Music Modernization Act Notices of License, Notices of Nonblanket Activity, Data Collection and Delivery Efforts, and Reports of Usage and Payment, 6630-6632 [2023-02118]

Download as PDF 6630 Federal Register / Vol. 88, No. 21 / Wednesday, February 1, 2023 / Rules and Regulations Tesoro, C.A. Banco Universal (Banco del Tesoro), or Banco Central de Venezuela are authorized: • MasterCard Incorporated • Visa Inc. • American Express Company • Western Union Company • MoneyGram International (b) This general license does not authorize: (1) Any transactions or activities with Banco de Desarrollo Economico y Social de Venezuela (BANDES) or Banco Bandes Uruguay S.A. (Bandes Uruguay); (2) The unblocking of any property blocked pursuant to the VSR, or any other part of 31 CFR chapter V, except as authorized by paragraph (a); or (3) Any transactions or activities otherwise prohibited by the VSR, or any other part of 31 CFR chapter V, or any transactions or activities with any blocked person other than the blocked persons identified in paragraph (a) of this general license. (c) Effective March 12, 2020, General License No. 15B, dated August 5, 2019, is replaced and superseded in its entirety by this General License No. 15C. Andrea Gacki, Director, Office of Foreign Assets Control. Dated: March 12, 2020. Andrea M. Gacki, Director, Office of Foreign Assets Control. [FR Doc. 2023–02112 Filed 1–31–23; 8:45 am] BILLING CODE 4810–AL–P LIBRARY OF CONGRESS U.S. Copyright Office 37 CFR Part 210 [Docket No. 2020–5] Music Modernization Act Notices of License, Notices of Nonblanket Activity, Data Collection and Delivery Efforts, and Reports of Usage and Payment U.S. Copyright Office, Library of Congress. ACTION: Supplemental interim rule. AGENCY: The U.S. Copyright Office is issuing a supplemental interim rule relating to certain reporting and payment requirements of digital music providers and related duties of the mechanical licensing collective under the Music Modernization Act. The amendment extends a previously adopted transition period pending further rulemaking by the Office regarding reports of adjustment. Based lotter on DSK11XQN23PROD with RULES1 SUMMARY: VerDate Sep<11>2014 16:39 Jan 31, 2023 Jkt 259001 on the imminent expiration of the existing transition period and recent public comments requesting further proceedings on the subject of adjustments, the Office has determined that there is a legitimate need to make this amendment, effective immediately. DATES: Effective February 1, 2023. FOR FURTHER INFORMATION CONTACT: Rhea Efthimiadis, Assistant to the General Counsel, by email at meft@ copyright.gov or telephone at 202–707– 8350. SUPPLEMENTARY INFORMATION: I. Background The Orrin G. Hatch-Bob Goodlatte Music Modernization Act (the ‘‘MMA’’) substantially modified the compulsory ‘‘mechanical’’ license for reproducing and distributing phonorecords of nondramatic musical works under 17 U.S.C. 115.1 It did so by switching from a song-by-song licensing system to a blanket licensing regime that became available on January 1, 2021 (the ‘‘license availability date’’),2 administered by a mechanical licensing collective (the ‘‘MLC’’) designated by the Copyright Office (the ‘‘Office’’).3 Digital music providers (‘‘DMPs’’) are able to obtain this new mechanical blanket license (the ‘‘blanket license’’) to make digital phonorecord deliveries of nondramatic musical works, including in the form of permanent downloads, limited downloads, or interactive streams (referred to in the statute as ‘‘covered activity’’ where such activity qualifies for a blanket license), subject to various requirements, including reporting obligations.4 DMPs also have the option to engage in these activities, in whole or in part, through voluntary licenses from copyright owners. A. The Office’s September 2020 and May 2022 Rules On September 17, 2020, as a part of its work to implement the MMA, the Office issued an interim rule adopting regulations concerning reporting requirements under the blanket license (the ‘‘September 2020 Rule’’).5 As relevant here, those interim regulations included requirements governing annual reporting and the ability to make 1 Public Law 115–264, 132 Stat. 3676 (2018). U.S.C. 115(e)(15). 