[Federal Register Volume 67, Number 199 (Tuesday, October 15, 2002)]
[Rules and Regulations]
[Pages 63549-63551]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-26162]


=======================================================================
-----------------------------------------------------------------------

POSTAL SERVICE

39 CFR Part 111


Domestic Mail Manual Change To Revise the Five Percent Error 
Limit for Sequenced Mailings

AGENCY: Postal Service.

ACTION: Final rule.

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

SUMMARY: This final rule adopts a proposal to revise Domestic Mail 
Manual (DMM) M050 to clarify how additional postage is assessed for 
Standard Mail Enhanced Carrier Route (ECR) and Periodicals carrier 
route mailings found to be out of sequence. Concurrent with the DMM 
amendment, the Postal Service will implement new policies and 
guidelines for assessing additional postage for Standard Mail and 
Periodicals carrier route mailings found to be out of sequence. Under 
the revised policies, for all mail required to be sequenced, no more 
than 5 percent of the total pieces in the entire carrier route portion 
of the mailing may be out of sequence.

EFFECTIVE DATE: This final rule is effective November 14, 2002.

FOR FURTHER INFORMATION CONTACT: Mary Bronson, (703) 292-3539.

SUPPLEMENTARY INFORMATION: As a result of classification reform (Postal 
Rate Commission Docket No. MC95-1), the Postal Service required that 
both Standard Mail items and Periodicals mail claiming the high density 
or saturation rates be in walk sequence within a tray or package. For 
Standard Mail items, basic carrier route rate mail was required to be 
in either walk-sequence or line-of-travel (LOT) order. With the 
implementation of Commission Docket No. 2000-1, a sequencing 
requirement (either walk-sequence or LOT) was added for Periodicals 
basic carrier route rates.
    Current standards state that, for each carrier route receiving 
mail, no more than 5 percent of the total pieces for each carrier route 
may be out of sequence or sorted to the wrong carrier route. The 
standard establishing a 5 percent limit for missequenced or missorted 
mail to an individual carrier route may cause confusion because it 
appears that the Postal Service has established a separate standard of 
compliance for sequencing as compared to other eligibility requirements 
for ECR or carrier route rates. Actually, the Postal Service routinely 
uses tolerances when evaluating discounted mailings to ensure 
compliance with eligibility standards. This policy change will 
standardize the procedure for determining eligibility for carrier route 
rates with the procedures for determining eligibility for other 
workshare discounts.
    In addition, the 5 percent limit for missequenced or missorted mail 
currently is applied to an individual carrier route because, until 
recently, the Postal Service was able to detect such errors only at the 
delivery unit and could not easily determine the percentage of error 
for the entire mailing. Due to advances in technology, this is no 
longer the case. Tools to assist postal employees when evaluating 
discounted mailings either during the acceptance process or when 
conducting audits are now available.
    In view of the capabilities provided by these tools, the Postal 
Service is amending the current standards to apply the 5 percent limit 
for walk-sequence and LOT errors to the entire mailing, not to an 
individual carrier route.
    One such tool is the Mailing Evaluation Readability and Look-up 
Instrument (MERLIN) currently being deployed to business mail entry 
units (BMEUs) and detached mail units (DMUs). The Postal Service will 
announce when it will start using MERLIN to determine sequencing 
accuracy at a future date. At that time, the Postal Service will use 
the established statistically valid sampling methods BMEU and DMU 
employees currently use when operating MERLIN to determine whether the 
5 percent error limit for sequencing is exceeded.
    On August 8, 2001, the Postal Service published a proposed rule in 
the Federal Register (66 FR 41485) amending the postal standards to 
clarify the application of the 5 percent error limit for carrier route 
sequenced mailings. The Postal Service received eight comments, all of 
which generally supported the proposal. Most of the comments also 
included questions and suggestions about how compliance with the 
sequencing standards would be determined and how any postage 
adjustments would be assessed. Because these administrative issues need 
not be addressed in the DMM standards, the Postal Service will clarify 
these policy issues in this notice and amend the DMM by deleting 
section M050.2.0, Accuracy, for out-of-sequence mail.
    Six commenters asked that the Postal Service reconsider the 
proposed method for calculating additional postage on

