[Federal Register Volume 62, Number 90 (Friday, May 9, 1997)]
[Rules and Regulations]
[Pages 25752-25755]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-12206]



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Part VI





Postal Service





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39 CFR Part 111



Experimental Nonletter-Size Business Reply Mail Categories and Fees; 
Implementation Standards; Changes in Domestic Classifications and Fees; 
Final Rule and Notice

  Federal Register / Vol. 62, No. 90 / Friday, May 9, 1997 / Rules and 
Regulations  

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POSTAL SERVICE

39 CFR Part 111


Experimental Nonletter-Size Business Reply Mail Categories and 
Fees; Implementation Standards

AGENCY: Postal Service.

ACTION: Final rule.

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SUMMARY: This final rule sets forth the Domestic Mail Manual (DMM) 
standards adopted by the Postal Service to implement the Decision of 
the Governors of the United States Postal Service on the Recommended 
Decision of the Postal Rate Commission on the Experimental Nonletter-
Size Business Reply Mail Categories and Fees, Docket No. MC97-1.
    Over a 2-year period, the Postal Service plans to study the effect 
of these experimental business reply mail (BRM) categories and fees as 
related to a controlled number of recipients of nonletter-size BRM. The 
nonletter-size BRM pieces in the experiment are expected to contain 
nonhazardous products that are typically received by firms such as 
medical diagnostic and pharmaceutical companies, medical supply houses, 
film processing companies, market research companies, and greeting card 
companies.

EFFECTIVE DATE: June 8, 1997.

FOR FURTHER INFORMATION CONTACT: Neil Berger, (202) 268-2859, or 
Michael T. Tidwell, (202) 268-2998.

SUPPLEMENTARY INFORMATION:

    The Postal Service will review applications and select as many as 
20 mailers to participate in the experiment. It is hoped that the BRM 
received by the participants will represent a diverse range of products 
returned by BRM. The limitation on the number of participants reflects 
a balance between the need to conduct an experiment that can be managed 
effectively with the need to collect sufficient data to ensure 
meaningful results.
    Selection of experiment participants depends on various criteria 
such as mail volume, product type and packaging, geographic location, 
ability to implement and maintain quality control procedures for 
accounting and documentation, and availability of postal resources. A 
prospective participant should be able to participate for at least 1 
year and, if selected, begin within a short period of time. Only two 
methods of counting the returned nonletter-size BRM pieces will be 
tested as part of this experiment: reverse manifesting and weight 
averaging.
    As part of this 2-year study, participants will be charged lower 
per piece BRM fees for qualifying pieces as follows:
     For participants using the weight averaging method, the 
per piece fee is 3 cents plus the appropriate First-Class Mail (or 
Priority Mail) postage.
     For participants using the reverse manifesting method, the 
per piece fee is 2 cents plus the appropriate First-Class Mail (or 
Priority Mail) postage.
    Participants must pay an annual business reply mail permit fee and 
an annual business reply mail advance deposit accounting fee, which are 
currently $85 and $205, respectively. A one-time set-up/qualification 
fee of $1,000 will be charged to participants using the reverse 
manifesting method. A one-time set-up/qualification fee of $3,000 will 
be charged to participants using the weight averaging method. In 
addition, there will be a monthly audit and maintenance fee of $1,000 
for participants using the reverse manifesting method and a monthly fee 
of $3,000 for participants using the weight averaging method.

Background

    On December 13, 1996, 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 experimental 
classifications and fees for specific types of nonletter-size business 
reply mail. The PRC designated the filing as Docket No. MC97-1 and 
published a notice of the filing, with a description of the Postal 
Service's proposals, on December 24, 1996, in the Federal Register (61 
FR 67860-67862).
    The Postal Service's Request to the PRC proposed that the Postal 
Service be permitted to establish new classifications and fees for 
nonletter-size business reply mail (BRM) on an experimental basis. The 
Postal Service proposed that these experimental BRM categories be put 
into effect for 2 years to provide sufficient time to determine the 
costs associated with the categories and the feasibility of 
implementing the experimental BRM categories on a permanent basis.

