[Federal Register Volume 66, Number 217 (Thursday, November 8, 2001)]
[Rules and Regulations]
[Pages 56435-56447]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-28011]


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POSTAL SERVICE

39 CFR Part 111


Production, Distribution, and Use of Postage Meters (Postage 
Evidencing Systems) and Postal Security Devices

AGENCY: Postal Service.

ACTION: Final rule.

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SUMMARY: The Postal Service is revising the Domestic Mail Manual (DMM) 
P030 to include policies and regulations pertaining to more secure 
postage evidencing systems, such as those that use a Postal Security 
Device (PSD), those that generate information-based indicia (IBI), and 
PC Postage (TM). The term ``postage evidencing systems'' is the 
collective term used when referring to these systems.
    The Postal Service will publish proposed revisions to Title 39, 
Code of Federal Regulations (CFR) part 501, Authorization to 
Manufacture and Distribute Postage Meters, to include policies and 
regulations pertaining to more secure postage evidencing systems, such 
as those that use a PSD, those that generate IBI, and PC Postage, in a 
future issue of the Federal Register.

DATES: This rule is effective January 1, 2002.

FOR FURTHER INFORMATION CONTACT: Wayne Wilkerson, (703) 292-3590, or 
facsimile, (703) 292-4073.

SUPPLEMENTARY INFORMATION: The proposed rule to replace the current DMM 
P030, Postage Meters and Meter Stamps, was published in the Federal 
Register August 15, 2001, (66 FR 42820). The Postal Service requested 
that comments on the proposed rule be submitted by September 14, 2001. 
The date for receipt of comments was extended to September 25, 2001. 
The Postal Service received three written comments from postage 
evidencing system providers. The Postal Service gave thorough 
consideration to the comments it received, modified the proposed rule 
as appropriate, and now announces the adoption of the final rule. The 
Postal Service's evaluation of the significant comments follows. The 
final rule, as revised, follows the discussion of the comments and of 
the other significant changes made since publication of the proposed 
rule.

Discussion of Comments

1. Specifications

    (a) One commenter requested that the regulations name specific 
technologies that would meet certain postage evidencing system 
requirements.
    There are many different solutions to meeting postage evidencing 
system requirements. We made no changes to the generalized terminology 
used.
    (b) One commenter requested that the definition of a PC Postage 
system be changed to require the system to print the destination 
address at the same time it prints the indicium.
    A PC Postage system need not print the destination address when it 
prints the indicium. We made no changes to the definition of a PC 
Postage system.
    (c) One commenter noted that although the regulations state that 
remote reset meters are reset electronically at the location of the 
meter, there might be nonelectronic means for resetting such meters.
    The Postal Service agrees with the commenter and revised the 
regulation.
    (d) One commenter suggested that the fluorescent ink used in a 
postage evidencing system must be Postal Service-approved ink.
    The Postal Service agrees with the commenter and changed the 
regulation in response to this comment.
    (e) One commenter suggested that users must be required to use only 
those labels approved by the Postal Service for a given postage 
evidencing system when using that system.
    The Postal Service agrees with the commenter and changed the 
regulation in response to this comment.

2. The Relationship Between the Customer and Their Postage Evidencing 
System Provider

    (a) One commenter noted that noncompliance with the terms and 
conditions of the authorized provider's lease or rental agreement 
should be a reason for revoking a license that authorizes lease or 
rental of a postage evidencing system. The commenter also requested 
requiring the immediate surrender of a postage evidencing system or 
Postal Security Device (PSD) upon termination of a lease or rental 
agreement.
    We revised the regulations to include licensee failure to abide by 
the terms and conditions of the authorized provider's lease or rental 
agreement, as a reason for possible revocation of a license. We added 
termination of a lease or rental agreement, as a reason for requiring 
the immediate surrender of a postage evidencing system or PSD.
    (b) One commenter requested that the agreement between the provider 
and their customer be referred to as a ``rental'' instead of a 
``lease.''
    To allow for a variety of contractual relationships, the text was 
changed to use the phrase ``lease or rental agreement'' for all 
references to the agreement between the provider and their customer.
    (c) One commenter requested that the Postal Service clarify that 
the base or host of the mailing system may be leased, sold, or rented 
at the discretion of the provider, although the postage evidencing 
system or PSD remains the property of the provider.
    We revised the regulation to clarify that the base or host 
component of the mailing equipment that supports the postage evidencing 
system or PSD may be sold, leased, or rented at the discretion of the 
provider and the customer, in accordance with the

[[Page 56436]]

product approval as granted by the Postal Service.

3. Licensing

    (a) Two commenters requested an increase to the proposed 30-day 
time period after which a license authorization to lease or rent a 
postage evidencing system can be cancelled when an active system is not 
associated with the license. The commenters noted that seasonal 
business or delays in fulfillment of new meter orders could cause a 30-
day period of inactivity.
    The Postal Service carefully considered this request and agrees 
that there may be some inconveniences for licensed users in some 
circumstances if license authorization to lease or rent a postage 
evidencing system can be cancelled when an active system is not 
associated with the license for 30 days or more. The regulation was 
changed to extend the period, to 60 days, in which a system can be 
inactive before the Postal Service can cancel a user's license 
authorization, and to allow exceptions for seasonal users.
    (b) One commenter requested that since products can be distributed 
via the Internet or telemarketing, the regulation should allow for the 
licensee to enter into an agreement by other means than a ``signed 
agreement.''
    The Postal Service agrees with this request and eliminated this 
requirement.
    (c) One commenter requested that licensee information be included 
in the national change-of-address database to alert the Postal Service 
and providers of potential customer relocations.
    The provider may access available databases to determine potential 
customer relocations at its discretion. We made no changes to the 
requirement.

4. Postage Evidencing Systems Outside the United States

    (a) One commenter noted that users do not receive any special 
documentation from the Postal Service giving approval to use a postage 
evidencing system outside the country.
    The Postal Service reviewed the regulation and clarified that the 
provider receives the approval from the Postal Service to place a 
postage evidencing system outside the country.
    (b) One commenter questioned the requirement that all postage 
evidencing systems authorized for use outside the United States have 
enhanced security features that include digital indicia.
    The Postal Service reviewed the requirement and revised it so that 
the requirement for postage evidencing systems to generate digital 
indicia is now the same for meters placed outside the country as it is 
for domestic meters.
    (c) One commenter questioned the need for more frequent inspections 
of postage evidencing systems located outside the country and asked 
that inspection and examination schedules for all postage evidencing 
systems be the same regardless of their location.
    The security of postage evidencing systems located outside the 
country must be ensured. The Postal Service reviewed the inspection and 
examination schedule for such systems located, and deleted the 
requirement for more frequent inspections and examinations. The Postage 
Evidencing System Inspection and Examination Schedule now applies to 
all systems, however, special circumstances may be invoked to inspect 
systems placed outside the country on a more frequent basis.

5. User Responsibilities

    (a) One commenter noted that the requirements for deposit of mail 
are confusing and suggested that the Postal Service remove all barriers 
for customers to deposit mail. The commenter noted that drop shipment 
of metered mail and zone-rated Priority and Express Mail are the areas 
of greatest concern.
    The Postal Service revised the regulation on deposit of mail to 
clarify the requirements. All single-piece-rate metered mail may be 
deposited in any collection box, unless specially marked collection 
boxes are provided. All metered Express Mail and metered Priority Mail 
can now be deposited in any collection box, unless specially marked 
collection boxes are provided to increase customer convenience in using 
those services.
    (b) Two commenters questioned the requirement for certain users of 
PC Postage systems to submit a mailpiece to the provider for quality 
assurance evaluation every 12 months. One commenter suggested that this 
requirement should be a Postal Service responsibility as part of the 
mail acceptance process, rather than a provider responsibility. The 
other commenter suggested that the requirement be waived if the 
customer uses a printer that is sold or specified by the provider.
    The Postal Service carefully considered this requirement, which is 
limited to PC Postage systems that print indicia with a printer that 
may also be used for nonpostal applications. The provider approval or 
specification of the printer used does not give the system user 
immunity from this requirement. The Postal Service does not agree that 
this should be a postal responsibility and makes no change to this 
requirement.
    (c) One commenter questioned the restriction on using different 
forms of postage evidencing on the same mailpiece since it could 
inconvenience customers who have more than one postage evidencing 
system.
    Different forms of postage evidencing are handled differently for 
facing and cancellation during mail processing. The Postal Service 
changed this requirement to limit it to letter-size, single-piece-rate 
mailpieces.

