[Federal Register Volume 77, Number 235 (Thursday, December 6, 2012)]
[Proposed Rules]
[Pages 72788-72791]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-29229]



Copyright Office

37 CFR Parts 201 and 203

[Docket No. 2012-1]

Copyright Office Fees

AGENCY: Copyright Office, Library of Congress.

ACTION: Notice of proposed rulemaking.


SUMMARY: The Copyright Office has further revised its proposed fee 
schedule for filing cable and satellite statements of account following 
feedback from interested parties in response to a Notice of Proposed 
Rulemaking published on March 28, 2012. The modified fee schedule set 
forth below reflects an updated calculation of the cost of providing 

DATES: Comments must be received in the Copyright Office no later than 
5 p.m. Eastern Standard Time (EST) on January 7, 2013. Reply comments 
must be received in the Copyright Office no later

[[Page 72789]]

than 5 p.m. Eastern Standard Time (EST) on January 22, 2013.

ADDRESSES: Comments should be submitted electronically. A comment page 
containing a comment form is posted on the Copyright Office Web site at 
http://www.copyright.gov/docs/newfees/comments/. The Web site interface 
requires submitters to complete a form specifying name and 
organization, as applicable, and to upload comments as an attachment 
via a browse button. To meet accessibility standards, all comments must 
be uploaded in a single file not to exceed six megabytes (MB) in one of 
the following formats: the Adobe Portable Document File (PDF) format 
that contains searchable, accessible text (not an image); Microsoft 
Word; WordPerfect; Rich Text Format (RTF); or ASCII text file format 
(not a scanned document). The form and face of the comments must 
include both the name of the submitter and the organization. All 
comments will be posted publicly on the Copyright Office Web site 
exactly as they are received, along with names and organizations. If 
electronic submission of comments is not feasible, please contact the 
Copyright Office at (202) 707-8380 for special instructions.

FOR FURTHER INFORMATION CONTACT: Megan Rivet, Budget Analyst, or 
Melissa Dadant, Senior Advisor for Operations and Special Projects, at 
(202) 707-8350.

SUPPLEMENTARY INFORMATION: In 2010, Congress enacted the Satellite 
Television Extension and Localism Act (``STELA''), Public Law 111-175, 
124 Stat. 1218, which, for the first time, granted authority to the 
Copyright Office to establish fees for the filing of statements of 
account (``SOAs'') pursuant to the section 111, 119, and 122 statutory 
licenses for cable and satellite users. Prior to 2010, the cost of 
processing such statements and associated royalty payments was funded 
solely by the royalty fees collected for the benefit of the copyright 
owners under the statutory licenses. STELA added a new provision to 
Title 17 that permits the Office to apportion up to 50 percent of the 
cost of processing the SOAs and royalty payments to licensees. More 
specifically, 17 U.S.C. 708(a) provides that the fees charged to 
licensees for the filing of SOAs ``shall be reasonable and may not 
exceed one-half of the cost necessary to cover reasonable expenses 
incurred by the Copyright Office for the collection and administration 
of the statements of account and any royalty fees deposited with such 
    On March 28, 2012, the Copyright Office published a Notice of 
Proposed Rulemaking (``NPR'') as the initial step in adopting new fees 
for various services, including the registration of claims, recordation 
of documents, special services, processing of requests for records 
pursuant to the Freedom of Information Act, and Licensing Division 
services, including the new fees for filing of cable and satellite 
SOAs. See 77 FR 18742 (March 28, 2012). Fees were proposed in 
accordance with the procedure set forth in the Copyright Act, which 
provides that the Register of Copyrights may, by regulation, adjust 
fees for certain enumerated services based upon a study of costs 
incurred by the Copyright Office. See 17 U.S.C. 708(b).
    Generally speaking, the Office has conducted a study of costs every 
three years. In each case, and in the case here, the Office is acutely 
aware of its obligations as an agency of the federal government, 
including the mandate to establish sound fiscal policies and develop a 
responsible budget. At the same time, the Office is cognizant of its 
responsibilities to both copyright owners and users of copyrighted 
works. Ultimately, the Office must price its services in a manner that 
is fair to the parties and conducive to well-functioning programs and 
recordkeeping. Indeed, elsewhere the Copyright Act indicates that fees 
``shall be fair and equitable and give due consideration to the 
objectives of the copyright system.'' 17 U.S.C. 708(b)(4).
    In response to the NPR, the Office received 138 comments on the 
proposed fees, three of which specifically addressed the new fees for 
filing cable and satellite SOAs. The Office received individual 
comments from the American Cable Association (``ACA'') and the National 
Cable & Telecommunications Association (``NCTA''), and a joint comment 
from Program Suppliers, Joint Sports Claimants, Commercial Television 
Claimants, Music Claimants, Canadian Claimants Group, National Public 
Radio, Broadcaster Claimants Group, and Devotional Claimants 
(collectively, ``Copyright Owners'').
    NCTA expressed the concern that the proposed fees sought to recover 
costs for services ``that go beyond what is reasonably necessary to 
administer the license and reflect[] expenses incurred in the past that 
are unlikely to recur in the future.'' NCTA Comments at 2. ACA 
requested the Office to provide a waiver of fees for cable operators 
experiencing financial hardship. See generally ACA Comments.
    Copyright Owners, on the other hand, argued that the proposed fees 
failed to recover half of the actual operating costs of the cable and 
satellite program, and also questioned the Office's methodology, 
specifically why actual costs were not the starting point for analysis. 
See generally Copyright Owners' Comments.
    In light of the comments received from affected stakeholders, and 
because the fees for filing cable and satellite SOAs are being set for 
the first time, the Office conducted further analysis of those fees. As 
explained below, it performed a second study, using a revised 
methodology to more precisely capture the cost of providing the 
services in question.

