National Ass'n of Broadcasters v. Librarian of Congress
Docket: Nos. 96-1449, 96-1450 and 96-1451
Court: Court of Appeals for the D.C. Circuit; June 26, 1998; Federal Appellate Court
A cable television system is required to pay royalty fees to the Register of Copyrights for retransmitting certain copyrighted programming, as stipulated in 17 U.S.C. § 111(d). The Librarian of Congress distributes the royalties among copyright owners, with Phase I involving apportionment among eight claimant classes, and Phase II involving awards to individual owners within those classes. If disputes arise during either phase, the Librarian convenes a Copyright Arbitration Royalty Panel to propose a settlement, which the Librarian, upon the Register’s recommendation, may adopt or reject. The current petitioners are disappointed claimants contesting the Librarian's Phase I royalty distribution for the years 1990-1992. However, the court's review of the Librarian's decision is limited, and none of the petitioners provided sufficient grounds to alter the awards, leading to the affirmance of the Librarian's decisions.
Historically, the Supreme Court ruled in 1974 that retransmission of non-network copyrighted programming by cable systems to distant markets did not constitute a "performance" under the Copyright Act of 1909, thus not giving rise to copyright infringement claims. The Court acknowledged the potential negative impact on copyright owners but determined that the regulation of these relationships falls within Congress's purview. The court declines to make a compromise decision on this matter, emphasizing that such resolutions should be legislated by Congress.
In response to the Fortnightly and Teleprompter decisions, Congress enacted the Copyright Act of 1976 to resolve the retransmission royalty issue, which had been debated since 1965. This Act allowed for royalty recovery for non-network programming retransmitted to distant markets, while not imposing liability for local broadcasts or network programming retransmitted in the same markets. Congress determined that local retransmission does not harm copyright owners' markets, whereas distant non-network programming does, as it infringes on the copyright owner's licensed territory and benefits cable systems by attracting subscribers.
To avoid the impracticality of individual negotiations between cable systems and copyright owners, Congress established a centralized royalty collection process through the Copyright Royalty Tribunal (Tribunal), which is responsible for adjusting royalty rates and distributing royalties. If disputes arose regarding the distribution of royalties, the Tribunal would hold hearings and determine the appropriate apportionment, required to complete proceedings within one year and provide detailed reasoning for its decisions. However, Congress did not specify the criteria or procedures for the Tribunal’s royalty assessments.
The bill lacks specific guidelines for the Copyright Royalty Tribunal in distributing royalty fees from cable systems under Section 111. The Committee decided against imposing restrictive standards for distribution, advocating instead for the Tribunal to evaluate all relevant data presented by claimants. The Tribunal established three main criteria for assessing claims: (1) harm to copyright owners from secondary transmissions, (2) benefits to cable systems from these transmissions, and (3) the marketplace value of the transmitted works. Additionally, two secondary criteria were introduced: (4) quality of the copyrighted material and (5) time-related factors.
The 1976 Act allowed judicial review of the Tribunal's decisions, permitting aggrieved parties to appeal within thirty days of a decision's publication in the Federal Register, with review based solely on the Tribunal's record. Over the years, the Tribunal's distribution decisions were challenged in several cases, including NAB I and NAB II.
Due to insufficient workload, Congress dissolved the Tribunal after seventeen years, transferring its functions to an ad hoc Copyright Arbitration Royalty Panel under the Copyright Royalty Tribunal Reform Act of 1993. The House Committee believed that ad hoc panels were more effective, citing positive experiences with arbitration in other contexts. The 1993 Act also assigned certain Tribunal functions to the Librarian of Congress and the Register of Copyrights, who are now integral to the arbitration process. The Copyright Office manages the compulsory licensing system, overseeing royalty accounts and establishing regulations, while the Library of Congress provides necessary administrative support to the Tribunal.
