intercollegiate broadcasting system v. copyright royalty board - final brief for appellees

ORAL ARGUMENT SCHEDULED FOR FEBRUARY 7, 2012

No. 11-1083

IN THE UNITED STATES COURT OF APPEALSFOR THE DISTRICT OF COLUMBIA CIRCUIT

INTERCOLLEGIATE BROADCASTING SYSTEM, INC.,A RHODE ISLAND NON-PROFIT CORPORATION,

Appellant,

v.

COPYRIGHT ROYALTY BOARD; LIBRARY OF CONGRESS,

Appellees.

COLLEGE BROADCASTERS, INC.; SOUNDEXCHANGE, INC.,

Intervenors for Appellees.

ON APPEAL FROM A FINAL DETERMINATION OF THE COPYRIGHT ROYALTY BOARD

FINAL BRIEF FOR APPELLEES

TONY WEST

Assistant Attorney General

SCOTT R. MCINTOSH (202) 514-4052KELSI BROWN CORKRAN (202) 514-3159

Attorneys, Appellate Staff Civil Division, Room 7216

U.S. Department of Justice 950 Pennsylvania Ave. NW

Washington, DC 20530-0001

USCA Case #11-1083 Document #1349396 Filed: 12/22/2011 of 58

CERTIFICATE AS TO PARTIES, RULINGS, AND RELATED CASES

Pursuant to D.C. Circuit Rule 28(a)(1), the undersigned counsel certifies as

follows:

A. Parties and Amici. All parties, intervenors, and amici appearing before

the Copyright Royalty Judges and in this Court are listed in the opening brief for

appellant.

B. Ruling Under Review. The ruling under review is a ratemaking decision

of the Copyright Royalty Judges: Digital Performance Right in Sound Recordings

and Ephemeral Recordings, 76 Fed. Reg. 13026 (March 9, 2011) (Joint Appendix

(“JA”) 1-33).

C. Related Cases. This case has not previously come before this Court or any

other court. Appellant has another appeal pending before this Court, No. 10-1314,

in which it challenges a different decision of the Copyright Royalty Judges, but raises

the same issue as it does here regarding the constitutionality of 17 U.S.C. § 803(d)(3).

D. Deferred Appendix. The parties are using a deferred appendix.

/s/ Kelsi Brown Corkran Kelsi Brown Corkran

i


TABLE OF CONTENTS

Page

GLOSSARY

STATEMENT OF JURISDICTION. ....................................................................... 1

STATEMENT OF THE ISSUES. ............................................................................ 2

PERTINENT STATUTES AND REGULATIONS................................................. 2

STATEMENT OF THE CASE................................................................................. 2

STATEMENT OF THE FACTS. ............................................................................. 3

I. Statutory and Regulatory Background. ................................................ 3

II. Procedural Background. ....................................................................... 8

SUMMARY OF ARGUMENT. ............................................................................. 10

STANDARD OF REVIEW. ................................................................................... 13

ARGUMENT.......................................................................................................... 13

I. IBS’s Attack On The Merits Of The Royalty Rate Determination Is Baseless. ................................................................. 13

II. This Court Has Jurisdiction To Review Challenges To The Copyright Royalty Judges’ Rate Determinations........................ 14

III. Congress Constitutionally Vested The Power To Appoint The Copyright Royalty Judges In The Librarian Of Congress........................................................................................ 21

A. The Copyright Royalty Judges Are Inferior Officers Under The Appointments Clause............................... 21

ii


B. The Librarian Of Congress Is The Head Of A Department Within The Meaning Of The Appointments Clause. .............................................................. 29

1. The Librarian Of Congress Is Accountable To The President............................................................ 30

2. The Library Of Congress Is A “Department” Within The Meaning Of The Appointments Clause. ........................................................................... 33

3. IBS Mistakes Statutory Labels For Constitutional Authority. ............................................... 37

CONCLUSION....................................................................................................... 43

CERTIFICATE OF COMPLIANCE WITH RULE 32(a)(7)(C)OF THE FEDERAL RULES OF APPELLATE PROCEDURE

CERTIFICATE OF SERVICE

iii


TABLE OF AUTHORITIES

Cases: Page

Alaska Airlines, Inc. v. Brock,480 U.S. 678 (1987)........................................................................................... 20

Bismullah v. Gates,551 F.3d 1068 (D.C. Cir. 2009). ........................................................................ 20

Bowsher v. Synar,478 U.S. 714 (1986)........................................................................................... 30

Buckley v. Valeo,424 U.S. 1 (1976)....................................... 12, 20, 21, 22, 29, 33, 34, 40, 41, 42*

Cablevision Systems Dev. Co. v. Motion Picture Ass’n of America, Inc.,836 F.2d 599 (D.C. Cir. 1988). .......................................................................... 34

Chabal v. Reagan,841 F.2d 1216 (3d Cir. 1988). ........................................................................... 42

Edmond v. United States,520 U.S. 651 (1997)................................................................. 12, 22, 24, 25, 27*

Eltra Corp. v. Ringer,579 F.2d 294 (4th Cir. 1978). ................................................................ 36, 40, 41

Federal Radio Commission v. General Electric Co.,281 U.S. 464 (1930)............................................................................... 16, 17, 19

Federal Radio Commission v. Nelson Bros. Bond & Mortgage, Co.,289 U.S. 266 (1933)........................................................................................... 18

Free Enterprise Fund v. Public Company Accounting Oversight Board, et al.,130 S. Ct. 3138 (2010)................................................. 12, 19, 25, 29, 33, 35, 42*

* Authorities on which the government chiefly relies.

iv


Freytag v. Commissioner of Internal Revenue,501 U.S. 868 (1991)................................................................. 26, 28, 34, 35, 41*

Ex parte Hennen,38 U.S. (13 Pet.) 230 (1839). ............................................................................. 30

Kalaris v. Donovan,697 F.2d 376 (D.C. Cir. 1983). .......................................................................... 30

Keeffe v. Library of Congress,777 F.2d 1573 (D.C. Cir. 1985). ........................................................................ 40

Landry v. Fed. Deposit Ins. Corp.,204 F.3d 1125 (D.C. Cir. 2000). ........................................................................ 26

Lebron v. Nat’l R.R. Passenger Corp.,513 U.S. 374 (1995)........................................................................................... 41

Live365, Inc. v. Copyright Royalty Board,698 F. Supp. 2d 25 (D.D.C. 2010). ............................................ 25, 26, 28, 29, 37

Mazer v. Stein,347 U.S. 201 (1954)........................................................................................... 34

Mistretta v. United States,488 U.S. 361 (1989)..................................................................................... 42, 43

Morrison v. Olson,487 U.S. 654 (1988)..................................................................................... 25, 28

Program Suppliers v. Librarian of Congress,409 F.3d 395 (D.C. Cir. 2005). ............................................................................ 4

Rancho Viejo, LLC v. Norton,323 F.3d 1062 (D.C. Cir. 2003). ........................................................................ 16

Recording Industry Ass’n of America v. Copyright Royalty Tribunal,662 F.2d 1 (D.C. Cir. 1981). ................................................................................ 4

v


Reno v. Flores,507 U.S. 292 (1993)........................................................................................... 16

SoundExchange, Inc. v. Librarian of Congress,571 F.3d 1220 (D.C. Cir. 2009). ........................................................................ 18

United States v. Booker,543 U.S. 220 (2005)........................................................................................... 20

United States v. First City National Bank of Houston, et al.,386 U.S. 361 (1967)........................................................................................... 19

United States v. Germaine,99 U.S. 508 (1878)................................................................................. 21, 22, 33

United States v. Salerno,481 U.S. 739 (1987)........................................................................................... 16

Washington Legal Foundation v. U.S. Sentencing Comm’n,17 F.3d 1446 (D.C. Cir. 1994). .......................................................................... 41

Wisconsin Public Power, Inc. v. FERC,493 F.3d 239 (D.C. Cir. 2007). .......................................................................... 13

Constitution:

U.S. Const., art. II, § 2, cl. 2. ...................................................................... 12, 21, 22

Statutes:

2 U.S.C. § 136 ................................................................................ 12, 23, 30, 32, 37

2 U.S.C. § 137......................................................................................................... 38

2 U.S.C. § 137c. ...................................................................................................... 38

2 U.S.C. § 166(a). ................................................................................................... 42

vi


2 U.S.C. § 171(1). ................................................................................................... 40

2 U.S.C. § 179p....................................................................................................... 39

2 U.S.C. §§ 431 et seq............................................................................................. 41

2 U.S.C. § 1711....................................................................................................... 39

5 U.S.C. § 101 ........................................................................................................ 41

17 U.S.C. § 106......................................................................................................... 3

17 U.S.C. § 106(6). ................................................................................................... 5

5 U.S.C. § 706............................................................................................... 8, 15, 18

17 U.S.C. § 112(e)(4)........................................................................................ 3, 5, 6

17 U.S.C. § 112(e)(5)................................................................................................ 6

17 U.S.C. § 114(d)(2). .............................................................................................. 3

17 U.S.C. § 114(f)(2). ..................................................................................... 3, 5, 10

17 U.S.C. § 114(f)(2)(A). ................................................................................... 6, 13

17 U.S.C. § 114(f)(2)(B)..................................................................................... 6, 13

17 U.S.C. § 114(f)(3). ............................................................................................... 6

17 U.S.C. § 701(a). ............................................................................................. 7, 24

17 U.S.C. § 801......................................................................................................... 2

