[Federal Register Volume 67, Number 105 (Friday, May 31, 2002)]
[Proposed Rules]
[Pages 38041-38043]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-13712]


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POSTAL SERVICE

39 CFR Part 111


Proposed Changes to the Move Update and Address Matching 
Requirements

AGENCY: Postal Service.

ACTION: Advance notice of proposed rulemaking and request for comment.

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SUMMARY: The Postal Service requests comments from the mailing industry 
on several proposals to reduce the volume of undeliverable-as-addressed 
(UAA) mail. The Postal Service intends to extend the Move Update 
requirement for presorted rate mailings beyond First-Class Mail to also 
include Periodicals, Standard Mail, and Package Services; to decrease 
from 180 days to 90 days the window a mailer has to process addresses 
through a USPS-approved Move Update process prior to the mailing date; 
and to remove manual notifications from ancillary service endorsements 
as a stand-alone option to satisfy the Move Update requirement. Also 
being considered is a requirement for more frequent use of address 
matching software and a requirement for that software to utilize more 
current address matching directories. The Postal Service is not 
proposing any immediate changes to the Domestic Mail Manual (DMM) or 
the elimination of manual ancillary service endorsements for single-
piece rated mail. The Postal Service will give due notice of these 
changes with an intended implementation date of no sooner than 18 
months from the publication of this notice.

DATES: Comments must be received on or before August 29, 2002.

ADDRESSES: Written comments should be delivered to the Office of 
Product Management--Addressing, National Customer Support Center, 
United States Postal Service, 6060 Primacy Pkwy, Ste. 201, Memphis, TN 
38188-0001. Comments may be transmitted via facsimile to 901-821-6206 
or via e-mail to [email protected]. Copies of all written comments 
will be available for inspection and photocopying at USPS Headquarters 
Library, 475 L'Enfant Plaza SW, 11th Floor N, Washington DC 20260-1450 
between 9 a.m. and 4 p.m., Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Wayne Orbke, 901-681-4658; or Charles 
B. Hunt, 901-681-4651.

SUPPLEMENTARY INFORMATION: On October 15, 2001, the Mailing Industry 
Task Force, a joint workgroup of mailing industry and Postal Service 
leaders, released its findings and recommendations in the report 
Seizing Opportunity (this report can be viewed at www.usps.com/strategicdirection/mitf.htm). To help drive costs out of the postal 
delivery system and to reduce the volume of UAA mail, the Task Force 
recommended that mailer requirements be revised to facilitate more 
frequent use of Move Update and address matching software.
    It is the intent of the Postal Service to implement the proposals 
contained in this notice as part of the Product Redesign effort that is 
currently under way. Product Redesign is a joint mailing industry and 
Postal Service initiative to evaluate and implement ideas that improve 
the overall value of the mail. Product Redesign has also focused on 
these same address quality initiatives with a goal of creating 
incentives for mailers to take steps to reduce the costs associated 
with UAA mail. The value of these proposals to both the mailing 
industry and the Postal Service is clearly recognized. In addition to 
the direct UAA mail impact on postage rates, the mailing industry 
incurs substantial indirect costs associated with wasted mail 
production, additional labor required to handle manual corrections, and 
lost business opportunities when their strategic messages cannot be 
delivered. Implementation of these ``Best Practices'' addressing 
proposals will benefit both the mailing industry and the Postal Service 
by substantially mitigating the impact of UAA mail and enhancing the 
value and viability of the mail as a communications medium of choice.

