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ORAL ARGUMENT SCHEDULED FOR FEBRUARY 7, 2012 No. 11-1083 IN THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT INTERCOLLEGIATE BROADCASTING SYSTEM, INC., A RHODE ISLAND NON-PROFIT CORPORATION, Appellant, v. COPYRIGHT ROYALTY BOARD; LIBRARY OF CONGRESS, Appellees. COLLEGE BROADCASTERS, INC.; SOUNDEXCHANGE, INC., Intervenors for Appellees. ON APPEAL FROM A FINAL DETERMINATION OF THE COPYRIGHT ROYALTY BOARD FINAL BRIEF FOR APPELLEES TONY WEST Assistant Attorney General SCOTT R. MCINTOSH (202) 514-4052 KELSI BROWN CORKRAN (202) 514-3159 Attorneys, Appellate Staff Civil Division, Room 7216 U.S. Department of Justice 950 Pennsylvania Ave. NW Washington, DC 20530-0001

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CERTIFICATE AS TO PARTIES, RULINGS, AND RELATED CASES Pursuant to D.C. Circuit Rule 28(a)(1), the undersigned counsel certifies as follows: A. Parties and Amici. All parties, intervenors, and amici appearing before the Copyright Royalty Judges and in this Court are listed in the opening brief for appellant. B. Ruling Under Review. The ruling under review is a ratemaking decision of the Copyright Royalty Judges: Digital Performance Right in Sound Recordings and Ephemeral Recordings, 76 Fed. Reg. 13026 (March 9, 2011) (Joint Appendix (JA) 1-33). C. Related Cases. This case has not previously come before this Court or any other court. Appellant has another appeal pending before this Court, No. 10-1314, in which it challenges a different decision of the Copyright Royalty Judges, but raises the same issue as it does here regarding the constitutionality of 17 U.S.C. 803(d)(3). D. Deferred Appendix. The parties are using a deferred appendix.

/s/ Kelsi Brown Corkran Kelsi Brown Corkran

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TABLE OF CONTENTS Page GLOSSARY STATEMENT OF JURISDICTION. ....................................................................... 1 STATEMENT OF THE ISSUES. ............................................................................ 2 PERTINENT STATUTES AND REGULATIONS................................................. 2 STATEMENT OF THE CASE................................................................................. 2 STATEMENT OF THE FACTS. ............................................................................. 3 I. II. Statutory and Regulatory Background. ................................................ 3 Procedural Background. ....................................................................... 8

SUMMARY OF ARGUMENT. ............................................................................. 10 STANDARD OF REVIEW. ................................................................................... 13 ARGUMENT.......................................................................................................... 13 I. IBSs Attack On The Merits Of The Royalty Rate Determination Is Baseless. ................................................................. 13 This Court Has Jurisdiction To Review Challenges To The Copyright Royalty Judges Rate Determinations........................ 14 Congress Constitutionally Vested The Power To Appoint The Copyright Royalty Judges In The Librarian Of Congress........................................................................................ 21 A. The Copyright Royalty Judges Are Inferior Officers Under The Appointments Clause............................... 21 ii

II.

III.

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B.

The Librarian Of Congress Is The Head Of A Department Within The Meaning Of The Appointments Clause. .............................................................. 29 1. The Librarian Of Congress Is Accountable To The President............................................................ 30 The Library Of Congress Is A Department Within The Meaning Of The Appointments Clause. ........................................................................... 33 IBS Mistakes Statutory Labels For Constitutional Authority. ............................................... 37

2.

3.

CONCLUSION....................................................................................................... 43 CERTIFICATE OF COMPLIANCE WITH RULE 32(a)(7)(C) OF THE FEDERAL RULES OF APPELLATE PROCEDURE CERTIFICATE OF SERVICE

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TABLE OF AUTHORITIES Cases: Page

Alaska Airlines, Inc. v. Brock, 480 U.S. 678 (1987)........................................................................................... 20 Bismullah v. Gates, 551 F.3d 1068 (D.C. Cir. 2009)......................................................................... 20 Bowsher v. Synar, 478 U.S. 714 (1986)........................................................................................... 30 Buckley v. Valeo, 424 U.S. 1 (1976)....................................... 12, 20, 21, 22, 29, 33, 34, 40, 41, 42* Cablevision Systems Dev. Co. v. Motion Picture Assn of America, Inc., 836 F.2d 599 (D.C. Cir. 1988)........................................................................... 34 Chabal v. Reagan, 841 F.2d 1216 (3d Cir. 1988). ........................................................................... 42 Edmond v. United States, 520 U.S. 651 (1997)................................................................. 12, 22, 24, 25, 27* Eltra Corp. v. Ringer, 579 F.2d 294 (4th Cir. 1978). ................................................................ 36, 40, 41 Federal Radio Commission v. General Electric Co., 281 U.S. 464 (1930)............................................................................... 16, 17, 19 Federal Radio Commission v. Nelson Bros. Bond & Mortgage, Co., 289 U.S. 266 (1933)........................................................................................... 18 Free Enterprise Fund v. Public Company Accounting Oversight Board, et al., 130 S. Ct. 3138 (2010)................................................. 12, 19, 25, 29, 33, 35, 42* * Authorities on which the government chiefly relies. iv

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Freytag v. Commissioner of Internal Revenue, 501 U.S. 868 (1991)................................................................. 26, 28, 34, 35, 41* Ex parte Hennen, 38 U.S. (13 Pet.) 230 (1839).............................................................................. 30 Kalaris v. Donovan, 697 F.2d 376 (D.C. Cir. 1983)........................................................................... 30 Keeffe v. Library of Congress, 777 F.2d 1573 (D.C. Cir. 1985)......................................................................... 40 Landry v. Fed. Deposit Ins. Corp., 204 F.3d 1125 (D.C. Cir. 2000)......................................................................... 26 Lebron v. Natl R.R. Passenger Corp., 513 U.S. 374 (1995)........................................................................................... 41 Live365, Inc. v. Copyright Royalty Board, 698 F. Supp. 2d 25 (D.D.C. 2010)............................................. 25, 26, 28, 29, 37 Mazer v. Stein, 347 U.S. 201 (1954)........................................................................................... 34 Mistretta v. United States, 488 U.S. 361 (1989)..................................................................................... 42, 43 Morrison v. Olson, 487 U.S. 654 (1988)..................................................................................... 25, 28 Program Suppliers v. Librarian of Congress, 409 F.3d 395 (D.C. Cir. 2005)............................................................................. 4 Rancho Viejo, LLC v. Norton, 323 F.3d 1062 (D.C. Cir. 2003)......................................................................... 16 Recording Industry Assn of America v. Copyright Royalty Tribunal, 662 F.2d 1 (D.C. Cir. 1981). ................................................................................ 4 v

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Reno v. Flores, 507 U.S. 292 (1993)........................................................................................... 16 SoundExchange, Inc. v. Librarian of Congress, 571 F.3d 1220 (D.C. Cir. 2009)......................................................................... 18 United States v. Booker, 543 U.S. 220 (2005)........................................................................................... 20 United States v. First City National Bank of Houston, et al., 386 U.S. 361 (1967)........................................................................................... 19 United States v. Germaine, 99 U.S. 508 (1878)................................................................................. 21, 22, 33 United States v. Salerno, 481 U.S. 739 (1987)........................................................................................... 16 Washington Legal Foundation v. U.S. Sentencing Commn, 17 F.3d 1446 (D.C. Cir. 1994)........................................................................... 41 Wisconsin Public Power, Inc. v. FERC, 493 F.3d 239 (D.C. Cir. 2007)........................................................................... 13 Constitution: U.S. Const., art. II, 2, cl. 2. ...................................................................... 12, 21, 22 Statutes: 2 U.S.C. 136 ................................................................................ 12, 23, 30, 32, 37 2 U.S.C. 137......................................................................................................... 38 2 U.S.C. 137c. ...................................................................................................... 38 2 U.S.C. 166(a). ................................................................................................... 42

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2 U.S.C. 171(1). ................................................................................................... 40 2 U.S.C. 179p....................................................................................................... 39 2 U.S.C. 431 et seq............................................................................................. 41 2 U.S.C. 1711....................................................................................................... 39 5 U.S.C. 101 ........................................................................................................ 41 17 U.S.C. 106......................................................................................................... 3 17 U.S.C. 106(6). ................................................................................................... 5 5 U.S.C. 706............................................................................................... 8, 15, 18 17 U.S.C. 112(e)(4)........................................................................................ 3, 5, 6 17 U.S.C. 112(e)(5)................................................................................................ 6 17 U.S.C. 114(d)(2). .............................................................................................. 3 17 U.S.C. 114(f)(2). ..................................................................................... 3, 5, 10 17 U.S.C. 114(f)(2)(A). ................................................................................... 6, 13 17 U.S.C. 114(f)(2)(B)..................................................................................... 6, 13 17 U.S.C. 114(f)(3). ............................................................................................... 6 17 U.S.C. 701(a). ............................................................................................. 7, 24 17 U.S.C. 801......................................................................................................... 2 17 U.S.C. 801 et seq....................................................................................... 1, 4, 5 17 U.S.C. 801(b). ................................................................................................. 23

