Federal Register / Vol. 62, No. 60 / Friday, March 28, 1997 / Proposed Rules 14833

PART 4—SCHEDULE FOR RATING

DISABILITIES

Subpart B—Disability Ratings

1. The authority citation for part 4

continues to read as follows:

Authority: 38 U.S.C. 1155.

2. Section 4.104 is amended by

revising diagnostic code 7122 and

adding a new authority citation at the

end of the section, to read as follows:

§ 4.104 Schedule of ratings—

cardiovascular system.

* * * * *

Rating

7122 Cold injury, residuals of:

With pain, numbness, cold sensitivity, or arthralgia plus two or

more of the following: Tissue

loss, nail abnormalities, color

changes, locally impaired sensation, hyperhidrosis, X-ray abnormalities (osteoporosis, subarticular punched out lesions, or

osteoarthritis) of affected parts .. 30

With pain, numbness, cold sensitivity, or arthralgia plus tissue

loss, nail abnormalities, color

changes, locally impaired sensation, hyperhidrosis, or X-ray abnormalities (osteoporosis, subarticular punched out lesions, or

osteoarthritis) of affected parts .. 20

With pain, numbness, cold sensitivity, or arthralgia .................... 10

Note (1): Amputations of fingers or toes,

and complications such as squamous cell

carcinoma at the site of a cold injury scar or

peripheral neuropathy should be separately

evaluated under other diagnostic codes.

Note (2): Evaluate each affected part (hand,

foot, ear, nose) separately and combine the

ratings, if appropriate, in accordance with 38

CFR 4.25.

* * * * *

(Authority: 38 U.S.C. 1155)

[FR Doc. 97–7833 Filed 3–27–97; 8:45 am]

BILLING CODE 8320–01–P

POSTAL SERVICE

39 CFR Parts 111 and 502

Manufacture, Distribution, and Use of

Postal Security Devices and

Information Based Indicia

AGENCY: Postal Service.

ACTION: Proposed rule.

SUMMARY: This proposal would add new

sections to the Domestic Mail Manual

(DMM) and title 39, Code of Federal

Regulations (CFR), to reflect policies

and regulations pertaining to the

Information Based Indicia Program

(IBIP). The proposal supports the IBIP

technical specifications published on

July 2, 1996, in the Federal Register (61

FR 34460). The standards and

regulations for the products/devices are

in some ways similar to those for

postage meters but are to be contained

in separate parts of the DMM and the

CFR. The DMM pertains to customer

requirements and product/service

provider support of those customers,

whereas the CFR contains requirements

such as authorization to manufacture

and distribute, product testing and

approval, security standards, and

financial arrangements.

DATES: Comments must be received on

or before April 28, 1997.

ADDRESSES: Written comments should

be mailed or delivered to the Manager,

Retail Systems and Equipment, Room

8430, 475 L’Enfant Plaza SW,

Washington, DC 20260–6807. Copies of

all written comments will be available

at the above address for inspection and

photocopying between 9 a.m. and 4

p.m., Monday through Friday.

FOR FURTHER INFORMATION CONTACT:

Nicholas S. Stankosky, (202) 268–5311.

SUPPLEMENTARY INFORMATION: The

Information Based Indicia Program

(IBIP) involves the development of new

technology to produce forms of postage

evidencing through the use of twodimensional barcodes and

cryptographic services to produce

postage from personal computers. This

technology will support Postal Service

efforts to reduce fraud and the potential

for misuse associated with current

mechanical postage meters. In addition,

IBIP provides a convenient access to

postage and an opportunity for customer

defined ‘‘value added’’ services.

There are five primary elements to

IBIP. The indicia includes:

• Town circle information.

• Postage amount applied.

• Device identifier.

• 2 dimensional bar code.

• Optional advertising art.

The postal security device (PSD)

performs core security functions such as

digital signature generation and

verification and the management of

registers. The host system controls the

customers infrastructure in device

authorization, device audit, postage

resetting and, together with the PSD,

produces the indicia.

The key management component

employs a public-key certificate based

digital signature that features a data

integrity service and provides the means

to validate the indicium. Finally, the

product/service provider infrastructure

provides support for all IBIP functions

including licensing, PSD production

and life cycle support, and provides an

interface with both the customer and the

Postal Service infrastructure. The Postal

Service interface involves the issuance

of licenses, updating licensee

information, product/device inventory

and tracking, resetting support and

account reconciliation, lost and stolen/

irregularity monitoring, and the

assignment of digital certificates.

In this proposal, the Postal Service

has taken into consideration and

evaluated applicable comments received

as a result of the July 2 Federal Register

notice, the July 19 public meeting on

technical specifications, and the

September 25 public meeting on policy

and regulations. The following is a

summary of the Postal Service’s position

on the general interest IBIP policy

issues:

• Any proposed product or device

must be submitted for approval under

proposed draft IBIP interim product

submission procedures (Jan 8, 1997

Federal Register). These procedures

include specifics on letters of intent,

nondisclosure agreements, the product/

service provider’s concept of operations

and infrastructure, documentation

requirements, product submissions, and

most testing activities.

• In an attempt to use the existing

Postal Service infrastructure as much as

possible, customer licensing and

product/device tracking will be

included in the Centralized Meter

Licensing System currently under

development. A license must be

obtained prior to the initialization or

use of a device. A customer already

licensed to use postage meters will not

have to apply again for an additional

license. The Postal Service will simply

update the customer’s file.

• The terms ‘‘manufacturer’’ and

‘‘vendor’’ are no longer referenced in

IBIP. These have been replaced by the

more appropriate term ‘‘product/service

provider’’, also known simply as

‘‘Provider.’’

• The PSD must be leased by the

product/service provider but customers

may purchase the software under two

circumstances. The first is in an open

system where the PSD operates

independently of the software. The

second is in a closed system where the

meter is rendered nonfunctional for

printing postage without the PSD. The

Postal Service will not offer PSDs to

customers.

• Until the Postal Service has

captured historical data on reliability

and security, the total amount of postage

in a descending register will be limited

to $500. Ascending registers must show

all postage printed over time.
14834 Federal Register / Vol. 62, No. 60 / Friday, March 28, 1997 / Proposed Rules

• Authorized product/service

providers must keep records of the

distribution, control, and maintenance

of all products/devices throughout the

complete lifecycle of the product. This

includes tracking of newly

manufactured PSDs, active leased PSDs

and inactive unleased PSDs. Tracking of

a PSD must begin as soon as the PSD is

initialized with the key.

• Indicia produced from the IBIP

Open and Closed Systems may be used

to indicate postage for First-Class,

Express and Standard Mail classes.

Indicia produced from the IBIP Closed

System also may be used on

International Mail. Mail bearing the

indicia is entitled to all privileges and

subject to all conditions applying to the

various classes of mail.

• Product/service providers are

responsible for audit functions. The

Postal Service will not take over this

function but may at times participate in

the audit process. PSDs must be audited

at least once every 3 months in

conjunction with remote settings and

resetting of the watch-dog timer.

• Product/service providers must

perform an analysis of each submitted

customer mailpiece as part of the

Provider’s Mailpiece Quality Assurance

program to ensure the quality and

readability of the indicia. The provider

must notify the customer and the Postal

Service of any deficiencies.

• All postage downloads or settings

will be made under the provisions of the

Computerized Remote Meter Resetting

System (CMRS). The Postal Service will

conduct periodic audits of a product/

service provider’s resetting system to

ensure that the system is operating

correctly and that postal revenues are

protected.

• Physical inspections of PSDs will

be made at the time of submission for

approval and if there is suspicion of a

security problem.

• The Postal Service will provide

refunds for any balance remaining on a

PSD. The licensee will be required to

submit a written refund request to the

Provider, along with the affected PSD

and supporting documentation such as

an electronic daily activity report.

• All approved systems must have the

capability to update postage rates

efficiently when such changes are

announced.

• There are provisions in the IBIP

regulations for the correction of postage

and dates. These are similar to those

used for metered postage. For date

correction, the facing identification

mark (FIM) and barcode will be

suppressed; for postage correction, the

FIM will be suppressed.

• Cautionary labels such as those

affixed to postage meters will not be

affixed to PSDs. However, providers

should make their customers aware of

this information through their supplied

software.

