Intercollegiate Broadcasting System, Inc. v. Copyright Royalty Board , 684 F.3d 1332 ( 2012 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 7, 2012 Decided July 6, 2012
No. 11-1083
INTERCOLLEGIATE BROADCASTING SYSTEM, INC.,
A RHODE ISLAND NON-PROFIT CORPORATION,
APPELLANT
v.
COPYRIGHT ROYALTY BOARD AND LIBRARY OF CONGRESS,
APPELLEES
COLLEGE BROADCASTERS, INC. AND SOUNDEXCHANGE, INC.,
INTERVENORS
On Appeal from a Final Order of the Copyright Royalty
Board
Christopher J. Wright argued the cause for appellant.
With him on the briefs were Timothy J. Simeone and William
Malone.
Kelsi Brown Corkran, Attorney, U.S. Department of
Justice, argued the cause for appellees. With her on the brief
were Tony West, Assistant U.S. Attorney General, and Scott
R. McIntosh, Attorney.
Michael B. DeSanctis argued the cause for intervenor
SoundExchange, Inc. in support of appellees. With him on
2
the brief were David A. Handzo, William M. Hohengarten,
and Garrett A. Levin.
Catherine R. Gellis was on the brief for intervenor
College Broadcasters, Inc. in support of appellee.
Before: GARLAND and GRIFFITH, Circuit Judges, and
WILLIAMS, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge
WILLIAMS.
WILLIAMS, Senior Circuit Judge: Intercollegiate
Broadcasting, Inc. appeals a final determination of the
Copyright Royalty Judges (“CRJs” or “Judges”) setting the
default royalty rates and terms applicable to internet-based
“webcasting” of digitally recorded music. We find we need
not address Intercollegiate’s argument that Congress’s grant
of power to the CRJs is void because the provision for judicial
review gives us legislative or administrative powers that may
not be vested in an Article III court. But we agree with
Intercollegiate that the position of the CRJs, as currently
constituted, violates the Appointments Clause, U.S. Const.,
art. II, § 2, cl. 2. To remedy the violation, we follow the
Supreme Court’s approach in Free Enterprise Fund v. Public
Company Accounting Oversight Bd., 130 S. Ct. 3138 (2010),
by invalidating and severing the restrictions on the Librarian
of Congress’s ability to remove the CRJs. With such removal
power in the Librarian’s hands, we are confident that the
Judges are “inferior” rather than “principal” officers, and that
no constitutional problem remains. Because of the
Appointments Clause violation at the time of decision, we
vacate and remand the determination challenged here;
accordingly we need not reach Intercollegiate’s arguments
regarding the merits of the rates and terms set in that
determination.
3
* * *
Intercollegiate is an association of “noncommercial”
webcasters who transmit digitally recorded music over the
internet in educational environments such as high school and
college campuses—a technologically updated version of
“closed circuit” campus radio stations. As with traditional
radio, such digital transmissions are “performances” under the
Copyright Act and thus entitle the owner of a song’s copyright
to royalty payments. See 17 U.S.C. § 106(6). And since
1998, the act has provided a “statutory license” for
webcasting—a set of provisions that encourage voluntary
negotiations over licensing terms but provide, if the parties
cannot agree, for proceedings before the CRJs to establish
reasonable terms. See id. § 114(d)(2), (f)(2)-(3); see also id.
§ 112(e)(4) (similar licenses for “ephemeral recordings”).
The administrative body responsible for setting these
terms has changed in name and structure over time, but the
Copyright Royalty Board (the regulatory name for the
collective entity composed of the CRJs and their staff, see 37
C.F.R. § 301.1) was established in its current form in 2004
and is composed of three Copyright Royalty Judges who are
appointed to staggered six-year terms by the Librarian of
Congress. See Copyright Royalty and Distribution Reform
Act of 2004, Pub. L. No. 108-419, 118 Stat. 2341 (codified at
17 U.S.C. § 801 et seq.). When a ratemaking proceeding is
initiated, the Judges are tasked with “mak[ing] determinations
and adjustments of reasonable terms and rates of royalty
payments,” 17 U.S.C. § 801(b)(1), where “reasonable” means
payments that “most clearly represent the rates and terms that
would have been negotiated in the marketplace between a
willing buyer and a willing seller,” id. § 114(f)(2)(B); see also
id. § 112(e)(4).
