Petition for Writ of Certiorari — National Religious Broadcasters Noncommercial Music License Committee, Petitioner v. Copyright Royalty Board, et al.
Supreme Court briefFeb 23, 2024
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NO. __________
IN THE
Supreme Court of the United States
NATIONAL RELIGIOUS BROADCASTERS
NONCOMMERCIAL MUSIC LICENSE COMMITTEE,
Petitioner,
v.
COPYRIGHT ROYALTY BOARD AND LIBRARIAN OF
CONGRESS,
Respondents.
On Petition for Writ of Certiorari to the United States
Court of Appeals for the District of Columbia Circuit
PETITION FOR A WRIT OF CERTIORARI
KARYN K. ABLIN
FLETCHER, HEALD &
HILDRETH, PLC
1300 N. 17th Street
11th Floor
Arlington, VA 22209
(703) 812-0443
ablin@fhhlaw.com
JOHN J. BURSCH
Counsel of Record
ALLIANCE DEFENDING
FREEDOM
440 First Street NW, Ste. 600
Washington, DC 20001
(616) 450-4235
jbursch@adflegal.org
CODY S. BARNETT
ALLIANCE DEFENDING
FREEDOM
44180 Riverside Pkwy
Lansdowne, VA 20176
(571) 707-4655
cbarnett@adflegal.org
RORY T. GRAY
ALLIANCE DEFENDING
FREEDOM
1000 Hurricane Shoals Rd.
NE, Ste. D-1100
Lawrenceville, GA 30043
(770) 339-0774
rgray@ADFlegal.org
Counsel for Petitioner
i
QUESTIONS PRESENTED
The Copyright Royalty Board sets default royalty
rates for webcasting sound recordings. Recently, the
Board adopted rates requiring noncommercial
religious webcasters to pay over 18 times the secular
NPR-webcaster rate to communicate religious
messages to listeners above a modest 218-averagelistener threshold. The D.C. Circuit upheld that
disparate burden based on the Board treating some
secular webcasters as poorly as religious webcasters.
The result is suppression of online religious speech.
The D.C. Circuit also affirmed unexplained Board
departures from precedent regarding who bears the
burden of proof in 17 U.S.C. 114(f) rate-setting
proceedings and the evidence required to meet that
burden. Its decision presents three important legal
questions:
1. Whether approving noncommercial rates that
favor NPR’s secular speech over religious speech
violates the Religious Freedom Restoration Act
(RFRA) or the First Amendment.
2. Whether 17 U.S.C. 114(f)(4)’s bar on considering Webcaster Settlement Act (WSA) agreements in
rate-setting proceedings extends to analyses valuing
rates in non-WSA agreements.
3. Whether the Board’s unexplained inversion of
the burden of proof in a 17 U.S.C. 114(f)(1) ratesetting proceeding—including its unexplained new
requirement of expert testimony to meet that
burden—violates the Administrative Procedure Act.
ii
PARTIES TO THE PROCEEDING
Parties below are Appellant/Intervenor National
Religious Broadcasters Noncommercial Music
License
Committee
(NRBNMLC),
Appellees
Copyright Royalty Board and Librarian of Congress,
Appellant/Intervenors National Association of
Broadcasters and SoundExchange, Inc., and
Intervenors Google LLC, Sirius XM Radio Inc., and
Pandora Media, LLC.
CORPORATE DISCLOSURE STATEMENT
The NRBNMLC is the noncommercial arm of the
National Religious Broadcasters Music License
Committee (NRBMLC). The NRBMLC is a standing
committee of the National Religious Broadcasters
(NRB), a trade association representing more than
1,300 radio and television stations, program
producers, multimedia developers, and related
organizations around the world. The NRB is a nonprofit corporation with no parent corporation, and no
publicly held company has a 10% or greater
ownership interest in the NRB.
iii
LIST OF RELATED PROCEEDINGS
U.S. Court of Appeals for the D.C. Circuit, No. 211243, consolidated with Nos. 21-1244 and 21-1245,
National Religious Broadcasters Noncommercial
Music License Committee v. Copyright Royalty Board,
opinion issued July 28, 2023, en banc review denied
September 27, 2023.
