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[Federal Register: August 25, 2010 (Volume 75, Number 164)]
[Rules and Regulations]               
[Page 52267-52269]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25au10-15]                         

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LIBRARY OF CONGRESS

Copyright Office

37 CFR Part 201

[Docket No. 2005-5]

 
Waiver of Statement of Account Filing Deadline for the 2010/1 
Period

AGENCY: Copyright Office, Library of Congress.

ACTION: Extension of Cable Statement of Account Filing Deadline

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SUMMARY: The Copyright Office extends the deadline for the filing of 
the 2010/1 cable statements of account to September 29, 2010. In 
granting the extension, the Office waives the filing requirements under 
Section 201.17(c)(1) of its rules. The passage of the Satellite 
Television Extension and Localism Act of 2010 (STELA) and the 
subsequent work by the Office to revise the cable statements of 
account, in light of STELA(s amendments to the Copyright Act, have 
impaired the timely availability of the on-line forms cable operators 
use to pay their royalty fees. These circumstances will make it 
extremely difficult for many cable operators to comply with the current 
deadline. For these reasons, therefore, the Office deems the extension 
necessary and in the public interest.

EFFECTIVE DATES: August 25, 2010.

FOR FURTHER INFORMATION CONTACT: Ben Golant, Assistant General Counsel, 
and Tanya M. Sandros, Deputy General Counsel, Copyright GC/I&R, P.O. 
Box 70400, Washington, DC 20024. Telephone: (202) 707-8380. Telefax: 
(202) 707-8366.

SUPPLEMENTARY INFORMATION: Section 111 of the Copyright Act (``Act''), 
title 17 of the United States Code (``Section 111''), provides cable 
operators with a statutory license to retransmit a performance or 
display a work embodied in a primary transmission made by a television 
station licensed by the Federal Communications Commission (``FCC''). 
Cable systems that retransmit broadcast signals in accordance with the 
provisions governing the statutory license set forth in Section 111 are 
required to pay royalty fees to the Copyright Office (``Office''). 
Payments made under the cable statutory license are remitted semi-
annually to the Office which invests the royalties in United States 
Treasury securities pending distribution of these funds to those 
copyright owners who are entitled to receive a share of the fees.
    Congress recently passed the Satellite Television Extension and 
Localism Act

[[Page 52268]]

