[Federal Register Volume 66, Number 113 (Tuesday, June 12, 2001)]
[Rules and Regulations]
[Pages 31822-31828]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-14748]



[[Page 31821]]

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Part IV





Postal Service





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39 CFR Part 551



Semipostal Stamp Program; Request for Proposals for Semipostal Stamps; 
Final Rule and Notice

  Federal Register / Vol. 66, No. 113 / Tuesday, June 12, 2001 / Rules 
and Regulations  

[[Page 31822]]


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POSTAL SERVICE

39 CFR Part 551


Semipostal Stamp Program

AGENCY: Postal Service.

ACTION: Final rule.

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SUMMARY: This final rule creates implementation regulations for the 
Semipostal Authorization Act, which authorizes the Postal Service to 
issue and sell semipostal postage stamps. Semipostal stamps are 
intended to raise funds for causes determined by the Postal Service to 
be in the public interest and appropriate. The final regulations relate 
to the selection procedures for causes and recipient executive 
agencies, the offices and authorities responsible for making decisions 
related to causes and recipient executive agencies, the criteria to be 
applied in evaluating proposals for causes and recipient executive 
agencies, sales limitations, the calculation of amounts to be 
transferred to executive agencies, and the determination of costs to be 
offset from differential revenue.

EFFECTIVE DATE: June 12, 2001.

FOR FURTHER INFORMATION CONTACT: Cindy Tackett, (202) 268-6555.

SUPPLEMENTARY INFORMATION:  

I. Introduction

    The Semipostal Authorization Act, Public Law 106-253, 114 Stat. 634 
(2000) (hereinafter ``Act''), authorizes the Postal Service to 
establish a 10-year program to sell semipostal stamps. The differential 
between the price of a semipostal stamp and the First-Class 
Mail service rate, less an offset for the reasonable costs of 
the Postal Service, consists of an amount to fund causes that the 
``Postal Service determines to be in the national public interest and 
appropriate.'' By law, revenue from sales (net of postage and the 
reasonable costs of the Postal Service) is to be transferred to 
selected executive agencies within the meaning of 5 U.S.C. 105.
    The Governors of the Postal Service are authorized to set prices 
for semipostal stamps according to a formula prescribed in the Act. 
Specifically, the Act prescribes that the price of a semipostal stamp 
is the ``rate of postage that would otherwise regularly apply,'' plus a 
differential, that is, the difference between sales revenue and 
postage, not to exceed 25 percent. This is essentially the same formula 
prescribed by the Stamp Out Breast Cancer Act, Public L. 105-41, 111 
Stat. 1119 (1997).
    The Act provides that the Postal Service is to promulgate certain 
regulations via a notice and comment rulemaking. Specifically, the 
Postal Service must identify the ``office or other authority within the 
Postal Service'' to make decisions on the ``appropriate causes and 
agencies'' eligible to receive amounts becoming available from 
differential revenue less an offset for the reasonable costs of the 
Postal Service. The Postal Service is also directed to issue 
regulations on the ``criteria and procedures'' to be applied in making 
decisions on recipient executive agencies and causes. The Act further 
requires the Postal Service to identify ``what limitations shall apply, 
if any, relating to the issuance of semipostals (such as whether more 
than one semipostal may be offered for sale at the same time).'' 
Finally, the Postal Service's regulations must ``specifically address 
how the costs incurred by the Postal Service * * * shall be computed, 
recovered, and kept to a minimum.''

II. Comments on the Proposed Rule

    On February 15, 2001, the Postal Service published a notice in the 
Federal Register (66 FR 10408) soliciting comments on a proposed rule 
to implement the Act. The Postal Service also published the notice on 
its Internet Web site at www.usps.com. The Postal Service received 73 
comments responding to the solicitation for comments, many of which 
were received electronically through the Postal Service's Web site. The 
comments are grouped into similar themes and are addressed below.

Selection Criteria

    Two commenters expressed support for the following general criteria 
for the Semipostal Stamp Program: (a) Semipostal stamps should benefit 
only congressionally authorized programs within U.S. Government 
executive agencies; (b) semipostal stamps should focus on programs that 
are characterized by a significant disparity between congressional 
authorizations and appropriations; (c) semipostal stamps should also 
look for programs for which there is a broad supportive network of 
private organizations that is willing and capable of assisting in local 
and national marketing; (d) semipostal stamps should have broad appeal 
to the American public and not be on programs and issues of narrow 
interest; and (e) the selection process should include estimating the 
revenue potential of a stamp through market surveys, evaluating the 
retention rates of commemorative and ``awareness'' stamps that have 
been issued on the same subject, and evaluating the experience of other 
countries to determine the differences between successful and 
unsuccessful semipostal issues.
    As a general matter, the Postal Service agrees that the types of 
factors mentioned above may be instructive and may be among the factors 
that could be used in the decision-making process; however, the Postal 
Service believes that those types of factors need not be formally 
inscribed in the regulations.
    The same commenters also questioned the requirement in Sec. 551.4 
that causes must ``further human welfare.'' The commenters stated that 
this term should be carefully defined to include causes or purposes 
that contribute to human welfare, such as a healthy environment or a 
sustainable level of biodiversity; alternatively, the requirement 
should be eliminated. The commenters also recommend that the 
requirement be removed from the list in Sec. 551.4(d).
    The Postal Service believes that the criterion of advancement of 
human welfare is quite broad, and can encompass a wide variety of 
subjects. Thus, the Postal Service does not interpret the requirement 
that proposals advance human welfare narrowly. To the contrary, the 
Postal Service intends to interpret this provision quite broadly. 
Topics such as a healthy environment or biodiversity appear on their 
face to be linked to the advancement of human welfare. This should 
assuage the commenters' concern. Consequently, the Postal Service does 
not believe a change in the regulation is necessary.

