In the Matter of Proposed Annulment of the Second-Class Mail Permit of ANNE ARUNDEL TIMES, 104 Roesler Road, Glen Burnie, Maryland 21061, POST OFFICE DEPARTMENT, DIVISION OF HEARING EXAMINERS, WASHINGTON, D.C. 20260 P.O.D. Docket No. 3/33 April 8, 1970 William A. Duvall Chief Hearing Examiner APPEARANCES: Lawrence C. Moore, Esq. Suite 412, Federal Bar Building Washington, D.C. 20006 for the Petitioner Samuel S. Horn, Esq. Office of the General Counsel Post Office Department Washington, D.C. 20260 for the Respondent James E. Wesner, Esq. Ginsburg, Feldman & Bress 1700 Pennsylvania Avenue, N.W. Washington, D.C. 20006 for the Capital Gazette Press, Inc., as Amicus Curiae
When this case was initiated, and in our pre-hearing conference, counsel there agreed that we had four issues to try.
By concession of counsel, the number of issues has been reduced to two.
And the questions now before us are whether the publisher is in compliance with the Department's so-called sixty-five percent rule, and the other issue is if the publisher does not comply with the sixty-five percent rule, how long a period of time, before and after proposed notification of annulment is initiated, may be considered or should be considered by the Department in making its decision to annul and serving it upon the publisher.
Now in order to put this matter in a little better perspective, I am going to review so much of the history of this proceeding as will give us the picture of the situation.
Evidence received in this hearing indicates that Mr. Elmer M. Jackson, Jr., acquired the Anne Arundel Times in June of 1969. At that time, the newspaper enjoyed a second-class mailing privilege, and Mr. Jackson applied to have that permit transferred to him or have a new permit issued in his name. This was done, I believe, in the month of August 1969.
Then in October of 1969, in filing the required Annual Statement of Ownership, Management and Circulation, Jr. Jackson reported figures which indicated that during the preceding twelve months the total paid circulation equalled approximately thirty percent of the total distribution.
These figures eventually found their way into the Department, and on December the 4th, a notice of proposed revocation was issued. And the effective part of that notice, which was in the form of a letter from the Director of Classifications, Special Services Division, to Mr. Jackson, publisher of Anne Arundel Times, was that the second-class mailing privileges theretofore enjoyed would be annulled fifteen days from the receipt of that notice, unless within that time the publisher filed a written statement showing compliance, or how the publisher intended to comply with the provisions of Sections 4351 and 4354 of Title 39, United States Code, which have been incorporated in substance into regulations of the Department found in Section 132.22 of the Postal Manual.
Section 4351 of Title 39, United States Code, provides for second-class mail privileges for newspapers and other periodical publications when entered and mailed in accordance with Sections 4352-4357 of this Title.
And the other section cited by the Director in the letter of December 4, 1969, to Mr. Jackson, contained among others the following provisions: The title of this section is Conditions for Entry of Publications. It begins: "(a) Generally a mailable periodical publication is entitled to be entered and mailed as second-class mail if it" -- and then there are four other qualifications listed, and the fifth one says "has a legitimate list of subscribers."
Now, Subsection (c) of this Section reads as follows: "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."
The provisions of the Postal Manual, referred to by the Director, refer again to the necessity for having a legitimate list of persons who have subscribed by paying or promising to pay at a rate above nominal for copies to be received during a stated time. That is the Departmental definition of a legitimate list of subscribers or a person who would be on a list of legitimate subscribers.
In regard to being designed primarily for free circulation, the Department defines the word "primarily" as follows -- this is Section 132.227 of the Postal Manual --: "Publications are designed for free circulation when the total number of copies furnished during any twelve-month period to legitimate paid subscribers (see 132.225) and to the purchasers of single copies constitutes less than sixty-five percent of the total number of copies distributed by mail at the second-class pound rate, or the transient rate by the publisher's carriers and by other means for any purpose."
After the notice of December 4th was issued to the publisher, there was a meeting in the office of the Director of the Division of Mail Classification and Special Services. This meeting took place on December the 11th, and the evidence that we have heard today indicates that Mr. Elmer M. Jackson, Jr., and his two sons were present, Mr. Riley was present, Mr. Ellis was present, and I believe Mr. Rosenfeld was present, although I am not sure about Mr. Rosenfeld.
