In the Matter of the Petition by

STERLING HOUSE INCORPORATED,
260 Park Avenue South,
New York, New York 10010

for denial of second-class entry of publication "PHOTO SCREEN"

P.O.D. Docket No. 2/256

August 23, 1968

Gerard N. Byrne Hearing Examiner

POST OFFICE DEPARTMENT,
DIVISION OF HEARING EXAMINERS,
WASHINGTON, D.C. 20260,

APPEARANCES:
Marion E. Harrison, Esq.
Reeves, Harrison, Sams & Revercomb
1750 Pennsylvania Avenue, N.W.
Washington, D.C. 20006 for the Petitioner

Norman P. Glass, Esq.
Office of the General Counsel
Post Office Department
Washington, D.C. 20260 for the Respondent

INITIAL DECISION OF HEARING EXAMINER

Petitioner applied on proper forms to the Post Office Department for second-class privileges, ^1/ for its publication "Photo Screen" and by letter dated February 10, 1967, the application was denied. The reasons were stated as follows:

"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."

Section 132.36 (39 CFR 132.3(f)) is quoted as follows:

(f) 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.

The Petitioner duly appealed this ruling, the case proceeded to hearing on March 18, 1968, and proposed findings of fact, conclusions of law and briefs in support thereof were submitted.

It is the Petitioner's contention that it has furnished to Respondent all information requested of it, and all existing information showing the extent to which "Photo Screen" has sold a certain percentage of its press run, and it is urged that this is all Petitioner is required to do.

The Respondent at the hearing introduced into evidence, without objection, Exhibits 1-15 (Tr. 2).

The evidence adduced at the hearing as brought out in the testimony of Petitioner's President Morris S. Latzen (Tr. 5-20) was to the effect that:

* * * * * *

PHOTO SCREEN is regularly issued with a frequency of more than quarterly, to wit, monthly. Petitioner has met the procedural requirements set forth in said citation.

PHOTO SCREEN Is issued and mailed at a known office or place of publication and otherwise fulfills the related requirements.

PHOTO SCREEN is formed of printed sheets.

PHOTO SCREEN is originated and published for the purpose of disseminating information of a public character.

PHOTO SCREEN has a legitimate list of subscribers.

PHOTO SCREEN is not designed primarily for advertising purposes.

PHOTO SCREEN is not designed primarily for free circulation but is designed to earn Petitioner a profit.

PHOTO SCREEN is not designed primarily for circulation at nominal rates.

PHOTO SCREEN is properly identified as to its second class status and related information on one of the first five pages of each issue.

Petitioner has complied with every statutory and every lawful regulatory requirement for second class entry.

The above points together with Respondent's admission that the publication is mailable, meet the requirements of the regulation except for the so-called 65% rule.

And he further testified that the owners of the publication were unable to provide information showing compliance with the (so-called) 65% rule for the reason that the publication had not achieved a circulation to subscribers and purchasers of 65% of the total number distributed by mail.^2/ (Tr. 22)

The Petitioner then introduced into evidence a list of 122 names with addresses, etc. as a legitimate list of paid subscribers (Tr. 15), and 30 copies of the publication in issue, constituting all issues of the publication (Tr. 23, 24).

On cross examination the witness reiterated that the circulation of the publication had never reached 65% as required by the Regulation 2/ (Tr. 25, 27, 29).

Another witness, Beyrl-Ruth Seiferling, the editor of the publication in issue, testified in support of Mr. Latzen's testimony as to the editorial policy of the management. Since it is cumulative it will not be abstracted here.

The Petitioner then rested and the Respondent did not present any testimony.

There is but one issue presented in this case, viz.:

Has the Petitioner complied with every statutory and every lawful regulatory requirement for second-class entry?

It was the position of Petitioner as expressed in his petition that the Petitioner was required to furnish information only on matters requested by the Director, Classification and Special Services Division, and that he had done so; that if the Director should amend his decision to allege that Petitioner had not complied with the "interpretive" language of the regulations (the 65% rule) (39 CFR 132.2(b)(7)) then Petitioner reserved the right to file an amended petition. This nicety of language turned on the wording of the second paragraph of the letter of February 10, 1967, quoted above, which mentioned only failure to furnish additional information, quoting Section 132.36 (39 CFR 132.3f) of the Postal Manual. Petitioner, in effect claimed that the Director did not "notify the Publisher specifying the reasons for the denial" as provided therein. Therefore, argues the Petitioner, no valid denial was ever made by the Director, since it was failure to comply with Section 132.227 (39 CFR 132.2(b)(7)) which was the specific reason for such denial.