Copyright Royalty Board, Determination of Rates
and Terms for Digital Performance of Sound Recordings and Making of Ephemeral Copies To Facilitate
Those Performances (Web V), 19-CRB-0005-WR
(2021–2025), opinion issued July 22, 2021, published
in the Federal Register on October 27, 2021, at 86
Fed. Reg. 59,452.
iv
TABLE OF CONTENTS
QUESTIONS PRESENTED ....................................... i
PARTIES TO THE PROCEEDING ........................... ii
CORPORATE DISCLOSURE STATEMENT ........... ii
LIST OF RELATED PROCEEDINGS ..................... iii
APPENDIX TABLE OF CONTENTS ...................... vi
TABLE OF AUTHORITIES ................................... viii
DECISIONS BELOW................................................. 1
STATEMENT OF JURISDICTION .......................... 1
PERTINENT CONSTITUTIONAL PROVISIONS
AND STATUTES .................................................. 2
INTRODUCTION ...................................................... 3
STATEMENT OF THE CASE ................................... 6
I. Regulatory background ........................................ 6
II. The Board’s 2021–2025 determination ................ 8
III.The D.C. Circuit’s ruling .................................... 11
REASONS FOR GRANTING THE WRIT............... 14
I. The Court should review the D.C. Circuit’s
refusal to apply strict scrutiny to the Board’s
discriminatory rates under RFRA or the First
Amendment. ........................................................ 15
A. The D.C. Circuit’s refusal to apply strict
scrutiny under RFRA conflicts with this
Court’s precedent and rulings by the
Seventh, Ninth, and Tenth Circuits. ............ 15
v
B. The Court should grant review to correct
the D.C. Circuit’s disregard of Tandon and
resolve the conflict between the decision
below and rulings by the Second, Sixth,
and Ninth Circuits. ....................................... 22
C. The D.C. Circuit’s approval of rates
targeting the most effective noncommercial
religious webcasters violates the Free
Speech Clause. ............................................... 27
II. The Court should grant review to correct the
D.C. Circuit’s misconstruction of 17 U.S.C.
114(f)(4)’s exclusionary rule, which conflicts
with Copyright Office precedent. ....................... 30
III.The D.C. Circuit’s affirmance of the Board’s
arbitrary and unexplained departures from
precedent on the burden of proof and expert
testimony violates the APA. ............................... 32
A. The Court should grant review to correct
the lower court’s APA violation in allowing
the Board to impose an unexplained new
expert-testimony requirement midstream. .. 33
B. Review is needed to correct the Board’s
inversion of the burden of proof without
explanation by requiring benchmark
proponents, rather than challengers, to
quantify proposed adjustments. ................... 36
CONCLUSION ......................................................... 38
vi
APPENDIX TABLE OF CONTENTS
Volume 1
Copyright Royalty Board
Final Rule and Order
Published October 27, 2021 (part 1) ....................... 1a
Volume 2
Copyright Royalty Board
Final Rule and Order
Published October 27, 2021 (part 2) ................... 368a
U.S. Court of Appeals for the
District of Columbia Circuit
Opinion issued July 28, 2023............................... 633a
U.S. Court of Appeals for the
District of Columbia Circuit
Judgment issued July 28, 2023 ........................... 679a
U.S. Court of Appeals for the
District of Columbia Circuit
Order denying rehearing en banc
Issued September 27, 2023 .................................. 681a
17 U.S.C. 106 ........................................................ 683a
17 U.S.C. 112(e).................................................... 684a
17 U.S.C. 114(d) & (f) ........................................... 689a
17 U.S.C. 802(f)(1) ................................................ 709a
