In the Matter of the Petition by ) September 16, 1977 ) PRENTICE-HALL, INC. ) 113 Sylvan Avenue ) Englewood Cliffs, New Yersey 07632 ) ) ) ) proposed Revocation of Second-Class ) Mail Privileges for "ANNOTATED TAX ) FORMS-PRACTICE & PROCEDURE"; "CAPITAL ) ADJUSTMENTS-REORGANIZATION-STOCK RIGHTS"; ) "CONSUMER & COMMERCIAL CREDIT-INSTALLMENT ) SALES"; "CONTROL OF BANKING REPORT"; ) "CORPORATION FORMS"; "FEDERAL TAX ) CITATOR"; "FEDERAL TAX GUIDE"; "FEDERAL ) TAXES"; "INHERITANCE & TRANSFER TAX"; ) "INSURANCE REPORT"; "OIL & GAS TAXES- ) P.S. Docket No. 4/80 NATURAL RESOURCES"; "PENSION & PROFIT- ) SHARING"; "PENSION & PROFIT-SHARING ) FORMS"; "PERSONNEL MANAGEMENT- ) COMMUNICATIONS"; "PERSONNEL MANAGEMENT- ) LABOR RELATIONS"; "PERSONNEL MANAGEMENT ) POLICIES & PRACTICES"; "REAL ESTATE ) REPORT"; "SECURITIES REGULATION REPORT"; ) "STATE & LOCAL TAXES REPORT BULLETIN"; ) "STATE TAX GUIDE"; "SUCCESSFUL ESTATE ) PLANNING IDEAS & METHODS"; "TAX COURT ) REPORTED & MEMORANDUM DECISIONS"; ) Lussier, Edward F. "WAGE-HOUR"; "WILLS-TRUSTS ESTATE ) PLANNING FORMS" and "WILLS-ESTATES- ) TRUSTS" ) ) Denial of Application for Second-Class ) Mail Privileges for "TAX EXEMPT ) ORGANIZATIONS"; "PROFESSIONAL CORPORA- ) TION GUIDE"; "MANUAL FOR MANAGING THE ) LAW OFFICE"; "SALES TAX"; and "PUBLIC ) PERSONNEL ADMINISTRATION-LABOR ) MANAGEMENT RELATIONS ) ) In the Matter of the Petition by ) ) EXECUTIVE REPORTS CORPORATION ) 113 Sylvan Avenue ) Englewood Cliffs, New Jersey 07632 ) ) Proposed Revocation of Second-Class ) Mail Privileges for "PROFESSIONAL ) MAN'S TAX DESK MANUAL" and ) "TREASURER'S GUIDE" ) ) Denial of Application for Second-Class ) Mail Privileges for "PRESIDENT'S GUIDE" ) and "REAL ESTATE MAN'S TAX DESK MANUAL" ) ) In the Matter of the Petition by ) ) INSTITUTE FOR BUSINESS PLANNING, INC. ) IBP Plaza ) Englewood Cliffs, New Jersey 07632 ) P.S. Docket No. 4/79 ) Proposed Revocation of Second-Class ) Mail Privileges for "ESTATE PLANNING- ) CHECKLIST FORMS"; "FORMS OF BUSINESS ) AGREEMENT AND RESOLUTIONS"; "REAL ) ESTATE INVESTMENT PLANNING"; "REAL ) ESTATE INVESTMENT PLANNING CHECKLISTS- ) FORMS"; "TAX PLANNING" and "PAY ) PLANNING CHECKLISTS-FORMS" ) APPEARANCES FOR PETITIONERS: Richard M. Schmidt, Jr., Esq. Ian D. Volner, Esq. Cohn and Marks Washington, D.C. APPEARANCES FOR RESPONDENT: Arpad de Kovacsy, Esq. Law Department U.S. Postal Service Washington, D.C.
This proceeding is before the undersigned on appeal by the Postal Service, as Respondent herein, from an Initial Decision issued on April 8, 1977, by Administrative Law Judge Rudolf Sobernheim. The last documents filed in the appeal process were filed by Respondent July 28, 1977. Previous thereto Respondent had filed its Appeal Brief, Petitioner its Response and Respondent a Reply to the Response. The issue is quite simple and the Briefs quite adequately cover it from the respective viewpoints. A very brief chronology sets it into proper perspective.