17 U.S.C. § 801 et seq....................................................................................... 1, 4, 5

17 U.S.C. § 801(b). ................................................................................................. 23

vii


17 U.S.C. § 801(b)(1). .............................................................................................. 5

17 U.S.C. § 801(b)(8). ............................................................................................ 24

17 U.S.C. § 801(d). ................................................................................................. 23

17 U.S.C. § 801(e). ................................................................................................. 23

17 U.S.C. § 802(c). ................................................................................................. 22

17 U.S.C. § 802(f)(1)(A)(I). ................................................................................... 27

17 U.S.C. § 802(f)(1)(B)..................................................................................... 7, 24

17 U.S.C. § 802(f)(1)(D). ............................................................................. 7, 24, 27

17 U.S.C. § 802(h). ................................................................................................. 23

17 U.S.C. § 802(i). ............................................................................................ 23, 24

17 U.S.C. § 803(a)(1).............................................................................................. 23

17 U.S.C. § 803(b). ................................................................................................... 6

17 U.S.C. § 803(b)(6). ............................................................................................ 23

17 U.S.C. § 803(b)(6)(C)(i). ..................................................................................... 6

17 U.S.C. § 803(b)(6)(C)(v). .................................................................................... 6

17 U.S.C. § 803(b)(6)(C)(vi). ................................................................................... 6

17 U.S.C. § 803(b)(6)(C)(ix). ................................................................................... 6

17 U.S.C. § 803(b)(6)(C)(x). .................................................................................... 6

17 U.S.C. § 803(c)(1)................................................................................................ 7

viii


17 U.S.C. § 803(c)(3)................................................................................................ 7

17 U.S.C. § 803(c)(6).............................................................................................. 23

17 U.S.C. § 803(d)(1). .......................................................................................... 2, 7

17 U.S.C. § 803(d)(3). ...................................................................... 8, 11, 13, 15, 16

17 U.S.C. § 804......................................................................................................... 5

28 U.S.C. § 561(a). ................................................................................................. 42

28 U.S.C. § 566(a). ................................................................................................. 42

28 U.S.C. § 566(c). ................................................................................................. 42

35 U.S.C. § 203(b). ................................................................................................. 16

38 U.S.C. § 7252(a). ............................................................................................... 16

42 U.S.C. § 405(g). ................................................................................................. 16

44 U.S.C. § 2114..................................................................................................... 39

49 U.S.C. § 1153(b)(3). .......................................................................................... 16

49 U.S.C. § 46110(c). ............................................................................................. 16

Act of January 26, 1802, 2 Stat. 128........................................................... 31, 37, 38

Copyright Act of 1870, 16 Stat. 212. ................................................................ 31, 39

Act of February 19, 1897, 29 Stat. 544............................................................. 31, 32

Copyright Act of 1976, Pub. L. No. 94-553, 90 Stat. 2541. ..................................... 4

Copyright Royalty and Distribution Reform Act of 2004,Pub. L. No. 108-419, 118 Stat. 2341. ....................................................................... 4

ix


Regulations:

37 C.F.R. § 301.1. ..................................................................................................... 1

37 C.F.R. § 351.4. ..................................................................................................... 6

37 C.F.R. § 351.8. ..................................................................................................... 6

37 C.F.R. § 351.10. ................................................................................................... 6

37 C.F.R. § 351.11. ................................................................................................... 7

37 C.F.R. § 351.14. ................................................................................................... 7

37 C.F.R. § 352.2. ..................................................................................................... 7

70 Fed. Reg. 30901 (May 31, 2005). .................................................................. 4, 23

72 Fed. Reg. 24084 (May 1, 2007). .......................................................................... 9

76 Fed. Reg. 13026 (March 9, 2011). .............................................. 1, 2, 8, 9, 10, 14

Legislative Materials:

29 Cong. Rec. 315 (1896) (Rep. Quigg). .......................................................... 31, 32

29 Cong. Rec. 318-19 (1896) (Rep. Dockery)............................................ 32, 36, 39

29 Cong. Rec. 378 (1896) (Rep. Bingham). ..................................................... 30, 31

29 Cong. Rec. 385 (1896) (Rep. Cummings). ........................................................ 32

29 Cong. Rec. 386 (1896) (Rep. Cannon). ....................................................... 32, 36

29 Cong. Rec. 387 (1896) (Rep. Stone).................................................................. 39

29 Cong. Rec. 387 (1896) (Rep. Fairchild). ........................................................... 39

x


29 Cong. Rec. 389 (1896) (Rep. Richardson)......................................................... 32

29 Cong. Rec. 977 (1897) (Sen. Call)..................................................................... 32

Other Authorities:

1 N. Webster, American Dictionary of the English Language(1828) (def. 2) (1995 facsimile ed.). .................................................................. 33

20 Charles Alan Wright & Mary Kay Kane, Federal Practiceand Procedure (2009)........................................................................................ 19

About the Librarian, Previous Librarians of Congress,John Silva Meehan, http://www.loc.gov/about/librarianoffice/meehan.html (last visited Nov. 2, 2011). ........................................................... 31

Ben Perley Poore, The Library of Congress,46 Harper’s New Monthly Mag. 41 (1873). ...................................................... 38

Glover Cleveland, First Annual Message (First Term) to the Congressof the United States (Dec. 8, 1885), available at http://www.presidency.ucsb.edu/ws/?pid=29526#axzz1ca1unU5r. .................. 39

John Y. Cole, For Congress and the Nation: A ChronologicalHistory of the Library of Congress (1979)......................................................... 38

Library of Congress, Librarians of Congress: 1802-1974 (1975).......................... 38

R.R. Bowker, The American National Library,21 Lib. J. 357 (1896).......................................................................................... 39

Theodore Roosevelt, Message to the Senate and the House ofRepresentatives (Dec. 3, 1901), available athttp://www.presidency.ucsb.edu/ws/?pid=29542#axzz1ca1unU5r. .................. 40

William Dawson Johnston, 1 History of the Libraryof Congress:1800-1864 (1904).......................................................................... 38

xi


GLOSSARY

ALJ Administrative Law Judge

APA Administrative Procedure Act

CBI College Broadcasters, Inc.

CRS Congressional Research Service

IBS Intercollegiate Broadcast System, Inc.

JA Joint Appendix

xii


No. 11-1083

IN THE UNITED STATES COURT OF APPEALSFOR THE DISTRICT OF COLUMBIA CIRCUIT

INTERCOLLEGIATE BROADCASTING SYSTEM, INC.,A RHODE ISLAND NON-PROFIT CORPORATION,

Appellant,

v.

COPYRIGHT ROYALTY BOARD; LIBRARY OF CONGRESS,

Appellees.

COLLEGEBROADCASTERS, INC.; SOUNDEXCHANGE, INC.,

Intervenors for Appellees.

ON APPEAL FROM A FINAL DETERMINATION OF THE COPYRIGHT ROYALTY BOARD

FINAL BRIEF FOR APPELLEES

STATEMENT OF JURISDICTION

Appellant Intercollegiate Broadcasting, Inc. (“IBS”) challenges a final

determination of the Copyright Royalty Judges. The final determination was1

published in the Federal Register on March 9, 2011. See 76 Fed. Reg. 13026 (March

IBS refers to the agency as the “Copyright Royalty Board,” a term drawn1

from the regulations. See 37 C.F.R. § 301.1. This brief uses the statutory term“Copyright Royalty Judges,” see 17 U.S.C. § 801 et seq., following the Judges’ ownpractice in the final determination below.


9, 2011) (JA 1-33). IBS filed a notice of appeal in this Court on March 17, 2011,

within the time provided by 17 U.S.C. § 803(d)(1). This Court has jurisdiction under

17 U.S.C. § 803(d)(1).

STATEMENT OF THE ISSUES

(1) Whether appellant has failed to offer any ground for vacating or reversing

the Copyright Royalty Judges’ rate determination for noncommercial webcasting.

(2) Whether the judicial review scheme set forth in section 803(d)(3) of the

Copyright Act comports with Article III.

(3) Whether the appointment of the Copyright Royalty Judges by the Librarian

of Congress comports with the Appointments Clause.

PERTINENT STATUTES AND REGULATIONS

The pertinent statutes and regulations are set forth in the addendum to

appellant’s brief.

STATEMENT OF THE CASE

This is an appeal from a final determination of the Copyright Royalty Judges,

a three-judge regulatory body in the Library of Congress responsible for establishing

the default rates and terms for statutory licenses under the Copyright Act. See 17

U.S.C. § 801. The determination sets the rates and terms for royalty payments

relating to “webcasting” — that is, the transmission of copyrighted sound recordings

2


over the internet. Since 1998, the Copyright Act has provided a statutory license for

webcasting, as well as a related statutory license for the creation of ephemeral copies

in the process of webcasting. See 17 U.S.C. §§ 114(d)(2) & (f)(2); id. § 112(e)(4)

(collectively, the “webcasting statutory license”). Under these provisions, the rates

and terms of the statutory license are to be settled through voluntary negotiation

among the interested parties or, if the parties cannot agree, through ratemaking

proceedings before the Copyright Royalty Judges.

