Determination of Rates and Terms for Digital Performance of Sound Recordings by New Subscription Services and Making of Ephemeral Copies To Facilitate Those Performances (NSS V), 103722-103726 [2024-29384]
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103722
Federal Register / Vol. 89, No. 244 / Thursday, December 19, 2024 / Proposed Rules
Spartanburg VORTAC 088° and
Charlotte VOR/DME 227° radials.
V–605: V–605 currently extends
between the Holston Mountain, TN
(HMV), VORTAC and the Spartanburg,
SC (SPA), VORTAC. In the route
description of VOR Federal Airway V–
605 between the Holston Mountain
VORTAC and the Spartanburg VORTAC
is a turn point listed as the intersection
of the Holston Mountain 171° and
Spartanburg VORTAC 358° radials
(GENOD, SC, Fix). Due to the relocation
of the Spartanburg VORTAC, the radials
that make up the GENOD Fix are
changed to become the intersection of
the Holston Mountain VORTAC 171° T/
175° M and the Spartanburg VORTAC
001° T/003° M radials. The FAA
proposes to update the route description
of VOR Federal Airway V–605 with the
new radials that define the GENOD Fix.
Additionally, the FAA changes the
order of the navigational aids (NAVAID)
to be listed from south to north to follow
the FAA’s current ATS route formatting
requirements. As amended, the airway
would extend between the Spartanburg
VORTAC and the Holston Mountain
VORTAC.
The NAVAID radials listed in the ATS
descriptions in the proposed regulatory
text of this NPRM are stated in degrees
True north. The full descriptions of the
above routes are set forth below in the
proposed amendments to part 71.
Regulatory Notices and Analyses
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Airspace, Incorporation by reference,
Navigation (air).
Copyright Royalty Board
The Proposed Amendment
37 CFR Part 383
In consideration of the foregoing, the
Federal Aviation Administration
proposes to amend 14 CFR part 71 as
follows:
PART 71—DESIGNATION OF CLASS A,
B, C, D, AND E AIRSPACE AREAS; AIR
TRAFFIC SERVICE ROUTES; AND
REPORTING POINTS
1. The authority citation for 14 CFR
part 71 continues to read as follows:
■
Authority: 49 U.S.C. 106(f); 40103, 40113,
40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959–
1963 Comp., p. 389.
§ 71.1
This proposal will be subject to an
environmental analysis in accordance
with FAA Order 1050.1F,
‘‘Environmental Impacts: Policies and
Procedures’’ prior to any FAA final
regulatory action.
Jkt 265001
[Amended]
2. The incorporation by reference in
14 CFR 71.1 of FAA Order JO 7400.11J,
Airspace Designations and Reporting
Points, dated July 31, 2024, and
effective September 15, 2024, is
amended as follows:
■
Paragraph 2004
Jet Routes.
*
*
*
*
*
J–83 [Amended]
From Appleton, OH; to Dryer, OH.
*
*
*
*
*
From Charleston, WV; INT Charleston 357°
and Dryer, OH, 172° radials; to Dryer.
*
*
*
*
*
Paragraph 6010(a) Domestic VOR Federal
Airways.
*
*
*
*
*
V–415 [Amended]
From Montgomery, AL, to INT
Montgomery 029° and Gadsden, AL, 124°
radials. From INT Rome, GA, 060° and
Foothills, SC, 258° radials; Foothills;
Spartanburg, SC; to INT Spartanburg 088° T/
090° M and Charlotte, NC, 227° T/232° M
radials.
*
*
*
*
*
V–605 [Amended]
From Spartanburg, SC; INT Spartanburg
001° T/003° M and Holston Mountain, TN,
171° T/175° M radials; to Holston Mountain.
*
Environmental Review
17:21 Dec 18, 2024
LIBRARY OF CONGRESS
J–85 [Amended]
The FAA has determined that this
proposed regulation only involves an
established body of technical
regulations for which frequent and
routine amendments are necessary to
keep them operationally current. It,
therefore: (1) is not a ‘‘significant
regulatory action’’ under Executive
Order 12866; (2) is not a ‘‘significant
rule’’ under DOT Regulatory Policies
and Procedures (44 FR 11034; February
26, 1979); and (3) does not warrant
preparation of a regulatory evaluation as
the anticipated impact is so minimal.
Since this is a routine matter that will
only affect air traffic procedures and air
navigation, it is certified that this
proposed rule, when promulgated, will
not have a significant economic impact
on a substantial number of small entities
under the criteria of the Regulatory
Flexibility Act.
VerDate Sep<11>2014
List of Subjects in 14 CFR Part 71
*
*
*
*
Issued in Washington, DC, on December
16, 2024.
Richard Lee Parks,
Manager (A); Rules and Regulations Group.
[FR Doc. 2024–30233 Filed 12–18–24; 8:45 am]
BILLING CODE 4910–13–P
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[Docket No. 23–CRB–0013–NSR (2026–
2030)]
Determination of Rates and Terms for
Digital Performance of Sound
Recordings by New Subscription
Services and Making of Ephemeral
Copies To Facilitate Those
Performances (NSS V)
ACTION:
Proposed rule.
The Copyright Royalty Judges
are publishing for comment proposed
regulations governing the rates and
terms for the digital performances of
sound recordings by new subscription
services and for the making of
ephemeral recordings necessary to
facilitate those transmissions for the
period commencing January 1, 2026,
and ending on December 31, 2030.
DATES: Comments and objections, if any,
are due no later than January 21, 2025.
ADDRESSES: You may submit comments
using eCRB, the Copyright Royalty
Board’s online electronic filing
application, at https://app.crb.gov/.
Instructions: To send your comment
through eCRB, if you don’t have a user
account, you will first need to register
for an account and wait for your
registration to be approved. Approval of
user accounts is only available during
business hours. Once you have an
approved account, you can only sign in
and file your comment after setting up
multi-factor authentication, which can
be done at any time of day. All
comments must include the Copyright
Royalty Board name and the docket
number for this proposed rule (23–CRB–
0013–NSR (2026–2030)). All properly
filed comments will appear without
change in eCRB at https://app.crb.gov,
including any personal information
provided.
Docket: For access to the docket, go to
eCRB, the Copyright Royalty Board’s
electronic filing and case management
system, at https://app.crb.gov/, and
search for docket number 23–CRB–
0013–NSR (2026–2030).
FOR FURTHER INFORMATION CONTACT:
Anita Brown, CRB Program Specialist,
at (202) 707–7658 or crb@loc.gov.
SUPPLEMENTARY INFORMATION:
SUMMARY:
Background
Section 114 of the Copyright Act, title
17 of the United States Code, provides
a statutory license that allows for the
public performance of sound recordings
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Federal Register / Vol. 89, No. 244 / Thursday, December 19, 2024 / Proposed Rules
by means of a digital audio transmission
by, among others, new subscription
services. 17 U.S.C. 114(f). For purposes
of the section 114 license, a ‘‘new
subscription service’’ is a ‘‘service that
performs sound recordings by means of
noninteractive subscription digital
audio transmissions and that is not a
preexisting subscription or preexisting
satellite digital audio radio service.’’ 17
U.S.C. 114(j)(8).
