[Federal Register Volume 63, Number 209 (Thursday, October 29, 1998)]
[Proposed Rules]
[Pages 57970-57996]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-28803]


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POSTAL SERVICE

39 CFR Part 111


Proposed Domestic Mail Manual Changes to Implement New Labeling 
List L001 and to Implement Package Reallocation for Periodicals and 
Standard Mail (A) Flats Placed on Pallets

AGENCY: Postal Service.

ACTION: Proposed rule.

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SUMMARY: The migration of flat-size Periodicals and Standard Mail (A) 
from sacks to pallets during the past several years has compelled both 
the Postal Service and the mailing community to take a closer look at 
how mail is being sorted to pallets to identify opportunities for 
improvement. Early last year, the Mailers Technical Advisory Committee 
(MTAC) Presort Optimization Work Group, comprised of representatives of 
the Postal Service, presort software vendors, mail owners, and 
printers, was established to study and recommend changes in presort 
software and sortation levels to improve the overall pattern of 
containerization of mail by reducing or eliminating residual mail and 
by reducing or eliminating inefficient use of containers.
    The MTAC work group has identified two significant opportunities to 
improve the presort of palletized Periodicals and Standard Mail (A) 
flats. These are based on (1) protecting the sectional center facility 
(SCF) pallet level through the reallocation of packages from finer-
level pallets to higher-level pallets (e.g., by moving packages from a 
5-digit or 3-digit pallet to an SCF pallet that would not otherwise be 
created) and (2) by increasing the amount of mail that can be sorted to 
the 5-digit level through the creation of Domestic Mail Manual (DMM) 
labeling list L001. L001 is a 5-digit scheme list that will be required 
for the preparation of Periodical and Standard Mail (A) pallets and 
carrier routes sacks. This 5-digit/scheme sort will yield 5-digit 
scheme pallets and carrier routes sacks for those 5-digit ZIP Code 
zones listed in L001 and 5-digit pallets and carrier routes sacks for 
ZIP Codes not listed in L001. The 5-digit ZIP Code zones in each scheme 
will be treated as a single presort destination subject to a single 
pallet or sack minimum volume, with no further separation by 5-digit 
prefix required.
    The Postal Service is proposing requiring mailers to sort all 
palletized flats packages and sacked carrier route flats packages of 
Periodicals and Standard Mail (A) using labeling list L001 to create 5-
digit scheme pallets and 5-digit scheme carrier routes sacks. Although 
package reallocation will be optional when initially implemented, the 
Postal Service believes that the opportunities it offers for more 
consistent service warrant exploring the possibility of requiring it at 
some future date.
    The proposed standards for package reallocation and 5-digit/scheme 
sort for palletized flats will also apply to Periodicals irregular 
parcels, which are prepared under the same standards that apply to 
flats, and to presorted Standard Mail (A) irregular parcels that are 
part of a mailing job prepared in part as FSM 1000 automation flats 
placed on pallets. The residual shape surcharge for non-letter, non-
flat-size mail will apply to the Standard Mail (A) irregular parcels.

DATES: Comments must be received on or before December 28, 1998.

ADDRESSES: Mail or deliver written comments to the Manager, Business 
Mail Acceptance, USPS Headquarters, 475 L'Enfant Plaza SW, Room 6800, 
Washington, DC 20260-6808. Copies of all written comments will be 
available for inspection and photocopying between 9 a.m. and 4 p.m., 
Monday through Friday, at the above address.

FOR FURTHER INFORMATION CONTACT: Cheryl Beller, (202) 268-5166.

SUPPLEMENTARY INFORMATION:

Package Reallocation to Protect the SCF Pallet

    Under current rules for preparing packages of flats on pallets, 
mailers are required to prepare SCF pallets after preparing required 5-
digit and optional 3-digit pallets. Many mailers choose to prepare 
optional 3-digit pallets, particularly when preparing regional or large 
volume national mailings. They can do this by selecting the option in 
their presort software that will result in the preparation of 3-digit 
pallets for the entire job (list) that is being processed. Generally, 
the preparation of 3-digit pallets benefits postal operations and 
improves service. In instances where an SCF serves multiple 3-digit ZIP 
Code areas, however, there are many situations where the preparation of 
3-digit pallets causes mail that would otherwise be prepared on SCF 
pallets to be sorted to a pallet level that is less finely sorted.
    A multiple 3-digit SCF is often comprised of both high-and low-
density 3-digit ZIP Code service areas. If a mailer selects the presort 
software option for preparing 3-digit pallets, it is common for a 
mailing to have sufficient volume to meet a mailer-specified pallet 
weight minimum for high-density 3-digit ZIP Codes but not enough volume 
to meet the pallet weight minimum for the remaining lower density 3-
digit ZIP Codes. Consequently, mail for the lower density 3-digit ZIP 
Codes often falls to a less finely sorted pallet level beyond the SCF 
level (e.g., to an ADC or BMC pallet). Always preparing 3-digit pallets 
can have a negative impact on delivery consistency for a mailing job 
because some mail destined to an SCF service area may be on 5-digit and 
3-digit pallets, which may also be drop shipped to the SCF, while the 
remaining mail for the same SCF service area may be on ADC or BMC 
pallets or in the appropriate level sack. Mail on the ADC or BMC 
pallets or in sacks may be entered into the postal processing system 
further upstream (e.g., at a BMC or at the origin post office where the 
mailing was prepared).
    Using current presort software, the primary option available to 
mailers for remedying the situation described above is to deactivate 
the option for preparing 3-digit pallets. This will result in mail for 
all 3-digit ZIP Codes within a multiple-3-digit ZIP Code SCF service 
area being combined to make an SCF pallet, based on the minimum pallet 
weight selected, after all required 5-digit pallets are prepared. 
However, because 3-digits pallets do have value for mailers and postal 
operations, their elimination is not an optimal solution. Discussions