The Judges commenced the proceeding below to determine the rates and terms

of the statutory webcasting license for the period beginning January 1, 2011 and

ending December 31, 2015. The Judges issued their determination on March 9, 2011,

and this appeal followed.

STATEMENT OF THE FACTS

I. Statutory and Regulatory Background

The Copyright Act confers on the owner of a copyright a set of exclusive rights

in the copyrighted work. See generally 17 U.S.C. § 106. In certain cases, however,

the Act limits the exclusivity of those rights by granting access to the copyrighted

work to any person who satisfies conditions set by law, including payment of a

royalty to the copyright owner. Congress enacted the first such “statutory licensing”

3


scheme in 1909. See Recording Industry Ass’n of America v. Copyright Royalty

Tribunal, 662 F.2d 1, 3 (D.C. Cir. 1981).

The royalty rates for statutory licenses were once fixed by statute. Since 1976,

however, Congress has vested responsibility for setting and adjusting such rates in

a series of administrative bodies. See generally 70 Fed. Reg. 30901 (May 31, 2005).

The first such agency was the Copyright Royalty Tribunal, which operated for more

than fifteen years. See Copyright Act of 1976, Pub. L. No. 94-553, § 801, 90 Stat.

2541, 2594. In 1993, Congress dismantled the Copyright Royalty Tribunal and

transferred its functions to the Librarian of Congress, who established the royalty

rates for statutory licenses with assistance from ad hoc Copyright Arbitration Royalty

Panels. See, e.g., Program Suppliers v. Librarian of Congress, 409 F.3d 395, 397

(D.C. Cir. 2005).

In 2004, Congress established a new and permanent panel of three Copyright

Royalty Judges. See Copyright Royalty and Distribution Reform Act of 2004, Pub.

L. No. 108-419, 118 Stat. 2341 (codified at 17 U.S.C. § 801 et seq.). “The

expectation [was] that the Copyright Royalty Judges, appointed to staggered, six-year

terms, [would] provide greater decisional stability, yielding the advantages of the

former Copyright Royalty Tribunal, but with greater efficiency and expertise.” 70

Fed. Reg. at 30901. In contrast to the Copyright Royalty Tribunal, which functioned

4


as a free-standing administrative agency, Congress placed the Copyright Royalty

Judges within the Library of Congress and made them subordinate to the Librarian

of Congress. See 17 U.S.C. § 801 et seq.

A primary responsibility of the Judges is to “make determinations and

adjustments of reasonable terms and rates of royalty payments” under the statutory

license provisions of the Copyright Act. Id. § 801(b)(1). Ratemaking proceedings

for the royalty payments for statutory licenses take place at regular intervals, and the

timing of these proceedings is set by statute. See id. § 804.

This case involves non-interactive “webcasting,” also known as “internet

radio” — i.e., the transmission over the internet of copyrighted sound recordings

without selection by the listener, like a traditional radio station. Webcasting requires

a license under the Copyright Act because it involves the “performance” of

copyrighted sound recordings by digital audio transmission. See id. § 106(6). Under

the webcasting statutory license, the Copyright Royalty Judges have the responsibility

to establish “reasonable rates and terms” for royalty payments that “most clearly

represent the rates and terms that would have been negotiated in the marketplace

between a willing buyer and a willing seller.” Id. § 114(f)(2); see also id. § 112(e)(4).

In determining such rates and terms, the Judges must distinguish among different

types of webcasting services and “base their decision on economic, competitive and

5


programming information presented by the parties.” Id. § 114(f)(2)(B). The royalty

rates must also include “a minimum fee for each type of service.” Id. §§ 114(f)(2)(A),

112(e)(4).

The Act encourages parties to reach agreement regarding royalty rates and

terms through voluntary negotiation. See id. § 803(b); id. § 114(f)(3); id. § 112(e)(5).

Absent a settlement, however, the Copyright Royalty Judges will hold ratemaking

proceedings to establish the rates and terms of the royalty payments under the

statutory license. Pursuant to detailed procedures set forth in the Act, these

proceedings take the form of a multi-party administrative trial. Participating parties

must file written direct evidentiary statements, including witness testimony and

supporting exhibits, in which they specifically request a particular royalty rate. See

id. § 803(b)(6)(C)(i); 37 C.F.R. § 351.4. After written direct statements are filed,

discovery commences. See 17 U.S.C. §§ 803(b)(6)(C)(v), (vi), (ix). If, after an

additional settlement period, the parties still have failed to negotiate a settlement, see

id. § 803(b)(6)(C)(x), the Judges will schedule a hearing for the presentation of the

parties’ direct cases through live witness testimony, including cross-examination and

the introduction of evidence. 37 C.F.R. §§ 351.8, 351.10. After any further

necessary discovery, the parties prepare and submit written rebuttal statements (when

6


directed by the Judges), id. § 351.11, followed by proposed findings of fact and

conclusions of law, id. § 351.14.

The Act directs the Judges to issue their determination within 11 months of the

post-discovery settlement conference or 15 days before the expiration of the prior

royalty rates and terms, whichever is earlier. 17 U.S.C. § 803(c)(1); 37 C.F.R. §

352.2. The Judges’ determination “shall be supported by the written record and shall

set forth the findings of fact relied on.” 17 U.S.C. § 803(c)(3). If the Judges are

confronted with a novel and material question of copyright law, they must obtain a

written opinion on the question from the Register of Copyrights, and then apply the

Register’s conclusions in their determination. Id. § 802(f)(1)(B). The Register also

reviews the Judges’ determination and issues corrections of any material legal errors.

Id. § 802(f)(1)(D). The Register, like the Judges, acts under the direction of the

Librarian. See id. § 701(a).

A final determination of the Copyright Royalty Judges is subject to direct

appeal to this Court by “any aggrieved participant . . . who fully participated in the

proceeding and who would be bound by the determination.” Id. § 803(d)(1). The Act

incorporates by cross-reference the standard of judicial review set forth in section 706

of the Administrative Procedure Act, which provides that the reviewing court shall

“decide all relevant questions of law,” and hold unlawful and set aside agency action

7


found to be “arbitrary, capricious, an abuse of discretion, or otherwise not in

accordance with law,” “without observance of procedure required by law,” or

“unsupported by substantial evidence.” 5 U.S.C. § 706; 17 U.S.C. § 803(d)(3). If,

after applying this standard of review, this Court concludes that the challenged

royalty rate determination should be modified or vacated, this Court may either enter

its own determination with respect to the amount or distribution of royalty fees and

costs, or remand to the Copyright Royalty Judges for further proceedings. 17 U.S.C.

§ 803(d)(3).

II. Procedural Background

On January 5, 2009, the Copyright Royalty Judges commenced proceedings to

determine the rates and terms for royalty payments under the webcasting statutory

license for the period beginning January 1, 2011 and ending December 31, 2015. See

76 Fed. Reg. 13026, 13026 (March 9, 2011) (JA 1). The Judges received petitions

to participate from 40 parties, most of whom were webcasters. Id. During the

subsequent period of voluntary negotiations, many of the parties reached settlement

agreements, and only four parties ultimately participated in the proceedings: appellant

IBS, on behalf of its members, who are all noncommercial educational webcasters;

intervenor College Broadcasters, Inc. (“CBI”), on behalf of its members, also

noncommercial educational webcasters; Live365, Inc., a commercial webcaster; and

8


intervenor SoundExchange, Inc., a non-profit corporation run by artists and

performers and designated to act as the default clearinghouse for receiving and

processing royalties paid under the statutory webcasting license. See generally id.;

72 Fed. Reg. 24084, 24105 (May 1, 2007).

With respect to noncommercial educational webcasting, CBI and

SoundExchange urged the Judges to adopt the royalty rates and terms set forth in a

settlement agreement that CBI and SoundExchange had already entered with one

another. 76 Fed. Reg. at 13038-39 (JA 13-14). IBS objected to the adoption of the

CBI-SoundExchange agreement, asserting that the rates and terms were unreasonable

with respect to “small” and “very small” noncommercial webcasters. Id. at 13039 (JA

14).

Following the submission of written statements, discovery, and testimony by

the parties, the Judges decided to adopt the royalty fee and rate structure set forth in

the CBI-SoundExchange agreement. In a thorough and detailed opinion, the Judges

explained that the rates and terms in the agreement were “demonstrably affordable to

noncommercial webcasters” and “best represent[]” what “would be paid in the willing

buyer/willing seller hypothetical marketplace for noncommercial webcasting.” Id.

at 13042 (JA 17). The Judges noted that 24 noncommercial webcasters submitted

comments in support of adopting the rates and terms in the CBI-SoundExchange

9


agreement, and that only IBS objected. Id. at 13039, 13042 (JA 14, 17). With respect

to IBS’s position, the Judges explained that IBS had failed to present “one iota of

evidence” supporting its proposal for different rates and terms for “small” and “very

small” noncommercial webcasters. Id. at 13041 (JA 16). Moreover, the Judges

observed, IBS had not even attempted to demonstrate that its alternative rate proposal

satisfied the statutory requirement that the royalty rates reflect what “would be

negotiated in the marketplace between a willing buyer and a willing seller.” Id.; see

also 17 U.S.C. § 114(f)(2).