Cost Recovery

    One commenter questioned whether the Postal Service would be able 
to recover its costs, and if not, whether ratepayers would be 
subsidizing the Semipostal Stamp Program. Another commenter recommended 
that strict auditing be used. The Postal Service believes that the 
regulations will provide the Postal Service with an adequate and 
effective means of preventing cross-subsidy. In particular, the Postal 
Service will track costs and revenues associated with the program, and 
will use data from comparable stamp issues to determine the additional 
costs attributable to semipostals. Furthermore, the Postal Service has 
reserved the right to withdraw semipostal stamps if sales or sales 
projections are lower than expected. In addition, the Act requires that 
the General Accounting Office prepare reports on the Semipostal Stamp 
Program. These measures provide

[[Page 31823]]

multiple means to protect against the risks cited by the commenters.
    One commenter suggested that there should be exclusions for off-
site meetings in resort areas and excessive spending on planning. The 
Postal Service is sensitive to these concerns, and Sec. 551.8(f) 
incorporates several measures to minimize costs associated with the 
program. The Postal Service does not foresee deductions for the cost of 
off-site meetings, since decisions on semipostal stamps by the 
Citizens' Stamp Advisory Committee (CSAC) would be combined with that 
body's regular meetings. Thus, the costs of such meetings would 
ordinarily not need to be deducted against differential revenue under 
the standard set forth in Sec. 551.8. Moreover, the Postal Service does 
not foresee the need for excessive spending. Indeed, in the case of the 
Breast Cancer Research Stamp, the costs as a proportion of total 
revenue transferred to the Department of Defense and the National 
Institutes of Health are very small, amounting to a small percentage of 
the funds transferred to date.
    Two commenters expressed support for the policy to recover from 
differential revenue those costs that are attributable to the 
semipostal stamp that are not normally incurred for comparable 
commemorative stamps; however, these commenters oppose the provision in 
Sec. 551.8(f)(2) that costs be minimized through issuance of one 
semipostal stamp at a time. To the extent this requirement prevents the 
Postal Service from having to dedicate additional resources to the 
Semipostal Stamp Program, the Postal Service believes that this 
provision serves as an appropriate means of minimizing costs, as 
required by the Act.
    One commenter recommended that the cost profile used in 
Sec. 551.8(c) should be identified before the sale of each stamp. The 
commenter believes that selection of a cost profile during or after the 
sales period could lead to inconsistencies in the amounts identified as 
recoverable costs. While the Postal Service agrees that it is generally 
sensible to decide on a cost profile before issuance of a stamp based 
on expectations of sales, the Postal Service believes it is reasonable 
to preserve discretion to change the cost profile if expectations of 
sales do not match actual experience. In such situations, it may be 
reasonable to draw comparisons between other commemorative issues 
exhibiting the same pattern, that is, where sales experience differs 
substantially from prior expectations. Naturally, such comparisons 
cannot be drawn until after the issuance of the semipostal stamp; 
hence, it is reasonable to preserve discretion to select comparable 
stamps after the sales period begins. Thus, the Postal Service declines 
to adopt this suggestion.
    One commenter suggested that advertising costs recoverable from 
differential revenue in Sec. 551.8(e)(4) be clearly defined, so as to 
result in no confusion with advertising costs in Sec. 551.8(g)(8). The 
advertising costs recoverable from differential revenue in 
Sec. 551.8(e)(4) include those costs for advertising where the 
semipostal stamp is the only product featured in the advertising and 
for which no additional expenses are actually incurred. Section 
551.8(g)(8) refers to advertising that is geared toward the image of 
the Postal Service as an entity. The Postal Service believes that this 
explanation addresses the commenter's concern.
    One commenter recommended that Sec. 551.8(d)(1) should be revised 
to include a threshold for costs considered too ``inconsequentially 
small.'' The Postal Service believes that a maximum threshold is 
reasonable. Hence, Sec. 551.8(d)(1) is amended so as to define the term 
``inconsequentially small'' to include cost items not exceeding $3,000 
per invoice.

Voluntary Purchase

    Two commenters expressed that customers should not be required to 
purchase semipostal stamps. The Postal Service agrees that the purchase 
of semipostal stamps should be strictly voluntary, and that postal 
retail units should have ample regular First-Class Mail postage stamps 
in stock at all locations where semipostal stamps are sold, so that no 
customers will feel compelled to purchase semipostal stamps. For 
emphasis, Sec. 551.2 is amended to include a passage from 39 U.S.C. 
416(c), which clearly states that the use of semipostal stamps is 
voluntary on the part of postal patrons.