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17 U.S.C. 801(b)(1). .............................................................................................. 5 17 U.S.C. 801(b)(8). ............................................................................................ 24 17 U.S.C. 801(d). ................................................................................................. 23 17 U.S.C. 801(e). ................................................................................................. 23 17 U.S.C. 802(c). ................................................................................................. 22 17 U.S.C. 802(f)(1)(A)(I). ................................................................................... 27 17 U.S.C. 802(f)(1)(B)..................................................................................... 7, 24 17 U.S.C. 802(f)(1)(D). ............................................................................. 7, 24, 27 17 U.S.C. 802(h). ................................................................................................. 23 17 U.S.C. 802(i)............................................................................................. 23, 24 17 U.S.C. 803(a)(1).............................................................................................. 23 17 U.S.C. 803(b). ................................................................................................... 6 17 U.S.C. 803(b)(6). ............................................................................................ 23 17 U.S.C. 803(b)(6)(C)(i). ..................................................................................... 6 17 U.S.C. 803(b)(6)(C)(v). .................................................................................... 6 17 U.S.C. 803(b)(6)(C)(vi). ................................................................................... 6 17 U.S.C. 803(b)(6)(C)(ix). ................................................................................... 6 17 U.S.C. 803(b)(6)(C)(x). .................................................................................... 6 17 U.S.C. 803(c)(1)................................................................................................ 7

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17 U.S.C. 803(c)(3)................................................................................................ 7 17 U.S.C. 803(c)(6).............................................................................................. 23 17 U.S.C. 803(d)(1). .......................................................................................... 2, 7 17 U.S.C. 803(d)(3). ...................................................................... 8, 11, 13, 15, 16 17 U.S.C. 804......................................................................................................... 5 28 U.S.C. 561(a). ................................................................................................. 42 28 U.S.C. 566(a). ................................................................................................. 42 28 U.S.C. 566(c). ................................................................................................. 42 35 U.S.C. 203(b). ................................................................................................. 16 38 U.S.C. 7252(a). ............................................................................................... 16 42 U.S.C. 405(g). ................................................................................................. 16 44 U.S.C. 2114..................................................................................................... 39 49 U.S.C. 1153(b)(3). .......................................................................................... 16 49 U.S.C. 46110(c). ............................................................................................. 16 Act of January 26, 1802, 2 Stat. 128........................................................... 31, 37, 38 Copyright Act of 1870, 16 Stat. 212. ................................................................ 31, 39 Act of February 19, 1897, 29 Stat. 544............................................................. 31, 32 Copyright Act of 1976, Pub. L. No. 94-553, 90 Stat. 2541. ..................................... 4 Copyright Royalty and Distribution Reform Act of 2004, Pub. L. No. 108-419, 118 Stat. 2341. ....................................................................... 4 ix

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Regulations: 37 C.F.R. 301.1. ..................................................................................................... 1 37 C.F.R. 351.4. ..................................................................................................... 6 37 C.F.R. 351.8. ..................................................................................................... 6 37 C.F.R. 351.10. ................................................................................................... 6 37 C.F.R. 351.11. ................................................................................................... 7 37 C.F.R. 351.14. ................................................................................................... 7 37 C.F.R. 352.2. ..................................................................................................... 7 70 Fed. Reg. 30901 (May 31, 2005). .................................................................. 4, 23 72 Fed. Reg. 24084 (May 1, 2007). .......................................................................... 9 76 Fed. Reg. 13026 (March 9, 2011). .............................................. 1, 2, 8, 9, 10, 14 Legislative Materials: 29 Cong. Rec. 315 (1896) (Rep. Quigg)........................................................... 31, 32 29 Cong. Rec. 318-19 (1896) (Rep. Dockery)............................................ 32, 36, 39 29 Cong. Rec. 378 (1896) (Rep. Bingham). ..................................................... 30, 31 29 Cong. Rec. 385 (1896) (Rep. Cummings). ........................................................ 32 29 Cong. Rec. 386 (1896) (Rep. Cannon). ....................................................... 32, 36 29 Cong. Rec. 387 (1896) (Rep. Stone).................................................................. 39 29 Cong. Rec. 387 (1896) (Rep. Fairchild). ........................................................... 39

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29 Cong. Rec. 389 (1896) (Rep. Richardson)......................................................... 32 29 Cong. Rec. 977 (1897) (Sen. Call)..................................................................... 32 Other Authorities: 1 N. Webster, American Dictionary of the English Language (1828) (def. 2) (1995 facsimile ed.). .................................................................. 33 20 Charles Alan Wright & Mary Kay Kane, Federal Practice and Procedure (2009)........................................................................................ 19 About the Librarian, Previous Librarians of Congress, John Silva Meehan, http://www.loc.gov/about/librarianoffice/ meehan.html (last visited Nov. 2, 2011). ........................................................... 31 Ben Perley Poore, The Library of Congress, 46 Harpers New Monthly Mag. 41 (1873). ...................................................... 38 Glover Cleveland, First Annual Message (First Term) to the Congress of the United States (Dec. 8, 1885), available at http://www.presidency.ucsb.edu/ws/?pid=29526#axzz1ca1unU5r. .................. 39 John Y. Cole, For Congress and the Nation: A Chronological History of the Library of Congress (1979)......................................................... 38 Library of Congress, Librarians of Congress: 1802-1974 (1975).......................... 38 R.R. Bowker, The American National Library, 21 Lib. J. 357 (1896).......................................................................................... 39 Theodore Roosevelt, Message to the Senate and the House of Representatives (Dec. 3, 1901), available at http://www.presidency.ucsb.edu/ws/?pid=29542#axzz1ca1unU5r. .................. 40 William Dawson Johnston, 1 History of the Library of Congress:1800-1864 (1904).......................................................................... 38

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GLOSSARY

ALJ APA CBI CRS IBS JA

Administrative Law Judge Administrative Procedure Act College Broadcasters, Inc. Congressional Research Service Intercollegiate Broadcast System, Inc. Joint Appendix

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No. 11-1083 IN THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT INTERCOLLEGIATE BROADCASTING SYSTEM, INC., A RHODE ISLAND NON-PROFIT CORPORATION, Appellant, v. COPYRIGHT ROYALTY BOARD; LIBRARY OF CONGRESS, Appellees. COLLEGEBROADCASTERS, INC.; SOUNDEXCHANGE, INC., Intervenors for Appellees. ON APPEAL FROM A FINAL DETERMINATION OF THE COPYRIGHT ROYALTY BOARD FINAL BRIEF FOR APPELLEES STATEMENT OF JURISDICTION Appellant Intercollegiate Broadcasting, Inc. (IBS) challenges a final determination of the Copyright Royalty Judges.1 The final determination was published in the Federal Register on March 9, 2011. See 76 Fed. Reg. 13026 (March

IBS refers to the agency as the Copyright Royalty Board, a term drawn from the regulations. See 37 C.F.R. 301.1. This brief uses the statutory term Copyright Royalty Judges, see 17 U.S.C. 801 et seq., following the Judges own practice in the final determination below.

