[Federal Register Volume 77, Number 235 (Thursday, December 6, 2012)]
[Proposed Rules]
[Pages 72788-72791]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-29229]
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LIBRARY OF CONGRESS
Copyright Office
37 CFR Parts 201 and 203
[Docket No. 2012-1]
Copyright Office Fees
AGENCY: Copyright Office, Library of Congress.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Copyright Office has further revised its proposed fee
schedule for filing cable and satellite statements of account following
feedback from interested parties in response to a Notice of Proposed
Rulemaking published on March 28, 2012. The modified fee schedule set
forth below reflects an updated calculation of the cost of providing
services.
DATES: Comments must be received in the Copyright Office no later than
5 p.m. Eastern Standard Time (EST) on January 7, 2013. Reply comments
must be received in the Copyright Office no later
[[Page 72789]]
than 5 p.m. Eastern Standard Time (EST) on January 22, 2013.
ADDRESSES: Comments should be submitted electronically. A comment page
containing a comment form is posted on the Copyright Office Web site at
http://www.copyright.gov/docs/newfees/comments/. The Web site interface
requires submitters to complete a form specifying name and
organization, as applicable, and to upload comments as an attachment
via a browse button. To meet accessibility standards, all comments must
be uploaded in a single file not to exceed six megabytes (MB) in one of
the following formats: the Adobe Portable Document File (PDF) format
that contains searchable, accessible text (not an image); Microsoft
Word; WordPerfect; Rich Text Format (RTF); or ASCII text file format
(not a scanned document). The form and face of the comments must
include both the name of the submitter and the organization. All
comments will be posted publicly on the Copyright Office Web site
exactly as they are received, along with names and organizations. If
electronic submission of comments is not feasible, please contact the
Copyright Office at (202) 707-8380 for special instructions.
FOR FURTHER INFORMATION CONTACT: Megan Rivet, Budget Analyst, or
Melissa Dadant, Senior Advisor for Operations and Special Projects, at
(202) 707-8350.
SUPPLEMENTARY INFORMATION: In 2010, Congress enacted the Satellite
Television Extension and Localism Act (``STELA''), Public Law 111-175,
124 Stat. 1218, which, for the first time, granted authority to the
Copyright Office to establish fees for the filing of statements of
account (``SOAs'') pursuant to the section 111, 119, and 122 statutory
licenses for cable and satellite users. Prior to 2010, the cost of
processing such statements and associated royalty payments was funded
solely by the royalty fees collected for the benefit of the copyright
owners under the statutory licenses. STELA added a new provision to
Title 17 that permits the Office to apportion up to 50 percent of the
cost of processing the SOAs and royalty payments to licensees. More
specifically, 17 U.S.C. 708(a) provides that the fees charged to
licensees for the filing of SOAs ``shall be reasonable and may not
exceed one-half of the cost necessary to cover reasonable expenses
incurred by the Copyright Office for the collection and administration
of the statements of account and any royalty fees deposited with such
statements.''
On March 28, 2012, the Copyright Office published a Notice of
Proposed Rulemaking (``NPR'') as the initial step in adopting new fees
for various services, including the registration of claims, recordation
of documents, special services, processing of requests for records
pursuant to the Freedom of Information Act, and Licensing Division
services, including the new fees for filing of cable and satellite
SOAs. See 77 FR 18742 (March 28, 2012). Fees were proposed in
accordance with the procedure set forth in the Copyright Act, which
provides that the Register of Copyrights may, by regulation, adjust
fees for certain enumerated services based upon a study of costs
incurred by the Copyright Office. See 17 U.S.C. 708(b).
Generally speaking, the Office has conducted a study of costs every
three years. In each case, and in the case here, the Office is acutely
aware of its obligations as an agency of the federal government,
including the mandate to establish sound fiscal policies and develop a
responsible budget. At the same time, the Office is cognizant of its
responsibilities to both copyright owners and users of copyrighted
works. Ultimately, the Office must price its services in a manner that
is fair to the parties and conducive to well-functioning programs and
recordkeeping. Indeed, elsewhere the Copyright Act indicates that fees
``shall be fair and equitable and give due consideration to the
objectives of the copyright system.'' 17 U.S.C. 708(b)(4).