At this meeting, the publisher attempted to find out what he must do to be permitted to continue with his second-class mailing permit. And the testimony is divergent as to whether he received instructions as to how to proceed.
Mr. Ellis, who was present, indicated that some instructions were given. Mr. Jay Jackson, who was also present, indicated that Mr. Riley told the publisher to go back and talk with the Glen Burnie Postmaster.
In any event, as a result of that meeting, a letter was written by the Director to the publisher allowing thirty days within which an inspector would come by and make an examination of the circulation records and submit a report of his findings to the Director's office.
Later, an inspector did go by, an inspector by the name of Mr. Wulforst, who testified at this proceeding, and he said that at this first examination he was unable to form a conclusion as to whether the publisher was in compliance with the Department's regulations, both in regard to the legitimate list of subscribers, which is not before us as an issue, and also as to the sixty-five percent rule.
The inspector asked for an opportunity to get additional information, and he was given that opportunity, and he went back. He testified that on the basis of his examination of the company's books and records at that time, there were some issues which were in compliance with the sixty-five percent rule, I believe he said the December 29th issue and the January 22nd issue. He also testified that the publisher indicated that it was his intention and desire to comply with the requirements and the postal regulations governing second-class matter, and that the trend that could be discerned was one towards compliance with Departmental regulations.
Now, then, that last inspection was conducted by Inspector Wulforst in cooperation with Inspector O'Donald, and it took place in the latter part of January, as I recall.
On January 21st, the Director wrote a letter to the publisher telling him, in substance, that the evidence indicated that the publication had not been brought into harmony with the circulation requirements for second-class matter, and that, as a result of this finding, the proposed annulment of his second-class permit for the publication would remain in effect, and advising the publisher that he had fifteen days within which to take an appeal, and that brings us up to the date of today's hearing insofar as the evidence is concerned.
Now, at the hearing, there were received in evidence these documents to which I have referred previously in this decision and, in addition, the Petitioner introduced an Exhibit No. 3 which gives the circulation for this weekly newspaper for the weeks from January 15th through March 12th.
The lowest percentage shown as being circulated to the legitimate list of paid subscribers was for the week of January 15, 1970, and that figure is seventy-three point two percent. So, the first question is, what do these figures reveal or indicate in terms of compliance?
Well, referring to the December 4th letter from the Director to the publisher, this Petitioner's Exhibit 3 clearly indicates to me an intention and a desire and effort on the part of the publisher to come into compliance with the regulation.
As the Department counsel pointed out in his oral presentation, the rule which was cited in the proposed revocation actually is a rule that is taken from the regulations governing admission, original entry, into the mail as second-class matter.
Well, be that as it may, I cannot escape the idea and the conviction that if a Department of the Government issues a regulation that purports to govern a particular field of activity, that Government Department, above all others, should observe and be governed by that regulation, and the regulation which is in 132.227 of the Postal Manual unequivocally calls for information during any twelve-month period.
Now, if that regulation is not applicable to the present situation, then it can't be used as a basis for revocation of this permit. And if it is applicable to the present situation, then it cuts both ways -- it is as applicable to the Government as it is to the publisher. In considering this case, I am mindful of the purposes of the laws governing second-class matter. Those laws were enacted years ago, and the purpose of them was to foster dissemination of information throughout the land. Now, times have changed so that we have so many media, means of communications, that perhaps some of that flavor is gone from the statutes.
But even if that is not so much their purpose now, I think clearly the purpose is not to prevent publishers from entering or remaining in the publishing field. So that in considering a case of this type, it is my view and I hold that information of as recent a date as can be obtained is to be examined and that it is to be considered.
I do not think that a present publisher should receive the benefit or the harm that might result from examination of circulation figures of a previous publisher. Each publisher, it seems to me, should be permitted and required to stand upon his own feet.
Now, that brings us to the other issue. We haven't disposed of the first one yet, but we are coming down to the second one. They are intermingled. For what period of time must the Director wait, or what period of time may or must the Director consider, both before and after his proposed action, before finalizing his proposed action?
