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II. MATERIALS RELATING TO "FOUNDATIONS OF SAND"
A. “Foundations of Sand: A Hard Look at the Social Sciences,” Excerpts......
B. Certificate of Copyright Registration for "Foundations of Sand” (August 23,

1982)..

Page 300

312

III. FURTHER MATERIALS RELATING TO THE COPYRIGHT OFFICE

314

A. Correspondence:

Letter from William F. Patry to Hon. Robert W. Kastenmeier (dated May

15, 1985).... B. Cases: 1. United States v. Steerwell Leisure Corp.,

F. Supp. (W.D.N.Y. 1984). 2. United States v. Gallo, F. Supp.

(W.D.N.Y. 1984).....

315 320

COPYRIGHT ROYALTY TRIBUNAL AND U.S.

COPYRIGHT OFFICE

WEDNESDAY, MAY 1, 1985

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON COURTS, CIVIL LIBERTIES,
AND THE ADMINISTRATION OF JUSTICE,
COMMITTEE ON THE JUDICIARY,

Washington, DC. The subcommittee met, pursuant to call, at 2:15 p.m., in room 2226, Rayburn House Office Building, Hon. Robert W. Kastenmeier (chairman of the subcommittee) presiding.

Present: Representatives Kastenmeier, Synar, Schroeder, Morrison, Boucher, Moorhead, and Swindall.

Staff present: Michael Remington, chief counsel; Deborah Leavy, counsel; Thomas E. Mooney, associate counsel; Audrey Marcus, clerk.

Mr. KASTENMEIER. The committee will come to order.

Without objection, the subcommittee will permit, today, the meeting to be covered, in whole or in part, by television broadcast and/or still photography, pursuant to rule V of the committee rules.

Also, pursuant to a standing request of my chairman, both witnesses this afternoon will be sworn in, in terms of testimony.

I would like to make this opening statement. This afternoon, the subcommittee is pleased to continue its oversight of various agencies that fall within our jurisdiction. Today's hearing will be on the two entities within the legislative branch of government: The Copyright Royalty Tribunal and the Copyright Office.

The Copyright Royalty Tribunal was created by the Copyright Act of 1976. The Tribunal is composed of five Commissioners appointed by the President, with the advice and consent of the Senate. It presently has two vacancies, probably more a finding of benign neglect by the administration than a conclusion that the agency and its authority are unimportant.

The Tribunal is important. It has general statutory authority to make determinations concerning copyright royalty rates in the area of cable television, phonograph records, jukeboxes, and noncommercial broadcasting; and further, to distribute cable and jukebox royalties deposited with the Register of Copyrights.

To set the tone for this hearing, I would like to state that I have little doubt that the Tribunal is in dire need of reform. The subcommittee has had a classic case of a broken agency on its hands. I do not know whether the agency is broken beyond repair. I certainly hope not.

The purpose of the hearing, therefore, is to inquire as to whether the agency generally is effective and whether the Commissioners' relative lack of expertise, and I say this historically, in copyright law has hurt the Tribunal in terms of its deliberations; whether judicial review has been meaningful; whether the absence of clear guidance from Congress on how the Tribunal shall make rate decisions creates a statutory defect that ought to be rectified.

Now, I ought to point out, and I regret to do so, a recent article in Broadcasting Magazine raised several of these questions, and it also, of course, contained a discussion of a book, Foundations in Sand, authored by a Dr. Lawrence Hafstad with Marianne Mele Hall and John Morse. I have several questions about this publication that I will ask Ms. Hall during the course of the hearing.

It is, of course, constitutionally the assigned job of the Senate to analyze and assess all factors in a person's record prior to confirmation. I have strong feelings that the House should not attempt to replicate that function. I will state, however, that this subcommittee has an exceedingly high interest in whether public officials, particularly those appointed by the President of the United States, satisfy the public confidence conferred upon them.

Presidential appointees are expected to uphold the Constitution, obey the laws of the land, and satisfy high ethical standards; they should, in exchange for relatively high salaries, work hard; and, finally, should be balanced and fair in the exercising of their judgment. This was once aptly observed more than a century ago by a Member of the House of Representatives, Henry Clay: “Government is a trust, the officers of the Government are trustees; and both the trust and trustees are created for the benefit of the people.”

Parenthetically, I would also address these comments to the employees of the Copyright Office, including the Register of Copyrights who is to be appointed in the near future.

Now, I, at this point, would like to call upon the Chairman of the Copyright Royalty Tribunal to come forth. I am not clear whether the other Commissioners-Commissioner Ray and Commissioner Aguero-also desire to come forward with the Chair.

Ms. HALL. They are not in attendance.
Mr. KASTENMEIER. All right.

Mr. SYNAR. Mr. Chairman, were the other two Commissioners invited?

Mr. KASTENMEIER. I don't recall specifically. It is the custom for Commissioners to come. I think technically they probably were all invited.

Mr. SYNAR. Could we receive notice on why they are not with us today?

Mr. KASTENMEIER. No; if they are not here--and I inquire again, are Commissioner Aguero and Commissioner Ray present today?

They were not, I would say to the gentleman from Oklahoma, listed as witnesses, but it is customary for them to be here.