Services using the section 114 license
may need to make one or more
temporary or ‘‘ephemeral’’ copies of a
sound recording to facilitate the
transmission of that recording. The
section 112 statutory license allows for
the making of these ephemeral
reproductions. 17 U.S.C. 112(e).
Chapter 8 of the Copyright Act
requires the Judges to conduct
proceedings every five years to
determine the rates and terms for the
sections 114 and 112 statutory licenses.
17 U.S.C. 801(b)(1), 804(b)(3)(A). The
current proceeding commenced in
January 2024 for rates and terms that
will become effective on January 1,
2026, and end on December 31, 2030.
Pursuant to section 804(b)(3)(A), the
Judges published in the Federal
Register a notice commencing the
proceeding and requesting that
interested parties submit their petitions
to participate. 89 FR 810 (Jan. 5, 2024).
SoundExchange, Inc.
(‘‘SoundExchange’’), Sirius XM Radio
Inc. (‘‘Sirius XM’’), and Stingray Music
USA Inc. (‘‘Stingray’’), each filed
Petitions to Participate.
The Judges gave notice to all
participants of the three-month
negotiation period required by 17 U.S.C.
803(b)(3) and directed that, if the
participants were unable to negotiate a
settlement, they should submit Written
Direct Statements no later than
September 13, 2024. On September 9,
2024, the Copyright Royalty Judges
(Judges) received a joint motion from
SoundExchange, Sirius XM, and
Stingray to adopt a settlement of their
interests regarding the rates and terms
for 2026–2030 for certain new
subscription services (NSS). The parties
request that the Judges adopt the
settlement in its entirety as a settlement
of rates and terms under sections 112(e)
and 114 of the Copyright Act for new
subscription services of the type at issue
in the captioned proceeding, i.e., music
services provided to residential
subscribers as part of a cable or satellite
television bundle subject to royalty rates
and terms in 37 CFR part 383. Joint
Motion to Adopt Partial Settlement at 1
(Joint Motion). SoundExchange
represents sound recording copyright
owners and performers. Sirius XM and
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Stingray rely on the royalty rates and
terms in 37 CFR part 383. Joint Motion
at 2. The Judges hereby publish the
settlement and request comments.
Statutory Timing of Adoption of Rates
and Terms
Section 801(b)(7)(A) of the Copyright
Act authorizes the Judges to adopt
royalty rates and terms negotiated by
‘‘some or all of the participants in a
proceeding at any time during the
proceeding’’ provided they are
submitted to the Judges for approval.
The Judges must provide ‘‘an
opportunity to comment on the
agreement’’ to participants and nonparticipants in the rate proceeding who
‘‘would be bound by the terms, rates, or
other determination set by any
agreement. . . .’’ 17 U.S.C.
801(b)(7)(A)(i). Participants in the
proceeding may also ‘‘object to [the
agreement’s] adoption as a basis for
statutory terms and rates.’’ Id.
The Judges ‘‘may decline to adopt the
agreement as a basis for statutory terms
and rates for participants that are not
parties to the agreement,’’ only ‘‘if any
participant [in the proceeding] objects to
the agreement and the [Judges]
conclude, based on the record before
them if one exists, that the agreement
does not provide a reasonable basis for
setting statutory terms or rates,’’ 17
U.S.C. 801(b)(7)(A)(ii), or where the
negotiated agreement includes
provisions that are contrary to the
provisions of the applicable license(s) or
otherwise contrary to statutory law. See
Scope of the Copyright Royalty Judges
Authority to Adopt Confidentiality
Requirements upon Copyright Owners
within a Voluntarily Negotiated License
Agreement, 78 FR 47421, 47422 (Aug. 5,
2013), citing 74 FR 4537, 4540 (Jan. 26,
2009).
Proposed Adjustments to Rates and
Terms
According to SoundExchange, Sirius
XM, and Stingray, the settlement
incorporates the same royalty rate
structure presently set forth in 37 CFR
part 383 except that annual increases in
the per-subscriber fees are to be based
on changes in the Consumer Price Index
for All Urban Consumers, rather than
being pre-negotiated as during the
current rate period. Thus, the statutory
royalty rates for 2026 are to be based on
an inflation adjustment to the 2025 rates
currently provided in § 383.3(a), and the
rates for each subsequent year of the
royalty period are to be determined by
a similar adjustment.
The Parties have also agreed that the
applicable terms used in part 383
should be those finally determined in
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the Web VI proceeding (Docket No. 23–
CRB–0012–WR (2026–2030)), except for
(1) the provisions concerning auditing
of payments and distributions, which
are substantively the same as those
currently in effect for new subscription
services of the type at issue in the
proceeding, and (2) a provision
addressing distribution of royalties,
which includes language based on that
in 37 CFR 384.4(i)(1) and 370.4(f)
permitting SoundExchange to use proxy
data to distribute royalties when it is not
able to obtain a usable report of use
from a Licensee. In other respects, the
Settlement preserves the existing
provisions of part 383 with only minor
updating. Joint Motion at 2–3.
The fact that the Settlement
incorporates terms that have not yet
been established in the Web VI
proceeding may raise concern as to
whether participants and nonparticipants in the rate proceeding who
would be bound by the terms, rates, or
other determination set by any
agreement are properly afforded the
aforementioned statutory opportunities
to object or comment on the agreement.
However, the Judges take notice that it
is not inappropriate for agreements to
incorporate and/or rely in part on
events, facts or determinations that have
not yet been established, e.g., references
to adjustments based on yet to be
determined consumer price index
measurements. The Judges are also
mindful that Congress intended to
facilitate and encourage settlement
agreements. See, H.R. Rep. No. 108–408,
at 24 and 30 (2002). Accordingly,
objectors and commenters may
knowingly and willingly choose to
accept some uncertainty as to future
settlement terms and a reference to an
outside method for resolving the
uncertain issues. The Judges do not
express an opinion as to the extent to
which any persons or entities who
would otherwise be bound by this
settlement may have a subsequent right
to challenge the applicability of as yet
non-existent terms.
Therefore, the Judges publish the
Settlement with the current
understanding that doing so is in
compliance with the statutory
opportunities to object or comment on
the agreement.
Those who would be bound by the
terms, rates, or other determination set
by the agreement may comment and
proceeding participants may object to
any or all of the proposed regulations
contained in this document.1 Such
1 The parties represent that SoundExchange,
Sirius XM, and Stingray, all of which have joined
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Federal Register / Vol. 89, No. 244 / Thursday, December 19, 2024 / Proposed Rules
comments and objections must be
submitted no later than January 21,
2025.
List of Subjects in 37 CFR Part 383
Copyright, Sound recordings,
Webcasters.