I think I have expressed the view that the Department ought to look at the most recent figures that you can get and the Department ought to go back into the past for them so as to have, if possible, operating results for at least a year. But I am not making that as a positive finding, and I am not doing that for these reasons: It seems to me, first, that this is an area which necessarily calls for the exercise of some discretion. I think that discretion has to be fairly applied and exercised. But I don't see how that you can say that at the end of four months you must be within this -- you must be over the hill in terms of compliance.
There might be a situation in which a publication would be so close that it would be a terrible hardship upon him if he lost his second-class mail permit on the basis of any such hard and fast rule as that.
So I think it is better to have some flexibility available for the Director.
And the second reason why I don't think I should make a finding in this regard is that it seems to me that this is the type of regulation which ought to be arrived at by the rule-making process, under the Administrative Procedure Act.
And I recommend that a rule-making procedure be initiated for the purpose of arriving at a reasonable regulation, reasonable from the standpoint of the Government paying a subsidy to a publisher to enjoy second-class mail privileges, and reasonable from the standpoint of the person who wants to enter or remain in the publishing business.
And I think that a wide variety of views ought to be sought on this point. I don't think this is the appropriate time and place for any such regulations as that to be made.
Now, considering all of the evidence that we have received here today, I am going to make the following findings of fact and conclusions of law.
First, I am going to adopt what I think are Mr. Wesner's first three proposed findings of fact: That for a period of June 5th, 1969 to September 25th, 1969, the paid circulation was eight thousand three hundred and forty-two; the free circulation was eleven thousand five hundred and eighty-nine. Obviously, this is not compliance with the second-class statutes or regulations.
From the period from October 2, 1969 to December 29, 1969, the paid circulation was twelve thousand three hundred and five; the free circulation was twelve thousand seven hundred and sixteen. Again, obviously, this is not compliance with the rule.
Now as I understand Mr. Wesner's third proposed finding of fact, it is that there is no showing as to the free circulation for the period from January -- December 29th to March 12th -- December 29, 1969 to March 12, 1970.
I make that finding with the footnote that we have the counterpart of that information in Petitioner's Exhibit 3 which shows the percentage of distribution that went to persons comprising the legitimate list of subscribers.
Next, I adopt Mr. Horn's proposed finding of fact that the Department acted within its proper authority in issuing the proposed Notice of Revocation, dated January 21, 1970, and that on the basis of the facts then known, that action was proper.
I find as a separate fact that it is not unreasonable, improper or illegal to consider circulation figures for a period of time subsequent to the issuance of the proposed Notice of Revocation. As a further finding of fact, the information submitted at this hearing as Petitioner's Exhibit No. 3 indicates that for each week between January 15, 1970 and March 12, 1970, the percentage of distribution of copies of Anne Arundel Times to persons comprising a legitimate list of subscribers exceeded sixty-five percent -- the lowest figure for that period of time being for the week of January 15th, in the amount of seventy-three and two-tenths percent, the highest figure being for the week of March 12, 1970 in the amount of eighty-seven and one-tenth percent -- and that between those two dates there is a marked trend upwards.
Now, as far as the annulment of this second-class mail permit is concerned, it is my decision and I recommend that the Petitioner be permitted to retain his second-class mailing permit, and that there be attached as a condition to that retention a requirement that the publisher submit to the Director each month a statement showing the total number of copies issued, the total number of copies distributed free, the total number of copies distributed to the legitimate list of subscribers, and any other copies otherwise disposed of.
I recommend that this condition be attached for a period of one year, at the end of which time if the publisher has complied with the requirements of the postal laws and regulations governing second-class matter, that the restriction and the conditions be removed. The Director is to keep these figures to be received from the publisher in confidence and they are to be kept sealed and not available for public inspection.
1/ This decision has been transcribed from pp. 97-109 of transcript of the hearing in this proceeding which was held on March 19, 1970. Some changes have been made to correct errors in punctuation, grammar and coherence. The Hearing Examiner has exerted care to see that no change was made which would alter or affect the import of the decision.