17 U.S.C. 803(d)(1) ............................................... 714a
17 U.S.C. 804(b)(3) ............................................... 715a
42 U.S.C. 2000bb-1............................................... 719a
42 U.S.C. 2000bb-2............................................... 720a
42 U.S.C. 2000bb-3............................................... 721a
vii
37 C.F.R. 380.2(a)................................................. 721a
37 C.F.R. 380.7 ..................................................... 722a
37 C.F.R. 380.10 (2016) ........................................ 726a
37 C.F.R. 380.10 ................................................... 728a
37 C.F.R. 380.30 ................................................... 730a
37 C.F.R. 380.31 ................................................... 733a
37 C.F.R. 380.32 ................................................... 737a
viii
TABLE OF AUTHORITIES
Cases
Antonyuk v. Chiumento,
89 F.4th 271 (2d Cir. 2023) ............................... 26
Archdiocese of Washington v. Washington
Metropolitan Area Transit Authority,
897 F.3d 314 (D.C. Cir. 2018) ............................ 15
Bose Corp. v. Consumers Union of United States,
Inc.,
466 U.S. 485 (1984)............................................ 19
Bostock v. Clayton County,
590 U.S. 644 (2020)............................................ 17
Burwell v. Hobby Lobby Stores, Inc.,
573 U.S. 682 (2014)...........................16, 17, 18, 21
Calvary Chapel Dayton Valley v. Sisolak,
140 S. Ct. 2603 (2020)........................................ 23
Canaan Christian Church v. Montgomery County,
29 F.4th 182 (4th Cir. 2022) .............................. 27
Carson v. Makin,
596 U.S. 767 (2022)............................................ 24
Church of the Lukumi Babalu Aye, Inc. v. City of
Hialeah,
508 U.S. 520 (1993)...................................... 21, 25
City of Arlington v. FCC,
569 U.S. 290 (2013)............................................ 30
Clark v. Governor of New Jersey,
53 F.4th 769 (3d Cir. 2022) ............................... 26
Employment Division v. Smith,
494 U.S. 872 (1990)............................................ 22
ix
Encino Motorcars, LLC v. Navarro,
579 U.S. 211 (2016)............................................ 32
FCC v. Fox Television Stations, Inc.,
556 U.S. 502 (2009)............................................ 32
Fellowship of Christian Athletes v. San Jose
Unified School District Board of Education,
82 F.4th 664 (9th Cir. 2023) .............................. 27
Free Enterprise Fund v. Public Company
Accounting Oversight Board,
561 U.S. 477 (2010)............................................ 22
Fulton v. City of Philadelphia,
593 U.S. 522 (2021)...................................... 24, 25
Gonzales v. O Centro Espirita Beneficente Uniao
do Vegetal,
546 U.S. 418 (2006)............................................ 16
Hurley v. Irish-American Gay, Lesbian & Bisexual
Group of Boston,
515 U.S. 557 (1995)............................................ 19
Kennedy v. Bremerton School District,
597 U.S. 507 (2022)................................ 22, 24, 28
Kisor v. Wilkie,
139 S. Ct. 2400 (2019)........................................ 36
Korte v. Sebelius,
735 F.3d 654 (7th Cir. 2013) ............................. 17
Little Sisters of the Poor Home for the Aged,
Colorado v. Sebelius,
571 U.S. 1171 (2014).......................................... 17
Little Sisters of the Poor Saints Peter & Paul
Home v. Pennsylvania,
140 S. Ct. 2367 (2020)........................................ 16
x
Minneapolis Star & Tribune Co. v. Minnesota
Commissioner of Revenue,
460 U.S. 575 (1983)................................ 27, 28, 29
N.Y. Times Co. v. Sullivan,
376 U.S. 254 (1964)............................................ 19
Packingham v. North Carolina,
582 U.S. 98 (2017)........................................ 14, 19
Palmore v. Sidoti,
