[Federal Register Volume 60, Number 74 (Tuesday, April 18, 1995)]
[Rules and Regulations]
[Pages 19355-19359]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-9146]



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POSTAL SERVICE

39 CFR Part 111


Revisions to Standards for Use of Permit Imprints

AGENCY: Postal Service.

ACTION: Final rule.

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SUMMARY: This final rule amends Domestic Mail Manual (DMM) standards 
concerning methods of paying postage. These amendments will:
    Change the publishing requirements for Form 3526, Statement of 
Ownership, Management, and Circulation, to allow greater flexibility in 
selecting the issue in which the required information will appear.
    Relax the conditions under which a company permit imprint may be 
used while strengthening the ability of the Postal Service to identify 
the place of mailing of company permit imprint mail and to obtain 
information about such mailings. Generally, mailers will be allowed to 
use a company-style imprint without having to obtain permits at two or 
more post offices, but these mailers will be required to show a point 
of contact to obtain records of the mailing. Penalties for failure to 
provide records are also established.
    Relax the design restrictions on permit imprint indicia. Generally, 
the new standards allow for more creativity while retaining 
restrictions that ensure that the indicia content is readable and 
clearly identifiable as postage payment.
    Set a November 1, 1995, sunset date for the use of second-class key 
rates.

EFFECTIVE DATES: June 2, 1995, except for amendments to P200 which will 
become effective April 18, 1995.

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

SUPPLEMENTARY INFORMATION: On May 4, 1994, the Postal Service published 
for public comment several proposed changes to DMM standards related to 
bulk and presort mailing fees and the methods of paying postage (59 FR 
23038-23041). Comments on the proposed rule were initially due to the 
Postal Service by June 20, 1994, but the comment period was 
subsequently extended to July 20, 1994, as published on June 22, 1994 
(59 FR 32165).
    The Postal Service received responses from 20 commenters, including 
three mailer associations, collectively offering 25 comments on 
specific elements of the proposed rule. Of those comments, 16 concerned 
the proposed rule's provisions regarding the return address on mail 
paid by company permit imprint; five comments spoke to the provisions 
regarding publication of Form 3526, Statement of Ownership, Management, 
and Circulation; and one comment each was offered on the provisions 
regarding the preparation of permit imprint mailings, the payment of 
annual fees, the design of company permit imprint indicia, and the 
termination of key rates. Discussion of these comments and the 
corresponding aspects of the final rule are presented below.

Form 3526

    The proposed rule would amend DMM E213.4.3 to change the publishing 
requirements for Form 3526, Statement of Ownership, Management, and 
Circulation. Although under current standards all publishers are 
required to file Form 3526 by October 1 of each year, those publishing 
general or requester publications are further required to publish the 
information on that form in the second issue of that publication after 
October 1. Responding to publishers' requests for a more flexible 
standard on the issue in which the information may appear, the Postal 
Service proposed to revise the standard to allow publication of Form 
3526 in any issue published during the month of October. (The proposed 
rule incorrectly cited DMM E213.4.3 as the section being revised; the 
correct citation is DMM E216.4.3. This correction is reflected in the 
final rule.)
    The five commenters on this provision generally supported its 
objective of a more flexible rule but correctly noted that the proposed 
wording precluded achievement of some of what the standard would 
require. For instance, it would be a physical impossibility for a 
publication to include in the data shown on the published form 
information about returned or unsold copies of the issue of the 
publication in which the annual report appeared. Further, publications 
not issued in October would implicitly be required to amend their 
frequency or violate the proposed standard. One commenter also noted 
that not specifying by regulation the issue in which the form had to 
appear weakened its effectiveness in publicizing the data that the form 
contained by making it harder for an interested reader to find. Another 
commenter requested clarification of ``issue date,'' whether this term 
referred to the cover date of the issue or to the date when the issue 
was produced or distributed.
    The Postal Service agrees that its proposal was worded at cross-
purposes to the ends that it sought to accomplish. Accordingly, the 
final rule is amended to allow more time for complete issue data to be 
developed; to recognize the practical limitations of a publication's 
frequency of issue (by relating the publication of the form to that 
frequency and allowing approximately equal time for publishing the form 
to all publications in proportion to their frequency of issuance); and 
to state clearly that the date of publishing the form is related to 
when issues of the publication are mailed. This final rule does not 
take steps specifically to facilitate a reader's ability to find the 
published form because the proposed rule neither contemplated a problem 
in that regard nor sought comment on imposing such a new requirement. 
The Postal Service may consider this comment for a future proposal.

