[Federal Register Volume 69, Number 170 (Thursday, September 2, 2004)]
[Rules and Regulations]
[Pages 53641-53645]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-19976]


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POSTAL SERVICE

39 CFR Part 111


Experimental Outside-County Periodicals Co-Palletization 
Discounts for High-Editorial, Heavy-Weight, Small-Circulation 
Publications

AGENCY: Postal Service.

ACTION: Interim rule.

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SUMMARY: This interim rule provides standards for a Postal Service\TM\ 
experiment. The experiment will test whether additional rate incentives 
would encourage the co-palletization and dropshipment of currently 
sacked bundles of individual Periodicals publications that have high-
editorial content, are heavier weight, and have small mailed 
circulation. This interim rule will implement editorial per-pound 
discounts that are based on the entry points and zones skipped 
resulting from dropshipping and co-palletization. The editorial per-
pound discounts, resulting from Docket No. MC2004-1 at the Postal Rate 
Commission, would apply to pieces in bundles placed on sectional center 
facility (SCF) and area distribution center (ADC) pallets that are 
dropshipped to either a destination area distribution center (DADC) or 
a destination sectional center facility (DSCF). The interim rule 
includes procedures for preparing and documenting co-palletized 
mailings and for requesting approval to participate in the experiment.
    Co-palletization is designed to move publications, big and small, 
out of sacks and onto pallets with an additional advantage of mail 
being entered closer to destination for better service. Both of these 
changes are expected to make the processing of Periodicals mail more 
efficient and less expensive. This change is especially beneficial in 
the case of smaller publications that are prepared in smaller sacks 
largely entered at the origin.

DATES: This interim rule is effective October 3, 2004. Applications for 
participation in the experiment will be available beginning September 
1, 2004. The starting date for the experiment is October 3, 2004. 
Comments on the standards must be received on or before October 2, 
2004.

ADDRESSES: Written comments should be mailed or delivered to the 
Manager, Mailing Standards, U.S. Postal Service, 475 L'Enfant Plaza 
SW., Room 3436, Washington, DC 20260-3436. Copies of all written 
comments will be available for inspection and photocopying at U.S. 
Postal Service Headquarters Library, 475 L'Enfant Plaza SW., 
Washington, DC, between 9 a.m. and 4 p.m., Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Donald Lagasse, (202) 268-7269; 
[email protected].

SUPPLEMENTARY INFORMATION: The Postal Service offers certain 
worksharing incentives in the form of discounts to encourage 
palletization and dropshipping of Periodicals mailings. Co-
palletization allows mailers to combine separately presorted bundles of 
different titles and editions on pallets to achieve the minimum pallet 
weight required to take advantage of current pallet and dropshipment 
discounts for Periodicals mail (e.g., 250 pounds of mail to a 
destination area distribution center (DADC)).
    Effective April 20, 2003, the Postal Service implemented the 
Experimental Outside-County Periodicals Co-Palletization Classification 
(Docket No. MC2002-3) that provided two additional per-piece discounts 
to co-palletized Periodicals that could not otherwise be palletized 
because they lacked sufficient volume and density. The experimental 
discounts are available for pieces in Periodicals mailings and mailing 
segments that would have otherwise been prepared in sacks but now may 
be prepared on ADC or sectional center facility (SCF) pallets and 
dropshipped to DADCs and DSCFs as a result of co-palletization.
    A report filed with the Postal Rate Commission (See http://www.prc.gov under Docket No. MC2002-3) in May 2004 shows over 9 million 
co-palletized pieces with a corresponding removal of over 180,000 sacks 
from Postal Service operations. We expect additional publications, 
printers, and consolidators to participate in the existing experiment, 
and believe that this experiment will lead to better preparation and 
deeper penetration of Periodicals mail into the Postal Service system.
    While the initial experiment has been reasonably successful, 
current per-piece incentives under the experiment are not sufficient to 
encourage co-palletization and dropshipment of publications with high 
editorial content. The current co-palletization experiment provides 
additional per-piece incentives when mailers go through the extra step 
of combining their mailings to build pallets and dropship them to 
destination ADCs and SCFs. Because the current rate structure has a 
flat editorial pound rate, publications that contain little or no 
advertising have little incentive to dropship, especially if they have 
heavier copy weights and lack the density to make single-publication 
pallets.
    On February 25, 2004, pursuant to 39 U.S.C. 3623, the Postal 
Service filed with the Postal Rate Commission (PRC) a request for a 
decision recommending new experimental co-palletization incentives for 
Outside-County Periodicals. The request was designated as Docket No. 
MC2004-1 by the PRC. The PRC recommended the experimental 
classification change and new discounts on July 7, 2004. This 
recommendation was approved by the Board of Governors on July 19, 2004; 
and the Board of Governors set October 3, 2004, as the anticipated 
implementation date for the experiment.
    The Postal Service will implement a 2-year experimental 
classification change to allow high-editorial, heavier weight, small 
circulation publications to receive the new proposed discounts on 
editorial pounds for pieces that are co-palletized and dropshipped, and 
meet all required conditions. The 2-year period will allow the Postal 
Service to measure the impact of the level of the discount structure. 
Also, the classification change extends the current co-palletization 
experiment (Docket No. MC2002-3) so that both experiments conclude at 
the same time. It is hoped that any future classification or structural 
change in the rate schedule would address both experiments together. 
The proposed classification language would also allow both experiments 
to continue until a proposal for a permanent discount is resolved, if 
that proposal is filed before the end of the 2-year period.
    Based on the response to the current experimental discounts, the 
Postal Service concluded that an additional rate design solution was 
needed to provide a fair, equitable, and adequate incentive. The new 
discounts will apply to editorial pounds based on the cost savings that 
the Postal Service would realize as a result of the mail being prepared 
on pallets and having those pallets dropshipped (i.e., skipping zones). 
The discounts will reflect the difference between the original zone for

