size, weight, content, ease of handling, and identity of both posting party and recipient.
Prior to the enactment of § 134.57, there were three restrictions on the use of third-class bulk rate privileges. First, eligibility was restricted to "qualified organizations"; secondly, the matter to be mailed had to meet specific criteria for size and weight; and finally, the matter had to be mailed by the qualified nonprofit organization. Except for the fact that RPA is not a designated qualified organization, the mailing at issue meets these pre- § 134.57 requirements in all respects.
Nevertheless, plaintiffs' contention that the regulation creates a subclass of third-class bulk rate mail is untenable. By merely limiting whose mail may be posted at the privileged rates, the regulation imposes no new restrictions on size, weight, content, ease of handling identity of mailer and recipient, or other factor relevant to the makeup of a mail classification. What it does is to construe the three long-standing restrictions on use of the special rates so as not to "grant any undue or unreasonable preferences" to any user. See 39 U.S.C. § 403(c). Read literally, prior law would have permitted a qualified nonprofit organization to use its permit to post material belonging to third persons not entitled to the special rates. For USPS to have permitted this "obviously unintended" result, see Hecht v. Pro-Football, Inc., 144 U.S. App. D.C. 56, 444 F.2d 931 (1971), cert. denied, 404 U.S. 1047, 30 L. Ed. 2d 736, 92 S. Ct. 701 (1972), would have been an egregious breach of its statutory duty. Accordingly, the Court concludes that § 134.57 is not a classification and that, therefore, a PRC recommendation was not a necessary precondition to valid USPS action.
Plaintiffs also contend that even if USPS did have authority to promulgate § 134.57, it did so in violation of the notice and comment requirements contained in chapter 5 of the Administrative Procedure Act, 5 U.S.C. § 553.
Without soliciting public comment, USPS published the regulation in the Federal Register on August 26, 1975, effective immediately. If the notice and comment rule were applicable, USPS's noncompliance would render the regulation invalid. However, relying on § 410 of Title 39, USPS contends that in promulgating § 134.57 it was exempt from these requirements.
§ 410 provides that, subject to certain enumerated exceptions not pertinent here, "no Federal law dealing with public or Federal contracts, property, works, officers, employees, budgets, or funds, including the provisions of chapter 5 and 7 of title 5, shall apply to the exercise of powers of the Postal Service." Defendants read § 410 as completely exempting USPS from the operation of chapter 5 of Title 5. However, this contention is not supported by simple rules of grammar. According to the terms of § 410, in order to be exempt from chapter 5 of Title 5, a federal law must deal with public or Federal contracts, property, works, officers, employees, budgets or funds. See, e.g., Chelsea Neighborhood Associations v. USPS, 516 F.2d 378 (2d Cir. 1975). Inasmuch as § 553 does not, defendants' argument that the APA's notice and comment requirements do not apply to USPS is without merit.
Alternatively, defendants argue that § 134.57 is an "interpretive" regulation, thus falling within one of the statutory exceptions to the notice and comment rules. See 5 U.S.C. § 553(b)(A).
One of the central purposes of the notice and comment requirements is to allow public participation in the promulgation of rules which have a substantial impact on those regulated. Thus, as a general rule, thirty days notice for solicitation of comments must precede all substantive, or legislative, rules and those interpretive rules which both constitute a change in prior agency position and have a "substantial impact on private rights and obligations."
See 5 U.S.C. § 553(b)(A); see also National Motor Freight Traffic Association, Inc. v. United States, 268 F. Supp. 90 (D.D.C. 1967) (three-judge court), affirmed, 393 U.S. 18, 21 L. Ed. 2d 19, 89 S. Ct. 49 (1968); Noel v. Chapman, 508 F.2d 1023 (2d Cir.) cert. den., 423 U.S. 824, 46 L. Ed. 2d 40, 96 S. Ct. 37 (1975); Eastern Kentucky Welfare Rights Organization v. Simon, 165 U.S. App. D.C. 239, 506 F.2d 1278 (1974); vacated on other grounds, 426 U.S. 26, 96 S. Ct. 1917, 48 L. Ed. 2d 450 (1976); Thompson v. Washington, 162 U.S. App. D.C. 39, 497 F.2d 626 (1973); Lewis-Mota v. Secretary of Labor, 469 F.2d 478 (2d Cir. 1972); Texaco, Inc. v. Federal Power Commission, 412 F.2d 740 (3d Cir. 1969); Saint Francis Memorial Hospital v. Weinberger, 413 F. Supp. 323 (N.D.Cal. 1976); Nader v. Butterfield, 373 F. Supp. 1175 (D.D.C. 1974); Pharmaceutical Manufacturers Association v. Finch, 307 F. Supp. 858 (D.Del. 1970).
"The question whether a rule is legislative or interpretive . . . depends upon whether or not it is issued pursuant to a grant of law-making power."
K. DAVIS, ADMINISTRATIVE LAW § 5.03. Cf. Addison v. Holly Hill Fruit Products, 322 U.S. 607, 88 L. Ed. 1488, 64 S. Ct. 1215 (1944) (rule interpreting statutory term deemed "legislative" where promulgated under express grant of law-making power). No such grant having been made by Congress to USPS, § 134.57 is, under this test, interpretive. Nevertheless, if the rule constitutes a change in prior agency position and has a substantial impact on the rights and obligations of NRTA and AARP, the rule would be invalid for failure to comply with the notice and comment requirements. In view of the fact that the policy underlying § 134.57 has been consistently applied to deny plaintiffs use of the special rate for mailing of the RPS catalog, USPS is, in this case, excused from complying with the notice and comment requirements. Plaintiffs' Motion for Summary Judgment is denied.
Defendants' Motion for Summary Judgment rests on the simple theory that the challenged regulation was issued under the Postal Service's general rulemaking authority and is consistent with the objectives of the statute as a whole. See 39 U.S.C. §§ 401(2), 403(c). Essentially, this proposition flows from the rejection of the three arguments made by plaintiffs in their Motion for Summary Judgment. Although the Court is free to substitute its judgment for that of the agency when ruling on the validity of an interpretive rule, see K. DAVIS, ADMINISTRATIVE LAW OF THE SEVENTIES § 5.05, it finds that § 134.57 fully comports with the spirit of the special rate legislation and was necessary to prevent abuse of the existing program. Since RPS is not qualified to post mail at special bulk third-class rates, the regulation was properly applied.
Defendants' Motion for Summary Judgment is granted.
JOHN LEWIS SMITH, JR. / United States District Judge
JOHN LEWIS SMITH, JR.
[EDITOR'S NOTE: The following court-provided text does not appear at this cite in 430 F. Supp.]
Upon consideration of the Cross Motions for Summary Judgment and Plaintiffs' Motion to Strike Attachments A-C, the points and authorities in support thereof and in opposition thereto, and the oral argument of counsel having been heard, it is by the Court this 6th day of April, 1977
ORDERED that Plaintiffs' Motion for Summary Judgment be, and the same hereby is, denied; and it is further
ORDERED that Plaintiffs' Motion to Strike Attachments A-C be, and the same hereby is, denied; and it is further
ORDERED that defendants' Motion for Summary Judgment be, and the same hereby is, granted.
JOHN LEWIS SMITH, JR. / UNITED STATES DISTRICT JUDGE