In May of 1976 an Initial Decision was issued in which, with two exceptions, revocation actions for certain of Petitioner's publications then enjoying second class privileges were upheld and denials of Petitioner's applications for second class privileges for other publications were also upheld. Appeals from this Initial Decision were taken by both parties under the applicable Rules of Practice in such proceedings which permit appeal to the Judicial Officer. On September 24, 1976, and during the pendency of those appeals, Public Law 94-421 was enacted. It provided in pertinent part for treating publications, such as those in issue here, as periodical publications entitled to second class mail privileges. As a result Respondent filed a motion to dismiss the proceedings without prejudice and advised that second class mail privileges would be granted for pending applications as of September 24, 1976. Petitioners filed a partial opposition to the motion to dismiss taking issue with what it considered a deviation from the "normally applicable Postal Service procedures" of rebating escrowed amounts to the date of filing of the applications. Thereupon the cases were remanded to the Administrative Law Judge for issuance of an Initial Decision covering this new and limited issue.
The decision of Judge Sobernheim on this issue was that the statutory amendment operates prospectively but as to applications pending at the time of enactment of the law refunds of escrow amounts are appropriate to the date of filing of the applications in accordance with Postal Service Manual (PSM) Section 132.32. That Section provides:
"132.32 ACCEPTANCE AFTER APPLICATION IS FILED
Publishers or news agents may not mail at the second-class rates until the application for second-class privileges is approved by the Director, Office of Mail Classification, Rates & Classification Department. See 132.36. Postmasters may not accept mailings at the second-class rates until they receive a written authorization from the Director, Office of Mail Classification. Postage at the applicable third- or fourth-class rates may be paid in money on mailings made while an application is pending. The postmaster will keep a record of such mailings on Form 3503, Record of Deposits Made While Second-Class Application isPending, and if second-class privileges are authorized by the Director, Office of Mail Classification, he will be instructed to return to the publishers or news agents the difference between the third- or fourth-class rates and the second-class rates. Form 3503 will not be kept and the difference will not be returned when postage is paid by stamps affixed."
Respondent poses two basic arguments for its exception to the Initial Decision the first being the contention that it is inconsistent with prior administrative interpretations of the regulation and the second being the contention that it interprets the regulation in a way which conflicts with former 39 USC § 4352 and the domestic mail classification schedule.
The Respondent's first argument is that PSM § 132.32 has the dual purpose of protection of the second class privilege from abuse and at the same time providing equitable rate relief for publications granted second class mail status. Respondent points out that if a publication does not qualify for second class mail privileges on the date of application but subsequently comes into compliance the practice has been to authorize the second class rates effective as of the date the publication came into compliance. Its citations to administrative cases in which this practice was recognized all involve cases where changes were made in the publications after filing of application. 1/
Respondent's second argument involves what it considers the error, in the Initial Decision's Conclusions of Law 13 and 14, of equating this situation to one where the Judicial Officer ultimately reverses a denial of an application. In essence Respondent's argument is that where the administrative proceeding results in a reversal the legal effect is that the publication has been determined to have been eligible as of the date of application whereas in the instant cases, that eligibility was established only by virtue of the statutory enactment as of September 24, 1976.
The question raised is basically one of the effect of the regulation. The administrative cases relied upon by Respondent are not controlling since they all involve physical changes in the publications made by the publisher during the pendency of the administrative proceedings. A distinction may readily be seen between a change in status completely within the control of the publisher and a change in status brought about by enactment of a federal statute. In the former case the opportunity for abuse is obvious.
A case can be made for Respondent's position that a similar result should be reached where there is a statutory enactment operating prospectively on the basis that to do otherwise would be to allow the grant of the privilege for a period prior to the statute. However, that case is not nearly so strong as the one which carves out an exception to the regulation where the publisher elects to change the physical characteristics of the publication. The fact is that the applications here were viable applications at the time the law was enacted with no final Postal Service Decision ever rendered and they are now being granted by mandate of Congress and not by any unilateral action taken by the publisher. While fully in agreement with the Initial Decision's conclusion on the nonretroactivity of the statute, I do not see that this requires reading into the preexisting regulation an exception from its otherwise clear language for this particular situation. Viewed either from the standpoint of policy or precedent the case is unique and the result reached by the Initial Decision is not perceived to have any far-reaching effects. Of course the regulation can always be amended to cover future cases if appropriate.
The Respondent's exception to the Initial Decision is disallowed and that decision is affirmed.