77292 Federal Register / Vol. 65, No. 238 / Monday, December 11, 2000 / Rules and Regulations

The SR’s provided scheduling ranks (as

applicable) should be used as follows:

For receipt side reductions, the order for

application of ranks is Upstream Rank

(Priority), Receipt Rank (Priority), Delivery

Rank (Priority), Downstream Rank (Priority).

For delivery side reductions, the order for

application of ranks is Downstream Rank

(Priority), Delivery Rank (Priority), Receipt

Rank (Priority), Upstream Rank (Priority).

[FR Doc. 00–30979 Filed 12–8–00; 8:45 am]

BILLING CODE 6717–01–P

DEPARTMENT OF LABOR

Mine Safety and Health Administration

30 CFR Part 42, 47, 56, 57, and 77

RIN: 1219–AA47

Hazard Communication (HazCom)

AGENCY: Mine Safety and Health

Administration (MSHA), Labor.

ACTION: Notice of public hearing and

extension of comment period.

SUMMARY: MSHA is announcing a public

hearing regarding the Agency’s interim

final rule on Hazard Communication

and extending the comment period. The

hazard communication requirements

were published in the Federal Register

on October 3, 2000 (65 FR 59048). The

hearing will be held under section 101

of the Federal Mine Safety and Health

Act of 1977.

DATES: The hearing will be held on

December 14, 2000. The hearing will

last from 9:00 a.m. to 5:00 p.m., but will

continue into the evening if necessary.

The comment period is extended until

December 19, 2000.

ADDRESSES: The hearing will be held at

the following location: Department of

Labor, Office of Administrative Law

Judges Courtroom, 800 K Street N.W.,

Suite 400N, Washington, D.C.

Comments may be transmitted by

electronic mail, fax, or mail. Comments

by electronic mail must be clearly

identified as such and sent to this e-mail

address: comments@MSHA.gov.

Comments by fax must be clearly

identified as such and sent to: MSHA,

Office of Standards, Regulations, and

Variances, 703–235–5551. Mail

comments should be clearly identified

as such and sent to MSHA, Office of

Standards, Regulations, and Variances,

4015 Wilson Boulevard, Room 631,

Arlington, VA 22203–1984. Interested

persons are encouraged to supplement

written comments with computer files

or disks; please contact the Agency with

any questions about format.

FOR FURTHER INFORMATION CONTACT:

David L. Meyer, Director; MSHA Office

of Standards, Regulations, and

Variances; phone 703–235–1910.

SUPPLEMENTARY INFORMATION: We

request that you notify us of your

intention to make an oral presentation

prior to the hearing date, but it is not

required that you do so. The hearing

will be conducted in an informal

manner by a panel of MSHA officials.

Although formal rules of evidence or

cross examination will not apply, the

presiding official may exercise

discretion to ensure the orderly progress

of the hearing and may exclude

irrelevant or unduly repetitious material

and questions.

The hearing will begin with an

opening statement from MSHA,

followed by an opportunity for members

of the public to make oral presentations.

The hearing panel may ask questions of

speakers. At the discretion of the

presiding official, the time allocated to

speakers for their presentations may be

limited. In the interest of conducting a

productive hearing, MSHA will

schedule speakers in a manner that

allows all points of view to be heard as

effectively as possible.

A verbatim transcript of the

proceeding will be prepared and made

part of the rulemaking record. A copy of

the hearing transcript will be made

available for public review.

MSHA will accept additional written

comments and other appropriate data

for the record from any interested party,

including those not presenting oral

statements. Written comments and data

submitted to MSHA will be included in

the rulemaking record. To allow for the

submission of post-hearing comments,

the comment period is extended and the

record will remain open until December

19, 2000.

Dated: December 7, 2000.

J. Davitt McAteer,

Assistant Secretary for Mine Safety and

Health.

[FR Doc. 00–31543 Filed 12–7–00; 1:20 pm]

BILLING CODE 4510–43–P

LIBRARY OF CONGRESS

Copyright Office

37 CFR Part 201

[Docket No. RM 2000–3B]

Public Performance of Sound

Recordings: Definition of a Service

AGENCY: Copyright Office, Library of

Congress.

ACTION: Final rule.

SUMMARY: The Copyright Office is

amending its regulatory definition of a

‘‘Service’’ for purposes of the statutory

license governing the public

performance of sound recordings by

means of digital audio transmissions in

order to clarify that transmissions of a

broadcast signal over a digital

communications network, such as the

Internet, are not exempt from copyright

liability under section 114(d)(1)(A) of

the Copyright Act.

DATES: Effective December 11, 2000.

FOR FURTHER INFORMATION CONTACT:

David O. Carson, General Counsel, or

Tanya M. Sandros, Senior Attorney,

Copyright Arbitration Royalty Panel,

P.O. Box 70977, Southwest Station,

Washington, D.C. 20024. Telephone:

(202) 707–8380. Telefax: (202) 252–

3423.

SUPPLEMENTARY INFORMATION:

Procedural History

On March 16, 2000, the Copyright

Office published a notice of proposed

rulemaking (‘‘NPRM’’) seeking comment

on whether the transmission of an AM/

FM radio broadcast signal over the

Internet by the broadcaster that

originates the AM/FM signal is exempt

from copyright liability under the

exemption to the digital performance

right in sound recordings set forth in

section 114 of the Copyright Act, title 17

of the United States Code. 65 FR 14227

(March 16, 2000). The Office initiated

this rulemaking proceeding in response

to a petition from the Recording

Industry Association of America

(‘‘RIAA’’).

In its petition, RIAA asked the Office

to adopt a rule ‘‘clarifying that a

broadcaster’s transmission of its AM or

FM radio station over the Internet . . .

is not exempt from copyright liability

under section 114(d)(1)(A).’’ RIAA also

believes that ‘‘until the Office rules, the

parties will not agree on who qualifies

for the Section 114 performance

license.’’ Petition at 7.

The Office agreed with RIAA’s

observation and postponed the pending

rate adjustment proceeding, the purpose

of which is to set the rates and terms for

the public performance of a sound

recording by means of digital audio

transmissions under the section 114

statutory license and to establish the

rates and terms for the making of an

ephemeral recording in accordance with

the section 112 statutory license. See 63

FR 65555 (November 27, 1998); 64 FR

52107 (September 7, 1999). The Office

took this action because it recognized

that the outcome of the rulemaking

would have the effect of deciding

whether the rates and terms set in that

Federal Register / Vol. 65, No. 238 / Monday, December 11, 2000 / Rules and Regulations 77293

proceeding would apply to broadcasters

who stream their AM or FM radio

stations over the Internet. 65 FR 14227

(March 16 , 2000).

A finding that the section 114(d)(1)(A)

exemption covered a digital

transmission of an AM or FM radio

station made by an FCC-licensed

broadcaster, including transmissions

made by the broadcaster over the

Internet, would likely mean that

broadcasters, who are currently parties

to the rate adjustment proceeding,

would withdraw from the proceeding

since the rates and terms to be decided

would not apply to any transmission

made by an FCC-licensed broadcaster.

This, in turn, would narrow the scope

of the issues and evidence presented to

the CARP.

After the publication of the NPRM,

the National Association of Broadcasters

(‘‘NAB’’) filed an action in the U.S.

District Court for the Southern District

of New York on behalf of its members,

asking for a declaratory judgment that

nonsubscription simultaneous

transmissions of radio broadcasts via the

Internet by FCC-licensed broadcasters

are exempt from the limited sound

recording performance right. See

National Ass’n of Broadcasters v.

Recording Indus. Ass’n of Am., No. 00

Civ. 2330 (S.D.N.Y., filed March 27,

2000). The NAB then moved to suspend

the rulemaking proceeding, Docket No.

RM 2000–3, until the Court had ruled in

this case.

Before making a decision on the

merits of the motion to suspend, the

Office published a second notice in

which it requested comments on

whether to grant the motion to suspend

the rulemaking proceeding and await

the decision of the U.S. District Court

for the Southern District of New York.

65 FR 17840 (April 5, 2000).

For the reasons set forth herein, the

Copyright Office is denying the NAB’s

motion to suspend this rulemaking and

is announcing a final rule to clarify that

a transmission by an FCC-licensed

broadcaster of its AM or FM radio

broadcast over the Internet is not

exempt from the limited public

performance right for digital

transmissions under section

114(d)(1)(A).

The Commenters

In response to the NPRM, the Office

received comments from the following

commenters: BroadcastAmerica.com,

Inc. (‘‘BroadcastAmerica’’); jointly,

American Society of Composers,

Authors and Publishers, Broadcast

Music, Inc., and SESAC, Inc.

