H. Rept. 109-64 - 109th Congress (2005-2006)
April 28, 2005, As Reported by the Judiciary Committee

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House Report 109-64 - TECHNICAL CORRECTIONS TO TITLE 17, UNITED STATES CODE, RELATING TO COPYRIGHT ROYALTY JUDGES




[House Report 109-64]
[From the U.S. Government Printing Office]



109th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     109-64

======================================================================



 
  TECHNICAL CORRECTIONS TO TITLE 17, UNITED STATES CODE, RELATING TO 
                        COPYRIGHT ROYALTY JUDGES

                                _______
                                

 April 28, 2005.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Sensenbrenner, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 1036]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on the Judiciary, to whom was referred the bill 
(H.R. 1036) to amend title 17, United States Code, to make 
technical corrections relating to copyright royalty judges, 
having considered the same, reports favorably thereon without 
amendment and recommends that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     1
Background and Need for the Legislation..........................     2
Hearings.........................................................     3
Committee Consideration..........................................     3
Vote of the Committee............................................     3
Committee Oversight Findings.....................................     3
New Budget Authority and Tax Expenditures........................     3
Congressional Budget Office Cost Estimate........................     3
Performance Goals and Objectives.................................     4
Constitutional Authority Statement...............................     4
Section-by-Section Analysis and Discussion.......................     4
Changes in Existing Law Made by the Bill, as Reported............     6
Markup Transcript................................................    17

                          Purpose and Summary

    H.R. 1036, an act to amend title 17, United States Code, is 
intended to make technical corrections to the copyright royalty 
judges program, which was authorized by Public Law 108-419, and 
is scheduled to become, effective on May 31, 2005. These 
corrections would allow the Register of Copyrights, copyright 
owners, and commercial users of compulsory licenses to benefit 
from a more precise delineation of the respective roles of the 
U.S. Copyright Office and the newly established Copyright 
Royalty Judges in proceedings that involve the determination of 
copyright royalty rates and royalty distributions. H.R. 1036 
will eliminate unintended ambiguities, thereby ensuring the 
transitional and permanent provisions that relate to the new 
program operate efficiently, saving both time and money for 
future participants in copyright royalty determination and 
distribution proceedings.

                Background and Need for the Legislation

    Last year, Congress enacted two laws\1\ that substantially 
altered the administrative structure within the Library of 
Congress, that determined copyright royalty rates and 
distributions under the various compulsory licenses authorized 
under title 17, United States Code. These laws eliminated the 
authority of the Librarian of Congress to empanel Copyright 
Arbitration Royalty Panels, or ``CARPs,''\2\ whenever private 
negotiations among affected stakeholders failed to establish 
copyright royalty rates or to determine the proper distribution 
of royalties under the various compulsory licenses.
---------------------------------------------------------------------------
    \1\The two laws are the ``Copyright Royalty and Distribution Reform 
Act of 2004'' (Public Law No. 108-419) and the ``Satellite Home Viewer 
Extension and Reauthorization Act of 2004'' (title IX of division J of 
Public Law 108-447).
    \2\For a more comprehensive discussion of the perceived 
deficiencies of the CARP system and the need for reform, see H. Rep. 
No. 108-408, (2004), which accompanied H.R. 1417, the ``Copyright 
Royalty and Distribution Reform Act of 2003.''
---------------------------------------------------------------------------
    The new legislation requires the Librarian of Congress, 
after consultation with the Register of Copyrights, to appoint 
three full-time Copyright Royalty Judges, or (``CRJs''), and to 
appoint one of the three as the Chief Copyright Royalty Judge. 
Qualifications for the new CRJ's are specified within Public 
Law 108-419.
    Once established, the three CRJs are authorized to: (1) 
determine and adjust the terms and rates of royalty payments 
for statutory licenses; (2) adjust statutory royalty rates for 
secondary transmissions by cable systems to reflect inflation, 
the average rates charged to cable subscribers for such 
transmissions, and Federal Communications Commission (FCC) 
regulations; (3) authorize, and make determinations regarding, 
distribution of royalty fees collected; (4) accept or reject 
royalty claims on the basis of timeliness or failure to 
establish a basis for the claim; (5) accept or reject rate 
adjustment petitions or petitions to participate; (6) determine 
whether a device is a digital audio recording device or a 
digital audio interface device subject to royalty payments; and 
(7) adopt an agreement on terms, rates, or distribution of 
royalties that are agreed to by some or all participants in a 
proceeding if the participants do not object.
    In addition to the two aforementioned laws, the 108th 
Congress also adopted S. Con. Res. 145, which directed the 
Clerk of the House of Representatives to make corrections in 
the enrollment of H.R. 1417, as previously passed by the U.S. 
Senate, before presenting the bill to the President for 
signature. Notwithstanding the corrections included in S. Con. 
Res. 145, the Committee believes further improvements are 
necessary. The Committee believes the CRJ's and affected 
stakeholders will benefit from the enactment of H.R. 1036, 
which includes further typographical, grammatical, and 
technical corrections that will clarify the intent of the 
drafters and improve the operation of the new Copyright Royalty 
Judges program.

                                Hearings

    No hearings were held on H.R. 1036.

                        Committee Consideration

    On March 3, 2005, the Subcommittee on Courts, the Internet, 
and Intellectual Property met in open session and ordered 
favorably reported the bill, H.R. 1036, by a voice vote, a 
quorum being present. On March 9, 2005, the Committee met in 
open session and ordered favorably reported the bill, H.R. 
1036, without amendment by a voice vote, a quorum being 
present.

                         Vote of the Committee

    In compliance with clause 3(b) of Rule XIII of the Rules of 
the House of Representatives, the Committee notes that there 
were no recorded votes during the committee consideration of 
H.R. 1036.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of Rule XIII of the Rules 
of the House of Representatives, the Committee reports that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of Rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of Rule XIII of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of Rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 1036, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, March 14, 2005.
Hon. F. James Sensenbrenner, Jr., Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1036, a bill to 
amend title 17, United States Code, to make technical 
corrections relating to copyright royalty judges.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Melissa E. 
Zimmerman, who can be reached at 226-2860.
            Sincerely,
                                       Douglas Holtz-Eakin.