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SoundExchange, Inc. (an intervenor here) is a non-profit
clearinghouse for musicians’ webcast royalty payments. In
2008 it initiated ratemaking proceedings before the CRJs to
set the default webcasting licensing rates for the years 2011-
2015. The Judges initiated proceedings and received 40
petitions to participate, mainly from webcasters. Over the
next two years, SoundExchange entered voluntary settlements
with almost all of the participants, leaving only two
webcasting participants, Intercollegiate and one other
licensee, Live365 (a commercial webcaster). (Live365
originally appealed the CRJs’ determination as to commercial
webcaster rates but reached a settlement with SoundExchange
before the filing of opening briefs.) Intervenor College
Broadcasting, Inc., an association of educational webcasters
similar to Intercollegiate, participated in cooperation with
SoundExchange, providing the CRJs their settlement
agreement as a reference for market rates.
After reviewing the evidence and testimony from the
remaining participants, the CRJs issued a final determination
in which they adopted as statutory rates the royalty structure
agreed to in the settlement between SoundExchange and
College Broadcasting. See 76 Fed. Reg. 13,026, 13,042/1
(Mar. 9, 2011). Those terms include a $500 flat annual fee
per station for both “educational” and other noncommercial
webcasters whose “Aggregate Tuning Hours” stay below a
monthly threshold separating them from commercial
webcasters. See id. at 13,039/1, 13,040/1. The CRJs rejected
Intercollegiate’s proposal to establish different fee structures
for “small” and “very small” noncommercial webcasters. See
id. at 13,040/2-13,042/1. Intercollegiate appealed the CRJs’
determination pursuant to 17 U.S.C. § 803(d)(1).
5
* * *
Intercollegiate first argues that all determinations made
by the CRJs are void because the relevant appeal provision
purports to ask Article III courts to take actions of a kind
beyond their constitutional jurisdiction. Specifically, 17
U.S.C. § 803(d)(1) provides for appeals of the CRJs’
determinations to the D.C. Circuit, and § 803(d)(3) states:
Section 706 of title 5 shall apply with respect to review
by the court of appeals under this subsection. If the court
modifies or vacates a determination of the Copyright
Royalty Judges, the court may enter its own
determination with respect to the amount or distribution
of royalty fees and costs, and order the repayment of any
excess fees, the payment of any underpaid fees, and the
payment of interest pertaining respectively thereto, in
accordance with its final judgment. The court may also
vacate the determination of the Copyright Royalty Judges
and remand the case to the Copyright Royalty Judges for
further proceedings in accordance with subsection (a).
17 U.S.C. § 803(d)(3) (emphasis added). Intercollegiate
claims that this provision vests us with powers unsuitable for
an Article III court, citing Federal Radio Commission v.
General Electric Co., 281 U.S. 464 (1930). There the Court
addressed a provision vesting in the courts of the District of
Columbia a power to substitute their own “determination” for
that of an agency; it found the power to be legislative or
administrative rather than judicial. Because the courts of the
District were then legislative in character, their exercise of
such a power presented no problem, but the Court regarded its
review of such a legislative or administrative decision as
beyond its authority under Article III. Id. at 469. As
Congress clearly meant to provide an avenue for appeal, yet
6
specified an invalid one, Intercollegiate argues, we must
throw out the whole regime.
We conclude that we need not address this objection
because it has no bearing on Intercollegiate’s case. So far as
the substance of the CRJs’ decision is concerned, no party has
asked us to enter our own determination, but rather to review
the decision for compliance with 17 U.S.C. § 114(f)(2)(A).
