Opinion ID: 497976
Heading Depth: 1
Heading Rank: 4

Heading: The Implementing Regulations

Text: 41 The classification decisions of the Board of Governors have recognized the Congressional requirement to preserve the second-class subsidized category as defined by statute prior to 1970. The current mail classification system is compiled in the Domestic Mail Classification Schedule (DMCS). See 39 C.F.R. Sec. 3001.68, Appendix A to Subpart C (1986). The detailed regulations which implement the DMCS are set forth in the Domestic Mail Manual (DMM), a publication incorporated by reference in 39 C.F.R. Sec. 111.1 (1986). The DMCS and the related provisions of the DMM still retain the general outline of the classification system established by Congress in 1879. Specifically, the DMCS states: 42 200.0105 Second-class matter must have a legitimate list of persons who have subscribed by paying or promising to pay at a rate above a nominal rate for copies to be received during a stated time.... 43 .... 44 200.012 Publications designed primarily for advertising purposes, free circulation, or circulation at nominal rates ... do not qualify for second-class privileges.... 45 .... 46 200.0122 Designed primarily for free circulation is defined as distribution of 50 percent or more of the copies of a publication for free or at a nominal rate. Copies mailed to persons who are not on a legitimate list of subscribers ... are free copies. 47 The Domestic Mail Manual regulations at issue in this proceeding are based on, and reflect, the language of the DMCS. In pertinent part, DMM Sec. 422.221 states the paid subscriber requirement of DMCS Sec. 200.0105: 48 General publications must have a legitimate list of subscribers who have paid or promised to pay, at a rate above a nominal rate, for copies to be received during a stated time.... 49 Similarly, DMM Sec. 422.223 excludes free publications from general second-class entry, echoing DMCS Secs. 200.012 and 200.0122: 50 Publications primarily designed for free circulation and/or circulation at nominal rates may not qualify for the general publications category. Publications are considered primarily designed for free circulation and/or circulation at nominal rates when one-half or more of all copies circulated are provided free of charge ... or are paid for at nominal rates by the ultimate recipients.... 51 These eligibility standards for general second-class publications follow the approach adopted by Congress in the 1879 postal legislation and maintained continuously for the following ninety years. The PRC and the Board of Governors, like Congress, have selected objective evidence of customer demand rather than the more subjective standard of newspaperness as the primary distinguishing characteristic of second-class mail. The objective evidence of a list of paid subscribers has been chosen as the most useful tool, consistent with the desire to avoid postal censorship, to distinguish between second-class publications issued in response to reader demand and third-class matter primarily designed for the advertising or other commercial purposes of the publisher.V. The Validity of the Paid Subscriber Rule 52 The Enterprise advances two arguments on appeal, both of which were raised and decided adversely to them in the administrative proceedings: 53 (1) the USPS's regulatory scheme is not a rational method under the first amendment of accomplishing the legislative purpose of favoring publications disseminating information in the public interest; and 54 (2) the applicable regulations unduly burden legitimate newspapers under the equal protection clause of the fifth amendment. 4
55 While the government has no power to restrict expression because of its message, its ideas, its subject matter, or its content, Police Department of Chicago v. Mosely, 408 U.S. 92, 95, 92 S.Ct. 2286, 2290, 33 L.Ed.2d 212 (1972), it has been recognized that, as the institution of the press has evolved into large publishing empires, it has been legitimately subjected to extensive regulatory legislation. Pittsburgh Press Co. v. Human Relations Commission, 413 U.S. 376, 382-83, 93 S.Ct. 2553, 2557, 37 L.Ed.2d 669 (1973). Expression, whether oral or written, may be subject to reasonable time, place, and manner restrictions. Clark v. Community for Creative Non-Violence, 468 U.S. 288, 293, 104 S.Ct. 3065, 3068-69, 82 L.Ed.2d 221 (1984). Such restrictions are valid provided that they are justified without reference to the content of the regulated speech, that they are