The Judges also adopted separate royalty rates and terms for commercial

webcasting. See 76 Fed. Reg. at 13027-38. (JA 2-13). Although Live365 initially

filed an appeal with regard to that portion of the determination, it later withdrew from

this litigation. Accordingly, the commercial webcasting royalty rates and terms are

not before this Court.

SUMMARY OF ARGUMENT

IBS has not identified any basis for reversing or vacating the noncommercial

webcasting royalty rates and terms established by the determination below. IBS

asserts that the determination violates section 114(f)(2)’s requirement that the rates

and terms distinguish among services, see 17 U.S.C. § 114(f)(2), but fails to provide

any argument or explanation regarding how or why the determination runs afoul of

10


this requirement. IBS’s conclusory and unsupported assertion falls far short of

presenting a serious challenge to the merits of the Judges’ determination.

IBS’s constitutional challenges also fail. IBS contends that section 803(d)(3)

of the Copyright Act violates Article III by empowering this Court to “enter its own

determination” if it concludes that the Copyright Royalty Judges’ determination is

unlawful under the standard of review set forth in section 706 of the Administrative

Procedure Act. 17 U.S.C. § 803(d)(3). As an initial matter, this Court may dismiss

the argument because IBS has not presented a case or controversy implicating the

validity of the provision it seeks to challenge. But even if IBS were permitted to

mount a facial challenge to section 803(d)(3), IBS does not identify any way in which

the provision offends Article III, let alone satisfy its burden of demonstrating that no

set of circumstances exists under which the Court could permissibly enter its own

determination. And even if Article III did wholly prohibit this Court from entering

a determination under section 803(d)(3), the proper response would not be, as IBS

asserts, to strike down the entire statutory scheme for determining royalty rates, but

rather to excise the offending portion of the provision, leaving the determination

below and the rest of the Copyright Act intact.

IBS also contends that Congress exceeded its power under the Appointments

Clause by vesting the right to appoint the Copyright Royalty Judges in the Librarian

11


of Congress. IBS misunderstands the applicable law and confuses statutory labels

with constitutional authority. Although the Judges are “officers” under the

Appointments Clause because they exercise “significant authority pursuant to the

laws of the United States,” Buckley v. Valeo, 424 U.S. 1, 126 (1976), they are

subordinate to the Librarian of Congress, a principal officer of the United States

appointed by the President with advice and consent of the Senate. 2 U.S.C. § 136.

The Judges thus fall within the category of “inferior” officers for whom Congress

may vest appointment “in the President alone, in the Courts of Law, or in the Heads

of Departments.” U.S. Const., art. II, § 2, cl. 2; Edmond v. United States, 520 U.S.

651, 663 (1997).

In arguing that the Librarian is not the head of a “Department,” IBS overlooks

the Supreme Court’s recent decision in Free Enterprise Fund, et al. v. Public

Company Accounting Oversight Board, et al., 130 S. Ct. 3138, 3163 (2010), which

definitively holds that the term “Department” in the Appointments Clause is not

limited to Cabinet agencies. Moreover, although the Library is regarded as a

legislative entity for various statutory purposes, the relevant history of the Library

establishes its status as a “Department” within the meaning of the Appointments

Clause. The Librarian is, and always has been, accountable to the President by virtue

of the President’s power of appointment and removal, and accordingly qualifies as the

12


“Head” of a “Department” with authority to appoint inferior officers within the

Library of Congress, including the Copyright Royalty Judges.

STANDARD OF REVIEW

Congress specified that the Copyright Royalty Judges’ determinations shall be

reviewed under the standard set forth in section 706 of the Administrative Procedure

Act (“APA”). See 17 U.S.C. § 803(d)(3). Accordingly, this Court will affirm the

Judges’ determination as long as the Judges have “examine[d] the relevant data and

articulate[d] a satisfactory explanation for [their] action including a rational

connection between the facts found and the choice made.” Wisconsin Public Power,

Inc. v. FERC, 493 F.3d 239, 256 (D.C. Cir. 2007) (internal quotation omitted).

ARGUMENT

I. IBS’s Attack On The Merits Of The Royalty Rate Determination Is Baseless.

IBS’s sole challenge to the merits of the royalty rate determination consists of

three sentences which assert that the determination violates section 114(f)(2)’s

requirement that the rates and terms distinguish among “the different types of eligible

non-subscription services” and “the different types of non-subscription transmission

services.” 17 U.S.C. §§ 114(f)(2)(A) & (B); Appellant’s Br. 17-18. The brief does

not provide any argument regarding how or why the royalty rate determination runs

afoul of section 114(f)(2), and as such, falls far short of presenting this Court with a

13


serious claim that the rate determination is inconsistent with any of the Judges’

obligations under the Copyright Act.

Although this Court need not and should not go any further in considering

IBS’s merits challenge, the government notes that IBS may be attempting to revive

its argument during the administrative proceedings that the Judges should adopt

separate royalty rates for two purported subgroups of noncommercial webcasters:

“small” and “very small.” See 76 Fed. Reg. 13026, 13040 (March 9, 2011). The

Judges thoroughly explained in their final determination, however, that IBS failed to

provide “one iota of evidence” to support its proposal, which amounted to “nothing

more than . . . two arbitrary subcategories of noncommercial webcaster, separated by

unsupported amounts of monthly aggregated tuning hours, in an effort to obtain lower

royalty rates for its members.” Id. at 13041; see also id. at 13038-42 (describing in

detail the many flaws with IBS’s arguments and proposed rates). IBS does not and

cannot point to any basis for vacating the Judges’ decision to reject IBS’s

unsupported attempt to create new subcategories of noncommercial webcasters.

II. This Court Has Jurisdiction To Review Challenges To The CopyrightRoyalty Judges’ Rate Determinations.

IBS additionally argues that the determination below is void because section

803(d) of the Copyright Act provides that this Court may, if it concludes that the

Copyright Royalty Judges’ determination is unlawful under the standard of review set

14


forth in the APA, 5 U.S.C. § 706, either vacate the determination and remand to the

Judges for further proceedings, or instead “enter its own determination with respect

to the amount or distribution of royalty fees and costs.” 17 U.S.C. § 803(d)(3).

According to IBS, this Court does not have authority under Article III to “enter its

own determination,” and thus must strike down the entire scheme for determining

royalty rates under the Act. Appellant’s Br. 9-12.

This argument fails for several reasons. First, because IBS has not seriously

attempted to challenge the merits of the determination, this case does not actually

provide this Court with an occasion to vacate the Judges’ decision and enter its own

determination. In this sense, it is IBS that asks the Court to engage in decision-

making outside the scope of its Article III authority: IBS has not presented a case or

controversy implicating the validity of the provision it seeks to challenge.

Moreover, even if Article III permitted IBS to mount a facial challenge to

section 803(d)(3), IBS has not demonstrated that the provision is unconstitutional.

Section 803(d)(3) expressly incorporates the longstanding and wholly uncontroversial

standard of judicial review articulated in the APA, 5 U.S.C. § 706. It additionally

provides that if, after applying the APA’s standard of review, this Court concludes

that the Copyright Royalty Judges’ determination should be modified or vacated, this

Court may either remand for further proceedings, or alternatively “enter its own

15


determination with respect to the amount or distribution of royalty fees and costs.”

17 U.S.C. § 803(d)(3).

IBS asserts that this last portion of the provision is unconstitutional, but fails

to identify any way in which a judicial determination of this kind would offend

Article III. Moreover, in order to bring a successful facial challenge, IBS would have

to “establish that no set of circumstances exists under which” this Court could enter

its own royalty rate determination in a manner consistent with Article III. United

States v. Salerno, 481 U.S. 739, 745 (1987) (emphasis added); see also, e.g., Reno v.

Flores, 507 U.S. 292, 301 (1993); Rancho Viejo, LLC v. Norton, 323 F.3d 1062,

1077-78, 1078 n.21 (D.C. Cir. 2003). IBS has not even attempted to satisfy that

burden, nor could it. Congress frequently empowers courts to amend or modify

agency decisions rather than remanding them, and the government is not aware of any

judicial decisions expressing Article III concerns about exercising this sort of

authority. See, e.g., 35 U.S.C. § 203(b); 38 U.S.C. § 7252(a); 42 U.S.C. § 405(g); 49

U.S.C. § 1153(b)(3); 49 U.S.C. § 46110(c).