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9, 2011) (JA 1-33). IBS filed a notice of appeal in this Court on March 17, 2011, within the time provided by 17 U.S.C. 803(d)(1). This Court has jurisdiction under 17 U.S.C. 803(d)(1). STATEMENT OF THE ISSUES (1) Whether appellant has failed to offer any ground for vacating or reversing the Copyright Royalty Judges rate determination for noncommercial webcasting. (2) Whether the judicial review scheme set forth in section 803(d)(3) of the Copyright Act comports with Article III. (3) Whether the appointment of the Copyright Royalty Judges by the Librarian of Congress comports with the Appointments Clause. PERTINENT STATUTES AND REGULATIONS The pertinent statutes and regulations are set forth in the addendum to appellants brief. STATEMENT OF THE CASE This is an appeal from a final determination of the Copyright Royalty Judges, a three-judge regulatory body in the Library of Congress responsible for establishing the default rates and terms for statutory licenses under the Copyright Act. See 17 U.S.C. 801. The determination sets the rates and terms for royalty payments relating to webcasting that is, the transmission of copyrighted sound recordings

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over the internet. Since 1998, the Copyright Act has provided a statutory license for webcasting, as well as a related statutory license for the creation of ephemeral copies in the process of webcasting. See 17 U.S.C. 114(d)(2) & (f)(2); id. 112(e)(4) (collectively, the webcasting statutory license). Under these provisions, the rates and terms of the statutory license are to be settled through voluntary negotiation among the interested parties or, if the parties cannot agree, through ratemaking proceedings before the Copyright Royalty Judges. The Judges commenced the proceeding below to determine the rates and terms of the statutory webcasting license for the period beginning January 1, 2011 and ending December 31, 2015. The Judges issued their determination on March 9, 2011, and this appeal followed. STATEMENT OF THE FACTS I. Statutory and Regulatory Background The Copyright Act confers on the owner of a copyright a set of exclusive rights in the copyrighted work. See generally 17 U.S.C. 106. In certain cases, however, the Act limits the exclusivity of those rights by granting access to the copyrighted work to any person who satisfies conditions set by law, including payment of a royalty to the copyright owner. Congress enacted the first such statutory licensing

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scheme in 1909. See Recording Industry Assn of America v. Copyright Royalty Tribunal, 662 F.2d 1, 3 (D.C. Cir. 1981). The royalty rates for statutory licenses were once fixed by statute. Since 1976, however, Congress has vested responsibility for setting and adjusting such rates in a series of administrative bodies. See generally 70 Fed. Reg. 30901 (May 31, 2005). The first such agency was the Copyright Royalty Tribunal, which operated for more than fifteen years. See Copyright Act of 1976, Pub. L. No. 94-553, 801, 90 Stat. 2541, 2594. In 1993, Congress dismantled the Copyright Royalty Tribunal and transferred its functions to the Librarian of Congress, who established the royalty rates for statutory licenses with assistance from ad hoc Copyright Arbitration Royalty Panels. See, e.g., Program Suppliers v. Librarian of Congress, 409 F.3d 395, 397 (D.C. Cir. 2005). In 2004, Congress established a new and permanent panel of three Copyright Royalty Judges. See Copyright Royalty and Distribution Reform Act of 2004, Pub. L. No. 108-419, 118 Stat. 2341 (codified at 17 U.S.C. 801 et seq.). The expectation [was] that the Copyright Royalty Judges, appointed to staggered, six-year terms, [would] provide greater decisional stability, yielding the advantages of the former Copyright Royalty Tribunal, but with greater efficiency and expertise. 70 Fed. Reg. at 30901. In contrast to the Copyright Royalty Tribunal, which functioned

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as a free-standing administrative agency, Congress placed the Copyright Royalty Judges within the Library of Congress and made them subordinate to the Librarian of Congress. See 17 U.S.C. 801 et seq. A primary responsibility of the Judges is to make determinations and adjustments of reasonable terms and rates of royalty payments under the statutory license provisions of the Copyright Act. Id. 801(b)(1). Ratemaking proceedings for the royalty payments for statutory licenses take place at regular intervals, and the timing of these proceedings is set by statute. See id. 804. This case involves non-interactive webcasting, also known as internet radio i.e., the transmission over the internet of copyrighted sound recordings without selection by the listener, like a traditional radio station. Webcasting requires a license under the Copyright Act because it involves the performance of copyrighted sound recordings by digital audio transmission. See id. 106(6). Under the webcasting statutory license, the Copyright Royalty Judges have the responsibility to establish reasonable rates and terms for royalty payments that most clearly represent the rates and terms that would have been negotiated in the marketplace between a willing buyer and a willing seller. Id. 114(f)(2); see also id. 112(e)(4). In determining such rates and terms, the Judges must distinguish among different types of webcasting services and base their decision on economic, competitive and

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programming information presented by the parties. Id. 114(f)(2)(B). The royalty rates must also include a minimum fee for each type of service. Id. 114(f)(2)(A), 112(e)(4). The Act encourages parties to reach agreement regarding royalty rates and terms through voluntary negotiation. See id. 803(b); id. 114(f)(3); id. 112(e)(5). Absent a settlement, however, the Copyright Royalty Judges will hold ratemaking proceedings to establish the rates and terms of the royalty payments under the statutory license. Pursuant to detailed procedures set forth in the Act, these proceedings take the form of a multi-party administrative trial. Participating parties must file written direct evidentiary statements, including witness testimony and supporting exhibits, in which they specifically request a particular royalty rate. See id. 803(b)(6)(C)(i); 37 C.F.R. 351.4. After written direct statements are filed, discovery commences. See 17 U.S.C. 803(b)(6)(C)(v), (vi), (ix). If, after an additional settlement period, the parties still have failed to negotiate a settlement, see id. 803(b)(6)(C)(x), the Judges will schedule a hearing for the presentation of the parties direct cases through live witness testimony, including cross-examination and the introduction of evidence. 37 C.F.R. 351.8, 351.10. After any further necessary discovery, the parties prepare and submit written rebuttal statements (when

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directed by the Judges), id. 351.11, followed by proposed findings of fact and conclusions of law, id. 351.14. The Act directs the Judges to issue their determination within 11 months of the post-discovery settlement conference or 15 days before the expiration of the prior royalty rates and terms, whichever is earlier. 17 U.S.C. 803(c)(1); 37 C.F.R. 352.2. The Judges determination shall be supported by the written record and shall set forth the findings of fact relied on. 17 U.S.C. 803(c)(3). If the Judges are confronted with a novel and material question of copyright law, they must obtain a written opinion on the question from the Register of Copyrights, and then apply the Registers conclusions in their determination. Id. 802(f)(1)(B). The Register also reviews the Judges determination and issues corrections of any material legal errors. Id. 802(f)(1)(D). The Register, like the Judges, acts under the direction of the Librarian. See id. 701(a). A final determination of the Copyright Royalty Judges is subject to direct appeal to this Court by any aggrieved participant . . . who fully participated in the proceeding and who would be bound by the determination. Id. 803(d)(1). The Act incorporates by cross-reference the standard of judicial review set forth in section 706 of the Administrative Procedure Act, which provides that the reviewing court shall decide all relevant questions of law, and hold unlawful and set aside agency action

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found to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law, without observance of procedure required by law, or unsupported by substantial evidence. 5 U.S.C. 706; 17 U.S.C. 803(d)(3). If, after applying this standard of review, this Court concludes that the challenged royalty rate determination should be modified or vacated, this Court may either enter its own determination with respect to the amount or distribution of royalty fees and costs, or remand to the Copyright Royalty Judges for further proceedings. 17 U.S.C. 803(d)(3). II. Procedural Background On January 5, 2009, the Copyright Royalty Judges commenced proceedings to determine the rates and terms for royalty payments under the webcasting statutory license for the period beginning January 1, 2011 and ending December 31, 2015. See 76 Fed. Reg. 13026, 13026 (March 9, 2011) (JA 1). The Judges received petitions to participate from 40 parties, most of whom were webcasters. Id. During the subsequent period of voluntary negotiations, many of the parties reached settlement agreements, and only four parties ultimately participated in the proceedings: appellant IBS, on behalf of its members, who are all noncommercial educational webcasters; intervenor College Broadcasters, Inc. (CBI), on behalf of its members, also noncommercial educational webcasters; Live365, Inc., a commercial webcaster; and

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intervenor SoundExchange, Inc., a non-profit corporation run by artists and performers and designated to act as the default clearinghouse for receiving and processing royalties paid under the statutory webcasting license. See generally id.; 72 Fed. Reg. 24084, 24105 (May 1, 2007). With respect to noncommercial educational webcasting, CBI and SoundExchange urged the Judges to adopt the royalty rates and terms set forth in a settlement agreement that CBI and SoundExchange had already entered with one another. 76 Fed. Reg. at 13038-39 (JA 13-14). IBS objected to the adoption of the CBI-SoundExchange agreement, asserting that the rates and terms were unreasonable with respect to small and very small noncommercial webcasters. Id. at 13039 (JA 14). Following the submission of written statements, discovery, and testimony by the parties, the Judges decided to adopt the royalty fee and rate structure set forth in the CBI-SoundExchange agreement. In a thorough and detailed opinion, the Judges explained that the rates and terms in the agreement were demonstrably affordable to noncommercial webcasters and best represent[] what would be paid in the willing buyer/willing seller hypothetical marketplace for noncommercial webcasting. Id. at 13042 (JA 17). The Judges noted that 24 noncommercial webcasters submitted comments in support of adopting the rates and terms in the CBI-SoundExchange