466 U.S. 429 (1984)............................................ 20
Pitt News v. Pappert,
379 F.3d 96 (3d Cir. 2004) ................................. 29
Pleasant View Baptist Church v. Beshear,
78 F.4th 286 (6th Cir. 2023) ........................ 23, 24
Priests for Life v. United States Department of
Health & Human Services,
772 F.3d 229 (D.C. Cir. 2014) ............................ 15
Reed v. Town of Gilbert,
576 U.S. 155 (2015)............................................ 28
Resurrection School v. Hertel,
35 F.4th 524 (6th Cir. 2022) .............................. 26
Roman Catholic Diocese of Brooklyn v. Cuomo,
592 U.S. 14 (2020).............................................. 26
SoundExchange, Inc. v. Copyright Royalty Board,
904 F.3d 41 (D.C. Cir. 2018) .............................. 37
Tandon v. Newsom,
593 U.S. 61 (2021).........................4, 12, 23, 25, 26
The Florida Star v. B.J.F.,
491 U.S. 524 (1989)............................................ 29
xi
Time Warner Cable, Inc. v. Hudson,
667 F.3d 630 (5th Cir. 2012) ............................. 29
Turner Broadcasting System, Inc. v. FCC,
512 U.S. 622 (1994)...................................... 28, 29
United States v. Christie,
825 F.3d 1048 (9th Cir. 2016) ........................... 17
United States v. Friday,
525 F.3d 938 (10th Cir. 2008) ........................... 18
Wheaton College v. Burwell,
573 U.S. 958 (2014)............................................ 17
Zubik v. Burwell,
578 U.S. 403 (2016)............................................ 17
Statutes
5 U.S.C. 706 .......................................................... 2, 32
17 U.S.C. 106 .............................................................. 6
17 U.S.C. 112 .............................................................. 6
17 U.S.C. 114 ...............................................6, 7, 11, 13
17 U.S.C. 802 ...................................................... 30, 31
17 U.S.C. 803 ........................................................ 1, 11
17 U.S.C. 804 .............................................................. 6
28 U.S.C. 1254 ............................................................ 1
42 U.S.C. 2000bb–1 ........................................ 2, 12, 15
42 U.S.C. 2000bb–2 .............................................. 2, 16
42 U.S.C. 2000bb-3.............................................. vi, 16
42 U.S.C. 2000cc–5..................................................... 2
xii
Webcaster Settlement Act of 2008, Pub. L. No.
110-435, 122 Stat. 4974 ..................................... 30
Webcaster Settlement Act of 2009, Pub. L. No.
111-36, 123 Stat. 1926 ....................................... 30
Regulations
37 C.F.R. 380.10 .................................. vi, 8, 10, 19, 24
37 C.F.R. 380.10 (2016) .............................................. 8
37 C.F.R. 380.2 ...................................................... vi, 7
37 C.F.R. 380.30 ................................................... vii, 9
37 C.F.R. 380.31 ................................. vii, 9, 10, 19, 24
37 C.F.R. 380.32 ..................................... vii, 10, 19, 24
37 C.F.R. 380.7 ...................................................... vi, 9
37 C.F.R. pt. 380, subpts. C–D (2016) ....................... 8
Determination of Reasonable Rates and Terms for
Digital Performance of Sound Recordings and
Ephemeral Recordings, 67 Fed. Reg. 45240
(July 8, 2002) (Web I) ............................7, 8, 33, 34
Digital Performance Right in Sound Recordings
and Ephemeral Recordings, 72 Fed. Reg.
24084 (May 1, 2007) (Web II) ........................ 7, 33
Determination of Royalty Rates for Digital
Performance Right in Sound Recordings and
Ephemeral Recordings, 79 Fed. Reg. 23102
(Apr. 25, 2014) (Web III) .................... 9, 33, 34, 36
Determination of Royalty Rates and Terms for
Ephemeral Recording and Webcasting Digital
Performance of Sound Recordings, 81 Fed.
