In the Matter of the Petition by

JACK SCHAFFER, Publisher,
The Schaffer Report,
56 North Williams Street,
Crystal Lake, Illinois 60014

Denial of Application of Second-Class Mail Privileges for
"THE SCHAFFER REPORT"

P.S. Docket No. 3/98

May 1, 1975

William A. Duvall Chief Administrative Law Judge

Jeffrey W. Kane, Esq., and
Saul J. Morse, Esq.,
315 State House,
Springfield, Illinois, for Petitioner

Grayson M. Poats, Esq.,
Law Department, U.S. Postal Service,
Washington, D.C., for Respondent

INITIAL DECISION^1/

This proceeding involves an appeal by State Senator Jack Schaffer, representing the 33rd District of the State of Illinois, from a proposed denial of his application for second-class mailing privileges for the publication, "The Schaffer Report." Hereinafter Senator Schaffer will be referred to as the Petitioner.

Petitioner is the owner and publisher of "The Schaffer Report," a quarterly publication with offices at 56 North Williams Street, Crystal Lake, Illinois 60014.

Petitioner filed his application with Respondent for second- class mail privileges on January 28, 1974.

Respondent denied Petitioner's application by letter dated June 19, 1974, stating as the sole reason therefore that Petitioner's publication is designed primarily for advertising purposes within the meaning of Section 132.226(b) of the Postal Service Manual.

By letters dated July 5, 1974, and July 24, 1974, Petitioner requested Respondent to reconsider its denial. Respondent denied such requests by letter dated September 17, 1974, and granted Petitioner 15 days from the receipt thereof to file a Petition for Appeal, pursuant to 39 C.F.R. 954.8.

Petitioner received Respondent's denial on September 19, 1974.

Respondent's denial letter of September 17, 1974, in allowing Petitioner 15 days from the receipt thereof to file a Petition for Appeal constitutes an extension of time within which to file the appeal within the meaning of 39 C.F.R. 954.8.

Petitioner filed a timely appeal and the matter has come to hearing today pursuant to notice given to the parties. Both parties were represented at the hearing by counsel who participated in the examination and cross-examination of the witnesses and who have submitted proposed findings of fact, conclusions of law, and supporting arguments.

At the outset of the hearing it was agreed by counsel for both parties that there is but one issue in this proceeding and that this issue may be stated as follows:

"Is the publication, 'The Schaffer Report,' designed primarily for advertising forforforfor within the meaning of 39 U.S. Code 4354(c) and within the meaning of Section 132.226 of the Postal Service Manual."

For purposes of clarity these provisions will be stated.

Section 4354 of Title 39, United States Code, sets forth the conditions which a publication must meet in order to be eligible for entry into the mail as second-class matter. Subsection (c) of this section provides 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 Postal regulation on this subject are largely a paraphrase of the requirements of Section 4354 of Title 39 of the United States Code and the regulations are found in Section 132.226 of the Postal Service Manual, (39 C.F.R. 132.226), which reads in pertinent part as follows:

"Publications designed primarily for advertising purposes may not qualify for second-class privileges. They include:

* * * * * * *

b. Those owned or controlled by individuals or business concerns and conducted as an auxiliary to and essentially for the advancement of the main business or calling of those who own or control them."

At the hearing there were four witnesses who appeared on behalf of the Petitioner. The first three of these witnesses were constituents of Senator Schaffer's and they testified, in general, that they find the Petitioner's publication to be a useful and informative publication, that it contains information which they do not find in other media and they all suggested that they would like to see an even broader scope of coverage in "The Schaffer Report".

Each witness testified that he feels that Senator Schaffer, as their representative in the Senate of the State of Illinois, has as one of his obligations the duty of reporting to his constituents on the matters pending before the Senate and, in particular, with respect to his position and his action on those matters. These witnesses were followed by Senator Schaffer who testified that he feels a reciprocal obligation to report to his constituents and to take positions on various issues pending before the Senate.

