02-10783. Authorization To Manufacture and Distribute Postage Meters

AGENCY:

Postal Service.

ACTION:

Proposed rule.

SUMMARY:

This proposed rule amends the regulations for checking postage meters out of service and for handling faulty meters.

DATES:

The Postal Service must receive your comments on or before June 3, 2002.

ADDRESSES:

Mail or deliver written comments to Manager, Postage Technology Management, 1735 N Lynn Street, Room 5011, Arlington, VA 22209-6050. You can view and copy all written comments at the same address between 9 a.m. and 4 p.m., Monday through Friday.

FOR FURTHER INFORMATION CONTACT:

Wayne Wilkerson at 703-292-3704 or by fax at 703-292-4050.

SUPPLEMENTARY INFORMATION:

The United States Postal Service is seeking to improve the secure handling of faulty postage meters by the approved postage meter providers and to enhance the accuracy of determinations by the postage meter providers of the proper amounts of postage to be refunded from faulty postage meters. We are proposing to amend the regulations for checking postage meters out of service and for handling faulty meters to address these concerns and to align the regulations with changes to the Domestic Mail Manual (DMM) regarding postage meters published in the Federal Register (66 FR 56432-56447) on November 8, 2001. Additionally, we deleted references to mechanical meters from the amended section since all mechanical postage meters have been decertified since 1999 and should no longer be in service. We will amend the remaining sections of CFR part 501 in the near future so that they all reflect the changes in the postage meter population and changes in the DMM.

List of Subjects in 39 CFR Part 501

• Administrative practice and procedure
• Postal Service

Notice and Comment

Although exempt from the notice and comment requirements of the Administrative Procedure Act (5 U.S.C. 553(b), (c)) regarding proposed rulemaking by 39 U.S.C. 410(a), the Postal Service invites public comments on the following proposed amendments to the Code of Federal Regulations (CFR). For the reasons set out in this document, the Postal Service is proposing to amend 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 (Public Law 95-452, as amended), 5 U.S.C. App. 3.

2. Revise paragraphs (g) and (h) of §501.23 to read as follows:

§ 501.23

Distribution controls.

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(g) Check a nonfaulty meter out of service in accordance with the procedures that the Postal Service has approved for that meter when the meter is to be removed from service for any reason. Ensure that a Postal Service employee certifies the register readings and clears the descending register when the meter is checked out of service, unless the Postal Service has approved other procedures for the specific meter model. Complete the check-out process in a timely manner and transmit the required data to the appropriate Postal Service information systems. Ensure that no employee of the meter manufacturer or any third party changes, interferes with, or performs any element of the postal employee's established check-out and withdrawal process for any meter, unless approval for the change in procedures is granted in writing by the Postal Service.

(h) Handle faulty meters, including those that are misregistering, are defective, show any evidence of tampering, or are defective in any other way, as follows:

(1) Ensure that all functions required to handle faulty meters are completed in a timely manner and in accordance with Postal Service regulations and procedures.

(2) Ensure that faulty meters are not presented to the licensing Post Office for checkout or withdrawal.

(3) Begin the process to retrieve any faulty meter within 2 business days of being notified of a problem.

(4) Complete PS Form 3601-C, Postage Meter Activity Report, in the presence of the licensee and obtain the licensee's signature on the form confirming that the information is accurate.

(i) When the registers can be read, the manufacturer or the manufacturer's agent must include the register information on the form.

(ii) When the register values cannot be read, the manufacturer or the manufacturer's agent must print the system report, if available for the meter, and must attach the report to PS Form 3601-C.

(iii) When the register values cannot be read, the licensee must provide any original daily usage logs with PS Form 3601-C for refund calculation.

(5) Identify and tag the meter as faulty as soon as the manufacturer or the manufacturer's agent receives it from the customer. Keep the identification tag and the PS Form 3601-C completed under paragraph (h)(4) of this section with the faulty meter until processing is completed and the meter is returned to service or is scrapped.