[[Page 53642]]

the mail if entered at the origin mailer's plant in sacks and the DADC 
or DSCF entry point resulting from co-palletization and dropshipment.

General Description

    The proposed discounts would apply exclusively to publications with 
the following characteristics:
    a. Advertising content of 15 percent or less;
    b. Copy weight of 9 ounces or more; and
    c. Mailed circulation of 75,000 pieces or less (including all 
editions, issues, and supplemental mailings).
    These characteristics are designed to limit the experiment to those 
publications most in need of an alternative discount structure to meet 
the key objectives. The proposed discounts would apply to co-palletized 
bundles of Periodicals mail that remain intact (the same bundles before 
and after co-palletization) that move from sacks (absent co-
palletization) to pallets presorted to the ADC or SCF and that are 
entered at the appropriate destination facility. A publication that 
would otherwise be prepared in sacks, because it cannot meet the 
required 250-pound minimum for an ADC pallet at the bindery, would 
qualify for the discounts if it were co-palletized with other 
publications on an ADC or SCF pallet and dropshipped to either the 
destination ADC or SCF.
    Residual mail from a qualifying publication that remained after 
pallets were prepared during the initial presort will also qualify for 
the proposed discounts, as long as it is co-palletized and dropshipped 
(e.g., less than 250 pounds of mail remaining for an ADC, after SCF 
pallets are prepared for the ZIP Codes\TM\ in that ADC service area). 
The consolidator/mailer could preserve originally presorted mail for a 
single publication on 5-digit, 3-digit (optional), SCF, and ADC pallets 
of 250 or more pounds, but this mail will not qualify for the 
experimental co-palletization discounts. Mailers could build upon 
originally presorted SCF and ADC pallets, but only the co-palletized 
pieces with less than 250 pounds per title or version for each ADC 
destination, if the pieces were independently presorted, would qualify 
for the co-palletization incentives. Multiple versions or titles that 
are presorted together into bundles through a selective binding 
operation will qualify, if, as a result of co-palletization, the 
presorted bundles move from sacks to pallets that are dropshipped, and 
meet all other standards for the discounts.
    Other dropship and palletization incentives available in the 
current rate schedule will apply to all pieces based on their 
eligibility (e.g., all dropship discounts and the $0.015 dropship 
pallet discount for pieces on pallets of 250 or more pounds that are 
dropshipped to DADCs or DSCFs). The only exceptions are the existing 
experimental Periodicals co-palletization and dropship discounts of 
$0.01 and $0.007 per piece. These will not apply to bundles using the 
proposed per-pound discounts. In other words, mailers may claim either 
the experimental per-piece or experimental per-editorial-pound 
discounts, but cannot claim both for the same mail bundles. However, 
mailers might claim the experimental per-piece discount for some 
bundles and experimental per-editorial-pound discounts for some other 
bundles on the same pallet if they are authorized to participate in the 
co-palletization experiments. Supplemental mailings (e.g., back issues 
not part of the mailing of the current issue) meeting the circulation 
requirement listed above (i.e., total mailed circulation not exceeding 
75,000 copies including supplemental mailings, prepared after, and 
separate from, the original mailing) will be treated as separate 
mailings and will have to meet the same requirements for pieces to be 
eligible for the additional incentives (for co-palletization/
dropshipment). That is, for the supplemental mailing, only pieces that 
cannot be prepared on destination ADC pallets of 250 or more pounds 
under the original presort before co-palletization will be eligible for 
the new co-palletization incentives.
    While mailers will be expected to prepare pallets of at least 250 
pounds, the Postal Service recognizes the difficulty in always 
accurately predicting co-palletized volumes and will allow mailers to 
claim the new discount for dropshipped pallets weighing less than 250 
pounds. It is expected that such pallets will represent an 
insignificant portion of co-palletized mailings. Less than 250-pound 
pallets (except overflow pallets) will not be eligible for the existing 
pallet discounts (e.g., $0.015 for dropshipped mail on pallets of 250 
or more pounds and $0.005 for mail on nondestinating entry pallets). To 
limit the scope of the experiment and simplify administration, any mail 
that is co-palletized on 5-digit or 3-digit pallets will not be 
entitled to the proposed co-palletization incentives.