6. Resetting and Payment Options

    (a) One commenter requested that the details of the Postage Payment 
Agreement be included in the regulations. We changed the regulation to 
require use of an approved postage payment process, rather than the 
signing of a specific agreement. The detailed requirements for the 
postage payment process will be included in Title 39, Code of Federal 
Regulations (CFR) part 501, Authorization to Manufacture and Distribute 
Postage Meters, with other regulations affecting providers of postage 
evidencing systems. The Postal Service will publish proposed revisions 
to this part to include policies and regulations pertaining to more 
secure postage evidencing systems, such as those that use a PSD, those 
that generate IBI, and PC Postage, in a future issue of the Federal 
Register.
    (b) One commenter requested that the on-site meter service program 
be available at any provider's office rather than just branch offices 
to ensure coverage under the program for direct distribution centers.
    The Postal Service agrees with the commenter and changed the 
regulation in response to this comment.
    (c) Commenters requested changes to the payment options for postage 
evidencing systems, for example extending the use of credit cards to 
systems other than PC Postage and allowing the use of checks as payment 
for postage on PC Postage systems.
    The Postal Service carefully considered the use of different 
payment options for postage evidencing systems and does not agree that 
these should be changed at this time. We made no change to the 
regulation.
    (d) In response to the requirement that the provider document each 
reset transaction for the user unless the provider gives the user a 
monthly statement documenting all transactions and the balance after 
each transaction, one commenter suggested that the provider could give 
the customer the option of whether or not to receive this

[[Page 56437]]

monthly statement. The commenter noted that there are multiple options 
for providing statements, including offering the customer the option 
not to receive one.
    The regulation does not specify the method used to provide the 
documentation. The Postal Service makes no change to this requirement.

7. Withdrawal and Return of Postage Evidencing Systems

    (a) One provider asked that instead of requiring that a defective 
postage evidencing system or PSD be retrieved by the provider within 3 
days, that the regulation state that the retrieval process begin within 
that time.
    The Postal Service changed the regulation to require that the 
provider begin the retrieval process for a defective postage evidencing 
systems or PSD within 2 days of notification by the licensee.
    (b) One commenter noted that with prior Postal Service approval, 
the provider procedures for check out and withdrawal of a manually 
reset meter may vary from those in the proposed regulation.
    The Postal Service reviewed the current procedures and changed the 
regulation since the provider may also check out a specifically 
designated meter model from service by using a Postal Service-approved 
process to transfer the postage remaining on the manually reset meter 
directly to a remotely reset meter.
    (c) One commenter asked that an option be added to allow the 
transfer of unused postage in a remote reset Generation 1 postage meter 
checked out of service to the appropriate meter resetting account after 
Postal Service verification.
    The Postal Service changed the regulation by adding this option to 
reflect current practice.
    (d) One commenter questioned the requirement that postage 
evidencing systems or PSDs that are returned must be shipped by 
Priority Mail unless the Postal Service gives written permission to 
ship at another rate or special service. The commenter noted that the 
Postal Service should not require use of a Postal Service product when 
there are equivalent or better products offered by the private sector 
that provide for equivalent or better tracking and tracing 
capabilities.
    The Postal Service revised the regulation by requiring the use of 
Priority Mail with Delivery Confirmation to return postage evidencing 
systems or PSDs to the provider when the unit is withdrawn from 
service, unless the Postal Service gives written permission to ship by 
another means or service.

8. Regulations on the Provider

    There were several requests for clarification of the regulations 
affecting providers and their relationship with the Postal Service.
    The Domestic Mail Manual (DMM) regulates customer use of postal 
services. Regulations affecting providers of postage evidencing systems 
are found in Title 39, Code of Federal Regulations (CFR) part 501, 
Authorization to Manufacture and Distribute Postage Meters. The Postal 
Service will publish proposed revisions to this part to include 
policies and regulations pertaining to more secure postage evidencing 
systems, such as those that use a PSD, those that generate IBI, and PC 
Postage, in a future issue of the Federal Register.

Discussion of Other Changes

    1. We added a statement that indicia are also called ``meter 
stamps'' or ``metered postage.''
    2. We limited check in and check out of remote reset meters to the 
licensing post office, unless the on-site meter program is used.
    3. We added a requirement that matter other than postage or postal 
markings printed by postage evidencing systems must not emulate valid 
indicia. This requirement applies to both letterpress and digital 
indicia.
    4. We made minor editorial changes.

List of Subjects in 39 CFR Part 111

    Administrative practice and procedure, Postal Service.

    For reasons stated in the preamble, the Postal Service is amending 
39 CFR part 111 as follows:

PART 111--[AMENDED]

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

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


    2. Revise the Domestic Mail Manual (DMM) as follows:

Domestic Mail Manual (DMM)

P  Postage and Payment Methods

P000  Basic Information

* * * * *
[Revise the title and text of P030 as follows:]

P030  Postage Meters (Postage Evidencing Systems)

    Summary: P030 describes the use and regulations for postage meters 
(postage evidencing systems) to prepare metered mail.
1.0  BASIC INFORMATION

1.1  Definition

    Postage evidencing systems are secure postage metering systems that 
generate indicia imprinted on or affixed to a mailpiece to evidence 
prepayment of postage. The USPS regulates these systems and their use 
to protect postal revenue. Only USPS-authorized manufacturers or 
product service providers (``providers'') may design, produce, and 
distribute the systems. Misuse of a postage evidencing system to avoid 
payment of postage is punishable by law. The major components of a 
postage evidencing system are:
    a. Funds registers and accounting functions to store and maintain 
postal financial data. Two funds registers are required:
    (1) The descending register that records the postage value 
remaining in the postage evidencing system.
    (2) The ascending register that increases as postage is printed. 
This register records the total value of all postage printed during the 
life of the postage evidencing system unless it is reset to zero by the 
provider during servicing between customers or when it reaches its 
maximum limit.
    b. Indicia generated by the system to show evidence of postage 
prepayment on the mailpiece. Indicia are also called ``meter stamps'' 
or ``metered postage.''
    c. USPS and provider infrastructure to support user licensing and 
customer information, ensure proper payment for postage, set and reset 
the system with postage value, and provide for inventory management. 
Provider and USPS interface to accomplish these functions.

1.2  Types

    Generation 1 postage evidencing systems use industry-standard 
electronic components for managing the registers and accounting for 
postal funds. Generation 2 postage evidencing systems use a USPS-
approved electronic component called a ``Postal Security Device 
(``PSD'') for managing the registers and accounting for postal funds. 
All PSDs must meet USPS performance criteria and must have a self-
disabling feature that prohibits the printing of postage when specific 
programmed requirements are not met. For all Generation 2 postage 
evidencing systems the provider and USPS infrastructure must interface 
to support licensing and customer information, ensure proper payment 
for postage, and provide for inventory management. The systems are 
categorized as follows:

[[Page 56438]]

    a. Traditional postage meter-a Generation 1 postage evidencing 
system:
    (1) The industry-standard electronic components used for managing 
registers and accounting for postal funds may or may not include a 
self-disabling feature that prohibits the printing of postage when 
specific programmed requirements are not met.
    (2) Indicia are printed either by a letterpress or digital printing 
process. Letterpress indicia are generated by the impact of a hard, 
inked printing die on the print surface. Digital indicia are generated 
electronically and produced on the print surface by a nonimpact 
technology, such as an ink jet, thermal, or laser printing process.
    (3) The provider and USPS infrastructure systems for all Generation 
1 postage evidencing systems interface to support licensing and 
customer information and to provide for inventory management. 
Generation 1 postage meters can be either manually reset (the meter 
must be physically taken to the USPS for resetting) or remotely reset. 
Remotely reset meters are replacing manually reset meters in accordance 
with a phased USPS retirement plan. The USPS infrastructure currently 
supports payment for postage for all Generation 1 postage evidencing 
systems, both manually reset and remotely reset. The provider 
infrastructure supports payment for postage for remotely reset meters 
but does not support payment for postage for manually reset meters.
    b. PSD Meter-a Generation 2 postage evidencing system:
    (1) A PSD Meter must use a USPS-approved PSD.
    (2) The indicia generated by a PSD Meter must be digital indicia 
approved by the USPS.
    (3) A PSD Meter must be reset using an electronic connection 
between the provider's postage resetting system and the postal 
registers in the PSD.
    c. Information-Based Indicia (IBI) Meter-a Generation 2 postage 
evidencing system:
    (1) An IBI Meter must use a USPS-approved PSD.
    (2) An IBI Meter must generate information-based indicia (IBI). IBI 
are digital indicia that include human-readable information and a USPS-
approved two-dimensional barcode or other USPS-approved symbology, with 
a digital signature and other required data fields.
    (3) An IBI Meter must be reset with an electronic connection 
between the provider's postage resetting system and the postal 
registers in the PSD.
    d. PC Postage (TM) system-a Generation 2 postage evidencing system:
    (1) A PC Postage system must use a USPS-approved electronic PSD.
    (2) The indicia generated by a PC Postage system must be IBI.
    (3) A PC Postage system must be reset with postage value using a 
personal computer to establish an electronic connection between the 
provider's postage resetting system and the postal registers in the 
PSD. The user must employ a personal computer to access critical 
infrastructure functions.

