[Federal Register Volume 65, Number 19 (Friday, January 28, 2000)]
[Rules and Regulations]
[Pages 4517-4520]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-2020]



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 Rules and Regulations
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  Federal Register / Vol. 65, No. 19 / Friday, January 28, 2000 / Rules 
and Regulations  

[[Page 4517]]



POSTAL SERVICE

39 CFR Part 111


Nonletter-Size Business Reply Mail Categories and Fees--Final 
Rule

AGENCY:  Postal Service.

ACTION:  Final rule.

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

SUMMARY:  The Postal Service is terminating the experimental nonletter-
size business reply mail categories and fees effective February 5, 
2000, and will implement a permanent classification and fees for 
weight-averaged nonletter-size business reply mail on February 6, 2000. 
This is in accordance with the Decision of the Governors of the Postal 
Service on the Recommended Decision of the Postal Rate Commission on 
Establishment of Permanent Classification and Fees for Nonletter-Size 
Business Reply Mail, Docket No. MC99-2; Board of Governors Resolution 
99-12 (November 1, 1999). The Postal Service was authorized to conduct 
the experiment until as late as February 29, 2000. The extension was 
granted in order for the experiment to be extended beyond its original 
expiration date of June 7, 1999, to allow the Postal Service additional 
time to resolve certain administrative and technical issues which could 
not be resolved before the original June 7, 1999, experiment expiration 
date. These issues have been resolved and it is possible to proceed 
with permanent implementation. The permanent fees for bulk weight 
averaging are the same as those placed into effect when the experiment 
was extended on June 8, 1999. The extension was approved pursuant to 
the Decision of the Governors of the Postal Service on the Recommended 
Decision of the Postal Rate Commission on the Classification and Fees 
for Nonletter-Size Business Reply Mail, Docket No. MC99-1; Board of 
Governors Resolution 99-6 (May 26, 1999). See 64 FR 31325-31326. This 
final rule also sets forth the Domestic Mail Manual (DMM) standards 
adopted for permanent implementation.

EFFECTIVE DATE:  February 6, 2000.

FOR FURTHER INFORMATION CONTACT:  Paul Lettmann, (202) 268-6261; or 
Michael T. Tidwell, (202) 268-2998.

SUPPLEMENTARY INFORMATION:  The Postal Service is terminating the 
experimental classification and fees for nonletter-size business reply 
mail (BRM) and establishing permanent classification and fees because 
appropriate levels of management oversight and sufficient technical 
resources are now available to ensure that revenue protection standards 
can be met. Earlier, the experimental period was extended beyond the 
two-year period that was to end on June 7, 1999, in order to give the 
Postal Service additional time to eliminate technical and 
administrative obstacles to permanent implementation.
    The weight-averaging experiment will end at midnight on February 5, 
2000, and the permanent classification and fees will become effective 
on February 6, 2000. The limitations that were in effect during the 
experiment with respect to the number of participants, mail volumes, 
geographic locations, and abilities to implement and maintain quality 
control procedures for accounting and documentation have been 
eliminated.
    The per piece accounting fee for bulk weight-averaged nonletter-
size BRM pieces will be 1 cent, plus the appropriate First-Class Mail 
or Priority Mail postage. Mailers will be required to pay an annual 
business reply mail permit fee and an annual business reply mail 
advance deposit accounting fee, which are currently $100.00 and 
$300.00, respectively. In addition, a monthly audit and maintenance fee 
of $600.00 will be assessed for each BRM account at a postal facility 
where the weight-averaging accounting method is employed.
    Mailers who want to take advantage of the lower per piece fees for 
qualifying nonletter-size BRM pieces must submit a letter of 
application to the postmaster at the post office where their BRM will 
be received. Those who receive approval for the bulk weight-averaging 
method will be required to enter into a service agreement with the 
Postal Service.