Company Permit Imprints

    The proposed rule would also amend DMM P040 to relax the conditions 
under which a company permit imprint may be used and to strengthen 
concurrently the ability of the Postal Service to identify the place of 
mailing of company permit imprint mail and to obtain information about 
such mailings.
    Current standards require a permit imprint indicium to contain the 
mailer's permit number and the name of the post office where the permit 
is held unless, for a mailer having permit imprint authorizations at 
two or more post offices, a company-style indicium is used (in which 
the name of the permit holder is substituted for the permit number and 
post office name). At the request of customers, the Postal Service 
proposed a relaxation of the applicable standards to let any permit 
holder use the company-style format.
    Current standards also require that company permit imprint 
mailpieces bear a complete domestic return address, but these standards 
do not specify what that address is to represent. This has permitted 
instances in which the permit holder has deliberately frustrated the 
efforts of the Postal Service to identify the point of mailing, what 
was mailed, and whether the correct postage was paid. Consequently, the 
Postal Service proposed to amend DMM P040 to require more information 
to document company permit imprint mailings (and mailings including 
company permit imprint pieces) by specifying that mailers use as the 
return address the location (the permit holder's or its 
[[Page 19356]] agent's) at which records for the mailing will be 
available to the Postal Service upon request; and to provide for 
suspension or revocation of permits if such records are not provided in 
a timely manner.
    No commenters opposed the relaxation of the current standards 
allowing access to use of company permit imprints, so that aspect of 
the proposed rule is adopted as the final rule. However, all the 16 
commenters on the element of the proposed rule regarding return 
addresses on company permit imprint mail were unsupportive of one or 
more of the associated tightened standards.
    Two commenters objected to the period for which mailing information 
would have to be retained at the location shown in the return address 
and argued that this period discouraged use of company permit imprints. 
These commenters asserted that the proposed 2-year retention period 
should be left at 1 year or dropped. The Postal Service agrees that the 
current 1-year retention period for company permit imprint mailings may 
be adequate, and it is restored in the final rule.
    Twelve commenters noted that different clients' or in-house 
departments' mailings may need different return addresses on mail 
bearing the same company imprint or that a single mailer or client may 
have business reasons to show different return addresses on different 
mailpieces (such as different processing centers). Such needs make 
showing a single return address impossible, the commenters argued. 
Three commenters suggested that the return address should simply 
represent ``the contact point at which more information about the 
physical location of the desired records can be obtained for USPS 
review.'' Three other commenters were sympathetic with the needs of the 
Postal Service to find mailing information, but these commenters noted 
the aforementioned concern about record management; two commenters 
noted the industry's sensitivity to the ``local'' appearance of 
mailpieces and how this is impeded by the presence of a ``nonlocal'' 
return address. Two of those commenters suggested the insertion of an 
origination code in the permit imprint indicia as an alternative to a 
specific return address.
    The Postal Service acknowledges the valid business concerns of its 
customers as represented in these comments. In part, however, some 
mailer anxiety may have arisen from an arguably reasonable misreading 
(or misinterpretation) of the proposed rule. Specifically, the Postal 
Service intended to require the mailer to show where mailing records 
could be made available if requested, not where they actually were 
generated or retained. (This is similar to the existing requirement for 
record availability at a ``known office of publication'' for second-
class mail.) These commenters apparently read the proposed rule as 
requiring a new and elaborate recordkeeping system; this was not the 
case, and the final rule is amended to make this clear.
    Moreover, the proposed rule is amended to include an option 
suggested by commenters as a method of identifying where records of the 
mailing can be made available for Postal Service review. The final rule 
retains the current standard for a complete domestic return address, 
but on the matter of what that address represents, the final rule gives 
the mailer two choices: (1) To show in the return address either the 
place where mailing records are maintained, at which they can be made 
available upon request by the USPS, or at which place where records are 
maintained can be determined; or (2) to show in the permit indicia the 
five-digit ZIP Code of the post office where records are available and 
separately notify that postmaster where the records are kept. The 
Postal Service believes that these options should afford both 
reasonable flexibility to customers and adequate information to locate 
the necessary mailing records.
    None of the commenters differed with the proposed rule's provisions 
concerning adverse actions the Postal Service would take against 
mailers who fail or refuse to provide mailing information; those 
provisions are adopted in the final rule.
    Another commenter noted that some of the current standards for 
government official mail would be directly opposed by the proposed 
standards for placement of the mailer's return address. The final rule 
is amended to except official mail from the proposed standards insofar 
as they are reflected in the final rule. This exception would be 
available only to mail constituting ``Official Business'' of the 
federal government and the mail preparation rules peculiar to it.