See Appellant’s Br. 17-18 (seeking vacation and remand for
lack of compliance with that provision); Appellees’ Br. 43
(seeking affirmance). That challenge is evaluated under the
familiar APA arbitrary and capricious standard, 5 U.S.C.
§ 706(2)(A), which is incorporated by direct reference in
§ 803(d)(3). Intercollegiate insists that § 803(d)(3) is “facially
unconstitutional” and therefore brings down the whole CRJ
determination process even if the defective provision is not
applicable in this case. Appellant’s Reply Br. 29. But as the
government points out, Intercollegiate has made no attempt to
satisfy the common standard for a facial constitutional
challenge, Appellees’ Br. 16 (citing United States v. Salerno,
481 U.S. 739, 745 (1987)), or justify the non-application of
that standard, or explain why the allegedly offensive language
wouldn’t be severable, see id. at 19-20. Intercollegiate offers
nothing in reply. See Appellant’s Reply Br. 29-30. We note,
incidentally, that power to make our “own determination”
would appear to present no problem on an issue as to which
the law permitted only one option.
* * *
Intercollegiate argues that the Copyright Royalty Board
as currently structured violates the Constitution’s
Appointments Clause, art. II, § 2, cl. 2, on two grounds:
(1) the Judges’ exercise of significant ratemaking authority,
without any effective means of control by a superior (such as
unrestricted removability), qualifies them as “principal”
7
officers who must be appointed by the President with Senate
confirmation; and (2) even if the Judges are “inferior”
officers, the Librarian of Congress is not a “Head of
Department” in whom Congress may vest appointment power.
We have discussed these issues in prior cases, but we never
resolved them because they were not timely raised by the
parties. See SoundExchange, Inc. v. Librarian of Congress,
571 F.3d 1220, 1226-27 (D.C. Cir. 2009) (Kavanaugh, J.,
concurring); Intercollegiate Broadcast Sys., Inc. v. Copyright
Royalty Bd., 574 F.3d 748, 755-56 (D.C. Cir. 2009) (per
curiam). Now that they are properly presented, we agree with
Intercollegiate on the first claim but not the second, and
accordingly provide a remedy that cures the constitutional
defect with as little disruption as possible.
The Appointments Clause provides that
[The President] . . . shall nominate, and by and with the
Advice and Consent of the Senate, shall appoint . . .
Officers of the United States, whose Appointments are
not herein otherwise provided for, and which shall be
established by Law: but the Congress may by Law vest
the Appointment of such inferior Officers, as they think
proper, in the President alone, in the Courts of Law, or in
the Heads of Departments.
U.S. Const., art. II, § 2, cl. 2. To qualify as an “Officer of the
United States” within the meaning of the clause, i.e., not
simply an “employee,” a person must “exercis[e] significant
authority pursuant to the laws of the United States.” Buckley
v. Valeo, 424 U.S. 1, 125-26 (1976); see Freytag v.
Commissioner, 501 U.S. 868, 880-82 (1991). Intercollegiate
contends that the CRJs not only exercise significant authority,
but are “principal” rather than “inferior” officers, so that
Congress’s decision to vest their appointment in the Librarian
8
rather than the President (with Senate approval) violates the
text of Article II.
The government concedes that the CRJs meet this initial
threshold of significant authority. If significance plays no role
beyond that threshold, i.e., has no bearing on whether an
officer is principal or inferior, then we may pass on to the
major differentiating feature, the extent to which the officers
are “directed and supervised” by persons “appointed by
Presidential nomination with the advice and consent of the
Senate.” Edmond v. United States, 520 U.S. 651, 663 (1997).
But there is in fact some conflict over whether there are
relevant degrees of significance in the authority of officers, so
we first briefly examine the conflict and then consider the
significance of the CRJs’ authority.
