%XKET
SECTION
BEFORE THE
POSTAL RATE COMMISSION
WASHINGTON, DC 20268-0001
Docket No. R97-1
Postal Rate And Fee Changes,1997
OPPOSITION OF ALLIANCE OF NONPROFIT MAILERS
TO MOTION OF UNITED STATES POSTAL SERVICE
TO COMPEL RESPONSES TO
INTERROGATORIES
USPWANM-Tl-26,36,41
AND ,42
(February 27,1998)
The Alliance of Nonprofit Mailers (“ANM”) hereby replies in opposition to
the Postal Service’s February 20 motion to compel responsesto Interrogatories
USPS/ANM-TI-26 and 36, and the Service’s February 23 motion to compel
responsesto USPS/ANM Tl-41 and 42. The interrogatories read as follows:
Please refer to Exhibit I-ANM-Tl of your
testimony,whereyou summarizethe results of a survey conduct’edby
ANM underyour supervision.For eachrespondingorganization that
mailed Standard A regular rate mail with nonprofit indicia, please
provide:
USPWANM-Tl-26.
a.
the nameof the organization
b.
the organization’s address;
C.
the number of pieces entered at regular rates with
nonprofit indicia; and
d.
the name of the Postal facility(ies) where the
mailing(s) were entered.
USPWANM-Tl-36.
Pleaseprovide the information requested in
USPSIANM-Tl-26, for the survey responsesyou received !since
completing your testimony.
Please provide all survey responses(i.e., to
questions l-10, as well as any additional commentsgiven) for each
respondentto the Alliance of Nonprofit Mailers survey of nonprofit
organizations.Includeany responsesreceivedsince 12/30/97 and not
reported in ANM-T-l.
USPWANM-Tl-41.
Pleaseprovide the FYI996 regular rate and
nonprofit Standard(A) volumesfor all mailerssent surveys,indiciating
which mailers respondedto the surveys,and which did not respond.
USPWANM-Tl-42.
ANM has respondedto these questionsby producing copies of all of the
surveyresponses,with the mailers’ identities redacted (Library ReferenceANM-LRl), alongwith the first threedigits of eachmailer’s ZIP code. ANM has objected, on
grounds of confidentiality, to producing the names,addressesor identities of the
specific mailers.
In its motions to compel, the Postal Serviceassertsthat the confidentiality
interestsofthe surveyrespondentsare insignificantbecausethe Postal Servicehas no
“preordained” intention to alter any “reasonable” operating practice “solely” in
responseto the situation that ANM describes(February 20 Motion to Compel at 2)
andbecause.
no assuranceof confidentiality appearson the “survey instrument.” The
Postal Service further contends that it needs to know the mailers’ identities to
determine the “magnitude” of “bias” in the “survey sample.” These claims are
unfounded. ANM discusseseachone in turn
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I.
ANM HAS A SUBSTANTIAL
INTEREST IN KEEPING
CONFIDENTIAL
THE
SURVEY
RESPONDENTS’
IDENTITIES.
Both ANhI and its membershave a compelling interest in preserving the
confidentiality of the survey respondents’identities. In recent rate cases,many of
ANh4’s membershave expressedreticenceto ANM representativesabout supplying
dataon their mail volumes,mailingpracticesor operationsto the Commission. These
mailers have asserted concerns that disclosure to the Postal Service of their
participationin an ANM-sponsoredsurveycould lead to retaliation or a.ggravationof
strainedrelations with the Postal Service. In responseto these concerns,ANM has
generallyrefrainedfrom collectingsuchinformation,or has obtained it under a pledge
of confidentiality concerning the identities of individual survey respondents. See
Declaration of R. Neal Denton at 1-2 (attached).
ANM mailed out the first wave of survey questionnairesin the present case
on December 5, 1997. As the Postal Service notes in its motions to compel, the
questionnaires did not expressly state that the survey responseswould be kept
confidential.Id. at 2. During the sameweek, ANM beganreceiving phone calls and
e-mailsfrom recipients of the survey. The immediatereaction of virtually all of the
recipientsofthe surveywas to expressconcernthat their individual responsesnot be
disclosedto the Postal Service,or to ask whether ANM was abandoningits practice
of keeping confidential the identities of individual respondents. Id.
The mailersofferedtwo reasonsfor their concerns. First, they expressedfear
that identifying the locations where Postal Service employeeshad accepted mail
bearing nonprofit evidencingof postagefor entry at commercialrates could subject
thoseemployeesto disciplineor retaliation from Postal Servicemanagement,thereby
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jeopardiig the mailers’relationshipswith thoseemployees.Second,the respondents
were apprehensivethat identifying individual mailers could lead to r’etaliationfrom
Postal Service managementin the form of back postage claims for past nonprofit
mailings, or even revocation of the mailers’ nonprofit permits. Id.