Background

    As a consequence of Postal Rate Commission Docket No. MC97-1, the 
United States Postal Service engaged in an experiment that started on 
June 8, 1997. It was designed to test the feasibility of two 
alternative methods of accounting for nonletter-size business reply 
mail: the reverse manifesting method and the bulk weight-averaging 
method. A maximum of 20 participants could participate in the 
experiment, with no more than 10 participants allowed for each of the 
two accounting methods. Separate set-up/qualification, monthly auditing 
or sampling, and per piece fees were established for each method.
    All experimental classifications and fees were originally scheduled 
to expire on June 7, 1999. However, on March 14, 1999, the Postal 
Service requested the Postal Rate Commission to approve an extension of 
the experiment until as late as February 29, 2000, or sooner if 
circumstances permitted. The request was made to allow the Postal 
Service additional time for the resolution of administrative and 
technical issues that stood in the way of implementing weight averaging 
on a permanent basis. The Postal Service also asked that the 
experimental reverse manifesting classification and fees be allowed to 
expire as originally scheduled, because the operational feasibility of 
the method was unproven. At the same time, the Postal Service requested 
the establishment of a permanent classification and fees for weight-
averaged nonletter-size Business Reply Mail.
    The proceedings for consideration of these requests were designated 
by the Postal Rate Commission as Docket No. MC99-1 and Docket No. MC99-
2, respectively. On May 19, 1999, pursuant to 39 U.S.C. 3624, the 
Commission recommended the extension of the nonletter-size BRM 
experiment until February 29, 2000, or until the Postal Service 
implemented permanent fees, whichever came first. The Commission also 
recommended the experimental weight-averaging classification and fees 
that were proposed in a Joint Stipulation and Agreement by the parties 
in Docket No. MC99-1.
    After reviewing the Commission's Recommended Decision and its 
consequences for the Postal Service and postal customers, the Governors 
of the

[[Page 4518]]

Postal Service, pursuant to 39 U.S.C 3625, acted on the Commission's 
recommendations on May 26, 1999. (Decision of the Governors of the 
United States Postal Service on the Recommended Decision of the Postal 
Rate Commission on the Renewal of Experimental Classification and Fees 
for Nonletter-Size Business Reply Mail Categories and Fees, Docket No. 
MC99-1.) The Governors approved the Commission's recommendations and 
established June 8, 1999, as the date on which the experimental 
classification and fees were to take effect. Accordingly, on June 8, 
1999, the following fees were implemented for weight-averaged 
nonletter-size BRM:
    1.  A $600 monthly maintenance fee.
    2.  A $0.01 per piece accounting fee.

The one-time set-up/qualification fee that was assessed when the 
experiment began was also eliminated at this time.
    Four customers participated in the original weight-averaging 
experiment at four sites, enabling the Postal Service to develop 
sufficient data to support the filing with the Postal Rate Commission 
of the Docket No. MC99-2 request for establishment of a permanent 
classification and fees for the bulk weight-averaging method. After the 
experiment was extended beyond the original June 7, 1999, expiration 
date, three other bulk weight-averaging sites were added, at the 
request of one of the original customer participants, bringing the 
total number of experimental sites to seven.

Weight-Averaging Method

    Weight averaging is a method of counting, rating, and billing non-
letter size BRM in bulk based on mathematical statistics, instead of 
individually rating each piece. The use of weight averaging as an 
alternative to slower, less efficient manual weighing and rating of 
each piece is not new. A few mailers and local postal officials devised 
various forms of bulk weight averaging years ago when faced with 
counting and rating large volumes of incoming mail.
    The bulk weight-averaging methodology that is now being adopted for 
nonletter-size BRM has significant advantages over other methods that 
have been used. The new methodology relies on a personal computer with 
statistical sampling software linked with an electronic scale that 
provides individual piece weights. The system allows a post office to 
collect and store statistically valid sample data on incoming BRM, to 
calculate average pieces per pound and average postage per pound 
factors, and to use the calculated factors as the basis for determining 
postage due for the entire volume of incoming BRM. As a result, the 
postage and fees that postal customers pay will be determined with a 
high degree of precision, while the Postal Service improves the 
efficiency of its operations and promotes customer satisfaction.
    Bulk weight averaging requires periodic sampling and monitoring of 
a postal customer's nonletter-size BRM to ensure that any changes in 
the characteristics of incoming pieces are reflected in the postage due 
calculations. The administrative overhead required to manage the method 
generates postal costs that are not covered by the current $100.00 
annual BRM permit fee and $300.00 annual BRM advance deposit accounting 
fee. For this reason a monthly maintenance fee is being assessed.

