# Classification Reform; Implementation Standards

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URL: https://www.frixlaw.com/law-library/documents/fr%3A96-5500

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** March 12, 1996
- **Citation:** 61 FR 10068

## Text

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 pos

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A96-5500. Public record. Not legal advice.