[Federal Register Volume 71, Number 81 (Thursday, April 27, 2006)]
[Proposed Rules]
[Pages 24829-24831]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-6186]


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LIBRARY OF CONGRESS

Copyright Office

37 CFR Part 201

[Docket No. 2006-2]


Electronic Payment of Royalties

AGENCY: Copyright Office, Library of Congress.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Copyright Office is proposing to amend its rules governing 
the submission of royalty fees to the Copyright Office to require such 
payments to be made by electronic funds transfer.

DATES: Written comments are due June 12, 2006. Reply comments are due 
July 11, 2006.

ADDRESSES: If hand delivered by a private party, an original and five 
copies of a comment or reply comment should be brought to Room LM-401 
of the James Madison Memorial Building between 8:30 a.m. and 5 p.m. and 
the envelope should be addressed as follows: Office of the General 
Counsel, U.S. Copyright Office, James Madison Memorial Building, Room 
LM-401, 101 Independence Avenue, SE, Washington, DC 20559-6000. If 
delivered by a commercial courier, an original and five copies of a 
comment or reply comment must be delivered to the Congressional Courier 
Acceptance Site located at 2nd and D Streets, NE, between 8:30 a.m. and 
4 p.m. The envelope should be addressed as follows: Office of the 
General Counsel, Room LM-403, James Madison Memorial Building, 101 
Independence Avenue, SE, Washington, DC. If sent by mail (including 
overnight delivery using U.S. Postal Service Express Mail), an original 
and five copies of a comment or reply comment should be addressed to 
U.S. Copyright Office, Copyright GC/I&R, P.O. Box 70400, Southwest 
Station, Washington, DC 20024. Comments and reply comments may not be 
delivered by means of overnight delivery services such as Federal 
Express, United Parcel Service, etc., due to delays in processing 
receipt of such deliveries.

FOR FURTHER INFORMATION CONTACT: Tanya M. Sandros, Associate General 
Counsel, Copyright GC/I&R, P.O. Box 70400, Southwest Station, 
Washington, DC 20024. Telephone: (202) 707-8380. Telefax: (202) 707-
8366.

SUPPLEMENTARY INFORMATION: Cable systems and satellite carriers that 
retransmit broadcast signals in accordance with the provisions 
governing the statutory licenses set forth in sections 111 and 119 of 
the Copyright Act, title 17 of the United States Code, respectively, 
are required to pay royalty fees to the Copyright Office. The Copyright 
Office also receives statutory fees from manufacturers and importers of 
digital audio recording devices and media who distribute these products 
in the United States. 17 U.S.C. chapter 10. Payments made under the 
cable and satellite carrier statutory licenses are remitted 
semiannually to the Copyright Office. Payments made under the Audio 
Home Recording Act of 1992 are made quarterly. The Copyright Office 
invests the royalties in United States Treasury securities pending 
distribution of these funds to those copyright owners who are entitled 
to receive a share of the fees.
    The current Copyright Office regulations permit payment by three 
different methods: electronic funds transfer (``EFT''), certified or 
cashier's check, or money order. 37 CFR 201.11 (f), (g) and (h); 37 CFR 
201.17 (i) and (j); and 37 CFR 201.28 (e). A mechanism for electronic 
payments was added in 1991, since it was thought that use of electronic 
payments would facilitate the process and lessen the administrative 
burden on the Office and on the filer. See 56 FR 29588 (June 28, 1991). 
An electronic payment option provides advantages to the payor and the 
Copyright Office as the agency responsible for the collection and 
distribution of the royalty fees. EFTs can be transmitted either as an 
Automated Clearing House (``ACH'') credit or a Fedwire (``Wire'') 
transaction depending upon how you arrange the transfer through your 
financial institution, or as an ACH debit by using the U. S. Department 
of the Treasury, Financial Management Service's web based remittance 
system, Pay.gov. In an ACH credit, your financial institution sends the 
remittance to the U. S. Treasury; whereas, in an ACH debit, you 
authorize the U. S. Treasury to take the funds out of the account at 
your financial institution.
    Use of an electronic payment option offers specific advantages over 
payment via a check or money order. First, the remitters gain more time 
to transfer funds without fear of incurring interest assessments for 
late payments. In the case of a Wire transaction, the remitter may make 
a payment up until and including the due date (provided the financial 
institution is open that day and is still processing wire transfers), 
whereas an ACH transaction requires more time. It must be completed one 
or two banking days before the due date to ensure interest for late 
payments are not assessed. Second, electronic payments avoid the 
problems associated with lost