He states that the positions taken by him on the various issues are not always the popular position with respect to the views of his constituents, but that the fact that some of his positions may not be popular with the voters is not necessarily a controlling factor in the formulation of his position with respect to the issues.

The Petitioner testified that he began to publish "The Schaffer Report" in September of 1973 and that in the intervening time he has been able to build up a subscription of perhaps as many as a thousand fifty individuals. Thus far, the publication of "The Schaffer Report" has not been a financial success, but the publication of this information is regarded by the Senator as being in conformity with his view as to his duty to his constituents.

The Petitioner indicated that he is uncertain at this time whether he intends to run for reelection in 1976 but he did indicate that he is seriously considering the continuation of the publication of "The Schaffer Report" regardless of whether he runs for reelection and regardless of whether he is successful in his race for reelection. These matters are subject to evaluation by him at some later date on the basis of more complete information.

Among the exhibits received in evidence were all of the copies of "The Schaffer Report" that have been published to date. These publications are five in number and the most recent issue was published as of March 31, 1975.

Now, in order to give an indication of the nature of this publication it is necessary to examine an issue in detail and for this purpose the most recent issue of the publication will be utilized. This issue is the one which the Respondent's principal witness testified, without objection by the Petitioner, is, in his view, the closes to being in conformity with the Postal laws and regulations governing second-class mail eligibility.

With this preface we will proceed with a description of Exhibit P-2.

At the top left-hand corner of page 1 of Exhibit P-2 there is the title of the publication, namely, "The Schaffer Report." Immediately underneath that and stretching across the front of Exhibit P-2 at the top of the publication are the words "Published by STATE SENATOR JACK SCHAFFER," and the first item on the page, there is the caption "79th General Assembly opens with Democrats in total control." The subcaption is "Illinois now one party state."

On this page there are two pictures. Senator Schaffer appears in each of these pictures, although he is not the only subject in the pictures. The story at the lower left of the front page in the two left-hand columns bears the caption, "Schaffer appointed minority spokesman on key Senate committee." Now, in order to get the flavor of this article or part of it, at least, it will be noted that the following language appears under the caption just stated:

"SPRINGFIELD-Illinois. Senate Minority Leader William C. Harris, R-Pontiac, announced the appointment of Senator Jack Schaffer, R-Cary, as minority spokesman on the Senate Public Health, Welfare and Corrections Committee.

"Harris also appointed Schaffer to membership on the committees on education, and executive appointments and administration.

"'As a freshman member of the Senate, Jach Schaffer has shown himself to be an inordinately capable and diligent legislator,' Harris stated. 'His hard work and grasp of the many complex issues facing our state government merit his appointment to these important positions.'"

This story continues with the description of the jurisdiction and functions of the Committee to which the Petitioner has been appointed and his name is mentioned at least one other time in the story and he is quoted at length in the story.

The only other remaining story on the front page of Exhibit P-2 bears the caption, "Chain-Of-Lakes--Fox River Commission reorganizes." The introductory paragraph of this story describes the activities of the Petitioner in setting forth the responsibilities of the Chain-Of-Lakes --Fox River Commission, and it states among other things that "State Senator Jack Schaffer (R-Cary) *** argued forcefully that the interest of the people living on and using the Fox River above and below the McHenry Dam would be better served with a unified effort to improve and maintain the Chain of Lakes and Fox River." The Petitioner's name is mentioned throughout, from time to time, in the remainder of the story and his views are contained.

It was pointed out in cross-examination of the Respondent's witness that on page 2 of Exhibit P-2 there is perhaps less mentioned of the Petitioner. In the upper right-hand corner there is a story captioned "SENIOR CITIZENS FAIL TO APPLY FOR TAX RELIEF." This describes some sort of tax relief available to Illinois senior citizens, some of whom may not have applied for it. The final paragraph in the article indicates, or states, that, "Forms are available at Senator Jack Schaffer's Crystal Lake office, 56 North Williams Street."

In the lower left portion of page 2 of Exhibit P-2 there is a photograph of Senator Schaffer with four young people to whom has been awarded a legislative scholarship for 1974. Beneath this picture and the caption of it is a box which directs attention to the means by which persons who want to do so may contact Senator Schaffer.

