In the Matter of the Petition by ) June 11, 1969 ) STERLING HOUSE INCORPORATED ) 260 Park Avenue South ) P.O.D. Docket No. 2/256 New York, New York 10010 ) ) for a second-class mail permit for ) the publication "PHOTO SCREEN." ) Rosenblatt, Peter R. POST OFFICE DEPARTMENT WASHINGTON, D. C. 20260
APPEARANCES:
For the Appellant:
Marion E. Harrison, Esq.
Messrs. Reeves, Harrison, Sams & Revercomb
1750 Pennsylvania Avenue, N. W.
Washington, D. C. 20006
For the Respondent:
Norman P. Glass, Esq.
Office of the General Counsel
Post Office Department
Washington, D. C. 20260
For the Amicus Curiae:
Whitman, Ransom & Coulson, Esqs.
522 Fifth Avenue
New York, New York 10036
and
Charles D. Ablard, Esq.
1629 K Street, N. W.
Washington, D. C. 20006
By letter dated February 10, 1967 the director, Classification and Special Services Division, Bureau of Operations (hereinafter the "Director") denied the Appellant's application for
second-class mail privileges for its publication "Photo Screen." By petition filed March 1, 1967 the Appellant appealed the Director's ruling and the matter went to hearing before a Department hearing examiner on March 18, 1968. The hearing examiner's initial decision, filed August 23, 1968, upheld the Director's ruling.
The Appellant duly appealed the initial decision to the Judicial Officer on October 30, 1968, and Department counsel filed its answering brief on February 4, 1969.
On October 11, 1968 the Judicial Officer, without objection of the parties, granted a motion by the Magazine Publishers Association to intervene in the appeal as amicus curiae. The Association's brief was filed on November 13, 1968.
The Appellant's application for second-class entry of "Photo Screen" was filed with the Postmaster of New York on February 10, 1966 on P.O.D. Form 3501 (Department Exhibits Nos. 9 and 12).
By letter dated March 9, 1966 the Postmaster advised the Appellant:
"The Department at Washington has informed this office that the circulation of the October 1965 issue of 'PHOTO SCREEN' does not meet the circulation requirements as outlined in Section 132.227, Postal Manual."
The letter suggests that the Appellant "reduce the number of copies assigned to news agents" and make an effort to "increase the list of persons who have subscribed to 'PHOTO SCREEN,'" and asks the Appellant to "Please furnish another statement on Form 3501 (enclosed) after the circulation of your publication complies with the circulation requirements."1/
By letter dated March 17, 1966 (Department Exhibit No. 10) the Appellant acknowledged the Postmaster's letter of March 9 "in which you inform us that the October, 1965 issue of PHOTO SCREEN does not meet the circulation requirements as outlined in Section 132.227, Postal Manual." The letter recites, inter alia, the Appellant's hope "that we will soon be able to furnish another statement on Form 3501 which complies with the circulation requirements."
Further correspondence between the parties ensued in which, by letters to the Appellant dated June 7, 1966, July 11, 1966, October 3, 1966, November 29, 1966 and February 3, 1967 (filed pursuant to the Judicial Officer's order of May 1, 1969) the Postmaster of New York inquired whether any issue of "Photo Screen" had yet met "the 65% paid circulation requirement." If so, the Appellant was directed to furnish a completed Form 3501 showing the circulation of such issue. The Appellant responded to each of these letters by letters dated respectively June 8, 1966 (Department Exhibit No. 8), July 15, 1966 (Department Exhibit No. 7), October 4, 1966 (Department Exhibit No. 6), December 1, 1966 (Department Exhibit No. 5) and February 6, 1967 (Department Exhibit No. 4), each of which states that the Appellant would be glad to furnish the Postmaster with a completed Form 3501 showing compliance with the "65% rule" as soon as an issue of the publication had actually achieved compliance.
Finally, by letter dated February 10, 1967 (Department Exhibit No. 3), the Director sent the Appellant a letter denying the original February 10, 1966 application upon the following ground:
"Although you have been requested to furnish additional information under the provisions of Section 132.36, Postal Manual, to establish that 'Photo Screen' meets the requirements for second-class mail privileges, and have been given ample time in which to do this, you have not furnished the information requested."
"Therefore, this publication does not fulfill the requirements for second-class entry."
There is no significant dispute about the facts. The Appellant claims, and the Respondent does not seriously contest, that the Appellant's application of February 10, 1966 was complete and showed compliance with all relevant requirements for second-class entry with the exception of the so-called "65% rule"--Section 132.227 of the Postal Manual--concerning circulation requirements. The application was ultimately denied not because of "Photo Screen's" conceded and continued failure to comply with the "65% rule," but because the Appellant failed to submit "additional information" showing a non-existent state of affairs--that is, "Photo Screen's" compliance with the rule.