3 As permitted under the MMA, the Office also designated a digital licensee coordinator (the ‘‘DLC’’) to represent licensees in proceedings before the Copyright Royalty Judges (the ‘‘CRJs’’) and the Office, to serve as a non-voting member of the MLC, and to carry out other functions. 84 FR 32274 (July 8, 2019). 4 17 U.S.C. 115(d). 5 85 FR 58114 (Sept. 17, 2020). 2 17 PO 00000 Frm 00022 Fmt 4700 Sfmt 4700 adjustments to monthly and annual reports and related royalty payments, including to correct errors and replace estimated inputs with finally determined figures.6 After enactment of the September 2020 Rule, the Office received a request from the DLC to modify it, prompted by operational and compliance concerns. After carefully evaluating the DLC’s request and the then-existing rulemaking record, the Office decided to make various amendments through a supplemental interim rule and request for comments issued on May 24, 2022 (the ‘‘May 2022 Rule’’).7 The May 2022 Rule provided extensive background on requirements relating to monthly reports of usage, annual reports of usage (‘‘AROUs’’), and reports of adjustment (‘‘ROAs’’), including with respect to timing, invoices, and response files.8 The Office assumes familiarity with both the September 2020 Rule and May 2022 Rule and their detailed explanations of these issues.9 In brief, and as relevant here, the May 2022 Rule established an invoice and response file process for ROAs (and by extension, AROUs that are combined with ROAs).10 Under these regulations, if there is an underpayment of royalties, the DMP must pay the difference to the MLC either contemporaneously with delivery of the ROA or promptly after receiving an invoice from the MLC.11 In those circumstances where the DMP will receive a response file from the MLC, the MLC must deliver the invoice to the DMP contemporaneously with the response file.12 The MLC must otherwise deliver the invoice to the DMP in a reasonably timely manner.13 If requested by the DMP, the MLC must deliver a response file no later than 45 days after receiving the ROA, unless the ROA is combined with an AROU, in which case the response file must be 6 37 CFR 210.27(f), (g)(3) and (4), (k). FR 31422, 31424–27 (May 24, 2022). 8 Id. at 31422–23. 9 To date, this proceeding has involved multiple rounds of public comments through a notification of inquiry, 84 FR 49966 (Sept. 24, 2019), a notice of proposed rulemaking, 85 FR 22518 (Apr. 22, 2020), and an ex parte communications process. In addition to the September 2020 Rule and May 2022 Rule, the Office has issued two other supplemental interim rules. 85 FR 84243 (Dec. 28, 2020); 86 FR 12822 (Mar. 5, 2021). Guidelines for ex parte communications, along with records of such communications, including those referenced herein, are available at https://www.copyright.gov/ rulemaking/mma-implementation/ex-partecommunications.html. All MMA rulemaking activity, including public comments, can currently be accessed via navigation from https:// www.copyright.gov/music-modernization. 10 87 FR 31425–27. 11 37 CFR 210.27(k)(4). 12 Id. 13 Id. 7 87 E:\FR\FM\01FER1.SGM 01FER1 Federal Register / Vol. 88, No. 21 / Wednesday, February 1, 2023 / Rules and Regulations delivered within 60 days.14 Acknowledging that the MLC would need time to implement these regulations, the May 2022 Rule provided a transition period ending on February 24, 2023, during which the MLC is not required to deliver invoices or response files within the specified timeframes.15 In response to the May 2022 Rule, the Office received relevant comments from only the MLC and DLC.16 At a high level, the MLC objected to the invoice and response file timelines in the rule. It asserted operational concerns related to waste, inefficiency, and burden if required to comply with the May 2022 Rule’s timeframes for delivering invoices and response files to DMPs for ROAs.17 The DLC did not object to the MLC’s position on this issue.18 The MLC also proposed that, instead of permitting DMPs to pay additional royalties promptly after receiving an invoice from the MLC, they should always have to pay adjusted royalties contemporaneously with delivery of the ROA to the MLC.19 The DLC disagreed on this point, stating that ‘‘the option [for DMPs] to make royalty payments for adjustments only after receiving an invoice from the MLC should remain in place.’’ 