[Federal Register Volume 77, Number 77 (Friday, April 20, 2012)]
[Rules and Regulations]
[Pages 23618-23619]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-9534]


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POSTAL SERVICE

39 CFR Part 501


Authority To Manufacture and Distribute Postage Evidencing 
Systems

AGENCY: Postal Service<SUP>TM</SUP>.

ACTION: Final rule.

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SUMMARY: The Postal Service is adopting an editorial revision of the 
rules concerning inventory controls for Postage Evidencing Systems 
(PES). These changes are intended to clarify the rules, and reflect a 
change in the name of the office responsible for enforcing them.

DATES: This rule is effective May 21, 2012.

FOR FURTHER INFORMATION CONTACT: Marlo Kay Ivey, Business Programs 
Specialist, Payment Technology, U.S. Postal Service, at 202-268-7613.

SUPPLEMENTARY INFORMATION: On December 1, 2011, the Postal Service 
proposed an editorial revision of the rules governing the inventory 
control processes of PES provided to customers by manufacturers or 
distributors. The office formerly known as Postage Technology 
Management (PTM) is now known as Payment Technology, making it 
necessary to modify the numerous references to PTM in 39 CFR 501.14 to 
reflect the new name. In addition, the Postal Service believed it was 
appropriate to take this opportunity to make a number of minor 
editorial changes throughout Sec.  501.14 to improve its clarity. None 
of these changes was intended to modify the substantive requirements of 
the section. No comments were received concerning this proposal. 
Accordingly, the proposed revision to Sec.  501.14 is adopted without 
further changes.

List of Subjects in 39 CFR Part 501

    Administrative practice and procedure.

    Accordingly, 39 CFR part 501 is amended as follows:

PART 501--AUTHORIZATION TO MANUFACTURE AND DISTRIBUTE POSTAGE 
EVIDENCING SYSTEMS

    1. The authority citation for 39 CFR part 501 continues to read as 
follows:

    Authority:  5 U.S.C. 552(a); 39 U.S.C. 101, 401, 403, 404, 410, 
2601, 2605, Inspector General Act of 1978, as amended (Pub. L. 95-
452, as amended); 5 U.S.C. App. 3.


0
2. Section 501.14 is revised to read as follows:


Sec.  501.14  Postage Evidencing System inventory control processes.

    (a) Each authorized provider of Postage Evidencing Systems must 
permanently hold title to all Postage Evidencing Systems that it 
manufactures or distributes, except those purchased by the Postal 
Service or distributed outside the United States.
    (b) An authorized provider must maintain sufficient facilities for 
and records of the business relationship, distribution, control, 
storage, maintenance, repair, replacement, and destruction or disposal 
of all Postage Evidencing Systems and their components to enable 
accurate accounting and location thereof throughout the entire life 
cycle of each Postage Evidencing System. A complete record shall entail 
a list by serial number of all Postage Evidencing Systems manufactured 
or distributed showing all movements of each system from the time that 
it is produced until it is scrapped, and the reading of the ascending 
register each time the system is checked into or out of service. These 
records must be available for inspection by Postal Service officials at 
any time during business hours.
    (c) To ensure adequate control over Postage Evidencing Systems, 
plans for the following subjects must be submitted for prior approval, 
in writing, to the office of Payment Technology.
    (1) Service procedures for all Postage Evidencing Systems--these 
are procedures to address the process to be used for new Postage 
Evidencing Systems as well as those previously leased to another 
customer.
    (2) Transportation and storage of Postage Evidencing Systems--these 
are procedures that provide reasonable precautions to prevent use by 
unauthorized individuals. Providers must ship all postage meters by 
Postal Service Registered Mail[supreg] service unless given written 
permission by the Postal Service to use another carrier. The provider 
must demonstrate that the alternative delivery carrier employs security 
procedures equivalent to those for Registered Mail service.
    (3) Postage Evidencing System examination/inspection procedures and 
schedule--the provider is required to perform postage meter 
examinations or inspections based on an approved schedule. Failure to 
complete the postage meter examination or inspections by the due date 
may result in the Postal Service requiring the provider to disable the 
meter's resetting capability. If necessary, the Postal Service shall 
notify the customer that the postage meter is to be removed from 
service and the authorization to use a Postage Evidencing System 
revoked, following the procedures for revocation specified by 
regulation. The Postal Service shall notify the provider to remove the 
postage meter from the customer's location.
    (4) Out-of-service procedures for a nonfaulty Postage Evidencing 
System--these procedures must be used when the system is to be removed 
from service for any reason.
    (5) Postage Evidencing System repair process--any physical or 
electronic access to the internal components of a postage meter, as 
well as any access to software or security parameters, must be 
conducted within an approved facility under the provider's direct 
control and active supervision. To prevent unauthorized use, the 
provider or any third party acting on its behalf must keep secure any 
equipment or other component that can be used to open or access the 
internal, electronic, or secure components of a postage meter.
    (6) Handling procedures for faulty meters--the provider must 
maintain handling procedures for faulty meters, including those that 
are inoperable, mis-