New Cost Study for Setting Cable and Satellite SOA Filing Fees

    The original cost study for the Office's administration of the 
cable and satellite statutory licenses used the additive model employed 
in previous cost studies for peripheral fee services. This method 
focuses on the desk time of dedicated employees, in other words, how 
much time they spend performing activities involved in processing a 
typical service request. While effective in analyzing services that can 
be measured by short intervals of time, it is sometimes not as 
successful in determining the cost of a more complex task, such as the 
processing of an entire SOA. At the same time, managing the cable and 
satellite SOAs is a major program of the Office and comprises the 
greatest portion of staff time and related resources in comparison to 
administering the other statutory licenses.
    In its reexamination of SOA program costs, the Office applied a 
traditional methodology that it has used to assess the costs of its 
services in other areas, such as copyright registration. This 
methodology calculates the full cost of the activity in question--in 
this case, the entire SOA program, including the receipt and 
administration of the SOAs and royalty fees deposited with such 
statements--based on actual expenditures and all costs directly or 
indirectly associated with these functions. The revised methodology 
identifies staffing costs for each particular program service and 
apportions non-personnel costs either directly to the services they 
support or, in the case of administrative and other indirect costs, in 
proportion to the staff costs previously identified. Staffing costs not 
associated directly or indirectly with any of the program services, 
along with a commensurate proportion of non-personnel costs, are 
excluded from the model.
    The revised methodology is more complete because it accounts for 

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relevant staff time, whether associated directly with a program service 
or indirectly, and includes all staff, including administrative and 
managerial staff, and all relevant non-personnel costs. Because it is 
all-inclusive, it covers costs incurred where the standard workflow 
path cannot be followed, as well as exceptional cases that involve 
time-intensive research or problem resolution, for example, cases where 
electronic funds transfer payments need to be matched with a SOA 
received much earlier or later than the payment or without a remittance 
advice. It also covers non-routine staff effort. For instance, during 
the period under review, the Office revised work procedures and forms, 
and updated its internal information systems, to facilitate its 
implementation of STELA. The Office expects these types of 
administrative and technical upgrades to continue to occur during the 
life of the SOA program.
    In conducting the second cost study, the Office applied a three-
year average of non-personnel costs to address concerns that an 
aberrant year may have an undue impact on the proposed fees. The Office 
considered reengineering efforts of the Licensing Division in the area 
of statutory licenses and the rise of associated costs in 2011. The 
administrative and technical enhancements are integral to the SOA 
program. However, in order to mitigate the impact of higher than usual 
costs in 2011, the 2011 costs have been averaged with costs from 2010 
and 2009 to achieve a balanced representation of the overall, ongoing 
cost of the SOA program, including periodic and technical upgrades.
    Finally, in both the initial and revised cost studies, the Office 
excluded approximately 75 percent of salaries for staff who work in the 
Fiscal Section of the Licensing Division. The Office did so because 
much of the work of these employees is dedicated to royalty management 
functions that serve copyright owners (e.g., production of financial 
statements, reconciliations, investments, and distributions); the 75 
percent exclusion is meant to fairly account for this fact.

