[Federal Register Volume 59, Number 88 (Monday, May 9, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-10985]


[[Page Unknown]]

[Federal Register: May 9, 1994]


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Part III





Library of Congress





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Copyright Office



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37 CFR Parts 251, 252, etc.




Copyright Arbitration Royalty Panels; Rules and Regulations; Interim 
Rule
LIBRARY OF CONGRESS

Copyright Office

37 CFR Parts 251, 252, 253, 254, 255, 256, 257, 258, 259, 301, 302, 
303, 304, 305, 306, 307, 308, 309, 310 and 311

[Docket No. RM 94-1A]

 
Copyright Arbitration Royalty Panels; Rules and Regulations

AGENCY: Copyright Office, Library of Congress.

ACTION: Interim regulations.

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SUMMARY: The Copyright Office of the Library of Congress is issuing 
interim regulations to revise the rules and regulations of the former 
Copyright Royalty Tribunal adopted by the Office on December 22, 1993. 
The Office is seeking comments on these interim rules, which will 
govern the conduct of royalty distribution and rate adjustment 
proceedings prescribed by the Copyright Royalty Tribunal Reform Act of 
1993 until final regulations are adopted.

DATES: Effective May 9, 1994.
    Written comments should be received by June 15, 1994. Reply 
comments should be received by July 15, 1994.

ADDRESSES: Fifteen copies of written comments should be addressed, if 
sent by mail, to: Copyright Arbitration Royalty Panel (CARP), P.O. Box 
70977, Southwest Station, Washington, DC 20024. If delivered by hand, 
copies should be brought to: Office of the General Counsel, Copyright 
Office, room LM-407, James Madison Memorial Building, 101 Independence 
Avenue, SE., Washington, DC 20540.

FOR FURTHER INFORMATION CONTACT: William Roberts, Senior Attorney, U.S. 
Copyright Office, Library of Congress, Washington, DC 20540, (202) 707-
8380.

SUPPLEMENTARY INFORMATION: The Copyright Royalty Tribunal Reform Act of 
1993, Public Law 103-198, eliminated the Copyright Royalty Tribunal 
(CRT) and replaced it with a system of ad hoc Copyright Arbitration 
Royalty Panels (CARPs), administered by the Librarian of Congress and 
the Copyright Office, for purposes of distributing royalties and 
adjusting royalty rates for the various compulsory licenses and 
statutory obligations of the Copyright Code. The CRT Reform Act, which 
was effective immediately upon its enactment, directed the Librarian 
and the Office to adopt the rules and regulations of the CRT found in 
chapter 3 of 37 CFR, 17 U.S.C. 802(d), and provided that the CRT's 
regulations were to remain in effect until the Librarian adopts 
``supplemental or superseding regulations.'' The Office adopted the 
CRT's rules and regulations on an interim basis on December 22, 1993, 
and notified the public that it intended to begin a rulemaking 
proceeding to revise and update those rules. 58 FR 67690 (1993). 
Today's interim regulations are the latest result of that rulemaking 
proceeding.

I. Notice of Proposed Rulemaking

    On January 18, 1994, the Copyright Office of the Library of 
Congress published a Notice of Proposed Rulemaking (NPRM) establishing 
a new set of rules and regulations intended to revise those of the 
former CRT. The NPRM contained long and substantial revisions required 
by the dual structure of the royalty rate adjustment and distribution 
system created by the CRT Reform Act. Instead of a single 
administrative body (the CRT), the new system features a division of 
authority. The Librarian and the Copyright Office are responsible for 
doing the preliminary work necessary for the operation of both the 
distribution and the rate adjustment proceedings, including the 
organization and selection of the CARPs. The CARPs are given sole 
authority to determine the appropriate distribution of royalties and 
the royalty rates. Their determinations are later reviewed by the 
Librarian of Congress. Since the CRT's rules were not designed to 
implement a system such as this, we were obliged to institute this 
rulemaking proceeding.
    The NPRM proposed removal of parts 301 through 311 of chapter III 
of 37 CFR and creation of subchapters A and B of chapter II. Subchapter 
A comprises the Copyright Office's rules and procedures, consisting of 
parts 201-211, which remain unchanged. New subchapter B, which is the 
subject of this rulemaking, comprises parts 251-259, and is devoted 
entirely to the rules and procedures of the CARPs. In the NPRM, part 
251, the Copyright Arbitration Royalty Panel Rules of Procedure, 
consisted of proposed regulations to govern the organization of the 
CARPs, access to CARP meetings and records, rules governing the conduct 
and course of proceedings, and procedures applicable to rate 
adjustments and distributions. The NPRM also reserved a subsection for 
standards of conduct for arbitrators, and sought comment as to what the 
appropriate ethical and financial standards should be.
    New part 252 proposed revised rules for the filing of claims to 
cable copyright royalties, modeled after the system used by the CRT for 
the filing of digital audio (DART) royalty claims. Parts 253 to 256--
Use of Certain Copyrighted Works in Connection With Noncommercial 
Educational Broadcasting; Adjustment of Royalty Rate for Coin-Operated 
Phonorecord Players; and Adjustment of Royalty Payable Under Compulsory 
License for Making and Distributing Phonorecords--proposed only 
technical changes to the former CRT's rules. Like part 252, part 257--
Filing of Claims to Satellite Carrier Royalty Fees--was modeled after 
the royalty claim procedures used by the CRT for DART. Finally, parts 
258 and 259--Adjustment of Royalty Fee for Secondary Transmissions by 
Satellite Carriers and Filing of Claims to Digital Audio Recording 
Devices and Media Royalty Payments--contained only minor technical 
amendments. Since the CRT Reform Act eliminated the jukebox compulsory 
license, 17 U.S.C. 116, and replaced it with a provision for negotiated 
licenses, the NPRM proposed elimination of the CRT's rules governing 
the filing of jukebox claims (formerly part 305 of 37 CFR).
    Following issuance in the Federal Register of the NPRM, the 
Copyright Office invited the interested parties to a public meeting to 
discuss the proposed regulations concerning rules and procedures for 
Copyright Arbitration Royalty Panels. The public meeting was held on 
February 1, 1994, at Hearing room 921 of the Office of the former 
Copyright Royalty Tribunal. More than 50 individuals attended; comments 
were noted in an unofficial transcript and became part of the 
Administrative Record.1 Written comments on the proposed 
rulemaking were due on or before February 15, 1994. Both oral and 
written comments are reflected in our current proceeding.
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    \1\Individuals wishing to inspect the unofficial transcript of 
this meeting may contact the Copyright General Counsel's Office at 
(202) 707-8380.
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    The Office received a total of 11 comments.2 Many parties 
filed joint comments, and some of the joint commentators also filed 
separate comments. The commentator groups for each of the 11 comments 
were as follows:

    \2\The first ten comments were filed on time. The 11th comment, 
from the Public Broadcasting Service, was filed April 21, 1994, more 
than two months late, and included a motion for leave to file the 
comment. The Copyright Office sees no reason why consideration of 
the comment should be denied, and we are therefore granting PBS' 
motion and considering the views expressed in the comment for this 
rulemaking.
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Recording Industry Association of America, Inc and the Alliance of 
Artists and Recording Companies, Inc. (referred to collectively as 
``RIAA/AARC'');
National Music Publishers Association and the Harry Fox Agency 
(collectively ``Music Publishers'');
Electronic Industries Association (``EIA'');
American Society of Composers, Authors and Publishers, Broadcast Music, 
Inc., and SESAC, Inc. (collectively ``Performing Rights Societies'');
United Video Division of United Video Satellite Group, Inc. (``United 
Video'');
National Cable Television Association (``NCTA'');
Program Suppliers, Joint Sports Claimants, the National Association of 
Broadcasters, Public Broadcasting Service, American Society of 
Composers, Authors and Publishers, Broadcast Music, Inc., SESAC, Inc., 
the Devotional Claimants, the Canadian Claimants, and National Public 
Radio (collectively ``Copyright Owners'');3
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    \3\ The parties comprising the Copyright Owners derive their 
names from their ``Phase I'' categories in the former Tribunal's 
cable royalty distribution proceedings. The Program Suppliers are 
more than 100 producers and distributors of syndicated series, 
movies, and television specials represented by the Motion Picture 
Association of America. The Joint Sports Claimants consist of Major 
League Baseball, the National Basketball Association, the National 
Hockey League and the National Collegiate Athletic Association. NAB 
represents claiming television and radio stations. PBS represents 
claiming member television stations and producers of public 
television programs. ASCAP, BMI and SESAC are three performing 
rights societies, also known as the Music Claimants, representing 
their members and affiliates. The Devotional Claimants consist of 
several producers and syndicators of religious programming. The 
Canadian Claimants represent Canadian programs broadcast by Canadian 
television stations. NPR represents its claiming member radio 
stations.
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Program Suppliers (``Program Suppliers'');
Joint Sports Claimants, the National Association of Broadcasters, 
Public Broadcasting Service, the Devotional Claimants, the Canadian 
Claimants, and National Public Radio (collectively ``Certain Copyright 
Owners'').
Gospel Music Coalition and Copyright Management, Inc. (collectively 
``Gospel Music'');
Public Broadcasting Service (``PBS'').

II. CRT Precedent and Pending Matters

    The NPRM addressed a significant preliminary issue: How the 
Copyright Office should deal with matters that were pending before the 
CRT at the time of its elimination. The Office stated that it was ``of 
the firm opinion that it is not the successor agency or office to the 
Copyright Royalty Tribunal'' and that it was therefore making a 
``preliminary finding that all proceedings pending before the Tribunal 
at the time of its elimination were terminated at that time.'' 59 FR 
2551 (1994). Parties wishing to have pending matters considered by 
either the Office, or the CARPs, or both, would have to resubmit the 
matters to the Office. Id.
    The Office went on to discuss the precedential effect, if any, of 
orders and rulings of the Tribunal issued in proceedings that were 
pending before the Tribunal at the time of its termination. We 
concluded:

    The Office has no intention of questioning or reopening matters 
decided by the former Tribunal with respect to ongoing proceedings. 
However, we understand that the termination of pending Tribunal 
proceedings and the requirement of new filings will likely raise 
again some of the issues previously decided by the Tribunal. The 
Copyright Office of the Library of Congress makes a preliminary 
finding that, while we will look to the Tribunal's decisions and 
orders for guidance, neither the Office nor the Copyright 
Arbitration Royalty Panels are legally bound by those decisions. All 
legal issues related to proceedings pending before the Tribunal at 
the time of its elimination may therefore be resubmitted to the 
Copyright Office and, where appropriate, to the Arbitration Panels 
for consideration. Id.

We also noted in a footnote to this paragraph:

    The Copyright Office acknowledges that it is of course bound by 
rate adjustments and distributions that the Tribunal had conducted 
and concluded before its elimination. Thus, for example, the Office 
will not entertain any petitions to reexamine cable distributions 
for years earlier than 1990.

Id. at fn. 1.
    These statements concerning the refiling of pending matters, and 
the possible effect as legal precedent of CRT rulings in pending 
proceedings, drew comments from two parties. The Copyright Owners 
favored the Office's position that all pending CRT matters terminated 
with enactment of the CRT Reform Act and would have to be refiled with 
the Office, the CARPs, or both. Copyright Owners, comment at 2. They 
noted that the largest single matter to be affected by this policy 
decision is the 1990 cable distribution, and asked that the parties to 
that proceeding be allowed to resubmit their cases with the Copyright 
Office, but with two qualifications. First, according to the Copyright 
Owners, the ``parties should be permitted to comment on the appropriate 
dates for submittal of the 1990 cases and the start of the 1990 hearing 
before a panel.'' Id. at 3. Second, they asked that the parties in the 
1990 distribution not be restricted to evidence submitted to the CRT: 
in other words, that they be allowed to update their cases in their 
filings with the Office rather than being bound by what they previously 
submitted to the Tribunal. Id. at 3-4.
    On the issue of rulings by the CRT in pending proceedings, the 
Copyright Owners agreed in principle with the Office's preliminary 
finding that these CRT rulings are not binding, but suggested ``slight 
changes to the phrasing of the discussion.'' Id. at 4. According to the 
Copyright Owners, the NPRM was unclear as to whether the Office's 
statement--that neither it nor the CARPs are bound by CRT rulings--
applied only to matters pending at the time of the CRT's termination, 
or whether it was intended to apply to all CRT decisions. If the 
language in the NPRM was intended to refer to all CRT rulings, then the 
Copyright Owners argued that it is contrary to the intent and language 
of 17 U.S.C. 802(c). Id. at 4-5.
    RIAA/AARC also questioned the NPRM's statement regarding treatment 
of CRT precedent. Their comments suggest that they interpret the NPRM 
as asserting that the Office and the CARPs are free to ignore CRT 
precedent in all cases. RIAA/AARC, comment at 1. RIAA/AARC appears to 
be arguing that any and all decisions of the CRT--not only those in 
concluded matters but also those in matters pending on or before 
December 17, 1993--represent legal precedent that is binding on the 
Office and the CARPs. Id. at 2.
    On reexamination of the NPRM, and especially in light of these 
comments, we have to admit that our discussions both of the refiling of 
pending matters and the legal effect of CRT decisions were unclear. 
These are extremely important issues, and we will try to clear up the 
confusion here.
    First of all, the Office restates its ``firm opinion that it is not 
the successor agency or office to the Copyright Royalty Tribunal.'' 59 
FR 2551 (1994). Second, we adhere to the policy determination that any 
proceeding still pending before the CRT on the date of its elimination, 
December 17, 1993--whether it involved rate adjustment, distribution, 
rulemaking, or administration--terminated as of that date. The legal 
effect of that termination is that the proceeding has ceased to exist, 
and that any rulings or decisions made by the Tribunal during the 
proceeding are null and void and without any binding effect, as 
precedent or otherwise, on the Copyright Office, the CARPs, or the 
parties.
    In cases where a proceeding was terminated by operation of the CRT 
Reform Act on December 17, 1993, the parties will be obliged to refile 
in the Copyright Office in accordance with these new CARP regulations, 
and present their arguments and, as a general rule, their 
evidence,4 as if there had never been a proceeding before the CRT. 
Parties to the 1990 cable distribution are not bound by their earlier 
filing with the CRT, and may refile their cases and evidence as they 
see fit.5
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    \4\A question was raised in the February 1, 1994, meeting as to 
the possibility, when the 1990 cable distribution proceedings are 
initiated by a CARP, of incorporating by reference, rather than 
completely refiling, one or more long documents already filed by a 
party in the suspended CRT proceedings. We agree that, to avoid 
wasteful and needless duplication, the CARP should have the 
prerogative to permit incorporation by reference.
    \5\As recommended in the comments of the Copyright Owners, we 
will at a later date invite the parties to the 1990 cable 
distribution to comment on when the proceeding should commence 
before the CARP.
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    Section 802(c) of the Copyright Code requires the CARPs to ``act on 
the basis of * * * prior decisions of the Copyright Royalty Tribunal.'' 
We emphasize, however, that this requirement applies only to 
proceedings that were concluded by the Tribunal. For example, CRT 
rulings from the 1989 cable distribution have precedential effect 
because the 1989 distribution is a concluded proceeding, but rulings 
made during the 1990 cable distribution are without precedential 
effect.
    We should add that, although rulings and orders from proceedings 
that were pending before the CRT at the time of its elimination do not 
constitute binding precedent, the Copyright Office will review those 
rulings and orders for information and guidance if the same issues 
arise during the course of a refiled proceeding, and will call them to 
the attention of the CARP.
    There is an important distinction to be made here. What we have 
said so far applies to cases where a proceeding was underway at the CRT 
before December 17, 1993, except for claims to royalties filed with the 
CRT before its elimination. Royalty claims are required to be filed 
during specific time periods set by the Copyright Code, and any valid 
claims filed with the CRT before the statutory deadlines, and still 
pending on December 17, 1993, are unaffected by the new law. For 
example, the Code requires claims for DART royalties to be filed in 
January and February of each year with respect to royalties from the 
preceding calendar year. 17 U.S.C. 1007(a)(1). Claims to 1992 royalties 
had to be filed with the CRT by February 28, 1993. It is not now 
necessary to refile those claims with the Copyright Office, even though 
1992 DART royalties have yet to be distributed. The Copyright Office 
has received from the CRT all claims to 1992 DART royalties that had 
been filed with the Tribunal, and it is therefore unnecessary, and 
without legal effect, to refile those claims with the Office.
    Finally, in connection with DART filings, an issue raised by one of 
the commentators brings up questions related to those we have been 
discussing. The comment of the Performing Rights Societies contests the 
validity of the rule proposed in Sec. 259.2 of the NPRM, which would 
require a performing rights society ``* * * to obtain from its members 
or affiliates separate specific and written authorization signed by 
members, affiliates or their representatives to file claims to the 
Musical Works Fund * * *''. Performing Rights Societies, comment at 1. 
This rule was promulgated by the CRT on October 18, 1993, and, as 
directed by the CRT Reform Act, the Office adopted it in its December 
22, 1993, regulation. 58 FR 67690 (1993). Our NPRM did not propose to 
amend the regulation beyond renaming it and assigning it a new section 
number (Sec. 259.2). The Performing Rights Societies filed a petition 
for reconsideration of the rule with the CRT on November 3, 1993, 
before the Tribunal was terminated, and are now asking for Copyright 
Office consideration of the question in the context of this rulemaking. 
Gospel Music has filed an opposition. Gospel Music, comment at 1-3.
    Although referred to as a ``comment,'' the letter from the 
Performing Rights Societies is more in the nature of a petition to 
address the issue anew. They say that they wish ``to petition to reopen 
the Tribunal's former rulemaking proceeding,'' and to have the matter 
addressed by the Copyright Office. The CRT had adopted a rule contrary 
to the Performing Rights Societies' petition; if the Societies had not 
petitioned the CRT for reconsideration, or if the CRT had acted one way 
or the other on the reconsideration request before it expired, we would 
consider the matter of the petition settled. As things stand, however, 
the petition for reconsideration was a pending CRT matter, and the 
Copyright Office will consider the Performing Rights Societies' 
``comment'' as a separate petition for rulemaking, not as part of this 
rulemaking proceeding. The ``comment'' of Gospel Music will be treated 
as an opposition to that petition. At a later date we will publish 
notice of a separate rulemaking in response to the Performing Rights 
Societies' petition, and will invite interested parties to comment at 
that time. Section 259.2, as adopted in 58 FR 67690 (1993) and renamed 
and renumbered in this rulemaking, remains in effect until the 
conclusion of the separate proceeding.

