Classification Reform; Implementation Standards

SUMMARY: This final rule sets forth the Domestic Mail Manual (DMM)

standards adopted by the Postal Service to implement the Decision of

the Governors of the Postal Service in Postal Rate Commission Docket

No. MC95-1, Classification Reform I, and requests further comments on

some aspects of those standards.

DATES: The final rule is effective on July 1, 1996. Comments as allowed

herein must be received on or before March 27, 1996.

ADDRESSES: Mail or deliver written comments to the Manager, Customer

Mail Preparation, USPS Headquarters, 475 L'Enfant Plaza SW, Washington,

DC 20260-2405. Copies of all written comments will be available for

inspection and photocopying between 9 a.m. and 4 p.m., Monday through

Friday, in Room 6830 at the above address.

FOR FURTHER INFORMATION CONTACT: Leo F. Raymond, (202) 268-5199,

concerning the DMM standards, or Lynn Martin, (202) 268-6351,

concerning the comments analysis.

SUPPLEMENTARY INFORMATION: On March 24, 1995, pursuant to its authority

under 39 U.S.C. 3621, et seq., the Postal Service filed with the Postal

Rate Commission (PRC) a request for a recommended decision on a number

of mail classification reform proposals (Classification Reform). The

PRC designated the filing as Docket No. MC95-1. The PRC published a

notice of the filing, with a description of the Postal Service's

proposals, on April 3, 1995, in the Federal Register (60 FR 16888-

16893).

On June 29, 1995, the Postal Service published for public comment

in the Federal Register an advance notice of proposed rulemaking (60 FR

34056-34069). That notice included an overview of the Postal Service's

proposals in MC95-1, the process that was used in developing them, and

the process being used to prepare for implementation of Classification

Reform and to begin development of the Domestic Mail Manual (DMM)

implementing standards. The notice also contained detailed information

about issues that had been identified for consideration in the

implementation process, presented in a format that paralleled the

Domestic Mail Classification Schedule (DMCS) changes proposed in the

MC95-1 filing. Many of those implementation issues had been developed

with the advice of the Classification Reform Implementation Advisory

Groups (IAGs) convened by the Postal Service as part of the process

described in the notice. The advance notice requested comments on the

criteria under consideration for inclusion in proposed DMM implementing

standards. Readers who are unfamiliar with the content of the Postal

Service's MC95-1 filing or the implementation process should review the

June 29 notice.

On August 30, 1995, the Postal Service published for public comment

in the Federal Register a second advance notice of proposed rulemaking

(60 FR 45298-45323). The second notice reported a summary of the

comments received in response to the first notice and invited further

comment from interested parties on updated proposed implementing

standards and on the implementation process generally. Readers were

advised that, following review of comments received in response to the

second notice, the Postal Service would revise its proposed

implementation criteria as appropriate and would use those criteria as

the basis for the DMM standards it would propose for adoption if the

Classification Reform proposals requested by the Postal Service in PRC

Docket No. MC95-1 were adopted.

On December 22, 1995, the Postal Service published for public

comment in the Federal Register a proposed rule (60 FR 66582-66703)

that summarized and responded to comments received from the August

notice; offered extensive details about contents of the proposed rule

that were new or modified compared to the earlier notices and assessed

their possible impact on the mailing community; offered simplified

charts to illustrate proposed mail preparation standards; supplied an

estimated list of 5-digit ZIP Codes affected by one of its proposals;

and concluded with a complete listing of changes to the standards in

the DMM that it proposed to adopt if the Classification Reform

proposals requested by the Postal Service in PRC Docket No. MC95-1 were

recommended by the PRC and approved by the Governors of the Postal

Service.

Pursuant to 39 U.S.C. 3624, on January 26, 1996, the PRC issued its

Recommended Decision on the Postal Service's Request to the Governors

of the Postal Service. The PRC recommendations made revisions to some

of the mail classification structure and rates requested by the Postal

Service. Based on an extensive analysis of the PRC's Recommended

Decision and deliberation as to its consequences to the Postal Service

and its customers, and pursuant to 39 U.S.C. 3625, the Governors acted

on the PRC's recommendations on March 4, 1996. Decision of the

Governors of the United States Postal Service on the Recommended

Decision of the Postal Rate Commission on Classification Reform I,

Docket No. MC95-1. With the exception of the PRC's separate courtesy

envelope mail and bulk parcel post proposals, the Governors determined

to approve the PRC's recommendations, and the Board of Governors set an

implementation date of July 1, 1996, for those rate and classification

changes to take effect. A notice announcing the Governors' Decision and

the issuance of final Domestic Mail Classification Schedule and Rate

Schedule changes is published elsewhere in this issue of the Federal

Register.

This final rule contains the DMM standards adopted by the Postal

Service to implement the Governors' decision. Except as specifically

noted below, the revised DMM standards will take effect on July 1,

1996.

In its testimony before the PRC, the Postal Service presented

extensive evidence concerning the prudence and necessity of certain

fundamental changes it was seeking to cause or facilitate in the

mailstreams it processes. Most if not all of those changes were not

founded in a particular rate or classification scheme, although the

Postal Service considered that the incentives offered in its requested

structure make it easier for customers to accept or benefit from those

changes. Many components of the proposed rule reflected basic

operational and network changes designed to improve the Postal

Service's ability to encourage, manage, and benefit from automated

mail, to improve mailflow, and to focus processing activities at a

redesigned matrix of node facilities. As a result, despite the

differences between the Postal Service's Request and the PRC's

recommendation which the Governors have approved, the value and

efficacy of those elements of the proposed rule related to mail

quality, preparation, automation, and equipment and network utilization

remain undiminished. As a result, the content of the proposed rule has

been adopted as a final rule except as described below to correct

factual or typographical errors, respond to comments received, or align

with the rate and classification

[[Page 10069]]

structure recommended by the PRC and approved by the Governors.

Because the PRC's Recommended Decision, as approved by the

Governors, made significant changes to the mail classification

structure requested by the Postal Service, adaptation of the proposed

rule to the final structure has been necessitated in the final rule.

Most of these changes are a direct consequence of the difference

between the rate and classification changes proposed by the Postal

Service and those recommended by the PRC and approved by the Governors.

These were matters at issue in the PRC proceeding and, as such, are not

subject to review or adjustment in this rulemaking. To the extent this

final rule establishes further standards that were not previously

published for public comment, the Postal Service has determined to seek

and consider additional input from customers. This further opportunity

for public comment is limited to matters that are newly introduced in

the final rule, that do not result from the difference in recommended

rate and classification provisions, and that are significant in their

impact on customers compared with what was proposed in the proposed

rule. The provisions for which comments are solicited are:

1. New standards applied to Periodicals that are similar to those

adopted in this final rule for First-Class and Standard Mail:

a. All pieces in an automation rate mailing must be delivery point

barcoded.

b. Presort and other preparation standards, including a 150-piece

minimum for preparing trays of automation rate letter-size mail.

c. 5-digit ZIP Codes used in the addresses on nonautomation rate

Periodicals must be verified annually for accuracy; mailers must

certify this at the time of mailing..

d. Letter-size reply envelopes and cards enclosed in automation

rate pieces must meet specific standards for automation-compatibility;

mailers must certify this at the time of mailing.

2. Standards for documentation produced by Presort Accuracy

Validation and Evaluation (PAVE) certified software and for

standardized documentation produced otherwise. These standards are

presented in P012, below; examples of documentation are also presented

as part of this notice.

After considering the potential impact of these provisions, the

Postal Service has determined to allow 15 days for public comment.

Although a longer comment period is usually provided, the Postal

Service concluded that a 15-day comment period was warranted in this

case for two reasons. First, the list of provisions on which comment is

sought is limited and straightforward. Mailers should have little

difficulty evaluating the impact of these provisions on their

operations and preparing comments in a short time period. Second, the

Postal Service wants to ensure that mailers have sufficient time after

the close of the comment period and publication of any possible

revisions to this final rule to make the necessary changes to their

operations before the July 1, 1996 implementation date. After review of

the comments received, the Postal Service will modify the corresponding

standards if such modification is determined to be appropriate.

Part A of this notice summarizes major changes that have been made

to or added to the proposed implementation standards since the proposed

rule. Part B provides an analysis of comments received on the proposed

rule and the Postal Service responses. Part C shows examples of

standardized documentation that would be generated under the standards

shown below. Part D summarizes the changes to the DMM, followed by the

text of the revised DMM standards.

A. Major Changes and Additions Since the December 22 Proposed Rule

This section identifies additions and changes to the final DMM

mailing standards that were not part of the proposed rules published on

December 22.

1. Marking Standards

Marking standards have been revised to allow mailers to continue to

use ``Presorted First-Class'' and ``Bulk Rate'' markings as class of

mail markings for presorted First-Class and Standard Mail. These

markings must appear in the postage area on mailpieces. Additional

mailing or rate specific markings are also required. This change will

allow mailers to continue to use existing envelope stock, precanceled

stamps, and meter slugs.

2. Postage Payment

Revisions have been made to postage payment standards to allow

mailers to affix metered postage to all the pieces in a mailing job at

the lowest rate that applies to any presorted mailing contained in the

mailing job.

3. Value Added Refund

The proposal that would have required all pieces in a value added

refund (VAR) mailing to have postage affixed at an automation rate has

been removed. First-Class mailpieces bearing postage at Presorted

First-Class rates will be acceptable for inclusion in automation First-

Class VAR mailings, and Standard Mail pieces bearing postage at

presorted nonautomation Regular rates will be acceptable for inclusion

in automation Standard Mail VAR mailings.

4. Minimum Quantity Per Mailing

In accordance with the Domestic Mail Classification Schedule

standards approved by the Governors, separate 500-piece minimum

quantity per mailing standards have been established for mailings of

cards in addition to those which apply to letters. Mailers may continue

to combine comparably prepared letters and cards in the same mailings

if the separate minimums are met and additional postage payment and

documentation standards are met.

5. Postage Statements

Mailing statements have been renamed postage statements to clarify

the new standards that will allow all mailings submitted for

verification as part of the same mailing job to be reported on a single

postage statement.

6. Sleeving and Banding

The proposed sleeving and banding standards for trayed letter mail

have been modified. There will be no exceptions to sleeving. Exceptions

to strapping of local mail have been extended to allow such exceptions

for mail entered and delivered within the service area of the SCF

serving the entry post office if approved by local management. The

proposal had limited this exception only to mail entered and delivered

within the service area of the facility where the mail was entered. The

DMM palletization standards have been modified to make it clear that

only trayed mail on stretchwrapped 5-digit, 3-digit, and SCF pallets

are exempt from tray-strapping.

7. Packaging Material

The proposal has been removed that required use of only rubber

bands to prepare packages within automation letter mailings. Upon

implementation of Classification Reform, mailers may continue to

prepare these packages using either rubber bands, elastic strapping,

plastic strapping or string. However, the Postal Service plans to

require use of rubber bands or elastic strapping for automation

mailings at a future date and will work with mailers on the timing of

this standard.

[[Page 10070]]

8. Courtesy Reply Mail in Automation Mailings

The standards have been revised concerning courtesy envelope and

business reply mail enclosed in pieces mailed at First-Class or

Standard Mail automation rates. The final rule also applies these

standards to automation Regular Periodicals. The proposal indicated

that the enclosed reply pieces must all bear a delivery point barcode,

in addition to being automation-compatible and bearing a FIM. Under the

final rule, the barcode standards have been revised to indicate that

ZIP+4 barcodes are required for business reply mail and that courtesy

reply mail must bear the correct delivery point barcode for the

delivery address as defined by the Postal Service. Unique 5-digit and

ZIP+4 barcodes provided by the Postal Service for use with courtesy

reply mail will be considered valid delivery point barcodes for

purposes of meeting this standard. In addition, the final rule requires

that the enclosed reply mail pieces meet the barcode preparation

standards in DMM C840. The standards concerning reply mail enclosed in

First-Class, Standard Mail and Periodicals automation rate mailings are

effective January 1, 1997. Comments are permitted on the extension of

this requirement to Periodicals.

9. 3-Digit Schemes for Automation Letters

Use of 3-digit scheme sort will be required for automation letters.

This standard will allow mailers to obtain the finest discount level

and the Postal Service to receive mail presorted to the finest extent

possible.

10. Grouping of Pieces in AADC Trays

Within mixed AADC trays in automation and upgradable letter

mailings, the proposed standard to group pieces in those trays by both

AADC, and within each AADC group, by 3-digit ZIP Code has been

modified. Mail in these mixed AADC trays will be required to be grouped

only by AADC area.

11. Specific Use of 1-Foot and 2-Foot Trays

The traying standards for proper use of appropriate 1-foot and 2-

foot trays have been clarified to specify the type of tray that must be

used when mailers have a quantity of mail for a tray sortation level

that exceeds the physical capacity of a 1-foot tray, but is less than

the minimum quantity for a full 2-foot tray. For automation and

upgradable mailings of other than card-size pieces, the Postal Service

would like the fewest number of packages (which are only prepared in

less-than-full trays). For these mailings, when the mail remaining

after filling all possible 2-foot trays exceeds the physical capacity

of a 1-foot tray, but is less than the minimum quantity for a full 2-

foot tray, mailers must place this mail in two 1-foot trays (a full 1-

foot tray (without packaging) and a less-than-full 1-foot tray (with

packaging)). For nonautomation mailings and for automation and

upgradable mailings consisting entirely of card-size pieces, which are

prepared in banded packages, the Postal Service would like to receive

the fewest number of trays. Therefore for nonautomation mailings, when

the mail remaining after filling all possible 2-foot trays exceeds the

physical capacity of a 1-foot tray, but is less than the minimum

quantity for a full 2-foot tray, mailers must place this mail in a

single less-than-full 2-foot tray.

12. Less-Than-Full 3-Digit Trays

Modification has been made to the proposed standard to tray all

mail for the 3-digit ZIP Codes served by the SCF of the entry post

office to at least the 3-digit level. These rules now apply only to the

SCF that serves the post office where the mailing is verified.

13. Modification to ADC Lists

The ADC list in proposed DMM L004 has been modified to provide for

some class-specific differences in labeling. In addition, separate ADC

and Mixed ADC labeling lists for Standard Mail irregular parcels have

been added as DMM L603 and L604.

14. Mixed ADC and AADC Tray Destinations for First-Class Mail

Mixed ADC and mixed AADC trays in First-Class mailings will be

labeled to the SCF that serves the entry post office rather than to the

3-digit ZIP Code of the entry post office.

15. Qualification of AADC and ADC Sort Levels for BMC Destination Entry

Discounts

Eligibility for destination BMC discounts for Standard Mail

prepared in AADC trays and ADC trays, sacks, and packages on pallets

has been clarified. The entire contents of these trays, sacks, or

packages placed on pallets may receive a DBMC discount, provided that

the ZIP Code in the top line of the tray or sack label, (or the ZIP

Code assigned to the ADC in L004 for the package) is in the service

area of the BMC at which the tray, sack, package on a pallet, is

entered.

16. Revisions to Barcoded Tray Label Specifications

The effective date for the standard to use barcoded tray and sack

labels for mailings at automation First-Class, automation Standard, and

automation Periodicals rates has been changed to January 1, 1997.

17. Revisions to Specifications for Mailer Prepared Tray and Sack

Labels

Adjustments and corrections have been made to the specifications in

DMM M032 concerning mailer-prepared tray and sack labels, including

barcoded labels. Mailers at all classes and rates are also reminded

that effective July 1, 1996, tray, sack, and pallet labels used with

their mailings must be revised to reflect the network changes, changes

to the names of the classes of mail, and other labeling changes that

will go into effect with these final DMM rules.

18. Enhanced Carrier Route Rates

Separate letter and nonletter rates have been established by the

Governors for the Standard Enhanced Carrier Route subclass. In

addition, the automation carrier route rate proposed under a separate

automation subclass has been recommended by the PRC and approved by the

Governors as an automation Enhanced Carrier Route rate. Accordingly,

automation Enhanced Carrier Route mailings must meet a separate minimum

quantity requirement from mail at automation Regular Standard rates,

and will be subject to the minimum per piece weight breakpoint for the

Enhanced Carrier Route subclass.