In Morrison v. Olson, 487 U.S. 654 (1988), the Court
held that an independent counsel appointed by the Attorney
General was an inferior rather than principal officer. Id. at
671-72. The counsel was removable “only for good cause,”
see id. at 663, but the Court also stressed that she was
“empowered by the Act to perform only certain, limited
duties,” with no “authority to formulate policy for the
Government or the Executive Branch,” and that her office was
not only “limited in jurisdiction,” but also “‘temporary’ in the
sense that an independent counsel is appointed essentially to
accomplish a single task, and when that task is over the office
is terminated,” see id. at 671-72. The deprecatory language
about the independent counsel’s duties seems to rest on a
premise that levels of significance may play some role in the
divide between principal and inferior.
But in Edmond the Court, once satisfied that the persons
in question exercised significant authority and were thus
officers, 520 U.S. at 662, went on to discuss only direction
and supervision. And it observed that the exercise of
9
significant authority “marks, not the line between principal
and inferior officer for Appointments Clause purposes, but
rather, as we said in Buckley, the line between officer and
nonofficer.” Id.In any event, assuming that significance of authority has
any import beyond setting the threshold for officers, it is a
metric on which the CRJs score high. Their ratemaking
decisions have considerable consequences—as our colleague
put it, “billions of dollars and the fates of entire industries can
ride on the Copyright Royalty Board’s decisions.”
SoundExchange, 571 F.3d at 1226 (Kavanaugh, J.,
concurring). The CRJs set the terms of exchange for musical
works not only on traditional media such as CDs, cassettes
and vinyl, but also on digital music downloaded through
iTunes and Amazon.com, digital streaming via the web, rates
paid by satellite carriers, non-commercial broadcasting, and
certain cable transmissions. See 17 U.S.C. §§ 115(c)(3)(C)-
(D) (phonorecords), 114(f)(1) & (f)(2)(A)-(B), (subscription
and non-subscription digital transmissions and satellite radio
services), 112(e)(3)-(4) (ephemeral recordings), 118(b)(4)
(non-commercial broadcasting), 111(d)(4) (secondary
transmissions by cable systems). Even though the CRJs affect
Intercollegiate only in regard to webcasting, Freytag calls on
us to consider all the powers of the officials in question in
evaluating whether their authority is “significant,” not just
those applied to the litigant bringing the challenge. 501 U.S.
at 882; Tucker v. Commissioner, 676 F.3d 1129, 1132 (D.C.
Cir. 2012).
Of course one might see these authorities of the CRJs as
primarily addressing “merely rates.” But rates can obviously
mean life or death for firms and even industries.
Intercollegiate calls our attention, for example, to a firm for
which royalty expenses constitute half its costs. See
Appellant’s Reply Br. 6-7; see generally id. 4-11.
10
As we noted, Edmond accepts officers’ classification as
“inferior” if their “work is directed and supervised at some
level by others who were appointed by Presidential
nomination with the advice and consent of the Senate.” 520
U.S. at 663. In concluding that the judges of the Coast Guard
Court of Criminal Appeals were inferior officers, the Court
emphasized three factors: (1) the judges were subject to the
substantial supervision and oversight of the Judge Advocate
General (who in turn was subordinate to the Secretary of
Transportation), see id. at 664; (2) the judges were removable
by the Judge Advocate General without cause, see id. (“The
power to remove officers, we have recognized, is a powerful
tool for control.” (citing Bowsher v. Synar, 478 U.S. 714, 727
(1986); Myers v. United States, 272 U.S. 52 (1926))); and
(3) another executive branch entity, the Court of Appeals for
the Armed Forces, had the power to reverse the judges’
decisions so that they had “no power to render a final decision
on behalf of the United States unless permitted to do so by
other Executive Officers.” Id. at 664-65.
As to Edmond’s first concern, the CRJs are supervised in
some respects by the Librarian and by the Register of
Copyrights, but in ways that leave broad discretion. The
Librarian (who is appointed by the President with advice and
consent of the Senate, see 2 U.S.C. § 136) is entrusted with
approving the CRJs’ procedural regulations, 17 U.S.C.