IBS’s challenge rests entirely on an 80-year-old case, Federal Radio

Commission v. General Electric Co., 281 U.S. 464 (1930) (“Federal Radio I”), in

which the Supreme Court held that it lacked jurisdiction to review a decision by the

Court of Appeals of the District of Columbia because that court was a “legislative

16


court” created pursuant to Article I and had entered the challenged decision in its

administrative, rather than judicial, capacity. See id. at 467-68. IBS’s argument

appears to be that section 803(d)(3) is unconstitutional because it confers

responsibilities on this Court that are akin to the administrative review exercised by

the Court of Appeals of the District of Columbia in issuing the determination

challenged in Federal Radio I. Appellant’s Br. 11. The Radio Act provided at the

time that the Federal Radio Commission’s licensing decision could be appealed to the

Court of Appeals of the District of Columbia, which would not only review “all

papers and evidence presented upon the [licensing] application,” but could also “take

additional evidence upon such terms and conditions as it may deem proper,” and then

“alter or revise the decision appealed from and enter such judgment as to it may seem

just.” Federal Radio I, 281 U.S. at 467. In other words, the Court of Appeals’ review

was de novo in every respect — the provision for appeal did “no more than make

[the] court a superior and revising agency in the same field.” Id.

Section 803(d)(3) is not comparable in any meaningful sense. Section

803(d)(3) authorizes this Court to enter its own determination only after finding the

Copyright Royalty Judges’ determination to be unlawful pursuant to the highly

deferential standard of review set forth in the APA. Unless the Judges’ decision is,

for example, arbitrary and capricious, or unsupported by substantial evidence, this

17


Court will affirm their judgment. See 5 U.S.C. § 706; see also SoundExchange, Inc.

v. Librarian of Congress, 571 F.3d 1220, 1225 (D.C. Cir. 2009) (observing that the

Court “owe[s] substantial deference” to the decisions of the Copyright Royalty

Judges). This is the same standard of judicial review that the Supreme Court

subsequently upheld in Federal Radio Commission v. Nelson Bros. Bond &

Mortgage, Co., 289 U.S. 266 (1933) (“Federal Radio II”). Following Federal Radio

I, Congress amended the Radio Act so as to limit the Court of Appeals’ review to

“questions of law,” providing that “findings of fact by the commission, if supported

by substantial evidence, shall be conclusive unless it shall clearly appear that the

findings of the commission are arbitrary or capricious.” Id. at 275-76. Relying on

Federal Radio I, the respondents in Federal Radio II argued that the Supreme Court

lacked jurisdiction to review the Court of Appeals’ decision reversing the challenged

Federal Radio Commission determination. The Supreme Court rejected that

argument, explaining that “in sharp contrast with the previous grant of authority,” the

amended standard of review “manifestly demand[ed] judicial, as distinguished from

administrative, review.” Id. at 276.

Section 803(d)(3) is also distinguishable from the judicial review provision in

Federal Radio I because, if this Court were to decide to enter its own determination

regarding royalty rates in a particular case, it would do so based on the record

18


amassed by the Copyright Royalty Judges. Nothing in section 803(d)(3) suggests that

this Court should or could “take additional evidence,” Federal Radio I, 281 U.S. at

467, or engage in any other inquiries resembling administrative proceedings.2

In short, IBS has failed to provide any basis for questioning the

constitutionality of the standard for judicial review set forth in section 803(d)(3). But

even assuming for argument’s sake that Article III prohibits this Court from entering

its own determination pursuant to section 803(d)(3), the offending sentence in the

statute would not require this Court to strike down the entire scheme established by

Congress for determining royalty rates under the Copyright Act. The Supreme Court

has observed that, “[g]enerally speaking, when confronting a constitutional flaw in

a statute, we try to limit the solution to the problem, severing any problematic

portions while leaving the remainder intact.” Free Enterprise Fund, et al. v. Public

Co. Accounting Oversight Board, et al., 130 S. Ct. 3138, 3161 (2010) (internal

quotation omitted). Likewise, this Court has recognized that “in order to avoid

invalidating more of a statute than necessary, we are to start with a presumption in

Although, as explained, Federal Radio I is easily distinguishable from the2

present case, we note that commentators have questioned Federal Radio I’sprecedential value following the Supreme Court’s decision in United States v. FirstCity National Bank of Houston, et al., 386 U.S. 361 (1967), which upheld a 1966statute providing for de novo judicial review of administrative decisions to permitcertain bank mergers. See 20 Charles Alan Wright & Mary Kay Kane, FederalPractice and Procedure § 16 (2009) (“After this decision, it is hard to see whatvitality, if any, is left in the first Federal Radio Commission case.”).

19


favor of severability.” Bismullah v. Gates, 551 F.3d 1068, 1071 (D.C. Cir. 2009)

(internal quotation and alteration omitted). Accordingly, “[u]nless it is evident that

the legislature would not have enacted those provisions which are within its power,

independently of that which is not, the invalid part may be dropped if what is left is

fully operative as a law.” Buckley v. Valeo, 424 U.S. 1, 108 (1976) (internal

quotation omitted); see also, e.g., United States v. Booker, 543 U.S. 220, 246 (2005);

Alaska Airlines, Inc. v. Brock, 480 U.S. 678, 685 (1987).

IBS cannot dispute that the Copyright Act would be fully operative as a law

even if this Court were to excise the portion of section 803(d)(3) empowering it to

enter its own rate determination. This Court would still have authority to fully review

the Copyright Royalty Judges’ determinations in accordance with section 803(d)(3)’s

incorporation of the standard of review set forth in the APA. And this Court would

still have authority to affirm, reverse, or vacate the Judges’ determination, and to

remand the case to the Judges for further proceedings consistent with the Court’s

holdings. IBS has failed to point to any evidence that Congress would have declined

to enact the Copyright Act’s entire scheme for determining royalty rates if it lacked

authority to empower this Court to enter its own determination rather than reversing

or remanding for further proceedings. Accordingly, the determination below is valid

regardless of IBS’s Article III challenge to section 803(d)(3).

20


III. Congress Constitutionally Vested The Power To Appoint The CopyrightRoyalty Judges In The Librarian Of Congress.

The Appointments Clause provides that the President “shall nominate, and by

and with the Advice and Consent of the Senate, shall appoint . . . Officers of the

United States.” U.S. Const., art. II, § 2, cl. 2. Congress may, however, “vest the

Appointment of such inferior Officers, as they think proper, in the President alone,

in the Courts of Law, or in the Heads of Departments.” Id. IBS cannot demonstrate

that Congress exceeded its power under this provision by vesting the right to appoint

the Copyright Royalty Judges in the Librarian of Congress. The Copyright Royalty

Judges are inferior officers who are constitutionally appointed by the “Head” of a

“Department.”

A. The Copyright Royalty Judges Are Inferior Officers Under The Appointments Clause.

Not all federal appointees are “Officers of the United States” in the

constitutional sense, but those who are must be appointed in conformance with the

Appointments Clause. See U.S. Const., art. II, § 2, cl. 2; Buckley v. Valeo, 424 U.S.

1, 125-26 (1976) (per curiam). An “officer” is a federal official who exercises

“significant authority pursuant to the laws of the United States.” Buckley, 424 U.S.

at 126. The Appointments Clause divides all “officers ” into two categories: principal

officers and inferior officers. See U.S. Const., art. II, § 2, cl. 2; United States v.

21


Germaine, 99 U.S. 508, 509-10 (1878). Principal officers must be appointed through

nomination by the President with the advice and consent of the Senate. U.S. Const.,

art. II, § 2, cl. 2; Buckley, 424 U.S. at 132. Congress is permitted, however, to make

inferior officers appointable by the President alone, the Courts of Law, or Heads of

Departments. U.S. Const., art. II, § 2, cl. 2; Buckley, 424 U.S. at 132. Although IBS

asserts that the Copyright Royalty Judges are principal officers, the precedent of the

Supreme Court and this Court establish that the Copyright Royalty Judges are inferior

officers.

Both principal and inferior officers “exercise . . . significant authority” on

behalf of the United States. Edmond v. United States, 520 U.S. 651, 662 (1997).

Although there is no “exclusive criterion” for distinguishing between the two,

“[g]enerally speaking, the term ‘inferior officer’ connotes a relationship with some

higher ranking officer or officers below the President: Whether one is an ‘inferior’

officer depends on whether he has a superior.” Id. The Supreme Court has

accordingly explained that an inferior officer is an officer “whose work is directed

and supervised at some level by others who were appointed by Presidential

nomination with the advice and consent of the Senate.” Id. at 663.

This analysis easily encompasses the Copyright Royalty Judges. The Judges

are limited to six-year terms,17 U.S.C. § 802(c), during which they are subordinate

22


to the Librarian of Congress, a principal officer of the United States appointed by the

President with the advice and consent of the Senate, 2 U.S.C. § 136. The Judges’3

authority is limited to matters relating to the establishment of royalty rates for a small

number of compulsory licenses enumerated in the Copyright Act. See 17 U.S.C. §

801(b). The Judges are expressly required to “act in accordance with regulations

issued by . . . the Librarian of Congress.” Id. § 803(a)(1). Any procedural regulations

issued by the Judges themselves, including rules governing royalty ratemaking

proceedings, must be approved by the Librarian. Id. § 803(b)(6). The Librarian is

authorized to promulgate binding ethical rules and to enforce those rules against the

Judges. Id. §§ 802(h), (i). The Librarian also causes the Judges’ decisions to be

published. Id. § 803(c)(6). The Judges lack space or administrative resources, and

are wholly reliant on the Librarian for support. Id. §§ 801(d), (e). And if the Judges

find themselves idle between ratemaking proceedings, they may be assigned other

Prior to Congress’s establishment of the Copyright Royalty Judges in 2004,3

royalty rates for statutory licenses were set by the now-defunct Copyright RoyaltyTribunal. See generally 70 Fed. Reg. 30901 (May 31, 2005). Because the Tribunalwas a free-standing agency, not contained within any executive department and notsupervised by any executive officer, Congress provided that the Tribunal’s membersbe appointed by the President with the advice and consent of the Senate. Congresscould have established the Copyright Royalty Judges on the same model, but insteadopted to make the Judges inferior officers appointed by the Librarian, the “Head” ofthe Library, who in turn is subject to plenary oversight by the President. TheConstitution permits Congress to choose either of these routes in complying with theAppointments Clause.