Manual BRM Verification Method

    The manual counting, weighing, rating, and billing for incoming 
nonletter-size BRM at delivery post offices is a labor-intensive and 
time-consuming task usually performed by postage due unit employees. 
These postal employees must weigh and rate each piece and calculate the 
appropriate postage and fees.
    This manual process frequently takes place during a short period 
between the arrival of the BRM at the postage due unit and the arrival 
of the BRM recipient at the post office to pick up the mail. Depending 
on mail volume, the necessary accounting sometimes delays the release 
and delivery of the mail. Such delays can adversely affect the 
recipient's ability to meet customer fulfillments expeditiously.

Alternative Verification Methods

    Some BRM recipients of large volumes of incoming nonmachinable BRM 
and local postal officials have developed alternative accounting 
methods that allow the recipients to take custody of their incoming 
mail sooner than mail manually weighed and rated on a piece-by-piece 
basis by the Postal Service.
    In some situations, these methods also make it less expensive for 
the Postal Service to determine the postage and fees. Two alternative 
accounting procedures, known as reverse manifesting and weight 
averaging, have been used for these purposes.
    As a rule, these alternative methods reduce postal workhours, 
provide more expeditious accounting, allow for earlier delivery of BRM 
pieces, and increase recipient satisfaction with BRM service. The 
experience of the Postal Service with these two methods has been 
limited.
    Review of these two methods has shown that the Postal Service 
should not permanently extend them to other BRM recipients until 
suitable and uniform standards are developed and the associated Postal 
Service costs are more fully documented.

Experimental Use of Alternative Methods

    On an experimental basis, the Postal Service proposed using these 
two alternative accounting procedures for processing large volumes of 
incoming nonletter-size BRM that, in contrast to letter-size BRM 
handled through the Business Reply Mail Accounting System (BRMAS), 
cannot be distributed on automated mail processing equipment.
    In consideration of these cost-saving accounting methods, the 
Postal Service proposed an experimental 2-cent per piece fee, in 
addition to the appropriate postage, for nonletter-size pieces using 
the reverse manifesting method and an experimental 3-cent per piece 
fee, in addition to the appropriate postage, for nonletter-size pieces 
using the weight averaging method.
    The Postal Service expects that establishing either method for a 
BRM permit account requires periodic

[[Page 25753]]

sampling, auditing, and monitoring of the permit holder's operations. 
As a consequence, this added administrative overhead will generate 
extraordinary postal costs beyond the current $85 annual BRM permit fee 
and $205 annual BRM advance deposit accounting fee.
    To recover these extraordinary costs, the Postal Service has 
adopted the following additional experimental fees:
     A one-time set-up/qualification fee of either $1,000 for 
the reverse manifesting method or $3,000 for the weight averaging 
method.
     A $1,000 monthly maintenance fee for accounts using the 
reverse manifesting method and $3,000 for accounts using the weight 
averaging method.

Data Collection and Analysis

    This experiment should give the Postal Service an opportunity to 
develop sampling, accounting, auditing, and monitoring procedures that 
meet acceptable standards of revenue protection. At the same time, the 
experiment should help the Postal Service determine the type of 
requirements that mailers must meet for their nonletter-size BRM to be 
accounted for using these alternative methods.
    The experiment will permit the Postal Service to evaluate more 
precisely the costs of the reverse manifesting and weight averaging 
methods. This evaluation can be achieved with the collection of data 
that represents a cross-section of recipients of nonletter-size BRM. 
These data will help the Postal Service assess the market for and 
potential financial impact of any permanent classification change.
    The Postal Service plans to select no more than 20 applicants to 
participate in the experiment, with as many as 10 selected applicants 
using reverse manifesting, and up to 10 applicants using weight 
averaging. The experiment has been authorized for a 2-year duration. 
The objectives of the experiment are as follows:
     To collect sufficient data for analyzing operational 
procedures, associated costs, and market research.
     To gauge and compare the costs and benefits of the two 
alternative methods: reverse manifesting and weight averaging.