For the reasons set forth in the
preamble, the Copyright Royalty Judges
propose to revise 37 CFR part 383 to
read as follows:
PART 383—RATES AND TERMS FOR
SUBSCRIPTION TRANSMISSIONS AND
THE REPRODUCTION OF
EMPHEMERAL RECORDINGS BY
CERTAIN NEW SUBSCRIPTION
SERVICES
Sec.
383.1 General.
383.2 Definitions.
383.3 Royalty fees for public performances
of sound recordings and the making of
ephemeral recordings.
383.4 Distribution of royalties.
383.5 Auditing payments and distributions.
383.6 Terms for making payment of royalty
fees.
Authority: 17 U.S.C. 112(e), 114, and
801(b)(1).
§ 383.1
General.
(a) Scope. This part establishes rates
and terms of royalty payments for the
public performance of sound recordings
in certain digital transmissions by
Licensees in accordance with the
provisions of 17 U.S.C. 114, and the
making of certain ephemeral recordings
by Licensees in accordance with the
provisions of 17 U.S.C. 112(e), during
the period commencing January 1, 2026,
and continuing through December 31,
2030.
(b) Legal compliance. Licensees
relying upon the statutory licenses set
forth in 17 U.S.C. 112(e) and 114 shall
comply with the requirements of those
sections and the rates and terms of this
part.
(c) Relationship to voluntary
agreements. Notwithstanding the
royalty rates and terms established in
this part, the rates and terms of any
voluntary license agreements entered
into by Copyright Owners and Licensees
shall apply in lieu of the rates and terms
of this part to transmissions with the
scope of such agreements.
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§ 383.2
Definitions.
For purposes of this part, the
following definitions shall apply:
in the Joint Motion, are the only parties that have
filed petitions to participate in this proceeding and,
therefore, ‘‘there is no basis for the Judges not to
adopt the Settlement as the statutory terms and
rates under [s]ection 112(e) and 114 for services
relying on the royalty rates and terms in 37 CFR
[p]art 383.’’ Joint Motion at 3.
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(a) Bundled Contracts means contracts
between the Licensee and a Provider in
which the Service is not the only
content licensed by the Licensee to the
Provider.
(b) Collective means the collection
and distribution organization that is
designated by the Copyright Royalty
Judges, and which, for the current rate
period, is SoundExchange, Inc.
(c) Copyright Owner means a sound
recording copyright owner, or a rights
owner under 17 U.S.C. 1401(l)(2), who
is entitled to receive royalty payments
made under this part pursuant to the
statutory licenses under 17 U.S.C. 112(e)
and 114.
(d) License Period means the period
commencing January 1, 2026, and
continuing through December 31, 2030.
(e) Licensee is a person that has
obtained statutory licenses under 17
U.S.C. 112(e) and 114, and the
implementing regulations in this part, to
make digital audio transmissions as part
of a Service (as defined in this section),
and ephemeral recordings for use in
facilitating such transmissions.
(f) Payor means the entity required to
make royalty payments to the Collective
or the entity required to distribute
royalty fees collected, depending on
context. The Payor is:
(1) A Licensee, in relation to the
Collective; and
(2) The Collective in relation to a
Copyright Owner or Performer.
(g) Performers means the independent
administrators identified in 17 U.S.C.
114(g)(2)(B) and (C) and the parties
identified in 17 U.S.C. 114(g)(2)(D).
(h) Provider means a ‘‘multichannel
video programming distributor’’ as that
term is defined in 47 CFR 76.1000(e);
notwithstanding such definition, for
purposes of this part, a Provider shall
include only a distributor of
programming to televisions, such as a
cable or satellite television provider.
(i) Qualified auditor means a Certified
Public Accountant independent within
the meaning of the American Institute of
Certified Public Accountants Code of
Professional Conduct.
(j) Service is a non-interactive
(consistent with the definition of
‘‘interactive service’’ in 17 U.S.C.
114(j)(7)) audio-only subscription
service (including accompanying
information and graphics related to the
audio) that is transmitted to residential
subscribers of a television service
through a Provider which is marketed as
and is in fact primarily a video service
where:
(1) Subscribers do not pay a separate
fee for audio channels.
(2) The audio channels are delivered
by digital audio transmissions through a
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technology that is incapable of tracking
the individual sound recordings
received by any particular consumer.
(3) However, paragraph (j)(2) of this
section shall not apply to the Licensee’s
current contracts with Providers that are
in effect as of the effective date of this
part if such Providers become capable in
the future of tracking the individual
sound recordings received by any
particular consumer, provided that the
audio channels continued to be
delivered to Subscribers by digital audio
transmissions and the Licensee remains
incapable of tracking the individual
sound recordings received by any
particular consumer.
(k) Subscriber means every residential
subscriber to the underlying service of
the Provider who receives Licensee’s
Service in the United States for all or
any part of a month; provided, however,
that for any Licensee that is not able to
track the number of subscribers on a
per-day basis, ‘‘Subscribers’’ shall be
calculated based on the average of the
number of subscribers on the last day of
the preceding month and the last day of
the applicable month, unless the Service
is paid by the Provider based on end-ofmonth numbers, in which event
‘‘Subscribers’’ shall be counted based on
end-of-month data.
(l) Stand-Alone Contracts means
contracts between the Licensee and a
Provider in which the only content
licensed to the Provider is the Service.
§ 383.3 Royalty fees for public
performances of sound recordings and the
making of ephemeral recordings.
(a) Royalty rates. Royalty rates for the
public performance of sound recordings
by eligible digital transmissions made
over a Service pursuant to 17 U.S.C.
114, and for ephemeral recordings of
sound recordings made pursuant to 17
U.S.C. 112(e) to facilitate such
transmissions during the License
Period, are as follows. For 2026, each
Licensee will pay, with respect to
content covered by the License that is
provided via the Service of each such
Licensee:
(1) For Stand-Alone Contracts, a
monthly payment of [amount to be
calculated in November 2025 and
published in December 2025 in the final
rule] per Subscriber to the Service of
such Licensee, which is equivalent to
the 2025 royalty rate of $0.0234, as
adjusted by the annual royalty fee
adjustment in paragraph (b) of this
section.
(2) For Bundled Contracts, a monthly
payment of [amount to be calculated in
November 2025 and published in
December 2025 in the final rule] per
Subscriber to the Service of such
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Licensee, which is equivalent to the
2025 royalty rate of $0.0390, as adjusted
by the annual royalty fee adjustment in
paragraph (b) of this section.
(b) Annual royalty fee adjustment. (1)
The Copyright Royalty Judges shall
adjust the royalty fees each year, as
described in paragraph (b)(2) of this
section, beginning with the fees for
2026, to reflect any changes occurring in
the cost of living as determined by the
most recent Consumer Price Index for
All Urban Consumers (U.S. City
Average, all items) (CPI–U) published
by the Secretary of Labor before
December 1 of the preceding year.