20 Having reviewed these comments, the Office is considering revising the May 2022 Rule. However, as discussed below, because at least some of the issues surrounding adjustments may be impacted by the unresolved issue of the relationship between adjustments and 14 Id. § 210.27(k)(8). § 210.27(k)(9). 16 DLC Supplemental Interim Rule Comments (July 8, 2022) (‘‘DLC Comments’’); MLC Ex Parte Letter (Oct. 17, 2022); DLC Ex Parte Letter (Nov. 18, 2022); MLC Ex Parte Letter (Dec. 21, 2022). 17 MLC Ex Parte Letter at 3–4, 8 (Oct. 17, 2022) (asserting, for example, that it would be ‘‘wasteful and burdensome’’ if the MLC is not allowed to abstain from processing a DMP’s adjustments to royalty reporting for 2021 or 2022 until the MLC receives the DMP’s ROA implementing the CRJs’ final determination in the ongoing Phonorecords III remand proceeding, because the forthcoming final determination will require all DMPs to retroactively adjust streaming royalties for those years, thereby rendering moot all adjustments previously submitted); id. at 4–6 (asserting, for example, that the MLC’s ‘‘efficient and effective blanket license administration will be hindered if adjustments are required to be processed as they are received’’ because it ‘‘would necessarily preempt The MLC’s ability to reprocess unmatched uses because reprocessing would have to be put on hold for each adjustment’’). 18 DLC Ex Parte Letter at 3–6 (Nov. 18, 2022) (stating that the DLC has ‘‘no objection in principle to the MLC’s request to delay processing of [2021 and 2022] adjustments’’ and that it ‘‘supports giving the MLC relief from its deadlines to process reports of adjustment and provide invoices and response files’’). 19 MLC Ex Parte Letter at 6–8 (Oct. 17, 2022). 20 DLC Ex Parte Letter at 6 (Nov. 18, 2022). lotter on DSK11XQN23PROD with RULES1 15 Id. VerDate Sep<11>2014 16:39 Jan 31, 2023 Jkt 259001 late fees, the Office has concluded that it should conduct further proceedings before proposing any amendments. B. Late Fees The issue of late fees is not new to this proceeding. As previously detailed by the Office, stakeholders, including the MLC and DLC, disagree about whether late fees adopted by the CRJs for late payments of royalties apply to adjustments.21 The Office previously declined to adopt a rule addressing the interplay between the CRJs’ late fee regulation and the Office’s provisions for adjustments because it was not clear at the time of the September 2020 Rule that doing so would be the best course ‘‘particularly where the CRJs may wish themselves to take the occasion of [the Phonorecords III] remand or otherwise update their operative regulation in light of the [September 2020 Rule].’’ 22 At the time, the Office said it would instead ‘‘monitor the operation of this aspect of the [September 2020 Rule], and as appropriate in consultation with the CRJs.’’ 23 Since the September 2020 Rule, however, the CRJs have not taken any action on the late fee issue and have not indicated an intent that they plan to do so. At the same time, the MLC’s and DLC’s comments in response to the May 2022 Rule again raised the issue and confirmed their continued disagreement on the issue. 24 Both the MLC and DLC requested the Office provide guidance.25 The DLC requested that the Office ‘‘specify that when both the initial estimated payments and the later adjustment of such payments to account for the updated and finalized information are made according to the timelines established in the regulations, such payments are proper and have been made by the ‘due date for payment’ as set forth in 17 U.S.C. 115(d)(8)(B)(i).’’ 26 The MLC opposed the DLC’s position 27 and instead proposed regulatory language providing that nothing in the adjustment 21 85 FR 58136–37 (discussing the DLC’s request ‘‘for language to ensure DMPs are not subject to late fees for adjustments to estimates’’ and the MLC’s request ‘‘to add language prescribing that no use of an estimate changes or affects the statutory due dates for royalty payments or the applicability of late fees to any underpayment of royalties that results from using an estimate’’); 85 FR 22530; see 37 CFR 385.3; 17 U.S.C. 115(d)(8)(B). 22 85 FR 58137. 