Historical Events

    One commenter submitting two comments objected to the exclusion of 
historical events in 39 CFR 551.4(d). The commenter expressed that the 
categorical exclusion of historical events was vague. The commenter 
further stated that historic-related national causes can further the 
national public interest and human welfare by educating the American 
people about their collective past. In the commenter's view, excluding 
historical events denies the opportunity to use semipostal stamps to 
fund the preservation of cultural resources and sites associated with 
those events. The Postal Service agrees that proposals as described by 
the commenter could arguably fit within the statutory criteria. 
Accordingly, the term ``historical events'' is removed from the list of 
excluded causes in Sec. 551.4(d).

Length of the Semipostal Stamp Program

    One commenter suggested that the Postal Service operate the 
Semipostal Stamp Program for 6 months and then revisit the merits of 
the program after review of actual performance. The Postal Service 
notes that it has already established a track record with semipostal 
stamps through issuance of the Breast Cancer Research Stamp, which was 
issued in July 1998 and will continue to be sold to the public until 
July 29, 2002. The Postal Service's experience with the Breast Cancer 
Research Stamp demonstrates that semipostal stamps are accepted by the 
public and constitute an effective means of raising funds for selected 
causes. Consequently, the Postal Service declines to adopt the 
commenter's proposal.

Frequency

    Two commenters expressed opposition to the requirement in 
Sec. 551.5 that semipostal stamps may be offered for sale for less than 
2 years to coincide with changes in the First-Class Mail single-piece 
first-ounce rate. The commenters stated that this provision should be 
eliminated on grounds of inequity to the beneficiary. The Postal 
Service is sensitive to these concerns, and intends to avoid situations 
where sales periods are shortened by underlying rate changes. This is 
not to suggest, however, that rate changes will never be implemented 
during the sales periods of future semipostal stamps. Past experience 
with the Breast Cancer Research Stamp suggests, however, that such 
situations should be kept to a minimum, because changing the underlying 
First-Class rate during the sales period of a semipostal generates 
confusion. This is because the postage value of semipostal stamps is 
based on their date of sale, not on their date of use, and there is no 
tracking system that would enable the Postal Service to measure 
differential revenue based on the date of use. Scheduling sales periods 
so as to coincide with changes in the First-Class Mail single-piece 
rate would accordingly enhance awareness among customers of the 
association of the underlying rate with the postage value of semipostal 
stamps. Thus, the Postal Service believes that Sec. 551.5 is 
reasonable.

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Breast Cancer Research Stamp

    Several commenters suggested that the Postal Service continue to 
sell the Breast Cancer Research Stamp, presumably pursuant to its 
authority under 39 U.S.C. 416. Two commenters objected to the exclusion 
in Sec. 551.4(d) of ``any cause that has been previously supported by a 
semipostal stamp, including the stamp issued pursuant to 39 U.S.C. 414 
[the authorizing statute for the Breast Cancer Research Stamp.]'' One 
commenter states that this restriction extends beyond the Act.
    The Postal Service notes that a categorical rule limiting the 
issuance of semipostals provides a means to diversify the Semipostal 
Stamp Program and ensures that no one cause receives the benefits of 
the program to the exclusion of others. However, the Postal Service 
believes that the CSAC could take account of this concern in selecting 
causes and recipient executive agencies. Therefore, the Postal Service 
will remove the limitation in Sec. 551.4(d) providing that former 
causes funded by prior semipostal stamps, including the semipostal 
authorized by 39 U.S.C. 414, are categorically excluded from 
consideration.

Date of Commencement

    Two commenters recommended that the Postal Service specify 
definitively that the 10-year sales period commences on August 1, 2002, 
immediately after the conclusion of the Breast Cancer Research Stamp in 
July 2002. As a general matter, the Postal Service intends to begin 
issuing semipostal stamps in mid-2002; however, the Postal Service does 
not wish to commit itself to issuing the first semipostal until it has 
a better idea of whether any rate changes are contemplated in that 
period, and whether the program would be better suited to begin after a 
rate change, rather than immediately prior to the date of 
implementation. Hence, the Postal Service declines to adopt the 
commenters' suggestion.

Number of Semipostal Stampss

    Five commenters suggested that the Postal Service reconsider 
Sec. 551.5(b), which provides that only one semipostal stamp will be 
offered for sale at a time. The commenters suggested that the Postal 
Service consider selling several semipostal stamps simultaneously. Two 
commenters suggested that the standard for discontinuing sales should 
be the standard in Sec. 551.5(d), which establishes criteria for the 
discontinuation of semipostal stamps. Two other commenters suggested 
issuing a new semipostal every year, with each offered for sale for a 
2-year period.
    The Postal Service appreciates these concerns, but submits that 
these interests are outweighed by other factors. In particular, the 
Postal Service believes that issuing more than one semipostal stamp 
will increase the complexity of the program from the perspective of 
both the postal retail employees and customers. This, in turn, could 
diminish the overall effectiveness of the program. Secondly, the Postal 
Service has scarce resources to commit to the Semipostal Stamp Program. 
Increasing the number of semipostal stamps would increase the 
administrative burden on the Postal Service and ultimately burden 
existing staff and limited resources. This, in turn, could require more 
dedicated resources to be committed to the task, and ultimately raises 
the proportion of costs to be offset against differential revenue. 
Finally, issuing multiple semipostals at the same time could lead to 
competition among semipostal stamps, and ultimately defeat the success 
of certain semipostal causes. Therefore, the Postal Service declines to 
adopt the commenters' suggestion.