1.3  Authorized Providers

    Postage evidencing systems are available only from authorized 
providers. All postage evidencing systems and PSDs remain the property 
of the USPS-authorized provider and are available only through a lease 
or rental agreement with the provider or its authorized agent. The USPS 
holds providers responsible for the control, secure operation, 
distribution, maintenance, inspection, and replacement of postage 
evidencing systems and PSDs throughout their entire life cycle. The 
provider is also responsible for the secure disposal or destruction of 
postage evidencing systems and PSDs at the end of their useful life. 
The following providers are authorized:

Ascom Hasler Mailing Systems Inc, 19 Forest Pkwy, Shelton CT 06484-
6140, 800-243-6275, www.ascom-usa.com
Francotyp-Postalia Inc, 140 N Mitchell Ct, Ste 200, Addison IL 60101-
5629, 800-341-6052, www.fp-usa.com
Neopost 30955 Huntwood Ave, Hayward CA 94544-7084, 800-624-7892, 
www.neopostinc.com
Pitney Bowes Inc, 1 Elmcroft Rd, Stamford CT 06926-0700, 800-322-8000, 
www.pitneybowes.com
PSI Systems Envelope Manager Software, 247 High St, Palo Alto CA 94301-
1041, 800-576-3279 x140, www.envmgr.com
Stamps.Com, 3420 Ocean Park Blvd, Ste 1040, Santa Monica CA 90405-3035, 
www.stamps.com

1.4  Licensee

    The licensee of a postage evidencing system is the person or entity 
authorized by the USPS to lease or rent a system. The licensee cannot 
own a postage evidencing system or PSD and may possess a postage 
evidencing system only under a valid lease or rental agreement with an 
approved provider or its agent. The licensee is responsible for the 
control, maintenance, and use of the postage evidencing system in 
accordance with USPS regulations. The base or host component of the 
mailing equipment that supports the postage evidencing system or PSD 
may be sold, leased, or rented at the discretion of the provider and 
the customer, in accordance with the product approval as granted by the 
USPS.

1.5  Possession of a Postage Evidencing System

    No person or entity other than an authorized provider, its 
authorized agent, the USPS, or a licensee may have a postage evidencing 
system or PSD in their possession. Any person or entity must 
immediately surrender a postage evidencing system or PSD to the 
provider, the provider's agent or to the USPS upon termination of a 
lease or rental agreement.

1.6  Use of a Postage Evidencing System

    No person or entity other than an authorized provider may use a 
postage evidencing system until the provider initializes the system or, 
where applicable, the USPS sets and seals the system, performs the 
required validations, and checks the system into service. Once the 
postage evidencing system is properly in service, it may be used by the 
licensee or others authorized by the licensee. The licensee is 
responsible for control and use of the system.

1.7  Classes of Mail

    Postage may be paid by imprinting or affixing indicia generated by 
a USPS-approved postage evidencing system on any class of mail except 
Periodicals. Such mail is called ``metered mail'' and is entitled to 
all privileges and subject to all conditions applying to the various 
classes of mail.
2.0  LICENSING

2.1  Procedures

    To possess and use a postage evidencing system, the user must apply 
for and be granted a license by the USPS. A single license allows the 
licensee to use multiple postage evidencing systems for metered mail 
deposited in the licensing post office in accordance with 11.0. A 
postage evidencing system can be licensed to only one post office. The 
user must submit a separate application, be granted a separate license 
authorization, and have a separate postage evidencing system for each 
licensing post office where the user intends to deposit mail. The 
procedures are as follows:
    a. The applicant submits to the provider all data required for the 
license, including the city name, state and ZIP Code of the licensing 
post office where the user intends to deposit the metered mail.

[[Page 56439]]

    b. The provider submits the required information to the USPS 
electronically.
    c. The USPS notifies the provider after granting the license.
    d. The USPS can cancel the licensee's authorization to rent or 
lease postage evidencing systems if an active system is not associated 
with the license for 60 days or more. The customer must reapply for a 
license to resume the use of a postage evidencing system. Exceptions 
may be granted to seasonal users.

2.2  Licensee's Agreement

    By applying for a USPS license to rent or lease a postage 
evidencing system, the applicant agrees that the license may be revoked 
immediately and the provider notified by the USPS to withdraw the 
postage evidencing system from service for the following reasons:
    a. The postage evidencing system is used in any fraudulent or 
unlawful scheme or enterprise.
    b. The postage evidencing system is not used for 12 consecutive 
months.
    c. The licensee fails to exercise sufficient control of the postage 
evidencing system or PSD or fails to comply with the regulations for 
its care or use.
    d. The licensee fails to abide by the terms and conditions of the 
authorized provider's lease or rental agreement.
    e. The postage evidencing system or PSD is taken or used outside 
the United States, its territories or possessions, except as 
specifically authorized under these regulations by the manager of 
Postage Technology Management, USPS Headquarters.
    f. Mail is deposited at other than the licensing post office 
(except as permitted under 11.0).

2.3  Refusal to License a User

    The USPS notifies both the applicant and the provider in writing 
when authorization for a license is refused. Any applicant refused 
authorization may appeal the decision under 2.5. The USPS may refuse 
authorization for a license for the following reasons:
    a. The applicant submitted false information on the license 
application.
    b. The applicant violated any regulation regarding the care or use 
of a PSD, postage evidencing system, or the indicia generated by a 
system that resulted in the revocation of the applicant's postage meter 
or postage evidencing system license within 5 years before the date the 
applicant submits the application.
    c. There is sufficient reason to believe that the applicant will 
use the postage evidencing system or PSD in violation of USPS 
regulations.

2.4  Revocation of a License

    The USPS can revoke the user's license when the user does not 
fulfill the responsibilities for the care and use of a PSD, postage 
evidencing system, or the indicia generated by a system. The USPS 
notifies the licensee's provider(s) of the revocation so that the 
provider(s) can notify the licensee, cancel the lease or rental 
agreement(s), and withdraw all postage evidencing systems from service. 
The notification is sent by certified mail. Revocation takes effect 10 
calendar days after the licensee receives the revocation notice unless, 
within that time, the licensee appeals the decision under 2.5. A 
license is subject to revocation for the reasons listed in 2.2, or if 
there is probable cause to believe that it is to be used in violation 
of USPS regulations.

2.5  Appeal Process

    An applicant who is refused a license, or a licensee whose license 
is revoked, may file a written appeal with the manager of Postage 
Technology Management, USPS Headquarters (see G043), within 10 calendar 
days after receiving notification of the decision.
3.0  LICENSED USER'S RESPONSIBILITIES

3.1  Signed Lease or Rental Agreement With Financial Agreement for 
Resetting

    The licensee must enter into a lease or rental agreement with the 
provider that includes provisions for resetting the postage evidencing 
system with postage and an authorized postage payment process under 
which the licensee agrees to make payment for postage using a payment 
method approved by the USPS. The USPS is not a party to the lease or 
rental agreement but use of a postage evidencing system is subject to 
the regulations of the USPS and the terms and conditions of the lease 
or rental agreement and the payment process.

3.2  Custody

    A postage evidencing system or PSD that is in the possession or 
custody of a licensee must remain in that user's custody until it is 
returned to the authorized provider, to its authorized agent, or to the 
USPS, or is seized by the U.S. Postal Inspection Service for violation 
of Federal law.

3.3  Update Licensee Information

    The licensee must update required license application information 
with the provider whenever there is any change in the licensee's name, 
address, telephone number, licensing post office, location of the 
postage evidencing system, or location of the PSD. The USPS will update 
the license information based on the receipt of updated information 
submitted by the provider.

3.4  Relocation of Licensee

    When a licensee notifies the provider of a change of the licensing 
post office in accordance with 3.3, the provider will perform the 
appropriate accounting functions to withdraw the postage evidencing 
system from service at the original licensing post office and install 
it and then reauthorize it for use at the new licensing post office, or 
issue another postage evidencing system for use at the new location.

3.5  Required Resetting

    All postage evidencing systems must be reset at least once every 3 
months. A zero value reset will meet this requirement.