§ 803(b)(6); with issuing ethical rules for the CRJs, id.§ 802(h); and with overseeing various logistical aspects of
their duties, e.g., id. §§ 801(d)-(e) (providing administrative
resources), 803(c)(6) (publishing CRJs’ decisions), 801(b)(8)
(assigning CRJs additional duties). None of these seems to
afford the Librarian room to play an influential role in the
CRJs’ substantive decisions.
The Register (who is appointed by the Librarian and acts
at his direction, see id. § 701(a)) has the authority to interpret
11
the copyright laws and provide written opinions to the CRJs
on “novel material question[s]” of law; the CRJs must abide
by these opinions in their determinations. See id.
§ 802(f)(1)(B). The Register also reviews and corrects any
legal errors in the CRJs’ determinations. Id. § 802(f)(1)(D).
Oversight by the Register at the direction of the Librarian on
issues of law of course is not exactly direction by a principal
officer, Edmond, 520 U.S. at 663, but it is a non-trivial limit
on the CRJs’ discretion, and the Librarian may well be able to
influence the nature of the Register’s interventions.
But the Register’s power to control the CRJs’ resolution
of pure issues of law plainly leaves vast discretion over the
rates and terms. If one looks to market conditions, as one
statutory provision governing webcasting directs, see 17
U.S.C. § 114(f)(2), each copyright owner and would-be user
are in something akin to a bilateral monopoly—a situation
where the seller has no substitute purchaser (here, because
each purchaser represents a distinct channel to end-users) and
the buyer no exact substitute supplier (assuming each creative
work is in some sense unique). (It is not a strict bilateral
monopoly, as many songs, etc., may have fairly close
substitutes.) In such a case, the range of possible market
prices is likely to be very wide: the floor is likely to be very
low (adding a user will commonly cost the copyright holder
nothing) and the ceiling relatively high, especially for creative
material that has few close substitutes.
Moreover, the CRJs also apply ratemaking formulas that
are even more open-ended. For example, § 801(b)(1) directs
the CRJs to set “reasonable terms and rates of royalty
payments” with reference to four factors: (1) to “maximize the
availability of creative works”; (2) to provide a “fair” return to
both the copyright owner and the copyright user; (3) to
“reflect the relative roles” of the owner and user as to
“creative contribution, technological contribution, capital
12
investment,” and the like; and (4) to “minimize any disruptive
impact” on industry structure. 17 U.S.C. § 801(b)(1)(A)-(D).
As we have previously stated, because these “factors pull in
opposite directions,” there is a “range of reasonable royalty
rates that would serve all these objectives adequately but to
differing degrees.” RIAA v. Copyright Royalty Tribunal, 622
F.3d 1, 9 (D.C. Cir. 1981). Thus the Register’s control over
the most significant aspect of the CRJs’ determinations—the
rates themselves—is likely to be quite faint. Even in the
realm of rates required to be based on “cost,” the ratemaker
typically has broad discretion. See Federal Power
Commission v. Conway Corp., 426 U.S. 271, 278 (1976)
(“[T]here is no single cost-recovering rate, but a zone of
reasonableness: ‘Statutory reasonableness is an abstract
quality represented by an area rather than a pinpoint. It allows
a substantial spread between what is unreasonable because too
low and what is unreasonable because too high.’” (quoting
Montana-Dakota Utilities Co. v. Northwestern Public Service
Co., 341 U.S. 246, 251 (1951))). And while we have
recognized that an obligation to follow another’s legal
opinions creates a genuine supervisory limit, see Tucker, 676
F.3d at 1134, here the law does not provide much constraint
on the rate, and it is the rate itself—not the answer to the pure
questions of law that the Register can address—that is of the
greatest importance.
