01-15771. Presorted Priority Mail Experiment

AGENCY:

Postal Service.

ACTION:

Final rule.

SUMMARY:

This final rule sets forth the Domestic Mail Manual (DMM) standards to be adopted by the Postal Service to conduct the presorted Priority Mail experiment pursuant to the Decision of the Governors of the United States Postal Service on the Opinion and Recommended Decision of the Postal Rate Commission (PRC) in Docket No. MC2001-1, experimental rate categories for presorted Priority Mail.

On March 7, 2001, the Postal Service filed a request before the Postal Rate Commission (PRC) requesting the establishment of experimental classifications and discounts for presorted Priority Mail. On May 25, 2001, the PRC issued a favorable Opinion and Recommended Decision. The Governors approved that action on June 4, 2001. The experiment will begin July 15, 2001, and is expected to be conducted for at least two years. Participation in the first year of the experiment will be limited to approximately 10 mailer locations. For application and information see Postal Bulletin 22051 (5-31-01).

EFFECTIVE DATE:

July 15, 2001.

FOR FURTHER INFORMATION CONTACT:

Karen A. Magazino, [phone], or Michael T. Tidwell, [phone].

SUPPLEMENTARY INFORMATION:

The Postal Service will review applications and select approximately 10 mailer locations to participate in the experiment. To receive the experimental discounts, selected mailers must meet certain containerization and mail preparation requirements in addition to various other criteria. It is desired that the Priority Mail shipped by the participants will represent a diverse range of shapes and weights. The limitation on the number of participants in the experiment is consistent with the need to conduct an experiment that can be managed effectively and enables the Postal Service to work with each participant on a one-on-one basis, determining the best method of containerization and preparation. To receive the experimental discounts, mailers also must meet the experiment's data collection requirements. Specific containerization and preparation requirements could vary from mailer to mailer due to the mailer's geographical location and mail densities. Since this is an experiment, the Postal Service will be able to reasonably adjust the requirements during the experiment. The Postal Service and selected participants will work with postal transportation networks to determine the appropriate surface and air transportation destinations. Prior to implementation, the selected participant and the Postal Service will incorporate the terms and conditions of participation into a Service Agreement that will be authorized and signed by both parties.

Mailers may choose from the following three presort levels and corresponding per-piece discounts:

Presort Level	Per-Piece Discount
5-Digit	$0.25
3-Digit	0.16
Area Distribution Center (ADC)	0.12

The discounts apply equally to letters, flats, and parcels (machineable and irregulars), including outside parcels when using surface transportation.

As selection criteria for the experiment, the Postal Service will seek mailers of diverse size, mailing locations, and mailpiece characteristics. Mailers must be prepared to work closely with business mail acceptance and logistics personnel to coordinate mail preparation and containerization and also must be prepared to meet the data collection requirements of the experiment. In addition, the Postal Service prefers mailers who will present presorted Priority Mail mailings on a regular and continuing basis.

A Presorted Priority Mail Experiment Management Team will select participants and administer the experiment. The team will include a representative from each of two functional groups within the Pricing and Product Design department: Mail Preparation and Standards, and Pricing. The other members of the team will be a representative from Operational Requirements, an office within the Operations Planning and Processing organization; a representative from Special Studies, a section of the Finance organization; and a representative from Expedited/Package Services (E/PS). All decisions of the team are final.

Existing Priority Mail classifications will remain unchanged.

Mailers selected for participation must abide by the terms of a Presorted Priority Mail Experiment Service Agreement. The following requirements will also apply:

Mailing Standards

1. Each mailing must contain a minimum of either 300 pieces or 500 pounds regardless of the mail processing categories. Residual pieces are included in the minimum volume requirement.

2. An annual Priority Mail presort fee of $125.00 must be paid at each mailing location.

3. Postage must be paid by either permit imprint or meter stamp.

4. Two copies of the applicable alternative Postage Statement (PS Form 3600-PMRX or PS Form 3600-PMPX) must be completed and submitted to the office of mailing. When presenting different mail processing categories in one mailing, separate postage statements must be completed for each mail processing category (shape) and collectively count towards the minimum volume requirement.

5. Mailings may contain non-identical-weight pieces only if the correct metered postage is affixed to each piece or if the RCSC serving the post office of mailing has authorized payment of postage by permit imprint under Manifest Mailing System, DMM P910.