Selection Process for Participants

    A mailer who wants to participate in the nonletter-size BRM 
experiment must submit a written request to: Manager, Classification 
and Product Development, Postal Service Headquarters, 475 L'Enfant 
Plaza SW, Room 6630, Washington, DC 20260-2453. The request must 
include sufficient data to assist in making an initial determination.
    Consideration is given to product type, geographic location, 
variability in the weight and daily volume of BRM, current accounting 
and quality control procedures, and availability of postal resources. 
In selecting participants, the manager of Classification and Product 
Development also uses the following criteria:
     The applicant must receive at one site a yearly average of 
several hundred thousand nonletter-size BRM pieces eligible for the 
current $0.10 per piece fee.
     The applicant must be able to participate in the 
experiment for at least 1 year.
     The applicant must be prepared to begin operation at a 
mutually agreed-upon time after selection.
    If the manager of Classification and Product Development determines 
that the applicant is suitable for participation, the applicant is 
instructed to follow the appropriate application procedures for 
authorization as described in Domestic Mail Manual G092 and published 
in this final rule. If the manager of Classification and Product 
Development determines that the applicant is not suitable, that manager 
sends the applicant a written notice explaining the reasons for the 
determination and, if appropriate, requests additional information for 
further review.
    Decisions of the manager of Classification and Product Development 
may be appealed to the BRM Experiment Review Board, Postal Service 
Headquarters, 475 L'Enfant Plaza SW, Room 6630, Washington DC 20260-
2453. Appeals must include sufficient information to assist the Review 
Board in reconsideration of initial determinations. Decisions of the 
Review Board are final.

Implementation

    Pursuant to 39 U.S.C. 3624, the PRC on April 2, 1997, issued to the 
Governors of the Postal Service its Recommended Decision on the Postal 
Service's Request. The PRC recommendation followed the mail 
classification structure and fees requested by the Postal Service.
    After reviewing the PRC's Recommended Decision and its consequences 
for the Postal Service and postal customers, the Governors, pursuant to 
39 U.S.C. 3625, acted on the PRC's recommendations on May 6, 1997. 
Decision of the Governors of the United States Postal Service on the 
Recommended Decision of the Postal Rate Commission on the Experimental 
Nonletter-Size Business Reply Mail Categories and Fees, Docket No. 
MC97-1.
    The Governors determined to approve the PRC's recommendations, and 
the Board of Governors set an implementation date of June 8, 1997, for 
those fee and classification changes to take effect. A notice 
announcing the Governors' Decision and the final Domestic Mail 
Classification Schedule and Rate Schedule changes is published 
elsewhere in this issue of the Federal Register.
    This final rule contains the DMM standards adopted by the Postal 
Service to implement the Governors' decision. The final rule reflects 
the criteria presented by the Postal Service in its pleadings before 
the PRC.
    As described above, the Postal Service is limiting these 
experimental rate categories to those pieces of nonletter-size business 
reply mail that are outside the parameters of current automation-
compatible letter-size business reply mail. As a consequence, the final 
rule excludes letter-size pieces prepared for a discount under the 
Business Reply Mail Accounting System (BRMAS).
    Because of the limited scope of this experiment, the Postal Service 
finds no need to solicit comment on the standards for nonletter-size 
BRM or to delay implementation of this experiment, pending their 
evaluation.

List of Subjects in 39 CFR Part 111

    Postal Service.

    For the reasons discussed above, the Postal Service hereby adopts 
the following amendments to the Domestic Mail Manual, which is 
incorporated by reference in the Code of Federal Regulations (see 39 
CFR part 111).