(collectively, the ‘‘Performing Rights

Organizations’’); Digital Media

Association (‘‘DiMA’’); jointly, Balogh

Broadcasting Company, Inc., Big Mack

Broadcasting, Inc., Hall

Communications, Inc., KSTP-AM,

L.L.C., KSTP–FM, L.L.C., LBJS

Broadcasting Company, L.P., Lyle

Broadcasting Corporation, M&M

Broadcasters, Ltd., Rice Capital

Broadcasting Inc., Twin Lakes

Communications, Inc., Zimmer

Broadcasting Company, Inc., Zimmer

Communications, Inc., Zimmer Radio of

Mid-Missouri, Inc., and ZRG of Illinois,

Inc. (collectively, ‘‘Broadcasters I’’);

jointly, AMFM, Inc., Bonneville

International Corporation, CBS

Corporation, Clear Channel

Communications, Inc., Cox Radio, Inc.,

Emmis Communications Corporation,

and National Association of

Broadcasters (collectively,

‘‘Broadcasters II’’); State Broadcasters

Associations (‘‘State Broadcasters’’);

Criswell Center For Biblical Studies

(‘‘Criswell’’); and jointly, The Recording

Industry Association of America, Inc.,

Association for Independent Music,

American Federation of Musicians, and

American Federation of Television and

Radio Artists (collectively, ‘‘Copyright

Owners’’), including a separate

memorandum, Copyright Liability of

Broadcasters for Webcasting Their AM/

FM Radio Signals, prepared by Robert

Gorman (‘‘Gorman’’).

Reply comments were filed by

Entercom Communications Corp., and

five of the eight commenters: the

Copyright Owners; Broadcasters I;

DiMA; State Broadcasters; and

Broadcasters II.

The Copyright Office’s Authority To

Conduct This Rulemaking

a. Authority to act. The Copyright

Office stated in the NPRM that it

initiated this proceeding under the

rulemaking authority granted by 17

U.S.C. 702, to ‘‘interpret the statute in

accordance with Congress’’ intentions

and framework and, where Congress is

silent, to provide reasonable and

permissible interpretations of the

statute.’’ 65 FR 14227, citing 57 FR

3284, 3292 (January 29, 1992). Our

authority to act is supported by Satellite

Broadcasting and Communications

Ass’n of Am. v. Oman, 17 F.3d 344

(11th Cir. 1994) (‘‘SBCA’’), and

Cablevision Sys. Dev. Co. v. Motion

Picture Ass’n of Am., Inc., 836 F.2d 599

(D.C. Cir.), cert. denied, 487 U.S. 1235

(1988) (‘‘Cablevision’’), where the

Eleventh Circuit and the D.C. Circuit

expressly acknowledged the Office’s

authority to provide reasonable

interpretations of the cable statutory

license. See, SBCA, 17 F.3d at 347 (‘‘The

Copyright Office is a federal agency

with authority to promulgate rules

concerning the meaning and application

of section 111’’); Cablevision, 836 F.2d

at 608–09(same). See also, DeSylva v.

Ballentine, 351 U.S. 570, 577–78

(1956)(recognizing that Copyright

Office’s interpretation of the Copyright

Act should ordinarily receive

deference).

Most of the commenters do not

challenge the Office’s rulemaking

authority in this proceeding. However,

the Broadcasters suggest that the Office

may be without authority to interpret

the extent of the section 114(d)(1)(A)

exemption. They argue that the

interpretation of section 114(d)(1)(A)

sought by RIAA in this proceeding—

whether copyright liability does or does

not attach to transmissions of radio

stations over the Internet—is very

different from previous rulemaking

proceedings of the Office interpreting

provisions of other compulsory licenses.

Specifically, the Broadcasters submit

that SBCA and Cablevision are poor

precedent for supporting rulemaking

authority in this case. In SBCA, the

Office determined that satellite carriers

were not eligible for the cable

compulsory license for their

retransmission of over-the-air broadcast

signals, thereby subjecting these

retransmissions to copyright owners’

exclusive rights. In Cablevision, the

Office interpreted the meaning of the

term ‘‘gross receipts’’ as it appeared in

the section 111 cable compulsory

license. According to the Broadcasters,

the copyright liability of satellite

carriers and cable systems was already

established, and the Office was merely

sorting out the terms of a compulsory

license. In this proceeding, however, the

Office is being called upon to decide

whether any copyright liability exists at

all for broadcasters who stream their

radio signals over the Internet. If,

according to the Broadcasters, there is

no copyright liability for such activity

because it is exempted by section

114(d)(1)(A), then the Copyright Office

has no jurisdiction over that activity

because it does not implicate the

copyright laws. The Broadcasters

conclude that the Copyright Office does

not have any authority to address the

status of broadcaster transmissions of

radio signals over the Internet until such

time as a federal court decides the issue.

If the Broadcasters’ position is

accepted, the Copyright Office’s ability

to administer section 114 of the

Copyright Act will be frustrated. Section

114 treats the public performance of

sound recordings by digital audio

transmissions in one of three ways: the

performance is either exempt from

copyright liability, subject to copyright

77294 Federal Register / Vol. 65, No. 238 / Monday, December 11, 2000 / Rules and Regulations

1Any broadcaster who wishes to participate and

has not yet filed a notice of intention to do so in

the pending proceeding should file such notice in

accordance with the requirements set forth in a

separate Federal Register notice addressing this

issue.

2We note as well that the Broadcasters’

distinction does not dispositively adjudicate the

substantive rights of copyright users. In both

situations, a party aggrieved by a decision of the

Office can seek judicial review. Satellite carriers

disagreed with the Office’s negative determination

of their eligibility for the section 111 license and

brought the SBCA litigation. If broadcasters do not

agree with the Office’s determination in this

proceeding, they likewise can seek judicial review.

owners’ exclusive rights, or subject to

statutory licensing. The Library of

Congress and the Copyright Office are

charged with conducting a copyright

arbitration royalty panel (‘‘CARP’’)

proceeding to set the rates and terms of

the statutory license, and the Library

has already begun the CARP process

(and stayed its initiation pending the

resolution of this rulemaking

proceeding). Many broadcasters, and the

NAB, have stayed out of the proceeding

on the grounds that they qualify for the

section 114(d)(1)(A) exemption. If these

parties are not covered by the

exemption (as the Office is determining

today), they should be afforded the

opportunity to participate in the CARP

proceeding.1 CARP proceedings are

adversarial in nature, making it critical

that the interests of all affected

copyright owners and users are

represented in the proceeding so that

the CARP has a full and complete

evidentiary record on which to render

its determination. Without such

information, the CARP cannot render a

complete and accurate decision, thereby

compromising the efficiency of the

section 114 license.

Under the Broadcasters’ approach,

copyright users of sound recordings can

effectively impede a CARP proceeding

by claiming that their activities are not

implicated by the proceeding until a

federal court determines that they are.

The Copyright Office would then be

forced either to go forward with the

CARP proceeding with an incomplete

record, or to postpone the proceeding

until after a ruling has been obtained

from a federal court. If no ruling is

obtained through private litigation, or

conflicting decisions are handed down

by the federal courts, the Library may

not be able to have a CARP at all. The

Copyright Office concludes that

Congress intended no such result.

Broadcasters distinguish the SBCA

case by observing that the issue therein

was whether a satellite carrier was a

‘‘cable system’’ for purposes of Section

111 compulsory licensing. In contrast,

according to Broadcasters, the issue here

is whether their ‘‘particular conduct

falls under the purview of the Copyright

Act.’’ Broadcasters II Reply, at 9–11.

They argue that because the activities of

the satellite carriers in SBCA related to

‘‘particular conduct admittedly

implicating copyright liability,’’ the

Office had the power to determine

whether that conduct was within the

scope of the cable compulsory license.

But they contend that where the activity

is exempt under a specific statutory

provision, the conduct may not be

considered further by the Office under

its authority to promulgate regulations

to administer a compulsory license, the

scope of which, but for the exemption,

would otherwise include such activity.

The Office finds this distinction

artificial and unpersuasive. Here, as in

SBCA, the issue is whether a particular

type of activity falls within the scope of

a statutory compulsory license. The fact

that Broadcasters claim to be exempt

from the performance right for sound

recordings does not deprive the Office

of the ability to determine whether they

are subject to the section 114

compulsory license. In order to

determine whether broadcasters

transmitting performances of their

broadcast signals over the Internet are

subject to the compulsory license, it is

necessary to address their claim that

they enjoy the exemption under section

114(d)(1)(A) when they engage in that

activity. If they are exempt, then the

inquiry proceeds no further. If they are

not exempt, then there appears to be no

dispute that their activity is subject to

the section 114(f) compulsory license.

Broadcasters cite absolutely no

authority for the proposition that an

agency may not determine whether

conduct falls within a particular

regulatory scheme administered by the

agency when a claim of exemption is

made by the party whose conduct is in

question.2

In sum, the Copyright Office

concludes that it does possess the

authority to conduct this rulemaking,

based on our responsibility to conduct

a CARP proceeding to establish rates

and terms for the section 114 license, as

provided in section 114 itself and

chapter 8 of the Copyright Act, and the

Office’s general rulemaking authority

granted by section 702 of the Act.

b. Advisability of acting. Most of the

comments address the advisability of

the Copyright Office’s undertaking of

this rulemaking proceeding. Not

surprisingly, those commenters

representing broadcasters favor

postponement or cancellation of this

proceeding, pending the outcome of the

NAB action in the Southern District of

New York. For the reasons described

below, the Office believes that it is

appropriate to exercise its authority and

resolve this rulemaking proceeding

now.

