[Federal Register Volume 85, Number 25 (Thursday, February 6, 2020)]
[Proposed Rules]
[Pages 6838-6841]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-01120]
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POSTAL SERVICE
39 CFR Part 501
Authorization To Manufacture and Distribute Postage Evidencing
Systems
AGENCY: Postal ServiceTM.
ACTION: Proposed rule.
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SUMMARY: The Postal Service proposes to amend its Postage Evidencing
Systems regulations. These changes set forth the procedure to become an
authorized Postage Evidencing System (PES) provider. The changes also
update or create new definitions, update all references of the Office
of Payment Technology to the Office of Commercial Payment, and
reorganize or reword certain provisions currently in the regulations
for clarity.
DATES: Comments must be received on or before March 9, 2020.
ADDRESSES: Mail or deliver written comments to: Director, Commercial
Payment, 475 L'Enfant Plaza SW, Room 3500, Washington, DC 20260. Email
and faxed comments are not accepted. You may inspect and photocopy all
written comments, by appointment only, at USPS[supreg] Headquarters
Library, 475 L'Enfant Plaza SW, 11th Floor North, Washington, DC 20260.
These records are available for review on Monday through Friday, 9
a.m.-4 p.m., by calling 202-268-2904. All submitted comments and
attachments are part of the public record and subject to disclosure. Do
not enclose any material in your comments that you consider to be
confidential or inappropriate for public disclosure.
[[Page 6839]]
FOR FURTHER INFORMATION CONTACT: Crystal F. Newman, Business Process
Specialist Principal, [email protected], 202-268-7072.
SUPPLEMENTARY INFORMATION: The Postal Service has worked over the past
6 months to create a new PES Provider Applicant Guide (Guide). This
Guide sets forth the process on how to apply to become a PES Provider.
It was developed by gathering feedback from stakeholders across the
organization, and from the learnings derived from onboarding PES
providers, including the most recent process used. This proposed rule
sets forth the process to apply to become a provider, and clarifies the
rule and regulations that an applicant is subject to during the
application process. While modifying the CFR to refer to the new Guide,
two other cleanup activities were accomplished. First, paragraph Sec.
501.3(c) referring to providers allowing the Postal Service to audit
their locations as a condition for authorization is being moved as it
is more properly placed under section Sec. 501.2. Second, Sec.
501.3(d) was not grammatically correct, so the language was updated
grammatically without changing the content of the requirement.
Finally, a few other minor changes were made to keep the
regulations current, including removing `meter imprints' and adding
`intelligent mail indicia' to the definition of Postage Evidencing
Systems, and updating the Office of Payment Technology to the Office of
Commercial Payment, which is its successor organization after the Mail
Entry and Payment Technology group was reorganized in August 2019.
List of Subjects in 39 CFR Part 501
Administrative practice and procedure, Postal Service.
For the reasons stated in the preamble, the Postal Service proposes
to amend 39 CFR Section 501 as follows:
PART 501--AUTHORIZATION TO MANUFACTURE AND DISTRIBUTE POSTAGE
EVIDENCING SYSTEMS
0
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.
0
2. Amend Sec. 501.1 to revise paragraph (a) and add paragraph (h) to
read as follows:
Sec. 501.1 Definitions.
(a) Postage Evidencing Systems regulated by part 501 produce
evidence of prepayment of postage by any method other than postage
stamps and permit imprints. A Postage Evidencing System is a device or
system of components that a customer uses to generate and print
evidence that postage required for mailing has been paid. Postage
Evidencing Systems print indicia, such as information-based indicia or
intelligent mail indicia to indicate postage payment. They include but
are not limited to postage meters and PC Postage systems.
* * * * *
(h) Postal Requirements include the Code of Federal Regulations,
Title 39 Section 501, the Domestic Mail Manual (DMM), the International
Mail Manual (IMM), and the Intelligent Mail Indicia Performance
Criteria (IMIPC).
0
3. Revise Sec. 501.2 to read as follows:
Sec. 501.2 Postage Evidencing System provider authorization.