Container and Presort Preparation

1. Three optional levels of presort will be available: ADC, 3-digit, and 5-digit. Mailers can use any or all of the three presort options. The ADC list will be provided by the Postal Service; mailers may not use DMM L603 or L604.

2. Mail processing categories (letters and flats in trays, loose sackable parcels, and outside parcels) may be combined in the same pallet/pallet box at the 5-digit level for surface transportation. Letters and flats in trays and parcels in sacks may be combined on the same pallet at the 3-digit and ADC levels for surface transportation destinations. Overflow trays or sacks are not permitted.

3. Residual pieces will not receive a discount and will be charged the single-piece rate. These pieces must be containerized in sacks or on pallets, depending on volume. The residual pieces count toward the minimum volume requirements.

Containerization Requirements

1. Priority Mail letters (DMM C050.2) and flats (DMM C050.3.1) must be uniform in thickness and have a smooth and regular shape. Letters and flats must be prepared in full flat trays or meet the minimum requirement of 25 pounds per tray. A full tray is to the bottom of the hand holds. An optional preparation will be available for loose flats shrink-wrapped onto pallets for destinations that have surface transportation from the origin. A minimum volume of 250 pounds per pallet will be required. This will be specified within each Service Agreement.

2. Flat trays must be capped, green side up, strapped, and labeled with an orange label with a barcode in accordance with DMM M033.1.5b. Content Identifier Numbers (CINS) are provided.

3. Parcels (DMM C050.4 and C050.5), excluding outside parcels, are not letter size or flat size, must be uniform in thickness with a smooth and regular shape, are greater than 3/4″ thick, and can fit into an orange Priority Mail sack. Parcels must be placed in sacks for all destinations with air transportation. The minimum volume per sack is 10 pieces. There will be an optional preparation to place parcels directly on pallets or in pallet boxes (DMM M041.4.0) for destinations with surface transportation from origin. A minimum volume of 250 pounds per pallet will be required. This requirement will be specified within each Service Agreement.

4. Outside parcels (C050.6) include any mailpiece that does not fit into a Priority Mail sack, or any parcel that weighs over 35 pounds, including live animals, hazardous materials, and other items specified in C050.0. These parcels may be combined with other presorted Priority Mail if sorted to 5-digit destinations only. Outside parcels are not eligible for the presorted trays or sacks of Priority Mail discount rates to destinations requiring air transportation. This eligibility criteria will be specified within each Service Agreement.

5. Any alternative preparation or localized containerization of Presorted Priority Mailings will be specified within each Service Agreement.

6. Pallets must be identified with orange placards containing destination information, mail processing category (e.g., flats, parcels), and presort level, as specified in the Service Agreement.

An application for participation in this experiment appears in Postal Bulletin 22051 (5-31-01), available online at http://ribbs.usps.gov.

Mailers may send a completed application via e-mail to [e-mail]; via fax to 703-292-4058; or via mail to: Manager Mail Preparation and Standards, US Postal Service, 1735 N. Lynn St., Rm 3025,Arlington, VA 22209-6038.

Because of the purpose and limited scope of this experiment, the Postal Service finds no need to solicit comment on the standards for presorted Priority Mail or to delay implementation of this experiment.

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, 414, 3001-3011, 3201-3219, 3403-3406, 3621, 3626, 5001.

2. Revise the Domestic Mail Manual (DMM) as set forth below:

G GENERAL INFORMATION

G000 The USPS and Mailing Standards

* * * * *

G090 Experimental Classifications and Rates

* * * * *

[Add new G095 to read as follows:]

G095 Presorted Priority Mail

1.0 ELIGIBILITY

1.1 Description

The standards in G095 apply to mailings that are produced by mailers with an approved Presorted Priority Mail Experiment Service Agreement.

1.2 Application

The Presorted Priority Mail rate applies to pieces meeting the standards in G095.

1.3 Mailing

Each mailing must:

a. Contain at least 300 pieces or 500 pounds.

b. Be presented with the correct postage statement.

c. An annual presort Priority Mail fee of $125.00 must be paid each 12-month period at each post office of mailing.

1.4 Preparation

Each piece in the mailing must be marked, prepared, documented, and presorted as specified in G095.