PART 111--[AMENDED]

    1. The authority citation for 39 CFR part 111 continues to read as 
follows:

    Authority: 5 U.S.C. 552(a); 39 U.S.C. 101, 401, 403, 404, 3001-
3011, 3201-3219, 3403-3406, 3621, 3626, 5001.

    2. Add new G092 to the Domestic Mail Manual as follows:

G  General Information:

* * * * *

G090  Experimental Classifications and Rates

* * * * *

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G092  Nonletter-Size Business Reply Mail

1.0  BASIC ELIGIBILITY

1.1  Description

    The standards in G092 apply to pieces claimed by an authorized 
mailer at the experimental fees for nonletter-size business reply mail 
(BRM). To participate in the experiment, a mailer must have the ability 
to establish and maintain quality control procedures that can document 
the receipt of large volumes of nonletter-size BRM. Draft Publication 
405, Guide to Business Reply Mail, contains the principal operating 
procedures for the experiment, including application forms, mailpiece 
design, and reverse manifesting and weight averaging calculations.

1.2  Applicability

    BRM pieces eligible under G092 must:
    a. Be mailed as First-Class Mail or Priority Mail and meet the 
specific standards in 2.0 or 3.0.
    b. Meet the applicable physical standards for nonletter-size mail 
in C050 (i.e., flat-size mail, machinable parcels, irregular parcels, 
or outside parcels) and C100 for First-Class Mail, except any BRM piece 
accounted for under the weight averaging method in 3.0 may not exceed 5 
pounds.
    c. Meet the basic standards for BRM in S922 other than those 
specific to letter-size pieces or pieces processed under the Business 
Reply Mail Accounting System (BRMAS).
    d. Meet the addressing standards in A010 and bear a delivery 
address with the correct ZIP+4 code and BRM ZIP+4 barcode assigned by 
the USPS.
    e. Be marked as specified in the service agreement under 2.0 or 3.0 
and comply with any current or future USPS marking standard.
    f. Meet the documentation and postage payment standards in 2.0 or 
3.0 and the service agreement.
    g. Be received at the post office that serves the permit holder.

1.3  Fees

    Each BRM piece eligible under G092 is charged the corresponding 
single-piece rate for First-Class Mail or Priority Mail plus the 
appropriate fee as shown in 5.2. To begin receiving pieces under this 
fee schedule, the participating mailer must also pay fees for these 
accounts and services:
    a. Annual BRM permit.
    b. Annual BRM advance deposit account, with an opening balance 
determined by expected volume for 2 days.
    c. Post office box service under D910 or caller service under D920, 
if applicable.
    d. One-time set-up/qualification fee.
    e. Applicable monthly maintenance fee.

1.4  Participation in Test

    A business reply mail recipient who wants to participate in the 
experiment and receive an account for nonletter-size BRM under G092 
must submit a written request for consideration to the manager of 
Classification and Product Development, USPS Headquarters (see G043 for 
address). The request must include sufficient data to assist the 
manager in making an initial determination. The manager may request 
additional data and an on-site visit to the applicant's plant. If the 
manager determines that the applicant is suitable for participation, 
the applicant follows the application procedures in either 2.0 or 3.0, 
as appropriate. Consideration is given to product type, geographic 
location of the mailer's site of operation, variability in the weight 
and daily volume of BRM, current accounting and quality control 
procedures, and availability of postal resources. In selecting 
participants, the manager also uses the following additional criteria:
    a. The applicant must receive or expect to receive at one site a 
yearly average of several hundred thousand nonletter-size BRM pieces 
eligible for the current $0.10 per piece fee under S922.
    b. The applicant must be able to participate in the experiment for 
at least 1 year.
    c. The applicant must be prepared to begin operation at a mutually 
agreed-upon time after selection.
2.0  REVERSE MANIFESTING