III. Interim Regulations

    Today's interim regulations reflect a comprehensive review of the 
entire body of the former Tribunal's rules and regulations, and a 
thorough analysis of the new procedures needed to implement the 
bifurcated system of ad hoc arbitration panels administered by the 
Librarian of Congress. The comments included a number of suggestions 
and proposed amendments, most of which were constructive and many of 
which we have adopted. In general the commentators were supportive of 
the Office's overall approach and most of the language in the NPRM.
    It was the consensus of the parties at the February 1, 1994, public 
meeting that a reply period for comments on the proposed rules would be 
desirable. At the time of the public meeting we thought it would be 
impossible to provide periods for reply comments addressed either to 
the responses to the NPRM or to these interim regulations; this was 
because the CARP infrastructure must be in place before proceedings can 
begin, and one of the deadlines for starting DART distribution 
proceedings was supposed to fall on March 30, 1994.6 On further 
consideration, however, the Office concluded that it would be virtually 
impossible to carry out the necessary procedures for appointing 
arbitrators before that date, and we issued a notice postponing the 
deadline, see 59 FR 9773 (1994) (postponing time period for declaration 
of controversy with respect to 1993 DART royalties to June 30, 1994). 
Even so, there is still the need to implement the CARP rules 
immediately, and to begin the screening and selection of potential 
arbitrators.
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    \6\Sec. 1007(b) of the Copyright Code states that, ``Within 30 
days after the period established for the filing of claims [January-
February] * * *, the Librarian of Congress shall determine whether 
there exists a controversy concerning the distribution of royalties 
* * *'', and sec. 1007(c) states that, if a controversy exists, 
``the Librarian shall * * * convene a copyright arbitration royalty 
panel to determine the distribution of royalty payments.''
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    In order to get revised regulations into effect immediately and, at 
the same time, to offer an opportunity to see how they work in practice 
and to elicit meaningful comments and suggestions, the Office is 
adopting today's regulations on an interim basis.7 All proceedings 
before the Office and the CARPs will be governed by the December 22, 
1993, interim rules as amended by these interim rules, unless and until 
they are further amended or superseded. Comments are due on June 15, 
1994, and reply comments on July 15, 1994, whereupon the Office plans 
to make another comprehensive review and analysis before adopting final 
regulations.
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    \7\These interim regulations consist of the earlier ``interim 
regulations'' adopted by the Copyright Office on December 22, 1993, 
58 FR 67690 (1993), as amended by today's changes.
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    The Librarian and the Office are committed to creating the fairest, 
most efficient possible system for adjusting royalty rates and 
distributing royalties. We believe that the rules and procedures 
adopted today will work, but during the coming months we will continue 
to monitor the CARP experience very closely and to identify any 
problems that need solving and any improvements that can be made.
    The following is a section-by-section summary of the amended 
regulations, together with a discussion of the applicable comments on 
the corresponding provisions of the NPRM.
(a) Part 251--Copyright Arbitration Royalty Panels Rules of Procedure
    Part 251 contains most of the rules and procedures governing the 
operation of the CARPs, and therefore received the greatest number of 
observations and suggestions from the commentators.
    (1) Status of certain DART proceedings. As a preliminary matter, it 
is important to consider the scope of part 251 with respect to digital 
audio proceedings under chapter 10 of the Copyright Code. It is the 
Office's reading of the CRT Reform Act that neither of the following is 
to be a CARP proceeding:
    (i) the proceeding raising the maximum rate for digital audio tape 
royalties which, under 17 U.S.C 1004(a)(3), is to be handled solely by 
the Librarian;
    (ii) the arbitration proceeding under 17 U.S.C. 1010 to determine 
if a digital audio recording or interface device is subject to royalty 
payments. We reach this conclusion based on the 1993 amendments to 
section 801 of the Copyright Code. Former section 801(b)(4), which 
assigned to the Tribunal the authority to distribute DART royalties, 
and ``to carry out its other responsibilities under chapter 10,'' was 
deleted; except for DART royalty distribution, which reappears in the 
new section 801(b)(3), that former authority was not reassigned to the 
Copyright Arbitration Royalty Panels. For these reasons the Office has 
not proposed any regulations in this rulemaking as to the raising of 
the DART maximum royalty payment or the status of a DART device. These 
are matters that will be covered later in separate DART regulations.
    We invite comments from the parties on the following:
    Is our interpretation concerning the status of DART proceedings 
under the CARP legislation correct?
    If it is correct, to what extent does the Office have authority to 
adopt regulations governing standards of conduct in DART proceedings?
    (2) Organization of Part 251. Part 251, which tracks the original 
format of the former Tribunal's regulations, is divided into seven 
subparts, identified as subparts A through F.
    Subpart A, entitled ``Organization,'' describes the composition and 
selection process for the CARPs. Subparts B and C--``Public Access to 
Copyright Arbitration Royalty Panel Meetings'' and ``Public Access to 
and Inspection of Records''--remain virtually the same as the former 
Tribunal's rules, with only a few minor technical amendments. Subpart 
D, ``Standards of Conduct,'' consists of a completely new set of rules 
prescribing the financial and ethical requirements for arbitrators, and 
governs ex parte communications, billing, sanctions for misconduct, and 
other matters involving ethical standards. Subpart E, ``Procedures of 
Copyright Arbitration Royalty Panels,'' prescribes the procedures to be 
followed by the CARPs in conducting proceedings, including those 
governing submission of evidence, conduct of hearings, reports of the 
CARPs, and orders of the Librarian. Subparts F and G--``Rate Adjustment 
Proceedings'' and ``Royalty Fee Distribution Proceedings''--provide 
certain additional requirements inherent in rate adjustment and 
distribution proceedings, and contain only a few changes of the former 
Tribunal's rules.
    The following summarizes the additions and changes in the various 
subparts of part 251.
(b) Subpart A--Organization
    As the NPRM explained, subpart A was in need of complete revision 
because of the differences between the statutory organization of the 
CRT and that of the CARPs. In addition to the changes proposed in the 
NPRM, these interim regulations incorporate additional revisions based 
on the comments and our own further review.
    (1) Official address. The Copyright Office has secured a special 
Post Office box for receiving mail relating to the CARPs and any other 
matters arising under subchapter B of chapter II of this title (37 
CFR). As the NPRM said, establishment of a single official address is 
important, since arbitration proceedings will not necessarily take 
place at a single location, within the Library of Congress or 
elsewhere. There may sometimes be an incentive for parties to deliver 
filings directly to the actual location where a CARP is meeting, but, 
for the reasons summarized in the NPRM, we believe it would be a 
mistake to allow official filings to go to locations different from the 
mailing address specified in these regulations.
    Therefore, all filings required by this subchapter, if sent by 
mail, should be marked for delivery to the official address contained 
in Sec. 251.1. The same address should be used for all correspondence 
or inquiries concerning the CARPs, distributions of royalties, rate 
adjustments, and other matters arising under this subchapter B. Note 
that, under Sec. 251.44, the CARPs are required to establish procedures 
under which filings may be delivered directly to them, as long as a 
copy is also delivered to the official address.
    (2) Purpose of the CARPs. Section 251.2 describes the royalty 
distribution and rate adjustment responsibilities of the CARPs with 
respect to the various compulsory licenses and statutory obligations 
established under the Copyright Code.8 The Copyright Owners 
requested deletion of the word ``television'' from the phrase ``cable 
television'' in subsection (e), pointing out that fee distributions for 
cable retransmissions under sections 111 of the statute cover radio as 
well as television distant signal carriage. We have corrected 
subsection (e) and have amended later references to ``cable 
television'' to read simply ``cable.''
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    \8\It is significant that, while adjustment of royalty rates for 
the cable compulsory license is one of the duties of the CARPs 
listed in Sec. 251.2, there is no similar provision for the 
satellite carrier compulsory license. This is because the current 
satellite rates were adjusted in 1992, before enactment of the CRT 
Reform Act, and the satellite carrier license is due to expire on 
December 31, 1994. Congress is currently moving legislation to 
extend the duration of the license and provide for another 
arbitrated adjustment of the royalty rates. The Office anticipates 
that, when and if the pending satellite bill is enacted, it will 
include a provision making the satellite arbitration a CARP 
proceeding. In that event we will amend these rules to reflect the 
legislative changes.
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    (3) List of arbitrators--(i) The NPRM proposals. To facilitate the 
process for selecting arbitrators, the NPRM proposed creation of a 
yearly list of qualified arbitrators obtained from professional 
arbitration associations or organizations. The association or 
organization would supply the names of arbitrators meeting the 
qualifications set out in Sec. 251.5, together with a brief summary of 
each person's educational and employment history, qualifications, and 
``any other information which the professional arbitration association 
or organization may consider relevant.'' The Librarian would then 
publish the list of qualified candidates in the Federal Register, and 
this would constitute the master list from which all selections for 
CARPs would be drawn for the calendar year.
    (ii) Comments of copyright owners. The Copyright Owners recommended 
several changes to Sec. 251.3 as proposed in the NPRM. Copyright 
Owners, comment at 16-19.
    First, they suggested that the Copyright Office solicit names of 
qualified arbitrators from at least five professional arbitration 
associations or organizations, including organizations that list former 
judges. Although, according to their predictions, the cost of an 
arbitration organization's list will be approximately $1,000, they 
``think that it is appropriate for a reasonable amount of money to be 
spent compiling these lists.'' Id. at 16. They also recommended 
consultation with not-for-profit arbitration associations that make no 
charge for their services.
    Second, the Copyright Owners suggested that the master list be 
confined to 50 names. This, they said, ``should provide a large enough 
group from diverse sources to avoid repeating the solicitation process 
in any one year.'' Id. at 17.
    Third, to assist in the control of costs of the arbitration 
process--a concern voiced by most of the commentators--the Copyright 
Owners suggested that Sec. 251.3(a) be amended to expand the required 
information provided to the Librarian by professional arbitration 
organizations; they recommended that this information include a 
description of the potential arbitrators' anticipated hourly, daily, or 
annual fees, including per diem expense requirements. Id. at 18.
    Fourth and finally, the Copyright Owners sought amendment of 
Sec. 251.3(a)(2), which would require arbitration associations and 
organizations to provide ``a brief summary of the member's employment 
history.'' They took the position that a brief summary would not 
provide adequate information upon which to formulate objections, and 
asked for an amendment requiring information on the potential 
arbitrators' ``areas of expertise, general nature of clients 
represented and types of proceedings in which the member represented 
clients.'' Id. at 19.
    (iii) Changes in Sec. 251.3. On the whole we think the comments and 
suggestions on lists of arbitrators make good sense, and we have 
adopted most of them with modifications and additions of our own.
    (A) Change in date for first lists provided by arbitration 
associations. Subsection (a) is amended by deleting ``March 1, 1994'' 
and replacing it with ``on or before May 6, 1994'' as the date the 
Office is to receive from arbitration associations the lists of 
qualified arbitrators in accordance with Sec. 251.3. We are providing a 
longer period in which to compile this year's lists since we could not 
complete the process of selection by March 1, 1994, and since the 
beginning of DART royalty distribution has been postponed from March 30 
to June 30, 1994. See 59 FR 9773 (1994).
    (B) References to ``member'' stricken. In the NPRM, Sec. 251.3 
referred throughout to the persons to be included in the list as 
``members'' of the associations and organizations submitting their 
names. It now seems clear that this term would be questionable or 
inaccurate in some cases. We have therefore substituted the phrase 
``persons qualified to serve as arbitrators'' and the term ``person'' 
in the subsection.
    (C) Public availability of information. The NPRM left open the 
question of whether the information provided by the arbitration 
associations or organizations under subsection (a) would be available 
to the public. This interim regulation has been amended to make clear 
that this information will be available to the public for inspection 
and copying, but only with respect to those potential arbitrators whose 
names are published in the Librarian's list.
    (D) Employment or professional affiliation history. As suggested in 
the comments, we have amended subsection (a)(2) to call for more 
detailed information about the person's professional career and 
expertise. The interim regulation also calls for information about 
clients represented and types of proceedings in which the person has 
been involved, but only if that information is available to the 
association or organization submitting the name. We recognize that a 
potential arbitrator's client base is not always the type of 
information available to a professional arbitration association or 
organization, and that potential arbitrators may be reluctant to 
disclose that kind of information publicly. Arbitrators will be 
required to disclose this and other information to the Librarian as 
part of their confidential financial disclosure statements, see 
Sec. 251.32.
    (E) Disclosures of fees to be charged. We agree with the points 
made in the comments: That the costs of the arbitration process should 
be kept as low as possible, that arbitrators' fees will comprise a 
major part of the costs, and that the rates a particular arbitrator 
will charge are an important element in the selection process. We have 
therefore added a new subsection (a)(5) calling for detailed 
information about the arbitrator's rates for fees. This information 
should include the basis on which the fee is to be computed (hourly, 
daily, etc.), any variation on that basis (overtime, etc.), and the 
amount of the basic rate. (As further discussed in the preamble to 
Sec. 251.38, recovery of expenses will be available only to the 
arbitrators coming from outside the Washington, DC area, and then will 
be limited to the Government per diem rate.)
    (F) Date of publication of arbitrator list. For the reasons 
mentioned above in connection with subsection (a), subsection (b) now 
calls upon the Librarian to publish the arbitrator list after May 6, 
1994, rather than after March 1. In future years the lists will be 
published after January 1.
    (G) Number of names on arbitration list. The Copyright Office 
agrees with the comments of the Copyright Owners that the number of 
names on an arbitrator list should not be left completely open, but we 
do not agree that the regulations should set an exact number. We 
believe that the interests of diversity will be served by publishing a 
list of at least 30 arbitrators, as opposed to an exact number; this 
should provide the flexibility necessary to the publication of a 
balanced list, which in some years might require more than 30. As a 
practical matter, the Office will try to produce a list that generally 
contains about 50 names. However, since we do not anticipate 
circumstances that would require a list with more than 75 names, we are 
adopting that number as the upper limit.
    (H) Number of arbitration associations or organizations. The 
Copyright Owners also asked that the regulations quantify the number of 
associations or organizations from which the Librarian will obtain 
lists of potential arbitrators, and recommended that the number be set 
at five. We agree that the number should be quantified and that under 
the statute it must be more than one, but we think five is too many. 
Several of the arbitration associations listed by the Copyright Owners 
in an appendix to their comment each represent several thousand 
arbitrators. The Office believes that three associations or 
organizations are likely to provide more than enough eligible 
candidates in most cases. The rule as now written, we think, is 
flexible enough to provide diversity, including the presence of former 
judges, on the arbitrator list.
    (4) Arbitrator list: Objections. Under Sec. 251.4, objections to 
individuals on an arbitration list published in the Federal Register in 
accordance with Sec. 251.3 may be lodged with the Librarian, but only 
by parties to a particular proceeding and only during a designated 30-
day time period that will begin and end before the proceeding starts. 
In the case of rate adjustment proceedings the objection period 
coincides with the pre-proceeding period for consideration of possible 
settlements provided by Sec. 251.63. For royalty distribution 
proceedings the period for objections is the same as the period for 
precontroversy motions and objections prescribed by Sec. 251.45. In 
both cases the Librarian's notice in the Federal Register will set out 
the inclusive dates of the objection period. A party to the proceeding 
may lodge objections to one or more of the potential arbitrators on the 
Librarian's list; the grounds for each objection must be stated plainly 
and in detail.
    (i) Comments on objection procedures--(A) RIAA/AARC. In their 
comments RIAA/AARC urged that, instead of tying the objection procedure 
to specific proceedings, the regulations provide for an objection 
period to come before publication of the annual list of arbitrators. 
RIAA/AARC, comment at 2-3. In their view, the proposed system of 
confirming objections to a period before the proceedings begin would 
expose the objecting party to--

* * * the risk of having arbitrators against whom they had just 
filed objections selected for the proceeding. This would inevitably 
have a chilling effect on the parties, thereby negating the purpose 
of the proceeding.

According to RIAA/AARC, a procedure under which potential parties to 
any proceedings could lodge objections to names proposed for the master 
list before it is published in final form would have the advantage of 
expanding overall participation by the parties in the process of 
choosing arbitrators. Id. at 3.
    (B) Music publishers. The Music Publishers had an alternative 
objection process to propose. They took the view that the NPRM's 
disclosure requirements for arbitrators were insufficient, and for this 
reason they recommended that the Librarian publish a ``select list'' of 
10 to 15 names before proceedings begin, with the requirement that 
those potential arbitrators file a financial disclosure statement. 
Under this plan, parties to the proceeding would be allowed to review 
the statements and then file their objections, if any. Music 
Publishers, comment at 5.
    (ii) Changes in Sec. 251.4. The Office is adopting amendments to 
Sec. 251.4 resulting from our decision not to provide any pre-
proceeding period for discovery (discussed below in connection with 
Secs. 251.45 and 251.63). Under the changes, the time period for filing 
objections to arbitrators has been reduced to 30 days. After 
consideration, however, we are unable to agree with the recommendations 
of either the RIAA/AARC or the Music Publishers. The RIAA/AARC proposal 
would require publication of a preliminary list that would be open to 
objections, followed by publication of a ``clean'' list of arbitrators 
whose names provoked no objections or who were found by the Librarian 
to be acceptable despite the objection. This would require substantial 
added administrative burdens, costs, and delays, and the 
``preliminary'' lists would have to be long enough to insure a final 
list of at least 30 names.
    We are not convinced that the procedure we are adopting will 
produce any chilling effect on participation by the parties. As we 
stated in the NPRM, 59 FR 2552 (1994), no peremptory challenges will be 
allowed, and all objections must be fully substantiated. Serious, well-
grounded objections will certainly disqualify an arbitrator from 
selection to a CARP. Where the objections are not sufficient to prevent 
an arbitrator from being selected, the ethics rules of subpart D should 
be adequate to prevent biased decisions resulting from an objection.
    Again, publication of ``select'' lists as proposed by the Music 
Publishers would be an additional and costly administrative burden, and 
would essentially eliminate the need for a master list. The conduct 
rules of subpart D of this interim regulation will require individuals 
appearing on the arbitrator list to file financial disclosure 
statements with the Librarian, and this requirement should satisfy the 
Music Publishers' primary concern.
    (5) Qualifications of Arbitrators. Under Sec. 251.5, as proposed in 
the NPRM, an individual must possess three basic qualifications to 
serve as a CARP arbitrator: Admission to the practice of law; 10 or 
more years of legal practice; and experience in conducting arbitration 
proceedings or facilitating the resolution and settlement of disputes. 
This proposal drew considerable comment from the parties, and there was 
substantial disagreement among them as to whether the arbitrators 
should all be lawyers.
    (i) Comments on requirement for legal qualifications--(A) Certain 
copyright owners. A group identified as ``Certain Copyright 
Owners''9 favored adoption of the lawyer requirement because, they 
said, lawyers and judges have experience in operating under procedural 
and evidentiary rules and applying precedent. Certain Copyright Owners, 
comment at 3. They argued that there is ``no need for panel members to 
possess any substantive expertise beyond knowledge and experience in 
the adjudication and resolution of disputes.'' Id. at 4. If non-lawyers 
were allowed to serve as arbitrators there might be some encouragement 
for the selection of experts such as economists; this, according to the 
comment, could ``distort the process'' by permitting the expert to 
``dominate the panel's consideration of any disputed questions within 
his or her area of expertise,'' and could create the potential for 
``unilateral decisionmaking.'' Id. at 4-5.
---------------------------------------------------------------------------

    \9\This group was comprised of Sports Claimants, the NAB, PBS, 
NPR, Devotional Claimants, and Canadian Claimants.
---------------------------------------------------------------------------

    (B) Program suppliers. Program Suppliers believed that non-lawyers 
should be allowed to serve as arbitrators, although they proposed that 
each CARP include at least one lawyer. Program Suppliers, comment at 2. 
They welcomed the expertise a non-lawyer might bring to the arbitration 
process. In their view the participation of a non-lawyer could promote 
collegiality in the decision-making process, and they noted that the 
CRT Reform Act contains no provision forbidding consideration of non-
lawyers. Id. at 6-7.
    (ii) Comments on selection of former judges. The comments of 
Certain Copyright Owners, Program Suppliers, and Copyright Owners 
generally are agreed that the Librarian should give strong 
consideration to the selection of former judges as arbitrators. They 
proposed that Sec. 251.5(c) be amended to read that a potential 
arbitrator must have ``[e]xperience in conducting arbitration 
proceedings, or facilitating or presiding over the resolution and 
settlement of disputes.'' (emphasis added). Certain Copyright Owners, 
comment at 5; Program Suppliers, comment at 8; Copyright Owners, 
comment at 21. This amendment, they said, would make clear that 
individuals with judicial experience are qualified to serve on CARPs.
    (iii) Comments on continuity of membership. There was considerable 
disagreement on the issue of continuity of membership from one CARP to 
another.
    (A) Copyright owners. Noting Chairman Hughes' floor statement on 
the desirability of continuity, the Copyright Owners argued that having 
the same arbitrators on multiple CARPs is ``essential'' to the 
efficient operation of the royalty rate adjustment and distribution 
process. Copyright Owners, comment at 20. In their view, continuity 
would ``ensure consistency in the decisionmaking process,'' thereby 
fostering the likelihood of settlement among the parties to a 
proceeding. Id. To encourage continuity, the Copyright Owners proposed 
that Sec. 251.5 be amended by adding a new subsection (d) to include an 
additional factor in the selection process, giving preference to any 
arbitrator who had previously served on a panel:

    (d) In addition, arbitrators who have previously served on a 
CARP should be given a preference for selection to a subsequent 
CARP; provided, however, that no arbitrator shall be selected as a 
member of a CARP following the sixth anniversary of the date of his 
or her first selection as a member of a CARP.

Id. at 20-21.
    (B) Certain copyright users. Commentators representing two groups 
of copyright users opposed the principle of continuity on the CARPs. 
NCTA argued that creating a preference based on service on an earlier 
CARP ``could favor those, such as copyright owners, who regularly 
participate before the panels.'' NCTA, comment at 2. United Video 
echoed NCTA's concern, stating its belief that the creation of ad hoc 
arbitration panels was intended as Congress' remedy to the insular 
nature of the CRT:

    As a practical matter, the licensees have no desire to see the 
CRT recreated in the guise of ``stable'' CARPs. Such ``stability'' 
would mean that copyright owners can yet again develop a body of 
mystical, impenetrable, unreasoned standards into which compulsory 
licensees are plunged every five years. . .''.

United Video, comment at 2. Both NCTA and United Video argued that, at 
the very least, the Copyright Office should ensure that arbitrators who 
have served on CARPs in distribution proceedings are not also chosen to 
serve on CARPs in ratemaking proceedings. NCTA comment at 2; United 
Video, comment at 2.
    (iv) Amendment of Sec. 251.5. The Copyright Office has considered 
the varying viewpoints of the parties on qualifications of arbitrators, 
but we have decided to adopt Sec. 251.5 as proposed with only one 
technical amendment to subsection (a). That subsection is intended to 
require arbitrators to be admitted to the practice of law. Since 
membership in a bar association is not synonomous with admission to the 
practice of law, we are broadening the requirement accordingly.
    (A) Legal qualifications. On the issue of whether arbitrators 
should be lawyers, we continue to believe that the adjudicatory nature 
of CARPs requires arbitrators to have experience in operating under 
procedural and evidentiary rules, applying precedent, and evaluating 
the legal significance of conflicting evidence. The importance of legal 
training is underscored by the relatively short period (180 days) 
allowed for conducting proceedings which are often long and 
complicated. Arbitrators will be called upon to decide substantive and 
procedural matters arising both during the hearings and in motions and 
pleadings, and there would be little or no time to train non-lawyers in 
how to handle them.
    (B) Former judges. The Copyright Office believes that Sec. 251.5 as 
drafted is certainly broad enough to allow appointment of former 
judges. Subsection (c), which is taken directly from section 802(b) of 
the Copyright Code, requires an arbitrator to have experience either in 
conducting arbitration proceedings or in facilitating the resolution 
and settlement of disputes. Unlike the Copyright Owners, we believe 
that experience in ``facilitating the resolution and settlement of 
disputes'' includes judges as well as mediators, and that the proposed 
``presiding over'' language is unnecessary. The Office is therefore 
adopting subsection (c) as proposed.
    (C) The question of continuity. Neither the Copyright Office nor 
the Library has had experience in selecting arbitrators under 
circumstances such as these, and for the present we think it is 
important to maintain flexibility in the selection process. The CRT 
Reform Act grants the Librarian considerable discretion in selecting 
arbitrators, and he intends to exercise that discretion to guard 
against any possibility of bias or undue influence. We therefore 
believe it would be a mistake to be bound to any system of preferences 
or exclusions in the selection process at this time. The Congress 
expressly chose not to make continuity among panel members a 
requirement. See 139 Cong. Rec. H10973 (daily ed. November 22, 1993) 
(floor statement of Rep. Hughes) (``The Librarian certainly has 
discretion to chose [sic] individuals willing to serve for 6 years. The 
Senate decided not to make this a requirement, however, and I agree 
with that decision.''). At the same time, we understand that under 
certain circumstances, especially in the case of distribution 
proceedings, continuity could have important advantages.
    Without expressing it as a binding policy or writing it into the 
regulations as a requirement, we agree with Chairman Hughes that, in 
choosing arbitrators for future proceedings, the Librarian should look 
to the quality of service and soundness of decision-making an 
individual has displayed as a member of an earlier CARP. We also agree 
that, in the selection process for a rate-adjustment CARP, the 
familiarity a former arbitrator in a distribution proceeding has 
demonstrated with respect to particular parties and their arguments 
should be taken into account in weighing the possibility of bias. 
Experience with the CARPs will help to determine, later on, whether 
some system of preferences or exclusions should be written into these 
regulations.
    (6) Composition and selection of CARPs: Quorum requirements. 
Section 251.6 of the NPRM described the procedure for selecting the 
members and chairperson of a CARP, and dealt with quorum requirements 
under various circumstances. Subsection (e) of the NPRM provided:

    If for any reason one or more of the arbitrators selected by the 
Librarian is unable to serve during the course of the proceedings, 
the Librarian shall promptly appoint a replacement: Provided, that 
once hearings have commenced, no such appointment shall be made and 
the remaining arbitrators shall constitute a quorum necessary to the 
determination of the proceeding.

This provision would leave the possibility of a single arbitrator 
deciding an entire proceeding.
    (i) Comments of copyright owners. To avoid the dangers inherent in 
a rule that would allow a quorum of one, the Copyright Owners proposed 
that subsection (e) be revised to read:

    (e) If for any reason two of the arbitrators selected by the 
Librarian are unable to serve during the course of the proceedings, 
the Librarian will suspend the proceedings until at least one new 
arbitrator is selected. Two arbitrators shall constitute a quorum 
necessary to the determination of any proceeding.