23


duties at the discretion of the Register of Copyrights, who likewise acts under the

direction of the Librarian. Id. § 801(b)(8); id. § 701(a).

Through the Register, the Librarian also has authority to review and correct the

legal determinations of the Copyright Royalty Judges. In creating the Judges,

Congress reserved to the Register — who acts under the Librarian’s general direction

and supervision — the authority to interpret the copyright laws. The Copyright Act

accordingly directs the Judges to obtain a written opinion from the Register on all

“novel material questions” of copyright law, and stipulates that the Judges “shall

apply” the Register’s conclusions in their ratemaking determinations Id. §

802(f)(1)(B). Moreover, the Register has the power to “review for legal error” all

determinations by the Copyright Royalty Judges and to “correct[]” any such errors in

the Judges’ reasoning or conclusions. Id. § 802(f)(1)(D). Such “correct[ions]” are

not only expressly made part of the record in the cases in which they arise, but are

also “binding as precedent” on the Judges in future cases. Id. Thus, the Copyright

Royalty Judges “are officers whose work is directed and supervised at some level by

others who were appointed by Presidential nomination with the advice and consent

of the Senate.” Edmond, 520 U.S. at 663.

Finally, the Librarian enjoys the authority to remove the Copyright Royalty

Judges for misconduct or neglect of duty. 17 U.S.C. § 802(i). The Supreme Court

24


has held that “[t]he power to remove officers . . . is a powerful tool for control,”

Edmond, 520 U.S. at 664, and indicated that officers are inferior even if they may be

removed only for cause, see Morrison v. Olson, 487 U.S. 654, 663, 671 (1988)

(“[T]he fact that [the officer] can be removed by the Attorney General indicates that

she is to some degree ‘inferior’ in rank and authority.”); see also Free Enterprise

Fund, et al. v. Public Co. Accounting Oversight Board, et al., 130 S. Ct. 3138, 3153

(2010) (discussing Morrison with approval).4

Indeed, the Copyright Royalty Judges’s status as inferior officers was recently

affirmed by the United States District Court for the District of Columbia. See

Live365, Inc. v. Copyright Royalty Board, 698 F. Supp. 2d 25 (D.D.C. 2010). The

plaintiff, Live365, sought to enjoin the proceedings below here on the ground that the

Copyright Royalty Judges were appointed in violation of the Appointments Clause.

Denying Live365’s motion for a preliminary injunction, the district court concluded:

“Upon careful examination . . . it appears that the CR Board judges are in fact

sufficiently subordinate to both the Librarian of Congress and the Register of

In Free Enterprise Fund, the Court struck down a statutory scheme that4

provided two layers of tenure protection: the inferior officer could be removed by theprincipal officer only for cause, and the principal officer could be removed by thePresident only for cause. 130 S. Ct. 3153-54. Because the Librarian may be removedat will by the President, see infra pp. 30-33, the statutory scheme at issue here fallssquarely under Morrison, which upheld “one level of protected tenure separat[ing]the President from an officer exercising executive power.” Id. at 3153.

25


Copyrights to qualify as inferior officers, and thus, their appointments by the

Librarian do not offend the Appointments Clause.” Id. at 39.

IBS nonetheless asserts that the Judges are principal officers “[b]ecause their

statutory duties include, but are not limited to, presiding over hearings, commanding

testimony, [and] compelling discovery . . . without supervision of the Librarian.”

Appellant’s Br. 14. This argument fails for several reasons. First, this Court has held

that not everyone who “take[s] testimony, conduct[s] trials, rule[s] on the

admissibility of evidence, and ha[s] the power to enforce compliance with discovery

orders” is even an “officer” within the meaning of the Appointments Clause, let alone

a principal officer. Landry v. Fed. Deposit Ins. Corp., 204 F.3d 1125, 1134 (D.C.

Cir. 2000) (internal quotation omitted). At least some Administrative Law Judges

(“ALJs”), for example, are “employees,” not “officers.” Id. Although the Copyright

Royalty Judges, unlike the ALJs in Landry, issue decisions that are final, this was

equally true of the special tax trial judges whom the Supreme Court determined to be

inferior officers in Freytag v. Commissioner of Internal Revenue, 501 U.S. 868, 881-

82 (1991).

Second, IBS misunderstands what it means to be “under supervision” for the

purpose of determining whether a federal appointee is an inferior officer. Although

the Copyright Royalty Judges enjoy independence in the conduct of their

26


proceedings, they expressly remain “[s]ubject to” the Register’s interpretation of

applicable law. See 17 U.S.C. § 802(f)(1)(A)(I). The Register’s power to “review”

and “correct[]” any legal errors in the Judges’ determinations, id. § 802(f)(1)(D),

along with the host of other restrictions described above, see supra pp. 22-25, more

than satisfy the requirement that the Judges’ work be “directed and supervised at

some level.” Edmond, 520 U.S. at 663.

Indeed, the Supreme Court has flatly rejected the notion that inferior officers

must be subject to interference with their procedural and factual determinations in

particular cases. In Edmond, for example, the Court held that civilian judges

appointed to the Coast Guard Court of Appeals by the Secretary of Transportation

were inferior officers, despite the fact that they (i) cannot be directed to decide

particular cases in particular ways in the first instance, (ii) cannot be removed based

on their rulings in individual cases, and (iii) enjoy highly deferential review from the

Court of Appeals for the Armed Forces. See id. at 664-65. Indeed, the civilian Coast

Guard judges not only weigh evidence and make findings of law and fact, including

credibility determinations, but also wield other, more significant powers, including

review of “court-martial proceedings that result in the most serious sentences,

including . . . death, dismissal . . ., dishonorable or bad-conduct discharge, or

confinement for one year or more.” Id. at 662 (internal quotation omitted). The

27


Copyright Royalty Judges’ authority to set royalty payment rates for statutory licenses

cannot possibly be more “principal” than the authority of Coast Guard judges to

review death sentences.

Likewise, the Supreme Court concluded that the independent counsel in

Morrison were inferior officers even though they enjoyed “full power and

independent authority to exercise all investigative and prosecutorial functions and

powers of the Department of Justice, the Attorney General, and any other officer or

employee of the Department of Justice,” 487 U.S. at 662, 671-72 (internal quotation

omitted). So, too, did the Court conclude that the special tax trial judges in Freytag

were inferior officers despite issuing final decisions and “exercis[ing] independent

authority.” 501 U.S. at 882; see also Live365, 698 F. Supp. 2d at 39-40 (observing

that “[i]n both Edmond and Freytag, the judges were held to be inferior officers

despite the fact that their duties included taking testimony, ruling on the admissibility

of evidence, issuing protective orders, and issuing subpoenas, and the CR Board

judges exercise many of those same responsibilities.”). The district court in Live365

thus correctly concluded that “the guiding precedent of the Supreme Court seemingly

requires the conclusion that despite the level of autonomy the CR Board judges

exercise, the degree of direction and supervision exercised over them by the Librarian

28


and the Register renders them inferior rather than principal officers.” Live365, 698

F. Supp. 2d at 40.

B. The Librarian Of Congress Is The Head Of A Department WithinThe Meaning Of The Appointments Clause.

IBS argues in the alternative that the Copyright Royalty Judges are inferior

officers but that their appointment by the Librarian of Congress is unconstitutional

because the Librarian is not a “Head[] of Department” in whom Congress may vest

appointment authority. Appellant’s Br. 15-17. This argument is also wrong.

For the purposes of the Appointments Clause, a “Department” is any principal

agency “in the Executive Branch or at least [with] some connection [to] that branch.”

Buckley, 424 U.S. at 127; see also Free Enterprise Fund, 130 S. Ct. at 3162-63. The

Library of Congress readily qualifies as a “Department” under this standard. The

President’s power to appoint and remove the Librarian reflects Congress’s purposeful

and explicit decision to place the Library within the Executive Branch for

Appointments Clause purposes. The Library’s executive nature in this respect is

further confirmed by many of the functions it performs, including the particular

function at issue in this case — the administration of copyright law. While certain

components of the Library, particularly the Congressional Research Service, are

directly charged with serving Congress, it is neither unusual nor constitutionally

problematic for a Department under the Appointments Clause to include components

29


charged with providing assistance to other branches. For the purposes of

constitutional separation of powers, all that matters is that the Head of the Library is

accountable to the President and is appointed in conformity with the Appointments

Clause.