Enclosure

cc:
        Honorable John Conyers, Jr.
        Ranking Member
H.R. 1036--A bill to amend title 17, United States Code, to make 
        technical. corrections relating to copyright royalty judges.
    H.R. 1036 would make technical corrections to the Copyright 
Royalty and Distribution Reform Act of 2004 and other aspects 
of copyright law. CBO estimates that implementing the bill 
would have no effect on spending subject to appropriation. 
Enacting the bill would not affect direct spending or revenues.
    H.R. 1036 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of State, local, or tribal 
governments.
    The CBO staff contact for this estimate is Melissa E. 
Zimmerman, who can be reached at 226-2860. The estimate was 
approved by Peter H. Fontaine, Deputy Assistant Director for 
Budget Analysis.

                    Performance Goals and Objectives

    H.R. 1036 does not authorize funding. Therefore, clause 
3(c)(4) of Rule XIII of the Rules of the House of 
Representatives is inapplicable. These corrections would allow 
the Register of Copyrights, copyright owners, and commercial 
users of compulsory licenses to benefit from a more accurate 
delineation of the respective roles of the U.S. Copyright 
Office and the newly established Copyright Royalty Judges in 
proceedings that involve the determination of copyright royalty 
rates and royalty distributions.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of Rule XIII of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in article I, section 8, clause 8 of the 
Constitution.

               Section-by-Section Analysis and Discussion

            SECTION 1. AMENDMENTS TO CHAPTER 8 OF TITLE 17, 
                          UNITED STATES CODE.

    Section 1 includes principally typographical, grammatical, 
stylistic and conforming changes, which are needed to eliminate 
unintended ambiguities in sections 801, 802, 803 and 804 of 
title 17, United States Code. These sections relate, 
respectively, to the appointment and functions of CRJs, staff 
of CRJs, proceedings involving CRJs, and the actual manner for 
instituting proceedings involving CRJs.
    Most of the changes merely correct spelling or punctuation 
errors, correct cross-references, eliminate unnecessary 
language, or conform the statute to editorial style/conventions 
used in the law of copyright. Therefore, this discussion is 
limited to an explanation of the technical changes in H.R. 1036 
that are most likely to require elucidation.
    H.R. 1036 contains two amendments to section 803(a)(1) of 
title 17, United States Code, which concern proceedings in 
general. The first is intended to restore noncontroversial 
language that was deleted from H.R. 1417 before enactment. This 
language makes clear that CRJs are expected to act in 
accordance with provisions of the Administrative Procedure 
Act\3\ unless provisions of title 17 require otherwise.
---------------------------------------------------------------------------
    \3\The Administrative Procedure Act or ``APA'' is contained in 
chapter 5 of title 5, United States Code.
---------------------------------------------------------------------------
    The second amendment to section 803(a)(1) of title 17, 
United States Code, clarifies that prior determinations and 
interpretations of copyright arbitration royalty panels, or 
``CARPs,'' are considered to be part of the body of past 
statutory license decisions that CRJs shall consider 
precedential. This provision is limited to only those 
determinations and interpretations that are not inconsistent 
with subsequent determinations of the Librarian of Congress or 
the Register of Copyrights. It should be noted that this 
clarification is not intended to elevate panel determinations 
and interpretations to a precedential level greater than that 
accorded under prior law, which was applied to panels whose 
decisions were reviewed by the Librarian of Congress.\4\
---------------------------------------------------------------------------
    \4\See 17 U.S.C. 802 (c) (2000).
---------------------------------------------------------------------------
    H.R. 1036 contains several amendments to 803(b)(6)(C)(i) of 
title 17, United States Code, which relate to discovery 
procedures in Copyright Royalty Judge proceedings. One 
amendment clarifies that CRJs have authority to specify the 
dates when participants in a proceeding are required to submit 
both written direct statements and written rebuttal statements. 
Another clarification is intended to ensure the statute is 
construed to require only written direct statements (and not 
written rebuttal statements) to be filed not earlier than 4 
months and not later than 5 months after the termination of the 
voluntary negotiation period.
    Finally, an amendment to 804(b)(3) of title 17, United 
States Code, corrects the ``triggering'' date for instituting 
section 112 and 114 proceedings by clarifying that the ``date 
of enactment'' of the Copyright Royalty and Distribution Reform 
Act of 2004 was the date intended by the drafters.

              SECTION 2. ADDITIONAL TECHNICAL AMENDMENTS.

    Section 2 includes necessary technical and conforming 
changes to sections 111, 114, 115, 118, 119, and 1007 of title 
17, United States Code.
    The principal clarifying and conforming changes in Section 
2 relate to the relationship between the Copyright Royalty 
Judges and the Librarian of Congress, who share responsibility 
for functions that relate to the authority to distribute 
royalties and the actual distribution or disbursing of such 
royalties.
    H.R. 1036 provides clearly that only the CRJs have 
authority to adjudicate disputes, to determine if a controversy 
exists, to authorize the withholding of any funds ``in 
controversy'' and to authorize the distribution of any 
royalties ``not in controversy'' by the Librarian of Congress. 
As a corollary, H.R. 1036 clarifies that the Librarian of 
Congress has the responsibility to distribute royalties 
pursuant to a lawful order from the Copyright Royalty Judges.
    The enactment of H.R. 1036, which precisely delineates the 
respective authorities shared by the CRJs and the Librarian of 
Congress, will help to ensure the more effective implementation 
of the ``Copyright Royalty and Distribution Reform Act of 
2004.'' Finally, H.R. 1036 includes a provision that corrects 
the effective date and transition provisions of Public Law 108-
419 to make clear the Librarian of Congress' authority to 
terminate any proceeding commenced before the effective date of 
the legislation.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

                      TITLE 17, UNITED STATES CODE

   [Note: The Copyright Royalty and Distribution Reform Act of 2004 
  (Public Law 108-419) amends certain provisions of title 17, United 
States Code which have been carried out here. Section 6 of such Public 
 Law provides that the amendments generally take effect 6 months after 
                          November 30, 2004.]

