[Federal Register Volume 60, Number 168 (Wednesday, August 30, 1995)]
[Proposed Rules]
[Pages 45298-45323]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-21522]



      

[[Page 45297]]

_______________________________________________________________________

Part IV





Postal Service





_______________________________________________________________________



39 CFR Part 111



Classification Reform; Implementation Standards; Proposed Rule

  Federal Register / Vol. 60, No. 168 / Wednesday, August 30, 1995 / 
Proposed Rules  

[[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                                             
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                     Rate \1\           
               Sort level                    Optional/       Rate qualification minimum                   Tray level                  letter   Rate card
                                             required                                                                                (cents)    (cents) 
--------------------------------------------------------------------------------------------------------------------------------------------------------
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, overflow allowed, grouped         27.0       17.5
                                                                                            by 3-digit/scheme).                                         
Mixed AADC.............................  Required........  N/A...........................  Mixed AADC (no minimum, grouped by AADC       27.0       17.5
                                                                                            and, within each, by 3-digit/scheme).                       
--------------------------------------------------------------------------------------------------------------------------------------------------------
\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/required       qualification              Tray level           Rate \2\
                                                         minimum \1\                                    (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                       
----------------------------------------------------------------------------------------------------------------
                                                                                             Rate \1\           
      Sort level          Optional/required      Package minimum          Tray level          letter   Rate 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                             
----------------------------------------------------------------------------------------------------------------
                                                                                             Rate \1\           
      Sort level          Optional/required      Package minimum          Tray level          letter   Rate 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                                                  
----------------------------------------------------------------------------------------------------------------
                                                                           Tray level (sack level for   Rate \1\
         Sort level             Optional/required      Package minimum              parcels)            (cents) 
----------------------------------------------------------------------------------------------------------------
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                        
----------------------------------------------------------------------------------------------------------------
                                                                                                        Rate \1\
      Sort level          Optional/required      Rate qualification minimum          Tray level         (cents) 
----------------------------------------------------------------------------------------------------------------
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                         
----------------------------------------------------------------------------------------------------------------
                                                                                                        Rate \2\
         Sort level             Optional/required      Package minimum           Sack level \1\         (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                          
----------------------------------------------------------------------------------------------------------------
                                                                                                       Rate \1\ 
         Sort level            Optional/required      Package minimum             Tray level              \2\   
--------------------------------------------------------------------------------------------------------(cents)-
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/required    minimum               Tray level              (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 
                                                                                                      piece rate
         Sort level            Optional/required    Package minimum \1\       Sack 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 
                                                                                                       per-piece
        Sort level           Optional/required        Package minimum             Sack level\1\           rate  
                                                                                                        (cents) 
----------------------------------------------------------------------------------------------------------------
                                                   Saturation                                                   
                                                                                                                
----------------------------------------------------------------------------------------------------------------
Carrier Route............  Required............  90% total active           Carrier Route (minimum          13.5
                                                  residential deliveries     125 pieces or 15 pounds.           
                                                  or 75% total active                                           
                                                  deliveries possible per                                       
                                                  route (100% if                                                
                                                  simplified address).                                          
                                                                            5-Digit Carrier Routes          13.5
                                                                             (no minimum).                      
                                                                                                                
----------------------------------------------------------------------------------------------------------------
                                                  High Density                                                  
                                                                                                                
----------------------------------------------------------------------------------------------------------------
Carrier Route............  Required............  125 pieces per route.....  Carrier Route (minimum          14.8
                                                                             125 pieces or 15 pounds.           
                                                                            5-Digit Carrier Routes          14.8
                                                                             (no minimum).                      
                                                                                                                
----------------------------------------------------------------------------------------------------------------
                                                      Basic                                                     
                                                                                                                
----------------------------------------------------------------------------------------------------------------
Carrier Route............  Required............  10 pieces per route......  Carrier Route (minimum          15.5
                                                                             125 pieces or 15 pounds).          
                                                                            5-Digit Carrier Routes          15.5
                                                                             (no minimum).                      
----------------------------------------------------------------------------------------------------------------
\1\ Trays preferred for letters. Palletization preferred for flats. No residual.                                


                                                      Proposed 3 Digit ``Scheme Sort'' Combinations                                                     
--------------------------------------------------------------------------------------------------------------------------------------------------------
               Area                            Plant name                     Proposed 3-digit Zip code                 3-digit Zip codes served        
--------------------------------------------------------------------------------------------------------------------------------------------------------
Great Lakes......................  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.....................  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..........................  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........................  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........................  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..........................  Albuquerque, NM..................  873, 877-878, 881, 883-884..............  870-874, 877-878, 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..........................  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........................  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........................  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...................  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 level       Optional/required    Package minimum     Tray level        Regular rate        service rate 
----------------------------------------------------------------------------------------------------------------
Carrier Route...  Optional............  10 pieces per     Carrier Route    Carrier Route.......  Publications   
                                         route.            (full, no                              Service       
                                                           overflow).                             Carrier Route.
Carrier Route...  Optional............  10 pieces per     5-Digit Carrier  Carrier Route.......  Publications   
                                         route.            Routes (no                             Service       
                                                           minimum).                              Carrier Route.
5-Digit.........  Optional............  N/A.............  5-Digit (full,   3/5-Digit...........  Publications   
                                                           no overflow                            Services      
                                                           allowed).                              Carrier Route.
3-Digit.........  Required............  N/A.............  3-Digit (full,   3/5-Digit...........  Publications   
                                                           overflow                               Service.      
                                                           allowed).                                            
AADC............  Required............  N/A.............  AADC (full,      Basic...............  Publications   
                                                           overflow                               Services.     
                                                           allowed).                                            
Mixed AADC......  Required............  No minimum AADC   Mixed AADC (no   Basic...............  Publications   
                                         Sequence (with    mimimum).                              Service.      
                                         separations).                                                          
----------------------------------------------------------------------------------------------------------------


                                        III-2.--Periodicals (Regular and Publications Service Subclasses)--Flats                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
       Sort level           Optional/required      Package minimum              Sack level               Regular rate        Publications service rate  
--------------------------------------------------------------------------------------------------------------------------------------------------------
Firm....................  Optional............  2 copies............  .............................  Carrier Route.......  Publications Service or      
                                                                                                                            Publications Service Carrier
                                                                                                                            Route, based on further     
                                                                                                                            packaging and sacking.      
Carrier Route...........  Optional............  6 pieces per route..  Carrier Route (minimum one 6-  Carrier Route.......  Publications Service Carrier 
                                                                       piece package required if 24                         Route.                      
                                                                       or more pieces).                                                                 
Carrier Route...........  Optional............  6 pieces per route..  5-Digit Carrier Routes (no     Carrier Route.......  Publications Service Carrier 
                                                                       minimum).                                            Route.                      
5-Digit.................  Required............  6 pieces............  5-Digit (minimum one 6-piece   3/5-Digit...........  Publications Service.        
                                                                       package required if 24 or                                                        
                                                                       more pieces).                                                                    
3-Digit.................  Required............  6 pieces............  3-Digit (minimum one 6-piece   3/5-Digit...........  Publications Service.        
                                                                       package required if 24 or                                                        
                                                                       more pieces).                                                                    
ADC.....................  Required............  6 pieces (fewer       ADC (minimum one 6-piece       Basic...............  Publications Service.        
                                                 permitted).           package required if 24 or                                                        
                                                                       more pieces).                                                                    
Mixed ADC...............  Required............  No minimum..........  Mixed ADC (no minimum).......  Basic...............  Publications Service.        
--------------------------------------------------------------------------------------------------------------------------------------------------------

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