List of Subjects in 39 CFR Part 111

Administrative practice and

procedure, Postal Service.

Although exempt from the notice and

comment requirements of the

Administrative Procedure Act (5 U.S.C.

553 (b), (c)) regarding proposed

rulemaking by 39 U.S.C. 410(a), the

Postal Service invites public comments

on the following proposed amendments

to the Domestic Mail Manual,

incorporated by reference in the Code of

Federal Regulations. See 39 CFR part

111.

PART 111—[AMENDED]

1. The authority citation for 39 CFR

part 111 continues to read as follows:

Authority: 5 U.S.C. 552(a); 39 U.S.C. 101,

401, 403, 404, 3001–3011, 3201–3219, 3403–

3406, 3621, 3626, 5001.

2. Add the following sections to the

Domestic Mail Manual as set forth

below:

P050 Information Based Indicia

1.0 BASIC INFORMATION

1.1 Description of Product/Device

The Product/Device prints an

authorized USPS Information Based

Indicia that shows evidence of postage.

The indicia consists of a USPSapproved two-dimensional barcode and

certain human-readable information

such as city and state, 5-digit ZIP Code

of licensing post office, Device ID

number, date, and amount of postage.

The Product/Device includes as a

primary component a postal security

device (PSD) that provides critical

functionality for accounting postage

with a computer-based (open system) or

postage meter-based (closed system)

host system. The PSD and host system

interact to generate the indicia. The

Product/Device is remotely set and

requires the customer to have funds on

deposit with the USPS before initial

setting or resetting.

1.2 Product/Service Device Providers

The Product/Device is available only

through a lease agreement from a USPS

authorized Product/Service Provider

(hereafter referred to as Provider). The

open host system is envisioned to

operate on personal computers. The

licensee can purchase the software if the

PSD component operates independently

of the software. For a closed system, the

customer can purchase the software if it

is rendered nonfunctional for printing

postage without the PSD. The USPS

holds Providers responsible for the life

cycle, control, operation, maintenance,

and replacement of their Products/

Devices.

1.3 Possession

A customer must have a USPS-issued

Product/Device Postage Meter License

(Form 3601–B) to use the PSD

component.

1.4 Classes of Mail

Indicia produced from the IBIP Open

and Closed System may be used to

indicate postage for First-Class, Express

and Standard Mail classes.

Additionally, indicia produced from the

IBIP Closed System may be used for

International mail. Mail bearing the

indicia is entitled to all privileges and

subject to all conditions applying to the

various classes of mail.

1.5 Amount of Postage

The value of the Product/Device

indicia affixed to each mailpiece must

be the exact amount due for the piece

when mailed.

1.6 Additional Postage

An indicia showing additional

postage may be placed on a shortpaid

mailpiece under 4.9, Postage Correction.

2.0 LICENSE

2.1 Procedures

The application and the license are

processed through the Centralized Meter

Licensing System (CMLS). An applicant

wanting to lease and use a Product/

Device must provide all applicable data

on the Form 3601–A, Application for a

License to Lease and Use Postage

Meters, to the Provider. The application

must state the post office where the

applicant intends to deposit mail

produced using their Product/Device.

The Provider electronically transmits

the information requested on Form

3601–A to CMLS in the USPS-specified

format. When a Provider transmits the

application on behalf of the applicant,

the USPS notifies the Provider when a

license is issued. A single license covers

all Products/Devices to the same

applicant by the same post office, but a

separate application must be submitted

for each post office where the applicant

wants to deposit Product/Device mail.

There is no fee for the application and

license. After approving an application,

the USPS issues a Postage Meter License

(Form 3601–B). Subsequently, for each

Product/Device checked into service, a

Form 3602–A, Record of Register

Readings, or equivalent will be
Federal Register / Vol. 62, No. 60 / Friday, March 28, 1997 / Proposed Rules 14835

provided. The licensee must maintain

daily register readings by using a

system-generated daily activity report or

by completing Form 3602–A to support

refund requests. A customer will not

have to apply for a license to use a

Product/Device if the customer already

possesses a valid postage meter license.

2.2 Refusal to Issue Product/Device

License

The USPS may refuse to issue a

Product/Device license for the following

reasons: The applicant submitted false

or fictitious information on the license

application; the applicant violated any

standard for the care or use of a

Product/Device or postage meter that

resulted in the revocation of that

applicant’s Product/Device license

within 5 years preceding submission of

the application; or there is sufficient

reason to believe that the Product/

Device is to be used in violation of the

applicable standards. The USPS sends

the licensee written notice when an

application for a license to lease and use

a Product/Device is refused. The USPS

notifies the Provider if the license is

refused. Any applicant refused a license

may appeal the decision under 2.4.

2.3 Revocation of License

The USPS sends written notice to the

licensee and the licensee’s Provider of

any revocation. Revocation takes effect

10 days after receipt unless, within that

time, the licensee appeals the decision

under 2.4. A license is subject to

revocation for any of the following

reasons:

a. A Product/Device is used for any

illegal scheme or enterprise or there is

probable cause to believe that the

Product/Device is to be used in

violation of the applicable standards.

b. The Product/Device is not reset or

audited within a 3-month period.

c. Sufficient control of a Product/

Device is not exercised or the standards

for its care or use are not followed.

d. The Product/Device is kept or used

outside the boundaries of the United

States or those U.S. territories and

possessions without USPS approval.

e. Product/Device mail is deposited at

other than the licensing post office

(except as permitted by 5.0 or D072).

f. Failure to forward mailpieces to the

Provider for quality assurance as

required by 2.5h.

2.4 Appeals

An applicant who is refused a license,

or a licensee whose license is revoked,

may file a written appeal with the

manager of Retail Systems and

Equipment (RSE), USPS Headquarters

(see G043 for address) within 10

calendar days of receipt of the decision.

A licensee appealing decisions on

postage adjustments may file the appeal,

with the same official, within 60 days of

the date that the Provider submitted the

postage adjustment recommendation to

the USPS.

2.5 Licensee Responsibilities

The licensee’s responsibilities for the

care and use of a Product/Device (PSD)

include the following:

a. After a PSD is delivered to a

licensee, it must remain in the licensee’s

custody until it is returned to the

authorized Provider.

b. Each day of operation, the licensee

must record the readings of the

ascending and descending registers on

Form 3602–A. A licensee using a

Product/Device system that records

these readings electronically may use

the system-generated report as a

substitute for Form 3602–A.

c. The licensee must, upon request,

make the Product/Device in the

licensee’s custody and corresponding

records on transactions immediately

available for review and audit to the

Provider or the USPS.

d. The licensee must remote-set

Products/Devices at least once every 3

months for examination.

e. The licensee must immediately

notify the Provider of any change in the

licensee’s name, address, telephone

number, the location of the Products/

Devices, or any other information on the

Form 3601–A.

f. The USPS issues a revised Product/

Device license based on the

transmission of updated information

from the Provider. The licensee must

verify and update license information

on a periodic basis. If a licensee changes

the post office where Product/Device

mail is to be deposited, the Product/

Device must be checked out of service

by the authorized Provider. The

customer must be relicensed at the new

post office before the Provider can issue

and reset a replacement device.

g. The licensee must report a

misregistering or otherwise defective

Product/Device to the Provider under

2.7 and must ensure that the defective

Product/Device is not used.

h. The licensee must maintain address

quality by updating the USPS CD–ROM

disk at least once every 3 months.

i. The licensee must forward a

mailpiece produced by the host system

to the Provider at least once every 3

months after initialization for quality

assurance.

j. The customer must enter into a

signed lease agreement with the

Provider that includes a financial

agreement for resetting the device with

postage.

2.6 Custody of Suspect Product/Device

(PSD)

Postal inspectors are authorized to

conduct unannounced, on-site

examinations of Products/Devices

reasonably suspected of being

manipulated or otherwise defective. An

inspector may also immediately withdraw a suspect Product/Device from

service for physical and/or laboratory

examination. The inspector issues the

licensee a receipt for the Product/

Device, forwards a copy to the Provider,

and, if necessary, assists in obtaining a

replacement Product/Device. Where

possible, the Inspection Service

provides the Provider with advance

notice that a Product/Device is to be

inspected. Unless there is reason to

believe that the Product/Device is

fraudulently set with postage, existing

postage in the Product/Device to be

examined is transferred to the

replacement Product/Device.