Page 3 of Exhibit P-2 is replete with mention of Senator Schaffer. There are two photographs of groups of people on this page and Senator Schaffer is in both groups. The only item on this entire page which does not relate to Senator Schaffer is a two column-inch item in the lower left-hand corner of page 3 which tells people how to call to get weather reports.

Page 4 of Exhibit P-2, in the upper left-hand corner, contains the masthead of the publication and it states that "The Schaffer Report is published by State Senator Jack Schaffer."

Two left-hand columns contain Senator Schaffer's views on "WHO WANTS THE FOX VALLEY TOLLWAY?" "WHY NOT LET THE CHICAGO NORTHWESTERN RUN THE RTA?" and "Mr. MEANY, I DON'T UNDERSTAND."

These articles assume the character primarily of editorials and the personal pronoun "I" is used quite frequently throughout these articles and the "I" can only refer to the publisher, Senator Schaffer.

The other three columns on page 3 relate to items concerning the Governor of Illinois and do not specifically, so far as my examination reveals, refer to or quote Senator Schaffer.

On page 5 of Exhibit P-2, Senator Schaffer appears in the only two pictures on that page and an article featuring Senator Schaffer occupies two-thirds of the left-hand two columns of page 5. There is no particular reference to Senator Schaffer on the remainder of page 5.

Page 6 is devoted to a poll to be returned to Senator Schaffer and his name appears prominently in regard to this poll. It should be pointed out that this poll occupies four out of five columns on that page and a portion of the fifth column on that page.

On page 7 of Exhibit P-2, the Petitioner appears in the only two pictures on this page. His views are featured in the stories bearing the captions, "INCREASED COMPENSATION BILL PASSES," and "Senator Schaffer Establishes Procedure For Legislative Scholarships."

There is only one picture on page 8 and Senator Schaffer appears in it, and the picture is published in connection with an article entitled, "MEDICAL REVIEW BOARD FOR DRIVER'S LICENSES." Senator Schaffer is referred to, and he is quoted, extensively in this article.

Also appearing on page 8 of this publication are two notices with respect to "The Schaffer Report." One such notice describes the nature and purpose of "The Schaffer Report" and the other notice is a solicitation for a subscription to the publication. One of these notices occupies a space approximately five inches by three inches and the other notice occupies a space of approximately three and a half by seven and a half inches.

It may be appropriate to point out here that this issue of the publication is eleven and one half by sixteen inches in size.

In considering a publication of any type it is necessary, sometimes painfully so, to consider the details of the publication rather than to speak in generalities. It was pointed out by Petitioner's Counsel that the Internal Revenue Service has issued a ruling which is No. 73-354 in regard to the treatment of amounts received and amounts expended by Congressmen who use the cash receipts and disbursement method of accounting in connection with publication and distribution of newsletters, reports and question- naires they send to constituents under the certain circumstances of their situation as Congressmen.

The Internal Revenue Service has ruled that such expenses are ordinary and necessary business expenses within the meaning of Section 162(a) of the Internal Revenue Code and that they are deductible. The fact that certain expenses are deductible, or rather that these expenses are deductible, does not relate in any way to the issue of which classification of mail is applicable to the reports that are sent by the Congressmen to their constituents. I would assume that the same ruling (No. 73-354) would be made applicable to the publication which is the subject of this proceeding, but again, that ruling, if it is made so applicable, is not related to, and, certainly, is not controlling in regard to the question of whether the publication is second-class or some other class of mail.

Adverting again to the testimony of the Petitioner's witnesses, all of them, with respect to the obligation of the Petitioner to report to his constituents, there is nothing in this proceeding that belittles that obligation. On the contrary, I think that the Petitioner is to be commended for his response to this obligation and, so far as I am aware he responds more fully than any other legislator of my acquaintance. Unfortunately, however admirable the function may be, it is not related to the issue in this proceeding. The Postal Service is not attempting to stop Senator Schaffer from carrying out what he feels is his obligation to his constituents. The Postal Service is only saying, if he does undertake to carry out this obligation in the manner in which he has elected, that the proper rate of postage must be paid for the vehicle he uses to achieve the desired results.