(2)(i) The calculation of the rate for
each year shall be cumulative based on
a calculation of the percentage increase
in the CPI–U from the CPI–U published
in November, 2024 (CPI–U%) and shall
be made according to the following
formulas:
(A) For Stand-Alone Contracts, (1 +
(Cy¥315.664/315.664) × $0.0234; and
(B) For Bundled Contracts, (1 +
(Cy¥315.664/315.664) × $0.0390; and
(ii) For both formulas Cy is the CPI–
U published by the Secretary of Labor
before December 1 of the preceding
year. The adjusted rate shall be rounded
to the nearest fourth decimal place.
(3) The Judges shall publish notice of
the adjusted fees in the Federal Register
at least 25 days before January 1 of each
year of the License Period. The adjusted
fees shall be effective on January 1 of
each year of the License Period for such
year.
(c) Minimum fee. Each Licensee will
pay an annual, non-refundable
minimum fee of one hundred thousand
dollars ($100,000), payable on January
31 of each calendar year in which the
Service is provided pursuant to
statutory licenses under 17 U.S.C. 112(e)
and 114. Such fee shall be recoupable
and credited against royalties due in the
calendar year for which the payment is
made.
(d) Allocation between ephemeral
recordings fees and performance royalty
fees. The Collective must credit 5% of
all royalty payments as royalty payment
for Ephemeral Recordings and credit the
remaining 95% to royalties under 17
U.S.C. 114. All Ephemeral Recordings
that a Licensee makes which are
necessary and commercially reasonable
for making noninteractive digital
transmissions through a Service are
included in the 5%.
§ 383.4
Distribution of royalties.
The Collective must promptly
distribute royalties received from
Licensees to Copyright Owners and
Performers that are entitled thereto, or
to their designated agents. The
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Collective shall only be responsible for
making distributions to those who
provide the Collective with information
as is necessary to identify and pay the
correct recipient. The Collective must
distribute royalties on a basis that
values all usage by a Licensee equally
based upon the information provided
under the Reports of Use requirements
for Licensees pursuant to § 370.4 of this
chapter and this part. However, in any
case in which a Licensee has not
provided a compliant Report of Use,
whether for the License Period or
otherwise, and the board of directors of
the Collective determines that further
efforts to seek the missing Report of Use
from the Licensee would not be
warranted, the Collective may distribute
the royalties associated with the
Licensee’s missing Report of Use on the
basis of Reports of Use for the
corresponding calendar year filed by
other Licensees.
§ 383.5 Auditing payments and
distributions.
(a) General. This section prescribes
procedures by which any entity entitled
to receive payment or distribution of
royalties may verify payments or
distributions by auditing the Payor. The
Collective may audit a Licensee’s
payments of royalties to the Collective,
and a Copyright Owner or Performer
may audit the Collective’s distributions
of royalties to the Copyright Owner or
Performer. Nothing in this section shall
preclude a verifying entity and the
Payor from agreeing to verification
methods in addition to or different from
those set forth in this section.
(b) Frequency of auditing. The
verifying entity may conduct an audit of
each Licensee only once a year for any
or all of the prior three calendar years.
A verifying entity may not audit records
for any calendar year more than once.
(c) Notice of intent to audit. The
verifying entity must file with the
Copyright Royalty Judges a notice of
intent to audit the Payor, which notice
the Judges must publish in the Federal
Register within 30 days of the filing of
the notice. Simultaneously with the
filing of the notice, the verifying entity
must deliver a copy to the Payor.
(d) The audit. The audit must be
conducted during regular business
hours by a qualified auditor who is not
retained on a contingency fee basis and
is identified in the notice. The auditor
shall determine the accuracy of royalty
payments or distributions, including
whether an underpayment or
overpayment of royalties was made. An
audit of books and records, including
underlying paperwork, performed in the
ordinary course of business according to
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103725
generally accepted auditing standards
by a qualified auditor, shall serve as an
acceptable verification procedure for all
parties with respect to the information
that is within the scope of the audit.
(e) Access to third-party records for
audit purposes. The Payor must use
commercially reasonable efforts to
obtain or to provide access to any
relevant books and records maintained
by third parties for the purpose of the
audit.
(f) Duty of auditor to consult. The
auditor must produce a written report to
the verifying entity. Before rendering
the report, unless the auditor has a
reasonable basis to suspect fraud on the
part of the Payor, the disclosure of
which would, in the reasonable opinion
of the auditor, prejudice any
investigation of the suspected fraud, the
auditor must review tentative written
findings of the audit with the
appropriate agent or employee of the
Payor in order to remedy any factual
errors and clarify any issues relating to
the audit; provided that an appropriate
agent or employee of the Payor
reasonably cooperates with the auditor
to remedy promptly any factual errors or
clarify any issues raised by the audit.
The auditor must include in the written
report information concerning the
cooperation or the lack thereof of the
employee or agent.
(g) Audit results; underpayment or
overpayment of royalties. If the auditor
determines the Payor underpaid
royalties, the Payor shall remit the
amount of any underpayment
determined by the auditor to the
verifying entity, together with interest at
the rate specified in § 380.2(d) of this
chapter. In the absence of mutually
agreed payment terms, which may, but
need not, include installment payments,
the Payor shall remit promptly to the
verifying entity the entire amount of the
underpayment determined by the
auditor. If the auditor determines the
Payor overpaid royalties, however, the
verifying entity shall not be required to
remit the amount of any overpayment to
the Payor, and the Payor shall not seek
by any means to recoup, offset, or take
a credit for the overpayment, unless the
Payor and the verifying entity have
agreed otherwise.
(h) Paying the costs of the audit. The
verifying entity must pay the cost of the
verification procedure, unless the
auditor determines that there was a net
underpayment (i.e., underpayments less
any overpayments) of 10% or more, in
which case the Payor must bear the
reasonable costs of the verification
procedure, in addition to paying or
distributing the amount of any
underpayment.
E:\FR\FM\19DEP1.SGM
19DEP1
103726
Federal Register / Vol. 89, No. 244 / Thursday, December 19, 2024 / Proposed Rules
(i) Retention of audit report. The
verifying party must retain the report of
the audit for a period of not less than
three years from the date of issuance.
§ 383.6 Terms for making payment of
royalty fees.
(a) Terms in general. Subject to the
provisions of this section, terms
governing timing and due dates of
royalty payments to the Collective, late
fees, statements of account, audit and
verification of royalty payments and
distributions, retention of records
requirements, treatment of Licensees’
confidential information, distribution of
royalties by the Collective, unclaimed
funds, designation of the Collective, and
any definitions for applicable terms not
defined in this part and not otherwise
inapplicable shall be those adopted by
the Copyright Royalty Judges for digital
audio transmission and the
reproduction of ephemeral recordings
by Commercial Webcasters in part 380,
subpart A, of this chapter, for the
License Period. For purposes of this
part, the term ‘‘Collective’’ refers to the
collection and distribution organization
that is designated by the Copyright
Royalty Judges. For the License Period,
the sole Collective is SoundExchange,
Inc.
(b) Reporting of performances.
Without prejudice to any applicable
notice and recordkeeping provisions,
statements of account shall not require
reports of performances.
(c) Applicable regulations. To the
extent not inconsistent with this part,
all applicable regulations, including
part 370 of this chapter, shall apply to
activities subject to this part.