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agreement, and that only IBS objected. Id. at 13039, 13042 (JA 14, 17). With respect to IBSs position, the Judges explained that IBS had failed to present one iota of evidence supporting its proposal for different rates and terms for small and very small noncommercial webcasters. Id. at 13041 (JA 16). Moreover, the Judges observed, IBS had not even attempted to demonstrate that its alternative rate proposal satisfied the statutory requirement that the royalty rates reflect what would be negotiated in the marketplace between a willing buyer and a willing seller. Id.; see also 17 U.S.C. 114(f)(2). The Judges also adopted separate royalty rates and terms for commercial webcasting. See 76 Fed. Reg. at 13027-38. (JA 2-13). Although Live365 initially filed an appeal with regard to that portion of the determination, it later withdrew from this litigation. Accordingly, the commercial webcasting royalty rates and terms are not before this Court. SUMMARY OF ARGUMENT IBS has not identified any basis for reversing or vacating the noncommercial webcasting royalty rates and terms established by the determination below. IBS asserts that the determination violates section 114(f)(2)s requirement that the rates and terms distinguish among services, see 17 U.S.C. 114(f)(2), but fails to provide any argument or explanation regarding how or why the determination runs afoul of

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this requirement. IBSs conclusory and unsupported assertion falls far short of presenting a serious challenge to the merits of the Judges determination. IBSs constitutional challenges also fail. IBS contends that section 803(d)(3) of the Copyright Act violates Article III by empowering this Court to enter its own determination if it concludes that the Copyright Royalty Judges determination is unlawful under the standard of review set forth in section 706 of the Administrative Procedure Act. 17 U.S.C. 803(d)(3). As an initial matter, this Court may dismiss the argument because IBS has not presented a case or controversy implicating the validity of the provision it seeks to challenge. But even if IBS were permitted to mount a facial challenge to section 803(d)(3), IBS does not identify any way in which the provision offends Article III, let alone satisfy its burden of demonstrating that no set of circumstances exists under which the Court could permissibly enter its own determination. And even if Article III did wholly prohibit this Court from entering a determination under section 803(d)(3), the proper response would not be, as IBS asserts, to strike down the entire statutory scheme for determining royalty rates, but rather to excise the offending portion of the provision, leaving the determination below and the rest of the Copyright Act intact. IBS also contends that Congress exceeded its power under the Appointments Clause by vesting the right to appoint the Copyright Royalty Judges in the Librarian

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of Congress. IBS misunderstands the applicable law and confuses statutory labels with constitutional authority. Although the Judges are officers under the

Appointments Clause because they exercise significant authority pursuant to the laws of the United States, Buckley v. Valeo, 424 U.S. 1, 126 (1976), they are subordinate to the Librarian of Congress, a principal officer of the United States appointed by the President with advice and consent of the Senate. 2 U.S.C. 136. The Judges thus fall within the category of inferior officers for whom Congress may vest appointment in the President alone, in the Courts of Law, or in the Heads of Departments. U.S. Const., art. II, 2, cl. 2; Edmond v. United States, 520 U.S. 651, 663 (1997). In arguing that the Librarian is not the head of a Department, IBS overlooks the Supreme Courts recent decision in Free Enterprise Fund, et al. v. Public Company Accounting Oversight Board, et al., 130 S. Ct. 3138, 3163 (2010), which definitively holds that the term Department in the Appointments Clause is not limited to Cabinet agencies. Moreover, although the Library is regarded as a legislative entity for various statutory purposes, the relevant history of the Library establishes its status as a Department within the meaning of the Appointments Clause. The Librarian is, and always has been, accountable to the President by virtue of the Presidents power of appointment and removal, and accordingly qualifies as the

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Head of a Department with authority to appoint inferior officers within the Library of Congress, including the Copyright Royalty Judges. STANDARD OF REVIEW Congress specified that the Copyright Royalty Judges determinations shall be reviewed under the standard set forth in section 706 of the Administrative Procedure Act (APA). See 17 U.S.C. 803(d)(3). Accordingly, this Court will affirm the

Judges determination as long as the Judges have examine[d] the relevant data and articulate[d] a satisfactory explanation for [their] action including a rational connection between the facts found and the choice made. Wisconsin Public Power, Inc. v. FERC, 493 F.3d 239, 256 (D.C. Cir. 2007) (internal quotation omitted). ARGUMENT I. IBSs Attack On The Merits Of The Royalty Rate Determination Is Baseless. IBSs sole challenge to the merits of the royalty rate determination consists of three sentences which assert that the determination violates section 114(f)(2)s requirement that the rates and terms distinguish among the different types of eligible non-subscription services and the different types of non-subscription transmission services. 17 U.S.C. 114(f)(2)(A) & (B); Appellants Br. 17-18. The brief does not provide any argument regarding how or why the royalty rate determination runs afoul of section 114(f)(2), and as such, falls far short of presenting this Court with a 13

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serious claim that the rate determination is inconsistent with any of the Judges obligations under the Copyright Act. Although this Court need not and should not go any further in considering IBSs merits challenge, the government notes that IBS may be attempting to revive its argument during the administrative proceedings that the Judges should adopt separate royalty rates for two purported subgroups of noncommercial webcasters: small and very small. See 76 Fed. Reg. 13026, 13040 (March 9, 2011). The Judges thoroughly explained in their final determination, however, that IBS failed to provide one iota of evidence to support its proposal, which amounted to nothing more than . . . two arbitrary subcategories of noncommercial webcaster, separated by unsupported amounts of monthly aggregated tuning hours, in an effort to obtain lower royalty rates for its members. Id. at 13041; see also id. at 13038-42 (describing in detail the many flaws with IBSs arguments and proposed rates). IBS does not and cannot point to any basis for vacating the Judges decision to reject IBSs unsupported attempt to create new subcategories of noncommercial webcasters. II. This Court Has Jurisdiction To Review Challenges To The Copyright Royalty Judges Rate Determinations. IBS additionally argues that the determination below is void because section 803(d) of the Copyright Act provides that this Court may, if it concludes that the Copyright Royalty Judges determination is unlawful under the standard of review set 14

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forth in the APA, 5 U.S.C. 706, either vacate the determination and remand to the Judges for further proceedings, or instead enter its own determination with respect to the amount or distribution of royalty fees and costs. 17 U.S.C. 803(d)(3). According to IBS, this Court does not have authority under Article III to enter its own determination, and thus must strike down the entire scheme for determining royalty rates under the Act. Appellants Br. 9-12. This argument fails for several reasons. First, because IBS has not seriously attempted to challenge the merits of the determination, this case does not actually provide this Court with an occasion to vacate the Judges decision and enter its own determination. In this sense, it is IBS that asks the Court to engage in decisionmaking outside the scope of its Article III authority: IBS has not presented a case or controversy implicating the validity of the provision it seeks to challenge. Moreover, even if Article III permitted IBS to mount a facial challenge to section 803(d)(3), IBS has not demonstrated that the provision is unconstitutional. Section 803(d)(3) expressly incorporates the longstanding and wholly uncontroversial standard of judicial review articulated in the APA, 5 U.S.C. 706. It additionally provides that if, after applying the APAs standard of review, this Court concludes that the Copyright Royalty Judges determination should be modified or vacated, this Court may either remand for further proceedings, or alternatively enter its own

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determination with respect to the amount or distribution of royalty fees and costs. 17 U.S.C. 803(d)(3). IBS asserts that this last portion of the provision is unconstitutional, but fails to identify any way in which a judicial determination of this kind would offend Article III. Moreover, in order to bring a successful facial challenge, IBS would have to establish that no set of circumstances exists under which this Court could enter its own royalty rate determination in a manner consistent with Article III. United States v. Salerno, 481 U.S. 739, 745 (1987) (emphasis added); see also, e.g., Reno v. Flores, 507 U.S. 292, 301 (1993); Rancho Viejo, LLC v. Norton, 323 F.3d 1062, 1077-78, 1078 n.21 (D.C. Cir. 2003). IBS has not even attempted to satisfy that burden, nor could it. Congress frequently empowers courts to amend or modify agency decisions rather than remanding them, and the government is not aware of any judicial decisions expressing Article III concerns about exercising this sort of authority. See, e.g., 35 U.S.C. 203(b); 38 U.S.C. 7252(a); 42 U.S.C. 405(g); 49 U.S.C. 1153(b)(3); 49 U.S.C. 46110(c). IBSs challenge rests entirely on an 80-year-old case, Federal Radio Commission v. General Electric Co., 281 U.S. 464 (1930) (Federal Radio I), in which the Supreme Court held that it lacked jurisdiction to review a decision by the Court of Appeals of the District of Columbia because that court was a legislative