(6) Secure all faulty meters and maintain the integrity of the meter and of the information residing on the meter.

(7) When there is evidence or suspicion of tampering, secure the meter and maintain it in its original state until it is returned for processing under paragraph (h)(10) of this section.

(8) Maintain a record of the faulty meter and all changes in its custody, state, and condition (including availability of register information) from the time the meter is reported as faulty until processing is completed under paragraphs (h)(13), (14), or (15) of this section. Make the record available to the Postal Service for its review upon request.

(9) Maintain a dedicated secure facility, approved by the Postal Service, for handling faulty meters.

(10) Have faulty meters returned directly to the dedicated secure facility described in paragraph (h)(9) of this section for processing. Have all faulty meters shipped via registered mail, Express Mail® service, or Priority Mail® service with Delivery Confirmation^TM service.

(11) Ensure that registers on a faulty meter are not cleared and no funds are refunded or transferred until after the meter is returned to the dedicated secure facility described in paragraph (h)(9) of this section and approved procedures are followed.

(12) Examine each meter withdrawn for faulty operation to determine if the registers can be read and if there is any evidence of tampering.

(13) If there is no evidence of tampering and the registers can be read or a summary report of the appropriate redundant electronic register memory readouts is available using Postal Service approved methods:

(i) Check out the meter and withdraw it from service under paragraph (g) of this section.

(ii) Submit a report to the Postal Service by the 15th of each month listing all faulty meters with readable displays received in the prior month, identifying the meter and including an explanation of the meter malfunction.

(14) If there is no evidence of tampering, if the meter registers cannot be read, and if a summary report of the appropriate redundant electronic register memory readouts cannot be retrieved:

(i) Develop other data to support the request for Postal Service approval of a postage adjustment amount, such as a manual calculation of the estimated value of the descending register based on estimated highest average daily usage, or applicable system-generated register documentation. Include the original daily usage logs maintained by the customer, if any, with the supporting data.

(ii) Furnish a report explaining the malfunction to the Postal Service within 5 days of receiving the meter. Accompany the report with a recommendation of the postage adjustment amount that includes all data developed to support the recommendation.

(iii) Maintain control of those meters that have unreadable registers and hold them in the manufacturer's dedicated secure facility described in paragraph (h)(9) of this section until a representative of the Postal Service approves the postage adjustment amount or verifies the condition of the meter before proceeding with the meter repair or destruction.

(iv) Ensure that under no circumstance is a refund issued or funds transferred for any postage value said to remain in a meter that has unreadable registers until the Postal Service has reviewed and analyzed the manufacturer's report and determined the appropriate postage adjustment, if any.

(15) If there is evidence or suspicion of tampering:

(i) Maintain control of the meter and place it in a secure area.

(ii) Ensure that the meter is handled in a secure manner and maintained in its original state until the Postal Service or its agent can be present during the examination.

(iii) Ensure that under no circumstance is a refund issued or funds transferred for any postage value said to remain in a meter that shows evidence of tampering until the Postal Service has reviewed and analyzed the manufacturer's report and determined the appropriate postage adjustment, if any.

(iv) After examination, if approved by the Postal Service or its agent, process the meter under paragraphs (h)(13) or (14) of this section.

(16) In some instances, even though the registers can be read, there is information or other indication that the meter has some mechanical or electrical malfunction that affects the accuracy of the registers or the accuracy of the value printed. Such a meter must be handled under paragraph (h)(14) of this section.

(17) Issue the refund of any postage value said to remain in a faulty meter, after Postal Service approval of the amount of the refund, when the Postal Service requires it. Request reimbursement from the Postal Service for these refunds by periodically submitting a reimbursement request letter to the Postal Service. The letter must be accompanied by listings and support documentation for each refund and must indicate the cause of failure for each incident.

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Stanley F. Mires,

Chief Counsel, Legislative.