[Federal Register Volume 75, Number 86 (Wednesday, May 5, 2010)]
[Proposed Rules]
[Pages 24534-24541]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-10660]


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POSTAL SERVICE

39 CFR Part 111


Treatment of Cigarettes and Smokeless Tobacco as Nonmailable 
Matter

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

ACTION: Proposed rule.

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SUMMARY: The Postal Service proposes to revise Mailing Standards of the 
United States Postal Service, Domestic Mail Manual (DMM[supreg]) 
601.11, pertaining to the mailing of tobacco cigarettes and smokeless 
tobacco. These provisions implement specific requirements to be in 
compliance with the Prevent All Tobacco Cigarettes Trafficking (PACT) 
Act, Public Law No. 111-154, which restricts the mailability of 
cigarettes and smokeless tobacco.

DATES: Submit comments on or before May 17, 2010.

ADDRESSES: Mail or deliver written comments to the Manager, Mailing 
Standards, U.S. Postal Service, 475 L'Enfant Plaza, SW., Room 3436, 
Washington, DC 20260-3436. You may inspect and photocopy all written 
comments at USPS Headquarters Library, 475 L'Enfant Plaza, SW., 11th 
Floor North, Washington, DC, between 9 a.m. and 4 p.m., Monday through 
Friday. E-mail comments, containing the name and address of the 
commenter, may be sent to: <a href="/cdn-cgi/l/email-protection#6f220e06030601083c1b0e010b0e1d0b1c2f1a1c1f1c41080019"><span class="__cf_email__" data-cfemail="c68ba7afaaafa8a195b2a7a8a2a7b4a2b586b3b5b6b5e8a1a9b0">[email protected]</span></a>, with a subject 
line of ``PACT Act.'' Faxed comments are not accepted.

FOR FURTHER INFORMATION CONTACT: Anthony Alverno, 202-268-2997, or Mary 
Collins, 202-268-5440.

SUPPLEMENTARY INFORMATION: 
    On March 31, 2010, the Prevent All Cigarette Trafficking (PACT) Act 
of 2009, Public Law No. 111-154 was enacted. The Act's purposes 
include:
    <bullet> Requiring Internet-based and other remote sellers of 
cigarettes and smokeless tobacco to comply with laws applied to other 
tobacco retailers;
    <bullet> Creating disincentives for the illegal smuggling of 
tobacco products;
    <bullet> Enhancing enforcement tools to deal with cigarette 
smuggling;
    <bullet> Stemming trafficking;
    <bullet> Increasing collection of federal, state, and local excise 
taxes on cigarettes and smokeless tobacco; and
    <bullet> Preventing youth access through Internet and contraband 
sales.
    Section 3 of the PACT Act pertains to the Postal Service and 
creates a new section 1716E of Title 18, U.S. Code. Section 3 of the 
PACT Act provides that, subject to certain exceptions, cigarettes, 
including roll-your-own tobacco and

[[Page 24535]]