2.7 Defective product/Device (PSD)

The licensee must immediately report

any defective Product/Device to the

Provider. The Provider must retrieve

any defective Product/Device within 3

business days of notification by the

licensee and notify the USPS. A faulty

Product/Device may not be used under

any circumstance and must be returned

to the Provider. The Provider provides

the licensee with a replacement

Product/Device.

2.8 Missing Product/Device (PSD)

The licensee must immediately report

to the Provider and licensing post office

the loss or theft of any Product/Device

or the recovery of any missing Product/

Device. Reports must include the PSD

identification number and serial

number; the date, location, and details

of the loss, theft, or recovery; and a copy

of any police report.

2.9 Returning Product/Device (PSD)

After a PSD is delivered to a licensee,

the PSD must be kept in the licensee’s

custody until returned to the authorized

Provider. A licensee with a faulty or

misregistering PSD or who no longer

wants to keep a PSD must return the

PSD to the Provider to be checked out

of service. PSDs must be shipped by

Priority Mail Returned Receipt for

Merchandise unless the Manager, RSE,

USPS Headquarters, gives written

permission to ship at another rate or

special service.
14836 Federal Register / Vol. 62, No. 60 / Friday, March 28, 1997 / Proposed Rules

3.0 SETTING PRODUCTS/DEVICES

(PSD)

3.1 Initial Setting

Before the licensee is issued a PSD,

the PSD must be initialized and

authorized by the Provider. The

customer must enter into a lease

agreement with the Provider that

includes a financial agreement for

resetting the device with postage.

Settings are made according to the

provisions of USPS Computerized

Remote Postage Meter Resetting System

(CMRS).

3.2 Payment for Postage

Payment must be made for postage

before the Product/Device is set. The

customer is permitted to make payment

in one of six ways: cash, debit card,

credit card, wire transfer and (ACH)

automated clearinghouse debit or credit.

Acceptance by a provider of all payment

forms, with the exception of debit and

credit card, is mandatory. If a provider

elects to offer debit and credit cards as

a payment option, the USPS selected

merchant card processor must be used

as the processor. All merchant card

processor discount fees must be borne

by the provider.

3.3 Postage Transfers and Refunds

Postage losses due to malfunctions are

the responsibility of the Provider. The

USPS provides refunds for any balance

remaining on the PSD. The licensee

must submit a written refund request

with the affected PSD to the Provider

along with supporting documentation

such as a daily activity report. The

USPS also provides refunds to a

licensee for any balance remaining in a

CMRS account.

3.4 Periodic Examinations

A Products/Device must be reset at

least once every 3 months. An update of

the watchdog timer along with a device

audit satisfies this requirement. The

USPS reserves the right to examine the

Product/Device by remote access or

otherwise.

3.5 Resetting

The following conditions must be met

to reset a Product/Device:

a. The licensee’s account must have

sufficient funds to cover the desired

postage increment, or the Provider must

agree to advance funds to the USPS on

behalf of the licensee. The USPS

encourages the Providers to recommend

the use of the following payment forms

by order of preference:

1. ACH Debit

2. ACH Credit

3. Wire Transfer

4. Debit Card Optional

5. Check Card Optional

6. Check

b. As part of the resetting procedure,

the licensee must provide identification

information according to the Provider’s

resetting specifications.

c. After a Product/Device is reset, the

Provider must provide the licensee with

documentation of the transaction and

the balance remaining in the licensee’s

account, unless the Provider provides a

monthly statement documenting all

transactions for the period and the

balance after each transaction.

3.6 Amount of Postage

The PSD descending register is

programmed not to exceed $500 at any

time.

4.0 INDICIA

4.1 Design

Product/Device indicia designs (types,

sizes, and styles) must be those

specified when Product/Device is

approved by the USPS for manufacture.

4.2 Legibility

Product/Device indicia must be

legible and must not overlap. An

illegible or overlapping indicia is not

acceptable when determining postage

paid. Minimal standards for acceptable

reflectance measurements of the indicia

and the background material are in the

Uniform Symbology Specifications PDF

417. The FIM must meet the dimensions

and print quality specified in DMM

C810. For an open system, the address

and POSTNET barcode must meet the

specifications listed in the DMM C840.

4.3 On Tape/Label

The USPS-approved tape/label must

be used when IBI indicia are to be

printed on tape/label. Labels are subject

to corresponding standards in DMM

C810.

4.4 Position

The Product/Device indicia must be

printed or applied in the upper right

corner of the envelope, address label, or

tag. The indicia must be at least 1⁄4 inch

from the right edge of the mailpiece and

1⁄4 inch from the top edge of the

mailpiece. The indicia barcode must be

horizontally oriented. The indicia must

not infringe on the areas reserved for the

facing identification mark (FIM),

POSTNET barcode, or optical character

reader (OCR) clear zone. These apply to

pieces meeting the dimensions specified

in C800.

4.5 Content, Generally

In usage, the indicia must consist of

human-readable information and twodimensional barcoded information

unless specified otherwise herein. The

human-readable information must

show, as a minimum, the city, state, and

5-digit ZIP Code of the licensing post

office, the device id, and the amount of

postage. On approval of the licensing

post office, the Product/Device indicia

may contain the name and state

designation of its local classified

branch. This authorization does not

apply to classified stations or to contract

stations or branches. Alternatively, the

indicia may show the ZIP Code rather

than the city and state designation. In

this case, the words ‘‘Mailed From ZIP

Code’’ and the mailer’s delivery address

ZIP Code must appear in place of the

city and state, respectively. When it is

necessary to print multidenomination

Product/Device indicia on more than

one tape, the human-readable

information showing the post office

must be on each tape.

4.6 Complete Date

The month, day, and year must be

shown in the indicia on all First-Class

Mail, and on all registered, certified,

insured, COD, special delivery, and

special-handling mail. On Standard

Mail the day may be omitted. Mail

pieces bearing an indicia with only the

month and year may be accepted during

the month shown. They may also be

accepted through the third day of the

following month if the postmaster finds

that the mailing was unavoidably

delayed before deposit with the USPS.

4.7 Date Accuracy

The date shown in the indicia must be

the actual date of deposit. Mail

deposited after the day’s last scheduled

collection may bear the date of the next

scheduled collection.

4.8 Date Correction

With the mailpiece oriented to read

the address, the indicia showing actual

date of mail and the word ‘‘REDATE’’

instead of the postage amount may be

used to correct the date. The indicia

must be placed on the non-address side

at least 20mm from the bottom edge of

the mailpiece. The indicia impression

must not bear the FIM nor the twodimensional barcode.

4.9 Postage Correction

An indicia for additional postage may

be placed on a shortpaid mailpiece to

correct postage. The corrected indicia

must be printed on the nonaddress side

at least 20mm from the bottom edge of

the piece and not on an envelope flap.

The Product/Device impression on the

nonaddress side must contain all the

indicia elements except for the FIM. To
Federal Register / Vol. 62, No. 60 / Friday, March 28, 1997 / Proposed Rules 14837

meet two-dimensional barcode

readability requirements, an indicia may

be printed on a USPS-approved tape/

label.

4.10 Other Matter Printed on Product/

Device Indicium

Advertising matter, slogans, return

addresses, and the postal markings

specified in 4.11 may be printed with

the indicia within space limitations. A

licensee must obtain the content for

printing this matter from the authorized

Product/Device Provider. Advertising

art messages must include the mailer’s

name or words such as ‘‘Mailer’s

Message.’’ The advertising art must not

be obscene, defamatory of any person or

group, or deceptive and it must not

advocate any unlawful action. The

Provider must obtain prior approval for

all advertising matter for any Product/

Device.

4.11 Postal Markings

Postal markings related to the class or

category of mail are permissible. If

placed in the advertising art area, only

the postal marking may be printed, and

it must fill the advertising art area as

much as possible. All words must be in

bold capital letters at least 1⁄4 inch high

(18-point type) and legible at 2 feet.

Exceptions are not made for small

advertising art that cannot accommodate

a permissible marking.

4.12 Open System FIM

A mailpiece generated from an open

system must bear a USPS-approved FIM

D unless the envelope is courtesy reply

with a FIM A or the piece is not a letter

or a flat. The location of the FIM applies

to pieces meeting the dimensions

specified in DMM C800.

