Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-14-01068/USCOURTS-caDC-14-01068-0/pdf.json

Parties Involved:
College Broadcasters, Inc.
Intervenor for Appellee
Copyright Royalty Board
Appellee
Intercollegiate Broadcasting System, Inc.
Appellant
Librarian of Congress
Appellee
SoundExchange, Inc.
Intervenor for Appellee

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued January 12, 2015 Decided August 11, 2015

No. 14-1068

INTERCOLLEGIATE BROADCASTING SYSTEM, INC.,

APPELLANT

v.

COPYRIGHT ROYALTY BOARD AND LIBRARIAN OF CONGRESS,

APPELLEES

COLLEGE BROADCASTERS, INC. AND SOUNDEXCHANGE, INC.,

INTERVENORS

On Appeal From the Copyright Royalty Board

John R. Grimm argued the cause for appellant. With him on

the briefs were Timothy J. Simeone and Christopher J. Wright.

Sonia K. McNeil, Attorney, U.S. Department of Justice,

argued the cause for appellees. With her on the brief was Mark

R. Freeman, Attorney.

Matthew S. Hellman argued the cause for intervenor

SoundExchange, Inc. With him on the brief were Michael B.

DeSanctis and Ishan K. Bhabha. David A. Handzo entered an

appearance. 

USCA Case #14-1068 Document #1567167 Filed: 08/11/2015 Page 1 of 36
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David D. Golden and Catherine R. Gellis were on the brief

for intervenor College Broadcasters, Inc. in support of appellees.

Before: GARLAND, Chief Judge, and SRINIVASAN and

WILKINS, Circuit Judges.

Opinion for the Court filed by Chief Judge GARLAND.

GARLAND, Chief Judge: Intercollegiate Broadcasting

System, Inc., appeals a determination by the Copyright Royalty

Board setting royalty rates for webcasting. Three years ago, we

vacated and remanded the Board’s prior determination on this

subject, concluding that its members had been appointed in

violation of the Constitution’s Appointments Clause. 

Thereafter, the Librarian of Congress appointed a new Board,

which made the determination at issue here. Intercollegiate

contends that the new Board’s determination again violated the

Appointments Clause because it was tainted by the previous

Board’s decision. The appellant also disputes the merits of the

Board’s determination. For the reasons set forth below, we

reject both challenges. 

I

Intercollegiate Broadcasting System (IBS) is a nonprofit

association that represents college and high school radio

stations, which historically broadcasted over the air. Many of its

member stations are now involved in webcasting -- the digital

transmission of sound recordings over the Internet by, for

example, Internet radio music services. 

In 1995, Congress amended the Copyright Act to grant the

owner of a sound recording copyright the exclusive right to

publicly perform the copyrighted work by means of a digital

audio transmission. See Digital Performance Right in Sound

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Recordings Act of 1995, sec. 2, § 106(6), Pub. L. No. 104-39,

109 Stat. 336, 336 (codified at 17 U.S.C. § 106(6)). This right

is now subject to certain limitations. Most relevant to this

appeal, subsequent amendments in the Digital Millennium

Copyright Act, Pub. L. No. 105-304, 112 Stat. 2860 (1998),

“created a statutory license in performances by webcast, to serve

Internet broadcasters and to provide a means of paying

copyright owners.” Intercollegiate Broad. Sys., Inc. v.

Copyright Royalty Bd. (Intercollegiate I), 574 F.3d 748, 753

(D.C. Cir. 2009) (internal quotation marks omitted); see 17

U.S.C. § 114(d)(2). These licenses permit entities other than the

copyright owner to use and perform the copyrighted sound

recordings without the copyright holder’s permission. In

exchange, the licensees -- here, webcasters -- must pay royalty

fees to the copyright owner as required by the statute. See

Indep. Producers Grp. v. Library of Congress, 759 F.3d 100,

101 (D.C. Cir. 2014). Such royalties are normally paid to

copyright owners through third-party clearinghouses like the

intervenor in this case, SoundExchange, Inc. 

In the Copyright Royalty and Distribution Reform Act of

2004, Pub. L. No. 108-419, 118 Stat. 2341, Congress created the

Copyright Royalty Board within the Library of Congress. The

Board is composed of three Copyright Royalty Judges,

appointed by the Librarian of Congress, and is authorized to

determine rates and terms for the licensing and use of

copyrighted works in (inter alia) webcasting. See 17 U.S.C.

§§ 114(f), 801(b)(1). If the parties voluntarily agree on rates

and terms, the Act directs the Board to adopt their agreement. 

See id. § 114(f)(3). If the parties fail to agree, the Board must

hold adversarial proceedings governed by the statute and its

regulations to determine “reasonable” royalty rates and terms for

the license period in question. Id. § 114(f)(2)(A); see id. § 803;

37 C.F.R. §§ 351.1 et seq. The Board’s final determination is

governed by the standards set forth in the Act. As relevant here,

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the Board must “distinguish among the different types” of

services and must determine “a minimum fee for each such type

of service.” 17 U.S.C. § 114(f)(2)(B). The final rates and terms

must be those 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. Following a review for

legal error by the Register of Copyrights, id. § 802(f)(1)(D), the

Librarian of Congress publishes the determination in the Federal

Register, id. § 803(c)(6).

In January 2009, the Board initiated a proceeding to

establish the rates and terms for the public performance of

digital sound recordings for the 2011-2015 period. Most

participants reached settlements during the voluntary negotiation

period prescribed by the statute. See Determination of Royalty

Rates for Digital Performance Right in Sound Recordings and

Ephemeral Recordings, 79 Fed. Reg. 23,102, 23,102 (Apr. 25,

2014) [hereinafter 2014 Final Determination]; see also 17

U.S.C. § 803(b)(3). The Board held an evidentiary hearing for

the remaining participants, including Intercollegiate. The Board

received written and live testimony from fifteen witnesses and

admitted sixty exhibits into evidence. See 79 Fed. Reg. at

23,104. The record also included written and oral argument of

counsel. See id. The Board issued a final determination on

March 9, 2011. See Digital Performance Right in Sound

Recordings and Ephemeral Recordings, 76 Fed. Reg. 13,026

(Mar. 9, 2011) [hereinafter 2011 Final Determination]. Among

other things, the determination included a $500 per station or per

channel annual minimum fee for all commercial and

noncommercial webcasters.

Intercollegiate appealed the 2011 final determination,

contending both that the Judges were appointed in violation of

the Appointments Clause, and that the minimum fee was

unlawful as applied to “small” and “very small” noncommercial

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webcasters. This court agreed with the former challenge and did

not reach the latter. See Intercollegiate Broad. Sys., Inc. v.

Copyright Royalty Bd. (Intercollegiate II), 684 F.3d 1332 (D.C.

Cir. 2012). We determined that Congress had vested the Judges,

who could not be removed except for cause, with sufficient

authority and independence to qualify as “principal” officers of

the United States. Id. at 1336-41. Under the Appointments

Clause, however, principal officers must be appointed by the

President and confirmed by the Senate. See U.S. CONST. art. II,

§ 2, cl. 2. To “cure[] the constitutional defect with as little

disruption as possible,” we declared invalid and severed the

statutory provision that barred the Librarian of Congress from

removing the Judges without cause. Intercollegiate II, 684 F.3d

at 1336-37, 1340. “Once the limitations on the Librarian’s

removal authority are nullified,” we said, the Judges “become

validly appointed inferior officers.” Id. at 1341. Because the

Judges were not validly appointed at the time they issued the

challenged determination, however, we vacated and remanded

that determination without reaching the merits of

Intercollegiate’s challenge. Id. at 1342. 