First, the Copyright Office disagrees

with the assertion that a federal court is

better suited at this point to determine

whether broadcaster transmissions over

the Internet are exempted by section

114(d)(1)(A) of the Copyright Act. We

do not question the competence or

expertise of the United States District

Court for the Southern District of New

York to interpret the copyright laws,

and ultimately this issue may be

resolved by the courts following the

Office’s ruling. But in the first instance,

where the law is complex and requires

clarification, the general policy is to

allow the agency to complete its action,

particularly ‘‘where the function of the

agency and the particular decision

sought to be reviewed involve exercise

of discretionary powers granted the

agency by Congress, or require

application of special expertise.’’ Miss

America Organization v. Mattel, Inc.,

945 F.2d 536, 540 (2nd Cir. 1991), citing

McKart v. United States, 395 U.S. 185

(1969); see also, Cablevision, 836 F.2d at

608 (‘‘The Copyright Office certainly has

greater expertise in such matters than do

the federal courts.’’)

Moreover, the Office has a long and

extensive history of administering and

interpreting the Copyright Act,

especially the statutory licensing

provisions of the Copyright Act. See,

e.g., 49 FR 13029 (April 2,

1984)(definition of gross receipts under

section 111 license); 57 FR 3284

(January 29, 1992)(definition of a cable

system under section 111 license); 62

FR 18705 (April 17, 1997)(establishing

filing regulations for SMATV systems

under section 111). The Office also

produced for Congress two studies on

the advisability of adopting a

performance right for sound recordings.

Copyright Implications of Digital Audio

Transmission Services: A Report of the

Register of Copyrights (1991);

Subcomm. on Courts, Civil Liberties,

and the Administration of Justice of the

Committee on the Judiciary House of

Representatives, 95th Cong.,

Performance Right in Sound Recordings

(Comm. Print 1978). And the Register of

Copyrights testified before both the

Senate and House of Representatives on

the legislation that amended sections

106 and 114. See Digital Performance

Right in Sound Recordings Act of 1995:

Hearings on S. 227 Before the Senate

Comm. On the Judiciary, 104th Cong.,

(March 9, 1995); Digital Performance

Right in Sound Recordings Act of 1995:

Hearings on H.R. 1506 Before the

Subcomm. On Courts and Intellectual

Federal Register / Vol. 65, No. 238 / Monday, December 11, 2000 / Rules and Regulations 77295

3At the time this Federal Register notice was

prepared, RIAA’s motion to dismiss NAB’s claims

was still pending in the court, and no further

motions have been filed. It seems highly unlikely

that the court will resolve the merits of the

declaratory relief action in the near future.

4 ‘‘[T]he legislation is a narrowly crafted response

to one of the concerns expressed by representatives

of the music community, namely that certain types

of subscription and interactive audio services might

adversely affect sales of sound recordings and erode

copyright owners’ ability to control and be paid for

the use of their work.’’ 1995 Senate Report at 15.

5Prior to the passage of the DPRA, FCC-licensed

broadcasters, cable systems and satellite systems all

transmitted or retransmitted sound recordings in

their programming without incurring any copyright

liability for the public performance of a sound

recording. Congress, in acknowledging the

promotional value to the record companies that

flows to them through advertiser-supported, free

over-the-air broadcasting, included specific

exemptions in the law from the digital performance

right for these users. See 17 U.S.C. 114(d)(1)(A), (B)

and (C).

Property of the House Comm. On the

Judiciary, 104th Cong. (June 28, 1995).

Thus, we believe we are well-suited to

interpret section 114, including the

extent of the section 114(d)(1)(A)

exemption.

Second, not only have the

commenters to the NPRM not cited any

authority that the Copyright Office must

defer to a federal court action, but they

have not cited any cases where a

government agency has deferred action

to a federal court a matter before the

agency. Goya Foods, Inc. v. Tropicana

Prods, Inc., 846 F.2d 848 (2d Cir. 1988),

and Nader v. Allegheny Airlines, Inc.,

426 U.S. 290 (1976) are cited by the

Broadcasters for the proposition that the

matter of the section 114(d)(1)(A)

exemption ‘‘lies within the traditional

realm of judicial competence.’’ Goya,

846 F.2d at 851. Neither of these cases,

however, involved a government agency

deferring judgment to a federal court on

a matter clearly within the agency’s

jurisdiction. In fact, both cases involved

just the opposite; a court’s decision not

to stay a judicial proceeding pending

the resolution of an agency proceeding.

There is not, therefore, any legal

authority that compels or counsels the

Office to stay this proceeding in

deference to the court in New York.

Third, there is a need to resolve the

status of broadcast transmissions over

the Internet for purposes of the CARP

proceeding to establish rates and terms

for the section 114 statutory license as

quickly as possible. As discussed above,

the success of a CARP proceeding

depends upon a full and complete

record. This means that all parties who

are potentially subject to the section 114

license must be identified and given the

opportunity to participate in the CARP

proceeding. The NAB/RIAA litigation in

the Southern District of New York may

not be resolved for several years,3 which

leaves the Copyright Office two

undesirable choices: postpone the CARP

until that litigation is resolved, or

proceed with what we believe would be

an insufficient record and receive an

incomplete decision from the CARP.

Neither of these choices is acceptable;

therefore, the Office is now deciding

whether the simultaneous transmission

of an over-the-air radio broadcast

transmission made by an FCC-licensed

broadcaster over the Internet is exempt

from the digital performance right.

Fourth, NAB has sought a declaratory

judgment from the New York district

court and is not currently being sued for

copyright infringement. There is

considerable question whether NAB has

presented the district court with a live

case and controversy, and the RIAA has

sought dismissal of the case on

jurisdictional grounds. If the suit is

dismissed, there will be no opportunity

for a court to interpret the meaning of

the section 114(d)(1)(A) exemption, at

least until such time as a copyright

infringement action is brought against a

broadcaster for transmitting over-the-air

radio broadcasts on the Internet. The

Office needs to act now to move the

CARP proceeding forward.

Finally, even if the New York district

court rules, and the case is appealed

through the Second Circuit, that is still

not the final word from the federal court

system. Other suits may be brought in

other federal circuits, creating the

potential for conflicting determinations.

Thus, we believe it makes far greater

sense for the Copyright Office to address

the status of broadcast transmissions

over the Internet and the section

114(d)(1)(A) exemption, given that it is

the expert agency entrusted with the

authority to interpret the meaning of the

provisions of the Copyright Act.

Scope of the Section 114(d)(1)(A)

Exemption

In 1995, Congress enacted the Digital

Performance Right in Sound Recordings

Act (‘‘DPRA’’), Public Law 104–39,

which created an exclusive right for

copyright owners of sound recordings,

subject to certain limitations, to perform

sound recordings publicly by means of

certain digital audio transmissions.

Among the limitations on the

performance right was the creation of a

new compulsory license for nonexempt,

noninteractive, digital subscription

transmissions, 17 U.S.C. 114(f), and an

exemption for certain nonsubscription

transmissions. 17 U.S.C. 114

(d)(1)(A)(i)–(iii) (1995).

Congress passed the DPRA in

response to the growth in the use of

digital technology to provide recordings

with superior sound quality (e.g., digital

phonorecord deliveries) and the growth

of digital transmission services that

could offer a consumer a digital

transmission of a particular sound

recording on demand. Congress realized

that these advancements offered new

and better ways to distribute music to

the consumer, but at the same time, it

recognized that the current law was

inadequate to protect the interests of the

copyright owners whose livelihoods

depend upon the revenues generated

from the sales of their works. Thus,

Congress created a limited performance

right in sound recordings. S. Rep. No.

104–128, at 14 (1995) (hereinafter ‘‘1995

Senate Report’’).

In drafting the DPRA, Congress tried

to balance the interests of the music

industry,4 traditional users of sound

recordings,5 and those who wished to

utilize the new technologies to make

transmissions of sound recordings. The

expressed intent of Congress in passing

the Act was ‘‘to provide copyright

holders of sound recordings with the

ability to control the distribution of

their product by digital transmissions,

without hampering the arrival of new

technologies, and without imposing

new and unreasonable burdens on radio

and television broadcasters, which often

promote, and appear to pose no threat

to, the distribution of sound

recordings.’’ 1995 Senate Report at 15.

This change, however, was not meant to

alter or upset in any way the

longstanding relationship between the

record industry and broadcasters.

Broadcasters II at 15, citing 1995 Senate

Report, at 9; accord H.R. Rep. No. 104–

274, at 6 (1995) (hereinafter ‘‘1995

House Report’’).

To strike the proper balance between

these parties, Congress created three

exemptions for nonsubscription

transmissions, including an express

exemption for a nonsubscription

broadcast transmission. 17 U.S.C.

114(d)(1)(A)(i)–(iii)(1995). It is the scope

of this exemption, which has been

debated since the passage of the DPRA,

see Reply Comments of the National

Association of Broadcasters at 9–12

(dated June 20, 1997), submitted in

Docket No. RM 97–1, that is the subject

of this proceeding.