[[Page 63550]]

missequenced carrier route pieces. Most asserted that charging a non-
carrier route presorted rate was too severe or ``punitive.'' Several 
also asked that the Postal Service clearly state what rate of postage a 
mailer would default to if errors exceeding the 5 percent tolerance 
were found. Two respondents argued that the resequencing option (in 
lieu of paying higher postage rates) is impractical and should not be 
considered as a way to mitigate the application of non-carrier route 
presorted rates. In response to these concerns, the Postal Service and 
mailing industry representatives jointly developed a process for 
determining the next higher rate for which missequenced carrier route 
pieces would be eligible.
    Currently, an out-of-sequence carrier route mailing is charged the 
next higher non-carrier route rate for which the mail qualifies. This 
can often result in large assessments that do not reflect the value 
that the Postal Service receives from a tray or bundle of mail sorted 
to the carrier route, even if it is not appropriately sequenced within 
the route. The Postal Service and the mailing industry developed a 
policy that uses the current rate structure to promote effective 
sequencing while recognizing the value of mail sorted to the carrier 
route. The Postal Service has determined that this new policy is a 
reasonable application of existing rates to carrier route mailings for 
which the only problem is improper sequencing.
    Effective November 14, 2002, the Postal Service will implement the 
following policy and guidelines for assessing additional postage for 
Standard Mail and Periodicals carrier route mailings found to be out of 
sequence.
    For mail that meets all other requirements for high density or 
saturation rates, if the pieces are found to exceed the 5 percent 
sequencing error limit (including being found in reverse walk 
sequence), the number of pieces that are out of sequence will be 
determined by multiplying the error percentage by the total pieces in 
the mailing claimed at the carrier route rates. That portion of the 
mailing will be charged the basic carrier route rate. This rate is 
available only when the mailer can demonstrate that an approved 
sequencing product was used in preparing the mail.
    For basic carrier route rate mailings only, reverse sequencing will 
not disqualify a mailing from the basic rates as long as the mailer 
used an approved sequencing product in preparing the mail. Therefore, 
no additional postage is assessed for basic carrier route mailings 
found to be in reverse sequence. If the 5 percent sequencing error 
limit is exceeded for other reasons, the percentage of error will be 
assessed against the carrier route portion of the mailing. That 
percentage of the carrier route portion of the mailing will be charged 
the next higher rate for which the mail qualifies. For example, if a 
basic carrier route mailing is found to be 30 percent out of sequence, 
30 percent of the pieces in the mailing claimed at the carrier route 
rates will be charged the next higher rate for which the pieces 
qualify. The remaining 70 percent of the basic carrier route rate 
pieces are not considered out of sequence and are charged the basic 
carrier route rate.
    Two commenters asked whether the application of a barcode to 
carrier route pieces would make any difference in determining the next 
higher rate. The presence of a barcode may make a difference, since the 
next higher rate may be an automation rate if the pieces meet 
automation standards and are properly barcoded.
    One respondent asked whether the Postal Service would take into 
consideration the work done by the mailing industry to ensure that 
errors are minimized and quality is maintained. The new policies take 
these efforts into consideration. The Postal Service included the 
provision to allow mailers who demonstrate that an approved sequencing 
product was used in preparing the mail to pay the basic carrier route 
rates for missequenced carrier route pieces originally claimed at high 
density and saturation rates. In addition, basic carrier route rate 
pieces found to be in reverse LOT order may still be considered 
eligible for that rate as long as the mailer can demonstrate that an 
approved sequencing product was used in preparing the mail.
    One commenter expressed concern about how the new rule will be 
interpreted with respect to carrier route mailings containing mail 
eligible for different carrier route rates. The writer suggests that 
LOT and walk-sequence prepared pieces in the same mailing should be 
evaluated separately with respect to the 5 percent rule. The Postal 
Service does not concur with the writer's suggestion. Mailings 
containing pieces claimed at different carrier route rates are similar 
to mailings containing pieces claimed at different presorted rates. A 
verification is conducted on a portion of the mailing to determine 
whether the entire mailing is properly presorted and the results are 
applied across the entire mailing.
    Four commenters asked for clarification regarding how errors are 
determined for missequenced versus missorted carrier route pieces. 
Several writers wanted to know whether there would be two separate 5 
percent tolerance levels for missequenced and missorted pieces. One 
writer asked, ``Are there different error percentages for sorting (that 
is, to the appropriate carrier route) and sequencing (that is, in 
proper line of travel)?'' Under this policy, sortation and sequencing 
are evaluated separately and each has a 5 percent tolerance level for 
errors.
    Two respondents asked whether mailers would have access to the same 
``technological innovations'' that the Postal Service now has to detect 
errors. The MERLIN machines used by the Postal Service to evaluate 
mailings are commercially available. Mailers may contact the Business 
Mail Acceptance office at Postal Service Headquarters for information 
about where to purchase MERLIN machines. Information regarding other 
tools used by postal employees when conducting audits or reviews of ECR 
and carrier route rate mailings will be announced in a future Federal 
Register notice.
    The following table shows some examples of the cost differential 
between the carrier route rate and the next higher rate in the event 
that the pieces are found to be out of sequence. The rates shown are 
for pieces for which no destination rate is claimed. The table does not 
include every possible rate combination.

