Court Invalidates Statutory Restrictions on Librarian to Remove Copyright Royalty Judges

The court was ruling on an appeal by Intercollegiate Broadcasting, an association of noncommercial webcasters, of a final determination of the default royalty rates and terms applicable to webcasting. The Copyright Royalty Board had rejected Intercollegiate’s proposal to establish different fee structures for small and very small commercial webcasters. The court declined to address Intercollegiate’s argument that Congress’s grant of powers to the judges is “void because the provisions for judicial review” give the court “legislative or administrative powers that may not be vested in an Article III court."

But a three-judge panel of the D.C. Circuit agreed with Intercollegiate that the Copyright Royalty Board’s current structure violates the Constitution. The court agreed with the webcaster’s argument that the judges’ exercise of “significant ratemaking authority without any effective means of control by a superior,” such as “unrestricted removability,” qualifies them as “principal” officers who must be appointed by the president with Senate confirmation. The judges’ ratemaking decisions have considerable consequences, the D.C. Circuit said, because “billions of dollars and the fates of entire industries can ride on the Copyright Royalty Board’s decisions."

"Of course one might see these authorities of the CRJs [copyright royalty judges] as primarily addressing ‘merely rates,'” the court said. “But rates can obviously mean life or death for firms and even industries.” The register of copyrights, who is appointed by the librarian, does have the authority to interpret the copyright laws and the copyright royalty judges must abide by the register’s opinion in those matters, it said. But the register’s power to control the judges’ “resolution of pure issues of law plainly leaves vast discretion over the rates and terms,” the court said. So the register’s control over the “most significant aspect” of judges’ determinations -- the rates themselves -- is likely to be faint,” the court said.

Given the judges’ “nonremovability and the finality of their decisions,” the librarian’s and register’s supervision functions “still fall short of the kind that would render the CRJs inferior officers,” the court said. The D.C. Circuit also took note of the fact that the judges’ rate “determinations are not reversible or correctable by any other officer or entity within the executive branch,” and concluded that the judges “as currently constituted are principal officers who must be appointed by the President and confirmed by the Senate, and that the structure of the Board therefore violates the Appointments Clause."

Invalidating and severing the portion of the statute limiting the librarian’s ability to remove the judges, the D.C. Circuit said that because the Copyright Royalty Board’s “structure was unconstitutional at the time it issued its determination, we vacate and remand the determination and do not address Intercollegiate’s arguments regarding the merits of the rates set therein.”

Three years ago, the court had sidestepped a similar question of legality of the appointment of the judges (WID July 13/09 p1). Royalty Logic, which wanted to challenge SoundExchange for the right to collect royalties, then argued the Copyright Royalty Board was unconstitutional because its judges were appointed against rules laid out in the Appointments Clause. The court didn’t address the issue, saying Royalty Logic forfeited the Appointments Clause issue because it failed to raise it in its initial brief.