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only by Congress but by the courts and the public.” Amalgamated Meat Cutters, Etc. v. Connally, 337 F. Supp. 737, 746 (D.D.C. 1971) (Leventhal, J.).
Recent decisions indicate that accountability may be obtained by requiring that the agency itself articulate and adhere to substantive criteria in the discharge of its administrative responsibilities. Thus, the judicial focus has shifted from demanding specificity of congressional authorization to requiring ascertainable standards for agency action. The result is that agency performance rather than legislative delegation is increasingly the critical standard.
The other value that finds constitutional expression in the due process guarantee is the prevention of arbitrariness in decision-making. This too was part of the delegation inquiry. The early decisions invalidating legislation in the name of that doctrine suggest that the fatal defects in those statutes were the combinations of indefinite delegations of legislative power with inadequate procedural safeguards for those likely to be affected by the statutes. Recent decisions seek the same end but take a somewhat different (more practical) approach. They dispense with reliance on the delegation doctrine and focus directly on procedural protections surrounding agency power and the availability of judicial review to ensure that those procedural safeguards are following in a particular case. See, e.g., Leventhal, Principled Fairness and Regulatory Urgency, 25 Case W. Res. L. Rev. 66, 70 (1974) (“The contemporary approach is one not of invalidating even the broadest statutory delegations of power, but of assuring that they are accompanied by adequate controls on subsequent administrative bebavior.").
Thus, the historic judicial concern with standardless delegations of legislative power has not vanished. It has developed into two modern notions that may fairly be termed successors to the delegation doctrine: first, that agencies should articulate and follow intelligible standards for exercising the powers delegated to them; and, second, that the exercise of such powers should be confined by procedural safeguards and policed by judicial review. Both of these notions find constitutional basis in the guarantee of due process of law.
With this understanding, it becomes evident that the constitutional defects of H.R. 2223 are not erased by the shift of focus from delegation to due process, Not only does this bill propose a virtually standardless delegation of authority to the Copyright Royalty Tribunal; it also offends modern notions relied upon in promoting agency accountability and preventing arbitrariness.
II. THE COPYRIGHT ROYALTY TRIBUNAL AND THE CONCEPT OF ACCOUNTABILITY
Where the Congress has not supplied specific directions for agency action, courts increasingly look to the agencies themselves for definition of rules and standards that confine agency power and guide its discretionary exercise. See, e.9., United States v. Bryant, 439 F.2d 642, 652 (D.C. Cir. 1971); Environmental Defense Fund v. Ruckelshaus, 439 F.2d 584, 597 (D.C. Cir. 1971).
But the Copyright Royalty Tribunal is singularly ill-suited to that task. Under $ 801 the Tribunal would be established in the Library of Congress. Unlike most administrative bodies, the Tribunal would not have a stable membership of persons appointed for fixed terms. Instead, the Tribunal would consist of shifting panels of three members, selected on an ad hoc basis by the Register of Copyrights from a list provided by the American Arbitration Association. § 803. These panels would be constituted as needed to consider petitions to adjust royalty rates and disputes concerning distribution of proceeds. There would be no continuity of personnel and hence no opportunity for individual Tribunal members to develop expertise in the field. The perpetually amateur status of individual members and the continual changes in Tribunal membership would preclude development by the Tribunal of consistent principles and policies to guide its decisions. The structure of the Tribunal is fundamentally at odds with the expectation that legislative delegation of power without standards can be cured by agency articulation of standards to guide itself.“
3 Leading commentators have applauded this development. See, e.g., K. Davis, Adminis. trative Law Text 8$ 2.02–,10 (3d ed. 1972).
*Cf. State v. Traffic Telephone Workers' Federation, 66 A, 2d 616, 626 (N.J. Sup. Ct. 1949):
"The personnel of the board of arbitration under the statute will vary with each strike. There is no permanence in the various boards of arbitration which may be constituted in successive cases. There is. thus, an even greater need of specific standards than there would be in the case of a continuous administrative body which might gather experience as it went along."
This defect is exacerbated by selection of members of the Copyright Royalty Tribunal from membership of the American Arbitration Association. These persons are experienced arbitrators and are undoubtedly well qualified to act as such. But arbitration is by nature an exceedingly ad hoc method of dispute resolution. As a mechanism for decision-making, it values expediency over predictability and sacrifices long-term policies to immediate resolution of disputes. Arbitration involves no tradition of adherence to precedent or to some consistent principle of decision. It treats each case on ts own bottom and therefore evolves no reliable way to handle future cases.