The situation in this case is not a new situation. It has been a source of some concern to the Postal Service for a long period of time, and some of these earlier views, I think, are of benefit in reaching the decision in this case. For example, as far back as April 15, 1879, the Attorney General sent an opinion to the Postmaster General expressing his views as to the proper construction of the phrase, "regular publication designed primarily for advertising purposes," which is substantially the language that has been carried in the law and the regulations down to the present time.

The Attorney General at that time said, "The words of the proviso are hardly susceptible of nonconstruction on account of their simplicity. The only phrase that it seems necessary to comment upon is, 'designed primarily for advertising purposes.' In this connection I think this phrase must be deemed to mean, 'chiefly or principally intended for advertising purposes.' The word 'primarily' is intended to indicate the chief or principal object of the publication, and not its first object in any sense of time. The use of the phrase as applied to a publication means one principally intended for advertising purposes and, by fair inference, not one the design or intention of which is that it should be used incidentally for advertising purposes.

"If this be the true construction of the phrase, and I do not doubt that it is, it is necessarily a question of fact in each case whether or not the chief intention of the publication under discussion is for advertising purposes. The intention must be ascertained in each individual case. In ascertaining it, it is important to observe that such a publication, 'must be originated and published for the dissemination of information of a public character or devoted to literature, the sciences, arts or some special industry,' and also have 'a legitimate list of subscribers.' The fact that it is devoted to literature, science, art or some special interest and that it has a legitimate list of subscribers may exist and yet it may be one, 'designed primarily for advertising purposes.' If this be the case, it is not entitled to admission into the second class of mail matter."

This language indicates that in deciding an issue such as the one presented to us today the details of the publication must be carefully examined and the facts weighed - not on the basis of form alone, or substance alone, but that the entire publication must be taken as a whole and that a decision must be made as to the impact of the publication. From this kind of weighing of the publication there flows the decision as to whether the publication is designed primarily for advertising purposes.

Based on my review of the publication involved in this proceeding, I find that "The Schaffer Report" is designed primarily for advertising purposes.

Proposed findings of fact and conclusions of law have been submitted by the parties and these are adopted or rejected as indicated.

The Petitioner is the owner and publisher of "The Schaffer Report," a quarterly publication with offices at 56 North Williams Street, Crystal Lake, Illinois.

So far as this record shows the main business or calling of Senator Schaffer is that of being a legislator.

Petitioner filed his application with Respondent for second-class mail privileges on January 28, 1974.

The application was denied and after the exchange of correspondence and upon due notice to the parties the matter came to hearing.

Petitioner herein is the duly elected Illinois State Senator from the 33rd Legislative District and is the only State Senator elected from that District.

The issues of "The Schaffer Report" admitted into evidence consist in large part of articles and pictures concerning Senator Schaffer's activities as a Senator, his positions on various issues before the Senate, and the activities he participated in and these matters were reported by Senator Schaffer in the form of the publication involved in this proceeding.

The most recent issue of "The Schaffer Report," Petitioner's Exhibit P-2, was received into evidence at the hearing in this matter.

Although that issue contains some factual data and information which reports the activities of Illinois State Government, with special reference to the issues before the Senate of the Illinois State Assembly of relevance and importance to the subscribers of the publication and the constituents of the 33rd Legislative District, Petitioner's Exhibit P-2 also contains information which tends to demonstrate, and I hold that it does demonstrate, that the publication "The Schaffer Report" is designed primarily for advertising purposes.

Of the 28 pictures in the five issues of "The Schaffer Report" admitted into evidence Senator Schaffer appears in 26.

The remaining two pictures are of recipients of Senator Schaffer's legislative scholarships.

