Once the Tribunal resolved the interlocutory issue, the parties did, in fact, reach a global settlement. The Tribunal was prepared to distribute the 1989-1991 royalties, which amounted to approximately $10 million, in December of 1992. At the request of the parties, the royalties were not distributed until January of 1993.

With regard to the public broadcasting statutory license, the Tribunal held a "paper" hearing to determine the new rates and terms. With the assistance of the General Counsel of the Tribunal, all but one of the parties were able to submit a settlement agreement or joint proposal.

In addition to all of the above, during the latter part of 1992, the Tribunal also had to grapple with implementation of the new Audio Home Recording Act. The Tribunal held an informal meeting with parties affected by the new Act, answered numerous telephone inquiries regarding the Act, and issued an Advance Notice of Rule Making.

III. Tribunal Budget and Staff

Mr. Chairman, it must be underscored that all of this work was achieved with three Commissioners, one professional staff member, the Tribunal's General Counsel, and without any professional consultants. This was realized through the expert budget management of a modest annual budget of $865,000. Moreover, 85% of these costs were shouldered by the claimants, the very parties that benefit from the Tribunal's services, with

the taxpayers shouldering a mere 15% of these costs. I defy any agency to match that

record.

It is also worth noting that the Tribunal was originally appropriated enough funds for a staff of eighteen. However, rather than take advantage of this appropriation, the Tribunal convened with a staff of ten. Now sixteen years later, the Tribunal functions with a staff of nine. I dare say, not too many Federal Agencies can claim that, almost two decades later, although their responsibilities have increased, their staff has decreased.

IV. The Tribunal's Record

The Tribunal's accomplishments in 1992 are not unique. The Tribunal has a long history of successfully performing difficult and very subjective statutory functions with small staff and a limited budget. See Attachment A. From 1977, when the Tribunal commenced operating with a budget of $276,000, to present when it operates with a budget of $911,000, the Tribunal has performed its responsibilities with a budget of under one million dollars. In fact, the Tribunal has regularly returned portions of its budget to the claimants and U.S. Treasury. See Attachment B. Over the past sixteen years, the Tribunal has distributed over $1 billion in cable royalties; $48 million in jukebox royalties; and $10 million in satellite royalties. See Attachment C.

Mr. Chairman, in your statement, you described the Tribunal as a "broken and unnecessary" agency. The Tribunal's record disputes your assessment. In 1981 the

General Accounting Office (GAO), at the request of the Committee on the Judiciary Subcommittee on Courts, Civil Liberties, and the Administration of Justice, House of Representatives, examined the operation of the Tribunal. GAO's study was based on an examination of the Tribunal's legislative history, its proceedings and procedures, interviews with Tribunal Commissioners, meetings with eighteen organizations affected by the Tribunal's operations and other key individuals, in and out of Government, knowledgeable about the Tribunal and the compulsory licenses it oversees. Notably, the key individuals and the representatives of the eighteen organizations interviewed were assured that any of their comments that might affect their future dealings with the Tribunal would be kept

confidential.

The GAO study reported that, with certain exceptions, the Tribunal was recognized by the affected interests as a competent body. Other than criticisms involving the problems that regularly occur in court rooms, and the Tribunal's legislative mission, the interviewed parties had no criticisms of the Tribunal. See Statement of Wilbur D. Campbell, Deputy Director, Accounting and Financial Management Division, Before the Committee on the Judiciary Subcommittee on Courts, Civil Liberties, and House Representatives (June 11, 1981).

The GAO concluded, in its report, that,

It is clear the Tribunal was given a very difficult task, with no technical
support, and minimal authority with which to work. The Tribunal has done

what it was mandated to do. ... It has followed acceptable procedures and
has made determinations required to date. Id. at 6, 22.

The Legislative Appropriations Subcommittee has regularly lauded the Tribunal's efficiency and professionalism. In the words of Chairman Fazio,

...

When you think of all the money adjudication costs, it is an incredible
total and small amount of public funds to make it all happen. You [the
Tribunal] are really doing the job. You have not taken advantage at all of
the sources of revenue that you have coming to you. I think everyone on the
Tribunal has operated in a very businesslike way. See Fiscal Year 1993
Legislative Branch Appropriation Request: Before the Subcommittee on
Legislative Appropriations of the House Committee on Appropriations, 102
Cong., 2nd Sess. 264 (1992) (statement of Chairman Fazio).

The United States Court of Appeals for the District of Columbia has found the Tribunal's efforts to set a market price "more than reasonable" in light of Congress' mandate to have the Tribunal operate as a substitute for the market place. See National Cable Television Association, Inc. v. Copyright Royalty Tribunal, 724 F.2d 176, 185 (1983); Cf. ACEMLA v. Copyright Royalty Tribunal, 854 F.2d 10 (2nd Cir. 1988). The Court has also acknowledged the fact that the Tribunal, by establishing precedents (the game rules), has facilitated settlements among the parties. In the words of the Court, "[t]he umpire has established precedents on which the players may rely in submitting their claims." See National Association of Broadcasters v. Copyright Royalty Tribunal, 675 F.2d 367, 385 (1982), quoted in NBC v. Copyright Royalty Tribunal, 848 F.2d 1289, 1297 (D.C. Cir. 1988). Additionally, the Tribunal has a sterling appeals record since, except for a few partial remands, all of the Tribunal's decisions have been affirmed by the Court. See Attachment

D.

V. Analysis of the Copyright Reform Act of 1993

The Bill Has No Cost Savings And Will In Fact Increase Costs

Mr. Chairman, in your statement, you argue that the Bill will save both the taxpayers and the royalty claimants some undisclosed amount. A careful review of the proposal reveals that, not only will it not save these parties any money, it may, in fact, increase their costs. The Bill proposes to impose the following additional responsibilities on the Register of Copyrights (Register):

a) ascertain whether a controversy exists;

b) if controversy exists, convene an arbitration panel;

c) review the arbitration panel's distribution determination to ascertain whether it

is arbitrary in view of the relevant statutory and legal criteria;

d) if the determination is arbitrary, the Register will have to fully examine the

record and issue a determination, within sixty days;

e) entertain petitions for rate adjustment, including determination of whether petitioner has a significant interest ;

f) commence rate adjustment proceeding;

g) Convene arbitration panel for rate adjustment;

h) in the case of public broadcasting rates, establish requirements by which
copyright owners receive reasonable notice of use of their works.

From my experience and knowledge of the issues presented to the Tribunal, it is unlikely that the Register will be able to perform these additional responsibilities without additional staff and resources. Unlike the Tribunal, which funds 86% of its operating costs with the royalties, the Register's costs of operation will be fully funded with taxpayer dollars. There will also be additional costs in setting up the internal workings of this new shop, and dismantling the Tribunal.