In short, the Copyright Royalty Tribunal as constituted under H.R. 2223 is institutionally incapable of converting its vague legislative mandate into a set of meaningful standards to guide its own decisions. To discharge an undefined policy, H.R. 2223 designates an administrative body incapable of defining a policy for itself. The inevitable result would be an endless series of ad hoc decisions made without identifiable objectives and therefore not susceptible of informed evaluation by Congress, courts, or the public. The goal of agency accountability is lost, and the statutory scheme is rendered unnecessarily vuluerable to constitutional attack.
Nor is the absence of public and legal accountability remedied by $ 807 ( a ) which provides the Tribunal adjustment of statutory royalty rates may be denied effect by adoption of an unfavorable resolution in either House of the Congress. This procedure for congressional veto supplies no standards for guidance of the Tribunal.
Congressional disapproval would provide no basis for ascertaining whether other rate adjustments were reasonable. At most the availability of such a veto would be a theoretical political check on arbitrary adjustments; as a practical matter, it seems unlikely that Congress would be in a position to exercise continuous and careful oversight of Tribunal decisions. Moreover, such congressional action could be objectionable as an unconstitutional effort to legislate without Presidential approval. However viewed, this negative congressional control of Tribunal royalty rates would provide no assurance that any adjustments were reasonable and not arbitrary and capricious.
III. JUDICIAL REVIEW UNDER H.R. 2223 AND AGENCY ARBITRARINESS
The central meaning of the constitutional guarantee of due process of law is the provision of adequate procedural safeguards against arbitrary or capricious government action. In the content of administrative law, due process requires not only that the agency itself follow certain regular procedures designed to ensure fairness to interested parties, but also that the agency's decisions be subject to judicial review for procedural error and abuse of discretion. See, e.g., L. Jaffe, Judicial Control of Administrative Action 381–89 (1965). Thus, the notorious judicial reluctance to construe a statute so as to preclude entirely judicial review can best be explained as a desire to avoid confronting a constitutional defect in congressional action.
Ultimately, both the specification of substantive standards for agency decision-making and the provision of procedural safeguards and judicial review are interlocked barriers against government arbitrariness. Without ascertainable criteria for the exercise of agency discretion, there is no reference by which to identify abuse of discretion. See, e.g., Yakus v. United States, 321 U.S. 414, 425–26 (1944). In other words, without some articulated objectives for agency action, it is impossible to determine whether a given decision is an arbitrary imposition of government power against particular party or an official policy of general applicabilty.
Thus, it has long been recognized that an important aspect of the delegation doctrine is to ensure that procedural safeguards, including judicial review of agency action, do not become empty formalities. As a recent and leading case stated :
"The safeguarding of meaningful judicial review is one of the primary functions of the doctrine prohibiting undue delegation of legislative powers. That this element of the doctrine ... has current vitality is brought out by the obser. vation of Justice Harlan in Arizona v. California, 373 U.S. 546, 626 (1963); [The doctrine) prevents judicial review from becoming merely an exercise at large by providing the Courts with some measure against which to judge the official action that has been challenged.'” Amalgamated Meat Cutters, Etc, v. Connally, 337 F. Supp. 737, 759–60 (D.D.C. 1971).
The pending bill allows the use of fair procedures by the Copyright Royalty Tribunal, but it makes grossly inadequate provision for judicial review. In fact, H.R. 2223 is apparently intended to preclude altogether judicial review of statutory royalty rate adjustments and to curtail sharply judicial review of royalty fee distributions.
Whether the absence of judicial review for Tribunal adjustments of copyright royalty rates is, in itself, a constitutionally fatal defect is difficult to say. It is not doubtful, however, that this preclusion of judicial review seriously compounds the problems of a standardless delegation of legislative power and an administrative body incapable of developing its own standards. When this denial of judicial review is conjoined with the failure (either in the legislation or in the subsequent Tribunal decisions) to establish specific criteria by which the Tribunal is to adjust statutory royalty rates, the constitutional infirmity of the legislation becomes apparent. As written, the bill provides no assurance that such adjustments will be made on a reasoned basis and will not be arbitrary and capricious.
CONCLUSION These three defects—the absence of meaningful statutory standards, the structural constraints against articulation of standards by the Tribunal itself, and the curtailment of judicial review-are cumulative. They combine to strip this proposed statutory scheme of reliable protections against arbitrary decisionmaking. They combine to render the Copyright Royalty determinations effectively beyond the reach of judicial and public scrutiny. As presently drafted, this proposed legislation is unwise and unnecessarily vulnerable to constitutional attack under the due process clause.