23 Id. 24 MLC Ex Parte Letter at 8 (Oct. 17, 2022); MLC Ex Parte Letter at 2–5 (Dec. 21, 2022); DLC Comments at 3. 25 See 85 FR 58136–37; MLC Ex Parte Letter at 8 (Oct. 17, 2022); MLC Ex Parte Letter at 2–5 (Dec. 21, 2022); DLC Comments at 3. 26 DLC Comments at 3. 27 MLC Ex Parte Letter at 2–5 (Dec. 21, 2022). PO 00000 Frm 00023 Fmt 4700 Sfmt 4700 6631 provisions ‘‘shall change a blanket licensee’s liability for late fees, where applicable.’’ 28 Other parts of the MLC’s comments on adjustments also touched on the issue of late fees. For example, discussing its opposition to allowing DMPs to avoid paying adjusted royalties until after receiving an invoice, the MLC argues that ‘‘[f]ull payment of royalties is due and owing from the original due date of each month’s royalties.’’ 29 C. Further Proceedings on Adjustments and Late Fees In sum, resolution of when royalties are ‘‘due’’ and when late fees are incurred could be relevant to the adjustment issues being considered by the Office. The Office therefore finds it prudent to consider both issues concurrently. It intends to publish a notification of inquiry in the near future to expand the public record on the late fee issue before publishing a proposed rule. Once it has evaluated the relevant comments, the Office plans to issue a notice of proposed rulemaking that jointly addresses both late fees and the other concerns raised in response to the May 2022 Rule (e.g., regarding the timing of royalty payments, invoices, and response files for adjustments). II. Supplemental Interim Rule One component of the May 2022 Rule, however, must be amended immediately to provide the Office with sufficient time to conduct these further public proceedings: the current February 24, 2023 expiration of the MLC’s transition period. Based on the MLC’s and DLC’s comments discussed above, the Office is extending the length of the MLC’s transition period during the pendency of the Office’s further rulemaking activity in this area. To provide flexibility, the new rule provides that the MLC’s transition period ends 30 days after receiving written notice from the Office. Prior to that time, as noted above, the Office expects to issue a superseding rule addressing the underlying issues as part of further public proceedings surrounding adjustments. Because of the short amount of time remaining before the expiration of the MLC’s current transition period on February 24, 2023, and based on the MLC’s unopposed assertions that complying with the May 2022 Rule’s timelines is operationally problematic, the Office finds that there is good cause to adopt this supplemental interim rule without public notice and comment, 28 MLC 29 MLC E:\FR\FM\01FER1.SGM Ex Parte Letter at 8 (Oct. 17, 2022). Ex Parte Letter at 2 (Dec. 21, 2022). 01FER1 6632 Federal Register / Vol. 88, No. 21 / Wednesday, February 1, 2023 / Rules and Regulations and to make it effective immediately upon publication.30 List of Subjects in 37 CFR Part 210 Copyright, Phonorecords, Recordings. Interim Regulations For the reasons set forth in the preamble, the U.S. Copyright Office amends 37 CFR part 210 as follows: PART 210—COMPULSORY LICENSE FOR MAKING AND DISTRIBUTING PHYSICAL AND DIGITAL PHONORECORDS OF NONDRAMATIC MUSICAL WORKS 1. The authority citation for part 210 continues to read as follows: ■ Authority: 17 U.S.C. 115, 702. § 210.27 [Amended] 2. Amend § 210.27(k)(9) by removing ‘‘February 24, 2023’’ and adding in its place ‘‘30 calendar days after receiving written notice from the Copyright Office’’. ■ Dated: January 26, 2023. Shira Perlmutter, Register of Copyrights and Director of the U.S. Copyright Office. Approved by: Carla D. Hayden, Librarian of Congress. [FR Doc. 2023–02118 Filed 1–31–23; 8:45 am] BILLING CODE 1410–30–P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA–R05–OAR–2022–0370; FRL–9950–02– R5] Air Plan Approval; Wisconsin; 2015 Ozone Standard Environmental Protection Agency (EPA). ACTION: Final rule. AGENCY: The Environmental Protection Agency (EPA) is approving rules submitted by the Wisconsin Department of Natural Resources (WDNR) as a revision to its State Implementation Plan (SIP). The submitted rules incorporate the 2015 primary and secondary National Ambient Air Quality Standards (NAAQS) for ozone. In addition, WDNR included