smokeless tobacco are nonmailable. Exceptions in the PACT Act permit 
the mailing of cigarettes and/or smokeless tobacco in narrowly defined 
circumstances, as described below.
    <bullet> Noncontiguous States: Intrastate shipments within Alaska 
or Hawaii;
    <bullet> Business/Regulatory Purposes: Shipments transmitted 
between verified and authorized tobacco industry businesses for 
business purposes, or between such businesses and federal or state 
agencies for regulatory purposes;
    <bullet> Certain Individuals: Infrequent, lightweight shipments 
mailed between adult individuals;
    <bullet> Consumer Testing: Shipments of cigarettes sent by verified 
and authorized manufacturers to adult smokers for consumer testing 
purposes; and
    <bullet> Public Health: Shipments by federal agencies for public 
health purposes under similar rules applied to manufacturers conducting 
consumer testing.
    The PACT Act provides that the Postal Service cannot accept or 
transmit any package that it knows, or has reasonable cause to believe, 
contains nonmailable smokeless tobacco or cigarettes. The proposed rule 
explains that the Postal Service has reasonable cause to not accept for 
delivery or transmit a package based on:
    <bullet> A statement on a publicly available Web site, or an 
advertisement, by any person that the person will mail matter which is 
nonmailable under this section in return for payment; or
    <bullet> The fact that the mailer or other person on whose behalf a 
mailing is being made is on the U.S. Attorney General's List of 
Unregistered or Noncompliant Delivery Sellers.
    Nonmailable cigarettes and smokeless tobacco deposited in the mail 
are subject to seizure and forfeiture. Senders of nonmailable 
cigarettes or smokeless tobacco are subject to criminal fines, 
imprisonment, and civil penalties.
    Section 6 of the PACT Act provides that the nonmailability 
provisions, as well as the noncontiguous states exception, take effect 
90 days after enactment. With respect to the remaining exceptions, the 
PACT Act requires the Postal Service to promulgate a final rule no 
later than 180 days after enactment of the PACT Act. 18 U.S.C. 
1716E(b)(3)(B)(i), (4)(B)(i), (5)(C)(i). The Postal Service accordingly 
will attempt to publish a final rule effective June 29, 2010, that, at 
a minimum, will cover the general nonmailability provisions and the 
noncontiguous states exception. The Postal Service will attempt to 
issue a final rule to give effect to the remaining exceptions to the 
PACT Act as soon as possible, but no later than September 27, 2010.
    The Postal Service offers the following observations on the various 
aspects of the proposed rule below.
    Definitions: Consistent with the PACT Act, the proposed rule uses 
the definitions of cigarettes, roll-your-own tobacco, smokeless 
tobacco, cigars, consumer testing, and states found in federal law in 
Titles 15, 18, and 26 of the U.S. Code. As provided in 18 U.S.C. 
1716E(b)(1), cigars are excluded from the mailability ban and therefore 
may be mailed regardless of any conditions required for the mailing of 
other applicable products under the PACT Act exceptions.
    Mailability: The proposed rule incorporates the PACT Act 
mailability restrictions for cigarettes and smokeless tobacco.
    Coverage of Exceptions: The PACT Act governs the permissibility of 
certain items within the Postal Service's mailstream network. The 
complex verification requirements for the PACT Act's exceptions, 
combined with the strict consequences of any noncompliance, render it 
impracticable for these requirements to be made applicable to mail 
originating or destinating outside of the Postal Service's service 
area. Therefore, the Postal Service does not believe that any 
alternative exists at this time to allow U.S. mailers to tender 
cigarettes and smokeless tobacco as outbound international mail or to 
receive them as inbound international mail under the PACT Act's 
exceptions. The proposed rule incorporates these principles by 
restricting the exceptions' applicability to domestic mail, but not to 
mail treated as domestic under Mailing Standards of the United States 
Postal Service, Domestic Mail Manual (DMM) 608.2.2 or international 
mail as defined in DMM 608.2.3.
    The applicability of these proposed rules to domestic mail under 
DMM 608.2.1 would include mail to, from, and between military 
installations, Army Post Offices (APOs), Fleet Post Offices (FPOs), and 
Diplomatic Post Offices (DPOs), except for mail treated as domestic 
under DMM 608.2.2. Delivery rules would apply to overseas military mail 
as practicable under the certain individuals' exception. Hold for 
Pickup service would not be required for delivery to APO, FPO, and DPO 
addresses.
    Noncontiguous States Exception: The PACT Act permits the mailing of 
cigarettes and smokeless tobacco within the State of Alaska and within 
the State of Hawaii. 18 U.S.C. 1716E(b)(2). The proposed rule would 
require that intra-Alaskan and intra-Hawaiian shipments of cigarettes 
or smokeless tobacco:
    <bullet> Be presented in a face-to-face transaction with a postal 
employee (thereby enabling acceptance personnel to verify that the 
shipment will destinate in the noncontiguous state of origin),
    <bullet> Destinate in the state of origin,
    <bullet> Bear a return address that is within the state of origin, 
and
    <bullet> Be marked with the following exterior marking on the 
address side of the mailpiece: ``INTRASTATE SHIPMENT OF CIGARETTES OR 
SMOKELESS TOBACCO.''
    Business/Regulatory Purposes Exception: Eligible mailers and 
recipients under the business/regulatory purposes exception include 
federal and state agencies, 18 U.S.C. 1716E(b)(3)(A)(ii), as well as 
``legally operating businesses that have all applicable State and 
Federal Government licenses or permits and are engaged in tobacco 
product manufacturing, distribution, wholesale, export, import, 
testing, investigation, or research.'' 18 U.S.C. 1716E(b)(3)(A)(i). The 
PACT Act charges the Postal Service with verifying that any person 
submitting an otherwise nonmailable tobacco product into the mails, and 
any person receiving such a product through the mails, as authorized 
under the business/regulatory purposes exception, is a business or 
government agency within the scope of the exception. 18 U.S.C. 
1716E(b)(3)(B)(ii)(I)-(II).
    The Postal Service proposes to require that each customer seeking 
to avail itself of this exception submit an application to the manager, 
Pricing and Classification Service Center (PCSC). The application 
requires the customer to furnish information about its legal status, 
any applicable licenses, and authority under which it operates. In 
addition, the applicant would be required to furnish similar 
information for all entities to which its mailings under this exception 
are addressed and to identify all locations where the applicant will 
present mail containing cigarettes and smokeless tobacco. The applicant 
would be required to update this information anytime it intends to mail 
to an entity or at a location not previously on its list. Only those 
shipments addressed to designated recipients and presented at 
designated locations would be eligible for the business/regulatory 
purposes exception. Before tendering any shipment under this exception, 
the mailer must present proof that the Postal Service has

[[Page 24536]]