3.6  Transaction Files

    Some postage evidencing systems generate records of transactions 
relating to indicia creation, funds transfer (including postage value 
downloads), and system or PSD audits. For postage evidencing systems 
that do not maintain automated transaction records, licensees are 
encouraged to maintain their own records of the readings of the 
ascending and descending registers for each day of operation. 
Transaction records are important in the validation of requests for 
refunds in the case of system malfunction.

3.7  Inspection and Examination

    The licensee must, upon request, make immediately available for 
examination and audit by the provider or by the USPS any postage 
evidencing system or PSD in the licensee's possession and any 
corresponding transaction records. The USPS can perform physical or 
remote examination of any postage evidencing system or PSD. The 
licensee must meet the requirements for provider inspections and USPS 
examinations. All postage evidencing systems are inspected in 
accordance with the Postage Evidencing Systems Inspection and 
Examination Schedule below.

[[Page 56440]]



                         Postage Evidencing Systems Inspection and Examination Schedule
----------------------------------------------------------------------------------------------------------------
                                                                                          USPS examination
    Security level        Postage evidencing system        Provider inspection              requirements
----------------------------------------------------------------------------------------------------------------
1.....................  Manually reset postage meter  Every 6 months..............  Must bring to post office
                                                                                     for examination when not
                                                                                     reset within 3 months.
2.....................  Remote reset postage meter    Annually or every 6 months    Examinations in special
                         with letterpress or digital   when there is no setting      circumstances.
                         indicia, but without self-    activity in 6 months.
                         disabling feature.
3.....................  Remote reset meter with       Every 2 years or every 6      Examinations in special
                         letterpress indicia and       months when there is no       circumstances.
                         self-disabling feature.       setting activity in 6
                                                       months.
4.....................  Remote reset postage meter    Every 2 years or enhanced     Examinations in special
                         with digital indicia and      inspection process when       circumstances.
                         self-disabling feature.       approved by USPS.
5.....................  PSD Meter, IBI Meter, or a    Inspections in special        Examinations in special
                         PC Postage system.            circumstances.                circumstances.
----------------------------------------------------------------------------------------------------------------

3.8  Quality Assurance

    Some PC Postage systems print indicia with a printer that may also 
be used for nonpostal applications. Users of such systems must forward 
a mailpiece bearing an indicium produced by the postage evidencing 
system and associated printer to the provider for quality assurance 
evaluation. The licensee must forward a quality assurance mailpiece to 
the provider when the system is installed, when there is a change to 
the printer connected to the system, and at least once every 12 months 
thereafter, in accordance with provider directions.

3.9  Labels With Fraud Warning and Serial Number

    The licensee must ensure that the fraud warning label placed by the 
provider on the postage evidencing system or its housing is not removed 
or destroyed while the postage evidencing system is in the licensee's 
possession. The fraud warning contains basic reminders on leasing or 
rental and use of the postage evidencing system, warnings against 
system tampering or misuse resulting in nonpayment of postage owed, and 
the penalties for such system misuse. The USPS does not authorize 
postage evidencing systems for use without this fraud warning. When the 
postage evidencing system has a serial number or barcode equivalent on 
the system housing, the user must ensure that neither the serial number 
nor the barcode is removed or destroyed while the postage evidencing 
system is in the licensee's possession.

3.10  Custody of Suspect Postage Evidencing Systems or PSDs

    The USPS may conduct unannounced, on-site examinations of postage 
evidencing systems or PSDs reasonably suspected of being manipulated or 
defective. A postal inspector may immediately withdraw a suspect 
postage evidencing system or PSD from service for physical and/or 
laboratory examination. The inspector withdrawing a suspect postage 
evidencing system or PSD issues the licensee a written acknowledgement 
of receipt of the item; forwards a copy to the provider; and, if 
appropriate, assists in obtaining a replacement postage evidencing 
system or PSD. Unless there is reason to believe that the postage 
evidencing system or PSD is fraudulently set with postage, existing 
postage in the postage evidencing system or PSD is refunded to the 
licensee, in accordance with established refund procedures, when it is 
withdrawn from service.

3.11  Defective Postage Evidencing System or PSD

    A defective postage evidencing system or PSD is one that is 
inoperable or inaccurately reflects its proper status. A faulty postage 
evidencing system or PSD may not be used under any circumstance. The 
procedures for dealing with a defective system are as follows:
    a. The licensee must immediately report any defective postage 
evidencing system or PSD to the provider.
    b. The provider must begin the retrieval process for any defective 
postage evidencing system or PSD within 2 business days of notification 
by the licensee.
    c. The provider may supply the licensee with a replacement postage 
evidencing system or PSD unless there is a reasonable basis for 
suspecting actual or attempted tampering.
    d. The provider may not authorize or issue a refund for monies 
remaining on the faulty postage evidencing system or PSD until the 
faulty system is in the possession of the provider and has been 
carefully inspected.

3.12  Missing Postage Evidencing Systems or PSDs

    The licensee must immediately report to the provider the loss or 
theft of any postage evidencing system or PSD or the recovery of any 
missing postage evidencing system or PSD. The report must include the 
system identification number and the date, location, and details of the 
loss, theft, or recovery. In the case of suspected theft, the licensee 
must submit a copy of the police report to the provider upon request. 
The provider will report all details of the incident to the manager of 
Postage Technology Management, USPS Headquarters, in accordance with 
established procedures.

3.13  Returning a Postage Evidencing System or PSD

    A licensee in possession of a faulty or retired postage evidencing 
system or PSD, or a licensed user who no longer plans to keep a postage 
evidencing system or PSD in their possession for any reason, must 
return it within 3 business days to the provider to be withdrawn from 
service. Postage evidencing systems and PSDs must be shipped by 
Priority Mail with Delivery Confirmation unless the manager of Postage 
Technology Management, USPS Headquarters, gives written permission to 
ship by another means or service.

3.14  Approval for Use of Postage Evidencing Systems at Military 
Post Offices

    A person authorized by the Department of Defense to use the 
services of an overseas military post office, such as an APO or FPO, 
can use a USPS-approved postage evidencing system. For such users, the 
APO or FPO will be designated as the licensing post office on their 
user license. These users must deposit the mail prepared with their 
system at the licensing post office. All USPS policies and regulations 
regarding postage evidencing systems apply.

[[Page 56441]]

3.15  Approval for Use of Postage Evidencing Systems Outside the 
United States

    The manager of Postage Technology Management, USPS Headquarters 
(see G043), must give approval to the provider before the provider may 
place a postage evidencing system with a licensee who plans to use the 
system outside the customs territory of the United States to print 
evidence of U.S. postage. The procedures and conditions are as follows:
    a. Licensees must maintain a permanent, established business 
address in the United States.
    b. Postage evidencing systems used in foreign locations may be 
leased or rented only from those providers who have an authorized 
dealer or representative in the country where the postage evidencing 
system is to be located. The only exception is for those PC Postage 
systems for which the PSD remains in the custody and possession of the 
provider rather than the licensee.
    c. Licensees are subject to all USPS regulations and U.S. statutes 
pertaining to mail, mail fraud, and misuse of postage evidencing 
systems.
    d. All postage evidencing systems authorized by the USPS for use in 
foreign locations must have enhanced security features that include 
remote reset and a self-disabling feature that prevents printing of 
postage when specific programmed requirements are not met. Only those 
systems specifically approved in writing by the manager of Postage 
Technology Management, USPS Headquarters, may be used outside the 
customs territory of the United States.
    e. Potential users must submit to the provider all data required 
for a license to lease or rent postage evidencing systems outside the 
country. The provider will annotate the application to state that it is 
for the foreign use of a U.S. postage evidencing system and show where 
the system is to be located. The provider must submit the application 
to the manager of Postage Technology Management, USPS Headquarters, for 
review and approval. Once an application is approved and the license 
authorized, Postage Technology Management will designate the licensing 
post office and notify the provider and the licensee. The license can 
be used for multiple postage evidencing systems as long as they all 
belong to the same licensed user and are licensed at the same licensing 
post office. Mailers who already have a USPS license to lease or rent 
postage evidencing systems must apply separately to participate in this 
program.
    f. The provider selected by the licensee must agree in writing to 
all terms and conditions established by the USPS pertaining to the 
distribution of U.S. postage evidencing systems outside of the United 
States. Once the postage evidencing system is installed, the provider 
must provide the information on system placement directly to the 
manager of Postage Technology Management, USPS Headquarters.
    g. Mail to be metered must be metered with U.S. postage and must be 
entered at the licensing post office.
    h. Postage evidencing systems located outside the United States 
must be remotely reset at least once every 3 months. A reset for zero 
postage satisfies this requirement. The Postage Evidencing System 
Inspection and Examination Schedule (3.7) applies to all systems, 
however special circumstances may be invoked to inspect systems placed 
outside the country on a more frequent basis. Failure to make the 
postage evidencing system available for inspection may result in the 
revocation of the foreign use license.

