In the Matter of the Petition by September 18, 1981 SQUIRE PUBLICATIONS 9000 State Line Shawnee Mission, KS 66206 Proposed Revocation of Second-Class Mail Privileges for "THE SQUIRE" P.S. Docket No. 10/125 APPEARANCE FOR PETITIONER Thomas D. Leathers, Publisher THE SQUIRE 9000 State Line Shawnee Mission, KS 66206 APPEARANCE FOR RESPONDENT: Stanley F. Mires, Esq. Rate Application Division Law Department United States Postal Service Washington, DC 20260-1100 Duvall, William A.
There are three issues in this matter, the first two of which are as follows:
1. Is there a legitimate list of subscribers to the publication who have paid or promised to pay a rate which is above nominal rate for copies to be received during a stated time. (Domestic Mail Manual (DMM), § 422.221)
2. Is the publication designed primarily for free circulation or circulation at nominal rates within the meaning of § 422.223, DMM.
In connection with the circulation questions, it was pointed out that there are two publications - one called THE SQUIRE, and the other called, appropriately, THE OTHER PAPER. In the proposed revocation letter it is stated that the circulation of THE SQUIRE is about 1,767 copies, while that of THE OTHER PAPER is about 11,000 copies, and that the latter are distributed free.
In the letter of notification of proposed revocation the third issue is raised when it is indicated that the publications are substantially the same "except for a few minor changes such as the titles and the identification statements." The letter continues as follows:
"Copies of several issues, July 24, August 21, September 11, October 16, and November 28, 1980, were examined and found to be essentially identical in content.
"The publisher of a second-class publication may prepare and circulate another publication as a free publication provided it is clear that the two publications are separate and distinct publications and not merely a cosmetic change to the second-class publication in an attempt to circumvent the paid circulation requirements.
"Since the free circulation and paid circulation publications are for the most part identical, it is concluded that the free circulation publication has been established to circumvent paying the nonsubscriber rates as well as to retain the second- class mail privileges for a publication primarily designed for free circulation.
"On the basis of the circulation data referred to above and the fact that the contents are identical, 'The Squire' is considered primarily designed for free circulation and therefore, does not qualify for the general publications category as stated in section 422.22, Domestic Mail Manual." (Resp. Ex. 7, pp. 2-3)
The above statements indicate that the Respondent combines the similarity of the two publications with the alleged circulation questions to form the basis for the proposed revocation. This conclusion is strengthened by the language in paragraphs 5 and 7 of the Investigative Memorandum submitted by the Postal Inspector who conducted an audit of Petitioner's mailings are the Shawnee Mission, KS, post office. These paragraphs read as follows:
Section 420.223 of the Domestic Mail Manual states that publications are considered primarily free circulation if more than one-half are provided free to the ultimate recipients or when other evidence indicates that the intent of the publisher is to circulate the publication free. Also a ruling was made in April, 1976, by the Office of Mail Classification regarding the Johnson County Sun. The publisher of this newspaper, which is still being published at Shawnee Mission, was informed that at least 20% of the non-advertising matter had to differ from its concurrent companion issues in order for it to be considered independent for postal purposes. A copy of that ruling is attached.
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The lack of difference between the papers was discussed with Mr. Leathers. He stated the identical format of the July 17, 1980, issues was an oversight. He stated further that he knew of the 20% difference ruling but believed it did not apply any more.
The matter of the similarity of publications based on the 20% rule was discussed and ruled upon in an appeal from a proposed revocation of second class mail privileges of the publication involved in the Matter of the Petition by George W. Schultz, Publisher of the Pequannock Township Argus, P.S. Docket No. 2/111, P.S. Decision April 12, 1974. In that case it was held:
"***A more fundamental difficulty is posed by the fact that Respondent proceeded on the issue of similarity on the basis of the 20% rule. Respondent's '20% rule' is that so long as there is a 20% difference in the nonadvertising portion of two publications, Respondent will consider them different for postal purposes. That rule, however, is characterized as an internal rule used in administering the classification standards 2/ and is not published in the Federal Register. While it may be a useful tool for Respondent binding on him, it cannot, as an unpublished rule, be regarded as establishing a standard to which the Petitioner must adhere. Unless and until the '20% rule' is properly published it can lend no support to a proposed revocation or denial of a second class mail permit.3/
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"3/ Some of the difficulties experienced by the parties and the presiding judge with respect to evidence regarding Petitioner's records would have been obviated by regulations stating more directly a publisher's obligation to keep available for inspection records from which the facts about circulation and proof of payment by subscribers can be established. Until such regulations are adopted it is likely that the confusion generated in this proceeding will be repeated in subsequent proceedings."