(a) The Postal Service considers Postage Evidencing Systems and
their respective infrastructure 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 entity without prior, written approval of the Postal Service.
Persons or entities that perform these activities are referred to
collectively as Postage Evidencing System (PES) Providers in this
section.
(1) Manufacturing and/or distributing any Postage Evidencing System
that generates or produces U.S. postage.
(2) Repairing, refurbishing, remanufacturing, modifying, 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 registration with the Postal Service of
customers of a Postage Evidencing System.
(c) Approval to become a Postage Evidencing System Provider
(1) Any person or entity seeking authorization to become a PES
Provider must submit a request to the Postal Service in writing to the
Office of Commercial Payment. Once the request is received, the Office
of Commercial Payment will provide the applicant the PES Provider
Applicant Guide and the Intelligent Mail Indicia Performance Criteria
(IMIPC), the IMIPC setting forth PES and indicia specification and
requirements. The contact information for Commercial Payment can be
found in Sec. 501.2(f).
(2) The PES Provider Applicant Guide sets forth the process for
applicants seeking to become a PES Provider. An applicant is subject to
the rules in both that Guide and the IMIPC, while they are attempting
to gain approval to become a PES Provider.
(3) An applicant applying for approval to become a PES Provider
must undergo three (3) primary phases which are laid out in the PES
Provider Applicant Guide: (1) Applicant Introduction and Letter of
Intent, (2) Applicant Qualification and Registration, and (3) PES
Evaluation. Each phase includes prerequisites to enter the phase,
deliverables expected during that phase, and requires written approval
by the Office of Commercial Payment to allow the process to continue to
the next phase.
(4) To the extent that an applicant reaches the PES Evaluation
phase, then the applicant is governed by Postal Requirements, the
IMIPC, and the PES Provider Applicant Guide even though not yet an
authorized PES Provider.
(5) The Postal Service, in its sole discretion, may approve an
applicant. In reaching its approval determination, the Postal Service
may review factors and make determinations including, but not limited
to, satisfactory evidence of the applicant's integrity and financial
responsibility, commitment to comply with the Postal Requirements, and
a determination that disclosure to the applicant of 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 the good business practices within the meaning of
39 U.S.C. 410(c)(2).
(6) No applicant is considered a PES Provider until the Postal
Service issues a final written decision. This is accomplished by the
provision of a final written approval of the applicant's status as an
authorized PES Provider in writing from Vice President of Mail Entry &
Payment Technology (or successor). The applicant is approved in writing
to engage in the function(s) for which authorization was sought and
approved.
(d) To the extent that any person or entity is approved to be a PES
Provider, such PES Provider must adhere to the Postal Requirements.
(e) As a condition of obtaining authorization under this section,
the PES Provider's facilities used for the
[[Page 6840]]
manufacture, distribution, storage, resetting, repair, refurbishment,
remanufacturing, modifying, or destruction of a Postage Evidencing
System and all facilities housing infrastructure supporting Postage
Evidencing Systems will be subject to unannounced inspection by
representatives of the Postal Service. If such facilities are outside
the continental United States, the PES Provider will be responsible for
all reasonable and necessary travel-related costs incurred by the
Postal Service to conduct the inspections. Travel-related costs are
determined in accordance with Postal Service Handbook F-15, Travel and
Relocation. At its discretion, the Postal Service may continue to fund
routine inspections outside the continental United States as it has in
the past, provided the costs are not associated with particular
security issues related to a PES Provider's Postage Evidencing System
or supporting infrastructure, or with the start-up or implementation of
a new plant or of a new or substantially changed manufacturing process.
(1) When conducting an inspection outside the continental United
States, the Postal Service will make every effort to combine the
inspection with other inspections in the same general geographic area
in order to enable affected PES Providers to share the costs. The
Postal Service team conducting such inspections will be limited to the
minimum number necessary to conduct the inspection. All air travel will
be contracted for at the rates for official government business, when
available, under such rules respecting class of travel as apply to
those Postal Service representatives inspecting the facility at the
time the travel occurs.