Waiving of Finest-Level Pallet Requirement

    In preparing a co-palletized mailing, mailers/consolidators cannot 
easily predict co-palletized volumes for each destination. Therefore, 
during the experiment, co-palletized mail will not be required to be 
placed on the finest level pallet possible. For example, even if a co-
palletized ADC pallet were to contain more than 500 pounds to a 
particular SCF, an SCF pallet would not be required. Mailers/
consolidators will be encouraged to periodically re-evaluate mail 
volumes for each ADC and SCF destination to determine whether 
additional SCF pallets can be created on a regular basis.

Documentation

    The consolidator/mailer will provide documentation (e.g., Mail.dat 
files that can be printed, if necessary) only for the mail that is co-
palletized, both before and after co-palletization. To substantiate 
that mail would have been prepared in sacks, the ``before'' 
documentation must be in Mail.dat or similar files that permit easy 
identification of mailings (e.g., by job ID, segment ID, and container) 
included in the co-palletization program, separate from mailings that 
are not included in the program. The ``after'' documentation must 
identify publications or segments with 250 or more pounds on a pallet 
(mail that does not qualify for added co-palletization incentives), and 
publications or segments with less than 250 pounds remaining for an ADC 
that do qualify for the new discounts. Documentation will be by title 
and version, segment, or edition, or by codes representing each title 
and version, segment, or edition. The consolidator/mailer will develop 
a new file (e.g., Mail.dat) for the mail after co-palletization showing 
how the mail was presorted and where it was entered. Data in the 
``after co-palletization'' files will be prepared so that they can be 
easily reconciled with the ``before'' Mail.dat files to validate that 
proper postage has been paid for all pieces (e.g., the same job IDs and 
mailing segment IDs appear in ``before'' Mail.dat files and ``after'' 
documentation).
    The primary goal of this documentation is to substantiate that, 
without co-palletization, the mail would have been prepared in sacks 
(i.e., ADC pallets of 250 or more pounds for any individual title, 
independently presorted version, or selectively bound pool could not 
have been made).
    In addition to the above, for each title and version for which the 
per-pound discount is claimed, the mailer will have to provide a 
detailed listing documenting the distribution of total advertising and 
editorial pounds to each zone ``before'' co-palletization, based on 
origin entry of the mail at the plant

