P.S. Docket No. SCD 02-346
January 15, 2003
In the Matter of the Petition by
NORMAN GREENE, CO-PUBLISHER
SAN DIEGO JEWISH PRESS
P.O. Box 600189
San Diego, CA 92160-0189
Denial of Application for Periodicals Mail Privileges for "HERITAGE"
P.S. Docket No. SCD 02-346
APPEARANCE FOR PETITIONER:
Jerome R. Moe, Esq.
701 B Street, Suite 380
San Diego, CA 92101-8144
APPEARANCE FOR RESPONDENT:
Harold E. Durham, Esq.
Civil Practice Section
United States Postal Service
475 L’Enfant Plaza, SW, Room 6666
Washington, DC 20260-1127
INITIAL DECISION
This proceeding arises out of a Petition filed by Norman Greene, publisher of the San Diego Jewish Press-Heritage, appealing a June 26, 2002 decision by the Manager, Mail Preparation and Standards, United States Postal Service. That decision denied Petitioner’s application to mail Heritage at the Periodicals rate.
A hearing was held in San Diego, California on October 2, 2002.[1] Petitioner testified in his own behalf and the Postal Service presented testimony from Jerome Lease, who drafted the June 26, 2002 decision. The parties also submitted a Joint Stipulation of Facts (JS), numbered 1 through 10, and the Postal Service filed Exhibits numbered 1 through 16, to which Petitioner posed no objection. Petitioner submitted one additional Exhibit, which was numbered 17. Both parties filed post-hearing briefs. The following findings of fact and conclusions of law are based on the entire record.
FINDINGS OF FACT
1. The San Diego Jewish Press-Heritage has been published as a weekly newspaper since approximately 1914. In November 2001, Petitioner and a partner purchased the paper from the Brin family, who had been the owner for nearly fifty years. (Tr. 9-10).[2]
2. A few years prior to 2001, the circulation of the paper had decreased, Mr. Brin allowed his Periodicals permit to expire, and the paper was no longer mailed to subscribers. Petitioner’s intention was to reestablish earlier circulation levels and restore the status of the paper. (Tr. 12-13).
3. In furtherance of its goal, Heritage sought to purchase the membership list of the United Jewish Federation of San Diego County (UJF). Initially, Heritage agreed to purchase the list for $28,000. UJF then proposed that, rather than money changing hands, Heritage provide subscriptions to UJF members for one year. After additional negotiation, UJF agreed to pay an additional $2,000, plus $167.50 in technical costs. (Tr. 14-19; JS ¶6; Exs. 4 and 11).
4. Although the UJF membership list contained more than 19,000 names, Heritage thought at the time of this arrangement that they would have to provide only approximately 6000 subscriptions because it was known that the list contained many duplicate names. They also knew that the list was not current and that many people on the list were deceased or no longer in the San Diego area. By the time Petitioner had culled out duplicate names and reduced the list to a more accurate number, nearly 12,000 subscriptions were provided under the agreement with UJF. (Tr. 14, 19-21).
5. If the copies of Heritage distributed under the agreement with UJF are included as being distributed to paid subscribers, approximately 52-53% of Heritage’s circulation is to paid subscribers. (Tr. 11).
6. Heritage is published 52 times a year. Its listed annual subscription rate is $24. (Tr. 11, 17; JS ¶2; Exs. 9 and 10).
7. On November 13, 2001, Petitioner submitted an Application for Periodicals Mailing Privileges, PS Form 3501, to the San Diego Post Office.[3] (Tr. 21; JS ¶3; Exs. 9 and 10).
8. On March 18, 2002, the San Francisco Rates and Classification Service Center disapproved the application because Petitioner had not demonstrated compliance with a rule requiring that at least 50% of a publication’s distribution be to persons who paid more than a nominal rate. (JS ¶5; Ex. 7).
9. Petitioner submitted some additional information to the Rates and Classification Service Center, but that office reaffirmed its decision and forwarded Petitioner’s appeal to the Manager, Mail Preparation and Standards, Headquarters, United States Postal Service. The Manager issued her denial of the appeal on June 26, 2002, and Mr. Greene filed his Petition. (JS ¶5; Ex. 7).
CONCLUSIONS OF LAW
1. Periodicals mail privileges are limited to newspapers and other periodical publications that meet certain criteria. To qualify for Periodicals rates, a publication must satisfy all the general requirements of Section E211 of the Domestic Mail Manual (DMM), which means essentially that it must be designed primarily for the transmission of information, be formed of printed sheets, maintain a known office of publication, and be issued at a regular frequency at least four times a year. By stipulation, the parties have agreed that Heritage satisfies these requirements. (JS ¶10).