Revised Fees for Cable and Satellite Statements of Account

    In the initial cost study, the Office analyzed the processing of 
cable SA1, SA2, and SA3 SOAs and satellite SOAs independently. In 
performing the revised study, it was evident that many of the program 
costs are common to both cable and satellite filings, in particular the 
fiscal management and information technology costs, and thus should be 
shared by both types of filers.
    Based on its further evaluation of the program costs for the 
collection and administration of the cable and satellite SOAs and the 
royalty fees deposited with such statements, the Office continues to 
propose a tiered fee schedule corresponding to the filing of the 
different types of SOAs. The fees for licensees who file a cable SA1 or 
SA2 form remain unchanged from the initial proposal, $15 for the filing 
of a SA1 form and $20 for the filing of a SA2 form. Such fees are 
reasonable in light of the minimal amount of processing required and 
the typical royalty payments associated with such statements, which are 
substantially lower than royalties associated with SA3 filings. See 17 
U.S.C. 708(b) (fees established by the Register for cable and satellite 
SOAs are to be ``reasonable''). Additionally, following its review of 
the totality of SOA program costs, as described above, the Office 
proposes to establish both the cable SA3 filing fee and satellite 
filing fee at $725. The Office believes that $725 is a reasonable fee 
in light of the second cost study and substantial royalty payments 
associated with these SOAs.
    Moreover, at the proposed levels, the fees collected from licensees 
filing SOAs should in the aggregate approach, but not exceed, 50 
percent of the Office's reasonable expenses to administer the cable and 
satellite SOA program, as determined in the more recent study conducted 
by the Office. Based on projected filings, the expected annual fee 
recovery will be approximately $1.77 million, or approximately 47 
percent of the estimated $3.74 million total annual SOA program cost.

Schedule of Revised Proposed Fees

    The chart below sets forth the proposed fees for filing cable and 
satellite SOAs:

                        Schedule of Proposed Fees
                 [Administration of statutory licenses]
                                                        Proposed new fee
(1) Processing of a statement of account based on
 secondary transmissions of primary transmissions
 pursuant to Sec.   111:
    (i) Form SA1.....................................                $15
    (ii) Form SA2....................................                 20
    (iii) Form SA3...................................                725
(2) Processing of a statement of account based on                    725
 secondary transmissions pursuant to Sec.  Sec.   119
 and 122

    The Office believes that, as revised, the proposed fees are 
appropriate based on the reasonable expenses incurred in the processing 
of cable and satellite SOAs and managing the associated royalty 
payments. Moreover, the fees are set to approach one-half the costs, 
without exceeding one-half, in order that owners and users of 
copyrighted works share the burden of supporting the cable and 
satellite SOA program. An outcome where program costs are shared 
relatively equally by owners and users is consistent with the mandate 
of STELA, as well as the objectives of the copyright system.

Waiver of Filing Fees

    ACA suggests that the Office ``establish a streamlined waiver 
process for smaller cable operators where payment of the filing fee 
would result in a financial hardship.'' ACA Comments at 2. While the 
Office understands ACA's rationale for this request, the law appears to 
preclude this option.
    Section 708(a) requires that ``fees shall be paid to the Register 
of Copyrights'' for filing a cable SOA. The statute also instructs the 
Register to fix said fees based on relevant costs. To this end, the 
Office conducted a cost study, taking into account that cable companies 
that file SA1 and SA2 forms benefit from the statutory licensing 
scheme, yet generate revenues considerably lower than the cable systems 
that file the SA3 form. Accordingly, the Office is proposing 
significantly lower fees to ensure that they are reasonable under the 
    To the extent the suggestion of ACA is that nothing in the law 
expressly prevents the Register from creating exceptions or waivers to 
the general fee, the Office notes that Congress has set forth express 
authority for the Register

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to waive fees elsewhere in section 708. Section 708(c) grants the 
Register discretion to waive fees for United States agencies and their 
employees, but only ``in occasional or isolated cases involving 
relatively small amounts.'' Such express and limited authority in the 
area of waivers suggests that Congress would have created a clear 
exception or waiver of the kind suggested by ACA had it so desired. 
Moreover, no such waivers exist with respect to other fee requirements, 
including for example, for registrations of individual claimants. The 
Office welcomes further comment on whether the statute provides 
authority to the Register to establish a waiver process where payment 
of the filing fee would result in a financial hardship and whether, in 
general, waivers of this kind should be permissible.

Technical Amendments

    The Office will adopt technical amendments as needed to conform 
existing regulations to the changes proposed in this notice.

Request for Comments

    As noted above, the Copyright Office is publishing the revised 
proposed fee schedule for these particular fees to provide the public 
with an opportunity to comment.

    Dated: November 29, 2012.
Maria A. Pallante,
Register of Copyrights.
[FR Doc. 2012-29229 Filed 12-5-12; 8:45 am]