19. Palletization of Mail Meeting Both Letter-Size and Automation Flat-

Size Standards

In the proposed rule, the Postal Service proposed an exception that

would allow certain letter-size mail to be prepared as packages on

pallets. Under this exception, mailers of pieces that meet both the

letter and automation flats dimensions, and who mail a portion of their

mailing job at the automation flats rates, would be permitted to

prepare the entire mailing job (i.e., Enhanced Carrier Route,

automation Regular, and nonautomation Regular mailings) as packages on

pallets, provided the nonautomation Regular portion was 10% or less of

the total pieces mailed at the Enhanced Carrier Route and automation

Regular rates, and flat rates (non-letter rates) were paid on all

pieces. The final rule will provide for this exception, but only until

January 1, 1997. Beginning January 1, 1997, the Enhanced Carrier Route

and nonautomation Regular portions of

[[Page 10071]]

mailing jobs of pieces that meet the definition of letter-size mail

will be required to be trayed. Preparation of trays on pallets is

preferred. This is consistent with the Postal Service's need to have

all letter mail prepared in trays, and is discussed further in the

section discussing comments.

20. Periodicals

The proposed Publications Service subclass of Periodicals was not

recommended to the Governors by the Postal Rate Commission. Instead

revised rates for Regular Periodicals were recommended. These changes

to Periodicals have been accepted by the Governors. As a consequence,

the Postal Service has determined to modify the mail preparation and

quality standards for entry at the Regular Periodicals rates. The

standards set forth in this notice are final rules. Because many of

these standards were not applied to all Periodicals mailers in the

proposed rule, the Postal Service will permit comments on these

standards.

Unlike the proposed rule, there are no rates and corresponding

preparation standards for automation carrier route mail; only mail

sorted to 5-digit and unique 3-digit ZIP Code packages, trays, and

sacks may qualify for applicable 3/5 rates; and zone rates apply only

to advertising pounds. Like the proposed rule, optional city will no

longer be a sortation level, and SDC, State, and Mixed States sortation

levels have been replaced with the appropriate ADC and mixed ADC or

AADC and mixed AADC sortation levels.

a. Regular Periodicals Automation Rate Mailings

(1) Letter-Size Pieces. Mailings must be presorted under standards

similar to automation First-Class and Standard mailings. There is no

automation carrier route mail preparation or rate. Mailers must sort

mail to required 5-digit, required unique 3-digit, required 3-digit/

scheme, and required AADC trays, using a 150-piece minimum at each tray

level. Remaining mail is trayed to mixed AADC trays. Only mail in 5-

digit and unique 3-digit trays is eligible for 3/5 automation Regular

Periodicals per-piece rates. Mail in 3-digit/scheme, AADC, and mixed

AADC trays qualifies for basic automation per-piece rates. Both 1-foot

and 2-foot tray sizes must be used as appropriate.

Mailings must be 100% delivery point barcoded. Addresses must be

matched semi-annually using CASS-certified software and a current AIS

database. Barcoded tray labels will be required effective January 1,

1997. Use of PAVE-certified software or standardized documentation will

be required effective January 1, 1997. Enclosed courtesy and business

reply mail envelopes will be required to be automation-compatible and

prepared with barcodes and FIM marks effective January 1, 1997.

(2) Flat-Size Pieces. Firm and carrier route packages cannot be

part of an Automation flats mailing. Mailers must prepare packages of 6

or more pieces to 5-digit, 3-digit, ADC and mixed ADC destinations and

place them in 5-digit, 3-digit, ADC and mixed ADC sacks or on the

appropriate level of pallet. Only pieces in 5-digit and unique 3-digit

sacks (or in 5-digit and unique 3-digit packages placed on pallets),

are eligible for the 3/5 automation Regular Periodicals per-piece

rates. Pieces in non-unique 3-digit, ADC and mixed ADC sacks (and non-

unique 3-digit, ADC and mixed ADC packages placed on pallets) will

qualify for basic Automation per-piece rates. Mailings must be 100%

ZIP+4 or delivery point barcoded. Addresses must be matched semi-

annually using CASS-certified software and a current AIS database.

Barcoded sack labels will be required effective January 1, 1997. Use of

PAVE-certified software or standardized documentation will be required

effective January 1, 1997. Enclosed courtesy and business reply mail

envelopes will be required to be automation-compatible and prepared

with barcodes and FIM marks effective January 1, 1997.

b. Nonautomation Mailings

(1) Letters. Mail must be prepared in trays. Both 1-foot and 2-foot

trays must be used as appropriate. Firm packages are permitted and

receive rates based on current criteria. Six-piece or larger carrier

route packages must be placed in carrier route trays when there are at

least 24 pieces for the tray, but trays with as few as one 6-piece

package are acceptable. Remaining carrier route packages are placed in

5-digit carrier routes trays. Six-piece or larger 5-digit, 3-digit,

ADC, and mixed ADC packages are prepared and must be placed in 5-digit,

3-digit, and ADC trays whenever there are at least 24 pieces for one of

those tray destinations. Trays with as few as one 6-piece or larger

package may be prepared. Remaining packages are placed in mixed ADC

trays. Only mail in 5-digit or unique 3-digit trays qualifies for 3/5

nonautomation Regular Periodicals per-piece rates. Mail in non-unique

3-digit, ADC and mixed ADC trays qualifies for basic per-piece rates.

The carrier route portion must be matched using CASS-Certified software

to a current CRIS file or other AIS product containing carrier route

codes, within 90 days prior to the date of mailing. No sequencing is

required for basic carrier route rates. High Density and Saturation

rate mail must be prepared in carrier walk sequence using a current

USPS DSF or CDS file or other USPS sequencing service within 90 days

prior to the date of mailing. Effective October 1, 1996, 5-digit ZIP

Codes in each address in the non-carrier route portion of the mailing

must have been verified and corrected within 12-months prior to the

date of mailing by a USPS approved method.

(2) Nonautomation Flats. Mail is sorted according to current DMM

issue 49 standards except that there must now be a minimum of one 6-

piece package in each sack other than a mixed ADC sack; the optional

city package and sack level has been eliminated; and SDC, state, and

mixed states packages and sacks have been replaced with ADC and mixed

ADC packages and sacks. Only mail in 5-digit or unique 3-digit sacks

(or in 5-digit or unique 3-digit packages on pallets) qualifies for 3/5

nonautomation Regular Periodicals per-piece rates. Mail in non-unique

3-digit, ADC, and mixed ADC packages and sacks qualifies for basic per-

piece rates. The carrier route portion must be matched using CASS-

Certified software to a current CRIS file or other AIS product

containing carrier route codes, within 90 days prior to the date of

mailing. No sequencing is required for basic carrier route rates. High

Density and Saturation rate mail must be prepared in carrier walk

sequence using a current USPS DSF or CDS file or other USPS sequencing

service within 90 days prior to the date of mailing. Effective October

1, 1996, 5-digit ZIP Codes in each address in the non-carrier route

portion of the mailing must have been verified and corrected within 12-

months prior to the date of mailing by a USPS approved method.

21. Submission of Form 3553

A standard to submit a Form 3553, CASS Report, with automation

carrier route First-Class, automation and nonautomation Enhanced

Carrier Route Standard, and carrier route Regular Periodicals has been

added to the final DMM standards. Submission of this report with each

mailing will document that the addresses in these mailings were matched

to a current database using CASS certified software within 90 days

prior to the date of mailing. Mailings at carrier route Nonprofit

Standard and carrier route Preferred Periodicals rates will not be

required to be accompanied by a Form 3553 because the standard for use

of CASS

[[Page 10072]]

certified address matching software will not apply to mailings at these

rates (although the standard to update their carrier route information

within 90 days prior to the date of mailing using a current database

will apply). Comments will be accepted on the application of these

rules to Regular Periodicals.

B. Summary of Comments From the December 22 Proposed Rule

The Postal Service received 64 pieces of correspondence offering

comments on the December 22 proposed rule. Respondents included major

mailer associations, individual publishers, printers, presort bureaus,

and mailers.

The specific points raised in the comments are presented below,

organized by general comments and then by letters, flats, Periodicals

and addressing.

1. General Comments

a. Change in Name of Third-Class and Fourth-Class Mail to Standard Mail

Three comments were received regarding the change in name of third-

and fourth-class mail to Standard Mail.

The Postal Service proposed, as part of Classification Reform, that

mail matter currently designated as third-class and fourth-class be

combined into a new single Standard Mail class. This change was not

opposed in the Postal Rate Commission (PRC) proceeding and has been

recommended by the PRC and approved by the Governors.

The Postal Service will be publishing information on the name

change in the Postal Bulletin and has other planned communication

events and publications to raise the awareness level of all mailers and

the general public of this change and the other changes needed to

implement Classification Reform.

b. Format of Final Mailing Standards for Classification Reform

One commenter requested that entire DMM pages be published in the

Postal Bulletin that transmits the mail preparation rules in this

Federal Register notice and requested that any new wording be placed in

bold.

Due to limits on time, space, cost, and size of the document, the

DMM standards published in the Postal Bulletin will follow the same

format as this final rule and will contain only the sections that are

changed. DMM issue 50, which will incorporate the new preparation

standards will be distributed prior to implementation.

c. Comments Beyond the Scope of this Rulemaking Process

Ten commenters submitted comments requesting such things as a

change in the rates, rate structure, minimum quantity standards for a

rate category, or stated concerns about the structure of the future

Classification Reform proposals for nonprofit mail, or suggested an

implementation date for Classification Reform. One commenter requested

that the Postal Service provide mailers its delivery performance data.

These comments are beyond the scope of this rulemaking. The rates,

rate structure, and basic standards for rates in MC-95-1 were subject

to litigation before the Postal Rate Commission, and cannot be

unilaterally revised by the Postal Service in a rulemaking process.

Similarly, the date for implementation of MC95-1 is determined by the

Board of Governors of the Postal Service and is outside the scope of

this rulemaking. Comments concerning the structure of the future

Classification Reform proposal for Nonprofit Mail have been noted, but

are also outside the scope of this rulemaking process.

d. General Comments on Mail Preparation Standards in the Proposed Rule

Eight general comments were received regarding the preparation

standards set forth in the proposed rule. One commenter was pleased to

see the Federal Register notice published on the Postal Service

electronic bulletin board (RIBBS). One indicated he found no problems

or inequities with the proposed rule. The remaining six disagreed with

the overall effect of the preparation rules.

One of these indicated that the Postal Service is adding ``picky

details`` to make the preparation standards complex. One indicated that

some of the implementation standards may be exclusionary and create

unnecessary barriers thereby creating growth of coarsely sorted and

non-automated mail, exactly the opposite of the intended outcome of

Classification Reform. Another commenter indicated that the preparation

rules will negatively impact mailer cost and service. This commenter

argued the proposed rules would keep more mailers out of automation

thereby eliminating their reason to improve address quality, and

leaving the USPS with more difficult-to-process mail. This commenter

suggested that the Postal Service delay implementing unduly restrictive

rules.

Three commenters indicated a combination of several of the make-up

standards for mail will increase preparation costs, listing such things

as 1) the separate mailstreams for barcoded and non-barcoded mail; 2)

the need to have 150 pieces to a 5-digit or 3-digit destination to

obtain 5-digit and 3-digit automation rates; 3) the requirement to use

barcoded tray labels on automation mailings; 4) the requirement for the

mailer to strap all trays of letter mail; 5) the standard to prepare

each subclass as a separate mailstream with separate subclass markings;

6) the required use of both 1-foot and 2-foot trays in letter-size

mailings; 7) the standards to tray letter mail prior to palletizing it;

8) the decrease in drop shipment discounts when trucking costs may

increase due to increased cost of preparing pallets and loss of cube

space in trailers; and 9) the standards for purchasing and printing new

reply mail pieces that bear barcodes and FIM marks for inclusion within

pieces at automation rates.

One commenter remarked that it did not appear the Postal Service

gave serious consideration to mailer comments concerning these issues

in the last Federal Register and requested that it give such attention

in this rulemaking.

Some of the items stated as concerns by these commenters involve

issues that were at issue in the PRC proceeding, such as drop shipment

discounts, and minimum quantity standards for mailings. The Postal

Service cannot use rulemaking to change rates, discounts, and DMCS

provisions that were recommended by the PRC and approved by the

Governors. The Postal Service recognizes that under Classification

Reform many mailers will be affected by new preparation criteria;

however, the Postal Service believes that these preparation criteria

are necessary to achieve the goal of encouraging mail that is efficient

for the Postal Service to handle.

e. Minimum Quantity Standards/Definition of a Mailing

Ten comments were received concerning the application of minimum

quantity standards to mailings and the definition of a mailing. These

commenters had concerns about the proposed standard that each separate

subclass and, within each subclass, each separate mail processing

category, meet the appropriate 500-piece (First-Class) or 200-piece

(Standard Mail) minimum quantity standard.

Five commenters indicated the minimum quantity should apply to the

combined subclasses in the physical mailing and not to each individual

subclass. Six commenters similarly requested that mailers should be

able to combine mailings of different subclasses and rate categories

that are part of the same mailing job. Four commenters stated that

applying the minimum to

[[Page 10073]]

each subclass could cause problems for qualifying non-barcoded mail

because when using lists that have a high percentage of names that can

be properly barcoded, there may not be enough pieces left over after

preparing the Automation mailing to meet a separate minimum quantity

standard for mailing at Retail (now Presorted First-Class) or Regular

(now Nonautomation Standard) rates. Another commenter expressed concern

that mail remaining that cannot meet a separate minimum quantity

standard will end up in the single-piece rate category, and that

single-piece rate mail is generally not accepted at business mail entry

units. One commenter also indicated that proposed DMM M130.1.1b, which

stated that a mailing can consist of only one processing category, and

M130.1.1d, which required that a separate rate marking appear on Retail

Mail (now named Presorted First-Class), do not permit mailers to

prepare the residual to an Automation mailing as a Retail (Presorted

First-Class) mailing. One commenter expressed concern that splitting a

Standard mailing job into three separate mailstreams complicates the

mailing process and that this conflicts with a stated purpose of

Classification Reform to simplify the preparation of mailings.

The Domestic Mail Classification Schedule approved by the Governors

specifies separate 500-piece minimum quantity standards for the

following First-Class mailings: (1) Letters and Sealed Parcels

Automation, (2) Cards Automation, (3) Letters and Sealed Parcels

Presorted, and (4) Cards Presorted. Accordingly, the final implementing

DMM standards in this notice contain these separate minimum quantity

standards for Automation mailings and for Presorted First-Class

Mailings, including the separate minimums for mailings of First-Class

Cards. First-Class mailers will be permitted to combine letters and

cards in the same mailing as they do currently, provided each separate

subclass (cards and letters) meets its own separate 500 piece minimum

quantity standard and mailers either affix exact postage to each piece

in the mailing or can provide standardized documentation to reflect the

number of pieces in each subclass and each rate category within the

combined mailing. The current provisions that all pieces in a mailing

must be of the same processing category (with certain exceptions

allowing for commingling Standard Machinable and Irregular parcels) are

also retained in the final implementing DMM standards.

The DMCS also prescribes separate minimum quantity standards of 200

pieces or 50 pounds each mailing of Standard Regular and Enhanced

Carrier Route rate mail. Due to operational differences in the way that

mail is handled, automation mail must be sorted and presented

separately from presorted nonautomation mail. The Postal Service has

determined that automation and nonautomation mail must therefore be

prepared and presented as separate mailings. Accordingly, the final

implementing DMM standards in this notice contain separate minimum

quantity standards for the following Standard mailings: (1) automation

Enhanced Carrier Route, (2) nonautomation Enhanced Carrier Route, (3)

automation Regular, and (4) presorted nonautomation Regular.

If, after preparing one or more of the above mailings within a

class, mailers are left with a quantity of pieces that do not meet the

minimum quantity standards for a Presorted First-Class or presorted

nonautomation Regular mailing, mailers are correct that such pieces

must be mailed at single-piece rates. These single-piece rate pieces

will be accepted through the Business Mail Entry Unit when presented

along with other presort rate mailings. Additional information on

markings and postage payment for these pieces is provided in the

separate comment sections on those two topics.