(2) If political or other impediments prevent the Postal Service
from conducting security evaluations of Postage Evidencing System
facilities in foreign countries, Postal Service approval of the
activities conducted in such facilities may be suspended until such
time as satisfactory inspections may be conducted.
(f) The Postal Service office responsible for administration of
this part is the Office of Commercial Payment or successor
organization. All submissions to the Postal Service required or invited
by this part are to be made to this office in person or via mail to 475
L'Enfant Plaza SW, Room 3500, Washington, DC 20260-0004.
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4. Amend Sec. 501.3 by
0
a. Removing paragraph (c);
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b. Redsignating paragraph (d) as paragraph (c);
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c. Revising newly redesignated paragraph (c); and
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d. Redesignating paragraph (e) as paragraph (d).
The revision to read as follows:
Sec. 501.3 Postage Evidencing System provider qualification.
* * * * *
(c) Protect customer information by not causing or permitting the
data to be released other than for the operation of a third-party
location. The provider bears the ultimate responsibility to ensure
customer information will not be compromised at any domestic or off
shore locations (including third-party locations), and bears the
responsibility to ensure its agents or contractors operating domestic
or off shore locations do not compromise this information. The provider
shall notify its customer that data relating to its systems is being
housed at a third-party location, and shall provide a copy thereof to
the Postal Service of such notice to its customers. To the extent that
any unauthorized release takes place, the provider shall notify the
Postal Service immediately upon discovery of any unauthorized use or
disclosure of data or any other breach or improper disclosure of data
of this agreement by the provider (as well as its agent operating the
third-party location) and will cooperate with the Postal Service in
every reasonable way to help the Postal Service regain possession of
the data and prevent its further unauthorized use or disclosure. In the
event that the Postal Service cannot regain possession of the data or
prevent its further unauthorized use or disclosure, the provider shall
indemnify the Postal Service from damages resulting from its (or such
third-party) actions.
* * * * *
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5. Amend Sec. 501.6 by revisnig paragraphs (c)(1), (2), and (3) and
paragraph (e) to read as follows:
Sec. 501.6 Suspension and revocation of authorization.
* * * * *
(c) * * *
(1) Upon determination by the Postal Service that a provider is in
violation of provisions of this part, or that its Postal Evidencing
System poses an unreasonable risk to postal revenue, Commercial
Payment, acting on behalf of the Postal Service, shall issue a written
notice of proposed suspension citing the specific conditions or
deficiencies for which suspension of authorization to manufacture and/
or distribute a specific Postage Evidencing System or class of Postage
Evidencing Systems may be imposed. Except in cases of willful
violation, the provider shall be given an opportunity to correct
deficiencies and achieve compliance with all requirements within a time
limit corresponding to the potential risk to postal revenue.
(2) In cases of willful violation, or if the Postal Service
determines that the provider has failed to correct cited deficiencies
within the specified time limit, Commercial Payment shall issue a
written notice of suspension setting forth the facts and reasons for
the decision to suspend, and the effective date if a written defense is
not presented as provided in paragraph (d) of this section.
(3) The notice shall also advise the provider of its right to file
a response under paragraph (d) of this section. If a written response
is not presented in a timely manner the suspension may go into effect.
The suspension shall remain in effect for ninety (90) calendar days
unless revoked or modified by Commercial Payment.
* * * * *
(e) After receipt and consideration of the defense, Commercial
Payment shall advise the provider of its decision, and the facts and
reasons for it. The decision shall be effective upon receipt unless it
provides otherwise. The decision shall also advise the provider that it
may be appealed within thirty (30) calendar days of receipt (unless a
shorter time frame is deemed necessary). If an appeal is not filed in a
timely manner, the decision of Commercial Payment shall become a final
decision of the Postal Service. The appeal may be filed with the Chief
Information Officer of the Postal Service and must include all
supporting evidence and state with specificity the reasons the provider
believes that the decision is erroneous. The decision of the Chief
Information Officer shall constitute a final decision of the Postal
Service.