[[Page 23619]]

registering, have unreadable registers, inaccurately reflect their 
current status, show any evidence of possible tampering or abuse, and 
those for which there is any indication that the postage meter has some 
mechanical or electrical malfunction of any critical security 
component, such as any component the improper operation of which could 
adversely affect Postal Service revenues, or of any memory component, 
or that affects the accuracy of the registers or the accuracy of the 
value printed.
    (7) Lost or stolen postage meter procedures--the provider must 
promptly report to the Postal Service the loss or theft of any postage 
meter or the recovery of any lost or stolen postage meter. Such 
notification to the Postal Service will be made by completing and 
filing a standardized lost and stolen meter incident report within 10 
calendar days of the provider's determination of a meter loss, theft, 
or recovery.
    (8) Postage meter destruction--when required, the postage meter 
must be rendered completely inoperable by the destruction process and 
associated postage; printing dies and components must be destroyed. 
Manufacturers or distributors of meters must submit the proposed 
destruction method; a schedule listing the postage meters to be 
destroyed, by serial number and model; and the proposed time and place 
of destruction to Payment Technology for approval prior to any meter 
destruction. Providers must record and retain the serial numbers of the 
meters to be destroyed and provide a list of such serial numbers in 
electronic form in accordance with Postal Service requirements for 
meter accounting and tracking systems. Providers must give sufficient 
advance notice of the destruction to allow Payment Technology to 
schedule observation by its designated representative who shall verify 
that the destruction is performed in accordance with a Postal Service-
approved method or process. To the extent that the Postal Service 
elects not to observe a particular destruction, the provider must 
submit a certification of destruction, including the serial number(s), 
to the Postal Service within 5 calendar days of destruction. These 
requirements for meter destruction apply to all postage meters, Postage 
Evidencing Systems, and postal security devices included as a component 
of a Postage Evidencing System.
    (d) If the provider uses a third party to perform functions that 
may have an impact upon a Postage Evidencing System (especially its 
security), including, but not limited to, business relationships, 
repair, maintenance, and disposal of Postage Evidencing Systems, 
Payment Technology must be advised in advance of all aspects of the 
relationship, as they relate to the custody and control of Postage 
Evidencing Systems and must specifically authorize in writing the 
proposed arrangement between the parties.
    (1) Postal Service authorization of a third-party relationship to 
perform specific functions applies only to the functions stated in the 
written authorization but may be amended to embrace additional 
functions.
    (2) No third-party relationship shall compromise the Postage 
Evidencing System, or its components, including, but not limited to, 
the hardware, software, communications, and security components, or of 
any security-related system with which it interfaces, including, but 
not limited to, the resetting system, reporting systems, and Postal 
Service support systems. The functions of the third party with respect 
to a Postage Evidencing System, its components, and the systems with 
which it interfaces are subject to the same scrutiny as the equivalent 
functions of the provider.
    (3) Any authorized third party must keep adequate facilities for 
and records of Postage Evidencing Systems and their components in 
accordance with paragraph (b) of this section. All such facilities and 
records are subject to inspection by Postal Service representatives, 
insofar as they are used to distribute, control, store, maintain, 
repair, replace, destroy, or dispose of Postage Evidencing Systems.
    (4) The provider must ensure that any party acting on its behalf in 
any of the functions described in paragraph (b) of this section 
maintains adequate facilities, records, and procedures for the security 
of the Postage Evidencing Systems. Deficiencies in the operations of a 
third party relating to the custody and control of Postage Evidencing 
Systems, unless corrected in a timely manner, can place at risk a 
provider's approval to manufacture and/or distribute Postage Evidencing 
Systems.
    (5) The Postal Service reserves the right to review all aspects of 
any relationship if it appears that the relationship poses a threat to 
Postage Evidencing System security and may require the provider to take 
appropriate corrective action. By entering into any relationship under 
this section, the provider is not relieved of any responsibility to the 
Postal Service, and such must be stated in any memorialization of the 
relationship.

Stanley F. Mires,
Attorney, Legal Policy & Legislative Advice.
[FR Doc. 2012-9534 Filed 4-19-12; 8:45 am]
BILLING CODE 7710-12-P