narrowly tailored to serve a significant governmental interest, and that they leave open ample alternative channels for communication of the information. Id. Accord Members of the City Council v. Taxpayers for Vincent, 466 U.S. 789, 807, 104 S.Ct. 2118, 2130, 80 L.Ed.2d 772 (1984); see also Wheeler v. Commissioner of Highways, 822 F.2d 586 (6th Cir.1987) (upholding provisions of the Kentucky Billboard Act against first and fourteenth amendment challenges). We find that the paid-subscriber rule meets this three-part test. 56 The federal courts have sustained the broad authority of the Post Office to establish content-neutral standards for favorable second-class mailing rates. In Lewis Publishing Co. v. Morgan, 229 U.S. 288, 33 S.Ct. 867, 57 L.Ed. 1190 (1913), the Supreme Court considered a challenge to the statutory requirement that each publisher of a second-class publication file and publish an annual statement of ownership and paid circulation and mark all paid editorial matter as an advertisement. The Court found these requirements helped to achieve the Congressional intent to promote the dissemination of knowledge by second-class mail by providing the public with the names not only of the apparent, but of what might prove to be the real and substantial owners of the publications, and by enabling the public to know whether matter which was published was what it purported to be or was in substance a paid advertisement. Id. at 316, 33 S.Ct. at 875. 57 The Court left no doubt regarding the authority of Congress to establish favorable rates for second-class publications and to condition second-class entry on the standards contained in section 14 of the Act of March 3, 1879 (which included the paid subscriber standard): 58 While it cannot be questioned that the conferring of the special privileges above stated were at least in form a discrimination against the public generally, beyond doubt, however, in the legislative mind they were deemed not to be of that character because the purpose of their bestowal was to secure to the public the benefits to result from the wide dissemination of intelligence as to current events. Certain, however, as is this view, it is equally also certain that for the purpose of securing the public benefits which it was conceived would result from the giving of the privilege, it was deemed that the power and duty existed to fix a standard which should be complied with by those who wished to enjoy the privilege,--a result manifested by the ... provisions of Sec. 14 of the Act of March 3, 1879, ch. 180, 20 Stat. 355, 359.... 59 229 U.S. at 304-05, 33 S.Ct. at 871. Summarizing the authority of Congress to limit second-class mail subsidies, the Court made it clear that Congress could deny the subsidy to publications designed primarily for advertising purposes: 60 As the right to consider the character of the publication as an advertising medium was previously deemed to be incidental to the exercise of the power to classify for the purpose of second class mail, it is impossible in reason to perceive why the new condition as to marking matter which is paid for as an advertisement is not equally incidental to the right to classify. 61 Id. at 315, 33 S.Ct. at 875. See also Lewis Publishing Co. v. Wyman, 182 F. 13 (8th Cir.1910), aff'd, 228 U.S. 610, 33 S.Ct. 599, 57 L.Ed. 989 (1913) (sustaining a regulation which limited the number of free sample copies for distribution at second-class rates in order to effectuate the paid-subscriber requirement). 62 As the PRC noted in its recommended decision in Tri-Parish Journal, Inc.: 63 Almost certainly, there exist persons who would like to receive publications but who cannot afford to subscribe to them. Regardless, the need to define a class of mail for publications requires that a line be drawn somewhere--and that an effort be made to restrict this classification to publications which have been shown to be considered of value by their recipients. 