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Federal Register / Vol. 72, No.

210 / Wednesday, October 31, 2007 / Proposed Rules 61585

subject line ‘‘Comment—Kauai Security postcard or envelope. We will consider ACTION: Notice of proposed rulemaking.
Zone.’’ all comments and material received
(3) Fax: (808) 541–2101. during the comment period. We may SUMMARY: The Copyright Royalty Judges
All comments will be reviewed as change this proposed rule in view of are publishing for comment proposed
they are received. Additionally, all them. regulations that set the rates and terms
comments submitted will ultimately be for the use of sound recordings by
Temporary Final Rule preexisting subscription services for the
available for viewing on the Federal
eRulemaking Portal at http:// Concurrent with this notice to extend period January 1, 2008, through
www.regulations.gov. the comment period, the Coast Guard is December 31, 2012.
also publishing a temporary final rule DATES: Comments and objections, if any,
FOR FURTHER INFORMATION CONTACT: are due no later than November 30,
Lieutenant Sean Fahey, U.S. Coast for a security zone in Nawiliwili Harbor.
That temporary final rule can be found 2007.
Guard District 14 at (808) 541–2106.
elsewhere in this issue of the Federal ADDRESSES: Comments and objections
Request for Additional Comments Register. The temporary final rule is may be sent electronically to
On October 3, 2007, we published a being issued on an emergency basis to crb@loc.gov. In the alternative, send an
notice of proposed rulemaking (NPRM) ensure that there is a security zone in original, five copies and an electronic
entitled ‘‘Security Zone; Nawiliwili place after the current security zone (72 copy on a CD either by mail or hand
Harbor, Kauai, Hawaii’’ in the Federal FR 50877, September 5, 2007) expires delivery. Please do not use multiple
Register (72 FR 56308). The comment on October 31, 2007. That temporary means of transmission. Comments and
period for the NPRM was originally set final rule is of limited duration—it will objections may not be delivered by an
to expire on October 24, 2007. Although be in effect from November 1, 2007, overnight delivery service other than the
we received many comments on the through November 30, 2007—and is U.S. Postal Service Express Mail. If by
subject rule, a few people wishing to necessary to ensure the safety and mail (including overnight delivery),
submit comments expressed difficulty security of water-based and land-based comments and objections must be
using the Federal eRulemaking Portal, obstructers, as well as the passengers addressed to: Copyright Royalty Board,
one of the four methods available to and crew of the Superferry, should the P.O. Box 70977, Washington, DC 20024–
submit comments on the NPRM. Superferry transit through Nawiliwili 0977. If hand delivered by a private
Recently, the Coast Guard migrated its Harbor. party, comments and objections must be
online rulemaking docket from the Public Meeting brought to the Copyright Office Public
Docket Management System (DMS) to Information Office, Library of Congress,
the Federal Docket Management System During this extended comment James Madison Memorial Building,
(FMS) (72 FR 54315, Sept. 24, 2007), period, you may also submit a request Room LM–401, 101 Independence
and this migration was accompanied by for a public meeting. Based on the Avenue, SE., Washington, DC 20559–