4.13 Closed System FIM

A mailpiece generated from a closed

system must bear a USPS-approved FIM

E, if the piece is nonbarcoded prior to

deposit. If the closed system generates

or uses envelopes that bear or will bear

a delivery point barcode (DPBC), the

envelopes must have a USPS-approved

FIM D unless the envelope is a courtesy

reply with a FIM A or the piece is not

a letter or a flat. The location of the FIM

applies to pieces meeting the

dimensions specified in DMM C800.

5.0 MAILINGS

5.1 Preparation

Product/Device mail is subject to the

preparation standards that apply to the

class of mail and rate claimed.

5.2 Combination

Product/Device mail may be

combined in the same mailing with mail

paid with other methods only if

authorized by the USPS.

5.3 Where to Deposit

Except as noted below, Product/

Device mail must be deposited at a post

office acceptance unit, window unit, or

other location designated by the

postmaster of the licensing post office

(i.e., the post office shown in the

indicia) and may not be given to a

delivery employee or deposited in a

street collection box, mail chute,

receiving box, cooperative mailing rack,

or other mail collection receptacle.

Exceptions to this general standard are

[as follows]:

a. Single-piece rate First-Class Mail

may be deposited in any street

collection box or such other place where

mail is accepted and that is served by

the licensing post office.

b. Limited quantities (i.e., a handful)

of single-piece rate First-Class Mail may

be deposited at offices other than the

licensing post office to expedite

dispatch.

5.4 Irregularities

Product/Device mail is examined by

the USPS to detect irregularities in

preparation and dating. Errors do not

include pieces that legibly show the

previous date if the pieces were

deposited in a collection box after the

last collection or were not collected by

the USPS as scheduled on the date in

the indicia.

6.0 PRODUCT/DEVICE

MANUFACTURE AND DISTRIBUTION

Title 39, Code of Federal Regulations,

part 502, contains information about the

authorization to manufacture and

distribute Products/Devices; the

suspension and revocation of such

authorization; performance standards

required in Products/Devices, test plans,

testing, and approval of Products/

Devices; required manufacturing

security measures; and standards for the

distribution and maintenance of

Products/Devices. Further information

may be obtained from Retail Systems

and Equipment, USPS Headquarters.

List of Subjects in 39 CFR Part 502

Administrative practice and

procedure, Postal Service.

Although exempt from the notice and

comment requirements of the

Administrative Procedure Act (5 U.S.C.

553(b), (c)), regarding proposed

rulemaking by 39 U.S.C. 410(a), the

Postal Service invites public comments

on the following proposed amendments

to the Code of Federal Regulations.

For the reasons set out in this

document, the Postal Service proposes

to add 39 CFR part 502 as follows:

PART 502—AUTHORITY TO

MANUFACTURE AND DISTRIBUTE

INFORMATION BASED INDICIA

PRODUCTS AND SERVICES

Sec.

502.1 Product/Service Provider

authorization.

502.2 Product/Service Provider

qualification.

502.3 Changes in ownership or control.

502.4 Burden of proof standard.

502.5 Suspension and revocation of

authorization.

502.6 Description of product/device.

502.7 Description of open and closed

systems.

502.8 Product/Service Provider.

502.9 Product/Device specifications.

502.10 Test plans.

502.11 Security testing.

502.12 Product/Device approval.

502.13 Conditions for approval.

502.14 Suspension and revocation of

approval.

502.15 Reporting.

502.16 Administrative sanction on

reporting.

502.17 Materials and workmanship.

502.18 Destruction of product/device

indicia.

502.19 Inspection of new products/devices.

502.20 Distribution facilities.

502.21 Distribution controls.

502.22 Administrative sanctions.

502.23 Product/Device replacement.

502.24 Inspection of products/devices not

located.

502.25 Products/Devices not located.

502.26 Computerized remote postage meter/

PSD resetting.

502.27 Indicia quality assurance.

502.28 Product/Device refunds.

502.29 Key management requirements.

502.30 Provider infrastructure.

502.31 Notice of proposed changes in

regulations.

Authority: 5 U.S.C. 552(a); 39 U.S.C. 101,

401, 403, 410, 2610, 2605; Inspector General

Act of 1978, as amended (Pub. L. 95–452, as

amended), 5 U.S.C. App. 3.

§ 502.1 Product/Service Provider

authorization.

Any person or concern seeking

authorization to manufacture and/or

distribute an Information Based Indicia

Program (IBIP) Product/Device must

submit a request to the Postal Service in

person or in writing. Upon qualification

and approval, the applicant is

authorized in writing to manufacture

Products/Devices and to lease them to

persons licensed by the Postal Service.

The Postal Service may specify the

functional area charged with processing

the application and administering its

Product/Device program.
14838 Federal Register / Vol. 62, No. 60 / Friday, March 28, 1997 / Proposed Rules

§ 502.2 Product/Service Provider

qualification.

Any person or Product/Service

Provider (hereafter referred to as

Provider) wanting authorization to

provide and/or lease, sell, or otherwise

distribute, as approved by the Postal

Service, Products/Devices for use by

licensees under Domestic Mail Manual

P050.1.2 must:

(a) Satisfy the Postal Service of its

integrity and financial responsibility;

(b) Obtain approval of at least one

Product/Device model incorporating all

the features and safeguards specified in

§ 502.9;

(c) Have, or establish, and keep under

its supervision and control adequate

manufacturing facilities suitable to carry

out the provisions of § 502.18 through

§ 502.21 to the satisfaction of the Postal

Service (such facilities must be subject

to unannounced inspection by

representatives of the Postal Service);

and

(d) Have, or establish, and retain

adequate facilities for the control,

distribution, and maintenance of

Products/Devices and their replacement

when necessary.

§ 502.3 Changes in ownership or control.

Any person or concern wanting to

acquire ownership or control of an

authorized Provider must provide the

Postal Service with satisfactory

evidence of that person’s or concern’s

integrity and financial responsibility.

§ 502.4 Burden of proof standard.

The burden of proof is on the Postal

Service in the adjudication of

suspensions and revocations under

§ 502.5 and § 502.14 and administrative

sanctions under § 502.16 and § 502.22.

Except as otherwise indicated in those

sections, the standard of proof shall be

the preponderance of evidence

standard.

§ 502.5 Suspension and revocation of

authorization.

(a) The Postal Service may suspend

and/or revoke authorization to provide

and/or distribute any or all of a

Provider’s Products/Devices if the

Provider engages in any unlawful

scheme or enterprise, fails to comply

with any provision in this part 502, or

fails to implement instructions issued in

accordance with any final decision

issued by the Postal Service within its

authority over the Product/Device

programs.

(b) The decision to suspend or revoke

a Provider’s authorization shall be based

on the nature and circumstances of the

violation (e.g., whether the violation

was willful, whether the Provider

voluntarily admitted to the violation,

whether the Provider cooperated with

the Postal Service, whether the Provider

implemented successful remedial

measures) and on the Provider’s

performance history. Before determining

whether a Provider’s authorization to

manufacture and/or distribute Products/

Devices should be revoked, the

procedures in paragraph (c) of this

section shall be followed.

(c) Suspension in all cases shall be as

follows:

(1) Upon determination by the Postal

Service that a Provider is in violation of

the provisions in this part 502, the

Postal Service shall issue a written

notice of proposed suspension citing

deficiencies for which suspension or

authorization to manufacture and/or

distribute a specific Product/Device or

classes thereof may be imposed under

paragraph (c)(2) of this section. Except

in cases of willful violation, the

Provider shall be given an opportunity

to correct deficiencies and achieve

compliance with all requirements

within a time limit corresponding to the

potential risk to postal revenue.

(2) In cases of willful violation, or if

the Postal Service determines that the

Provider has failed to correct cited

deficiencies within the specified time

limit, the Postal Service shall issue a

written notice setting forth the facts and

reasons for the decision to suspend and

the effective date if a written defense is

not presented as provided in paragraph

(d) of this section.

(3) If, upon consideration of the

defense as provided in paragraph (e) of

this section, the Postal Service deems

that the suspension is warranted, the

suspension shall remain in effect for up

to 90 days unless withdrawn by the

Postal Service, as provided in paragraph

(c)(4)(iii) of this section.