Mr. SYNAR. Mr. Chairman, I would ask unanimous consent that the subcommittee, in writing, request an answer on why the two

Mr.

Commissioners are not with us, so that we could have that for the record. Mr. KASTENMEIER. We can determine that.

SYNAR. Thank you. Mr. KASTENMEIER. We have an independent communication from Commissioner Ray.

Ms. Hall, would you stand, please, so I can administer the oath? [Witness sworn.]

Subcommittee and GPO staff have made necessary grammatical, spelling, and technical corrections to the official transcript. A copy of the original transcript is on file with the subcommittee.)

Mr. KASTENMEIER. Ms. Hall, we have your statement, which is submitted I take it on behalf of yourself, Commissioner Ray, and Commissioner Aguero. I notice you have noted in your statement where one or another of you may have differed from the conclusions therein.

Ms. HALL. Correct.

Mr. KASTENMEIER. We will accept the statement for the record together with the one-page statement of your new general counsel, Robert Cassler, as appendix E, together with other appendixes, and you may summarize your statement as you care to. TESTIMONY OF MARIANNE HALL, CHAIRMAN, COPYRIGHT ROY.

ALTY TRIBUNAL, ACCOMPANIED BY ROBERT CASSLER, GENER-
AL COUNSEL
Ms. Hall. Thank you, Mr. Chairman.

It is an honor to appear before this committee to report on the operations and functioning of the Copyright Royalty Tribunal.

As you have stated, Mr. Chairman, we are a five-person Commission. Presently, there are three Commissioners onboard. We have had two vacancies since September 26 of this year.

Our statutory responsibilities, as you have stated, in rulemaking are to set the rates in four areas of copyright compulsory licensing. We are also involved in adjudication; that is, in the distribution of royalties for cables' retransmission of copyrighted works and for the use of copyrighted works by jukeboxes.

Our adjudication, or distribution, occurs yearly in both those areas. Our rate setting occurs yearly for PBS and occurs at varying intervals for the other three areas. This year we will be reviewing rates for the cable retransmissions and for Public Broadcasting.

Our agency is small and our budget is small. We operate on approximately $758,000 for fiscal year 1986. That is up approximately $36,000 from fiscal year 1985, and $32,000 of that $36,000 increase is due to statutory increases in salary and benefits over which we have no control.

The general administration of the agency is the next topic I would like to address. We have recently worked very hard at centralizing all of our files and automating our offices. It was particularly important to centralize the administrative files and to centralize and organize our accounting records.

In utilizing the newly purchased computer, we have been able to do a complete accounting review of all of our distributions. And we have found some errors in those distributions from the past. We have corrected them to assure that all claimants receive equal pro rata shares of the moneys that are due to them as they become due.

The next topic in my statement deals with the office personnel and support. We have recently hired a general counsel. And I would like to introduce Mr. Robert Cassler, our general counsel. We hired the general counsel under the strong recommendations of this body and the Budget Subcommittee. We were aware that heretofore those recommendations had been tendered and, in fact, money had been appropriated, and yet a general counsel was not hired until this year. We are very pleased to have Mr. Cassler onboard, and we hope that he will help us in our pursuit of a more professional product from this agency.

Mr. KASTENMEIER. I dislike interrupting at this point, but it is clear that we have a vote on, a very important vote. The vote is to consider the proposition to seat Mr. McCloskey from the State of Indiana. The four of us, accordingly, must go to the House floor. I would assume, following this vote, the House will entertain the whole proposition at some length and we will be undisturbed. We can, therefore, return I think in probably greater numbers. The minority will be fully represented when we return.

That being the case, I think it is best to recess now. You may resume your testimony upon return.

The committee stands in recess for 10 minutes.
[Recess.)
Mr. KASTENMEIER. The committee will come to order.

When the committee recessed, 10 minutes ago or so, for a vote,
Commissioner Hall was in the middle of her presentation, so we
again will yield to you, Ms. Hall.
Ms. HALL. Thank you.

I believe I had just introduced our general counsel, which is the legal support we have brought onboard recently. It is my opinion that we firmly need some support in the area of economics, and I have so stated in my statement to the committee. This is my personal view. But much of what we deal with is very legal and very economic, and we need help in those areas.

Our current calendar for this year will involve the distribution of the 1983 cable royalty fund, approximately $80 to $100 million by the time it is distributed, and the 1983 jukebox royalty fund, which will approach $6 million at the time it is distributed. Both of these adjudications have been commenced, a controversy has been declared, and we have had pretrial conferences in those areas.

In addition to the adjudication for this year, we will do rulemaking. We have just completed the inflationary increase on the cable rates, which is mandated by the statute. We will, at the end of the year, adjust public broadcasting's rates as applied to their use of copyrighted works. That will involve a simple mathematical adjustment at the end of the year.

We anticipate one other major rulemaking proceeding, and that will be in response to a petition filed by Mr. Turner regarding an adjustment of the rates in 1985 of those signals which were recently deregulated, in 1980, by the FCC; 1985 is the window year in which rates set in 1982 due to the regulation in 1980 can be reviewed. To date, we have one petition filed, parties have until De

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