transition difficulties and delays in comments we receive, we may choose to 6000. If delivered by a commercial
comments being posted on FDMS. So hold a public meeting. You may submit courier, comments and objections must
we will continue to accept comments on a request for a public meeting to be delivered between 8:30 a.m. and 4
the propose rule until November 20, Lieutenant Sean Fahey at U.S. Coast p.m. to the Congressional Courier
2007. Comments may be submitted in Guard District 14, PJKK Federal Acceptance Site located at 2nd and D
one of the three methods listed in the Building, 300 Ala Moana Blvd., Street, NE., Washington, DC, and the
ADDRESSES section of this rule. Based on
Honolulu, Hawaii 96850, explaining envelope must be addressed to:
the comments we receive, we may why one would be beneficial. The Copyright Royalty Board, Library of
change the rule. deadline for submitting requests is Congress, James Madison Memorial
We encourage you to participate in November 20, 2007. Building, LM–403, 101 Independence
this rulemaking by submitting If we determine that a public meeting Avenue, SE., Washington, DC 20559–
comments and related material. If you would aid this rulemaking, we will hold 6000.
do so, please identify the docket number one at a time and place announced by
FOR FURTHER INFORMATION CONTACT:
for this rulemaking (USCG–2007– a later notice in the Federal Register.
Richard Strasser, Senior Attorney, or
29354), indicate the specific section of Dated: October 24, 2007. Gina Giuffreda, Attorney-Advisor, by
this document to which each comment Sally Brice-O’Hara, telephone at (202) 707–7658 or e-mail at
applies, and give the reason for each Rear Admiral, U.S. Coast Guard, Commander, crb@loc.gov.
comment. We recommend that you Fourteenth Coast Guard District. SUPPLEMENTARY INFORMATION:
include your name, mailing address, [FR Doc. 07–5412 Filed 10–26–07; 2:34 pm]
and an e-mail address or other contact Background
BILLING CODE 4910–15–P
information in the body of your Section 106(6) of the Copyright Act,
document to ensure that you can be title 17 of the United States Code, gives
identified as the submitter. This also LIBRARY OF CONGRESS a copyright owner of sound recordings
allows us to contact you in the event an exclusive right to perform the
further information is needed or if there Copyright Royalty Board copyrighted works publicly by means of
are questions. For example, if we cannot a digital audio transmission. This right
read your submission due to technical 37 CFR Part 382 is limited by section 114(d), which
difficulties and you cannot be allows certain non-interactive digital
contacted, your submission may not be [Docket No. 2006–1 CRB DSTRA] audio services, including preexisting
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considered. Please submit all comments Adjustment of Rates and Terms for subscription services, to make digital
and related material in an unbound Preexisting Subscription and Satellite transmissions of a sound recording
format, no larger than 81⁄2 by 11 inches, Digital Audio Radio Services under a compulsory license, provided
suitable for copying. If you would like the services pay a reasonable royalty fee
to know your comments reached us, AGENCY: Copyright Royalty Board, and comply with the terms of the
please enclose a stamped, self-addressed Library of Congress. license. Moreover, these services may