The Copyright Office and the Library of Congress play significant roles in administering compulsory licenses and overseeing Tribunal functions, leveraging nearly a century of experience in copyright matters. Under the revised distribution scheme established by the 1993 Act, an arbitration panel is assigned to initially propose distributions of disputed royalties, with a 180-day timeline to gather evidence and formulate a settlement based on a comprehensive written record, prior Tribunal decisions, and Librarian rulings. The panel must submit its proposed settlement report to the Librarian within this timeframe.
Upon receiving the report, the Librarian, advised by the Register of Copyrights, has 60 days to either adopt or reject the arbitration panel's proposal. Adoption occurs unless the Librarian deems the proposal arbitrary or inconsistent with copyright law. If rejected, the Librarian must issue a new order for royalty fees and publish both the arbitration panel's determination and the Librarian's decision in the Federal Register, along with making the report publicly accessible.
Aggrieved parties can challenge the Librarian's decision in the U.S. Court of Appeals for the District of Columbia Circuit within 30 days of publication. If no appeal is filed, the Librarian's decision becomes final. The court can only modify or vacate the Librarian's decision upon finding it arbitrary, and if modified, the court may determine royalty amounts, order repayments, and potentially remand the case back for further arbitration.
The petitioners challenge a decision by the Librarian regarding royalty distribution under the 1993 Act, representing three distinct claimant classes: Program Suppliers (owners of syndicated television content), National Association of Broadcasters (owners of localized broadcast content), and Devotional Claimants (owners of religious-themed programming). The dispute involves over $500 million in royalties collected for non-network programming from 1990 to 1992, categorized into Basic Funds, 3.75% Funds, and Syndex Funds. The Basic Funds include royalties from small and medium cable systems and large systems under outdated FCC rules. In contrast, the 3.75% and Syndex Funds consist of royalties from large cable systems following the repeal of certain FCC rules.
On December 4, 1995, the Librarian initiated a Phase I distribution controversy and convened a copyright arbitration royalty panel (Panel), which conducted extensive hearings and reviewed substantial evidence. The Panel proposed a new distribution of royalties on May 31, 1996, significantly different from the last approved distribution in 1989. For instance, the Panel proposed a 55.55% share for Program Suppliers from the Basic Fund, contrasting with the previous 60% allocation. The Register of Copyrights subsequently indicated that the Panel's report could not be adopted due to a lack of sufficient findings of fact and legal conclusions, making it unsustainable on appeal.
The Librarian is unable to conduct a de novo review of the case due to the 60-day time constraint and the incomplete record on certain issues, which hinders forming a conclusion on royalty distribution. Although the Copyright Act does not explicitly allow the Librarian to remand the Panel's report, it is deemed the appropriate course of action to ensure a determination that can withstand judicial review. During a meeting, claimants expressed concerns about the remand's legality and wisdom, yet the Register opted to submit "certified questions" to the Panel for clarification without reopening the case.
The Panel's response highlighted the inherent subjectivity in determining royalty shares, which rely on informed judgment rather than mathematical precision. The Panel acknowledged significant debate and compromise among its members in reaching a consensus, noting that the report required further editing and refinement. Despite the time constraints, the Panel affirmed its essential judgments. Following a review of the Panel's responses, the Register recommended adopting the findings with adjustments for settlements related to certain claims and for identified errors in fund apportionment.
The Librarian of Congress has adopted the Register's recommendation concerning the Copyright Arbitration Royalty Panel's report on the distribution of cable funds for 1990-1992, endorsing the decision to partially accept and partially reject the Panel's findings. The final apportionment of royalties, as approved by the Librarian, is detailed in a table categorizing various claimants, including Programmer, JSC, NAB, MC, PBS, Devotional, and CC, with specified percentages for Basic, 3.75, and Syndex Funds across the collection years.
Petitioners have appealed the decision, with NAB arguing for a larger share of the Basic and 3.75 Funds, which they believe should be taken from Programmer's award. Devotional seeks a three percent share or at least a minimum amount that aligns with the Panel's proposals without specifying the source of the increase. Programmer also claims entitlement to a larger award, suggesting that the specifics should be determined upon remand to the Librarian.
