COPYRIGHT ROYALTY TRIBUNAL

STATEMENT OF COMMISSIONER FRANCES GARCIA, CHAIRMAN AND BUDGET DIRECTOR

PREPARED STATEMENT

Senator MATTINGLY. Our next witness will be Commissioner Frances Garcia, the Chairman of the Copyright Royalty Tribunal.

Ms. GARCIA. Good morning.

Senator MATTINGLY. Would you like to make a statement or submit it for the record?

MS. GARCIA. Senator, I have about a three-page prepared statement. I am willing to just submit it for the record, or if you would like me to take the time to read it, I will.

Senator MATTINGLY. You can submit it for the record.

Ms. GARCIA. I am prepared to answer any questions you might have. [The statement follows:]

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STATEMENT OF FRANCES GARCIA

I am Frances Garcia, Chairman of the Copyright Royalty

Tribunal and also responsible for the Tribunal's budget matters.

The Tribunal's statutory responsibilities are:

(a) To make determinations concerning copyright royalty rates (1) in the area of cable television (17 U.S.C. 111), (2) for phonorecords (17 U.S.C. 115), (3) for coin-operated phonorecord players (jukeboxes) (17 U.S.C. 116), and (4) for

non-comercial broadcasting (17 U.S.C. 118); and,

(b) to distribute cable television and jukebox royalties deposited with the Register of Copyrights (17 U.S.C. 111 and 17 U.S.C. 116).

The Tribunal has issued its final determinations in the mechanical royalty adjustment, jukebox royalty adjustment, cable royalty adjustment, the 1978 and 1979 cable distribution, and the 1979 and 1980 jukebox royalty distribution proceedings.

We have previously reported to this Subcommittee concerning the additional Tribunal proceedings that will be necessary if the Federal Communications Commission deregulated the cable television industry. The Commission's decision has been sustained by the courts and the Tribunal therefore has commenced the proceeding mandated by the Copyright Act. The major responsibility of the Tribunal in this regard is stated in H.R. 94-1476 which requires us to consider "the economic impact that such adjustment may have on copyright owners and users, including broadcast stations, and the effect of such additional distant signal equivalents, if any, on local broadcasters' ability to serve the public." Because of the significant changes taking place in the cable and broadcast industries, this proceeding will be complex and protracted. Copyright Act does not permit the Tribunal to utilize royalty fees for the cost of such proceedings.

The

The Copyright Act mandates the Tribunal later this year to conduct a public broadcasting copyright royalty proceeding. Again the Copyright Act precludes the use of royalty fees for such a

proceeding.

Legislative measures are now being actively considered in both the House and Senate, which, if enacted, would mandate the commencement of additional Tribunal proceedings. A so-called "cable copyright compromise" approved by the House Judiciary Committee and now being considered by the House Commerce Committee

authorizes an additional cable copyright royalty proceeding.

The

Senate Judiciary Committeee is considering a proposal, co-sponsored by the joint leadership of the Senate, which would give the Tribunal major new responsibilities with regard to the unauthorized reproduction of copyrighted works, in the wake of a landmark copyright decision by the Ninth Circuit Court of Appeals.

During the past year the General Accounting Office reviewed the operations and structure of the Tribunal. The GAO found that the Tribunal has operated according to its legislative mandate and completed all proceedings on schedule. The GAO also concluded that the Tribunal has not when necessary been given adequate staff and budget resources.

The Tribunal supports the efforts of this Subcommittee to reduce our operational costs indeed, it was the Tribunal

which initiated such proposals. As we have previously advised this Subcommittee, we believe that our expenses can be cut in FY 1983 by the President not filling the two terms which expire in September of this year. This recommendation has received support elsewhere in the Legislative Branch. We believe such action is consistent with reductions being considered in other agencies, and in accord with the recommendations made by the Chairman of this Subcommittee.

Due to a vacancy for part of FY 1981, the Tribunal did not expend 5% of our appropriation. Our appropriation for FY 1982

of $400,000 is less than our actual expenditures of $438,000 in FY 1981. There is no flexibility in the $400,000 allotment. With four commissioners the Tribunal's ability to meet its obligations and to operate would have been severly restricted; however, now that there are five commissioners, it is impossible.

The Tribunal has submitted a budget request which is essential if the President wants a five member body. The 1983 budget is being submitted for $526,000. Only if the President supports our re-structuring recommendations, would it be possible to make a substantial cut in our budget request. With the exception of salaries and benefits, which are for

five commissioners, the other line items are substantially the

The Tribunal's original request for fiscal year 1982 was for $500,000, This was reduced to $461,000 by the House, to $400,000 by the Senate, and then to $400,000 in Conference between the Senate and the House. The House Appropriations Committee Report on Legislative Branch Appropriations for fiscal year 1982 states that the committee, "plans to begin phasing out the availability of appropriated funds" for the operation of the Copyright Royalty Tribunal.

In addition, Senator Mattingly has recommended to the Chairman of the Senate Judiciary Committee that the Tribunal should be restructured to consist

of three rather than five Commissioners.

In its testimony before the Senate and House legislative committees the Tribunal has also made recommendations concerning the restructuring of the Tribunal, and did so with the fiscal objectives of both the Senate and House in mind. It was in light of this that, when the Tribunal learned that the vacancy left by the resignation of Commissioner James might be filled, the

Tribunal wrote a letter to Pendleton James, Assistant to the President for Presidential Personnel, informing him of the recommendations of the

congressional committees, of the Tribunal's restructuring recommendations, and that it would be necessary to request a supplemental appropriation if the President determined that it was necessary for the Tribunal to function with

five Commissioners.

However, on November 2, 1981, a fifth Commissioner to fill the James vacancy was nominated by the President.

Under the $400,000 budget with four Commissioners, the Tribunal's ability to meet its obligations and to operate would have been severly restricted. However, under the current budget appropriation to absorb the payroll of a fifth Commissioner is impossible. Unable to reduce any of the other line appropriations, the Tribunal request additional program funds of $57,000 to meet the unavoidable salary expenses upon Senate confirmation of the fifth Commissioner

In addition to the salary costs of the fifth commissioner and his assistant, the Tribunal will also require supplemental program monies of $2,000 for rental of space. This amount will allow the Tribunal to meet its current obligation level as reflected by actual expenses incurred in FY 1981 and projected expenditures for FY 1982.

At this time, the Tribunal must also request a pay supplemental for fiscal year 1982 of $36,000 to meet the additional salary requirements effected by the pay cap increase for the five commissioners and the 4.8% cost of living

adjustment for their five confidential assistants.