In response to the NPR, the Office received 138 comments on the
proposed fees, three of which specifically addressed the new fees for
filing cable and satellite SOAs. The Office received individual
comments from the American Cable Association (``ACA'') and the National
Cable & Telecommunications Association (``NCTA''), and a joint comment
from Program Suppliers, Joint Sports Claimants, Commercial Television
Claimants, Music Claimants, Canadian Claimants Group, National Public
Radio, Broadcaster Claimants Group, and Devotional Claimants
(collectively, ``Copyright Owners'').
NCTA expressed the concern that the proposed fees sought to recover
costs for services ``that go beyond what is reasonably necessary to
administer the license and reflect[] expenses incurred in the past that
are unlikely to recur in the future.'' NCTA Comments at 2. ACA
requested the Office to provide a waiver of fees for cable operators
experiencing financial hardship. See generally ACA Comments.
Copyright Owners, on the other hand, argued that the proposed fees
failed to recover half of the actual operating costs of the cable and
satellite program, and also questioned the Office's methodology,
specifically why actual costs were not the starting point for analysis.
See generally Copyright Owners' Comments.
In light of the comments received from affected stakeholders, and
because the fees for filing cable and satellite SOAs are being set for
the first time, the Office conducted further analysis of those fees. As
explained below, it performed a second study, using a revised
methodology to more precisely capture the cost of providing the
services in question.
New Cost Study for Setting Cable and Satellite SOA Filing Fees
The original cost study for the Office's administration of the
cable and satellite statutory licenses used the additive model employed
in previous cost studies for peripheral fee services. This method
focuses on the desk time of dedicated employees, in other words, how
much time they spend performing activities involved in processing a
typical service request. While effective in analyzing services that can
be measured by short intervals of time, it is sometimes not as
successful in determining the cost of a more complex task, such as the
processing of an entire SOA. At the same time, managing the cable and
satellite SOAs is a major program of the Office and comprises the
greatest portion of staff time and related resources in comparison to
administering the other statutory licenses.
In its reexamination of SOA program costs, the Office applied a
traditional methodology that it has used to assess the costs of its
services in other areas, such as copyright registration. This
methodology calculates the full cost of the activity in question--in
this case, the entire SOA program, including the receipt and
administration of the SOAs and royalty fees deposited with such
statements--based on actual expenditures and all costs directly or
indirectly associated with these functions. The revised methodology
identifies staffing costs for each particular program service and
apportions non-personnel costs either directly to the services they
support or, in the case of administrative and other indirect costs, in
proportion to the staff costs previously identified. Staffing costs not
associated directly or indirectly with any of the program services,
along with a commensurate proportion of non-personnel costs, are
excluded from the model.
The revised methodology is more complete because it accounts for
all
[[Page 72790]]
relevant staff time, whether associated directly with a program service
or indirectly, and includes all staff, including administrative and
managerial staff, and all relevant non-personnel costs. Because it is
all-inclusive, it covers costs incurred where the standard workflow
path cannot be followed, as well as exceptional cases that involve
time-intensive research or problem resolution, for example, cases where
electronic funds transfer payments need to be matched with a SOA
received much earlier or later than the payment or without a remittance
advice. It also covers non-routine staff effort. For instance, during
the period under review, the Office revised work procedures and forms,
and updated its internal information systems, to facilitate its
implementation of STELA. The Office expects these types of
administrative and technical upgrades to continue to occur during the
life of the SOA program.
In conducting the second cost study, the Office applied a three-
year average of non-personnel costs to address concerns that an
aberrant year may have an undue impact on the proposed fees. The Office
considered reengineering efforts of the Licensing Division in the area
of statutory licenses and the rise of associated costs in 2011. The
administrative and technical enhancements are integral to the SOA
program. However, in order to mitigate the impact of higher than usual
costs in 2011, the 2011 costs have been averaged with costs from 2010
and 2009 to achieve a balanced representation of the overall, ongoing
cost of the SOA program, including periodic and technical upgrades.
Finally, in both the initial and revised cost studies, the Office
excluded approximately 75 percent of salaries for staff who work in the
Fiscal Section of the Licensing Division. The Office did so because
much of the work of these employees is dedicated to royalty management
functions that serve copyright owners (e.g., production of financial
statements, reconciliations, investments, and distributions); the 75
percent exclusion is meant to fairly account for this fact.
Revised Fees for Cable and Satellite Statements of Account
In the initial cost study, the Office analyzed the processing of
cable SA1, SA2, and SA3 SOAs and satellite SOAs independently. In
performing the revised study, it was evident that many of the program
costs are common to both cable and satellite filings, in particular the
fiscal management and information technology costs, and thus should be
shared by both types of filers.