Copyright Owners, comment at 22.
    (ii) Amendment of Sec. 251.6.--(A) Quorum requirement. The 
Copyright Office shares the Copyright Owners' concern, and is therefore 
adopting the requirement that two arbitrators constitute a quorum 
necessary to the determination of a proceeding. Should a CARP panel be 
reduced to one serving arbitrator for any reason, it would be necessary 
either to replace one or both of the other arbitrators or terminate the 
proceeding. However, there are inherent problems in adopting a process 
of replacing arbitrators, especially after hearings have begun.
    (B) Problems presented by replacement of arbitrators. Our concerns 
go to the heart of the fairness of the proceedings and compliance with 
the requirements of the Administrative Procedure Act. If a new 
arbitrator is selected midway through hearings in a proceeding, he or 
she will lose the benefit of earlier live testimony, and rights of 
parties to the proceeding under the APA could be compromised. We also 
recognize that proceedings cost a great deal of money, and that the 
parties may be reluctant or financially unable to repeat the hearing 
process in its entirety for the benefit of a new arbitrator. One 
partial solution to the fairness problem might be to require all CARP 
hearings to be recorded on videotape. As an alternative to terminating 
the proceedings completely and starting the whole process anew, 
videotaping might provide substantial monetary savings in the long run.
    (C) Compromise solution. In an effort to ensure that a quorum of 
two will exist, and to provide rational, fair, and economical 
procedures for replacing arbitrators, including chairpersons, in 
various situations, the Copyright Office is adopting a compromise 
provision. Where one or two of the arbitrators has left a CARP panel, 
the Librarian of Congress may be called upon to suspend the proceedings 
(thus tolling the running of the statutory periods).\10\ If the hearing 
has not yet begun, the Librarian is obliged to bring a CARP back up to 
its full complement of three members; but, if the hearing is underway, 
no replacement will be made unless necessary to provide the required 
quorum of two members.
---------------------------------------------------------------------------

    \10\The Copyright Office has added a new Sec. 251.8 to Subpart A 
dealing with suspension of proceedings and tolling of the running of 
statutory periods, including the 180-day hearing period. This new 
section is discussed below.
---------------------------------------------------------------------------

    (a) Hearings Not Yet Begun. If hearings in the proceeding have not 
yet begun and the CARP has fallen below its statutory three-person 
complement (two arbitrators selected by the Librarian and a third 
chosen--as member and chairperson--by the other two), the Librarian 
will suspend the proceeding and inaugurate a procedure to bring the 
CARP back up to three members. Where one or two vacancies are to be 
filled, and either or both of the vacant seats were previously occupied 
by arbitrators chosen by the Librarian, the Librarian will select the 
necessary replacement or replacements. If there is one vacancy, and it 
was previously occupied by the chairperson, the two remaining 
arbitrators will select the replacement. If there are two vacancies, 
and one was previously occupied by the chairperson, the Librarian will 
select one replacement, and that person will join with the remaining 
arbitrator to choose the replacement.
    (b) Hearings begun. If hearings have begun, the Librarian will not 
suspend the proceedings and select replacements unless it is necessary 
to do so to achieve a quorum. In other words, if the hearing is 
underway with the full complement of arbitrators and one drops out, 
nothing need be done. However, if two of the three arbitrators drop out 
at once, or if the hearing is going forward with two arbitrators and 
one drops out, the Librarian will need to suspend the proceedings and 
select one new arbitrator (not two) to provide the necessary quorum.
    Where the hearing has started and the CARP loses its chairperson, a 
problem arises since the Librarian has no authority under the statute 
to fill the chair of a CARP. The solution in this situation is to ask 
the two remaining arbitrators, or the one remaining arbitrator and the 
newly-selected arbitrator, to decide between themselves which of the 
two of them will serve as chairperson.
    A more serious problem arises from the fact that a new arbitrator 
in an ongoing hearing will not have had the benefit of hearing and 
seeing the earlier testimony and arguments. In an effort to accommodate 
the rights of the parties under the APA and, at the same time to save 
time and money, the interim regulation requires that the Librarian's 
selection of a replacement arbitrator in an ongoing hearing receive the 
unanimous written agreement of all parties to the proceeding. If the 
parties agree, the hearings will continue from the point of suspension; 
if not, the Librarian will terminate the proceeding and start the whole 
process anew.
    (7) Suspension of proceedings. Several provisions of these interim 
regulations, including those on the replacement of arbitrators under 
Sec. 251.6 and the removal and replacement of an arbitrator for 
misconduct under Subpart D, require the Librarian to suspend any 
ongoing proceedings long enough to make the necessary replacement or 
replacements. Upon considering the problem the Copyright Office has 
concluded that these regulations should also contain a section 
governing the conditions and procedures for suspensions, making clear 
in particular that suspension tolls the running of the 180-day hearing 
period or any other time period in effect. We have added this provision 
as Sec. 251.8, at the end of subpart A.
    Under subsection (a) of the new Sec. 251.8, whenever an arbitrator 
must be replaced for any reason, the Librarian is obliged to order a 
suspension of the proceeding by notice to all parties in writing, to 
make the replacement expeditiously, and to give written notice to the 
parties of the resumption of the proceeding ``from the time and point 
at which it was suspended.'' Subsection (b) is intended to deal with 
cases in which the Librarian is convinced that, because of temporary 
situations such as serious illness or personal tragedy affecting an 
arbitrator, it would be extremely difficult or impossible to continue 
the proceeding for the time being. In these situations, not involving 
replacement of an arbitrator, the proceeding may be suspended only with 
the written consent of all parties, and for a stated period of one 
month or less.
    Section 251.8(c), which applies to all suspensions, provides that 
the suspension ``shall result in a complete cessation of all aspects of 
the proceeding, including the running of any statutory period provided 
for completion of the proceeding.'' We believe it is necessary and 
important during the time of suspension to toll the periods provided 
for proceedings in the statute, particularly the 180-day period 
prescribed by 17 U.S.C. 802(e). The tolling provision is intended to 
allow sufficient time for selection of replacements without cutting 
into and reducing the full period the arbitrators will need for hearing 
the case and rendering a decision.
(c) Subpart B--Public Access to Copyright Arbitration Royalty Panel 
Meetings
Subpart C--Public Access to and Inspection of Records
    The Copyright Office is adopting all of subparts B and C, as 
proposed in the NPRM, with changes regarding recordings and photographs 
at open meetings. The Copyright Owners requested a minor change in 
Sec. 251.12, which governs the conduct of open meetings held by a CARP, 
to say that the right of a witness to withhold authorization of a 
recording of his or her testimony does not apply to the official 
transcript. We agree, but on further consideration we think Sec. 251.12 
could have been too strict in operation. We see no reason why the CARP 
proceedings should not be conducted with the greatest possible 
openness.
    Section 251.12 now reads that the public and the news media will be 
able to take photographs and to make audio or video records of the 
proceedings, so long as the CARP is informed in advance and nothing is 
done to disrupt the proceedings. The permission of the participants in 
the proceedings would not be required.
(d) Subpart D--Standards of Conduct
    The CRT Reform Act amended section 802(b) of the Copyright Code to 
provide that the ``Librarian of Congress, upon recommendation of the 
Register of Copyrights, shall adopt regulations regarding standards of 
conduct which shall govern arbitrators and the proceedings under this 
chapter.'' The need to provide standards of conduct for arbitrators in 
these regulations is particularly important because the CARP 
arbitrators are not employees of the Federal Government. They are 
private individuals to whom controversies are being referred under this 
particular form of alternative dispute resolution. Since the 
established standards of conduct for government employees are not 
applicable to the CARP arbitrators, these regulations must adopt those 
and other standards in the specific provisions of part 251.
    Instead of proposing specific regulations in our NPRM, we asked for 
recommendations as to what standards of conduct should apply to the 
CARP arbitrators.
    (1) Comments and recommendations. Three of the written comments 
addressed standards of conduct.
    (i) RIAA/AARC. The RIAA/AARC strongly supported a code of conduct. 
On the ground that the characteristics of CARP arbitrators are closest 
to those of administrative law judges, they recommended that the Office 
base its regulations on the ``Model Code of Judicial Conduct for 
Federal Administrative Law Judges,'' and attached to their comment 
pertinent provisions of the Code. RIAA, comments at 3-4, and Appendix.
    (ii) Music publishers. The Music Publishers also suggested that the 
Office adopt rules based on the ``Model Code of Judicial Conduct,'' and 
emphasized that the rule should prohibit all ex parte communications 
with the CARPs. Music Publishers, comments at 10.
    (iii) Copyright owners. The Copyright Owners advocated strict 
standards, noting that royalty distributions can involve hundreds of 
millions of dollars. They specifically recommended that the Librarian 
investigate persons under consideration as arbitrators for conflicts of 
interest, and that, if any conflicts are found to exist before or 
during the proceeding, the particular individual be disqualified. With 
respect to employment of a potential or actual arbitrator by any 
interested party, they recommended a pre-employment ban of five years 
and a post-employment ban of three years. In their view, however, 
current conflicts of interest or recent past employment with an 
interested party need not be disqualifying if the parties to the 
proceeding unanimously waive the disqualification. The Copyright Owners 
also recommended that strict regulations be adopted to prohibit ex 
parte communications, or any other appearances of impropriety, and to 
rule out unreasonable billing by the arbitrators. Copyright Owners, 
comments at 25-29.
    (2) Meeting with endispute representatives. As the result of 
questions raised during an informal meeting of Copyright Office 
officials with two representatives from Endispute, an arbitration 
association, we have made some modifications to our sections on billing 
(Secs. 251.3, 251.38, 251.54) and our definition of employment 
(Sec. 251.36). Those modifications are explained below in our 
discussion of each applicable section. A summary of our meeting with 
Endispute has been placed in the comment file of this docket and is 
available for public inspection.
    (3) Basic conclusions. In formulating our interim rules for 
standards of conduct, the Copyright Office has considered the 
recommendations of the parties, and has incorporated some of them, as 
explained below. On the fundamental question of the model to follow, 
however, we have decided to base the rules on those promulgated by the 
Office of Government Ethics (OGE), rather than the codes of judicial 
conduct or codes governing administrative law judges. OGE's rules are 
more detailed and rely less on self-reporting or recusal. We believe it 
is important that the standards be clearly expressed so that the public 
is assured of fairness and the arbitrators know precisely what is 
expected of them. It is also important that, rather than merely 
expressing good intentions, the rules be enforceable and enforced.
    (4) Interim regulations on standards of conduct. Part D of these 
interim regulations (Secs. 251.30-39) reflects the Copyright Office's 
conclusions as to the general and specific standards to govern the 
conduct of CARP arbitrators. The following is a summary of these 
interim rules, and we solicit detailed comments on any or all of them.
    (i) Basic obligations of arbitrators. Section 251.30 provides the 
basic obligations of the arbitrators in general terms. It is derived 
from Title 5, Sec. 2635.101 of the rules of the Office of Government 
Ethics, as modified to meet circumstances applicable to the CARP 
arbitrators.
    The general obligations set out in Sec. 251.30 apply both to the 
arbitrators selected to preside in a particular proceeding and to the 
arbitrators who are listed as available but who have not yet been 
selected. They specify that arbitrators: Shall not use their position 
for private gain; shall not hold any conflicts of interest; shall not 
solicit or accept gifts from interested parties; shall not reveal 
nonpublic information; shall not give preferential treatment to any 
party, shall not engage in outside activities that conflict with their 
duties; shall not seek employment with any interested party; and shall 
endeavor to avoid all appearances of impropriety.
    In establishing these general obligations, the Copyright Office has 
also incorporated provisions from the Model Code for Administrative Law 
Judges recommended by the RIAA/AARC. These provisions address the 
behavior of arbitrators at hearing: To maintain order and decorum, to 
be patient, dignified, and courteous to the parties and witnesses, and 
to dispose of business promptly. RIAA, comment at Appendix.
    These general obligations are to be considered just as binding as 
the specific obligations that follow in Secs. 251.31-38. They are meant 
to cover situations not anticipated by the specific sections, but which 
nonetheless would constitute a violation of ethical standards. 
Complaints based on these general provisions are as valid, and must be 
taken as seriously, as those based on specific obligations. While most 
of the general obligations have more specific counterparts in the 
obligations spelled out in Secs. 251.31-38, some do not. One example is 
Sec. 251.30(f), which prohibits bias on the part of an arbitrator. A 
specific rule on bias would probably be futile because it could not 
envision all possible situations; but, if supported, a charge of bias 
could be grounds for disqualification.
    (ii) Financial interests. Section 251.31 specifies what constitutes 
a financial conflict of interest that would result in an automatic 
disqualification to serve. This section does not cover all areas of 
potential bias; it applies only to those that involve a current 
financial conflict and would result in automatic disqualification. 
Other areas of potential bias would be covered by the objection 
procedure in Sec. 251.4, as discussed above in connection with that 
section and below in connection with these Standards of Conduct 
regulations.
    (A) Distribution proceedings. Section 251.31 states that, in a 
distribution proceeding, the arbitrator may not have a financial 
interest in any claimant to that proceeding, or in any copyright owner 
that ultimately receives royalties from a claimant to the proceeding, 
whether or not the claimant is party to a voluntary settlement. The 
reason for disqualifying anyone with a financial interest in a party 
that has already settled its dispute is that, since distributions are 
annual proceedings, the arbitrator might otherwise be tempted to insert 
precedent that could help that party in the following year's 
controversy.
    As noted, the prohibition against financial conflicts applies more 
widely than merely to interests in claimants to the proceeding. It also 
covers interests in copyright owners who receive royalties from a 
claimant to the proceeding, such as a television producer who does not 
file a claim herself but receives royalties from a syndicator who does.
    (B) Rate adjustment proceedings. In a rate adjustment proceeding 
the arbitrator may not have a financial interest in any copyright owner 
or user entity that would be affected by the outcome of the proceeding.
    (C) Definition of financial interest. For purposes of both 
distribution and rate adjustment proceedings, Sec. 251.31(b) defines 
``direct or indirect financial interest'' to include employment and 
other affiliations, ownerships of securities, and deriving any income, 
however small, from an interested party. Section 251.31(c) makes two 
specific exceptions to the definition of ``financial interest'': (1) 
Where the individual's money is invested in a mutual fund or blind 
trust and he or she cannot control the investment decisions; and (2) 
where the individual is receiving fixed post-employment benefits that 
would not be affected by the outcome of the proceeding, such as 
benefits from health insurance or a pension.
    (D) Curing a conflict of interest. Section 251.32(b) provides two 
ways to cure a conflict of interest: (1) The potential arbitrator may 
divest himself or herself of the interest that caused the 
disqualification; or (2) the parties may be asked to consider the 
nature and degree of the conflict and, if all parties agree that the 
conflict is not sufficient to result in disqualification, the 
individual may serve.
    (E) Objection procedure. Even if the arbitrator does not have a 
financial conflict of interest, parties who nonetheless believe a 
potential for bias exists for any other reason may petition the 
Librarian under the objection procedure described in Sec. 251.4. 
Parties will have available to them the employment history, 
affiliations, and the general nature of the clients represented by the 
potential arbitrators upon which to base their objections. The 
Librarian will rule on objections on a case-by-case basis.
    (F) Interests of relatives and associates. Section 251.31(d) 
specifies that the financial interests of the arbitrator's spouse, 
minor child, and business associates are to be imputed to the 
arbitrator. This paragraph is derived directly from Sec. 2635.402(b)(2) 
of the OGE's regulations.
    (iii) Financial disclosure statement. Section 251.32 requires all 
listed arbitrators to file confidential financial disclosure statements 
with the Librarian, within one month following publication in the 
Federal Register of the annual list of arbitrators containing their 
names. To maintain the confidentiality of the statements, only the 
Librarian and designated Library staff will be permitted to review 
them. The Librarian will not select any arbitrator who has a conflict 
of interest as defined in Sec. 251.31. When the two selected 
arbitrators pick their chairperson, they will have to consult first 
with the Librarian to see that the person they nominate has no conflict 
of interest. If the Librarian finds that a conflict does exist, the two 
selected arbitrators will be asked to choose another arbitrator who has 
no conflict of interest.
    After the panel is selected, the arbitrators will have one week to 
file updated financial disclosure forms with the Librarian: This 
requirement is intended to ensure that no conflicts had developed 
between the time the arbitrators were listed and the time they were 
selected. If any conflicts arise during the later course of the 
proceeding, or if any change in an arbitrator's financial interests 
presenting a disqualifying conflict of interest is found during the 
hearing to have gone unreported, the Librarian will suspend the 
proceeding in accordance with Sec. 251.8 of these interim regulations 
and replace the arbitrator with another arbitrator from the arbitrator 
list.
    (iv) Ex Parte communications. Section 251.33 sets out the varying 
circumstances under which a ban is imposed on ex parte communications 
with: (1) The Librarian of Congress or the Register of Copyrights; (2) 
staff of the Library or the Copyright Office; (3) persons selected as 
arbitrators in a proceeding; and (4) persons named in the current list 
of qualified arbitrators. The section also describes what anyone 
receiving a prohibited communication must do, and the possible 
consequences of a violation of the rule.
    (A) Prohibited communications--(aa) Communications with librarian 
or register. (1) Who is banned from communicating: Anyone outside the 
Library of Congress or Copyright Office;
    (2) What communications are banned: The merits or status of any 
matter, procedural or substantive, relating to royalty distribution or 
rate adjustment;
    (3) When communications are banned: Any time.
    (4) Exceptions: Statements on public policies involved in CARP 
operations where the discussion is unrelated to specific proceedings; 
for example, a discussion on the advisability of amending the copyright 
statute.
    (bb) Communications with Library of Congress or Copyright Office 
staff. (1) Who is banned from communicating: anyone outside the Library 
or the Office;
    (2) What communications are banned: The substantive merits of any 
past, pending, or future royalty distribution or rate adjustment 
proceeding;
    (3) When communications are banned: Any time.
    (4) Exceptions: procedural inquiries. If the employee does not know 
the answer, he or she will relay the question to the CARP and pass the 
answer back to the inquirer.
    (cc) Arbitrators selected by the librarian. (1) Who is banned from 
communicating: Interested parties or anyone acting at their instance;
    (2) What communications are banned: Total ban on all communications 
for any reason.
    (3) When communications are banned: A period beginning with the 
arbitrator's selection and ending with the filing of the CARP's report, 
and, if the matter is remanded, the period starting with the 
reconvening of the CARP, and ending with the filing of the final 
report.
    (4) Exceptions: None
    (dd) Arbitrators listed as qualified in current list. (1) Who is 
banned from communicating: Interested parties or anyone acting at their 
instance;
    (2) What communications are banned: The merits of any past, 
pending, or future royalty distribution or rate adjustment proceeding;
    (3) When communications are banned: The period when the 
individual's name appears on the Librarian's current list of qualified 
arbitrators;
    (4) Exceptions: None.
    (B) Action required by recipients of banned communication. Anyone 
who receives a prohibited communication is required immediately to end 
the communication and place on the public record of the proceeding the 
actual communication, if written or recorded, or a description of the 
communication, if oral, together with a memorandum describing any 
further responses. The communication may not be considered by the CARP 
unless and until it is properly submitted into evidence by one of the 
parties.
    (iii) Action taken by librarian or CARP. Either the Librarian or 
the CARP may require the party responsible for the prohibited 
communication to show cause why that party's interest in the proceeding 
should not be dismissed or otherwise adversely affected. This provision 
is derived from section 557 of the Administrative Procedure Act.
    (v) Gifts and other things of monetary value. Section 351.34 deals 
with the ethical question of when, if ever, an arbitrator may accept 
gifts or other things of monetary value ``from a person or organization 
having an interest that would be affected by the outcome of the 
proceeding,'' whether or not there was any intent to influence the 
outcome. The ban would be total for arbitrators actually selected for a 
CARP, and somewhat less stringent for individuals named as qualified on 
the Librarian's current list. The prohibition covers both direct and 
indirect solicitation and acceptance of gifts or things of value; it 
extends to gifts or other monetary benefits to the individual's family, 
or to a charity, if provided with the knowledge of or at the instance 
of the selected or listed arbitrator.
    (A) Selected arbitrators. For arbitrators who have been selected to 
serve on a CARP, Sec. 251.34 establishes a total ban on the 
solicitation or acceptance of any gifts or other monetary benefits, no 
matter how small in value. The prohibition would be in effect from the 
time of the arbitrator's selection through the submission of the CARP 
report, and during any court-ordered remand.
    (B) Listed arbitrators. The ban also applies to arbitrators named 
on the Librarian's current list, but with two exceptions: (1) 
Acceptance of gifts or other things, including meals, where their value 
is less than $20 per occasion and less than $50 in a calendar year; and 
(2) acceptance of gifts or other things when the circumstances make it 
clear that the action was motivated purely by family and personal 
relationships. These two exceptions are derived from the OGE's 
regulations, and are intended to make plain that nominal, unsolicited 
benefits cannot be used to disqualify a potential arbitrator. They are 
not intended to encourage gift-giving under any circumstances, 
especially where, as here, arms-length relationships should be the rule 
rather than the exception.
    (vi) Outside employment and other activities. Section 251.35 
specifies that, once an arbitrator has been selected for a CARP and 
until all possibility of a court-ordered remand is ended, the 
arbitrator is required to refrain from any outside activity that would 
raise a question about the individual's ability to render an impartial 
decision. This ban extends beyond matters that could be considered a 
financial conflict of interest, and beyond receipt of gifts or other 
things of value. The following are examples of prohibited activities: 
giving free legal advice; attending a gathering sponsored by an 
interested party; giving a speech related to the proceedings; or 
accepting direct or indirect payment of honoraria. The ban on honoraria 
covers appearances, speeches, and articles that are related to the 
proceeding or, if the offer is from an interested party, that are 
related to any matter.
    (vii) Pre-arbitration and post-arbitration employment restrictions. 
Section 251.36 provides that no arbitrator will be selected for a CARP 
if he or she had been employed within the previous five years by a 
party financially interested in the proceeding, although this rule may 
be waived under certain circumstances with the unanimous consent of the 
parties. The section also prohibits arbitrators from arranging future 
employment with any party to the proceeding, and from entering into 
employment with any party for three years after the date of the CARP 
report. ``Employment'' for these purposes is given its most expansive 
meaning to include any business relationship that involves the 
providing of personal services, but not including service as an 
arbitrator, mediator, or neutral. The five-year rule for pre-
arbitration employment, and the three-year rule for post-arbitration 
employment, is based on the comments of the Copyright Owners. Copyright 
Owners, comment at 26-27. The definition of ``employment'' comes from 
Sec. 2635.603(a) of the OGE's regulations. The exception for employment 
as an arbitrator, mediator, or neutral was adopted following our 
discussion with Endispute.
    (viii) Use of nonpublic information. As noted earlier, it is our 
intention that CARP proceedings be conducted as openly as possible. In 
proceedings such as these, however, there will necessarily be 
information that must be kept confidential, and Sec. 251.37 deals with 
these situations. Arbitrators are not to reveal any information from 
filings, pleadings, or evidence that the CARP has ruled to be 
confidential. Nor, unless required by law, are arbitrators to disclose 
any of the following: Intra-panel communications, or communications 
between the Library and the panel, intended to be confidential; draft 
rulings or decisions; and the final CARP report before it is submitted 
to the Librarian. Section 251.37(c) also prohibits an arbitrator from 
using nonpublic information for personal profit or for the profit of 
anyone else. This provision was derived from Sec. 2635.703 of the OGE's 
regulations.
    (ix) Billing and commitment to standards. In response to requests 
from the parties that these regulations seek to ensure that 
arbitrators' charges are reasonable, we have adopted the following 
provisions on billing:
    (A) Bound by initial proposal. Arbitrators will be bound by the 
hourly or daily charge they proposed when their names were first 
submitted for listing by the Librarian. See Sec. 251.3. They will not 
be allowed to charge in excess of those rates. We think this 
requirement will induce arbitrators to quote reasonable rates, since 
they know that their selection by the Librarian will be based in part 
on this factor.
    In our discussions with Endispute a suggestion was made to allow 
arbitrators to charge a reasonable cancellation fee if a proceeding is 
settled early, to compensate them for having cleared their schedules. 
We have not adopted the proposal in these interim regulations, but we 
solicit comments on whether a cancellation fee is justifiable and, if 
so, how it might be worked into the overall CARP scheme for paying 
arbitrators.
    (B) Incidental expenses. Arbitrators residing within the 
Washington, DC metropolitan area11 will not be allowed to bill for 
incidental expenses such as local travel, meals, telephone calls, 
postage, and the like. All their incidental expenses will have to be 
absorbed entirely in the hourly or daily rate the arbitrator proposes. 
Arbitrators can, and doubtless will, take their incidental expenses 
into account when proposing their rate. In addition, as required by 
section 801(d) of the Copyright Code, the Library and the Copyright 
Office will provide the CARPs with necessary administrative services, 
and this will sharply reduce some of the arbitrators' incidental 
expenses. Arbitrators who reside outside the Washington, DC 
metropolitan area will be allowed to add their expenses for travel, 
lodging, and meals to their bills so long as these expenses do not 
exceed the applicable government rate.12
---------------------------------------------------------------------------

    \1\1The Washington, DC metropolitan area is comprised of the 
District of Columbia, the independent cities of Alexandria, Fairfax, 
and Falls Church, the Virginia counties of Arlington, Fairfax, and 
Loudoun, and the Maryland counties of Montgomery and Prince Georges.
    \1\2As of January 1, 1994, the government rate for the 
Washington, DC metropolitan area is lodging not to exceed $113 a 
day, and $36 for meals ($8 breakfast, $8 lunch, $20 dinner).
---------------------------------------------------------------------------

    (C) Detailed accounting. Arbitrators are required to submit a 
detailed account of the work they performed during their billed time. 
This should give the parties a means of reviewing the reasonableness of 
the charges.
    (D) No billing for support services. Except for support services 
provided by the Library of Congress and the Copyright Office, the 
arbitrators will be required and expected to perform their own work, 
including research, analysis of the record, and decision-writing. 
Although it might be argued that delegating some more routine work to 
others could lower the bill, this practice would undermine the full use 
of the arbitrators' experience and expertise, which were the reasons 
for their selection.
    (E) Signed agreement. Finally, the Library will require all 
arbitrators to sign an agreement at the time of their selection, 
stating that they will abide by all of the standards of conduct and 
billing restrictions specified in this subpart. Failure to sign the 
agreement will preclude selection of the individual for a CARP.
    (x) Sanctions and remedies. Section 251.39 specifies some of the 
sanctions and remedies for the violation of the standards of conduct 
provided by this subpart. The listings, which are not exhaustive, are 
divided into subsections laying out the sanctions and remedies 
applicable to: (1) Selected arbitrators; (2) listed arbitrators; and 
(3) interested parties who engaged in ethical violations. A final 
subsection, applicable to any and all violations of the standards of 
conduct under these regulations, authorizes the Librarian of Congress 
to refer the matter to the Department of Justice or other law 
enforcement authority for criminal prosecution. The following is a 
summary of Sec. 251.39:
    (A) Selected arbitrators. Sanctions and remedies applicable only 
against arbitrators selected to serve on a CARP: Removal from the 
proceeding;
    (B) Selected and listed arbitrators. Sanctions and remedies 
applicable against both arbitrators selected to serve on a CARP and 
persons listed as qualified in the Librarian's current list:
    (aa) Permanent removal of the person's name from the current and 
any future list of available arbitrators published by the Librarian;
    (bb) Referral of the matter to the organized bar of which the 
person is a member for possible disciplinary action; and
    (cc) Referral of the matter to competent law enforcement authority 
for possible criminal prosecution.
    (C) Interested parties or individuals. Sanctions and remedies 
applicable against interested parties or individuals who violate the 
ethical standards established by this regulation:
    (aa) Referral of the matter to the organized bar or professional 
association of which the offending individual is a member for possible 
disciplinary action;
    (bb) Barring the offending individual from current appearances 
before the CARP, from future appearances, or both;
    (cc) Designation of an issue in the current or in a future 
proceeding, requiring the party to show cause why its interest should 
not be dismissed, denied, or otherwise adversely affected; and
    (dd) Referral of the matter to competent law enforcement authority 
for possible criminal prosecution.
    On the question of referral of cases for criminal prosecution we 
note that, although arbitrators are not Federal Government employees, 
we are firmly of the opinion that U.S. criminal provisions do apply to 
attempts to influence them. Title 18 U.S.C. 201, which prohibits the 
influencing of public officials, defines public officials as