several updates to ensure implementation of the ozone NAAQS, in areas currently or formerly designated as nonattainment for any ozone standard, in a manner lotter on DSK11XQN23PROD with RULES1 SUMMARY: 30 See 5 U.S.C. 553(b)(B), (d)(3). VerDate Sep<11>2014 16:39 Jan 31, 2023 Jkt 259001 consistent with Clean Air Act (CAA) requirements. DATES: This final rule is effective on March 3, 2023. ADDRESSES: EPA has established a docket for this action under Docket ID No. EPA–R05–OAR–2022–0370. All documents in the docket are listed on the www.regulations.gov website. Although listed in the index, some information is not publicly available, i.e., Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the internet and will be publicly available only in hard copy form. Publicly available docket materials are available either through www.regulations.gov or at the Environmental Protection Agency, Region 5, Air and Radiation Division, 77 West Jackson Boulevard, Chicago, Illinois 60604. This facility is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding Federal holidays and facility closures due to COVID–19. We recommend that you telephone Charles Hatten, Environmental Engineer, at (312) 886–6031 before visiting the Region 5 office. FOR FURTHER INFORMATION CONTACT: Charles Hatten, Environmental Engineer, Control Strategies Section, Air Programs Branch (AR18J), Environmental Protection Agency, Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604, (312) 886–6031, hatten.charles@epa.gov. The EPA Region 5 office is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding Federal holidays and facility closures due to COVID–19. SUPPLEMENTARY INFORMATION: Throughout this document whenever ‘‘we,’’ ‘‘us,’’ or ‘‘our’’ is used, we mean EPA. I. What is being addressed in this document? This rule approves Wisconsin’s April 8, 2022, submission to update chapter NR 404 of Wisconsin’s ambient air quality rule to incorporate the 2015 primary and secondary ozone national ambient air quality standards (NAAQS) and the chapter NR 484 incorporation by reference rule with the monitoring requirements related to the NAAQS to make Wisconsin’s rules consistent with the Federal rules in the Wisconsin SIP. In addition, WDNR revised sections of chapters NR 407 (Operation permits), 408 (Construction permits for direct major sources in nonattainment areas) and 428 (nitrogen oxides (NOX) reasonably available control PO 00000 Frm 00024 Fmt 4700 Sfmt 4700 technologies (RACT)), to ensure implementation of the Federal ozone NAAQS in areas currently or formerly designated as nonattainment for any ozone standard, in a manner consistent with CAA requirements. An explanation of the CAA requirements, a detailed analysis of the revisions, and EPA’s reasons for approval are provided in EPA’s notice of proposed rulemaking (NPRM), dated August 16, 2022 (87 FR 50280), and will not be restated here. II. What comments did we receive on the proposed rule? EPA provided a 30-day review and comment period in the NPRM. The comment period ended on September 15, 2022. We received no comments on the proposed rule. III. What action is EPA taking? EPA is approving the revision to chapters NR 404, 407, 408, 428, and 484, as submitted on April 8, 2022, into the Wisconsin SIP. Specifically, EPA is approving NR 404.04(5)(d) and (Note), NR 407.02(4)(c)1. and Note, NR 408.02(24)(c), NR 408.02(32)(a)6., NR 428.20, NR 428.21(3), NR 428.255 and NR 484.04 Table 2(7s), as published in the Wisconsin Register #794, effective March 1, 2022. IV. Incorporation by Reference In this rule, EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, EPA is finalizing the incorporation by reference of the Wisconsin Regulations discussed in Section I and listed in Section III of this preamble and set forth in the amendments to 40 CFR part 52 set forth below. EPA has made, and will continue to make, these documents generally available through www.regulations.gov and at the EPA Region 5 Office (please contact the person identified in the FOR FURTHER INFORMATION CONTACT section of this preamble for more information). V. Statutory and Executive Order Reviews. Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA’s role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action: E:\FR\FM\01FER1.SGM 01FER1