(1) Move Update Requirement for All Classes of Mail

    UAA mail is a persistent problem for both the mailing industry and 
the Postal Service. In testimony presented before the Postal Rate 
Commission during omnibus rate case Docket No. R-2001-1, USPS costs 
associated with UAA mail in fiscal year 2000 were $1.8 billion. UAA 
volume for that year totaled 5.7 billion pieces. By comparison, a 1998 
Postal Service study of the UAA problem commissioned through Price 
Waterhouse revealed UAA costs for fiscal year 1998 were $1.5 billion 
and its associated volume was 5.4 billion pieces. Overall UAA volume 
has grown by 5.26% in two years.
    When UAA volume was tracked through the Computerized Forwarding 
System (CFS) sites by class of mail, it was noted that First-Class Mail 
UAA volume actually decreased from 1998 to 2000 by 0.29%, while UAA 
volume for all other classes increased. First-Class Mail is the only 
class currently with a Move Update requirement for presort and 
automation postage rates. Clearly the Move Update requirement is 
working to contain the growth of UAA within First-Class Mail. The 1998 
Price Waterhouse study also revealed that if it were not for the change 
of address programs, such as National Change of Address (NCOA), Address 
Change Service (ACS), and FASTforward\, UAA costs would have been over 
$3 billion.
    If the Move Update requirement was expanded to other classes of 
mail, the Postal Service and the mailing industry could realize even 
greater cost savings. These savings may help to contribute to rate 
stabilization and improved delivery service.

[[Page 38042]]

(2) Frequency of Use of Move Update Processing

    Currently the DMM requires that addresses on all Presorted and 
automation rate First-Class Mail be updated within 180 days before the 
mailing date using an USPS-approved method (i.e., NCOA, ACS, 
FASTforward\, an ancillary service endorsement, or other methods 
approved by the National Customer Support Center). It is proposed that 
this 180-day window be reduced to 90 days and linked to the previous 
proposal of expanding the Move Update requirement to the other classes 
of mail.
    Approximately 17% of all Americans move every year. In Fiscal Year 
2000, families and individuals filed over 41 million change-of-address 
orders. In the same year, there were 2.6 million business filings. With 
such a dynamic environment, managing addresses affected by customer 
moves is challenging. The monthly rate of deterioration of address 
currency, due to family and individual moves alone, is approximately 
1.4%. In 6 months (the current Move Update requirement), about 8.4% of 
addresses in the mailer's files has the potential to be inaccurate. To 
minimize this natural deterioration, the Postal Service has 
recommended, since the inception of the Move Update requirement in July 
1997, that Move Update processing be completed as close to the mailing 
date as possible. While this is desirable, the Postal Service 
understands that it may not always be possible for the mailer. However, 
it is in the best interests of both the mailing industry and the Postal 
Service to require Move Update processing at most 90 days before the 
mailing date. Reducing by one-half the natural deterioration of address 
currency can be expected to significantly decrease UAA volume and the 
costs associated with the re-handling and redirection of mail.

(3) Removal of Manual Hardcopy Notifications as a Move Update 
Option

    The Postal Service is proposing the elimination of manual 
notifications resulting from ancillary service endorsements, as a 
method to meet the Move Update requirement. There are currently six 
USPS-approved methods to meet the Move Update requirement. They are: 
(1) NCOA, (2) FASTforward\, (3) ACS, (4) an appropriate ancillary 
service endorsement, (5) the NCSC-approved alternate method for mailers 
that have statutory or regulatory restrictions that prohibit changing 
customer addresses without direct notification from the addressee, and 
(6) the NCSC-approved alternative for mailers' processes that 
effectively produces a Move Update accuracy of at least 99% as measured 
against the Postal Service's Change-of-Address (COA) systems.
    NCOA and FASTforward\ are processes that occur before or at the 
time of mailing and are known as pre-mailing methods. ACS and use of 
ancillary service endorsements are Move Update methods that are post-
mailing in nature. The two alternative methods may be pre-or post-
mailing processes. With the exception of ancillary service endorsements 
that require manually produced address notices, all of the current 
options would remain available to mailers for Move Update 
qualification.
    Providing mailers with manually prepared address notifications is 
the least effective and most costly Move Update method for the Postal 
Service requiring high cost carrier and clerk labor. For mailers, the 
higher fee per notice (currently $0.60 versus $0.20 for ACS electronic 
notifications) must be added to their high labor costs associated with 
manually processing and incorporating the COA information into their 
address files. These costs often far exceed the fee for the address 
correction notice. This will be further impacted when the manual 
notification fee increases from $0.60 to $0.70 when the rate case 
Docket No. R2001-1 is implemented. The ACS fee will remain at $0.20.
    When one considers the impact on both the Postal Service and the 
mailing industry of these inherent problems related to cost, quality, 
and timeliness of manual updates, it does not make sense to continue to 
allow manual address notifications as a method for obtaining automation 
and presorted rate discounts. Another point to consider is the fact 
that many of these endorsements require the Postal Service to return 
the mailpiece to the mailer at a significant cost. There is a viable 
cost-effective replacement available for mailers who cannot process 
electronic address corrections and must use hardcopy. This replacement 
method is the electronic ACS hardcopy option that provides a computer-
formatted, high quality printout in a timely manner at a reasonable 
cost to the Postal Service and the mailer. The current fee is $0.20, 
the same as the cost for ACS electronic notification. No additional 
carrier or clerk labor is required to prepare the ACS channel hardcopy 
address corrections. This option requires minimal initial cost for a 
mailer to implement.