Permit Imprint Indicia Design

    The proposed rule would also amend DMM P040 to relax the design 
restrictions on permit imprint indicia. While allowing greater 
flexibility in the preparation of permit imprint indicia, the proposed 
standard would reinforce the distinctiveness of an indicium by allowing 
its incorporation into a design of the mailer's choice. The combined 
design would be subject to broad location and appearance standards that 
balance design flexibility and the Postal Service's legitimate interest 
in maintaining recognizable permit indicia.
    Two commenters spoke to this matter. One noted an anomalous 
interpretation of the existing preparation requirement that permit 
imprint mail be ``faced,'' stating that some post offices are taking 
the literal definition of ``facing'' (mail oriented with the addresses 
facing in the same direction) as prohibiting the counterstacking of 
flats (as permitted by current standards in DMM module M). The final 
rule is amended to clarify this point. The other commenter raised 
several issues: (1) The compatibility of the minimum dimensions in 
proposed DMM P040.4.2d with the placement of an indicia on a paper 
address label; (2) the definition of ``address area''; (3) the impact 
of proposed DMM P040.4.2d (i.e., that no printing appears above or to 
the right of the permit information); and (4) the inability to use 4-
point type for permits placed on paper address labels.
    The Postal Service does not have a fixed definition of ``address 
area,'' deferring to the self-definition inherent in the relatively 
specific space on a mailpiece left open by some mailers for the 
printing of an address or the placement of an address label. Although 
the absence of a specific definition of ``address area'' may leave room 
for occasional differences in interpretation, the Postal Service does 
not believe that sufficient benefit would be derived from the added 
standards needed to present a definition, given the varied ways 
customers design mail. Therefore, no change is made in the final rule 
in this regard.
    As the commenter detected, the proposed rule failed to contemplate 
fully permit imprints appearing on paper address labels. Accordingly, 
DMM P040.4.2b, P040.4.2d, and P040.4.2e of the final rule are amended. 
Rather than seeking to impose specific detailed standards for various 
types of address labels, the final rule simply requires that an area be 
allowed in the upper right corner of the address label that is 
sufficient to separate the indicium content from other information on 
the label, and to allow that content to be printed in a type size 
legible at normal reading distance. The Postal Service realizes that 
``normal reading distance'' is a subjective term but believes that a 
more specific measurement would be excessive and unnecessary.
    The commenter also appeared to be confused by the proposed rule 
regarding the presence of printing above and to [[Page 19357]] the 
right of the permit indicia. The final rule is amended to clarify that 
this prohibition is applied relatively depending on whether the indicia 
appears on the mailpiece, on a label, or in an address area. In the 
latter two cases, printing is allowed on the mailpiece itself beyond 
the address label or address area. Otherwise, if located directly on 
the mailpiece in the location specified in the proposed rule, little 
space remains for further printing without diminishing the visibility 
of the indicia; no change in the proposed rule is made in this regard.
    The final rule also adds a minor revision to DMM P040.1.9 to 
clarify that permit imprints may be printed on permanently affixed 
adhesive labels.

