[Federal Register Volume 69, Number 33 (Thursday, February 19, 2004)]
[Rules and Regulations]
[Pages 7688-7689]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-3497]


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POSTAL SERVICE

39 CFR Part 551


Semipostal Stamp Program

AGENCY: Postal Service.

ACTION: Final rule.

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

DATES: This final rule is effective February 5, 2004.

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

SUPPLEMENTARY INFORMATION: On November 20, 2003, the Postal Service 
published a notice of proposed rulemaking (68 FR 65430) soliciting 
public comment on proposed changes to 39 CFR 551.8, which establishes 
procedures for determining offsets from semipostal differential 
revenue. No comments were received by the closing date, December 22, 
2003. Thus, the Postal Service is adopting the proposed rule without 
substantive change. In preparing the final rule, nonsubstantive edits 
were made to section 551.8(d)(1).

[[Page 7689]]

    The final rule is intended to clarify cost offset policies and 
procedures. Edits to section 551.8(a) and (c) expand the types of 
``comparable stamps'' that could be used in conducting cost 
comparisons. The final rule no longer limits 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.
    Edits to section 551.8(c) specify that different comparable stamps 
may be used for specific cost comparisons. The final rule thus 
clarifies 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.
    Edits to section 551.8(d)(1) provide that costs less than $3,000 
will be offset from differential revenue, but only if they are charged 
to a semipostal-specific finance number.
    Edits to section 551.8(d)(2) clarify that costs that do not need to 
be tracked include not only those costs that are too burdensome to 
track, but also those costs that are too burdensome to estimate.
    Finally, edits to section 551.8(d)(6) and (f) clarify that 
printing, sales, distribution, and several other types of costs could 
be recovered when they materially exceed the costs of comparable 
stamps.
    The Postal Service hereby adopts the following revisions to the 
Code of Federal Regulations.

List of Subjects in 39 CFR Part 551

    Administrative practice and procedure, Postal Service.

0
For the reasons set out in this document, the Postal Service hereby 
amends 39 CFR part 551 as follows:

PART 551--SEMIPOSTAL STAMP PROGRAM

0
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.

0
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 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 which are less 
than $3,000 per invoice and are not specifically charged to a 
semipostal finance number.
    (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.

Neva Watson,
Attorney.
[FR Doc. 04-3497 Filed 2-18-04; 8:45 am]
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