* * * an officer or employee or person acting for or on behalf of 
the United States, or any department, agency or branch of Government 
thereof, including the District of Columbia, in any official 
function, under or by authority of any such department, agency, or 
branch of Government, or a juror. [emphasis supplied]

We believe that arbitrators are persons acting for or on behalf of the 
Library of Congress by the authority of the Librarian. Therefore, 
although we certainly hope the situation never arises, we will not 
hesitate to refer for criminal prosecution attempts to influence the 
arbitrators.
    Questions may well be asked as to how the Library of Congress would 
go about removing a selected arbitrator from a proceeding under this 
subpart, and the legal basis for such an action. We believe that the 
appropriate procedure for the Librarian would involve suspension of the 
proceeding under Sec. 251.8, issuance of an order declaring the 
arbitrator's seat vacant and the reasons for that action, and 
appointment of a replacement under Sec. 251.6. The legal basis for the 
action would be the arbitrator's violation of these regulations, and 
the breach of his or her contract with the Librarian of Congress under 
which the individual was committed to observe these regulations. We 
invite comments on these conclusions, and on other possible sanctions 
and remedies for violations of these rules.
    (xi) Appendix to this preamble: Examples of typical fact 
situations. In setting these standards of conduct, the Office is aware 
that the interests that could be affected by rate adjustment and 
royalty distribution proceedings are quite extensive. We therefore wish 
to make sure, especially in the area of financial conflicts of 
interest, that we have set the standard at an appropriate point. Should 
we cast the net wider in our efforts to anticipate bias, or, on the 
contrary, have we gone too far? As an appendix to this preamble, we 
have set out ten examples (with their related section numbers) of 
situations that seem likely to occur in the next few years. We solicit 
comments as to whether or not these situations should be grounds for 
eliminating an arbitrator from consideration by the Librarian to serve 
on a panel. Please note that these examples are intended solely to 
focus thought and elicit opinions; they are in no way intended to 
suggest our opinions on how they should be answered.
(e) Subpart E--Procedures of Copyright Arbitration Royalty Panels
    (1) Formal hearings--(i) Phase I and Phase II proceedings. In cable 
royalty distribution proceedings, the former Tribunal traditionally 
divided the proceeding into two phases. In Phase I, the Tribunal 
determined the percentage allocation of the royalty pool among nine 
categories of claimants.13 Then, if there were any disputes within 
a claimant category, the Tribunal would move to Phase II and make a 
suballocation. However, this procedure was ``common law'' at the 
Tribunal and was not embodied in Sec. 251.41, which states only that 
formal hearings will be conducted for royalty distribution. It was not 
adopted, even as ``common law,'' for satellite royalty distribution 
proceedings because the first three yearly funds were completely 
settled.
---------------------------------------------------------------------------

    \1\3The nine Phase I categories were: Program Suppliers, Sports, 
Commercial Television, Music, Noncommercial Educational Television, 
Devotional Claimants, Canadian Claimants, Noncommercial Educational 
Radio, and Commercial Radio. The claimant categories resulted mostly 
from the way the claimants themselves coalesced before the Tribunal, 
as they were entitled to do under section 111.
---------------------------------------------------------------------------

    We solicit comments on the following:
    Is the procedure of dividing a cable distribution proceeding into 
Phases I and II a precedent that is binding on the Copyright Office?
    If not, should it nonetheless be followed?
    If it should be followed, should we adopt rules governing the 
procedure?
    Should those rules include a definition of each of the Phase I 
categories?
    (ii) ``Paper'' proceedings. As proposed, Sec. 251.41(b) of the NPRM 
permitted the parties to petition the Librarian to have their 
controversy decided solely on the submission of written pleadings. 
However, the section did not identify the basis on which the Librarian 
would rule in favor of the petition. The Music Publishers urged that 
the basis should be the same as that for summary judgment set forth in 
Rule 56 of the Federal Rules of Civil Procedure: ``that there is no 
genuine issue as to any material fact.'' Music Publishers, comment at 
9-10.
    The Copyright Owners proposed a procedure called ``summary 
decision,'' which would use the same standard: ``no genuine issue for a 
hearing.'' They also proposed including a procedure for ``motions to 
dismiss'' for disposing of claims or petitions, which would be handled 
within the same framework. Motions for ``summary decision'' and 
``motion to dismiss'' could be filed with the CARP panel or, if no 
panel had been constituted, with the Librarian. Copyright Owners, 
comment at 24.
    The Office agrees with Music Publishers and Copyright Owners: the 
grounds for granting a petition for a ``paper hearing'' should be that 
no genuine issue exists as to any material fact. We have added a second 
ground supporting petitions for ``paper hearings'': if all parties to 
the proceeding agree to the petition.
    As under the NPRM, petitions asking that a controversy be decided 
on the basis of written pleadings may be filed with the Librarian 
during the 30-day pre-hearing periods provided in Secs. 251.45 and 
251.63. If the Librarian finds that there is no factual issue requiring 
a formal hearing, or that all parties agree that the petition should be 
granted, he or she may decide in favor of ``paper proceedings.'' Unlike 
the NPRM, however, Sec. 252.41 now gives the Librarian alternative 
discretion to designate the request for a paper proceeding as an issue 
for the CARP. Similarly, the procedure for a motion to dismiss, to be 
found in Sec. 251.45(b), is to file it with the Librarian who may, in 
his or her discretion, decide the motion to dismiss or designate it an 
issue for the panel.
    (2) Suspension or waiver of rules. Section 251.42 provides that a 
CARP, for purposes of that panel's individual proceeding only, may 
waive the procedural provisions of the rules upon a showing of good 
cause. Copyright Owners have asked that any waiver of the procedural 
rules by the panel be allowed only if all the parties to the proceeding 
agree. Copyright Owners, comment at 23.
    The Copyright Owners may be concerned that the discretion of the 
panel to waive rules could lead to a denial of due process, but the 
proposal to allow waivers only with the unanimous consent of the 
parties may go too far in the opposite direction. It might hinder a 
CARP's efforts to do justice in an individual instance, and it might 
give the party opposing the waiver unfair leverage. For example, the 
panel might want to waive the rules that allow only direct and rebuttal 
testimony, thus permitting surrebuttal testimony in the interest of 
getting more information. If unanimous consent were needed for the 
waiver, however, the party that might be disadvantaged by the 
additional information would have a veto.
    The Office has decided to retain this provision as written, but we 
will closely monitor the circumstances under which future CARPs find 
good cause to suspend or waive the rules. Should any patterns of 
unfairness or denial of due process begin to emerge, we will revisit 
this provision.
    (3) Filing and service of written cases and pleadings--(i) 
Attestation of Written Testimony. Section 251.44(d) requires that the 
written testimony of each witness be accompanied by an affidavit or 
declaration. Copyright Owners asked that this requirement be deleted 
and be made optional because witnesses testify orally under oath, and, 
in essence, swear twice. Copyright Owners, comment at 23. However, 
because some testimony is stipulated and is entered into the record 
without oral testimony, we have decided to retain the provision.
    (ii) Typographical error. With regard to subsection (e)(1) of 
Sec. 251.44, the Copyright Owners noted a typographical error: The word 
``not'' was inadvertently left out when the subparagraph was carried 
over from the former Tribunal's rules. Copyright Owners, comment at 23. 
The correction has been made.
    (iii) Service list. Subsection (f) requires the parties to a 
proceeding to serve everyone on the service list when making a filing 
with the CARP or the Librarian. The Copyright Owners asked that the 
section be amended to require the Librarian to develop a service list 
for each proceeding and distribute it to the parties so that they can 
comply with the requirements of service. The Copyright Owners also 
asked for the rule to specify that each party to a proceeding has an 
obligation to inform the Librarian of changes in its name or address 
affecting the service list. Copyright Owners, comment at 23. These are 
both good suggestions with which we agree, and we have amended the 
subsection accordingly.
    (iv) Oppositions and replies. Copyright Owners requested that one 
or more new paragraphs be added to Sec. 251.44 to provide for automatic 
pleading cycles whenever motions are filed in a proceeding. They 
recommended that oppositions to motions be filed within ten days and 
replies to oppositions be filed within five days of the date of 
service. Copyright Owners, comment at 23-24. The former Tribunal's 
rules did not contain provisions on these points, which we agree will 
be useful. Accordingly we have added a new subsection (g) to 
Sec. 251.44.
    (4) Precontroversy motions and discovery. Section 251.45, as 
proposed in the NPRM, provided a period for precontroversy exchange of 
documents and discovery, and the filing of precontroversy motions and 
objections. The resolution of these precontroversy actions would have 
been made by the Librarian.
    (i) Comments of copyright owners. The Copyright Owners supported, 
in principle, the concept of a period of discovery to take place before 
the 180-day arbitration period, as a means of reducing hearing costs 
and focusing the issues to be decided. However, they argued that 
precontroversy discovery would be a ``wasted effort'' if it were to 
occur before the filing of the written direct cases, and that discovery 
requests should be focused on actual written cases rather than general 
information. They also urged that resolution of precontroversy matters 
should be made by the CARP, not by the Librarian, because the panel 
would ultimately be the body to determine the relevance of the 
proffered facts. Copyright Owners, comment at 6-9. To achieve what the 
Copyright Owners want--precontroversy discovery handled by the CARP and 
based on written direct cases--it would be necessary to have the 
written direct cases filed, and the CARP empaneled, before the 
beginning of the 180-day arbitration period.
    To accomplish this goal in accordance with the provisions of the 
Copyright Code, the Copyright Owners recommended that a distinction be 
made between ``the commencement of proceedings,'' 17 U.S.C. 803(d), and 
the ``notice initiating an arbitration proceeding,'' 17 U.S.C. 802 (b) 
and (e). Under this theory the Office would first declare the 
``commencement of proceedings'' and thereupon require the filing of 
written direct cases and empanel the CARP; discovery motions and 
objections would be ruled on by the CARP. After discovery is complete 
the Office would then ``initiate an arbitration proceeding,'' and at 
that point the 180-day arbitration period would begin to run. Copyright 
Owners, comment at 9-12.
    (ii) Amendment of Sec. 251.45. We agree with the Copyright Owners 
that precontroversy discovery before the filing of written direct cases 
would not be productive. At worst it could raise the costs of 
litigation and become a fishing expedition to harass an opposing 
claimant. However, as a matter of statutory construction, the Office 
cannot agree that the ``commencement of proceedings'' can be 
conceptually separated from ``initiating an arbitration proceeding'' so 
as to permit the CARP to sit earlier than the 180-day arbitration 
period. Section 802(b), which first uses the phrase ``initiating an 
arbitration proceeding,'' employs it in the context of ``a notice in 
the Federal Register initiating an arbitration proceeding under section 
803 * * *'' In Sec. 803, the notice to which Sec. 802(b) refers is the 
``notice of commencement of proceedings.'' Therefore, the phrases refer 
to each other and must be considered synonymous. Although, as noted in 
the NPRM, Chairman Hughes in his statement accompanying the CRT Reform 
Act recommended that our regulations provide for precontroversy 
discovery ``to the extent practicable,'' we have come to the conclusion 
that there is no way to accomplish this goal under the statutory 
scheme.
    We have therefore amended Sec. 251.45 to eliminate the proposal for 
precontroversy discovery, and we have not adopted the Copyright Owners' 
recommendation to have discovery of written direct cases ruled on by 
the Panel before the 180-day period, because we do not believe that the 
statute allows for it.
    (5) Transcript and record. We have reviewed Sec. 251.49 on our own 
motion. The former Tribunal's rules required persons wishing a copy of 
the hearing transcript to purchase it from the official reporter, but 
we think the public should not only be able to inspect the transcript 
but also to make their own copies. We have therefore amended the 
section to provide that, during the proceeding, the public will have 
the opportunity to copy the transcript at a location specified by the 
CARP chairperson. After the proceeding, the transcript and the rest of 
the written record will be available at the Copyright Office for 
copying.
    In addition, partly for reasons discussed above in connection with 
Sec. 251.6, we solicit comments on whether the hearing sessions should 
be recorded on video as well as audio tape. Videotaping would add to 
the costs of the proceeding, but it would have several advantages: (1) 
Ensuring the accuracy of the official transcript, (2) allowing the 
arbitrators to reach a better decision by helping them to review the 
case more accurately, and (3) affording arbitrators who missed any 
portion of the proceeding, because of illness or because they were 
appointed after the proceeding had begun, an opportunity to make up for 
their absences.
    (6) Assessment of costs of arbitration panels. Section 251.54 
provides for the assessment of the costs of the Arbitration Panels.
    (i) Comments on assessments in distribution proceedings. The 
Copyright Owners and RIAA/AARC have asked that the section be amended 
to provide that, in distribution proceedings, the costs of the CARPs be 
deducted from the relevant royalty fund. Copyright Owners, comment at 
24. RIAA/AARC, comment at 4. The Office finds that it does not 
currently have authority to adopt this proposal. Section 802(h)(1) of 
the Copyright Code states: ``The Librarian of Congress and the Register 
of Copyrights may * * * deduct from royalty fees * * * the reasonable 
costs incurred by the Library of Congress and the Copyright Office 
under this chapter.'' It does not provide that the Office can deduct 
the costs incurred by the CARP.
    We agree that this is an unsatisfactory result. The Librarian of 
Congress, with input from the Copyright Office, is in the process of 
drafting ``financial reform'' legislation that would deal with this 
problem among other fiscal matters affecting the Library; we hope that 
the legislation will be introduced and enacted in the 103rd Congress. 
As currently drafted, title V of the proposed bill would add the 
following provision dealing with the point at issue here:

In distribution proceedings, the Librarian of Congress and the 
Register of Copyrights may deduct from royalty fees deposited or 
collected under this title the reasonable costs incurred by the 
copyright royalty panels, and pay the arbitrators from such 
deductions at such intervals and in such manner as the Librarian of 
Congress shall by regulation provide. Such deduction shall be made 
before the fees are distributed to any copyright claimants. 
Claimants shall bear the costs of the copyright arbitration royalty 
panels in direct proportion to their share in the distribution.

    We invite further comments on this problem. Should the proposed 
legislation be enacted we would, of course, go forward with additional 
regulatory proceedings aimed at implementing it.
    (ii) Comments and assessments in ratemaking proceedings. NCTAs 
expressed concern about the assessment of costs in a ratemaking 
proceeding. Section 251.54(a)(1) repeats the statutory language from 
Sec. 802(c): ``In the case of a rate adjustment proceeding, the parties 
to the proceeding shall bear the entire cost thereof in such manner and 
proportion as the panel shall direct.'' NCTA believes that it would be 
unfair for it to be assessed part of the costs of a rate adjustment 
proceeding it did not initiate; speculating that it could find itself 
defending an existing rate only because some other party petitioned to 
have it reconsidered. NCTA asked that the arbitrators be instructed to 
proceed on the presumption that the party seeking the rate adjustment 
should bear the costs of the proceeding. NCTA, comment at 3.
    When the Tribunal was in existence, the costs of a rate adjustment 
proceeding were borne by the taxpayers, because the only authority the 
Tribunal had to assess its costs to the parties was for distribution 
proceedings. See, former 17 U.S.C. 807. Therefore, neither the 
petitioners nor the nonpetitioners paid any of the costs of a rate 
adjustment proceeding. With the adoption of the CRT Reform Act, 
Congress made a policy decision that taxpayers no longer would pay for 
the rate adjustment proceedings, and that the costs would be entirely 
borne by the parties. However, we cannot find any suggestion, nor is 
there any reason to believe, that Congress wanted to put the costs of 
the proceeding on the petitioner alone. On the contrary, Congress 
expressly stated that all the parties to a ratemaking proceeding shall 
pay, and left it to the panel to decide only the manner and proportion 
of their payments. The effect of putting the costs on the petitioner 
would be to make petitioners pay a high price for the periodic rate 
reviews that are already scheduled and contemplated by Congress.
    NCTA's concern about a frivolous petitioner for rate adjustment may 
be justified. However, Sec. 803 of the Copyright Code provides that 
only petitioners with a significant interest in the rate can initiate a 
rate adjustment proceeding. Therefore, frivolous petitions or petitions 
from noninterested persons will be dismissed. However, once a 
petitioner with a significant interest petitions, the rate review 
becomes a matter of the public interest, because any member of the 
public may potentially pay, be a recipient of, or be affected by the 
rate. Therefore, since the burden should be shared by both the owners 
and users in an inquiry as to which rate would best serve the public 
interest, we cannot agree with NCTA's request.
    (iii) Comments on billing cycle. Endispute expressed concern with 
the NPRM's proposal to have the arbitrators bill the parties only after 
the submission of the panel's report to the Librarian. In a 180-day 
proceeding, the arbitrators might have to wait seven to eight months 
before receiving any compensation. Endispute urged that the arbitrators 
be able to bill the parties monthly, but this would raise difficulties 
in a distribution proceeding. There, the parties, by law, are to pay 
the arbitrators in proportion to their share of the fund, but their 
share will not be known until the end of the proceeding.
    Because of this problem we have not included a provision for 
monthly billing in this interim regulation. At the same time we are 
soliciting comments on the advisability of monthly billing and how it 
might be accomplished, given the statutory requirement that parties pay 
in proportion to their share of the fund. We are also interested in 
comments on the feasibility of alternatives to monthly billing, such as 
requiring the parties to make advance partial payments until a final 
bill can be prepared.
    (4) Amendment of Sec. 251.54. After reviewing the question of 
assessments, we have decided to modify the rule to take account of the 
possibility that, after the CARP has made its report, the Librarian may 
change the final distribution percentages or the percentages may be 
changed because of a court-ordered remand. As amended, the section 
requires the parties who have paid the arbitrators according to earlier 
percentages to reimburse each other to reflect the final percentages.
(f) Subpart F--Rate Adjustment Proceedings
    (1) Scope and commencement of adjustment proceedings. In its 
comments EIA challenged the Office's characterization in Secs. 251.60 
and 251.61 of the authority to raise the DART royalty maximum as a 
``rate'' adjustment proceeding. They argued that the charge--2% of the 
transfer price--cannot be changed by the Librarian, and that only the 
maximum of $8/$12 per device can. EIA, comment at 3-4. Whether the word 
``rate'' encompasses only the applicable percentage, or whether it also 
includes the floors and ceilings on that percentage, does not have to 
be addressed here because, as noted above, the review of the DART 
royalty maximum by the Librarian is not a CARP proceeding. Therefore, 
the Office has deleted the references to it in Secs. 251.60 and 251.61.
    (2) Period for consideration. Section 251.63 provides a 30-day 
period before a rate adjustment proceeding to give the parties an 
opportunity to settle their differences.
    (i) Comments of copyright owners. The Copyright Owners have asked 
that the first sentence be amended to clarify that the period is for 
consideration ``of settlement.'' Copyright Owners, comment at 25. The 
Office concurs, but has further modified the phrase to read 
``consideration of their settlement.'' This is because it cannot be 
known officially who all the parties to a rate adjustment proceeding 
will be until the proceeding is initiated and everyone has had an 
opportunity to file notices of intent to participate. Therefore, pre-
proceeding settlements can be reached only by those parties who make 
themselves known to each other, and the most that can be achieved is a 
settlement of their differences.
    (ii) Comments of music publishers. The Music Publishers asked how a 
rate settlement reached during the period before convening of the CARP 
could be approved by the Librarian. Music Publishers, comment at 7-8. 
If there is a settlement among the known parties, no approval by the 
Librarian is necessary. Either it will result in a withdrawal of the 
rate petition, or it will become the jointly-held position of the 
parties to the settlement as to what the new rate should be. Once their 
jointly-held position becomes known, it cannot be considered a full 
settlement until the rate is proposed to the United States public, 
either in a notice-and-comment proceeding or in a CARP 
proceeding.14
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    \1\4The settlement that was reached in the 1987 mechanical 
license rate adjustment among Music Publishers, RIAA and the 
Songwriters Guild of America (SGA) was not approved as a final 
disposition of the rate adjustment by the Tribunal. It was proposed 
to the public in a notice-and-comment proceeding to see if the 
jointly-held position of these three organizations should become the 
basis of the Tribunal's rate adjustment. The comments agreed with 
Music Publishers/RIAA/SGA's proposal, and only then did the Tribunal 
adopt it. 1987 Adjustment of the Mechanical Royalty Rate, 52 FR 
22637 (1987).
---------------------------------------------------------------------------

    (iii) Request for comments. The Office has made no changes in the 
interim rule. However, we are interested in comments concerning the 30-
day settlement period in rate adjustment proceedings. We have two 
specific questions:
    If a settlement is reached, would it be a useful alternative to the 
convening of a CARP for the Library/Office to propose the agreed-upon 
rate to the public in a notice-and-comment proceeding?
    Does the Librarian have authority to adopt such a procedure, or 
would the convening of a CARP be required?
    (3) Assessment of costs. Section 251.65 is based on Sec. 802(h)(1) 
of the statute as amended by the CRT Reform Act, which allows the 
Librarian of Congress and the Copyright Office to assess their 
reasonable costs to the parties ``to the most recent relevant 
arbitration proceeding.'' EIA commented that this assessment is only 
permitted, according to Sec. 802(h)(1), ``if no royalty pool exists 
from which their costs can be deducted.'' EIA, comment at 4. EIA's 
point is well-taken, and the Office has modified the section 
accordingly.
    EIA requested further that the costs of the proceeding to raise the 
DART royalty maximum by the Librarian be assessed to the DART royalty 
pool. EIA, comment at 5. However, as noted above, this proceeding is 
not a CARP proceeding and is therefore not germane to this rulemaking.
(g) Subpart G--Royalty Fee Distribution Proceedings
    The Copyright Office is adopting subpart G as proposed in the NPRM 
with one technical amendment. The reference to ``cable television'' in 
Sec. 251.72(a) and Sec. 251.73 is being changed to read ``cable,'' as 
noted in the preamble discussion to Sec. 251.2.
(h) Part 252--Filing of Claims to Cable Royalty Fees
    Part 252 prescribes the filing requirements for claims to cable 
royalties. As noted in the NPRM, the procedural system for filing cable 
claims borrows heavily from the one adopted by the former Tribunal for 
the filing of digital audio claims. See 58 FR 53822 (1993).
    (1) Content of claims. Section 252.3 prescribes the general 
requirements for the submission and content of cable royalty claims.
    (i) Joint claimants. The CRT's requirements for filing DART claims 
included provisions dealing with joint claims. In setting out the 
required content of claims, subsection (a)(3) provides:

If the claim is a joint claim, a concise statement of the 
authorization for the filing of the joint claim. For this purpose a 
performing rights society shall not be required to obtain from its 
members or affiliates separate authorizations, apart from their 
standard agreements.

Subsection (e), as adopted from the CRT's regulations and proposed in 
the NPRM, provided:

All claimants filing a joint claim shall make available to the 
Copyright Office, other claimants, and, where applicable, a 
Copyright Arbitration Royalty Panel, a list of all individual 
claimants covered by the joint claim.