The standard of review is established under subsection 802(g) of the 1993 Act, allowing modification or vacating of the Librarian's decision only if found arbitrary based on the existing record. Devotional asserts that the review should align with the Administrative Procedure Act (APA) standards as applicable to Tribunal decisions, a position supported by Programmer and NAB, who reference the APA's arbitrary and capricious test as articulated in a key Supreme Court case.
Judicial review of an agency's decision must assess whether it considered relevant factors and if there was a clear error in judgment. The Administrative Procedure Act (APA) review is now more limited, with the "substantial evidence" test no longer applicable. The intervenors assert that under subsection 802(f), the Librarian must accept the Panel’s proposed settlement unless it is deemed "arbitrary or contrary" to Title 17. Under subsection 802(g), modification or remand of the Librarian's decision occurs only if it is found that he acted in an "arbitrary manner," establishing a narrower "double arbitrary" standard compared to APA review. The Librarian contends that the court's review is at the extreme edge of what is reviewable based on substantive correctness. Consequently, under subsection 802(g), a royalty award can only be overturned if the evidence necessitates a significantly different award, and a facially plausible explanation from the Librarian suffices for upholding it. This deferential standard aligns with congressional intent as outlined in the 1993 Act. Judicial review of Tribunal royalty distribution decisions was already deferential under APA standards, focusing on whether awards fall within a "zone of reasonableness," rather than reassessing evidence for appropriateness. The courts lack the authority to invalidate specific allocations if they remain within this zone. Congress intended the Tribunal to be the primary authority on these matters, recognizing the limitations of judicial review in this context. Statutory reasonableness is a broad concept, allowing variability in what is considered acceptable, with the Commission tasked to translate this into specific monetary allocations.
The repeal of section 810 and the enactment of subsection 802(g) in the 1993 Act indicate Congress's intent to alter the standard of review for royalty distribution decisions, contrary to Devotional's claim. The new language differs significantly from previous statutes, suggesting a deliberate legislative change. The absence of the Administrative Procedure Act (APA) references in the 1993 Act implies that the arbitrary and capricious standard does not apply to subsection 802(g). The review process is simplified to assess whether the Librarian acted arbitrarily based on the existing record, rather than applying multiple standards from the APA. Additionally, the 1993 Act introduces a two-tier administrative review process involving the Register and the Librarian, contrasting with the prior system where the Tribunal had final authority. This process must now be completed within 240 days, a reduction from the 365 days allowed under the 1976 Act.
The Panel’s report must include the written record and specify only the relevant facts recognized by the arbitration panel, contrasting with the Tribunal's requirement to detail applicable criteria, relevant facts, and specific reasons for its decisions. The 1993 Act shifts the administrative decision-making framework from quasi-adjudication to arbitration by an ad hoc panel, with settlements reviewed by the Register and the Librarian, facilitated by positive prior experiences with arbitration under the Section 119 satellite compulsory license. This change aligns with Congress's goal of promoting swift, informal claim settlements while minimizing costly judicial processes. Clear procedural and evidentiary guidelines, supported by the Copyright Office, are essential to ensure fairness, with streamlined discovery rules playing a critical role in expediting cases and fostering settlements. The transition from an arbitral model—focused solely on the case at hand—to an administrative model, which emphasizes record-building for review, risks undermining arbitrators’ effectiveness in dispute resolution. The potential for parties to relitigate in courts could transform arbitration into an extension of judicial review, causing delays. Legislative history indicates a desire to limit judicial review scope, initially proposing restrictions in the 1976 Act that were deemed too limiting, leading to the inclusion of full review provisions from the Administrative Procedure Act in the final legislation.
The 1993 Act reflects a shift toward limiting judicial review of royalty distribution decisions, aligning more closely with the Senate's original proposal to restrict claims to those under the Arbitration Act. The Arbitration Act allows courts to vacate awards based on "evident partiality or corruption" of arbitrators. However, it is argued that Congress did not intend to adopt the narrow review standards of the Arbitration Act in enacting subsection 802(g), as the 1993 Act does not explicitly reference the Arbitration Act and its language regarding "arbitrary manner" differs significantly from the limited grounds for vacatur under the Arbitration Act. Additionally, the framework of the Railway Labor Act and the Compact is distinct, and the mere use of "final and binding" does not imply that the RLA's review standards apply to the Compact.