Eight commenters indicated that mailings of all subclasses should

be able to be reported on the same mailing statement, and on the same

documentation. Four commenters requested clarification concerning the

application of minimum quantity standards to plant verified drop

shipment (PVDS) mailings expressing opinions that Customer Support

ruling PS-283 be continued under Classification Reform. Three

commenters pointed out that there is a conflict in the proposed rule

between the information presented in the general comments section which

states separate subclasses cannot be part of the same mailing, and the

information in DMM 600.2.4 which states that all the Standard Mail

subclasses can be prepared in the same mailing, and that this is

further confused by rules and comments indicating that mailings of

different subclasses can be combined on the same pallets in palletized

mailings. These commenters stated that the proposed policy was

confusing and inconsistently applied throughout the proposed standards.

One of these commenters indicated that he interpreted the proposed

standards to mean that Standard Automation and Regular (now

nonautomation Regular) mail may be on the same pallet and can be

reported on the same documentation and mailing statement. One commenter

stated that his support for 100% barcoding during the Implementation

Advisory Group (IAG) meetings was conditional on having Enhanced

Carrier Route, Automation, and Regular subclass mail to be part of the

same mailing and reported on the same mailing statement. This commenter

believed that previous responses to comments led him to believe the

Postal Service agreed with this single mailing concept.

The information in proposed DMM 600.2.4, which stated that all the

Standard mail subclasses could be prepared in the same mailing

contained a typographical error omitting the word ``not.'' The Postal

Service regrets any confusion this may have caused. Under

Classification Reform, a mailing will consist of a group of mail of the

same class and subclass which will be processed in the same manner by

the Postal Service, and which is submitted for verification at the same

time. Each mailing will be required to meet a separate minimum quantity

standard. As indicated above, for presorted Regular Standard Mail

mailers, automation mail must be prepared as a separate mailing from

mail entered at presorted nonautomation rates, and automation Enhanced

Carrier Route mail must be submitted as a separate mailing from mail

entered at nonautomation Enhanced Carrier Route rates and from other

Regular Standard mailings. Each of these four mailings must therefore

meet a separate 200-piece or 50-pound minimum quantity standard.

Similarly, a First-Class Automation letter mailing must meet a separate

500-piece minimum quantity standard and a Presorted First-Class letter

mailing must meet a separate 500-piece minimum quantity standard.

Separate minimum quantity standards must also be met for mailings of

automation First-Class Cards and Presorted First-Class Cards.

The final implementing DMM standards contained in this notice

provide that separate mailings of the same class of mail and in the

same mailing job that are presented for verification at the same time

may be claimed on a single postage statement. The Postal Service has

renamed its ``mailing statements'' as ``postage statements'' to avoid

confusion as to whether more than one mailing can be reported on a

single statement. Under the standardized documentation standards for

these mailings, separate documents describing each mailing will

[[Page 10074]]

be required except for copalletized, commingled, or combined mailings

submitted on pallets. For these palletized mailings, packages or sacks

or trays from each of the separate mailings are sorted together for

placement on the appropriate level of pallets. Therefore, standardized

documentation for palletized mailings will report pieces contained in

each separate mailing by each separate rate category on a pallet by

pallet basis, with a summary roll up of the total pieces for each

separate mailing and each rate for the entire mailing job. Each of the

mailings on the pallets that are part of the same mailing job may be

reported on a single postage statement. The DMM standards in this

notice have been revised to make these standards clear.

Customer Support Ruling PS-283, Third-Class Destination Entry

Discounts and Fourth-Class Bulk Bound Printed Matter for PVDS, that

pertains to application of minimum quantity standards for plant

verified drop shipment (PVDS) mailings will continue to apply to the

corresponding Standard mailings under Classification Reform.

f. Marking Standards

Eighteen comments were received in response to the proposed marking

standards for First-Class and Standard Mail. Five commenters expressed

outright opposition to the additional required markings. Three

commenters suggested the Postal Service consider a transition period to

allow time for mailer system and mailpiece design changes to

accommodate the proposed marking standards. One of these commenters

requested a one-year transition period to allow his company to deplete

their envelope stock bearing current markings. One commenter asked

whether the Postal Service would produce precanceled stamps bearing the

proposed markings and asked whether it would accept stamps with current

markings. One of these commenters questioned the need for the markings

since they have no impact on improving deliverability of mailpieces.

One commenter indicated that 5 to 7 address lines would be needed

for the markings plus a barcode, and that this means their address

windows will have to be enlarged to accommodate the extra address

lines. Another commenter similarly indicated he would have space

problems with their addresses if an optional endorsement line had to be

added. Two commenters indicated they had cleaned their address blocks

to appear more personalized and had eliminated all but the carrier

route endorsement line and the Address Correction Service information

line. These commenters were concerned the proposed markings would

detract from the appearance of their mailings and thereby reduce the

response rate to these pieces.

Several commenters pointed out problems that separate markings for

separate mailings would pose for their operations. Four MLOCR users

indicated that they cannot mark the mail before processing it, and that

the ability to apply the marking with an ink jet is not currently

available. They also stated that since their mailings consist of

various size pieces it would be hard to spray on a marking in a

consistent place. They further indicated that they could not apply

markings representing individual presort rates. One of these mailers

stated that in a letter sorter environment postage is applied to the

pieces prior to sorting them, and therefore correct markings could be

applied only if an optional endorsement line was used (requiring an

enormous amount of programming time) or if some mail was run through

the postage meter process a second time. Five commenters stated that

because their Retail Mail (renamed Presorted First-Class) will come

from Automation mail that was not delivery point barcoded, a standard

to separately mark this mail as Retail Mail (now Presorted First-Class)

would be a problem in itself and would also lead to postage payment

problems. One of these commenters stated the same marking and postage

problems will be encountered if some of the uncoded mail must be

entered at the First-Class single-piece rates.

One commenter requested use of a generic ``Presort'' marking for

all mailings. Two commenters requested that Retail Mail be allowed to

bear an Automation marking, and two commenters suggested Automation

mail be permitted to use the Retail marking. Two commenters indicated

there would be no efficient way to delete old markings and add new

markings to mailpieces. Another commenter indicated that the proposed

endorsements would cause a problem in his mailing operations in which

separately sorted mailings that each bear preprinted markings on an

insert appearing through a window are merged together using barcode

sorters to boost presort qualification levels. The merged final mailing

would therefore not be able to show an individual rate qualification

level marking. One commenter stated that one of the exhibits in the

proposed rule appeared to require destination entry level in the

markings and requested that the Postal Service eliminate this standard.

One commenter indicated that the standards are unclear and

requested clarification as to whether each subclass would have to bear

a separate marking. This commenter requested further information as to

which markings can appear in the indicia. Another commenter pointed out

that the proposed language in DMM P040, Exhibit 4.1b, stated that the

``Bulk Rate'' marking in permit imprints should be replaced with a

``Presort'' marking, yet the standards in proposed DMM M810.1.1 stated

that Standard Mail must be marked Standard or STD. This commenter

stated that based on proposed DMM M810.1.1 he would have expected the

permit imprint to have contained the marking ``Standard'' rather than

:``Presort.'' One commenter was confused as to where the proposed

subclass markings could be placed and suggested this standard could be

a problem unless they were allowed in the address block. One commenter

stated that the rules for optional endorsement lines and key lines need

to be standardized since the information in each of these appears to be

similar but is not consistent in content and format. One commenter

asked whether the markings in DMM P700 would be required for everyone

or just for customers who use manifest mailing systems.

One commenter wanted to know why nonprofit mailers and Periodicals

Mail did not need to meet the new marking standards.

One commenter didn't understand the need for the markings

indicating that it will provide no additional information to the Postal

Service. One commenter stated that the marking standards are the result

of shortcomings in the Postal Service In-Office Cost System (IOCS).

This commenter further stated that the Postal Service should invest in

technology to correct these shortcomings, and not require mailers to

invest in technology to fix them. One commenter indicated that the

Postal Service should use mailers' acceptance documents to gather

needed information and expressed a belief that these forms are not

analyzed and documented now. This commenter further questioned whether

the information this proposal requested would be used any more

effectively.

Markings are used to develop detailed cost information about

various categories of mail. The Postal Service In-Office Cost System

(IOCS) determines the costs attributable to each subclass and certain

rate categories. These attributable costs are used in determining

rates. The IOCS uses a sampling system. A data collector will

[[Page 10075]]

go to a randomly selected postal employee at a randomly selected time

and record the subclass, and where applicable, the rate category

information appearing on any mail that postal employee is handling at

the time of observation. The data collector will use the markings that

appear on individual mail pieces, as well as postage, piece size, and

other information to determine the subclass and any applicable rate

category of the mail being handled at the time of observation.

Accurate cost attribution depends on accurate piece markings. It is

therefore in the best interest of both mailers and the Postal Service

to have accurate costing information for subclasses and mailing and

rate categories within subclasses for ratemaking purposes.

Classification Reform offers an opportunity to implement markings that

will enable the Postal Service to more accurately determine the costs

of automation (barcoded) mailings and other mailings. Accordingly, the

Postal Service has determined that the markings applied to First-Class

and Standard mailpieces must accurately reflect the subclass and

mailing category at which the pieces are actually mailed. For mail at

any carrier route rates, a marking specifying the actual rate category

within a mailing will also be required.

The Postal Service is also sensitive to the concerns of the mailers

who commented. It recognizes that in some instances the marking

standards contained in this notice may require mailers to make changes

to their current mailing practices. In response to these concerns, the

Postal Service has made modifications to the final marking standards to

make them easier for mailers to comply with. The final standards are

described below.

In response to comments concerning needed phase-in time to use

current stocks of envelopes bearing ``Presorted First-Class'' and

``Bulk Rate'' markings, and concerns over use of precanceled stamps

that currently bear these printed markings, the Postal Service has

decided to retain use of ``Presorted First-Class'' rather than adopt

the proposed ``Presort First-Class'' for First-Class Mail; and to

retain use of ``Bulk Rate'' or ``Blk. Rt.'' as the marking for Standard

Mail (A) rather than the proposed ``Standard'' marking plus another

specific mailing marking. Use of these current class specific markings

will still allow the Postal Service to collect accurate data without

adding the extra cost to mailers of buying new envelopes, or replacing

meter slugs, or remarking mail bearing precanceled stamps with what

would have been obsolete markings. This retention of current markings

will also eliminate the confusion that would have occurred during any

transition period that would have allowed mail bearing the old markings

concurrent with mail bearing new markings. Accordingly, the Postal

Service does not plan to phase-in the marking standards.

For all First-Class and Standard Mail (A) presort rate mailings,

both a class marking and a mailing marking will be required on each

piece. For carrier route rates a class marking, mailing marking, and a

specific carrier route rate marking will be required.

For presorted First-Class mailings (both Automation and Presorted

First-Class), the class marking of either ``First-Class'' or

``Presorted First-Class'' must appear in the postage area. For

presorted Standard (A) mailings (Automation, Enhanced Carrier Route,

and Nonautomation), the class marking ``Bulk Rate'' or ``Blk. Rt.''

must appear in the postage area. The postage area is defined as the

area within the permit imprint or precanceled stamp, or below or to the

left of the meter stamp, permit imprint or precanceled stamp.

For automation First-Class, automation Regular Standard, and

automation Enhanced Carrier Route Standard mailings, the marking

``AUTO'' in all capital letters will be required on all pieces in

addition to the applicable class marking described above. In addition,

mail qualifying for a presort First-Class or Enhanced Carrier Route

Standard automation carrier route letter rate, must bear an additional

CR rate marking so that the marking will appear as ``AUTOCR'' on each

piece qualifying for those rates. The ``AUTOCR'' marking is in addition

to the applicable class marking described above. The ``AUTOCR'' marking

may appear only on pieces qualifying for an automation carrier route

rate and the ``AUTO'' marking may appear only on pieces qualifying for

a non-carrier route automation rate. The automation marking (``AUTO''

or ``AUTOCR'') may appear in the postage area or on the top line of the

address (only a barcode may appear above it). Alternatively, for MLOCR

users, the appropriate ``AUTO'' or ``AUTOCR'' marking may appear to the

left of a barcode in the lower right corner of the envelope, or to the

left of a date applied by the MLOCR in the postage payment area.

For nonautomation Presorted First-Class mailings the marking

``Presorted First-Class'' will be required in the postage area. This

serves as the marking for both the class of mail and type of mailing.

As indicated above, mail entered at the Presorted First-Class rates

will not be permitted to also bear an ``AUTO'' or ``AUTOCR'' marking.

Mail entered at single-piece First-Class rates must bear only the

``First-Class'' marking, no marking, or under certain conditions, the

``Presorted First-Class'' marking. Single-piece rate mail may bear the

``Presorted First-Class'' marking only if additional postage is affixed

to each piece to bring the total postage affixed to each piece up to

the correct single-piece rate (based on the weight of the piece). For

mailers using precanceled stamps or permit imprints, the additional

postage affixed to single-piece rate mail could be in the form of

either stamps or a meter imprint. The addition of postage to single-

piece rate mail marked ``Presorted First-Class'' will allow IOCS data

collectors to determine that the piece was mailed at a single-piece

First-Class rate.

For presorted nonautomation Regular Standard mailings, the ``Bulk

Rate'' or ``Blk. Rt.'' marking will be required in the postage area.

This serves as the marking for both the class of mail and type of

mailing. For nonautomation Enhanced Carrier Route Standard Mail, each

piece must bear the marking ``ECRLOT'', ``ECRWSH'', or ``ECRWSS'' that

is appropriate for the rate paid (basic, high density, or saturation)

for the piece in addition to the ``Bulk Rate'' or ``Blk. Rt.'' class of

mail marking. The Enhanced Carrier Route markings may appear either in

the postage area or on the top line of the address. Mail entered at

single-piece Standard rates must bear the marking ``Standard'', or

under certain conditions, the ``Bulk Rate'' or ``Blk. Rt.'' marking.

Single-Piece Standard Mail may bear the ``Bulk Rate'' or ``Blk. Rt.''

marking only if additional postage is affixed to each piece to bring

the total postage affixed to each piece up to the correct single-piece

rate (based on the weight of the piece). For mailers using precanceled

stamps or permit imprints, the additional postage could be in the form

of either stamps or a meter. The addition of postage to single-piece

rate mail marked ``Bulk Rate'' or ``Blk. Rt.'' will allow IOCS data

collectors to determine that the piece was mailed at a single-piece

Standard rate.

These marking standards will allow use of current meter slugs,

permit imprints, and precanceled stamps that bear the ``Presorted

First-Class'' and ``Bulk Rate'' or ``Blk. Rt.'' markings. For mailers

who electronically presort mail, any additional mailing and carrier

route rate markings can be applied on the top line of the address.

For MLOCR users, including those preparing mail under value added

refund (VAR) provisions, it is

[[Page 10076]]

recognized that some changes to their operations may be needed to

comply with these marking standards. However, these mailers should be

able to comply with these standards provided they can spray the

appropriate ``AUTO'' or ``AUTOCR'' marking on mailpieces at the time a

delivery point barcode is applied. The ``AUTO'' or ``AUTOCR'' marking

would have to be suppressed any time a 5-digit barcode or no barcode is

applied. Since pieces in both the automation First-Class mailing and

the Presorted First-Class mailing will be allowed to bear the marking

``Presorted First-Class'' in the postage area, this will allow mail not

coded to delivery point being to be submitted as a properly marked

Presorted First-Class mailing, provided all other standards for that

type of mailing are met, including a separate 500 piece minimum

quantity standard. Similarly the provision for both an automation

Enhanced Carrier Route mailing and a nonautomation Regular mailing to

bear the marking ``Bulk Rate'' or ``Blk. Rt.'' in the postage area, and

the ability to apply the appropriate ``AUTO'' or ``AUTOCR'' marking at

the time the barcode is applied will allow mail not coded to delivery

point to be submitted as a properly marked nonautomation Regular

mailing. The provision allowing the ``AUTO'' and ``AUTOCR'' marking to

be printed to the left of the barcode in the lower right corner of the

mailpiece, or in the postage area to the left of a date applied by the

MLOCR, should make the ``AUTO'' or ``AUTOCR'' markings easier to apply

for these mailers. In response to the commenter that indicated ink jet

capability has not yet been developed, it should be pointed out that

MLOCR users may currently use ink jet to spray a new mailing date and

the correct ZIP Code for the mailpiece, and that many mailers are using

these options already. The Postal Service does not believe that it

would be onerous to adapt these existing systems to apply the ``AUTO''

or ``AUTOCR'' markings.