[[Page 53643]]

where it is printed and presorted into bundles ready for co-
palletization and mailing (e.g., a modified version of the ``before'' 
postage statement showing the zoned distribution of total copies, total 
pounds, and advertising pounds, if any, plus an added column showing 
editorial pounds). This listing will be provided for all publications 
claiming the discount, including publications with no advertising 
content. The mailer will also provide a detailed listing that shows the 
total editorial weight and experimental per-pound discount claimed for 
each title and version by zone, based on the original zones reported on 
the zone listing ``before'' co-palletization. For example, for 210 
editorial pounds of mail that would have been entered in Zone 3, if 
entered in sacks at the origin mailer's plant, the ``after'' 
documentation might show for Zone 3: 120 editorial pounds qualifying 
for the DADC per-pound discount and 90 pounds qualifying for the DSCF 
per-pound discount.
    The Postal Service retains the right to disallow any documentation 
showing a change in the office of origin entry if the physical printing 
of the title has not moved to a different location.
    All other mailing documentation described in DMM P012 (i.e., USPS 
Qualification Report and Detailed Zone Listing) must be presented or 
made available at the time of acceptance with each co-palletized 
mailing.

Discounts

    The proposed discounts in table 1 apply to the editorial pounds of 
the co-palletized mail prepared on an ADC or SCF pallet and entered at 
the destination ADC or SCF. The discounts vary by the zones skipped as 
a result of preparing and dropshipping mail on pallets. For example, as 
a result of co-palletization, 10,000 pounds of editorial material are 
entered at destination ADCs instead of origin ADCs (defined as the 
Postal Service facility that serves the plant where the mail is printed 
and presorted into packages before co-palletization). The original 
delivery zone for the mail is determined using the zone charge for the 
3-digit ZIP Code for the origin plant. In this example, of the total 
10,000 editorial pounds, if 3,400 pounds would have been mailed to 
addresses in Zone 6; 2,700 pounds would have been mailed to addresses 
in Zone 5; and the remaining 3,900 pounds would have been mailed to 
addresses in Zone 4, and the mail is now co-palletized and entered at 
the appropriate destination ADCs, then the value of the discount for 
that portion of the mailing would be ($0.073 x 3,400 = $248.20) plus 
($0.050 x 2,700 = $135.00) plus ($0.028 x 3,900 = $109.20) for a total 
of $492.40.

 Table 1.--Discounts for Co-Palletized Pieces Prepared on an ADC or SCF
                                 Pallet
------------------------------------------------------------------------
                     Original zone                        DADC     DSCF
------------------------------------------------------------------------
Zones 1 & 2...........................................    $.008    $.014
Zone 3................................................     .013     .019
Zone 4................................................     .028     .034
Zone 5................................................     .050     .056
Zone 6................................................     .073     .079
Zone 7................................................     .101     .107
Zone 8................................................     .125     .131
------------------------------------------------------------------------

Postage Statement

    The Postal Service is issuing a new edition of postage statement PS 
Form 3541, Postage Statement--Periodicals One Issue or One Edition, 
which includes the new co-palletization per-editorial-pound discounts. 
Periodicals mailers must use this postage statement or an approved 
facsimile for mailings that qualify for and claim the new discounts.
    Publications mailed under the CPP program may be included as part 
of a co-palletized mailing. Publishers may elect to (1) remove the co-
palletized portion of a mailing job from the Centralized Postage 
Payment (CPP) consolidated postage statement and pay postage at the 
consolidation point, or (2) provide, to the preparer of the 
consolidated postage statement, information about the co-palletized 
portion of their mailing to be included on the consolidated postage 
statement submitted to the New York Rates and Classification Service 
Center.
    Publishers that co-palletize multiple editions of the same 
publication must submit a consolidated postage statement and register 
of mailings.

Data Reporting

    In order to collect data required by the PRC's Rules 54 and 64, and 
desired for Postal Service management's evaluation of the proposed 
discounts, the Postal Service will get the following monthly data from 
the experiment's participants using a spreadsheet similar to the one 
being used in the current experiment:
    1. Number of pieces receiving the DADC discount.
    2. Number of pieces receiving the DSCF discount.
    3. Number of titles receiving one or both of the co-palletization 
discounts.
    4. Number of containers that would have been sacks without co-
palletization, as well as their weight and the number of addressed 
pieces.
    5. Number of sacks after consolidation, as well as their weight and 
the number of addressed pieces.
    6. Number of pallets qualifying for the DADC discount, as well as 
their weight and the number of addressed pieces.
    7. Number of pallets qualifying for the DSCF discount, as well as 
their weight and the number of addressed pieces.
    8. Editorial and total pounds shifting to destination ADCs from the 
various zones.
    9. Editorial and total pounds shifting to destination SCFs from the 
various zones.