To everymailerwho raisedtheseconcerns,the Alliance’s ExeclutiveDirector,
Neal Denton, gave ANM’s assurancethat the identities of individual survey
respondents would be kept confidential. Mr. Denton gave the sameassuranceto
mailers during phone calls made to verify survey responsesor dlsal with other
questionsinvolving the survey. While he did not talk with every survey respondent,
he personallyspokewith severaldozen. He instructedthe other ANM representatives
involvedin collectingsurveyresponsesto inform the respondentsthat their identities
would be kept confidential. And he provided similar instructions to personnelat the
AmericanMuseumAssociationand American SymphonyOrchestraAssociation, the
two outsideorganizationsthat used the surveyto collect information from their own
members.Id. at 3.
The nonprofit mailers’ concerns about Postal Service r’etaliation are,
unfortunately, not without foundation in reality. Since the demiseof the revenue
forgone appropriationbecameapparentin the early 199Os,the Postal Servicehas tried
repeatedlyto reduceif not eliminatethe availability of nonprofit postal rates.
In testimony before a House appropriations subcommittee :in early 1993,
PostmasterGeneralRunyon askedCongressto tighten the eligibility requirementsfor
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nonprofit permits, or phaseout nonprofit rates entirely.’ In responseto subsequent
requestsfrom Capitol Hill for legislativesolutions to the revenueforgone issue,the
Postal Service reiterated that nonprofit rates should be phasedout Ientirely.’ The
Postal Service has continued to this day in its quest for legislation that would
eliminatethe nonprofit subclasses.SeeUSPS legislativeproposal, “Postal Incentive
Pricing:An Alternativeto H.R 22, The PostalReform Act of 1997’ (April 21, 1997).
Moreover, the ink was hardly dry on the RevenueForgone Reform Act of
1993whenthe PostalServiceset out to alter the terms of the compromiseembodied
in it. As the Commission is undoubtedly aware, the Postal Service adopted so
restrictive a reading of the provisions allowing space advertising in third-class
nonprofit publications that Congress was forced to intervene by enacting the
DcConciniamendmenta yearlater. In Docket Nos. R94-I, the Postal Service singled
out nonprofit third-classmail for presort rate differentials far smallerthan offered to
commercial mailers, and in Docket No. MC95-I, the Service excluded nonprofit
mailersfrom the classificationreforms offered to commercialthird-class mailers.
The Postal Service’smost aggressivecounterattack has involved individual
eligibility cases. Since the 1993, the Postal Service has assertednumerous back
. . .
postageclaimsagainstnonprofit mailingsbasedon retroactiveapplication of ehgrbdlty
restrictionsthat:were neitherexpressedin the statutenor previously announcedby the
PostalService(e.g., that mention of a ‘VISA” or “‘MasterCard” membershipbenefit
’ Statement of Postmaster General/CEO Marvin Runyon Befo:re the House
AppropriationsSubcommitteeon Treasury,Postal Service,and General]Government
Concerningthe Fiscal Year 1994 Budget Request(Feb. 4, 1993) at 6.
* USPS legislative white paper, “Learning to Live Without RevenueForgone: A
Transitional Proposal” (March 11, 1993).
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was not a permissible reference). Professional associations with decades-old
nonprofit permits have seenthose permits revoked on the asserted(and incorrect)
ground that organizationswith tax exemptionunder Section 501(c)(6) of the Internal
Revenue Code are ineligible for nonprofit postal rates. The Postal Service has
acknowledgedthat its enforcementcampaignnonprofit mailers is a national policy.
‘It’s your turn,” PostalServiceChief Inspector Kenneth Inspector told ANM statTat
a meeting of the Mailers’ Technical Advisory Committee on June 11, 1997.’ If
nonprofit mailers are laboring under the belief that the Postal Service has targeted
them for retaliation, their fears are not entirely without basis.
In any event, whether nonprofit mailers’ concernsover retali;ationFromthe
PostalServicearewell founded,thoseconcernsaregenuinelyheld, and .theyaffect the
willingnessof individual mailersto discloseinformation for use in rate cases. Based
on ANM’s experiencewith this survey,andin dealingwith nonprofit mailersover the
pastdecade,it is ANM’s judgment that it would lose its ability to collect meaningful
data from nonprofit mailers on their mailing volumes, practicesand operations if it
were forced to breach its commitment of confidentiality for the id’entitiesof the
individual survey respondentsin this case. Id.’