First-Class, Regular Standard and Enhanced Carrier Route Standard

mailers opposed to placing markings in the top line of the address will

either need to modify their address labels or address inserts and

windows, or to place the applicable mailing and carrier route rate

markings in the postage area.

Nonprofit Standard and Preferred Periodicals mailers are not

affected by these new marking standards because these subclasses were

not part of this Classification Reform effort. Cost data for

Periodicals Mail is determined by the publication number that must

appear in each copy. Accordingly, new marking standards will not be

applied to Regular Periodicals under Classification Reform.

g. Postage Payment

Five commenters had concerns about postage payment issues. Four of

these commenters had concerns about the treatment of mail that would

not qualify as part of an Automation mailing and would, as a result,

become part of a Retail (Presorted First-Class) mailing. These

commenters requested that Retail (Presorted First-Class) mail left over

after preparing Automation mailings be permitted to bear postage at the

Automation rates rather than the Retail (Presorted First-Class) rates,

and that any difference between the postage affixed and the actual rate

of postage owed for these mailings be paid by means of a meter strip

affixed to the mailing statement or through an advance deposit account.

This would simplify their mailing operations and prevent them from

having to remeter mail entered at Retail (Presorted First-Class) rates.

Generally mailers affix postage to mail prior to sorting it. Most of

these commenters indicated that they use MLOCRs to prepare the mail and

indicated that they would not know whether a piece could be barcoded

and entered as part of an Automation mailing until after it was sorted.

These commenters indicated that the proposed standards to separately

mark and pay postage at the appropriate Retail (Presorted First-Class)

rates for their nondelivery point barcoded mail would require them to

run the mail through a second metering operation after it was sorted,

adding cost and time to their operations. One of these commenters also

requested that single-piece rate mail that could not be made part of

either an Automation mailing or a Retail (Presorted First-Class)

mailing also be allowed to pay the difference in postage between the

rate affixed and the single-piece rate through a meter strip or an

advance deposit account.

The rules for payment of postage under Classification Reform will

differ by method of postage payment as they do today. For mailings paid

by permit imprint, all pieces in a mailing must be of identical weight

(unless manifesting or an optional or alternative procedure has been

authorized by a rates & classification service center). Presort

mailings containing more than one rate category must be verifiable

either based on weight (because the pieces are of identical weight and

the mailer separates the trays or sacks by rate category at the time of

verification), or based on the submission of standardized documentation

showing the number of pieces in each rate category. As indicated under

the marking section, if any pieces remain that are subject to single-

piece rates, each such piece must have postage affixed at the correct

single-piece rate, or the pieces must be submitted as a separate

single-piece rate permit imprint mailing bearing the proper rate

markings for single-piece rate mail and meeting a separate minimum

quantity standard for a permit imprint mailing.

For metered mailings, postage must be metered on each piece at

either the exact rate of postage for the mailpiece, or at the lowest

rate applicable to any piece in the mailing, unless the mailer is

authorized by a rates and classification service center to mail under

an alternative program such as value added. An exception is provided by

this final rule for mailing jobs. When a mailing job consists of two

(First-Class) or two to three (Standard) mailing categories, and all

the mailings in the mailing job are presented for verification at the

same time, mailers may apply postage at the lowest rate applicable to

any piece in the mailing job to all pieces in the mailing job. For

First-Class metered mailings, each piece weighing more than 1-ounce

must bear the correct amount of additional postage to pay for the

additional ounces.

Metered mailings containing more than one rate category must be

verifiable either based on weight (because the pieces are of identical

weight and the mailer separates the trays or sacks by rate category at

the time of verification), or based on the submission of standardized

documentation showing the number of pieces in each rate category.

Presort mailings of nonidentical-weight pieces must (and mailings of

identical weight may) be accompanied by standardized documentation that

shows the number of pieces in the applicable rate categories and the

total postage owed for the mailing. Any difference between the amount

of postage affixed to the piece and the amount of postage owed for the

presort mailing may be paid by means of a meter strip affixed to the

postage statement or through a trust fund account. If any pieces remain

that are subject to single-piece rates, each such piece must have

postage affixed at the correct single-piece rate.

For mailing jobs metered at the lowest rate in the job and having

all mailings submitted on one postage statement, the individual

mailings in a job of identical-weight pieces may also be verified by

weighing as described above. Nonidentical-weight mailing jobs must (and

identical weight mailings may) be accompanied by documentation that

[[Page 10077]]

shows the pieces and postage at each rate category by mailing with a

summary for the job. Any difference between the total amount of postage

affixed to each piece and the amount of postage owed for the total of

all the presort mailings for the job may be paid by means of a meter

strip affixed to the postage statement or through a single debit to an

advance deposit account. If any pieces remain that are subject to

single-piece rates, each such piece must have postage affixed at the

correct single-piece rate.

For precanceled stamp mailings, each piece must bear either a

Postal Service precanceled stamp or stamps precanceled with a mailer's

postmark. Mailers must be able to document (either by the weighing

method or standardized documentation as described for meters) the

difference between the price paid for the stamp affixed and the amount

of postage owed for the presort mailing. The additional postage owed

for the presort mailing and any single-piece rate pieces must be paid

in the same manner as described for metered mailings. The provisions

for mailing jobs also apply to precanceled stamp mailings.

For value added refund mailings, the value added refund

documentation and payment procedures will be extended to the

nonautomation presorted portion of the mailing.

Mailings or jobs of any postage payment method in which cards and

letters are combined must be accompanied by standardized documentation

that substantiates that the separate minimum quantity standards for

cards and letters have been met. The documentation must also contain

separate rate columns for each card rate and for each letter rate in

the mailing or mailing job. In addition, if such combined mailings are

paid with precanceled stamps or meters, the cards must bear postage at

card rates and the letters must bear postage at the letter rates. Any

difference between postage affixed and postage owed for the presort

portion of a mailing or mailing job containing both cards and letters

may also be paid by means of a meter strip affixed to the postage

statement or through an advance deposit account. If any pieces remain

that are subject to single-piece rates, each such piece must have

postage affixed at the correct single-piece rate, or the pieces must be

submitted as a separate single-piece rate permit imprint mailing

bearing the proper rate markings for single-piece rate mail and meeting

a separate minimum quantity standard for a permit imprint mailing.

h. Minimum Per Piece Rate Breakpoints for Standard Mail (A)

Five comments were received regarding the minimum per piece rate

weight breakpoints. All five commenters requested that the same

breakpoint be used for the entire class of Standard Mail for the sake

of simplicity. Two of these commenters further indicated that they

wanted the highest weight breakpoint to apply to the entire class.

These two commenters also stated a belief that there was no reason for

the weight limits on heavy letter mail (mail weighing more than 3

ounces) that is eligible for mailing at the Automation letter rates to

be different for First-Class, Periodicals, Regular Standard, and

Nonprofit Standard Mail.

Separate rate schedules for each subclass of Standard Mail were

recommended by the PRC and approved by the Governors. The rate

schedules for the Regular, Enhanced Carrier Route, and Nonprofit

subclasses of Standard Mail (A) each separately prescribe that mailers

must pay either the minimum piece rate or the pound rates, whichever is

higher. The weight breakpoint for each subclass is mathematically

derived to determine the weight at which the pound rates become higher

than the minimum per piece rates. Accordingly, the Postal Service

cannot change the point at which the pound rates apply for individual

subclasses in this process. Once a particular weight break is exceeded,

the non-letter size piece and pound rates apply. The Postal Service

does set the weight limits for eligibility for automation First-Class

or Periodicals letter rates based on operational and administrative

criteria. In the interest of simplicity, the Postal Service has

determined to allow First-Class and Periodicals letter mail that meets

the higher Standard Mail weight breakpoint to be eligible for barcoded

letter rates provided that such mail meets all other standards for that

rate. This affords as many mailers as possible the highest weight cut-

off for Automation letter rates.

i. Acceptance Procedures for Presort Errors

One commenter requested information as to what would happen if one

of his machines missorted one piece of mail. This commenter gave an

example of a situation where on the second pass of an MLOCR, a piece

destined to a 3-digit bin might mistakenly be sorted by the machine to

another bin. The commenter indicated that the machine would not report

that piece at the 3-digit automation rate, but indicated that this

piece might be subsequently found and placed in a mixed AADC tray

because it would be difficult to find the proper 3-digit tray. The

commenter asked whether finding such a piece within a mixed AADC tray

would be considered an error, and if such errors exceeded whatever

tolerance might be established, if it would disqualify the mailing or

result in substantial penalties. The commenter requested that this type

of error be ignored for acceptance purposes since the primary 3-digit

and AADC separations would be made and correct postage would be paid on

the piece.

Currently, a First-Class barcoded mailing is permitted to contain

an unlimited amount of residual mailpieces without penalty, even if the

pieces could have been sorted to a finer extent. This is because the

residual mail is currently paid at single-piece rates. When

Classification Reform is implemented, all pieces in an Automation

mailing will receive a presort rate. Therefore it will be expected that

all pieces within such mailings be presorted to the finest extent

possible to 3-digit and AADC destinations prior to placing mail in a

mixed AADC tray. All possible 5-digit trays will not be expected

because this is an optional sortation level. Therefore, if during the

acceptance process, mail is discovered in a mixed AADC tray that could

have been sorted to a 3-digit or AADC tray in the mailing, such mail

will be considered a presort error. Because the Postal Service

recognizes that some machine or human errors can occur in the

preparation of mailings, the Postal Service allows a tolerance without

penalty for errors discovered in a mailing during acceptance. If the

errors found in the mailing exceed this tolerance, mailers will be

given the same two choices currently available: (1) to take the mailing

back, correct it, and resubmit it to the Postal Service; or (2) to pay

additional postage at the appropriate rate for the proportion of the

mailing found to be in error during the verification process. The

Postal Service does not agree with the commenter that certain types of

errors should be ignored because the mailer did not intentionally make

the error. The Postal Service expects that mailers will exercise good

machine maintenance and other quality control procedures in their

operations to ensure that such errors in sorting are minimized.

j. Destination Delivery Unit Discounts

Ten commenters had concerns over the proposed revisions in the

qualification criteria for destination delivery unit discounts for

Standard

[[Page 10078]]

Mail and Publications Service Periodicals to require that mailers take

carrier route sorted mail to the postal facility where sequencing of

the mail takes place rather than to the postal facility where the

carrier is located, in those situations where these were not the same

facility.

Seven commenters requested that the change requiring carrier route

mail to be entered at the location where the mail is sequenced should

be dropped. These mailers questioned how a small mailer is to know this

information and that it will be subject to change. Two commenters did

not disagree with the new standard but recommended that the Postal

Service develop a list of 5-digit ZIP Code facilities at which mailers

must drop Destination Delivery Unit mail. One commenter stated that

this standard only has logic for letters and possibly for automation

flats, and that applying it to non-automation flats could interfere

with well established mailing patterns for newspapers and their

shippers. This commenter requested that postmasters be given the

authority to allow mail to be dropped at the delivery office.

As pointed out by one commenter, a change in where the mail is

dropped makes sense only for letter mail. Moreover, any change in where

the mail is dropped would apply only to automation (barcoded) letter

mail that is processed at CSBCS sites. Since Publications Service was

not recommended as a separate subclass of Periodicals mail, and there

is no automation carrier route rate applicable to Regular Periodicals,

this revision will not apply to Periodicals under implementation of

Classification Reform. Mailers of Periodicals, and of Standard letters

mailed at other than automation Enhanced Carrier Route letter rates,

will continue to drop their mail at the destination where the carrier

is located since it is the carrier who sequences this mail under these

final rules. However, for automation Enhanced Carrier Route letter

mail, mailers will be required to drop their mail at the postal

facility where the mail is sequenced. This could be the facility at

which the carrier sequence barcode sorter (CSBCS) is located which will

sequence the mail, rather than the facility at which the carrier is

located. Mailers may contact the appropriate USPS district drop

shipment coordinators to determine the sites where automation Enhanced

Carrier Route letter mail must be dropped to obtain DDU discounts. The

Postal Service plans to incorporate information as to where automation

Enhanced Carrier Route mail must be dropped to obtain DDU discounts in

its AIS Drop Shipment product in the future.

k. Replacement of SDC Network With ADC Network

One comment was received in response to the Postal Service's notice

that the SDC network would be replaced by the ADC network for all mail,

effective with the implementation of Classification Reform. This

commenter asked whether we would be creating an excess of skin sacks as

a result of this since there are more ADCs than SDCs. He indicated that

today all working flat mail is placed in the same sack, and it appears

that the network change would require a separate sack for this mail for

each ADC.

The sortation rules for mail sorted to ADCs will require either a

full tray (with no overflow) or a sack meeting a prescribed minimum

quantity. Therefore there should not be an excess of skin sacks created

by this network change. Mail that cannot be placed in full letter or

flat trays, or in sacks meeting the specified minimum quantity would

continue to be merged into mixed trays or sacks with the label changed

to Mixed ADC rather than mixed states.

l. Enhanced Carrier Route Rate Eligibility for Routes With Fewer Than

Ten Stops

One commenter commended the USPS for allowing mail destined for

carrier routes that have fewer than 10 delivery stops to qualify for

the Saturation Enhanced Carrier Route rates if it meets the applicable

density and documentation standards.

m. Eligibility for Enhanced Carrier Route High Density Rates

Three comments were received in response to the Postal Service's

indication that walk sequencing rather than line-of-travel (LOT)

sequencing would be required to qualify for High Density Enhanced

Carrier Route rates. All three commenters indicated that LOT sequencing

should be permitted.

Currently, walk sequence is required to obtain these rates, and

that standard has been retained in the applicable DMCS provisions

recommended by the PRC and accepted by the Governors.

n. Density Standards for Saturation Enhanced Carrier Route Mail

One commenter requested an explanation as to why in proposed DMM

sections E632.1.7b and c, multiple pieces for a single delivery address

are not allowed to count toward meeting the Saturation Enhanced Carrier

Route qualification criteria, but are permitted to count toward meeting

the 125-pieces per route standard for High Density Enhanced Carrier

Route rates. This commenter asked whether this excludes multiple

dwelling units such as apartments or trailer parks. He requested

clarification of this rule and also a modification to make this rule

consistent for qualification for both rates.

The proposed DMM sections E632.1.7b and c do not reflect a change

from current standards but merely carry forward the current standards

in DMM E334.1.6d. To meet the saturation criteria, the Postal Service

requires delivery of a mailpiece to at least 90% of the active

residential addresses or at least 75% of the total number of active

possible delivery addresses for each carrier route claiming these

rates, whereas for High Density rates it requires only a total of 125

sequenced pieces per route. A delivery address for purposes of meeting

the Saturation standards could be individual apartments in an apartment

complex or highrise or individual trailers in a trailer park. This

standard for saturation rates does not preclude mailers from mailing

more than one piece to a specific delivery address, it only specifies

that the specific delivery address to which a piece or pieces are

delivered can count only once towards meeting the applicable percentage

of active possible delivery addresses per carrier route.

o. Placement of All Packages or Pieces for the Entry SCF in 3-Digit or

Finer Trays or Sacks

Eleven comments were received in response to the Postal Service's

proposal to require that all mail for the 3-digit ZIP Codes served by

the SCF of the entry post office be trayed or sacked to a 3-digit or

finer level of sortation. This proposed standard could have resulted in

the preparation of less-than-full 3-digit trays and sacks for the 3-

digit ZIP Codes served by the SCF of the entry post office where full

3-digit or finer trays or sacks for these destinations could not be

prepared. This standard was added to avoid having small quantities of

local mail being transported from the local office to an ADC or AADC

where it would undergo processing and transportation back to the SCF at

which it was entered. The avoidance of this loop would result in better

service and an expanded opportunity for mail to qualify for destination

SCF rates.