Petitioner has requested, also, that it be found as a fact that "The subscription fee for 'The Schaffer Report' is one dollar for four years, which fee adequately covers the costs of production of the publication." This finding is rejected because the evidence in this proceeding is that Senator Schaffer has been subjected to out-of-pocket expenses over and above his income from subscriptions. In order to continue the publication the Senator indicated that it would require a circulation of two to three thousand before the publication of "The Schaffer Report" would be a financial success.

The Petitioner requested that it be found that "Petitioner publishes 'The Schaffer Report' as a function of his office as State Senator and in no other capacity." This finding is rejected because of the other capacities already alluded to in which the Senator publishes this report. In addition, it is indicated in his testimony that the Senator is even considering publishing the report if he does not run, or if he runs but is not elected in the 1976 election.

"Based on the most recent issue of 'The Schaffer Report,' Petitioner's Exhibit P-2, the publication is designed primarily for advertising purposes and therefore fails to qualify for second-class privileges within the meaning of 39 C.F.R. 132.226."

Petitioner requested that it be found that, "The fact that Petitioner's previous and most recent issues of 'The Schaffer Report' failed to qualify the publication for second-class privileges because the specific content therein demonstrates these issues to be primarily for advertising purposes, does not prejudice the fact that Petitioner otherwise complied with all requirements for the issuance of second-class privileges and the fact that Petitioner could publish future issues which were not designed primarily for advertising purposes and which would qualify Petitioner for second-class privileges in every respect."

This finding is denied insofar as it is suggested that the publication meets all the other requirements for issuance of second-class mail privileges. In this proceeding it was not undertaken to examine the publication's compliance with all of the other requirements for second-class mail privileges. I could not make a finding on those questions about which no proof was taken. We did take proof on the issue which was formed on the basis of the pleadings in this case.

The last finding of fact requested by petitioner is that,

"Petitioner had in fact made every effort to comply with all regulations of the United States Postal Service and states that such efforts will continue in the future."

It cannot be found that the Petitioner has made every effort to comply with all regulations of the United States Postal Service. There are various kinds of efforts that could be made which so far as the record shows have not been made. For example, some of the stories that appear in the publication might be rewritten so as not to emphasize Senator Schaffer and his role in them. I don't say that that would bring the publication into compliance but it would seem to me that it would be a step in that direction.

It is found that the Senator has stated that he will continue his effort to bring the publication into compliance with the regulations of the Postal Service.

The Petitioner requested that the following conclusions of law be made.

"The Petitioner's publication, 'The Schaffer Report,' complies in all respects except with the requirements of 39 C.F.R. 132.226 for second-class privileges prescribed by 39 C.F.R. 132.2."

For reasons previously indicated with respect to a similar requested finding of fact, this proposed conclusion of law is rejected. Namely, we have not inquired into all of the requirements of the postal regulations for eligibility for second-class mail privileges.

The second requested conclusion of law by Petitioner reads as follows: "Petitioner, in his capacity as a duly elected State Senator, is qualified as a matter of alw to publish a periodical publication which could meet the qualifications for second-class privileges as set forth by 39 C.F.R. 132.2, notwithstanding the denial of Petitioner's application in this proceeding. Such denial is based solely on the factual content of Petitioner's publication that is a matter of record in this proceeding."

That proposed conclusion of law is adopted except that the word "could" is deleted and there will be inserted in lieu thereof the word "does," because this publication "could" qualify but as of the moment "does" not.

Lastly, the Petitioner requests that the following conclusion of law be made: Petitioner's application for second-class privileges is denied without prejudice to his right to reapply at a future time. This conclusion of law is adopted.

As a final conclusion of law it is concluded that the ruling the Respondent expressed in its letter of June 19, 1974, and later in the letter of September 17, 1974, is correct and should be sustained.

Proposed findings of fact and conclusions of law submitted by the parties have been carefully considered. They are adopted to the extent herein indicated. Otherwise, such proposed findings of fact and conclusions of law are rejected for the reasons stated or because they are contrary to or unsupported by the weight of the evidence in this proceeding.

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1/ Transcribed from oral decision as rendered at close of hearing held April 7, 1975. Minor language changes have been made, but the substance of the decision is unchanged.