Thereafter, the Librarian appointed three new Copyright

Royalty Judges to replace the previous Judges. The new Judges

directed the parties to submit proposals regarding how to

proceed on the remand. Unsurprisingly, the parties proposed

nearly opposite ways forward. SoundExchange initially

proposed that the Judges “reinstate the Final Determination in its

entirety without undertaking further proceedings.”

SoundExchange’s Mot. Concerning Conduct of Proceedings on

Remand 1 (J.A. 173). Intercollegiate said the Judges should

reopen proceedings and permit additional written and oral

testimony and briefing. See IBS’s Proposal for Conduct of

Remand 1 (J.A. 194). 

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After reviewing the parties’ proposals, the Board issued a

preliminary Notice of Intention to Conduct a Paper Proceeding

on Remand. The Notice contained several key points. First, the

Board interpreted this court’s remand as directing it to review

the entire record and to issue a new determination on all issues,

not just the $500 minimum fee that Intercollegiate had

challenged on appeal. Notice of Intention to Conduct Paper

Proceeding on Remand 4 (J.A. 221) [hereinafter Notice]. 

Second, because the court did not reach the merits of the

dispute, the Board understood that it “could, after an appropriate

process, issue a new final determination that . . . reaches the

same conclusions . . . as the prior Final Determination.” Id. at

5 (J.A. 222). The Board recognized, however, that it was “also

free to reach completely different conclusions in [its] new final

determination.” Id. Third, the Board decided neither to “rubber

stamp” the prior Board’s decision, nor to conduct a “complete

‘do over’ of the entire original process.” Id. at 6 (J.A. 223). 

Instead, it would conduct an independent, de novo review of the

entire written record of the proceeding. Id. at 7 (J.A. 224). The

Board decided not to hold new evidentiary hearings because

Intercollegiate had “fail[ed] . . . to point to any instance of an

exclusion of relevant evidence that affected the outcome of the

proceeding, or to any portion of the Final Determination that

turned on witness credibility.” Id. Likewise, the Board decided

not to accept additional submissions because “no party ha[d]

provided any specific reason . . . to reopen the record,” and

because each party “had ample opportunity to present its case.” 

Id. 

In sum, the Board concluded that “it would be neither fair,

nor efficient, nor economical to proceed . . . with additional

submissions, discovery, and evidentiary hearings.” Notice at 7-

8 (J.A. 224-25). Accordingly, as authorized by 17 U.S.C.

§ 803(b)(5), the Board stated its intention to “conduct[] only a

paper proceeding, consisting of a review of the existing record

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in this proceeding, and then issu[e] a determination at the

conclusion of that review.” Id. at 9 (J.A. 226). The Board

established a ten-day period for comments on the Notice. “[T]o

the extent that any party disagree[d]” with the plan to go

forward with a paper proceeding, the Board directed such party

to “identify in its comments to this notice specific examples

where it believes the outcome of the original proceeding turned

on elements, such as witness demeanor, that are not readily

determined from a review of the written record.” Id. 

After the end of the comment period, the Board announced

that it would “proceed with [its] consideration de novo on the

existing record” and would “accept no further submissions.” 

Order Following Notice of Intention to Conduct Paper

Proceeding (J.A. 233). The Board issued its preliminary written

determination on January 9, 2014. See 2014 Final

Determination, 79 Fed. Reg. at 23,103. On April 25, 2014, the

Board issued the final determination at issue on this appeal. See

id. at 23,102. Once again, the final determination imposed a

$500 per station or per channel annual minimum fee for both

commercial and noncommercial webcasters. See id. at 23,122-

24. As in the 2011 final determination, the Board rejected

Intercollegiate’s proposal to impose lower annual fees on

“small” and “very small” noncommercial webcasters. Id. at

23,123. 

Intercollegiate filed a timely appeal of the Board’s final

determination to this court, which has jurisdiction pursuant to 17

U.S.C. § 803(d)(1). Intercollegiate contends that the Board’s

determination violated the Appointments Clause again. It also

challenges the merits of the determination insofar as it requires

Intercollegiate’s members to pay $500 per year. Reply Br. 4 &

n.1. SoundExchange, the nonprofit entity responsible for

distributing statutory royalties for the 2011-2015 period, see 37

C.F.R. § 380.2, intervened to defend the determination. 

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II

Intercollegiate’s principal contention is that the new

Board’s determination violated the Appointments Clause

because it was “still tainted by the Appointments Clause

violation that originally led this Court to remand” the previous

Board’s determination. Intercollegiate Br. 15. We consider that

constitutional challenge de novo. See Am. Bus. Ass’n v. Rogoff,

649 F.3d 734, 737 (D.C. Cir. 2011).

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, . . . but

the Congress may by Law 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.” U.S. CONST.

art. II, § 2, cl. 2. As we have noted, this court vacated and

remanded the previous Board’s 2011 determination of

webcasting rates because the Copyright Royalty Judges who

made that determination had been appointed in violation of the

Clause. Intercollegiate II, 684 F.3d at 1342. The Librarian of

Congress responded by replacing the three original Judges with

three new ones, appointed under the statute with the offending

provision severed and with the power to reconsider the matter de

novo. 

Intercollegiate does not dispute that the three new Judges

were properly appointed by the Librarian under the

Appointments Clause. Rather, it contends that, “[b]y merely

reviewing de novo their predecessors’ proceedings instead of

conducting their own proceeding permitting firsthand credibility

determinations and evidentiary rulings, the Judges did nothing

more than enshrine the constitutional violations that this Court

sought to cure.” Intercollegiate Br. 15. We disagree.

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A

This court has twice before considered the validity of

decisions made after the replacement of an improperly appointed

official. Both cases support the validity of a subsequent

determination when -- as here -- a properly appointed official

has the power to conduct an independent evaluation of the

merits and does so.

1. In FEC v. Legi-Tech, we held that a properly

reconstituted Federal Election Commission (FEC) could

reauthorize pending enforcement actions that had been initiated

by an unconstitutionally constituted Commission. 75 F.3d 704,

706 (D.C. Cir. 1996). In an earlier case, another panel of this

court had held that a provision of the Federal Election Campaign

Act, placing two congressional officers on the Commission as

ex officio members, violated constitutional separation-of-powers

principles. See FEC v. NRA Political Victory Fund, 6 F.3d 821

(D.C. Cir. 1993). That case also held that the ex officio

provision was severable. Id. at 827-28. Thereafter, the

Commission voted to reconstitute itself and exclude the ex

officio members. The reconstituted Commission then

considered the pending actions, deliberated for three days, and

voted to continue the actions against the defendant. This was

sufficient to cure the constitutional violation, we said,

notwithstanding the possibility that the Commission may have

in fact “rubberstamp[ed]” the enforcement action. Legi-Tech, 75

F.3d at 708-09.1

1

See Doolin Sec. Sav. Bank, F.S.B. v. Office of Thrift Supervision,

139 F.3d 203, 213 (D.C. Cir. 1998) (describing “misgivings” in LegiTech about “whether the new FEC had engaged in a real fresh

deliberation” (internal quotation marks omitted)); see also Andrade v.