Based on its further evaluation of the program costs for the
collection and administration of the cable and satellite SOAs and the
royalty fees deposited with such statements, the Office continues to
propose a tiered fee schedule corresponding to the filing of the
different types of SOAs. The fees for licensees who file a cable SA1 or
SA2 form remain unchanged from the initial proposal, $15 for the filing
of a SA1 form and $20 for the filing of a SA2 form. Such fees are
reasonable in light of the minimal amount of processing required and
the typical royalty payments associated with such statements, which are
substantially lower than royalties associated with SA3 filings. See 17
U.S.C. 708(b) (fees established by the Register for cable and satellite
SOAs are to be ``reasonable''). Additionally, following its review of
the totality of SOA program costs, as described above, the Office
proposes to establish both the cable SA3 filing fee and satellite
filing fee at $725. The Office believes that $725 is a reasonable fee
in light of the second cost study and substantial royalty payments
associated with these SOAs.
Moreover, at the proposed levels, the fees collected from licensees
filing SOAs should in the aggregate approach, but not exceed, 50
percent of the Office's reasonable expenses to administer the cable and
satellite SOA program, as determined in the more recent study conducted
by the Office. Based on projected filings, the expected annual fee
recovery will be approximately $1.77 million, or approximately 47
percent of the estimated $3.74 million total annual SOA program cost.
Schedule of Revised Proposed Fees
The chart below sets forth the proposed fees for filing cable and
satellite SOAs:
Schedule of Proposed Fees
[Administration of statutory licenses]
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Proposed new fee
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(1) Processing of a statement of account based on
secondary transmissions of primary transmissions
pursuant to Sec. 111:
(i) Form SA1..................................... $15
(ii) Form SA2.................................... 20
(iii) Form SA3................................... 725
(2) Processing of a statement of account based on 725
secondary transmissions pursuant to Sec. Sec. 119
and 122
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The Office believes that, as revised, the proposed fees are
appropriate based on the reasonable expenses incurred in the processing
of cable and satellite SOAs and managing the associated royalty
payments. Moreover, the fees are set to approach one-half the costs,
without exceeding one-half, in order that owners and users of
copyrighted works share the burden of supporting the cable and
satellite SOA program. An outcome where program costs are shared
relatively equally by owners and users is consistent with the mandate
of STELA, as well as the objectives of the copyright system.
Waiver of Filing Fees
ACA suggests that the Office ``establish a streamlined waiver
process for smaller cable operators where payment of the filing fee
would result in a financial hardship.'' ACA Comments at 2. While the
Office understands ACA's rationale for this request, the law appears to
preclude this option.
Section 708(a) requires that ``fees shall be paid to the Register
of Copyrights'' for filing a cable SOA. The statute also instructs the
Register to fix said fees based on relevant costs. To this end, the
Office conducted a cost study, taking into account that cable companies
that file SA1 and SA2 forms benefit from the statutory licensing
scheme, yet generate revenues considerably lower than the cable systems
that file the SA3 form. Accordingly, the Office is proposing
significantly lower fees to ensure that they are reasonable under the
circumstances.
To the extent the suggestion of ACA is that nothing in the law
expressly prevents the Register from creating exceptions or waivers to
the general fee, the Office notes that Congress has set forth express
authority for the Register
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to waive fees elsewhere in section 708. Section 708(c) grants the
Register discretion to waive fees for United States agencies and their
employees, but only ``in occasional or isolated cases involving
relatively small amounts.'' Such express and limited authority in the
area of waivers suggests that Congress would have created a clear
exception or waiver of the kind suggested by ACA had it so desired.
Moreover, no such waivers exist with respect to other fee requirements,
including for example, for registrations of individual claimants. The
Office welcomes further comment on whether the statute provides
authority to the Register to establish a waiver process where payment
of the filing fee would result in a financial hardship and whether, in
general, waivers of this kind should be permissible.
Technical Amendments
The Office will adopt technical amendments as needed to conform
existing regulations to the changes proposed in this notice.
Request for Comments
As noted above, the Copyright Office is publishing the revised
proposed fee schedule for these particular fees to provide the public
with an opportunity to comment.
Dated: November 29, 2012.
Maria A. Pallante,
Register of Copyrights.
[FR Doc. 2012-29229 Filed 12-5-12; 8:45 am]
BILLING CODE 1410-30-P