Application Process

    Parties interested in participating in the experimental per-pound 
discounts must request approval from the Postal Service. Send your 
requests to the Manager, Mailing Standards, at 475 L'Enfant Plaza SW., 
Room 3436, Washington, DC 20260-3436. Your request must include the 
following information, which will be treated as confidential by the 
Postal Service:
    1. A completed application form. Application forms will be 
available from the Manager, Mailing Standards, beginning September 1, 
2004. Application forms may be requested via e-mail to 
[email protected].
    2. A process map and narrative describing mail movement from 
production through the co-palletization process to dispatch to 
destination entry Postal Service facilities.
    3. Samples of presort documentation (before and after co-
palletization), and a description of when and how presort documentation 
and postage statements are generated.
    4. Samples of the detailed listing documenting the distribution of 
total advertising and editorial pounds to each zone ``before'' co-
palletization, based on origin entry of the mail (i.e., the plant where 
it is printed and presorted into bundles ready for co-palletization and 
mailing).
    5. An explanation of how data for mailings included under the co-
palletization experiment will be collected and reported to the Postal 
Service, including whether the model spreadsheet provided by the Postal 
Service can be used.
    6. A list of the publications to be included in the test initially 
and evidence that each publication has obtained the appropriate 
authorizations at the office(s) where mailings will be verified and 
postage paid. If the applicant is not a printer and/or is consolidating 
publications for other printers, a list of these printers must also be 
included with the application. If the location where mail will be

[[Page 53644]]

consolidated currently does not have a detached mail unit (DMU), 
arrangements must be made to establish one with the local Post Office 
responsible for the acceptance and verification of mailings.
    Requests to participate will be accepted beginning September 1, 
2004. Applicants meeting all requirements for the co-palletization test 
will receive a 90-day conditional authorization. The Postal Service 
will give final approval after the successful completion of the 90-day 
conditional period.
    The implementation date is October 3, 2004.
    Accordingly, the Postal Service hereby adopts the following 
regulations on an interim basis. Although exempt from the notice and 
comment requirements of the Administrative Procedure Act (5 U.S.C. 410 
(a)), the Postal Service invites comments on the following revisions to 
the Domestic Mail Manual (DMMTM), incorporated by reference 
in the Code of Federal Regulations (CFR). See 39 CFR part 111.

PART 111--[AMENDED]

0
1. The authority citation for 39 CFR part 111 is revised to read as 
follows:

    Authority: 5 U.S.C. 552(a); 39 U.S.C. 101, 401, 403, 414, 416, 
3001-3011, 3201-3219, 3403-3406, 3621, 3626, 5001.

0
2. Amend the following sections of the Domestic Mail Manual (DMM) as 
set forth below:

Domestic Mail Manual (DMM)

* * * * *

G General Information

* * * * *

G900 Experimental Classification and Rate Filings

* * * * *

G990 Experimental Classifications and Rates

* * * * *
    [Renumber current 993 as new 994 and add new 993 to read as 
follows:]
    Outside-County Periodicals Co-Palletization Drop-ship Discounts for 
High-Editorial, Heavy-Weight, Small-Circulation Publications
1.0 Eligibility

1.1 Description

    The standards in G993 apply to mailings that are produced by 
mailers and consolidators who are approved to use the outside-county 
Periodicals co-palletization drop-ship discounts for high-editorial, 
heavy-weight, small-circulation publications.

1.2 Rate Application

    The outside-county co-palletization drop-ship per-pound discounts 
apply to pieces meeting the standards in G993.

1.3 Basic Standards

    The basic standards for eligibility under G993 are as follows:
    a. The advertising content of the publication must be 15 percent or 
less.
    b. The weight per copy must be 9 ounces or more.
    c. The total mailed circulation must be 75,000 addressed pieces or 
less (including all editions, issues, and supplemental mailings).
    d. Each mailing must consist of at least two different Periodicals 
publications or two different editions, segments, or versions of a 
Periodicals publication. Each mailing must be presented with the 
correct postage statement(s) and register of mailing. Mailings 
consisting of different Periodicals publications must be accompanied by 
separate postage statements for each publication. Mailings consisting 
of different editions or versions of the same Periodicals publication 
must be accompanied by one consolidated postage statement and a 
register of mailings.
    e. Each mailing must meet the documentation and postage payment 
standards outlined in 2.0 and P200.
    f. Each mailing must be entered, and postage must be paid, at the 
post office where consolidation takes place, except that postage for 
publications authorized under the Centralized Postage Payment (CPP) 
system may be paid to the New York Rates and Classification Service 
Center (RCSC). Each publication included in a mailing under these 
standards must be authorized for original entry or additional entry at 
the post office where the co-palletized mailing is entered.