Implementation

    On June 1, 1999, the Commission issued the Recommended Decision of 
the Postal Rate Commission on the Classification and Fees for Weight-
Averaged Nonletter-Size Business Reply Mail, 1999, Docket No. MC99-2. 
The Governors approved the Commission's recommendations on November 1, 
1999, and set an implementation date of February 6, 2000, to make the 
classification and fees permanent.
    This final rule sets forth the Domestic Mail Manual (DMM) standards 
adopted by the Postal Service to implement the Governors' Decision. 
Many of the DMM provisions placed into effect during the experimental 
phase are being continued, with the exception of such restrictions as 
the number of participants, geographic location, annual volume of 
nonletter-size BRM pieces, and the time frame and duration of 
participation. The Postal Service is continuing to limit the use of the 
nonletter-size BRM bulk weight-averaging method to those pieces that 
are outside the parameters of current automation-compatible letter-size 
BRM. Reply mail letters that cannot qualify for qualified business 
reply mail (QBRM) because they weigh too much also are eligible for the 
weight-averaging method. Any piece accounted for under the weight-
averaging method may not exceed 5 pounds.
    The Postal Service finds no need to solicit comments on the final 
rule setting forth the DMM standards for nonletter-size BRM because of 
the multiple filings with the Postal Rate Commission as well as the 
limited purposes of the experiment that was conducted for a period over 
two years in length.

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--[REVISED]

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

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

    2. Revise the Domestic Mail Manual as follows:
G  General Information
* * * * *
G090  Experimental Classifications and Rates
* * * * *

    [Remove G092.]

G092  Nonletter-Size Business Reply Mail
* * * * *

PR RATES AND FEES

* * * * *

R900  SERVICES

* * * * *


2.0  BUSINESS REPLY MAIL (BRM)

* * * * *


2.2  Per Piece Charges

    [Amend 2.2 to add the nonletter-size BRM fee to read as follows:]
    Each piece is charged the applicable First-Class Mail or Priority 
Mail postage plus a per piece fee upon return to the permit holder:

----------------------------------------------------------------------------------------------------------------
                                                                               Fee with BRM     Fee without BRM
                                                                             advance deposit    advance deposit
                  Type                           Postage (per piece)           account (in        account (in
                                                                               addition to        addition to
                                                                                 postage)           postage)
----------------------------------------------------------------------------------------------------------------
Regular BRM.............................  $0.33 first ounce or fraction                *$0.08              $0.30
                                           $0.22 each additional ounce or
                                           fraction.
                                          Postcards: $0.20

[[Page 4519]]

 
Qualified BRM...........................  $0.30 first ounce or fraction                *$0.05                N/A
                                           $0.22 second ounce or fraction.
                                          Postcards: $0.18
Nonletter-size BRM (Weight-averaged in    $0.33 first ounce or fraction                 *$.01               N/A
 accordance with S922.7.0).                $0.22 each additional ounce or
                                           fraction.
----------------------------------------------------------------------------------------------------------------
*BRM accounting fee required.


    [Add new 2.3 to read as follows:]


2.3  Monthly Maintenance Fee

    A maintenance fee must be paid for each month, or part of a month, 
in which the postage and fees charged to an account are determined 
using the bulk weight-averaging method for nonletter-size BRM described 
in S922.
* * * * *

S  Special Services

* * * * *

S900  Special Postal Services

* * * * *
S920  Convenience
* * * * *
S922  Business Reply Mail (BRM)
* * * * *


3.0  POSTAGE AND FEES

* * * * *

    [Add new section 3.4 to read as follows:]


3.4  Nonletter-Size BRM Fees

    A mailer must pay the annual BRM permit fee and the annual BRM 
advance deposit account fee. In addition, a maintenance fee must be 
paid monthly for each account to which postage and fees are charged for 
nonletter-size BRM on the basis of the bulk weight-averaging method 
described in 7.0. Payment is due on the first day that postage and fees 
are determined using the bulk weight-averaging method and each 
succeeding monthly payment is due on the anniversary date of the 
initial payment or previous fee payment, whichever is later.

    [Redesignate 3.4 through 3.10 as 3.5 through 3.11; amend 
redesignated 3.5b to read as follows:]


3.5  Charges

    Charges are as follows:
* * * * *
    b. Fee Per Piece. The applicable BRM fee must be collected for each 
returned piece of BRM in addition to the applicable single-piece First-
Class Mail or Priority Mail postage. Lower per piece fees apply to mail 
paid through a BRM advance deposit account, QBRM pieces (R900), and 
nonletter-size BRM pieces that are rated by means of the approved bulk 
weight-averaging method described in 7.0.
* * * * *

    [Add new section 7.0 to read as follows:]


7.0  BULK WEIGHT-AVERAGING METHOD

7.1  Description

    Bulk weight averaging (WA) is a method of counting, rating, and 
billing eligible incoming nonletter-size business reply mail (BRM) 
based on principles of mathematical statistics. Probability sampling 
techniques are used to measure the characteristics of the total BRM 
volume by examining a fraction of the volume. Statistically valid 
samples that are drawn from the incoming BRM volume each postal 
accounting period are used by post offices to compute average postage 
due per pound and average piece count per pound factors. The net bulk 
weight of mail received is multiplied by these conversion factors to 
get the estimated volume received and postage and fee amounts. Only 
eligible BRM pieces rated by means of the approved WA method may 
qualify for the nonletter-size BRM per piece rate.