The royalty distribution system established by the 1993 Act includes a layer of administrative review by the Librarian of Congress and the Court of Appeals for the District of Columbia, distinguishing it from typical arbitration scenarios where decisions are generally not reviewable. Unlike the Arbitration Act, which generally prohibits review of the merits of an arbitrator’s decision, subsection 802(g) seems to allow for some level of limited review of the Librarian's merit assessments. The document also indicates that, in the absence of specific congressional guidance on the burden of proof in administrative proceedings, courts may define the applicable standard of review.
A standard of review for administrative decisions must be tailored to the specific decision-making process and challenges faced by the agency, as noted in previous royalty distribution cases. The review process involves assessing the agency's ability to support its decisions with factual evidence, which can vary based on the nature of the decision being made. When Congress assigns a new mission to an agency with broad guidelines, judicial oversight of the agency's rationality can be less stringent. Over time, as the agency gains experience, the expectations for the rigor of its decision-making may increase.
The Tribunal, now referred to as the Librarian, is tasked with distributing royalties among claimants and is granted significant discretion by Congress for this purpose. This discretion is greater than that typically afforded to regulatory agencies in cost-of-service rate making. The expertise of the Tribunal's members in copyright policy is acknowledged, and the expectation is for sufficient accounting to ensure the rationality of the rates being reviewed.
The 1993 Act establishes a specific administrative framework, where the term "arbitrary" is used in two contexts: the court can vacate the Librarian's decisions if made arbitrarily, while the Librarian must adopt the Panel's proposed settlements unless they are deemed arbitrary or contrary to legal provisions. This distinction emphasizes the different standards applied in reviewing the Librarian's actions compared to those of the Panel.
The legal document outlines the structured review process of royalty awards, which involves an initial evaluation by the Librarian followed by judicial review. It emphasizes the deference granted to the expertise of the Librarian and the Register in matters of royalty distribution, supported by case law. Reviewing bodies typically afford some deference to original factfinders to avoid the inefficiencies of duplicative proceedings and because original decision-makers are often better positioned to assess evidence reliability.
The document addresses a challenge to the Secretary's order, asserting that the findings lack sufficient evidence. It cautions against reexamining extensive findings in a manner that transforms the administrative contest into a judicial one. The review is constrained to the Librarian's decisions, and the court can only intervene if the Librarian acted arbitrarily in approving the Panel's recommendations. An award would be deemed arbitrary if it is unsupported by evidence or based on evidence that cannot reasonably justify the decision.
The text further asserts that administrative orders can be invalidated if they are contrary to indisputable evidence or if the facts do not support the legal conclusions. The standard of review applied is one of reasonableness, meaning a finding should only be overturned if no reasonable person could support it, requiring evidence to not only suggest a contrary conclusion but to compel it.
The Librarian's approval of an award by the Panel could be deemed arbitrary if it clearly violates Title 17 provisions or if the Librarian disregards explicit statutory commands. Congress limits the authority of administrative agencies, allowing courts to intervene only to protect individual rights against actions exceeding granted powers. Courts generally provide relief when officials act unlawfully to the detriment of individuals, preventing arbitrary administrative actions. The Librarian's interpretations of ambiguous provisions are granted deference, as established in Chevron USA Inc. v. Natural Resources Defense Council, Inc., allowing for significant weight to be given to an agency's statutory construction. If the Librarian's award is rationally supported by evidence and does not violate statutory provisions, it must be upheld despite the broad deference afforded to the Librarian's decisions, particularly given the unique nature of the cable royalty distribution system.