3.16  Address Management System CD-ROM

    For postage evidencing systems designed to access the USPS Address 
Management System (AMS) CD-ROM, the licensed user must maintain address 
quality by ensuring the CD-ROM is updated at least once every 6 months.
4.0  MANUALLY RESET GENERATION 1 POSTAGE METERS

4.1  Initial Setting, Check In, and Installation

    A manually reset meter may be installed only as a replacement to 
complete the current lease or rental term for an existing meter of the 
same make and model. All manually reset meters will be taken out of 
service in the near future and replaced by remotely reset meters in 
accordance with a phased USPS retirement plan. Before delivering a 
manually reset postage meter to the licensee, the provider must present 
the meter and a completed PS Form 3601-C, Postage Meter Activity 
Report, to the licensing post office to have the meter set, sealed (if 
applicable), and checked into service by the post office where it is to 
be regularly set or examined, unless the meter is serviced through the 
on-site meter service program described in 4.5. The installation 
process for manually reset meters is completed when the data from PS 
Form 3601-C is transmitted to the appropriate postal information 
systems.

4.2  Check Out and Withdrawal

    When a manually reset meter is withdrawn from a user, the provider 
must present the meter and a completed PS Form 3601-C to the licensing 
post office to have the meter checked out of service by the post office 
where it was regularly set or examined, unless the meter was serviced 
through the on-site meter service program described in 4.5. The manager 
of Postage Technology Management, USPS Headquarters, may allow the 
provider to check out a specifically designated manually reset meter 
model from service without USPS participation when the provider uses a 
USPS-approved process to transfer the postage remaining on the meter 
directly to a remotely reset meter. The withdrawal process for manually 
reset meters is completed when the data from PS Form 3601-C is 
transmitted to the appropriate postal information systems.

4.3  Location of Setting

    Except under 4.5, a manually reset meter must be set at the 
licensing post office. Alternative meter setting locations are no 
longer allowed. A meter may not be set at a contract postal unit.

4.4  Payment for Postage Settings

    Payment must be made for postage at the time of resetting. Payment 
may be in cash or by check, USPS-approved debit card, or money order. 
Payment is subject to USPS standards and procedures.

4.5  On-Site Meter Service Program

    The on-site meter service program, where available, allows 
qualified USPS employees to set or examine manually reset meters and 
check them into or out of service at a licensee's place of business 
within the area served by the licensing post office, or at a facility 
of the provider or their agent. Only the licensee's meters 
participating in the on-site meter service program may be serviced at 
that location. A fee is charged for each meter set, examined, or 
checked into or out of service at a licensee's place of business, 
unless a USPS employee qualified to service meters is regularly 
assigned to that licensee's location for other postal administrative 
duties. The licensee must pay applicable postage and on-site meter 
service fees in R900 by check at the time of the meter service for 
manually reset meters. A fee is charged for each meter examined or 
checked into or out of service at a facility of the provider or their 
agent. The provider must pay applicable postage and on-site meter 
service fees in R900 by check at the time of the meter service. Fees 
are charged in accordance with R900.14.

[[Page 56442]]

4.6  Postage Transfer or Refund

    After USPS verification, unused postage in a manually reset meter 
checked out of service may be transferred to another of the licensee's 
meters licensed at the same post office, or the licensee may request a 
refund. Refunds are granted in accordance with P014.

4.7  Postage Adjustment for a Faulty Meter

    To request a postage adjustment for a faulty manually reset meter, 
the licensee must present to the provider the meter and the licensee's 
transaction records, if any. After examining a meter to be checked out 
of service for apparent faulty operation affecting the ascending or 
descending registers, the provider must report the malfunction to the 
manager of Postage Technology Management, USPS Headquarters. The report 
must contain all applicable meter documentation (including the setting 
history and transaction records, if any) and a recommendation about the 
appropriate postage adjustment, if any. When the electronic redundant 
memory data, as examined by the provider, is inconclusive with respect 
to the appropriate postage adjustment, the provider must include an 
analysis of the licensee's recent mailing history supporting the 
recommended postage adjustment, the reason for the memory failure, and 
the method used to determine the lost register values. At the same time 
the report is made to the USPS, the provider must notify the licensee 
of the proposed postage adjustment. A licensee may appeal a postage 
adjustment to the manager of Postage Technology Management, USPS 
Headquarters (see G043), within 60 calendar days of the date that the 
provider submitted the postage adjustment recommendation to the USPS 
and notified the user.
5.0  REMOTE RESET GENERATION 1 POSTAGE METERS

5.1  Initial Setting, Check in, and Installation

    A remote reset Generation 1 postage meter is checked into service 
in the presence of a postal employee qualified to check in postage 
evidencing systems. The meter is checked into service at the licensing 
post office unless the on-site meter service program (see 5.6) is used. 
The provider must furnish the postal employee with the meter and a 
completed PS Form 3601-C. The check in process for a remote reset 
Generation 1 postage meter is completed when the required data is 
transmitted to the appropriate postal information systems, and may be 
completed concurrently with or prior to installation of the meter at 
the licensee's location. The manager of Postage Technology Management, 
USPS Headquarters, may allow the provider to check in a specifically 
designated meter model without USPS participation when the provider 
uses a USPS-approved process in which the information to complete the 
check in process is captured directly from the postage evidencing 
system. The installation process for these meters is completed when the 
provider transmits required data to the appropriate postal information 
systems.

5.2  Check Out and Withdrawal

    A remote reset Generation 1 postage meter is checked out of service 
in the presence of a postal employee qualified to check out postage 
evidencing systems. The meter is checked out of service at the 
licensing post office unless the on-site meter service program (see 
5.6) is used. The provider must furnish the postal employee with the 
meter and a completed PS Form 3601-C. The check out process for a 
remote reset Generation 1 postage meter is completed when the required 
data is transmitted to the appropriate postal information systems. The 
manager of Postage Technology Management, USPS Headquarters, may allow 
the provider to check out a specifically designated meter model from 
service without USPS participation when the provider uses a USPS-
approved process in which the information to complete the check out 
process is captured directly from the postage evidencing system. In 
this instance, the provider must examine the meter before a refund can 
be issued for the postage remaining in the meter. The withdrawal 
process for remote reset meters is completed when the provider 
transmits required data to the appropriate postal information systems.

5.3  Location of Setting

    A remote reset Generation 1 postage meter is reset telephonically 
at the location of the meter.

5.4  Payment for Postage Settings

    For a remote reset Generation 1 postage meter, the licensee may 
deposit funds only by check, electronic funds, or automated 
clearinghouse transfer, in accordance with USPS standards and 
procedures.

5.5  Resetting

    To reset a remote reset Generation 1 postage meter, the following 
conditions must be met:
    a. The licensee's account must have sufficient funds to cover the 
desired postage increment, or the provider must have agreed to advance 
funds to the licensee.
    b. The licensee must give the provider identifying information and 
system audit data as required by the USPS and in accordance with the 
provider's resetting specifications. Before completing the resetting, 
the provider must verify the identifying data, authenticate the user's 
license, conduct the postage evidencing system audit, and ascertain 
whether the user's account contains sufficient funds to cover the 
desired postage increment.
    c. After the resetting transaction is completed, the provider must 
document the transaction for the licensee, including the balance 
remaining in the licensee's account, unless the provider gives the user 
a monthly statement documenting all transactions for the period and the 
balance after each transaction.

5.6  On-Site Meter Service Program

    The on-site meter service program, where available, allows 
qualified USPS employees to check remote reset Generation 1 meters into 
or out of service at a facility of the provider or their agent. Meters 
to be serviced are accompanied by PS Form 3601-C. A fee is charged for 
each meter examined or checked into or out of service at a facility of 
the provider or their agent. The provider must pay applicable postage 
and on-site meter service fees in R900 by check at the time of the 
meter service for remote reset Generation 1 meters. Fees are charged in 
accordance with R900.14.

5.7  Postage Transfer or Refund

    After USPS verification, unused postage in a remote reset 
Generation 1 postage meter checked out of service may be transferred by 
the USPS to another of the licensee's postage evidencing systems 
licensed at the same post office, or to the customer's meter resetting 
account, or the licensee may request a refund. Refunds for unused 
postage in the meter and for any unused balance in the licensee's 
account are granted in accordance with P014.