Fixed Percentages for Recipient Executive Agencies

    One commenter suggested that the proposed rule be amended so that 
agencies receive a specified percentage of the gross receipts from 
sales. The Act requires the Postal Service to deduct its reasonable 
costs incurred in connection with the program. Guaranteeing specific 
amounts could result in situations in which the Postal Service 
subsidizes amounts transferred to other agencies through ratepayer 
revenue. This, in the Postal Service's view, does not appear to be 
consistent with the spirit of the Act. Hence, the recommended change is 
not adopted.

Interested Persons

    One commenter stated that the relationship between interested 
persons and recipient executive agencies in Sec. 551.3(a) is unclear. 
The commenter notes that ``descriptions of possible collaborations in 
the actual request for proposals could significantly increase the 
involvement across federal agencies and partnering organizations.'' 
Section 551.4 provides that interested persons include, but are not 
limited to, ``individuals, corporations, associations, and executive 
agencies under 5 U.S.C. 105.'' The same meaning naturally extends to 
the term ``interested persons'' as that term is used in Sec. 551.3. 
Furthermore, the regulations contain no limitation against 
collaboration. Thus, the Postal Service believes that this explanation 
clarifies the rule.

CSAC

    One commenter observed that there is no description of the CSAC in 
Sec. 551.3, and suggested that a description of the composition and 
function of that body would be helpful. Information about the CSAC is 
available on the Postal Service's Web site, www.usps.com, and 
regulations pertaining to the CSAC are published in Sec. 644.5 of the 
Administrative Support Manual. To avoid unnecessary duplication, the 
Postal Service believes that the regulations describing the CSAC should 
not be printed in the rule pertaining to semipostal stamps; however, 
the Postal Service has amended Sec. 551.3 to include a reference to the 
regulations describing the CSAC. The Postal Service further notes that 
a description of the CSAC was included in footnote 1 of the 
supplementary information section of the proposed rule.
    Two commenters stated that the CSAC is not the appropriate body to 
make recommendations on causes and recipient executive agencies to the 
postmaster general. The commenters instead recommended that the 
responsibility be assigned to a separate body consisting of fundraising 
and marketing experts. As an alternative, the commenters suggested that 
two additional appointments be made to the CSAC to represent 
fundraising expertise.
    The Postal Service submits that the CSAC is well equipped to assume 
responsibility for the recommendation of causes and recipient executive 
agencies. CSAC membership represents a diverse and broad spectrum of 
American society, and CSAC members can be entrusted to use their 
judgment, experience, and talents to achieve the statutory objectives 
of the Act. The CSAC has had ample experience in selecting themes for 
commemorative stamps, many of which have been aimed at raising public 
awareness of important national interests. Thus, the CSAC already 
assumes related responsibilities through the selection of designs for 
commemorative stamps, and the Postal Service is confident that CSAC 
members can apply the same talents in the context of semipostal 
decision-making. Furthermore, establishing a separate panel of experts 
in marketing and fundraising would add substantially to the costs of 
administering the program, and would ultimately reduce the funds 
available for causes. A new committee would entail substantial planning 
and coordination and involve travel and

[[Page 31825]]

related expenses, which also would consume additional Postal Service 
administrative staff and resources. The Postal Service also declines to 
adopt the suggestion to increase the size of the CSAC. The addition of 
two persons would add to the expenses to be deducted from differential 
revenue. Moreover, existing CSAC members should be well equipped to 
make judgments on the feasibility of proposals, particularly given that 
interested persons submitting proposals are encouraged to provide 
supporting information demonstrating that the proposal would benefit 
the public interest.

CSAC Recommendations

    Two commenters stated that the CSAC should be required to recommend 
more than one cause to the postmaster general Sec. 551.3(d). The Postal 
Service does not believe that such a requirement is necessary or 
appropriate. The CSAC can make recommendations and prioritize them as 
it determines in its discretion. A rule requiring a specific number of 
recommendations could result in a situation where the CSAC is forced to 
make a recommendation notwithstanding its belief that none of the 
eligible proposals meet the statutory objectives. The Postal Service 
submits that this result is not intended by the Act, which confers 
discretionary authority, and not a compulsory obligation, on the Postal 
Service to issue semipostal stamps.
    Two commenters suggested that the recommendation of causes and 
designs be handled as two separate actions, in order to facilitate 
consultations with the proposal beneficiary on the design to be 
developed. The Postal Service declines to adopt this proposal as part 
of its regulations. Such a requirement could contribute to delay. The 
CSAC meets four times per year, and in some cases consultations could 
cause delays in production and distribution schedules. Moreover, the 
Postal Service does not wish to commit itself or the CSAC to engaging 
in consultations with proposal submitters on stamp designs.