2.1  Basic Requirements

    Reverse manifesting is a method of assessing postage due and per 
piece fees for BRM by using a computerized database for calculating the 
weight and postage for each BRM piece received and to output a 
tabulation from the system for verification by the USPS. The weight is 
determined by weighing each piece or by using predetermined weights 
based on the data entered during processing (coded weight based on 
piece type). To participate in reverse manifesting for nonletter-size 
BRM, a mailer must meet these standards:
    a. Receive or expect to receive nonletter-size BRM on a consistent 
basis.
    b. Have or obtain a BRM permit and a BRM advance deposit account. 
The mailer must maintain sufficient funds in the advance deposit 
account to cover at least 2 days' postage and fees.
    c. Have or be able to develop an approved computerized manifest 
system.
    d. Provide documentation showing current internal quality control 
procedures for tracking and processing BRM or the ability to establish 
such procedures.

2.2  Application

    A business reply mail recipient applying for participation in the 
reverse manifesting portion of the experiment must complete a standard 
application provided by the USPS. The applicant submits this 
application to the manager of Classification and Product Development. 
The applicant includes the following documentation:
    a. Detailed specifications about the computerized manifest system, 
with all records identified and labeled.
    b. Detailed explanation of the supporting records, including 
samples of each manifest type, samples of each BRM piece and label, and 
postage due statements.
    c. Detailed description of internal quality control procedures.

2.3  Authorization

    The manager of Classification and Product Development reviews the 
application and proceeds as follows:
    a. If the applicant meets the conditions required for the reverse 
manifesting method and the application is otherwise consistent with the 
purposes and goals of the experiment, the manager approves the 
application and prepares a service agreement with the applicant. The 
agreement details the operating procedures for the reverse manifesting 
system and the responsibilities of the applicant and the USPS. For the 
purposes of the experiment, the Postal Service may require additional 
documentation and periodic review and inspection of each experiment 
participant's BRM processing and accounting operations. No agreement 
may remain in effect beyond the 2-year duration established for the 
experiment. The experimental classifications and fees take effect on 
June 8, 1997; they will be in effect no later than June 7, 1999.
    b. If the applicant does not appear to meet the conditions required 
for the reverse manifesting method or it is determined that approval of 
an application would not be consistent with the purposes and goals of 
the experiment, the manager of Classification and Product Development 
denies the application and sends

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written notice to the applicant, with the reasons for denial. The 
applicant has 30 days after receipt of the notice to file a written 
appeal to the BRM Experiment Review Board, USPS Headquarters. Decisions 
of the Review Board are final.

2.4  Renewal

    A reverse manifesting service agreement may be renewed before its 
expiration date after a review by the manager of Classification and 
Product Development. The preparation of a new agreement or an addendum 
to the current agreement depends on the type of modifications made to 
the system. Authorization may not extend beyond the ending date of the 
experimental classification.
3.0  WEIGHT AVERAGING

3.1  Basic Requirements

    Weight averaging is a method of assessing postage due and per piece 
fees for BRM without counting and weighing each piece. The USPS 
develops an average piece weight factor and an average piece count 
factor through verification procedures. These two factors (the weight 
average factors) are applied to the bulk weight of future BRM volumes 
to assess postage due and per piece fees. To participate in weight 
averaging for nonletter-size BRM, a mailer must meet these standards:
    a. Receive or expect to receive nonletter-size BRM on a consistent 
basis, within a statistically acceptable weight range.
    b. Have or obtain a BRM permit and a BRM advance deposit account. 
The mailer must maintain sufficient funds in the advance deposit 
account to cover at least 2 days' postage and fees.
    c. Provide documentation showing current internal quality control 
procedures for tracking and processing BRM or the ability to establish 
such procedures.

3.2  Application

    A business reply mail recipient applying for participation in the 
weight averaging portion of the experiment must complete a standard 
application provided by the USPS. The applicant submits this 
application to the manager of Classification and Product Development. 
The applicant includes with the application documentation that contains 
sample BRM pieces and labels representative of the weight range and 
types of pieces to be weight-averaged.

