The U.S. Copyright Office issued an interim rule for comment that lays out an intricate and well thought out approach to the Register’s role in designating the Mechanical Licensing Collective and the Digital Licensee Coordinator under Title I of the Music Modernization Act.
Consistent with the MLC’s role as a quasi-governmental organization (or quasi-private, depending on how you look at it), the interim rule confirms that “directors of the MLC are inferior officers under the Appointments Clause of the Constitution [,] that the Librarian of Congress must approve each subsequent selection of a new director….[and] that the Register work with the MLC, once it has been designated to ensure that the Librarian retains the ultimate authority to appoint and remove all directors.” Presumably, state corporate laws governing the formation of the MLC will give way to this requirement.
The Librarian’s ability to can directors should help assuage some of the concerns about the powers of the MLC and is, of course, entirely consistent with the powers of the MLC as a quasi-governmental organization.
Another requirement that caught my eye relates to the “Hoffa Clause” that allows the MLC to invade the black box to pay operating expenses not covered by the services in the administrative assessment. The Copyright Office seems quite aware of the moral hazard present, and asks the prospective MLC candidates to provide:
Information regarding whether and how the proposed MLC may apply unclaimed accrued royalties on an interim basis to defray operating costs, as well as any accompanying plans for future reimbursement of such royalties from future collections of the administrative assessment, including relevant legal considerations and guidelines in the event the proposed MLC does intend to apply unclaimed accrued royalties.
All in all, the Copyright Office should be commended for putting together a comprehensive and even-handed “job description” for the MLC and the DLC in keeping with the Office’s statutory role in getting this quasi-governmental organization up and running.