1.5 All Pieces

Each presorted Priority Mail mailing must meet the applicable standards in E120 and in M010 and M030. Each presorted Priority Mail mailing must be presented under the standards below. Subject to M012, all pieces must be marked “Presorted Priority Mail” or “Presorted Priority.” Mailers may abbreviate presorted with “PRSRT.” Markings must be placed on the addressed side of the mailpiece.

1.6 Applicability

Presorted Priority Mail pieces must:

a. Meet the applicable standards for letters in C050.2, flats in C050.3.1, parcels in C050.4 and C050.5, or outside parcels in C050.6. In addition, flats must be uniform in thickness and have a smooth and regular shape.

b. Meet the basic addressing standards in A010 and E130.3 and bear a delivery address with the correct 5-digit ZIP Code.

c. Be marked as specified in 1.5 and comply with USPS mailing standards.

d. Meet the documentation and postage payment standards (permit imprint or meter stamps) in the service agreement.

e. Be received at the post office that serves the permit holder.

f. An annual Priority Mail presort fee of $125.00 must be paid at each location where the mail is entered.

g. Outside parcels are eligible for the presorted discount rates only when using surface transportation. Outside parcels may be combined with other Priority Mail sorted to 5-digit destinations only.

h. Outside parcels are not eligible for presorted rates or containerization to destinations requiring air transportation.

i. Three optional levels of presort will be available: 5-digit, 3-digit, and ADC. Mailers can use any or all of the three presort options.

1.7 Documentation

Mailings may contain non-identical-weight pieces, as specified in the service agreement, only if the correct postage is affixed to each piece or if the RCSC serving the post office of mailing has authorized payment of postage by permit imprint under Manifest Mailing System (MMS), in accordance with P910.

2.0 REQUIRED PREPARATION—LETTERS AND FLATS

2.1 General

Letters and flats in trays must be prepared as follows:

a. The weight of a tray must not exceed 70 pounds.

b. Addresses on all pieces must face upward in the same direction.

c. Pieces must be placed in trays to maintain their orientation. Once the minimum volume is reached to allow or require preparation of a tray, additional pieces must be placed in the same tray up to its capacity to minimize the number of trays used. When possible, pieces must be placed in two or more stacks to optimize tray use, but mail must not overfill the tray to inhibit adequate closure or covering of the content.

d. Each tray must bear the correct orange label with a barcode. The appropriate Content Identifier Numbers (CINs) are provided in 2.3.

e. Each tray must be covered, green side up, and strapped in accordance with M033.1.5 and 1.6.

f. Overflow trays are not permitted.

2.2 Tray Preparation

Tray preparation and labeling is as follows:

a. 5-Digit. Optional. Minimum 25 pounds of mail or full flat tray (8 inches in height, to the bottom of the handholds).

(1) Line 1: use the city, state abbreviation, and 5-digit ZIP Code destination from the City/State file.

(2) Line 2: “PRIORITY”; followed by “LTRS” or “FLTS”, or if combined Ltrs/Flts as appropriate; followed by “5D.”

b. 3-Digit. Optional. Minimum 25 pounds of mail or full flat tray (8 inches in height, to the bottom of the handholds).

(1) Line 1: use L002, Column A.

(2) Line 2: “PRIORITY”; followed by “LTRS” or “FLTS” as appropriate; followed by “3D.”

c. ADC. Optional. Minimum 25 pounds of mail or full flat tray (8 inches in height, to the bottom of the handholds).

(1) Line 1: use the presorted Priority Mail experiment labeling list provided to participants.

(2) Line 2: use “PRIORITY”; followed by “LTRS” or “FLTS” as appropriate; followed by “ADC.”

d. Residual. No minimum.

(1) Line 1: use “WORKING” or “WKG” and label to origin.

(2) Line 2: use “PRIORITY”; followed by “LTRS” or “FLTS” as appropriate; followed by “WKG.”

2.3 3-Digit Content Identifier Numbers (CINs)

Priority Mail Flats—Presorted

5-digit flats	154	PRIORITY FLTS 5D
3-digit flats	155	PRIORITY FLTS 3D
ADC flats	157	PRIORITY FLTS ADC
Residual flats	158	PRIORITY FLTS WKG

2.4 ADC Tray

Pieces in each ADC tray must be destined for the same zone, unless the exact postage is affixed or MMS under P910 is used, or must be eligible for a rate that does not vary by zone.