[[Page 57971]]

with the major presort software vendors have revealed that presort 
programs can be created that will enable optimal SCF palletization 
without necessarily eliminating 3-digit pallets. The process, which is 
known as package reallocation, prevents sortation to the 3-digit pallet 
level when such preparation impedes optimal SCF palletization. 
Moreover, the process will reallocate the minimum amount of mail 
necessary from high-density pallets at a finer level of sortation (5-
digit/scheme or 3-digit pallets) to create an SCF pallet that would not 
otherwise have been prepared without reallocation. This will help draw 
mail back to the SCF pallet level from ADC/BMC pallets and will also 
allow mailers to palletize mail that would otherwise be required to be 
prepared in sacks due to the elimination of standards for preparing 
mixed ADC and mixed BMC pallets of flats that became effective October 
4, 1998.

Increasing the Amount Of Mail At the 5-Digit Level by Creating a 5-
digit/scheme List

    The Postal Service is also proposing implementation of a new 5-
digit/scheme list for pallets and carrier routes sacks of Periodicals 
and Standard Mail (A) flat packages and bundles that is similar to the 
old DMM L001 list. However, there are three primary differences in the 
new list and the old DMM L001 list: (1) the old list was a multi-coded 
city list while the new list is a ``scheme type'' list of combinations 
of 5-digits based on where the flats are actually worked within a 
single processing facility; (2) the old L001 list was used for package 
preparation as well as sack and pallet preparation while the new list 
will be used only for sack and pallet preparation; and (3) the old L001 
pallet level was optional while the new DMM L001 list will become part 
of the required 5-digit/scheme pallet level. Therefore, the 5-digit 
pallet presort level for packages of flats will become a 5-digit/scheme 
presort level and mailers will not prepare individual 5-digit pallets 
to zones that are listed as part of a combination on the new L001 list; 
instead they will prepare them as an L001 pallet. The expected results 
are an increase in the amount of mail that can be placed on 5-digit (to 
be renamed 5-digit/scheme) pallets and the likelihood that postal 
plants will be able to crossdock more mail directly to delivery 
offices.
    With the implementation of the new 5-digit scheme pallet, the SCF 
pallet level may become more vulnerable than it is today. For instance, 
if some mail for low-density 3-digits is already falling through the 
SCF level, because of the preparation of other 3-digit pallets for 
areas within the same SCF, then the 5-digit scheme pallet will likely 
amplify the problem as more mail is potentially pulled away from the 
SCF pallet. Package reallocation will help to address this. It should 
be noted that although the examples reference multiple 3-digit SCF 
packages, reallocation will also apply to single 3-digit SCFs.

Implementation Dates

    The Postal Service proposes requiring 5-digit/scheme pallets and 
carrier routes sacks using labeling list L001 effective May 1999, and 
implementing the option to prepare pallets using package reallocation 
at the same time in conjunction with presort software releases 
incorporating the April address information system releases. This will 
allow presort vendors and mailers sufficient time to incorporate 
changes related to the R97-1 rate case before making changes necessary 
to support L001 and reallocation. This will also allow them time to 
have palletization software tested and PAVE-certified.

Summary of Proposed USPS Revisions

Reallocation Rules

Determine Whether Reallocation Should be Performed
    The presort software will identify instances where some mail for an 
SCF service area would fall beyond the SCF level (e.g., on ADC or BMC 
pallets) if all required 5-digit/scheme and optional 3-digit pallets, 
if selected, are prepared for the SCF service area. The SCF pallet 
level serves as a dividing line and reallocation is performed only when 
there is mail for the same SCF service area on both sides of the 
dividing line.
    The software will next determine the weight of mail that would drop 
beyond the SCF level and the minimum weight of mail (correlating to a 
minimum number of pieces in the mailing) that is required to bring that 
mail back to the SCF level. For example, if a mailer sets 500 pounds as 
the minimum weight for SCF pallets and there are 300 pounds of mail 
that fall beyond the SCF pallet level after preparation of 5-digit/
scheme and/or 3-digit pallet(s), then 200 pounds would be the minimum 
volume to be reallocated to bring the 300 pounds back to the SCF level.

General Reallocation Rules

    a. Package preparation is not Affected by the Reallocation process. 
This process should always reallocate only the minimum number of 
complete packages necessary to create an SCF pallet meeting the minimum 
pallet weight selected. Based on the weight of individual pieces within 
a package, the weight of mail that is reallocated will often be 
slightly more than the minimum volume required to create an SCF pallet. 
For example, if a mailer selects 250 pounds as the minimum SCF pallet 
weight and 239 pounds of mail would fall beyond the SCF level after 5-
digit/scheme and 3-digit pallets are prepared for a specific SCF 
service area, the software may find the smallest package available for 
reallocation on a candidate 3-digit pallet that contains 16 pieces that 
each weigh 0.8125 pound. As a result, the total weight of the mail that 
will be reallocated is 13 pounds and the SCF pallet that will be 
created will contain 252 pounds of mail.
    b. Reallocate packages from the highest (least finely sorted) 
available pallet level possible. For example, attempt to reallocate 
some mail from a 3-digit pallet first; if that is not possible, attempt 
to eliminate a 3-digit pallet and reallocate all mail from that pallet 
to create an SCF pallet. Finally, if mail cannot be reallocated from a 
3-digit pallet, attempt to reallocate some mail from a 5-digit/scheme 
pallet.
    c. The reallocation process may result in the elimination of a 3-
digit pallet to create an SCF pallet, but a 5-digit/scheme pallet may 
not be eliminated in order to create an SCF pallet.
    d. When reallocating mail to create an SCF pallet, reallocate mail 
from only one pallet. This may be accomplished by reallocating a 
portion of a 3-digit pallet, reallocating all mail from a 3-digit 
pallet, or reallocating a portion of a 5-digit/scheme pallet following 
the sequence in b.
    e. Mailers may use any minimum pallet weight(s) permitted by DMM 
standards and may use different minimum weights for different pallet 
levels in conjunction with package reallocation. For example, a mailer 
may select 500 pounds as the minimum weight for creating 5-digit/scheme 
pallets, 1000 pounds for optional 3-digit pallets, and 250 pounds for 
SCF pallets.