authorized the mailer to tender such shipments at that location.
    Based on information furnished in the customer's application, the 
Postal Service will make determinations of eligibility to mail under 
this exception. The applicant bears the burden of establishing its and 
its recipients' eligibility as legally operating businesses that have 
all applicable state and federal government licenses or permits and 
that are engaged in tobacco product manufacturing, distribution, 
wholesale, export, import, testing, investigation, or research; or, in 
the case of mailings for regulatory purposes, the applicant's or its 
recipient's status as a federal or state agency. Customers whose 
applications or amendments to existing applications are denied in whole 
or in part may appeal to the manager, PCSC. The proposed rule provides 
that eligibility to mail under the business/regulatory purposes 
exception may be revoked by the manager, PCSC, in the event of failure 
to comply with any applicable rules and regulations. Decisions by the 
manager, PCSC, to uphold the denial of an application or to revoke a 
customer's eligibility under the business/regulatory purposes exception 
may be appealed to the Judicial Officer under 39 CFR part 953. In order 
to ensure that eligibility determinations remain current, the proposed 
rule provides that any authorization to mail under this exception will 
lapse if the mailer does not actually tender any such mail during any 
six-month period, and that the mailer must submit a new application for 
eligibility for any future mailings after that point.
    The PACT Act requires that eligible shipments under this exception 
be sent via mail classes that provide for the ``tracking and 
confirmation of the delivery.'' 18 U.S.C. 1716E(b)(3)(B)(ii)(III). The 
mail service that fulfills this requirement is Express Mail service, 
which offers tracking information and confirmation of delivery. 
Consequently, the proposed rule specifies that eligible shipments under 
the business/regulatory purposes exception would be required to use 
Express Mail service.
    The PACT Act provides that eligible mailings be ``marked with 
marking that makes it clear to employees of the United States Postal 
Service that it is a permitted mailing of otherwise nonmailable tobacco 
products that may be delivered only to a permitted government agency or 
business and may not be delivered to any residence or individual 
person.'' 18 U.S.C. 1716E(b)(3)(B)(ii)(VI). The Postal Service 
accordingly proposes that each mailing tendered under the business/
regulatory purposes exception bear the following marking: ''PERMITTED 
TOBACCO PRODUCT--DELIVER ONLY TO ADDRESSED BUSINESS/AGENCY-- RECIPIENT 
MUST FURNISH PROOF OF AGE AND EMPLOYMENT OR AGENCY.'' The marking would 
be required to appear on the exterior of the address side of the 
mailing container.
    The PACT Act requires that the Postal Service maintain information, 
to include ``the identity of the business or government entity 
submitting the mailing containing otherwise nonmailable tobacco 
products for delivery and the identity of the business or government 
entity receiving the mailing'' for a three-year period beginning on the 
date of the mailing. 18 U.S.C. 1716(b)(3)(B)(ii)(IV)-(V). Such 
information must be made available to designated law enforcement 
agencies during the designated period of retention. The Postal Service 
understands this retention requirement to apply to sender and recipient 
name and address information for each mailing. Currently, the Postal 
Service does not organize or retain handwritten or typed Express Mail 
mailing labels for the designated statutory retention period. To comply 
with this requirement, the Postal Service proposes that all customers 
seeking to mail under this exception use Express Mail service with 
Return Receipt. The Return Receipt must bear the sender's eligibility 
number issued by the PCSC as well as the addressee's full name and 
address, and be made returnable to the manager, PCSC, which will retain 
the record for the requisite period. Further, the business or 
government name and full mailing address of the sender and recipient 
would be required to appear on the Express Mail label, and match those 
listed on the customer's application on file with the Postal Service. 
18 U.S.C. 1716E(b)(3)(B)(ii)(IV).
    The PACT Act provides that eligible mailings under the business/
regulatory purposes exception ``be delivered only to a verified 
employee of the recipient business or government agency, who is not a 
minor and who shall be required to sign for the mailing.'' 18 U.S.C. 
1716E(b)(3)(B)(ii)(VII). For this exception, the term ``minor'' is 
defined as ``an individual who is less than the minimum age required 
for the legal sale or purchase of tobacco products as determined by 
applicable law at the place the individual is located.'' 18 U.S.C. 
1716E(b)(3)(C). To implement this requirement, the proposed rule would 
require that Express Mail service be used without the option for waiver 
of signature. Further, to ensure that delivery is effected on a person 
who is a representative of the company and not a minor, the proposed 
rule would require that all Express Mail shipments under this exception 
be required to be delivered using Hold for Pickup service. Hold for 
Pickup is shipped directly to a postal retail location, in lieu of 
being deposited at the recipient's address. The package is held until 
the recipient retrieves it during retail office hours. This measure 
would reduce the potential that underage or unauthorized individuals 
may receive a nonmailable shipment of cigarettes or smokeless tobacco. 
Furthermore, the recipient would be required to furnish proof of age 
through production of a driver's license, passport, or other 
government-issued photo identification that lists age or date of birth, 
as well as proof that the recipient is an employee or agent of the 
business or government entity identified on the mailing label.
    Certain Individuals: The exception for certain individuals 
generally permits the mailing of small quantities of cigarettes or 
smokeless tobacco sent non-commercially by individual adults to 
businesses or other adults. 18 U.S.C. 1716E(b)(4)(A). Such shipments 
can include, but are not limited to, the following:
    <bullet> Cigarettes and smokeless tobacco exchanged as gifts 
between individual adults; and
    <bullet> The return by a consumer of a damaged or unacceptable 
tobacco product to the manufacturer.
    For purposes of the certain individuals' exception, the PACT Act 
requires the Postal Service to ``verify that any person submitting an 
otherwise nonmailable tobacco product into the mails * * * is the 
individual identified on the return address label of the package and is 
not a minor.'' 18 U.S.C. 1716E(b)(4)(B)(ii)(I). Further, for a mailing 
addressed to an individual recipient, the PACT Act specifies that the 
sender affirm that the recipient is not a minor. 18 U.S.C. 
1716E(b)(4)(B)(ii)(II). For purposes of this exception, a minor is ``an 
individual who is less than the minimum age required for the legal sale 
or purchase of tobacco products as determined by applicable law at the 
place the individual is located.'' 18 U.S.C. 1716E(b)(4)(C).
    To give effect to these statutory requirements, the proposed rule 
provides that shipments by individuals of cigarettes or smokeless 
tobacco would be required to bear the sender's name in the return 
address, and that such shipments be presented in a face-to-face 
transaction with a postal employee. In

[[Page 24537]]