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61586 Federal Register / Vol. 72, No. 210 / Wednesday, October 31, 2007 / Proposed Rules

make any necessary ephemeral including the proposed rates and terms, establish rates and terms for the
reproductions to facilitate the digital was filed on October 19, 2007. activities of preexisting subscription
transmission of the sound recording Section 801(b)(7)(A) allows for the services under the sections 112 and 114
under a second license set forth in adoption of rates and terms negotiated licenses.
section 112(e) of the Copyright Act. The by ‘‘some or all of the participants in a
proceeding at any time during the List of Subjects in 37 CFR Part 382
terms and rates for this statutory license
have been adjusted periodically by the proceeding’’ provided they are Copyright, Digital audio
Librarian of Congress and appear in 37 submitted to the Copyright Royalty transmissions, Performance right, Sound
CFR Part 260. However, the Copyright Judges for approval. This section recordings.
Royalty and Distribution Reform Act of provides that in such event:
Proposed Regulations
2004, Pub. L. No. 108–419, transferred (i) The Copyright Royalty Judges shall
jurisdiction over these rates and terms provide to those that would be bound by the For the reasons set forth in the
to the Copyright Royalty Judges terms, rates, or other determination set by preamble, the Copyright Royalty Judges
(‘‘Judges’’). 17 U.S.C. 801(b)(1). The any agreement in a proceeding to determine propose to add part 382 to Chapter III
current rates applicable to preexisting royalty rates an opportunity to comment on of title 37 of the Code of Federal
subscription services expire on the agreement and shall provide to
participants in the proceeding under section
Regulations to read as follows:
December 31, 2007.
803(b)(2) that would be bound by the terms,
On January 9, 2006, pursuant to 17 rates, or other determination set by the
PART 382—RATES AND TERMS FOR
U.S.C. 803(b)(1)(A)(i)(V), the Copyright agreement an opportunity to comment on the PREEXISTING SUBSCRIPTION
Royalty Judges published a notice in the agreement and object to its adoption as a SERVICES’ DIGITAL TRANSMISSIONS
Federal Register announcing basis for statutory terms and rates; and OF SOUND RECORDINGS AND
commencement of the proceeding to (ii) The Copyright Royalty Judges may MAKING OF EPHEMERAL
decline to adopt the agreement as a basis for PHONORECORDS
determine rates and terms of royalty statutory terms and rates for participants that
payments under sections 114 and 112 are not parties to the agreement, if any Sec.
for the activities of preexisting participant described in clause (i) objects to 382.1 General.
subscription services 1 and requesting the agreement and the Copyright Royalty 382.2 Royalty fees for the digital
interested parties to submit their Judges conclude, based on the record before performance of sound recordings and the
petitions to participate. 71 FR 1455 them if one exists, that the agreement does making of ephemeral phonorecords by
(January 9, 2006). Petitions to not provide a reasonable basis for setting preexisting subscription services.
participate in the proceeding to set these statutory terms or rates. 382.3 Terms for making payment of royalty
fees.
rates and terms were received from 17 U.S.C. 801(b)(7)(A). Rates and terms 382.4 Confidential information and
SoundExchange, Inc. and Music Choice. adopted pursuant to this provision are statements of account.
The Judges set the schedule for the binding on all copyright owners of 382.5 Verification of statements of account.
proceeding, including the dates for the sound recordings and preexisting 382.6 Verification of royalty payments.
filing of written direct statements as subscription services performing the 382.7 Unknown copyright owners.
well as the dates for oral testimony. sound recordings for the license period Authority: 17 U.S.C. 112(e), 114, and
Subsequent to the filing of their written 2008–2012. 801(b)(1).
direct statements, but prior to the oral As part of this notice of proposed
rulemaking, the Copyright Royalty § 382.1 General.
presentation of witnesses,
SoundExchange and Music Choice Judges are modifying two aspects of the (a) This part 382 establishes rates and
informed the Judges that they had proposed rates and terms. First, the terms of royalty payments for the public
‘‘reached a settlement of all issues submitted proposal placed the rates and performance of sound recordings by
between them in this proceeding, terms in part 260, which is in Chapter nonexempt preexisting subscription
including the rates and terms for the II of 37 CFR. Chapter II contains the services in accordance with the
statutory license applicable to pre- regulations of the Copyright Office, not provisions of 17 U.S.C. 114(d)(2), and
existing subscription services’’ under the Copyright Royalty Board. Therefore, the making of ephemeral phonorecords
sections 114 and 112 of the Copyright we are changing the numbering of the in connection with the public
Act for the period from January 1, 2008, proposed regulations to reflect their performance of sound recordings by
through December 31, 2012. Notice of proper location in Chapter III of 37 CFR. nonexempt preexisting subscription
Settlement at 1 (filed June 12, 2007). Second, proposed §§ 260.5(c) and services in accordance with the
They also stated that the settlement 260.6(c) (now 382.5(c) and 382.6(c), provisions of 17 U.S.C. 112(e).
agreement would be submitted to the respectively) require that interested
(b) Upon compliance with 17 U.S.C.
Judges ‘‘for approval and adoption parties intending to conduct an audit of
114 and the terms and rates of this part,
pursuant to 17 U.S.C. 801(b)(7)(A).’’ Id. a service or of the entity making the
nonexempt preexisting subscription
at 2. The settlement agreement, royalty payment, respectively, file with
services may engage in the activities set
the Copyright Office a notice of intent
forth in 17 U.S.C. 114(d)(2).
1 The Notice also commenced and requested
to audit. We are changing these
provisions to require that such notices (c) Upon compliance with 17 U.S.C.
Petitions to Participate for the proceeding to
determine rates and terms for preexisting satellite of intent to audit be filed with the 112(e) and the terms and rates of this
digital audio radio services (‘‘SDARS’’), as required Copyright Royalty Board rather than the part, nonexempt preexisting
under section 804(b)(3)(B). Unlike the preexisting Copyright Office. subscription services may engage in the
subscription services, the SDARS did not reach a activities set forth in 17 U.S.C. 112(e)
As discussed above, the public may
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settlement regarding rates and terms governing their