Pricing

    Two commenters stated that Sec. 551.6 should specify that the 
differential is not to exceed 25 percent of the underlying rate of 
postage. The Postal Service agrees that this change comports with the 
statutory language, and has made corresponding changes to Sec. 551.6.

III. Comments Outside the Scope of the Rulemaking

    A number of commenters also addressed issues beyond the scope of 
the proposed rule. These are summarized below.
    Nine commenters expressed favorable views about semipostal stamps 
generally. The Postal Service appreciates these views and encourages 
interested persons to consider responding to future requests for 
proposals.
    Twenty-one commenters expressed that the Postal Service should not 
offer semipostal stamps. Those opposed to semipostal stamps cited a 
number of concerns. Some commenters suggested that it would be 
inappropriate for the Postal Service to select causes, since, in their 
view, it would show favoritism of certain causes or groups over others. 
Some commenters expressed concern that the Postal Service would have to 
defend decisions on semipostals. Some commenters were also concerned 
that controversial causes would be featured on semipostal stamps, and 
this would lead to litigation and public disapproval. Some commenters 
suggested that Congress should make decisions on causes. Other 
commenters suggested that the Postal Service should instead focus on 
other priorities, such as improving mail delivery service. Some 
commenters were concerned about the cost of the program. One commenter 
noted that semipostal stamps are unfair to stamp collectors.
    The Postal Service is aware of the sentiments expressed in the 
comments, but notes that the regulations are based on legislation that 
Congress enacted, and thus comments disfavoring the concept of 
semipostal stamps are not within the scope of the rulemaking. The 
Postal Service further notes, however, that the regulations are 
intended to promote sound decision-making with regard to the selection 
of causes and recipient executive agencies, which should provide ample 
protection against many of the concerns raised by the commenters.
    One commenter suggested that semipostal stamps raise funds that go 
towards political parties. Another commenter raised a related issue by 
suggesting that funds be transferred to ``legitimate 501(c)(3) 
organizations.'' These proposals are not consistent with the Act, since 
the Act requires that funds must be transmitted to executive agencies, 
as defined by 5 U.S.C. 105. Political parties and tax-exempt 501(c)(3) 
nonprofit organizations are not executive agencies under 5 U.S.C. 105; 
hence they are not eligible to receive funds directly through the 
Semipostal Stamp Program.
    One commenter recommended that vending packet machines include a 
brief explanation of the semipostal nature of the stamps. The Postal 
Service already has implemented, and will continue to implement, 
measures to promote awareness of the postage value of semipostal 
stamps. Currently, the Postal Service promotes awareness of the postage 
value of stamps by printing a notice on the selvage of semipostal 
sheets that clearly states that each stamp is valid for postage. The 
Postal Service will continue these means of raising awareness of the 
dual purpose of semipostal stamps.
    Several commenters suggested ideas for semipostal stamps, including 
the following:
     One commenter suggested a NASCAR semipostal stamp to honor 
the drivers who have passed away.
     Two commenters suggested a semipostal stamp for hunger.
     One commenter suggested a gay women's Irish Catholic/
German American Voting Rights fund.
     One commenter suggested a prostate research stamp.
     One commenter suggested an Alzheimer's disease semipostal 
stamp.
     Two commenters suggested a Dale Earnhardt commemorative 
stamp to benefit the Carolinas Foundation.
     Five commenters suggested a semipostal stamp to fund a 
companion animal spay-neuter initiative.
     One commenter suggested a generic childhood cancer 
semipostal stamp.
    The Postal Service appreciates the public's interest in ideas for 
future semipostal stamps, but notes that these comments are premature 
at this time, as the proposed rule merely sought suggestions on, inter 
alia, the procedures for selection of causes and agencies for future 
semipostals. The selection process for a new semipostal stamp will be 
announced in a separate notice published in the Federal Register, at 
which time interested persons may submit proposals for new semipostals 
in accordance with 39 CFR Part 551. The Postal Service will welcome 
conforming proposals on causes at that time.
    A number of commenters also raised miscellaneous issues unrelated 
to semipostal stamps. One commenter raised questions with regard to 
stamps featuring the image of Martin Luther King, Jr. Another commenter 
asked for information on the requirements for designing stamps. One 
commenter asked about mailing self-stamped envelopes to Ontario. One 
commenter asked for a hardcopy of the proposed regulations. Three 
commenters expressed opposition to stamps featuring designs honoring 
trappers and trapping. One commenter suggested that the First-Class 
Mail rate be changed in

[[Page 31826]]

greater than 1-cent increments. One commenter suggested printing stamps 
featuring the faces of missing children. One commenter suggested that 
the Postal Service suspend Saturday delivery in lieu of raising postage 
rates. One commenter requested information on purchasing stamps through 
the Postal Service's Web site. One commenter raised concerns about the 
privacy of her correspondence. One commenter raised concerns about 
postal rates and operating efficiency. One commenter expressed concern 
about delivery of mail to households. One commenter sent a published 
article related to the variable pay program for postal management.
    The Postal Service values public comment on its affairs and 
appreciates receiving information from those doing business with the 
Postal Service, but notes that these comments are beyond the scope of 
the rulemaking.