64 Recommended Opinion at p 511. Both the legislative history of the rule and the substantial testimony received by the PRC in the Tri-Parish case make clear the unavoidable difficulty in awarding second-class privileges on the basis of a publication's worthiness as demonstrated by its resemblance to a bona fide newspaper. It is true that the motivating force behind the paid-subscriber rule was to deny second-class mailing privileges to those publications containing mainly advertising or other commercial messages benefitting primarily the publisher. However, conditioning eligibility for second-class status on the subjective newsworthy qualities of a publication or other equally subjective method of assessing the amount of pure editorial/educative material as opposed to commercial/advertising material would result in an impermissible level of content-based decisionmaking. By focusing on the desires of the public, as expressed by their willingness to either subscribe and pay for or formally request a publication, the regulatory scheme avoids the thorny alternative of permitting the Postal Service to make those decisions. 65 The Enterprise makes much of the fact that the USPS has admitted that it is a legitimate newspaper, which presumably means that its primary purpose is the education/information of the public on public issues, with limited local advertising being secondary to that purpose. It contends that the difficult decisions regarding whether or not a certain publication qualifies as a legitimate newspaper should be left to another court at another time, since they are not applicable to the case sub judice. However, this argument overlooks not only the authority of the USPS but its need to make classification decisions which will apply to literally thousands of differing publications in a relatively simple, expeditious, and content-neutral manner. The first amendment is not violated merely because a content-neutral regulation raises the cost of one avenue of communication, or prevents the use of one mode of communication where others exist. This is especially true where the cost of the desired mode is artificially reduced through government subsidies. 66 An analogous situation involving Congressional denial of tax-exempt status under 26 U.S.C. Sec. 501(c)(3) to organizations which engage in substantial lobbying activities was addressed in Regan v. Taxation With Representation (TWR), 461 U.S. 540, 103 S.Ct. 1997, 76 L.Ed.2d 129 (1983). The Court rejected a claim that the denial of tax-exempt status for this reason violated the first amendment, emphasizing that the denial of a subsidy places no affirmative burden on the exercise of these rights: 67 The Code does not deny TWR the right to receive deductible contributions to support its non-lobbying activity, nor does it deny TWR any independent benefit on account of its intention to lobby. Congress has merely refused to pay for the lobbying out of public monies. This Court has never held that Congress must grant a benefit such as TWR claims here to a person who wishes to exercise a constitutional right. 68 ... Congress has not infringed any First Amendment rights or regulated any First Amendment activity. Congress has simply chosen not to pay for TWR's lobbying. We again reject the notion that First Amendment rights are somehow not fully realized unless they are subsidized by the State. 69 .... 70 These are scarcely novel principles. We have held in several contexts that a legislature's decision not to subsidize the exercise of a fundamental right does not infringe the right, and thus is not subject to strict scrutiny.... 71 The reasoning of these decisions is simple: although government may not place obstacles in the path of a [person's] exercise of ... freedom of [speech], it need not remove those not of its own creation. Although TWR does not have as much money as it wants, and thus cannot exercise its freedom of speech as much as it would like, the Constitution does not confer an entitlement to such funds as may be necessary to realize all the advantages of that freedom. 72 461 U.S. at 545-46, 549-50, 103 S.Ct. at 2001, 2003 (footnotes and citations omitted) (quoting Cammarano v. United States, 358 U.S. 498, 515, 79 S.Ct. 524, 535, 3 L.Ed.2d 462 (1959), and Harris v. McRae, 448 U.S. 297, 316, 318, 100 S.Ct. 2671, 2688, 65 L.Ed.2d 784 (1980)). Cf. Jones v. North Carolina Prisoners' Labor Union, Inc., 433 U.S. 119, 130-31, 97 S.Ct. 2532, 2540-41, 53 L.Ed.2d 629 (1977) (denial of bulk mailing privileges to prisoners' union upheld; it is clear that losing these cost advantages [of lower bulk mailing rates] does not fundamentally implicate free speech values) (emphasis in original). 