[Federal Register Volume 83, Number 199 (Monday, October 15, 2018)]
[Rules and Regulations]
[Pages 51840-51842]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-22372]


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LIBRARY OF CONGRESS

Copyright Office

37 CFR Part 201

[Docket No. 2018-6]


Streamlining the Administration of DART Royalty Accounts and 
Electronic Royalty Payment Processes

AGENCY: U.S. Copyright Office, Library of Congress.

ACTION: Final rule.

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SUMMARY: The U.S. Copyright Office is establishing a rule to codify its 
procedures for closing royalty payments accounts under section 1005 of 
the Copyright Act, and is amending its regulations governing online 
payment procedures for statutory licensing statements of account to no 
longer require that payments for these accounts be made in a single 
lump sum. These changes are intended to improve the efficiency of the 
Copyright Office's Licensing Division operations.

DATES: Effective November 14, 2018.

FOR FURTHER INFORMATION CONTACT: Regan A. Smith, General Counsel and 
Associate Register of Copyrights, by email at [email protected], or 
Jalyce Mangum, Attorney-Advisor, by email at [email protected]. Each 
can be contacted by telephone by calling (202) 707-8350.

SUPPLEMENTARY INFORMATION:

I. Background

    On July 11, 2018 (83 FR 32068), the Office published a Notice of 
Proposed Rulemaking (``NPRM'') to streamline the administration of 
digital audio

[[Page 51841]]

recording technology (DART) royalty accounts and the statement of 
account royalty payment processes. Specifically, the Copyright Office 
proposed to codify the manner in which it would exercise its statutory 
authority to close out DART royalty payment accounts under 17 U.S.C. 
1005, and to implement what it considered to be a technical change 
regarding requirements for payment of royalty fees by electronic funds 
transfer (EFT) for each of the cable, satellite, and DART royalty 
licenses. In response to the publication of the proposed rule, the 
Office did not receive any substantive comments. Consequently, the 
Office is adopting the previously proposed text as a final rule.

