In the Matter of the Petition by ) January 31, 1994 ) SWIFT COUNTY MONITOR-NEWS, INC. ) P. O. Box 227 ) Benson, MN 56215-0227 ) ) ) ) Proposed Revocation of Second-Class ) Mail Privileges for "SWIFT COUNTY ) MONITOR-NEWS" ) P.S. Docket No. 40/34 APPEARANCE FOR PETITIONER: Mark R. Anfinson, Esq. Lake Calhoun Professional Building 3109 Hennepin Avenue South Minneapolis, MN 55408-2621 APPEARANCE FOR RESPONDENT: Jeffrey H. Zelkowitz, Esq. Law Department United States Postal Service Washington, DC 20260-1146
This proceeding arises out of a Petition filed by Swift County Monitor-News, Inc. ("Petitioner") from a ruling of the Director, Office of Classification and Rates Administration ("Respondent" or "Director"), revoking Petitioner's second-class mail authorization on the ground that the weekly newspaper published by Petitioner failed to meet the requirement that it not contain more that 75 percent advertising in more than half of the issues published during a twelve month period.(1)
Domestic Mail Manual ("DMM") §423.131(a).(2)
A hearing was held in this matter on June 4, 1993. Counsel for each of the parties appeared at the hearing, participated in examining and cross-examining witnesses, and submitted a Joint Stipulation of Facts, Exhibits, and Issues. Subsequently, both parties filed Proposed Findings Of Fact And Conclusions of Law, And Memorandum Of Points And Authorities. To the extent indicated below, proposed conclusions have been adopted; otherwise they have been rejected as irrelevant. Based on the entire record herein, including the testimony of the witnesses, stipulations, pleadings and exhibits, I make the following findings of fact and conclusions of law:
1. Swift County Monitor-News ("News") is published by Petitioner, a Minnesota business corporation with principal offices located at 101-12th Street South, Benson, MN 56215. News was granted a second-class authorization as a general publication and has been authorized to mail at second-class rates for at least twenty years.
2. News is a weekly newspaper that consists primarily of news and editorial matter which is of interest to its community, along with advertising from local and regional advertisers. The advertising includes material that appears in the pages of the newspaper itself ("run-of-press advertising"), as well as pre-printed advertising inserts which are delivered in bulk to the newspaper's printing plant and inserted into the newspaper after it is printed.
3. Each issue of News is printed in three editions which are geographically based. The only difference between the editions is the amount of advertising in each. All editions contain the same editorial matter as well as the "run-of-press" advertising. One edition is circulated to readers within the newspaper's local trade area, which extends approximately twenty miles from Benson. This edition contains all of News' advertising inserts as well as a supplement consisting of classified advertisements. The second edition is circulated to readers outside of the local trade area but within the newspaper's regional trade area. The second edition includes the classified advertising supplement but not the advertising inserts. The third edition is circulated to readers outside of the local or regional trade area, such as former residents who have moved to the Minneapolis-St. Paul metropolitan area or out of state. The third edition does not contain the classified advertising supplement or the advertising inserts.
4. The parties stipulated that the first edition of News regularly contains more than 75 percent advertising and the second and third editions regularly contain less than 75 percent advertising. The parties also stipulated that, therefore, more than half of the issues of News have an edition which contains more than 75 percent advertising, and the other editions in those issues contain less than 75 percent advertising.
5. By letter dated September 18, 1992, the General Manager, Rates and Classification Center, Chicago, Illinois, issued an initial decision revoking News' second-class authorization. This decision was based upon the General Manager's finding that News did not comply with DMM §423.131(a). The General Manager found that forty-eight out of the forty-nine issues of News published between September 25, 1991, and August 19, 1992, contained more than 75% advertising. ( Joint Exhibit "JX" 1).(3)
6. By letter dated September 30, 1992, Petitioner, through its attorney, submitted a timely appeal of the General Manager's decision to the Director, Office of Classification and Rates Administration. (JX 2).
7. By letter dated October 26, 1992, the Director denied Petitioner's appeal and upheld the General Manager's decision. The Director explained that, under Customer Support Ruling PS-241 (sometimes referred to as "the Ruling"), an issue of a publication produced in editions is considered to have more than 75 percent advertising if any one of the editions has more than 75 percent advertising. ( JX 3).(4)
8. On November 14, 1992, Petitioner filed a timely Petition in this forum appealing the decision of the Director.
9. The parties have stipulated, for purposes of this proceeding only, that News complies with all second-class eligibility requirements, with the exception of DMM §423.131(a).