Agencies

[Federal Register Volume 88, Number 21 (Wednesday, February 1, 2023)]
[Rules and Regulations]
[Pages 6630-6632]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-02118]


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LIBRARY OF CONGRESS

U.S. Copyright Office

37 CFR Part 210

[Docket No. 2020-5]


Music Modernization Act Notices of License, Notices of Nonblanket 
Activity, Data Collection and Delivery Efforts, and Reports of Usage 
and Payment

AGENCY: U.S. Copyright Office, Library of Congress.

ACTION: Supplemental interim rule.

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SUMMARY: The U.S. Copyright Office is issuing a supplemental interim 
rule relating to certain reporting and payment requirements of digital 
music providers and related duties of the mechanical licensing 
collective under the Music Modernization Act. The amendment extends a 
previously adopted transition period pending further rulemaking by the 
Office regarding reports of adjustment. Based on the imminent 
expiration of the existing transition period and recent public comments 
requesting further proceedings on the subject of adjustments, the 
Office has determined that there is a legitimate need to make this 
amendment, effective immediately.

DATES: Effective February 1, 2023.

FOR FURTHER INFORMATION CONTACT: Rhea Efthimiadis, Assistant to the 
General Counsel, by email at [email protected] or telephone at 202-
707-8350.

SUPPLEMENTARY INFORMATION:

I. Background

    The Orrin G. Hatch-Bob Goodlatte Music Modernization Act (the 
``MMA'') substantially modified the compulsory ``mechanical'' license 
for reproducing and distributing phonorecords of nondramatic musical 
works under 17 U.S.C. 115.\1\ It did so by switching from a song-by-
song licensing system to a blanket licensing regime that became 
available on January 1, 2021 (the ``license availability date''),\2\ 
administered by a mechanical licensing collective (the ``MLC'') 
designated by the Copyright Office (the ``Office'').\3\ Digital music 
providers (``DMPs'') are able to obtain this new mechanical blanket 
license (the ``blanket license'') to make digital phonorecord 
deliveries of nondramatic musical works, including in the form of 
permanent downloads, limited downloads, or interactive streams 
(referred to in the statute as ``covered activity'' where such activity 
qualifies for a blanket license), subject to various requirements, 
including reporting obligations.\4\ DMPs also have the option to engage 
in these activities, in whole or in part, through voluntary licenses 
from copyright owners.
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    \1\ Public Law 115-264, 132 Stat. 3676 (2018).
    \2\ 17 U.S.C. 115(e)(15).
    \3\ As permitted under the MMA, the Office also designated a 
digital licensee coordinator (the ``DLC'') to represent licensees in 
proceedings before the Copyright Royalty Judges (the ``CRJs'') and 
the Office, to serve as a non-voting member of the MLC, and to carry 
out other functions. 84 FR 32274 (July 8, 2019).
    \4\ 17 U.S.C. 115(d).
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A. The Office's September 2020 and May 2022 Rules

    On September 17, 2020, as a part of its work to implement the MMA, 
the Office issued an interim rule adopting regulations concerning 
reporting requirements under the blanket license (the ``September 2020 
Rule'').\5\ As relevant here, those interim regulations included 
requirements governing annual reporting and the ability to make 
adjustments to monthly and annual reports and related royalty payments, 
including to correct errors and replace estimated inputs with finally 
determined figures.\6\
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    \5\ 85 FR 58114 (Sept. 17, 2020).
    \6\ 37 CFR 210.27(f), (g)(3) and (4), (k).
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    After enactment of the September 2020 Rule, the Office received a 
request from the DLC to modify it, prompted by operational and 
compliance concerns. After carefully evaluating the DLC's request and 
the then-existing rulemaking record, the Office decided to make various 
amendments through a supplemental interim rule and request for comments 
issued on May 24, 2022 (the ``May 2022 Rule'').\7\ The May 2022 Rule 
provided extensive background on requirements relating to monthly 
reports of usage, annual reports of usage (``AROUs''), and reports of 
adjustment (``ROAs''), including with respect to timing, invoices, and 
response files.\8\ The Office assumes familiarity with both the 
September 2020 Rule and May 2022 Rule and their detailed explanations 
of these issues.\9\
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    \7\ 87 FR 31422, 31424-27 (May 24, 2022).
    \8\ Id. at 31422-23.
    \9\ To date, this proceeding has involved multiple rounds of 
public comments through a notification of inquiry, 84 FR 49966 
(Sept. 24, 2019), a notice of proposed rulemaking, 85 FR 22518 (Apr. 
22, 2020), and an ex parte communications process. In addition to 
the September 2020 Rule and May 2022 Rule, the Office has issued two 
other supplemental interim rules. 85 FR 84243 (Dec. 28, 2020); 86 FR 
12822 (Mar. 5, 2021). Guidelines for ex parte communications, along 
with records of such communications, including those referenced 
herein, are available at https://www.copyright.gov/rulemaking/mma-implementation/ex-parte-communications.html. All MMA rulemaking 
activity, including public comments, can currently be accessed via 
navigation from https://www.copyright.gov/music-modernization.
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    In brief, and as relevant here, the May 2022 Rule established an 
invoice and response file process for ROAs (and by extension, AROUs 
that are combined with ROAs).\10\ Under these regulations, if there is 
an underpayment of royalties, the DMP must pay the difference to the 
MLC either contemporaneously with delivery of the ROA or promptly after 
receiving an invoice from the MLC.\11\ In those circumstances where the 
DMP will receive a response file from the MLC, the MLC must deliver the 
invoice to the DMP contemporaneously with the response file.\12\ The 
MLC must otherwise deliver the invoice to the DMP in a reasonably 
timely manner.\13\ If requested by the DMP, the MLC must deliver a 
response file no later than 45 days after receiving the ROA, unless the 
ROA is combined with an AROU, in which case the response file must be