this manner, the Postal Service would be able to discharge its 
obligation to verify the sender's age and confirm that the sender's 
identification matches the name listed in the return address. Age and 
identity would be verified through the use of government-issued photo 
identification that lists age or date of birth, such as a driver's 
license or passport. Further, for shipments addressed to an individual, 
the proposed rule would require that the recipient's first and last 
name appear in the address block (in lieu of a generic descriptor, such 
as ``resident'' or ``occupant'') on the mailpiece. To fulfill the 
requirements of the PACT Act, the proposed rule specifies that at the 
time of the mailing, the customer would be required to orally affirm to 
the accepting postal employee that the recipient is not a minor under 
the laws applicable to the recipient at the destination location.
    The PACT Act also specifies additional quantity and frequency 
limitations on the certain individuals' exception. In particular, such 
mailings cannot weigh in excess of 10 ounces. 18 U.S.C. 
1716E(b)(4)(B)(ii)(III). Shipments entered under this exception are 
capped at no more than 10 mailings in any 30-day period. 18 U.S.C. 
1716E(b)(4)(B)(ii)(VII). Further, as with the business/regulatory 
purposes exception, such mailings may only be sent via mail classes 
that provide for the ``tracking and confirmation of the delivery.'' 18 
U.S.C. 1716E(b)(4)(B)(ii)(IV). Again, the mail service that fulfills 
this requirement is Express Mail, which offers tracking information and 
confirmation of delivery. As explained above, the proposed rule 
specifies that eligible shipments under the certain individuals' 
exception would be required to use Express Mail with Hold for Pickup 
service.
    The PACT Act provides that mailings under the certain individuals' 
exception ``shall not be delivered or placed in the possession of any 
individual who has not been verified as not being a minor.'' 18 U.S.C. 
1716E(b)(4)(B)(ii)(V). To implement this requirement, the proposed rule 
would require that Express Mail be delivered in the context of a face-
to-face interaction between the recipient and postal employee, thereby 
enabling age verification. Each piece would be required to be marked 
with a special marking, thereby triggering the need for age 
verification at delivery: ``PERMITTED TOBACCO PRODUCT--DELIVER ONLY TO 
AGE-VERIFIED ADULT OF LEGAL AGE.'' To ensure that delivery is effected 
on a person who is not a minor, the proposed rule would require that 
Express Mail shipments (other than Express Mail shipments to APO, FPO, 
or DPO addresses) under this exception be delivered using Hold for 
Pickup service, whereby the shipment would be held at a postal retail 
unit for pickup by the recipient. Further, the recipient would be 
required to furnish proof of age through production of a driver's 
license, passport, or other government-issued photo identification that 
lists age or date of birth.
    The proposed rule provides that eligibility to mail under the 
certain individuals' exception may be revoked by the manager, PCSC, in 
the event of failure to comply with any applicable rules and 
regulations. A customer may appeal an adverse decision to the manager, 
Mailing Standards. Decisions by the manager, Mailing Standards, to 
revoke a customer's eligibility under this exception may be appealed to 
the Judicial Officer under 39 CFR part 953.
    Consumer Testing: The exception for consumer testing permits a 
legally operating cigarette manufacturer (or legally authorized agent) 
to mail cigarettes to verified adult smokers solely for consumer 
testing purposes. 18 U.S.C. 1716E(b)(5)(A). Consumer testing is defined 
in the PACT Act as ``testing limited to formal data collection and 
analysis for the specific purpose of evaluating the product for quality 
assurance and benchmarking purposes of cigarette brands or sub-brands 
among existing adult smokers.'' 18 U.S.C. 1716E(b)(5)(D)(ii). Notably, 
the statutory exception applies only to cigarettes and cigarette 
manufacturers (or legally authorized agents) and not to smokeless 
tobacco or non-manufacturer participants in the tobacco industry.
    The PACT Act limits eligibility to cigarette manufacturers that 
have ``a permit, in good standing, issued under section 5713 of the 
Internal Revenue Code of 1986'' and the legally authorized agents of 
such manufacturers. 18 U.S.C. 1716E(b)(5)(A)(i). The PACT Act requires 
the Postal Service to ``verify that any person submitting a tobacco 
product into the mails under this paragraph is a legally operating 
cigarette manufacturer permitted to make a mailing under this 
paragraph, or an agent legally authorized by the legally operating 
cigarette manufacturer to submit the tobacco product into the mails on 
behalf of the manufacturer.'' 18 U.S.C. 1716E(b)(5)(C)(ii)(I). As with 
the business/regulatory purposes exception, the Postal Service intends 
to discharge this obligation by requiring customers to submit an 
application to the manager, PCSC, for eligibility to mail under this 
exception. The application would require the applicant to provide 
information to establish that the customer, or the customer's principal 
if the customer is a manufacturer's agent, is a cigarette manufacturer 
in good standing under 26 U.S.C. 5713. In addition, the applicant would 
be required to identify all locations where mail containing cigarettes 
for consumer testing will be presented. Any changes to the customer's 
information or entry locations would require a subsequently filed 
amendment to the customer's application. As part of its application, 
the customer would sign a certification to the effect that the customer 
will comply with the following PACT Act requirements, 18 U.S.C. 
1716E(b)(5)(C)(ii)(II)-(III):
    <bullet> Any recipient of consumer testing shipments of cigarettes 
is an adult established smoker;
    <bullet> No recipient has made any payment for the cigarettes;
    <bullet> Any recipient will sign a written statement to the effect 
indicating that the recipient wishes to receive the mailings;
    <bullet> The manufacturer or the legally authorized agent of the 
manufacturer will offer the opportunity for any recipient to withdraw 
the recipient's written statement at least once in every three-month 
period; and
    <bullet> Any package mailed under this exception will contain not 
more than 12 packs of cigarettes (240 cigarettes), on which all taxes 
levied by the destination state and locality have been paid and all 
related destination state tax stamps or other tax-payment indicia have 
been applied.
    To facilitate administration and enforcement of this exception, the 
proposed rule also requires that the customer certify that it will 
maintain records establishing compliance with these obligations for a 
three-year period from the date of each mailing. Customers must provide 
copies of records establishing compliance to the manager, PCSC, upon 
request no later than ten business days after the date of the request. 
Before tendering any shipment under this exception, the mailer must 
present proof that the Postal Service has authorized the mailer to 
tender such shipments at that location.
    Customers whose applications are denied by the Manager, PCSC, may 
appeal to the manager, Mailing Standards. The proposed rule provides 
that eligibility to mail under the consumer testing exception may be 
revoked by the manager, Mailing Standards, in the event of failure to 
comply with any applicable rules and regulations. Decisions by the 
manager, Mailing Standards, to uphold the denial of an application or 
to revoke a

[[Page 24538]]

customer's eligibility under the consumer testing exception may be 
appealed to the Judicial Officer under 39 CFR part 953. To ensure that 
eligibility determinations remain current with respect to mailers' 
behavior, the proposed rule provides that any authorization to mail 
under this exception would lapse if the mailer does not actually tender 
any such mail during any six-month period, and that the mailer must 
submit a new application for eligibility for any future mailings after 
that point.
    The PACT Act establishes quantity, frequency, and other 
limitations. The proposed rule accordingly limits quantity to twelve 
packs of cigarettes per package and frequency of no more than one 
package from any one manufacturer to an adult smoker during any 30-day 
period. 18 U.S.C. 1716E(b)(5)(A)(ii)-(iii). The proposed rule also 
implements PACT Act requirements for payment of destination state and 
locality taxes and the use of tax stamps or other indicia. 18 U.S.C. 
1716E(b)(5)(A)(iv). Additionally, the proposed rule incorporates 
conditions for consumer testing:
    <bullet> That no payment by the recipient for the cigarettes is 
permitted;
    <bullet> The recipient must be paid a fee for participation in 
consumer tests;
    <bullet> The recipient must evaluate the cigarettes and provide 
feedback to the manufacturer in connection with the consumer test; and
    <bullet> The total calendar-year distribution of cigarettes under 
the consumer testing exception may not exceed one percent of the 
manufacturer's total cigarette sales for the prior calendar year.