1. The ultimate issue raised by the Petition in this case is whether News' second-class mail privileges were properly revoked based on an alleged failure to comply with the 75 percent advertising restriction in DMM §423.131(a). Petitioner's principal contention is that Customer Support Ruling PS-241 is unreasonable because it constitutes an erroneous interpretation of DMM §423.131(a). Petitioner further contends that a weighted average rule is the only reasonable formula for assessing the amount of advertising in publications with more than one edition.
2. The Postal Service contends that the revocation decision in this case must be sustained because it was based upon a Customer Support Ruling and such Rulings are regulations of the Postal Service. The Postal Service further contends that even if the revocation decision were not based on a Customer Support Ruling, the Postal Service's policy of disqualifying a publication from second-class privileges if only one of the editions in each issue exceeds that limit, is a reasonable interpretation of DMM §423.131(a).
3. Respondent correctly contends that the definition of Postal Service regulations is broad enough to include Customer Support Rulings. The Code of Federal Regulations specifically provides that DMM provisions are regulations and further provides that Postal Service regulations also include "any other regulatory issuances and directives." 39 C.F.R. §§211.2, 211.2(3). In Respondent's view, the fact that Customer Support Ruling PS-241, upon which the revocation decision is based, may have the force and effect of a Postal Service regulation, puts an end to the controversy. (Respondent's Points and Authorities, p. 17).
Even assuming that Customer Support Rulings are regulations, this finding alone does not settle the issues raised by Petitioner. Although DMM §423.131(a) and Customer Support Ruling PS-241 may both be regulations, they are not necessarily entitled to the same weight. The 75 percent advertising restriction in DMM §423.131(a) is statutory language that was adopted by Congress as part of the Postal Rates--Adjustment Act of 1951, Pub. L. No. 82-233, §2(a), codified as 39 U.S.C. §289(a) (1951). This identical language was subsequently incorporated into the Domestic Mail Classification Schedule (39 C.F.R. Pt. 3001, Subpt. C, App. A §200.012(a)) and repeated in the DMM. Accordingly, DMM §423.131(a) is a regulation that has the force of law. Customer Support Ruling PS-241, on the other hand, carries no such statutory authority. Nor was the Ruling promulgated under any direct grant of legislative authority from Congress, comparable to the authority to set rates and classes of mail granted to the Board of Governors of the Postal Service in conjunction with the Postal Rate Commission. See 39 U.S.C. §§3621-3623. Customer Support Ruling PS-241 on its face purports to be an interpretation of the 75 percent advertising limitation embodied in DMM §423.131(a). An interpretive rule is necessarily entitled to less weight than the law it purports to interpret. See, generally, K. Davis, Administrative Law Treatise, Vol.2, §§7:8-7:11 (2d ed. 1979). If, as Petitioner contends, Customer Support Ruling PS-241 is unreasonable, i.e., that it is an erroneous interpretation of DMM §423.131(a), the conflict must be resolved in favor of the DMM provision.
4. The parties are in direct disagreement as to whether Customer Support Ruling PS-241 is a reasonable interpretation of DMM §423.131(a). Petitioner contends that the interpretation adopted by the Postal Service is unreasonable because the use of the phrase "issues published during a twelve month period" in the DMM necessarily requires that all of the editions which comprise the issues published over that period should be considered in determining the rate of advertising.(5) The Postal Service maintains that only the edition with the highest percentage of advertising need be considered.
I find it unnecessary to rule on the per se validity of Customer Support Ruling PS-241 because the facts in this particular case raise no conflict between the Ruling and the DMM provision.(6) Even assuming, arguendo, that Petitioner is correct in maintaining that all editions must be counted in determining compliance with the 75 percent advertising restriction, News contained more than 75 percent advertising in over half of the total editions which comprised its issues during the twelve month period upon which the revocation determination was based. Petitioner printed three editions per week over the forty-eight week period from September 25, 1991, to August 19, 1992, for a total of 144 editions. (JX 1, attachment). Of those 144 editions, 82--well over half of the editions printed during the twelve month period--contained more than 75 percent advertising. Indeed, even though the parties stipulated that News generally contains less than 75 percent advertising in two of its editions and more than 75 percent advertising in only one of its editions, for the period at issue here News contained more than 75 percent advertising in two of its three weekly editions in over half--35 out of 48--of the weekly issues published over the twelve month period surveyed. (Id.)
5. Petitioner's contention that an average weighted by circulation is the only reasonable method of determining the amount of advertising in multi-edition publications for purposes of DMM §423.131(a), is without merit. A straight averaging of the amount of advertising in each edition is, for example, just one other method of determining the amount of advertising in multi-edition publications which takes into account all of the editions which comprise the issues, as Petitioner insists it must. For reasons related to the asserted difficulty of enforcing any averaging rule, the Postal Service has declined to adopt such an approach. See Respondent's Points and Authorities, pp. 9-16. In any event, it is not within my jurisdiction to rule on the relative merits of one formula over another. The Postal Service has chosen to adopt Customer Support Ruling PS-241, and, as found above, the application of the Ruling to the facts in this case does not result in a conflict with DMM §423.131(a).