CHAPTER 1--SUBJECT MATTER AND SCOPE OF COPYRIGHT

           *       *       *       *       *       *       *


Sec. 111. Limitations on exclusive rights: Secondary transmissions

    (a)  * * *

           *       *       *       *       *       *       *

    (d) Statutory License for Secondary Transmissions by Cable 
Systems.--
            (1)  * * *
            (2) The Register of Copyrights shall receive all 
        fees deposited under this section and, after deducting 
        the reasonable costs incurred by the Copyright Office 
        under this section, shall deposit the balance in the 
        Treasury of the United States, in such manner as the 
        Secretary of the Treasury directs. All funds held by 
        the Secretary of the Treasury shall be invested in 
        interest-bearing United States securities for later 
        distribution with interest by the Librarian of Congress 
        [in the event no controversy over distribution exists, 
        or by the Copyright Royalty Judges. in the event a 
        controversy over such distribution exists.] upon 
        authorization by the Copyright Royalty Judges.

           *       *       *       *       *       *       *

            (4) The royalty fees thus deposited shall be 
        distributed in accordance with the following 
        procedures:
                    (A)  * * *
                    (B) After the first day of August of each 
                year, the Copyright Royalty Judges shall 
                determine whether there exists a controversy 
                concerning the distribution of royalty fees. 
                [If the Copyright Royalty Judges determine that 
                no such controversy exists, the Librarian 
                shall, after deducting reasonable 
                administrative costs under this section, 
                distribute such fees to the copyright owners 
                entitled to such fees, or to their designated 
                agents.] If the Copyright Royalty Judges 
                determine that no such controversy exists, the 
                Copyright Royalty Judges shall authorize the 
                Librarian of Congress to proceed to distribute 
                such fees to the copyright owners entitled to 
                receive them, or to their designated agents, 
                subject to the deduction by the Librarian of 
                reasonable administrative costs under this 
                section. If the Copyright Royalty Judges 
                [finds] find the existence of a controversy, 
                the Copyright Royalty Judges shall, pursuant to 
                chapter 8 of this title, conduct a proceeding 
                to determine the distribution of royalty fees.
                    [(C) During the pendency of any proceeding 
                under this subsection, the Copyright Royalty 
                Judges shall withhold from distribution an 
                amount sufficient to satisfy all claims with 
                respect to which a controversy exists, but 
                shall have discretion to proceed to distribute 
                any amounts that are not in controversy.]
                    (C) During the pendency of any proceeding 
                under this subsection, the Copyright Royalty 
                Judges shall have the discretion to authorize 
                the Librarian of Congress to proceed to 
                distribute any amounts that are not in 
                controversy.

           *       *       *       *       *       *       *


Sec. 114. Scope of exclusive rights in sound recordings

    (a)  * * *

           *       *       *       *       *       *       *

    (f) Licenses for Certain Nonexempt Transmissions.--
            (1)(A) Proceedings under chapter 8 shall determine 
        reasonable rates and terms of royalty payments for 
        subscription transmissions by preexisting subscription 
        services and transmissions by preexisting satellite 
        digital audio radio services specified by subsection 
        (d)(2) during the 5-year period beginning on January 1 
        of the second year following the year in which the 
        proceedings are to be commenced, [except where a 
        different transitional period is provided under section 
        6(b)(3) of the Copyright Royalty and Distribution 
        Reform Act of 2004 or such other period.], except in 
        the case of a different transitional period provided 
        under section 6(b)(3) of the Copyright Royalty and 
        Distribution Reform Act of 2004, or such other period 
        as the parties may agree. Such terms and rates shall 
        distinguish among the different types of digital audio 
        transmission services then in operation. Any copyright 
        owners of sound recordings, preexisting subscription 
        services, or preexisting satellite digital audio radio 
        services may submit to the Copyright Royalty Judges 
        licenses covering such subscription transmissions with 
        respect to such sound recordings. The parties to each 
        proceeding shall bear their own costs.

           *       *       *       *       *       *       *

            (2)(A) Proceedings under chapter 8 shall determine 
        reasonable rates and terms of royalty payments for 
        subscription transmissions by eligible nonsubscription 
        transmission services and transmissions by new 
        subscription services specified by subsection (d)(2) 
        during the 5-year period beginning on January 1 of the 
        second year following the year in which the proceedings 
        are to be commenced, [except where a different 
        transitional period is provided] except in the case of 
        a different transitional period provided under section 
        6(b)(3) of the Copyright Royalty and Distribution 
        Reform Act of 2004, or such other period as the parties 
        may agree. Such rates and terms shall distinguish among 
        the different types of eligible nonsubscription 
        transmission services and new subscription services 
        then in operation and shall include a minimum fee for 
        each such type of service. Any copyright owners of 
        sound recordings or any entities performing sound 
        recordings affected by this paragraph may submit to the 
        Copyright Royalty Judges licenses covering such 
        eligible nonsubscription transmissions and new 
        subscription services with respect to such sound 
        recordings. The parties to each proceeding shall bear 
        their own costs.

           *       *       *       *       *       *       *


Sec. 115. Scope of exclusive rights in nondramatic musical works: 
                    Compulsory license for making and distributing 
                    phonorecords

    In the case of nondramatic musical works, the exclusive 
rights provided by clauses (1) and (3) of section 106, to make 
and to distribute phonorecords of such works, are subject to 
compulsory licensing under the conditions specified by this 
section.
    (a) * * *

           *       *       *       *       *       *       *

    (c) Royalty Payable Under Compulsory License.--
            (1)  * * *

           *       *       *       *       *       *       *

            (3)(A)  * * *
            (B) Notwithstanding any provision of the antitrust 
        laws, any copyright owners of nondramatic musical works 
        and any persons entitled to obtain a compulsory license 
        under subsection (a)(1) may negotiate and agree upon 
        the terms and rates of royalty payments under this 
        paragraph and the proportionate division of fees paid 
        among copyright owners, and may designate common agents 
        to negotiate, agree to, pay or receive such royalty 
        payments. Such authority to negotiate the terms and 
        rates of royalty payments includes, but is not limited 
        to, the authority to negotiate the year during which 
        the royalty rates prescribed under [subparagraphs (B) 
        through (F)] this subparagraph and subparagraphs (C) 
        through (E) and chapter 8 of this title shall next be 
        determined.