(4) Frequency of Use of Address Matching Software

    Currently the DMM requires that addresses on all non-carrier route 
automation rate mailings (First-Class Mail, Periodicals, and Standard 
Mail) must be ZIP+4 coded within 180 days before the mailing date. The 
mailer must use current Coding Accuracy Support System (CASS)-certified 
address matching software and the current USPS Address Information 
System (AIS) directory. It is proposed that this 180-day window be 
reduced to 90 days. Starting June 30, 2002 (R2001-1), the Postal 
Service will require a delivery point barcode (DPBC) on all Enhanced 
Carrier Route (ECR) high density and saturation rate pieces claimed at 
letter rates, in addition to the carrier route coding. Carrier route 
coding is already required within 90-days of mailing.
    Today, the Postal Service is delivering mail to over 137 million 
delivery points. Each year, on average, 2.8 million new delivery points 
are added and 1.1 million are deleted, and approximately 6.5 million 
change transactions are processed (changes to the ZIP+4 code, carrier 
route number, or address elements). The total average number of changes 
to delivery points and ZIP+4 range-based records is 10.4 million per 
year. These address element and Postal Code changes that affect mail 
deliverability are distinct from, and in addition to, the COA orders 
filed each year by families, individuals, and businesses.
    Edits to the Address Management System (AMS) result in a 26.6% 
annual change rate, which translates to 2.22% of the records changed 
per month. It is a daunting challenge to keep addresses current with 
the proper ZIP+4 codes and carrier route number in such a dynamic 
environment.
    By going from a 180-day to a 90-day matching and coding requirement 
to obtain automation rate discounts, we would potentially reduce by 
half (from approximately 13.3% to 6.65%) the number of mailpieces 
containing inaccurate address coding.

(5) Address Matching Directory Update Frequency

    When processing address files through CASS-certified address 
matching software, the system must use the ``current USPS database/
directory'' to obtain the correct ZIP+4 codes. The update standards in 
DMM A950.3.0 define a ``current USPS database'' by the following 
matrix:

[[Page 38043]]



                          Current DMM Standards
------------------------------------------------------------------------
                                                       Last Permissible
 File Release Date  Use of file   Required Use Date   Use Date  And must
       released on  . . .           Must begin no     end no later than
                                  later than . . .          . . .
------------------------------------------------------------------------
February 15....................  April 1...........  May 31.
April 15.......................  June 1............  July 31.
June 15........................  August 1..........  September 30.
August 15......................  October 1.........  November 30.
October 15.....................  December 1........  January 31.
December 15....................  February 1........  March 31.
------------------------------------------------------------------------

    New AIS product releases must be included in address matching 
systems no later than 45 days after the release date. Mailers are 
expected to update their systems with the latest data files as soon as 
practicable. This provides mailers a maximum of 105 days for product 
release use (45 days for installation and testing, and 60 days of use 
thereafter) as noted in the above table. This built-in overlap in dates 
for product use allows mailers adequate time to install the new data 
files and test their systems.
    The Postal Service is proposing the reduction of these timeframes 
for permissible use of any product release from 60 days to 30 days. The 
45-day allowance for installation and testing remains unchanged. As a 
result, mailers would have a maximum of 75 days for AIS product release 
use (45 days for installation and testing, and 30 days of use 
thereafter). Therefore, the new USPS database/directory product cycle 
would be as follows:

                         Proposed DMM Standards
------------------------------------------------------------------------
                                                       Last Permissible
 File Release Date  Use of file   Required Use Date   Use Date  And must
       released on  . . .           Must begin no     end no later than
                                  later than . . .          . . .
------------------------------------------------------------------------
January 15.....................  March 1...........  March 31.
February 15....................  April 1...........  April 30.
March 15.......................  May 1.............  May 31.
April 15.......................  June 1............  June 30.
May 15.........................  July 1............  July 31.
June 15........................  August 1..........  August 31.
July 15........................  September 1.......  September 30.
August 15......................  October 1.........  October 31.
September 15...................  November 1........  November 30.
October 15.....................  December 1........  December 31.
November 15....................  January 1.........  January 31.
December 15....................  February 1........  February 28.
------------------------------------------------------------------------

    As stated in the previous section, over 26.6% of the Postal 
Service's AMS database experiences some change over the course of a 
year. The required use of monthly instead of bi-monthly directories may 
help to further reduce UAA mail caused by inaccurate address coding by 
another 2.22%.
    This proposal to use monthly directories coupled with the proposal 
for more frequent address coding are inextricably linked and must be 
considered as an integrated two-part solution to reduce UAA mail that 
results from poor physical address quality. More frequent coding 
against old database directories or less frequent coding against newer 
database directories adds no real value. It is the combination of the 
two that is expected to provide an increase in the accuracy of address 
information on mailpieces.
    Consider an illustrative automation rate mailing submitted on 
November 30 as the most extreme example of the results of using current 
standards. The addresses within the mailing were ZIP+4 coded on the 
last permissible day of May 31 using the oldest ``current'' ZIP+4 file 
of February 15. The AMS data source that was used to process the 
mailer's addresses is over nine months old. When factored against the 
2.22% monthly AMS change rate, approximately 19.98% (9 months x 2.22%) 
of the mailpieces within the mailing may potentially contain the wrong 
ZIP+4 code and therefore the wrong POSTNET barcode.
    Under this proposal, using the same extreme example, the automation 
rate mailing is submitted on November 30. The addresses within the 
mailing were ZIP+4 coded on the last permissible day that is now August 
31 using the oldest ``current'' ZIP+4 file of June 15. The AMS data 
source that was used to process the mailer's addresses is now only five 
months old. Again when factored against the 2.22% monthly AMS change 
rate, only 11.1% (5 months x 2.22%) of the mailpieces may potentially 
contain the wrong ZIP+4 code.

------------------------------------------------------------------------
                                Current Standards    Proposed Standards
------------------------------------------------------------------------
Date of Mailing.............  November 30.........  November 30.
Oldest Permissible Date       May 31..............  August 31.
 Address List was Matched &
 Coded.
Oldest Date of Valid AIS      February 15.........  June 15.
 Directory Used for Matching
 & Coding.
Age of Addressing Data Used   9 Months............  5 Months.
 for Matching & Coding.
Percentage of Addressing      19.98%..............   11.1%.
 File Containing Potentially
 Incorrect ZIP+4 codes.
------------------------------------------------------------------------

    The proposed standards would significantly reduce the number of 
mailpieces with potentially inaccurate ZIP+4 codes that would have to 
be redirected. This combined approach should decrease the volume of UAA 
mail within the postal delivery system and thereby reduce the total 
costs associated with UAA mail.
    For the reasons stated above, the Postal Service seeks comments on 
the impact of strengthening address quality standards in the mutual 
pursuit of reducing UAA costs and enhancing delivery service standards. 
In particular, the Postal Service seeks comments on the intended 
implementation time of not less than 18 months; the extension of the 
Move Update requirement for presorted rate mailings to Periodicals, 
Standard Mail, and Package Services mailers; the impact to mailers who 
currently use manual ancillary service endorsements as an option to 
satisfy the Move Update requirement; and the impact of more frequent 
use of Move Update and address matching software.

    Authority: 5 U.S.C. 552(a); 39 U.S.C. 101, 401, 403, 404, 414, 
3001-3011, 3201-3219, 3403-3406, 3621, 3626, 5001.

Stanley F. Mires,
Chief Counsel, Legislative.
[FR Doc. 02-13712 Filed 5-30-02; 8:45 am]
BILLING CODE 7710-12-P