Four commenters indicated that this standard should be changed from

required to optional because it would be impossible for many drop

shipment mailers to comply with it. These

[[Page 10079]]

commenters pointed out that at many mail preparation facilities,

mailings are presorted and produced first and decisions as to

destination entry drop points made second after the mailer is able to

determine the total volume of mail it has produced on a given day for

certain drop shipment destinations. Because the presort is performed

prior to determining drop entry points, requiring 3-digit sortation

based on the SCF service area of the facility at which the mail is

dropped would require these mailers either to resort the mail by drop

ship sites or, to manually remove this mail from ADC, AADC, mixed ADC

and mixed AADC trays or sacks and make manual corrections to mailing

documentation. Six commenters indicated that these less-than-full 3-

digit trays should be eligible for the applicable 3-digit or 3/5 rate

rather than a basic rate. One commenter believed that a standard for

separate 3-digit trays was overkill and requested the ability to

prepare an SCF tray for this mail with separator cards. This would

prevent mailers from having to prepare 10 separate less-than-full 3-

digit trays for SCF areas such as White River Junction, VT, which

serves 10 different 3-digit ZIP Code areas. One commenter opposed this

standard, indicating that consistency in mail preparation transcends

the minimal benefit derived from this proposal.

In response to the comments by drop shipment mailers, the Postal

Service is revising the final DMM language to require preparation of

these less-than-full 3-digit trays or sacks only for the 3-digit ZIP

Codes served by the SCF of the post office where the mail is verified.

These trays or sacks would be optional for other entry points. The

Postal Service would also like to point out that because tray label

destinations for mixed AADC trays and mixed ADC trays and sacks of mail

will differ depending on the location of where the mail is dropped,

plant verified drop shipment mailers will be expected to make

appropriate tray label changes for any mixed AADC trays or mixed ADC

trays and sacks that are drop shipped to other than the facility where

the mail is verified.

The Postal Service does not want to reinstitute preparation of SCF

trays. Therefore the Postal Service is retaining the standard that,

after preparation of any applicable carrier route and 5-digit trays or

sacks, and all 3-digit trays or sacks meeting the applicable minimum

quantity standards, any mail (for automation and upgradable letters) or

any 5-digit and 3-digit packages (for other sortations) remaining for

the 3-digit ZIP Code or ZIP Codes served by the post office where the

mail is verified, must be prepared in separate 3-digit sacks or trays.

The only exception is that for automation letter mailings, preparation

of 3-digit scheme trays would be required where scheme sorts are

indicated in DMM L003. The Postal Service recognizes that in some SCF

areas like White River Junction, VT, which serves 10 different 3-digit

ZIP Code areas, this could result in as many as 10 separate less-than-

full trays or sacks for mailings at other than automation letter rates.

(For automation rate letters, only 3 separate scheme trays would be

required for this mail, assuming there were pieces in the mailing for

each of these schemes.) However, as stated above, the Postal Service

does not wish to reinstitute preparation of SCF packages, trays, or

sacks. The Postal Service is also retaining its position that when the

pieces in these entry or origin 3-digit (3-digit scheme for automation

rate letters) trays or sacks do not meet applicable minimum quantity

standards for 3-digit or 3/5 rates, the pieces must be paid at basic

rates.

p. Presort Accuracy Validation and Evaluation (PAVE)

The Postal Service proposed to require use of PAVE-certified

software or standardized documentation when preparing mailings under

any of the reformed subclasses. Four commenters responded to this

proposal. One commenter indicated that PAVE should not be required for

mail acceptance, rather there should be only a requirement for

standardized documentation. One commenter indicated that he is waiting

for further information. This commenter recommended that the

verification process for all changes and new proposals be incorporated

into the standardized documentation standards in order to eliminate

redundant documentation and streamline acceptance. One commenter

indicated that his company has invested in sophisticated documentation

software and needs the standardized documentation requirements in order

to make necessary programming changes. One commenter indicated that the

Postal Service needs to establish timely and reasonable procedures for

mailers to have their documentation certified as standard. One

commenter sent in a sample of current documentation to determine

whether it met the standardized documentation requirements.

The Postal Service has retained the standard for mailers to use

either PAVE-certified software or to use standardized documentation.

The standardized documentation requirements are included in this final

rule. Mailers who use standardized documentation need not also meet the

PAVE-certified software standard although its use is strongly

recommended. Mailers using PAVE-certified software can be assured that

their documentation will meet the standardized documentation

requirement. The standardized documentation specified in this final

rule does not incorporate all the new eligibility and mail preparation

standards of Classification Reform as requested by one commenter. The

standardized documentation is used to show that the presort criteria

have been met and that rates were properly claimed on the postage

statement. Certification of addressing standards, move update standards

for First-Class Mail, certification that enclosed reply pieces in

automation rate mailings are prepared with proper barcodes and FIMs,

etc. cannot properly be captured by standardized documentation and will

be certified through separate use of a Form 3553, the postage

statement, or other means. Consolidation of all these certification

standards may be considered in the future but is not part of these

final implementing rules.

The Postal Service plans to have PAVE testing available for

affected presort categories prior to implementation of Classification

Reform. PAVE test files will be available to software vendors on March

22 for First-Class and Regular Standard letters and flats categories,

and on March 29 for Enhanced Carrier Route Standard categories. This

will provide sufficient time for the Postal Service to evaluate

returned test files and certify participants prior to implementation of

Classification Reform. Vendors whose files fail as a result of an

initial evaluation will also have time for retesting and reevaluation

for certification prior to the July 1 implementation date. Test files

for Regular Periodicals will not be available until early summer as a

result of the significant changes made to the quality and preparation

standards in this category from those published in the proposed rule.

Accordingly, the standard for use of PAVE certified software or

standardized documentation for Regular Periodicals will not be required

until January 1, 1997.

Mailers are advised that PAVE certification does not remove the

requirement to submit documentation with each mailing where

documentation is required. This is because PAVE tests the ability of a

software program to sort addresses properly, but does not test the

[[Page 10080]]

mailer's proper use of it or the application of proper mailing

parameters to each mailing. Use of PAVE-certified software will assure

that the documentation produced meets the requirements for standardized

documentation. PAVE also tests the ability to prepare properly

formatted postage statement facsimiles. Software that is developed in-

house by mailers may be PAVE-certified. Requests for PAVE certification

information and tests should be directed to:

Pave Program, National Customer Support Center, US Postal Service,

6060 Primacy Pky Ste 101, Memphis TN 38188-0001

A list of PAVE certified products, by vendor, will be available on

RIBBS, the Postal Service Rapid Information Bulletin Board System, and

from the above address.

q. Perceived Restriction on the Mailability of Postcards as Bills

One commenter pointed out that the proposed Domestic Mail

Classification Schedule language in section 232.2 indicated that

mailpieces having certain characteristics such as punched holes,

vertical tearing guides, an address portion which is smaller than the

remainder of the card and numbers or letters unrelated to postal

purposes appearing in the address portion of the card, are not mailable

as a postal card or postcard unless the mailpieces are prepared as

prescribed by the Postal Service. This commenter believed that these

standards were new restrictions and was concerned that the Postal

Service included neither descriptions of ``face'' and ``holes, tearing

guides'' in the proposed DMM language in the proposed rule, nor

preparations ``prescribed by the Postal Service'' in order for mailers

to maintain mailability for such pieces. The commenter believed that

this meant that the Postal Service was seeking to prohibit such pieces

from being mailed and expressed concern about the impact this would

have on mailers of postcard bills.

DMCS section 232.2 does not set forth new restrictions on

postcards. This section carries forward the provisions of current DMCS

section 100.043. The related DMM preparation standards for this DMCS

provision are in current DMM C100.2.6 through 2.8. The Postal Service

did not propose any changes to DMM C100.2.6 through 2.8, except that

DMM C100.2.8 was revised to reflect the changes in the names of the

classes and subclasses of mail proposed in MC95-1 and to reflect the

proposed change to prepare this mail in trays rather than sacks. The

reason current DMM C100.26 and 2.7 were not included in the proposed

rule is because no changes were proposed for those existing sections.

The asterisks that appeared between revised DMM C100.2.1 and revised

DMM C100.2.8 meant that no changes were made to current rules that

appeared between these two sections in the DMM. Accordingly, the

current DMM provisions in C100.2.6 and 2.7 allowing postcards having

the characteristics described in DMCS section 232.2, to be mailed at

card rates if they are prepared under the provisions of DMM C100.2.8

will remain in effect. The commenter is also advised that the

additional preparation standards in C100.2.8 for pieces having the

aforementioned physical characteristics are for the purposes of

maintaining eligibility for card rates. Pieces having punched holes,

vertical tearing guides, an address portion smaller than the remainder

of the card, and numbers or letters unrelated to postal purposes

appearing in the address portion of the card, that are described in DMM

C100.2.6 and 2.7, and that do not meet the additional standards in DMM

C100.2.8, are still mailable but must pay postage at the letter rates

rather than the card rates.

2. Automation Mailings

a. 100% Barcoding

Nineteen commenters responded to the Postal Service proposal that

mailings at the proposed automation First-Class and automation Standard

Mail subclasses be comprised of 100% delivery point barcoded pieces for

letters and 100% ZIP+4 barcoded or delivery point barcoded pieces for

flats. Although an automation subclass was not recommended by the PRC,

the Postal Service reviewed these comments in light of its desire to

retain the 100% barcoding standard for automation mailings in the

First-Class Letters and Parcels subclass, automation mailings in the

Regular Standard Mail subclass, and automation mailings in the Enhanced

Carrier Route Standard Mail subclass. Furthermore, the Postal Service

plans to extend the 100% barcoding standard to automation (barcoded

rate) mailings within the Regular Periodicals subclass. Comments on

this extension to automation mailings of Regular Periodicals will be

permitted as discussed above.

Two commenters supported this standard, one of which indicated that

there is no need to phase in this standard because there is another

subclass at which to mail noncoded pieces. Another commenter requested

that implementation of this standard be delayed.

Four commenters requested a gradual increase in the percentage of

barcoded pieces needed to qualify, two of which suggested moving the

standard first to 90% and then to 95%, and one which wanted a 2-year

phase-in period. One commenter suggested that the standard be changed

to 95%, and another suggested that the Postal Service provide some

tolerance. One commenter asked whether there will be any error

tolerance for occurrences such as labels falling off, address

misprints, or a barcode spraying over two envelopes.

Two commenters requested the rules be changed to allow nonbarcoded

letter mail to be placed in the same trays as delivery point barcoded

mail, one suggesting separation of barcoded and nonbarcoded mail in all

trays, and one suggesting this practice be limited to AADC and mixed

AADC trays. Three other commenters indicated that splitting their mail

lists into two separate mailstreams, one with delivery point barcodes

and one without, will increase their mail preparation expenses. One of

these indicated it could result in more nonpresorted mail and another

commenter indicated that this standard would eliminate large volumes of

easier to process mail. Another commenter stated that together with the

150-piece minimum for rate qualification, the 100% barcoding standard

will result in a net increase in postage for many mailers, which in

turn could lead to a decrease in the volume of barcoded and presorted

mail. This commenter further stated that because postage for

nonbarcoded mail will increase total postage, the 100% barcoding

standard could result in a decrease of business for mail service

companies.

As indicated in the comment section of the December 22, 1995,

proposed rule, when mailers, as is currently permitted, mix delivery

point barcoded mail and non-delivery point barcoded mail within 3-digit

and residual portions of their barcoded rate mailings, the non-delivery

point barcoded mail is rejected from barcode sorters and must be rerun

on MLOCRs or multiposition letter sorting machines (MPLSMs). (Mail

presorted to 5-digit packages and trays must currently be 100% delivery

point barcoded.) Requiring mailers to prepare a separate mailing for

non-delivery point barcoded mail eliminates these extra handlings and

allows this mail to be directed properly from the start, resulting in

more efficient Postal Service processing. These efficiencies are

recognized in the lower automation rates recommended by the PRC and

approved by the Governors. Accordingly, the Postal Service does not

[[Page 10081]]

believe that phasing in or delaying this standard is appropriate. In

return for lower automation rates, mailers will have to perform the

additional work of separating nondelivery point barcoded mail (letters)

and non-ZIP+4 or delivery point barcoded mail (flats) from barcoded

mail, and presenting it as a separate Presorted First-Class,

nonautomation Regular Standard, nonautomation Enhanced Carrier Route

Mailing, or nonautomation Regular Periodicals mailing.

The Postal Service does not understand how this standard will

eliminate large volumes of easier to process mail or how it will lead

to a decrease in the volume of barcoded and presorted mail as some

commenters suggested. The nonautomation mailing rates approved by the

Governors are higher than current nonautomation rates, and much higher

than the automation rates to be implemented. For example, the rate

difference between an automation First-Class mailing and a Presorted

First-Class mailing is 3.4 cents-per-piece at basic automation rates

and 4.1 cents-per-piece for 3-digit automation rates. There is a 7.3

cents-per-piece difference between automation Regular Standard basic

rates and nonautomation Standard Regular basic rates, and a 3.4 cents-

per-piece difference between automation Regular Standard 3-digit rates

and nonautomation 3/5 Regular Standard rates. Based on these

incentives, the Postal Service believes most mailers will try to

qualify as much mail as possible for the lower automation rates,

thereby leading to an increase in barcoded mail.

One commenter took exception to a Postal Service response to a

comment indicating that if the 100% barcoding standard results in more

nonbarcoded mail presented for OCR processing at the origin post

office, the Postal Service believes that it has the operational

capacity to process this mail. The commenter stated that mailers have

been told for years that nonqualified residual must be presented early

in the night because operating units aren't able to handle this volume.

This commenter maintains that the 100% barcoding standard will result

in larger volumes of nonbarcoded mail and that this in turn will affect

the cut-off times that are now around 9:00 p.m. for acceptance of this

mail.

As indicated above, the Postal Service does not believe that the

100% barcoding standard will result in larger volumes of nonbarcoded

mail. When mailers separate out the current 15% of their nonbarcoded

mail that is currently permitted within barcoded rate mailings and

submit it as a separate mailing, they are not increasing the total

amount of nonbarcoded mail that must be processed by the Postal

Service. Furthermore, these mailers are likely to submit the non-

delivery point barcoded pieces as either a Presorted First-Class or

nonautomation Regular Standard mailing. These presorted nonautomation

rate mailings will contain 5-digit, 3-digit, and ADC trays (AADC trays

for upgradable mail) that can be dispatched directly to the appropriate

facility and thereby bypass individual piece processing at the entry

SCF. For automation Regular Standard mail, mixed AADC trays will be

directed to concentration centers, and nonautomation mixed ADC trays

will be directed to origin ADC for processing, also bypassing

processing at the entry SCF (unless the entry SCF happens to be the

concentration center or ADC). First-Class Mail received at the entry

post office in mixed AADC or mixed ADC trays will be processed at the

entry SCF. However, the processing of this mail will be more efficient

than the current processing of residual mail. Current residual mail

contains a mix of barcoded and nonbarcoded pieces. Under Classification

Reform, mixed AADC trays of automation rate mail will be 100% barcoded

and can be directed to an outgoing primary barcode sorter, mixed AADC

trays of upgradable nonbarcoded mail can be directed to an MLOCR

operation, and mixed ADC trays of nonupgradable mail can be directed to

the appropriate mechanized or manual operation. Furthermore, because

the SCF of the entry post office will not also have to process on OCRs

the current volume of mailer-prepared pieces without delivery point

barcodes that are rejected from that plant's barcode sorters, there

should be an offsetting lessening of mail volume presented to a plant's

OCRs for processing. If, despite all these offsetting factors, a higher

quantity of nonbarcoded single piece or mixed AADC barcoded mail is

experienced at a particular postal facility, the Postal Service can

make internal adjustments to handle that mail. Accordingly, the Postal

Service reiterates its belief that it has the operational capacity to

process this mail.