Dated: December 10, 2024.
David P. Shaw,
Chief Copyright Royalty Judge.
[FR Doc. 2024–29384 Filed 12–18–24; 8:45 am]
BILLING CODE 1410–72–P
ENVIRONMENTAL PROTECTION
AGENCY
40 CFR Part 52
[EPA–R09–OAR–2024–0588; FRL–12486–
01–R9]
lotter on DSK11XQN23PROD with PROPOSALS1
Air Plan Revisions; California;
California Mobile Source Regulations
Environmental Protection
Agency (EPA).
ACTION: Proposed rule.
AGENCY:
Table of Contents
The Environmental Protection
Agency (EPA) is proposing to approve
all or portions of two submissions by
the State of California (‘‘State’’) to revise
SUMMARY:
VerDate Sep<11>2014
17:21 Dec 18, 2024
Jkt 265001
its State Implementation Plan (SIP). The
submissions consist of State regulations
establishing standards and other
requirements relating to the control of
emissions from certain new on-road
vehicles and engines. The EPA is
proposing to approve the SIP revision
because the regulations meet the
applicable requirements of the Clean Air
Act. If finalized, approval of the
regulations as part of the California SIP
will make them Federally enforceable.
DATES: Comments must be received on
or before January 21, 2025.
ADDRESSES: Submit your comments,
identified by Docket ID No. EPA–R09–
OAR–2024–0588 at https://
www.regulations.gov. For comments
submitted at Regulations.gov, follow the
online instructions for submitting
comments. Once submitted, comments
cannot be edited or removed from
Regulations.gov. The EPA may publish
any comment received to its public
docket. Do not submit electronically any
information you consider to be
Confidential Business Information (CBI)
or other information whose disclosure is
restricted by statute. Multimedia
submissions (audio, video, etc.) must be
accompanied by a written comment.
The written comment is considered the
official comment and should include
discussion of all points you wish to
make. The EPA will generally not
consider comments or comment
contents located outside of the primary
submission (i.e., on the web, cloud, or
other file sharing system). For
additional submission methods, please
contact the person identified in the FOR
FURTHER INFORMATION CONTACT section.
For the full EPA public comment policy,
information about CBI or multimedia
submissions, and general guidance on
making effective comments, please visit
https://www.epa.gov/dockets/
commenting-epa-dockets. If you need
assistance in a language other than
English or if you are a person with a
disability who needs a reasonable
accommodation at no cost to you, please
contact the person identified in the FOR
FURTHER INFORMATION CONTACT section.
FOR FURTHER INFORMATION CONTACT: Rory
Mays, EPA Region IX, 75 Hawthorne St.,
San Francisco, CA 94105; phone: (415)
972–3227; email: mays.rory@epa.gov.
SUPPLEMENTARY INFORMATION:
Throughout this document, ‘‘we,’’ ‘‘us’’
and ‘‘our’’ refer to the EPA.
I. Background
II. The State’s Submissions
A. What regulations did the State submit?
B. Are there other versions of these
regulations in the SIP?
PO 00000
Frm 00026
Fmt 4702
Sfmt 4702
C. What is the purpose of the submitted
regulations?
D. What requirements do the regulations
establish?
III. EPA’s Evaluation and Proposed Action
A. How is the EPA evaluating the
regulations?
B. Do the State’s regulations meet CAA SIP
evaluation criteria?
C. Proposed Action and Public Comment
IV. Environmental Justice Considerations
V. Incorporation by Reference
VI. Statutory and Executive Order Reviews
I. Background
Under the Clean Air Act (CAA or
‘‘Act’’), the EPA establishes national
ambient air quality standards (NAAQS)
to protect public health and welfare.
The EPA has established NAAQS for
certain pervasive air pollutants
including ozone, carbon monoxide,
nitrogen dioxide, sulfur dioxide, lead,
and particulate matter. Under section
110(a)(1) of the CAA, states must submit
plans that provide for the
implementation, maintenance, and
enforcement of the NAAQS within each
State. Such plans are referred to as SIPs,
and revisions to those plans are referred
to as SIP revisions. Section 110(a)(2) of
the CAA sets forth the content
requirements for SIPs. Among the
various requirements, SIPs must include
enforceable emission limitations and
other control measures, means, or
techniques as may be necessary or
appropriate to meet the applicable
requirements of the CAA. See CAA
section 110(a)(2)(A).
Emissions sources contributing to
ambient air pollution levels can be
divided into two basic categories:
stationary emissions sources and mobile
emissions sources. As a general matter,
the CAA assigns stationary source
regulation and SIP development
responsibilities to the States through
title I of the Act and assigns mobile
source regulation to the EPA through
title II of the Act. In so doing, the CAA
preempts various types of State
regulation of mobile sources as set forth
in section 209(a) (preemption of State
emissions standards for new motor
vehicles and engines), section 209(e)
(preemption of State emissions
standards for new and in-use off-road
vehicles and engines),1 and section
211(c)(4)(A) (preemption of State fuel
requirements for motor vehicle emission
control other than California’s motor
vehicle fuel requirements for motor
1 EPA regulations refer to ‘‘nonroad’’ vehicles and
engines whereas California Air Resources Board
(CARB) regulations refer to ‘‘off-road’’ vehicles and
engines. These terms refer to the same types of
vehicles and engines, and for the purposes of this
action, we will be using CARB’s chosen term, ‘‘offroad,’’ to refer to such vehicles and engines.
E:\FR\FM\19DEP1.SGM
19DEP1
]]>Agencies
[Federal Register Volume 89, Number 244 (Thursday, December 19, 2024)]
[Proposed Rules]
[Pages 103722-103726]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-29384]
=======================================================================
-----------------------------------------------------------------------
LIBRARY OF CONGRESS
Copyright Royalty Board
37 CFR Part 383
[Docket No. 23-CRB-0013-NSR (2026-2030)]
Determination of Rates and Terms for Digital Performance of Sound
Recordings by New Subscription Services and Making of Ephemeral Copies
To Facilitate Those Performances (NSS V)
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The Copyright Royalty Judges are publishing for comment
proposed regulations governing the rates and terms for the digital
performances of sound recordings by new subscription services and for
the making of ephemeral recordings necessary to facilitate those
transmissions for the period commencing January 1, 2026, and ending on
December 31, 2030.
DATES: Comments and objections, if any, are due no later than January
21, 2025.
ADDRESSES: You may submit comments using eCRB, the Copyright Royalty
Board's online electronic filing application, at https://app.crb.gov/.
Instructions: To send your comment through eCRB, if you don't have
a user account, you will first need to register for an account and wait
for your registration to be approved. Approval of user accounts is only
available during business hours. Once you have an approved account, you
can only sign in and file your comment after setting up multi-factor
authentication, which can be done at any time of day. All comments must
include the Copyright Royalty Board name and the docket number for this
proposed rule (23-CRB-0013-NSR (2026-2030)). All properly filed
comments will appear without change in eCRB at https://app.crb.gov,
including any personal information provided.