Priority for Reallocation of Packages

    3-digit pallets will remain optional. If 3-digit pallets are 
prepared, attempt to reallocate mail by following these steps:
    a. The software will attempt to identify a 3-digit pallet of 
adequate weight that can support reallocation of one or more packages 
to bring the mail that has fallen through the SCF level back to the SCF 
level. There must be a sufficient volume of mail remaining on the 3-
digit pallet after reallocation to meet the 3-digit pallet weight 
minimum established by the mailer in compliance

[[Page 57972]]

with applicable DMM standards. If a 3-digit pallet of adequate weight 
is available, then an SCF pallet will be prepared by reallocating some 
mail from the 3-digit pallet and combining it with the mail that would 
have fallen beyond the SCF level. For example, when a mailer sets the 
minimum pallet weight for all presort levels at 500 pounds, if there 
are 300 pounds of mail beyond the SCF dividing line, a minimum of 200 
pounds needs to be reallocated. An adequate weight 3-digit pallet would 
be one containing a minimum of 700 pounds of mail. After reallocation 
of a minimum of 200 pounds of mail, 500 or more pounds of mail would 
remain on the 3-digit pallet and this would meet the minimum pallet 
weight standard.
    b. If no single 3-digit pallet within the SCF service area contains 
an adequate volume of mail to allow reallocation of a portion of the 
mail on a pallet as described in the previous step, then eliminate one 
3-digit pallet and reallocate all of the mail to an SCF pallet that 
also contains the mail that would have fallen through the SCF level. 
The result will be that the software will not prepare one 3-digit 
pallet per any affected SCF service area (i.e., it eliminates a 3-digit 
pallet) if it is detrimental to the SCF pallet.
    Because 5-digit/scheme pallets provide savings in both pallet and 
package handlings, whenever a 3-digit pallet is available, the software 
should eliminate a 3-digit pallet instead of borrowing mail from a 5-
digit/scheme pallet.
    c. If there are no 3-digit pallets, the software will look for a 5-
digit/scheme pallet of adequate weight that can support reallocation of 
one or more packages to bring the mail that would fall through the SCF 
level back to the SCF level. A sufficient volume of mail must remain on 
the 5-digit/scheme pallet after reallocation to meet the pallet weight 
minimum established by the mailer in compliance with applicable DMM 
standards. If a 5-digit/scheme pallet of adequate weight is available, 
the reallocated packages will be combined with the mail that would have 
fallen through the SCF level.
    If no single 5-digit/scheme pallet within the SCF service area 
contains an adequate volume of mail to allow reallocation of a portion 
of the mail on a pallet as described in the previous step, then no 
packages will be reallocated and an SCF pallet will not be prepared. 
Under this scenario, the mail that falls beyond the SCF pallet level 
must be placed on the appropriate level pallet (ADC or BMC) or in the 
appropriate level sack. The reallocation standards do not allow a 5-
digit/scheme pallet to be eliminated in order to protect an SCF pallet.

If 3-digit pallets are not prepared, follow these steps:

    a. The software will attempt to identify a 5-digit/scheme pallet of 
adequate weight that can support reallocation of one or more packages 
to bring the mail that would fall through the SCF level back to the SCF 
level. A sufficient volume of mail must remain on the 5-digit/scheme 
pallet after reallocation to meet the pallet weight minimum established 
by the mailer in compliance with applicable DMM standards. If a 5-
digit/scheme pallet of adequate weight is available, the reallocated 
packages will be combined with the mail that would have fallen through 
the SCF level.
    b. If no single 5-digit/scheme pallet within the SCF service area 
contains an adequate volume of mail to allow reallocation of a portion 
of the mail on a pallet as described in the previous step, then no 
packages will be reallocated and an SCF pallet will not be prepared. 
Under this scenario, the mail that falls beyond the SCF pallet level 
must be placed on the appropriate level pallet (ADC or BMC) or in the 
appropriate level sack. The reallocation standards do not allow a 5-
digit/scheme pallet to be eliminated in order to protect an SCF pallet.
    5-digit/scheme pallets will not be permitted to be eliminated for 
the following reasons: (1) these pallets may be cross-docked to 
delivery units and are therefore valuable to postal operations as well 
as to customers for service, and (2) Periodicals mailers have expressed 
concerns about the cost and corresponding rate impact of eliminating 5-
digit pallets. Therefore, to minimize the amount of mail that will 
shift from that level to the SCF, mail may be reallocated from 5-digit/
scheme pallets only if sufficient volumes remain to retain the 5-digit/
scheme pallet.
    Moreover, the Postal Service expects a significant shift of more 
mail to the 5-digit/scheme pallet level as a result of required use of 
labeling list L001. Therefore, any reallocation of mail from the 5-
digit/scheme level to the SCF level will be more than offset by the new 
volume that will be captured by the required 5-digit/scheme pallet.
    Documentation of Reallocation for Verification and Presort Accuracy 
Validation and Evaluation (PAVE) Certification
    In developing the proposed standards for reallocation, the MTAC 
work group considered what information would be needed during the 
postal verification process to allow acceptance personnel to identify 
whether reallocation had been performed and determine if it had been 
performed correctly. It was determined that proper reallocation could 
best be ensured by: (1) keeping the rules as simple as possible by 
employing a one-to-one relationship in the reallocation process; that 
is, mail from only one pallet may be reallocated to create an SCF 
pallet; and (2) requiring any mailer who uses reallocation to use PAVE-
certified presort software that has been certified to meet the 
reallocation standards.
    Instances where mail is reallocated to protect an SCF pallet will 
be documented on the USPS Qualification Report by designating the 
protected SCF pallet with an identifier of ``PSCF.'' This identifier 
will be used only on the USPS Qualification Report and will not be 
required to appear on pallet labels or on any other mailing 
documentation. Furthermore, the MTAC Mail.DAT Work Group has indicated 
that they will accommodate the ``PSCF'' identifier in their data file 
structure and that they will make the appropriate changes to support 
verification.
    Although exempt from the notice and comment requirements of the 
Administrative Procedure Act (5 U.S.C. 553(b), (c)) regarding proposed 
rulemaking by 39 U.S.C. 410(a), the Postal Service invites comments on 
the following proposed revisions of the Domestic Mail Manual, 
incorporated by reference in the Code of Federal Regulations. See 39 
CFR part 111.