    (A) Comments of PBS. According to PBS, when it comes to joint 
claims it is unclear, under subsections (a)(3) and (e) of Sec. 252.3, 
how to satisfy the requirement in subsection (a)(4) for identifying a 
secondary transmission that ``establish[es] the basis for the claim.'' 
Would the requirement be satisfied by identifying at least one 
secondary transmission for at least one of the claimants included 
within a joint claim? Or is it necessary to identify at least one such 
transmission for each individual claimant included within the joint 
claim? PBS, comment at 2.
    PBS argues that the former interpretation is the correct one, since 
the requirement in subsection (e) for filing a list identifying all 
joint claimants would not be necessary if each joint claimant had to 
identify a secondary transmission. Further support for this 
interpretation is drawn from the fact that Sec. 252.3 is adopted from 
the filing requirements for DART, which clearly do not require each 
joint claimant to identify one or more of his or her songs that were 
the subject of a digital transmission. PBS, comment at 2-3.
    PBS asks us to clarify this matter and amend Sec. 251.3 so as not 
to require identification of a secondary transmission for each joint 
claimant. They note that they currently spend upwards of 300 hours a 
year on this requirement,15 which they argue serves no substantive 
purpose beyond providing a jurisdictional basis for a party to 
participate.
---------------------------------------------------------------------------

    \1\5It is clear that under Sec. 302.7 of the former Tribunal's 
rules each joint claimant was required to identify at least one 
secondary transmission of its copyrighted works.
---------------------------------------------------------------------------

    (B) Amendment of Sec. 252.3(e). We acknowledge that Sec. 252.3 as 
proposed in the NPRM muddies the waters for the filing of cable royalty 
claims, and of satellite royalty claims as well. We are troubled, 
however, by changing what had been a longstanding requirement at the 
Tribunal for obliging all claimants to identify at least one secondary 
transmission of their copyrighted works. While such requirement does 
undoubtably add to the time and expense burdens of joint claimants such 
as PBS, it is not without purpose. The law states plainly that cable 
compulsory license royalties are only to be distributed to ``copyright 
owners who claim that their works were the subject of secondary 
transmissions by cable systems during the relevant semiannual period.'' 
17 U.S.C. 111(d)(3). To support such a claim, each claimant may 
reasonably be asked to identify at least one secondary transmission of 
his or her work, thus permitting the Copyright Office to screen the 
claims and dismiss any claimants who are clearly not eligible for 
royalty fees. The requirement will also help to reduce time spent by a 
CARP determining which claimants have a valid claim: If only one 
secondary transmission is identified for one of the joint claimants, 
then it could not readily be determined if the other claimants were 
even eligible for cable royalties.
    In an effort to end this confusion we are deleting subsection (e) 
with its requirement that joint claimants submit a list identifying all 
the claimants. Instead, we are amending subsection (a)(4) to require 
that each claimant to a joint claim, other than a joint claim filed by 
a performing rights society on behalf of its members or affiliates, 
must identify at least one secondary transmission of his or her works.
    (ii) Address and name change. Subsection (c) of Sec. 253.3 provides 
that ``[i]n the event that the legal name and/or address of the 
claimant changes after the filing of a claim, the claimant shall notify 
the Copyright Office of such change within 30 days of the change.'' 
Failure to provide this notification could, under certain 
circumstances, make the claim subject to dismissal. Copyright Owners 
request that subsection (c) be deleted in its entirety because ``it 
could be an unnecessary draconian trap for the unwary (or wary) 
claimant.'' Copyright Owners, comment at 25.
    It is not the intention of the Copyright Office that subsection (c) 
should be used to dismiss otherwise valid claims. The concern is that 
the Office must be able to communicate with the claimants, especially 
if an action requires prompt disposition. To take one example, suppose 
one party files a motion to dismiss another party's claim, and the 
Copyright Office asks the claimant to respond to the motion; the 
claimant has moved and there is no response. There would be no means to 
find out whether the first party's motion is valid in that situation. 
Subsection (c) is intended to give the Office authority to dismiss for 
failure to prosecute a claim in cases where the Office was not given 
timely notice of the change of address or name.
    At the same time, we acknowledge the possibility that the 30-day 
deadline for notifying the Office of an address or name change could 
work hardships. We have therefore amended subsection (c) to provide 
that dismissal may only occur after the Office has made a good faith 
attempt to communicate with the claimant, and the effort failed because 
the claimant did not inform the Office of a change in legal name or 
address.
    (2) Compliance with statutory dates. Section 252.4 implements the 
statutory requirement that cable claims must be made in the month of 
July for royalties from the preceding calendar year. Subsection (b) 
provides that a cable claim is timely filed if it is mailed with the 
U.S. Postal Service and bears a U.S. postmark during the month of July.
    (i) Comments of copyright owners: Canadian and Mexican mailings. 
The Copyright Owners have asked that the provision for a July U.S. 
postmark be expanded to include mailings from Canadian and Mexican post 
offices. Copyright Owners, comment at 25. The Copyright Owners did not 
document their request, and the Office is uncertain about the authority 
or feasibility of acceding to it. We have therefore decided not to 
accept the Copyright Owners' proposed amendment at this time, but we 
invite them, and any other interested parties, to provide further 
information and comments on the question.
    (ii) Amendments of Sec. 252.4. After reviewing the timeliness 
requirement, we have decided to add a new subsection (b) to Sec. 252.4, 
in recognition of Sec. 703 of the Copyright Code.16 The new 
subsection provides that, when the last day of July falls on a 
Saturday, Sunday, holiday, or other nonbusiness day in the District of 
Columbia or the Federal Government, the Copyright Office will accept 
claims received in the Office on the first business day in August, and 
will also accept claims bearing a U.S. postmark dated on the first 
August business day.
---------------------------------------------------------------------------

    \1\6Section 703 of the Copyright Code states, ``In any case in 
which time limits are prescribed under this title for the 
performance of an action in the Copyright Office, and in which the 
last day of the prescribed period falls on a Saturday, Sunday, 
holiday, or other nonbusiness day within the District of Columbia or 
the Federal Government, the action may be taken on the next 
succeeding business day, and is effective as of the date when the 
period expired.''
---------------------------------------------------------------------------

    The Copyright Office is also amending Sec. 252.4 by making a 
consequential change in subsection (c), and by adding new subsections 
(d) and (e). Subsection (d) provides that no claim may be filed by 
facsimile transmission. Under new subsection (e), parties whose claims 
were not timely received by the Office will be given an opportunity to 
offer proof of delivery. A claimant who sent a claim which was properly 
addressed17 and properly mailed, but which was nonetheless 
received late by the Copyright Office or was not received at all, may 
still be able to prove the validity of his or her filing. If the claim 
was sent by certified mail, return receipt requested, we will accept 
the claim if the claimant can produce the receipt showing that it was 
properly mailed. We will not accept as evidence either the affidavit of 
an officer or employee of the claimant, or the affidavit of a U.S. 
postal worker.
---------------------------------------------------------------------------

    \1\7A claim addressed to the former Tribunal will not be 
considered properly addressed.
---------------------------------------------------------------------------

    (3) Proof of fixation of works. Section 252.5 of our earlier 
interim regulation, which was imported from the CRT rules, provided a 
detailed procedure for proving fixation of a work for which a cable 
claim had been filed. The Copyright Owners have asked that the section 
be deleted in its entirety because it is no longer necessary. Copyright 
Owners, comment at 25. The Copyright Office agrees. If there are any 
future controversies involving whether a work was fixed in a tangible 
medium, they can be resolved under the general authority of the Library 
and the CARPs to issue dispositive determinations during the course of 
a proceeding.
    (4) Copies of claims. In place of ``Proof of fixation of works,'' 
the Copyright Office is adopting a new text in Sec. 252.5. The new 
section provides that all claimants must submit an original and two 
copies of their claims to cable royalty fees.
(i) Part 257--Filing of Claims to Satellite Carrier Royalty Fees
    Although none of the commentators requested any changes in part 
257, the Copyright Office is making several amendments modeled after, 
and for the same reasons as, the changes made in part 252. Subsection 
257.3(a)(4) is amended, and subsection (e) is deleted, to clarify that 
each claimant in a joint claim must identify at least one secondary 
transmission of his or her works. (See the discussion of filing of 
cable claims under Sec. 252.3 above.) Subsection (c) is amended to 
allow the Copyright Office to dismiss a claim if it has made a good 
faith effort to contact a claimant, but has failed because the claimant 
has not informed the Office of a change in name or address. Section 
251.4--Compliance with Statutory Dates--is amended by allowing 
claimants to file on the first business day in August whenever July 31 
falls on a non-business day, adding a prohibition of submission of 
claims by facsimile transmission, and allowing claimants to offer proof 
of mailing for claims properly mailed but not received by the Copyright 
Office. Finally, Sec. 251.5--Proof of Fixation of Works--is eliminated 
and replaced with a provision requiring claimants to submit an original 
and two copies of each claim to satellite carrier royalty fees.
(j) Part 259--Filing of Claims to Digital Audio Recording Devices and 
Media Royalty Payments
    Corresponding to our amendments to the rules for filing cable and 
satellite claims, we are making the same changes with regard to filing 
a DART claim. Section 259.3(c) removes the provision for requiring name 
and address changes to be filed within 30 days, and replaces it with a 
general obligation to report changes. Section 259.4 is amended by 
adding a new subsection (e) which prohibits the filing by facsimile 
transmission of the notice of appointment of an independent 
administrator. Section 259.5 is changed to allow claimants to file on 
the first business day in March whenever the last day in February falls 
on a Federal Government nonbusiness day, to prohibit the filing of 
claims by facsimile transmission, and to allow claimants who send their 
claims by certified mail, return receipt requested, to offer proof of 
mailing if the Copyright Office has not timely received the claim. A 
new section Sec. 259.6, modeled after Sec. 252.6 and Sec. 257.5, is 
added to part 259 requiring the filing of an original and two copies of 
claims to DART royalties.

Appendix A to Subpart D--Standards of Conduct

    Note: The following Appendix will not appear in the Code of 
Federal Regulations.

    We use this Appendix to offer ten examples of hypothetical 
situations that are intended to probe the proper extent of the 
restrictions on financial interests. Many of them refer to Phase I or 
Phase II of the former Tribunal's cable proceedings. This is not 
intended to presume the actual structure of the CARP proceedings, but 
rather to improve the quality of the comments by providing concrete 
situations.

Sec. 251.31(a)(1)

    Example 1: An arbitrator is being considered for a cable 
controversy among five Phase I categories. He has a financial 
interest in a claimant that is in one of the other Phase I 
categories which has settled its interest in the proceeding. Does he 
have a financial conflict of interest?
    Example 2: An arbitrator is being considered for a Phase I cable 
controversy that includes the Commercial Television Station 
category. She has a financial interest in a commercial broadcast 
station. However, the station is not a claimant in the proceeding 
because it is not carried as a distant signal by any cable system. 
Does she have a financial conflict of interest?
    Example 3: An arbitrator is being considered for a cable 
controversy in which there is a complete Phase I settlement, but 
there is one Phase II controversy. He has a financial interest in a 
claimant outside of the Phase II category that has the controversy. 
Does he have a financial conflict of interest?
    Example 4: An arbitrator has a financial interest in a motion 
picture production company which does not file a claim for cable 
royalties. However, the distributor who syndicates the company's 
movies to television does file claims for royalties, and remits to 
the film producer a percentage of all his syndication revenues. Does 
the arbitrator have a financial conflict of interest?

Sec. 251.31(a)(2)

    Example 5: An arbitrator is being considered for a cable rate 
adjustment proceeding that would review the 3.75% rate. She has a 
financial interest in a cable system that grosses less than $292,000 
per half year. The 3.75% rate only applies to cable systems that 
gross more than $292,000 per half year. Does she have a financial 
conflict of interest?
    Example 6: An arbitrator is being considered for a cable rate 
adjustment proceeding that would review the 3.75%. He has a 
financial interest in a cable network which negotiates carriage on 
cable systems in the private marketplace. Does he have a financial 
conflict of interest?

Sec. 251.31(b)

    Example 7: An arbitrator is being considered for a satellite 
carrier distribution proceeding. He is an affiliate of a performing 
rights society, and receives, on average, $100 a year for a song he 
wrote 30 years ago. Does he have a financial conflict of interest?

Sec. 251.31(c)(1)

    Example 8: An arbitrator is being considered for a mechanical 
rate adjustment hearing. He has a stock mutual fund which is 
currently invested in several recording companies. Does he have a 
financial conflict of interest?

Sec. 251.31(c)(2)

    Example 9: An arbitrator is being considered for a Phase I cable 
distribution proceeding. From 1960 to 1970, she worked for a program 
syndicator. She is now receiving a fixed pension from the syndicator 
for her ten years' work. Does she have a financial conflict of 
interest?

Sec. 251.36(c)

    Example 10: An arbitrator has presided over a cable rate 
adjustment proceeding which reviewed the 3.75% rate. The time for 
all appeals has passed, and no one has appealed. The arbitrator 
returns to private practice and a cable system wants to hire the 
arbitrator to be its attorney on matters before the FCC. During the 
proceeding, the cable industry was represented by NCTA and CATA. The 
cable system that wants to hire the arbitrator was not a party to 
the proceeding, nor did it authorize NCTA or CATA to represent it in 
the proceeding; however, the cable system was affected by the change 
in the 3.75% rate. Can the arbitrator take the cable system on as a 
client?

List of Subjects

37 CFR Parts 251 and 301

    Administrative practice and procedure, Hearing and appeal 
procedures.

37 CFR Parts 252 and 302

    Cable television, Claims, Copyright.

37 CFR Parts 253 and 304

    Copyright, Music, Radio, Rates, Television.

37 CFR Parts 254 and 306

    Copyright, Jukeboxes, Rates.

37 CFR Parts 255 and 307

    Copyright, Music, Recordings.

37 CFR Parts 256 and 308

    Cable television, Rates.

37 CFR Parts 257 and 309

    Cable television, Claims.

37 CFR Parts 258 and 310

    Copyright, Satellite.

37 CFR Parts 259 and 311

    Claims, Copyright, Digital audio recording devices, and Media.

37 CFR Parts 303

    Copyright, Jukeboxes.

37 CFR Parts 305

    Claims, Jukeboxes.

Interim Rules

    For the reasons set out in the preamble, 37 CFR chapters II and III 
are amended under authority of 17 U.S.C. 802(d) as follows:
    1. Part 301 of chapter III is removed.
    1a. Existing parts 201 through 211 are designated as subchapter A, 
and a new heading for subchapter A is added to read as follows: 
Subchapter A--Copyright Office and Procedures.
    1b. New subchapter B--Copyright Arbitration Royalty Panel Rules and 
Procedures--is added to chapter II consisting of parts 251-259.
    2. A new part 251 is added to subchapter B of chapter II to read as 
follows:

PART 251--COPYRIGHT ARBITRATION ROYALTY PANEL RULES OF PROCEDURE

Subpart A--Organization

Sec.
251.1  Official address.
251.2  Purpose of Copyright Arbitration Royalty Panels.
251.3  Arbitrator lists.
251.4  Arbitrator lists: Objections.
251.5  Qualifications of the arbitrators.
251.6  Composition and selection of Copyright Arbitration Royalty 
Panels.
251.7  Actions of Copyright Arbitration Royalty Panels.
251.8  Suspension of Proceedings.
Subpart B--Public Access to Copyright Arbitration Royalty Panel 
Meetings
251.11  Open meetings.
251.12  Conduct of open meetings.
251.13  Closed meetings.
251.14  Procedure for closed meetings.
251.15  Transcripts of closed meetings.
251.16  Requests to open or closed meetings.

Subpart C--Public Access to and Inspection of Records

251.21  Public records.
251.22  Public access.
251.23  FOIA and Privacy Act.

Subpart D--Standards of Conduct

251.30  Basic obligations of arbitrators.
251.31  Financial interests.
251.32  Financial disclosure statement.
251.33  Ex parte communications.
251.34  Gifts and other things of monetary value.
251.35  Outside employment and other activities.
251.36  Pre-arbitration and post-arbitration employment 
restrictions.
251.37  Use of nonpublic information.
251.38  Billing and commitment to standards.
251.39  Remedies.

Subpart E--Procedures of Copyright Arbitration Royalty Panels

251.40  Scope.
251.41  Formal hearings.
251.42  Suspension or waiver of rules.
251.43  Written cases.
251.44  Filing and service of written cases and pleadings.
251.45  Precontroversy motions, and discovery.
251.46  Conduct of hearings: Role of arbitrators.
251.47  Conduct of hearings: Witnesses and counsel.
251.48  Rules of evidence.
251.49  Transcript and record.
251.50  Rulings and orders.
251.51  Closing the hearing.
251.52  Proposed findings and conclusions.
251.53  Report to the Librarian of Congress.
251.54  Assessment of costs of arbitration panels.
251.55  Post-panel motions.
251.56  Order of the Librarian of Congress.
251.57  Effective date of order.
251.58  Judicial review.

Subpart F--Rate Adjustment Proceedings

251.60  Scope.
251.61  Commencement of adjustment proceedings.
251.62  Content of petition.
251.63  Period for consideration.
251.64  Disposition of petition: Initiation of arbitration 
proceeding.
251.65  Deduction of costs of rate adjustment proceedings.

Subpart G--Royalty Fee Distribution Proceedings

251.70  Scope.
251.71  Commencement of proceedings.
251.72  Determination of controversy.
251.73  Declaration of controversy: Initiation of arbitration 
proceeding.
251.74  Deduction of costs of distribution proceedings.

    Authority: 17 U.S.C. 801-803.

Subpart A--Organization


Sec. 251.1  Official address.

Copyright Arbitration Royalty Panel (CARP), P.O. Box 70977, Southwest 
Station, Washington, DC 20024.


Sec. 251.2  Purpose of Copyright Arbitration Royalty Panels.

    The Librarian of Congress, upon the recommendation of the Register 
of Copyrights, may appoint and convene a Copyright Arbitration Royalty 
Panel (CARP) for the following purposes:
    (a) To make determinations concerning copyright royalty rates for 
the cable compulsory license, 17 U.S.C. 111.
    (b) To make determinations concerning copyright royalty rates for 
making and distributing phonorecords, 17 U.S.C. 115.
    (c) To make determinations concerning copyright royalty rates for 
coin-operated phonorecord players (jukeboxes) whenever a negotiated 
license authorized by 17 U.S.C. 116 expires or is terminated and is not 
replaced by another such license agreement.
    (d) To make determinations concerning royalty rates and terms for 
the use by noncommercial educational broadcast stations of certain 
copyrighted works, 17 U.S.C. 118.
    (e) To distribute cable and satellite carrier royalty fees and 
digital audio recording devices and media payments under 17 U.S.C. 111, 
119, and chapter 10, respectively, deposited with the Register of 
Copyrights.


Sec. 251.3  Arbitrator lists.

    (a) Any professional arbitration association or organization may 
submit, on or before May 6, 1994, and before January 1 of each year 
thereafter, a list of persons qualified to serve as arbitrators on a 
Copyright Arbitration Royalty Panel. The list shall contain the 
following for each person:
    (1) The full name, address, and telephone number of the person.
    (2) The current position and name of the person's employer, if any, 
along with a brief summary of the person's employment history, 
including areas of expertise, and, if available, a description of the 
general nature of clients represented and the types of proceedings in 
which the person represented clients.
    (3) A brief description of the educational background of the 
person, including teaching positions and membership in professional 
associations, if any.
    (4) A statement of the facts and information which qualify the 
person to serve as an arbitrator under Sec. 251.5.
    (5) A description or schedule detailing fees proposed to be charged 
by the person for service on a CARP.
    (6) Any other information which the professional arbitration 
association or organization may consider relevant.
    (b) After May 6, 1994, and after January 1 of each year thereafter, 
the Librarian of Congress shall publish in the Federal Register a list 
of at least 30, but not more than 75 persons, submitted to the 
Librarian from at least three professional arbitration associations or 
organizations. The persons so listed must satisfy the qualifications 
and requirements of this subchapter and can reasonably be expected to 
be available to serve as arbitrators on a Copyright Arbitration Royalty 
Panel during that calendar year. This list will constitute the 
``arbitrator list'' referred to in this subchapter. With respect to 
persons on the arbitrator list, the Librarian will make available for 
copying and inspection the information provided under paragraph (a) of 
this section.


Sec. 251.4  Arbitrator lists: Objections.

    (a) In the case of a rate adjustment proceeding, any party to a 
proceeding may, during the 30-day period specified in Sec. 251.63, file 
an objection with the Librarian of Congress to one or more of the 
persons contained on the arbitrator list for that proceeding. Such 
objection shall plainly state the grounds and reasons for each person 
claimed to be objectionable.
    (b) In the case of a royalty distribution proceeding, any party to 
the proceeding may, during the 30-day time period specified in 
Sec. 251.45(a), file an objection with the Librarian of Congress to one 
or more of the persons contained on the arbitrator list for the 
proceeding. Such objection shall plainly state the grounds and reasons 
for each person claimed to be objectionable.


Sec. 251.5  Qualifications of the arbitrators.

    In order to serve as an arbitrator to a Copyright Arbitration 
Royalty Panel, a person must, at a minimum, have the following 
qualifications:
    (a) Admitted to the practice of law in any state, territory, trust 
territory, or possession of the United States.
    (b) Ten or more years of legal practice.
    (c) Experience in conducting arbitration proceedings or 
facilitating the resolution and settlement of disputes.


Sec. 251.6  Composition and selection of Copyright Arbitration Royalty 
Panels.

    (a) Within ten days after publication of a notice in the Federal 
Register initiating arbitration proceedings under this subchapter, the 
Librarian of Congress will, upon recommendation of the Register of 
Copyrights, select two arbitrators from the arbitrator list for that 
calendar year.
    (b) The two arbitrators so selected shall, within 10 days of their 
selection, choose a third arbitrator from the same arbitrator list. The 
third arbitrator shall serve as the chairperson of the panel during the 
course of the proceedings.
    (c) If the two arbitrators fail to agree upon the selection of the 
third, the Librarian will promptly select the third arbitrator from the 
same arbitrator list.
    (d) The third arbitrator so chosen shall serve as the chairperson 
of the panel during the course of the proceeding. In all matters, 
procedural or substantive, the chairperson shall act according to the 
majority wishes of the panel.
    (e) Two arbitrators shall constitute a quorum necessary to the 
determination of any proceeding.
    (f) If, before the commencement of hearings in a proceeding, one or 
more of the arbitrators is unable to continue service on the CARP, the 
Librarian will suspend the proceeding as provided by Sec. 251.8, and 
will inaugurate a procedure to bring the CARP up to the full complement 
of three arbitrators. Where one or two vacancies exist, and either or 
both of the vacant seats were previously occupied by arbitrators 
selected by the Librarian, the Librarian will select the necessary 
replacements from the current arbitrator list. If there is one vacancy, 
and it was previously occupied by the chairperson, the two remaining 
arbitrators shall select the replacement from the arbitrator list, and 
the person chosen shall serve as chairperson. If there are two vacant 
seats, and one of them was previously occupied by the chairperson, the 
Librarian will select one replacement from the arbitrator list, and 
that person shall join with the remaining arbitrator to choose the 
replacement, who shall serve as chairperson.
    (g) After hearings have commenced, the Librarian will not suspend 
the proceedings or inaugurate a replacement procedure unless it is 
necessary in order for the CARP to have a quorum. If the hearing is 
underway and two arbitrators are unable to continue service, or if the 
hearing had been proceeding with two arbitrators and one of them is no 
longer able to serve, the Librarian will suspend the proceedings under 
Sec. 251.8 and seek the unanimous written agreement of the parties to 
the proceeding for the Librarian to select a replacement. In the 
absence of such an agreement, the Librarian will terminate the 
proceeding. If such agreement is obtained, the Librarian will select 
one arbitrator from the arbitrator list.
    (h) If, after hearings have commenced, the chairperson of the CARP 
is no longer able to serve, the Librarian will ask the two remaining 
arbitrators, or the one remaining arbitrator and the newly-selected 
arbitrator, to agree between themselves which of them will serve as 
chairperson. In the absence of such an agreement, the Librarian will 
terminate the proceeding.


Sec. 251.7  Actions of Copyright Arbitration Royalty Panels.

    Any action of a Copyright Arbitration Royalty Panel requiring 
publication in the Federal Register according to 17 U.S.C. or the rules 
and regulations of this subchapter shall be published under the 
authority of the Librarian of Congress and the Register of Copyrights. 
Under no circumstances shall a CARP engage in rulemaking designed to 
amend, supplement, or supersede any of the rules and regulations of 
this subchapter, or seek to have any such action published in the 
Federal Register.


Sec. 251.8  Suspension of proceedings.

    (a) Where it becomes necessary to replace a selected arbitrator 
under Sec. 251.6 or to remove and replace a selected arbitrator under 
subpart D of this part, the Librarian will order a suspension of any 
ongoing hearing or other proceeding by notice in writing to all 
parties. Immediately after issuing the order of suspension, and without 
delay, the Librarian will take the necessary steps to replace the 
arbitrator or arbitrators, and upon such replacement will issue an 
order, by notice in writing to all parties, resuming the proceeding 
from the time and point at which it was suspended.
    (b) Where, for any other reason, such as a serious medical or 
family emergency affecting an arbitrator, the Librarian considers a 
suspension of a proceeding necessary and fully justified, he may, with 
the unanimous written consent of all parties to the proceeding, order a 
suspension of the proceeding for a stated period not to exceed one 
month.
    (c) Any suspension under this section shall result in a complete 
cessation of all aspects of the proceeding, including the running of 
any period provided by statute for the completion of the proceeding.