Assuming, arguendo, that the Petitioner maintained such a position by substantial evidence, it may be safely said that any such contention has been waived by the statements of counsel and testimony of Petitioner's president at the hearing. On page 4 of the transcript the Petitioner's Counsel is quoted as follows:

"The underlying, or ultimate purpose of this hearing, as Petitioner views it, is to establish that the magazine called Photo Screen complies with all statutory and regulatory requirements for second class entry; with one exception; and then, if need be, to perfect a test case, to challenge the validity of the rule which constitutes that exception. The exception to which I refer is the so-called 65% rule, which is more formally designated as the Rule set forth in 39 CFR Section 132.2(b)(7), which appears at Page 73 of the latest edition of the Code of Federal Regulations, and which is also set forth in Section 132.227 of the Postal Manual, the particular page being page dated July 27, 1967."

And the Petitioner's president repeatedly stated that the management had provided "all the information requested of us, with the exception of the compliance with the 65% rule." (Tr. 22, 25, 28) Further, the Petitioner made no effort to amend its petition as set out in paragraph 4 thereof, but contested the validity of Section 132.227 (39 CFR 132.2(b)(7)) in its brief.

Respondent's Exhibit No. 11, was a letter from the Director, in Washington, D. C., to the Postmaster, New York, calling attention to the fact that the circulation of the October 1965 edition of the publication did not meet the requirements of Section 132.227, and suggested that the publisher reduce the number of copies consigned to news agents, and that the publisher make an effort to increase the number of subscribers. Either or both of these suggestions could have resulted in compliance. Presumably the Postmaster conveyed these suggestions to the publisher since Respondent's Exhibits 5, 6, 7, 8, 9 and 10 answered the matters set out in the Director's letter and stated that compliance with the 65% rule, (Section 132.227, Postal Manual) would be reported as soon as that percentage should be attained.

Although not argued at the hearing, Petitioner has asserted in its brief that the regulation (Section 132.227, Postal Manual) issued by the Postmaster General: (a) constitutes ultra vires legislation, (b) is not reasonable, (c) is not within the framework of the statute, (d) has no rational relationship to the statute it embellishes, (e) is limited in its scope, and, finally, (f) this rule, as well as others failed to comply with the Administrative Procedure Act, (39 USC 553(b), (c), (d) and (e)), and therefore the regulation is unlawful and void. (Petitioner's brief, pp. 18-29). The particulars of the charge that the regulation failed to comply with the Administrative Procedure Act (correct citation: 5 USC) were not stated, nor does there appear to be any reason shown on the face of the statute for the assertion of invalidity. In any event, it is not within the powers of a hearing examiner to determine the constitutionality of statutes nor the validity of Departmental regulations. (Section 821.332b, Postal Manual, 39 CFR 821.3(c)(2)(ii)).

The following findings of fact are made:

1. Petitioner filed an application for second-class mailing privileges dated February 10, 1966. (Gov. Exhibits 9 and 12).

2. The Director, Classification and Special Services Division, Bureau of Operations, informed the Postmaster, New York, New York, that the circulation of the publication, as stated, did not meet the requirements of Section 132.227, Postal Manual, (39 CFR 132.2(b)(7)) (the 65% rule) and suggested possible remedies for such conditions. (Gov. Exhibit 11).

3. Petitioner, upon being informed of failure to meet requirements of said Section 132.227 repeatedly informed the Postmaster, New York, that it would furnish evidence of compliance with said Section 132.227 as soon as such information were to become available.

4. Information required by said Section 132.227 was never made available to said Director by Petitioner.

5. Section 132.36, Postal Manual (39 CFR 954.5) states that failure of the publisher to furnish required information or evidence may be cause for denial of the application as incomplete, or, on its face, not fulfilling the requirements for entry.

6. Pursuant to said Section 132.36 the said Director by letter dated February 10, 1967, denied the Petitioner's application for second-class mail privileges, specifically for failure to furnish additional required information, and Petitioner thereupon perfected this appeal.

The following conclusions of law are drawn:

1. Sterling House Publications, Inc. failed to furnish a completed application form for second-class mailing privileges for Photo Screen Magazine.

2. The failure of a publisher to furnish the necessary information requires denial of his application for second-class mailing privileges.

3. Photo Screen magazine was properly denied second-class mailing privileges.

The action of the Director, as aforesaid, was proper, and his decision is hereby upheld.

/s/

1/ 39 U.S.C. 4354. Conditions for entry of publications

(a) Generally a mailable periodical publication is entitled to be entered and mailed as second-class mail if it--

(1) is regularly issued at stated intervals as frequently as four times a year and bears a date of issue and is numbered consecutively;

(2) is issued from a known office of publication;

(3) is formed or printed sheets;

(4) is originated and published for the dissemination of information of a public character, or devoted to literature, the sciences, arts, or a special industry; and

(5) has a legitimate list of subscribers.

(b) For the purpose of this section, the word "printed" does not include reproduction by the stencil, mimeograph or hectograph processes or reproduction in imitation of typewriting.

(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.

2/ 132.227 (39 CFR 132.2(b)(7)) .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.