Broadcasters take a broad view of the

exemption. Their position is that any

transmission made by an FCC-licensed

broadcaster, whether made over-the-air

or over the Internet, falls within the

scope of the section 114(d)(1)(A)

exemption. Not surprisingly, Copyright

Owners and DiMA take a different view

and interpret the scope of the exemption

more narrowly. Their position is that a

77296 Federal Register / Vol. 65, No. 238 / Monday, December 11, 2000 / Rules and Regulations

6The definition ‘‘transmission’’ was amended in

the DMCA. It now reads: ‘‘A ‘transmission’ is either

an initial transmission or a retransmission.’’ 17

U.S.C. 114(j)(15) (1998).

transmission of a radio signal over the

Internet, generally referred to as a

webcast, is subject to the copyright

owner’s public performance right, even

when the transmission is made by an

FCC-licensed broadcaster and is

identical to an over-the-air transmission.

See 17 U.S.C. 106(6). They further argue

that Congress could not possibly have

meant to exempt anything other than

over-the-air broadcasts in the DPRA,

because Congress had not even yet

considered transmissions of sound

recordings over the Internet and how

they fit into the statutory scheme. This

is a critical point, because the scope of

the exemption did not change when

Congress amended section 114 in 1998

with the passage of the DMCA.

To resolve this question, we examine

the legislative history of the DPRA and

the DMCA to discern what Congress

intended to do and when it intended to

do it. From this examination, it is clear

that in 1995, Congress’ focus was not on

Internet transmissions of sound

recordings, but rather on the emerging

interactive services, e.g., the pay-perlisten, audio-on-demand, or ‘‘dial-up’’

services for a particular recording or

artist, and the existing noninteractive

subscription services that offered nearly

continuous play of music through cable

and satellite services. See 1995 Senate

Report at 22.

Consideration of Internet services

came later once it became clear that the

DPRA did not adequately address their

operations. The House Manager’s Report

for the DMCA makes this point clearly:

At the time the DPRSRA [Digital

Performance Right in Sound Recordings Act]

was crafted, Internet transmissions of music

were not the focus of Congress’ effort. Thus,

while the DPRSRA created a statutory license

for certain subscription services that existed

at the time, not enough was known about

how nonsubscription music services would

evolve on the Internet or in other digital

media. However, given the proliferation and

evolution of such services as well as the

licensing complexities described above, it is

now appropriate to address the licensing of

nonexempt nonsubscription digital audio

transmissions.

Staff of the House of Representatives

Comm. on the Judiciary, 105th Cong., 2d

Sess., Section-by-Section Analysis of

H.R. 2281 as Passed by the United States

House of Representatives on August 4,

1998 at 51 (Comm. Print, Serial No. 6,

1998) (hereinafter ‘‘House Manager’s

Report’’).

It was during the DMCA debate in

1998 that Congress focused on the need

to clarify how the law applied to the

transmission of a sound recording by a

noninteractive, nonsubscription service

streaming music over the Internet.

These services, now known in the

industry as webcasters, had argued that

they, like the broadcasters, were noninfringing users because noninteractive,

nonsubscription transmissions were

exempt under section 114(d)(1)(A)(i)

(1995). The record industry did not

agree, arguing that the transmissions

were subject to the newly created digital

performance right. DiMA at 4.

Congress revisited the issue and,

ultimately, amended sections 114 and

112 to clarify ‘‘that the digital sound

recording performance right applies to

nonsubscription digital audio services

such as webcasting, addresses unique

programming and other issues raised by

Internet transmissions, and creates

statutory licensing to ease the

administrative and legal burdens of

constructing efficient licensing

systems.’’ House Manager’s Report at 50.

These changes were part of the Digital

Millennium Copyright Act of 1998

(‘‘DMCA’’), Public Law 105–304, which

among other things, amended section

114 by creating a new statutory license

for nonexempt eligible nonsubscription

transmissions (e.g., webcasting) and

nonexempt transmissions by preexisting

satellite digital audio radio services to

perform sound recordings publicly in

accordance with the terms and rates of

the statutory license. 17 U.S.C.

114(f)(1998). The DMCA also amended

section 114(d)(1)(A) to ‘‘delete two

exemptions that were either the cause of

confusion as to the application of the

DPRA to certain nonsubscription

services (especially webcasters) or

which overlapped with other

exemptions (such as the exemption in

subsection (A)(iii) for nonsubscription

broadcast transmissions). The deletion

of these two exemptions [was] not

intended to affect the exemption for

nonsubscription broadcast

transmissions.’’ 1998 House Report at

80.

The question, however, is what

constitutes a nonsubscription broadcast

transmission for purposes of the DPRA,

since its meaning remained unchanged

when Congress amended section 114 in

1998. Both Copyright Owners and DiMA

maintain that a ‘‘nonsubscription

broadcast transmission’’ is nothing more

than a traditional over-the-air broadcast

made by an FCC-licensed broadcaster.

Broadcasters disagree and argue that the

definition of a ‘‘broadcast transmission’’

for purposes of the section 114 license

is not so limited, but includes all

transmissions of an AM or FM radio

signal, even those over the Internet, if

made by the FCC-licensed broadcaster.

In answering this question,

Broadcasters and Copyright Owners

each argue that the statutory language

and licensing scheme, the legislative

histories of the DPRA and the DMCA,

and public policy considerations

support its respective position.

Statutory Language and Legislative

History

a. Statutory definitions. The DPRA

established three exemptions from the

digital performance right for certain

nonsubscription transmissions,

including an express exemption for a

‘‘nonsubscription broadcast

transmission.’’ It read, in relevant part,

as follows:

(1) Exempt Transmissions and

Retransmissions.—The performance of a

sound recording publicly by means of a

digital audio transmission, other than as a

part of an interactive service, is not an

infringement of section 106(6) if the

performance is part of—

(A)(iii) a nonsubscription broadcast

transmission.

17 U.S.C. 114(d)(1)(A)(iii) (1995).

Broadcasters assert that the statutory

language is clear and unambiguous on

its face and that where this is so, one

need not resort to the legislative history

to discern the meaning of the statutory

terms. Broadcasters I at 7; Broadcasters

II at 18. Broadcasters II also rely on the

well-established proposition that where

a term is defined by the statute, an

agency and the courts are constrained to

adhere to this definition when

interpreting the provisions of the act,

citing Fox v. Standard Oil, 294 U.S. 87,

95–96 (1935).

Using these principles, the

Broadcasters analyze the statutory

definitions of the relevant terms set

forth in section 114(j) to determine

whether a webcast of an AM/FM radio

station’s programming is exempt. These

terms were defined in the DPRA as

follows:

A ‘‘broadcast’’ transmission is a

transmission made by a terrestrial broadcast

station licensed as such by the Federal

Communications Commission.

17 U.S.C. 114(j)(2) (1995).

A ‘‘digital audio transmission’’ is a digital

transmission as defined in section 101, that

embodies the transmission of a sound

recording. This term does not include the

transmission of any audiovisual work.

17 U.S.C. 114(j)(3)( (1995).

A ‘‘nonsubscription’’ transmission is any

transmission that is not a subscription

transmission.

17 U.S.C. 114(j)(5) (1995)

A ‘‘transmission’’ includes both an initial

transmission and a retransmission.

17 U.S.C. 114(j)(9) (1995).6

Federal Register / Vol. 65, No. 238 / Monday, December 11, 2000 / Rules and Regulations 77297

All commenters agree that the statutory

definitions for a ‘‘transmission,’’ a

‘‘digital audio transmission,’’ and a

‘‘nonsubscription transmission’’ are

clear and that the transmissions in

dispute qualify as nonsubscription, noninteractive, digital audio transmissions

for purposes of the DPRA. See

Broadcasters II at 20; Gorman at 28 n.89.

The dispute lies with the definition of

a ‘‘broadcast transmission.’’

Broadcasters argue that the pivotal

element in the definition is the

designation of the nature of the entity

making the transmission—not the

method of the transmission. In other

words, the fact that an FCC-licensed

broadcast station makes the

transmission is dispositive. Thus,

Broadcasters reason that any

transmission made by a terrestrial

broadcast station licensed by the FCC,

whether disseminated over-the-air or

transmitted over the Internet, fits the

statutory definition of a

‘‘nonsubscription broadcast

transmission’’ and therefore, is

expressly exempt under the section

114(d)(1)(A)(iii) (1995) exemption and

remains exempt under the current

section 114(d)(1)(A) (1998) provision.

Broadcasters I Reply at 6; Broadcasters

II Reply at 17. Furthermore, they

contend that transmissions made by

FCC-licensed broadcasters ‘‘do, in fact,

comply with FCC content requirements

to promote the public interest and serve

the local community.’’ Broadcasters II

Reply at 17.

In creating a safe harbor for radio

broadcasts, Congress identified key

factors that ‘‘place[d] such programming

beyond the concerns that animated the

creation of the limited public

performance right in sound recordings

in Section 106(6). Specifically, radio

programs that (1) are available without

subscription; (2) do not rely upon

interactive delivery; (3) provide a mix of

entertainment and non-entertainment

programming and other public interest

activities to local communities to fulfill

FCC licensing conditions; (4) promote,

rather than replace, record sales; and (5)

do not constitute ‘‘multichannel

offerings of various music formats.’’’’