18 U.S.C. 1716E(b)(5)(A)(v)(I)-(III), (B)(ii).

    Consistent with the PACT Act, the mailing of cigarettes for 
consumer testing purposes would not be permitted to states that 
prohibit the delivery of cigarettes to individuals, and these rules 
shall not preempt, limit, or otherwise affect any related state laws. 
18 U.S.C. 1716E(b)(5)(B)(i). The proposed rule provides that customers 
maintain records to establish compliance with all of these requirements 
for three years.
    The PACT Act requires that eligible shipments under this exception 
be sent via mail systems that provide for the ``tracking and 
confirmation of the delivery.'' 18 U.S.C. 1716E(b)(5)(C)(ii)(IV). As 
explained above, the mail service that fulfills this requirement is 
Express Mail service, which offers tracking information and 
confirmation of delivery. Consequently, the proposed rule specifies 
that eligible shipments under the consumer testing exception would be 
required to use Express Mail service.
    The PACT Act provides that eligible mailings under the consumer 
testing exception be delivered ``only to the named recipient and only 
after verifying that the recipient is an adult.'' 18 U.S.C. 
1716E(b)(5)(C)(ii)(VII). For purposes of the consumer testing 
exception, the term ``adult'' is defined in this exception as ``an 
individual who is not less than 21 years of age.'' 18 U.S.C. 
1716E(b)(5)(D)(i). To implement this requirement, the proposed rule 
would require that Express Mail service be used without the option for 
waiver of signature. Further, to ensure that delivery is effected on a 
person who is the named individual on the package and at least 21 years 
of age, the proposed rule would require that all Express Mail shipments 
under this exception be required to be delivered using Hold for Pickup 
service. For age and identity verification, the recipient would be 
required to furnish proof of age through production of a driver's 
license, passport, or other government-issued photo identification that 
lists age or date of birth.
    The PACT Act provides that eligible mailings ``be marked with 
marking that makes it clear to employees of the United States Postal 
Service that it is a permitted mailing of otherwise nonmailable tobacco 
products that may be delivered only to the named recipient after 
verifying that the recipient is an adult.'' 18 U.S.C. 
1716E(b)(5)(C)(ii)(VI). The Postal Service accordingly proposes that 
each mailing tendered under the consumer testing exception bear the 
following marking: ``PERMITTED TOBACCO PRODUCT--DELIVER ONLY TO 
ADDRESSEE UPON AGE VERIFICATION--AGE 21 OR ABOVE.'' The marking would 
be required to appear on the exterior of the address side of the 
mailing container, so as to ensure that eligible shipments are 
correctly identified as falling under the consumer testing exception.
    The PACT Act requires that the Postal Service maintain records 
``relating to a mailing'' under the consumer testing exception for a 
three-year period beginning on the date of the mailing. 18 U.S.C. 
1716E(b)(5)(C)(ii)(V). Such information must be made available to 
certain law enforcement agencies during the designated period of 
retention. The Postal Service understands this retention requirement to 
apply to mailing information, including sender and address information, 
for each mailing. Currently, the Postal Service does not organize or 
retain handwritten or typed Express Mail mailing labels for the 
designated statutory retention period. To comply with this requirement, 
the Postal Service proposes that customers seeking to mail under this 
exception use Express Mail service with Return Receipt. The Return 
Receipt must bear the sender's eligibility number issued by the PCSC, 
as well as the addressee's full name and address, and be made 
returnable to the Manager, PCSC, who will retain the record for the 
requisite period.
    Public Health: The PACT Act provides that federal government 
agencies ``involved in the consumer testing of tobacco products solely 
for public health purposes may mail cigarettes under the same 
requirements, restrictions, and rules and procedures that apply to 
consumer testing mailings of cigarettes by manufacturers,'' with the 
exception that the agency shall not be required to pay recipients for 
participating in testing. 18 U.S.C. 1716E(b)(6). The proposed rule 
accordingly creates a public health exception for federal agencies. 
This exception is made subject to the same mailing standards as those 
applied to manufacturers involved in consumer testing, with the 
exception that federal agencies do not need to comply with the mailing 
standard requiring that the customer certify that the recipient is 
being paid a fee for participation in consumer tests.
    The Postal Service accordingly invites comments on the following 
proposed revision of the Mailing Standards of the United States Postal 
Service, Domestic Mail Manual, incorporated by reference in the Code of 
Federal Regulations. See 39 CFR 111.

List of Subjects in 39 CFR Part 111

    Administrative practice and procedure, Postal Service.

    Accordingly, 39 CFR part 111 is proposed to be amended as follows:

PART 111--[AMENDED]

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

    Authority:  5 U.S.C. 552(a); 13 U.S.C. 301-307; 18 U.S.C. 1692-
1737; 39 U.S.C. 101, 401, 403, 404, 414, 416, 3001-3011, 3201-3219, 
3403-3406, 3621, 3622, 3626, 3632, 3633, and 5001.