In reviewing the petitioners' challenges, none provide sufficient grounds for vacating or remanding the Librarian’s decision. Specifically, the Programmer’s claims for remand include: 1) the Librarian's failure to link each award to substantial evidence and explain the basis for each, 2) his agreement with the Panel's unlawful removal of the "harm" criterion from royalty distribution, and 3) the arbitrary nature of his order endorsing the Panel's differential treatment of similarly situated claimants.
The excerpt critiques the Programmer's arguments regarding the Librarian's order related to the Panel's award determinations. The Programmer contends that the Librarian failed to adequately discuss the evidence considered by the Panel and the rationale behind the awards, asserting that this lack of clarity indicates insufficient reasoning in decision-making. The Programmer's claims are twofold: (1) subsection 802(f) mandates the Librarian to provide a detailed order discussing each stage of the decision-making process and evidentiary support for the awards; and (2) even if not required by law, it was arbitrary for the Librarian to omit such a comprehensive order.
The response emphasizes that section 802 does not impose a duty on the Librarian to replicate the Panel's work. Utilizing the Chevron framework for statutory interpretation, the court must first seek congressional intent through the statute's language. It notes that while subsection 802(e) requires the Panel to submit a report including relevant findings, subsection 802(f) does not impose an equivalent obligation on the Librarian to report his findings. The Librarian has a 60-day period to review the Panel’s report, during which he must adopt the proposed settlement unless deemed arbitrary or illegal. If rejected, he must issue a distribution order without extending the review period and must publish his decision alongside the Panel’s report. Therefore, the court concludes that the Librarian is not obliged to fully recap the Panel's work as claimed by the Programmer.
Congress intended for the Librarian to make available the Panel’s report and record, indicating that subsection 802(f) should not be interpreted in a way that makes its final sentence redundant. Principles of statutory construction dictate that every word used by Congress must be given effect. The Librarian's understanding of his obligations under subsection 802(f) is deemed reasonable and permissible, aligning with the Tribunal's discretion to structure its proceedings. Courts afford deference to agency interpretations, especially those responsible for implementing new statutes. The Librarian's interpretation promotes efficiency by avoiding redundant efforts within the 60-day review period designated by subsection 802(g).
The Commission’s Order and the ALJ’s opinion adequately communicate their findings and reasoning, which is sufficient given the expedited nature of the proceedings. The Librarian's decision to adopt the Panel’s modified proposed settlement does not appear arbitrary under the established review standard. The agency's path must be reasonably discernible, even if not ideally clear, and it is permissible for an agency to incorporate parts of the record by reference.
The Programmer's argument that the Librarian acted arbitrarily in approving the Panel's conclusion on the harm criterion is unfounded. The argument has two components: 1) the Panel's alleged violation of subsection 802(c) and the Librarian's failure to intervene, and 2) the Panel's insufficient explanation for eliminating the harm criterion. However, past decisions clarify that Congress delegated the responsibility for developing assessment criteria to the Tribunal and, subsequently, the Librarian, Register, and Panel. The Act anticipates that the Tribunal will specify its criteria in the final determination. There is no indication that subsection 802(c) rescinds this delegation, which remains intact as the basis for determining appropriate criteria for distribution claims.
The ad hoc panel serves as the initial factfinder, but its decisions can be reviewed by the Register and the Librarian. If they disagree with the panel's rejection of prior Tribunal practices, they can enforce those practices. The Librarian concluded that the panel should have based final percentage awards on all classes' awards, regardless of whether they settled or litigated. This approach aligns with the Librarian's responsibilities under the review standard of subsection 802(f) and his authority to establish procedures for the panel and claimants under subsection 801(e).
The Librarian's interpretation of subsection 802(c) is deemed reasonable and permissible, adhering to the Chevron analysis. Programmer failed to demonstrate that the Librarian acted arbitrarily in determining that removing the harm criterion was lawful; the arguments presented by Programmer regarding the harm criterion were found to be irrelevant to the Court's considerations. The panel justified its decision to eliminate the harm criterion, explaining it as a variation of market value diminution, and no further justification was necessary.