activities under sections 112 and 114 and comment and object to any or all of the without limit to the number of
proceeded to a full hearing before the Judges. proposed regulations contained in this ephemeral phonorecords made.
Consequently, those rates and terms will be notice of proposed rulemaking. Those (d) For purposes of this part, Licensee
determined by the Judges and also will be
contained in proposed Part 382. Today’s notice of
who do comment and object, however, means any preexisting subscription
proposed rulemaking discusses only the preexisting must be prepared to participate in service as defined in 17 U.S.C.
subscription services. further proceedings in this docket to 114(j)(11).

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Federal Register / Vol. 72, No. 210 / Wednesday, October 31, 2007 / Proposed Rules 61587

§ 382.2 Royalty fees for the digital (iv) Monies received from the sale of who provide the Collective with such
performance of sound recordings and the time to providers of paid programming information as is necessary to identify
making of ephemeral phonorecords by such as infomercials; the correct recipient. The Collective
preexisting subscription services. (v) Where merchandise, service, or shall distribute royalties on a basis that
(a) Commencing January 1, 2008, and anything of value is received by values all performances by a Licensee
continuing through December 31, 2011, Licensee in lieu of cash consideration equally based upon the information
a Licensee’s monthly royalty fee for the for the use of Licensee’s programming provided under the reports of use
public performance of sound recordings service, the fair market value thereof or requirements for Licensees contained in
pursuant to 17 U.S.C. 114(d)(2) and the Licensee’s prevailing published rate, § 370.2 of this chapter.
making of any number of ephemeral whichever is less; (2) If the Collective is unable to locate
phonorecords to facilitate such (vi) Monies or other consideration a copyright owner or performer entitled
performances pursuant to 17 U.S.C. received by Licensee from Licensee’s to a distribution of royalties under
112(e) shall be 7.25% of such Licensee’s carriers, but not including monies paragraph (c)(1) of this section within 3
monthly gross revenues resulting from received by Licensee’s carriers from years from the date of payment by a
residential services in the United States. others and not accounted for by Licensee, such distribution may first be
(b) Commencing January 1, 2012, and Licensee’s carriers to Licensee, for the applied to the costs directly attributable
continuing through December 31, 2012, provision of hardware by anyone and to the administration of that
a Licensee’s monthly royalty fee for the used in connection with the distribution. The foregoing shall apply
public performance of sound recordings programming service; notwithstanding the common law or
pursuant to 17 U.S.C. 114(d)(2) and the (vii) Monies or other consideration statutes of any State.
making of any number of ephemeral received for any references to or
phonorecords to facilitate such inclusion of any product or service on § 382.4 Confidential information and
statements of account.
performances pursuant to 17 U.S.C. the programming service; and
112(e) shall be 7.5% of such Licensee’s (viii) Bad debts recovered regarding (a) For purposes of this part,
monthly gross revenues resulting from paragraphs (e)(1)(i) through (vii) of this confidential information shall include
residential services in the United States. section. statements of account and any
(c) Each Licensee making digital (2) Gross revenues shall include such information pertaining to the statements
performances of sound recordings payments as set forth in paragraphs of account designated as confidential by
pursuant to 17 U.S.C. 114(d)(2) and (e)(1)(i) through (viii) of this section to the nonexempt preexisting subscription
ephemeral phonorecords pursuant to 17 which Licensee is entitled but which are service filing the statement. Confidential