There was not in the notice of proposed revocation, nor in the statements of witnesses or counsel, nor elsewhere in this record a citation to a section of the Federal Register, the Corde of Federal Regulations or the Domestic Mail Manual in which the "20% rule" appears, and I have been unable to find any such citation. In the absence of such published rule, that portion of the proposed revocation which is based on the said "rule" must be dismissed. The fact that the "20% rule" was used as the basis for an uncontested ruling on another publication, one that is not involved in this proceeding (Resp. Ex. 1, Att. 35), is irrelevant and immaterial to this proceeding. (Tr. 59)
Next to be considered is the allegation that there is no legitimate list of subscribers to THE SQUIRE. On this subject § 422.221 of the Domestic Mail Manual provides:
".221 List of Subscribers. General publications must have a legitimate list of subscribers who have paid or promised to pay, at a rate above a nominal rate, for copies to be received during a stated time. Persons whose subscriptions are obtained are a nominal rate (see 422.222) shall not be included as a part of the legitimate list of subscribers. Copies sent on fullfillment of subscriptions obtained at a nominal rate must be charged with postage at nonsubscriber rates (see 411.4)."
There is no allegation by Respondent that the subscription rate charged for THE SQUIRE is nominal or less than nominal. Randomly selected Forms 3451 attached to Respondent's Exhibit 1 reveal the following typical information as to the number of subscribers to whom THE SQUIRE was mailed as of the dates indicate:
Dates of Sample Subscriber Total Mailing Copies Copies Copies
April 23, 1980 150 1673 1823
June 11, 1980 150 1710 1860
July 23, 1980 175 1767 1942
(Resp. Ex. 1, Att's. 11, 18 and 23)
There was no showing that the people to whom the "Subscriber Copies," above, were sent do not constitute "a legitimate list of subscribers who have paid or promised to pay, at a rate above a nominal rate, for copies to be received during a stated time." Myrick v. United States, 219 F. 1, C.C.A. 1 (1915); American Biographical Center Clio Press, P.S. Docket No. 2/106, I.D. Nov. 27, 1973, p. 9, and the cases therein cited.
Insofar as the notice of proposed revocation is based on the allegation that the publication has no legitimate list of subscribers, the notice must be dismissed.
There remains the allegation that is stated as follows in the notice of proposed revocation:
"Section 422.223, Domestic Mail Manual, states that publications primarily designed for free circulation and/or circulation at nominal rates may not qualify for the general publications category. Publications are considered primarily designed for free circulation and/or circulation at nominal rates when one-half or more of all copies circulated are provided free of charge to the ultimate recipients, or are paid for at nominal rates by the ultimate recipients, or when other evidence indicates that the intent of the publisher is to circulate the publication free and/or at nominal rates. The distribution of all copies of a publication is considered, whether circulated in the mails or otherwise." (Emphasis added)
The evidence on this point is shrouded in obscurity, uncertainty and indefiniteness. To begin with, it is uncertain how many copies of the July 17, 1980 issue of THE SQUIRE were printed. At one point Respondent's witness Inspector Haker testified that "About 14,000, 14,900" were printed. (Tr. 18) In paragraph 4 of his Investigative Memorandum dated August 12, 1980, it is stated that "The invoice from the printer for the July 17 issue showed 13,000 copies printed." These two figures reveal a discrepancy of from 1000 to 1900 copies in the print run of this publication. In a publication of the size of THE SQUIRE, a discrepancy of this size in the number of copies printed could have a vital effect upon the percentage of the total copies mailed to regular subscribers. In addition, a difference of this magnitude causes one to entertain doubt as to the accuracy of the remainder of the statistical data.
Another question relates to the number of copies that were distributed outside the mails. Inspector Haker was asked what the publisher did with the copies of THE SQUIRE in exess of the 1942 copies mailed at Shawnee Mission. The testimony continued as follows:
Q. How can you tell from this exhibit (R. Ex. 1, Att. 23) what he did with the remaining copies? Assumw that there were 13,000 copies, as you say.
A. Well, we know that they weren't mailed in Shawnee Mission. They weren't put into the mail at Shawnee Mission.
Q. Right. How do you know they were distributed at all?
A. Because we saw copies at the K Mart.
Q. Yes, but you couldn't have seen the difference between 13,000 and 1,942.
A. No; we didn't see that many copies, obviously.
Q. Do you know anything about his distribution to places like the K Mart?
A. No, sir; I have no idea how it was done. I can offer negative ideas, but that's it. (Tr. 69-70)
With respect to the issue relating to free circulation or circulation at nominal rates, there simply is not enough competent, persuasive evidence in this record on which to base a decision. There is in the record some information, which can only be called vague and uncertain, as to how many copies of THE SQUIRE are printed. There is in the record information as to the number of copies mailed to subscribers. The record is deficient, however, in documented, solid information as to the number of copies that are distributed free. This last statement is true not only with respect to THE SQUIRE, but, also, in regard to THE OTHER PAPER.
Section 556(d) of Title 5, United States Code, specifies that "Except as otherwise ordered by statute, the proponent of a rule or order has the burden of proof." In this case Respondent has not produced the reliable, probative and substantial evidence required to sustain its burden of proof.
The proposal to annul the second-class mail privileges held by Squire Publications for the publication THE SQUIRE is set aside and this proceeding is hereby dismissed.