Key Rates

    The proposed rule would amend DMM P200 to set a sunset date for the 
use of key rates. Key rates basically represent a simplified method of 
computing zone-rate postage on issues of second-class publications 
having a stable distribution pattern. The proposed rule stated that no 
new users of key rate would be authorized after September 30, 1994, or 
upon adoption of a final rule, whichever is later, and, to allow for an 
orderly transition for remaining key rate users, termination of key 
rates would be deferred until March 31, 1995, or 6 months after 
adoption of a final rule, whichever is later.
    The one comment on this element of the proposed rule supported it, 
but questioned whether 6 months was sufficient time to allow for 
systems adjustments by current key rate mailers. The Postal Service 
recognizes the need for an orderly transition and believes that the 
proposed period is sufficient. This belief is buoyed by the absence of 
opposing comments and by the presumption that 6 months is a relatively 
generous timeframe in the context of the daily or weekly mailing 
frequency of typical key rate mailers. Accordingly, the final rule 
terminating key rates is adopted without change, except that fixed 
dates will be adopted to ensure adequate notice and compliance. Key 
rates will no longer be authorized for new customers after April 30, 
1995; use of key rates will no longer be permitted for current key rate 
mailers after October 31, 1995.

Mailing Fees

    Finally, the proposed rule also sought comments on changes to DMM 
E110.6.1, DMM E312.2.6, and DMM E411.4.0 that would have standardized 
the assessment of bulk or presort mailing fees on First-, third- and 
special fourth-class mail. On further consideration, the Postal Service 
has determined to retain the current provisions for the present time. 
The distinctions among these fees are based on historical differences 
and on assumptions about the amount of revenue that will be produced by 
those fees. Absent strong mailer desire for change (no supporting or 
objecting comments were received), the Postal Service will retain the 
current standards. (The sole commenter on this proposal did not address 
the change but asked for clarification regarding applications for bulk 
mailing permits (and the application fees), particularly whether those 
would be affected by the proposed rule; they would not.)

List of Subjects in 39 CFR Part 111

    Postal Service.

    For the reasons discussed above, the Postal Service hereby adopts 
the following amendments to the Domestic Mail Manual, which is 
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. The following sections of the Domestic Mail Manual are revised 
as noted below:
E216  Publisher Records
* * * * *

4.0  Statement of Ownership, Management, and Circulation

* * * * *
4.3  Publication
    The publisher of each publication authorized second-class mail 
privileges as a general or requester publication must publish a 
complete statement of ownership, containing all information required by 
Form 3526, in an issue of the publication to which that statement 
relates; other publications are not required to publish this statement. 
A reproduction of the Form 3526 submitted to the USPS may be used. The 
required information must appear in an issue whose primary mailed 
distribution begins not later than October 10 for publications issued 
more frequently than weekly, or not later than October 31 for 
publications issued weekly or less frequently but more frequently than 
monthly; or in the first issue whose primary mailed distribution begins 
after October 1 for all other publications.
* * * * *
P040  Permit Imprints