    2. Revise the following sections of Mailing Standards of the United 
States Postal Service, Domestic Mail Manual (DMM) as follows:

Mailing Standards of the United States Postal Service, Domestic Mail 
Manual (DMM)

* * * * *

[[Page 24539]]

600 Basic Standards for All Mailing Services

601 Mailability

* * * * *

[Renumber current 601.11 and 12 as new 12 and 13, and add new 11 as 
follows:]

11 Cigarettes and Smokeless Tobacco

11.1 Definitions

    For this standard, we define terms as follows:
    a. Cigarette: any roll of tobacco wrapped in paper or in any 
substance not containing tobacco, and any roll of tobacco wrapped in 
any substance containing tobacco which, because of its appearance, the 
type of tobacco used in the filler, or its packaging and labeling, is 
likely to be offered to, or purchased by, consumers as a cigarette. The 
term cigarette includes roll-your-own tobacco and excludes cigars.
    b. Smokeless tobacco: any finely cut, ground, powdered, or leaf 
tobacco that is intended to be placed in the oral or nasal cavity or 
otherwise consumed without being combusted.
    c. Cigar: any roll of tobacco wrapped in leaf tobacco or in any 
substance containing tobacco, unless, because of its appearance, the 
type of tobacco used in the filler, or its packaging and labeling, the 
product is likely to be offered to, or purchased by, consumers as a 
cigarette.
    d. Roll-your-own tobacco: any tobacco which, because of its 
appearance, type, packaging, or labeling, is suitable for use and 
likely to be offered to, or purchased by, consumers as tobacco for 
making cigarettes or cigars, or for use as wrappers thereof.
    e. Consumer testing: testing limited to formal data collection and 
analysis for the specific purpose of evaluating the product for quality 
assurance and benchmarking purposes of cigarette brands or sub-brands 
among existing adult smokers.
    f. State: any of the 50 states of the United States, the District 
of Columbia, and any commonwealth, territory, or possession of the 
United States.

11.2 Nonmailability

    Except as provided in 11.8.3, all cigarettes (including roll-your-
own tobacco) and smokeless tobacco are nonmailable and shall not be 
deposited in or carried through the Postal Service mailstream. The 
Postal Service will not accept for delivery or transmit any package 
that it knows, or has reasonable cause to believe, contains nonmailable 
cigarettes or smokeless tobacco. In the event the Postal Service 
reasonably suspects that a mailer is tendering nonmailable cigarettes 
or smokeless tobacco, then the mailer bears the burden of proof in 
establishing eligibility to mail. Nonmailable cigarettes and smokeless 
tobacco deposited in the mail are subject to seizure and forfeiture. 
Any nonmailable cigarettes and smokeless tobacco products seized and 
forfeited shall be destroyed or retained by the Federal Government for 
the detection or prosecution of crimes or related investigations and 
then destroyed. Senders of nonmailable cigarettes and smokeless tobacco 
may be subject to seizure and forfeiture of assets, criminal fines, 
imprisonment, and civil penalties. The Postal Service has reasonable 
cause not to accept for delivery or transmit a package based on:
    a. A statement on a publicly available website, or an 
advertisement, by any person that the person will mail matter which is 
nonmailable under this section in return for payment; or
    b. The fact that the mailer or other person on whose behalf a 
mailing is being made is on the U.S. Attorney General's List of 
Unregistered or Noncompliant Delivery Sellers.

11.3 Mailability Exceptions

    Cigarettes and smokeless tobacco are mailable if one of the 
conditions in 11.4 through 11.8 is met. These exceptions only apply to 
domestic mail under 608.2.1, including mail to, from, and between 
military installations and Army Post Office (APO), Fleet Post Office 
(FPO), and Diplomatic Post Office (DPO) addresses, with the exception 
that delivery procedures for overseas military mail under the certain 
individuals' exception in 11.6 may vary as practicable. These 
exceptions do not apply to mail treated as domestic under 608.2.2 or 
international mail as defined in 608.2.3.

11.4 Mailing Within Noncontiguous States

    Intra-Alaskan and intra-Hawaiian shipments of cigarettes or 
smokeless tobacco are mailable, provided that such mailings:
    a. Are presented in a face-to-face transaction with a postal 
employee within the state;
    b. Destinate in the same state of origin;
    c. Bear a valid complete return address that is within the state of 
origin; and
    d. Are marked with the following exterior marking on the address 
side of the mailpiece: ``INTRASTATE SHIPMENT OF CIGARETTES OR SMOKELESS 
TOBACCO.''

11.5 Exception for Business/Regulatory Purposes

    Eligibility to mail and to receive mail under the business/
regulatory purposes exception is limited to federal and state 
government agencies and legally operating businesses that have all 
applicable state and federal government licenses or permits and are 
engaged in tobacco product manufacturing, distribution, wholesale, 
export, import, testing, investigation, or research, only under the 
conditions in 11.5.1 through 11.5.3.

11.5.1 Application

    Each customer seeking to mail cigarettes or smokeless tobacco under 
the business/regulatory purposes exception must complete an application 
letter requesting to mail under the business/regulatory purposes 
exception.
    a. The applicant must furnish:
    1. Information about its legal status, any applicable licenses, and 
authority under which it operates;
    2. Information about the legal status, any applicable licenses, and 
operational authority for all entities to which the applicant's 
mailings under this exception will be addressed; and
    3. All locations where mail containing cigarettes and smokeless 
tobacco will be presented.
    The applicant must update this information anytime it intends to 
mail to an entity not on its list. Only those shipments containing 
otherwise nonmailable tobacco addressed to recipients on the customer's 
list of designated recipients would be eligible for the business/
regulatory purposes exception.
    b. The applicant must establish its and its recipients' eligibility 
as legally operating businesses that have all applicable state and 
federal government licenses or permits and are engaged in tobacco 
product manufacturing, distribution, wholesale, export, import, 
testing, investigation, or research; or, in the case of mailings for 
regulatory purposes, as a federal or state agency.
    c. Applications must be mailed to the manager, Pricing & 
Classification Service Center (PCSC), see 608.8.0 for address. The 
manager, PCSC, issues the initial agency decision of a determination of 
eligibility to mail under the business/regulatory purposes exception.
    d. Customers whose applications or amendments to existing 
applications are denied in whole or in part may appeal to the manager, 
Mailing Standards (see 608.8.0).
    e. Eligibility to mail under the business/regulatory purposes 
exception

[[Page 24540]]

may be revoked by the manager, Mailing Standards, in the event of 
failure to comply with any applicable rules and regulations. Decisions 
by the manager, Mailing Standards, to uphold the denial of an 
application or to revoke a customer's eligibility under the business/
regulatory purposes exception may be appealed to the Judicial Officer 
under 39 CFR part 953.
    f. Upon written request by a state or federal agency, the manager, 
Mailing Standards, may, in his or her discretion, waive certain 
application requirements for mailings entered by the requesting state 
or federal agency for regulatory purposes.
    g. Any determination of eligibility to mail under this exception 
shall lapse if the authorized mailer does not tender any mail under 
this exception within any six-month period. After that time, the 
affected mailer must apply for and receive new authorization for any 
mailings under this exception.