Reg. 26316 (May 2, 2016) (Web IV) ....8, 34, 35, 36
xiii
Determination of Royalty Rates and Terms for
Transmission of Sound Recordings by Satellite
Radio & “Preexisting” Subscription Services,
83 Fed. Reg. 65210 (Dec. 19, 2018) ................... 33
Notification of Agreements Under the WSA of
2009, 74 Fed. Reg. 40614 (Aug. 12, 2009) ........... 7
Constitutional Provisions
U.S. Const. amend I ............................................. 2, 22
Other Authorities
Memorandum Opinion on Novel Material
Questions of Law, Docket No. 14-CRB-0001WR (Sept. 18, 2015) ..................................... 11, 30
Report of the CARP, Docket No. 2000-9 CARP
DTRA 1&2 (Feb. 20, 2002) ................................ 33
1
DECISIONS BELOW
The Copyright Royalty Board’s Determination of
Royalty Rates and Terms for Ephemeral Recording
and Digital Performance of Sound Recordings is
reported at 86 Fed. Reg. 59,452 and reprinted at
App.1a as redacted. The full, unredacted version is
available in the appellate record at D.C. Cir.
J.A.1113–423.
The D.C. Circuit’s opinion affirming the Board is
reported at 77 F.4th 949 (D.C. Cir. 2023) and
reprinted at App.633a. The D.C. Circuit’s order
denying rehearing en banc is not reported but is
available at 2023 WL 6319401 (D.C. Cir. Sept. 27,
2023) and reprinted at App.681a.
STATEMENT OF JURISDICTION
The D.C. Circuit had jurisdiction under 17 U.S.C.
803(d)(1), entered judgment on July 28, 2023, and
denied rehearing en banc on September 27, 2023. On
December 15, 2023, the Chief Justice extended the
time to file this petition until January 25, 2024. On
January 5, 2024, the Chief Justice further extended
the time to file this petition until February 23, 2024.
This Court has jurisdiction under 28 U.S.C. 1254(1).
2
PERTINENT CONSTITUTIONAL
PROVISIONS AND STATUTES
The First Amendment to the United States Constitution provides, in relevant part: “Congress shall
make no law respecting an establishment of religion,
or prohibiting the free exercise thereof; or abridging
the freedom of speech.” U.S. Const. amend I.
The Religious Freedom Restoration Act of 1993
(“RFRA”) provides that the “Government shall not
substantially burden a person’s exercise of religion
even if the burden results from a rule of general
applicability,” 42 U.S.C. 2000bb–1(a), unless “it
demonstrates that application of the burden to the
person—(1) is in furtherance of a compelling
governmental interest; and (2) is the least restrictive
means of furthering that compelling governmental
interest,” 42 U.S.C. 2000bb–1(b). “[T]he term ‘exercise
of religion’ means religious exercise, as defined in
section 2000cc–5 of this title.” 42 U.S.C. 2000bb–2(4).
“The term ‘religious exercise’ includes any exercise of
religion, whether or not compelled by, or central to, a
system of religious belief.” 42 U.S.C. 2000cc–5(7).
The Administrative Procedure Act (“APA”) tells
reviewing courts to “hold unlawful and set aside
agency action, findings, and conclusions” that are
“arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law,” or “contrary to
constitutional right, power, privilege, or immunity.” 5
U.S.C. 706(2)(A) & (B).
17 U.S.C. 114(f) and other relevant statutes and
regulations are set forth in the appendix.
3
INTRODUCTION
This Court’s immediate review is required to
correct constitutional and statutory errors committed
by the Copyright Royalty Board in its 17 U.S.C. 114(f)
rate-setting for webcasting sound recordings.
The D.C. Circuit deferred broadly to the Board’s
decision, affirming exponentially higher royalty rates
for noncommercial religious webcasters than for
secular National Public Radio (NPR) noncommercial
webcasters. The result is a two-tier noncommercial
rate structure with secular NPR stations at the top
and religious stations on the bottom. Under the
Board’s system, NPR webcasters are able to reach a
large audience at reasonable royalty rates paid by the
federal government. But religious stations pay 18
times the average NPR rate above a modest average
of 218 listeners. This discriminatory treatment
elevates secular content and suppresses religious
speech online, putting religious stations at a severe
disadvantage in the marketplace of ideas.