           *       *       *       *       *       *       *

            (E)(i) License agreements voluntarily negotiated at 
        any time between one or more copyright owners of 
        nondramatic musical works and one or more persons 
        entitled to obtain a compulsory license under 
        subsection (a)(1) shall be given effect in lieu of any 
        determination by the Librarian of Congress and 
        Copyright Royalty Judges. Subject to clause (ii), the 
        royalty rates determined pursuant to subparagraph [(C) 
        or (D)] (C) and (D) shall be given effect as to digital 
        phonorecord deliveries in lieu of any contrary royalty 
        rates specified in a contract pursuant to which a 
        recording artist who is the author of a nondramatic 
        musical work grants a license under that person's 
        exclusive rights in the musical work under paragraphs 
        (1) and (3) of section 106 or commits another person to 
        grant a license in that musical work under paragraphs 
        (1) and (3) of section 106, to a person desiring to fix 
        in a tangible medium of expression a sound recording 
        embodying the musical work.musical work.
            (ii) The second sentence of clause (i) shall not 
        apply to--
                    (I) a contract entered into on or before 
                June 22, 1995, and not modified thereafter for 
                the purpose of reducing the royalty rates 
                determined pursuant to subparagraph [(C) or 
                (D)] (C) and (D) or of increasing the number of 
                musical works within the scope of the contract 
                covered by the reduced rates, except if a 
                contract entered into on or before June 22, 
                1995, is modified thereafter for the purpose of 
                increasing the number of musical works within 
                the scope of the contract, any contrary royalty 
                rates specified in the contract shall be given 
                effect in lieu of royalty rates determined 
                pursuant to subparagraph [(C) or (D)] (C) and 
                (D) for the number of musical works within the 
                scope of the contract as of June 22, 1995; and

           *       *       *       *       *       *       *


Sec. 118. Scope of exclusive rights: Use of certain works in connection 
                    with noncommercial broadcasting

    (a)  * * *
    (b) Notwithstanding any provision of the antitrust laws, 
any owners of copyright in published nondramatic musical works 
and published pictorial, graphic, and sculptural works and any 
public broadcasting entities, respectively, may negotiate and 
agree upon the terms and rates of royalty payments and the 
proportionate division of fees paid among various copyright 
owners, and may designate common agents to negotiate, agree to, 
pay, or receive payments.
            (1)  * * *

           *       *       *       *       *       *       *

            (3) Voluntary negotiation proceedings initiated 
        pursuant to a petition filed under section 804(a) for 
        the purpose of determining a schedule of terms and 
        rates of royalty payments by public broadcasting 
        entities to [copyright owners in works] owners of 
        copyright in works specified by this subsection and the 
        proportionate division of fees paid among various 
        copyright owners shall cover the 5-year period 
        beginning on January 1 of the second year following the 
        year in which the petition is filed. The parties to 
        each negotiation proceeding shall bear their own costs.
    (c) Subject to the terms of any voluntary license 
agreements that have been negotiated as provided by subsection 
(b)(2) or (3), a public broadcasting entity may, upon 
compliance with the provisions of this section, including the 
rates and terms established by the [Copyright Royalty Judges 
under subsection (b)(4), to the extent that they were accepted 
by the Librarian of Congress] Copyright Royalty Judges under 
subsection (b)(4), engage in the following activities with 
respect to published nondramatic musical works and published 
pictorial, graphic, and sculptural works:
            (1)  * * *

           *       *       *       *       *       *       *


Sec. 119. Limitations on exclusive rights: Secondary transmissions of 
                    superstations and network stations for private home 
                    viewing

    (a)  * * *

           *       *       *       *       *       *       *

    (b) Statutory License for Secondary Transmissions for 
Private Home Viewing .--
            (1)  * * *

           *       *       *       *       *       *       *

            (4) Procedures for distribution.--The royalty fees 
        deposited under paragraph (2) shall be distributed in 
        accordance with the following procedures:
                    (A)  * * *
                    (B) Determination of controversy; 
                distributions.--After the first day of August 
                of each year, the Librarian of Congress shall 
                determine whether there exists a controversy 
                concerning the distribution of royalty fees. 
                [If the Librarian of Congress determines that 
                no such controversy exists, the Librarian of 
                Congress shall, after deducting reasonable 
                administrative costs under this paragraph, 
                distribute such fees to the copyright owners 
                entitled to receive them, or to their 
                designated agents.] If the Copyright Royalty 
                Judges determine that no such controversy 
                exists, the Copyright Royalty Judges shall 
                authorize the Librarian of Congress to proceed 
                to distribute such fees to the copyright owners 
                entitled to receive them, or to their 
                designated agents, subject to the deduction by 
                the Librarian of reasonable administrative 
                costs under this section. If the Librarian of 
                Congress finds the existence of a controversy, 
                the Librarian of Congress shall, pursuant to 
                chapter 8 of this title, convene a copyright 
                arbitration royalty panel to determine the 
                distribution of royalty fees.
                    [(C) Withholding of fees during 
                controversy.--During the pendency of any 
                proceeding under this subsection, the Librarian 
                of Congress shall withhold from distribution an 
                amount sufficient to satisfy all claims with 
                respect to which a controversy exists, but 
                shall have discretion to proceed to distribute 
                any amounts that are not in controversy.]
                    (C) Withholding of fees during 
                controversy.--During the pendency of any 
                proceeding under this subsection, the Copyright 
                Royalty Judges shall have the discretion to 
                authorize the Librarian of Congress to proceed 
                to distribute any amounts that are not in 
                controversy.