(4) At the end of the 90-day

suspension, the Postal Service may:

(i) Extend the suspension in order to

allow more time for investigation or to

allow the Provider to correct the

problem;

(ii) Make a determination to revoke

authorization to provide and/or

distribute the Provider’s Products/

Devices in part or in whole; or

(iii) Withdraw the suspension based

on identification and implementation of

a satisfactory solution to the problem.

Provider suspensions may be

withdrawn before the end of the 90-day

period if the Postal Service determines

that the Provider’s solution and

implementation are satisfactory.

(d) The Provider may present the

Postal Service with a written

determination within 30 calendar days

of receiving the written notice (unless a

shorter period is deemed necessary).

The defense must include all supporting

evidence and specify the reasons for

which the order should not be imposed.

(e) After receipt and consideration of

the defense, the Postal Service shall

advise the Provider of the decision and

the facts and reasons for it. The decision

shall be effective on receipt unless it

provides otherwise. The decision shall

also advise the Provider that it may

appeal that determination within 30

calendar days of receiving written

notice (unless a shorter period is

deemed necessary), as specified therein.

The appeal must include all supporting

evidence and specify the reasons the

Provider believes that the decision is

erroneous.

(f) An order or final decision under

this section does not preclude any other

criminal or civil statutory, common law,

or administrative remedy that is

available by law to the Postal Service,

the United States, or any other person

or concern.

§ 502.6 Description of product/device.

The Product/Device prints an

authorized Postal Service Information

Based Indicia that shows evidence of

postage. The indicia consists of a USPSapproved two-dimensional barcode and

certain human-readable information

such as city and state, 5-digit ZIP Code

of licensing post office, Device ID

number, date, and amount of postage.

The Product/Device includes as a

primary component a postal security

device (PSD) that provides critical

functionality for accounting postage

with a computer-based (open system) or

postage meter-based (closed system) and

a host system. The PSD and host system

interact to generate the indicia. The

Product/Device is remotely set with

postage value and requires the licensee

to have funds on deposit with the Postal

Service prior to initial setting or

resetting.

§ 502.7 Description of open and closed

systems.

(a) An ‘‘Open System’’ does not

require that the implementing

components be dedicated to the IBIP

functions. This system may allow

multiple non-postage related software

applications to be in use and it also may

depend on several interconnected

devices that may serve multiple

purposes for their user. The open

system computer and peripherals such

as the printer and CD–ROM drive may

perform functions unrelated to the

Information Based Indicia Program

(IBIP). Host operations may depend

upon computer software such as

operating systems and communications
Federal Register / Vol. 62, No. 60 / Friday, March 28, 1997 / Proposed Rules 14839

systems. The open system version is

responsible for composing a complete,

integrated mailpiece front (or a tape/

label for the piece).

(b) The ‘‘closed system’’ is a device

dedicated toward IBIP functions. Closed

systems do not have to satisfy Postal

Service address standards or include the

destination ZIP Code in the indicia.

Closed systems may satisfy the other

administrative requirements through

external processes. If a closed system

operates as a component of an

integrated mailing system, it may be

subject to the open system

requirements. An integrated mailing

system shall be subject to open system

requirements if it includes a computer

interfaced to the meter and it prepares

mailpiece fronts or labels that include

both the destination address and the

indicium. The integrated system is an

open system even if different printers

apply the address and the indicium. If

the mailing system satisfies these

criteria, the USPS considers the ‘‘meter’’

to be an open system peripheral device

that performs the dual functions of

printing indicia and interfacing the PSD

to the open host. The integrated mailing

system must be approved by the USPS

according to the open system criteria.

§ 502.8 Product/Device provider.

A Product/Device is available only

through a lease agreement from

Providers authorized by the Postal

Service. For an open system, the

licensee may purchase the software if

the PSD component operates

independently of the software. The open

system form of the host is envisioned to

operate on personal computers. For a

closed system, the licensee may

purchase the printing device if it is

rendered nonfunctional without the

PSD. The Postal Service holds Providers

responsible for the life cycle, control,

operation, maintenance, and

replacement of their Products/Devices.

§ 502.9 Product/Device specifications.

The IBIP Specifications describe

system elements that include Postal

Service infrastructure, Provider

infrastructure, and customer

infrastructure. The existing Postal

Service infrastructure supports

customer authorization, product audit,

postage resetting reporting, total

population management, key

management support, financial

reconciliation, product lifecycle

tracking, lost and stolen/irregularity

management functions. The Provider

infrastructure will support all IBIP

functions. The customer infrastructure

will consist of the Product/Device’s PSD

and host system. The Postal Service will

evaluate and test IBIP Products/Devices

for compliance with this infrastructure.

(a) The indicium data content is

described in the Information Based

Indicia Program (IBIP) Indicium

Specification. Contact the Manager,

Retail Systems and Equipment, USPS,

475 L’Enfant Plaza, Washington DC

20260–6807 for these requirements.

(b) The PSD implements digital

signature technology for the creation

and verification of digital signatures.

Postal Security Device Specification is

described in the Information Based

Indicia Program Postal Security Device

Specification. Contact the Manager,

Retail Systems and Equipment, USPS,

475 L’Enfant Plaza, Washington DC

20260–6807 for these requirements.

(c) Indicia Design Requirements—The

indicia design must comply with the

requirements in Domestic Mail Manual

(DMM) P050.

(d) Host System Functional

Requirements are contained in the

Information Based Indicia Program Host

System Specification. Contact the

Manager, Retail Systems and

Equipment, USPS, 475 L’Enfant Plaza,

Washington DC 20260–6807 for these

requirements.

(e) Key Management Functional

Requirements are contained in The

Information Based Indicia Program Key

Management Plan. Contact the Manager,

Retail Systems and Equipment, USPS,

475 L’Enfant Plaza SW, Washington DC

20260–6807 for these requirements.

§ 502.10 Test plans.

Each Product/Device Model that is

submitted for USPS approval must be

submitted in accordance with the

provisions contained in the Information

Based Indicia Program Interim Product

Submission Procedures. Contact the

Manager, Retail Systems and

Equipment, USPS, 475 L’Enfant Plaza,

Washington DC 20260–6807 for these

requirements.

§ 502.11 Security testing.

The Postal Service reserves the right

to require or conduct additional

examination and testing at any time,

without cause, of any Product/Device

submitted to the Postal Service for

approval or approved by the Postal

Service for manufacture and

distribution.

§ 502.12 Product/Device approval.

As provided in § 502.12, the Provider

has a duty to report security weaknesses

to the Postal Service to ensure that each

Product/Device model and every

Product/Device in service protects the

Postal Service against loss of revenue at

all times. A grant of approval of a model

does not constitute an irrevocable

determination that the Postal Service is

satisfied with the revenue-protection

capabilities of the model. After approval

is granted to manufacture and distribute

a Product/Device, no change affecting

the features or safeguards of a Product/

Device may be made except as

authorized or ordered by the Postal

Service in writing.

§ 502.13 Conditions for approval.

(a) The Postal Service may require at

any time that production models of

approved Products/Devices, as well as

the design, user manuals, and

specifications applicable to such

Products/Devices and any revisions

thereof, be deposited with the Postal

Service.

(b) On request by the Postal Service,

additional Products/Devices must be

submitted to the Postal Service for

testing, at the expense of the Provider.

(c) All Product/Device submissions

must adhere to the requirements

contained in the Information Based

Indicia Program Interim Product

Submission Procedures. Particular

attention should be given to the

requirement to simultaneously submit

an identical Product/Device to a

laboratory accredited under the National

Voluntary Laboratory Accreditation

Program (NVLAP) for FIPS 140–1

certification.

§ 502.14 Suspension and revocation of

approval.

(a) The Postal Service may suspend

Product/Device approval under § 502.13

if the Postal Service has probable cause

to believe that a Provider’s Product/

Device or class and/or version thereof

poses an unreasonable risk to postal

revenue. Suspension of approval to

Provider or distribute a Product/Device

or class and/or version thereof, in whole

or in part, shall be based on the

potential risk to postal revenue. Before

determining whether approval of a

Product/Device or class and/or version

should be revoked, the procedures in

paragraph (b) of this section shall be

followed.