ERNEST GELLHORN, Professor of Law, University of Virginia, Charlottesville, Va.
October 14, 1975.
PITTMAN, LOVETT, FORD, & HENNESSEY,
Washington, D.C., November 14, 1975, Hon. ROBERT W. KASTENMEIER, Chairman, Subcommittee on Courts, Civil Liberties, and the Administration of
Justice, House Judiciary Committee, 2137 Rayburn House Office Building,
Washington, D.C. DEAR CONGRESSMAN KASTENMEIER: I appreciate the opportunity to comment on the alternative method of dealing with the cable issue in H.R. 2223 proposed by TelePrompTer Corporation. TelePrompTer Corporation is certainly to be commended for its efforts to find a solution to this issue.
Before commenting on the proposal, I would like to reaffirm the testimony which I gave before the Subcommittee last June on behalf of the Ad Hoc Committee of Concerned Cable Television Operators for a Fair Copyright Law. In keeping with that testimony, I urge that Section 110 of the bill be amended liy adding subsection 8, exempting cable television from the bill, deleting all of Section 111 and amending chapter 8 on the Royalty Tribunal to exclude cable television. Appropriate amendments are attached.
Even if the Committee does not accept these amendments, cable television should be eliminated from the present bill as premature until such time as regulatory legislation is enacted and the full facts surrounding the initialling of the "Consensus Agreement" are developed on the record.
The Office of Telecomunications Policy at the White House, and the Federal ('ommunications Commission are both drafting proposed regulatory legislation for cable television. I understand Congressman Torbert H. Macdonald has announced that he plans hearings on regulatory legislation for cable television next year.
It is still our view that H.R. 2223 should be enacted, but that the provisions on cable should be deferred until Congress establishes its policy on cable television. Until that is done, the structures of the industry and the regulatory scheme is unknown. The present copyright legislation, by its nature, establishes communications policy. (See Senate Report No. 93–1035, 93rd Cong., 2nd Sess., on S. 1361 p. 66.) After Congress adopts legislation for the regulation of cable television and the regulatory structure of the industry is established, it will be appropriate for the first time to consider copyright legislation on cable television.
Moreover, many members of Congress believe that the industry has agreed, through the so-called “Consensus Agreement", to the payment of copyright. The full facts concerning how that "Consensus Agreement” was obtained on November 10, 1971 by duress and business compulsion, including threats, by a White House staff member, of a blood bath for cable if it did not agree to copyright,
should be developed so that Congress will be fully informed on how that "consent" was obtained.
Turning now to the TelePrompter proposal, our basic objection is that it includes the legislative fiction that receiving and distributing a broadcast signal by a cable television system is a performance. This is contrary to the reason and logic of the United States Supreme Court in both Fortnightly Corporation v. United Artists, 392 U.S. 390 (1968), and TelePrompTer Corporation v. CBS, 415 U.S. 394 (1974). The proposal recognizes the validity of the principles established by the Court (that carriage of such signals is not a performance) only in areas in which broadcast stations have the right to insist on carriage under the ECC's Rules. This right varies with market size and distance from the reference point of the market or the contour in which the system is located. It would seem that, if carriage of a signal is not a performance within the Grade B contour of a station, outside all 35-mile zones under the Commission's Rules (possibly as far out as 79 miles) where there is a right to insist on carriage, it logically would not be a performance within the Grade B contour of a major market station which cannot insist on carriage by systems outside of its 35-mile zone.
There is really no basis to hold carriage of a station on a cable system to be a performance other than the 28 owners of most of the copyrighted material on television want to collect a second time from the public-once through the advertiser and a second time through the cable operator. The Commission's power to limit the number of distant signals carried on a system has been sustained. No further power is needed to protect both the broadcaster and the copyright owner.
As I understand the TelePrompTer proposal, its fundamental thrust is that no copyright liability will attach to the carriage by cable television systems of any network program broadcast by either a local or a distant signal on the theory that the copyright owner dedicates a network program to the entire country. It also exempts non-network programs carried by stations which are entitled to insist on carriage under the FCC Rules. These Rules on carriage are arbitrary with respect to major markets and areas outside the 35-mile zones of all markets. In order to be consistent with that theory on dedication, a copyright owner who sells a non-network program to a television station must intend for an agreed price, to dedicate that performance to the entire public within the Grade B contour of the station and as far beyond as it can be received off-the air. The type antenna used by the public, be it rabbit ears, rooftop, independent tower on CATV, is immaterial to the price the copyright owner receives. In order to eliminate arbitrary discrimination against the public, based on the size of market in which the cable system is located, it would seem that the definition of “copyright qualifying broadcast station" in the proposal should be revised to reflect the principles above described.