Regnery, 824 F.2d 1253, 1257 (D.C. Cir. 1987) (finding no

Appointments Clause violation where a properly appointed official

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In Doolin Security Savings Bank, F.S.B. v. Office of Thrift

Supervision, we again affirmed the ability of a properly

appointed officer to uphold the decision of one who was not. 

139 F.3d 203, 213-14 (D.C. Cir. 1998). There, the agency

persuaded us that a validly appointed agency director had “made

a detached and considered judgment” in ratifying the previous

director’s decision. Id. Because the new director “effectively

ratified the [previous director’s] Notice of Charges . . . at a time

when he could have initiated the charges himself,” it was not

even necessary to decide whether the previous director had

“lawfully occupied the position.” Id. at 214.

These precedents make clear that the new Board’s de novo

determination that a $500 annual fee was proper did not violate

the Appointments Clause. Intercollegiate seeks to avoid this

result by overstating the importance of particular facts in each

case. 

Intercollegiate argues that Legi-Tech is distinguishable

because it was based in part on the practical futility of

remanding to the Commission for new proceedings because the

Commission’s voting membership had not changed. Under such

circumstances, we said, “forcing the Commission to start at the

beginning of the administrative process, given human nature,

promises no more detached and ‘pure’ consideration of the

merits.” Legi-Tech, 75 F.3d at 709. But Intercollegiate’s

argument proves too much. It implies that the Board’s

determination would be less vulnerable had the Librarian

retained the three original Judges -- who, we held, became

“validly appointed inferior officers” once “the limitations on the

Librarian’s removal authority [were] nullified,” Intercollegiate

with final authority, but who had been in office only three days,

ratified and implemented a program that had been extensively planned

by his improperly appointed predecessor).

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II, 684 F.3d at 1341 -- rather than replaced them with new

individuals. We doubt that Intercollegiate would regard those

original Judges as more independent than their replacements. 

Indeed, because Legi-Tech held that ratification by a

reconstituted Commission with the same voting members was

sufficient to satisfy the Appointments Clause, it follows a

fortiori that a de novo determination by a Copyright Royalty

Board with all new members was sufficient as well.

Intercollegiate also seeks to distinguish both Legi-Tech and

Doolin on the ground that they involved administrative

enforcement actions -- “an area of traditionally broad discretion”

-- rather than the exercise of judicial authority in an adversarial

proceeding. Intercollegiate Br. 25-26 & n.52. But neither LegiTech nor Doolin rested its holding on that ground.2

 Moreover,

this court subsequently suggested that the logic of Legi-Tech and

Doolin would apply in the adjudication context as well: in a

case vacating an order issued by a two-person National Labor

Relations Board (NLRB) that we found lacked a statutory

quorum, we suggested that ratification by a properly constituted

Board would be appropriate. See Laurel Baye Healthcare of

Lake Lanier, Inc. v. NLRB, 564 F.3d 469, 476 (D.C. Cir. 2009)

(citing Legi-Tech, 75 F.3d 704); cf. Fortuna Enters., LP v.

NLRB, 789 F.3d 154, 158 (D.C. Cir. 2015) (reviewing an NLRB

decision that “reinstat[ed] and incorporat[ed] by reference” a

prior decision issued by a two-person Board).3

2

Legi-Tech mentioned the point in a single sentence, after the

court had already rejected the appellee’s challenge and immediately

before introducing a further rejection with the clause, “In any event.” 

75 F.3d at 709.

3

In a footnote, Intercollegiate suggests that Doolin is also

distinguishable because it included a question as to whether the

previous director in that case was validly appointed under the

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2. Intercollegiate maintains that two Supreme Court cases

stand for the proposition that the only way to remedy the

exercise of judicial authority by invalidly appointed judges is for

the new judges to “conduct a new hearing, not merely a de novo

review of the record assembled by the constitutionally invalid

tribunal.” Intercollegiate Br. 20. Neither case stands for that

proposition.

In the first case Intercollegiate cites, Ryder v. United States,

the Supreme Court held only that an Appointments Clause

violation arising out of a decision rendered by an improperly

constituted tribunal was not remedied through appellate review

by a properly constituted body with a narrower scope of

authority. 515 U.S. 177, 187-88 (1995). Ryder involved a

member of the United States Coast Guard who was convicted by

a court-martial. Two appellate courts -- the Coast Guard Court

of Military Review, followed by the United States Court of

Military Appeals -- affirmed his conviction. Ryder argued to the

Court of Military Appeals that two members of the Coast Guard

Court had been appointed in violation of the Appointments

Clause. Id. at 179. Although the Court of Military Appeals

agreed that the appointments violated the Clause, it nonetheless

affirmed the intermediate court’s ruling. Id. at 179-80.

The Supreme Court reversed, rejecting the government’s

argument that any defect in the Coast Guard Court “was in

effect cured by the review available to petitioner in the Court of

Military Appeals.” Id. at 186. Because the Coast Guard Court

“had broader discretion to review claims of error, revise factual

Vacancies Act. Intercollegiate Br. 28 n.54. But the court held that,

notwithstanding whether the previous director was validly appointed

under either the Vacancies Act or the Appointments Clause, Doolin,

139 F.3d at 205, 207, the new director could ratify the previous

director’s decision. Id. at 212-14 (citing Legi-Tech, 75 F.3d 704).

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determinations, and revise sentences than” the Court of Military

Appeals did, the Supreme Court concluded it “simply cannot be

said . . . that review by the properly constituted Court of Military

Appeals gave petitioner all the possibility for relief that review

by a properly constituted Coast Guard Court . . . would have

given him.” Id. at 187-88. The Supreme Court therefore held

that Ryder was “entitled to a hearing before a properly appointed

panel of that court.” Id. at 188.

We agree with Intercollegiate insofar as it argues Ryder

stands for the proposition that review by a properly appointed

body can be insufficient to cure an Appointments Clause

violation. But it does not stand for the proposition that de novo

review is insufficient. To the contrary, the problem Ryder

identified was that the reviewing court (the Court of Military

Appeals) did not have authority to conduct a de novo review (as

did the Coast Guard Court). Id. at 187. Nor does Ryder stand

for the proposition that the only remedy for an Appointments

Clause violation is a new evidentiary hearing regardless of the

scope of the reviewing court’s authority. Intercollegiate’s only

support for that claim is a single sentence at the end of the

Court’s opinion, which stated that Ryder was “entitled to a

hearing before a properly appointed panel.” Id. at 188. Nothing

in that sentence suggests that a new hearing would have been

required if the reviewing court had possessed de novo authority. 

Nor does anything suggest that such a hearing would have to

involve live witnesses or additional evidence.4

4

Cf. United States v. Fla. E. Coast Ry. Co., 410 U.S. 224, 241

(1973) (holding that a statute’s use of the word “hearing” did not “by

its own force require [an agency] either to hear oral testimony, to

permit cross-examination . . . , or to hear oral argument”); Henry J.

Friendly, “Some Kind of Hearing,” 123 U. PA. L. REV. 1267, 1281

(1975) (noting that a “hearing” may include a proceeding based on

written, rather than oral, presentations). 

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In the case before us, the original Copyright Royalty Board

did not have “broader discretion,” Ryder, 515 U.S. at 187-88,

than did the new Board. To the contrary, the new Board had full

authority to make its own determination, including the discretion

to do so after a completely new proceeding or a de novo review

of the record. Although it chose the latter, it did so of its own

accord. Thus, unlike in Ryder, here it can be said that “review

by the properly constituted [Board] gave [Intercollegiate] all the

possibility for relief that review by a properly constituted

[original Board] would have given [it].” Id. at 187-88. 