(b) Suspension in all cases shall be as

follows:

(1) Upon determination by the Postal

Service that a Product/Device poses an

unreasonable risk to postal revenue, the

Postal Service shall issue a written

notice of proposed suspension citing

deficiencies for which suspension may

be imposed under paragraph (b)(2) of

this section. The Provider shall be given

an opportunity to correct deficiencies

and achieve compliance with all

requirements within a time limit
14840 Federal Register / Vol. 62, No. 60 / Friday, March 28, 1997 / Proposed Rules

corresponding to the potential risk to

postal revenue.

(2) If the Postal Service determines

that the Provider has failed to correct

cited deficiencies within the specified

time limit, the Postal Service shall issue

a written notice setting forth the facts

and reasons for the decision to suspend

and the effective date if a written

defense is not presented as provided in

paragraph (c) of this section.

(3) If, upon consideration of the

defense as provided in paragraph (d) of

this section, the Postal Service deems

that the suspension is warranted, the

suspension shall remain in effect for up

to 90 days unless withdrawn by the

Postal Service, as provided in paragraph

(b)(4)(iii) of this section.

(4) At the end of the 90-day

suspension, the Postal Service may:

(i) Extend the suspension in order to

allow more time for investigation or to

allow the Provider to correct the

problem;

(ii) Make a determination to revoke

the approval of the Provider’s Product/

Device or class and/or version, or

(iii) Withdraw the suspension based

on identification and implementation of

a satisfactory solution to the problem.

Provider suspensions may be

withdrawn before the end of the 90-day

period if the Postal Service determines

that the Provider’s solution and

implementation are satisfactory.

(c) The Provider may present the

Postal Service with a written defense to

any suspension or revocation

determination within 30 calendar days

of receiving the written notice (unless a

shorter period is deemed necessary).

The defense must include all supporting

evidence and specify the reasons for

which the order should not be imposed.

(d) After receipt and consideration of

the written defense, the Postal Service

shall advise the Provider of the decision

and the facts and reasons for it. The

decision shall be effective on receipt

unless it states otherwise. The decision

shall also advise the Provider that it

may appeal that determination within

30 calendar days of receiving written

notice (unless a shorter period is

deemed necessary), as specified therein.

The appeal must include all supporting

evidence and the reasons that the

Provider believes that the decision is

erroneous.

(e) An order or final decision under

this section does not preclude any other

criminal or civil statutory, common law,

or administrative remedy that is

available by law to the Postal Service,

the United States, or any other person

or concern.

§ 502.15 Reporting.

(a) For purposes of this section,

‘‘Provider’’ refers to the authorized

Product/Service Provider in § 502.1 and

its foreign or domestic affiliates,

subsidiaries, assigns, dealers,

independent dealers, employees, and

parent corporations.

(b) Each authorized Product/Service

Provider in § 502.1 must submit a

preliminary report to notify the Postal

Service promptly (in no event more than

21 calendar days of discovery) of the

following:

(1) All findings or results of any

testing known to the Provider

concerning the security or revenue

protection features, capabilities, or

failings of any Product/Device sold,

leased, or distributed by the Provider

that has been approved for sale, lease,

or distribution by the Postal Service or

any foreign postal administration; or

have been submitted for approval by the

Provider to the Postal Service or a

foreign postal administration.

(2) All potential security weaknesses

or methods of Products/Devices

tampering that the Provider distributes

of which the Provider knows or should

know, and the Product/Device or model

subject to each method. These potential

security weaknesses include but are not

limited to suspected equipment defects,

suspected abuse by a Product/Device

licensee or Provider employee,

suspected security breaches of the

Computerized Remote Postage Meter

Resetting System, cryptographic key

compromises, occurrences outside

normal performance, or any repeatable

deviation from normal Product/Device

performance (within the same model

family and/or by the same licensee).

(c) Within 45 days of the preliminary

notification of the Postal Service under

§ 502.15(b), the Provider must submit a

written report to the Postal Service. The

report must include the circumstances,

proposed investigative procedure, and

the anticipated completion date of the

investigation. The Provider must also

provide periodic status reports to the

Postal Service during subsequent

investigation and, on completion, must

submit a summary of the investigative

findings.

(d) The Provider must establish and

adhere to timely and efficient

procedures for internal reporting of

potential security weaknesses. The

Provider is required to submit a copy of

internal reporting procedures and

instructions to the Postal Service for

review.

§ 502.16 Administrative sanction on

reporting.

(a) Notwithstanding any act,

admission, or omission by the Postal

Service, an authorized Provider may be

subject to an administrative sanction for

failing to comply with § 502.15.

(b) The Postal Service shall determine

all costs and revenue losses measured

from the date that the Provider knew, or

should have known, of a potential

security weakness, including, but not

limited to, administrative and

investigative costs and documented

revenue losses that result from any

Product/Device for which the Provider

failed to comply with any provision in

§ 502.15. The Postal Service may

recover from Provider any and all such

costs and losses (net of any amount

collected by the Postal Service from the

licensees or Product/Device users) with

interest by issuing a written notice to

the Provider setting forth the facts and

reasons on which the determination to

impose the sanction is based. The notice

shall advise the Provider of the date that

the action takes effect if a written

defense is not presented within 30

calendar days of receipt of the notice.

(c) The Provider may present the

Postal Service with a written defense to

the proposed action within 30 calendar

days of receipt. The defense must

include all supporting evidence and

specify the reasons for which the

sanction should not be imposed.

(d) After receipt and consideration of

the defense, the Postal Service shall

advise the Provider of the decision and

the facts and reasons for it; the decision

shall be effective on receipt unless it

states otherwise. The decision shall also

advise the Provider that it may, within

30 calendar days of receiving written

notice, appeal that determination as

specified therein.

(e) The Provider may submit a written

appeal to the Postal Service within 30

calendar days of receipt of the decision.

The appeal must include all supporting

evidence and specify the reasons that

the Provider believes that the

administrative sanction was erroneously

imposed. The submission of an appeal

stays the effectiveness of the sanction.

(f) The imposition of an

administrative sanction under this

section does not preclude any other

criminal or civil statutory, common law,

or administrative remedy that is

available by law to the Postal Service,

the United States, or any other person

or concern.

§ 502.17 Materials and workmanship.

All Products/Devices must adhere to

the quality in materials and

workmanship of the approved
Federal Register / Vol. 62, No. 60 / Friday, March 28, 1997 / Proposed Rules 14841

production model and must be

manufactured with suitable chips, tools

. . . etc., to ensure proper functioning.

§ 502.18 Destruction of product/device

indicia.

All IBIP indicia created in the process

of testing the Products/Devices by the

provider, or its agent, must be collected

and destroyed daily.

§ 502.19 Inspection of new products/

devices.

All new Products/Devices must be

inspected carefully before leaving the

Provider’s Product/Device facility.

§ 502.20 Distribution facilities.

An authorized Provider must keep

adequate facilities for and records of the

distribution, control, and maintenance

of Products/Devices. All such facilities

and records are subject to inspection by

Postal Service representatives.

§ 502.21 Distribution controls.

Each authorized Product/Service

Provider must do the following:

(a) Hold title permanently to all

leased PSDs except those purchased by

the Postal Service.

(b) On behalf of applicants,

electronically transmit copies of

completed PS Forms 3601–A,

Application for a License to lease and

use Postage Meters, to the designated

Postal Service central processing

facility.

(c) Lease PSDs only to parties that

have valid licenses issued by the Postal

Service.

(d) Supply with the host system only

Product/Device slogan or advertising art

that meets the Postal Service

requirements for suitable quality and

content. The Provider must obtain prior

approval for all advertising matter for

any Product/Device.

(e) Unless otherwise authorized by the

Postal Service, the Provider must

immediately obtain and check out of

service PSDs, if the licensee no longer

wants the PSD or if the PSD is to be

removed from service for any other

reason. The Provider must keep in its

possession for at least 1 year the

licensee’s PS Form 3601–C, Postage

Meter Installation, Withdrawal, or

Replacement, and copy of the applicable

PS Form 3602–A, Record of Meter

Register Readings, or equivalent.

(f) Retrieve any misregistering, faulty,

or defective Product/Device to be

checked out of service within 3 business

days of being notified by the licensee of

the defect. After examining the Product/

Device withdrawn for apparent faulty

operation affecting registration, the

Provider must compile a report

explaining the malfunction to Retail

Systems and Equipment (RSE), USPS

Headquarters.