Docket: For access to the docket, go to eCRB, the Copyright Royalty
Board's electronic filing and case management system, at https://app.crb.gov/, and search for docket number 23-CRB-0013-NSR (2026-2030).
FOR FURTHER INFORMATION CONTACT: Anita Brown, CRB Program Specialist,
at (202) 707-7658 or [email protected].
SUPPLEMENTARY INFORMATION:
Background
Section 114 of the Copyright Act, title 17 of the United States
Code, provides a statutory license that allows for the public
performance of sound recordings
[[Page 103723]]
by means of a digital audio transmission by, among others, new
subscription services. 17 U.S.C. 114(f). For purposes of the section
114 license, a ``new subscription service'' is a ``service that
performs sound recordings by means of noninteractive subscription
digital audio transmissions and that is not a preexisting subscription
or preexisting satellite digital audio radio service.'' 17 U.S.C.
114(j)(8).
Services using the section 114 license may need to make one or more
temporary or ``ephemeral'' copies of a sound recording to facilitate
the transmission of that recording. The section 112 statutory license
allows for the making of these ephemeral reproductions. 17 U.S.C.
112(e).
Chapter 8 of the Copyright Act requires the Judges to conduct
proceedings every five years to determine the rates and terms for the
sections 114 and 112 statutory licenses. 17 U.S.C. 801(b)(1),
804(b)(3)(A). The current proceeding commenced in January 2024 for
rates and terms that will become effective on January 1, 2026, and end
on December 31, 2030. Pursuant to section 804(b)(3)(A), the Judges
published in the Federal Register a notice commencing the proceeding
and requesting that interested parties submit their petitions to
participate. 89 FR 810 (Jan. 5, 2024). SoundExchange, Inc.
(``SoundExchange''), Sirius XM Radio Inc. (``Sirius XM''), and Stingray
Music USA Inc. (``Stingray''), each filed Petitions to Participate.
The Judges gave notice to all participants of the three-month
negotiation period required by 17 U.S.C. 803(b)(3) and directed that,
if the participants were unable to negotiate a settlement, they should
submit Written Direct Statements no later than September 13, 2024. On
September 9, 2024, the Copyright Royalty Judges (Judges) received a
joint motion from SoundExchange, Sirius XM, and Stingray to adopt a
settlement of their interests regarding the rates and terms for 2026-
2030 for certain new subscription services (NSS). The parties request
that the Judges adopt the settlement in its entirety as a settlement of
rates and terms under sections 112(e) and 114 of the Copyright Act for
new subscription services of the type at issue in the captioned
proceeding, i.e., music services provided to residential subscribers as
part of a cable or satellite television bundle subject to royalty rates
and terms in 37 CFR part 383. Joint Motion to Adopt Partial Settlement
at 1 (Joint Motion). SoundExchange represents sound recording copyright
owners and performers. Sirius XM and Stingray rely on the royalty rates
and terms in 37 CFR part 383. Joint Motion at 2. The Judges hereby
publish the settlement and request comments.
Statutory Timing of Adoption of Rates and Terms
Section 801(b)(7)(A) of the Copyright Act authorizes the Judges to
adopt royalty rates and terms negotiated by ``some or all of the
participants in a proceeding at any time during the proceeding''
provided they are submitted to the Judges for approval. The Judges must
provide ``an opportunity to comment on the agreement'' to participants
and non-participants in the rate proceeding who ``would be bound by the
terms, rates, or other determination set by any agreement. . . .'' 17
U.S.C. 801(b)(7)(A)(i). Participants in the proceeding may also
``object to [the agreement's] adoption as a basis for statutory terms
and rates.'' Id.
The Judges ``may decline to adopt the agreement as a basis for
statutory terms and rates for participants that are not parties to the
agreement,'' only ``if any participant [in the proceeding] objects to
the agreement and the [Judges] conclude, based on the record before
them if one exists, that the agreement does not provide a reasonable
basis for setting statutory terms or rates,'' 17 U.S.C.
801(b)(7)(A)(ii), or where the negotiated agreement includes provisions
that are contrary to the provisions of the applicable license(s) or
otherwise contrary to statutory law. See Scope of the Copyright Royalty
Judges Authority to Adopt Confidentiality Requirements upon Copyright
Owners within a Voluntarily Negotiated License Agreement, 78 FR 47421,
47422 (Aug. 5, 2013), citing 74 FR 4537, 4540 (Jan. 26, 2009).
Proposed Adjustments to Rates and Terms
According to SoundExchange, Sirius XM, and Stingray, the settlement
incorporates the same royalty rate structure presently set forth in 37
CFR part 383 except that annual increases in the per-subscriber fees
are to be based on changes in the Consumer Price Index for All Urban
Consumers, rather than being pre-negotiated as during the current rate
period. Thus, the statutory royalty rates for 2026 are to be based on
an inflation adjustment to the 2025 rates currently provided in Sec.
383.3(a), and the rates for each subsequent year of the royalty period
are to be determined by a similar adjustment.
The Parties have also agreed that the applicable terms used in part
383 should be those finally determined in the Web VI proceeding (Docket
No. 23-CRB-0012-WR (2026-2030)), except for (1) the provisions
concerning auditing of payments and distributions, which are
substantively the same as those currently in effect for new
subscription services of the type at issue in the proceeding, and (2) a
provision addressing distribution of royalties, which includes language
based on that in 37 CFR 384.4(i)(1) and 370.4(f) permitting
SoundExchange to use proxy data to distribute royalties when it is not
able to obtain a usable report of use from a Licensee. In other
respects, the Settlement preserves the existing provisions of part 383
with only minor updating. Joint Motion at 2-3.
The fact that the Settlement incorporates terms that have not yet
been established in the Web VI proceeding may raise concern as to
whether participants and non-participants in the rate proceeding who
would be bound by the terms, rates, or other determination set by any
agreement are properly afforded the aforementioned statutory
opportunities to object or comment on the agreement. However, the
Judges take notice that it is not inappropriate for agreements to
incorporate and/or rely in part on events, facts or determinations that
have not yet been established, e.g., references to adjustments based on
yet to be determined consumer price index measurements. The Judges are
also mindful that Congress intended to facilitate and encourage
settlement agreements. See, H.R. Rep. No. 108-408, at 24 and 30 (2002).
Accordingly, objectors and commenters may knowingly and willingly
choose to accept some uncertainty as to future settlement terms and a
reference to an outside method for resolving the uncertain issues. The
Judges do not express an opinion as to the extent to which any persons
or entities who would otherwise be bound by this settlement may have a
subsequent right to challenge the applicability of as yet non-existent
terms.
Therefore, the Judges publish the Settlement with the current
understanding that doing so is in compliance with the statutory
opportunities to object or comment on the agreement.
Those who would be bound by the terms, rates, or other
determination set by the agreement may comment and proceeding
participants may object to any or all of the proposed regulations
contained in this document.\1\ Such
[[Page 103724]]
comments and objections must be submitted no later than January 21,
2025.
