[Federal Register Volume 68, Number 224 (Thursday, November 20, 2003)]
[Proposed Rules]
[Pages 65430-65431]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-28957]


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POSTAL SERVICE

39 CFR Part 551


Semipostal Stamp Program

AGENCY: Postal Service.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would clarify procedures for determining 
offsets for the Postal Service's reasonable costs from semipostal 
differential revenue.

DATES: Comments must be received on or before December 22, 2003.

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

SUPPLEMENTARY INFORMATION: On June 12, 2001, the Postal Service 
published a final rule establishing the regulations in 39 CFR part 551 
for the Semipostal Stamp Program (66 FR 31822). Minor revisions were 
made to these regulations to implement Public Law No. 107-67, 115 Stat. 
514 (2001), and to reflect minor organizational changes in the Postal 
Service (67 FR 5215 (February 5, 2002)).
    The Postal Service proposes to amend regulations in section 551.8. 
The proposed changes are relatively straightforward and are intended to 
clarify existing regulations. A brief description of each proposed 
change follows.
    Proposed edits to section 551.8(a) and (c) would expand the types 
of ``comparable stamps'' that could be used in conducting cost 
comparisons. Under current regulations, comparable stamps for purposes 
of cost comparisons are defined as commemorative stamps having similar 
sales; physical characteristics; and marketing, promotional, and public 
relations activities. The proposed rule would no longer limit the 
universe of comparable stamps to commemorative stamps. This measure 
would accordingly allow other types of stamps, such as definitive or 
special issue stamps, to serve as a baseline for cost comparisons. In 
some instances, it is conceivable that a definitive or special issue 
stamp could serve as the best proxy for comparative analysis, because, 
much like some semipostal stamps, such stamps are often sold for longer 
periods, are subjected to multiple print runs, and produced and 
distributed in much larger quantities than commemorative stamps. Thus, 
it is possible that some definitive or special issue stamps could more 
accurately mirror the characteristics of commemorative stamps, at least 
for certain discrete cost comparisons.
    A proposed edit to section 551.8(c) would specify that different 
comparable stamps may be used for specific cost comparisons. For 
example, a given stamp might be useful for comparing marketing and 
advertising costs incurred in connection with a semipostal stamp. 
Nevertheless, a comparable stamp selected for purposes of comparing 
marketing and advertising costs might not serve as the best proxy for 
comparing other types of costs, for example because it has different 
physical characteristics than the semipostal stamp to which it is 
compared. The proposed change would clarify that the Postal Service 
could select different comparable stamps for discrete cost comparisons. 
This will enhance accuracy in conducting comparative analysis for 
purposes of determining cost offsets.
    A proposed edit to section 551.8(d)(1) would clarify that costs 
less than $3,000 would not be offset from differential revenue, as long 
as they were not charged to a semipostal-specific finance number. The 
current rule is intended to preclude the need for time-consuming 
recordkeeping for low-value expenditures. Tracking low-dollar 
expenditures is, however, simplified whenever such costs are charged to 
a semipostal-specific finance number. Thus, the Postal Service intends 
to track semipostal costs less than $3,000 when such costs are assigned 
to semipostal-specific finance number.
    A proposed edit to section 551.8(d)(2) would clarify that costs 
that do not need to be tracked include not only those costs that would 
be too burdensome to track, but also those costs that would be too 
burdensome to estimate.
    Finally, the proposed edits to section 551.8(d)(6) and (f) would 
clarify that printing, sales, distribution, and several other types of 
costs could be recovered when they materially exceed the costs of 
comparable stamps. While such costs arguably could be recovered under 
section 551.8(d)(5), the proposed edit would establish, in clear and 
unambiguous terms, the circumstances in which such costs are to be 
offset from differential revenue.
    In accordance with 39 U.S.C. 416(e)(2), the Postal Service invites 
public comment on the following proposed amendments to the Code of 
Federal Regulations.

List of Subjects in 39 CFR Part 551

    Administrative practice and procedure, Postal Service.

    For the reasons set out in this document, the Postal Service 
proposes to revise 39 CFR 551 as follows:

PART 551--SEMIPOSTAL STAMP PROGRAM

    1. The authority citation for 39 CFR part 551 is revised to read as 
follows:

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

    2. In Sec.  551.8, revise paragraphs (a), (c), (d), (e), and (g) to 
read as follows:


Sec.  551.8  Cost offset policy.

    (a) Postal Service policy is to recover from the differential 
revenue for each semipostal stamp those costs that are determined to be 
attributable to the semipostal stamp and that would not

[[Page 65431]]

normally be incurred for stamps having similar sales; physical 
characteristics; and marketing, promotional, and public relations 
activities (hereinafter ``comparable stamps'').
* * * * *
    (c) For each semipostal stamp, the Office of Stamp Services, in 
coordination with the Office of Accounting, Finance, Controller, shall, 
based on judgment and available information, identify the comparable 
stamp(s) and create a profile of the typical cost characteristics of 
the comparable stamp(s) (e.g., manufacturing process, gum type), 
thereby establishing a baseline for cost comparison purposes. The 
determination of comparable stamps may change during or after the sales 
period, and different comparable stamp(s) may be used for specific cost 
comparisons.
    (d) Except as specified, all costs associated with semipostal 
stamps will be tracked by the Office of Accounting, Finance, 
Controller. Costs that will not be tracked include:
    (1) Costs that the Postal Service determines to be 
inconsequentially small, which include those cost items that are not 
charged to a semipostal-specific finance number and do not exceed 
$3,000 per invoice.
    (2) Costs for which the cost of tracking or estimation would be 
burdensome (e.g., costs for which the cost of tracking exceeds the cost 
to be tracked);
    (3) Costs attributable to mail to which semipostal stamps are 
affixed (which are attributable to the appropriate class and/or 
subclass of mail); and
    (4) Administrative and support costs that the Postal Service would 
have incurred whether or not the Semipostal Stamp Program had been 
established.
    (e) Cost items recoverable from the differential revenue may 
include, but are not limited to, the following:
    (1) Packaging costs in excess of the cost to package comparable 
stamps;
    (2) Printing costs of flyers and special receipts;
    (3) Costs of changes to equipment;
    (4) Costs of developing and executing marketing and promotional 
plans in excess of the cost for comparable stamps;
    (5) Other costs specific to the semipostal stamp that would not 
normally have been incurred for comparable stamps; and
    (6) Costs in paragraph (g) of this section that materially exceed 
those that would normally have been incurred for comparable stamps.
* * * * *
    (g) Other costs attributable to semipostals but which would 
normally be incurred for comparable stamps would be recovered through 
the postage component of the semipostal stamp price. Such costs are not 
recovered, unless they materially exceed the costs of comparable 
stamps. These include, but are not limited to, the following:
    (1) Costs of stamp design (including market research);
    (2) Costs of stamp production and printing;
    (3) Costs of stamp shipping and distribution;
    (4) Estimated training costs for field staff, except for special 
training associated with semipostal stamps;
    (5) Costs of stamp sales (including employee salaries and 
benefits);
    (6) Costs associated with the withdrawal of the stamp issue from 
sale;
    (7) Costs associated with the destruction of unsold stamps; and
    (8) Costs associated with the incorporation of semipostal stamp 
images into advertising for the Postal Service as an entity.
    We will publish an appropriate amendment to 39 CFR part 551 to 
reflect these changes if the proposal is adopted.

Stanley F. Mires,
Chief Counsel, Legislative.
[FR Doc. 03-28957 Filed 11-19-03; 8:45 am]
BILLING CODE 7710-12-P