3.0 REQUIRED PREPARATION—PARCELS

3.1 General

Parcels in sacks must be prepared as follows:

a. Each sack must bear the correct sack label.

b. Each sack must bear the correct orange barcoded sack label. The appropriate Content Identifier Numbers (CINs) are provided in 3.3.

c. The weight of a sack must not exceed 70 pounds.

d. Sack preparation is not required for outside parcels.

e. Overflow sacks are not permitted.

3.2 Sack Preparation

Sack preparation and labeling is as follows:

a. 5-Digit. Optional. Minimum 10 pieces.

(1) Line 1: use the city, state abbreviation, and 5-digit ZIP Code destination from the City/State file.

(2) Line 2: “PRIORITY”; followed by “PARCELS”; followed by “5D.”

b. 3-Digit. Optional. Minimum 10 pieces.

(1) Line 1: use L002, Column A.

(2) Line 2: “PRIORITY”; followed by “PARCELS”; followed by “3D.”

c. ADC. Optional. Minimum 10 pieces.

(1) Line 1: use the presorted Priority Mail experiment labeling list provided to participants.

(2) Line 2: use “PRIORITY”; followed by “PARCELS”; followed by “ADC.”

d. Residual. No minimum.

(1) Line 1: use “WORKING” or “WKG” and label to origin.

(2) Line 2: use “PRIORITY”; followed by “PARCELS”; followed by “WKG.”

3.3 3-Digit Content Identifier Numbers (CINs)

Priority Mail Parcels—Presorted

5-digit parcels	160	PRIORITY PARCELS 5D
3-digit parcels	161	PRIORITY PARCELS 3D
ADC parcels	163	PRIORITY PARCELS ADC
Residual parcels	164	PRIORITY PARCELS WKG

3.4 ADC Sacks and Pallets

Pieces in each ADC sack or pallet must be destined for the same zone, unless the exact postage is affixed or MMS under P910 is used, or eligible for a rate that does not vary by zone.

4.0 OPTIONAL PREPARATION

4.1 General

More than one mail processing category (letters and flats in trays, parcels in sacks, loose sackable parcels, and outside parcels) may be combined into the same container at the 5-digit level. Letters and flats in trays and parcels in sacks may be combined in the same container at the 3-digit and ADC levels. Overflow trays or sacks are not allowed. This will be specified in the service agreement.

4.2 Flats

Loose flats may be shrink-wrapped onto pallets for 5-digit, 3-digit, or ADC destinations with surface transportation from origin. A minimum volume of 250 pounds per pallet is required. This will be specified within each service agreement.

4.3 Parcels

Parcels other than outside parcels may be directly placed on pallets or in pallet boxes for destinations with surface transportation from origin. A minimum volume of 250 pounds per pallet is required. This will be specified within each service agreement.

5.0 RATES AND FEES

5.1 Rate Application

Each presorted Priority Mail mailpiece is charged the applicable single-piece Priority Mail rate in R100.8.0, less a per piece discount, based upon the level of sortation, as follows:

Presort Level	Per-Piece Discount
5-Digit	$0.25
3-Digit	0.16
Area Distribution Center (ADC)	0.12

6.0 REVOCATION

6.1 Discontinued Eligibility

The Manager, Mail Preparation and Standards may revoke a mailer's authorization to participate in the experiment if that mailer:

a. Provides incorrect data on the required documentation and appears unable or unwilling to correct identified problems.

b. No longer meets the criteria for participation in the experiment or the terms of the service agreement.

6.2 Notice

After a revocation notice is issued, the USPS consults with the mailer and determines necessary corrective actions and an implementation schedule for such actions. At the conclusion of this schedule the USPS reexamines the participant's documentation and system. Failure to correct identified problems is sufficient grounds for revocation of the mailer's authorization to participate in the experiment.

6.3 Appeal

The participant may file a written appeal of revocation within 15 days from the date of the receipt of the notice, with evidence explaining why the authorization should not be revoked. The appeal must be filed with the Presorted Priority Mail Experiment Management Review Board. Decisions of the Board are final.

* * * * *

As provided by 30 CFR 111.3, notice of issuance will be published in the Federal Register.

Stanley F. Mires,

Chief Counsel, Legislative.