04-22234. Authorization to Manufacture and Distribute Postage Meters

AGENCY:

Postal Service.

ACTION:

Final rule.

SUMMARY:

This final rule amends the regulations that define a postage meter and its components and a manufacturer and/or distributor of postage meters. The rule also puts forth the responsibilities of any authorized person or entity to notify the Postal Service upon a change in ownership or control, or bankruptcy or insolvency, and identifies factors the Postal Service will consider in acting upon requests for changes of approval, ownership, or control of an approved manufacturer or distributor.

DATES:

This rule is effective on October 7, 2004.

FOR FURTHER INFORMATION CONTACT:

Wayne Wilkerson, manager of Postage Technology Management, by fax at 703-292-4050.

SUPPLEMENTARY INFORMATION:

A proposed rule was published in the Federal Register on May 10, 2004, pages 25864-25865, with comments due on or before July 9, 2004. Written comments were received from the vendor community.

The Postal Service gave thorough consideration to these comments, and incorporated as appropriate with only minor, non-material exception. You may review comments received by submitting a request of the office of Postage Technology Management at 703-292-3691 or by fax at 703-292-4073.

The final plan follows.

List of Subjects in 39 CFR Part 501

• Administrative practice and procedure
• Postal Service

The Amendment

For the reasons set out in this document, the Postal Service is amending 39 CFR Part 501 as follows:

PART 501—AUTHORIZATION TO MANUFACTURE AND DISTRIBUTE POSTAGE METERS

1. The authority citation for Part 501 continues to read as follows:

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

2. Revise § 501.1 to read as follows:

§ 501.1

Postage evidencing system/infrastructure authorization.

(a) Postage evidencing systems produce evidence of prepayment of U.S. postage by any method other than postage stamps or permit imprint. They include but are not limited to postage meters and PC Postage” systems. The Postal Service considers the infrastructure associated with such systems to be essential to the exercise of its specific powers to prescribe postage and provide evidence of payment of postage under 39 U.S.C. 404(a)(2) and (4).

(b) Due to the potential for adverse impact upon Postal Service revenue, the following activities may not be engaged in by any person or concern without prior, written approval of the Postal Service:

(1) Producing or distributing any postage evidencing system that generates U.S. postage.

(2) Repairing, distributing, refurbishing, remanufacturing, or destroying any component of a postage evidencing system that accounts for or authorizes the printing of U.S. postage.

(3) Owning or operating an infrastructure that maintains operating data for the production of U.S. postage, or accounts for U.S. postage purchased for distribution through a postage evidencing system.

(4) Owning or operating an infrastructure that maintains operating data that is used to facilitate licensing or registration with the Postal Service of users of a postage evidencing system.

(c) Any person or entity seeking authorization to perform any activity described in paragraph (b) of this section must submit a request to the Postal Service in person or in writing.

(d) Approval shall be based upon satisfactory evidence of the applicant's integrity and financial responsibility, and commitment to the security of the postage evidencing system, and a determination that disclosure to the applicant of the Postal Service customer, financial, or other data of a commercial nature necessary to perform the function for which approval is sought would be appropriate and consistent with good business practices within the meaning of 39 U.S.C. 410 (c)(2). The Postal Service may condition its approval on the agreement to undertakings by the applicant that would give the Postal Service appropriate assurance of the applicant's ability to meet its obligations under this section, including but not limited to the method and manner of performing certain financial, security, and servicing functions and the need to maintain sufficient financial reserves to guarantee uninterrupted performance of not less than 3 months of operation.

(e) Qualification and approval may be based upon conditions agreed to by the Postal Service and the applicant. The applicant is approved in writing to engage in the function(s) for which authorization was sought and approved.

3. Revise § 501.3 to read as follows:

§ 501.3

Changes in ownership or control, bankruptcy, or insolvency.

(a) Any person or entity authorized under § 501.1 must promptly notify the Postal Service when it has a reasonable expectation that there may be a change in its ownership or control including changes in the ownership of an affiliate which exercises control over its postage evidencing system operations in the United States. A change of ownership or control within the meaning of this section includes entry into a strategic alliance or other agreement whereby the third party has access to data related to the security of the system or the third party is a competitor to the Postal Service. Any person or entity seeking to acquire ownership or control of a person or entity authorized under § 501.1 must provide the Postal Service satisfactory evidence that it satisfies the conditions for approval stated in § 501.1. Early notification of a proposed change in ownership or control will facilitate expeditious review of an application to acquire ownership or control under this section.

(b) Any person or entity authorized under § 501.1 must promptly notify the Postal Service when it has a reasonable expectation that there may be a change in the status of its financial condition either through bankruptcy, insolvency, assignment for the benefit of creditors, or other similar financial action. Any person or entity authorized under § 501.1 who experiences a change in the status of its financial condition may, at the discretion of the Postal Service, have its authorization under § 501.1 modified or terminated.

Stanley F. Mires,

Chief Counsel, Legislative.