List of Subjects in 39 CFR Part 111

    Postal service.
    Accordingly, the Postal Service proposes the following revisions to 
the Domestic Mail manual, incorporated by reference in 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, 414, 
3001-3011, 3201-3219, 3403-3406, 3621, 3626, 5001.

    2. Revise the following sections of the Domestic Mail Manual as 
follows:

E  ELIGIBILITY

E200  Periodicals

* * * * *

E230  Nonautomation Rates

* * * * *
2.0  CARRIER ROUTE RATES
* * * * *

2.2  Eligibility

* * * * *

[[Page 57973]]

[Revise 2.2a to add the word ``scheme'' before ``carrier routes sacks'' 
as follows:]
    a. The basic carrier route rate applies to copies in carrier route 
packages of six or more letter-size pieces each that are sorted to 
carrier route, 5-digit carrier routes, or 3-digit carrier routes trays; 
and six or more flat-size pieces or irregular parcel-size pieces each 
that are sorted to carrier route or 5-digit/scheme carrier routes 
sacks.
* * * * *

E250  Destination Entry

* * * * *
2.0  DDU RATE

 2.1  Eligibility

[Revise the second sentence of 2.1 by adding the word ``scheme'' before 
``carrier routes sacks'' as follows:]
    * * * Copies claimed at DDU rates must be part of a carrier route 
package placed in a carrier route tray or sack, a 5-digit carrier 
routes tray, or a 5-digit/scheme carrier routes sack for flats and 
irregular parcels, under M200, or palletized under M045, and otherwise 
eligible for and claimed at a carrier route rate. * * *
* * * * *

E600  Standard Mail

* * * * *

E630  Nonautomation Presort Rates

* * * * *
2.0  ENHANCED CARRIER ROUTE RATES
* * * * *

2.8  Basic Rates

    Basic (nonautomation) carrier route rates apply to each piece that 
is sorted under M620 into the corresponding qualifying groups:
* * * * *
[Revise 2.8b to add the word ``scheme'' before ``carrier routes sacks'' 
as follows:]
    b. Flat-size pieces in a carrier route package of 10 or more pieces 
palletized under M045, or placed in a carrier route sack containing at 
least 125 pieces or 15 pounds of pieces or in a 5-digit/scheme carrier 
routes sack.
* * * * *

E650  Destination Entry

E651  Regular, Nonprofit, and Enhanced Carrier Route Standard Mail

* * * * *
7.0  DDU DISCOUNTS
* * * * *

7.2  Eligibility

[Revise the first sentence of 7.2 to provide DDU rate eligibility for 
carrier route flats placed in 5-digit/scheme carrier routes sacks, as 
follows:]
    Pieces in a mailing that meet the standards in 1.0 through 4.0 and 
7.0 are eligible for the DDU rate when deposited at a DDU, addressed 
for delivery within that facility's service area (carrier routes), and 
placed in properly prepared and labeled carrier route packages sorted 
to carrier route trays (letters) or sacks (flats and irregular 
parcels), 5-digit carrier routes trays (letters) or sacks (irregular 
parcels), or 5-digit/scheme carrier routes sacks (flats) under M600, or 
palletized under M045, and otherwise eligible for and claimed at a 
carrier route rate. * * *
* * * * *

L  Labeling Lists

L000  General Use

[Amend L000 by adding new labeling list L001 as follows:]

L001  5-Digit Scheme--Periodical and Standard (A) Flats

    When required by the standards for specific rates, flats packages 
for the 5-digit ZIP Codes shown in Column A must be combined on pallets 
or in carrier routes sacks labeled to the corresponding destination 
shown in Column B.

BILLING CODE 7710-12-P

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BILLING CODE 7710-12-C

[[Page 57992]]

M  Mail Preparation and Sortation

M000  General Preparation Standards

M010  Mailpieces

M011  Basic Standards

1.0  TERMS AND CONDITIONS

1.1 Presort Process

[Amend 1.1 to incorporate a reference to package reallocation to read 
as follows:]
    Presort is the process by which a mailer prepares mail so that it 
is sorted to at least the finest extent required by the standards for 
the rate claimed. Generally, presort is performed sequentially, from 
the lowest (finest) level to the highest level, to those destinations 
specified by standard and is completed at each level before the next 
level is prepared. Under standards for package reallocation for 
Periodicals flats and irregular parcels and Standard Mail (A) flats on 
pallets (see M041 and M045), mail will not necessarily be placed on the 
lowest (finest) level pallets. Not all presort levels are applicable in 
all situations.