Two comments were received regarding the exception set forth in the

proposed rule to allow outgoing courtesy reply mail envelopes bearing a

FIM and a preapplied unique 5-digit or unique ZIP+4 barcode to be

considered to have a proper delivery point barcode as opposed to an 11-

digit delivery point barcode required for all other mail. The Postal

Service allowed this because this mail can be easily identified at

acceptance by the presence of the FIM. One commenter indicated that he

was pleased to see this provision and the other commenter noted that

this exception was missing from the DMM standards and requested it be

added to the DMM. Since the incidence of courtesy reply mail within the

outgoing barcoded mailstream should be small, and limited to MLOCR

users, this exception will be handled as an acceptance issue and will

not be included in DMM standards.

One commenter indicated that the 100% barcoding standards should

also apply to Nonprofit Standard Mail and to Periodicals mail. The 100%

barcoding standards have been added to Periodicals Automation mailings.

Nonprofit Standard and Preferred Periodicals mail is not part of this

phase of Classification Reform and therefore will not be affected by

this standard at this time. As indicated above, this standard is being

applied to automation Regular Periodical mail under the final rule.

One commenter suggested that the Postal Service cannot barcode all

addresses and that mailers therefore should not be held to this

standard. This commenter also believed that there are addresses in the

United States that have not been assigned ZIP+4 codes. One commenter

indicated the ZIP+4 database has errors and suggested that the Postal

Service match the DSF file against the ZIP+4 file, using CASS-certified

software, to list all noncoded addresses, and further list good

addresses that are not matched to the finest level to determine why

this might happen. Another commenter expressed concern that valid

addresses might not be coded due to data problems or strict software

standards, and invalid addresses might appear valid because incorrect

ZIP+4 codes are assigned. One commenter requested that the standard be

changed from 100% to between 95% and 97% to account for new addresses

and 911 conversions that are not in the database.

There are no addresses for which the Postal Service is unable to

assign a ZIP+4 code. For legal and privacy reasons, the Postal Service

cannot disclose mailing lists. The ZIP+4 files contain ranges of ZIP

Codes and are not intended as a product that would allow a mailer to

determine whether an address on a mailpiece actually exists. Mailers

with good quality addresses can obtain delivery point barcodes on their

mailpieces. If they cannot, those pieces can be mailed at the

appropriate rates for nonbarcoded mailings. Having

[[Page 10082]]

identified a need for accurate barcodes to ensure proper automation

sortation, the Postal Service tests and certifies address matching

software to ensure that it is producing correct barcodes. Because only

correct barcodes are acceptable, software is controlled to help ensure

that an incomplete or otherwise poor quality address receives a barcode

only if it is correct. The Governors approved reduced postage rates for

mail with correct barcodes. Those rates were not designed to apply to

nonbarcoded mail or to mail with incorrect barcodes. Use of bad

barcodes causes misdirected mailpieces. This in turn causes increased

costs and reduces the Postal Service's ability to provide timely,

consistent delivery service. To aid mailers with barcoding, the Postal

Service already has a variety of tools to assist in improving address

quality. If a mailer using CASS- or MASS-certified software cannot

apply a correct delivery point barcode or, for flats a correct ZIP+4

barcode, to mailpieces, the mailer should, and will be required to,

mail those pieces at the Presorted First-Class, presorted nonautomation

Regular Standard, nonautomation Regular Periodicals, or single-piece

rates, whichever is applicable.

b. Courtesy and BRM Barcoded Envelopes

Thirteen commenters responded to the proposed standard that,

effective January 1, 1997, letter-size courtesy and business reply

envelopes and cards included in letter-size an flat-size automation

First-Class or automation Standard mailings must be automation-

compatible, bear a FIM, and bear a correct barcode for the address to

which the piece is returned. Three commenters requested a more liberal

phase-in period for this standard, one specifying a minimum of 1 year,

to allow mailers to exhaust their existing stock of reply mail letters

and cards. Four commenters indicated that they do not support this

standard, three of which stated that they object to the standard

because enclosed reply mail has no connection with the cost of

processing the outgoing mailpiece. One of those commenters further

stated that the cost of processing reply mail should be borne by the

reply mail.

Several commenters had concerns over the certification standard and

enforcement of this standard. One commenter stated that this will add

costs to his mailing operation by requiring someone to proof every

reply piece prior to insertion. Two commenters requested a further

explanation of the certification standards and indicated most

lettershops are not involved with the creation and postal approval of

courtesy and business reply envelopes. Two commenters stated tracking

down the producer of the business reply piece will be difficult. One

commenter stated that the Postal Service's contention that a mailer

capable of printing a barcode on an outgoing piece should be able to

prepare properly barcoded reply pieces has no bearing on this standard

because some mailers do not print the reply pieces, only the host

pieces. Three commenters indicated that liability for noncompliance

should be the owner of the mail, not the preparer or presenter. One

commenter stated the Postal Service needs to clarify the actions that

will be taken for noncompliance. One commenter stated that enforcement

seems unattainable and that this standard could renew a call for a

public automation rate. One commenter assumed that an improperly

prepared reply piece discovered at acceptance would downgrade the

entire mailing to a higher rate of postage and stated that such a

penalty is draconian and a dangerous precedent that could drive postal

customers away from using return mailpieces rather than encourage their

use.

The Postal Service is adopting its proposal that letter-size reply

envelopes and cards that are included within both letter-size and flat-

size mailpieces entered as automation First-Class, automation Regular

Standard and automation Enhanced Carrier Route Standard mailings, must

be automation-compatible, bear a FIM, and a correct barcode for the

reply address. In addition, the Postal Service is extending this

requirement to automation mailings of Regular Periodicals. Comments on

this extension to Regular Periodicals will be permitted as discussed

above.

In addition to the customer convenience of a reply vehicle,

increasing the use of barcoded reply vehicles is expected to keep

postage rates down by making this mail more efficient to process. The

Postal Service recognizes that mailers will need to work with their

customers and possibly modify their contracts with advertisers and

others to ensure that this standard is met. To allow time for this and

for utilization of existing reply mail stock, the Postal Service is

setting an implementation date of January 1, 1997, for this standard.

The Postal Service does not believe a longer delay of this standard is

warranted. At that time, automation First-Class, automation Regular

Standard, automation Regular Enhanced Carrier Route, and automation

Regular Periodicals mailers will be required to certify that enclosed

reply pieces are properly prepared when the mailing is presented to the

post office. Mailers will certify this by checking a box on the postage

statement and signing the statement. For this purpose, the mailer is

whomever presents the mail to the post office. As indicated above, it

will be up to mailers to work with their customers and advertisers to

ensure that reply pieces provided to mailers comply with the standards

for barcoded reply pieces. Upon implementation, if mailers cannot

certify that this standard has been met, or noncomplying reply pieces

are found within the outgoing mailing, the mailing may not be mailed at

the automation rates and must pay the higher nonautomation rates.

Several commenters had questions concerning the standards for

proper preparation of reply mail. Two commenters had concerns over the

proposed standard for a delivery point barcode on all pieces. One

pointed out that business reply mail is required to use a ZIP+4 barcode

and that most courtesy envelope mail uses a unique ZIP+4 barcode. This

commenter indicated that requiring an 11-digit delivery point barcode

will require many mailers to make expensive form design changes to

accommodate the larger barcode without any benefit to the Postal

Service. The other commenter pointed out that there is a discrepancy

between the Postal Service's apparent willingness to accept courtesy

reply mail bearing unique 5-digit and ZIP+4 barcodes as properly

barcoded outgoing pieces for purposes of meeting the 100% barcoded

standard for automation rates, and its unwillingness to accept them on

courtesy reply pieces contained within such mailings. One commenter

questioned whether the standards for barcode preparation in DMM C840

would also be required as this section was not referenced in the

appropriate E module sections of the proposed DMM language. This

commenter was concerned that, if the reflectance standards contained in

C840 will be required, that the envelope industry may not be able to

meet them. This commenter also stated that because most reply envelopes

are printed with a flexographic process, 100% of the barcodes cannot be

guaranteed to meet the automation standards as this process does not

produce results as consistent as laser, inkjet, and impact printing.

One commenter, for environmental reasons, requested that the Postal

Service work to modify the reflectance tolerance levels in DMM C840 for

the area around the barcode, to improve the capability of its barcode

readers to read nonpolymer

[[Page 10083]]

window envelope coverings, and to relax its flexibility standards in

order to accommodate recycled paper. Another commenter requested that a

reference to DMM C840 be included in the DMM standards for enclosed

courtesy reply mail because this is the section that provides for

barcodes in the address block. One commenter requested the ability to

put barcodes in the address area for business reply mail. Another

commenter believed that the Postal Service had committed to allow the

barcode, permit holder, and permit number to appear on inserts through

a window on business reply mail in early 1996 and thanked us for this

effort.

The DMM standards concerning courtesy reply mail can be found in

DMM E140.1.5, E241.1.2, E641.1.2, and C810.8. The Postal Service has

determined that, for purposes of enclosed courtesy reply mail under

this section, a unique 5-digit or unique-ZIP+4 barcode provided by the

Postal Service will satisfy the delivery point barcode standards. This

will make these rules consistent with the acceptance provisions for

allowing outgoing courtesy reply mail prepared in this manner to count

toward the 100% delivery point barcoding standards for letter-size

automation rates. The Postal Service will require that barcodes on

enclosed reply mail meet the barcode, reflectance, and window standards

in DMM C840. The Postal Service recognizes that some recycled paper

will not meet the reflectance standards. However, recycled paper that

meets the Postal Service reflectance standards is available. Because

the reflectance standards reflect the current capabilities of USPS

barcode reader equipment they cannot be modified. Originators of reply

mail pieces will be expected to make the necessary changes to the

preparation of these pieces to ensure that they meet all the applicable

DMM standards. Although the Postal Service has not begun a formal

rulemaking process to allow BRM format elements such as the name of the

permit holder and the permit number to appear through a window on BRM

pieces, it will consider this for a future rulemaking.

The Postal Service will provide, free of charge, camera-ready

positives of appropriate FIMs and correct barcodes for the production

of reply mail. Mailers should contact their local Postal Service

account representative or postal business center to obtain the

positives and additional information on preparation standards.

Obtaining the correct barcode for mailpieces is extremely important.

The Postal Service assigns ZIP+4 barcodes to BRMAS reply pieces.

Publication 353, Designing Reply Mail, contains information on

correctly preparing barcoded courtesy reply mail and business reply

mail. Additional information on business reply mail and barcode

standards is contained in the Domestic Mail Manual. These publications

contain information on how to prepare barcodes that appear in the

address block of reply pieces and those that appear through an address

window.

c. Barcoded Tray and Sack Labels

Nineteen comments were received concerning the proposal to require

that automation First-Class and Standard Mail, and automation-

compatible Publications Service Periodicals be prepared with barcoded

tray or sack labels. The proposed Publications Service subclass of

periodicals was not recommended to the Governors by the Postal Rate

Commission. Instead revised rates for Regular Periodicals were

recommended and these changes to Periodicals have been accepted by the

Governors. The Postal Service is applying the requirement for barcoded

tray and sack labels to all automation Regular Periodicals under these

final rules.

Eight commenters indicated that implementation of this standard

needs to be delayed in order to give mailers enough time to buy

equipment and/or adapt their systems. Two of these commenters indicated

that at least 6 months was needed and another indicated that the date

should be much later than July 1, 1996. One commenter indicated that he

must replace dot matrix printers with ink jet, thermal or laser

printers. One commenter indicated that this standard should be dropped

as it will require him to stock labels for every 3-digit ZIP Code

because he will no longer be able to handwrite labels for destinations

that are seldom used. He indicated that this will cause him either

enormous storage problems or require him to purchase either an outside

vendor's system of special printers and unprinted labels. One commenter

simply stated that his operation is not set up to handle barcoded

labels at this time.

Six commenters indicated that the barcode specifications in the DMM

cannot be met by most mailers and are not met by the Postal Service's

own label printing facility. Problem areas mentioned included the point

size, characters per inch, and size of the labels. These commenters

also pointed out that these DMM standards are not met by the PASSPORT

and Monarch printers system indicated to be a way to meet these

standards in the proposed rule. One commenter indicated that the DMM

M032 exhibit needs to include the appropriate CINs for tray and sack

labels under Classification Reform.

Three commenters were concerned about the Postal Service's ability

to supply the total demand for these labels in a timely manner. One

commenter stated that the Postal Service needs to design better tray

label holders that will hold the label in place.

The Postal Service has investigated the barcode label

specifications in the DMM in relation to these comments. As a result,

some changes to the barcode tray and sack label specifications in DMM

M032 have been made and are published in this notice. Revised CINs have

also been published in the DMM section of this notice. In order to give

mailers time to incorporate these barcode specification changes into

any current systems they may have to produce labels and to give other

mailers time to buy necessary equipment and adapt their mailing systems

to incorporate barcoded tray labels, the Postal Service is delaying the

requirement to use barcoded tray and sack labels with automation rate

mailings until January 1, 1997. At that time automation First-Class,

automation Regular Standard, automation Enhanced Carrier Route, and

automation Regular Periodicals mailings must be prepared with barcoded

tray or sack labels. As indicated above, comments will be allowed on

the extension of this standard to Regular Periodicals mail.

The Postal Service currently has tray management systems that

utilize barcoded container labels deployed at its largest plants and is

aggressively deploying these systems to other plants. Barcoded tray

labels are needed to capture the efficiencies of the tray management

systems. Barcoded labels are also currently used to sort trays and

sacks of Standard mail at BMCs. Accordingly, mailers are strongly

encouraged to begin using barcoded tray labels prior to the January 1,

1997, implementation date.

Furthermore, mailers are reminded that, even though the requirement

to use barcoded tray and sacks labels with automation mailings has been

delayed, new tray and sack labels will be required for all mailings

under Classification Reform (with the exception of some sort levels of

First-Class Mail) due to the changes in postal networks, the addition

of scheme sorts, and changes to the names of the classes of mail.

As indicated in the previous notice, the Postal Service will supply

barcoded tray and sack labels. Customers must complete Form 1578-B and

submit it to their local post office, which after

[[Page 10084]]

checking the order, will forward it to the Postal Service Label

Printing Center in Topeka, Kansas. The labels will be delivered in

approximately 6 weeks of the order. These labels will reflect the

network changes and the new CINs for Classification Reform and can not

be used until July 1, 1996.

Alternatively, mailers having a personal computer and a modem can

obtain free PASSPORT software from the Postal Service that will enable

them to order labels directly from the Label Printing Center in Topeka.

In addition, the PASSPORT system will allow mailers to print barcoded

labels on demand if they use one of three printers--Monarch 9425 or

Monarch 9445, or Intermac 3000. The Passport system also includes free

updates to the Postal Service labeling lists in DMM module L. PASSPORT

software or further information about Passport may be obtained from the

National Customer Support Center at 1-800-238-3150.

The Postal Service purchased new tray labels holders last year that

hold labels more firmly in place. The Postal Service is systematically

replacing old tray label holders with the new ones.

d. ZIP Code Limits on Letter-Size Automation Carrier Route Rates

Eleven commenters responded to the proposal to limit letter-size

automation Carrier Route rates to ZIP Codes where mail will be

sequenced either manually or by a carrier sequence barcode sorter

(CSBCS). One commenter is opposed to the idea of reducing eligibility

for carrier route rates. One commenter indicated that this limit on

where letter-size automation carrier route rates can be obtained

worsens the rate qualification degradation caused by the 150-piece

standard for 5-digit and 3-digit Automation rates. This commenter

indicated that he will mail at the Enhanced Carrier Route nonautomation

letter rates rather than try to qualify mail for the 5-digit barcoded

rate.