Accordingly, Intercollegiate did indeed have “a hearing before

a properly appointed panel,” id. at 188, of Copyright Royalty

Judges.

The second case Intercollegiate cites, Wingo v. Wedding,

did not involve the Appointments Clause at all and is even

further afield. 418 U.S. 461 (1974). In Wingo, the Court held

that a court’s local rule authorizing magistrate judges to conduct

evidentiary hearings in federal habeas corpus proceedings was

invalid because it was precluded by the Federal Magistrates Act. 

Id. at 472. The Court further held that, because the Act required

a district court judge to “personally hold evidentiary hearings,”

the invalidity of the rule was not cured by a provision requiring

the district court to review a recording of the evidentiary hearing

de novo. Id. at 472-74.

Thus, Wingo does not, as Intercollegiate insists, stand for

the general proposition that “de novo review of an existing

record is an inadequate remedy where a validly appointed judge

exceeds the scope of his legal authority.” Intercollegiate Br. 23. 

Rather, it stands for the proposition that such review is

inadequate when a statute expressly requires the reviewing judge

to personally hold an evidentiary hearing. The statute governing

Board proceedings lacks any equivalent requirement that the

Judges hold live hearings. To the contrary, it expressly permits

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them to proceed on the paper record alone. See 17 U.S.C.

§ 803(b)(5); see also id. § 803(b)(6)(C)(iii) (“Hearsay may be

admitted in proceedings under this chapter to the extent deemed

appropriate by the Copyright Royalty Judges.”).

B

Intercollegiate further maintains that, even if independent

review of a prior record by a properly constituted Board may be

sufficient to cure an Appointments Clause violation, the Board’s

determination on remand was “not independent of the earlier

Board’s reasoning, but rather was incurably tainted by it.” 

Intercollegiate Br. 24. The appellant’s arguments about the

Board’s lack of independence are unpersuasive.

1. First, Intercollegiate makes a number of general

arguments. It argues that the fact that the new Judges’

determination was “substantially identical” to that of the prior

Judges “undermine[s] the pretense that the Judges’ decision was

fully independent.” Reply Br. 10. Although Intercollegiate

acknowledges that the new determination differs from the

previous one on a number of points that it does not challenge on

this appeal, see id. at 10 & n.9; Board Br. 18 n.4, it emphasizes

that the Board “adopted a rate structure that is overwhelmingly

(if not entirely) identical to the one this court vacated,” Reply

Br. 11. As our precedents show, however, once a new Board

has been properly appointed (or reconstituted), the

Appointments Clause does not bar it from reaching the same

conclusion as its predecessor. See Legi-Tech, 75 F.3d at 708-09;

Doolin, 139 F.3d at 213-14; see also Andrade v. Regnery, 824

F.2d 1253, 1257 (D.C. Cir. 1987). Identifying an Appointments

Clause infirmity in a decision does not guarantee that a party

will get the merits decision it wants.

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Intercollegiate next seeks to infer a lack of independence

from the way the Judges characterized their task. Noting that,

in denying Intercollegiate’s motion for rehearing, the Judges

described their role as “‘pick[ing] up the process where th[e]

earlier Judges left off,’” Intercollegiate insists that they thus

“implicitly validate[d] every decision that led to the point where

the ‘earlier Judges left off.’” Intercollegiate Br. 30 (emphasis

omitted) (quoting Order Denying Mot. for Reh’g 2 (J.A. 235)). 

But this takes the Judges’ statement badly out of context. The

Judges made that remark in rejecting Intercollegiate’s assertion

that the new panel had “improperly delegated responsibility for

holding hearings” to the prior panel. Order Denying Mot. for

Reh’g 2 (J.A. 235). As the Judges explained: 

This assertion confuses “delegation” with

“succession.” This is not a case where the Judges

delegated the job of holding hearings to a subordinate

administrative law judge. The current Judges

succeeded to the positions of the earlier Judges and

picked up the process where those earlier Judges left

off.

Id. (internal citation and quotation marks omitted). The Judges

then went on to emphasize that the “current panel weighed and

analyzed the record de novo.” Id. at 3 (J.A. 236). 

The Judges had earlier declared, in their Notice of Intention

to Conduct a Paper Proceeding, that they were “free to reach

completely different conclusions in their new final

determination” than the prior Judges reached. Notice at 5 (J.A.

222). After completion of the comment period that followed

that notice, the Judges announced that they would “proceed with

their consideration de novo on the existing record.” Order

Following Notice of Intention (J.A. 233). Thereafter, the

Judges’ final determination confirmed that they had decided the

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matter “based upon a de novo review of the substantial record

that the parties developed during the proceeding leading to the

first determination.” 2014 Final Determination, 79 Fed. Reg. at

23,103. We think it beyond peradventure that the Judges

understood their task to involve a de novo determination.

2. We find equally unpersuasive Intercollegiate’s

miscellaneous attempts to identify specific indications of the

previous Judges’ hidden influence on their successors.

Intercollegiate notes that, although the regulations permit

the Board to conduct a papers-only hearing, here the Board “did

not conduct a review of just the papers,” but instead also

reviewed the record and transcripts from the prior proceeding. 

Intercollegiate Br. 31-32 (emphasis omitted). But if this is a

problem of any kind, it is not a constitutional problem; nothing

in the Appointments Clause instructs properly appointed

officials to conduct proceedings in any particular way. Whether

it constitutes a problem of administrative procedure is a question

we address below. See infra Part III. 

Intercollegiate attempts to transmute this procedural issue

into a constitutional one by focusing on the relationship between

the new Judges and their predecessors. In particular,

Intercollegiate argues that “the new Judges refused to consider

any argument or evidence not assembled by their

unconstitutionally appointed predecessors.” Reply Br. 1

(emphasis added). But the phrase “assembled by” is misleading. 

As the Board emphasized in denying rehearing, “the parties to

that hearing created the record,” based on the evidence that they

themselves, including Intercollegiate, submitted. Order Denying

Mot. for Reh’g 2 (J.A. 235). There is no Appointments Clause

problem in limiting Intercollegiate to the evidence that it

decided, on its own volition, to submit to the previous Board. 

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Relatedly, Intercollegiate maintains that it has “never had

an opportunity to oppose the fee before a panel of judges whose

appointment does not offend the Constitution.” Reply Br. 2. 

But again, that is incorrect. All of its original arguments were

presented, in paper form, to the new Board. And the Board gave

Intercollegiate the further opportunity to argue that such a paper

proceeding was insufficient: the Board expressly invited the

parties to identify any reason why they should not proceed on

the prior record. See Notice at 2, 9 (J.A. 219, 226). 

Intercollegiate did submit comments arguing for a new

evidentiary hearing, but the new Board rejected those

arguments, concluding that “[e]ach party has had ample

opportunity to present its case.” Id. at 7 (J.A. 224). Again,

whether this contravened rules of administrative procedure is an

issue we address below. See infra Part III. But it is not an

Appointments Clause problem.

Intercollegiate also insists that the “oral testimony the

Judges reviewed was taken by the original Board, subject to the

original Judges’ evidentiary rulings, and is therefore tainted by

the original Board’s constitutional infirmity.” Intercollegiate Br.