In these circumstances, RFRA and the First
Amendment require that the government burden
satisfy strict scrutiny. Yet the D.C. Circuit refused to
apply that exacting standard, gave broad deference to
the Board, affirmed this imbalanced rate structure,
and made it effectively impossible for religious
stations to obtain NPR-comparable rates in the
future. Only this Court may correct its errors. It
should do so now because religious webcasters are
already being forced to reduce their listenership to
avoid paying the artificially high royalty rates.
The D.C. Circuit’s refusal to apply strict scrutiny
under RFRA conflicts with this Court’s precedent and
rulings by the Seventh, Ninth, and Tenth Circuits.
4
And the lower court’s free-exercise analysis, which
relies—in part—on the Board treating some secular
webcasters as poorly as religious webcasters, is
incompatible with this Court’s decision in Tandon v.
Newsom, 593 U.S. 61 (2021) (per curiam), and rulings
by the Second, Sixth, and Ninth Circuits. This Court’s
review is necessary to ensure that the D.C. Circuit
and the Board take religious liberty and free speech
seriously, not only here but in the myriad appeals the
D.C. Circuit considers from federal agencies.
The D.C. Circuit also affirmed several Board
errors of copyright and administrative law that
benefit copyright owners and make it even harder for
noncommercial religious webcasters to escape from
disparate rates in future license periods. The lower
court misread 17 U.S.C. 114(f)(4)’s exclusionary rule
to bar more religious-broadcaster-proffered evidence
from consideration than the statute contemplates, in
conflict with a binding Copyright Office ruling. And
the court affirmed the Board’s imposition of a new per
se requirement—applied arbitrarily and without
warning or explanation—that parties supporting
their rate proposals through so-called “benchmark”
agreements must establish the comparability of those
benchmarks through expert testimony rather than
other forms of evidence it had previously accepted.
Finally, the court affirmed the Board’s capricious
inversion of the burden of proof, again in copyright
owners’ favor, to require the proponent of a proffered
rate benchmark—rather than its challenger—to
anticipate and quantify any proposed adjustments
that a challenger may raise. This change, too, was
made without warning or explanation, in violation of
the Administrative Procedure Act.
5
More than 25 years after Congress established a
webcasting statutory license, this Court has yet to
weigh in on the Board’s and D.C. Circuit’s rate-setting
decisions. Absent this Court’s course correction, the
Board is likely to continue to disregard RFRA and the
First Amendment in its rate-setting determinations.
The Board already adopted much higher rates for
noncommercial religious webcasters than for secular
NPR broadcasters in the prior license term, and there
is no indication the Board will mend its ways in future
rate-setting proceedings.
Further, no percolation of these issues among the
circuits will occur, as the D.C. Circuit is the only court
that reviews Board determinations. Thus, the Board’s
and the D.C. Circuit’s rulings would benefit greatly
from this Court’s immediate review to assess their
compliance with governing constitutional and statutory standards.
In sum, this case is an ideal vehicle for the Court
to exercise supervision of Board rate-setting proceedings, and the time is ripe for that guidance. The Court
should grant review.
6
STATEMENT OF THE CASE 1
I.
Regulatory background
Congress granted copyright owners certain exclusive rights in their works, including the right to make
public performances of certain types of works. 17
U.S.C. 106. For sound recordings, Congress limited
that right by (a) restricting it to certain digital audio
transmissions (including webcasting) and (b) creating
a statutory license for “noninteractive” transmissions—i.e., where listeners cannot select content. Id.
106(6), 112(e), 114(d). Congress ordered the Copyright Royalty Board to set royalty rates under this
and a related statutory license—covering ephemeral
recordings to facilitate those transmissions—every
five years if parties are unable to negotiate agreedupon rates. Id. 804(b)(3).
Under this regime, webcasters can make noninteractive digital audio transmissions and ephemeral
recordings of copyrighted sound recordings if they
provide notice and pay royalty rates set by the Board.