5.8  Postage Adjustment for Faulty Meters

    To request a postage adjustment for a faulty remote reset 
Generation 1 postage meter, the licensee must present to the provider 
the meter and the licensee's transaction records, if any. After 
examining a meter checked out of service for apparent faulty operation 
affecting the ascending or descending registers, the provider must 
report the malfunction to the manager of Postage

[[Page 56443]]

Technology Management, USPS Headquarters. The report must contain all 
applicable meter documentation and a recommendation regarding the 
appropriate postage adjustment, if any. When the electronic redundant 
memory data, as examined by the provider, is inconclusive as to the 
need for a postage adjustment, the provider must include an analysis of 
the licensee's recent mailing history supporting the recommended 
postage adjustment, the reason for the memory failure, and the method 
used to determine the lost register values. At the same time the report 
is made to the USPS, the provider must notify the licensee of the 
proposed postage adjustment. A licensee may appeal a postage adjustment 
to the manager of Postage Technology Management, USPS Headquarters (see 
G043), within 60 calendar days of the date that the provider submitted 
the postage adjustment recommendation to the USPS and notified the 
user.
6.0  PSD METERS AND IBI METERS

6.1  Initialization, Authorization, Check In and Installation

    All PSD Meters and IBI Meters use a PSD to maintain postal 
registers and authorize the printing of evidence of postage. Before the 
licensee can print evidence of postage, these postage evidencing 
systems must be initialized and authorized by the provider. The 
initialization process installs PSD-specific information that does not 
change over the life cycle of the PSD. The authorization process sets 
user-specific information. The provider reauthorizes the PSD when 
certain user-specific information changes. PSD Meters and IBI Meters 
are checked into service by the provider. The information necessary to 
complete the check in process is captured directly from the postage 
evidencing system. The installation process for these meters is 
completed when the required data is transmitted to the appropriate 
postal information systems.

6.2  Check Out and Withdrawal

    When a PSD Meter or IBI Meter is no longer used, the licensee 
notifies the provider and arranges to return the meter to the provider. 
The provider checks the meter out of service. The provider must examine 
the meter before a refund can be issued for any postage remaining on 
the meter. The information to complete the check out process is 
captured directly from the postage evidencing system. The withdrawal 
process for a PSD Meter or IBI Meter is completed when the required 
data is transmitted to the appropriate postal information systems.

6.3  Location of Setting

    A PSD Meter or IBI Meter is reset remotely at the location of the 
meter by means of a connection between the provider's resetting system 
and the postal registers in the PSD.

6.4  Payment for Postage Settings

    For PSD Meters and IBI Meters the licensee may deposit funds only 
by check, electronic funds transfer, or automated clearinghouse 
transfer, in accordance with USPS standards and procedures.

6.5  Resetting

    To reset a PSD Meter or IBI Meter the following conditions must be 
met:
    a. The licensee's account must have sufficient funds to cover the 
desired postage increment, or the provider must have agreed to advance 
funds to the licensee.
    b. The licensee must provide identifying information and system 
audit data as required by the USPS and in accordance with the 
provider's resetting specifications. Before completing the resetting, 
the provider must verify the identifying data, authenticate the user's 
license, conduct a remote postage evidencing system audit, and 
ascertain whether the user's account contains sufficient funds to cover 
the desired postage increment.
    c. After the resetting transaction is completed, the provider must 
document the transaction for the licensee, including the balance 
remaining in the licensee's account, unless the provider gives the user 
a monthly statement documenting all transactions for the period and the 
balance after each transaction.

6.6  Postage Refund

    Unused postage in a PSD Meter or IBI Meter will be refunded to the 
licensed user along with any unused balance in their account under 
P014.

6.7  Postage Adjustment for Faulty PSD Meters and IBI Meters

    When the licensee requests a postage adjustment for a faulty PSD 
Meter or IBI Meter, the meter must first be withdrawn from service and 
physically examined by the provider. The provider will compare the data 
in the PSD registers with the data from the system transaction records. 
After examining a PSD Meter or IBI Meter withdrawn from service for 
apparent faulty operation affecting the ascending or descending 
registers, the provider must notify the licensee of the proposed 
postage adjustment, if any. At the same time the user is notified, the 
provider must report the malfunction to the manager of Postage 
Technology Management, USPS Headquarters. The report must contain all 
applicable documentation (including a copy of the transaction records) 
and a recommendation for any appropriate postage adjustment. The 
licensee may appeal a postage adjustment to the manager of Postage 
Technology Management, USPS Headquarters (see G043), within 60 calendar 
days of the date that the user is notified of the proposed postage 
adjustment recommendation.
7.0  PC POSTAGE SYSTEMS

7.1  Initialization, Authorization, Check In and Installation

    All PC Postage systems use a PSD to maintain postal registers and 
perform postal functions. Before the licensee can print evidence of 
postage using a PC Postage system, the system's PSD must be initialized 
and authorized by the provider. The initialization process installs 
PSD-specific information that does not change over the life cycle of 
the PSD. The authorization process sets user-specific information. The 
provider reauthorizes the PC Postage system PSD when certain user-
specific information changes. The installation and check in process for 
a PC Postage system is completed when the data required by the USPS is 
transmitted to the appropriate postal information systems.

7.2  Check Out and Withdrawal

    When a PC Postage system is no longer used, the licensee notifies 
the provider. The provider withdraws the system from service and 
transmits the required data to the appropriate postal information 
systems to check it out of service. A PSD in the custody of the 
licensee must be returned to the provider for examination before a 
refund can be issued for any postage remaining on the PSD.

7.3  Location of Setting

    A PC Postage system is reset remotely using a personal computer 
with a connection between the provider's resetting system and the 
postal registers in the PSD.

7.4  Payment for Postage Settings

    For a PC Postage system, the USPS will accept payment only in the 
form of credit card or automated clearinghouse debit, in accordance 
with USPS standards and procedures.

7.5  Resetting

    To reset a PC Postage system the following conditions must be met:

[[Page 56444]]

    a. The licensee must initiate payment to the USPS sufficient to 
cover the desired postage increment before requesting a postage value 
download to reset the system.
    b. The licensee must provide identifying information and system 
audit data as required by the USPS and in accordance with the 
provider's resetting specifications. Before completing the resetting, 
the provider must verify the identifying data, authenticate the user's 
license, conduct a postage evidencing system audit, and ascertain 
whether payment to the USPS sufficient to cover the requested postage 
value download was initiated by the licensee.
    c. The provider will supply the licensee with documentation of the 
reset transaction and the balance in the descending register, if any.

7.6  Postage Refunds

    The USPS provides refunds for the entire postage value balance 
remaining on the PSD of a PC Postage system that is withdrawn from 
service and is in the possession of the provider. Refunds are requested 
and paid through the provider in accordance with P014.

7.7  Postage Adjustment for Faulty PSD

    When the licensee requests a postage adjustment for a faulty PSD of 
a PC Postage system, the PSD must first be withdrawn from service and 
physically examined by the provider. The provider will compare the data 
in the PSD registers with the data from the system transaction records. 
After examining a PSD withdrawn from service for apparent faulty 
operation affecting the ascending or descending registers, the provider 
must notify the licensee of the proposed postage adjustment, if any. At 
the same time the user is notified, the provider must report the 
malfunction to the manager of the Postage Technology Management, USPS 
Headquarters. The report must contain all applicable documentation 
(including a copy of the transaction records) and a recommendation for 
any appropriate postage adjustment. The licensee may appeal a postage 
adjustment to the manager of the Postage Technology Management, USPS 
Headquarters (see G043), within 60 calendar days of the date that the 
user is notified of the proposed postage adjustment recommendation.
8.0  INDICIA--GENERAL INFORMATION

8.1  Amount of Postage

    The value of the indicia affixed to each mailpiece must be either 
the exact amount due or another amount permitted by standard. Refunds 
for overpayment must meet the standards in P014.

8.2  Refunds for Unused Indicia

    Refunds for indicia amounts already printed on an envelope or label 
but not mailed are made in accordance with P014.

8.3  Mixed Forms of Postage Evidencing

    Different forms of evidence of prepayment of postage may not be 
mixed on letter-size, single-piece-rate mailpieces. In particular, 
postage stamps and indicia generated by a postage evidencing system may 
not be used on the same mailpiece; indicia generated by a postage 
evidencing system that uses a facing identification mark (FIM) to face 
the mail may not be used on the same mailpiece as indicia printed with 
fluorescent ink; and IBI may not be used on the same mailpiece as 
letterpress indicia or non-IBI digital indicia.