of 2010 (``STELA``), Pub. L. No. 111-175 (2010). STELA amended the 
cable statutory license found in Section 111 of the Copyright Act as 
well as the distant and local satellite licenses found in Sections 119 
and 122, respectively.\1\ Among other updates, the new law revised the 
rates for the cable retransmission of distant broadcast signals and 
changed the method for calculating royalty fees. Cable operators now 
pay royalties on a ``community-by-community`` basis (that is, according 
to ``subscriber groups'') rather than on a system-wide basis as had 
been the case before STELA amended Section 111(d) of the Act. In 
addition, STELA now requires cable operators to pay for the 
retransmission of distant multicast streams in certain instances. STELA 
also broadened the definition of ``local service area'' found in 
Section 111(f) of the Act to accommodate a digital television station`s 
technical service area. The President signed STELA on May 27, 2010, 
with a retroactive effective date of February 27, 2010.
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    \1\One of STELA`s principal purposes was to reauthorize the 
satellite carrier distant broadcast signal license for another five 
years. Congress also amended the licenses to take into account the 
recent digital broadcast television transition and the ability of 
digital television stations to split their signal into several sub-
channels (i.e., ``multicasting'').
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    Cable operators must pay royalties under the Section 111 license on 
a semi-annual basis using a Statement of Account (``SOA'') form\2\ 
developed by the Office.\3\ Section 111 does not establish a specific 
deadline upon which a cable operator must file its SOA with the Office. 
Instead, Congress had left it to the Office to implement a filing 
schedule to fulfill the mandates found in the statute. See 37 CFR 
201.17(c)(1). Cable operators that file their statement of accounts 
late must add interest to their royalty payment. See 37 CFR 
201.17(i)(4).
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    \2\There are two types of Statement of Account forms. The Form 
SA1-2 is for smaller cable operators (cable television systems whose 
semiannual gross receipts are less than $527,600). The Form SA3 is 
for larger cable operators (cable television systems whose 
semiannual gross receipts are $527,600 or more).
    \3\The Office receives about 4,800 statement of account forms 
from cable operators each accounting period.
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    The SOAs are available in a print format, a PDF format, and a 
software ``fill-in'' format created by Gralin Associates, Inc.\4\ The 
first two forms are freely available from the Office either by mail or 
by accessing them via the web at copyright.gov. Cable operators have to 
pay Gralin for the right to use its specialized software. It is 
estimated that about 40%-45% of all cable statement of account forms 
filed with the Office have been prepared using the Gralin form since 
the software was first made available in1985.
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    \4\Gralin is a specialty software company, unaffiliated with the 
government, that custom designs ``filler'' forms for cable operators 
and other businesses. Gralin touts the following benefits of using 
its SOA software: (1) generates a single database containing 
information for all cable system`s Statement of Account information; 
(2) allows editing of data for subsequent filings; (3) performs the 
necessary royalty fee calculations for short and long forms; (4) 
available for use on an unlimited number of computers in a single 
location; (5) database may be located on a server accessible by all 
system users at a single location; and (6) prints the cable system`s 
Statement of Account on images of the Copyright Office prescribed 
forms. See http://www.gralin.net (Last accessed on August 13, 2010).
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    The Office recently revised the cable statement of account forms in 
light of the recent STELA amendments to Section 111. The new SA3 form 
now reflects the royalty rate adjustments found in STELA and includes, 
inter alia, modifications to accommodate the reporting of subscriber 
groups and multiple channel line-ups and the retransmission of 
multicast streams. The paper and PDF versions of the form have been 
available to cable operators since the second week in July. However, 
the Gralin SOA ``fill-in'' form, which is usually released at or about 
the same time as the paper version in years past, was not made publicly 
available until August 6, 2010. This form was delayed because it had to 
undergo performance tests over a period spanning several days. As such, 
cable operators who have relied on the Gralin form have been unable to 
access it or use it until very recently.
    NCTA request. On August 12, 2010, the National Cable and 
Telecommunications Association (``NCTA'') filed a letter with the 
Office seeking an extension, for 30 days, of the filing deadline for 
cable copyright Statements of Account covering the first accounting 
period of 2010.\5\
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    \5\Letter from Diane Burstein, Deputy General Counsel, NCTA, to 
Marybeth Peters, Register of Copyrights, dated August 12, 2010.
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    NCTA explains that Section 111(d)(2) of the Act requires cable 
operators to file semi-annual Statements of Account. It then states 
that Section 201.17(c)(1) of the Office`s regulations provide that 
those filings ``shall be deposited in the Copyright Office, together 
with the total royalty fee for such accounting periods as prescribed by 
Section 111(d)(1) (B), (C), or (D) of title 17, by not later than the 
immediately following August 29, if the SOA covers the January 1 
through June 30 accounting period....'' It also notes that Section 
201.17(i)(4) of the Office`s regulations state that royalty fee 
payments ``submitted as a result of late or amended filings'' must 
include interest. NCTA requests that the Office issue a waiver so that 
SOAs currently due August 30, 2010, instead would be due September 29, 
2010. NCTA adds that pursuant to its waiver request, SOA filings made 
by that date would be considered timely and no interest would be 
assessed, but that SOA filings made after September 29, 2010, would be 
assessed interest from September 30, 2010, until the filing date.
    NCTA comments that this one-time waiver is warranted in light of 
the changes to the Statement of Account forms and associated 
calculations resulting from Congress's adoption of STELA leaving little 
time for making the necessary changes to the SOA forms that must be 
used for the first accounting period of 2010. It adds that many cable 
operators that file SOAs for multiple cable systems use commercial 
software to facilitate those filings. It remarks that this software was 
not approved by the Office for use until August 6, 2010. According to 
NCTA, even after the software`s release, cable operators using the 
software have discovered problems that have delayed their ability to 
input necessary data.\6\
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    \6\Id. It appears that NCTA is referring to Gralin without 
stating so directly.
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    NCTA asserts that granting the waiver will be in the public 
interest. It states that additional time will help operators accurately 
complete their SOA filings, thus reducing the need to file supplemental 
or amended SOAs. It adds that providing sufficient time so operators 
can make that single filing will also alleviate burdens on the Office. 
NCTA asserts that it is authorized to represent that Program Suppliers, 
Joint Sports Claimants, Commercial Television Claimants, Public 
Television Claimants, Music Claimants, Devotional Claimants, National 
Public Radio and Canadian Claimants (collectively, the ``Phase I 
Claimants'') do not oppose the granting by the Copyright Office of this 
one-time waiver.\7\
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    \7\Id.
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    Discussion. We grant NCTA's request to waive the filing requirement 
under Section 201.17(c)(1) of the Office's rules and extend the filing 
deadline to Septemeber 29, 2010. We recognize that the passage of STELA 
in the late Spring of this year, and the subsequent work by the Office 
to revise the cable statements of account, have impaired the timely 
availability of the forms cable operators use to pay their royalty 
fees, especially the revised Gralin form. While we recognize that the 
paper and PDF versions of the SOA have been available since July, many 
large and small cable