[[Page 6631]]

delivered within 60 days.\14\ Acknowledging that the MLC would need 
time to implement these regulations, the May 2022 Rule provided a 
transition period ending on February 24, 2023, during which the MLC is 
not required to deliver invoices or response files within the specified 
timeframes.\15\
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    \10\ 87 FR 31425-27.
    \11\ 37 CFR 210.27(k)(4).
    \12\ Id.
    \13\ Id.
    \14\ Id. Sec.  210.27(k)(8).
    \15\ Id. Sec.  210.27(k)(9).
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    In response to the May 2022 Rule, the Office received relevant 
comments from only the MLC and DLC.\16\ At a high level, the MLC 
objected to the invoice and response file timelines in the rule. It 
asserted operational concerns related to waste, inefficiency, and 
burden if required to comply with the May 2022 Rule's timeframes for 
delivering invoices and response files to DMPs for ROAs.\17\ The DLC 
did not object to the MLC's position on this issue.\18\ The MLC also 
proposed that, instead of permitting DMPs to pay additional royalties 
promptly after receiving an invoice from the MLC, they should always 
have to pay adjusted royalties contemporaneously with delivery of the 
ROA to the MLC.\19\ The DLC disagreed on this point, stating that ``the 
option [for DMPs] to make royalty payments for adjustments only after 
receiving an invoice from the MLC should remain in place.'' \20\
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    \16\ DLC Supplemental Interim Rule Comments (July 8, 2022) 
(``DLC Comments''); MLC Ex Parte Letter (Oct. 17, 2022); DLC Ex 
Parte Letter (Nov. 18, 2022); MLC Ex Parte Letter (Dec. 21, 2022).
    \17\ MLC Ex Parte Letter at 3-4, 8 (Oct. 17, 2022) (asserting, 
for example, that it would be ``wasteful and burdensome'' if the MLC 
is not allowed to abstain from processing a DMP's adjustments to 
royalty reporting for 2021 or 2022 until the MLC receives the DMP's 
ROA implementing the CRJs' final determination in the ongoing 
Phonorecords III remand proceeding, because the forthcoming final 
determination will require all DMPs to retroactively adjust 
streaming royalties for those years, thereby rendering moot all 
adjustments previously submitted); id. at 4-6 (asserting, for 
example, that the MLC's ``efficient and effective blanket license 
administration will be hindered if adjustments are required to be 
processed as they are received'' because it ``would necessarily 
preempt The MLC's ability to reprocess unmatched uses because 
reprocessing would have to be put on hold for each adjustment'').
    \18\ DLC Ex Parte Letter at 3-6 (Nov. 18, 2022) (stating that 
the DLC has ``no objection in principle to the MLC's request to 
delay processing of [2021 and 2022] adjustments'' and that it 
``supports giving the MLC relief from its deadlines to process 
reports of adjustment and provide invoices and response files'').
    \19\ MLC Ex Parte Letter at 6-8 (Oct. 17, 2022).
    \20\ DLC Ex Parte Letter at 6 (Nov. 18, 2022).
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    Having reviewed these comments, the Office is considering revising 
the May 2022 Rule. However, as discussed below, because at least some 
of the issues surrounding adjustments may be impacted by the unresolved 
issue of the relationship between adjustments and late fees, the Office 
has concluded that it should conduct further proceedings before 
proposing any amendments.

B. Late Fees

    The issue of late fees is not new to this proceeding. As previously 
detailed by the Office, stakeholders, including the MLC and DLC, 
disagree about whether late fees adopted by the CRJs for late payments 
of royalties apply to adjustments.\21\ The Office previously declined 
to adopt a rule addressing the interplay between the CRJs' late fee 
regulation and the Office's provisions for adjustments because it was 
not clear at the time of the September 2020 Rule that doing so would be 
the best course ``particularly where the CRJs may wish themselves to 
take the occasion of [the Phonorecords III] remand or otherwise update 
their operative regulation in light of the [September 2020 Rule].'' 
\22\ At the time, the Office said it would instead ``monitor the 
operation of this aspect of the [September 2020 Rule], and as 
appropriate in consultation with the CRJs.'' \23\
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    \21\ 85 FR 58136-37 (discussing the DLC's request ``for language 
to ensure DMPs are not subject to late fees for adjustments to 
estimates'' and the MLC's request ``to add language prescribing that 
no use of an estimate changes or affects the statutory due dates for 
royalty payments or the applicability of late fees to any 
underpayment of royalties that results from using an estimate''); 85 
FR 22530; see 37 CFR 385.3; 17 U.S.C. 115(d)(8)(B).
    \22\ 85 FR 58137.
    \23\ Id.
---------------------------------------------------------------------------

