issue to be 
reviewed. A Postal Service representative will examine the circulation 
records at the known office of publication to verify compliance with 
circulation requirements.
    Publications reviewed by Postal Service-approved independent audit 
bureaus will continue to have their eligibility and postage payment 
reviews conducted by those bureaus. Consistent with current practice, 
the Postal Service still retains the right to review the records of any 
publication and to reach its own conclusion about compliance of the 
publication with the applicable eligibility requirements. Publications 
mailed under the Centralized Postage Payment System will continue to 
have postage payment reviews conducted annually by the New York Rates 
and Classification Service Center.

3. Public Comments

    The comment period ended on February 21, 1995, and only three 
written comments were received. After thorough consideration of those 
comments, the Postal Service adopts the revised procedures as proposed.
    The first commenter did not object to the separation of the review 
process into eligibility and postage payment reviews but did object to 
what the commenter viewed as ``the proposed weakening of current 
second-class subscriber verification procedures.'' The commenter 
expressed concerns that the Postal Service would determine which 
publications to review by relying solely on data provided by publishers 
on PS Form 3526, Statement of Ownership, Management, and Circulation. 
The commenter asserted that reliance on such data ``is inadequate to 
police those who misstate circulation data so as to qualify improperly 
for second-class mailing privileges.'' The commenter also objected to 
the Postal Service policy concerning the release of second-class 
mailing statements under the Freedom of Information Act.
    As an initial matter, the Postal Service plans to conduct 
eligibility reviews of publications whenever it believes that valid 
reasons exist for such reviews, regardless of the data provided by a 
publisher on Form 3526. The Postal Service agrees with the commenter 
that the vast majority of publishers file honest reports and strongly 
believes that this practice will not change with the revised review 
procedures. Those publishers tempted to deceive the Postal Service 
under the revised procedures can just as readily provide false 
information under current procedures. Criminal and civil fraud 
provisions, however, provide a strong deterrent to such activity.
    As far as the commenter's objection to Postal Service policy on the 
release of mailing statements under the Freedom of Information Act, a 
response to that objection is outside the scope of this notice.
    The second commenter expressed concerns that the Postal Service was 
``moving backward'' in its attempt to conduct reviews of authorized 
publications. The commenter predicted that, under the revised review 
procedures, entry post offices serving publishers' printers and 
fulfillment houses would be overwhelmed with publication issues to be 
verified. Such a large number of postage payment reviews to be 
conducted at one time would, according to the commenter, delay the 
processing of publications not having appropriate documentation to 
support analyses of zone-rated advertising portions in the 
publications.
    The Postal Service assures publishers that the revised review 
procedures have been tested and that they will not cause congestion or 
processing delays at business mail entry units or detached mail units. 
The documentation from which the review data will be drawn is the same 
documentation required with the mailing of a publication under current 
procedures. The Postal Service wishes to remind publishers that 
although some shift in the number of reviews will occur at certain post 
offices, only one issue of a publication will be reviewed each year and 
publishers will receive prior notification of the review date.
    The third commenter remarked that the revised procedures are too 
burdensome because they impose ``a new level of review on second-class 
publications'' and because they eliminate the ``responsibility bulk 
mail acceptance clerks have for the information and advice they give 
mailers.'' The commenter, while ``agree[ing] with the philosophy'' that 
the Postal Service should conduct eligibility reviews ``according to 
its judgment of the necessity for the review,'' asserted that some 
publishers 

[[Page 39198]]
mail publications that do not always qualify for second-class rates and 
that revocations of second-class mailing privileges take an average of 
10 years, with a minimum of 6 years.
    The Postal Service believes that the revised review procedures do 
not entail an additional level of review. Postage payment reviews have 
been a long-standing part of Postal Service audits of second-class 
publications. The revised procedures ensure that all publications are 
reviewed on a uniform annual basis in contrast to the current system in 
which some publications are reviewed at least three times as often as 
others.
    The Postal Service also believes that the commenter's concerns that 
the procedure will add an extra layer of staff effort and increase 
handling costs is unfounded. The revised review procedures simply 
reallocate current resources to more productive functions. These 
procedures do not lessen the responsibility of acceptance clerks, who 
perform an important role at the deposit point in examining the mail 
for proper preparation. These clerks cannot be expected, however, to 
uncover all possible errors during their reviews. To do so would 
require an in-depth scrutiny that increases considerably the cost of 
reviews, if done on each mailing, and delays the acceptance and 
processing of the mailing.
    With respect to the comment about the responsibility of postal 
employees providing accurate information, the Postal Service believes 
that the commenter is concerned that the revised procedures will 
increase revenue deficiency assessments and possibly even criminal 
penalties, both of which the commenter finds objectionable in cases 
where a postal employee makes an error in calculating postage or 
accepting the mail or the employee provides incorrect advice to a 
publisher about second-class eligibility requirements. This commenter's 
concerns suggest that the Postal Service audit its own acceptance 
practices at postal facilities and devote more resources to training 
employees.
    The commenter's suggestions about examining acceptance procedures 
at business mail entry units and improving employee training are well 
taken. The Postal Service does, in fact, conduct frequent audits of 
mail acceptance procedures at its facilities. The Postal Service also 
provides training for postal employees throughout the year, using 
classroom and on-the-job instruction to convey the intent of new and 
current programs, policies, and procedures.
    With respect to the concerns about the imposition of a revenue 
deficiency where a mailer has relied on the advice of a postal 
employee, the Postal Service notes, as in prior rulemakings, that the 
Postal Service is required to collect debts owed to it but will 
consider requests for relief or compromise of deficiencies on a case-
by-case basis, consistent with existing policies. See 59 FR 23161-23162 
(May 5, 1994).
    An annual postage payment review will facilitate the discovery of 
preparation problems. Although this review, on occasion, might result 
in the assessment of a revenue deficiency, an annual review avoids the 
expense and processing delays associated with in-depth reviews of each 
mailing. An annual review also ensures that all publishers operate 
under the same rules, consistent with the commenter's belief that the 
eligibility rules for second-class mailing privileges should be 
enforced uniformly.
    Although the average revocation action does not approach the age 
estimated in the comment, the Postal Service acknowledges that 
venerable cases exist. The Postal Service is making efforts to expedite 
these cases while complying with its obligation to afford all 
publishers due process.
    Appropriate procedures to reflect these changes will be implemented 
upon publication of this notice.
Stanley F. Mires,
Chief Counsel, Legislative.
[FR Doc. 95-18761 Filed 7-31-95; 8:45 am]
BILLING CODE 7710-12-P