Subpart B--Public Access to Copyright Arbitration Royalty Panel 
Meetings


Sec. 251.11  Open meetings.

    (a) All meetings of a Copyright Arbitration Royalty Panel shall be 
open to the public, with the exception of meetings that are listed in 
Sec. 251.13.
    (b) At the beginning of each proceeding, the CARP shall develop the 
original schedule of the proceeding which shall be published in the 
Federal Register at least seven calendar days in advance of the first 
meeting. Such announcement shall state the times, dates, and place of 
the meetings, the testimony to be heard, whether any of the meetings 
are to be closed, and, if so, which ones, and the name and telephone 
number of the person to contact for further information.
    (c) If changes are made to the original schedule, they will be 
announced in open meeting and issued as orders to the parties 
participating in the proceeding, and the changes will be noted in the 
docket file of the proceeding.
    In addition, the contact person for the proceeding shall make any 
additional efforts to publicize the change as are practicable.
    (d) If it is decided that the publication of the original schedule 
must be made on shorter notice than seven days, that decision must be 
made by a recorded vote of the panel and included in the announcement.


Sec. 251.12  Conduct of open meetings.

    Meetings of a Copyright Arbitration Royalty Panel will be conducted 
in a manner to ensure the greatest degree of openness possible. 
Reasonable access for the public will be provided at all public 
sessions. Any person may take photographs, and make audio or video 
recordings of the proceedings, so long as the panel is informed in 
advance. The chairperson has the discretion to regulate the time, 
place, and manner of the taking of photographs or the audio or video 
recording of the proceedings to ensure the order and decorum of the 
proceedings. The right of the public to be present does not include the 
right to participate or make comments.


Sec. 251.13  Closed meetings.

    In the following circumstances, a Copyright Arbitration Royalty 
Panel may close its meetings or withhold information from the public:
    (a) If the matter to be discussed has been specifically authorized 
to be kept secret by Executive Order, in the interests of national 
defense or foreign policy; or
    (b) If the matter relates solely to the internal practices of a 
Copyright Arbitration Royalty Panel; or
    (c) If the matter has been specifically exempted from disclosure by 
statute (other than 5 U.S.C. 552) and there is no discretion on the 
issue; or
    (d) If the matter involves privileged or confidential trade secrets 
or financial information; or
    (e) If the result might be to accuse any person of a crime or 
formally censure him or her; or
    (f) If there would be clearly unwarranted invasion of personal 
privacy; or
    (g) If there would be disclosure of investigatory records compiled 
for law enforcement, or information that if written would be contained 
in such records, and to the extent disclosure would:
    (1) Interfere with enforcement proceedings; or
    (2) Deprive a person of the right to a fair trial or impartial 
adjudication; or
    (3) Constitute an unwarranted invasion of personal privacy; or
    (4) Disclose the identity of a confidential source or, in the case 
of a criminal investigation or a national security intelligence 
investigation, disclose confidential information furnished only by a 
confidential source; or
    (5) Disclose investigative techniques and procedures; or
    (6) Endanger the life or safety of law enforcement personnel.
    (h) If premature disclosure of the information would frustrate a 
Copyright Arbitration Royalty Panel's action, unless the panel has 
already disclosed the concept or nature of the proposed action, or is 
required by law to make disclosure before taking final action; or
    (i) If the matter concerns a CARP's participation in a civil action 
or proceeding or in an action in a foreign court or international 
tribunal, or an arbitration, or a particular case of formal agency 
adjudication pursuant to 5 U.S.C. 554, or otherwise involving a 
determination on the record after opportunity for a hearing; or
    (j) If a motion or objection has been raised in an open meeting and 
the panel determines that it is in the best interests of the proceeding 
to deliberate on such motion or objection in closed session.


Sec. 251.14  Procedure for closed meetings.

    (a) Meetings may be closed, or information withheld from the 
public, only by a recorded vote of a majority of arbitrators of a 
Copyright Arbitration Royalty Panel. Each question, either to close a 
meeting or to withhold information, must be voted on separately, unless 
a series of meetings is involved, in which case the CARP may vote to 
keep the discussions closed for 30 days, starting from the first 
meetings. If the CARP feels that information about a closed meeting 
must be withheld, the decision to do so must also be the subject of a 
recorded vote.
    (b) Before a discussion to close a meeting or withhold information, 
the chairperson of a CARP must certify that such an action is 
permissible, and the chairperson shall cite the appropriate exemption 
under Sec. 251.13. This certification shall be included in the 
announcement of the meeting and be maintained as part of the record of 
proceedings of that CARP.
    (c) Following such a vote, the following information shall be 
published in the Federal Register as soon as possible:
    (1) The vote of each arbitrator; and
    (2) The appropriate exemption under Sec. 251.13; and
    (3) A list of all persons expected to attend the meeting and their 
affiliation.


Sec. 251.15  Transcripts of closed meetings.

    (a) All meetings closed to the public shall be subject either to a 
complete transcript or, in the case of Sec. 251.13(h) and at the 
discretion of the Copyright Arbitration Royalty Panel, detailed 
minutes. Detailed minutes shall describe all matters discussed, 
identify all documents considered, summarize action taken as well as 
the reasons for it, and record all roll call votes as well as any views 
expressed.
    (b) Such transcripts or minutes shall be kept by the Copyright 
Office for at least two years, or for at least one year after the 
conclusion of the proceedings, whichever is later. Any portion of 
transcripts of meetings which the chairperson of a CARP does not feel 
is exempt from disclosure under Sec. 251.13 will ordinarily be 
available to the public within 20 working days of the meeting. 
Transcripts or minutes of closed meetings will be reviewed by the 
chairperson at the end of the proceedings of the panel and, if at that 
time the chairperson determines that they should be disclosed, he or 
she will resubmit the question to the CARP to gain authorization for 
their disclosure.


Sec. 251.16  Requests to open or close meetings.

    (a) Any person may request a Copyright Arbitration Royalty Panel to 
open or close a meeting or disclose or withhold information. Such 
request must be captioned ``Request to Open'' or ``Request to Close'' a 
meeting on a specified date concerning a specific subject. The person 
making the request must state his or her reasons, and include his or 
her name, address, and telephone number.
    (b) In the case of a request to open a meeting that a CARP has 
previously voted closed, the panel must receive the request within 3 
working days of the meeting's announcement. Otherwise the request will 
not be heeded, and the person making the request will be so notified. 
An original and three copies of the request must be submitted.
    (c) For a CARP to act on a request to open or close a meeting, the 
question must be brought to a vote before the panel. If the request is 
granted, an amended meeting announcement will be issued and the person 
making the request notified. If a vote is not taken, or if after a vote 
the request is denied, said person will also be notified promptly.

Subpart C--Public Access to and Inspection of Records


Sec. 251.21  Public records.

    (a) All official determinations of a Copyright Arbitration Royalty 
Panel will be published in the Federal Register in accordance with 
Sec. 251.7 and include the relevant facts and reasons for those 
determinations.
    (b) All records of a CARP, and all records of the Librarian of 
Congress assembled and/or created under 17 U.S.C. 801 and 802, are 
available for inspection and copying at the address provided in 
Sec. 251.1 with the exception of:
    (1) Records that relate solely to the internal personnel rules and 
practices of the Copyright Office or the Library of Congress;
    (2) Records exempted by statute from disclosure;
    (3) Interoffice memoranda or correspondence not available by law 
except to a party in litigation with a CARP, the Copyright Office, or 
the Library of Congress;
    (4) Personnel, medical, or similar files whose disclosure would be 
an invasion of personal privacy;
    (5) Communications among arbitrators of a CARP concerning the 
drafting of decisions, opinions, reports, and findings on any CARP 
matter or proceeding;
    (6) Communications among the Librarian of Congress and staff of the 
Copyright Office or Library of Congress concerning decisions, opinions, 
reports, selection of arbitrators, or findings on any matter or 
proceeding conducted under 17 U.S.C. chapter 8;
    (7) Offers of settlement that have not been accepted, unless they 
have been made public by the offeror;
    (8) Records not herein listed but which may be withheld as 
``exempted'' if a CARP or the Librarian of Congress finds compelling 
reasons for such action.


Sec. 251.22  Public access.

    (a) Location of Records. All of the following records relating to 
rate adjustment and distribution proceedings under this subchapter 
shall be maintained at the Copyright Office:
    (1) Records required to be filed with the Copyright Office; or
    (2) Records submitted to or produced by the Copyright Office or 
Library of Congress under 17 U.S.C. 801 and 802, or
    (3) Records submitted to or produced by a Copyright Arbitration 
Royalty Panel during the course of a concluded proceeding. In the case 
of records submitted to or produced by a CARP that is currently 
conducting a proceeding, such records shall be maintained by the 
chairperson of that panel at the location of the hearing or at a 
location specified by the panel. Upon conclusion of the proceeding, all 
records shall be delivered by the chairperson to the Copyright Office.
    (b) Requesting information. Requests for information or access to 
records described in Sec. 251.21 shall be directed to the Copyright 
Office at the address listed in Sec. 251.1. No requests shall be 
directed to or accepted by a Copyright Arbitration Royalty Panel. In 
the case of records in the possession of a CARP, the Copyright Office 
shall make arrangements with the panel for access and copying by the 
person making the request.
    (c) Fees. Fees for photocopies of CARP or Copyright Office records 
are $0.40 per page. Fees for searching for records, certification of 
documents, and other costs incurred are as provided in 17 U.S.C. 705, 
708.


Sec. 251.23  FOIA and Privacy Act.

    Freedom of Information Act and Privacy Act provisions applicable to 
CARP proceedings can be found in parts 203 and 204 of subchapter A of 
this chapter.

Subpart D--Standards of Conduct


Sec. 251.30  Basic obligations of arbitrators.

    (a) Definitions. For purposes of these regulations, the following 
terms shall have the meanings given in this subsection:
    (1) A ``selected arbitrator'' is a person named by the Librarian of 
Congress, or by other selected arbitrators, for service on a particular 
CARP panel, in accordance with Sec. 251.6 of these regulations;
    (2) A ``listed arbitrator'' is a person named in the ``arbitration 
list'' published in accordance with Sec. 251.3 of these regulations.
    (b) General principles applicable to arbitrators. Selected 
arbitrators are persons acting on behalf of the United States, and the 
following general principles apply to them. Where a situation is not 
covered by standards set forth specifically in this subpart, selected 
arbitrators shall apply these general principles in all cases in 
determining whether their conduct is proper. Listed arbitrators shall 
apply these principles where applicable.
    (1) Arbitrators are engaged in a matter of trust that requires them 
to place ethical and legal principles above private gain.
    (2) Arbitrators shall not hold financial interests that conflict 
with the conscientious performance of their service.
    (3) Arbitrators shall not engage in financial transactions using 
nonpublic information or allow the improper use of such information to 
further any private interest.
    (4) Selected arbitrators shall not solicit or accept any gift or 
other item of monetary value from any person or entity whose interests 
may be affected by the arbitrators' decisions. Listed arbitrators may 
accept gifts of nominal value or gifts from friends and family as 
specified in Sec. 251.34(b).
    (5) Arbitrators shall put forth their honest efforts in the 
performance of their service.
    (6) Arbitrators shall act impartially and not give preferential 
treatment to any individual, organization, or entity whose interests 
may be affected by the arbitrators' decisions.
    (7) Arbitrators shall not engage in outside employment or 
activities, including seeking or negotiating for employment, that 
conflicts with the performance of their service.
    (8) Arbitrators shall endeavor to avoid any actions creating the 
appearance that they are violating the law or the ethical standards set 
forth in this subpart.
    (9) Arbitrators shall maintain order and decorum in the 
proceedings, be patient, dignified, and courteous to the parties, 
witnesses, and their representatives, and dispose promptly the business 
before them.


Sec. 251.31  Financial interests.

    (a) No selected arbitrator shall have a direct or indirect 
financial interest--
    (1) in the case of a distribution proceeding, in any claimant to 
the proceeding whether or not in a voluntary settlement agreement, or 
any copyright owner who receives royalties from such claimants because 
of their representation;
    (2) in the case of a rate adjustment proceeding, in any individual, 
organization or entity that would be affected by the outcome of the 
proceeding.
    (b) ``Direct or indirect financial interest'' shall include: being 
employed by, being a consultant to, being a representative or agent 
for, being a member or affiliate of, being a partner of, holding any 
office in, owning any stocks, bonds, or other securities, or deriving 
any income from the prohibited entity.
    (c) ``Direct or indirect financial interest'' shall not include--
    (1) owning shares in any stock or bond mutual fund or blind trust 
which might have an interest in a prohibited entity but whose decisions 
to invest or sell is not under the control of the selected arbitrator, 
or
    (2) receiving any post-employment benefit such as health insurance 
or a pension so long as the benefit would not be affected by the 
outcome of the proceeding.
    (d) For the purposes of this section, the financial interest of the 
following persons will serve to disqualify the selected arbitrator to 
the same extent as if they were the arbitrator's own interests:
    (1) the arbitrator's spouse;
    (2) the arbitrator's minor child;
    (3) the arbitrator's general partner; or
    (4) an organization or entity which the arbitrator serves as 
officer, director, trustee, general partner or employee.


Sec. 251.32  Financial disclosure statement.

    (a) Each year, within one month of publication in the Federal 
Register of the list of available arbitrators, each listed arbitrator 
shall file with the Librarian of Congress a confidential financial 
disclosure statement as provided by the Library of Congress, which 
statement shall be reviewed by the Librarian and designated Library 
staff to determine what conflicts of interest, if any, exist according 
to Sec. 251.30.
    (b) If any conflicts of interest do exist, the Librarian shall not 
choose that person for the proceeding for which he or she has the 
financial conflict, except--
    (1) the listed arbitrator may divest himself or herself of the 
interest that caused the disqualification, and become qualified to 
serve, or
    (2) the listed arbitrator may disclose on the record the conflict 
of interest causing disqualification and may ask the parties to 
consider whether to allow him or her to serve in the proceeding. Any 
agreement by the parties to allow the listed arbitrator to serve shall 
be unanimous and shall be incorporated into the record of the 
proceeding.
    (c) At such time as the two selected arbitrators choose a third 
arbitrator, they shall consult with the Librarian to determine if any 
conflicts of interest exist for the third arbitrator. If, in the 
opinion of the Librarian of Congress, any conflicts of interest do 
exist, the two selected arbitrators shall be asked to choose another 
arbitrator who has no conflict of interest.
    (d) Within one week of the selection of the CARP panel, the three 
selected arbitrators shall file with the Librarian an updated 
confidential financial disclosure form or, if there are any changes in 
the arbitrator's financial interests, a statement to that effect. If 
any conflicts of interest are revealed on the updated form, the 
Librarian will suspend the proceeding and replace the selected 
arbitrator with another arbitrator from the arbitrator list in 
accordance with the provision of Sec. 251.6.
    (e) During the following periods of time, the selected arbitrators 
shall be obliged to inform the Librarian immediately of any change in 
their financial interests that would reasonably raise a conflict of 
interest--
    (1) during the period beginning with the filing of the updated 
disclosure form or statement required by paragraph (d) of this section 
and ending with the submission of the panel's report to the Librarian, 
and
    (2) if the same arbitrator or arbitrators are recalled to serve 
following a court-ordered remand, during the time the panel is 
reconvened.
    (f) If the Librarian determines that an arbitrator has failed to 
give timely notice of a financial interest constituting a conflict of 
interest, or that the arbitrator in fact has a conflict of interest, 
the Librarian shall remove that arbitrator from the proceeding.


Sec. 251.33.  Ex parte communications.

    (a) Communications with Librarian or Register. No person outside 
the Library of Congress shall engage in ex parte communication with the 
Librarian of Congress or the Register of Copyrights on the merit or 
status of any matter, procedural or substantive, relating to the 
distribution of royalty fees, the adjustment of royalty rates or the 
status of digital audio recording devices, at any time whatsoever. This 
prohibition shall not apply to statements concerning public policies 
related to royalty fee distribution and rate adjustment so long as they 
are unrelated to the merits of any particular proceeding.
    (b) Selected arbitrators. No interested party shall engage in, or 
cause someone else to engage in, ex parte communications with the 
selected arbitrators in a proceeding for any reason whatsoever from the 
time of their selection to the time of the submission of their report 
to the Librarian, and, in the case of a remand, from the time of their 
reconvening to the time of their submission of their report to the 
Librarian.
    (c) Listed arbitrators. No interested party shall engage in, or 
cause someone else to engage in, ex parte communications with any 
person listed by the Librarian of Congress as qualified to serve as a 
arbitrator about the merits of any past, pending, or future proceeding 
relating to the distribution of royalty fees or the adjustment of 
royalty rates. This prohibition applies during any period when the 
individual appears on a current arbitrator list.
    (d) Library and Copyright Office personnel. No person outside the 
Library of Congress (including the Copyright Office staff) shall engage 
in ex parte communications with any employee of the Library of Congress 
about the substantive merits of any past, pending, or future proceeding 
relating to the distribution of royalty fees or the adjustment of 
royalty rates. This prohibition does not apply to procedural inquiries 
such as scheduling, filing requirements, status requests, or requests 
for public information.
    (e) Outside contacts. The Librarian of Congress, the Register of 
Copyrights, the selected arbitrators, the listed arbitrators, and the 
employees of the Library of Congress described in paragraphs (a) 
through (d) of this section, shall not initiate or continue the 
prohibited communications that apply to them.
    (f) Responsibilities of recipients of communication. (1) Whoever 
receives a prohibited communication shall immediately end it and place 
on the public record of the applicable proceeding: (i) all such written 
or recorded communications;
    (ii) memoranda stating the substance of all such oral 
communications; and
    (iii) all written responses, and memoranda stating the substance of 
all oral responses, to the materials described in paragraphs (f)(1) (i) 
and (ii) of this section.
    (2) The materials described in this paragraph (f) shall not be 
considered part of the record for the purposes of decision unless 
introduced into evidence by one of the parties.
    (g) Action by Librarian. When notice of a prohibited communication 
described in paragraphs (a) through (d) of this section has been placed 
in the record of a proceeding, either the Librarian of Congress or the 
CARP may require the party causing the prohibited communication to show 
cause why his or her claim or interest in the proceeding should not be 
dismissed, denied, or otherwise adversely affected.


Sec. 251.34  Gifts and other things of monetary value.

    (a) Selected arbitrators. From the time of selection to the time of 
the submission of the arbitration panel's report, whether during the 
initial proceeding or during a court-ordered remand, no selected 
arbitrator shall solicit or accept, directly or indirectly, any gift, 
gratuity, favor, travel, entertainment, service, loan, or any other 
thing of monetary value from a person or organization that has an 
interest that would be affected by the outcome of the proceeding, 
regardless of whether the offer was intended to affect the outcome of 
the proceeding.
    (b) Listed arbitrators. No listed arbitrator shall solicit or 
accept, directly or indirectly, any gift, gratuity, favor, travel, 
entertainment, service, loan, or any other thing of monetary value from 
a person or organization that has an interest in any proceeding for 
which the arbitrator might be selected, regardless of whether the offer 
was intended to affect the outcome of the proceeding, except--
    (1) a listed arbitrator may accept unsolicited gifts having an 
aggregate market value of $20 or less per occasion, as long as the 
aggregate market value of individual gifts received from any one source 
does not exceed $50 in a calendar year, or
    (2) a listed arbitrator may accept a gift given under circumstances 
in which it is clear that the gift is motivated by a family 
relationship or personal friendship rather than the potential of the 
listed arbitrator to decide a future proceeding.
    (c) A gift that is solicited or accepted indirectly includes a 
gift--
    (1) given with the arbitrator's knowledge and acquiescence to the 
arbitrator's parent, sibling, spouse, child, or dependent relative 
because of that person's relationship to the arbitrator, or
    (2) given to any other person, including any charitable 
organization, on the basis of designation, recommendation, or other 
specification by the arbitrator.


Sec. 251.35  Outside employment and other activities.

    (a) From the time of selection to the time when all possibility of 
being selected to serve on a court-ordered remand is ended, no 
arbitrator shall--
    (1) engage in any outside business or other activity that would 
cause a reasonable person to question the arbitrator's ability to 
render an impartial decision;
    (2) accept any speaking engagement, whether paid or unpaid, related 
to the proceeding or sponsored by a party that would be affected by the 
outcome of the proceeding; or
    (3) accept any honorarium, whether directly or indirectly paid, for 
any appearance, speech, or article related to the proceeding or offered 
by a party who would be affected by the outcome of the proceeding.
    (b) Honoraria indirectly paid include payments--
    (1) given with the arbitrator's knowledge and acquiescence to the 
arbitrator's parent, sibling, spouse, child, or dependent relative 
because of that person's relationship to the arbitrator, or
    (2) given to any other person, including any charitable 
organization, on the basis of designation, recommendation, or other 
specification by the arbitrator.


Sec. 251.36  Pre-arbitration and post-arbitration employment 
restrictions.

    (a) The Librarian of Congress will not select any arbitrator who 
was employed at any time during the period of five years immediately 
preceding the date of that arbitrator's selection by any party to, or 
any person, organization or entity with a financial interest in, the 
proceeding for which he or she is being considered. However, a listed 
arbitrator may disclose on the record the past employment causing 
disqualification and may ask the parties to consider whether to allow 
him or her to serve in the proceeding, in which case any agreement by 
the parties to allow the listed arbitrator to serve shall be unanimous 
and shall be incorporated into the record of the proceeding.
    (b) No arbitrator may arrange for future employment with any party 
to, or any person, organization, or entity with a financial interest 
in, the proceeding in which he or she is serving.
    (c) For a period of three years from the date of submission of the 
arbitration panel's report to the Librarian, no arbitrator may enter 
into employment with any party to, or any person, organization, or 
entity with a financial interest in, the particular proceeding in which 
he or she served.
    (d) For purposes of this section, ``employed'' or ``employment'' 
means any business relationship involving the provision of personal 
services including, but not limited to, personal services as an 
officer, director, employee, agent, attorney, consultant, contractor, 
general partner or trustee, but does not include serving as an 
arbitrator, mediator, or neutral engaged in alternative dispute 
resolution.


Sec. 251.37  Use of nonpublic information.

    (a) Unless required by law, no arbitrator shall disclose in any 
manner any information contained in filings, pleadings, or evidence 
that the arbitration panel has ruled to be confidential in nature.
    (b) Unless required by law, no arbitrator shall disclose in any 
manner--
    (1) intra-panel communications or communications between the 
Library of Congress and the panel intended to be confidential;
    (2) draft interlocutory rulings or draft decisions; or
    (3) the CARP report before its submission to the Librarian of 
Congress.
    (c) No arbitrator shall engage in a financial transaction using 
nonpublic information, or allow the improper use of nonpublic 
information, to further his or her private interest or that of another, 
whether through advice or recommendation, or by knowing unauthorized 
disclosure.


Sec. 251.38  Billing and commitment to standards.

    (a) Arbitrators are bound by the hourly or daily fee they proposed 
to the Librarian of Congress when their names were submitted to be 
listed under Sec. 251.3, and shall not bill in excess of their proposed 
charges.
    (b) Arbitrators shall not charge the parties any expense in 
addition to their hourly or daily charge, except, in the case of an 
arbitrator who resides outside the Washington, DC metropolitan area, 
travel, lodging, and meals not to exceed the government rate.
    (c) When submitting their statement of costs to the parties under 
Sec. 251.54, arbitrators shall include a detailed account of their 
charges, including the work performed during each hour or day charged.
    (d) Except for support services provided by the Library of 
Congress, arbitrators shall perform their own work, including research, 
analysis of the record, and decision-writing.
    (e) At the time of selection, arbitrators shall sign an agreement 
stating that they will abide by all the terms therein, including all of 
the standards of conduct and billing restrictions specified in this 
subpart. Any arbitrator who does not sign the agreement will not be 
selected to serve.


Sec. 251.39  Remedies.