73 The governmental interest furthered by the paid-subscriber rule is that of limiting the second-class subsidy to material of demonstrable value to the recipients and not primarily designed for advertising purposes. Congress's decision to subsidize the dissemination of information designed to educate and inform the public, but not that which directly or indirectly serves the financial interests of the publisher, by way of content-neutral regulation has been approved by the federal courts. In Hannegan v. Esquire, 327 U.S. 146, 66 S.Ct. 456, 90 L.Ed. 586 (1946), the Supreme Court overturned the revocation of a publisher's second-class privileges where the Postmaster General had ruled that the magazine's contents, although not obscene, did not contribute to the public good and the public welfare. Id. at 149-50, 66 S.Ct. at 458. In so holding, the Court stated, [w]e may assume that Congress has broad power of classification and need not open second-class mail to publications of all types. Id. at 155, 66 S.Ct. at 461. The Court contrasted the disapproved practice of content-based censorship with the implicitly-approved objective standards for second-class entry: 74 It is plain ... that the favorable second-class rates were granted periodicals meeting the requirements of the Fourth condition [the basis of the paid subscriber rule], so that the public good might be served through a dissemination of the class of periodicals described. But that is a far cry from assuming the Congress had any idea that each applicant for the second-class rate must convince the Postmaster General that his publication positively contributes to the public good or public welfare. 75 Id. at 157, 66 S.Ct. at 461-62. Numerous other courts have cited, interpreted, or enforced these requirements without question. See H.W. Wilson Co. v. United States Postal Service, 580 F.2d 33, 35 (2d Cir.1978), aff'g 438 F.Supp. 326, 327 (S.D.N.Y.1977); Institute for Scientific Information, Inc. v. United States Postal Service, 555 F.2d 128, 130 (3d Cir.1977); Myrick v. United States, 219 F. 1, 4-5 (1st Cir.1915); Sunshine Publishing Co. v. Summerfield, 184 F.Supp. 767, 771-72 (D.D.C.1960). Hence, we find the rule to be sufficiently tailored to accomplish this significant governmental interest. 76 Finally, mailing privileges have not been denied to the Enterprise by operation of the paid-subscriber rule. The alternatives of third-class bulk rate or the more favorable second-class requester status are open to the paper. Because we find that these alternatives constitute ample substitute avenues for communication, we discern no first amendment violation.
77 Although a regulation implementing a legislative classification generally will be found constitutional if it is rationally related to a legitimate governmental purpose, see Zobel v. Williams, 457 U.S. 55, 60, 102 S.Ct. 2309, 2312-13, 72 L.Ed.2d 672 (1982), a higher level of scrutiny is applicable in cases involving suspect classifications or classifications which burden fundamental rights, see Clements v. Fashing, 457 U.S. 957, 963, 102 S.Ct. 2836, 2843-44, 73 L.Ed.2d 508 (1982). The Supreme Court has explained that a legislature's decision not to subsidize the exercise of a fundamental right does not infringe the right, and thus is not subject to strict scrutiny. TWR, 461 U.S. at 549, 103 S.Ct. at 2003. Since we have found the regulations at issue here to be content-neutral and narrowly drawn, strict scrutiny is inapplicable. 78 The Supreme Court has also recognized that Congress may establish postal categories with the generality of cases in mind, without making them depend on all of the variations that might appear in individual cases. United States Postal Service v. Council of Greenburgh Civic Associations, 453 U.S. 114, 132-33, 101 S.Ct. 2676, 2686-87, 69 L.Ed.2d 517 (1981). The government's interest in an educated public is undeniable and is served by subsidized in-county second-class rates, 39 U.S.C. Sec. 3626(a)(1), and provisions which direct the PRC to consider the value of mail matter to recipients in its rate and classification decisions, 39 U.S.C. Secs. 3622(b)(8), 3623(c)(2). It is equally legitimate and important for government to ensure that subsidized mailing privileges are not abused; i.e., that publications having little or no demonstrable value to their recipients are not mailed at public expense. 79 We find that the paid-subscriber rule is rationally related to the objective of limiting subsidized second-class mailing privileges to publications which can objectively be determined to have value to their recipients. 5 The rule reflects the judgment of Congress that a publication distributed to paid subscribers is more likely to be desired and read by its recipients than an unsolicited publication, and the Enterprise has failed to point out any error of constitutional dimension in this judgment. 80 AFFIRMED.