P.S. Docket No. 16/94
August 23, 1983
In the Matter of the Petition by )
)
INTERNATIONAL AUDIO RESEARCH SOCIETY )
2449 Dwight Way )
Berkeley, CA 94704-2353 )
)
Revocation of Reentry Authorization )
for "IAR HOTLINE" ) P.S. Docket No. 16/94
APPEARANCE FOR PETITIONER:
J. Peter Moncrieff
President
2449 Dwight Way
Berkeley, CA 94704-2353
APPEARANCE FOR RESPONDENT:
Stanley F. Mires, Esq.
Law Department
U. S. Postal Service
Washington, DC 20260-1143
Grant, Quentin E.
INITIAL DECISION
This is an appeal from the revocation by the Office of Mail Classification, USPS, of second-class reentry of Petitioner's publication, IAR Hotline, as a publication of a strictly scientific society.
The parties have agreed to forego an oral hearing and to submit the matter for decision on the pleadings as supplemented by affidavits, other relevant documents and written argument. My order of May 31, 1983, confirmed the agreement of the parties and fixed June 24, 1983, as the date for closing the record.
Respondent filed timely the following documents which, in addition to Respondent's Answer to the Petition, I have considered in reaching this decision:
a. Certified copy of administrative record.
b. Affidavit of Edmund J. Wronski.
c. Motion to Affirm Revocation of Second-Class Reentry.
d. Memorandum in support of motion to affirm.
Petitioner filed no additional papers following the issuance of my May 31 order. In arriving at this decision I have considered, as setting forth Petitioner's position, the Petition, dated April 13, 1983, Petitioner's Rebuttal of Respondent's Answer dated May 17, 1983, and arguments contained in Petitioner's letters included in the certified administrative file.
FINDINGS OF FACT
1. Petitioner International Audio Research Society applied under date of March 16, 1982, to enter its publication IAR Hotline as a publication of a "strictly scientific society" (Ex. 1 1/). On the application form Petitioner stated that the publication does not carry advertising matter in the interests of other persons or concerns and that Petitioner was not organized for profit.
2. At the time it filed this application (and since September 1980) Petitioner was authorized second-class mail privileges for the publication as a general publication under DMM 422.2 (Ex. 1, 7).
3. With its application Petitioner included a certified copy of its constitution (Ex. 2) and by-laws (Ex. 3) (both adopted on 12/23/75). The by-laws were amended on 7/21/80 to authorize issuance of the publication involved in this proceeding.
4. DMM § 422.31j. defines a strictly scientific society as an organization whose exclusive purpose is to bring individuals together for the purpose of cooperating in scientific investigations and pursuits in the applied, pure, or natural sciences, and to disseminate technical information dealing with these subjects.
5. Under date of 4/13/82 Petitioner filed application for additional reentry of the publication under DMM 422.3 (Publications of Institutions and Societies). Annexed to the application was the following letter dated 4/13/82 (Ex. 5):
To: U.S. Postal Service
Dear Sirs:
IAR Hotline is a purely scientific publication, which carries no advertising whatsoever, nor is promotion accorded any product in exchange for any kind of consideration.
All discussions of specific products are objective, scientific discussions, and relate specifically to the basic scientific concepts of audio which are educationally explained in the publication. If a product's price is mentioned, it is not as an inducement to purchase, but rather as a necessary part of the discussion of scientific tradeoffs, of cost vs. engineering design and features.
Sincerely
4/13/82
/s/
J. Peter Moncrieff
President & Publisher
6. On 5/24/82 Petitioner's application for reentry under DMM 422.3 was granted, effective 4/13/82, with the following remarks (Ex. 4):
The application for reentry of "IAR Hotline" to change authorization from section 422.2 to section 422.3, Domestic Mail Manual, is approved. Our records have been amended to show that copies of issues of the publication may contain only the publisher's own advertising and not, under any conditions, the advertising of other persons or organizations.