    In addition to those provided above, remedies for the violation of 
the standards of conduct of this section may include, but are not 
limited to, the following--
    (a) in the case of a selected arbitrator,
    (1) removal of the arbitrator from the proceeding;
    (2) permanent removal of the arbitrator's name from the current and 
any future list of available arbitrators published by the Librarian;
    (3) referral of the matter to the bar of which the arbitrator is a 
member.
    (b) in the case of a listed but not selected arbitrator--
    (1) permanent removal of the arbitrator's name from the current and 
any future list of available arbitrators published by the Librarian;
    (2) referral of the matter to the bar of which the listed 
arbitrator is a member.
    (c) in the case of an interested party or individual who engaged in 
the ethical violation--
    (1) referral of the matter to the bar or professional association 
of which the interested individual is a member;
    (2) barring the offending individual from current and/or future 
appearances before the CARP;
    (3) designation of an issue in the current or in a future 
proceeding as to whether the party's interest should not be dismissed, 
denied, or otherwise adversely affected.
    (d) In all applicable matters of violations of standards of 
conduct, the Librarian may refer the matter to the Department of 
Justice, or other legal authority of competent jurisdiction, for 
criminal prosecution.

Subpart E--Procedures of Copyright Arbitration Royalty Panels


Sec. 251.40  Scope.

    This subpart governs the proceedings of Copyright Arbitration 
Royalty Panels convened under 17 U.S.C. 803 for the adjustment of 
royalty rates and distribution of royalty fees. This subpart does not 
apply to other arbitration proceedings specified by 17 U.S.C., or to 
actions or rulemakings of the Librarian of Congress or the Register of 
Copyrights, except where expressly provided in the provisions of this 
subpart.


Sec. 251.41  Formal hearings.

    (a) The formal hearings that will be conducted under the rules of 
this subpart are rate adjustment hearings and royalty fee distribution 
hearings. All parties intending to participate in a hearing of a 
Copyright Arbitration Royalty Panel must file a notice of their 
intention. A CARP may also, on its own motion or on the petition of an 
interested party, hold other proceedings it considers necessary to the 
exercise of its functions, subject to the provisions of Sec. 251.7. All 
such proceedings will be governed by the rules of this subpart.
    (b) During the 30-day period specified in Sec. 251.45(a) for filing 
motions in a distribution proceeding, or during the 30-day period 
described in Sec. 251.63 for settling rate differences, as appropriate, 
any party may petition the Librarian of Congress to dispense with 
formal hearings, and have the CARP panel decide the controversy or rate 
adjustment on the basis of written pleadings. The Librarian, upon 
recommendation of the Register of Copyrights, may rule on the petition 
or designate it as an issue to be ruled upon by the CARP. The petition 
may be granted if--
    (1) there is no genuine issue as to any material fact, or
    (2) all parties to the controversy agree with the petition.


Sec. 251.42  Suspension or waiver of rules.

    For purposes of an individual proceeding, the provisions of this 
subpart may be suspended or waived, in whole or in part, by a Copyright 
Arbitration Royalty Panel upon a showing of good cause, subject to the 
provisions of Sec. 251.7. Such suspension or waiver shall apply only to 
the proceeding of the CARP taking that action, and shall not be binding 
on any other panel or proceeding. Where procedures have not been 
specifically prescribed in this subpart, and subject to Sec. 251.7, the 
panel shall follow procedures consistent with 5 U.S.C. chapter 5, 
subchapter II.


Sec. 251.43  Written cases.

    (a) The proceedings of a Copyright Arbitration Royalty Panel for 
rate adjustment or royalty fee distribution shall begin with the filing 
of written direct cases of the parties who have filed a notice of 
intent to participate in the hearing.
    (b) The written direct case shall include all testimony, including 
each witness's background and qualifications, along with all the 
exhibits to be presented in the direct case.
    (c) Each party may designate a portion of past records, including 
records of the Copyright Royalty Tribunal, that it wants included in 
its direct case. Complete testimony of each witness whose testimony is 
designated (i.e., direct, cross and redirect) must be referenced.
    (d) In the case of a royalty fee distribution proceeding, each 
party must state in the written direct case its percentage or dollar 
claim to the fund. In the case of a rate adjustment proceeding, each 
party must state its requested rate. No party will be precluded from 
revising its claim or its requested rate at any time during the 
proceeding up to the filing of the proposed findings of fact and 
conclusions of law.
    (e) No evidence, including exhibits, may be submitted in the 
written direct case without a sponsoring witness, except where the CARP 
panel has taken official notice, or in the case of incorporation by 
reference of past records, or for good cause shown.
    (f) Written rebuttal cases of the parties shall be filed at a time 
designated by a CARP upon conclusion of the hearing of the direct case, 
in the same form and manner as the direct case, except that the claim 
or the requested rate shall not have to be included if it has not 
changed from the direct case.


Sec. 251.44  Filing and service of written cases and pleadings.

    (a) Copies filed with a Copyright Arbitration Royalty Panel. In all 
filings with a Copyright Arbitration Royalty Panel, the submitting 
party shall deliver, in such a fashion as the panel shall direct, an 
original and three copies to the panel. The submitting party shall also 
deliver one copy to the Copyright Office at the address listed in 
Sec. 251.1. In the case of exhibits whose bulk or whose cost of 
reproduction would unnecessarily encumber the record or burden the 
party, a CARP may reduce the number of copies required by the panel, 
but a complete copy must still be submitted to the Copyright Office. In 
no case shall a party tender any written case or pleading by facsimile 
transmission.
    (b) Copies filed with the Librarian of Congress. In all pleadings 
filed with the Librarian of Congress, the submitting party shall 
deliver an original and five copies to the Copyright Office. In no case 
shall a party tender any pleading by facsimile transmission.
    (c) English language translations. In all filings with a CARP or 
the Librarian of Congress, each submission that is in a language other 
than English shall be accompanied by an English-language translation, 
duly verified under oath to be a true translation. Any other party to 
the proceeding may, in response, submit its own English-language 
translation, similarly verified.
    (d) Affidavits. The testimony of each witness in a party's written 
case, direct or rebuttal, shall be accompanied by an affidavit or a 
declaration made pursuant to 28 U.S.C. 1746 supporting the testimony.
    (e) Subscription and verification. (1) The original of all 
documents filed by any party represented by counsel shall be signed by 
at least one attorney of record and shall list the attorney's address 
and telephone number. All copies shall be conformed. Except for 
English-language translations, written cases, or when otherwise 
required, documents signed by the attorney for a party need not be 
verified or accompanied by an affidavit. The signature of an attorney 
constitutes certification that to the best of his or her knowledge and 
belief there is good ground to support it, and that it has not been 
interposed for purposes of delay.
    (2) The original of all documents filed by a party not represented 
by counsel shall be both signed and verified by that party and list 
that party's address and telephone number.
    (3) The original of a document that is not signed, or is signed 
with the intent to defeat the purpose of this section, may be stricken 
as sham and false, and the matter shall proceed as though the document 
had not been filed.
    (f) Service. The Librarian of Congress shall compile and distribute 
to those parties who have filed a notice of intent to participate, the 
official service list of the proceeding, which shall be composed of the 
names and addresses of the representatives of all the parties to the 
proceeding. In all filings with a CARP or the Librarian of Congress, a 
copy shall be served upon counsel of all other parties identified in 
the service list, or, if the party is unrepresented by counsel, upon 
the party itself. Proof of service shall accompany the filing with the 
CARP panel or the Copyright Office. If a party files a pleading that 
requests or would require action by the panel or the Librarian within 
10 or fewer days after the filing, it must serve the pleading upon all 
other counsel or parties by means no slower than overnight express mail 
on the same day the pleading is filed. Parties shall notify the 
Librarian of any change in the name or address to which service shall 
be made, and shall serve a copy of such notification on all parties and 
the CARP panel.
    (g) Oppositions and replies. Except as otherwise provided in these 
rules or by the Librarian of Congress or a CARP, oppositions to motions 
shall be filed within ten business days of the date of service of the 
motion, and replies to oppositions shall be filed within five business 
days of the date of service of the opposition. The date of service 
shall be deemed to be the third business day following service by mail 
or the next business day following service by overnight delivery, by 
hand, or by telefacsimile.


Sec. 251.45  Precontroversy motions, and discovery.

    (a) Precontroversy motions and objections. In the case of a royalty 
fee distribution proceeding, the Librarian of Congress shall, in the 
notice asking the claimants whether any controversies exist concerning 
distribution of the royalty funds, designate a 30-day period in which 
any party to the proceeding may file with the Librarian of Congress 
objections to, or motions to dismiss, any party's royalty claim, or 
motions for declaratory rulings, or for procedural or evidentiary 
rulings, on any proper ground. In the case of a rate adjustment 
proceeding, the 30-day period shall correspond with the 30-day period 
specified in Sec. 251.63 for settling rate differences.
    (b) Any party to the proceeding wishing to file a response to such 
motion or objection may do so within two weeks. The Librarian, upon 
recommendation of the Register of Copyrights, shall rule on the motion 
or objection prior to the initiation of an arbitration proceeding, or 
may designate the motion or objection as an issue for the panel to rule 
on.
    (c) Discovery and motions filed with a Copyright Arbitration 
Royalty Panel. (1) A Copyright Arbitration Royalty Panel shall 
designate a period following the filing of the written direct and 
rebuttal cases in which parties may request of an opposing party 
nonprivileged underlying documents related to the written exhibits and 
testimony.
    (2) After the filing of the written cases, any party may file with 
a CARP objections to any portion of another party's written case on any 
proper ground including, without limitation, relevance, competency, and 
failure to provide underlying documents. If an objection is apparent 
from the face of a written case, that objection must be raised or the 
party may thereafter be precluded from raising such an objection.
    (d) Amended filings and discovery. In the case of objections filed 
with either the Librarian of Congress or a CARP, each party may amend 
its claim, petition, written case, or direct evidence to respond to the 
objections raised by other parties, or to the requests of either the 
Librarian or a panel. Such amendments must be properly filed with the 
Librarian or the CARP, wherever appropriate, and exchanged with all 
parties. All parties shall be given a reasonable opportunity to conduct 
discovery on the amended filings.


Sec. 251.46  Conduct of hearings: Role of arbitrators.

    (a) At the opening of a hearing conducted by a Copyright 
Arbitration Royalty Panel, the chairperson shall announce the subject 
under consideration.
    (b) Only the arbitrators of a CARP, or counsel as provided in this 
chapter, shall question witnesses.
    (c) Subject to the vote of the CARP, the chairperson shall have 
responsibility for:
    (1) Setting the order of presentation of evidence and appearance of 
witnesses; 6I11(2) Administering oaths and affirmations to all 
witnesses;
    (3) Announcing the CARP panel's ruling on objections and motions 
and all rulings with respect to introducing or excluding documentary or 
other evidence. In all cases, whether there are an even or odd number 
of arbitrators sitting at the hearing, it takes a majority vote to 
grant a motion or sustain an objection. A split vote will result in the 
denial of the motion or the overruling of the objection;
    (4) Regulating the course of the proceedings and the decorum of the 
parties and their counsel, and insuring that the proceedings are fair 
and impartial; and
    (5) Announcing the schedule of subsequent hearings.
    (d) Each arbitrator may examine any witness or call upon any party 
for the production of additional evidence at any time. Further 
examination, cross-examination, or redirect examination by counsel 
relevant to the inquiry initiated by an arbitrator may be allowed by a 
CARP panel, but only to the limited extent that it is directly 
responsive to the inquiry of the arbitrator.


Sec. 251.47  Conduct of hearings: Witnesses and counsel.

    (a) With all due regard for the convenience of the witnesses, 
proceedings shall be conducted as expeditiously as possible.
    (b) In each distribution or rate adjustment proceeding, each party 
may present its opening statement with the presentation of its direct 
case.
    (c) All witnesses shall be required to take an oath or affirmation 
before testifying; however, attorneys who do not appear as witnesses 
shall not be required to do so.
    (d) Witnesses shall first be examined by their attorney and by 
opposing attorneys for their competency to support their written 
testimony and exhibits (voir dire).
    (e) Witnesses may then summarize, highlight or read their 
testimony. However, witnesses may not materially supplement or alter 
their written testimony except to correct it, unless the CARP panel 
expands the witness's testimony to complete the record.
    (f) Parties are entitled to raise objections to evidence on any 
proper ground during the course of the hearing, including an objection 
that an opposing party has not furnished nonprivileged underlying 
documents. However, they may not raise objections that were apparent 
from the face of a written case and could have been raised before the 
hearing without leave from the CARP panel. See Sec. 251.45(c).
    (g) All written testimony and exhibits will be received into the 
record, except any to which the panel sustains an objection; no 
separate motion will be required.
    (h) If the panel rejects or excludes testimony and an offer of 
proof is made, the offer of proof shall consist of a statement of the 
substance of the evidence which it is contended would have been 
adduced. In the case of documentary or written evidence, a copy of such 
evidence shall be marked for identification and shall constitute the 
offer of proof.
    (i) The CARP panel shall discourage the presentation of cumulative 
evidence, and may limit the number of witnesses that may be heard on 
behalf of any one party on any one issue.
    (j) Parties are entitled to conduct cross-examination and redirect 
examination. Cross-examination is limited to matters raised on direct 
examination. Redirect examination is limited to matters raised on 
cross-examination. The panel, however, may limit cross-examination and 
redirect examination if in its judgment this evidence or examination 
would be cumulative or cause undue delay. Conversely, this subsection 
does not restrict the discretion of the panel to expand the scope of 
cross-examination or redirect examination.
    (k) Documents that have not been exchanged in advance may be shown 
to a witness on cross-examination. However, copies of such documents 
must be distributed to the CARP panel and to other participants or 
their counsel at hearing before being shown to the witness at the time 
of cross-examination, unless the panel directs otherwise. If the 
document is not, or will not be, supported by a witness for the cross-
examining party, that document can be used solely to impeach the 
witness's direct testimony and cannot itself be relied upon in findings 
of fact as rebutting the witness's direct testimony. However, upon 
leave from the panel, the document may be admitted as evidence without 
a sponsoring witness if official notice is proper, or if, in the 
panel's view, the cross-examined witness is the proper sponsoring 
witness.
    (l) A CARP will encourage individuals or groups with the same or 
similar interests in a proceeding to select a single representative to 
conduct their examination and cross-examination for them. However, if 
there is no agreement on the selection of a representative, each 
individual or group will be allowed to conduct its own examination and 
cross-examination, but only on issues affecting its particular 
interests, provided that the questioning is not repetitious or 
cumulative of the questioning of other parties within the group.


Sec. 251.48  Rules of evidence.

    (a) Admissibility. In any public hearing before a Copyright 
Arbitration Royalty Panel, evidence that is not unduly repetitious or 
cumulative and is relevant and material shall be admissible. The 
testimony of any witness will not be considered evidence in a 
proceeding unless the witness has been sworn.
    (b) Documentary evidence. Evidence that is submitted in the form of 
documents or detailed data and information shall be presented as 
exhibits. Relevant and material matter embraced in a document 
containing other matter not material or relevant or not intended as 
evidence must be plainly designated as the matter offered in evidence, 
and the immaterial or irrelevant parts shall be marked clearly so as to 
show they are not intended as evidence. In cases where a document in 
which material and relevant matter occurs is of such bulk that it would 
unnecessarily encumber the record, it may be marked for identification 
and the relevant and material parts, once properly authenticated, may 
be read into the record. If the CARP panel desires, a true copy of the 
material and relevant matter may be presented in extract form, and 
submitted as evidence. Anyone presenting documents as evidence must 
present copies to all other participants at the hearing or their 
attorneys, and afford them an opportunity to examine the documents in 
their entirety and offer into evidence any other portion that may be 
considered material and relevant.
    (c) Documents filed with a Copyright Arbitration Royalty Panel or 
Copyright Office. If the matter offered in evidence is contained in 
documents already on file with a Copyright Arbitration Royalty Panel or 
the Copyright Office, the documents themselves need not be produced, 
but may instead be referred to according to how they have been filed.
    (d) Public documents. If a public document such as an official 
report, decision, opinion, or published scientific or economic data, is 
offered in evidence either in whole or in part, and if the document has 
been issued by an Executive Department, a legislative agency or 
committee, or a Federal administrative agency (Government-owned 
corporations included), and is proved by the party offering it to be 
reasonably available to the public, the document need not be produced 
physically, but may be offered instead by identifying the document and 
signaling the relevant parts.
    (e) Introduction of studies and analyses. If studies or analyses 
are offered in evidence, they shall state clearly the study plan, all 
relevant assumptions, the techniques of data collection, and the 
techniques of estimation and testing. The facts and judgments upon 
which conclusions are based shall be stated clearly, together with any 
alternative courses of action considered. If requested, tabulations of 
input data shall be made available to the Copyright Arbitration Royalty 
Panel.
    (f) Statistical studies. Statistical studies offered in evidence 
shall be accompanied by a summary of their assumptions, their study 
plans, and their procedures. Supplementary details shall be included in 
appendices. For each of the following types of statistical studies the 
following should be furnished:
    (1) Sample surveys. (i) A clear description of the survey design, 
the definition of the universe under consideration, the sampling frame 
and units, the validity and confidence limits on major estimates; and
    (ii) An explanation of the method of selecting the sample and of 
which characteristics were measured or counted.
    (2) Econometric investigations. (i) A complete description of the 
econometric model, the reasons for each assumption, and the reasons for 
the statistical specification;
    (ii) A clear statement of how any changes in the assumptions might 
affect the final result; and
    (iii) Any available alternative studies that employ alternative 
models and variables, if requested.
    (3) Experimental analysis. (i) A complete description of the 
design, the controlled conditions, and the implementation of controls; 
and
    (ii) A complete description of the methods of observation and 
adjustment of observation.
    (4) Studies involving statistical methodology. (i) The formula used 
for statistical estimates;
    (ii) The standard error for each component;
    (iii) The test statistics, the description of how the tests were 
conducted, related computations, computer programs, and all final 
results; and
    (iv) Summarized descriptions of input data and, if requested, the 
input data themselves.


Sec. 251.49  Transcript and record.

    (a) An official reporter for the recording and transcribing of 
hearings shall be designated by the Librarian of Congress. Anyone 
wishing to inspect or copy the transcript of a hearing may do so at a 
location specified by the chairperson of the Copyright Arbitration 
Royalty Panel conducting the hearing.
    (b) The transcript of testimony and all exhibits, papers, and 
requests filed in the proceeding, shall constitute the official written 
record. Such record shall accompany the report of the determination of 
the CARP to the Librarian of Congress required by 17 U.S.C. 802(e).
    (c) The record, including the report of the determination of a 
CARP, shall be available at the Copyright Office for public inspection 
and copying in accordance with Sec. 251.22.


Sec. 251.50  Rulings and orders.

    In accordance with 5 U.S.C., subchapter II, a Copyright Arbitration 
Royalty Panel may issue rulings or orders, either on its own motion or 
that of an interested party, necessary to the resolution of issues 
contained in the proceeding before it; Provided, That no such rules or 
orders shall amend, supplement or supersede the rules and regulations 
contained in this subchapter. See Sec. 251.7.


Sec. 251.51  Closing the hearing.

    To close the record of hearing, the chairperson of a Copyright 
Arbitration Royalty Panel shall make an announcement that the taking of 
testimony has concluded. In its discretion the panel may close the 
record as of a future specified date, and allow time for exhibits yet 
to be prepared to be admitted, provided that the parties to the 
proceeding stipulate on the record that they waive the opportunity to 
cross-examine or present evidence with respect to such exhibits. The 
record in any hearing that has been recessed may not be closed by the 
chairperson before the day on which the hearing is to resume, except 
upon ten days' notice to all parties.


Sec. 251.52  Proposed findings and conclusions.

    (a) Any party to the proceeding may file proposed findings of fact 
and conclusions, briefs, or memoranda of law, or may be directed by the 
chairperson to do so. Such filings, and any replies to them, shall take 
place at such time after the record has been closed as the chairperson 
directs.
    (b) Failure to file when directed to do so shall be considered a 
waiver of the right to participate further in the proceeding, unless 
good cause for the failure is shown.
    (c) Proposed findings of fact shall be numbered by paragraph and 
include all basic evidentiary facts developed on the record used to 
support proposed conclusions, and shall contain appropriate citations 
to the record for each evidentiary fact. Proposed conclusions shall be 
stated separately. Proposed findings submitted by someone other than an 
applicant in a proceeding shall be restricted to those issues 
specifically affecting that person.


Sec. 251.53  Report to the Librarian of Congress.

    (a) At any time after the filing of proposed findings of fact and 
conclusions of law specified in Sec. 251.52, and not later than 180 
days from publication in the Federal Register of notification of 
commencement of the proceeding, a Copyright Arbitration Royalty Panel 
shall deliver to the Librarian of Congress a report incorporating its 
written determination. Such determination shall be accompanied by the 
written record, and shall set forth the facts that the panel found 
relevant to its determination.
    (b) The determination of the panel shall be certified by the 
chairperson and signed by all of the arbitrators. Any dissenting 
opinion shall be certified and signed by the arbitrator so dissenting.
    (c) At the same time as the submission to the Librarian of 
Congress, the chairperson of the panel shall cause a copy of the 
determination to be delivered to all parties participating in the 
proceeding.
    (d) The Librarian of Congress shall make the report of the CARP and 
the accompanying record available for public inspection and copying.


Sec. 251.54  Assessment of costs of arbitration panels.

    (a) After the submission of the panel's report to the Librarian of 
Congress, the panel may assess its ordinary and necessary costs, 
according to Sec. 251.38, to the participants to the proceeding as 
follows:
    (1) In the case of a rate adjustment proceeding, the parties to the 
proceeding shall bear the entire cost thereof in such manner and 
proportion as the panel shall direct.
    (2) In the case of a royalty distribution proceeding, the parties 
to the proceeding shall bear the total cost of the proceeding in direct 
proportion to their share of the distribution.
    (3) In the case of a change in the share of distribution because of 
the Librarian's substitution of a new determination, or a determination 
reached as a result of a court-ordered remand, the parties shall make 
restitution to each other for the difference in payments that resulted 
from the change.
    (b) The chairperson of the panel shall cause to be delivered to 
each participating party a statement of the total costs of the 
proceeding, the party's share of the total cost, and the amount owed by 
the party to each arbitrator.
    (c) All parties to a proceeding shall have 30 days from receipt of 
the statement of costs and bill for payment in which to tender payment 
to the arbitrators. Payment should be in the form of a money order, 
check, or bank draft. Failure to submit timely payment may submit the 
nonpaying party to the provisions of the Debt Collection Act of 1982, 
including disclosure to consumer credit reporting agencies and referral 
to collection agencies.


Sec. 251.55  Post-panel motions.

    (a) Any party to the proceeding may file with the Librarian of 
Congress a petition to modify or set aside the determination of a 
Copyright Arbitration Royalty Panel within 14 days of the Librarian's 
receipt of the panel's report of its determination. Such petition shall 
state the reasons for modification or reversal of the panel's 
determination, and shall include applicable sections of the party's 
proposed findings of fact and conclusions of law.
    (b) Replies to petitions to modify or set aside shall be filed 
within 14 days of the filing of such petitions.


Sec. 251.56  Order of the Librarian of Congress.

    (a) After the filing of post-panel motions, see Sec. 251.55, but 
within 60 days from receipt of the report of the determination of a 
panel, the Librarian of Congress shall issue an order accepting the 
panel's determination or substituting the Librarian's own 
determination. The Librarian shall adopt the determination of the panel 
unless he or she finds that the determination is arbitrary or contrary 
to the applicable provisions of 17 U.S.C.
    (b) If the Librarian substitutes his or her own determination, the 
order shall set forth the reasons for not accepting the panel's 
determination, and shall set forth the facts which the Librarian found 
relevant to his or her determination.
    (c) The Librarian shall cause a copy of the order to be delivered 
to all parties participating in the proceeding. The Librarian shall 
also publish the order, and the determination of the panel, in the 
Federal Register.


Sec. 251.57  Effective date of order.

    An order of determination issued by the Librarian under Sec. 251.56 
shall become effective 30 days following its publication in the Federal 
Register, unless an appeal has been filed pursuant to Sec. 251.58 and 
notice of the appeal has been served on all parties to the proceeding.


Sec. 251.58  Judicial review.

    (a) Any order of determination issued by the Librarian of Congress 
under Sec. 251.55 may be appealed, by any aggrieved party who would be 
bound by the determination, to the United States Court of Appeals for 
the District of Columbia Circuit, within 30 days after publication of 
the order in the Federal Register.
    (b) If no appeal is brought within the 30 day period, the order of 
determination of the Librarian is final, and shall take effect as set 
forth in the order.
    (c) The pendency of any appeal shall not relieve persons obligated 
to make royalty payments under 17 U.S.C. 111, 115, 116, 118, 119, or 
1003, and who would be affected by the determination on appeal, from 
depositing statements of account and royalty fees specified by those 
sections.