1.4 Discount Eligibility

    To be eligible for the discounts, mailpieces must be:
    a. Part of a Periodicals mailing meeting the standards in M200, 
M820, or M900.
    b. Part of a mailing segment with less than 250 pounds per title or 
version per ADC destination, if independently presorted. This includes 
mail for an ADC service area that remains after finer levels of pallets 
are prepared.
    c. Prepared as packages on pallets under M041 and M045, or under 
M900.
    d. Prepared on either an ADC or SCF pallet of co-palletized pieces. 
Mailers may build on ADC or SCF pallets of 250 or more pounds prepared 
as part of the original presort. However, the pieces originally on 
these pallets (250 or more pounds per title or edition) do not qualify 
for the co-palletization discounts.
2.0 Documentation
    Each mailing must be accompanied by documentation meeting the 
standards in P012, as well as any other mailing information requested 
by the USPS to support the postage claimed (e.g., advertising 
percentage and weight per copy). Documentation must be presented by 
title and version, segment, or edition; or by codes representing each 
title and version, segment, or edition included in the co-palletized 
mailing. In addition, documentation for the co-palletized mailing must:
    a. Include a detailed listing documenting the distribution of total 
advertising and editorial pounds to each zone ``before'' co-
palletization, based on origin entry of the mail (i.e., entry at, or at 
the local post office for, the plant where the mail is printed and 
presorted into bundles ready for co-palletization and mailing).
    b. Upon request, include presort reports showing how the pieces 
would have been prepared prior to co-palletization.
    c. Include presort and pallet reports showing how the co-palletized 
pieces are prepared and where they will be entered (DADC or DSCF).
    d. Distinguish publications or segments that do not qualify for the 
co-palletization discounts (e.g., because there are 250 or more pounds 
to an ADC destination) from those that do qualify for the discounts 
(e.g., existing per piece co-palletization discounts and new per-pound 
discount).
    e. Allow easy reconciliation with reports prepared to reflect how 
mail would have been prepared prior to co-palletization if requested to 
verify compliance with standards for discount eligibility.
3.0 Data Reporting
    Each month, the mailer or consolidator must provide the following 
data via e-mail to [email protected] in spreadsheet format using the model 
spreadsheet and timelines provided by the USPS:
    a. Number of titles receiving the new co-palletization discounts 
for high editorial publications.
    b. Number of sacks that would have been prepared without co-
palletization, as well as the total weight, the editorial weight, and 
the number of addressed pieces that would have been in these sacks, by 
destination ADC and destination SCF.

[[Page 53645]]

    c. Number of sacks prepared after co-palletization, as well as the 
weight and the number of addressed pieces in these sacks.
    d. Number of pallets containing mail qualifying for the ADC co-
palletization discounts, as well as the weight and the number of 
addressed pieces receiving the ADC discount on these pallets. Pallets 
containing some bundles that use the per-piece discounts and some 
bundles that use the per-pound discount must be counted separately.
    e. Number of pallets containing mail qualifying for the SCF co-
palletization discounts, as well as the weight and the number of 
addressed pieces receiving the SCF discount on these pallets. Pallets 
containing some bundles that use the per-piece discounts and some 
bundles that use the per-pound discount must be counted separately.
4.0 Discounts

4.1 Basic Standards

    Pieces must be prepared on one of the following:
    a. An SCF or ADC pallet of 250 or more pounds drop shipped to the 
appropriate DADC.
    b. An SCF pallet of 250 or more pounds drop shipped to the 
appropriate DSCF.
    c. An overflow DSCF or DADC pallet drop shipped to the appropriate 
DSCF or DADC.
    d. An ADC pallet weighing between 100 and 250 pounds and drop 
shipped to the appropriate DADC.