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court created pursuant to Article I and had entered the challenged decision in its administrative, rather than judicial, capacity. See id. at 467-68. IBSs argument appears to be that section 803(d)(3) is unconstitutional because it confers responsibilities on this Court that are akin to the administrative review exercised by the Court of Appeals of the District of Columbia in issuing the determination challenged in Federal Radio I. Appellants Br. 11. The Radio Act provided at the time that the Federal Radio Commissions licensing decision could be appealed to the Court of Appeals of the District of Columbia, which would not only review all papers and evidence presented upon the [licensing] application, but could also take additional evidence upon such terms and conditions as it may deem proper, and then alter or revise the decision appealed from and enter such judgment as to it may seem just. Federal Radio I, 281 U.S. at 467. In other words, the Court of Appeals review was de novo in every respect the provision for appeal did no more than make [the] court a superior and revising agency in the same field. Id. Section 803(d)(3) is not comparable in any meaningful sense. Section 803(d)(3) authorizes this Court to enter its own determination only after finding the Copyright Royalty Judges determination to be unlawful pursuant to the highly deferential standard of review set forth in the APA. Unless the Judges decision is, for example, arbitrary and capricious, or unsupported by substantial evidence, this

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Court will affirm their judgment. See 5 U.S.C. 706; see also SoundExchange, Inc. v. Librarian of Congress, 571 F.3d 1220, 1225 (D.C. Cir. 2009) (observing that the Court owe[s] substantial deference to the decisions of the Copyright Royalty Judges). This is the same standard of judicial review that the Supreme Court subsequently upheld in Federal Radio Commission v. Nelson Bros. Bond & Mortgage, Co., 289 U.S. 266 (1933) (Federal Radio II). Following Federal Radio I, Congress amended the Radio Act so as to limit the Court of Appeals review to questions of law, providing that findings of fact by the commission, if supported by substantial evidence, shall be conclusive unless it shall clearly appear that the findings of the commission are arbitrary or capricious. Id. at 275-76. Relying on Federal Radio I, the respondents in Federal Radio II argued that the Supreme Court lacked jurisdiction to review the Court of Appeals decision reversing the challenged Federal Radio Commission determination. The Supreme Court rejected that

argument, explaining that in sharp contrast with the previous grant of authority, the amended standard of review manifestly demand[ed] judicial, as distinguished from administrative, review. Id. at 276. Section 803(d)(3) is also distinguishable from the judicial review provision in Federal Radio I because, if this Court were to decide to enter its own determination regarding royalty rates in a particular case, it would do so based on the record

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amassed by the Copyright Royalty Judges. Nothing in section 803(d)(3) suggests that this Court should or could take additional evidence, Federal Radio I, 281 U.S. at 467, or engage in any other inquiries resembling administrative proceedings.2 In short, IBS has failed to provide any basis for questioning the constitutionality of the standard for judicial review set forth in section 803(d)(3). But even assuming for arguments sake that Article III prohibits this Court from entering its own determination pursuant to section 803(d)(3), the offending sentence in the statute would not require this Court to strike down the entire scheme established by Congress for determining royalty rates under the Copyright Act. The Supreme Court has observed that, [g]enerally speaking, when confronting a constitutional flaw in a statute, we try to limit the solution to the problem, severing any problematic portions while leaving the remainder intact. Free Enterprise Fund, et al. v. Public Co. Accounting Oversight Board, et al., 130 S. Ct. 3138, 3161 (2010) (internal quotation omitted). Likewise, this Court has recognized that in order to avoid invalidating more of a statute than necessary, we are to start with a presumption in Although, as explained, Federal Radio I is easily distinguishable from the present case, we note that commentators have questioned Federal Radio Is precedential value following the Supreme Courts decision in United States v. First City National Bank of Houston, et al., 386 U.S. 361 (1967), which upheld a 1966 statute providing for de novo judicial review of administrative decisions to permit certain bank mergers. See 20 Charles Alan Wright & Mary Kay Kane, Federal Practice and Procedure 16 (2009) (After this decision, it is hard to see what vitality, if any, is left in the first Federal Radio Commission case.). 19
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favor of severability. Bismullah v. Gates, 551 F.3d 1068, 1071 (D.C. Cir. 2009) (internal quotation and alteration omitted). Accordingly, [u]nless it is evident that the legislature would not have enacted those provisions which are within its power, independently of that which is not, the invalid part may be dropped if what is left is fully operative as a law. Buckley v. Valeo, 424 U.S. 1, 108 (1976) (internal quotation omitted); see also, e.g., United States v. Booker, 543 U.S. 220, 246 (2005); Alaska Airlines, Inc. v. Brock, 480 U.S. 678, 685 (1987). IBS cannot dispute that the Copyright Act would be fully operative as a law even if this Court were to excise the portion of section 803(d)(3) empowering it to enter its own rate determination. This Court would still have authority to fully review the Copyright Royalty Judges determinations in accordance with section 803(d)(3)s incorporation of the standard of review set forth in the APA. And this Court would still have authority to affirm, reverse, or vacate the Judges determination, and to remand the case to the Judges for further proceedings consistent with the Courts holdings. IBS has failed to point to any evidence that Congress would have declined to enact the Copyright Acts entire scheme for determining royalty rates if it lacked authority to empower this Court to enter its own determination rather than reversing or remanding for further proceedings. Accordingly, the determination below is valid regardless of IBSs Article III challenge to section 803(d)(3).

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III.

Congress Constitutionally Vested The Power To Appoint The Copyright Royalty Judges In The Librarian Of Congress. The Appointments Clause provides that the President shall nominate, and by

and with the Advice and Consent of the Senate, shall appoint . . . Officers of the United States. U.S. Const., art. II, 2, cl. 2. Congress may, however, vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments. Id. IBS cannot demonstrate that Congress exceeded its power under this provision by vesting the right to appoint the Copyright Royalty Judges in the Librarian of Congress. The Copyright Royalty Judges are inferior officers who are constitutionally appointed by the Head of a Department. A. The Copyright Royalty Judges Are Inferior Officers Under The Appointments Clause.

Not all federal appointees are Officers of the United States in the constitutional sense, but those who are must be appointed in conformance with the Appointments Clause. See U.S. Const., art. II, 2, cl. 2; Buckley v. Valeo, 424 U.S. 1, 125-26 (1976) (per curiam). An officer is a federal official who exercises significant authority pursuant to the laws of the United States. Buckley, 424 U.S. at 126. The Appointments Clause divides all officers into two categories: principal officers and inferior officers. See U.S. Const., art. II, 2, cl. 2; United States v.

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Germaine, 99 U.S. 508, 509-10 (1878). Principal officers must be appointed through nomination by the President with the advice and consent of the Senate. U.S. Const., art. II, 2, cl. 2; Buckley, 424 U.S. at 132. Congress is permitted, however, to make inferior officers appointable by the President alone, the Courts of Law, or Heads of Departments. U.S. Const., art. II, 2, cl. 2; Buckley, 424 U.S. at 132. Although IBS asserts that the Copyright Royalty Judges are principal officers, the precedent of the Supreme Court and this Court establish that the Copyright Royalty Judges are inferior officers. Both principal and inferior officers exercise . . . significant authority on behalf of the United States. Edmond v. United States, 520 U.S. 651, 662 (1997). Although there is no exclusive criterion for distinguishing between the two, [g]enerally speaking, the term inferior officer connotes a relationship with some higher ranking officer or officers below the President: Whether one is an inferior officer depends on whether he has a superior. Id. The Supreme Court has accordingly explained that an inferior officer is an officer whose work is directed and supervised at some level by others who were appointed by Presidential nomination with the advice and consent of the Senate. Id. at 663. This analysis easily encompasses the Copyright Royalty Judges. The Judges are limited to six-year terms,17 U.S.C. 802(c), during which they are subordinate

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to the Librarian of Congress, a principal officer of the United States appointed by the President with the advice and consent of the Senate, 2 U.S.C. 136.3 The Judges authority is limited to matters relating to the establishment of royalty rates for a small number of compulsory licenses enumerated in the Copyright Act. See 17 U.S.C. 801(b). The Judges are expressly required to act in accordance with regulations issued by . . . the Librarian of Congress. Id. 803(a)(1). Any procedural regulations issued by the Judges themselves, including rules governing royalty ratemaking proceedings, must be approved by the Librarian. Id. 803(b)(6). The Librarian is authorized to promulgate binding ethical rules and to enforce those rules against the Judges. Id. 802(h), (i). The Librarian also causes the Judges decisions to be published. Id. 803(c)(6). The Judges lack space or administrative resources, and are wholly reliant on the Librarian for support. Id. 801(d), (e). And if the Judges find themselves idle between ratemaking proceedings, they may be assigned other

Prior to Congresss establishment of the Copyright Royalty Judges in 2004, royalty rates for statutory licenses were set by the now-defunct Copyright Royalty Tribunal. See generally 70 Fed. Reg. 30901 (May 31, 2005). Because the Tribunal was a free-standing agency, not contained within any executive department and not supervised by any executive officer, Congress provided that the Tribunals members be appointed by the President with the advice and consent of the Senate. Congress could have established the Copyright Royalty Judges on the same model, but instead opted to make the Judges inferior officers appointed by the Librarian, the Head of the Library, who in turn is subject to plenary oversight by the President. The Constitution permits Congress to choose either of these routes in complying with the Appointments Clause. 23

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duties at the discretion of the Register of Copyrights, who likewise acts under the direction of the Librarian. Id. 801(b)(8); id. 701(a). Through the Register, the Librarian also has authority to review and correct the legal determinations of the Copyright Royalty Judges. In creating the Judges, Congress reserved to the Register who acts under the Librarians general direction and supervision the authority to interpret the copyright laws. The Copyright Act accordingly directs the Judges to obtain a written opinion from the Register on all novel material questions of copyright law, and stipulates that the Judges shall apply the Registers conclusions in their ratemaking determinations Id.