32. But that, too, is incorrect. Intercollegiate maintains that, “if

the new Judges disagree[d] with an evidentiary ruling excluding

testimony, they ha[d] no way of reversing it.” Id. at 32 n.66. In

fact, the reconstituted Board had full authority to review de novo

and reject any of the original Board’s evidentiary rulings. 

Indeed, in each circumstance in which the prior Board had

excluded evidence, the new Board concluded, de novo, that the

exclusion was appropriate. See 2014 Final Determination, 79

Fed. Reg. at 23,122 n.60; id. at 23,123. Moreover, with respect

to the excluded evidence that Intercollegiate principally presses,

which related to the finances of smaller webcasters, the new

Board went on to explain why, even if the evidence were

admitted, it would not support Intercollegiate’s rate proposal. 

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See id. at 23,123; Order Denying Mot. for Reh’g 4 (J.A. 237);

see also infra Part IV.B.

Intercollegiate further contends that the Board’s

determination lacked independence because it included

quotations from a “colloquy between the earlier Judges and

counsel” during oral argument in the prior proceeding. 

Intercollegiate Br. 31 (citing 2014 Final Determination, 79 Fed.

Reg. at 23,121 n.56). But that colloquy was in the written

record, and nothing about the Appointments Clause barred the

Board from relying on it -- any more than it would bar it from

relying on a colloquy between two counsel, neither of whom

was appointed by anyone. In any event, the colloquy in question

was on a topic not challenged on this appeal. See 79 Fed. Reg.

at 23,121 n.56 (discussing the adoption of the voluntary

settlement for noncommercial educational webcasters).

Finally, Intercollegiate complains that the new Board was

not independent because its failure to conduct live hearings

deprived the Board of the ability to make its own assessments of

witness credibility based on demeanor. To the extent this

complaint implies that the Board relied on the prior Board’s

assessments of witness demeanor, that is unsupported. We do

not see any instances in which the new or the prior Board made

credibility determinations based on demeanor, and

Intercollegiate’s briefs do not describe any such instances. And

to the extent this is a claim that the Board was required to hear

oral testimony rather than rely on hearsay or a paper record, that

is at most a statutory claim, which we address below. See infra

Part III. As we said above, there is nothing in the Appointments

Clause that requires live hearings. 

3. In sum, we find nothing in the proceedings leading up to

and including the new Board’s determination that suggests a

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lack of independence from the previous, constitutionally

defective determination.5

C

Intercollegiate maintains that even asking for evidence of

ongoing taint from the previous proceeding amounts to

improperly applying a harmless-error test. Because an

Appointments Clause violation is a structural error that warrants

reversal regardless of whether prejudice can be shown, see

Landry v. FDIC, 204 F.3d 1125, 1131 (D.C. Cir. 2000) (“There

is certainly no rule that a party claiming constitutional error in

the vesting authority must show a direct causal link between the

error and the authority’s adverse decision.”), Intercollegiate

maintains that it is not required to show any taint. But

Intercollegiate’s invocation of this principle ismisplaced. In our

prior decision in this matter, we concluded that the appointment

of the Judges constituted error under the Appointments Clause,

and (consistent with Landry) we vacated their decision without

any consideration of whether that error was harmless. 

Intercollegiate II, 684 F.3d at 1342. The Librarian responded by

appointing new Judges. As all acknowledge, there was no

Appointments Clause error in those subsequent appointments. 

Accordingly, we are not now considering taint in order to

determine whether an error was harmless. Rather, we are

5

Although we have focused on Intercollegiate’s many criticisms

of the scope of the review undertaken by the new Board, we do not

mean to suggest that a review of similar scope (which was, in fact,

quite expansive) was required to ensure the absence of an

Appointments Clause problem on remand. Indeed, in Legi-Tech we

rejected the appellee’s claim that the FEC “must redo the statutorily

required procedures in their entirety” to cure the constitutional defect

in the previously constituted Commission. 75 F.3d at 707; see id. at

708-09.

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considering taint to determine whether there was any error in the

second proceeding at all.

Landry, repeatedly cited by Intercollegiate, only reinforces

the point. The case involved an Appointments Clause challenge

to the Administrative Law Judge (ALJ) who presided over the

petitioner’s disciplinary hearing. 204 F.3d at 1130. That

challenge, we held, was not precluded simply because the

properly appointed members of the agency had affirmed the

ALJ’s decision upon direct, de novo review. Id. at 1130-31. An

important basis for our decision was the “catch-22” the case

posed: “If the process of final de novo review could cleanse the

[Appointments Clause] violation of its harmful impact, then all

such arrangements would escape judicial review.” Id. Here,

however, the unconstitutional arrangement did not escape

judicial review. In our previous decision, we found an

Appointments Clause violation, and then remedied it by both

invalidating the offending statutory provision and vacating the

prior determination -- all without requiring any showing of

prejudice. 

Indeed, for all its protest, the overall gravamen of

Intercollegiate’s challenge is that “the Judges’ Determination is

still tainted by the Appointments Clause violation that originally

led this Court to remand” the previous determination. 

Intercollegiate Br. 15 (emphasis added); see Reply Br. 4. It thus

implicitly acknowledges that, in the absence of taint, it would

have no claim. Intercollegiate also acknowledges that not every

possible kind of taint is fatal because, if it were, there would be

no way to remedy an Appointments Clause violation. It is

always possible, for example, that a subsequent judge will

affirm a former judge’s decision simply out of agency solidarity. 

But even Intercollegiate acknowledges that this kind of

speculative taint would be insufficient to render the second

judge’s decision invalid. See Oral Arg. Recording at 40:04-

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42:32.6 As we said above, a court’s holding that there has been

an Appointments Clause violation does not mean that the

violation cannot be remedied by a new, proper appointment. 

And once there has been such an appointment, the subsequent

proceeding is constitutionally suspect only if there is sufficient

continuing taint arising from the first. See Legi-Tech, 75 F.3d

at 708 n.5 (“[T]he issue is not whether Legi-Tech was

prejudiced by the original [decision], which it undoubtedly was,

but whether, given the FEC’s remedial actions, there is

sufficient remaining prejudice to warrant dismissal.”).

In sum, because the Judges’ determination was an

independent, de novo decision by a properly appointed panel

seized with the full authority of the prior Board, we reject

Intercollegiate’s challenge to its constitutionality.

III

In its reply brief, Intercollegiate argues that the Board’s

determination was also improper because it failed to give effect

to this court’s vacatur of the previous determination. Nothing in

our prior decision addressed what the Board had to do on

remand. Nonetheless, Intercollegiate argues that, under our

precedent, “when an agency determination is vacated and

remanded, the remedy includes compiling a new record.” Reply

Br. 2. As we discuss below, that is not the law unless a statute

so requires. In this case, no statute does.

6

See Legi-Tech, 75 F.3d at 708 (affirming decision of a

reconstituted FEC, notwithstanding that the court was “willing to

assume that no matter what course was followed -- other than a

dismissal with prejudice (which not even Legi-Tech dares request) --

some effects of the unconstitutional structure of the FEC are to be

presumed to have impacted on the action”).

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The precedent upon which Intercollegiate relies is Action on

Smoking & Health v. Civil Aeronautics Board, 713 F.2d 795

(D.C. Cir. 1983). There, an agency had re-promulgated a

previously vacated rule without reopening the rulemaking for

additional notice and comment. We admonished the agency that

the word “vacate” means, among other things, “to cancel or

rescind” and “to make of no authority or validity.” Id. at 797. 