Broadcasters II at 26–27 (footnote

omitted), citing 1995 Senate Report at

15. Broadcasters argue that these

characteristics apply equally to the

transmission of a local radio broadcast

signal whether transmitted over-the-air

or streamed via the Internet; and

consequently, all transmissions of radio

broadcasts should be exempt without

regard to the method of transmission.

Copyright Owners and DiMA disagree

with the Broadcasters’ approach. They

argue that the exemption for a

‘‘nonsubscription broadcast

transmission’’ was adopted in order to

shelter broadcasters from the new

digital performance right, if and when

they converted their over-the-air signals

from an analog to a digital format.

Gorman at 9; DiMA at 3. In direct

opposition to the Broadcasters’

approach, Copyright Owners focus on

how the word ‘‘terrestrial’’ and the

phrase ‘‘licensed as such by the FCC’’

are used in the definition of a

‘‘broadcast station.’’ See also, DiMA

Reply at 2.

They contend that use of the word

‘‘terrestrial’’ limits the exemption to

over-the-air transmissions made by a

broadcast station and, thus, by

implication, excludes from the

exemption any nationwide

transmissions by radio stations that

broadcast via satellite. Gorman at 29.

They point out numerous citations in

the legislative history which make it

abundantly clear that Congress meant to

protect traditional over-the-air broadcast

transmissions. For example,

The sale of many sound recordings and the

careers of many performers have benefitted

considerably from airplay and other

promotional activities provided by both

noncommercial and advertiser-supported,

free over-the-air broadcasting. * * * H.R.

1506 does not change or jeopardize the

mutually beneficial economic relationship

between the recording and traditional

broadcasting industries.

1995 House Report, at 13 (emphasis added).

[F]ree over-the-air broadcasts are available

without subscription, do not rely on

interactive delivery, and provide a mix of

entertainment and non-entertainment

programming and other public interest

activities to local communities to fulfill a

condition of the broadcasters’ license. The

Committee has considered these factors in

concluding not to include free over-the-air

broadcast services in the legislation.

Id. (emphasis added).

The classic example of such an exempt

transmission is a transmission to the general

public by a free over-the-air broadcast

station, such as a traditional radio or

television station, and the Committee intends

that such transmissions be exempt regardless

of whether they are in a digital or nondigital

format, in whole or in part.

1995 Senate Report at 19 (emphasis added).

They also argue that use of the phrase

‘‘licensed as such by the FCC’’ ‘‘reflects

Congressional intent to limit the scope

of the exemption to those activities for

which a broadcast station needs an FCC

license.’’ Gorman at 29 (footnote

omitted). The focus here is on the nature

of the transmission and not the

characterization of the entity making the

transmission. From this perspective, the

only transmissions which are exempt

under section 114(d)(1)(A) are those

made by an FCC-licensed broadcaster

under the terms of its license. In

general, such transmissions are overthe-air transmissions made within the

broadcaster’s local service area.

Webcasts of AM/FM radio signals are

not so limited and, therefore, do not fit

the statutory definition of a ‘‘broadcast’’

transmission for purposes of the DPRA.

Id. at 29–30; see also DiMA Reply at 2.

Copyright Owners acknowledge that

their interpretation of the exemption is

narrower than the Broadcasters’ but

argue that the exemption for ‘‘broadcast

transmissions’’ must be construed in

this manner because the statute

provides a complete exemption from the

digital performance right in sound

recordings. In making this argument,

they rely upon the general rule of

statutory construction that exemptions

must be construed narrowly, ‘‘and any

doubt must be resolved against the one

asserting the exemption,’’ in order to

preserve the purpose of the provision.

Tasini v. New York Times Co., 206 F.3d

161, 168 (2nd Cir. 2000). Specifically,

they argue that a narrow interpretation

of the exemption is particularly

warranted in this context ‘‘where

denying the exemption would still leave

AM/FM Webcasts eligible for a statutory

license (rather than subjecting them to

full copyright liability).’’ Gorman at 19.

Broadcasters dispute Copyright

Owners’ contention that it is

appropriate to read the exemption for

broadcast transmission so narrowly.

They claim that Copyright Owners

ignore Congress’ intent to construe the

digital performance right narrowly and

limit the right only to certain digital

transmissions of sound recordings.

Broadcasters II Reply at 24–25.

Broadcasters argue further that it is

inconceivable that after refusing for

decades to grant copyright owners of

sound recordings a sound recording

performance right, Congress ‘‘intended

to sweep within a newly-created and

narrowly-circumscribed performance

right broadcaster transmissions over the

Internet of their broadcast

programming.’’ Broadcasters II Reply at

21 (emphasis omitted).

Historically, the Copyright Office

construes limitations on copyright

narrowly, especially those rights

constrained by a compulsory license.

See 49 FR 14944, 14950 (April 16, 1984)

and 57 FR 3284, 3293 (January 29,

1992). This tenet is fully consistent with

the rules of statutory construction

which require ‘‘[s]tatutes granting

exemptions from their general operation

[to] be strictly construed, and any doubt

must be resolved against the one

asserting the exemption.’’ See 73 Am.

Jur. 2d 313 (1991); Tasini, supra.

77298 Federal Register / Vol. 65, No. 238 / Monday, December 11, 2000 / Rules and Regulations

7A ‘‘transmission’’ is either an initial

transmission or a retransmission. 17 U.S.C.

114(j)(15).

Broadcasters argue that this precept

favors their interpretation, asserting that

the newly created digital performance

right was narrowly crafted and not

meant to disturb the traditional

broadcasting system in place at the time

the DPRA was passed. But once created,

the right is to be defined by reference to

the statute, and there is no reason to

depart from the general rule that the

exemption to the right must be narrowly

construed. The key to determining the

scope of the exemption is an

understanding of the meaning of the

term ‘‘broadcast transmission.’’

As previously discussed, Broadcasters

assert that the exemption from the

digital performance rights applies not

only to traditional over-the-air broadcast

transmissions, but also to transmissions

of these signals over the Internet. The

Broadcasters interpret the exemption in

the broadest possible manner based

upon their reading of the statutory

definition for a ‘‘broadcast

transmission’’ which defines the

transmission solely on the basis that it

was made by an FCC-licensed

broadcaster. They argue that the

language is clear and unambiguous and

so the analysis ends here.

The Copyright Office does not agree.

The use of the descriptive phrase

‘‘terrestrial broadcast station licensed as

such by the Federal Communications

Commission’’ involves much more than

the mere designation of a particular

entity. In fact, as the Copyright Owners

argue, Congress appears to have chosen

these words not only as a convenient

way in which to identify the entity

entitled to make a broadcast

transmission, but also as a way to

circumscribe which actions the entity

may legally undertake within the scope

of the section 114 exemption. Even if

the Broadcasters’ reading of the

definition is a plausible one, the

Copyright Owners’ more limited

interpretation, seconded by DiMA, is at

least equally plausible. For this reason,

the Office turns to the relevant

legislative history in order to

understand how Congress intended the

law to operate.

Turning to the legislative history is

appropriate where, as here, the precise

meaning is not apparent and a clear

understanding of what Congress meant

is crucial to an accurate determination

of how Congress intended the digital

performance right and the statutory

scheme to operate. See also, 57 FR 3284,

3293 (1992). Consequently, we place

great weight on the passages in the 1995

House and Senate Reports which

discuss and characterize broadcast

transmissions.

As noted above, Congress used the

descriptive term ‘‘over-the-air’’

frequently to identify those broadcasts it

sought to protect under the exemption.

Such transmissions are made in

accordance with the terms of the FCC

license issued to the broadcaster. If

Congress had discussed or referenced

any other type of transmission made by

an FCC-licensed broadcaster, we might

be more inclined to support the

Broadcasters’ interpretation of the

statutory definition. This is not the case,

and the Office concludes that Congress

used the phrase ‘‘licensed as such’’ to

serve two purposes. First, it identifies

the entity entitled to make a broadcast

transmission under an exemption to the

digital performance right; and second, it

specifies which transmissions made by

the broadcaster are exempt, that is,

those transmissions made over-the-air

by the broadcasting entity under the

terms of the FCC license.

b. Additional exemptions. Copyright

Owners do not limit their analysis of the

statutory language to the statutory

exemption under consideration. This is

only their starting point. They continue

their analysis of section 114 under a

second well-established rule of statutory

construction which requires

interpretation of each provision in a

section in such a way as to produce a

harmonious whole. 2A Sutherland, Stat.

Const.§ 46.05 (6th ed. 2000); see also 57

FR 3284, 3292 (1992).

Of particular interest are the

exemptions for a ‘‘retransmission of a

radio station’s broadcast transmission’’

set forth in sections 114(d)(1)(B) and (C)

(1995). Section 114(d)(1)(B) restricts

retransmissions to a 150-mile radius

from the site of the radio broadcast

transmitter, to the local communities

served by the retransmitter, and those

carried by a cable system or a

noncommercial educational broadcast

station. Similarly, section 114(d)(1)(C)

exempts certain incidental

transmissions, transmissions to and

within business establishments, and

those retransmissions made to deliver

licensed programming to the user.

Copyright Owners argue that these

provisions merely reflect congressional

intent to grandfather existing

retransmission services at the time of

the passage of the DPRA. Gorman at 10;

DiMA Reply at 2–3; see also, 1995

Senate Report at 22 (noting that a

retransmission over the Internet which

is being used to facilitate an exempt

transmission or retransmission, would

not qualify as an ‘‘incidental’’

retransmission under section

114(d)(1)(C)(1)).