IV. Conclusion

    In accordance with 39 U.S.C. 416, the Postal Service hereby adopts 
the following amendments to the Code of Federal Regulations.

List of Subjects in 39 CFR Part 551

    Administrative practice and procedure, Postal Service.

    For the reasons set out in this document, the Postal Service amends 
39 CFR chapter I by revising the heading for subchapter G and adding 
part 551 to subchapter G to read as follows:

Subchapter G--Postage Programs

PART 551--SEMIPOSTAL STAMP PROGRAM

Sec.
551.1   Semipostal Stamp Program.
551.2   Semipostal stamps.
551.3   Procedure for selection of causes and recipient executive 
agencies.
551.4   Submission requirements and selection criteria.
551.5   Frequency and other limitations.
551.6   Pricing.
551.7   Calculation of funds for recipient executive agencies.
551.8   Cost offset policy.

    Authority: 39 U.S.C. 101, 201, 203, 401, 403, 404, 410, 414, and 
416.


Sec. 551.1  Semipostal Stamp Program.

    The Semipostal Stamp Program is established under the Semipostal 
Authorization Act, Public Law No. 106-253, 114 Stat. 634 (2000). The 
office of Stamp Services has primary responsibility for administering 
the Semipostal Stamp Program. The office of the vice president, 
Finance, Controller, has primary responsibility for financial aspects 
of the Semipostal Stamp Program.


Sec. 551.2  Semipostal stamps.

    Semipostal stamps are stamps that are sold for a price that exceeds 
the postage value of the stamp. The difference between the price and 
postage value of semipostal stamps, also known as the differential, 
less an offset for reasonable costs, as determined by the Postal 
Service, consists of a contribution to fund causes determined by the 
Postal Service to be in the national public interest and appropriate. 
Funds are to be transferred to selected recipient executive agencies, 
as defined under 5 U.S.C. 105. The office of Stamp Services determines 
the print quantities of semipostal stamps. The use of semipostal stamps 
shall be voluntary on the part of postal patrons.


Sec. 551.3  Procedure for selection of causes and recipient executive 
agencies.

    The Postal Service is authorized to select causes and recipient 
executive agencies to receive funds raised through the sale of 
semipostal stamps. The procedure for selection of causes and recipient 
executive agencies is as follows:
    (a) In advance of the issuance of a semipostal stamp, the office of 
Stamp Services will publish a request for proposals in the Federal 
Register inviting interested persons to submit proposals for a cause 
and recipient executive agencies for a future semipostal stamp. The 
notice will specify the beginning and ending dates of the period during 
which proposals may be submitted. The notice will also specify the 
approximate period in which the semipostal stamp for which proposals 
are solicited is to be sold. The office of Stamp Services may publicize 
the request for proposals through other means, as it determines in its 
discretion.
    (b) Proposals will be received by the office of Stamp Services, 
which will review each proposal under Sec. 551.4.
    (c) Those proposals that the office of Stamp Services determines 
satisfy the requirements of Sec. 551.4 will be forwarded for 
consideration by the Citizens' Stamp Advisory Committee, which is 
described in Administrative Support Manual (ASM) section 644.5. For 
availability of ASM 644.5, contact the Office of Stamp Services (202) 
268-2319.
    (d) The Citizens' Stamp Advisory Committee will review eligible 
proposals forwarded by the office of Stamp Services. Based on the 
proposals submitted, the Citizens' Stamp Advisory Committee will make 
recommendations on a cause and eligible recipient executive agency(ies) 
to the postmaster general. If no eligible proposals are recommended, 
the Postal Service will solicit additional proposals through 
publication of a notice in the Federal Register and through other means 
as it determines in its discretion.
    (e) Meetings of the Citizens' Stamp Advisory Committee are closed, 
and deliberations of the Citizens' Stamp Advisory Committee are 
predecisional in nature.
    (f) The postmaster general will act on the recommendations of the 
Citizens' Stamp Advisory Committee. The decision of the postmaster 
general shall consist of the final agency decision.
    (g) The office of Stamp Services will notify the executive 
agency(ies) in writing of a decision designating the agency(ies) as 
recipients of funds from a semipostal stamp.
    (h)(1) A proposal submission may designate one or two recipient 
executive agencies to receive funds, but if more than one executive 
agency is proposed, the proposal must specify the percentage shares of 
differential revenue, net of the Postal Service's reasonable costs, to 
be given to each agency. If percentage shares are not specified, it is 
presumed that the proposal intends that the funds be split evenly 
between the agencies. If more than two recipient executive agencies are 
proposed to receive funds and the proposal is selected, the proposal is 
treated as prescribed by paragraph (h)(3) of this section.
    (2) If more than one proposal is submitted for the same cause, and 
the proposals would have different executive agencies receiving funds, 
the funds would be evenly divided among the executive agencies, with no 
more than two agencies being designated to receive funds, as determined 
by the vice president and consumer advocate.
    (3) Within 10 days of receipt of a notice indicating that it has 
been selected to receive funds, a selected agency could request a 
proportionately larger share if it can demonstrate that its share of 
total funding of the cause from other sources (excluding any additional 
funds available as a result of the semipostal stamp) exceeds that of 
the other recipient executive agency. The request must be in writing 
and must be sent to the manager of Stamp Services. In those cases, the 
determination regarding the proportional share to be divided among the 
recipient executive agencies is made by the Postal Service's vice 
president and consumer advocate.
    (i) As either a separate matter, or in combination with 
recommendations on a cause and a recipient executive agency(ies), the 
Citizens' Stamp