And we required the agency to initiate new rulemaking

proceedings before re-promulgating the vacated rule. Id. at 798.

Intercollegiate reads too much into Action on Smoking. In

that case, we required the agency to begin new notice-andcomment proceedings because the relevant statute, the

Administrative Procedure Act (APA), required them for a new

rulemaking. See id. at 798, 800 (citing 5 U.S.C. § 553(b), (c)). 

But we also noted that for some agency decisions, neither the

agency’s organic act nor the APA requires hearings -- either

initially or on a remand.7

 Moreover, we made clear that, even

where the APA ordinarily does require notice-and-comment

proceedings, we were “not hold[ing] that an agency must start

from scratch in every situation in which rules are vacated or

remanded.” Id. at 800. Rather, “[a]n exception is provided by

the Administrative Procedure Act itself ‘when the agency for

good cause finds (and incorporates the finding and a brief

statement of the reasons therefor in the rules issued) that notice

and public procedure thereon are impracticable, unnecessary, or

contrary to the public interest.’” Id. (quoting 5 U.S.C.

7

See Action on Smoking, 713 F.2d at 799 n.2 (noting that, because

“‘neither the National Bank Act nor the APA requires the Comptroller

to hold a hearing . . . when passing on applications for new banking

authorities,’ . . . the court of appeals . . . would not have been

authorized to require the Comptroller to conduct new hearings” on

remand (quoting Camp v. Pitts, 411 U.S. 138, 140-41 (1973))).

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§ 553(b)(B)).8 That exception did not apply in Action on

Smoking, partly because the new rule “contain[ed] not a single

word” explaining why the new proceedings would have been

“impracticable, unnecessary, or contrary to the public interest.” 

Id.

In this case, as Intercollegiate acknowledges, the Board is

not governed by the notice-and-comment rulemaking

requirements of the APA, but rather by the procedures set forth

in the Copyright Act. See Reply Br. 8 n.7. Consequently, at

most our vacatur required the Board to conduct a remand

proceeding that complied with those procedures, which it did. 

First, neither the Copyright Act nor the Board’s regulations

prescribe any particular procedures on remand. See 17 U.S.C.

§ 803(a), (d)(3). The relevant regulation provides only that,

“[i]n the event of a remand . . . , the parties to the proceeding

shall . . . file with the Judges written proposals for the conduct

and schedule of the resolution of the remand.” 37 C.F.R.

§ 351.15. At the time of its adoption, the Board described that

regulation as “purposely flexible to permit the Judges, and the

parties, to address the particulars of each remand before the

Judges in an effort to promote administrative efficiency and

reduce costs.” See Proceedings of the Copyright Royalty Board;

Remand, 74 Fed. Reg. 38,532, 38,532 (Aug. 4, 2009). A de

novo review of the record falls well within that description. 

Second, even assuming that the entirety of the procedural

requirements for initial determinations applied, a record review

would still pass muster. The statute gives the Board two ways

8

As we subsequently explained, “[i]f the original record is still

fresh, a new round of notice and comment might be unnecessary”

within the meaning of that exception. Mobil Oil Corp. v. EPA, 35

F.3d 579, 584-85 (D.C. Cir. 1994).

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to evaluate the parties’ evidence and establish appropriate rates. 

The Board may conduct a live, trial-like adversarial hearing,

thereby permitting the cross-examination of witnesses and the

introduction of trial exhibits. See 17 U.S.C. § 803(b) (describing

such hearings); 37 C.F.R. §§ 351.3, 351.5-.10. Or, the Board

may “decide, sua sponte or upon motion of a participant, to

determine issues on the basis of” the parties’ submissions

through “[p]aper proceedings.” 17 U.S.C. § 803(b)(5). The

Board must take the latter approach when the material facts are

undisputed and all parties consent, but it may also conduct a

paper proceeding “under such other circumstances as the

Copyright Royalty Judges consider appropriate.” Id. (emphasis

added). Here, after receiving proposals from the parties, the

Judges determined that “it would be neither fair, nor efficient,

nor economical to proceed . . . with additional submissions,

discovery, and evidentiary hearings.” Notice at 7-8 (J.A.

224-25). Accordingly, as permitted by 17 U.S.C. § 803(b)(5),

they stated their intention to “conduct[] only a paper proceeding,

consisting of a review of the existing record in this proceeding.” 

Notice at 9 (J.A. 226). 

That determination was reasonable. As the Board

explained, “[e]ach party . . . had ample opportunity to present its

case” in the initial proceedings, and “no party has provided any

specific reason why it is necessary to reopen the record and take

further evidence.” Id. at 7 (J.A. 224). Moreover, Intercollegiate

had “fail[ed] . . . to point to any instance of an exclusion of

relevant evidence that affected the outcome of the proceeding,

or to any portion of the Final Determination that turned on

witness credibility.” Id. Nor did Intercollegiate fill those gaps

during the subsequent comment period. See IBS’s Comments

Regarding Judges’ Notice of Intention to Conduct Paper

Hearings 1-4 (J.A. 227-30). 

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Intercollegiate further maintains that the Board violated the

statute by conducting a papers-only proceeding that in fact went

beyond the usual papers by including transcripts of oral

testimony taken by the earlier Board. The papers-only

proceeding described in the statute consists of “written direct

statement[s] . . . , the response by any opposing participant, and

one additional response by each such participant.” 17 U.S.C.

§ 803(b)(5). To the extent Intercollegiate argues that the statute

does not contemplate consideration of a transcript of previous

oral testimony in a paper proceeding, its position is contrary to

the text of both the statute and the relevant regulation. See id.

§ 803(b)(6)(C)(ii)(II) (broadly defining “written direct

statement” as “witness statements, testimony, and exhibits to be

presented in the proceedings, and such other information that is

necessary to establish terms and rates, or the distribution of

royalty payments, as the case may be, as set forth in regulations

issued by the Copyright Royalty Judges”); 37 C.F.R.

§ 351.4(b)(2) (providing that a party relying on “the testimony

of a witness in a prior proceeding . . . shall include a copy with

the written direct statement”).9

 But even if Intercollegiate were

correct that the statute does not specifically provide for the

consideration of such a transcript in a paper proceeding, there is

no basis for concluding that a proceeding that exceeds the

statutory requirements is improper -- or at least not sufficiently

improper to require another vacatur, particularly in light of the

9

The Board’s regulations also provide that procedural

requirements “may be suspended or waived, in whole or in part, upon

a showing of good cause, to the extent allowable by law.” 37 C.F.R.

§ 350.6. The Board’s Notice of Intention to Conduct a Paper

Proceeding provided a persuasive showing of good cause for relying

on an enhanced papers-only record.

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APA’s admonition to take “due account . . . of the rule of

prejudicial error,” 5 U.S.C. § 706.10

In sum, because neither this court’s vacatur order nor any

statute bars the procedural approach the Board took on remand,

we reject Intercollegiate’s claim that the Board’s approach

contravened our order.

IV

Intercollegiate also challenges the merits of the Board’s

imposition of a $500 annual minimum fee for all noncommercial

webcasters, including “small” and “very small” webcasters. We

consider such a challenge under the judicial review standards of

the APA. See 17 U.S.C. § 803(d)(3) (providing that “Section

706 of title 5 shall apply with respect to review by the court of

appeals under this subsection”). Under those standards, we will

uphold a ratemaking determination unless it is “arbitrary,

capricious, contrary to law, or not supported by substantial

evidence.” Intercollegiate I, 574 F.3d at 755 (citing 5 U.S.C.