Similarly, DiMA argues that Congress

never intended to exempt broadcast

retransmissions via the Internet;

otherwise it would have enlarged these

exemptions when it passed the DMCA,

which it chose not to do. See DiMA at

5. In addition, DiMA argues that

Congress would not have limited the

exemption for a ‘‘retransmission’’ of a

‘‘broadcast transmission’’ by

differentiating between radio

transmissions made by terrestrial and

non-terrestrial broadcast technologies, if

it was content with exempting any

transmission made by an FCC-licensed

broadcaster. DiMA Reply at 2. Copyright

Owners concur with DiMA on this

point. In addition, they argue that the

definition of an ‘‘eligible

nonsubscription transmission’’ supports

this interpretation because it includes

retransmissions of broadcast signals.

Had Congress meant to exempt any and

all transmissions of a broadcast signal,

it would not have included this wording

in the definition of an ‘‘eligible

nonsubscription transmission,’’ the

newly created class of transmissions

subject to the statutory license. DiMA

Reply at 3.

Broadcasters counter the Copyright

Owners’ interpretation in regard to these

exemptions, noting an exception to the

150-mile limitation for nonsubscription

retransmissions by ‘‘a terrestrial

broadcast station.’’ They also suggest

that the limitations on retransmissions

were directed only to those made by

third parties, and not to a simultaneous

transmission made directly by the FCClicensed broadcaster. Broadcasters II

Reply at 25. In addition, Broadcasters

stress that a transmission of a radio

program, even via the Internet, serves

the needs and interests of the local

community as required under the FCC

license. For these reasons, Broadcasters

argue that Congress created a specific

exemption for certain retransmissions of

nonsubscription radio broadcast

transmissions, including those that are

transmitted ‘‘by a terrestrial broadcast

station, terrestrial translator, or

terrestrial repeater licensed by the

Federal Communications Commission.’’

While it is clear that a broadcast

transmission is exempt, it is equally

clear that a retransmission of a radio

signal (though technically a

transmission) 7 is exempt only under

certain circumstances. This fact alone

undermines the Broadcasters’ assertion

that any transmission made by an FCClicensed broadcaster is immediately and

totally exempt. In addition, their

Federal Register / Vol. 65, No. 238 / Monday, December 11, 2000 / Rules and Regulations 77299

8 In fact, streaming was a novel and little

recognized—much less used—technology in 1995.

According to one radio analyst cited by DiMA, the

number of worldwide radio broadcasts over the

Internet has grown from a meager 56 stations in

1995 to more than 3500 today. DiMA Rely at 4 n.10.

9Section 114(d)(1)(C)(iv) provides that:

The performance of a sound recording publicly

by means of a digital audio transmission, other than

as a part of an interactive service, is not an

infringement of section 106(6) if the performance is

part of—

(C) a transmission that comes within [] the

following categor[y]—

(iv) a transmission to a business establishment for

use in the ordinary course of its business: Provided,

That the business recipient does not retransmit the

transmission outside of its premises or the

immediately surrounding vicinity, and that the

transmission does not exceed the sound recording

complement. 17 U.S.C. 114(d)(1)(C)(iv).

specific arguments on this point do not

withstand scrutiny.

First, the exception to the 150-mile

limitation is only for retransmissions

made by ‘‘a terrestrial broadcast station,

terrestrial translator, or terrestrial

repeater licensed by the Federal

Communications Commission.’’ 17

U.S.C. 114(d)(1)(B)(i)(I). Again, the fact

that the entity making the

retransmission must be licensed by the

FCC sets limits on how far each

retransmission can reach. In no case,

however, could these retransmissions

parallel the reach of the Internet or a

retransmission made by a satellite.

Second, the suggestion that the

retransmissions discussed in section

114(d)(1)(B) refer only to those made by

third parties and not to simultaneous

retransmissions made by the originating

broadcaster is groundless. There is no

such distinction set forth in the statute.

And finally, we see no significance to

the fact that the retransmission of a

radio signal may meet the license

requirements for service to a local

community, when in fact such a

transmission exceeds the geographical

limits established for the broadcast

under the FCC license.

c. Expansion of the statutory license.

Copyright Owners and DiMA contend

that the original licensing scheme was

conceived without any significant

thought to the transmission of sound

recordings by means other than the

conventional over-the-air transmissions

in use at the time. Copyright Owners at

12–13; DiMA at 4; See also House

Manager’s Report at 51. This became an

obvious problem with the growth of the

Internet and the rapid increase in the

use of the new streaming technology to

transmit sound recordings over the

Internet.8

Copyright Owners contend that, in

order to address this problem, Congress

made a significant change to section 114

when it passed the DMCA. For example,

it amended section 114(d)(2) to extend

the statutory license to ‘‘eligible

nonsubscription transmissions’’ and

defined the term to include

retransmissions of broadcast

transmissions. 17 U.S.C. 114(j)(6).

Copyright Owners argue that these

changes support its position that the

statutory scheme militates against

exempting transmissions of AM/FM

radio signals over the Internet.

First, they note that when Congress

expanded the statutory license, it

specifically considered the needs of the

emerging services that wanted to stream

sound recordings over the Internet. See

1998 House Report at 80, 82 and 84.

They then claim that Congress never

‘‘intended to single out any class of

webcasters for special treatment, or for

some webcasters to be exempt and

others to be liable.’’ Gorman at 24.

Instead, they argue that Congress

amended the DPRA to make all

webcasters, including those who are

also FCC-licensed broadcasters, eligible

for the statutory license.

In addition, they note that in the case

where the transmitting entity does not

have the right or ability to control the

programming of the broadcast station,

special terms apply. Congress made

these transmissions subject to the

compulsory license but chose not to

make these transmissions immediately

subject to certain restrictions otherwise

applicable to a nonexempt,

nonsubscription transmission, except in

the case where the broadcast station

regularly violates the restriction and the

copyright owners give notice to the

service making the retransmission. See

17 U.S.C. 114(d)(2)(C)(i)–(iii), (ix).

Copyright Owners argue that ‘‘[t]his

language implies that where the

transmitter can control the content of

the signal, [it] must meet the conditions

of the statutory license. Because the

content of AM/FM signals can be

controlled by the broadcaster, this

suggests that Congress intended

broadcast transmissions to be subject to

the statutory license.’’ Gorman at 25–26

(footnotes omitted). Otherwise, as DiMA

points out, ‘‘why would Congress have

imposed licensing and ‘notice and

takedown’ requirements on third parties

that retransmit radio broadcasts, if the

broadcaster itself could transmit the

same programming over the Internet

without a license and without

restriction?’’ DiMA Reply at 4 (footnote

omitted).

The Copyright Office believes that the

narrowly drawn safe harbors for

retransmissions of radio signals

illustrate Congressional intent to

distinguish between a traditional overthe-air broadcast transmission of an

AM/FM radio signal and a

retransmission of that signal. Even

though the statutory definition of a

transmission includes both an initial

transmission and a retransmission,

Congress clearly chose to treat

retransmissions of a radio signal

differently. ‘‘Retransmissions of radio

station broadcast transmissions * * *

are exempt only if they are not part of

an interactive service and fall within

certain specified categories.’’ 1995

Senate Report at 19 (emphasis added).

These restrictions limit the reach of a

retransmission of an AM/FM radio

signal and neither suggest nor allow for

retransmission of an AM/FM radio

signal to a national audience. Had

Congress meant to exempt without

limitation a further broadcast of a radio

station’s signal beyond the limits

prescribed by its FCC license, it would

not have restricted its retransmissions

beyond the 150-mile limit to only those

entities who make such transmissions

under the terms of an FCC license, or

limited subsequent retransmissions to

the reach of a terrestrial broadcast

station, terrestrial translator, or

terrestrial repeater. 17 U.S.C.

114(d)(B)(i).

d. Ephemeral recordings. The DMCA

amended section 112 to adjust for

changes Congress made to section 114.

Copyright Owners argue that Congress

amended section 112(a) to make clear

that a broadcast radio or televison

station, licensed as such by the FCC,

may make a single ephemeral copy of a

sound recording in furtherance of its

transmissions within its local service

area even when those transmissions are

made in a digital format. For purposes

of section 112(a)(1), the term ‘‘local

service area’’ is used as defined in

section 111(f) of the Copyright Act. See,

H.R. Rep. No. 94–1476, at 103 (1976).

This provision limits the geographic

reach of the signal and makes clear that

it is not subject to worldwide

distribution. In addition, Congress

created a second statutory license in

order to give those entities eligible for

a section 114 statutory license and those

exempt under section 114(d)(1)(C)(iv) 9

the right to make one or more ephemeral

recordings to facilitate their

transmissions under the section 112

statutory license. See 17 U.S.C. 112(e).