1.2  Presort Levels

    Terms used for presort levels are defined as follows:
* * * * *
[Amend 1.2d and add new 1.2e to differentiate between 5-digit schemes 
for automation letters and 5-digit schemes for pallets and for carrier 
routes sacks of Periodicals flats and irregular parcels and Standard 
Mail (A) flats; renumber current 1.2e through 1.2m as 1.2f through n, 
as follows:]
    d. 5-digit scheme for automation letters: the ZIP Code in the 
delivery address on all pieces is one of the 5-digit ZIP Code areas 
processed by the USPS as a single scheme, as shown in the USPS City 
State File.
    e. 5-digit scheme carrier routes for Periodicals flats and 
irregular parcels and Standard Mail (A) flats: the ZIP Code in the 
delivery address on all pieces begins with one of the 5-digit ZIP Code 
zones processed by the USPS as a single scheme, as shown in L001.
* * * * *

1.3  Preparation Instructions

* * * * *
[Insert new 1.3h and i to define 5-digit/scheme sort for carrier routes 
sacks of Periodicals flats and irregular parcels and Standard Mail (A) 
flats and 5-digit/scheme sort for Periodicals flats and irregular 
parcels packages and Standard Mail (A) flats packages on pallets; 
renumber 1.3h through p as 1.3j through r, respectively, to read as 
follows:]
    h. A 5-digit/scheme sort for sacked carrier route rate Periodicals 
flats and irregular parcels and Enhanced Carrier Route rate Standard 
Mail (A) flats yields 5-digit scheme carrier routes sacks for those 5-
digit ZIP Codes listed in L001 and 5-digit carrier routes sacks for 
other areas. The 5-digit ZIP Codes in each scheme are treated as a 
single presort destination subject to a single minimum sack volume, 
with no further separation by 5-digit ZIP Code required. Sacks prepared 
for a 5-digit scheme destination that contain packages for only one of 
the schemed 5-digit areas are still considered 5-digit scheme sorted 
and are labeled accordingly. The 5-digit/scheme sort is required for 
carrier route rate flat-size and irregular parcel Periodicals and flat-
size Enhanced Carrier Route rate Standard Mail (A) in sacks and may not 
be used for mail at other rates in sacks.
    i. A 5-digit/scheme sort for Periodicals flats and irregular 
parcels and Standard Mail (A) flats prepared as packages on pallets 
yields 5-digit scheme pallets for those 5-digit ZIP Codes listed in 
L001 and 5-digit pallets for other areas. The 5-digit ZIP Codes in each 
scheme are treated as a single presort destination subject to a single 
minimum pallet volume, with no further separation by 5-digit ZIP Code 
required. Pallets prepared for a 5-digit scheme destination that 
contain packages for only one of the schemed 5-digit areas are still 
considered 5-digit scheme sorted and are labeled accordingly. The 5-
digit/scheme sort is required for flat-size and irregular parcel-size 
Periodicals and flat-size Enhanced Carrier Route rate Standard Mail (A) 
prepared as packages on pallets and may not be used for other mail 
prepared on pallets, except for packages of Standard Mail (A) irregular 
parcels that are part of a mailing job that is prepared in part as 
palletized flats at automation rates.
* * * * *

M030  General Preparation Standards

    M031 Labels
* * * * *
4.0  PALLET LABELS
* * * * *

4.8  Delivery Unit, SCF, DDU, and DSCF Rates

[Amend 4.8 to refer to 5-digit/scheme pallets, as follows:] If a 5-
digit, 5-digit/scheme, 3-digit, or SCF pallet contains copies claimed 
at Periodicals delivery unit and SCF zone rates, or Standard Mail DDU 
and DSCF rates, as applicable, the content line of the pallet label 
must show the designation ``DDU/SCF,'' after the content description.
* * * * *
5.0  SECOND LINE CODES
[Amend 5.0 to include code for 5-digit scheme carrier routes sacks, as 
follows:] The codes shown below must be used as appropriate on Line 2 
of sack, tray, and pallet labels.

------------------------------------------------------------------------
                Content type                         *COM022*Code
------------------------------------------------------------------------
                  *        *        *        *        *
Scheme.....................................  SCH
------------------------------------------------------------------------

(Periodicals and Standard Mail (A) 5-digit scheme carrier routes sacks 
and 5-digit scheme pallets only)
* * * * *

M032  Barcoded Labels

1.0  BASIC STANDARDS--TRAY AND SACK LABELS
* * * * *

Exhibit 1.3a  3-Digit Content Identifier Numbers

[Amend Exhibit 1.3a, Periodicals (PER) and Standard (A) by inserting 
new 5-digit scheme carrier routes sacks and 5-digit scheme Enhanced 
Carrier Routes sacks categories, respectively, to read as follows:]
* * * * *

----------------------------------------------------------------------------------------------------------------
              Class and mailing                      CIN                  Human-Readable content line
----------------------------------------------------------------------------------------------------------------
*                  *                  *                  *                  *                  *
                                                        *
              Periodicals (Per)
*                  *                  *                  *                  *                  *
                                                        *
PER Flats--Carrier Route:

[[Page 57993]]