---------------------------------------------------------------------------
\1\ The parties represent that SoundExchange, Sirius XM, and
Stingray, all of which have joined in the Joint Motion, are the only
parties that have filed petitions to participate in this proceeding
and, therefore, ``there is no basis for the Judges not to adopt the
Settlement as the statutory terms and rates under [s]ection 112(e)
and 114 for services relying on the royalty rates and terms in 37
CFR [p]art 383.'' Joint Motion at 3.
---------------------------------------------------------------------------
List of Subjects in 37 CFR Part 383
Copyright, Sound recordings, Webcasters.
For the reasons set forth in the preamble, the Copyright Royalty
Judges propose to revise 37 CFR part 383 to read as follows:
PART 383--RATES AND TERMS FOR SUBSCRIPTION TRANSMISSIONS AND THE
REPRODUCTION OF EMPHEMERAL RECORDINGS BY CERTAIN NEW SUBSCRIPTION
SERVICES
Sec.
383.1 General.
383.2 Definitions.
383.3 Royalty fees for public performances of sound recordings and
the making of ephemeral recordings.
383.4 Distribution of royalties.
383.5 Auditing payments and distributions.
383.6 Terms for making payment of royalty fees.
Authority: 17 U.S.C. 112(e), 114, and 801(b)(1).
Sec. 383.1 General.
(a) Scope. This part establishes rates and terms of royalty
payments for the public performance of sound recordings in certain
digital transmissions by Licensees in accordance with the provisions of
17 U.S.C. 114, and the making of certain ephemeral recordings by
Licensees in accordance with the provisions of 17 U.S.C. 112(e), during
the period commencing January 1, 2026, and continuing through December
31, 2030.
(b) Legal compliance. Licensees relying upon the statutory licenses
set forth in 17 U.S.C. 112(e) and 114 shall comply with the
requirements of those sections and the rates and terms of this part.
(c) Relationship to voluntary agreements. Notwithstanding the
royalty rates and terms established in this part, the rates and terms
of any voluntary license agreements entered into by Copyright Owners
and Licensees shall apply in lieu of the rates and terms of this part
to transmissions with the scope of such agreements.
Sec. 383.2 Definitions.
For purposes of this part, the following definitions shall apply:
(a) Bundled Contracts means contracts between the Licensee and a
Provider in which the Service is not the only content licensed by the
Licensee to the Provider.
(b) Collective means the collection and distribution organization
that is designated by the Copyright Royalty Judges, and which, for the
current rate period, is SoundExchange, Inc.
(c) Copyright Owner means a sound recording copyright owner, or a
rights owner under 17 U.S.C. 1401(l)(2), who is entitled to receive
royalty payments made under this part pursuant to the statutory
licenses under 17 U.S.C. 112(e) and 114.
(d) License Period means the period commencing January 1, 2026, and
continuing through December 31, 2030.
(e) Licensee is a person that has obtained statutory licenses under
17 U.S.C. 112(e) and 114, and the implementing regulations in this
part, to make digital audio transmissions as part of a Service (as
defined in this section), and ephemeral recordings for use in
facilitating such transmissions.
(f) Payor means the entity required to make royalty payments to the
Collective or the entity required to distribute royalty fees collected,
depending on context. The Payor is:
(1) A Licensee, in relation to the Collective; and
(2) The Collective in relation to a Copyright Owner or Performer.
(g) Performers means the independent administrators identified in
17 U.S.C. 114(g)(2)(B) and (C) and the parties identified in 17 U.S.C.
114(g)(2)(D).
(h) Provider means a ``multichannel video programming distributor''
as that term is defined in 47 CFR 76.1000(e); notwithstanding such
definition, for purposes of this part, a Provider shall include only a
distributor of programming to televisions, such as a cable or satellite
television provider.
(i) Qualified auditor means a Certified Public Accountant
independent within the meaning of the American Institute of Certified
Public Accountants Code of Professional Conduct.
(j) Service is a non-interactive (consistent with the definition of
``interactive service'' in 17 U.S.C. 114(j)(7)) audio-only subscription
service (including accompanying information and graphics related to the
audio) that is transmitted to residential subscribers of a television
service through a Provider which is marketed as and is in fact
primarily a video service where:
(1) Subscribers do not pay a separate fee for audio channels.
(2) The audio channels are delivered by digital audio transmissions
through a technology that is incapable of tracking the individual sound
recordings received by any particular consumer.
(3) However, paragraph (j)(2) of this section shall not apply to
the Licensee's current contracts with Providers that are in effect as
of the effective date of this part if such Providers become capable in
the future of tracking the individual sound recordings received by any
particular consumer, provided that the audio channels continued to be
delivered to Subscribers by digital audio transmissions and the
Licensee remains incapable of tracking the individual sound recordings
received by any particular consumer.
(k) Subscriber means every residential subscriber to the underlying
service of the Provider who receives Licensee's Service in the United
States for all or any part of a month; provided, however, that for any
Licensee that is not able to track the number of subscribers on a per-
day basis, ``Subscribers'' shall be calculated based on the average of
the number of subscribers on the last day of the preceding month and
the last day of the applicable month, unless the Service is paid by the
Provider based on end-of-month numbers, in which event ``Subscribers''
shall be counted based on end-of-month data.
(l) Stand-Alone Contracts means contracts between the Licensee and
a Provider in which the only content licensed to the Provider is the
Service.
Sec. 383.3 Royalty fees for public performances of sound recordings
and the making of ephemeral recordings.
(a) Royalty rates. Royalty rates for the public performance of
sound recordings by eligible digital transmissions made over a Service
pursuant to 17 U.S.C. 114, and for ephemeral recordings of sound
recordings made pursuant to 17 U.S.C. 112(e) to facilitate such
transmissions during the License Period, are as follows. For 2026, each
Licensee will pay, with respect to content covered by the License that
is provided via the Service of each such Licensee:
(1) For Stand-Alone Contracts, a monthly payment of [amount to be
calculated in November 2025 and published in December 2025 in the final
rule] per Subscriber to the Service of such Licensee, which is
equivalent to the 2025 royalty rate of $0.0234, as adjusted by the
annual royalty fee adjustment in paragraph (b) of this section.
(2) For Bundled Contracts, a monthly payment of [amount to be
calculated in November 2025 and published in December 2025 in the final
rule] per Subscriber to the Service of such
[[Page 103725]]
Licensee, which is equivalent to the 2025 royalty rate of $0.0390, as
adjusted by the annual royalty fee adjustment in paragraph (b) of this
section.
(b) Annual royalty fee adjustment. (1) The Copyright Royalty Judges
shall adjust the royalty fees each year, as described in paragraph
(b)(2) of this section, beginning with the fees for 2026, to reflect
any changes occurring in the cost of living as determined by the most
recent Consumer Price Index for All Urban Consumers (U.S. City Average,
all items) (CPI-U) published by the Secretary of Labor before December
1 of the preceding year.