Under the Copyright Owners’

construction of the section 112

amendments, a broadcaster would be

unable to make ephemeral recordings

under the exemption set forth in section

112(a)(1) for the purpose of streaming its

radio signal because the transmission

could not be limited to the station’s

‘‘local service area.’’ Likewise,

77300 Federal Register / Vol. 65, No. 238 / Monday, December 11, 2000 / Rules and Regulations

broadcasters would be ineligible for the

section 112(e) statutory license if AM/

FM radio transmissions are exempt,

since only a transmitting organization

entitled to make transmissions under

the section 114 license or the section

114(d)(1)(C)(iv) business exemption can

make ephemeral recordings under the

statutory license. Because Congress’

intent was not to prevent broadcasters

from making ephemeral recordings,

Copyright Owners believe the only

plausible construction of the statute

requires the exemption for a

‘‘nonsubscription broadcast

transmission’’ to exclude AM/FM

webcasts. Gorman at 27.

Broadcasters offer a different

interpretation of the effect of the new

amendments. They contend they are

eligible to make an ephemeral recording

under section 112(a) because the ‘‘local

service area’’ for a transmission over the

Internet is global in scope. Broadcasters

II Reply at 26. DiMA agrees with the

Broadcasters on this point, citing the

Conference Report to the DMCA:

The addition to section 112(a) of a

reference to section 114(f) is intended to

make clear that subscription music services,

webcasters, satellite digital audio radio

services and others with statutory licenses for

the performance of sound recordings under

section 114(f) are entitled to the benefits of

section 112(a) with respect to the sound

recordings they transmit.

1998 House Report at 79. DiMA notes

that each of the listed services has a

‘‘local service area’’ that extends beyond

the traditional local community served

by a terrestrial radio station and is either

‘‘inherently national or global in scope.’’

DiMA at 7.

Fortunately, the Copyright Office

need not reach the question concerning

the scope of the ‘‘local service area’’ for

an Internet-originated program to

resolve the question as it affects this

proceeding, since it is the ‘‘local service

area’’ of the FCC-licensed broadcaster

that is relevant. The change to section

112(a) was made ‘‘to extend explicitly to

broadcasters the same privilege they

already enjoy with respect to analog

broadcasts.’’ 1998 House Report at 78.

The ‘‘local service area’’ of a broadcaster

is defined by the terms of the FCC

license under which it operates. The

fact that an FCC-licensed broadcaster

may choose to transmit its signal

simultaneously over the Internet does

not, by virtue of this action, enhance the

‘‘local service area’’ associated with the

initial broadcast of the radio signal. To

do otherwise would mean that the

broadcasting area for a particular radio

signal as defined by the terms of an FCC

license would be totally meaningless,

since the simultaneous transmission of

a radio signal over the Internet makes

the transmission instantly available

anywhere in the world.

Consequently, we agree with the

Copyright Owners that section 112(a)

provides an exemption for making an

ephemeral recording to a broadcaster

who is transmitting its signal over-theair in a digital format. It does not allow

for the making of an ephemeral

recording for the purpose of streaming

that same signal over the Internet unless

the transmission is made under the

statutory license set forth in section 114.

This interpretation is consistent with

our analysis of the exemption for a

broadcast transmission.

Policy Considerations

Industry analysts have questioned

whether it would have been logical for

Congress to craft a statutory licensing

scheme which subjects a third party that

licenses a radio station signal for

streaming purposes to the statutory

licensing provisions when the radio

station itself could perform the same

operation without any restrictions or

restraints under a general exemption.

See David J. Wittenstein & M. Larrane

Ford, The Webcasting Wars, 2 J.

Internet. L. 1,8 (1998); M. Powers,

Broadcasters Sue Recording Industry;

http://radio.about.com/entertainment/

radio/library/weekly/aa/33000b.htm)

(March 30, 2000).

Copyright Owners have asked the

same question and conclude that it

would be illogical to allow broadcasters

to stream their AM/FM radio signal

under an exemption but impose

copyright liability on a third party when

it retransmits the identical

programming. Furthermore, they argue

that ‘‘[t]here is certainly nothing in the

DPRA or DMCA to suggest that the right

of a sound recording copyright owner to

compensation should turn on whether

the same transmission is made by the

broadcaster or the broadcaster’s agent.’’

Gorman at 23; see also Wittenstein &

Ford, supra at 8.

More importantly, however, DiMA

argues that by allowing broadcasters to

stream their programming over the

Internet, broadcasters get a free pass to

engage in the very activity that

compelled Congress to pass the DPRA.

For example, the law forbids an online

service, subject to the statutory license,

from playing multiple selections by the

same recording artist during any threehour period. DiMA states that should

broadcasters be allowed to stream their

programming over the Internet under

the section 114(d)(1)(A) exemption, they

could ignore the very program

restrictions put into place to thwart

unauthorized copying with impunity

and gain market share—and a

competitive advantage over nonbroadcasting webcasters—by virtue of

these practices. DiMA at 6; DiMA Reply

at 4.

On the other hand, Broadcasters

contend that it would be absurd to

embrace the Webcasters and Copyright

Owners’ interpretation of the statute

because it would mean that radio

broadcasters would have to alter

radically their programming practices in

order to fit the requirements of the

statutory license, negotiate voluntary

licenses to do what they already do

over-the-air, or cease streaming

activities altogether. Broadcasters II at

13; Broadcasters II Reply at 28. They

argue that such a harsh reading of the

statute flies in the face of the stated

intent of the DPRA because it would

alter dramatically the longstanding

relationship between the record

industry and the broadcasters that

Congress meant to preserve; a

relationship which historically has had

a beneficial and a promotional effect on

the sale of records. Broadcasters I Reply

at 11. Therefore, Broadcasters maintain

that all streamed broadcasts of AM/FM

radio signals made by an FCC-licensed

broadcaster, whether over-the-air or via

the Internet, fall within the safe harbor

created in the section 114(d)(1)(A)

exemption.

Broadcasters also assert that the

acknowledged benefits that flow from

the longstanding relationship between

the record industry and broadcasters are

not lost because a radio program is

streamed over the Internet. ‘‘If radio

broadcasts are beneficial to the record

industry on a local scale due to the

public exposure afforded sound

recordings from their airplay, that same

broadcasting activity is all the more

beneficial to the record industry on a

national or global scale due to the even

greater public exposure (leading to

increased record sales) that those

recordings will receive.’’ Broadcasters II

Reply at 32 (emphasis omitted).

DiMA disagrees. It argues that a

broadcaster would receive the greater

benefit if allowed to transmit its radio

signal over the Internet under the

section 114(a) exemption because

webcasts create an additional revenue

stream for a broadcaster apart from the

advertising revenues that flow from the

traditional over-the-air broadcast. Since

all services competing in the Internet

market compete for the same audience

share and advertising dollars, DiMA

argues that they should do business on

the same basis and be subject to the

same licensing requirements.

Broadcasters counter this argument by

focusing on the restrictions placed on

Federal Register / Vol. 65, No. 238 / Monday, December 11, 2000 / Rules and Regulations 77301

the type of advertising that broadcasters

are allowed to do under their license,

e.g., restrictions on tobacco advertising

and on promotions and contests, and

the costs incurred in meeting their

obligations to serve the needs of their

communities. State Broadcasters Reply

at 4. In fact, broadcasters argue that they

will be at a competitive disadvantage if

they cannot transmit sound recordings

over the Internet under an exemption

and, instead, are subject to potentially

prohibitive license fees. Id. at 5.

Interestingly, Broadcasters rely on the

fact that the programming on a

transmission of an AM/FM radio signal

over the Internet is identical to the

programming transmitted on an overthe-air broadcast to support their

position that these signals are, in both

instances, exempt. They contend that

Congress exempted broadcast

transmissions because they ‘‘comply

with FCC content requirements to

promote the public interest and serve

the local community.’’ Broadcasters II

Reply at 17, 22. In addition, they argue

that much of the value of the Internet

transmission comes from the ability to

retain listener loyalty, both those within

the local community served by the overthe-air transmission and those ‘‘who are

traveling away from their home

listening areas.’’ Broadcasters I Reply at

3. Broadcasters also distinguish radio

broadcast streams from Internetoriginated programs on the basis that

the radio stations generally program

only a single channel, unlike the

multiple channels of music

programming offered by Internet-only

services. Broadcasters II Reply at 27

n.14.

Yet, this distinction does not explain

why a broadcaster licensed by the FCC

can freely stream its radio programming

over the Internet, but a third-party

licensee of its content is subject to the

statutory license. Both transmitting

entities are providing exactly the same

programming which must comply with

FCC restrictions and serve the local

communities. To resolve this apparent

paradox, we believe that Congress

defined discrete categories of

transmissions (rather than transmitters),

then evaluated the potential for

displacement of record sales on the

basis of the characteristics of those

transmissions and applied the statutory

restrictions and exemptions

accordingly.

Using this approach, the Office has

determined that the section 114(d)(1)(A)

exemption does not cover transmissions

of an AM/FM radio signal over the

Internet. This conclusion is apparent

when one considers that under the

Broadcasters’ entity-based

interpretation, a broadcaster that created

an Internet-only service

indistinguishable from the services

offered by non-broadcaster webcasters

would be exempt from the digital public

performance right, even though its

transmissions are never part of an overthe-air broadcast. In fact, under the

Broadcasters’ interpretation, a

broadcaster could cease broadcasting

altogether, but continue to enjoy the

exemption so long as it held the FCC

license.