*                  *                  *                  *                  *                  *
                                                        *
5-digit carrier routes sacks.................             386  PER FLTS CR-RTS.
5-digit scheme car. rts. Sacks...............             SCH  XXX PER FLTS CR-RTS.
*                  *                  *                  *                  *                  *
                                                        *
PER Parcels--Carrier Route:
*                  *                  *                  *                  *                  *
                                                        *
5-digit carrier routes sacks.................             386  PER IRREG CR-RTS.
5-digit scheme car. rts. Sacks...............             SCH  XXX PER IRREG CR-RTS.
*                  *                  *                  *                  *                  *
                                                        *
              Periodicals (News)
*                  *                  *                  *                  *                  *
                                                        *
NEWS Flats--Carrier Route:
*                  *                  *                  *                  *                  *
                                                        *
5-digit carrier routes sacks.................             486  NEWS FLTS CR-RTS.
5-digit scheme car. rts. sacks...............             SCH  XXX NEWS FLTS CR-RTS.
*                  *                  *                  *                  *                  *
                                                        *
NEWS Parcels--Carrier Route:
*                  *                  *                  *                  *                  *
                                                        *
5-digit carrier routes sacks.................             386  NEWS IRREG CR-RTS.
5-digit scheme car. rts. Sacks...............             SCH  XXX NEWS IRREG CR-RTS.
*                  *                  *                  *                  *                  *
                                                        *
              Standard Mail (A)
*                  *                  *                  *                  *                  *
                                                        *
Enhanced Carrier Route Flats--Nonautomation:
*                  *                  *                  *                  *                  *
                                                        *
5-digit carrier routes sacks.................             586  STD FLTS CR-RTS.
5-digit scheme car. rts. Sacks...............             SCH  XXX STD FLTS CR-RTS.
*                  *                  *                  *                  *                  *
                                                        *
----------------------------------------------------------------------------------------------------------------

M033  Sacks And Trays

1.0  BASIC STANDARDS
* * * * *

1.7  Origin/Entry SCF/Plant Sacks and Trays

[Amend the first sentence in 1.7 to refer to preparation of required 5-
digit/scheme carrier routes sacks for Periodicals and Standard Mail 
(A), as follows:] After all required carrier route, 5-digit (and, where 
permitted, 5-digit/scheme), 3-digit (and, where permitted, 3-digit 
scheme) sacks/trays are prepared * * *
* * * * *

M040  Pallets

M041  General Standards

* * * * *
5.0  PREPARATION
[Amend 5.1 and 5.2 to indicate that pallet sortation using package 
reallocation may not always require sorting a mailing to the finest 
level as follows: (note that 5.1 is as amended effective October 4, 
1998, with the elimination of options to prepare flats on mixed ADC and 
mixed BMC pallets)]

5.1  Presort

    Pallet preparation and pallet sortation are subject to the specific 
standards in M045. Pallet sortation is generally intended to presort 
the palletized portion of a mailing to at least the finest extent 
required for the corresponding class of mail and method of preparation. 
Pallet sortation is sequential from the lowest (finest) level to the 
highest and must be completed at each required level before the next 
optional or required level is prepared. Standard preparation terms and 
presort levels for pallets are defined in M011 and M045. For sacks, 
trays, or machinable parcels on pallets, the mailer must prepare all 
required pallet levels before any mixed ADC or mixed BMC pallets are 
prepared for a mailing or job. Packages and bundles prepared under M045 
must not be placed on mixed ADC or mixed BMC pallets. Packages and 
bundles that cannot be placed on pallets must prepared in sacks under 
the standards for the rate claimed. The standards for package 
reallocation (M045.5.0), an optional method of pallet preparation, are 
designed to retain as much mail as possible at the SCF level and may 
result in some packages of Periodicals flats and irregular parcels and 
Standard Mail (A) flats, and irregular parcels that are part of a 
mailing job that is prepared in part as palletized flats at automation 
rates, not being placed on the finest level of pallet possible. Mailers 
must use PAVE-certified presort software to prepare mailings using 
package reallocation.

[[Page 57994]]

5.2  Required Preparation

    A pallet must be prepared to a required sortation level when there 
are 500 pounds of Periodicals or Standard Mail packages, sacks, or 
parcels or six layers of Periodicals or Standard Mail (A) letter trays. 
For packages of Periodicals flats and irregular parcels and packages of 
Standard Mail (A) flats on pallets prepared under the standards for 
package reallocation (M045.5.0), not all mail for a required 5-digit/
scheme destination is required to be on a 5-digit/scheme pallet. Mixed 
pallets of sacks, trays, or machinable parcels must be labeled to the 
BMC or ADC (as appropriate) serving the post office where mailings are 
entered into the mailstream. The processing and distribution manager of 
that facility may issue a written authorization to the mailer to label 
mixed BMC or mixed ADC pallets to the post office or processing and 
distribution center serving the post office where mailings are entered. 
These pallets contain all mail remaining after required and optional 
pallets are prepared to finer sortation levels under M045, as 
appropriate.
* * * * *
6.0  COPALLETIZED, COMBINED, OR MIXED-RATE LEVEL MAILINGS OF FLAT-SIZE 
PIECES
* * * * *
[Amend 6.3 and 6.4 to indicate that pallet sortation using package 
reallocation may not always require sorting a mailing to the finest 
level, as follows:]

6.3  Periodicals Publications

    To combine more than one Periodicals publication on pallets, the 
mailer must merge and presort copies of all the publications into 
common packages to achieve the finest presort level for the combined 
mailing. To copalletize different Periodicals flat-size publications, 
the mailer must consolidate on pallets all independently sorted 
packages for each publication to achieve the finest presort level for 
the mailing, except that a copalletized mailing prepared under 
M045.5.0, using package reallocation, may not always result in all 
packages being placed on the finest pallet level possible. Both 
combining and copalletizing publications must be supported by the 
documentation required in M045. Preferred Periodicals may be combined 
with Regular Periodicals only as permitted by standard.