3.3  Authorization

    The manager of Classification and Product Development reviews the 
application and proceeds as follows:
    a. If the applicant meets the conditions required for the weight 
averaging method and the application is otherwise consistent with the 
purposes and goals of the experiment, the manager approves the 
application and prepares a service agreement with the applicant. The 
agreement details the operating procedures for weight averaging and the 
responsibilities of the applicant and the USPS. For the purposes of the 
experiment, the Postal Service may require additional documentation and 
periodic review and inspection of each experiment participant's BRM 
processing and accounting operations. No agreement may remain in effect 
beyond the 2-year duration established for the experiment. The 
experimental classifications and fees take effect on June 8, 1997; they 
will be in effect no later than June 7, 1999.
    b. If the application does not appear to meet the conditions 
required for the weight averaging method, the manager of Classification 
and Product Development denies the application and sends written notice 
to the applicant, with the reasons for denial. The applicant has 30 
days after receipt of the notice to file a written appeal to the BRM 
Experiment Review Board, USPS Headquarters. Decisions of the Review 
Board are final.

3.4  Renewal

    A weight averaging service agreement may be renewed before its 
expiration date after a review by the manager of Classification and 
Product Development. The preparation of a new agreement or an addendum 
to the current agreement depends on the type of modifications made. 
Authorization may not extend beyond the ending date of the experimental 
classification.
4.0  REVOCATION

4.1  Reasons

    The manager of Classification and Product Development may revoke a 
BRM participant's authorization for the experiment if that participant:
    a. Provides incorrect data on the manifest or other required 
documentation and appears unable or unwilling to correct the problems.
    b. Neglects to perform the required quality control procedures.
    c. No longer meets the criteria in this standard and the service 
agreement.

4.2  Notice

    After a revocation notice is issued, the participant and the USPS 
determine corrective actions and an implementation schedule, at the 
conclusion of which the USPS reexamines the participant's system. 
Failure to correct identified problems is sufficient grounds to revoke 
the participant's authorization.

4.3  Appeal

    Revocation proceeds if the participant is unable or unwilling to 
correct the discrepancies found. The participant may file a written 
appeal of revocation within 15 days from the date of receipt of the 
notice, with evidence explaining why the authorization should not be 
revoked. The appeal must be filed with the BRM Experiment Review Board, 
which issues the final agency decision. The participant may continue to 
accept BRM under the authorization, pending a decision on appeal. The 
revocation decision takes effect 7 days after receipt by the 
participant.
5.0  RATES AND FEES

5.1  Rate Application

    Each BRM piece received under G092 is charged the applicable per 
piece fee in 5.2 and the appropriate single-piece First-Class Mail rate 
or Priority Mail rate. In addition to the fees in 5.3 and 5.4, the 
required BRM permit fee and BRM advance deposit account fee must be 
paid every 12-month period.

5.2  Per Piece Fee

    Per piece, in addition to single-piece rate First-Class Mail or 
Priority Mail postage:
    a. Nonletter-size experimental (reverse manifesting): $0.02.
    b. Nonletter-size experimental (weight averaging): $0.03.

5.3  Monthly Maintenance Fee

    Per month:
    a. Nonletter-size experimental (reverse manifesting): $1,000.00.
    b. Nonletter-size experimental (weight averaging): $3,000.00.

5.4  Set-Up/Qualification Fee

    Per initial application:
    a. Nonletter-size experimental (reverse manifesting): $1,000.00.
    b. Nonletter-size experimental (weight averaging): $3,000.00.
    A transmittal letter making these changes in the pages of the 
Domestic Mail Manual will be published and will be transmitted to 
subscribers automatically. As provided by 39 CFR 111.3, notice of 
issuance will be published in the Federal Register.
Stanley F. Mires,
Chief Counsel, Legislative.
[FR Doc. 97-12206 Filed 5-7-97; 9:42 am]
BILLING CODE 7710-12-P