8.4  Use of Indicia

    Valid indicia produced by a postage evidencing system can be used 
only to show evidence of payment for postage or other services provided 
by the USPS. Indicia for zero postage must not be affixed to any item 
delivered by another carrier. In any illustration of information-based 
indicia (IBI) produced by an IBI Meter or a PC Postage system, and not 
intended to be used as postage, the two-dimensional barcode must be 
rendered unreadable.
9.0  INDICIA

9.1  Approved Designs

    The manager of Postage Technology Management, USPS Headquarters, 
must approve the design (type, format, and content) of all indicia that 
will be produced by a postage evidencing system. This approval shall 
include all elements in the indicium required by USPS regulations and 
the postage evidencing system performance criteria and applies to the 
entire area within the indicium boundary (9.4).

9.2  Legibility

    Indicia must be legible. Illegible or unreadable (unscannable) 
indicia are not acceptable as payment of postage. Should there be a 
need to place multiple indicia on an envelope (e.g., for redate or 
postage correction) the indicia must not overlap each other. 
Overlapping indicia are not acceptable as payment of postage. 
Reflectance measurements of the indicia and the background material 
must meet the standards in C840.5.

9.3  Position

    Indicia must be printed or applied in the upper right corner of the 
envelope or address label. Indicia must be at least 1/4 inch from the 
right edge of the mailpiece and 1/4 inch from the top edge of the 
mailpiece, and must not infringe on the areas reserved for the FIM, 
POSTNET barcode, or optical character reader (OCR) clear zone. Indicia 
must be oriented with the longest dimension parallel to the address. 
When a FIM is printed with the indicia, the position of the FIM must 
meet the requirements in C100.5.0.

9.4  Boundaries

    The USPS controls what is printed within the boundaries of indicia. 
The boundaries are defined as follows:
    a. For letterpress indicia, the boundaries are determined by the 
dimensions of the printing die used by the postage evidencing system to 
print postal information. Licensees may obtain an additional printing 
die from the provider, often called the ``ad plate,'' for additional 
text to be included when printing indicia. The ad plate may contain 
postal markings (9.7) or other printed matter (9.8).
    b. For digital indicia, including IBI, the boundaries are defined 
by the right edge of the envelope, the top edge of the envelope, and 
the bottom edge and the left edge of any USPS-required indicium element 
printed by the postage evidencing system. A 1/2-inch clear zone, within 
which nothing shall be printed by the postage evidencing system, must 
surround the indicium boundaries to the left of and below all elements 
of the indicium.

9.5  Contents

    Unless otherwise approved by the manager of Postage Technology 
Management, USPS Headquarters, the following information must be 
included in indicia:
    a. The city, state, and 5-digit ZIP Code of the licensing post 
office; the postage evidencing system serial number or PSD 
identification number; identification of the provider; the date of 
mailing; the words ``US Postage,'' and the postage amount.
    b. As an alternative to the city, state, and 5-digit ZIP Code of 
the licensing post office, just the ZIP Code of the licensing post 
office; in this case, the words ``Mailed from ZIP Code'' may be added 
to the indicia.
    c. For multiple indicia on a given mailpiece, information showing 
the licensing post office in each indicium.
    d. For digital indicia, including IBI, the class of mail and 
presort level.

[[Page 56445]]

    e. For IBI, the required data elements of the two-dimensional 
barcode in accordance with the performance criteria for the given 
postage evidencing system.
    f. For special indicia, including the date correction or redate 
indicia, the postage correction indicia, indicia for APO/FPO, and the 
indicia for prepaid reply mail, information as required by 10.0.

9.6  Format

    Arial font must be used for all postal information in the indicia. 
The postage amount must be at least 10-point type size. For all other 
required information, the type size must be at least 8 points. The mail 
class or endorsement, the postage amount, and the words ``US Postage'' 
must be in bold type and all letters must be capital letters. The words 
``US Postage'' must be the most prominent and conspicuous printed 
matter in the indicia other than the postage amount. The remaining 
required information (city, state, and 5-digit ZIP Code; the date; and 
the PSD ID) need not be capitalized or bold. The type size used for all 
other text printed in the indicia must be no greater than 8 points and 
must not be in bold type.

9.7  Postal Markings

    The postal marking that may be included in indicia vary by indicia 
type, as follows:
    a. Letterpress indicia may include postal markings related to the 
class of mail and presort level, or ancillary service endorsement, in 
accordance with postal regulations. When placed in the ad plate area, 
only the postal marking may be printed, and it must fill the ad plate 
area as much as possible. All words must be in bold capital letters at 
least 1/4 inch high or 18-point type, and legible. Exceptions are not 
made for small ad plates that cannot accommodate a permissible marking.
    b. Digital indicia may include ancillary service endorsements.

9.8  Other Matter Printed by Postage Evidencing Systems

    Other printed matter must not infringe on the areas reserved for 
the FIM, POSTNET barcode, or optical character reader (OCR) clear zone. 
The matter that may be printed is based on indicia type, as follows:
    a. For letterpress indicia only, advertising matter, slogans, and 
return addresses may be printed with the indicia within space 
limitations. Licensed users must obtain the ad plates for printing this 
matter from the authorized provider. Ad plate messages must be 
distinguished by the inclusion of the name of the mailer or words such 
as ``Mailer's Message.'' The ad plate must not be obscene, defamatory 
of any person or group, or deceptive, nor may it advocate unlawful 
action. The ad plate must not emulate any form of valid indicia or 
payment for postage.
    b. For postage evidencing systems that print digital indicia, 
including IBI, an approved indicium shall include within its boundaries 
only postal markings and text required or recommended by USPS 
regulation, except that the indicium may identify the provider. Other 
matter may be printed only outside the boundaries of the clear zone 
(9.4) surrounding the indicium. Such printed matter may not be obscene, 
defamatory of any person or group, or deceptive, and it must not 
advocate any unlawful action. The printed matter must not emulate any 
form of valid indicia or payment for postage.

9.9  Ink

    All indicia printed by Generation 1 postage evidencing systems must 
be printed with USPS-approved fluorescent ink. Failure to use 
fluorescent ink may lead to the revocation of the user's license. 
Generation 2 postage evidencing systems must use fluorescence to ensure 
that the mail is faced during processing, unless otherwise approved by 
the manager of Postage Technology Management (G043). Generation 2 
postage evidencing systems that do not print with fluorescent ink must 
use an alternative USPS-approved method to ensure that the mail is 
faced during processing. Approved methods include use of a facing 
identification mark (FIM) for indicia printed directly on letter-size 
First-Class Mail (9.10) or printing indicia on USPS-approved labels 
(9.11). The ink or alternative facing method used is specified in the 
indicia approval granted by the manager of Postage Technology 
Management, USPS Headquarters.

9.10  Facing Identification Mark

    The facing identification mark (FIM) serves to orient and separate 
certain types of First-Class Mail during the facing and canceling 
process. Letter-size First-Class Mail with IBI printed with 
nonfluorescent ink directly on the envelope by an IBI Meter or a PC 
Postage system must bear a USPS-approved FIM D unless it is courtesy 
reply mail. The FIM must meet the format, dimensions, print quality, 
and placement specified in C100.5.

9.11  Adhesive Label or Tape

    When indicia are printed on adhesive tape or on a label for 
application to the mailpiece, the tape or label used, including the 
label stock itself as well as the use of fluorescent ink to print 
indicia and the format and placement of any fluorescence on the label 
stock, must be approved by the manager of Postage Technology 
Management, USPS Headquarters. Failure to use the label approved by the 
USPS for use with the system may result in revocation of the postage 
evidencing system license. The label must meet the following 
requirements:
    a. The label must be a pressure-sensitive, permanent label. The 
label is subject to the corresponding standards in C810.6.2 for minimum 
peel adhesion. The applied label must adhere well enough that it cannot 
be removed in one piece. A face stock/liner label (also called a 
``sandwich'' label) must not be used for printing indicia for postage 
evidencing.
    b. The label must meet the reflectance requirements in C840.5.0.
    c. The label must be large enough to contain the entire indicia.
    d. Indicia printed on a label must be the same as the indicia 
approved by the manager of Postage Technology Management for printing 
directly on an envelope. The label must not include any image or text 
other than those allowed by USPS regulation, unless approved by the 
manager of Postage Technology Management.
    e. For labels or tapes applied to standard letter-size envelopes 
and postcards sent as First-Class Mail, the indicia must be printed 
with fluorescent ink (9.9), or the label must have fluorescent tagging 
that is sufficient to enable the USPS to face and process the mail, as 
verified by postal testing of each label design. The fluorescent 
tagging must meet a minimum fluorescent emission intensity of at least 
20 phosphor meter units (PMUs), with a maximum of 70 PMUs. The visible 
color of the fluorescent tagging may be any color that meets the 
fluorescence requirements. The fluorescent tagging shall exhibit no 
noticeable change (i.e., no more than 10%) in its emission when exposed 
to elevated temperature and high humidity conditions.
    f. The label must be placed on the envelope so that the position of 
the indicium meets the requirements in 9.3.
    g. When a label is applied to an envelope that already has a FIM, 
the label must not cover the existing FIM.