As indicated in previous notices, the limits on availability of

automation Carrier Route letter rates are necessary for efficient

Postal Service processing. For an increasing number of 5-digit ZIP Code

areas, the Postal Service sorts mail to delivery point sequence (DPS),

the sequence in which carriers deliver the mail, using two passes on

delivery barcode sorters (DBCSs). Where this takes place, the carrier

does not have to sort this mail manually into delivery or walk

sequence, which saves carrier in-office time. At postal facilities

where DPS processing is performed, it is to the Postal Service's

advantage to have as much mail as possible DPS processed on the

automated equipment. Currently, at 5-digit ZIP Code areas for which DPS

processing on DBCSs has been implemented, all mailer-prepared carrier

route and walk-sequence presorted letter mail received with barcodes is

processed on DBCSs rather than being directed to carriers for manual

sequencing. Carrier route and walk-sequence sorted letter mail without

barcodes is directed to MLOCRs for application of barcodes and

subsequent DPS processing. In many cases today, this process results in

the Postal Service backflowing mail from a delivery unit to the place

where the DBCS or MLOCR is located. Thus, there is no additional value

provided to the Postal Service by mailer presortation to carrier route

or walk-sequence versus a 5-digit presortation for automation-

compatible letter mail at destinating DBCS sites.

Carrier route rates are based in part on steps avoided by the

Postal Service during processing. The preparation of carrier route

packages and trays of barcoded mail addressed to ZIP Code areas at

which mail is DPS processed on DBCSs does not avoid processing steps.

The Postal Service will not give reduced rates for mail preparation

that provides the Postal Service no value. Automation Carrier Route

rates will therefore not be provided to barcoded carrier route mail at

those 5-digit ZIP Code areas where DPS sequencing on DBCSs takes place.

Carrier sequence barcode sorters (CSBCSs) are smaller barcode

sorting machines that also sequence mail to delivery point. However,

mail must already be sorted to the carrier route level before it can be

processed on a CSBCS. Therefore it will still make sense for the Postal

Service to offer carrier route rates for barcoded mail that it sorts on

CSBCSs and for mail on carrier routes that are sequenced manually.

The Postal Service is aware that this limit on automation Carrier

Route rates will reduce the number of pieces a mailer can qualify for

automation carrier route rates. It will be up to each mailer to make

the decision whether the level of discount is worth the expense of

preparing their particular mail for automation rates. The issue

concerning the 150-piece minimum for 5-digit and 3-digit automation

letter rates is further discussed under a separate section on 150-piece

standards.

Seven commenters indicated that the list of ZIP Codes ineligible

for automation Carrier Route rates should be available on RIBBS on a

permanent basis and that small mailers should not have to subscribe to

the City/State file as this is an unnecessary and costly burden.

The Postal Service sees no advantage and only possible confusion in

providing a list of ZIP Codes where letter-size automation Carrier

Route rates may be obtained. The argument that small mailers should not

have to subscribe to the City/State file because this is an unnecessary

and costly burden is not a good one. To qualify for automation Carrier

Route rates, mailers will be required to match their addresses using

CASS-certified software to a current CRIS file or other AIS product

containing carrier route codes within 90 days prior to the date of

mailing. The City/State File is automatically provided with all Address

Information System (AIS) products and must always be used in

conjunction with these AIS products for accurate matching. Accordingly,

obtaining information as to which are the permissible ZIP Codes for

automation Carrier Routes rates can be done at the same time as

addresses are matched to the applicable CRIS, ZIP+4 or other AIS

product that contains carrier route codes. In addition, some presort

software vendors are including a City/State file match as part of the

presort program. Accordingly, the Postal Service does not believe that

use of the City/State file for determining the 5-digit ZIP Code areas

for which automation Carrier Route rates can be obtained will be an

unnecessary or costly burden to mailers. Furthermore, because software

processing using the City/State file and an appropriate database

containing carrier route information is already required for these

mailings, the Postal Service does not believe that publication of the

lists on RIBBS would be beneficial.

Two commenters indicated that the Postal Service should provide an

equipment deployment schedule to mailers that would give mailers

sufficient lead time and would also provide the Postal Service a tool

to make sure that the schedule is followed.

The Postal Service does not plan to publish an equipment deployment

schedule. Knowing when and where equipment is scheduled to be shipped

to a plant will not provide mailers with the information that they are

seeking. Knowing to which location and when a piece of equipment will

be shipped does not equate to having a list of ZIP Codes that will be

processed on that equipment. The 5-digit ZIP Codes that will be

processed on this equipment are determined locally. ZIP Codes being

processed on DBCSs may be shifted to processing on CSBCSs as these

machines are deployed. This in turn will provide the capacity for

additional ZIP Codes to be processed on DBCSs.

[[Page 10085]]

Because procedures will be in place to update the City/State file

on an established bimonthly basis, as to which 5-digit ZIP Codes may

obtain the automation Carrier Route letter rates, and because mailers

can easily incorporate this information in their mailings approximately

every 90 days in connection with the required address matching

standard, the Postal Service does not deem it appropriate to publicly

provide its equipment deployment plans.

e. 5-Digit Scheme Sortation for Automation Letters

Seven commenters responded to the information provided in the

proposed rule that the Postal Service will not provide 5-digit scheme

sortation for letters at the time Classification Reform is implemented.

All seven commenters would like the Postal Service to do so. One

argument for this action is to avoid the need to install a separate and

costly software release to implement it at a later date. Three of these

commenters indicated that having scheme sortation would enable mailers

to qualify more mail for 5-digit automation rates. Two commenters

indicated 5-digit scheme sort would reduce costs for both mailers and

the Postal Service. Two commenters indicated that the volatility of 5-

digit schemes should be no different than the update of the ZIP Codes

eligible for letter automation Carrier Route rates and suggested a

workgroup be formed to discuss obstacles. One commenter similarly

stated that it seems that there are systems in place to handle

volatility of scheme issues.

The Postal Service recognizes that 5-digit scheme sortation will

allow mailers to qualify more mail for 5-digit automation letter rates,

and agrees that it is in the best interest of mailers and the Postal

Service to provide these schemes when practical. As indicated in

comments on automation Carrier Route rates, the Postal Service is

actively deploying CSBCS and DBCS equipment. ZIP Codes being processed

on DBCSs may be shifted to processing on CSBCSs as these machines are

deployed. This in turn will provide the capacity for additional ZIP

Codes to be processed on DBCSs. This volatility will result in frequent

changes to 5-digit schemes being used within local plants in the near

future. Therefore 5-digit scheme sorts will not be implemented at this

time. Given this, the Postal Service does not believe that it would

benefit from forming a workgroup to discuss these matters.

f. 3-Digit Scheme Sort for Letters

Eleven comments were received in response to the provisions for a

3-digit scheme sort for automation letters set forth in the Proposed

rule. All 10 commenters interpreted proposed section DMM M810.1.7 as

requiring all possible 3-digit sorts to be prepared before performing

3-digit scheme sorts and all disagreed with it. One of these commenters

indicated that requiring 3-digit sorts prior to scheme sort would drive

an unacceptable amount of mail into the residual mailstream, both

decreasing mailer discounts and increasing the amount of raw mail

processed by USPS receiving units. Several commenters pointed out that

this information conflicted with the information presented in the

discussion of comments that scheme sorts could be prepared prior to

preparing 3-digit sortations. One commenter asked that we reword the

obvious error in DMM M810.1.7. One commenter stated that if the Postal

Service does require preparation of 3-digit trays prior to preparing 3-

digit scheme trays, that this is contrary to what was agreed to at the

Implementation Advisory Group meetings and also defeats the purpose of

scheme sort by not allowing mailers to merge small quantities of some

scheme 3-digit areas with larger quantities of others in order to meet

a single 150-piece minimum quantity standard for the 3-digit scheme.

The Postal Service acknowledges that the wording of proposed

section DMM M810.1.7 was misleading. This section was intended to give

greater flexibility to mailers and not intended to require that 3-digit

sorts would have had to been prepared prior to preparing 3-digit scheme

sorts. The Postal Service agrees with mailers that this would be

counterproductive, and notes the comment indicating that elimination of

3-digit scheme sort would increase the amount of mail falling into

basic rate levels of sortation.

The Postal Service has re-reviewed comments opposed to requiring

scheme sort that were received in response to the August 30 notice.

Reasons for opposition were either not given (other than to say it

would be a barrier to automation) or were based on desires not to

change current software programs or to be able to use the same software

sortation program for both automation and nonautomation mail. As

pointed out to these mailers in the comments section of the proposed

rule, mailers will be required to change their software because of

major changes under Classification Reform in the way mail is sorted,

including different sortation rules for automation mail and

nonautomation mail.

Accordingly, the Postal Service has revised the DMM language in

this final rule to require use of 3-digit scheme sort. A separate

labeling list in DMM L003 contains the information needed to sort to 3-

digit schemes and to sort non-scheme 3-digit ZIP Codes to direct 3-

digit trays. This will simplify sortation rules to avoid confusion such

as that encountered with the Proposed rule, and also, as pointed out by

a commenter, ensure that mail is sorted to the finest extent possible.

This will also ensure that mailers will qualify the most mail possible

for 3-digit Automation rates.

g. 5-Digit Scheme Sortation for Automation Flats

One commenter indicated a desire for implementation of a 5-digit

scheme sort for automation flats. Five-digit scheme sortation for

automation flats is not foreseeable in the near future. The Postal

Service will look at the feasibility of such sortation after it has

implemented 3-digit scheme sortation for automation flats.

h. 3-Digit Scheme Sort for Flats

Four comments were received concerning provisions for a 3-digit

scheme sort for automation flat mailings. All four expressed a desire

that these schemes be available on the date of implementation because

it will benefit both the Postal Service and mailers. One commenter also

pointed out that it would prevent the cost of installing another

software change if this was implemented on the same date as

Classification Reform.

The Postal Service believes that a 3-digit scheme list for flats is

feasible and has begun work on developing such a sortation scheme.

However, work will not be completed in time to make this available with

Classification Reform implementation. The 3-digit scheme sort for flats

should be available in 1997.

i. Value Added Mailings

Nine comments were received concerning the Postal Service's

proposal to include only pieces with postage affixed at an automation

First-Class or automation Standard Mail rate in mailings presented

under the value added refund (VAR) procedures in DMM P014.4. All nine

commenters strongly disagreed with this proposal and stated that the

original intent of value added refund procedures was to encourage the

upgrading of Presorted First-Class Mail to barcoded mail. Two

commenters pointed out that this was never offered for discussion with

[[Page 10086]]

members of the Implementation Advisory Group. One commenter indicated

that this will reduce the volume of barcoded mail received by the

Postal Service. One commenter indicated that this standard increases

the postage risk of presort bureaus because the bureaus will be

required to affix 5-cent postage to each nonbarcoded piece rather than

2-cents, and it is unlikely the difference could be recovered from the

mailer. One commenter indicated that no mailer would be able to remeter

all the pieces that did not qualify for barcoded rates. Two commenters

indicated that not all pieces coming into their shop will enter into

the automation mailstream. One of these further indicated that this

will cause problems for mailers when doing a handsort on nonautomation

mail.

In response to mailer comments, the Postal Service has determined

to continue to allow mail having postage affixed at the Presorted

First-Class rate or presorted nonautomation Regular Standard rates, to

continue to be mailed under the value added refund program.

j. Optimizing 5-Digit Sortation for Automation Letters

One commenter asked whether mailers would be able to continue to

optimize 5-digit sortation of Automation letters by moving some but not

all pieces able to be sorted to 5-digit trays to 3-digit or 3-digit

scheme trays to bring the total number of pieces sorted to the 3-digit/

scheme destination to the minimum of 150 pieces.

Because 5-digit sortation is optional for Automation mail, mailers

are not required to sort all possible pieces to the 5-digit level.

Accordingly, if a mailer has more than 150 pieces for a 5-digit ZIP

Code destination and fewer than 150 pieces for a 3-digit or 3-digit

scheme destination, mailers will be permitted to move pieces that

potentially could have been sorted to 5-digit destinations to a 3-

digit/scheme level of sortation. Each 5-digit destination would have to

be left with a minimum of 150 pieces trayed to that destination and

each 3-digit/scheme destination would also have to have a minimum of

150 pieces trayed to that destination. Furthermore, the pieces that

could have been placed in a 5-digit tray but were actually placed in a

3-digit or 3-digit scheme tray would have to be documented and reported

as qualifying for 3-digit automation rates.

k. Grouping of Pieces in AADC and Mixed AADC Trays in Automation Letter

Mailings

One commenter requested that this standard be dropped because it

would be impractical to sort mail within AADC and mixed AADC trays into

3-digit or AADC groups in his MLOCR operation. This commenter indicated

that if the MLOCR determines on the first pass that there are fewer

than 150 pieces for a particular 3-digit ZIP Code, then, on the second

pass groups with fewer than 150 pieces for a 3-digit or 3-digit scheme

will be aggregated to appropriate AADC or mixed AADC bins. Imposing the

standard for ZIP Code sortation within the AADC and mixed AADC trays

would require costly and time-consuming additional presort passes on

this mail to sort it into 3-digit sequence.

The Postal Service maintains that for mailers using presort

software, or even sorting manually, it should not be a burden to

maintain 3-digit/scheme groupings when placing mail in AADC trays or to

maintain groupings by AADC within mixed AADC trays. However, the Postal

Service acknowledges that this could be problematic for some MLOCR

users depending upon how mail is sorted to bins on the second pass. The

Postal Service is retaining this standard because it allows mailings to

be easily matched to standardized documentation during verification, or

if weigh verification is used, to determine that mail is presorted to

the finest extent possible. However, the Postal Service will waive this

standard for MLOCR users who submit standardized documentation.

In addition, the Postal Service has reviewed its need for pieces

within mixed AADC trays grouped by AADC to be further subgrouped by 3-

digit ZIP Code within each AADC group. This 3-digit subgrouping would

also be burdensome to MLOCR users sorting to AADC bins. Also,

documentation of these 3-digit subgroupings within mixed AADC trays

could potentially require a mailer to list every 3-digit ZIP Code in

the country. The Postal Service has determined that the added length to

required documentation and added sortation complexity is not outweighed

by the gains in ease of verification. Accordingly, the final

implementing DMM language will require only grouping by AADCs within

mixed AADC trays.

l. Numeric ZIP Code Standard for Automation Letter Mail

One commenter questioned the meaning of proposed DMM E241.1.1c that

required Regular Periodicals barcoded letter rate mail to ``Bear a

delivery address that includes the correct numeric ZIP+4 or 5-digit ZIP

Code (or, only if prepared with a delivery point barcode (DPBC), the

numeric equivalent to the DPBC).'' This commenter asked whether this

section meant that the entire DPBC numeric must be printed in front of

the delivery point barcode as part of the ZIP Code correction process

allowed MLOCR mailers.

This standard means only that each piece in an automation mailing

must bear a numeric ZIP Code in the address and that this ZIP Code can

be either a 5-digit, ZIP+4, or delivery point numeric ZIP Code at the

choice of the mailer, with the exception that a delivery point numeric

code is only permitted on pieces bearing a delivery point barcode.

m. Request for Elimination of Required Tray Sortation Level

One commenter wanted to begin sortation at the AADC tray level if

the cost of manual presortation was found to be higher than the savings

from sorting mail to qualify for 3/5 rates and 3- and 5-digit

automation rates.

The presort rates are based on presorting mail to the finest extent

possible, with the exception that 5-digit trays are optional for

automation rate letters and for the upgradable presort option for

nonautomation letters. Accordingly, mailers will be required to prepare

3-digit trays of automation letter mail any time there are at least 150

pieces for a 3-digit ZIP Code before preparing AADC trays. Similarly,

for upgradable Presorted First-Class and upgradable nonautomation

Regular Standard Mail preparation, 3-digit trays will be required any

time there are at least 150 pieces for a 3-digit ZIP Code prior to

preparing AADC trays. For all other mailings, preparation of all

possible 5-digit trays and 3-digit trays is required prior to preparing

ADC trays.

n. ACT Tags

Two comments were received in response to the Postal Service's

removal of the standard for mailers to apply ACT tags to trays of

automation First-Class letters. One commenter applauded the decision to

drop this standard. One commenter pointed out that current DMM

P014.4.14c requires mailers to sleeve, band, and ACT tag all trays in a

mailing for which a value added refund (VAR) request will be submitted.

The commenter requested that the Postal Service remove this standard

from the DMM.