1.0  Basic Information

* * * * *
    [Renumber existing 1.6 and 1.7 as 1.8 and 1.9; add new 1.6 and 1.7 
and revise renumbered 1.8 and 1.9 as follows:]
1.6  Information
    Upon request by the USPS, a permit holder (and its agent, if 
applicable) must provide in a timely manner complete information (as 
specified in 3.5) about mailings or mailpieces for which postage was 
paid using its company permit imprint.
1.7  Suspension
    The USPS may immediately suspend the authorization to use a permit 
imprint if the permit holder or its agent refuses or fails to provide 
information as specified in 1.6.
1.8  Revocation
    A permit may be revoked for use in operating any unlawful scheme or 
enterprise, for nonuse for any 12-month period, for refusal to provide 
information about permit imprint use or mailings, or for any 
noncompliance with the standards applicable to using permit imprints. 
The permit holder may appeal a revocation in writing to the postmaster 
within 10 days of receipt of the notice. If revocation is initiated for 
nonuse and the permit holder states in writing that it plans to resume 
mailings within a 90-day period, the permit will be continued for 90 
days. Further appeal may be made through the postmaster to the district 
manager, customer service and sales, if the initial decision was made 
by the postmaster; or to the RCSC if the initial decision was made at 
the district level.
1.9  Use
    [Revise the first sentence as follows:]
    Permit imprints may be printed directly on mailpieces, on labels 
(including address labels) permanently affixed to mailpieces, or on 
mailpiece wrappers, envelopes, and other containers. * * *

2.0  Preparing Permit Imprints

* * * * *
2.4  Placement
    The entire permit imprint indicium must be aligned parallel with 
the address of the mailpiece and placed in the upper right corner of 
the address side, of the address area, or of the address label, subject 
to these conditions:
    a. The indicium must not encroach on reserved space on the 
mailpiece (e.g., [[Page 19358]] the OCR read area) if such a standard 
applies.
    b. The position (but not the format) of the indicium may be varied 
so that data processing equipment can simultaneously print the address, 
imprint, and other postal information.
* * * * *

3.0  Permit Imprint Content

* * * * *
3.5  Company Permit Imprint
    A company permit imprint is one in which the exact name of the 
company or individual holding the permit is shown in the permit imprint 
indicium in place of the city, state, and permit number. A customer may 
use a company permit imprint indicium if:
    a. For 1 year from the date of mailing, the permit holder or its 
agent keeps records for each mailing paid by company permit imprint and 
makes these available for USPS review on request. These records include 
(for each version of what was mailed, if applicable) the weight of a 
single piece; the total number of pieces mailed; the total postage; the 
date(s) and post office(s) of mailing, and other records required by 
the rate of postage claimed or the method of payment used. A complete 
sample mailpiece must be included for each identical-weight mailing, or 
each commingled or combined version in a nonidentical-weight mailing. 
Sample mailpieces are not required for nonidentical-piece third- or 
fourth-class machinable or irregular parcel mailings (e.g., merchandise 
and other fulfillment mailings).
    b. Each mailpiece bears a complete domestic return address. The 
return address on official mail is subject to the corresponding 
standards. On other unendorsed bulk third-class mail, the return 
address may be below the permit imprint. Except for official mail, if 
the return address is not the physical location at which the USPS may 
review the records listed in 3.5a (i.e., where they are either retained 
or can be made available) or is not a point of contact from which such 
a physical location can be readily determined, the mailer must:
    (1) Include in the indicia the 5-digit ZIP Code of the physical 
location at which the records listed in 3.5a are either retained or can 
be made available for USPS review; and
    (2) Provide the postmaster of that post office with a complete 
sample mailpiece (except as noted above); the date(s) and post 
office(s) of mailing; and the name and local address of the party from 
whom the records listed in 3.5a may be obtained.