(g) Report promptly the loss or theft

of any Product/Device or the recovery of

any lost or stolen Product/Device. The

Provider must provide notification to

the Postal Service by completing a

standardized lost and stolen Product/

Device incident report and filing it with

the Postal Service within 30 days of the

Provider’s determination of a Product/

Device loss, theft, or recovery. The

Provider must complete all preliminary

location activities specified in § 502.25

before submitting this report to the

Postal Service.

(h) Cancel a lease agreement with any

lessee whose Product/Device license is

revoked by the Postal Service, remove

the Product/Device within 15 calendar

days, and have the Product/Device

checked out of service.

(i) Promptly remove from service any

Product/Device that the Postal Service

indicates should be removed from

service. When a Product/Device license

is canceled, all Products/Devices in use

by the licensee must be removed from

service.

(j) Examine each Product/Device

withdrawn from service for failure to

record its operations correctly and

accurately, and report to the Postal

Service the failure or fault that caused

the failure.

(k) Provide RSE monthly with a

compatible computer tape of lost or

stolen Products/Devices. The file is due

on the first of each month (for the

preceding month’s activity).

(l) Take reasonable precautions in the

transportation and storage of Products/

Devices to prevent use by unauthorized

individuals. Providers must ship all

Products/Devices by Postal Service

Registered Mail 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.

(m) Submit a daily financial

transaction for each postage value

download or postage refill.

§ 502.22 Administrative sanction.

(a) Product/Device for purposes of this

section means any Product/Device

manufactured by an authorized Provider

under § 502.1 that is not owned or

leased by the Postal Service.

(b) An authorized Provider that,

without just cause, fails to conduct or

perform adequately any of the controls

in § 502.21, to follow standardized lost

and stolen Product/Device incident

reporting in § 502.25, or to conduct any

of the inspections required by § 502.24

in a timely fashion is subject to an

administrative sanction based on the

investigative and administrative costs

and documented revenue losses (net of

any amount collected by the Postal

Service from the licensee or Product/

Device user) with interest per

occurrence measured from the date on

which the cost and/or loss occurred, as

determined by the Postal Service.

Sanctions shall be based on the costs

and revenue losses that result from the

Provider’s failure to comply with these

requirements.

(c) The Postal Service may impose an

administrative sanction under this

section by issuing a written notice to the

Provider setting forth the facts and

reasons on which the determination to

impose the sanction is based. The Postal

Service shall determine all costs and

losses. The notice shall advise the

Provider of the date that the action shall

take effect if a written defense is not

presented within 30 calendar days of

receipt of the notice.

(d) The Provider may present to the

Postal Service a written defense to the

proposed action within 30 calendar

days of receipt of the notice. The

defense must include all supporting

evidence and specify the reasons for

which the sanction should not be

imposed.

(e) After receipt and consideration of

the written defense, the Postal Service

shall advise the Provider of the decision

and the facts and reasons for it. The

decision shall be effective on receipt

unless it states otherwise.

(f) The Provider may submit a written

appeal of the decision within 30

calendar days of receiving the decision,

addressed to the manager of Retail

Systems and Equipment, Postal Service

Headquarters. The appeal must include

all supporting evidence and specify the

reasons that the Provider believes that

the administrative sanction was

erroneously imposed. The submission of

an appeal stays the effectiveness of the

sanction.

(g) The imposition of an

administrative sanction under this

section does not preclude any other

criminal or civil statutory, common law,

or administrative remedy that is

available by law to the Postal Service,

the United States, or any other person

or concern.

§ 502.23 Product/Device replacement.

(a) The Provider must keep its

Products/Devices in proper operating

condition for licensees by replacing

them when necessary or desirable to

prevent electronic failure, malfunction,

clock/timer/battery life expiration, or

mechanical breakdown.
14842 Federal Register / Vol. 62, No. 60 / Friday, March 28, 1997 / Proposed Rules

(b) The Provider must provide the

licensees with modifications reflecting

rate changes.

§ 502.24 Inspection of products/devices in

use.

The Provider must conduct audits of

PSDs at least once every 3 months in

conjunction with the postage value

resetting requirements in § 502.26. In

general, the primary role of the PSD in

the device audit function is to create

device audit messages and pass those

messages to the host system for

transmission to the Postal Service.

§ 502.25 Products/Devices not located.

Upon learning that one or more of its

Products/Devices in service cannot be

located, the Provider must undertake

reasonable efforts to locate the Products/

Devices by following a series of Postal

Service-specified actions designed to

locate the Products/Devices. If these

efforts are unsuccessful and a Product/

Device is determined to be lost or

stolen, the Provider must notify the

Postal Service within 30 days by

submitting a Lost and Stolen Product/

Device Incident Report.

(a) If a licensee cannot be located, the

Provider must, at a minimum, complete

the following actions:

(1) Call directory assistance for the

licensee’s new telephone number.

(2) Contact the licensee’s local post

office for current change of address

information.

(3) Contact the CMLS site and the

local MATS coordinator to verify the

location of the Product/Device or

licensee currently maintained in those

Postal Service records.

(4) Contact the rental agency

responsible for the property where the

licensee was located, if applicable.

(5) Visit the licensee’s last known

address to see whether the building

superintendent or a neighbor knows the

licensee’s new address.

(6) Mail a certified letter with return

receipt to the licensee at the last known

address with the endorsement

‘‘Forwarding and Address Correction

Requested.’’

(7) If new address information is

obtained during these steps, any

scheduled Product/Device inspection

must be completed promptly.

(b) If a Product/Device is reported to

be lost or stolen by the licensee, the

Provider must, at a minimum, complete

the following actions:

(1) Ensure that the licensee has filed

a police report and that copies have

been provided to the appropriate

Inspection Service Contraband Postage

Identification Program (CPIP) specialist.

(2) Withhold issuance of a

replacement Product/Device until the

missing Product/Device has been

properly reported to the police and to

the appropriate Inspection Service CPIP

specialist.

(c) If the Provider later learns that the

Product/Device has been located and/or

recovered, the Provider must update lost

and stolen Product/Device activity

records, inspect the Product/Device

promptly, initiate a postage adjustment

or transfer, if appropriate, and check the

Product/Device out of service if a

replacement Product/Device has been

supplied to the licensee.

(d) If a Product/Device reported to the

Postal Service as lost or stolen is later

located, the Provider is responsible for

submitting a new Lost and Stolen

Product/Device Incident Report that

references the initial report and outlines

the details of how the Product/Device

was recovered. This report must be

submitted to the Postal Service within

30 days of recovery of the Product/

Device. The Provider is also responsible

for purging lost and stolen Product/

Device reports that are provided on a

periodic basis to the Postal Service for

those Product/Devices that have been

recovered.

(e) Any authorized Provider that fails

to comply with standardized lost and

stolen reporting procedures and

instructions is subject to an

administrative sanction under § 502.22,

as determined by the Postal Service.

§ 502.26 Computerized Remote Postage

Meter Resetting/PSD Resetting.

(a) Description. The Computerized

Remote Meter Resetting System (CMRS)

permits postal licensees to reset PSDs at

their places of business and/or homes

via modem and/or network interface. To

reset a PSD, the licensee must connect

to the Provider and provide identifying

data and device audit data. Before

proceeding with the setting transaction,

the Provider must verify all the data

(including conducting the product

audit) and ascertain from its own files

whether the licensee has sufficient

funds on deposit with the Postal

Service. If the funds are available and

the product audit was successful, the

Provider may complete the setting

transaction.

(b) Deposits with the Postal Service.

(1) A CMBS licensee is required to have

funds available on deposit with the

Postal Service before resetting a PSD or

the Provider may opt to provide a funds

advance in accordance with The Cash

Management Operating Specifications

For The Computerized Remote Postage

Meter Resetting System. Contact the

Treasurer’s Office of the United States

Postal Service, 475 L’Enfant Plaza SW,

Washington, DC 20260–5130 for this

document. The details of this deposit

requirement are covered within the

Acknowledgment of Deposit

Requirement document. By signing this

document, the licensee agrees to transfer

funds to the Postal Service through a

lockbox bank, as specified by the

Provider, for the purpose of prepayment

of postage. The Provider representative

must provide all new CMRS licensees

with this document when a new

account is established. The document

must be completed and signed by the

licensee and sent to the Minneapolis

Accounting Service Center by the

Provider.

