[Federal Register: November 18, 2002 (Volume 67, Number 222)]
[Rules and Regulations]
[Page 69478-69479]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18no02-4]
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POSTAL SERVICE
39 CFR Part 501
Authorization To Manufacture and Distribute Postage Meters
AGENCY: Postal Service.
ACTION: Final rule.
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SUMMARY: This final rule amends the regulations for inspecting postage
meter production facilities that are located outside the continental
United States. This rule requires the manufacturer to reimburse the
Postal Service for certain costs incurred by required inspections of
production facilities located outside the continental United States.
DATES: The rule is effective November 18, 2002.
FOR FURTHER INFORMATION CONTACT: Wayne Wilkerson, manager of Postage
Technology Management, at 703-292-3782, or by fax at 703-292-4050.
SUPPLEMENTARY INFORMATION: Title 39, Code of Federal Regulations (CFR)
part 501, Authorization to Manufacture and Distribute Postage Meters,
requires the Postal Service to inspect meter production facilities to
determine if the facilities satisfy Postal Service requirements for
meter and component security and production quality. A manufacturer may
have valid business reasons for selecting a particular location for its
production facilities. However, when a manufacturer chooses to locate
these facilities outside the continental United States, conducting the
required inspections of such facilities places an undue cost burden on
the Postal Service. The Postal Service is requiring the manufacturer to
reimburse the travel-related costs.
The proposed rule was published in the Federal Register on May 9,
2002 [Vol. 67, No. 90, page 31168], with a request for submission of
comments by June 10, 2002. We received two submissions from postage
meter manufacturers in response to the solicitation of public comments.
The Postal Service gave thorough consideration to the comments it
received, modified the proposed rule as appropriate, and now announces
the adoption of the final rule.
Discussion of Comments
1. Both commenters opposed having the provider become responsible
for the costs incurred by the Postal Service when it conducts required
inspections of provider facilities located outside the continental U.S.
One commenter claimed that this requirement is both unfair and
unreasonable, since it puts an undue burden on a company with
production facilities outside the U.S., and therefore places non-U.S.-
based companies at a disadvantage. The commenter also noted that in the
global economy, it is unreasonable to expect products to be sourced
from a single country. The other commenter noted that even though
providers have maintained facilities in Europe for years, the Postal
Service has not asked that the providers pay postal expenses for travel
to these European locations. The commenter requested that European
production facilities be exempt from the new rule.
The Postal Service understands the concern about having providers
pay the costs incurred for Postal Service personnel who travel outside
the continental United States to inspect production facilities. The
initially approved foreign manufacturing and production facilities were
located in Europe. The Postal Service was able to minimize its cost by
conducting periodic, routine, security inspections of multiple
production locations on a single trip. Ongoing routine inspections of
these long-established locations have resolved many of the security
issues that can arise during facility startup. Although the final rule
includes no exemption from the requirement for manufacturers to pay for
Postal Service inspections of European production facilities, the
Postal Service plans to continue its policy of funding the cost of
certain inspection trips, as it has in the past, at its discretion.
Postal Service funding will be limited to trips for routine inspections
when the Postal Service can conduct multiple inspections and costs are
not excessive. The Postal Service must limit its cost exposure by
requiring manufacturers to pay the travel-related costs for inspections
outside the continental United States whenever the costs are associated
with particular security issues related to the manufacturer's products,
or with the startup or implementation of a new plant or of a new or
substantially changed manufacturing process. The Postal Service revised
the proposed rule in response to this comment.
2. One commenter noted that when the Postal Service inspected
overseas facilities in the past, the inspection team often visited more
than one manufacturer or facility on a given trip. The other commenter
noted that it is unreasonable to require the provider to pay travel
expenses for inspections, which are conducted in the interests of the
Postal Service. The commenter suggested that each organization consider
whether the expense of travel is justified by the benefit gained. If it
is not, then the trip should be postponed and not billed to another
organization. The commenter noted that requirement for providers to
reimburse the Postal Service also raises the issue of who is to decide
the specifics of travel, including the number of Postal Service
representatives.
Although the decision on where to locate production facilities for
meter products or components is not one in which the Postal Service
would expect to participate, such decisions may have the effect of
increasing Postal Service costs incurred in the administration of the
postage meter program. Given the financial constraints under which the
Postal Service must operate, and our determination to avoid additional
revenue security issues, the Postal Service cannot allow the business
decisions of providers to determine the security of Postal Service
revenues or to increase Postal Service costs indiscriminately. However,
in recognition of the concerns expressed, the Postal Service is adding
paragraph 501.2(c)(i) to clarify the final rule by defining how the
Postal Service will control the costs allocated to the manufacturer.
For example, the Postal Service will combine trips to more than one
facility whenever possible and will limit the number of Postal Service
representatives on the inspection team to the minimum number required
to conduct the inspection.
3. It has come to the attention of the Postal Service that
companies are considering using production facilities in certain
foreign countries where political or other impediments may prevent the
Postal Service from conducting security evaluations of these
facilities. Postal Service approval to distribute meters produced in
such facilities may be suspended until such time as satisfactory
inspections may be conducted. In recognition of this concern, the
Postal Service is adding paragraph 501.2(c)(ii) to clarify the final
rule.
[[Page 69479]]
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 (Public Law
95-452, as amended); and 5 U.S.C. App. 3.
2. Amend Sec. 501.2 by revising the introductory text and
paragraphs (c) and (d) to read as follows:
Sec. 501.2 Manufacturer qualification.
Any concern wanting authorization to manufacture and/or lease
postage meters for use by licensees under Domestic Mail Manual P030
must:
* * * * *
(c) Have, or establish, and keep under its supervision and control,
adequate production facilities suitable to carry out the provisions of
Sec. Sec. 501.15 through 501.21 to the satisfaction of the Postal
Service. The production facilities must be subject to unannounced
inspection by representatives of the Postal Service. If the provider's
production facilities are located outside the continental United
States, the 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 manufacturer's product, or with the start-up or
implementation of a new plant or of a new or substantially changed
manufacturing process.
(i) 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 manufacturers 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.
(ii) If political or other impediments prevent the Postal Service
from conducting security evaluations of meter manufacturing facilities
in foreign countries, Postal Service approval to distribute meters
produced in those facilities may be suspended until such time as
satisfactory inspections may be conducted.
(d) Have, or establish, and keep under its active supervision and
control adequate facilities for the control, distribution, and
maintenance of meters and their replacement or secure disposal or
destruction when necessary.
Stanley F. Mires,
Chief Counsel, Legislative.
[FR Doc. 02-29097 Filed 11-15-02; 8:45 am]
BILLING CODE 7710-12-P