9.12  Complete Date

    Indicia must include the month, day, and year for all First-Class 
Mail, registered, certified, insured, COD, and special handling mail, 
whether the indicia is printed directly onto the

[[Page 56446]]

mailpiece or onto a separate label or tape. For prepaid reply postage 
see 10.4. The date format must be in accordance with 9.6. The year must 
be represented by four digits. The date (day, month, or year) may be 
shown in indicia for Standard Mail and Package Services, except that 
labels for use with a PC Postage system must include the month, day, 
and year in all uses.

9.13  Date Accuracy

    The date of mailing in the indicium must be the actual date of 
deposit, except that mail entered after the day's last scheduled 
collection from the licensing post office or collection box may bear 
the actual date of entry or the date of the next scheduled collection 
from the licensing post office or collection box. Authorized dispatch-
prepared presort mail accepted after midnight may bear the previous 
day's date. When the licensee knows the mail will not be tendered to 
the USPS on the date of mailing shown in the indicium, the user should 
use a date correction indicium (10.1).
10.0  SPECIAL INDICIA

10.1  Date Correction or Redate

    A date correction or redate indicium is required for any mailpiece 
not deposited by the date of mailing in the indicium as required by 
9.13. Only one date correction indicium is permitted on a mailpiece. 
The date correction or redate indicium may be printed on a USPS-
approved label instead of directly on the mailpiece. Formats are as 
follows:
    a. For all postage evidencing systems except PC Postage systems, a 
date correction must show the actual date of deposit and zero postage 
value (``0.00''). The date correction is placed on the nonaddress side 
in the upper right corner or on the address side in the lower left 
corner of letter-size mail. On flats or parcels, it must be placed next 
to the original indicium. The mailer may use an ink jet printer to 
correct the date in the indicia on pieces in barcoded mailings if the 
text, preceded by two asterisks and showing the actual date of deposit, 
city, state, and 3-digit ZIP Code of the mailing office, is placed 
above the address block and below the indicia.
    b. For PC Postage systems, a date correction or redate indicium 
includes only the actual date of deposit and the word ``REDATE,'' 
instead of a postage value. On letter-size mail, redate indicia must be 
placed on the nonaddress side at least 3/4 inch from the bottom edge of 
the mailpiece and not on an envelope flap. On flats or parcels, it must 
be placed next to the original indicium. The redate or date correction 
must not include the FIM or the two-dimensional barcode.

10.2  Postage Correction

    Indicia for additional postage must be placed on a shortpaid 
mailpiece to correct postage. The postage correction may be printed on 
a USPS-approved label instead of directly on the mailpiece and must 
contain all of the elements required for indicia in 9.5. Formats are as 
follows:
    a. For all postage evidencing systems except for PC Postage 
systems, the postage correction indicium is placed on the nonaddress 
side in the upper right corner or on the address side in the lower left 
corner of letter-size mail. On flats or parcels, it must be placed next 
to the indicium.
    b. For a PC Postage system, the word ``CORRECTION'' must be printed 
in the postage correction and it must not include a FIM. On letter-size 
mail, the PC Postage correction indicium must be printed on the 
nonaddress side at least 3/4 inch from the bottom edge of the mailpiece 
and not on an envelope flap. On flats or parcels, it must be placed 
next to the original indicium. The postage correction indicium may be 
printed on a USPS-approved label instead of directly on the mailpiece.

10.3  APO/FPO Meters

    Postage evidencing systems used by military (APO/FPO) post offices 
must show the military branch and address format for each location 
(e.g., ``ARMY APO AE 09102''). Exceptions are made only for postage 
evidencing systems used in fleet post offices on board U.S. naval 
vessels that may show the name of the ship instead of the standard 
wording for Navy meters (e.g., ``USS SARATOGA (CV-60) 34078-2740'').

10.4  Reply Postage

    Indicia generated by any postage evidencing system may be used to 
prepay reply postage on Express Mail; on Priority Mail when the rate is 
the same for all zones; on First-Class Mail cards, letters, and flats 
up to a maximum of 13 ounces; and on single-piece-rate Media Mail and 
Library Mail, under the following conditions:
    a. The postage amount must be enough to prepay the postage in full.
    b. Indicia may be printed directly on the mailpiece or on a label 
and must be positioned in accordance with 9.3. An applied label must 
meet the standards in 9.11.
    c. Indicia used to prepay reply postage, except for IBI generated 
by a PC Postage system, must not show the date.
    d. IBI generated by a PC Postage system to prepay reply postage 
must show the date the licensee printed the indicium and must include 
the words ``REPLY POSTAGE.''
    e. The mailpiece must be pre-addressed for return to the licensee. 
Prepaid reply mail is delivered only to the address of the licensee. 
When the address is altered, the mail is held for postage.
    f. Except for those PC Postage systems with the capability to print 
an address for the given class or size of mailpiece, the address side 
of reply mail may be prepared by any photographic, mechanical, or 
electronic process or combination of such processes (other than 
handwriting, typewriting, or handstamping). For those PC Postage 
systems with the capability to print destination addresses for the 
given size and class of mailpiece, the address must be prepared using 
the PC Postage system.
    g. The words ``NO POSTAGE STAMP NECESSARY POSTAGE HAS BEEN PREPAID 
BY'' must be printed above the address.
    h. For barcoded letter-size First-Class Mail reply mail for all 
postage evidencing systems except PC Postage, FIM C is used (C100.5). 
For PC Postage, FIM D is required for prepaid reply mail when the 
indicium is printed directly on the mailpiece.
    i. The address side must follow the style and content as described 
in this section and shown in the example below. Nothing may be added 
except a return address, FIM, or barcode.

[[Page 56447]]

[GRAPHIC] [TIFF OMITTED] TR08NO01.004

11.0  MAILINGS

11.1  Preparation of Metered Mail

    Metered mail is subject to the preparation standards that apply to 
the class of mail and rate claimed.

11.2  Notification of Metered Mailings Presented in Bulk

    Mailers who present presorted First-Class Mail, Standard Mail, 
Parcel Post in bulk quantities, Presorted Bound Printed Matter, Carrier 
Route Bound Printed Matter, or Presorted Media Mail using metered 
postage must complete Form 3615. Completion of this form is for record 
keeping only. If an applicant has a completed Form 3615 on file for 
other services, notification to present metered mail in bulk is 
annotated on the existing application. There is no fee for this 
service.

11.3  Combination

    Metered mail may be combined in the same mailing with mail paid by 
other methods only if authorized by the USPS.

11.4  Where to Deposit

    Metered mail may be deposited in the following locations, except 
that certain special services require that the mail be presented 
directly to a USPS employee (see S900).
    a. The licensee may deposit metered mail at a post office 
acceptance unit, retail unit, or other location designated by the 
postmaster of the licensing post office (i.e., the post office shown in 
the indicia).
    b. Metered mail may be deposited in any street collection box under 
the jurisdiction of the licensing post office, except where specially 
marked collection boxes are available adjacent to the standard 
collection box.
    c. Express Mail, Priority Mail, and single-piece-rate First-Class 
Mail may be deposited in any street collection box or other such place 
where mail is accepted, except where specially marked collection boxes 
are available adjacent to the standard collection box.
    d. Metered mail may be deposited at other than the licensing post 
office under D072.
    e. International mail may be deposited in accordance with the 
International Mail Manual (IMM).
    f. A licensed user authorized to use an APO or FPO as the licensing 
post office may deposit mail only at the licensing APO or FPO.
    g. All other licensee's who have USPS approval to use a postage 
evidencing system outside the country may deposit mail only at their 
domestic licensing post office.

11.5  Irregularities

    The USPS examines metered mail to detect irregularities in 
preparation and dating.
12.0  AUTHORIZATION TO PRODUCE AND DISTRIBUTE METERS (POSTAGE 
EVIDENCING SYSTEMS)
    Title 39, Code of Federal Regulations, part 501, contains 
information concerning authorization to produce and distribute postage 
meters (postage evidencing systems); the suspension and revocation of 
such authorization; performance standards, test plans, testing, and 
approval; required production security measures; and standards for 
distribution and maintenance. Further information may be obtained from 
the manager of Postage Technology Management, USPS Headquarters (see 
G043 for address).
    An appropriate amendment to 39 CFR part 111 to reflect these 
changes will be published to include this final rule.

Stanley F. Mires,
Chief Counsel, Legislative.
[FR Doc. 01-28011 Filed 11-7-01; 8:45 am]
BILLING CODE 7710-12-P