U.S.C. 112(e) shall make an advance paid to a parent, subsidiary, division, or information shall also include any
payment of $100,000 per year, payable affiliate of Licensee, in lieu of payment information so designated in a
no later than January 20th of each year. to Licensee but not including payments confidentiality agreement which has
The annual advance payment shall be to Licensee’s carriers for the been duly executed between a
nonrefundable, but the royalties due programming service. Licensee shall be nonexempt preexisting subscription
and payable for a given year or any allowed a deduction from ‘‘gross service and an interested party, or
month therein under paragraphs (a) and revenues’’ as defined in paragraph (e)(1) between one or more interested parties;
(b) of this section shall be recoupable of this section for affiliate revenue Provided that all such information shall
against the annual advance payment for returned during the reporting period be made available, for the verification
such year; Provided, however, that any and for bad debts actually written off proceedings provided for in §§ 382.5
unused annual advance payment for a during reporting period. and 382.6.
(f) During any given payment period, (b) Nonexempt preexisting
given year shall not carry over into a
the value of each performance of each subscription services shall submit
subsequent year.
digital sound recording shall be the monthly statements of account on a
(d) A Licensee shall pay a late fee of form provided by the Collective and the
1.5% per month, or the highest lawful same.
monthly royalty payments.
rate, whichever is lower, for any § 382.3 Terms for making payment of (c) A statement of account shall
payment received after the due date. royalty fees. include only such information as is
Late fees shall accrue from the due date (a) Payment to Collective. All royalty necessary to verify the accompanying
until payment is received. payments shall be made to the royalty payment. Additional
(e)(1) For purposes of this section, Collective designated for the collection information beyond that which is
gross revenues shall mean all monies and distribution of royalties for the sufficient to verify the calculation of the
derived from the operation of the 2008–2012 time period, which shall be royalty fees shall not be included on the
programming service of the Licensee SoundExchange. statement of account.
and shall be comprised of the following: (b) Timing of payment. Payment shall (d) Access to the confidential
(i) Monies received by Licensee from be made on the forty-fifth day after the information pertaining to the royalty
Licensee’s carriers and directly from end of each month for that month, payments shall be limited to:
residential U.S. subscribers for commencing with the month succeeding (1) Those employees, agents,
Licensee’s programming service; the month in which the royalty fees are consultants and independent
(ii) Licensee’s advertising revenues (as set. contractors of the Collective, subject to
billed), or other monies received from (c) Distribution of royalties. (1) The an appropriate confidentiality
sponsors, if any, less advertising agency Collective shall promptly distribute agreement, who are engaged in the
commissions not to exceed 15% of those royalties received from Licensees to collection and distribution of royalty
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fees incurred to a recognized advertising copyright owners and performers, or payments hereunder and activities
agency not owned or controlled by their designated agents, that are entitled directly related hereto, who are not also
Licensee; to such royalties. The Collective shall employees or officers of a sound
(iii) Monies received for the provision only be responsible for making recording copyright owner or
of time on the programming service to distributions to those copyright owners, performing artist, and who, for the
any third party; performers, or their designated agents purpose of performing such duties