6. Petitioner's policy argument is not appropriate for resolution in this forum. Petitioner contends that Customer Support Ruling PS-241 undercuts the long-established Congressional policy of favoring newspapers and periodicals with respect to mail rates because newspapers and periodicals serve the important function of bringing news and information to the public. According to Petitioner, Customer Support Ruling PS-241 works a financial hardship on News and other small weekly newspapers which depend upon the revenue from advertising inserts in order to remain economically viable and thereby to fulfill their main function of bringing news and information to the public. Petitioner's policy argument raises issues that properly should be determined by the Postal Rate Commission. The Postal Rate Commission was created by Congress to review proposed rate and classification changes and to make recommendations to the Postal Service Board of Governors, in accordance with certain specific factors. These factors include the costs attributable to the class of mail and the educational and informational value of the mail matter to the recipient of the mail. 39 U.S.C. §3622. Petitioner's policy argument requires just such an analysis of costs versus benefit to the public. Moreover, a procedure is available to Petitioner for bringing its policy concerns to the attention of the Postal Rate Commission, either as a single party or in conjunction with similarly situated weekly newspapers. See 39 U.S.C. §3662; Combined Communications v. United States Postal Service, 891 F.2d 1221 (6th Cir. 1989); Buchanan v. United States Postal Service, 508 F.2d 259, 264 (5th Cir. 1975).
7. Accordingly, I find that the Petition filed herein should be denied and that the ruling of the Director revoking Petitioner's second-class mail authorization should be sustained.
Judith A. Dowd Acting Chief Administrative Law Judge
2. DMM §423.131 states, in pertinent part, as follows:
Publications Designed for Advertising.
General publications principally designed for advertising purposes may not qualify for second class privileges. These
include but are not limited to the following:
a. Publications that contain more than 75%
advertising in more than half of the issues pub-
lished during a twelve month period.
3. The General Manager erred in stating that there were forty-nine weekly issues of News published between September 25, 1991, and August 19, 1992. The statistical report attached to the General Manager's letter, upon which he relied in making his revocation decision, shows that the actual number of issues during this period was forty-eight, of which forty-seven contained more than 75 percent advertising in at least one edition. (JX 1, attachment). This misstatement amounts to harmless error, since it does not affect the validity of the General Manager's decision.
The information in the statistical report further shows that the advertising content of the editions of News deviated during the period of time between September 25, 1991, and August 19, 1992, from the percentages to which the parties stipulated in paragraph four, above. The report shows that News contained more than 75 percent advertising in two of its three editions in 35 of the 48 weekly issues published during this period. All totaled, Petitioner published 144 editions during the period surveyed, and of that number, 82 editions contained more than 75 percent advertising. (Id.)
4. Customer Support Ruling PS-241, which was signed by Ernest J. Collins, General Manager, Business Requirements Division, Office of Classification and Rates Administration, states, in pertinent part, as follows:
When an issue of a general . . . publication is pre-
pared in editions, the advertising content and num-
ber of copies of each edition may vary. However,
if the advertising content of any one edition exceeds
the prescribed 75 percent advertising limitation, the
issue will be considered as having more than 75
percent advertising matter. It should be noted that
when an issue of a general . . . publication is pre-
pared in editions, it is not permissible to determine
the percentage of advertising in the issue by averaging
the percentage of advertising in the editions.
5. The legislative history of the Postal Rates--Adjustment Act fails to shed any light on the meaning Congress may have attached to the word "issues" when it passed that legislation. See 1951 U.S. Code Cong. & Ad. Serv., 2489-2528; 97 Cong. Rec. 1023-11061 (1951). While Respondent's witness essentially testified that the term "issue" meant all of the versions of the paper printed on a given date and edition referred to the various versions of which the issue is composed (Transcript pp. 84-85), the term "issue" has not always been used in exactly that way. See, for example, Combined Communications v. United States Postal Service, 891 F.2d 1221, 1222 (6th Cir. 1989) (two different versions of the paper published on the same date both called "issues").
6. Presuming that Customer Support Rulings are regulations, the Administrative Law Judge may even lack jurisdiction to decide the validity of the Ruling. See, David Sellers, P.S. Docket No. 37/153, at 4 (P.S.D. August 17, 1993), and cases cited. ("[N]either the Administrative Law Judge nor the Judicial Officer has authority to determine the . . . validity of Postal Service statutes and regulations.")