1. The Librarian Of Congress Is Accountable To The President.

The Librarian of Congress is “appointed by the President, by and with the

advice and consent of the Senate.” 2 U.S.C. § 136. No statute limits the President’s

oversight of the Librarian, nor has Congress reserved to itself the power to review or

influence the Librarian’s conduct in office. Cf. Bowsher v. Synar, 478 U.S. 714, 730-

31 (1986) (holding that the Comptroller General is a congressional agent because

Congress retained removal authority). The Librarian “make[s] rules and regulations

for the government of the Library,” 2 U.S.C. § 136, and in discharging that

responsibility, he is accountable to the President alone.

An incident of the President’s appointment power is that there are no

limitations on the President’s power to remove the Librarian. See Ex parte Hennen,

38 U.S. (13 Pet.) 230, 259 (1839); Kalaris v. Donovan, 697 F.2d 376, 389 (D.C. Cir.

1983). It has long been recognized that the Librarian is removable by the President

at will. See, e.g., 29 Cong. Rec. 378 (1896) (Rep. Bingham) (“President Cleveland

to-day can by a mere stroke of his pen change or remove the Librarian of Congress

30


for any cause or reason good to himself, or for a more efficient administration of the

Library.”). President Jackson in fact removed the Librarian of Congress after the

Librarian publicly criticized President Jackson and his family. Id. In turn, President

Lincoln later removed the Librarian whom Jackson had appointed and replaced him

with a Republican. See About the Librarian, Previous Librarians of Congress, John

Silva Meehan, http://www.loc.gov/about/librarianoffice/meehan.html (last visited

Nov. 2, 2011).

Indeed, the President’s power to appoint and remove the Librarian of Congress

is as venerable as the Library of Congress itself. The first Librarian was appointed

by President Thomas Jefferson in 1802. See Act of January 26, 1802, 2 Stat. 128.

The 1802 Act called for “a librarian to be appointed by the President of the United

States solely, [to] take charge of the said library.” Id. § 3, 2 Stat. 129. After Congress

assigned to the Librarian responsibility for the administration of the federal copyright

laws, see Copyright Act of 1870, § 85, 16 Stat. 212, Congress enacted additional

legislation requiring Senate confirmation of the Librarian’s appointment. See Act of

February 19, 1897, 29 Stat. 544. The historical record makes clear that Congress

crafted the 1897 legislation specifically to satisfy the requirements of the

Constitution. Members of Congress debated the constitutional status of the Library,

including explicit consideration of the Appointments Clause. See, e.g., 29 Cong. Rec.

31


http://www.loc.gov/about/librarianoffice/meehan.html

315 (1896) (Rep. Quigg); id. at 319 (Rep. Dockery); id. at 386 (Rep. Cannon). Some

proposed that the Library should be under the control of Congress, with its employees

appointed by congressional committees. See, e.g., id. at 385 (Rep. Cummings).

Others insisted that “with respect to an office of this kind,” Congress “should not

depart from the constitutional provision that the President shall nominate and by and

with the advice and consent of the Senate appoint.” Id. at 389 (Rep. Richardson).

The latter view prevailed. Congress expressly acknowledged in the 1897 Act

the Librarian’s executive functions, see 29 Stat. 545 (appropriating funds for

activities “under the direction of the Librarian of Congress, necessary for the

execution of the copyright law”), and accordingly directed that the Librarian shall “be

appointed by the President, by and with the advice and consent of the Senate,” 29

Stat. 544. The implications of this decision were not lost on Congress. One opponent

of the 1897 legislation warned: “By this bill, when enacted into law, Congress forever

puts it out of their power to control the Library. It now loses its name and function

as a Congressional Library, and becomes a national or Presidential Library, beyond

the control of Congress, except by the President’s consent.” 29 Cong. Rec. 977

(1897) (Sen. Call).

The 1897 statute, now codified at 2 U.S.C. § 136, reflects Congress’s

recognition that the Library is not, for purposes of the Appointments Clause, an organ

32


of Congress itself. Rather, it is an executive Department led by a principal officer

who “exercis[es] significant authority pursuant to the laws of the United States,”

Buckley, 424 U.S. at 126, and must therefore be appointed in conformity with the

Appointments Clause.

2. The Library Of Congress Is A “Department” Within The Meaning OfThe Appointments Clause.

Congress’s deliberate choice to vest the appointment of the Librarian in the

President, subject to confirmation by the Senate, leaves little doubt as to the status of

the Library as a Department under the Appointments Clause. At the time of the

framing, the term “department” referred to a “‘separate allotment or part of business;

a distinct province, in which a class of duties are allotted to a particular person.’”

Free Enterprise Fund, 130 S. Ct. at 3162-63 (quoting 1 N. Webster, American

Dictionary of the English Language (1828) (def. 2) (1995 facsimile ed.)). As used

in the Appointments Clause, the term “has reference to the subdivision of the power

of the Executive into departments, for the more convenient exercise of that power.”

Germaine, 99 U.S. at 510; see Buckley, 424 U.S. at 127 (“Departments” in the

Appointments Clause “are themselves in the Executive Branch or at least have some

connection with that branch”).

The Library possesses all of the features characteristic of recognized

“Departments” under the Appointments Clause. It is a free-standing entity, not

33


contained within any other administrative agency. It indisputably performs executive

functions, including in particular the administration of the copyright laws — and has

been accorded deference from the courts for its interpretations of those laws. See,

e.g., Mazer v. Stein, 347 U.S. 201, 211-13 (1954); Cablevision Systems Dev. Co. v.

Motion Picture Ass’n of America, Inc., 836 F.2d 599, 608-10 (D.C. Cir. 1988)

(Copyright Office regulations are entitled to Chevron deference); cf. Buckley, 424

U.S. at 139 (“Legislative power, as distinguished from executive power, is the

authority to make laws, but not to enforce them or appoint the agents charged with

the duty of such enforcement.” (internal quotation omitted)). And most importantly,

the Library is headed by a principal “Officer[] of the United States” who is appointed

by the President and removable at his will. The Library accordingly is “subject to the

exercise of political oversight and share[s] the President’s accountability to the

people.” Freytag, 501 U.S. at 886.

In urging that the Library is nonetheless not a “Department,” IBS cites the

Supreme Court’s decision in Freytag. Appellant’s Br. 16. But neither Freytag’s

holding nor its reasoning support IBS’s contention. The Freytag Court refused to

hold that the term “department” is limited to the Cabinet agencies, and it expressly

reserved the question whether the heads of non-Cabinet “principal agencies” may

appoint inferior officers. 501 U.S. at 886-87 & n.4. Moreover, the Court has now

34


definitively answered that question in the affirmative, holding in Free Enterprise

Fund that although the Securities Exchange Commission is not a Cabinet agency, it

constitutes a Department for the purposes of the Appointments Clause. See 130 S.

Ct. at 3162-63. The Court explained that this reading of the Appointments Clause is

consistent with the historical definition of “department,” and with Congress’s early

practice of authorizing the Postmaster General to appoint inferior officers “without

the title of Secretary or any role in the President’s Cabinet.” Id. at 3163.

Free Enterprise Fund specifically endorses the reasoning in Justice Scalia’s

Freytag concurrence, which explained that it would be a “most implausible

disposition” to hold that a non-Cabinet principal agency is not a “Department” under

the Appointments Clause. Freytag, 501 U.S. at 919-20 (Scalia, J., concurring in part

and concurring in judgment); Free Enterprise Fund, 130 S. Ct. at 3162. Under such

a regime, the Librarian would lack the authority to appoint not only the Copyright

Royalty Judges, but any inferior officers within the Library. These officers would

instead have to be appointed “by the President, the courts of law, or the ‘Secretary of

Something Else.’” Freytag, 501 U.S. at 919-20. Such a result would make little

sense, and the Constitution does not require it.

Moreover, the congressional sponsors of the 1897 legislation certainly believed

the Library to be a “department” under the Constitution. One member specifically

35


argued: “This Library of Congress is a department of the Government. It is an

executive department and should be under the control of the executive branch. . . . [It]

is an executive bureau, and as such should be presided over by some executive officer

with authority to appoint and remove its employees.” 29 Cong. Rec. 318-19 (1896)

(Rep. Dockery). Another member urged rejection of a proposal for Congress to take

control of the Library, explaining: “[W]e have various Departments of the

Government. The Presidents and the heads of these Departments make appointments

of subordinates. Their action is reported to Congress. We haul them up, ‘drag them

over the coals,’ if they fail to perform their duty. We have the powers of

impeachment; we criticize and investigate. And that is as it ought to be.” Id. at 386

(Rep. Cannon).

The Fourth Circuit thus correctly held, in the only appellate decision to address

the constitutional status of the Library of Congress, that Congress did not violate the

Appointments Clause by vesting the Librarian with the power to appoint the Register

of Copyrights. See Eltra Corp. v. Ringer, 579 F.2d 294, 298-301 (4th Cir. 1978). In

a unanimous decision, the court of appeals concluded that the Librarian’s

appointment of the Register satisfies the Constitution because “the Copyright Office

is an executive office, operating under the direction of an Officer of the United States

and as such is operating in conformity with the Appointments Clause.” Id. The same

36


is true of the Copyright Royalty Judges. See Live365, 698 F. Supp. 2d at 43

(concluding that the Librarian “qualif[ies] as a Head of Department with executive

authority to appoint inferior officers” such as the Copyright Royalty Judges).