Simultaneously, Petitioner was granted special nonprofit rates under DMM 411.33 (Ex. 7; Ex. 8, p. 2).
7. On December 30, 1982, the General Manager, Domestic Mail Classification Division (USPS Hq.), wrote to Petitioner stating that the file in that office contained no information as to the Federal tax-exempt, nonprofit status of Petitioner. The letter requested Petitioner to furnish such information and a certified copy of articles of incorporation and any other evidence demonstrating that Petitioner is a "strictly scientific society" within the meaning of that term as used in the governing postal regulations (Ex. 9).
8. Petitioner replied to the foregoing request by letter dated January 28, 1983 (Ex. 10). The letter stated that Petitioner does not mail under the nonprofit postal rates and has not asked authority to do so. Further, it stated that Petitioner has not incorporated but pointed to the constitution and by-laws previously furnished to USPS, and its own advertising, as evidence of Petitioner's strictly scientific nature.
9. On April 1, 1983, the Director, Office of Mail Classification (USPS Hq.), in a letter (Ex. 11) to Petitioner stated that USPS records disclosed that special second-class rates were granted Petitioner with its reclassification as a strictly scientific society under DMM 422.31j. The letter went on to state, in substance, that Petitioner has failed to file evidence that it is a strictly scientific society and proof of its nonprofit status as required by DMM 443.2 to establish entitlement to special nonprofit rates. The letter concluded with a revocation of Petitioner's reentry authorization under 422.31j(4) (strictly scientific society) and the special nonprofit rates and stated that Petitioner's publication would revert to its original authorization under DMM 422.2 (General Publications) at the regular second-class rates (DMM 411.2).
10. Petitioner took timely appeal from the foregoing revocation by petition dated April 13, 1983.
11. In its Answer to the Petition Respondent has raised an additional reason for revocation of the reentry authorization, i.e., that the publication contains advertisements other than its own, specifically for the sale of a type of capacitor called an "IAR Wonder Cap" manufactured by an entity other than Petitioner (Ex. 15, p. 13; Ex. 16, p. 15). Petitioner has denied this allegation.
12. IAR Hotline #13 (Sept. 1981), in an article about capacitors, praises the "IAR Wonder Cap," highly recommends its use for sonic improvement, and solicits orders direct to Petitioner for the product (Ex. 15, p. 13). The article states that this product was designed by Petitioner, is manufactured by a small business which is limited in the number of orders it can handle, but that the product is available through Petitioner by special arrangements with the manufacturer.
13. According to the affidavit of Edmund J. Wronski, a mail classification specialist in the Domestic Mail Classification Division, USPS, it is the long-continued policy of USPS that the term "strictly professional, literary, historical, or scientific society" in DMM 422.31j. refers exclusively to nonprofit organizations and that when USPS has a question regarding the nonprofit status of such a society it requires the applicant to submit evidence of its nonprofit status.
Also, according to Mr. Wronski's affidavit, it has been the long-continued practice of USPS to grant to qualified nonprofit societies applying for second-class privileges under DMM 422.31j. the authority to mail their publication at special nonprofit rates under DMM 423.133 without requiring an additional formal application for such rates.
POSITIONS OF THE PARTIES
Petitioner's arguments for retention of its second-class mail authorization under DMM 422.3 may be summarized as follows:
Petitioner is a strictly scientific society entitled to authorization as such under DMM 422.3; it has not applied for and has not made use of special rates for nonprofit organizations under DMM 423.1 and, therefore, should not be required to establish entitlement to such rates by incorporating as a nonprofit corporation or by furnishing evidence of federal tax exemption as a nonprofit organization or any other evidence of nonprofit status. All Petitioner seeks is regular second-class mailing privileges as a strictly scientific society under DMM 422.3 which imposes no requirement of status as a nonprofit organization.
With regard to the advertising of the IAR Wonder Cap, alleged by USPS to disqualify Petitioner under DMM 422.31, Petitioner says that the product is its own product, made available only by IAR as a service to members and other readers of the publication. It contends that if the editorial mention of the product can be considered advertising it is Petitioner's own advertising, permitted under DMM 422.31.