2. In addition, a publication must be authorized under one of five qualification categories and meet the specific requirements for that category.[4] Petitioner applied for eligibility as a General Publication. The standards for this category are found in DMM §E212.1, and those pertinent to this case are the following:
1.2 Circulation Standards
a. General publications must have a legitimate list of subscribers who have paid or promised to pay, at more than a nominal rate, for copies to be received during a stated time.
* * *
f. At least 50% of a publication’s distribution must be to persons who have paid above a nominal rate. Nominal rate subscriptions include those sold at a subscription price so low that the rate cannot be considered a material consideration; or at a reduction to the subscriber (under a premium or any other arrangement) of more than 50% of the basic annual subscription rate that would entitle the subscriber to receive one copy of each issue published during the subscription period. . . ..
3. Section E215 of the DMM describes some situations when mailing to nonsubscribers is permitted and may be counted to satisfy the rules above:
1.4 Gift Subscriptions
The subscription list may contain the names of persons whose subscriptions were paid for by other individuals as gifts; these subscriptions are considered subscriber copies. Subscriptions paid by advertisers or other persons promoting their own interests, and subscriptions given free by the publisher, are not gift subscriptions, and are considered nonsubscriber or nonrequester copies subject to the corresponding rate.
4. The question to be answered is whether Heritage meets the requirement of §E212.1.2f quoted above. Petitioner contends that the copies distributed in accordance with the arrangement with UJF are bona fide gift subscriptions and should be counted. If they are not counted, it is clear that Heritage does not meet the 50% requirement. (See Finding of Fact #5).
5. Respondent argues that the intent of the gift subscription provision in §E215.1.4 is to recognize gifts given for the benefit of the recipient, based on a personal relationship between the donor and the recipient. Respondent contends that the evidence does not demonstrate any such relationship in this case, and that these subscriptions were essentially given free by the publisher. I disagree. The evidence shows that UJF paid $30,000 for the subscriptions and supports Petitioner’s contention that the UJF intended to benefit its members. I find no evidence of any other benefit flowing to UJF from its arrangement with Petitioner. The fact that UJF is an organization, not an “individual,” does not preclude it from giving bona fide gift subscriptions. Aaron R. Fodiman, PS Docket No. 36/84 (I.D. February 26, 1991).
6. However, Petitioner cannot overcome the fact that, at most, UJF paid only $5 per subscription. §E212.1.2f requires that any subscriber who is to be counted to meet the 50% standard must pay more than a nominal rate for a subscription. The language of §E212.1.2f clearly defines “nominal rate” as any amount more than 50% below the basic annual subscription rate. UJF paid Petitioner $30,000 for subscriptions for its members. If Petitioner mailed only 6000 copies to names on the UJF list, that equates to $5 per subscription, far less than 50% of the basic rate of $24. Petitioner argues that $24 is not really the basic annual rate because Petitioner often discounts the subscription rate and just “takes what it can get.” That argument is not persuasive. It is Petitioner, not the Postal Service, who set the rate at $24. Mr. Greene testified that “we generally sell it for $24 a year,” Petitioner’s application form listed $24 as the annual subscription price, and the parties stipulated that this is the annual subscription price.[5]
7. Because less than 50% of Heritage’s distribution is to persons who paid above a nominal rate, the decision of the Manager, Mail Preparation and Standards, denying Petitioner’s application for Periodicals mailing rates is sustained.
Bruce R. Houston
Chief Administrative Law Judge
[1] The hearing was conducted by the undersigned Administrative Law Judge via speaker telephone from Arlington, VA. All other participants, including the court reporter, were present in a conference room at the hearing site.
[2] References to the hearing transcript are “Tr._.” References to the Joint Stipulation of Facts will be “JS,” and references to the tabbed exhibits will be “Ex._.”
[3] The Form 3501 used was a 1994 version, which used the term “Second-Class Mail,” rather than “Periodicals.” Since that time, the Postal Service has changed the terminology but the rules and procedures remain the same. See DMM §E211.1.1.
[4] DMM §E212. The five categories are (1) General Publications, (2) Publications of Institutions and Societies, (3) Publications of State Departments of Agriculture, (4) Requester Publications, and (5) Foreign Publications.