6.4  Standard Mail (A)

    To copalletize different Standard Mail (A) flat-size mailings, the 
mailer must consolidate on pallets all independently sorted packages 
from each mailing to achieve the finest presort level for the mailing, 
except that a copalletized mailing prepared under M045.5.0, using 
package reallocation, may not always result in all packages being 
placed on the finest pallet level possible. At the time of mailing, the 
mailer must present computer-generated listings required in M045 that 
include a summary list consolidating the copalletized multiple mailings 
and a list of the contents of each pallet by ZIP Code and presort 
level.
* * * * *

M045  Palletized Mailings

* * * * *
4.0  PALLET PRESORT AND LABELING

4.1  Packages, Bundles, Sacks, or Trays

[Amend 4.1a to reflect that the 5-digit sortation is for sacks and 
trays; add new 4.1b requiring 5-digit/scheme sort for packages of 
Periodicals and Standard Mail (A) flats; and renumber 4.1b through e as 
4.1c through f, as follows:]
    Preparation sequence and Line 1 labeling:
    a. 5-digit: required for sacks; optional for trays; for Line 1, use 
5-digit ZIP Code destination of contents.
    b. 5-digit/scheme: required for Periodicals and Standard Mail (A) 
packages and bundles; for Line 1 for 5-digit pallets, use 5-digit ZIP 
Code destination of contents; for Line 1 for 5-digit scheme pallets, 
use L001, column B.
* * * * *

4.4  Line 2

[Amend 4.4 to require ``SCHEME'' OR ``SCH'' to appear on 5-digit scheme 
pallets of Periodicals or Standard Mail (A), as follows:]
    Line 2, class of mail (shown below, as appropriate), processing 
category and mail type (e.g., ``MACH,'' ``LTRS BC''), ``SCHEME'' or 
``SCH'' for 5-digit scheme pallets of Periodicals or Standard Mail (A), 
and any processing code required by the applicable labeling list under 
4.1, 4.2, and 4.3:
* * * * *
[Add section 5.0 to specify preparation requirements for package 
reallocation; and renumber sections 5.0 to 12.0, (as published in DMM 
Issue 54 incorporating changes for R-97), as 6.0 through 13.0, as 
follows:]
5.0  PACKAGE REALLOCATION FOR PERIODICALS FLATS AND IRREGULAR PARCELS 
AND STANDARD MAIL (A) FLATS ON PALLETS

5.1  Basic Standards

    Package reallocation is an optional preparation method; only PAVE-
certified presort software may be used to create pallets under the 
standards in 5.2 through 5.4. The software will determine if mail for 
an SCF service area would fall beyond the SCF level if all required 5-
digit/scheme and optional 3-digit pallets are prepared. The SCF pallet 
level serves as a dividing line and reallocation is performed only when 
there is mail for the same SCF service area on both sides of the 
dividing line. The amount of mail required to bring the mail that would 
fall beyond the SCF level back to an SCF level pallet level is the 
minimum volume that will be reallocated, where possible.

5.2  General Reallocation Rules

    Reallocation rules:
    a. Package preparation is not affected by the reallocation process. 
Reallocate only complete packages and only the minimum number of 
packages necessary to create an SCF pallet meeting the minimum pallet 
weight. Based on the weight of individual pieces within a package, the 
weight of mail that is reallocated may be slightly more than the 
minimum volume required to create an SCF pallet.
    b. Reallocate packages from the highest available pallet level 
possible. If it is not possible to reallocate some mail from a 3-digit 
pallet first; then attempt to eliminate a 3-digit pallet and reallocate 
all mail from that pallet to create an SCF pallet; if mail cannot be 
reallocated from a 3-digit pallet, then attempt to reallocate some mail 
from a 5-digit/scheme pallet.
    c. The reallocation process may result in the elimination of a 3-
digit pallet to create an SCF pallet, but a 5-digit/scheme pallet may 
not be eliminated in order to create an SCF pallet.
    d. When reallocating mail to create an SCF pallet, reallocate mail 
from only one pallet. This may be accomplished by reallocating a 
portion of a 3-digit pallet, reallocating all mail from a 3-digit 
pallet, or reallocating a portion of a 5-digit/scheme pallet following 
the sequence in 5.2b.
    e. Mailers may use any minimum pallet weight(s) permitted by DMM 
standards and may use different minimum weights for different pallet 
levels in conjunction with package reallocation.

[[Page 57995]]

5.3  Reallocation of Packages if Optional 3-Digit Pallets are 
Prepared

    Reallocation rules:
    a. Attempt to identify a 3-digit pallet of adequate weight that can 
support reallocation of one or more packages to bring the mail that has 
fallen through the SCF level back to the SCF level without eliminating 
the pallet. A sufficient volume of mail must remain on the 3-digit 
pallet after reallocation to meet the 3-digit pallet weight minimum 
established by the mailer in compliance with applicable DMM standards. 
If a 3-digit pallet of adequate weight is available, create an SCF 
pallet by combining the reallocated mail from the 3-digit pallet with 
the mail that would have fallen through the SCF level.
    b. If no single 3-digit pallet within the SCF service area contains 
an adequate volume of mail to allow reallocation of a portion of the 
mail on a pallet as described in the previous step, then eliminate one 
3-digit pallet and reallocate all of the mail to create an SCF pallet 
by combining it with the mail that would have fallen through the SCF 
level. The result will be that the software will not prepare one 3-
digit pallet for the SCF service area if it is detrimental to the SCF 
pallet.
    c. If there are no 3-digit pallets, attempt to identify a 5-digit/
scheme pallet of adequate weight to support reallocation of one or more 
packages to bring the mail that would fall through the SCF level back 
to the SCF level. A sufficient volume of mail must remain on the 5-
digit/scheme pallet after reallocation to meet the pallet weight 
minimum established by the mailer in compliance with applicable DMM 
standards. If a 5-digit/scheme pallet of adequate weight is available, 
create an SCF pallet by combining the reallocated packages with the 
mail that would have fallen through the SCF level.
    d. If no single 5-digit/scheme pallet within the SCF service area 
contains an adequate volume of mail to allow reallocation of a portion 
of the mail on a pallet as described in c, then no packages will be 
reallocated and an SCF pallet will not be prepared; the mail that falls 
beyond the SCF pallet level must be placed on the appropriate level 
pallet (ADC or BMC) or in the appropriate level sack.