           *       *       *       *       *       *       *


CHAPTER 8--COPYRIGHT ARBITRATION ROYALTY PANELS

           *       *       *       *       *       *       *


Sec. 801. Copyright Royalty Judges; appointment and functions

    (a)  * * *
    (b) Functions.--Subject to the provisions of this chapter, 
the functions of the Copyright Royalty Judges shall be as 
follows:
            (1) To make determinations and adjustments of 
        reasonable terms and rates of royalty payments as 
        provided in sections 112(e), 114, 115, 116, 118, [119 
        and 1004] 119, and 1004. The rates applicable under 
        sections 114(f)(1)(B), 115, and 116 shall be calculated 
        to achieve the following objectives:
                    (A)  * * *

           *       *       *       *       *       *       *

    (f) Independence of Copyright Royalty Judge.--
            (1) In making determinations.--
                    (A) In general.--(i) Subject to [clause 
                (ii) of this subparagraph and subparagraph (B)] 
                subparagraph (B) and clause (ii) of this 
                subparagraph, the Copyright Royalty Judges 
                shall have full independence in making 
                determinations concerning adjustments and 
                determinations of copyright royalty rates and 
                terms, the distribution of copyright royalties, 
                the acceptance or rejection of royalty claims, 
                rate adjustment petitions, and petitions to 
                participate, and in issuing other rulings under 
                this title, except that the Copyright Royalty 
                Judges may consult with the Register of 
                Copyrights on any matter other than a question 
                of fact.
                    (ii) [A Copyright Royalty Judge or Judges, 
                or, by motion to the Copyright Royalty Judge or 
                Judges,] One or more Copyright Royalty Judges 
                or, by motion to one or more Copyright Royalty 
                Judges, any participant in a proceeding may 
                request an interpretation by the Register of 
                Copyrights concerning any material question of 
                substantive law [(not including] (other than 
                questions of procedure before the Copyright 
                Royalty Judges, the ultimate adjustments and 
                determinations of copyright royalty rates and 
                terms, the ultimate distribution of copyright 
                royalties, or the acceptance or rejection of 
                royalty claims, rate adjustment petitions, or 
                petitions to participate) concerning an 
                interpretation or construction of those 
                provisions of this title that are the subject 
                of the proceeding. Any such request for a 
                written interpretation by the Register of 
                Copyrights shall be on the record. Reasonable 
                provision shall be made for comment by the 
                participants in the proceeding on the material 
                question of substantive law, in such a way as 
                to minimize duplication and delay. Except as 
                provided in subparagraph (B), the Register of 
                Copyrights shall deliver to the Copyright 
                Royalty Judges a response within 14 days after 
                the Register of [Copyrigts] Copyrights receives 
                all of the briefs or comments of the 
                participants. Such decision shall be in writing 
                and shall be included by the Copyright Royalty 
                Judges in the record that accompanies their 
                final determination. If such a decision is 
                timely delivered to the Copyright Royalty 
                Judges, the Copyright Royalty Judges shall 
                apply the legal interpretation embodied in the 
                response of the Register of Copyrights in 
                resolving material questions of substantive 
                law.

           *       *       *       *       *       *       *

                    (D) Review of legal conclusions by the 
                Register of Copyrights.--The Register of 
                Copyrights may review for legal error the 
                resolution by the Copyright Royalty Judges of a 
                material question of substantive law under this 
                title that underlies or is contained in a final 
                determination of the Copyright Royalty Judges. 
                If the Register of Copyrights concludes, after 
                taking into consideration the views of the 
                participants in the proceeding, that any 
                resolution reached by the Copyright Royalty 
                Judges was in material error, the Register of 
                Copyrights shall issue a written decision 
                correcting such legal error, which shall be 
                made part of the record of the proceeding. The 
                Register of Copyrights shall issue such written 
                decision not later than 60 days after the date 
                on which the final determination by the 
                Copyright Royalty Judges is issued. 
                Additionally, the Register of Copyrights shall 
                cause to be published in the Federal Register 
                such written decision, together with a specific 
                identification of the legal conclusion of the 
                Copyright Royalty Judges that is determined to 
                be erroneous. As to conclusions of substantive 
                law involving an interpretation of the 
                statutory provisions of this title, the 
                decision of the Register of Copyrights shall be 
                binding as precedent upon the Copyright Royalty 
                Judges in subsequent proceedings under this 
                chapter. When a decision has been rendered 
                pursuant to this subparagraph, the Register of 
                Copyrights may, on the basis of and in 
                accordance with such decision, intervene as of 
                right in any appeal of a final determination of 
                the Copyright Royalty Judges pursuant to 
                section 803(d) in the United States Court of 
                Appeals for the District of Columbia Circuit. 
                If, prior to intervening in such an appeal, the 
                Register of Copyrights gives notification to, 
                and undertakes to consult with, the Attorney 
                General with respect to such intervention, and 
                the Attorney General fails, within a reasonable 
                period after receiving such notification, to 
                intervene in such appeal, the Register of 
                Copyrights may intervene in such appeal in his 
                or her own name by any attorney designated by 
                the Register of Copyrights for such purpose. 
                Intervention by the Register of Copyrights in 
                his or her own name shall not preclude the 
                Attorney General from intervening on behalf of 
                the United States in such an appeal as may be 
                otherwise provided or required by law.

           *       *       *       *       *       *       *


Sec. 803. Proceedings of Copyright Royalty Judges

    (a) Proceedings.--
            (1) In general.--[The Copyright] The Copyright 
        Royalty Judges shall act in accordance with this title, 
        and to the extent not inconsistent with this title, in 
        accordance with subchapter II of chapter 5 of title 5, 
        in carrying out the purposes set forth in section 801. 
        The Copyright Royalty Judges shall act in accordance 
        with regulations issued by the Copyright Royalty Judges 
        and the Librarian of Congress, and on the basis of a 
        written record, prior determinations and 
        interpretations of the Copyright Royalty Tribunal, 
        Librarian of Congress, the Register of Copyrights, 
        copyright arbitration royalty panels (to the extent 
        those determinations are not inconsistent with a 
        decision of the Librarian of Congress or the Register 
        of Copyrights), and the Copyright Royalty Judges (to 
        the extent those determinations are not inconsistent 
        with a decision of the Register of Copyrights that was 
        timely delivered to the Copyright Royalty Judges 
        pursuant to section 802(f)(1) (A) or (B), or with a 
        decision of the Register of Copyrights pursuant to 
        section 802(f)(1)(D)), under this chapter, and 
        decisions of the court of appeals under this chapter 
        before, on, or after the effective date of the 
        Copyright Royalty and Distribution Reform Act of 2004.