3 SeeAlliance Report (June 13, 1997) at 1.
’ Indeed, severallarge nonprofit mailerswere so concernedabout YPostalService
retaliation that they declined to participate in the survey notwithsta~ndingANM’s
assuranceof confidentiality. Id. at 3.
-6.
II.
THE POSTAL SERVICE HAS FAILED TO IDENTIFY ANY
SURSTANTIAL INTEREST IN DISCLOSING TRE SURVEY
RESPONDENTS’ IDENTITIES.
By contrast, the Postal Servicehasfailed to explain why its interestsrequire
breachingthe confidentialityof the surveyrespondents’identities. The Postal Service
contendsthe ANM surveyis not “representative”ofthe universeof nonprofit mailers,
and that infomration about the identities of the survey respondentsis necessaryto
determine the “magnitude of this bias,” February 20 Motion to Com;pelat 3. The
Postal Service’s hypothesis is that the sample of mail representedby the survey
respondents,comparedwith the entire universe of nonprofit mail, is (overweighted
with mail enteredat standard(A) nonprofit rates but later forced to pay back postage
based on commercial rates: “publications [sic] who were assessedStandard (A)
commercial rates for certain mailings, when the mailers had intended to pay more
favorable nonprofit rates.” Id.
Disclosing the identities of ANM’s survey
respondents,however, is neither necessarynor sufficient to test this hypothesis.
To develop relevant and probative evidencethat the extent of back postage
paymentsreportedby ANM’s survey respondentsis unrepresentativeof the universe
of nonprofit mail in Fiscal Year 1996, the Postal Servicewould need to compare (1)
the fbequencyofback postagepaymentsreported by the survey respondentswith (2)
the frequency of back postage paymentsmade by the entire universe of nonprofit
mailers, or a representativesampleof that universe(e.g., all nonprofit mail entered
within the three-digit ZIP codescovered by ANM’s survey). Armed with the latter
data, however, the Postal Service could offer evidenceon the extent of the back
postagephenomenondire+, without knowing the identitiesof the individual mailers
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in ANM’s survey.’
Lacking the latter data, the Postal Service cannot offer any relevant or
probative evidenceon the representativenessof ANM’s sampleeven [f the Postal
Service learns the iaimtity of everysurveyre.cpondeni.One cannot compare a sample
with its universe, or with a benchmarksample,unlessone knows the distribution of
observationsin the universe, or the benchmarksample.
The real problem here is that the Postal Service-the only participant in this
casethat possesses
revenueandvolumedata(including data on back postageclailms)
for the entireuniverseof Standard(A) nonprofit mail-neglected to analyzethe data
beforefiling its rate request,andhasrelbsedto do so in responseto ANM:‘s discovery
requests sincethen. Having failed to do its homework, the Postal Service is now
seeking to force ANM to withdraw the only independentdata in the record, or to
betrayits commitmentto the sourcesof those data. The discoveryrules provide no
support for this strategy, however
Finally,the balancethat the Postal Servicewould strike between its interests
and the confidentiality interests of ANM and nonprofit mailers stands in glaring
contrastwith the Postal Service’sposture when the shoehasbeen on the other foot.
Contraryto thePostal Service’sassertion,PresidingOfficer’s Ruling No. MC95/1-19
is closely on point. Like the party seekingto discover the identities of the Postal
’ The Postal Service has, or should have, data in its system on every piece of
nonprofit mail entered in Fiscal Year 1996 that has been subject to back postage
paymentssincethen. The Postal Servicehas, or should have, a mailing statementfor
every piece of mail entered by nonprofit mailers at commercialrates in the United
States.Examiningthese statements,or a reasonablesampleof them, would provide
independentconfirmation of the significanceof the IOCS/RPW mismatch.
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Service’ssurveyrespondentsin MC951, the PostalServicehere has failed to provide
more than a generalizedand unsupported claim that it needsthe information. As
explainedabove,the requestedinformation is either unnecessaryor insufficient. And
in Docket No. MC93-1, BulkSmall Parcel Service, 1992, the Postal Service refused
to disclosew meaningfuldata underlying its initial marketing survey. SeeMC93-1
Op. & Rec. Decis. 7 118-122 (August 25, 1993).
The presentdisputediffers from the disputesin MC95-1 and MC93-1 in one
critical respect: the Postal Service, party seekingdisclosure here, has independent
means of generating relevant data without breaching the survey respondents’
confidentiality. A forliori, the balanceweighs againstcompelleddisclosure.
CONCLUSION
For the foregoing reasons,the Postal Service’smotions to compel should be
denied.
Respectfully submitted,
David M. Levy
“/
SIDLEY & AUSTIN
1722Eye Street, N.W.