II. Discussion

    Close-out of DART fund accounts. In the NPRM, the Office proposed 
to codify a new procedure for closing out DART royalty payments 
accounts under section 1005 of the Copyright Act and to update its 
regulations governing online payment procedures for cable, satellite, 
and DART statements of account to no longer require royalty fees to be 
made by a single, lump sum payment.
    As noted in the NPRM, the Audio Home Recording Act of 1992 (AHRA) 
\1\ amended title 17 to require parties who manufacture and distribute 
or import and distribute any digital audio recording devices or media 
in the United States to file DART statements of account and to make 
royalty payments.\2\ Congress delegated to the Copyright Office and the 
Copyright Royalty Tribunal (``CRT'')--a predecessor to the system 
administered by the Copyright Royalty Judges (``CRJs'')--authority to 
administer the royalty system under chapter 10.\3\ Under section 1003, 
the importer or manufacturer of a digital audio recording device or 
media files quarterly and annual statements of account with respect to 
distribution(s), accompanied by royalty payments.\4\ After deducting 
the reasonable costs incurred for administering this license, the 
Register then deposits the remaining balance with the Treasury of the 
United States, which is divided between a sound recording fund and a 
musical works fund, and then subdivided into various subfunds.\5\ Under 
the Copyright Act, the Licensing Division of the Copyright Office 
administers these funds and distributes them to copyright owners 
pursuant to the CRJs' distribution orders.\6\
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    \1\ See Public Law 102-563, 106 Stat. 4237 (1992).
    \2\ See 17 U.S.C. 1003.
    \3\ See id.; see also S. Rep. No. 102-294, at 39 
(``Administration of the royalty system is the dual responsibility 
of the Copyright Office and the CRT'').
    \4\ 17 U.S.C. 1003(b), (c)(1), (c)(3).
    \5\ Id. at 1005, 1006(b).
    \6\ Id. at 1007; see, e.g., Order Granting Claimants' Request 
for Partial Distribution of 2005 Through 2008 DART Music Funds 
Royalties, Docket No. 2010-8 CRB DD 2005-2008 (MW), available at 
https://www.crb.gov/orders/2011/04411-order-granting-claimants-partial-distribution.pdf (last visited May 16, 2018).
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    After the Licensing Division has distributed the royalty funds 
pursuant to the CRJs order, however, small royalty balances can still 
be attributed to these subfunds unless the Copyright Office has 
formally closed them out.\7\ Maintaining these small amounts in 
separate funds creates administrative expenses for the Licensing 
Division, and the transaction costs associated with distributing such 
small amounts of money can exceed the amount of money remaining in 
these accounts. Section 1005 gives the Register discretion to close out 
the royalty payments account for a calendar year four years after the 
close of that year, and attribute ``any funds remaining in [the] 
account and any subsequent deposits that would otherwise be 
attributable to that calendar year as attributable to the succeeding 
calendar year.'' \8\ In practice, the Register has not previously 
established a procedure to exercise this discretion. The Office now 
adopts a rule codifying conditions by which she may close out royalty 
payments accounts. Specifically, the Office is adding a new section 
201.31 instructing that, four years after the close of any calendar 
year, the Register of Copyrights may exercise her discretion to close 
out the royalty payments account for that calendar year, including any 
sub-accounts, that are subject to a final distribution order under 
which royalty payments have been disbursed. In accordance with section 
1005, the Register will treat any funds remaining in such account or 
subsequent deposits as attributable to the closest succeeding calendar 
year.
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    \7\ These attributions can occur as a result of subsequent 
deposits made by payees, or, more often, in the course of routine 
review and adjustments made in the years following each 
appropriation, for example, when anticipated contract expenditures 
or other overhead expenses come in slightly under budget.
    \8\ 17 U.S.C. 1005.
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    Payment by Electronic Funds Transfer. Separately, the Licensing 
Division administers various statutory licensing schemes, including 
those requiring the submission of statements of account (``SOAs'') by 
cable systems, satellite carriers, and manufacturers or importers of 
digital audio recording devices and media.\9\ Pursuant to its statutory 
authority, the Copyright Office has promulgated regulations relating to 
each of these statutory licenses requiring that ``[a]ll royalty fees 
shall be paid by a single electronic funds transfer.'' \10\ In 
practice, however, the Office has found that the requirement that 
remitters make royalty payments for multiple statements of account in a 
single, lump sum payment is unnecessarily restrictive and has hampered 
ongoing modernization efforts. In connection with the most recent 
satellite SOA form, the Copyright Office has announced that it 
``intends to transition to a single EFT payment method (Pay.gov) for 
making royalty payments.'' \11\
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    \9\ See 17 U.S.C. 111(d)(1), 119(b)(1), 122(a)(5), 1003(c).
    \10\ 37 CFR 201.11(f)(1), 201.17(k)(1), 201.28(h)(1). See 
Electronic Payment of Royalties, 71 FR 45739 (Aug. 10, 2006).
    \11\ U.S. Copyright Office, Satellite Statement of Account Form 
(Jan. 1, 2018), https://www.copyright.gov/forms/formSC.pdf.
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    The new rule removes the requirement that filers submit multiple 
SOAs in a single EFT payment for the relevant statutory licenses. The 
current regulatory requirement that funds be submitted through EFT will 
remain in place.

List of Subjects in 37 CFR Part 201

    Copyright, General provisions.

Final Regulations

    For the reasons set forth in the preamble, the Copyright Office 
amends 37 CFR part 201 as follows:

PART 201--GENERAL PROVISIONS

0
1. The authority citation for part 201 continues to read as follows:

    Authority: 17 U.S.C. 702.


Sec.  201.11  [Amended]

0
2. Amend Sec.  201.11 by removing ``a single'' from paragraph (f)(1) 
introductory text.


Sec.  201.17  [Amended]

0
3. Amend Sec.  201.17 by removing ``a single'' from paragraph (k)(1) 
introductory text.


Sec.  201.28  [Amended]

0
4. Amend Sec.  201.28 by removing ``a single'' from paragraph (h)(1) 
introductory text.

0
5. Add Sec.  201.31 to read as follows:


Sec.  201.31  Procedures for closing out royalty payments accounts in 
accordance with the Audio Home Recording Act.

    (a) General. This section prescribes rules pertaining to the close 
out of royalty payments accounts in accordance with 17 U.S.C. 1005.

[[Page 51842]]

    (b) In the Register's discretion, four years after the close of any 
calendar year, the Register of Copyrights may close out the royalty 
payments account for that calendar year, including any sub-accounts, 
that are subject to a final distribution order under which royalty 
payments have been disbursed. Following closure of an account, the 
Register will treat any funds remaining in that account, or subsequent 
deposits that would otherwise be attributable to that calendar year, as 
attributable to the succeeding calendar year.

    Dated: September 10, 2018.
Karyn Temple,
Acting Register of Copyrights and Director of the U.S. Copyright 
Office.

Approved by:

Carla D. Hayden,
Librarian of Congress.
[FR Doc. 2018-22372 Filed 10-12-18; 8:45 am]
 BILLING CODE 1410-30-P