[[Page 24830]]

checks or delays in processing mail. Third, copyright owners, the 
ultimate recipients of the funds, accrue more interest on the funds 
because the monies go directly to the Department of the Treasury 
instead of being diverted to the Copyright Office for processing first. 
And finally, the Copyright Office benefits from the use of the 
electronic payment option because it lessens the Office's 
administrative workload by reducing paperwork and related 
administrative costs.
    Currently, electronic funds transfers (EFTs) are used primarily by 
the larger cable systems and account for more than 95% of the royalty 
fees collected by the Office, whereas smaller systems tend to still 
send checks through the mail. As a result, the Office still receives a 
relatively high number of checks and other paper remittances for a 
disproportionately small amount of the royalty fees. Consequently, the 
Office is taking steps to increase further the number of payments made 
by EFTs by amending its rules to require remitters to use an EFT when 
making royalty fee payments.
    In addition, the proposed rules would require that parties submit 
specific identifying and linking information as part of the EFT and/or 
as part of a ``remittance advice'' which will accompany the 
Statement(s) of Account and be faxed or emailed to the Licensing 
Division. This information would include: (1) the remitter's name and 
address; (2) the name of a contact person, telephone number and 
extension, and email address; (3) the actual or anticipated date that 
the EFT will be transmitted; (4) the type of royalty payment (i.e., 
cable, satellite, or DART); (5) the total amount to be submitted via an 
EFT; (6) the total amount to be paid by year and period; (7) the number 
of statements of account that the EFT covers; (8) ID number(s) assigned 
by the Licensing Division; (9) the legal name of the owner for each 
Statement of Account; and (10) identification of the first community 
served (city and state) (for cable systems only). The information to be 
sent as part of the EFT and the information that needs to be included 
in the remittance advice will be detailed in circulars issued by the 
Copyright Office with respect to a specific type of EFT.
    Frequently, with multiple filings and a single payment to cover 
them all, Office staff find that an overpayment or underpayment of the 
fee results after they have apportioned the fee to each statement based 
on the amount indicated therein. The ``remittance advice'' form helps 
avoid this type of problem by providing the Office with the information 
needed to match the EFT with the appropriate Statements of Account.
    Currently, the Office requests similar identifying and linking 
information, but in many cases the information is wholly or partially 
omitted. In these cases, Office staff must tediously search through the 
bundles of statements of account submitted in an effort to match the 
correct statements with a payment. Considerable efforts have been made 
to contact remitters and advise them of these errors and omissions. 
Failure to provide this information creates delays in processing and 
undercuts the advantages gained by submitting an electronic payment. 
Because of the burden imposed upon the Office in attempting to process 
payments which lack sufficient identifying information, the proposed 
rules would allow the Office to return any EFT which fails to properly 
identify statements to which they relate and would require the remitter 
to resubmit the EFT correctly. Should this occur, the remitter will 
then be responsible for any assessed interest charge that accrues as a 
result of a late payment.
    Also, the rules would require that ``remittance advice'' 
information be included with the statements of account in order to 
accurately identify what is submitted and how the fees are to be 
allocated among the statements.
    The Office is further amending its regulations to include a waiver 
provision in cases where there may be circumstances which would make it 
virtually impossible for a remitter to use the electronic payment 
option or would work a financial or other hardship. Requests for a 
waiver must include a statement setting forth the reasons why the 
waiver should be granted and the statement must be signed by a duly 
authorized representative of the entity making the payment, certifying 
that the information provided is true and correct.

Regulatory Flexibility Act Statement

    Although the Copyright Office, as a department of the Library of 
Congress and part of the Legislative Branch, it is not an ``agency'' 
subject to the Regulatory Flexibility Act, 5 U.S.C. 601-612, the 
Register of Copyrights has considered the effect of the proposed 
amendment on small businesses. The Register has determined that the 
amendments would not have a significant economic impact on a 
substantial number of small businesses because they may request a 
waiver from the requirement to submit payment via an electronic funds 
transfer in the event compliance with the requirement would create a 
financial or other hardship for the remitter.

List of Subjects in 37 CFR Part 201

    Copyright.

Proposed Regulations

    For the reasons set forth in the preamble, part 201 of title 37 of 
the Code of Federal Regulations is proposed to be amended as follows:

PART 201--GENERAL PROVISIONS

    1. The authority citation for part 201 continues to read as 
follows:

    Authority: 17 U.S.C. 702.
    2. Amend Sec.  201.11 to revise paragraph (f) to read as follows:


Sec.  201.11  Satellite carrier statements of account covering 
statutory licenses for secondary transmissions.>

* * * * *
    (f) Royalty fee payment. (1) All royalty fees shall be paid by a 
single electronic funds transfer and payment must be received in the 
designated bank by the filing deadline for the relevant accounting 
period. The following information shall be provided as part of the EFT 
and/or as part of the remittance advice as provided for in circulars 
issued by the Copyright Office:
    (i) Remitter's name and address;
    (ii) Name of a contact person, telephone number and extension, and 
email address;
    (iii) The actual or anticipated date that the EFT will be 
transmitted;
    (iv) Type of royalty payment (i.e. satellite);
    (v) Total amount submitted via the EFT;
    (vi) Total amount to be paid by year and period;
    (vii) Number of statements of account that the EFT covers;
    (viii) ID numbers assigned by the Licensing Division;
    (ix) Legal name of the owner for each Statement of Account.
    (2) The remittance advice shall be attached to the Statement(s) of 
Account. In addition, a copy of the remittance advice shall be emailed 
or sent by facsimile to the Licensing Division.
    (3) A remitter may request a waiver from the requirement for 
payment by electronic funds transfer as set forth in paragraph (1) of 
this section. To obtain a waiver, the remitter shall submit to the 
Licensing Division at least 60 days prior to the royalty fee due date a 
certified statement setting forth the reasons explaining why payment by 
an electronic funds transfer would impose a financial or other hardship 
on the remitter. The certification must be signed by a duly authorized

[[Page 24831]]

representative of the entity making the payment. A waiver shall cover 
only a single payment period. Failure to obtain a waiver may result in 
the remittance being returned to the remitter.
* * * * *
    3. Amend Sec.  201.17 to revise paragraph (i)(1) to read as 
follows:


Sec.  201.17  Statements of Account covering compulsory licenses for 
secondary transmissions by cable systems.