[[Page 31827]]

Advisory Committee will recommend to the postmaster general a design 
(i.e., artwork) for the semipostal stamp. The postmaster general will 
make a final determination on the design to be featured.


Sec. 551.4  Submission requirements and selection criteria.

    (a) Proposals on recipient executive agencies and causes must 
satisfy the following requirements:
    (1) Interested persons must timely submit an original and 20 copies 
of the proposal. For purposes of this section, interested persons 
include, but are not limited to, individuals, corporations, 
associations, and executive agencies under 5 U.S.C. 105. Interested 
persons submitting proposals are also encouraged to submit an Adobe 
Acrobat (.pdf) file saved on a 3.5 inch diskette or CD-ROM diskette 
containing the entire contents of the submission. In extraordinary 
circumstances, the office of Stamp Services may, in its discretion, 
consider a late-filed proposal.
    (2) The proposal submission must be signed by the individual or a 
duly authorized representative and must provide the mailing address, 
phone number, fax number (if available), and E-mail address (if 
available) of a designated point of contact.
    (3) The submission must describe the cause and the purposes for 
which the funds would be spent.
    (4) The submission must demonstrate that the cause to be funded has 
broad national appeal, and that the cause is in the national public 
interest and furthers human welfare. Respondents are encouraged to 
submit supporting documentation demonstrating that funding the cause 
would benefit the national public interest.
    (5) The submission must be accompanied by a letter from an 
executive agency or agencies on agency letterhead representing that:
    (i) it is an executive agency as defined under 5 U.S.C. 105,
    (ii) it is willing and able to implement the proposal, and
    (iii) it is willing and able to meet the requirements of the 
Semipostal Authorization Act, if it is selected. The letter must be 
signed by a duly authorized representative of the agency.
    (b) Proposal submissions become the property of the Postal Service 
and are not returned to interested persons who submit them. Interested 
persons who submit proposals are not entitled to any remuneration, 
compensation, or any other form of payment, whether their proposal 
submissions are selected or not, for any reason.
    (c) The following persons are disqualified from submitting 
proposals:
    (1) Any contractor of the Postal Service that may stand to benefit 
financially from the Semipostal Stamp Program; or
    (2) Members of the Citizens' Stamp Advisory Committee and their 
immediate families, and employees or contractors of the Postal Service, 
and their immediate families, who are involved in any decision-making 
related to causes, recipient agencies, or artwork for the Semipostal 
Stamp Program.
    (d) Consideration for evaluation will not be given to proposals 
that request support for the following: Anniversaries; public works; 
people; specific organizations or associations; commercial enterprises 
or products; cities, towns, municipalities, counties, or secondary 
schools; hospitals, libraries, or similar institutions; religious 
institutions; causes that do not further human welfare; or causes 
determined by the Postal Service or the Citizens' Stamp Advisory 
Committee to be inconsistent with the spirit, intent, or history of the 
Semipostal Authorization Act.
    (e) Artwork and stamp designs should not be submitted with 
proposals.


Sec. 551.5  Frequency and other limitations.

    (a) The Postal Service is authorized to issue semipostal stamps for 
a 10-year period beginning on the date on which semipostal stamps are 
first sold to the public under 39 U.S.C. 416. The 10-year period will 
commence after the sales period of the Breast Cancer Research Stamp is 
concluded in accordance with the Stamp Out Breast Cancer Act, as 
amended by the Semipostal Authorization Act. The office of Stamp 
Services will determine the date of commencement of the 10-year period.
    (b) The Postal Service will offer only one semipostal stamp for 
sale at any given time during the 10-year period.
    (c) The sales period for any given semipostal stamp is limited to 
no more than 2 years, as determined by the office of Stamp Services.
    (d) Prior to or after the issuance of a given semipostal stamp, the 
Postal Service reserves the right to withdraw the semipostal stamp from 
sale, or to reduce the sales period, if, inter alia:
    (1) Its sales or revenue statistics are lower than expected,
    (2) The sales or revenue projections are lower than previously 
expected, or
    (3) The cause or recipient executive agency does not further, or 
comply with, the statutory purposes or requirements of the Semipostal 
Authorization Act. The decision to withdraw a semipostal stamp is to be 
made by the postmaster general, after review of supporting 
documentation prepared by the office of Stamp Services.