5.4  Reallocation of Packages if Optional 3-Digit Pallets are Not 
Prepared

    Reallocation rules:
    a. Attempt to identify a 5-digit/scheme pallet of adequate weight 
to support reallocation of one or more packages to bring the mail that 
would fall through the SCF level back to the SCF level. A sufficient 
volume of mail must remain on the 5-digit/scheme pallet after 
reallocation to meet the pallet weight minimum established by the 
mailer in compliance with applicable DMM standards. If a 5-digit/scheme 
pallet of adequate weight is available, create an SCF pallet by 
combining the reallocated packages with the mail that would have fallen 
through the SCF level.
    b. If no single 5-digit/scheme pallet within the SCF service area 
contains an adequate volume of mail to allow reallocation of a portion 
of the mail on a pallet as described in a, then no packages will be 
reallocated and an SCF pallet will not be prepared; the mail that falls 
beyond the SCF pallet level must be placed on the appropriate level 
pallet (ADC or BMC) or in the appropriate level sack.

5.5  Documentation

    Mailings must be supported by documentation produced by PAVE-
certified software meeting the standards in P012.
* * * * *

M200  Periodicals (Nonautomation)

* * * * *
3.0  SACK PREPARATION (FLAT-SIZE PIECES AND IRREGULAR PARCELS)

3.1  Sack Preparation

[Amend 3.1b to reflect that the 5-digit/scheme carrier routes sort 
replaces 5-digit carrier routes sort for flats and irregular parcels, 
as follows:]
    Sack size, preparation sequence, and Line 1 labeling:
* * * * *
    b. 5-digit/scheme carrier routes (carrier route packages only): 
required at 24 pieces, optional with one six-piece package minimum 
except under 1.5; for Line 1 for 5-digit carrier routes sacks, use 5-
digit ZIP Code destination of contents; for Line 1 for 5-digit scheme 
carrier routes sacks, use L001, column B.
* * * * *

3.2  Sack Line 2

[Add new 3.2e for 5-digit scheme carrier routes sacks; and renumber 
3.2e through h as 3.2f through i, as follows:]
* * * * *
    e. 5-digit scheme car. rts.: ``SCHEME''
* * * * *

M600  Standard Mail (Nonautomation)

* * * * *

M620  Enhanced Carrier Route Standard Mail

* * * * *
4.0  SACK PREPARATION-FLAT-SIZE PIECES AND IRREGULAR PARCELS
* * * * *

4.2  Sack Preparation

[Amend 4.2b and add new 4.2c, as follows:]
    Sack size, preparation sequence, and Line 1 labeling:
* * * * *
    b. 5-digit carrier routes: required (no minimum); for irregular 
parcels; for Line 1, use 5-digit ZIP Code destination of packages, 
preceded for military mail by the prefixes under M031.
    c. 5-digit/scheme carrier routes: required (no minimum) for flats; 
for Line 1, for 5-digit sacks, use 5-digit ZIP Code destination of 
packages; for Line 1 for 5-digit scheme sacks, use L001, column B.

4.3  Sack Line 2

[Add new 4.3e for 5-digit scheme carrier routes sacks, as follows:]
* * * * *
    e. 5-digit scheme car. rts.: ``SCHEME''
* * * * *

P  Postage and Payment Methods

P000  Basic Information:

* * * * *

P012  Documentation

* * * * *
2.0  STANDARDIZED DOCUMENTATION-FIRST-CLASS MAIL, PERIODICALS, AND 
STANDARD MAIL (A)
* * * * *

2.2  Format and Content

* * * * *
    d. For packages on pallets, the body of the listing reporting these 
required elements:
* * * * *
[Amend d(4) to add standards for identifying SCF pallets created as a 
result of package reallocation by adding the following to the end of 
the section:]
    (4) * * * Document SCF pallets created as a result of package 
reallocation under M045.5.0 on the USPS Qualification Report by 
designating the protected SCF pallet with an identifier of ``PSCF.'' 
This identifier is only required to appear on the USPS Qualification 
Report; it is not required to appear on pallet labels or on any other 
mailing documentation.
* * * * *

[[Page 57996]]

2.4  Sortation Level

    The actual sortation level (or corresponding abbreviation) is used 
for the package, tray, sack, or pallet levels required by 2.2 and shown 
below:
[Add new ``PSCF'' indicator to identify SCF pallets created as a result 
of package reallocation under M045.5.0, as follows:]

------------------------------------------------------------------------
              Sortation level                        Abbreviation
------------------------------------------------------------------------
                  *        *        *        *        *
SCF (pallets)..............................  N/A.
SCF (pallets created from package            PSCF.
 reallocation).
                  *        *        *        *        *
------------------------------------------------------------------------

Neva R. Watson,
Attorney, Office of Legal Policy.
[FR Doc. 98-28803 Filed 10-28-98; 8:45 am]
BILLING CODE 7710-12-P