11.5.2 Mailing

    Customers eligible to mail under the business/regulatory purposes 
exception may enter mailings of cigarettes and smokeless tobacco only 
at the locations specified in the customer's application. Before 
mailing any shipment under this exception, the mailer must present 
proof that the PCSC has authorized the mailer to mail such shipments at 
that location. All mailings under the business/regulatory purposes 
exception must:
    a. Be entered as Express Mail with Hold for Pickup service (waiver 
of signature not permitted) (see 113);
    b. Be accompanied by a request for return receipt (PS Form 3811, 
see 503.6), which must bear the sender's eligibility number issued by 
the PCSC as well as the addressee's full name and address, and be made 
returnable to the manager, PCSC -- Tobacco Mailing Unit (see 608.8.0 
for address), which will retain the record for a three-year period;
    c. Bear the marking ``PERMITTED TOBACCO PRODUCT--DELIVER ONLY TO 
ADDRESSED BUSINESS/AGENCY--RECIPIENT MUST FURNISH PROOF OF AGE AND 
EMPLOYMENT OR AGENCY.'' on the address side of the mailpiece; and
    d. bear the business or government agency name and full mailing 
addresses of both the sender and recipient, both of which must match 
exactly those listed on the customer's application on file with the 
Postal Service.

11.5.3 Delivery

    Mailings bearing the marking for business/regulatory purposes can 
only be delivered to a verified employee of the addressee business or 
government agency. The recipient must show proof that he or she is an 
employee or agent of the business or government identified as the 
addressee on the mailing label. Delivery is completed under the 
following conditions:
    a. The recipient must be an adult of at least the minimum age for 
the legal sale or purchase of tobacco products at the place of 
delivery. The recipient must furnish proof of age via a driver's 
license, passport, or other government-issued photo identification that 
lists age or date of birth.
    b. Once age and the recipient's identity as an employee or agent of 
the addressee are established, the recipient must sign PS Form 3849 and 
PS Form 3811 in the appropriate signature blocks.

11.6 Exception for Certain Individuals

    The exception for certain individuals permits the mailing of small 
quantities of cigarettes or smokeless tobacco by individual adults to 
businesses or to other adults. Such shipments may include, but are not 
limited to, cigarettes and smokeless tobacco exchanged as gifts between 
individual adults and a damaged or unacceptable tobacco product 
returned by a consumer to the manufacturer. Eligibility to mail under 
the certain individuals' exception may be revoked by the manager, PCSC, 
in the event of failure to comply with any applicable rules and 
regulations. A customer may appeal an adverse initial decision to the 
manager, Mailing Standards (see 608.8.0). The mailer bears the burden 
of proof in establishing eligibility in the event of revocation. 
Decisions by the manager, Mailing Standards, to revoke a customer's 
eligibility under this exception may be appealed to the Judicial 
Officer under 39 CFR part 953. Mailings under this exception must be 
made under the conditions in 11.6.1 through 11.6.3.

11.6.1. Entry and Acceptance

    Mailings under the certain individuals' exception must be entered 
under the following conditions:
    a. Cigarettes or smokeless tobacco may only be mailed via a face-
to-face transaction with a postal employee.
    b. Cigarettes or smokeless tobacco may only be entered by an adult 
of at least the minimum age for the legal sale or purchase of tobacco 
products at the place of entry.
    c. The individual presenting the mailing must furnish government-
issued photo identification that lists age or date of birth, such as a 
driver's license or passport, at the time of the mailing. The name on 
the identification must match the name of the sender appearing in the 
return address block of the mailpiece.
    d. For mailings addressed to an individual, at the time the mailing 
is presented, the customer must orally confirm that the addressee is an 
adult of at least the minimum age for the legal sale or purchase of 
tobacco products at the place of delivery.

11.6.2 Mailing

    No customer may send or cause to be sent more than 10 mailings 
under this exception in any 30-day period. All mailings under the 
certain individual's exception must:
    a. Be entered as Express Mail with Hold for Pickup service 
requested (except overseas military mail shipments (waiver of signature 
not available)); see 113.
    b. Bear the marking ``PERMITTED TOBACCO PRODUCT--DELIVER ONLY TO 
AGE-VERIFIED ADULT OF LEGAL AGE'' on the address side of the exterior 
of the mailpiece;
    c. Bear the full name and mailing address of the sender and 
recipient on the Express Mail label;
    d. Weigh no more than 10 ounces.

11.6.3 Delivery

    Delivery under the certain individuals' exception is made under the 
following conditions:
    a. The recipient signing for the Express Mail article must be an 
adult of at least the minimum age for the legal sale or purchase of 
tobacco products at the place of delivery.
    b. The recipient must furnish proof of age via a driver's license, 
passport, or other government-issued photo identification that lists 
age or date of birth.
    c. Once age is established, the recipient must sign PS Form 3849 in 
the appropriate signature block.

11.7 Exception for Consumer Testing

    The exception for consumer testing permits a legally operating 
cigarette manufacturer or a legally authorized agent of a legally 
operating cigarette manufacturer to mail cigarettes to verified adult 
smokers solely for consumer testing purposes. The manufacturer for 
which mailings are entered under this exception must have a permit, in 
good standing, issued under 26 U.S.C. 5713. The consumer testing 
exception applies only to cigarettes and not smokeless tobacco. Items 
must be mailed under conditions in 11.7.1 through 11.7.3.