Washington,DC 200016
(202) 736-8214
Joel T. Thomas
1800 K Street, N.W., Suite 810
Washington, D.C. 20006
(703) 476- 4646
Counselfor Alliance of Nonprofit Mailers
February 27, 1998
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DECLARATION
OF
R NEAL DENTON
My name is R. Neal Denton. I am Executive Director of the Alliance of
Nonprofit Mailers (“ANM”), with offices at 1211 Connecticut Avenue, N.W.,
Washington,DC 20036-2701. I haveheld my presentposition since 1992. Between
1986 and 1992 I was AssistantDirector of ANM.
I was involvedin administeringthe mailer surveywhose results.are tabulated
in Exhibit ANM-T-I to the testimonyof ANM witness John Haldi (ANM-T-l).
The
purpose of this Declaration is to explain the commitmentsmade by ANM to the
survey respondentsconcerningthe confidentiality of their responses.
In late November 1997,Dr. Haldi told me that he had begun to suspectthat
the disproportionateincreasesin attributable costsreported by the Postal Servicefor
Standard(A) nonprofit mail could be due to a mismatchof cost and volume data for
mail entered by nonprofit organizationswith nonprofit evidencing of postage, but
originally or ultimately paying commercialrates. To test this hypothesis,Dr. Haldi
asked ANM to administer a survey designed by him to gain information about
nonprofit organizations’ mailings in Fiscal Year 1996.
In recentrate cases,manyof ANM’s membershaveexpressedreticenceto me
and other ANM representativesabout supplyingdata on their mail volumes, mailing
practicesor operationsto the Commission,Thesemailershave assertedconcernsthat
disclosureto the Postal Serviceof their participation in an ANM-sponsored survey
could leadto retaliation or aggravationof strainedrelationswith the Postal Service.
In responseto these concerns,ANM has generally refrained from collecting such
information, or has obtained it under a pledge of confidentiality concerning the
identities of individual surveyrespondents.
ANM mailed out the first wave of survey questionnairesin the present case
on December 5, 1997. As the Postal Service notes in its motions to compel, the
questionnaires did not expressly state that the survey responseswould be kept
confidential.
During the same week, I began receiving phone calls and e-mails from
recipients of the survey. The immediatereaction of virtually all of the recipientsof
the surveywas to expressconcernthat their individual responsesnot be disclosedto
the Postal Service,or to ask whether AhM was abandoningits practice of keeping
confidential the identities of individual respondents.
The individualswith whom I spoke,or from whom I received e-mails,offered
two reasonsfor their concerns.Fist, they expressedfear that identifying the localities
where Postal Serviceemployeeshad acceptedmail bearing nonprofit evidencing of
postagefor entry at commercialrates could subjectthose employeesto discipline or
retaliation from Postal Service management,thereby jeopardizing the mailers’
relationshipswith thoseemployees.Second,the respondentswere apprehensivethat
identifying individual mailers could lead to retaliation from Postal Servicemanagement in the form of back postage claims for past nonprofit mailings, or even
revocationofthe mailers’ nonprofit permits. (Many of thesemailers are, or recently
have been, involved in contentious revenue deficiency disputes with the Postal
Service.)
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To every mailer who raised these concerns, I gave my assu;rancethat the
identities of individual survey respondentswould be kept confidential. I gave the
sameassuranceto mailersduring phonecalls madeto verify survey responsesor deal
with other questionsinvolving the survey. While I did not talk with every survey
respondent,I personallyspokewith severaldozen. And I instructed the other ANh4
representativesthat mannedthe phones in collecting data for the survey to inform
respondents that their identities would be kept confidential. I provided similar
instructions to personnel at the American Museum Association and American
Symphony Orchestra Association, the two organizations that used the survey to
collect information from their own members.
Most of the mailerswith whom I spoke seemedsatisfiedby lthisassurance.
Several mailers, however-including mailers that I am aware ente:redvery large
volumesof mail in Fiscal Year 1996with nonprofit markingsbut paying commercial
rates of postage-were unpersuadedthat a confidentiality commitment would be
enforced, and ultimately declinedto participate in the survey.
Basedon my experiencewith this survey,andin dealingwith nonprofit mailers
over the past decade,it is my judgment that ANM would lose its ability to collect
meaningfid data from nonprofit mailers on their mailing volumes, practices and
operationsif we were to breachour commitmentof confidentiality for the identities
of the individual survey respondentsin this case.
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DECLARATION
I, R. Neal Denton, declare under penalties of pejury that the foregoing
_’ J
statementis true and correct.
.~,~‘.i
Dated:
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CERTIFICATE
OF SERVICE
I hereby certify that I have this day servedthe foregoing document on all
participants of record in this proceedingin accordancewith section 12 of the Rules
of Practice.
February 27, I998