802(f)(1)(B). Moreover, the Register has the power to review for legal error all determinations by the Copyright Royalty Judges and to correct[] any such errors in the Judges reasoning or conclusions. Id. 802(f)(1)(D). Such correct[ions] are not only expressly made part of the record in the cases in which they arise, but are also binding as precedent on the Judges in future cases. Id. Thus, the Copyright Royalty Judges are officers whose work is directed and supervised at some level by others who were appointed by Presidential nomination with the advice and consent of the Senate. Edmond, 520 U.S. at 663. Finally, the Librarian enjoys the authority to remove the Copyright Royalty Judges for misconduct or neglect of duty. 17 U.S.C. 802(i). The Supreme Court

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has held that [t]he power to remove officers . . . is a powerful tool for control, Edmond, 520 U.S. at 664, and indicated that officers are inferior even if they may be removed only for cause, see Morrison v. Olson, 487 U.S. 654, 663, 671 (1988) ([T]he fact that [the officer] can be removed by the Attorney General indicates that she is to some degree inferior in rank and authority.); see also Free Enterprise Fund, et al. v. Public Co. Accounting Oversight Board, et al., 130 S. Ct. 3138, 3153 (2010) (discussing Morrison with approval).4 Indeed, the Copyright Royalty Judgess status as inferior officers was recently affirmed by the United States District Court for the District of Columbia. See Live365, Inc. v. Copyright Royalty Board, 698 F. Supp. 2d 25 (D.D.C. 2010). The plaintiff, Live365, sought to enjoin the proceedings below here on the ground that the Copyright Royalty Judges were appointed in violation of the Appointments Clause. Denying Live365s motion for a preliminary injunction, the district court concluded: Upon careful examination . . . it appears that the CR Board judges are in fact sufficiently subordinate to both the Librarian of Congress and the Register of

In Free Enterprise Fund, the Court struck down a statutory scheme that provided two layers of tenure protection: the inferior officer could be removed by the principal officer only for cause, and the principal officer could be removed by the President only for cause. 130 S. Ct. 3153-54. Because the Librarian may be removed at will by the President, see infra pp. 30-33, the statutory scheme at issue here falls squarely under Morrison, which upheld one level of protected tenure separat[ing] the President from an officer exercising executive power. Id. at 3153. 25

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Copyrights to qualify as inferior officers, and thus, their appointments by the Librarian do not offend the Appointments Clause. Id. at 39. IBS nonetheless asserts that the Judges are principal officers [b]ecause their statutory duties include, but are not limited to, presiding over hearings, commanding testimony, [and] compelling discovery . . . without supervision of the Librarian. Appellants Br. 14. This argument fails for several reasons. First, this Court has held that not everyone who take[s] testimony, conduct[s] trials, rule[s] on the admissibility of evidence, and ha[s] the power to enforce compliance with discovery orders is even an officer within the meaning of the Appointments Clause, let alone a principal officer. Landry v. Fed. Deposit Ins. Corp., 204 F.3d 1125, 1134 (D.C. Cir. 2000) (internal quotation omitted). At least some Administrative Law Judges (ALJs), for example, are employees, not officers. Id. Although the Copyright Royalty Judges, unlike the ALJs in Landry, issue decisions that are final, this was equally true of the special tax trial judges whom the Supreme Court determined to be inferior officers in Freytag v. Commissioner of Internal Revenue, 501 U.S. 868, 88182 (1991). Second, IBS misunderstands what it means to be under supervision for the purpose of determining whether a federal appointee is an inferior officer. Although the Copyright Royalty Judges enjoy independence in the conduct of their

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proceedings, they expressly remain [s]ubject to the Registers interpretation of applicable law. See 17 U.S.C. 802(f)(1)(A)(I). The Registers power to review and correct[] any legal errors in the Judges determinations, id. 802(f)(1)(D), along with the host of other restrictions described above, see supra pp. 22-25, more than satisfy the requirement that the Judges work be directed and supervised at some level. Edmond, 520 U.S. at 663. Indeed, the Supreme Court has flatly rejected the notion that inferior officers must be subject to interference with their procedural and factual determinations in particular cases. In Edmond, for example, the Court held that civilian judges appointed to the Coast Guard Court of Appeals by the Secretary of Transportation were inferior officers, despite the fact that they (i) cannot be directed to decide particular cases in particular ways in the first instance, (ii) cannot be removed based on their rulings in individual cases, and (iii) enjoy highly deferential review from the Court of Appeals for the Armed Forces. See id. at 664-65. Indeed, the civilian Coast Guard judges not only weigh evidence and make findings of law and fact, including credibility determinations, but also wield other, more significant powers, including review of court-martial proceedings that result in the most serious sentences, including . . . death, dismissal . . ., dishonorable or bad-conduct discharge, or confinement for one year or more. Id. at 662 (internal quotation omitted). The

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Copyright Royalty Judges authority to set royalty payment rates for statutory licenses cannot possibly be more principal than the authority of Coast Guard judges to review death sentences. Likewise, the Supreme Court concluded that the independent counsel in Morrison were inferior officers even though they enjoyed full power and independent authority to exercise all investigative and prosecutorial functions and powers of the Department of Justice, the Attorney General, and any other officer or employee of the Department of Justice, 487 U.S. at 662, 671-72 (internal quotation omitted). So, too, did the Court conclude that the special tax trial judges in Freytag were inferior officers despite issuing final decisions and exercis[ing] independent authority. 501 U.S. at 882; see also Live365, 698 F. Supp. 2d at 39-40 (observing that [i]n both Edmond and Freytag, the judges were held to be inferior officers despite the fact that their duties included taking testimony, ruling on the admissibility of evidence, issuing protective orders, and issuing subpoenas, and the CR Board judges exercise many of those same responsibilities.). The district court in Live365 thus correctly concluded that the guiding precedent of the Supreme Court seemingly requires the conclusion that despite the level of autonomy the CR Board judges exercise, the degree of direction and supervision exercised over them by the Librarian

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and the Register renders them inferior rather than principal officers. Live365, 698 F. Supp. 2d at 40. B. The Librarian Of Congress Is The Head Of A Department Within The Meaning Of The Appointments Clause.

IBS argues in the alternative that the Copyright Royalty Judges are inferior officers but that their appointment by the Librarian of Congress is unconstitutional because the Librarian is not a Head[] of Department in whom Congress may vest appointment authority. Appellants Br. 15-17. This argument is also wrong. For the purposes of the Appointments Clause, a Department is any principal agency in the Executive Branch or at least [with] some connection [to] that branch. Buckley, 424 U.S. at 127; see also Free Enterprise Fund, 130 S. Ct. at 3162-63. The Library of Congress readily qualifies as a Department under this standard. The Presidents power to appoint and remove the Librarian reflects Congresss purposeful and explicit decision to place the Library within the Executive Branch for Appointments Clause purposes. The Librarys executive nature in this respect is further confirmed by many of the functions it performs, including the particular function at issue in this case the administration of copyright law. While certain components of the Library, particularly the Congressional Research Service, are directly charged with serving Congress, it is neither unusual nor constitutionally problematic for a Department under the Appointments Clause to include components 29

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charged with providing assistance to other branches.

For the purposes of

constitutional separation of powers, all that matters is that the Head of the Library is accountable to the President and is appointed in conformity with the Appointments Clause. 1. The Librarian Of Congress Is Accountable To The President.