           *       *       *       *       *       *       *

    (b) Procedures.--
            (1) Initiation.--
                    (A) Call for petitions to participate.--(i) 
                The Copyright Royalty Judges shall cause to be 
                published in the Federal Register notice of 
                commencement of proceedings under this chapter, 
                calling for the filing of petitions to 
                participate in a proceeding under this chapter 
                for the purpose of making the relevant 
                determination under section 111, 112, 114, 115, 
                116, 118, 119, 1004, or 1007, as the case may 
                be--
                            (I)  * * *

           *       *       *       *       *       *       *

                            (V) by no later than January 5 of a 
                        year specified in any other provision 
                        of section 804(b) for the filing of 
                        petitions for the commencement of 
                        proceedings, if a petition has not been 
                        filed by that date, except that [in the 
                        case of] the publication of notice 
                        requirement shall not apply in the case 
                        of proceedings under section 111 that 
                        are scheduled to commence in 2005[, 
                        such notice may not be published]..

           *       *       *       *       *       *       *

            (6) Regulations.--
                    (A)  * * *

           *       *       *       *       *       *       *

                    (C) Requirements.--Regulations issued under 
                subparagraph (A) shall include the following:
                            (i) The written direct statements 
                        and written rebuttal statements of all 
                        participants in a proceeding under 
                        paragraph (2) shall be filed by a date 
                        specified by the Copyright Royalty 
                        Judges, [which may] which, in the case 
                        of written direct statements, may be 
                        not earlier than 4 months, and not 
                        later than 5 months, after the end of 
                        the voluntary negotiation period under 
                        paragraph (3). Notwithstanding the 
                        preceding sentence, the Copyright 
                        Royalty Judges may allow a participant 
                        in a proceeding to file an amended 
                        written direct statement based on new 
                        information received during the 
                        discovery process, within 15 days after 
                        the end of the discovery period 
                        specified in [clause (iii)] clause 
                        (iv).

           *       *       *       *       *       *       *

    (c) Determination of Copyright Royalty Judges.--
            (1)  * * *
            (2) Rehearings.--
                    (A)  * * *
                    (B) Timing for filing motion.--Any motion 
                for a rehearing under subparagraph (A) may only 
                be filed within 15 days after the date on which 
                the Copyright Royalty Judges deliver to the 
                participants in the proceeding their initial 
                determination [concerning rates and terms].

           *       *       *       *       *       *       *

            (7) Late payment.--A determination [of Copyright] 
        of the Copyright Royalty Judges may include terms with 
        respect to late payment, but in no way shall such terms 
        prevent the copyright holder from asserting other 
        rights or remedies provided under this title.
    (d) Judicial Review.--
            (1)  * * *
            (2) Effect of rates.--
                    (A)  * * *

           *       *       *       *       *       *       *

                    (C) Obligation to make payments.--
                            (i) The pendency of an appeal under 
                        this subsection shall not relieve 
                        persons obligated to make royalty 
                        payments under section 111, 112, 114, 
                        115, 116, 118, 119, or 1003, who would 
                        be affected by the determination on 
                        appeal, from--
                                    (I) providing the 
                                [statements of account and any 
                                report of use] applicable 
                                statements of account and 
                                reports of use; and

           *       *       *       *       *       *       *


Sec. 804. Institution of proceedings

    (a)  * * *
    (b) Timing of Proceedings.--
            (1) Section 111 proceedings.--(A)  * * *
            (B) In order to initiate proceedings under section 
        801(b)(2) concerning the adjustment of royalty rates 
        under section 111 to which subparagraph (B) or (C) of 
        section 801(b)(2) applies, within 12 months after an 
        event described in either of those subsections, any 
        owner or user of a copyrighted work whose royalty rates 
        are specified by section 111, or by a rate established 
        under this chapter before or after the enactment of the 
        Copyright Royalty and Distribution Reform Act of 2004, 
        may file a petition with the Copyright Royalty Judges 
        declaring that the petitioner requests an adjustment of 
        the rate. The Copyright Royalty Judges shall then 
        proceed as set forth in subsection (a) of this section. 
        Any change in royalty rates made under this chapter 
        pursuant to this subparagraph may be reconsidered in 
        the year 2005, and each fifth calendar year thereafter, 
        in accordance with the provisions in section [801(b)(3) 
        (B) or (C)] 801(b)(2)(B) or (C), as the case may be. A 
        petition for adjustment of rates established by section 
        111(d)(1)(B) as a result of a change [is] in the rules 
        and regulations of the Federal Communications 
        Commission shall set forth the change on which the 
        petition is based.

           *       *       *       *       *       *       *

            (3) Section 114 and corresponding 112 
        proceedings.--
                    (A) For eligible nonsubscription services 
                and new subscription services.--Proceedings 
                under this chapter shall be commenced as soon 
                as practicable after the [effective date] date 
                of enactment of the Copyright Royalty and 
                Distribution Reform Act of 2004 to determine 
                reasonable terms and rates of royalty payments 
                under sections 114 and 112 for the activities 
                of eligible nonsubscription transmission 
                services and new subscription services, to be 
                effective for the period beginning on January 
                1, 2006, and ending on December 31, 2010. Such 
                proceedings shall next be commenced in January 
                2009 to determine reasonable terms and rates of 
                royalty payments, to become effective on 
                January 1, 2011. Thereafter, such proceedings 
                shall be repeated in each subsequent fifth 
                calendar year.

