Posted by Jonathan Adler:
Is the Copyright Royalty Board Unconstitutional?
http://volokh.com/archives/archive_2009_07_05-2009_07_11.shtml#1246986788
This morning the U.S. Court of Appeals for the D.C. Circuit released
its opinion in [1]SoundExchange, Inc. v. Librarian of Congress. A
three-judge panel consisting of Judges Ginsburg, Henderson, and
Kavanaugh, largely rejected SoundExchange's challenge to the royalty
rate set by the Copyright Royalty Board that satellite radio services
must pay to copyright owners for the use of sound recordings. The
panel concluded that the rate was not arbitrary, capricious, or
unsupported by substantial evidence, but found (as the government
conceded) that the Board failed to set a rate for "ephemeral copies."
While he joined the court's opinion in full, Judge Kavanaugh wrote a
brief concurrence noting a potential separation-of-powers question
raised by the manner in which Board members are appointed.
As this case demonstrates, billions of dollars and the fates of
entire industries can ride on the Copyright Royalty Board�s
decisions. The Board thus exercises expansive executive authority
analogous to that of, for example, FERC, the FCC, the NLRB, and the
SEC. But unlike the members of those similarly powerful agencies,
since 2004 Copyright Royalty Board members have not been nominated
by the President and confirmed by the Senate. Instead, as a result
of a 2004 statute, Board members are appointed by the Librarian of
Congress alone. Board members are removable by the Librarian, but
only for cause. Moreover, in exercising important duties, Board
members are apparently unsupervised by the Librarian of Congress or
by any other Executive Branch official.
The new statutory structure raises a serious constitutional issue.
Under the Appointments Clause, principal officers of the United
States must be nominated by the President and confirmed by the
Senate. U.S. CONST. art. II, § 2, cl. 2. Copyright Royalty Board
members plainly are officers of the United States. And they appear
to be principal officers � not inferior officers � because they are
not removable at will and their decisions regarding royalty rates
apparently are not reversible by the Librarian of Congress or any
other Executive Branch official. See Edmond v. United States, 520
U.S. 651, 662-66 (1997); see also 17 U.S.C. §§ 701, 801-03; Tr.
of Oral Arg. at 24 (Government counsel agreeing that Librarian of
Congress and Register of Copyrights cannot change copyright royalty
rates set by the Board).
If the members of the Board are in fact principal officers, then
the present means of appointing Board members is unconstitutional.
But no party here has timely raised a constitutional objection. We
therefore may resolve the case without deciding whether the Board
is constitutionally structured, and so I join the opinion of the
Court.
References
1. http://pacer.cadc.uscourts.gov/common/opinions/200907/08-1078-1194999.pdf
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