The Librarian of Congress is appointed by the President, by and with the advice and consent of the Senate. 2 U.S.C. 136. No statute limits the Presidents oversight of the Librarian, nor has Congress reserved to itself the power to review or influence the Librarians conduct in office. Cf. Bowsher v. Synar, 478 U.S. 714, 73031 (1986) (holding that the Comptroller General is a congressional agent because Congress retained removal authority). The Librarian make[s] rules and regulations for the government of the Library, 2 U.S.C. 136, and in discharging that responsibility, he is accountable to the President alone. An incident of the Presidents appointment power is that there are no limitations on the Presidents power to remove the Librarian. See Ex parte Hennen, 38 U.S. (13 Pet.) 230, 259 (1839); Kalaris v. Donovan, 697 F.2d 376, 389 (D.C. Cir. 1983). It has long been recognized that the Librarian is removable by the President at will. See, e.g., 29 Cong. Rec. 378 (1896) (Rep. Bingham) (President Cleveland to-day can by a mere stroke of his pen change or remove the Librarian of Congress

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for any cause or reason good to himself, or for a more efficient administration of the Library.). President Jackson in fact removed the Librarian of Congress after the Librarian publicly criticized President Jackson and his family. Id. In turn, President Lincoln later removed the Librarian whom Jackson had appointed and replaced him with a Republican. See About the Librarian, Previous Librarians of Congress, John Silva Meehan, http://www.loc.gov/about/librarianoffice/meehan.html (last visited Nov. 2, 2011). Indeed, the Presidents power to appoint and remove the Librarian of Congress is as venerable as the Library of Congress itself. The first Librarian was appointed by President Thomas Jefferson in 1802. See Act of January 26, 1802, 2 Stat. 128. The 1802 Act called for a librarian to be appointed by the President of the United States solely, [to] take charge of the said library. Id. 3, 2 Stat. 129. After Congress assigned to the Librarian responsibility for the administration of the federal copyright laws, see Copyright Act of 1870, 85, 16 Stat. 212, Congress enacted additional legislation requiring Senate confirmation of the Librarians appointment. See Act of February 19, 1897, 29 Stat. 544. The historical record makes clear that Congress crafted the 1897 legislation specifically to satisfy the requirements of the Constitution. Members of Congress debated the constitutional status of the Library, including explicit consideration of the Appointments Clause. See, e.g., 29 Cong. Rec.

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315 (1896) (Rep. Quigg); id. at 319 (Rep. Dockery); id. at 386 (Rep. Cannon). Some proposed that the Library should be under the control of Congress, with its employees appointed by congressional committees. See, e.g., id. at 385 (Rep. Cummings). Others insisted that with respect to an office of this kind, Congress should not depart from the constitutional provision that the President shall nominate and by and with the advice and consent of the Senate appoint. Id. at 389 (Rep. Richardson). The latter view prevailed. Congress expressly acknowledged in the 1897 Act the Librarians executive functions, see 29 Stat. 545 (appropriating funds for activities under the direction of the Librarian of Congress, necessary for the execution of the copyright law), and accordingly directed that the Librarian shall be appointed by the President, by and with the advice and consent of the Senate, 29 Stat. 544. The implications of this decision were not lost on Congress. One opponent of the 1897 legislation warned: By this bill, when enacted into law, Congress forever puts it out of their power to control the Library. It now loses its name and function as a Congressional Library, and becomes a national or Presidential Library, beyond the control of Congress, except by the Presidents consent. 29 Cong. Rec. 977 (1897) (Sen. Call). The 1897 statute, now codified at 2 U.S.C. 136, reflects Congresss recognition that the Library is not, for purposes of the Appointments Clause, an organ

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of Congress itself. Rather, it is an executive Department led by a principal officer who exercis[es] significant authority pursuant to the laws of the United States, Buckley, 424 U.S. at 126, and must therefore be appointed in conformity with the Appointments Clause. 2. The Library Of Congress Is A Department Within The Meaning Of The Appointments Clause.

Congresss deliberate choice to vest the appointment of the Librarian in the President, subject to confirmation by the Senate, leaves little doubt as to the status of the Library as a Department under the Appointments Clause. At the time of the framing, the term department referred to a separate allotment or part of business; a distinct province, in which a class of duties are allotted to a particular person. Free Enterprise Fund, 130 S. Ct. at 3162-63 (quoting 1 N. Webster, American Dictionary of the English Language (1828) (def. 2) (1995 facsimile ed.)). As used in the Appointments Clause, the term has reference to the subdivision of the power of the Executive into departments, for the more convenient exercise of that power. Germaine, 99 U.S. at 510; see Buckley, 424 U.S. at 127 (Departments in the Appointments Clause are themselves in the Executive Branch or at least have some connection with that branch). The Library possesses all of the features characteristic of recognized Departments under the Appointments Clause. It is a free-standing entity, not 33

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contained within any other administrative agency. It indisputably performs executive functions, including in particular the administration of the copyright laws and has been accorded deference from the courts for its interpretations of those laws. See, e.g., Mazer v. Stein, 347 U.S. 201, 211-13 (1954); Cablevision Systems Dev. Co. v. Motion Picture Assn of America, Inc., 836 F.2d 599, 608-10 (D.C. Cir. 1988) (Copyright Office regulations are entitled to Chevron deference); cf. Buckley, 424 U.S. at 139 (Legislative power, as distinguished from executive power, is the authority to make laws, but not to enforce them or appoint the agents charged with the duty of such enforcement. (internal quotation omitted)). And most importantly, the Library is headed by a principal Officer[] of the United States who is appointed by the President and removable at his will. The Library accordingly is subject to the exercise of political oversight and share[s] the Presidents accountability to the people. Freytag, 501 U.S. at 886. In urging that the Library is nonetheless not a Department, IBS cites the Supreme Courts decision in Freytag. Appellants Br. 16. But neither Freytags holding nor its reasoning support IBSs contention. The Freytag Court refused to hold that the term department is limited to the Cabinet agencies, and it expressly reserved the question whether the heads of non-Cabinet principal agencies may appoint inferior officers. 501 U.S. at 886-87 & n.4. Moreover, the Court has now

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definitively answered that question in the affirmative, holding in Free Enterprise Fund that although the Securities Exchange Commission is not a Cabinet agency, it constitutes a Department for the purposes of the Appointments Clause. See 130 S. Ct. at 3162-63. The Court explained that this reading of the Appointments Clause is consistent with the historical definition of department, and with Congresss early practice of authorizing the Postmaster General to appoint inferior officers without the title of Secretary or any role in the Presidents Cabinet. Id. at 3163. Free Enterprise Fund specifically endorses the reasoning in Justice Scalias Freytag concurrence, which explained that it would be a most implausible disposition to hold that a non-Cabinet principal agency is not a Department under the Appointments Clause. Freytag, 501 U.S. at 919-20 (Scalia, J., concurring in part and concurring in judgment); Free Enterprise Fund, 130 S. Ct. at 3162. Under such a regime, the Librarian would lack the authority to appoint not only the Copyright Royalty Judges, but any inferior officers within the Library. These officers would instead have to be appointed by the President, the courts of law, or the Secretary of Something Else. Freytag, 501 U.S. at 919-20. Such a result would make little sense, and the Constitution does not require it. Moreover, the congressional sponsors of the 1897 legislation certainly believed the Library to be a department under the Constitution. One member specifically

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argued: This Library of Congress is a department of the Government. It is an executive department and should be under the control of the executive branch. . . . [It] is an executive bureau, and as such should be presided over by some executive officer with authority to appoint and remove its employees. 29 Cong. Rec. 318-19 (1896) (Rep. Dockery). Another member urged rejection of a proposal for Congress to take control of the Library, explaining: [W]e have various Departments of the Government. The Presidents and the heads of these Departments make appointments of subordinates. Their action is reported to Congress. We haul them up, drag them over the coals, if they fail to perform their duty. We have the powers of impeachment; we criticize and investigate. And that is as it ought to be. Id. at 386 (Rep. Cannon). The Fourth Circuit thus correctly held, in the only appellate decision to address the constitutional status of the Library of Congress, that Congress did not violate the Appointments Clause by vesting the Librarian with the power to appoint the Register of Copyrights. See Eltra Corp. v. Ringer, 579 F.2d 294, 298-301 (4th Cir. 1978). In a unanimous decision, the court of appeals concluded that the Librarians appointment of the Register satisfies the Constitution because the Copyright Office is an executive office, operating under the direction of an Officer of the United States and as such is operating in conformity with the Appointments Clause. Id. The same

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is true of the Copyright Royalty Judges. See Live365, 698 F. Supp. 2d at 43 (concluding that the Librarian qualif[ies] as a Head of Department with executive authority to appoint inferior officers such as the Copyright Royalty Judges). 3. IBS Mistakes Statutory Labels For Constitutional Authority.