           *       *       *       *       *       *       *

                    (C)(i)  * * *
                    (ii) Not later than 30 days after a 
                petition to determine rates and terms for a new 
                type of service [that] is filed by any 
                copyright owner of sound recordings, or such 
                new type of service, indicating that such new 
                type of service is or is about to become 
                operational, the Copyright Royalty Judges shall 
                issue a notice for a proceeding to determine 
                rates and terms for such service.
                    (iii) The proceeding shall follow the 
                schedule set forth in [such] subsections (b), 
                (c), and (d) of section 803, except that--
                            (I)  * * *

           *       *       *       *       *       *       *


         CHAPTER 10--DIGITAL AUDIO RECORDING DEVICES AND MEDIA

SUBCHAPTER A--DEFINITIONS

           *       *       *       *       *       *       *


Sec. 1007. Procedures for distributing royalty payments

    (a)  * * *
    (b) Distribution of Payments in the Absence of a Dispute.--
After the period established for the filing of claims under 
subsection (a), in each year, the Copyright Royalty Judges 
shall determine whether there exists a controversy concerning 
the distribution of royalty payments under section 1006(c). If 
the Copyright Royalty Judges determine that no such controversy 
exists, the [Librarian of Congress] Copyright Royalty Judges 
shall, within 30 days after such determination, authorize the 
distribution of the royalty payments as set forth in the 
agreements regarding the distribution of royalty payments 
entered into pursuant to subsection (a). The Librarian of 
Congress shall, before such royalty payments are distributed, 
deduct the reasonable administrative costs incurred [by the 
Librarian] under this section.
    (c) Resolution of Disputes.--If the Copyright Royalty 
Judges find the existence of a controversy, the Copyright 
Royalty Judges shall, pursuant to chapter 8 of this title, 
conduct a proceeding to determine the distribution of royalty 
payments. During the pendency of such a proceeding, the 
Copyright Royalty Judges shall withhold from distribution an 
amount sufficient to satisfy all claims with respect to which a 
controversy exists, but shall, to the extent feasible, 
authorize the distribution of any amounts that are not in 
controversy. The Librarian of Congress shall, before such 
royalty payments are distributed, deduct the reasonable 
administrative costs incurred [by the Librarian] under this 
section.

           *       *       *       *       *       *       *

                              ----------                              


 SECTION 6 OF THE COPYRIGHT ROYALTY AND DISTRIBUTION REFORM ACT OF 2004

SEC. 6. EFFECTIVE DATE AND TRANSITION PROVISIONS.

    (a)  * * *
    (b) Transition Provisions.--
            (1) In general.--Subject to paragraphs (2) and (3), 
        the amendments made by this Act shall not affect any 
        proceedings commenced, petitions filed, or voluntary 
        agreements entered into before the effective date 
        provided in subsection (a) under the provisions of 
        title 17, United States Code, as amended by this Act, 
        and pending on such effective date. Such proceedings 
        shall continue, determinations made in such 
        proceedings, and appeals taken therefrom, as if this 
        Act had not been enacted, and shall continue in effect 
        until modified under title 17, United States Code, as 
        amended by this Act. Such petitions filed and voluntary 
        agreements entered into shall remain in effect as if 
        this Act had not been enacted. For purposes of this 
        paragraph, the Librarian of Congress may determine 
        whether a proceeding has commenced. The Librarian of 
        Congress may terminate any proceeding [commenced before 
        the date of enactment of this Act] commenced before the 
        effective date provided in subsection (a) pursuant to 
        chapter 8 of title 17, United States Code, and any 
        proceeding so terminated shall become null and void. In 
        such cases, the Copyright Royalty Judges may initiate a 
        new proceeding in accordance with regulations adopted 
        pursuant to section 803(b)(6) of title 17, United 
        States Code.

           *       *       *       *       *       *       *


                           Markup Transcript


                            BUSINESS MEETING

                        WEDNESDAY, MARCH 9, 2005

                  House of Representatives,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:00 a.m., in 
Room 2141, Rayburn House Office Building, Hon. F. James 
Sensenbrenner, Jr. [Chairman of the Committee] presiding.
    Chairman Sensenbrenner. The Committee will be in order. A 
working quorum is present comprised entirely of Members of the 
majority party. So rather than doing a ratification of minority 
Committee assignments, since there is no one here to make a 
motion to do that, we will now go to the next item on the 
agenda which is the adoption of S. 167, the ``Family 
Entertainment and Copyright Act of 2005,'' and the Chair 
recognizes the gentlemen from Texas, Mr. Smith, the Chairman of 
the Subcommittee on Courts, the Internet, and Intellectual 
Property for a motion.
    Mr. Smith. Mr. Chairman, I ask unanimous consent that we 
consider the following bills en bloc: S. 167, H.R. 683, H.R. 
1036, H.R. 1037, H.R. 1038.
    Chairman Sensenbrenner. How about House Concurrent 
Resolution----
    Mr. Smith. It's my understanding, Chairman, that needs to 
be considered separately.
    Chairman Sensenbrenner. Okay. Without objection, the 5 
bills mentioned by the gentleman from Texas will be considered 
en bloc, and the Chair recognizes the gentleman from Texas to 
explain them.
    Mr. Smith. I'll try to be brief, Mr. Chairman. The first 
bill, S. 167 really consists of three previous bills that this 
Committee has approved and that passed the House last year. The 
first one is the Family Movie Act, and I think Members will 
recall that that simply gives parents the right to determine 
what their children see when they rent or buy a movie video.
    The second part of this particular bill is the Art Act 
which creates new penalties for those who camcord movies in 
public theaters and who willfully infringe copyright law by 
distributing copies of prereleased works, movies or otherwise.
    The Trademark Dilution Revision Act of 2005 simply, 
basically protects trademarks in a better way and also makes 
sure that people cannot infringe trademarks as easily as they 
do now. It also does a good job of trying to keep us out of 
court to determine some of the ambiguities of that particular 
subject.
    The two technical correction bills are just that, technical 
corrections of the Satellite Viewer, Home Viewer Movie Act, and 
the technical corrections, in addition to the satellite 
corrections are technical corrections of the CARP bill, which 
we approved last year and which passed the House.
    The last bill in the en bloc package, Mr. Chairman, is your 
bill, the Multidistrict Litigation Restoration Act of 2005, and 
I will yield to you to make any comments on that.
    And that would be the quick summary of the five bills en 
bloc.
    [The bill, H.R. 1036, follows:]
      
      