(2)(i) The calculation of the rate for each year shall be
cumulative based on a calculation of the percentage increase in the
CPI-U from the CPI-U published in November, 2024 (CPI-U%) and shall be
made according to the following formulas:
(A) For Stand-Alone Contracts, (1 + (Cy-315.664/315.664)
x $0.0234; and
(B) For Bundled Contracts, (1 + (Cy-315.664/315.664) x
$0.0390; and
(ii) For both formulas Cy is the CPI-U published by the
Secretary of Labor before December 1 of the preceding year. The
adjusted rate shall be rounded to the nearest fourth decimal place.
(3) The Judges shall publish notice of the adjusted fees in the
Federal Register at least 25 days before January 1 of each year of the
License Period. The adjusted fees shall be effective on January 1 of
each year of the License Period for such year.
(c) Minimum fee. Each Licensee will pay an annual, non-refundable
minimum fee of one hundred thousand dollars ($100,000), payable on
January 31 of each calendar year in which the Service is provided
pursuant to statutory licenses under 17 U.S.C. 112(e) and 114. Such fee
shall be recoupable and credited against royalties due in the calendar
year for which the payment is made.
(d) Allocation between ephemeral recordings fees and performance
royalty fees. The Collective must credit 5% of all royalty payments as
royalty payment for Ephemeral Recordings and credit the remaining 95%
to royalties under 17 U.S.C. 114. All Ephemeral Recordings that a
Licensee makes which are necessary and commercially reasonable for
making noninteractive digital transmissions through a Service are
included in the 5%.
Sec. 383.4 Distribution of royalties.
The Collective must promptly distribute royalties received from
Licensees to Copyright Owners and Performers that are entitled thereto,
or to their designated agents. The Collective shall only be responsible
for making distributions to those who provide the Collective with
information as is necessary to identify and pay the correct recipient.
The Collective must distribute royalties on a basis that values all
usage by a Licensee equally based upon the information provided under
the Reports of Use requirements for Licensees pursuant to Sec. 370.4
of this chapter and this part. However, in any case in which a Licensee
has not provided a compliant Report of Use, whether for the License
Period or otherwise, and the board of directors of the Collective
determines that further efforts to seek the missing Report of Use from
the Licensee would not be warranted, the Collective may distribute the
royalties associated with the Licensee's missing Report of Use on the
basis of Reports of Use for the corresponding calendar year filed by
other Licensees.
Sec. 383.5 Auditing payments and distributions.
(a) General. This section prescribes procedures by which any entity
entitled to receive payment or distribution of royalties may verify
payments or distributions by auditing the Payor. The Collective may
audit a Licensee's payments of royalties to the Collective, and a
Copyright Owner or Performer may audit the Collective's distributions
of royalties to the Copyright Owner or Performer. Nothing in this
section shall preclude a verifying entity and the Payor from agreeing
to verification methods in addition to or different from those set
forth in this section.
(b) Frequency of auditing. The verifying entity may conduct an
audit of each Licensee only once a year for any or all of the prior
three calendar years. A verifying entity may not audit records for any
calendar year more than once.
(c) Notice of intent to audit. The verifying entity must file with
the Copyright Royalty Judges a notice of intent to audit the Payor,
which notice the Judges must publish in the Federal Register within 30
days of the filing of the notice. Simultaneously with the filing of the
notice, the verifying entity must deliver a copy to the Payor.
(d) The audit. The audit must be conducted during regular business
hours by a qualified auditor who is not retained on a contingency fee
basis and is identified in the notice. The auditor shall determine the
accuracy of royalty payments or distributions, including whether an
underpayment or overpayment of royalties was made. An audit of books
and records, including underlying paperwork, performed in the ordinary
course of business according to generally accepted auditing standards
by a qualified auditor, shall serve as an acceptable verification
procedure for all parties with respect to the information that is
within the scope of the audit.
(e) Access to third-party records for audit purposes. The Payor
must use commercially reasonable efforts to obtain or to provide access
to any relevant books and records maintained by third parties for the
purpose of the audit.
(f) Duty of auditor to consult. The auditor must produce a written
report to the verifying entity. Before rendering the report, unless the
auditor has a reasonable basis to suspect fraud on the part of the
Payor, the disclosure of which would, in the reasonable opinion of the
auditor, prejudice any investigation of the suspected fraud, the
auditor must review tentative written findings of the audit with the
appropriate agent or employee of the Payor in order to remedy any
factual errors and clarify any issues relating to the audit; provided
that an appropriate agent or employee of the Payor reasonably
cooperates with the auditor to remedy promptly any factual errors or
clarify any issues raised by the audit. The auditor must include in the
written report information concerning the cooperation or the lack
thereof of the employee or agent.
(g) Audit results; underpayment or overpayment of royalties. If the
auditor determines the Payor underpaid royalties, the Payor shall remit
the amount of any underpayment determined by the auditor to the
verifying entity, together with interest at the rate specified in Sec.
380.2(d) of this chapter. In the absence of mutually agreed payment
terms, which may, but need not, include installment payments, the Payor
shall remit promptly to the verifying entity the entire amount of the
underpayment determined by the auditor. If the auditor determines the
Payor overpaid royalties, however, the verifying entity shall not be
required to remit the amount of any overpayment to the Payor, and the
Payor shall not seek by any means to recoup, offset, or take a credit
for the overpayment, unless the Payor and the verifying entity have
agreed otherwise.
(h) Paying the costs of the audit. The verifying entity must pay
the cost of the verification procedure, unless the auditor determines
that there was a net underpayment (i.e., underpayments less any
overpayments) of 10% or more, in which case the Payor must bear the
reasonable costs of the verification procedure, in addition to paying
or distributing the amount of any underpayment.
[[Page 103726]]
(i) Retention of audit report. The verifying party must retain the
report of the audit for a period of not less than three years from the
date of issuance.
Sec. 383.6 Terms for making payment of royalty fees.
(a) Terms in general. Subject to the provisions of this section,
terms governing timing and due dates of royalty payments to the
Collective, late fees, statements of account, audit and verification of
royalty payments and distributions, retention of records requirements,
treatment of Licensees' confidential information, distribution of
royalties by the Collective, unclaimed funds, designation of the
Collective, and any definitions for applicable terms not defined in
this part and not otherwise inapplicable shall be those adopted by the
Copyright Royalty Judges for digital audio transmission and the
reproduction of ephemeral recordings by Commercial Webcasters in part
380, subpart A, of this chapter, for the License Period. For purposes
of this part, the term ``Collective'' refers to the collection and
distribution organization that is designated by the Copyright Royalty
Judges. For the License Period, the sole Collective is SoundExchange,
Inc.
(b) Reporting of performances. Without prejudice to any applicable
notice and recordkeeping provisions, statements of account shall not
require reports of performances.
(c) Applicable regulations. To the extent not inconsistent with
this part, all applicable regulations, including part 370 of this
chapter, shall apply to activities subject to this part.
Dated: December 10, 2024.
David P. Shaw,
Chief Copyright Royalty Judge.
[FR Doc. 2024-29384 Filed 12-18-24; 8:45 am]
BILLING CODE 1410-72-P
