04-3497. Semipostal Stamp Program

AGENCY:

Postal Service.

ACTION:

Final rule.

SUMMARY:

This final rule clarifies procedures for determining offsets for the Postal Service's reasonable costs from semipostal differential revenue.

DATES:

This final rule is effective February 5, 2004.

FOR FURTHER INFORMATION CONTACT:

Cindy Tackett, [phone].

SUPPLEMENTARY INFORMATION:

On November 20, 2003, the Postal Service published a notice of proposed rulemaking (68 FR 65430) soliciting public comment on proposed changes to 39 CFR 551.8, which establishes procedures for determining offsets from semipostal differential revenue. No comments were received by the closing date, December 22, 2003. Thus, the Postal Service is adopting the proposed rule without substantive change. In preparing the final rule, nonsubstantive edits were made to section 551.8(d)(1).

The final rule is intended to clarify cost offset policies and procedures. Edits to section 551.8(a) and (c) expand the types of “comparable stamps” that could be used in conducting cost comparisons. The final rule no longer limits the universe of comparable stamps to commemorative stamps. This measure would accordingly allow other types of stamps, such as definitive or special issue stamps, to serve as a baseline for cost comparisons.

Edits to section 551.8(c) specify that different comparable stamps may be used for specific cost comparisons. The final rule thus clarifies that the Postal Service could select different comparable stamps for discrete cost comparisons. This will enhance accuracy in conducting comparative analysis for purposes of determining cost offsets.

Edits to section 551.8(d)(1) provide that costs less than $3,000 will be offset from differential revenue, but only if they are charged to a semipostal-specific finance number.

Edits to section 551.8(d)(2) clarify that costs that do not need to be tracked include not only those costs that are too burdensome to track, but also those costs that are too burdensome to estimate.

Finally, edits to section 551.8(d)(6) and (f) clarify that printing, sales, distribution, and several other types of costs could be recovered when they materially exceed the costs of comparable stamps.

The Postal Service hereby adopts the following revisions to the Code of Federal Regulations.

List of Subjects in 39 CFR Part 551

• Administrative practice and procedure
• Postal Service

For the reasons set out in this document, the Postal Service hereby amends 39 CFR part 551 as follows:

PART 551—SEMIPOSTAL STAMP PROGRAM

1. The authority citation for 39 CFR part 551 is revised to read as follows:

Authority: 39 U.S.C. 101, 201, 203, 401, 403, 404, 410, 414, 416.

2. In § 551.8, revise paragraphs (a), (c), (d), (e), and (g) to read as follows:

§ 551.8

Cost offset policy.

(a) Postal Service policy is to recover from the differential revenue for each semipostal stamp those costs that are determined to be attributable to the semipostal stamp and that would not normally be incurred for stamps having similar sales; physical characteristics; and marketing, promotional, and public relations activities (hereinafter “comparable stamps”).

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(c) For each semipostal stamp, the Office of Stamp Services, in coordination with the Office of Accounting, Finance, Controller, shall, based on judgment and available information, identify the comparable stamp(s) and create a profile of the typical cost characteristics of the comparable stamp(s) (e.g., manufacturing process, gum type), thereby establishing a baseline for cost comparison purposes. The determination of comparable stamps may change during or after the sales period, and different comparable stamp(s) may be used for specific cost comparisons.

(d) Except as specified, all costs associated with semipostal stamps will be tracked by the Office of Accounting, Finance, Controller. Costs that will not be tracked include:

(1) Costs that the Postal Service determines to be inconsequentially small, which include those cost items which are less than $3,000 per invoice and are not specifically charged to a semipostal finance number.

(2) Costs for which the cost of tracking or estimation would be burdensome (e.g., costs for which the cost of tracking exceeds the cost to be tracked);

(3) Costs attributable to mail to which semipostal stamps are affixed (which are attributable to the appropriate class and/or subclass of mail); and

(4) Administrative and support costs that the Postal Service would have incurred whether or not the Semipostal Stamp Program had been established.

(e) Cost items recoverable from the differential revenue may include, but are not limited to, the following:

(1) Packaging costs in excess of the cost to package comparable stamps;

(2) Printing costs of flyers and special receipts;

(3) Costs of changes to equipment;

(4) Costs of developing and executing marketing and promotional plans in excess of the cost for comparable stamps;

(5) Other costs specific to the semipostal stamp that would not normally have been incurred for comparable stamps; and

(6) Costs in paragraph (g) of this section that materially exceed those that would normally have been incurred for comparable stamps.

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(g) Other costs attributable to semipostals but which would normally be incurred for comparable stamps would be recovered through the postage component of the semipostal stamp price. Such costs are not recovered, unless they materially exceed the costs of comparable stamps. These include, but are not limited to, the following:

(1) Costs of stamp design (including market research);

(2) Costs of stamp production and printing;

(3) Costs of stamp shipping and distribution;

(4) Estimated training costs for field staff, except for special training associated with semipostal stamps;

(5) Costs of stamp sales (including employee salaries and benefits);

(6) Costs associated with the withdrawal of the stamp issue from sale;

(7) Costs associated with the destruction of unsold stamps; and

(8) Costs associated with the incorporation of semipostal stamp images into advertising for the Postal Service as an entity.

Neva Watson,

Attorney.