The DMM language in this final rule removes the requirement for use

of ACT tags within VAR mailings. However, mailers participating in

other special programs such as multiple acceptance times may still be

required to prepare mail with ACT tags.

[[Page 10087]]

3. Letter Mail

a. Standard To Prepare All Letter Mail in Trays

Eight commenters responded to the Postal Service's proposal to

require preparation of all letter mail entered at reformed subclasses

in trays. Six of the comments were opposed to this standard for

Enhanced Carrier Route Standard Mail. Two were opposed to it as a

standard for any letter mail, and one was concerned about the

availability of trays.

Three commenters indicated the traying standards would result in

higher preparation costs for their mailings and loss of cube on

trailers for drop shipment. One of these commenters indicated that this

standard and others led to a net loss for his company despite the

decrease in Automation rates. Two commenters indicated that since the

attributable costs underlying the proposed Enhanced Carrier Route rates

were based on flat-sized mail, and therefore letter-size mail is paying

a higher rate, letter mailers should have the option of traying or

sacking this mail. One commenter stated that heavy letters, which are

not automation-compatible due to weight, would be more efficiently

handled in sacks since more pieces could fit into a sack than in a tray

resulting in fewer containers for the Postal Service and mailers to

handle. One commenter stated the Postal Service should be prepared to

allow optional forms of preparation such as bundles on pallets in the

event of tray shortages. Another commenter stated that Enhanced Carrier

Route letter mail should be allowed to be prepared as packages on

pallets provided such preparation is limited to 5-digit pallets. This

commenter believed this limited packages on pallets preparation would

not have a great impact on handling for the Postal Service and would

alleviate the demand for trays.

Trays are the most efficient method of containerizing letter mail

for the Postal Service. Since the Postal Service prepares letter mail

in trays, it is important that all mailer prepared letter mail be

prepared in trays. Accordingly, the DMM standards set forth in this

final rule require that all letter mail, except for Nonprofit Standard

and Preferred Periodicals, be prepared in trays. It should also be

clarified that although encouraged, it is not required that Standard or

Periodicals letters prepared in trays be palletized. Mailers will be

permitted to bedload trays of letter mail. However, if a mailer wants

to palletize Standard letter mail, it must be prepared in trays on

pallets, with one short-time exception. If, as described in the section

on flat-size mail, the letter-size piece also meets the definition of

an automation-compatible flat, and a portion of the mailing job is

mailed at the automation Regular Standard flats rate, until January 1,

1997, all the pieces in the mailing job may be prepared in packages

placed directly on pallets provided all pieces pay the applicable rates

as a flat-size piece and the amount of nonautomation Regular Standard

mail palletized in this manner does not exceed 10% of the amount of

Enhanced Carrier Route and Automation Regular Standard mail in the

mailing job. After January 1, 1997, all letter mail, other than letter

mail meeting the dimensions of an automation flat and mailed at those

rates, must be prepared in trays and preferably in trays on pallets.

The Postal Service acknowledges that trayed mail can sometimes fill

trailers more quickly than the same amount of mail prepared in sacks,

and that the number of pieces that can be placed in a trailer might

affect a mailer's decision as to whether to prepare mail for

destination entry discounts. The standard to use both 1-foot and 2-foot

trays will aid in assuring the most efficient use of trailer space

under the traying environment. As indicated in response to a previous

comment, the Postal Service recognizes that many mailers will be

affected by start-up costs for new preparation criteria and possibly

some additional ongoing costs. However, the Postal Service believes

that these preparation criteria are necessary to achieve one of the

goals of Classification Reform of encouraging mail that is most

efficient for the Postal Service to handle.

One commenter indicated that they now prepare letter mail in sacks

in which they mix letter-size and flat-size mail (this mail is a flat

only because it exceeds \1/4\-inch in thickness). This mailer indicated

that the standard to tray letters and sack flats will be a problem for

them causing their mailstream to be split four ways (barcoded vs.

nonbarcoded and trayed vs. sacked). One commenter stated if they could

not sack their letters they would like to tray their flats so their

automated handling systems could handle only one type of equipment.

Similarly, one commenter requested the ability to place automation

Standard flats in flats trays since it is not efficient to prepare both

barcoded tray labels and barcoded sack labels.

Currently, mailers are not permitted to mix mail of different mail

processing categories in the same mailing, except for limited

circumstances under which mailers may combine machinable and irregular

parcels. The standard for separate mailings for separate mail

processing categories will continue under Classification Reform.

Letters and flats are handled under two separate mail processing

streams and must not be merged together in the same mailing. Under

Classification Reform, mail exceeding \1/4\ of an inch in thickness and

classified as a flat will therefore be required to be sacked or

prepared as packages on pallets. The Postal Service also will not

permit flat mail to be prepared in letter trays due to the strong

chance this mail will be directed to letter sorting operations where

such pieces will not process on mechanized or automation letter sorting

equipment. As indicated in the last two notices, Standard flats will

not be permitted to be prepared in flats trays upon implementation of

Classification Reform. The Postal Service plans to initially limit the

use of these trays to First-Class flats to allow for a more gradual

change to a future operating environment in which all flat mail will be

prepared in trays (except for Standard Mail and Periodicals prepared as

packages on pallets). Currently, the Postal Service processes First-

Class flats in trays. Generally, flats trays are better handled at

processing and distribution center facilities and Airmail Facilities

than sacks which are more conducive to BMC processing. At processing

and distribution center facilities and at AMFs the Postal Service has

tray handling systems. When barcoded flat mail is distributed on flat

sorting machines using the barcode, there are instances were the flat

mail is dispatched in flat trays to the next handling or destination

regardless of class. Therefore, it is likely that as part of

transitioning all classes of flats mail to tray preparation, allowing

automation-compatible (barcoded) flat mail in trays would be the next

step, albeit a future step.

b. 150-Piece/Full Tray Standard

Twenty-two commenters responded to the Postal Service's proposal to

require 150 pieces per 5-digit ZIP Code or 3-digit ZIP Code destination

to qualify for 5-digit or 3-digit automation rates, and to be used as

the basis for sorting to 5-digit, 3-digit and AADC trays. Six of these

commenters also voiced concern over the standard for 150 pieces per 3-

digit ZIP Code area being the basis for rate qualification and

sortation for the 3/5-digit nonautomation Regular Standard rates.

Nine commenters cited specific examples of rate degradation in the

automation rate categories and four commenters were concerned about

rate degradation in the 3/5-digit

[[Page 10088]]

nonautomation Regular Standard rate categories. These commenters

indicated that the 150-piece minimum would cause varying percentages of

their mail to drop from 5-digit to 3-digit, or from 3-digit to basic

within the automation rates, or from 3/5-digit to basic in the

nonautomation Regular Standard rates. Most of these commenters had

concerns regarding the shift in rate qualifications based on a

comparison of the qualification criteria under the current 10-piece/50-

piece minimums to qualify for current barcoded rates or the current

125-piece/15-pound criteria to qualify for current 3/5-digit non-

automation rates and the new 150-piece qualification rules.

One commenter indicated that because the proposed automation rates

were slightly lower than current rates the rate impact might balance

out for the barcoded portion of the mailing, but that since the rates

for nonbarcoded mail were increasing, it would raise their total

postage bill. Two commenters stated that the 150-piece rule would have

a big impact on 5-digit rate qualifications, one indicating all his

current 5-digit mail will move to the 3-digit qualification level

resulting in a 3% postage increase. The other indicated that the 150-

piece standard at the 5-digit level would force many mailers into

moving their mail into the Enhanced Carrier Route subclass since they

may have many carrier routes that will meet the 10-piece package

minimum, but very few groups of 150-pieces to a particular 5-digit ZIP

Code. One commenter indicated that modeling based on the 150-piece

criteria showed that some of his third-class customers would pay higher

rates under Classification Reform even though their lists were close to

100% barcoded. One commenter indicated they will probably discontinue

preparation of 5-digit sortations in order to be able to continue

qualifying mail for the 3-digit level, and that this degradation of

presort seems counter-productive to the Postal Service.

Other commenters had further concerns over the rate implications

for mail that could physically fill trays but would not meet the 150-

piece standard. Sixteen commenters in total requested that the Postal

Service allow mailers two choices to qualify for rates, one based upon

physically full trays without regard to the number of pieces within

them, and the other the proposed 150-piece minimum. These commenters

indicated that enforcement of the 150-piece standard will cause a

tremendous hardship on the ability of mailers of thicker pieces to

discount mail. One commenter stated he thought the idea was to fill

trays. Six commenters further requested that the physically full tray

option allow full 1-foot trays to qualify for rates without regard to

number of pieces. Two commenters indicated a physically full tray

criteria for rates and sortation would promote tray usage efficiencies.

One commenter stated that the definition of a full tray should be 85%

full because this is flexible enough to allow mailers to calculate the

number of pieces needed to fill a tray and would resolve mailer

consternation over near misses such as 130 pieces filling a tray but

not being eligible for a rate. Two commenters believed the Postal

Service should perform market surveys to gather data on mail volume

characteristics to assess the impact of the 150-piece minimum on its

customers.

Some of these commenters provided statistics on the number of

pieces that would fill trays as requested by the Postal Service in the

proposed rule. One commenter indicated they had pieces for which 47 to

65 pieces would fill a 1-foot tray. Five commenters cited pieces that

would fill two-foot trays ranging from as few as 63 pieces upwards to

140 pieces per tray. One commenter pointed out that by his estimate

``heavy'' letter mail, weighing up to 3.4383, which will be permitted

to qualify for letter-size barcoded rates under Classification Reform,

would generally average 125 pieces per 2-foot tray. Another commenter

also noted the Postal Service's provisions for including ``heavy

weight'' mail in the Automation mailstream and indicated this will

``probably encourage a growing volume of such letters that fill trays

in less quantity than lighter weight mail.'' Another commenter pointed

out that allowing an option to base the qualification and sortation on

a physically full tray would allow more opportunity for larger size

pieces that meet both the letter size dimensions and the automated flat

dimensions to be prepared as a barcoded letter.

Two commenters also stated that basing the traying criteria on the

150-piece minimum could result in service degradation since much mail

now trayed to the 5-digit or 3-digit level will drop down to the AADC

level. Two other commenters indicated that this drop in sortation level

will result in more residual or mixed AADC mail to be processed by the

Postal Service at the local SCF because some mail currently placed in

AADC trays will not be able to meet the 150-piece standard and will

subsequently be trayed at the mixed AADC level. These commenters

questioned whether the Postal Service could handle this volume and

questioned whether requiring a move from an AADC tray to a mixed AADC

tray made any sense from a mail processing standpoint.

One commenter stated that basing rates on the average number of

pieces that fill a 1-foot tray makes sense only if adequate supplies of

1-foot trays are available and was concerned that if they were not and

overflow had to be placed in a 2-foot tray it would result in loss of

cube space for drop shipment purposes.

One commenter questioned whether the 150-piece rule applied to

postcards since 150 postcards equals only about 4 inches of mail.

One commenter stated his thickness varies and in many instances 150

pieces will not fit in a single tray. Another indicated that sometimes

he produces sub-150-piece count trays containing mail of varying

thicknesses under a manifesting agreement. This commenter indicated

that because he manifests he cannot arbitrarily move mail around to

fill trays. One commenter indicated that at only 125-140 pieces per

tray none of this mail would qualify and the customer would have to

revise their mailing package which could result in losing sales.

Several commenters who advocate addition of an ``or full tray''

criteria to the qualifications for First-Class and Standard Regular

Automation mail and to Standard Regular Nonautomation mail, challenged

the reasons given by the Postal Service in the Proposed rule for

keeping the standard at 150 pieces. Four commenters indicated that

having an option to base discounts on full tray should not complicate

acceptance too much since mailers are currently preparing and

documenting this mail now under tray-based rules and the Postal Service

is currently accepting it.

Five commenters responded to the Postal Service's statement that if

a physically-full tray qualification criteria were instituted, it would

be based on a physically full 2-foot tray rather than a one-foot tray.

These commenters stated this makes no sense since the Postal Service is

basing the 150-piece rule on a one-foot tray. Three of these commenters

stated this would be unfair since it would require these mailers to

make twice as many trays to achieve equal qualification levels.

One commenter stated that allowing physically full trays to qualify

without a piece limit does not make sense from a unit (per piece) cost

or gross profit standpoint in that the Postal Service would have to

transport up to six trays of thicker Standard Mail for every one tray

of First-Class Mail, and would receive less revenue for the Standard

Mail.

[[Page 10089]]

One mailer of Standard pieces indicated that it appears the 150-

piece standard was designed primarily for MLOCR barcode sorter users.

This commenter indicated that since 90% of mailers do not use barcode

sorters, this reasoning should not apply to them. One commenter simply

stated that the level playing field argument does not make sense.

Four commenters challenged the Postal Service's argument that the

150-piece minimum per 3-digit area to be applied to nonautomation

Regular Standard Mail will not keep qualification levels equivalent to

today arguing that today mail can qualify based on either 125 pieces or

15 pounds of mail. Two commenters gave examples wherein their mailings

currently require only 75 pieces or 80 pieces to meet the 15-pound

minimum. These mailers indicated that the 150-piece rule will either

double or increase by 78% the number of pieces they will need to

qualify for the 3/5 rate. These commenters also pointed out that the

dual standard of 200 pieces or 50 pounds still applies as the minimum

quantity standard for each Standard mailing.

The Postal Service believes that applying a 150-piece minimum to an

entire 3-digit area to qualify for 3/5 nonautomation Regular Standard

rates will, on average, result in comparable or better rate

qualifications when compared to current qualification criteria, even

for heavier pieces of mail. Currently, the 125-piece/15-pound sacking

rules are applied separately to 5-digit sacks and to 3-digit sacks. The

two commenters with pieces meeting the 15 pound requirement with 75 to

80 pieces of mail to an individual 5-digit or 3-digit sack, would still

be able to meet the 150-piece requirement per 3-digit area in instances

where they had an equivalent number of pieces that are now contained in

two 5-digit sacks for the same 3-digit area, or in other combinations

of 5-digit and 3-digit sacks for the same 3-digit area. Mailers who

currently qualify for this rate based on a separate 125-piece

requirement should, on average, be able to qualify more mail for 3/5

rates since the 150-piece rule applies to an entire 3-digit area and

not to individual 5-digit or 3-digit trays.

The Postal Service would like to point out to the two commenters

who were concerned that they could not qualify for automation rates

based on the 150-piece rule because they could not fit 150 pieces in a

single tray, that the Postal Service has provided for overflow trays

wherever it has established a 150-piece minimum. This means that if a

mailer has 150 pieces for a given sortation level, the mail will

qualify for the rate regardless of the number of trays it takes to tray

the mail to that sortation level. Likewise, for thinner pieces, if the

150 piece minimum for a rate level is met, the mail will qualify for

that rate even if 150 pieces does not fill a tray.

The rate design approved for automation letters provides reduced

rates for these mailings. Those rates are based in part on more

stringent preparation standards that allow more efficient Postal

Service processing of that mail. Under the Automation Standard Mail (A)

letter rates, certain mailers could experience a minor increase in

postage over what they pay today given a number of assumptions, such as

that all mail not eligible for an automation carrier route rate moves

to the 3-digit barcoded rate level, and that there are no basic

automation rate pieces in the mailing. This hypothetical postage

increase would also be offset by any pieces which the mailer now

qualifies for basic rates, because there is a significant decrease in

the basic automation rates under Classification Reform.

Overall, the Postal Service believes that the automation letter

discount levels and preparation standards will lower postage bills for

automation mailings for most mailers of all three classes. Under

current Barcoded rate mailing rules, a large portion of mail qualifying

for 5-digit and 3-digit rates is already prepared in full 2-foot trays

without packages. Because the 150-piece standard is based on a 1-foot

tray, most mailers should be able to place even more mail in full 5-

digit and 3-digit trays under this standard.

The 150-piece minimum represents an average of the average number

of First-Class pieces that can fill three-fourths of a 1-foot tray and

the average number of Standard letter-size pieces that can fill three-

fourths of a 1-f

This text is long and has been trimmed here. Open the source document for the complete record.