The Appellant's case at the hearing was presented through Morris S. Latzen, the Appellant's president, and Beyrl-Ruth Seiferling, the editor of the publication in question. The Respondent Director did not offer any witnesses.
The initial decision found that the Appellant had conceded its failure to supply all of the information required by the Respondent--specifically, compliance with the "65% rule." The hearing examiner commented that the Appellant's attack on the rule's validity was not fully developed and that he was, in any event, prevented from ruling on that subject by Postal Manual 821.332(b). Thus, the initial decision upheld the Director's contention that the Appellant had failed to furnish a completed application for second-class mail entry and that this failure required that the application be denied.
The Appellant argues, essentially, that the "65% rule" is illegal and that the Director's requirement that it submit "additional information" to show compliance therewith is consequently irrelevant. The well-reasoned and thoughtful amicus brief of the Magazine Publishers Association argues, similarly, that the "65% rule" exceeds the scope and purpose of the underlying statute, produces substantial injury to the magazine industry, and is therefore void as an improper exercise of the rule-making power. The Department argues that the Appellant abandoned its original application, which was incomplete by reason of its failure to recite compliance with the "65% rule," and that "There was therefore no application before the Respondent in the form prescribed . . ." (Brief, p. 2). Hence, the argument runs, the Director had a perfect right to require further information upon pain of a denial of the application.
The statute at issue is 39 U.S.C. 4354(c). It reads, in pertinent part, as follows:
"§ 4354. Conditions for entry of publications
* * * *
"(c) A periodical publication designed primarily for advertising purposes or for free circulation or for circulation at nominal rates is not entitled to be admitted as second class mail under this section."
Exercising its power to issue a regulation under that statute the Department issued Postal Manual § 132.227:
".227 Free Circulation Publications. Publications designed primarily for free circulation may not qualify for second-class privileges. Publications are designed primarily for free circulation when the total number of copies furnished
during any 12-month period to legitimate paid subscribers (see 132.225) and to the purchasers of single copies constitutes less than 65 percent of the total number of copies distributed by mail at the second-class pound rates or the transient rate, by the publishers' carriers, and by other means for any purpose. See 132.31a."
It will be recalled that the Postmaster's letter of March 9, 1966 advised the Appellant that the application failed to comply with this regulation.
However the Director's ultimate ruling of February 10, 1967 was not based on the above regulation, but rather upon Postal Manual 132.36, which reads as follows:
"36. GRANTING OR DENIAL OF APPLICATION. The Director, Classification and Special Services Division, Bureau of Operations, rules on all applications. If he grants the application, he notifies the postmaster at the office where the application for original entry was filed, who in turn notifies the applicant. Before taking action on an application, the Director may call on the publisher for additional information or evidence to support or clarify the application. Failure of the publisher to furnish the information requested may be cause for denial of the application as incomplete or, on its face, not fulfilling the requirements for entry. If the Director denies the application, he must notify the publisher specifying the reasons for the denial. The denial becomes effective in 15 days from receipt of the notice by the publisher unless the publisher appeals therefrom. See 132.83."
It will be noted that the Director is supposed to deal with the applicant through the postmaster only in the event the application is granted.
Postal Manual 132.36 permits the Director to require "additional information or evidence to support or clarify the application," presumably even if the application appears on its face to be complete. The publisher's failure to submit such "additional information" upon demand would entitle the Director to deny the application "as incomplete or, on its face, not fulfilling the requirements for entry." Clearly, however, the Director could not require the publisher to submit "additional information" or deny his application as "incomplete" arbitrarily or without adequate reason. Hence, if an application appeared "on its face" to be complete, the Director could require the submission of "additional information" only if the same were actually essential to save the application from being "incomplete" in some fashion not apparent on its face.
In other words, the Director is not entitled to utilize the "additional information" provision of Section 132.36 as a device to avoid observing the same regulation's further provision that he "notify the publisher specifying the reasons for the denial." Were this not so, the Director could respond to a complete application clearly showing non-compliance with a second-class requirement by requesting "additional information" showing compliance therewith. When the publisher failed to supply the required "additional information" showing compliance, the Director would be entitled to deny the application upon that ground rather than because of the publisher's non-compliance with the second-class requirement.