7.2   Eligibility

    Only eligible BRM pieces rated by means of the approved WA method 
may qualify for the nonletter-size BRM per piece rate. BRM pieces rated 
by the bulk weight-averaging accounting method must:
    a. Be mailed as First-Class Mail or Priority Mail.
    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 may not exceed 5 
pounds.
    c. Meet the basic standards for BRM in S922 other than those 
specified for letter-size pieces or pieces processed as QBRM.
    d. Meet the addressing standards in A010 and bear a delivery 
address with the correct ZIP+4 code and barcodes assigned to the BRM 
permit holder by the USPS.
    e. Comply with current or future USPS marking standards.
    f. Be received at the post office that serves the permit holder.

7.3  Fees

    Bulk weight-averaged nonletter-size BRM is subject to a per piece 
fee (R900) in addition to single-piece rate First-Class Mail or 
Priority Mail postage. Payment of a monthly maintenance fee is required 
in addition to the annual business reply mail permit fee and annual 
advance deposit accounting fee.

7.4  Application Procedures

    A mailer who wants to have nonletter-size BRM rated by bulk weight 
averaging (WA) as described in 7.0 must submit a written request to the 
postmaster of the office where the BRM permit is held and where the BRM 
will be received. The postmaster will forward this information to the 
Manager, Operations Systems, USPS Headquarters, who will confirm the 
BRM pieces meet the requirements of 7.2 and WA is capable of producing 
the required level of precision in determining postage due amounts. The 
postmaster will be notified if these requirements are met and will 
receive instructions on how statistical sampling of the BRM is to be 
performed. A mailer's request must include the following information:
    a. Mailer name and address.
    b. Name and location of the post office at which BRM will be 
received, post office box number to be used, and a centralized 
automated payment system account number (CAPS), if available.
    c. A description of the incoming BRM piece weight distribution (in 
nearest ounces or pounds) over a 24-hour period, e.g., total piece 
volume consists of x number of 3-ounce pieces, Y number of 4-ounce 
pieces, and Z number of 5-ounce pieces.
    d. Piece volume information that includes the estimated average 
volume and postage for nonletter-size BRM received over a 24-hour 
period and monthly.

[[Page 4520]]

    e. A statement indicating whether the piece volume is subject to 
seasonal variation and, if applicable, estimates of monthly volumes for 
a 12-month period.

7.5  Authorization

    After a mailer's request for bulk weight averaging has been 
reviewed and approved by the Manager, Operations Systems, USPS 
Headquarters, the post office that received the original request 
provides an authorization letter and has the mailer sign a service 
agreement for bulk weight averaging of nonletter-size BRM for a 
specified post office box. If the mailer does not appear to meet the 
requirements for bulk weight averaging, the post office sends the 
applicant a written notice advising of the reasons for denial. The 
applicant has 15 days following receipt of the notice to file a written 
appeal of the decision with the postmaster and to furnish further 
information explaining why the application should be approved. If the 
postmaster still finds that the application should be denied, the 
postmaster forwards the file to the Manager, Operations Systems, USPS 
Headquarters, who issues a final written decision to the mailer.

7.6  Action

    [Reserved.]

7.7  Reasons

    A postmaster may terminate a mailer's authorization to have 
nonletter-size BRM bulk weight-averaged at any time if:
    a. The mailer provided incorrect or incomplete information when 
applying for the bulk weight-averaging method.
    b. The mailer's BRM pieces no longer meet the eligibility 
requirements of 7.2.
    c. USPS finds that bulk weight averaging no longer provides 
adequate revenue protection.
    d. The mailer no longer desires to have bulk weight averaging used.

7.8  Notice and Appeal

    A termination takes effect 15 days from the mailer's receipt of the 
notice unless the mailer files a written appeal within that period with 
the postmaster stating why use of the weight-averaging method should 
not be suspended or terminated. The mailer may continue to have the 
bulk weight-averaging method used pending a final decision on the 
appeal. If the postmaster does not uphold an appeal of a suspension or 
termination, the postmaster forwards the mailer's appeal together with 
all pertinent information to the Manager, Operations Systems, USPS 
Headquarters, who issues a final agency decision to the mailer.
* * * * *
    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. 00-2020 Filed 1-27-00; 8:45 am]
BILLING CODE 7710-12-U