4.0  Formats

    [Renumber existing 4.0 as 4.1, and Exhibits 4.0a-c as 4.1a-c; amend 
and add new 4.2 as follows:]
4.1  Basic Standard
    Unless prepared under the option in 4.2, permit imprint indicia for 
ordinary mail, official mail, and Mailgrams must be prepared in one of 
the formats shown in Exhibit 4.1a, Exhibit 4.1b, and Exhibit 4.1c, as 
applicable to the rate claimed or type of mail.
4.2  Optional Format
    Permit imprint indicia may be prepared in a format other than the 
basic format described in 4.1 subject to these conditions:
    a. The rule that forms a box around the content of the indicium may 
be omitted if the content remains as specified in 3.0 and Exhibits 
4.1a-c.
    b. Unless printed directly on an address label, the indicium 
content specified in 3.0 is placed within a clear area no smaller than 
\1/2\ inch high and \1/2\ inch wide, no more than 1\1/2\ inches below 
or left from the upper right corner of the mailpiece or of the address 
area when oriented to read the address, regardless of the processing 
category or the postage rate claimed. If printed on an address label 
(including paper, adhesive, and multilayer sandwich labels), the space 
allowed for the indicium content in 3.0 must be rectangular, large 
enough to ensure legibility of that content from a normal reading 
distance and to clearly separate it from other information on the 
label, and located in the upper right corner of the label when oriented 
to read the address.
    c. No printing appears in the indicium area other than that 
required or allowed under 3.0.
    d. Except as required to enclose the permit information, no 
printing appears either on the mailpiece above or to the right of the 
permit information when the indicium is printed directly on the 
mailpiece, or within the address area or on the address label above or 
to the right of the permit information when the indicium appears there.
    e. Except for indicia printed on address labels, the permit 
information is printed in no smaller than 4-point type. In indicia 
printed on address labels under 4.2b, the permit information must be 
legible from a normal reading distance.
    f. Except as required to enclose the permit information, any 
decorative designs intended to be part of the permit imprint indicium 
design appear below or to the left of the permit information in an area 
extending no farther than 4\1/2\ inches to the left of the right edge, 
and 1\1/2\ inches below the top edge of the mailpiece, address area, or 
address label, as applicable. Such designs must not resemble or imitate 
a postage meter imprint, postage stamp, postcard postage, or other 
method of postage payment; and must not include words, symbols, or 
designs used by the USPS to identify a class of mail, rate of postage, 
or level of service, unless such elements are correctly used under the 
applicable standards for the mailpiece on which they appear and the 
corresponding postage and fees have been paid.
    g. All other applicable standards in 1.0 through 5.0 are met.
* * * * *

5.0  Mailings

* * * * *
5.3  Preparation of Mailing
    All pieces in a permit imprint mailing must be faced (i.e., have 
the address facing in the same direction, unless counterstacked under 
the applicable standards) and meet the preparation standards applicable 
to the rate claimed. Mail claimed at a rate where postage varies by 
zone must be separated by zone when mailed unless authorized by the 
USPS.
5.4  Place of Mailing
    Mail must be deposited and accepted at the post office that issued 
the permit, at a time and place designated by the postmaster, except as 
otherwise provided for plant-verified drop shipments.
* * * * *
5.6  Prepayment
    Payment must be made for each mailing, either in cash or through an 
advance deposit account, before the mailing can be released for 
processing. Funds to pay postage must be deposited as prescribed by the 
USPS. If the funds paid or on deposit are less than that necessary to 
pay for a mailing, the difference must be paid or deposited before it 
or other permit imprint mailings can be accepted. Credit for postage is 
not allowed. Postage may not be paid partly in money and partly by 
postage stamps unless permitted by standard.
* * * * *
P200  Second-Class Mail
* * * * *

3.0  Key Rate

* * * * * [[Page 19359]] 
3.5  Termination of Key Rate Option
    New authorizations to use key rates will not be granted after April 
30, 1995. Publications already authorized key rates may continue to use 
them until October 31, 1995. Effective November 1, 1995, use of key 
rates is eliminated.
    [Delete 3.0 as of 11/1/95.]
* * * * *
    A transmittal letter making these changes in the pages of the 
Domestic Mail Manual will be published and will be transmitted to 
subscribers automatically. Notice of issuance will be published in the 
Federal Register as provided by 39 CFR 111.3.
Stanley F. Mires,
Chief Counsel, Legislative.
[FR Doc. 95-9146 Filed 4-17-95; 8:45 am]
BILLING CODE 7710-12-P