§ 706(2)). “Review of administratively determined rates is

particularly deferential because of their highly technical nature.” 

Id. (internal quotation marks omitted). 

10Intercollegiate also argues that relying on a paper proceeding

gives “short shrift” to the Supreme Court’s teaching “in Wingo . . .

[about] just how important the judge’s role of factfinder is.” 

Intercollegiate Br. 29-30. But as we have explained above, see supra

Part II.A.2, Wingo’s holding was based on a statute that required the

judge to personally hold evidentiary hearings. See 418 U.S. at 472-74. 

By contrast, not only does the statute at issue here permit the Judges

to hold paper proceedings, 17 U.S.C. § 803(b)(5), it also permits them

to consider hearsay in any kind of proceeding, id. § 803(b)(6)(C)(iii).

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Intercollegiate argues that the $500 minimum fee was

arbitrary, capricious, and contrary to law because the Judges:

(A) failed to consider the statutorily prescribed factors; and (B)

ignored the record evidence.

A

Intercollegiate contends that the Board failed to honor the

statutory requirement that, in setting reasonable royalty rates, it

“distinguish among the different types of eligible

nonsubscription transmission services then in operation” and

determine “a minimum fee for each such type of service.” 17

U.S.C. § 114(f)(2)(B) (emphasis added). The appellant argues

that, by setting the same annual minimum fee for all commercial

and noncommercial webcasters regardless of their size, the

Board did not distinguish between “types” of entities but instead

treated them the same. 

 In fact, the Board did acknowledge the statutory

requirement that it distinguish among different types of

webcasters. See 2014 Final Determination, 79 Fed. Reg. at

23,122. And it did distinguish between two types -- that is,

between commercial and noncommercial webcasting services --

“because there is a good economic foundation for maintaining

this dichotomy.” Id. Although it imposed the same annual

minimum fee on both, see 37 C.F.R. § 380.3(b)(1)-(2), it set perperformance royalty rates and payment terms for commercial

services that are different from those for noncommercial

services, see id.; 79 Fed. Reg. at 23,121-23.11 Moreover, the

reason the Board set the minimum fee for commercial services

at $500 was that it was statutorily required to do so: $500 was

11This is not to suggest, however, that the requirement to

distinguish among different types of services obligates the Board to

impose different fees when the same fee would be reasonable.

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the fee upon which commercial webcasters had agreed in a

voluntary settlement, see 79 Fed. Reg. at 23,104, and the statute

requires the Board to give effect to such voluntary agreements

“in lieu of” any determination, see 17 U.S.C. § 114(f)(3). That

did not disable the Board from fixing $500 as the fee for

noncommercial webcasters if such a fee was in accord with the

statutory criteria.

What the Board declined to do was adopt Intercollegiate’s

“proposal to make further distinctions among noncommercial

webcasters based on the quantity of sound recordings they

transmit under the statutory license (as measured by ATH

[Aggregate Tuning Hours]).” 2014 Final Determination, 79 Fed.

Reg. at 23,122. Intercollegiate’s proposal was to create two new

categories of noncommercial webcasters: “small”

noncommercial webcasters (defined as noncommercial

webcasters with usage up to 15,914 ATH per month) and “very

small” noncommercial webcasters (defined as noncommercial

webcasters with usage up to 6,365 ATH per month). Id. at

23,121. Under Intercollegiate’s proposal, small noncommercial

webcasters would pay a flat annual fee of $50. Id. Very small

noncommercial webcasters would pay a flat annual fee of $20. 

Id. 

The statute does direct that, in distinguishing among

different types of services, “such differences [are] to be based on

criteria including, but not limited to, the quantity and nature of

the use of sound recordings.” 17 U.S.C. § 114(f)(2)(B). But it

also directs that, “[i]n establishing rates and terms for

transmissions” by such services, the Board “shall establish rates

and terms 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. And the Board

concluded that the evidence did not support the proposition that

“a willing buyer and a willing seller would negotiate a different

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rate for noncommercial webcasters at a given ATH level than

they would for all other noncommercial webcasters.” 2014

Final Determination, 79 Fed. Reg. at 23,122.

Intercollegiate maintains that, far from relying on the

willing-buyer/willing-seller factor, the Board effectively

disregarded it. According to Intercollegiate, Congress “required

the [Judges] to set a rate that webcasters would willingly agree

to in the marketplace, and there is no substantial evidence that

any webcaster, regardless of its financial means, would agree to

a $500 annual fee.” Intercollegiate Br. 38-39 (emphasis

omitted). Indeed, Intercollegiate insists that “the very fact that

it objected to the universal $500 fee is evidence that some

webcasters would not” agree to that fee. Id. at 39. 

This misstates the statutory directive in two ways. First, the

Act requires the Board to impose a “minimum fee for each such

type of service,” 17 U.S.C. § 114(f)(2)(B) (emphasis added), not

for each individual webcaster. And second, the Board must set

a fee that both a willing buyer and a willing seller would

negotiate, not just one that is acceptable to the buyer (the

webcaster). See 2014 Final Determination, 79 Fed. Reg. at

23,123. The Act does not permit Intercollegiate to veto a fee

simply by objecting. 

As we discuss below, the Board did in fact base its decision

on the willing-buyer/willing-seller factor. And it had substantial

evidence to support its conclusion that the $500 minimum fee

was appropriate.

B

In the proceedings below, Intercollegiate’s primary

argument in support of its proposal was that small and very

small noncommercial webcasters are unable to pay the $500

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minimum fee and hence would not willingly agree to it. As the

Board noted, however, there was no record evidence to support

that argument. See 2014 Final Determination, 79 Fed. Reg. at

23,123. Intercollegiate did not offer testimony from any

member claiming to be adversely affected by the $500 fee, “in

spite of the Judges’ invitation to do so.” Id. at 23,121. Nor did

it “offer testimony from any entity that demonstrably qualified

as a ‘small’ or ‘very small’ noncommercial webcaster.” Id. at

23,123. Indeed, the Board noted that Intercollegiate’s assertion

was “undercut by testimony that some of these same entities pay

IBS close to $500 annually for membership dues and fees for

attending conferences.” Id.

The only evidence that Intercollegiate points to now, or that

it relied on before the Board, is “a reference by Captain Kass [its

chief operating officer] to a survey that showed that IBS

members had an average annual operating budget of $9,000.” 

79 Fed. Reg. at 23,123; see Intercollegiate Br. 37. 

Intercollegiate complains that “[t]he Judges improperly chose

not to credit this testimony -- not because it was not probative or

persuasive, but because they [improperly] considered it

inadmissible.” Intercollegiate Br. 37. But that is wrong on two

counts. First, the Board properly excluded Kass’ reference to

the survey because Intercollegiate did not offer the survey itself

into evidence, and without that evidence, the Board could not

assess its validity. See 79 Fed. Reg. at 23,123 (citing 37 C.F.R.