The gravamen of IBSs argument is that, because this Court has described the Library of Congress as a Congressional agency, the Librarian cannot be head of an executive department as that term is used in Article II . . . and the Librarians actions are not those of a head of department subject to Presidential control. Appellants Br. 16-17 (internal quotation omitted). That contention is self-evidently false. It is the President, not Congress or any congressional agent, who appoints the Librarian, and the President may remove him at will. 2 U.S.C. 136. IBS cannot reconcile its argument with this provision, nor with the two-hundred-year history of the Librarians accountability to the President, which clearly demonstrates that Congress specifically structured the Library of Congress to be an executive Department within the meaning of the Appointments Clause. IBSs mistaken analysis appears to look in part to the Librarys name, which dates back to its original purpose of holding Congresss books. See Act of January 26, 1802, 1, 2 Stat. 128-29. Even in that first Act, however, Congress provided for

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appointment of the Librarian by the President, and authorized the President and Vice President to borrow books. Id. 3, 4, 2 Stat. 129. President Jefferson actively supervised the first Librarian, John Beckley, providing a catalogue of needed books that formed the basis of the Librarys purchasing program over its first four years. See William Dawson Johnston, 1 History of the Library of Congress:1800-1864 3637 (1904). President Jeffersons purchasing instructions were direct and detailed: [N]eat bindings, not splendid ones . . . good editions, not pompous ones. Library of Congress, Librarians of Congress: 1802-1974 20 (1975). In 1816, privileges of using the Library were extended to the Attorney General, and soon after, those privileges were extended to other cabinet members. See John Y. Cole, For Congress and the Nation: A Chronological History of the Library of Congress 12, 15 (1979). Congress also directed the Library to serve the Judicial Branch. See 2 U.S.C. 137 (power of Supreme Court Justices to issue regulations for the use of the Librarys law department); id. 137c (right of Judges of the D.C. Circuit to withdraw books). By the time that the Library opened its doors to the public in 1897, it had assume[d] national proportions. Ben Perley Poore, The Library of Congress, 46 Harpers New Monthly Mag. 41, 49 (1873). President Cleveland, in his first annual message to Congress, described the Library as the principal library of the Government, which did not function merely as a research tool for Congress, but also

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ensured the accessibility of books to the public and served as the depository library for copyrighted works. Glover Cleveland, First Annual Message (First Term) to the Congress of the United States (Dec. 8, 1885), available at

http://www.presidency.ucsb.edu/ws/?pid=29526#axzz1ca1unU5r; see also R.R. Bowker, The American National Library, 21 Lib. J. 357 (1896) ([T]he Library of Congress, so called, is now the library of the nation as well as of Congress.). In 1870, Congress assigned the Librarian principal responsibility in the federal government for the administration of the copyright laws. See 16 Stat. 212 (1870). Congress also has charged the Library with public archival and preservation functions similar to those of the National Archives, an executive agency. Compare 2 U.S.C. 179p (national film registry collection); id. 1711 (national sound-recording preservation program) with 44 U.S.C. 2114 (preservation of films and sound recordings by the Archivist). Thus, as Congress recognized in 1897 when it conformed the Librarians appointment to the requirements of the Appointments Clause, it is a misnomer to call it the Congressional Library. It is a great national Library and belongs to the Government of the United States. 29 Cong. Rec. 318-19 (1896) (Rep. Dockery); accord id. at 387 (Rep. Stone); id. (Rep. Fairchild). Likewise, President Theodore Roosevelt observed in a message to Congress a few years later: [T]he Federal Library, which, though still the Library of Congress, and

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so entitled, is the one national library of the United States. Theodore Roosevelt, Message to the Senate and the House of Representatives (Dec. 3, 1901), available at http://www.presidency.ucsb.edu/ws/?pid=29542#axzz1ca1unU5r. IBS bases its argument primarily on this Courts decision in Keeffe v. Library of Congress, 777 F.2d 1573, 1574 (D.C. Cir. 1985), a First Amendment case describing the Library in dicta as a congressional agency. The Court cited 2 U.S.C. 171(1), which states that Congress in 1800 established for itself a library. But neither Keeffes description of the Library nor section 171(1) undermine the historical reality that the Librarian from the outset has been a Presidential appointee, subject to Presidential supervision, and that in 1897, Congress removed any doubt that the Library is, for the purposes of the Appointments Clause, an executive Department. The Fourth Circuit correctly recognized in Eltra that the Librarys codification in Title 2 of the United States Code is simply a statutory label that does not determine the Librarys status under the Constitution. See 579 F.2d at 301 (describing it as irrelevant for Appointments Clause purposes that the Office of the Librarian of Congress is codified under the legislative branch). If codification in Title 2 alone were determinative, the Supreme Courts opinion in Buckley would have been much shorter: the Federal Election Commission (FEC) was codified in the legislative branch. 424 U.S. at 109-10. Indeed, on this theory, the FEC would still be

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unconstitutional today, because the amended provisions creating the agency remain in Title 2. 2 U.S.C. 431 et seq.; see Eltra, 579 F.2d at 301. The same is true of the Librarys classification as a legislative entity for various statutory purposes, such as the Administrative Procedure Act and the Freedom of Information Act. See, e.g., Washington Legal Foundation v. U.S. Sentencing Commn, 17 F.3d 1446, 1449 (D.C. Cir. 1994) (the Library is exempt from the APA as a legislative entity). Just as Congress can define the government for statutory purposes but not constitutional ones, see Lebron v. Natl R.R. Passenger Corp., 513 U.S. 374, 392 (1995), and just as Congresss definition of executive departments in 5 U.S.C. 101 does not limit the term Department in Article II, see Freytag, 501 U.S. at 886-87 & n.4, statutory classifications of this kind do not impede the Librarians exercise of executive power under the Constitution. What matters is that the Librarian is accountable to the President and is appointed in conformity with the Appointments Clause. See Buckley, 424 U.S. at 128 n.165 (an officer exercising significant authority, appointed by and accountable to the President is an executive officer under the Constitution irrespective of Congress designation to the contrary). Nor is the status of the Library under the Appointments Clause altered by the fact that one of the Librarys components, the Congressional Research Service

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(CRS), is charged by statute with serving Congress. 2 U.S.C. 166(a). For purposes of the Appointments Clause, the role of CRS vis-a-vis Congress is akin to the role of the U.S. Marshals Service vis-a-vis the federal courts. By statute, the primary role and mission of the Marshals Service is to provide for the security and to obey, execute, and enforce all orders of the federal courts. 28 U.S.C. 566(a); see also id. 566(c). The Marshals Service is situated within the Department of Justice. Id. 561(a). Yet no one would seriously suggest that the Attorney General is not the Head of a Department simply because the Department of Justice includes a component that is charged by law with serving another branch of the federal government. Cf. Chabal v. Reagan, 841 F.2d 1216, 1219-23 (3d Cir. 1988). So too here, an establishment that otherwise qualifies as a department under the Appointments Clause does not lose that status even when it is assigned functions that come much closer to the legislative powers of Congress under Article I. Compare Free Enterprise Fund, 130 S. Ct. at 3161-62 (Securities and Exchange Commission constitutes a department under the Appointments Clause), with Buckley, 424 U.S. at 133 (the functions of a typical administrative agency may be predominantly quasijudicial and quasilegislative rather than executive); see also Mistretta v. United States, 488 U.S. 361, 382 (1989) (noting constitutionality of statutory

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provisions that to some degree commingle the functions of the Branches, but that pose no danger of either aggrandizement or encroachment). CONCLUSION For the foregoing reasons, the Copyright Royalty Judges determination should be affirmed. Respectfully submitted, TONY WEST Assistant Attorney General SCOTT R. MCINTOSH (202) 514-4052 KELSI BROWN CORKRAN (202) 514-3159 Attorneys, Appellate Staff Civil Division, Room 7216 U.S. Department of Justice 950 Pennsylvania Ave. NW Washington, DC 20530-0001

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CERTIFICATE OF COMPLIANCE WITH RULE 32(a)(7)(C) OF THE FEDERAL RULES OF APPELLATE PROCEDURE I hereby certify pursuant to Fed. R. App. P. 32(a)(7)(C) that the foregoing brief contains 9723 words, according to the count of WordPerfect X5.

/s/ Kelsi Brown Corkran Kelsi Brown Corkran

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CERTIFICATE OF SERVICE I hereby certify that on this 22nd day of December, 2011, I electronically filed the foregoing brief with the Clerk of the Court for the United States Court of Appeals for the D.C. Circuit by using the appellate CM/ECF system. I certify that appellants counsel and intervenors counsel are registered CM/ECF users and that service will be accomplished by the appellate CM/ECF system.

/s/ Kelsi Brown Corkran Kelsi Brown Corkran

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