Retry of CRB Webcasting Rate-setting Meets Appointments Clause, DC Circuit Says
The U.S. Court of Appeals for the D.C. Circuit ruled against the Intercollegiate Broadcasting System. The three-judge panel ruled against noncommercial broadcaster association IBS’s appeal of the Copyright Royalty Board’s 2014 redetermination in its proceeding to set webcasting royalty rates for the 2011-15. The D.C. Circuit previously ruled against CRB in IBS’s earlier appeal of the board’s 2011 determination on webcasting rates. The court had said CRB judges in charge of the rate-setting were appointed in violation of the Appointments Clause and that CRB’s minimum annual $500 fee for commercial and noncommercial webcasters shouldn’t apply to small webcasters.
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The new CRB panel conducted only a paper proceeding on the webcasting rates. “It would be neither fair, nor efficient, nor economical to proceed," it said in 2014, "with additional submissions, discovery, and evidentiary hearings.” That proceeding also imposed the $500 per-station fee.
“We find nothing in the proceedings leading up to and including the new Board’s determination that suggests a lack of independence from the previous, constitutionally defective determination,” the D.C. Circuit ruled Tuesday. Past D.C. Circuit precedents “make clear” that the new CRB 2014 determination “did not violate the Appointments Clause,” the court said. IBS contended that although the librarian of Congress “properly appointed” the three new judges, they were “tainted” by the previous rate-setting determination.
The D.C. Circuit thought differently. It said that the new CRB “had full authority to make its own determination, including the discretion to do so after a completely new proceeding or a de novo review of the record. Although it chose the latter, it did so of its own accord.” IBS also claimed the new CRB’s lack of live hearings meant the board wasn’t able to independently assess witness credibility. “To the extent this complaint implies that the Board relied on the prior Board’s assessments of witness demeanor, that is unsupported,” the D.C. Circuit said. “We do not see any instances in which the new or the prior Board made credibility determinations based on demeanor, and Intercollegiate’s briefs do not describe any such instances.”
The D.C. Circuit also rejected IBS’s challenge of the CRB requirement that small webcasters pay the $500 minimum annual fee. The court said it typically upholds a rate-making determination unless it’s capricious, “contrary to law, or not supported by substantial evidence.” IBS’s case was undercut by CRB evidence that noncommercial webcasters are “able and willing to pay the proposed fees,” including a voluntary agreement College Broadcasters, which represents noncommercial education broadcasters, “had already reached” with SoundExchange, the D.C. Circuit said. CRB “had substantial evidence to support its conclusion that an annual minimum fee of $500 reasonably approximated that to which a willing buyer and seller would agree. Accordingly, it did not act unreasonably in setting that fee,” the D.C. Circuit said.
IBS is “disappointed” but is hopeful that the upcoming CRB determination on the 2016-20 webcasting rates “will fairly reflect actual marketplace rates,” CEO Fritz Kass said in an interview. “IBS’s position for over a decade is that the marketplace for noncommercial is established based on agreements between SoundExchange, NPR and CPB, and that IBS should be paying a proportional rate based on our own usage.” The U.S. Copyright Office didn’t comment.
The D.C. Circuit’s ruling “isn’t a surprise,” said Fletcher Heald copyright and music licensing lawyer Kevin Goldberg. “This case has been going on for years and we’re pretty much right back where we started.” The webcasting rates have remained relatively the same despite the change in CRB members following the initial D.C. Circuit ruling, and the new case’s precedential value is basically nil because CRB is working on a new rate-setting process, Goldberg told us. “It just shows how long all of this plays out and how much uncertainty there can be in the process."