----------------------------------------------------------------------------------------------------------------
           Standard mail letters                ECR rate          Next higher non-auto rate         Difference
----------------------------------------------------------------------------------------------------------------
Basic \4\..................................          $0.194  $0.248 (PRST 3/5 rate) \1\.........          $0.054
High Density...............................           0.164  $0.194 (Basic ECR letter rate).....           0.030
Saturation.................................           0.152  $0.194 (Basic ECR letter rate).....           0.042
--------------------------------------------
 Standard mail nonletters (3.3 oz. or less)     ECR rate               Next higher rate             Difference
                    \2\
--------------------------------------------
Basic \4\..................................          $0.194  $0.288 (PRST 3/5 rate) \1\.........          $0.094
High Density...............................           0.169  $0.194 (Basic ECR nonletter).......           0.025

[[Page 63551]]

 
Saturation.................................           0.160  $0.194 (Basic ECR nonletter).......           0.034
--------------------------------------------
        Periodicals (Outside-County)            CR rates               Next higher rate             Difference
--------------------------------------------
Basic......................................          $0.163  $0.256 (5-digit nonauto) \3\.......          $0.093
High Density...............................           0.131  $0.163 (Basic CR rate).............           0.032
Saturation.................................           0.112  $0.163 (Basic CR rate).............           0.051
--------------------------------------------
          Periodicals (In-County)               CR rates               Next higher rate             Difference
--------------------------------------------
Basic......................................          $0.050  $0.087 (5-digit nonauto) \3\.......          $0.037
High Density...............................           0.034  $0.050 (Basic CR rate).............           0.016
Saturation.................................           0.028  $0.050 (Basic CR rate).............          0.022
----------------------------------------------------------------------------------------------------------------
\1\ For ECR basic rate pieces, the next higher rate may also be the Presorted basic rate or an automation rate
  for which the mail qualifies.
\2\ Standard Mail letters and nonletters weighing more than 3.3 ounces are subject to both a per-piece charge
  and a pound rate. The cost differential between the applicable carrier route rate and the applicable next
  higher rate for pieces weighing more than 3.3 ounces is not shown on this chart.
\3\ For Periodicals carrier route basic rate pieces, the next higher rate may also be the 3-digit rate or an
  applicable automation rate for which the mail qualifies.
\4\ The nonmachinable surcharge that is assessed on Standard Mail letter-size pieces meeting the criteria in DMM
  C050.2.2 does not apply to pieces mailed at the ECR or automation letter rates. When pieces claimed at the ECR
  basic rates are found to be ineligible for that rate, the pieces may be subject to the nonmachinable surcharge
  in addition to the applicable presort rate, depending upon the physical characteristics of the pieces. The
  nonmachinable surcharge is $0.04 per piece for Standard Mail regular Presorted rate pieces and $0.02 for
  nonprofit Presorted rate pieces.

List of Subjects in 39 CFR Part 111

    Administrative practice and procedure, Postal Service.

PART 111--[AMENDED]

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

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


    2. Amend the following section of the Domestic Mail Manual (DMM) as 
set forth below:

M Mail Preparation and Sortation

M000 General Preparation Standards

* * * * *

M050 Delivery Sequence

* * * * *
2.0 ACCURACY
    [Delete 2.0 in its entirety; renumber 3.0 and 4.0 as 2.0 and 3.0.]
    We will publish an appropriate amendment to 39 CFR part 111 to 
reflect these changes.

Stanley F. Mires,
Chief Counsel, Legislative.
[FR Doc. 02-26162 Filed 10-11-02; 8:45 am]
BILLING CODE 7710-12-P