Sec. 551.6  Pricing.

    (a) The Semipostal Authorization Act prescribes that the price of a 
semipostal stamp is the ``rate of postage that would otherwise 
regularly apply, plus a differential not to exceed 25 percent.'' For 
purposes of this provision, the First-Class Mail'' single-piece first-
ounce rate of postage will be considered ``the rate of postage that 
would otherwise regularly apply.''
    (b) The prices of semipostal stamps are determined by the Governors 
of the United States Postal Service in accordance with the requirements 
of 39 U.S.C. 416.


Sec. 551.7  Calculation of funds for recipient executive agencies.

    (a) The Postal Service is to determine its reasonable costs in 
executing its responsibilities pursuant to the Semipostal Authorization 
Act, as specified in Sec. 551.8. These costs are offset against the 
revenue received through sale of each semipostal stamp in excess of the 
First-Class Mail single-piece first-ounce rate in effect at the time of 
purchase.
    (b) Any reasonable costs offset by the Postal Service shall be 
retained by it, along with revenue from the sale of the semipostal 
stamps, as recorded by sales units through the use of a specially 
designated account.
    (c) The Postal Service is to pay designated recipient executive 
agency(ies) the remainder of the differential revenue less an amount to 
recover the reasonable costs of the Postal Service, as determined under 
Sec. 551.8.
    (d) The amounts for recipient executive agencies are transferred in 
a manner and frequency determined by mutual agreement, consistent with 
the requirements of 39 U.S.C. 416.


Sec. 551.8  Cost offset policy.

    (a) Postal Service policy is to recover from the differential 
revenue for each semipostal stamp those costs that are determined to be 
attributable to the semipostal stamp and that would not normally be 
incurred for commemorative stamps having similar sales; physical 
characteristics; and marketing, promotional, and public relations 
activities (hereinafter ``comparable stamps'').
    (b) Overall responsibility for tracking costs associated with 
semipostal stamps will rest with the office of the vice president, 
Finance, Controller. Individual organizational units

[[Page 31828]]

incurring costs will provide supporting documentation to the office of 
the vice president, Finance, Controller.
    (c) For each semipostal stamp, the office of the vice president, 
Finance, Controller, shall, based on judgment and available 
information, identify the comparable commemorative stamp(s) and create 
a profile of the typical cost characteristics of the comparable 
stamp(s) (e.g., manufacturing process, gum type), thereby establishing 
a baseline for cost comparison purposes. The determination of 
comparable commemorative stamps may change during or after the sales 
period, if the projections of stamp sales differ from actual 
experience.
    (d) Except as specified, all costs associated with semipostal 
stamps will be tracked by the office of the vice president, Finance, 
Controller. Costs that will not be tracked include:
    (1) Costs that the Postal Service determines to be 
inconsequentially small, which include those cost items not exceeding 
$3,000 per invoice;
    (2) Costs for which the cost of tracking would be burdensome (e.g., 
costs for which the cost of tracking exceeds the cost to be tracked);
    (3) Costs attributable to mail to which semipostal stamps are 
affixed (which are attributable to the appropriate class and/or 
subclass of mail); and
    (4) Administrative and support costs that the Postal Service would 
have incurred whether or not the Semipostal Stamp Program had been 
established.
    (e) Cost items recoverable from the differential revenue may 
include, but are not limited to, the following:
    (1) Packaging costs in excess of the cost to package comparable 
stamps;
    (2) Printing costs of flyers and special receipts;
    (3) Costs of changes to equipment;
    (4) Costs of developing and executing marketing and promotional 
plans in excess of the cost for comparable stamps; and
    (5) Other costs specific to the semipostal stamp that would not 
normally have been incurred for comparable stamps.
    (f) The Semipostal Stamp Program incorporates the following 
provisions that are intended to maximize differential revenues 
available to the selected causes. These include, but are not limited 
to, the following:
    (1) Avoiding, to the extent practicable, promotional costs that 
exceed those of comparable stamps;
    (2) Establishing restrictions on the number of concurrently issued 
semipostal stamps; and
    (3) Making financial and retail system changes in conjunction with 
regularly scheduled revisions.
    (g) Other costs attributable to semipostals but which would 
normally be incurred for comparable stamps would be recovered through 
the postage component of the semipostal stamp price. These include, but 
are not limited to, the following:
    (1) Costs of stamp design (including market research);
    (2) Costs of stamp production and printing;
    (3) Costs of stamp shipping and distribution;
    (4) Estimated training costs for field staff, except for special 
training associated with semipostal stamps;
    (5) Costs of stamp sales (including employee salaries and 
benefits);
    (6) Costs associated with the withdrawal of the stamp issue from 
sale;
    (7) Costs associated with the destruction of unsold stamps; and
    (8) Costs associated with the incorporation of semipostal stamp 
images into advertising for the Postal Service as an entity.

Stanley F. Mires,
Chief Counsel, Legislative.
[FR Doc. 01-14748 Filed 6-11-01; 8:45 am]
BILLING CODE 7710-12-U