(2) This is required to incorporate the

following language into its Product/

Device rental agreements:

Acknowledgement of Deposit Requirement

See The Cash Management Operating

Specifications For The Computerized Remote

Postage Meter Resetting System. Contact the

Treasurer’s Office of the United States Postal

Service, 475 L’Enfant Plaza SW, Washington

DC 20260–5130 for this document.

§ 502.27 Indicia quality assurance.

The licensee is required to forward a

mailpiece to the Provider at least once

every 3 months for evaluation. If the

licensee fails to comply with this

requirement, the Provider must notify

the licensee that, all future postage

value resettings will be denied. The

Provider must notify the Postal Service

of all noncomplying licensees, so that

license revocations can be initiated. The

Provider is required to provide guidance

to the licensee to correct any

deficiencies that are discovered.

§ 502.28 Product/Device refunds.

Postage losses due to malfunctions are

the responsibility of the Provider. In

order to receive a refund for any

remaining balance on a PSD, the

licensee will be required to submit a

written refund request and the PSD to

the Provider. Additionally, supporting

documentation such as a daily activity

report must be submitted. The Postal

Service will also provide refunds to a

licensee for any balance remaining in

their CMRS account.

§ 502.29 Key management requirements.

These requirements are contained in

The Information Based Indicia Program

Key Management Plan. Contact the

Manager, Retail Systems and

Equipment, USPS, 475 L’Enfant Plaza,

Washington DC 20260–6807 for these

requirements.

§ 502.30 Provider infrastructure.

The Provider must establish and

maintain an interface to USPS systems

as specified in the Information Based
Federal Register / Vol. 62, No. 60 / Friday, March 28, 1997 / Proposed Rules 14843

Indicia Program Product/Service

Provider Infrastructure Specification.

Contact the Manager, Retail Systems

and Equipment, USPS, 475 L’Enfant

Plaza, Washington DC 20260–6807 for

these requirements.

§ 502.31 Notice of Proposed Changes in

Regulations.

Appropriate amendments to 39 CFR

parts 111 and 502 to reflect these

changes will be published if the

proposal is adopted

Stanley F. Mires,

Chief Counsel, Legislative.

[FR Doc. 97–7861 Filed 3–27–97; 8:45 am]

BILLING CODE 7710–12–M

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Part 52

[MI38–01–6734; FRL–5803–2]

Approval And Promulgation Of

Implementation Plans: Michigan

AGENCY: Environmental Protection

Agency.

ACTION: Proposed rule.

SUMMARY: The Environmental Protection

Agency (EPA) is proposing to approve

requested State Implementation Plan

(SIP) revisions submitted by the State of

Michigan for the purpose of transferring

the authority of the Michigan Air

Pollution Control Commission

(Commission) to the Director of the

Michigan Department of Natural

Resources (MDNR) and subsequently

transferring the authority of the Director

of MDNR to the Director of the Michigan

Department of Environmental Quality

(MDEQ). Nothing in this action should

be construed as permitting, allowing, or

establishing a precedent for any future

request for revision to any SIP. The EPA

shall consider each request for revision

to the SIP in light of specific technical,

economic, and environmental factors

and in relation to relevant statutory and

regulatory requirements.

DATES: Comments on this proposed rule

must be received in writing on or before

April 28, 1997. Public comments on this

document are requested and will be

considered before taking final action on

this SIP revision.

ADDRESSES: Written comments should

be sent to: Carlton T. Nash, Chief,

Regulation Development Section, Air

Programs Branch (AR–18J), U.S.

Environmental Protection Agency, 77

West Jackson Boulevard, Chicago,

Illinois 60604.

Copies of the Michigan SIP revision

request and EPA’s analysis are available

for inspection at the above address.

FOR FURTHER INFORMATION CONTACT:

Laura Gerleman, Air Programs Branch,

Permits and Grants Section (AR–18J),

U.S. Environmental Protection Agency,

Region 5, 77 West Jackson Boulevard,

Chicago, Illinois 60604, (312) 353–5703. Copies of the State of Michigan’s final

authorization revision application are

available during normal business hours

at the following addresses for inspection

and copying: Library of Michigan,

Government Documents Section, 717

West Allegan, Lansing, Michigan; Olson

Library, Northern Michigan University,

Harden Circle Drive, Marquette,

Michigan; Detroit Public Library Main

Branch, Sociology and Economics

Department, 5201 Woodward Avenue,

Detroit, Michigan. To arrange for access

to the materials in Lansing, call (517)

373–9489 between 9 a.m. and 6 p.m. on

Mondays through Saturdays and

between 12 p.m. and 4 p.m. on Sundays

(Eastern time); in Marquette, call (906)

227–2260 between 8 a.m. and 12 a.m. on

Mondays through Thursdays, between 8

a.m. and 9 p.m. on Fridays, and between

10 a.m. and 6 p.m. on Sundays (Eastern

time); in Detroit, call (313) 833–1440

between 9:30 a.m. and 5:30 p.m. on

Tuesdays and Thursdays through

Saturdays, and between 1 p.m. and 9

p.m. on Wednesdays (Eastern time).

Anyone wishing to come to the Region

5 offices should contact Laura Gerleman

first.

SUPPLEMENTARY INFORMATION:

A. Executive Order 1991–31

On November 8, 1991, Governor John

Engler of Michigan signed Executive

Order 1991–31 which, inter alia,

abolished the Commission and

transferred the authority of the

Commission to the Director of MDNR.

The State of Michigan submitted to EPA

under a December 13, 1994 cover letter,

a SIP revision request containing the

transfer of authority of the Commission

to the Director of MDNR. The EPA

deemed the submittal complete in a

February 16, 1995 letter to Roland

Harmes, Director, MDNR.

B. Executive Order 1995–18

On July 31, 1995, Governor Engler

signed Executive Order 1995–18 which,

inter alia, elevated eight program

divisions and two program offices from

within MDNR to the MDEQ, effective

October 1, 1995. The authority given to

the Director of MDNR in Executive

Order 1991–31 was conferred upon the

Director of MDEQ in Executive Order

1995–18, with the exception of

administrative appeals decisions. For

administrative appeals where the

Director of MDEQ made the original

permit decision, Executive Order 1995–

18 requires the Director to appoint an

individual within or outside MDEQ to

decide the appeal.

The State of Michigan submitted

Executive Order 1995–18 to EPA under

a January 19, 1996 cover letter as a

supplement to the December 13, 1994

SIP revision.

C. Authority

The EPA proposes to approve

Michigan’s requested SIP revisions as

reorganizations of Michigan’s

environmental agencies wherein the

authorities of the Director of the

Commission under the SIP have been

conferred upon the Director of MDEQ by

Executive Order. Public comment is

solicited on the requested SIP revision

and on EPA’s proposed approval of the

request. Public comments received by

the date indicated above will be

considered in the development of EPA’s

final rule.

The EPA notes that it is currently

reviewing the Michigan Environmental

Audit Privilege and Immunity Law,

Public Act 132 of 1996, and its potential

impact on Michigan’s federally

delegated and authorized programs,

including programs under the Federal

Clean Air Act. The EPA’s proposed

approval only addresses and seeks

comments on the requested SIP

revisions submitted by Michigan that

result from Executive Order 1991–31

and Executive Order 1995–18. The

EPA’s proposed approval of requested

revisions to Michigan’s SIP arising out

of these two Executive Orders does not

express any viewpoint on the question

of whether there are legal deficiencies in

Michigan’s SIP resulting from Public

Act 132 of 1996.

Administrative Requirements

This action has been classified as a

Table 3 action for signature by the

Regional Administrator under the

procedures published in the Federal

Register on January 19, 1989 (54 FR

2214–2225), as revised by a July 10,

1995 memorandum from Mary Nichols,

Assistant Administrator for Air and

Radiation. The Office of Management

and Budget (OMB) has exempted this

regulatory action from E.O. 12866

review.

Under the Regulatory Flexibility Act,

5 U.S.C. 600 et seq., EPA must prepare

a regulatory flexibility analysis

assessing the impact of any proposed or

final rule on small entities. (5 U.S.C. 603

and 604.) Alternatively, EPA may certify

that the rule will not have a significant

impact on a substantial number of small