Programmer alleged that the Librarian acted arbitrarily by approving the panel's awards, claiming inconsistencies in evaluating market value across different awards and neglecting evidence that could undermine the PBS award. However, these alleged errors do not warrant adjustments to Programmer's award, as Programmer did not clarify how these corrections would benefit it. The appeal rights under subsection 802(g) are limited to "aggrieved parties," and Programmer did not demonstrate any grievance. Additionally, ACEMLA is not considered aggrieved by the award to LAMCO, as they are separate entities with no statutory ground for challenge.
Devotional seeks an upward adjustment of its award due to four alleged errors by the Librarian in approving its award, including a lack of independent examination of the evidence and a downward adjustment of the proposed award without sufficient basis.
The Librarian upheld the Panel's decision not to increase Devotional's share of royalty funds after the elimination of the harm criterion and did not give Devotional's viewership surveys equal weight as other claimants' evidence. These issues do not justify vacating or remanding Devotional’s award. Devotional's first argument fails similarly to a prior argument made by a Programmer, as subsection 802(f) does not require the Librarian to replicate the Panel's decision-making process. The Librarian’s order addressed specific issues identified in the original Panel report without being unreasonable.
Devotional's claim that the Librarian and the Panel did not provide a rational basis for reducing its award lacks merit. The Panel incorrectly assumed that all royalty funds for 1990-1992 were in dispute and did not adjust the proposed awards for the NPR settlement, which the Librarian corrected by adjusting all class awards accordingly. Consequently, Devotional's final share was slightly lower than its previous share from 1989. The adjustment resulted in a relative difference of approximately 5.62% for the Basic Funds and 4.275% for the 3.75 Fund.
Devotional contends that the Panel intended to maintain its award amount despite the settlements, arguing that the Librarian’s reduction was unjust given unchanged circumstances. However, the Librarian's adjustment was not arbitrary or irrational; he made a reasonable decision to correct the Panel's mistake without reassessing the relative entitlements of each party. The final award, only slightly different from the previous one, remains within a reasonable range, negating the need to determine the Panel’s original intent regarding Devotional's award.
Tribunal rulings do not rely on exact mathematical calculations but must fall within a zone of reasonableness. The argument by Devotional for an increased award based on the elimination of the harm criterion is rejected, as this criterion was only one of five factors in the Tribunal’s distribution calculus. The removal of this factor does not necessitate a specific adjustment to the award for the class, especially since the weight of the marketplace value criterion was increased simultaneously. The actual impact of removing the harm factor is unclear, as it depends on the relative importance of the other factors and any changes in their assessments. The Tribunal's focus is not on whether the Canadians improved their evidence submissions, but on whether such improvements justify a greater award from the 1980 fund compared to 1979, considering submissions from other claimants. The failure to increase Devotional's award does not indicate arbitrary action. Additionally, the unchanged circumstances since the 1989 fund distribution do not necessitate a reevaluation of the award, as "changed circumstances" is just one of many factors influencing royalty determinations. The Tribunal's approach has previously been established to avoid a rigid reliance on this factor alone, allowing for adjustments based on improved evidentiary submissions. If a claimant presents compelling new evidence that contradicts prior conclusions, the Tribunal must evaluate this evidence and adjust the award accordingly if justified.
The document addresses the rejection of Devotional's argument that the lack of changed circumstances justified a consistent percentage award. The decision to uphold the award is based on the Panel's discretion in weighing evidence. It emphasizes that the Tribunal and Panel, not the reviewing body, are responsible for assessing witness credibility and evidence weight. The claim that the Panel arbitrarily valued Devotional’s evidence less than that of other claimants is dismissed, noting that the judicial review does not involve re-evaluating evidence. The finding that certain survey results supported PBS’s award without affecting Devotional’s allocation is not seen as arbitrary. The difference in award percentages, being only three points, falls within a reasonable range. Additionally, the Panel deemed Devotional's cable operator testimony less compelling compared to other evidence, which is within its prerogative. The decision-making process allows for acceptance of certain evidence while rejecting others, a principle supported by case law. The conclusion reached is that there is no compelling basis to assert that the Librarian acted arbitrarily in determining Devotional’s award, despite the Panel's explanation being somewhat lacking in detail. Furthermore, NAB's claims regarding categorization errors in Nielsen results affecting award adjustments are also mentioned as being arbitrary in nature.