[[Page 52269]]

operators have continued to rely on the Gralin form to fulfill their 
SOA reporting and filing requirement under Section 111. Given that the 
Gralin form had been made available well in advance of the first day of 
the 60-day filing period in years past, operators had reasonably 
expected that it would be ready to use at or about the same time this 
year. However, through no fault of their own, the cable operators 
relying on Gralin did not have access to the revised Gralin form until 
August 6 this year, reducing to about three weeks the time they would 
have had to process and file their forms in the absence of a waiver. We 
recognize that complying with the existing deadline would be an 
arduous, and perhaps insurmountable task, for many cable operators 
particularly those who would have to file hundreds of forms during 
these last three weeks.
    Further, as NCTA indicates, there are still minor problems with the 
Gralin software that have been discovered after its official release on 
August 6th. Cable operators should not be held accountable for matters 
beyond their control. The grant of the requested waiver will permit 
Gralin an additional amount of time to fix the problems with its 
software so that the SOA filings will be both accurate and complete.\8\
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    \8\Gralin has reported that the glitches in its software have 
led, in limited instances, to difficulties in reporting certain data 
points and printing of the SA3 form. The Office is currently working 
with Gralin to resolve these glitches.
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    We also agree with NCTA when it states that additional time will 
help operators accurately complete their SOA filings, thus reducing the 
need to file supplemental or amended SOAs. It is evident that providing 
sufficient time so operators can make that single filing will alleviate 
burdens on the cable industry as well as the Copyright Office and 
produce more accurate filings. In this context, a waiver will serve the 
interest of the public because it will reduce unnecessary paperwork and 
further the efficient administration and processing of the incoming 
SOAs.
    NCTA has also indicated that copyright owner groups would not 
oppose a thirty day extension of the filing deadline, and the Office 
has received confirmation from representatives of the copyright owner 
groups that this is the case. On this point, we note that the Office is 
waiving a procedural deadline and not a substantive royalty 
requirement. Cable operators will still be paying the royalties that 
are due under the Section 111 framework, albeit under a modified 
timeline. Thus, in light of the problems associated with providing 
forms and the lack of any opposition from those who have a direct stake 
in the filing of the statements of account and the timely receipt of 
royalty payments, the Office perceives no reason to deny the request.
    Finally, we note that waivers are rarely granted by the Office. 
However, the action taken today is necessary because of unique, 
extenuating circumstances.\9\
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    \9\See Filing of Claims for DART Royalty Funds, 68 FR 74481 
(Dec. 24, 2003), citing Northeast Cellular Telephone Company v. FCC, 
897 F.2d 1164, 1166 (D.C. Cir. 1990) (holding that a waiver of an 
agency`s rules is ``appropriate only if special circumstances 
warrant a deviation from the general rule and such deviation will 
serve the public interest.'').
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    We hereby waive Section 201.17(c)(1) and extend the date for filing 
cable statements of account to September 29, 2010. Accordingly, 
interest will be assessed pursuant to Section 201.17(i)(4) for late 
payments made after September 29, 2010.

    Dated: August 18,2010
Marybeth Peters,
Register of Copyrights,
U.S. Copyright Office.
[FR Doc. 2010-20956 Filed 8-24-10; 8:45 am]
BILLING CODE 1410-30-S
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