Respondent says that the revocation of second-class reentry for IAR Hotline as a publication of a strictly scientific society should be affirmed (1) because the term "strictly professional, literary, historical, or scientific society" in the pertinent statutes and regulations refers exclusively to nonprofit organizations and Petitioner has declined to furnish evidence that it is a nonprofit organization and (2) because, contrary to the terms of Petitioner's second-class authorization, the publication contains advertising for persons or concerns other than Petitioner.
Respondent, in support of its first argument, above, cites longstanding administrative practice, as recited in Mr. Wronski's affidavit, based on the terms of the applicable statutes and regulations, refers to the legislative history of the pertinent statutes, and cites judicial and administrative interpretation of those statutes. (United States ex rel. Chicago Business College v. Payne, 20 App. D.C. 606 (1902); Columbian Correspondence College v. Wynne, 25 App. D.C. 149 (1905); Anthony E. Whyte (AMR International, Inc.), P.O.D. Docket No. 3/66 (PSD 10/7/71); Corporate Seminars, Inc., P.O.D. Docket No. 3/84 (ID 2/3/72); Institute of Computer Technology, P.S. Docket No. 3/38 (ID 7/17/74)).
DISCUSSION
This is an odd case in that Petitioner takes the position that it did not seek, does not want, and will not use the special nonprofit rates which USPS granted gratuitously when it authorized reentry of IAR Hotline as the publication of a strictly scientific society and which the pending revocation would take away. Petitioner says that all it seeks in this appeal is to retain second-class mail classification as a strictly scientific society "to which we believe the DMM entitles us by any rational interpretation of its actual language and structure." Petitioner's May 17, 1983 rebuttal of Respondent's Answer to the Petition goes so far as to state, "Indeed, we are really asking that the Postal Service revise its rates upward for societies authorized second-class privileges under 422.3, so that USPS policies conform with DMM."
Petitioner's carefully reasoned argument based on close reading of DMM 422.3, 423.1, and 423.11 would be persuasive if this decision could rest on the DMM alone. Indeed, Respondent's memorandum of law in support of the revocation does not attempt to meet Petitioner's argument on Petitioner's grounds. Rather, Respondent properly looks to the statute under which the pertinent DMM second-class regulations are issued (former Title 39 U.S.C.A. § 4355), the legislative history thereof, and court and administrative decisions dealing with the issue.
The statute, in pertinent part provides as follows:
§ 4355. Conditions for entry of publications of certain organizations
(a) Mailable periodical publications meeting the first three conditions of section 4354(a) of this title regularly issued at stated intervals, from a known office of publication, formed in printed sheets are entitled to be entered and mailed as second class mail when they do not contain advertising other than that of the publisher and if they are --
. . .
(8) published by a strictly professional, literary, historical, or scientific society.
Section 4369 (of former Title 39) provides that the Postmaster General may require publications having second-class mail privileges under the above statute to furnish information, in such form and detail as he may require, to determine whether the publication continues to qualify thereunder. Section 4369 also authorizes the Postmaster General to provide by rule or regulation for revocation of second-class privileges for failure to furnish such information.
Court and postal administrative decisions cited by Respondent, supra, have uniformly held that the organizations granted second-class privileges under § 4355 (and its predecessor statutes) may not be conducted for the gain and profit of their shareholders, that they must be nonprofit organizations.
CONCLUSION
Under sections 4355 and 4369 of former Title 39 U.S.C.A. and the implementing regulations, the Office of Mail Classification properly required Petitioner to furnish evidence of its nonprofit status. Upon Petitioner's failure to do so, the Director of that office properly issued notice of revocation of the reentry authorization for IAR Hotline as a publication of a strictly scientific society.
Such revocation is hereby affirmed.
The foregoing disposition of this matter renders unnecessary a decision on the advertising issue.
1/ All exhibit references are to exhibits in the certified record filed by Respondent.