* * * * *
    (i) Royalty fee payment. (1) All royalty fees must be paid by a 
single electronic funds transfer, and must be received in the 
designated bank by the filing deadline for the relevant accounting 
period. The following information must be provided as part of the EFT 
and/or as part of the remittance advice as provided for in circulars 
issued by the Copyright Office:
    (i) Remitter's name and address;
    (ii) Name of a contact person, telephone number and extension, and 
email address;
    (iii) The actual or anticipated date that the EFT will be 
transmitted;
    (iv) Type of royalty payment (i.e. cable);
    (v) Total amount submitted via the EFT;
    (vi) Total amount to be paid by year and period;
    (vii) Number of statements of account that the EFT covers;
    (viii) ID numbers assigned by the Licensing Division;
    (ix) Legal name of the owner for each Statement of Account;
    (x) Identification of the first community served (city and state).
    (2) The remittance advice shall be attached to the Statement(s) of 
Account. In addition, a copy of the remittance advice shall be emailed 
or sent by facsimile to the Licensing Division.
    (3) The Office may waive the requirement for payment by electronic 
funds transfer as set forth in paragraph (1)(i) of this section. At 
least 60 days prior to the royalty fee due date, the remitter shall 
submit to the Licensing Division a certified statement setting forth 
the reasons explaining why payment by an electronic funds transfer 
would be virtually impossible or, alternatively, why it would impose a 
financial or other hardship on the remitter. The statement must be 
signed by a duly authorized representative of the entity making the 
payment. A waiver shall cover only a single payment period. Failure to 
obtain a waiver may result in the remittance being returned to the 
remitter.
* * * * *
    4. Amend Sec.  201.28 as follows:
    a. By revising paragraph (e)(3)(ii);
    b. By redesignating Sec.  Sec.  201.28(h) through (l) as Sec.  
Sec.  201.28(i) through (m) respectively, and adding a new Sec.  
201.28(h);
    c. By amending newly redesignated Sec.  201.28(j)(1)(ii) to remove 
``(i)(2)'' and add in its place ``(j)(2)''
    d. By amending newly redesignated Sec.  201.28(j)(3)(i) to remove 
``(i)(3)'' and add in its place ``(j)(3)''
    e. By amending newly redesignated Sec.  201.28(j)(3)(vi) to remove 
``(i)'' and add in its place ``(j)''.
    The additions and revisions to Sec.  201.28 read as follows:


Sec.  201.28  Statements of Account for digital media audio recording 
devices or media.

* * * * *
    (e) * * *
    (3) * * *
    (ii) The amount of the royalty payment shall be calculated in 
accordance with the instructions specified in the quarterly Statement 
of Account form. Payment shall be made as specified in section 
201.28(h).
* * * * *
    (h) Royalty fee payment. (1) All royalty fees must be paid by a 
single electronic funds transfer, and must be received in the 
designated bank by the filing deadline for the relevant accounting 
period. The following information must be provided as part of the EFT 
and/or as part of the remittance advice as provided for in circulars 
issued by the Copyright Office:
    (i) Remitter's name and address;
    (ii) Name of a contact person, telephone number and extension, and 
email address;
    (iii) The actual or anticipated date that the EFT will be 
transmitted;
    (iv) Type of royalty payment (i.e. DART);
    (v) Total amount submitted via the EFT;
    (vi) Total amount to be paid by year and period;
    (vii) Number of statements of account that the EFT covers;
    (viii) ID numbers assigned by the Licensing Division;
    (ix) Legal name of the owner for each Statement of Account.
    (2) The remittance advice shall be attached to the Statement(s) of 
Account. In addition, a copy of the remittance advice shall be emailed 
or sent by facsimile to the Licensing Division.
    (3) The Office may waive the requirement for payment by electronic 
funds transfer as set forth in paragraph (1) of this section. At least 
60 days prior to the royalty fee due date, the remitter shall submit to 
the Licensing Division a certified statement setting forth the reasons 
explaining why payment by an electronic funds transfer would be 
virtually impossible or, alternatively, why it would impose a financial 
or other hardship on the remitter. The certification must be signed by 
a duly authorized representative of the entity making the payment. A 
waiver shall cover only a single payment period. Failure to obtain a 
waiver may result in the remittance being returned to the remitter.
* * * * *

    Dated: April 20, 2006.
Tanya M. Sandros,
Associate General Counsel.
[FR Doc. E6-6186 Filed 4-26-06; 8:45 am]
BILLING CODE 1410-33-S