3. IBS Mistakes Statutory Labels For Constitutional Authority.

The gravamen of IBS’s argument is that, because this Court has described the

Library of Congress as “a Congressional agency,” “the Librarian cannot be head of

an executive department as that term is used in Article II . . . and the Librarian’s

actions are not those of a head of department subject to Presidential control.”

Appellant’s Br. 16-17 (internal quotation omitted).

That contention is self-evidently false. It is the President, not Congress or any

congressional agent, who appoints the Librarian, and the President may remove him

at will. 2 U.S.C. § 136. IBS cannot reconcile its argument with this provision, nor

with the two-hundred-year history of the Librarian’s accountability to the President,

which clearly demonstrates that Congress specifically structured the Library of

Congress to be an executive Department within the meaning of the Appointments

Clause.

IBS’s mistaken analysis appears to look in part to the Library’s name, which

dates back to its original purpose of holding Congress’s books. See Act of January

26, 1802, § 1, 2 Stat. 128-29. Even in that first Act, however, Congress provided for

37


appointment of the Librarian by the President, and authorized the President and Vice

President to borrow books. Id. §§ 3, 4, 2 Stat. 129. President Jefferson actively

supervised the first Librarian, John Beckley, providing a catalogue of needed books

that formed the basis of the Library’s purchasing program over its first four years.

See William Dawson Johnston, 1 History of the Library of Congress:1800-1864 36-

37 (1904). President Jefferson’s purchasing instructions were direct and detailed:

“[N]eat bindings, not splendid ones . . . good editions, not pompous ones.” Library

of Congress, Librarians of Congress: 1802-1974 20 (1975). In 1816, privileges of

using the Library were extended to the Attorney General, and soon after, those

privileges were extended to other cabinet members. See John Y. Cole, For Congress

and the Nation: A Chronological History of the Library of Congress 12, 15 (1979).

Congress also directed the Library to serve the Judicial Branch. See 2 U.S.C. § 137

(power of Supreme Court Justices to issue regulations for the use of the Library’s law

department); id. § 137c (right of Judges of the D.C. Circuit to withdraw books).

By the time that the Library opened its doors to the public in 1897, it had

“assume[d] national proportions.” Ben Perley Poore, The Library of Congress, 46

Harper’s New Monthly Mag. 41, 49 (1873). President Cleveland, in his first annual

message to Congress, described the Library as “the principal library of the

Government,” which did not function merely as a research tool for Congress, but also

38


ensured the accessibility of books to the public and served as the depository library

for copyrighted works. Glover Cleveland, First Annual Message (First Term) to the

Congress of the United States (Dec. 8, 1885), available at

http://www.presidency.ucsb.edu/ws/?pid=29526#axzz1ca1unU5r; see also R.R.

Bowker, The American National Library, 21 Lib. J. 357 (1896) (“[T]he Library of

Congress, so called, is now the library of the nation as well as of Congress.”).

In 1870, Congress assigned the Librarian principal responsibility in the federal

government for the administration of the copyright laws. See 16 Stat. 212 (1870).

Congress also has charged the Library with public archival and preservation functions

similar to those of the National Archives, an executive agency. Compare 2 U.S.C.

§ 179p (national film registry collection); id. § 1711 (national sound-recording

preservation program) with 44 U.S.C. § 2114 (preservation of films and sound

recordings by the Archivist). Thus, as Congress recognized in 1897 when it

conformed the Librarian’s appointment to the requirements of the Appointments

Clause, “it is a misnomer to call it the Congressional Library. It is a great national

Library and belongs to the Government of the United States.” 29 Cong. Rec. 318-19

(1896) (Rep. Dockery); accord id. at 387 (Rep. Stone); id. (Rep. Fairchild).

Likewise, President Theodore Roosevelt observed in a message to Congress a few

years later: “[T]he Federal Library, which, though still the Library of Congress, and

39


http://www.presidency.ucsb.edu/ws/?pid=29526#axzz1ca1unU5r

so entitled, is the one national library of the United States.” Theodore Roosevelt,

Message to the Senate and the House of Representatives (Dec. 3, 1901), available at

http://www.presidency.ucsb.edu/ws/?pid=29542#axzz1ca1unU5r.

IBS bases its argument primarily on this Court’s decision in Keeffe v. Library

of Congress, 777 F.2d 1573, 1574 (D.C. Cir. 1985), a First Amendment case

describing the Library in dicta as “a congressional agency.” The Court cited 2 U.S.C.

§ 171(1), which states that Congress in 1800 “established for itself a library.” But

neither Keeffe’s description of the Library nor section 171(1) undermine the historical

reality that the Librarian from the outset has been a Presidential appointee, subject to

Presidential supervision, and that in 1897, Congress removed any doubt that the

Library is, for the purposes of the Appointments Clause, an executive Department.

The Fourth Circuit correctly recognized in Eltra that the Library’s codification in

Title 2 of the United States Code is simply a statutory label that does not determine

the Library’s status under the Constitution. See 579 F.2d at 301 (describing it as

“irrelevant” for Appointments Clause purposes that the Office of the Librarian of

Congress is codified under the legislative branch). If codification in Title 2 alone

were determinative, the Supreme Court’s opinion in Buckley would have been much

shorter: the Federal Election Commission (“FEC”) was codified in the legislative

branch. 424 U.S. at 109-10. Indeed, on this theory, the FEC would still be

40


http://www.presidency.ucsb.edu/ws/?pid=29542#axzz1ca1unU5r

unconstitutional today, because the amended provisions creating the agency remain

in Title 2. 2 U.S.C. §§ 431 et seq.; see Eltra, 579 F.2d at 301.

The same is true of the Library’s classification as a legislative entity for various

statutory purposes, such as the Administrative Procedure Act and the Freedom of

Information Act. See, e.g., Washington Legal Foundation v. U.S. Sentencing

Comm’n, 17 F.3d 1446, 1449 (D.C. Cir. 1994) (the Library is exempt from the APA

as a legislative entity). Just as Congress can define “the government” for statutory

purposes but not constitutional ones, see Lebron v. Nat’l R.R. Passenger Corp., 513

U.S. 374, 392 (1995), and just as Congress’s definition of “executive departments”

in 5 U.S.C. § 101 does not limit the term “Department” in Article II, see Freytag, 501

U.S. at 886-87 & n.4, statutory classifications of this kind do not impede the

Librarian’s exercise of executive power under the Constitution. What matters is that

the Librarian is accountable to the President and is appointed in conformity with the

Appointments Clause. See Buckley, 424 U.S. at 128 n.165 (an officer exercising

significant authority, appointed by and accountable to the President is an executive

officer under the Constitution “irrespective of Congress’ designation” to the

contrary).

Nor is the status of the Library under the Appointments Clause altered by the

fact that one of the Library’s components, the Congressional Research Service

41


(“CRS”), is charged by statute with serving Congress. 2 U.S.C. § 166(a). For

purposes of the Appointments Clause, the role of CRS vis-a-vis Congress is akin to

the role of the U.S. Marshals Service vis-a-vis the federal courts. By statute, the

“primary role and mission” of the Marshals Service is “to provide for the security and

to obey, execute, and enforce all orders” of the federal courts. 28 U.S.C. § 566(a);

see also id. § 566(c). The Marshals Service is situated within the Department of

Justice. Id. § 561(a). Yet no one would seriously suggest that the Attorney General

is not the Head of a “Department” simply because the Department of Justice includes

a component that is charged by law with serving another branch of the federal

government. Cf. Chabal v. Reagan, 841 F.2d 1216, 1219-23 (3d Cir. 1988). So too

here, an establishment that otherwise qualifies as a “department” under the

Appointments Clause does not lose that status even when it is assigned functions that

come much closer to the “legislative powers” of Congress under Article I. Compare

Free Enterprise Fund, 130 S. Ct. at 3161-62 (Securities and Exchange Commission

constitutes a “department” under the Appointments Clause), with Buckley, 424 U.S.

at 133 (the functions of “a typical administrative agency” “may be ‘predominantly

quasijudicial and quasilegislative’ rather than executive”); see also Mistretta v.

United States, 488 U.S. 361, 382 (1989) (noting constitutionality of “statutory

42


provisions that to some degree commingle the functions of the Branches, but that

pose no danger of either aggrandizement or encroachment”).

CONCLUSION

For the foregoing reasons, the Copyright Royalty Judges’ determination should

be affirmed.

Respectfully submitted,

TONY WEST Assistant Attorney General

SCOTT R. MCINTOSH

(202) 514-4052KELSI BROWN CORKRAN (202) 514-3159

Attorneys, Appellate Staff Civil Division, Room 7216

U.S. Department of Justice 950 Pennsylvania Ave. NW

Washington, DC 20530-0001

43


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intercollegiate broadcasting system v. copyright royalty board - final brief for appellees

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