    Since the September 2020 Rule, however, the CRJs have not taken any 
action on the late fee issue and have not indicated an intent that they 
plan to do so. At the same time, the MLC's and DLC's comments in 
response to the May 2022 Rule again raised the issue and confirmed 
their continued disagreement on the issue.\24\ Both the MLC and DLC 
requested the Office provide guidance.\25\ The DLC requested that the 
Office ``specify that when both the initial estimated payments and the 
later adjustment of such payments to account for the updated and 
finalized information are made according to the timelines established 
in the regulations, such payments are proper and have been made by the 
`due date for payment' as set forth in 17 U.S.C. 115(d)(8)(B)(i).'' 
\26\ The MLC opposed the DLC's position \27\ and instead proposed 
regulatory language providing that nothing in the adjustment provisions 
``shall change a blanket licensee's liability for late fees, where 
applicable.'' \28\ Other parts of the MLC's comments on adjustments 
also touched on the issue of late fees. For example, discussing its 
opposition to allowing DMPs to avoid paying adjusted royalties until 
after receiving an invoice, the MLC argues that ``[f]ull payment of 
royalties is due and owing from the original due date of each month's 
royalties.'' \29\
---------------------------------------------------------------------------

    \24\ MLC Ex Parte Letter at 8 (Oct. 17, 2022); MLC Ex Parte 
Letter at 2-5 (Dec. 21, 2022); DLC Comments at 3.
    \25\ See 85 FR 58136-37; MLC Ex Parte Letter at 8 (Oct. 17, 
2022); MLC Ex Parte Letter at 2-5 (Dec. 21, 2022); DLC Comments at 
3.
    \26\ DLC Comments at 3.
    \27\ MLC Ex Parte Letter at 2-5 (Dec. 21, 2022).
    \28\ MLC Ex Parte Letter at 8 (Oct. 17, 2022).
    \29\ MLC Ex Parte Letter at 2 (Dec. 21, 2022).
---------------------------------------------------------------------------

C. Further Proceedings on Adjustments and Late Fees

    In sum, resolution of when royalties are ``due'' and when late fees 
are incurred could be relevant to the adjustment issues being 
considered by the Office. The Office therefore finds it prudent to 
consider both issues concurrently. It intends to publish a notification 
of inquiry in the near future to expand the public record on the late 
fee issue before publishing a proposed rule. Once it has evaluated the 
relevant comments, the Office plans to issue a notice of proposed 
rulemaking that jointly addresses both late fees and the other concerns 
raised in response to the May 2022 Rule (e.g., regarding the timing of 
royalty payments, invoices, and response files for adjustments).

II. Supplemental Interim Rule

    One component of the May 2022 Rule, however, must be amended 
immediately to provide the Office with sufficient time to conduct these 
further public proceedings: the current February 24, 2023 expiration of 
the MLC's transition period. Based on the MLC's and DLC's comments 
discussed above, the Office is extending the length of the MLC's 
transition period during the pendency of the Office's further 
rulemaking activity in this area. To provide flexibility, the new rule 
provides that the MLC's transition period ends 30 days after receiving 
written notice from the Office. Prior to that time, as noted above, the 
Office expects to issue a superseding rule addressing the underlying 
issues as part of further public proceedings surrounding adjustments.
    Because of the short amount of time remaining before the expiration 
of the MLC's current transition period on February 24, 2023, and based 
on the MLC's unopposed assertions that complying with the May 2022 
Rule's timelines is operationally problematic, the Office finds that 
there is good cause to adopt this supplemental interim rule without 
public notice and comment,

[[Page 6632]]

and to make it effective immediately upon publication.\30\
---------------------------------------------------------------------------

    \30\ See 5 U.S.C. 553(b)(B), (d)(3).
---------------------------------------------------------------------------

List of Subjects in 37 CFR Part 210

    Copyright, Phonorecords, Recordings.

Interim Regulations

    For the reasons set forth in the preamble, the U.S. Copyright 
Office amends 37 CFR part 210 as follows:

PART 210--COMPULSORY LICENSE FOR MAKING AND DISTRIBUTING PHYSICAL 
AND DIGITAL PHONORECORDS OF NONDRAMATIC MUSICAL WORKS

0
1. The authority citation for part 210 continues to read as follows:

    Authority:  17 U.S.C. 115, 702.


Sec.  210.27   [Amended]

0
2. Amend Sec.  210.27(k)(9) by removing ``February 24, 2023'' and 
adding in its place ``30 calendar days after receiving written notice 
from the Copyright Office''.

    Dated: January 26, 2023.
Shira Perlmutter,
Register of Copyrights and Director of the U.S. Copyright Office.

    Approved by:
Carla D. Hayden,
Librarian of Congress.
[FR Doc. 2023-02118 Filed 1-31-23; 8:45 am]
BILLING CODE 1410-30-P
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