  
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    Chairman Sensenbrenner. The Chair passes on this.
    Without objection, all Members may place opening statements 
in the record on each of the bills being considered en bloc at 
this time. Hearing no objection, so ordered.
    [The prepared statement of Mr. Smith follows:]
 Prepared Statement of the Honorable Lamar Smith, a Representative in 
Congress From the State of Texas, and Chairman, Subcommittee on Courts, 
                the Internet, and Intellectual Property
    The enactment of H.R. 1417, the ``Copyright Royalty and 
Distribution Reform Act of 2004'' last Congress was a signature and 
bipartisan achievement.
    This legislation represented the culmination of more than 20 years 
of Congressional efforts to develop the appropriate administrative and 
adjudicatory constructs to oversee the royalty rate-setting and 
distribution functions that are necessitated by commercial reliance on 
compulsory licenses.
    The new processes were developed after extensive consultation with 
the Register of Copyrights, copyright owners, and many of the 
commercial users who are beneficiaries of these licenses.
    Before addressing the specifics of the bill, I'd like to take a 
moment to acknowledge the longstanding concern and incredible 
dedication of the Subcommittee Ranking Member, Mr. Berman, to this 
issue. I think it also appropriate to acknowledge the energy, 
enthusiasm and expertise contributed by his former Counsel, Alec 
French.
    When the Copyright Royalty Judge, or ``CRJ,'' system is fully 
implemented, disputes will be settled in a more predictable, rational 
and consistent manner; decisions will be improved by the involvement of 
judges required to possess relevant subject matter expertise; and 
significant cost savings and efficiencies should be realized by 
participants.
    A clear articulation of the precise delineation of the respective 
roles of the Copyright Office and the new CRJ's is fundamental to the 
success of the new system.
    Under the CRJ construct, the Librarian of Congress remains 
responsible for a number of administrative and ministerial duties, to 
include the actual distribution of royalties determined to be not in 
controversy.
    Conversely, the CRJs are responsible for fact-finding in 
adjudicatory proceedings, for determining whether or not a controversy 
exists and for authorizing the distribution of royalties by the 
Librarian.
    Unfortunately, as enrolled, H.R. 1417 inadvertently stated in some 
places that the Librarian was charged with ``authoriz[ing]'' the 
distribution of funds.
    This error is representative of the types of errors that needs to 
be corrected. In addition, this bill contains further non-controversial 
stylistic, technical, clarifying and conforming changes.
    I urge my colleagues to adopt the provisions in H.R. 1036, which I 
believe will help to alleviate needless uncertainties and contribute to 
the smooth, efficient operation of the new CRJ process.

    [The prepared statement of Mr. Berman follows:]
Prepared Statement of the Honorable Howard L. Berman, a Representative 
     in Congress from the State of California, and Ranking Member, 
    Subcommittee on Courts, the Internet, and Intellectual Property
    I want to thank the Chairman for his able leadership in moving this 
bill forward expeditiously.
    One of the Subcommittee's major accomplishments last Congress was 
to see the CARP reform bill from its inception to ultimate passage. The 
original bill accomplished much with a general overhaul of the 
administrative construct by which copyright royalties are determined 
and distributed based on the compulsory licenses authorized by the 
Copyright Act.
    H.R. 1036, the Technical Corrections to the Copyright Royalty and 
Distribution Reform Act of 2004, which I introduced with the Chairman 
of the Subcommittee, makes a number of technical corrections. Some 
provisions merely change spelling and punctuation; others correct 
cross-references, paragraph numbering, or editorial style in copyright 
law.
    The corrections not in the aforementioned categories are merely 
technical as well. Those changes include amending the statute to 
correctly identify the roles of the copyright royalty judges and the 
librarian of congress in authorizing and distributing royalty payments. 
In addition, the bill addresses the omission of CARP decisions serving 
as precedent and provides consistency for written direct statements and 
written rebuttal statements.
    I want to thank the Copyright Office, the Legislative Counsel and 
some outside groups for their assistance in noting many of the errors 
and then their help in drafting this bill.
    I urge my colleagues to support this bill.

    Chairman Sensenbrenner. Are there any amendments to any of 
the bills?
    [No response.]
    Chairman Sensenbrenner. There being no amendments, without 
objection, the previous question is ordered on reporting the 
bills favorably and the vote on reporting these bills favorably 
will be taken when a reporting quorum is present.
    Without objection the order for the previous question is 
vitiated. There is a Subcommittee amendment on H.R. 683, the 
Dilution Bill. Without objection, the Subcommittee amendment is 
agreed to. Hearing none, so ordered.
    And now without objection, the previous question is ordered 
on reporting the bills favorably with H.R. 683 being reported 
favorably as amended. And the vote will be taken at the time 
that a reporting quorum appears.
    [Intervening business.]
    Chairman Sensenbrenner. If there are no further amendments, 
without objection, the previous question is ordered favorably 
reporting Senate 167.
    We are still one short of a reporting quorum. I would ask 
the Members present to be patient, and as soon as we round up--
here we go. They have been rounded up. [Laughter.]
    The previous question has been ordered on reporting 
favorably the following bills: Senate 167, H.R. 683, H.R. 1036, 
H.R. 1037 and H.R. 1038. So many as are in favor of reporting 
these bills favorably will say aye.
    Opposed, no?
    The ayes appear to have it. The ayes have it, and the bills 
are reported favorably.
    Without objection, those bills which were amended here, 
meaning H.R. 683, will be reported favorably to the House in 
the form of a single amendment in the nature of a substitute, 
incorporating the amendments adopted here today. That unanimous 
consent request also includes Senate 167 as amended.
    Is there any objection?
    [Intervening business.]
    Chairman Sensenbrenner. Okay. Without objection, all 
Members will be given 2 days as provided by House rules, in 
which to submit additional dissenting supplemental or minority 
views, and without objection the staff is directed to make any 
technical and conforming changes.
    [Intervening business.]
    Chairman Sensenbrenner. There being no further business to 
come before the Committee, the Committee stands adjourned.
    [Whereupon, at 10:17 a.m., the Committee was adjourned.]