§ 351.10(e)). Second, the Board reasonably concluded that,

even if it “could accept such a reference as evidence, it would

not advance IBS’ case [because] an assertion that the average

operating budget for IBS members is $9,000 does not establish

that its members lack the wherewithal to pay a $500 minimum

royalty.” Id. Moreover, the Board reasonably noted that there

was no necessary “correlation between the quantity of sound

recordings being transmitted by a noncommercial webcaster,”

which was the criterion for Intercollegiate’s designation of small

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and very small services, “and the size of that webcaster’s

operating budget (and, thus, its ability to pay a $500 minimum

annual fee).” Id.12

By contrast, the Board found affirmative evidence that

noncommercial webcasters were indeed both “able and willing

to pay the proposed fees.” 79 Fed. Reg. at 23,123. The most

persuasive such evidence -- as well as support for a $500

minimum fee as the amount that willing buyers and sellers

would negotiate -- was that College Broadcasters, an

organization representing noncommercial educational

broadcasters, had already reached a voluntary agreement with

SoundExchange (the nonprofit entity that collects statutory

royalties and distributes them to the copyright holders) that

included the same fee. Id. The statute expressly authorizes the

12In a footnote, Intercollegiate also refers to Kass’ testimony that

some Intercollegiate members have annual operating budgets as low

as $250 or less. Intercollegiate 39 n.70. The Board concluded that

this evidence was of little import because:

Captain Kass did not testify that any of those IBS

members would fall into either of IBS’s proposed

categories of “small” and “very small” noncommercial

webcasters (which are defined based on their ATH

usage, not on the size of their operating budgets). Nor

did IBS present any evidence as to how many IBS

members had similarly small operating budgets. Nor

did IBS disclose the basis for this statement. 

Order Denying Mot. for Reh’g 4 (J.A. 237). The Board was not

unreasonable in concluding that this “single anecdotal reference to

‘some’ webcasters with miniscule operating budgets [was] insufficient

to demonstrate the existence of a distinct segment of the

noninteractive webcasting market.” Id. (internal quotation marks

omitted).

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Board to consider the rates and terms of such voluntary license

agreements in setting webcasting rates and terms. 17 U.S.C.

§ 114(f)(2)(B). 

The Board also found corroboration in the fact that “24

noncommercial webcasters filed comments with the Judges

stating that they support[ed] the rates and terms of [that]

Agreement, which they found reasonable and affordable.” 79

Fed. Reg. at 23,121; see id. at 23,123. And there was also the

fact that, in the ratemaking for the 2006-2010 period, “it was

established . . . that 363 noncommercial webcasters paid

royalties in 2009 similar to SoundExchange’s current rate

proposal, with 305 of those webcasters paying only the $500

minimum fee.” Id. at 23,123. “Taken together with IBS’s

failure to present even a morsel of contrary evidence, the Judges

[found] this fact to be strong evidence that noncommercial

webcasters are able and willing to pay the proposed fees.” Id.

Finally, the Board also relied on testimony from

SoundExchange’s chief operating officer, who testified that its

average annual administrative cost per station or channel was

approximately $825. 79 Fed. Reg. at 23,124. Intercollegiate

“offered no persuasive evidence to dispute this estimate.” Id.

Noting Board precedents concluding that it was reasonable and

appropriate for the minimum fee to cover SoundExchange’s

administrative cost, the Judges found that, “[w]ith the average

administrative cost exceeding $800, . . . a $500 minimum fee

[was] eminently reasonable and appropriate.” Id.; see

Beethoven.com LLC v. Librarian of Congress, 394 F.3d 939,

949 (D.C. Cir. 2005) (concluding that the Librarian was not

arbitrary in approving a $500 minimum fee “to cover the license

administrator’s administrative costs” because the administrator

“would not have negotiated a minimum fee that failed to cover

at least its administrative costs”). In the Board’s view,

SoundExchange’s costs further supported its finding that

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Intercollegiate’s proposal of a $20 or $50 fee did not satisfy the

willing-buyer/willing-seller standard. “The record does not

support a conclusion,” the Board reasonably concluded, that “a

willing seller would agree to a price that is substantially below

its administrative costs.” 79 Fed. Reg. at 23,123. 

Intercollegiate claims that, in relying on the absence of

evidence to dispute SoundExchange’s evidence of average cost,

the Board made the same mistake it made in the rate proceeding

for 2006-2010, when it also set a $500 minimum fee on “the

theory that [it] covered the costs of administering the statutory

license.” Intercollegiate Br. 38 (citing Intercollegiate I, 574

F.3d at 767). In Intercollegiate I, this court vacated that fee

because the Board’s conclusion about SoundExchange’s

administrative costs was based largely on the fact that

SoundExchange had proposed the fee, coupled with a “lack of

evidence” that the fee did not reflect the organization’s costs. 

574 F.3d at 767. “[R]ational decisionmaking,” we said,

“requires more than an absence of contrary evidence; it requires

substantial evidence to support a decision.” Id. Accordingly,

we found it arbitrary for the Board to impose the $500 fee on the

theory that webcasters should pay the administrative cost of

administering the license when there was no record evidence of

what that cost was. Id. 

This time, however, the Board did not set the fee based

solely on SoundExchange’s administrative costs. It also relied

on the above-described evidence of what a willing buyer and

seller would negotiate. And this time, the Board did not reach

a conclusion about SoundExchange’s administrative costs in the

absence of record evidence. Instead, it relied on the evidence of

industry-wide average administrative cost. 

Evidence of average cost may not be perfect, but nothing in

Intercollegiate I bars its use. It is true, as Intercollegiate notes,

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that there was evidence that “[t]he exact cost imposed by any

particular licensee varies widely.” Reply Br. 18 (quoting

Kessler Test. at 25 (J.A. 26)). But that is often the case with

average cost. And as we discussed above, and made clear in

Intercollegiate I itself, the statute does not require the Board to

set royalty fees licensee by licensee.13 To the contrary, the

statute instructs the Board to impose a “minimum fee for each

such type of service.” 17 U.S.C. § 114(f)(2)(B) (emphasis

added); see Beethoven.com, 394 F.3d at 949. 

As we have noted, the Copyright Act directs the Board to

“establish rates and terms that most clearly represent the rates

and terms that would have been negotiated in the marketplace

between a willing buyer and a willing seller” if the webcasting

statutory license did not exist. 17 U.S.C. § 114(f)(2)(B). But

“[t]he statute does not require that the [hypothetical] market

assumed by the Judges achieve metaphysical perfection.” 

Intercollegiate I, 574 F.3d at 757. This court’s task is “only [to]

assess the reasonableness of the Judges’ interpretation of the

inherent ambiguity” in Congress’ directive. Id. In light of the

evidence of SoundExchange’s average administrative cost, the

voluntary agreement between College Broadcasters and

SoundExchange setting a $500 minimum fee, the comments of

other noncommercial webcasters supporting that fee, and the

experience of the 2006-2010 ratemaking, the Board had

substantial evidence to support its conclusion that an annual

13See Intercollegiate I, 574 F.3d at 761 (“The Judges are not

required to preserve the business of every participant in a market. 

They are required to set rates and terms that ‘most clearly represent the

rates and terms that would have been negotiated in the marketplace

between a willing buyer and a willing seller.’ If small commercial

webcasters cannot pay the same rate as other willing buyers and still

earn a profit, then the Judges are not required to accommodate them.”

(quoting 17 U.S.C. § 114(f)(2)(B))).

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minimum fee of $500 reasonably approximated that to which a

willing buyer and seller would agree. Accordingly, it did not act

unreasonably in setting that fee.

V

For the foregoing reasons, we affirm the determination of

the Copyright Royalty Board.

So ordered.

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