11.7.1 Application

    Each customer seeking to mail cigarettes under the consumer testing

[[Page 24541]]

exception must submit an application letter to mail under consumer 
testing exception. The applicant must furnish:
    a. Information to establish that the customer, or the customer's 
principal if the customer is a manufacturer's agent, is a cigarette 
manufacturer in good standing under 26 U.S.C. 5713;
    b. If the customer is an agent of a manufacturer, complete details 
about the agency relationship with the manufacturer; and
    c. All locations where mail containing cigarettes for consumer 
testing will be presented.
    d. As part of its application, the applicant must certify in 
writing that it will comply with the following requirements:
    1. Any recipient of consumer testing samples of cigarettes is an 
adult established smoker;
    2. No recipient has made any payment for the cigarettes;
    3. Every recipient will sign a statement indicating that the 
recipient wishes to receive the mailings;
    4. The manufacturer or the legally authorized agent of the 
manufacturer will offer the opportunity for any recipient to withdraw 
the recipient's written statement at least once in every three-month 
period;
    5. Any package mailed under this exception will contain not more 
than 12 packs of cigarettes (maximum of 240 cigarettes) on which all 
taxes levied on the cigarettes by the state and locality of delivery 
have been paid and all related state tax stamps or other tax-payment 
indicia have been applied; and
    6. The manufacturer will maintain records establishing compliance 
with these obligations for a three-year period from the date of each 
mailing.
    e. The applicant must establish its eligibility by submitting 
applications to the manager, Pricing & Classification Service Center 
(PCSC).
    f. The applicant must provide any requested copies of records 
establishing compliance to the manager, PCSC (see 608.8.0), and/or the 
manager, Mailing Standards (see 608.8.0), upon request no later than 10 
business days after the date of the request.
    g. The manager, PCSC, issues the initial agency decision of a 
determination of eligibility to mail under the consumer testing 
exception. Customers whose applications are denied in whole or in part 
may appeal to the manager, Mailing Standards. Eligibility to mail under 
the consumer testing exception may be revoked by the manager, Mailing 
Standards, in the event of failure to comply with any applicable rules 
and regulations. Decisions by the manager, Mailing Standards, to uphold 
the denial of an application or to revoke a customer's eligibility 
under the consumer testing exception may be appealed to the Judicial 
Officer under 39 CFR part 953.
    h. Any determination of eligibility to mail under this exception 
shall lapse if the authorized mailer does not tender any mail under 
this exception within any six-month period. After that time, the 
affected mailer must apply for and receive new authorization for any 
further mailings under this exception.

11.7.2 Mailing

    Customers eligible to mail under the consumer testing exception may 
enter mailings of cigarettes only at the locations specified in the 
customer's application and under the following conditions:
    a. Before tendering any shipment under this exception, the mailer 
must present proof that the PCSC has authorized the mailer to tender 
such shipments at that location.
    b. All mailings under the consumer testing exception:
    1. Must be entered as Express Mail with Hold for Pickup service 
requested (waiver of signature not available); see 113.
    2. Be accompanied by a request for return receipt (PS Form 3811; 
see 503.6), which must bear the sender's eligibility number issued by 
the PCSC, as well as the addressee's full name and address, and be made 
returnable to the manager, PCSC--Tobacco Mailing Unit (see 608.8.0 for 
address);
    3. Must bear the marking ``PERMITTED TOBACCO PRODUCT--DELIVER ONLY 
TO ADDRESSEE UPON AGE VERIFICATION--AGE 21 OR ABOVE'' on the address 
side of the exterior of the mailpiece;
    4. Must bear the full mailing addresses of both the sender and 
recipient on the Express Mail label. The name and address of the sender 
must match exactly those listed on the customer's application on file 
with the PCSC;
    5. Are limited in tobacco contents to no more than 12 packs of 
cigarettes (maximum 240 cigarettes) on which all taxes levied on the 
cigarettes by the destination state and locality have been paid and all 
related state tax stamps or other tax-payment indicia have been 
applied;
    6. May not be addressed to an addressee residing in a state that 
prohibits the delivery or shipment of cigarettes to individuals in the 
destination state;
    7. May be sent only to an addressee who has not made any payment 
for the cigarettes, is being paid a fee for participation in consumer 
tests, and has agreed to evaluate the cigarettes and furnish feedback 
to the manufacturer in connection with the consumer test.
    c. Customers must maintain records to establish compliance with the 
requirements in 11.7.
    d. Mailing frequency may not exceed more than one package from any 
manufacturer to an adult smoker during any 30-day period.
    e. Nothing in these rules shall preempt, limit, or otherwise affect 
any related state laws.

11.7.3 Delivery

    Mailings bearing the marking for consumer testing can only be 
delivered to the named addressee under the following conditions:
    a. The recipient signing for the Express Mail Hold for Pickup 
service (see 113) article must be an adult of at least 21 years of age.
    b. The recipient must furnish proof of age through production of a 
driver's license, passport, or other government-issued photo 
identification that lists age or date of birth.
    c. The name on the identification must match the name of the 
addressee on the Express Mail label.
    d. Once age is established, the recipient must sign the PS Form 
3849 and PS Form 3811 in the appropriate signature blocks.

11.8 Public Health Exception

    Federal government agencies involved in the consumer testing of 
tobacco products solely for public health purposes may mail cigarettes 
under the mailing standards of 11.7, except as provided herein. The 
federal agency shall not be subject to the requirement that the 
recipient be paid a fee for participation in consumer tests. Upon 
written request, the manager, Mailing Standards, may, in his or her 
discretion, waive certain of the application requirements.
* * * * *
    We will publish an appropriate amendment to 39 CFR part 111 to 
reflect these changes when the proposal is adopted.

Stanley F. Mires,
Chief Counsel, Legislative.
[FR Doc. 2010-10660 Filed 5-3-10; 4:15 pm]
BILLING CODE 7710-12-P


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