Subpart F--Rate Adjustment Proceedings


Sec. 251.60  Scope.

    This subpart governs only those proceedings dealing with royalty 
rate adjustments affecting cable (17 U.S.C. 111), the production of 
phonorecords (17 U.S.C. 115), performances on coin-operated phonorecord 
players (jukeboxes) (17 U.S.C. 116), and noncommercial educational 
broadcasting (17 U.S.C. 118). Those provisions of subpart E of this 
part generally regulating the conduct of proceedings shall apply to 
rate adjustment proceedings, unless they are inconsistent with the 
specific provisions of this subpart.


Sec. 251.61  Commencement of adjustment proceedings.

    (a) In the case of cable, phonorecords, and coin-operated 
phonorecord players (jukeboxes), rate adjustment proceedings shall 
commence with the filing of a petition by an interested party according 
to the following schedule:
    (1) Cable: During 1995, and each subsequent fifth calendar year.
    (2) Phonorecords: During 1997 and each subsequent tenth calendar 
year.
    (3) Coin-operated phonorecord players (jukeboxes): Within one year 
of the expiration or termination of a negotiated license authorized by 
17 U.S.C. 116.
    (b) Cable rate adjustment proceedings may also be commenced by the 
filing of a petition, according to 17 U.S.C. 801(b)(2)(B) and (C), if 
the Federal Communications Commission amends certain of its rules with 
respect to the carriage by cable systems of broadcast signals, or with 
respect to syndicated and sports programming exclusivity.
    (c) In the case of noncommercial educational broadcasting, a 
petition is not necessary for the commencement of proceedings. 
Proceedings commence with the publication of a notice of the initiation 
of arbitration proceedings in the Federal Register on June 30, 1997, 
and at five year intervals thereafter.


Sec. 251.62  Content of petition.

    (a) In the case of a petition for rate adjustment proceedings for 
cable television, phonorecords, and coin-operated phonorecord players 
(jukeboxes), the petition shall detail the petitioner's interest in the 
royalty rate sufficiently to permit the Librarian of Congress to 
determine whether the petitioner has a ``significant interest'' in the 
matter. The petition must also identify the extent to which the 
petitioner's interest is shared by other owners or users; owners or 
users with similar interests may file a petition jointly.
    (b) In the case of a petition for rate adjustment proceedings as 
the result of a Federal Communications Commission rule change, the 
petition shall also set forth the actions of the Federal Communications 
Commission on which the petition for a rate adjustment is based.


Sec. 251.63  Period for consideration.

    To allow time for parties to settle their differences regarding 
rate adjustments, the Librarian of Congress shall, after the filing of 
a petition, or prior to the commencement of proceedings made under 17 
U.S.C. 118(b), designate a 30-day period for consideration of their 
settlement. The Librarian shall cause notice of the consideration 
period to be published in the Federal Register, and such notice shall 
include the effective dates of that period.


Sec. 251.64  Disposition of petition; initiation of arbitration 
proceeding.

    At the end of the 30-day period for settling rate differences, and 
after the Librarian has ruled on all motions filed during that period 
under Sec. 251.45(b), the Librarian will determine the sufficiency of 
the petition, including, where appropriate, whether one or more of the 
petitioners' interests are ``significant.'' If the Librarian determines 
that a petition is significant, he or she will cause to be published in 
the Federal Register a declaration of a controversy accompanied by a 
notice of initiation of an arbitration proceeding. The same declaration 
and notice of initiation shall be made for noncommercial educational 
broadcasting in accordance with 17 U.S.C. 118. Such notice shall, to 
the extent feasible, describe the nature, general structure, and 
schedule of the proceeding.


Sec. 251.65  Deduction of costs of rate adjustment proceedings.

    The Librarian of Congress and the Register of Copyrights may deduct 
the reasonable costs the Library of Congress and the Copyright Office 
incurred as a result of a rate adjustment proceeding from the relevant 
royalty pool. If no royalty pool exists, the Librarian of Congress and 
the Register of Copyrights may assess their reasonable costs directly 
to the parties participating in the most recent relevant proceedings.

Subpart G--Royalty Fee Distribution Proceedings


Sec. 251.70  Scope.

    This subpart governs only those proceedings dealing with 
distribution of royalty payments deposited with the Register of 
Copyrights for cable (17 U.S.C. 111), satellite carrier (17 U.S.C. 
119), and digital audio recording devices and media (17 U.S.C. chapter 
10). Those provisions of subpart E generally regulating the conduct of 
proceedings shall apply to royalty fee distribution proceedings, unless 
they are inconsistent with the specific provisions of this subpart.


Sec. 251.71  Commencement of proceedings.

    (a) Cable. In the case of royalty fees collected under the cable 
compulsory license (17 U.S.C. 111), any person claiming to be entitled 
to such fees must file a claim with the Copyright Office during the 
month of July each year in accordance with the requirements of this 
subchapter.
    (b) Satellite carriers. In the case of royalty fees collected under 
the satellite carrier compulsory license (17 U.S.C. 119), any person 
claiming to be entitled to such fees must file a claim with the 
Copyright Office during the month of July each year in accordance with 
the requirements of this subchapter.
    (c) Digital audio recording devices and media. In the case of 
royalty payments for the importation and distribution in the United 
States, or the manufacture and distribution in the United States, of 
any digital recording device or medium, any person claiming to be 
entitled to such payments must file a claim with the Copyright Office 
during the month of January or February each year in accordance with 
the requirements of this subchapter.


Sec. 251.72  Determination of controversy.

    (a) Cable. After the first day of August each year, the Librarian 
of Congress shall determine whether a controversy exists among the 
claimants of cable compulsory license royalty fees. In order to 
determine whether a controversy exists, and to facilitate agreement 
among the claimants as to the proper distribution, the Librarian may 
request public comment or conduct public hearings, whichever he or she 
deems necessary. All requests for information and notices of public 
hearings shall be published in the Federal Register, along with a 
description of the general structure and schedule of the proceeding.
    (b) Satellite carriers. After the first day of August of each year, 
the Librarian shall determine whether a controversy exists among the 
claimants of the satellite carrier compulsory license royalty fees. In 
order to determine whether a controversy exists, and to facilitate 
agreement among the claimants as to the proper distribution, the 
Librarian may request public comment or conduct public hearings, 
whichever he or she deems necessary. All requests for information and 
notices of public hearings shall be published in the Federal Register, 
along with a description of the general structure and schedule of the 
proceeding.
    (c) Digital audio recording devices and media. Within 30 days after 
the last day of February each year, the Librarian of Congress shall 
determine whether a controversy exists among the claimants of digital 
audio recording devices and media royalty payments as to any Subfund of 
the Sound Recording Fund or the Musical Works Fund as set forth in 17 
U.S.C. 1006(b) (1) and (2). In order to determine whether a controversy 
exists, and to facilitate agreement among the claimants as to the 
proper distribution, the Librarian may request public comment or 
conduct public hearings, whichever he or she deems necessary. All 
requests for information and notices of public hearings shall be 
published in the Federal Register, along with a description of the 
general structure and schedule of the proceeding.


Sec. 251.73  Declaration of controversy: Initiation of arbitration 
proceeding.

    If the Librarian determines that a controversy exists among the 
claimants to either cable, satellite carrier, or digital audio 
recording devices and media royalties, the Librarian shall publish in 
the Federal Register a declaration of controversy along with a notice 
of initiation of an arbitration proceeding. Such notice shall, to the 
extent feasible, describe the nature, general structure and schedule of 
the proceeding.


Sec. 251.74   Deduction of costs of distribution proceedings.

    The Librarian of Congress and the Register of Copyrights may, 
before any distributions of royalty fees are made, deduct the 
reasonable costs incurred by the Library of Congress and the Copyright 
Office as a result of the distribution proceeding, from the relevant 
royalty pool.
    3. Part 302 of chapter III is removed.
    3a. A new part 252 is added to subchapter B of chapter II to read 
as follows:

PART 252--FILING OF CLAIMS TO CABLE ROYALTY FEES

Sec.
252.1  Scope.
252.2  Time of filing.
252.3  Content of claims.
252.4  Compliance with statutory dates.
252.5  Copies of claims.

    Authority: 17 U.S.C. 111(d)(4), 801, 803.


Sec. 252.1   Scope.

    This part prescribes procedures under to 17 U.S.C. 111(d)(4)(A), 
whereby parties claiming to be entitled to cable compulsory license 
royalty fees shall file claims with the Copyright Office.


Sec. 252.2   Time of filing.

    During the month of July each year, any party claiming to be 
entitled to cable compulsory license royalty fees for secondary 
transmissions of one or more of its works during the preceding calendar 
year shall file a claim to such fees with the Copyright Office. No 
royalty fees shall be distributed to a party for secondary 
transmissions during the specified period unless such party has timely 
filed a claim to such fees. Claimants may file claims jointly or as a 
single claim.


Sec. 252.3   Content of claims.

    (a) Claims filed by parties claiming to be entitled to cable 
compulsory license royalty fees shall include the following 
information:
    (1) The full legal name of the person or entity claiming royalty 
fees.
    (2) The telephone number, facsimile number, if any, and full 
address, including a specific number and street name or rural route, of 
the place of business of the person or entity.
    (3) If the claim is a joint claim, a concise statement of the 
authorization for the filing of the joint claim. For this purpose a 
performing rights society shall not be required to obtain from its 
members or affiliates separate authorizations, apart from their 
standard membership affiliate agreements.
    (4) For both individual claims and joint claims, other than a joint 
claim filed by a performing rights society on behalf of its members or 
affiliates, a general statement of the nature of each claimant's 
copyrighted works and identification of at least one secondary 
transmission by a cable system of each claimant's copyrighted works 
establishing a basis for the claim.
    (b) Claims shall bear the original signature of the claimant or of 
a duly authorized representative of the claimant.
    (c) In the event that the legal name and/or address of the claimant 
changes after the filing of the claim, the claimant shall notify the 
Copyright Office of such change. If the good faith efforts of the 
Copyright Office to contact the claimant are frustrated because of 
failure to notify the Office of a name and/or address change, the claim 
may be subject to dismissal.
    (d) In the event that, after filing an individual claim, a claimant 
chooses to negotiate a joint claim, either the particular joint 
claimant or the individual claimant shall notify the Copyright Office 
of such change within 14 days from the making of the agreement.


Sec. 252.4   Compliance with statutory dates.

    (a) Claims filed with the Copyright Office shall be considered 
timely filed only if:
    (1) They are received in the offices of the Copyright Office during 
normal business hours during the month of July, or
    (2) They are properly addressed to the Copyright Office in 
accordance with Sec. 251.1, and they are deposited with sufficient 
postage with the United States Postal Service and bear a July U.S. 
postmark.
    (b) Notwithstanding subsection (a), in any year in which July 31 
falls on a Saturday, Sunday, holiday, or other nonbusiness day within 
the District of Columbia or the Federal Government, claims received by 
the Copyright Office by the first business day in August, or properly 
addressed and deposited with sufficient postage with the United States 
Postal Service and postmarked by the first business day in August, 
shall be considered timely filed.
    (c) Claims dated only with a business meter that are received after 
July 31, will not be accepted as having been timely filed.
    (d) No claim may be filed by facsimile transmission.
    (e) In the event that a properly addressed and mailed claim is not 
timely received by the Copyright Office, a claimant may nonetheless 
prove that the claim was properly mailed if it was sent by certified 
mail return receipt requested, and the claimant can provide the 
receipt. No affidavit of an officer or employee of the claimant, or of 
a U.S. postal worker will be accepted as proof in lieu of the receipt.


Sec. 252.5   Copies of claims.

    A claimant shall, for each claim submitted to the Copyright Office, 
file an original and two copies of the claim to cable royalty fees.

PART 303--[REMOVED]

    4. Part 303--Access to Phonorecord Players (Jukeboxes) of chapter 
III is removed.

PART 304--[REDESIGNATED AS PART 253]

    5. Part 304 of chapter III is transferred to subchapter B of 
chapter II and is redesignated as part 253.
    6. The heading for part 253 is revised to read as follows:

PART 253--USE OF CERTAIN COPYRIGHTED WORKS IN CONNECTION WITH 
NONCOMMERCIAL EDUCATIONAL BROADCASTING

    7. The authority citation to part 253 is revised to read as 
follows:

    Authority: 17 U.S.C. 118, 801(b)(1) and 803.


Sec. 253.4   [Amended]

    8. Section 253.4 is amended in the introductory text of the section 
by removing ``Secs. 304.5 and 304.6'' and adding ``Secs. 253.5 and 
253.6''.


Sec. 253.8   [Amended]

    9. Section 253.8(e) is amended by removing ``CRT'' each place it 
appears and adding ``Copyright Office''.


Sec. 253.9   [Amended]

    10. Section 253.9 is amended by removing ``CRT'' and adding 
``Copyright Office''.


Sec. 253.10   [Amended]

    11. Section 253.10 is amended by removing ``CRT'' each place it 
appears and adding ``Copyright Office''.


Sec. 253.10b   [Amended]

    11a. Section 253.10(b) is amended by removing ``Sec. 304.5'' and 
adding ``Sec. 253.5''.


Sec. 253.10c   [Amended]

    11b. Section 253.10(c) is amended by removing ``Sec. 304.5'' and 
adding ``Sec. 253.5''.


Sec. 253.12   [Amended]

    12. Section 253.12 ``Amendment of certain regulations'' and 253.13 
``Issuance of interpretative regulations'' are removed.

PART 305--[REMOVED]

    13. Part 305 Claims to Phonorecord Player (Jukebox) Royalty Fees of 
chapter III is removed.

PART 306--[REDESIGNATED AS PART 254]

    14. Part 306 is transferred to chapter II, subchapter B and is 
redesignated as part 254.
    15. The heading for part 254 is revised to read as follows:

PART 254--ADJUSTMENT OF ROYALTY RATE FOR COIN-OPERATED PHONORECORD 
PLAYERS

    16. The authority citation for part 254 is revised to read as 
follows:

    Authority: 17 U.S.C. 116, 801(b)(1).


Sec. 254.1   [Amended]
    17. Section 254.1 is amended by removing ``306'' and adding ``254'' 
and by removing ``and 804(a)''.
PART 307--[REDESIGNATED AS PART 255]
    18. Part 307 of chapter III is transferred to subchapter B of 
chapter II and is redesignated as part 255.
    19. The heading for part 255 is revised to read as follows:
PART 255--ADJUSTMENT OF ROYALTY PAYABLE UNDER COMPULSORY LICENSE 
FOR MAKING AND DISTRIBUTING PHONORECORDS
    20. The authority citation for part 255 is revised to read as 
follows:

    Authority: 17 U.S.C. 801(b)(1) and 803.
Sec. 255.1   [Amended]
    21. Section 255.1 is amended by removing ``307'' and adding 
``255''.
Sec. 255.2   [Amended]
    22. Section 255.2 is amended by removing ``Sec. 307.3'' and adding 
``Sec. 255.3''.
Sec. 255.3   [Amended]
    23. Section 255.3 is amended in paragraph (g)(1) by removing 
``Copyright Royalty Tribunal'' and in (g)(1) and (g)(2) by removing 
``CRT'' each place it appears and adding ``Librarian of Congress'' in 
each place, respectively.
PART 308--[REDESIGNATED AS PART 256]
    24. Part 308 of chapter III is transferred to subchapter B of 
chapter II and is redesignated as part 256.
    25. The heading for part 256 is revised to read as follows:
PART 256--ADJUSTMENT OF ROYALTY FEE FOR CABLE COMPULSORY LICENSE
PART 309--[REDESIGNATED AS PART 257]
    26. Part 309 of chapter III is transferred to subchapter B of 
chapter II and is redesignated as part 257.
    27. Part 257 is revised to read as follows:
PART 257--FILING OF CLAIMS TO SATELLITE CARRIER ROYALTY FEES
Sec.
257.1  General.
257.2  Time of filing.
257.3  Content of claims.
257.4  Compliance with statutory dates.
257.5  Copies of claims.
257.6  Separate claims required.

    Authority: 17 U.S.C. 119(b)(4).
Sec. 257.1   General.
    This part prescribes the procedures under 17 U.S.C. 119(b)(4) 
whereby parties claiming to be entitled to compulsory license royalty 
fees for secondary transmissions by satellite carriers of television 
broadcast signals to the public for private home viewing shall file 
claims with the Copyright Office.


Sec. 257.2   Time of filing.

    During the month of July each year, any party claiming to be 
entitled to compulsory license royalty fees for secondary transmissions 
by satellite carriers during the previous calendar year of television 
broadcast signals to the public for private home viewing shall file a 
claim to such fees with the Copyright Office. No royalty fees shall be 
distributed to any party during the specified period unless such party 
has timely filed a claim to such fees. Claimants may file claims 
jointly or as a single claim.


Sec. 257.3   Content of claims.

    (a) Claims filed by parties claiming to be entitled to satellite 
carrier compulsory license royalty fees shall include the following 
information:
    (1) The full legal name of the person or entity claiming royalty 
fees.
    (2) The telephone number, facsimile number, if any, and full 
address, including a specific number and street name or rural route, of 
the place of business of the person or entity.
    (3) If the claim is a joint claim, a concise statement of the 
authorization for the filing of the joint claim. For this purpose, a 
performing rights society shall not be required to obtain from its 
members or affiliates separate authorizations, apart from their 
standard membership or affiliate agreements.
    (4) For both individual claims and joint claims, other than a joint 
claim filed by a performing rights society on behalf of its members or 
affiliates, a general statement of the nature of each claimant's 
copyrighted works and identification of at least one secondary 
transmission by a satellite carrier of each claimant's copyrighted 
works establishing a basis for the claim.
    (b) Claims shall bear the original signature of the claimant or of 
a duly authorized representative of the claimant.
    (c) In the event that the legal name and/or full address of the 
claimant changes after the filing of the claim, the claimant shall 
notify the Copyright Office of such change. If the good faith efforts 
of the Copyright Office to contact the claimant are frustrated because 
of failure to notify the Office of a name and/or address change, the 
claim may be subject to dismissal.
    (d) In the event that, after filing an individual claim, an 
interested copyright party chooses to negotiate a joint claim, either 
the particular joint claimants or individual claimant shall notify the 
Copyright Office of such change within 14 days from the making of the 
agreement.


Sec. 257.4  Compliance with statutory dates.

    (a) Claims filed with the Copyright Office shall be considered 
timely filed only if: (1) They are received in the offices of the 
Copyright Office during normal business hours during the month of July, 
or
    (2) They are properly addressed to the Copyright Office in 
accordance with Sec. 251.1, and they are deposited with sufficient 
postage with the United States Postal Service and bear a July U.S. 
postmark.
    (b) Notwithstanding subsection (a), in any year in which July 31 
falls on a Saturday, Sunday, holiday, or other nonbusiness day within 
the District of Columbia or the Federal Government, claims received by 
the Copyright Office by the first business day in August, or properly 
addressed and deposited with sufficient postage with the United States 
Postal Service and postmarked by the first business day in August, 
shall be considered timely filed.
    (c) Claims dated only with a business meter that are received after 
July 31, will not be accepted as having been timely filed.
    (d) No claim may be filed by facsimile transmission.
    (e) In the event that a properly addressed and mailed claim is not 
timely received by the Copyright Office, a claimant may nonetheless 
prove the claim was properly mailed if it was sent by certified mail 
return receipt requested, and the claimant can provide the receipt. No 
affidavit of an officer or employee of the claimant, or of a U.S. 
postal worker will be accepted as proof in lieu of the receipt.


Sec. 257.5  Copies of claims.

    A claimant shall, for each claim submitted to the Copyright Office, 
file an original and two copies of the claim to satellite carrier 
royalty fees.


Sec. 257.6  Separate claims required.

    If a party intends to file claims for both cable compulsory license 
and satellite carrier compulsory license royalty fees during the same 
month of July, that party must file separate claims with the Copyright 
Office. Any single claim which purports to file for both cable and 
satellite carrier royalty fees will be dismissed.

PART 310-[REDESIGNATED AS PART 258]

    28. Part 310 of chapter III is transferred to subchapter B of 
chapter II and is redesignated as part 258.
    29. The heading for part 258 is revised to read as follows:

PART 258--ADJUSTMENT OF ROYALTY FEE FOR SECONDARY TRANSMISSIONS BY 
SATELLITE CARRIERS

    29a. The authority citation for part 258 continues to read as 
follows:

    Authority: 17 U.S.C. 119(c)(3)(F).


Sec. 258.1  [Amended]

    30. Section 258.1 is amended by removing ``310'' and adding 
``258''.


Sec. 258.2  [Amended]

    31. Section 258.2 is amended by removing ``Sec. 310(3)(b)'' and 
adding ``Sec. 258(3)(b)''.

PART 311--REDESIGNATED AS PART 259]

    32. Part 311 of chapter III is transferred to subchapter B of 
chapter II and is redesignated as part 259.
    33. The heading for part 259 is revised to read as follows:

PART 259--FILING OF CLAIMS TO DIGITAL AUDIO RECORDING DEVICES AND 
MEDIA ROYALTY PAYMENTS

    33a. The authority citation for part 259 is amended to read as 
follows:

    Authority: 17 U.S.C. 1007(a)(1).


Sec. 259.1  [Amended]

    34. Section 259.1 is amended by removing ``Copyright Royalty 
Tribunal'' and adding ``Copyright Office''.


Sec. 259.2  [Amended]

    35. Section 259.2 is amended by removing ``Copyright Royalty 
Tribunal'' each place it appears and adding ``Copyright Office''.


Sec. 259.3  [Amended]

    36. Section 259.3 is amended by removing ``Copyright Royalty 
Tribunal'' each place it appears and adding ``Copyright Office''.
    36a. Section 259.3 is amended by revising paragraph (c) to read as 
follows:


Sec. 259.3  Content of claims.

* * * * *
    (c) In the event that the legal name and/or address of the claimant 
changes after the filing of the claim, the claimant shall notify the 
Copyright Office of such change. If the good faith efforts of the 
Copyright Office to contact the claimant are frustrated because of 
failure to notify the Office of a name and/or address change, the claim 
may be subject to dismissal.
* * * * *


Sec. 259.4  [Amended]

    37. Section 259.4 is amended by removing ``Copyright Royalty 
Tribunal'' each place it appears and adding ``Copyright Office''.
    37a. A new paragraph (e) is added to Sec. 259.4 to read as follows:


Sec. 259.4  Content of notices regarding independent administrators.

* * * * *
    (e) No notice may be filed by facsimile transmission.


Sec. 259.5  [Amended]

    38. Section 259.5 is revised to read as follows:


Sec. 259.5  Compliance with statutory dates.

    (a) Claims filed with the Copyright Office shall be considered 
timely filed only if: (1) They are received in the offices of the 
Copyright Office during normal business hours during the months of 
January or February, or
    (2) They are properly addressed to the Copyright Office in 
accordance with Sec. 251.1, and they are deposited with sufficient 
postage with the United States Postal Service and bear a January or 
February U.S. postmark.
    (b) Notwithstanding subsection (a), in any year in which the last 
day of February falls on Saturday, Sunday, a holiday, or other 
nonbusiness day within the District of Columbia or the Federal 
Government, claims received by the Copyright Office by the first 
business day in March, or properly addressed and deposited with 
sufficient postage with the United States Postal Service and postmarked 
by the first business day in March, shall be considered timely filed.
    (c) Claims dated only with a business meter that are received after 
the last day of February, will not be accepted as having been timely 
filed.
    (d) No claim may be filed by facsimile transmission.
    (e) In the event that a properly addressed and mailed claim is not 
received by the Copyright Office, a claimant may nonetheless prove that 
the claim was properly mailed if it was sent by certified mail return 
receipt requested, and the claimant can provide the receipt. No 
affidavit of an officer or employee of the claimant, or of a postal 
worker will be accepted as proof in lieu of the receipt.
    39. Section 259.6 is revised to read as follows:


Sec. 259.6  Copies of claims.

    A claimant shall, for each claim submitted to the Copyright Office, 
file an original and two copies of the claim to digital audio recording 
devices and media royalty payments.

CHAPTER III--[REMOVED]

    41. Chapter III is removed.

    Dated: May 3, 1994.
Barbara Ringer,
Acting Register of Copyrights.

    Approved by:
James H. Billington,
The Librarian of Congress.
[FR Doc. 94-10985 Filed 5-6-94; 8:45 am]
BILLING CODE 1410-09-P