D.C. Circuit Holds Copyright Royalty Board Unconstitutional, Fixes It

On Friday the D.C. Circuit held that the Copyright Royalty Board’s structure violates the Appointments Clause and judicially reconstructed the Board to avoid the constitutional violation.  

The parties agreed that Copyright Royalty Judges “exercise significant authority” of the sort characteristic of constitutional officers, so the Court had only to decide whether they were principal officers who must be appointed by the President with Senate confirmation or inferior officers who may be appointed by “the Heads of Departments”–in this case, the Librarian of Congress.

In determining that the Copyright Royalty Judges were superior officers, the court relied primarily on three factors: (1) the lack of significant supervision exercised by the Librarian and Register of Copyrights over the Board’s “vast discretion over the rates and terms” that govern copyright owners and users, (2) the Librarian’s inability to remove CRJs except for good cause, and (3) the virtually unreviewable nature of the Board’s rate-setting decisions, which are “subject to reversal or change only when challenged in an Article III court.”

Rather than requiring CRJs to be appointed by the President and confirmed by the Senate, the D.C. Circuit demoted them from principal officers to inferior officers by granting the Librarian of Congress unlimited removal power over the Board.  In resolving the constitutional violation by judicial fiat, the D.C. Circuit followed the example of the Supreme Court in Free Enterprise Fund v. PCAOB130 S. Ct. 3138 (2010), which preserved the Public Company Accounting Oversight Board by blue-penciling a for-cause removal restriction that had doubly insulated that Board from presidential control.

The court noted tension in the Supreme Court’s Appointments Clause cases concerning the role of the officer’s “significant authority” in the analysis.  According to Edmond v. United States520 U.S. 651 (1997), significant authority marks only “the line between officer and nonofficer” and “not the line between principal and inferior officer.”  Thus, Coast Guard Court of Criminal Appeals Judges, who exercised significant authority, were inferior officers nonetheless, because they were subject to substantial supervision.  But in Morrison v. Olson, 487 U.S. 654 (1988), the Court looked to the independent counsel’s limited authority in determining she was an inferior officer.  The D.C. Circuit did not need to resolve this tension, because the Copyright Royalty Board’s authority is significant by any standard.

Judge Williams also wrote the court’s previous Appointments Clause opinion, in which he held that IRS appeals officers, because of their limited discretionary authority, are not subject to the Appointments Clause.

Intercollegiate Broadcasting System Inc v. Copyright Royalty Board, No. 11-1083 (July 6, 2012) (Williams, S.J., joined by Garland & Griffith, JJ.).

See also:

  • SoundExchange, Inc. v. Librarian of Cong., 571 F.3d 1220, 1226-27 (D.C. Cir. 2009) (Kavanaugh, J., concurring) (“Copyright Royalty Board members plainly are officers of the United States. And they appear to be principal officers—not inferior officers—because they are not removable at will and their decisions regarding royalty rates apparently are not reversible by the Librarian of Congress or any other Executive Branch official. . . . If the members of the Board are in fact principal officers, then the present means of appointing Board members is unconstitutional.”).
  • Court Finds Copyright Royalty Board Unconstitutional, Reuters (July 6, 2012) (“Fritz Kass, the volunteer CEO of Intercollegiate, said the group was pleased the court found the board unconstitutional and vacated the order requiring college webcasters to pay unreasonably high rates. However, the court should have allowed Congress to change how the judges are appointed instead of attempting to fix the constitutional problem on its own, he added.”)

Cf.:

  • D.C. Circuit Holds IRS Appeals Officers Are Not Subject to the Appointments Clause, D.C. Circuit Review (Apr. 20, 2012) (“Senior Judge Williams, who wrote the unanimous opinion, agreed with the Tax Court that Congress’s failure to create an officer-level position by statute does not, by itself, exempt the office from the appointment requirement of Article II. . . . Instead, the Court relied on the limited discretionary authority that Appeals employees exercise.  Among other limitations, they must follow detailed guidelines and prior IRS positions, and they must consult presidentially appointed Chief Counsel ‘when a lack of uniformity exists on the disposition of the issue or the issue is unusual or complex.’ “).

But see: 

  • Hans_Bader, Comment, on Jonathan H. Adler, D.C. Circuit Holds Copyright Royalty Board Unconstitutional, The Volokh Conspiracy (July 6, 2012) (“The remedy is too narrow.  In the Supreme Court’s Free Enterprise Fund v. PCAOB decision, there was an independent separation-of-powers violation that resulted in the excision of the invalid removal provision.  After that, there was no appointments clause violation going forward. . . . Here, there is an appointments-clause violation to be fixed by remedying invalid appointments (requiring proper appointments), not just tinkering with removal limits.”)
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One response to “D.C. Circuit Holds Copyright Royalty Board Unconstitutional, Fixes It

  1. Pingback: Czars, and Removability, and Intercollegiate Broadcasting, oh my! | D.C. Circuit Review

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