The Panel and the Librarian intended to award NAB a percentage of royalties based on the lower range of its Nielsen survey results but ultimately fixed the award at 7.5% without appropriately adjusting for alleged miscategorization errors in the Nielsen data involving specific programs. NAB argues that these errors should have warranted a larger award. However, the review confirms that the Librarian's interpretation of the Panel's intent is authoritative unless clearly unreasonable. It is established that the Nielsen results were not meant to be the exclusive basis for determining NAB's royalty share; they served merely as a reference. The Panel clarified its intent to assess fair market value rather than strictly adhering to Nielsen statistics. Despite NAB's claims regarding miscategorization, they fail to provide grounds for overturning the award, as the Nielsen figures were only one component of the Panel's broader evaluation of programming value. The Panel deemed 7.5% a fair market value for NAB's programming, acknowledging the inherent limitations of Nielsen data. The Panel exercised its discretion in evaluating evidence without finding arbitrary actions in its refusal to adjust the Nielsen results. Additionally, challenges to the Nielsen survey's accuracy lacked alternative evidence to substantiate claims about viewing, and the Program Suppliers acknowledged that Nielsen measures tuning rather than direct market value.
The Tribunal aimed to estimate a market price despite the absence of a functioning market, relying on available analogies rather than mathematical derivation. It utilized expert judgment to arrive at a "best guess," which was deemed reasonable and not warranting intervention according to the “arbitrary manner” standard of subsection 802(g). Accurate figures for recent costs of carrying special fourth-class mail were lacking; however, rough adjustments were possible based on inaccurate data. The Postal Service and Chief Examiner proposed different adjustment methods, leading the Commission to compromise.
The conclusion of the report indicates that the Copyright Tribunal Reform Act of 1993 has significantly narrowed the standard of review for the Librarian’s apportionment of cable royalties. The findings do not support any modifications or remand of the Librarian’s Phase I awards, resulting in the denial of the petitions for review of the decision regarding the distribution of 1990, 1991, and 1992 cable royalties.
Syndicated series and specials are defined as programs licensed to and broadcast by at least one U.S. commercial television station, or produced for multiple stations, or predominantly containing syndicated elements. Syndication is the sale of programming on a market-by-market basis, with "off-network" syndication referring to programs previously aired on a network, while "first run" syndication refers to programs debuting in syndication. The report also details NAB's programming as content produced for a single U.S. commercial television station, excluding certain exceptions. The Librarian allocated royalties to five additional classes of copyright owners, including Joint Sports Claimants, Music Claimants, National Public Radio, Public Broadcasters, and Canadian Claimants, with PBS and CC intervening in support of the Librarian's decision.
JSC submitted an amicus curiae brief in support of the Librarian's decision, opposing certain arguments from the petitioners. Prior to the enactment of the 1993 Act, a distribution proceeding was underway to determine the Phase I apportionment of 1990 royalties, which was subsequently suspended when the Tribunal was abolished by the Act. Following this, the Librarian organized a panel to propose a settlement for the 1990, 1991, and 1992 royalties. The 3.75% Fund refers to the calculation of royalties based on 3.75% of gross receipts. The potential difference between "double-arbitrary" and "single-arbitrary" standards may be negligible; if the Panel's proposed award is deemed arbitrary or contrary to Title 17, the Librarian's approval without modification could also be viewed as arbitrary. The Register's recommendation to the Librarian, adopted without changes, indicates that the Librarian's review parallels the Court's review of Tribunal royalty distributions. Importantly, the 1993 Act does not define 'arbitrary,' but it is interpreted as consistent with the 'arbitrary' standard in the Administrative Procedure Act (APA). While the Register did not claim that the review of the Librarian's decision had not changed, the likelihood of petitioners' arguments affecting the Librarian's Phase I apportionment is low. Given historical litigation trends among copyright owners, clarity on the standard of review is deemed beneficial. The 1993 Act repealed subsection 803(a) of the 1976 Act, which previously mandated Tribunal adherence to the APA. The only reference to the APA in the 1993 Act involves a requirement for the Panel to conduct its proceedings under the notice and comment provisions of the APA. These legislative changes suggest Congress intended to limit the APA's applicability, indicating that the presumption favoring APA review standards may be overridden by clear congressional intent.