* * * * *
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6. Amend Sec. 501.7 by revising paragraph (a) to read as follows:
Sec. 501.7 Postage Evidencing System requirements.
(a) A Postage Evidencing System submitted to the Postal Service for
approval must meet the requirements of the Intelligent Mail Indicia
Performance Criteria (IMIPC) published by Commercial Payment. Copies of
the current IMIPC may be requested via mail to the address in Sec.
501.2(f).
* * * * *
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7. Amend Sec. 501.8 by revising paragraph (a) to read as follows:
[[Page 6841]]
Sec. 501.8 Postage Evidencing System test and approval.
(a) To receive Postal Service approval, each Postage Evidencing
System must be submitted by the provider and evaluated by the Postal
Service in accordance with the Intelligent Mail Indicia Performance
Criteria (IMIPC) published by Commercial Payment. Copies of the current
IMIPC may be requested via mail to the address in Sec. 501.2(f). These
procedures apply to all proposed Postage Evidencing Systems regardless
of whether the provider is currently authorized by the Postal Service
to distribute Postage Evidencing Systems. All testing required by the
Postal Service will be an expense of the provider.
* * * * *
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8. Amend Sec. 501.10.by revising paragraph (a) introductory text and
paragraph (b) to read as follows:
Sec. 501.10 Postage Evidencing System modifications.
(a) An authorized provider must receive prior written approval from
the director, Commercial Payment, of any and all changes made to a
previously approved Postage Evidencing System. The notification must
include a summary of all changes made and the provider's assessment as
to the impact of those changes on the security of the Postage
Evidencing System and postage funds. Upon receipt of the notification,
Commercial Payment will review the summary of changes and make a
decision regarding the need for the following:
* * * * *
(b) Upon receipt and review of additional documentation and/or test
results, Commercial Payment will issue a written acknowledgement and/or
approval of the change to the provider.
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9. Amend Sec. 501.14 by revising paragraph (c) introductory text,
paragraph (c)(8), and paragraph (d) introductory text to read as
follows:
Sec. 501.14 Postage Evidencing System inventory control processes.
* * * * *
(c) To ensure adequate control over Postage Evidencing Systems,
plans for the following subjects must be submitted for prior approval,
in writing, to the Office of Commercial Payment.
* * * * *
(8) Postage meter destruction--when required, the postage meter
must be rendered completely inoperable by the destruction process and
associated postage; printing dies and components must be destroyed.
Manufacturers or distributors of meters must submit the proposed
destruction method; a schedule listing the postage meters to be
destroyed, by serial number and model; and the proposed time and place
of destruction to Commercial Payment for approval prior to any meter
destruction. Providers must record and retain the serial numbers of the
meters to be destroyed and provide a list of such serial numbers in
electronic form in accordance with Postal Service requirements for
meter accounting and tracking systems. Providers must give sufficient
advance notice of the destruction to allow Commercial Payment to
schedule observation by its designated representative who shall verify
that the destruction is performed in accordance with a Postal Service-
approved method or process. To the extent that the Postal Service
elects not to observe a particular destruction, the provider must
submit a certification of destruction, including the serial number(s),
to the Postal Service within 5 calendar days of destruction. These
requirements for meter destruction apply to all postage meters, Postage
Evidencing Systems, and postal security devices included as a component
of a Postage Evidencing System.
(d) If the provider uses a third party to perform functions that
may have an impact upon a Postage Evidencing System (especially its
security), including, but not limited to, business relationships,
repair, maintenance, and disposal of Postage Evidencing Systems,
Commercial Payment must be advised in advance of all aspects of the
relationship, as they relate to the custody and control of Postage
Evidencing Systems and must specifically authorize in writing the
proposed arrangement between the parties.
* * * * *
Brittany M. Johnson,
Attorney, Federal Compliance.
[FR Doc. 2020-01120 Filed 2-5-20; 8:45 am]
BILLING CODE P