We find that, given the CRJs’ nonremovability and the
finality of their decisions (discussed below), the Librarian’s
and Register’s supervision functions still fall short of the kind
that would render the CRJs inferior officers.
The second Edmond factor, removability, also supports a
finding that the CRJs are principal officers. Unlike the judges
in Edmond, the CRJs can be removed by the Librarian only
for misconduct or neglect of duty. See 17 U.S.C. § 802(i).
And while the presence of a “good cause” restriction in
13
Morrison did not prevent a finding of inferior officer status, it
clearly did not hold that such a restriction on removal was
generally consistent with the status of inferior officer.
Instead, as Edmond explains, Morrison relied heavily on the
Court’s view that the independent counsel also “performed
only limited duties, that her jurisdiction was narrow, and that
her tenure was limited [to performance of a ‘single task’].”
Edmond, 520 U.S. at 661.
Finally, the CRJs’ rate determinations are not reversible
or correctable by any other officer or entity within the
executive branch. As we have mentioned, their procedural
rules are reviewed by the Librarian, and their legal
determinations by the Register. But the Judges are afforded
full independence in making determinations concerning
adjustments and determinations of copyright royalty rates
and terms, the distribution of copyright royalties, the
acceptance or rejection of royalty claims, rate adjustment
petitions, and petitions to participate, and in issuing other
rulings under this title, except that the Copyright Royalty
Judges may consult with the Register of Copyrights on
any matter other than a question of fact.
17 U.S.C. § 802(f)(1)(A)(i); see also id. § 802(f)(1)(A)(ii)
(Register’s authority “under this clause shall not be construed
to authorize the Register . . . to provide an interpretation of
questions of procedure . . . [or] the ultimate adjustments and
determinations of copyright royalty rates and terms”). Thus,
unlike the judges in Edmond, 520 U.S. at 664-65, the CRJs
issue decisions that are final for the executive branch, subject
to reversal or change only when challenged in an Article III
court.
Having considered all of these factors, we are in
agreement with the view suggested by Judge Kavanaugh in
14
SoundExchange that the CRJs as currently constituted are
principal officers who must be appointed by the President and
confirmed by the Senate, and that the structure of the Board
therefore violates the Appointments Clause. 571 F.3d at
1226-27 (concurring opinion). We therefore must decide the
appropriate remedy to correct the violation.
In Free Enterprise Fund, the Supreme Court reviewed the
structure of the Public Company Accounting Oversight Board,
whose members were appointed and removable by the
Commissioners of the Securities and Exchange Commission.
The Court held that in the circumstances of that case the “for-
cause” restriction on the Commissioners’ removal power
violated the Constitution’s separation of powers by impeding
the President’s ability to execute the laws. See 130 S. Ct. at
3151-54. Rather than finding all authority exercised by the
PCAOB to be unconstitutional, however, the Court held that
invalidating and severing the problematic for-cause restriction
was the solution best matching the problem and preserving the
remainder intact. Id. at 3161 (citing Ayotte v. Planned
Parenthood of Northern New England, 546 U.S. 320, 328
(2006)).
We likewise conclude here that invalidating and severing
the restrictions on the Librarian’s ability to remove the CRJs
eliminates the Appointments Clause violation and minimizes
any collateral damage. Specifically, we find unconstitutional
all of the language in 17 U.S.C. § 802(i) following “The
Librarian of Congress may sanction or remove a Copyright
Royalty Judge . . . .” Without this restriction, we are
confident that (so long as the Librarian is a Head of
Department, which we address below) the CRJs will be
inferior rather than principal officers. With unfettered
removal power, the Librarian will have the direct ability to
“direct,” “supervise,” and exert some “control” over the
Judges’ decisions. Edmond, 520 U.S. at 662-64. Although
15
individual CRJ decisions will still not be directly reversible,
the Librarian would be free to provide substantive input on
non-factual issues via the Register, whom the Judges are free
to consult, 17 U.S.C. § 802(f)(1)(A)(i). This, coupled with the
threat of removal satisfies us that the CRJs’ decisions will be
constrained to a significant degree by a principal officer (the
Librarian). We further conclude that free removability
constrains their power enough to outweigh the extent to which
the scope of their duties exceeds that of the special counsel in
Morrison. Cf. Free Enterprise Fund, 130 S. Ct. at 3162(“Given that the [SEC] is properly viewed, under the
Constitution, as possessing the power to remove Board
members at will, and given the Commission’s other oversight
authority, we have no hesitation in concluding that under
Edmond the [PCAOB] members are inferior officers . . . .”).
