Copyhype

On July 6, the DC Circuit Court of Appeals issued its decision in Intercollegiate Broadcasting v. Copyright Royalty Board. I had written about the case before — check out my article Is the Copyright Royalty Board Unconstitutional? for more background — but basically, this litigation arose out of rate determinations in front of the Copyright Royalty Board, an agency in the Library of Congress that sets royalty rates for a number of statutory licenses. Here, the statutory licenses regarded the use of sound recordings by “webcasters”, such as the Intercollegiate Broadcasting System. During an appeal of the Royalty Board’s determination to a federal court, Intercollegiate raised the argument that the rates were void because Copyright Royalty Judges are unconstitutionally appointed.

Though a headline declaring the Board unconstitutional is dramatic, the actual holding is quite narrow. The Circuit Court’s decision leaves the Board entirely intact, except for restrictions on the Librarian of Congress’s ability to fire Board Judges, which Congress included when it created the Board. The Court stated, “Specifically, we find unconstitutional all of the language in 17 U.S.C. § 802(i) following ‘The Librarian of Congress may sanction or remove a Copyright Royalty Judge . . . .'” ¹17 U.S.C. 802(i) in full reads (with the now unconstitutional language in italics):

(i) Removal or Sanction.— The Librarian of Congress may sanction or remove a Copyright Royalty Judge for violation of the standards of conduct adopted under subsection (h), misconduct, neglect of duty, or any disqualifying physical or mental disability. Any such sanction or removal may be made only after notice and opportunity for a hearing, but the Librarian of Congress may suspend the Copyright Royalty Judge during the pendency of such hearing. The Librarian shall appoint an interim Copyright Royalty Judge during the period of any such suspension.

The court reasoned that absent this ability to remove Copyright Royalty Judges, the Board’s authority and discretion to set royalty rates was so broad as to make them “principal officers” — and under the Constitution, only the President may appoint “principal officers.” However, the court concludes, “Once the limitations on the Librarian’s removal authority are nullified, they would become validly appointed inferior officers,” and the Constitution allows Congress the ability to vest appointment power of inferior officers “in the President alone, in the Courts of Law, or in the Heads of Departments” — the last of which includes the Librarian of Congress.

This last point, that the Librarian of Congress is a Head of a Department, had been contested by Intercollegiate Broadcasting in the same case. The Circuit Court rejected the claim.

The Library of Congress is an Executive Department

As I noted in my previous post on this subject, the Constitution doesn’t define “Department”, and current Supreme Court precedent on what constitutes a Department is “not … entirely clear.” Specifically, in Free Enterprise Fund v. PCAOB, ²561 US ___ (2010). the Court seemingly ignored the majority’s convulted definition of a Department from Freytag v. Commissioner ³501 U.S. 868 (1991). and adopted the concurrence’s simpler definition.

The court here did the same. Under this definition, a Department is any “freestanding component of the Executive Branch, not subordinate to or contained within any other such component.” And the Library of Congress “clearly meets” this definition. Said the court:

To be sure, it performs a range of different functions, including some, such as the Congressional Research Service, that are exercised primarily for legislative purposes. But as we have mentioned, the Librarian is appointed by the President with advice and consent of the Senate, and is subject to unrestricted removal by the President. Further, the powers in the Library and the Board to promulgate copyright regulations, to apply the statute to affected parties, and to set rates and terms case by case are ones generally associated in modern times with executive agencies rather than legislators. In this role the Library is undoubtedly a “component of the Executive Branch.”

This means that both Circuits that have been faced with this question have held that the Library is an executive department under the Appointments Clause. ⁴The other is the Fourth Circuit, in Eltra v. Ringer, 579 F.2d 294, 300-301 (1978). This part of the decision I believe is fully correct, and hopefully should resolve any lingering doubts over the Librarian as a Head of a Department — relevant since the Librarian also appoints the Register of Copyrights, who engages in some executive functions.

The Impact of the Decision

The effect of this decision is limited to a vacation of the rate determination proceeding involving Intercollegiate Broadcasting and the other parties in this case — the proceeding starts over from square one, with the slight change that Copyright Royalty Judges can be removed without cause. It is uncertain whether parties in previous proceedings will launch their own constitutional challenges based on this decision, but it would seem that any future proceedings would be immune from Appointments Clause challenges now that the Circuit Court has struck down what it considers the unconstitutional removal provisions.

What does this mean constitutionally? It’s difficult to say. One can search in vain through the Constitution, the Convention Debates, or Ratification sources (like the Federalist Papers) to find Constitutional principles that were furthered by this decision. As I noted in my earlier piece, the Appointments Clause came about largely from discussion over the best way to ensure quality officers while minimizing cronyism and encroachment of one branch of government over another. The distinction between principal and inferior officers was added later as a nod to pragmatism — it would be inefficient for the President to have a hand in every single official appointment. The Heads of Departments and courts of law were seen as qualified enough to make those appointments — the only branch prohibited from appointing executive officers was Congress, based on separation of powers concerns.

So the strict formalist line of thought, unbounded by any principles, that the Circuit Court followed makes little sense. Limiting the Librarian of Congress’s ability to remove Copyright Royalty Judges doesn’t result in Congress encroaching on the Executive Branch’s authority; if anything, it minimizes the chances Judges would consider politics when making decisions. And it is odd that the current setup is more open to challenges under a clause designed to foster quality officers than the previous Copyright Royalty Tribunal, where members were appointed directly by the President. As William Patry noted, one Senator had said privately “the CRT was a dumping ground for unqualified people to whom the President owed a small favor.”

The only principle here would seem to be that Intercollegiate Broadcasting was unhappy with the rate determination made by the Copyright Royalty Judges and found a successful way to make a collateral challenge on constitutional grounds. No word yet on whether this decision will be appealed.