One consequence of this would be the deprivation, or at least the impairment of proper judicial review of the departmental regulation prescribing the second-class standards upon which the Director based his demand for "additional information." Postal Manual Sections 821.332(b) and 821.3(c)(1)(ii) prevent the Department's own quasi-judicial officers from ruling on the validity of regulations. This absence of an internal check makes it all the more important that challenges to the validity of departmental regulations be framed clearly and that they be confronted directly, where appropriate, in the Department's administrative rulings in order to protect the Appellant's constitutional right of judicial review.
In this case the Director's memorandum of March 7, 1966 to the Postmaster of New York (Department Exhibit No. 11), the Postmaster's substantially identical letter of March 9, 1966 to the Appellant, the Appellant's reply of March 17, 1966 (Department Exhibit No. 10) and the correspondence that followed (see pp. 3 and 4, supra.) eliminate any doubt as to the true reason for the Director's ultimate formal denial of the application one year after its submission. The Postmaster, at the Director's instructions, refused on March 9, 1966 to grant the application because the application itself showed clearly that the Appellant's circulation fell short of the requirements of the "65% rule." But instead of formally rejecting the application on that ground he gave the Appellant some gratuitous advice on increasing "Photo Screen's" circulation, and thereafter repeatedly requested the Appellant to supply "additional information" showing a compliance with the "65% rule" clearly and unambiguously negatived by the original application.
Hence it was not really "additional" information which the Director sought from the Appellant, but rather contrary information. The Appellant was not asked to remedy an omission or clarify an ambiguity in the facts furnished by the application, so that the Director might reach a fair and intelligent decision. The Appellant was asked, first, to change circumstances accurately recorded in the application which required a denial of the application under the Department's "65% rule," and thereafter to
furnish the Director new and different information reflecting the change of circumstances and compliance with the "65% rule."
The Director's decision to delay denial of the application to permit the Appellant to bring itself into compliance with the "65% rule" could, under different circumstances, be deemed a simple act of forbearance. But the Director's ultimate issuance of a ruling based on another ground denied the Appellant his right to obtain judicial review of the "65% rule's" legal validity, which he now seeks.
Under the foregoing circumstances I find the Director's denial of second-class entry to "Photo Screen" was proper. The finding rests, however, on the Appellant's non-compliance with Postal Manual 132.227, the "65% rule," rather than the purported violation of Postal Manual 132.36 cited by the Director's ruling and the initial decision below. Normally it might have been appropriate to remand this case to the hearing examiner for a hearing and determination on the issue of violation of the "65% rule." However the Appellant has, itself, repeatedly confirmed the application's clear showing of such non-compliance.2/ Therefore there is obviously no point in holding a hearing to determine this issue. As stated, I am not permitted to determine Section 132.227's legality, and it therefore stands for present purposes.
Two other points are worthy of mention.
Firstly, the Respondent's argument that the Appellant "abandoned" its original application of February 10, 1966, is contradicted by the Department's correspondence with the Appellant. The Director's letter of denial of February 10, 1967 identifies February 10, 1966 as the "Date of Application" and the preceding correspondence from the Postmaster put the Appellant in a position in which he could do nothing further to advance the application until "Photo Screen's" circulation had climbed sufficiently to permit the Appellant to claim compliance with the "65% rule." Hence the Appellant was neither able to move the application nor appeal from any denial thereof for a full year. It would be both inaccurate and unjust to lay this state of affairs at Appellant's door and to charge it with an abandonment of its application.
Secondly, the Director himself failed to comply with the requirements of Postal Manual 132.36 by declining to communicate his requirement for "additional information" directly to the Appellant (see p. 7, supra). This omission goes beyond mere form, for it also affected the Appellant's standing to challenge in court the Department's "65% rule" upon which the denial was actually based. The only direct communication from the Director to the Appellant is the letter of February 10, 1967, by which, of course, the Director denied the application on the basis of the Appellant's asserted violation of the very same Postal Manual 132.36. Had the Director written the Appellant directly on March 7, 1966, as that section required, instead of to the Postmaster of New York he, instead of the Postmaster alone would have been on record as refusing to grant second-class entry on the basis of non-compliance with the "65% rule."
For all of the foregoing reasons I hold that the Appellant's application for second-class mail entry of the publication "Photo Screen" is denied upon the ground of the Appellant's failure to comply with Postal Manual 132.227.
1/ The Respondent filed a copy of this letter and other correspondence from the Department to the Appellant with the Judicial Officer on May 7, 1969, pursuant to the Judicial Officer's order of May 1, 1969.
2/In fact, the Appellant has gone so far as to declare that the publication could not at the time of the application, cannot now and probably never will be able to comply with the "65% rule." Should time prove this admission too sweeping the Appellant may, of course, file an entirely new application.