In sum, the inability of the Librarian to remove the CRJs,
coupled with the absence of a principal officer’s direction and
supervision over their exercise of authority, renders them
principal officers—but obviously ones not appointed in the
manner constitutionally required for such officers. Once the
limitations on the Librarian’s removal authority are nullified,
they would become validly appointed inferior officers—at
least if the Librarian is a Head of Department, the issue to
which we now turn.
* * *
Intercollegiate argues that even if the CRJs are inferior
officers, the Board’s structure is unconstitutional because the
Librarian is not a “Head of Department” within the meaning
of the Appointments Clause. The Supreme Court addressed
the same challenge as to the SEC Commissioners in Free
Enterprise Fund; it ultimately held: “Because the
Commission is a freestanding component of the Executive
Branch, not subordinate to or contained within any other such
16
component, it constitutes a ‘Departmen[t]’ for the purposes of
the Appointments Clause.” 130 S. Ct. at 3163. See also
Freytag, 501 U.S. at 915-22 (Scalia, J., concurring in part and
concurring in judgment); Buckley, 424 U.S. at 127(“Departments” referred to in the Appointments Clause “are
themselves in the Executive Branch or at least have some
connection with that branch”). Intercollegiate notes that we
have referred to the Library of Congress as a “congressional
agency,” see Keeffe v. Library of Congress, 777 F.2d 1573,
1574 (D.C. Cir. 1985), and argues that it is not an executive
department that can satisfy the “Head of Department”
definition in Free Enterprise Fund.
Despite our language in Keeffe, the Library of Congress is
a freestanding entity that clearly meets the definition of
“Department.” Free Enterprise Fund, 130 S. Ct. at 3162-63.
To be sure, it performs a range of different functions,
including some, such as the Congressional Research Service,
that are exercised primarily for legislative purposes. But as
we have mentioned, the Librarian is appointed by the
President with advice and consent of the Senate, 2 U.S.C.
§ 136, and is subject to unrestricted removal by the President,
Ex parte Hennen, 38 U.S. (13 Pet.) 230, 259 (1839); Kalaris
v. Donovan, 697 F.2d 376, 389 (D.C. Cir. 1983). Further, the
powers in the Library and the Board to promulgate copyright
regulations, to apply the statute to affected parties, and to set
rates and terms case by case are ones generally associated in
modern times with executive agencies rather than legislators.
In this role the Library is undoubtedly a “component of the
Executive Branch.” Free Enterprise Fund, 130 S. Ct. at 3163.
It was on this basis that the Fourth Circuit rejected a similar
charge that the Librarian was not a “Head of Department” for
purposes of appointing the Register. Eltra Corp. v. Ringer,
579 F.2d 294, 300-301 (4th Cir. 1978). We too hold that the
Librarian is a Head of Department who may permissibly
appoint the Copyright Royalty Judges.
17
* * *
We hold that without the unrestricted ability to remove
the Copyright Royalty Judges, Congress’s vesting of their
appointment in the Librarian rather than in the President
violates the Appointments Clause. Accordingly we invalidate
and sever the portion of the statute limiting the Librarian’s
ability to remove the Judges. Because the Board’s structure
was unconstitutional at the time it issued its determination, we
vacate and remand the determination and do not address
Intercollegiate’s arguments regarding the merits of the rates
set therein.
So ordered.