It is estimated that the cost of providing assessment-related briefings, testimony, staff papers, and technical memoranda related to the formal printed assessment report to the Congress in fiscal year 1982 will be $420,000 ($230,000 as of June 1) and in fiscal year 1983 will be $475,000, but these costs are so interconnected with the assessment costs, per se, that it is inappropriate to try to identify them separately.

Your budget projects an increase of 41 percent in obligations for "other services" between fiscal years 1981 and 1983. Can you tell us why costs in this area are rising so sharply?

Response:

The obligations for other services are almost entirely for assessment contracts, which make up the largest single amount of OTA's external costs. Since OTA utilizes outside panelists and contractors as a major source of information for performing assessments, the balance of external to internal costs appears to work the best when the external costs are about 42-45 percent. In fiscal year 1981 the external percent dropped to 37 percent; during FY '82 and '83 we are attempting to correct for this. The estimated obligations for FY '82 and '83 also reflect the impact of inflation on these costs. The FY '83 request contains funds to perform a higher level of effort in new assessments over both FY '81 and FY '82.

Fourth Quarter Spending

Question:

I notice that two-thirds of your printing and reproduction budget and 46 percent of your supplies money was spent in the fourth quarter of fiscal 1981. Can you tell the Committee why you spent so much of your appropriation in these two areas in the fourth quarter of the year?

Response:

The major factor which affects the obligations of printing and reproduction is the cycle of delivery of assessments to the Committees of Congress and their subsequent printing. During the fourth quarter of FY '81, OTA had a very large number of assessments printed or in the process of final editing and printing. Since we start the majority of our projects in the second and third quarters of a Congressional session, the

completions tend to be the heaviest during this period (i.e., third and fourth quarters of the fiscal year) as well, reflecting the performance time of an assessment and the availability of staff to commence new work.

The total for the fourth quarter, object classification 26, supplies, reported by the General Accounting Office on its year-end

report contained an error that has since been corrected. Object classification 26 was incorrectly assigned; correction of this error has reduced the fourth quarter total for the supplies category to $24,000, only 21 percent of the adjusted total of $114,000. Normally, our bulk purchasing and inventory practices, which reduce costs through volume discounts and lower delivery and handling costs, result in higher obligations in this area during the first quarter of the fiscal year.

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:]

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. The Copyright Act does not permit the Tribunal to utilize royalty fees for the cost of such proceedings.

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