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61588 Federal Register / Vol. 72, No. 210 / Wednesday, October 31, 2007 / Proposed Rules

during the ordinary course of intent to audit within 30 days of the as an acceptable verification procedure
employment, require access to the filing of the interested parties’ notice. for all interested parties.
records; and Such notification of intent to audit shall (f) Costs of the verification procedure.
(2) An independent and qualified also be served at the same time on the The interested parties requesting the
auditor who is not an employee or party to be audited. verification procedure shall pay for the
officer of a sound recording copyright (d) Retention of records. The party cost of the verification procedure,
owner or performing artist, but is requesting the verification procedure unless an independent auditor
authorized to act on behalf of the shall retain the report of the verification concludes that there was an
interested copyright owners with for a period of three years. underpayment of five (5) percent or
respect to the verification of the royalty (e) Acceptable verification procedure. more, in which case, the entity which
payments. An audit, including underlying made the underpayment shall bear the
(3) Copyright owners and performers paperwork, which was performed in the costs of the verification procedure.
whose works have been used under the ordinary course of business according to (g) Interested parties. For purposes of
statutory licenses set forth in 17 U.S.C. generally accepted auditing standards this section, interested parties are those
112(e) and 114(f) by the Licensee whose by an independent auditor, shall serve who are entitled to receive royalty
Confidential Information is being as an acceptable verification procedure payments pursuant to 17 U.S.C.
supplied, or agents thereof, subject to an for all parties. 114(g)(2), or their designated agents.
appropriate confidentiality agreement, (f) Costs of the verification procedure.
provided that the sole confidential The interested parties requesting the § 382.7 Unknown copyright owners.
information that may be shared verification procedure shall pay for the If the Collective is unable to identify
pursuant to this paragraph (d)(3) are the cost of the verification procedure, or locate a copyright owner or performer
monthly statements of accounts that unless an independent auditor who is entitled to receive a royalty
accompany royalty payments. concludes that there was an distribution under this part, the
(e) The Collective or any person underpayment of five (5) percent or Collective shall retain the required
identified in paragraph (d) of this more; in which case, the service which payment in a segregated trust account
section shall implement procedures to made the underpayment shall bear the for a period of 3 years from the date of
safeguard all confidential financial and costs of the verification procedure. distribution. No claim to such
business information, including, but not (g) Interested parties. For purposes of distribution shall be valid after the
limited to royalty payments, submitted this section, interested parties are those expiration of the 3-year period. After
as part of the statements of account, copyright owners who are entitled to expiration of this period, the Collective
using a reasonable standard of care, but receive royalty fees pursuant to 17 may apply the unclaimed funds to offset
no less than the same degree of security U.S.C. 114(g), their designated agents, or any costs deductible under 17 U.S.C.
used to protect confidential financial the Collective. 114(g)(3). The foregoing shall apply
and business information or similarly notwithstanding the common law or
§ 382.6 Verification of royalty payments.
sensitive information belonging to the statutes of any State.
Collective or such person. (a) General. This section prescribes
general rules pertaining to the Dated: October 26, 2007.
(f) Books and records relating to the
verification of the payment of royalty James Scott Sledge,
payment of the license fees shall be kept
fees to those parties entitled to receive Chief Copyright Royalty Judge.
in accordance with generally accepted
accounting principles for a period of such fees, according to terms [FR Doc. E7–21473 Filed 10–30–07; 8:45 am]
three years. These records shall include, promulgated by the Copyright Royalty BILLING CODE 1410–72–P

but are not limited to, the statements of Board.


account, records documenting an (b) Frequency of verification.
interested party’s share of the royalty Interested parties may conduct a single ENVIRONMENTAL PROTECTION
fees, and the records pertaining to the audit of the Collective during any given AGENCY
administration of the collection process calendar year.
and the further distribution of the (c) Notice of intent to audit. Interested 40 CFR Part 52
royalty fees to those interested parties parties must submit a notice of intent to
[EPA–R09–OAR–2007–0459; FRL–8487–7]
entitled to receive such fees. audit the entity making the royalty
payment with the Copyright Royalty Revisions to the California State
§ 382.5 Verification of statements of Board, which shall publish in the Implementation Plan, Great Basin
account. Federal Register a notice announcing Unified Air Pollution Control District
(a) General. This section prescribes the receipt of the notice of intent to and Mojave Desert Air Quality
general rules pertaining to the audit within 30 days of the filing of the Management District
verification of the statements of account interested parties’ notice. Such
by interested parties according to terms notification of interest shall also be AGENCY: Environmental Protection
promulgated by the Copyright Royalty served at the same time on the party to Agency (EPA).
Board. be audited. ACTION: Proposed rule.
(b) Frequency of verification. (d) Retention of records. The
Interested parties may conduct a single interested party requesting the SUMMARY: EPA is proposing to approve
audit of a nonexempt preexisting verification procedure shall retain the revisions to the Great Basin Unified Air
subscription service during any given report of the verification for a period of Pollution Control District (GBUAPCD)
and Mojave Desert Air Quality
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calendar year. three years.


(c) Notice of intent to audit. Interested (e) Acceptable verification procedure. Management District (MDAQMD)
parties must submit a notice of intent to An audit, including underlying portions of the California State
audit a particular service with the paperwork, which was performed in the Implementation Plan (SIP). Under
Copyright Royalty Board, which shall ordinary course of business according to authority of the Clean Air Act as
publish in the Federal Register a notice generally accepted auditing standards amended in 1990 (CAA or the Act), we
announcing the receipt of the notice of by an independent auditor, shall serve are proposing to approve local rules that

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