4.2 Discounts and Description

    The discounts in exhibit 4.2 are applicable to editorial pounds of 
the co-palletized pieces prepared on an ADC or SCF pallet and entered 
at the destination ADC and SCF. The discounts are dependent on the 
applicable zones that would have resulted from origin entry of the 
publications without co-palletization.

 Exhibit 4.2.--Discounts for Co-Palletized Pieces Prepared on an ADC or
                               SCF Pallet
------------------------------------------------------------------------
                      Origin zone                         DADC     DSCF
------------------------------------------------------------------------
Zones 1 & 2...........................................    $.008    $.014
Zone 3................................................     .013     .019
Zone 4................................................     .028     .034
Zone 5................................................     .050     .056
Zone 6................................................     .073     .079
Zone 7................................................     .101     .107
Zone 8................................................     .125     .131
------------------------------------------------------------------------

5.0 Request To Participate
    A mailer or consolidator may request approval to use the outside-
county Periodicals co-palletization drop-ship per-pound discounts by 
submitting a written request to the Manager, Mailing Standards (see 
G043 for address). The request must be accompanied by the following:
    a. A completed application form (available from the Manager, 
Mailing Standards).
    b. A process map and narrative demonstrating how and where presort 
and co-palletization reports (including ``before'' and ``after'' data) 
are created as they relate to mail movement and consolidation of 
packages to be co-palletized. The map and narrative must also describe 
mail movement from production through the co-palletization process 
including dispatch to destination entry Postal Service facilities.
    c. Samples of all required documentation that will be used to 
substantiate eligibility for the discounts, and of the documentation 
that must be provided at the time of mailing, including ``before'' and 
``after'' reports and postage statements. The sample reports must 
demonstrate:
    (1) How the co-palletized portion of the mailing is segregated from 
other mailing segments on the ``before'' reports.
    (2) How mailing jobs, mailing segments, and containers will be 
identified in both ``before'' and ``after'' reports to allow 
reconciliation of the reports.
    (3) How pieces appearing on the ``after'' reports that qualify for 
the co-palletization discounts (mailing segments with less than 250 
pounds to an ADC) are differentiated from those that do not (mailing 
segments with 250 or more pounds to an ADC). How pieces receiving the 
per-pound discounts are differentiated from those receiving the per-
piece discounts.
    d. A detailed listing documenting the distribution of total 
advertising and editorial pounds to each zone ``before'' co-
palletization, based on origin entry of the mail (i.e., entry at the 
plant or the local post office for the plant, where it is printed and 
presorted into bundles ready for co-palletization and mailing).
    e. An explanation of how data for mailings included under the co-
palletization experiment will be collected and reported to the USPS, 
including whether the model spreadsheet provided by the USPS can be 
used.
    f. A list of the publications to be included initially in the test 
and evidence that each publication has obtained the appropriate 
additional entry authorization at the office where mailings will be 
verified and postage paid. The list must indicate if the publications 
are authorized under the Centralized Postage Payment (CPP) system. If 
the applicant is not a printer and/or is consolidating publications for 
other printers, a list of those printers must be included with the 
application.
6.0 Decision on Request
    The manager, Mailing Standards, approves or denies a written 
request to use the experimental outside-county Periodicals co-
palletization per-pound discounts. If the application is approved, the 
mailer or consolidator will be notified in writing by the manager, 
Mailing Standards. Initial approval is for a conditional 90-day period. 
When the mailer or consolidator has demonstrated the ability to prepare 
and enter mailings under the standards in G993, final authorization 
will be granted. If the application is denied, the mailer or 
consolidator may file at a later date or submit additional information 
needed to support the request.
7.0 USPS Suspension
    The manager, Mailing Standards, may suspend at any time an approval 
to use the per-pound discounts when there is an indication that Postal 
Service revenue is not fully protected. The manager will notify the 
participant in writing of the decision. The suspension becomes 
effective upon the mailer's receipt of the notification.
* * * * *
    We will publish an appropriate amendment to 39 CFR 111 to reflect 
these changes if the proposal is adopted.

Neva R. Watson,
Attorney, Legislative.
[FR Doc. 04-19976 Filed 9-1-04; 8:45 am]
BILLING CODE 7710-12-P