The Supreme Court has established that exemptions from the Administrative Procedure Act (APA) must be explicit, particularly in the context of the 1952 immigration legislation, which adapted the APA for deportation proceedings. This adaptation included specific deviations that were recognized in the legislative history, leading to the conclusion that the current statute explicitly overrides the APA's hearing provisions. In Marcello v. Bonds and Asiana Airlines v. FAA, it was determined that the APA's notice and comment requirements do not apply when they conflict with statutory language detailing specific rulemaking procedures.
In relation to the 1993 Act, while a "clear report" from the arbitration panel is beneficial for the Librarian of Congress, it is not mandated under subsection 802(e). Furthermore, significant delays can occur between the Librarian's final decision and judicial resolution regarding royalties, which may date back several years.
Under the Arbitration Act, a district court can only vacate an arbitrator’s award under limited circumstances: if the award was obtained through corruption or fraud, if there is evident partiality, if there was misconduct by the arbitrators, or if the arbitrators exceeded their powers. Claims that the Librarian's decision lacks deference due to the ad hoc arbitration members' supposed lack of expertise misunderstand the nature of administrative expertise, as the Panel serves as the primary factfinder and is best suited to evaluate evidence and credibility. Additionally, both the Register and the Librarian apply their expertise to royalty distribution through the review of the Panel's claims settlement proposals, reinforcing the specialized nature of the administrative decision being reviewed.
Congress established the commission as an instrumentality to ensure expert supervision and administrative judgment in applying legislative standards. The commission's powers are defined by law, which imposes limitations on its authority. Judicial review is appropriate for evaluating whether the commission acts within its granted authority, adheres to due process requirements, and complies with legal standards. The Register’s submission of questions to the Panel for clarification on award proposals is deemed proper, and Chevron deference is granted to the Register's reasonable interpretation, given the lack of specific legislative guidance. Programmer's argument regarding the Register's "remand" extending the Librarian's review period is rejected; even if the claim were correct, a missed deadline does not warrant invalidating the Librarian's decision. The Panel rejected the harm criterion as a factor in distributing credits, instead prioritizing marketplace value, resulting in all parties receiving zero harm credits. The Librarian, based on the Register's recommendation, is authorized to make procedural rulings before a copyright arbitration royalty panel is convened. The Panel concluded that evidence of harm was not quantifiable and did not differentiate between the parties' entitlements to harm credits.
Two expert witnesses indicated that "harm" reflects the supply side of the market, while "benefit" pertains to the buyer’s side. The Panel concluded that "market value" is the appropriate basis for assessing class claims. Programmer's assertion that subsection 802(f) restricts the Librarian to adopting or rejecting the Panel’s report is unsupported by the provision's language, warranting deference to the Librarian’s reasonable interpretation under Chevron. The Librarian’s order confirms a partial adoption of the Panel’s settlement, with specific adjustments to distribution percentages. The Librarian endorses the Register’s recommendation, exercising authority under 17 U.S.C. 802(f) to establish cable royalty fee distributions. The compromise award for Devotional’s programming is not deemed arbitrary, as percentage awards involve subjective judgment and balancing of competing claims. The Tribunal's process met constitutional due process standards; the Nielsen and Bortz surveys served as the primary statistical evidence for the Panel, indicating mixed results without clear trends in programming value or viewer share. The suggestion that the Panel needed to correct Nielsen figures is rejected, as it was within the Panel's discretion to disregard the harm criterion and not follow previous Tribunal corrections based on its evaluation of evidence reliability.