When Congress crafted the DPRA, it

intended that the law would

accommodate foreseeable technological

changes and drafted the bill

accordingly. At the same time, Congress

understood that it could not predict

how technology would develop or how

it would alter the ways in which sound

recordings were performed or

distributed. Nevertheless, its intent was

clear: ‘‘[I]t is the Committee’s intention

that both the rights and the exemptions

and limitations created by the bill be

interpreted in order to achieve their

intended purposes.’’ 1995 Senate Report

at 14.

The purpose for enacting the DPRA

was two-fold: ‘‘first, * * * to ensure

that recording artists and recording

companies will be protected as new

technologies affect the ways in which

their creative works are used; and

second, to create fair and efficient

licensing mechanisms that address the

complex issues facing copyright owners

and copyright users as a result of the

rapid growth of digital audio services.’’

House Manager’s Report at 49.

The Copyright Office’s determination

to read the statutory definition of a

‘‘broadcast transmission’’ as including

only over-the-air transmissions made by

an FCC-licensed broadcaster under the

terms of that license is consistent with

Congress’ intent in passing the DPRA.

This approach preserves the traditional

relationship between the record

companies and the radio broadcasters as

it existed in 1995. In effect, it allows for

the continued transmission of an overthe-air radio broadcast signal without

regard to whether the transmission is

made in an analog or a digital format.

Such signals, however, are limited

geographically under the licensing

standards of the FCC. At the same time,

it subjects all other digital transmissions

made by a noninteractive,

nonsubscription service to the terms

and conditions of the statutory license

in order to compensate record

companies for the increased risk that a

listener may make a high-quality

unauthorized reproduction of a sound

recording directly from the transmission

instead of purchasing a legitimate copy

in the marketplace, a risk that is clearly

greater when the recipient is receiving

the transmission on a computer, which

can instantly replicate and retransmit

the transmission.

Congress’ intent would be thwarted if

an FCC-licensed radio broadcaster was

allowed to transmit its radio signal over

a digital communication network, such

as the Internet, without any restrictions

on the programming format. For

example, as DiMA suggests, an FCClicensed broadcaster could tailor its

program to highlight a particular artist

and announce its intent to do so in

advance, thereby increasing the

likelihood that a listener would be

prepared to make a copy of the sound

recording at the appointed time. Such a

result would violate not only the letter

of the law under our interpretation of

the statute, but also the very spirit and

intent of the law. For these reasons, the

definition of the term ‘‘Service’’ shall be

amended to reflect the determination of

the Copyright Office that any entity that

transmits an AM/FM radio signal over a

digital communications network is

subject to the terms of the statutory

license set forth in 17 U.S.C. 114(d)(2).

List of Subjects in 37 CFR Part 201

Copyright.

In consideration of the foregoing, part

201 of 37 CFR is amended in the

manner set forth below.

PART 201—GENERAL PROVISIONS

1. The authority citation for part 201

continues to read as follows:

Authority: 17 U.S.C. 702.

2. Section 201.35(b)(2) is revised to

read as follows:

§ 201.35 Initial Notice of Digital

Transmission of Sound Recordings under

Statutory License.

* * * * *

(b) * * *

(2) A Service is an entity engaged in

the digital transmission of sound

recordings, pursuant to section 114(f) of

title 17 of the United States Code, and

includes, without limitation, any entity

that transmits an AM/FM broadcast

signal over a digital communications

network such as the Internet, regardless

of whether the transmission is made by

the broadcaster that originates the AM/

FM signal or by a third party, provided

that such transmission meets the

applicable requirements of the statutory

license set forth in 17 U.S.C. 114(d)(2).

* * * * *

77302 Federal Register / Vol. 65, No. 238 / Monday, December 11, 2000 / Rules and Regulations

Dated: November 21, 2000.

Marybeth Peters,

Register of Copyrights.

James H. Billington,

The Librarian of Congress.

[FR Doc. 00–31457 Filed 12–8–00; 8:45 am]

BILLING CODE 1410–31–P

POSTAL SERVICE

39 CFR Part 20

Global Express Guaranteed: Changes

in Postal Rates

AGENCY: Postal Service.

ACTION: Interim rule with request for

comment.

SUMMARY: The Postal Service is

changing the rates for Global Express

Guaranteed (GXG) Document service

and Global Express Guaranteed NonDocument service and announcing the

inclusion of GXG in the current U.S.

Postal Service collection pickup service.

EFFECTIVE DATE: The effective date will

be concurrent with the effective date for

the new domestic rates, tentatively set

for January 7, 2001. Comments on the

interim rule must be received on or

before January 6, 2001.

ADDRESSES: Written comments should

be mailed or delivered to Business

Initiatives, Expedited/Package Services,

U.S. Postal Service, 200 E. Mansell

Court, Suite 300, Roswell, GA 30076–

4850. Copies of all written comments

will be available for public inspection

between 9 a.m. and 4 p.m., Monday

through Friday, in the Expedited/

Package Services office, 200 E. Mansell

Court, Suite 300, Roswell, GA.

FOR FURTHER INFORMATION CONTACT:

Malcolm E. Hunt, 770–360–1104.

SUPPLEMENTARY INFORMATION: Global

Express Guaranteed is the U.S. Postal

Service’s premium international mail

service. GXG is an expedited delivery

service that is the product of a business

alliance between the U.S. Postal Service

and DHL Worldwide Express, Inc. It

provides time-definite service from

designated U.S. ZIP Code areas to

locations in over 200 destination

countries and territories. Global Express

Guaranteed consists of two mail

classifications: Global Express

Guaranteed Document Service and

Global Express Guaranteed NonDocument Service. Regulations for

Global Express Guaranteed service are

currently set forth in section 215 of the

International Mail Manual (IMM). These

regulations were moved to IMM 210

pursuant to the notice published in the

Federal Register on September 26, 2000.

Numerous and successive expansions

and changes to the service have been

listed in previous Federal Register

notices and are summarized in the final

rule, which will be published in early

December.

The Postal Service is changing the

rates for Global Express Guaranteed

service and is announcing the inclusion

of this service in the current collection

pickup service. The revised set of rates,

set forth below, is based on experience

gained with providing the service and

more accurately reflects the actual costs

of providing this service across the

various rate groups. Additionally, the

rate lanes for the Global Express

Guaranteed Non-Document service are

changed to an alpha character

designation for clarity between the

Document and Non-Document services.

Although the Postal Service is

exempted by 39 U.S.C. 410(a) from the

advance notice requirements of the

Administrative Procedure Act regarding

proposed rulemaking (5 U.S.C. 553), the

Postal Service invites public comment

on the interim rule at the above address.

The Postal Service is implementing

the following rates and amending the

International Mail Manual, which is

incorporated by reference in the Code of

Federal Regulations. See 39 CFR 20.1.

List of Subjects in 39 CFR Part 20

Foreign relations, International postal

services.

PART 20—[AMENDED]

1. The authority citation for 39 CFR

Part 20 continues to read as follows:

Authority: 5 U.S.C. 552(a); 39 U.S.C. 401,

404, 407, 408.

2. Chapter 2 of the International Mail

Manual is amended as follows to

provide for the new rates and to include

pickup service:

2 CONDITIONS FOR MAILING

* * * * *

210 Global Express Guaranteed

* * * * *

213.2 Destination Countries and Rate

Groups

[The Individual Country Listings for

Global Express Guaranteed (GXG)

service rates will be amended to reflect

the rate changes.]

213.3 Pickup Service

Collection service pickup is available

for delivery addresses within the

participating Global Express Guaranteed

ZIP Codes. GXG collection service will

be provided when a postal employee

goes to a customer’s location

specifically to deliver or collect mail

other than Global Express Guaranteed

shipments and the employee is handed

a Global Express Guaranteed shipment

in addition to other mail to be collected.

No pickup fee will be charged when

Global Express Guaranteed shipments

are picked up during a delivery stop or

during a scheduled stop made to collect

other mail not subject to a pickup fee.

On-call or scheduled pickup services

are currently not available for GXG

Service.

* * * * *

216.1 Document Service Rates/Groups

Weight not over

(lbs.)

Rate

group

1

Rate

group

2

Rate

group

3

Rate

group

4

0.5 ............................................................................................................................................................ 24.00 25.00 32.00 32.00

1 ............................................................................................................................................................... 33.00 34.00 39.00 45.00

2 ............................................................................................................................................................... 38.00 40.00 46.00 52.00

3 ............................................................................................................................................................... 40.00 46.00 53.00 59.00

4 ............................................................................................................................................................... 43.00 50.00 60.00 66.00

5 ............................................................................................................................................................... 46.00 55.00 67.00 73.00

6 ............................................................................................................................................................... 48.00 58.00 72.00 80.00

7 ............................................................................................................................................................... 51.00 61.00 76.00 86.00

8 ............................................................................................................................................................... 53.00 65.00 80.00 93.00

9 ............................................................................................................................................................... 55.00 68.00 85.00 100.00

10 ............................................................................................................................................................. 58.00 70.00 89.00 104.00

11 ............................................................................................................................................................. 60.00 73.00 92.00 109.00