There are a number of other problems with the definitions in the proposal. For example, in the definition of "copyright owners percentage share" the total program expense is part of the formula. A number of the nine items listed under program expense, Schedule 2 of the Annual Financial Report of Networks and Licensees of Broadcast Stations, FCC Form 324, do not appear to be related to copyright. These items include salaries of talent, salaries of other program employees and a catch-all of all other program expense. Moreover, the items involved included under this heading may be changed by the FCC from time. to-time. A copy of the FCC Form 324 is included for your information.
One of the difficulties with the definition of "market share" in the proposal is the implied statutory approval of whatever rating service the Commission may now use or may use in the future. Different rating services may come into existence. Therefore, standards for selection of a service by the FCC should be developed with an opportunity to contest the ratings used by submission of ratings by other rating services.
Based on these hurried comments, it is doubtful whether or not sufficient data can be accumulated in these various areas and their effect on different systems determined quickly enough to evaluate the proposal. The above comments under: line the necessity to eliminate cable from H.R. 2223. In any case, cable should be eliminated from the present bill and deferred until regulatory legislation is completed and further study is given to the TelePrompTer proposal. Sincerely,
FREDERICK W. FORD,
Cable Television Operators for a Fair Copyright Laro. Enclosures.
f 110. Limitations on esclusive rights: Exemption of certain performances and
displays Notwithstanding the provisions of section 106, the following are not infringements of copyright:
(1) performance or display of a work by instructors or pupils in the course of face-to-face teaching activities of a nonprofit educational institution, in a classroom or similar place devoted to instruction, unless, in the case of a motion picture or other audiovisual work, the performance, or the display of individual images, is given by means of a copy that was not lawfully made under this title, and that the person responsible for the performance knew or had reason to believe was not lawfully made;
(2) performance of a nondrámatic literary or musical work or display of a work, by or in the course of a transmission, if :
(A) the performance or display is a regular part of the systematic instructional activities of a governmental body or a nonprofit educational institution; and
(B) the performance or display is directly related and of material assistance to the teaching content of the transmission; and
(C) the transmission is made primarily for: (i) reception in classrooms or similar places normally devoted to instruction,
(ii) reception by persons to whom the transmission is directed because their disabilities or other special circumstances prevent their attendance in classrooms or similar places normally devoted to instruction, or
(iii) reception by officers or employees of governmental bodies as a part of their official duties or employment;
(3) performance of a nondramatic literary or musical work or of a dramaticomusical work of a religious nature, or display of a work, in the course of services at a place of worship or other religious assembly;
(4) performance of a nondramatic literary or musical work otherwise than in a transmission to the public without any purpose of direct or indirect commercial advantage and without payment of any fee or other compensation for the performance to any of its performers, promoters, or organizers, if :
(A) there is no direct or indirect admission charge, or
(B) the proceeds, after deducting the reasonable costs of producing the performance, are used exclusively for educational, religious, or charitable purposes and not for private financial gain, except where the copyright owner has served notice of his objections to the performance under the following conditions:
(i) The notice shall be in writing and signed by the copyright owner or his duly authorized agent; and
(ii) The notice shall be served on the person responsible for the performance at least seven days before the date of the performance, and shall state the reasons for his objections; and
(iii) The notice shall comply, in form, content, and manner of service, with requirements that the Register of Copyrights shall prescribe by regulation;
(5) communication of a transmission embodying a performance or display of a work by the public reception of the transmission on a single receiving apparatus of a kind commonly used in private homes, unless :
(A) a direct charge is made to see or hear the transmission; or (B) the transmission thus received is further transmitted to the public;
(6) performance of a nondramatic musical work in the course of an annual agricultural or horticultural fair or exhibition conducted by a governmental body or a nonprofit agricultural or horticultural organization;
(7) performance of a nondramatic musical work by a vending establishment open to the public at large without any direct or indirect admission charge, where the sole purpose of the performance is to promote the retail sale of copies or phonorecords of the work and the performance is not transmitted beyond the place where the establishment is located.
(8) the further transmitting to the public, by means of broadcast receiving equipment, wherever located, which receives and makes available by means of cable or wires and related equipment to individual reception sets of the kind commonly used in private homes, of a transmission embodying a performance or exhibition of a work; Provided: The further transmission is made simultaneously and without altering or adding to the content of the original transmission and no direct admission fee is charged for the privilege of seeing or hearing such transmission and the receiving apparatus is not coin operated.