17 U.S.C. 112(e)(6)(A), 114(f)(3)(B). The Board must
“establish rates and terms that most clearly represent
the rates and terms that would have been negotiated
in the marketplace between a willing buyer and a
willing seller.” 17 U.S.C. 114(f)(1)(B). These rates
must also “distinguish among the different types of
services,” such as commercial versus noncommercial
webcasters. Ibid. The Board may “consider the rates
and terms for comparable types of audio transmission
services and comparable circumstances under voluntary license agreements.” Id. 114(f)(1)(B)(ii).
1 Record citations to sealed evidence are to the Joint Appendix
filed below, cited as “D.C. Cir. J.A.__.”
7
Despite the Board’s willing-buyer-willing-seller
mandate, noncommercial rates in early years of the
statutory license were based on seller-proposed structures rather than actual noncommercial agreements.
Determination of Reasonable Rates and Terms for
Digital Performance of Sound Recordings and Ephemeral Recordings (Web I), 67 Fed. Reg. 45240, 45258–
59 (July 8, 2002); Digital Performance Right in Sound
Recordings and Ephemeral Recordings (Web II), 72
Fed. Reg. 24084, 24097–98 (May 1, 2007). This
resulted in royalty rates so high that noncommercial
and other webcasters obtained congressional relief
via Webcaster Settlement Act (WSA) legislation,
which temporarily facilitated voluntary (nonprecedential) rate agreements. 17 U.S.C. 114(f)(4). This
legislation enabled noncommercial religious and
other webcasters to avoid paying the Board’s higher
rates from 1998 through 2015 because they reached
negotiated agreements with SoundExchange, the
record companies’ representative and Boarddesignated collective to administer these statutory
licenses. E.g., Notification of Agreements Under the
WSA of 2009, 74 Fed. Reg. 40614, 40620–26 (Aug. 12,
2009); 37 C.F.R. 380.2(a). SoundExchange reached
these agreements with commercial webcasters and
three groups of noncommercial webcasters—NPR
stations; student-run stations, represented by College
Broadcasters, Inc. (CBI); and religious webcasters
represented by Petitioner NRBNMLC. E.g., 74 Fed.
Reg. at 40616–26.
In 2016-2020, after WSA-authorized agreements
expired and SoundExchange refused to negotiate
lower rates with religious noncommercial stations,
religious webcasters were forced to pay—for the first
time—much higher, Board-set royalty rates under a
8
structure that SoundExchange, the seller’s representative, proposed. 37 C.F.R. 380.10(a)(2) (2016); Determination of Royalty Rates and Terms for Ephemeral
Recording and Webcasting Digital Performance of
Sound Recordings (Web IV), 81 Fed. Reg. 26316,
26392–96 (May 2, 2016). Those rates included an
annual minimum fee to webcast to approximately 218
average monthly listeners plus commercial-level fees
to reach additional listeners. Yet the Board adopted
much lower rates and terms for certain other noncommercial webcasters, which Sound-Exchange and each
buyer representative—NPR and CBI—jointly proposed. 37 C.F.R. pt. 380, subpts. C–D (2016); Web IV,
81 Fed. Reg. at 26405. For the first time, the Board
required religious broadcasters to pay far more than
NPR stations to communicate with listeners above a
modest average audience of 218—the size of a small
church or college lecture hall.
II.
The Board’s 2021–2025 determination
For 2021–2025, the Board again adopted
statutory royalty rates for NPR webcasters that had
been jointly proposed by NPR and SoundExchange.
D.C. Cir. J.A.1413. Petitioner proposed two rate alternatives—modeled after the NPR rates—to ensure
larger religious webcasters could communicate with
listeners on equal footing with secular NPR stations.
D.C. Cir. J.A.1366–70. The NPR benchmark rates fell
squarely within the Board’s established test for
assessing comparability with the target market: they
were negotiated by similar noncommercial buyers
and the same record company sellers, plus covered the
same statutory rights and license term—all reflected
in an arms-length agreement. E.g., Web I, 67 Fed.
Reg. at 45245 (applying same-buyer-seller-rights test
9
for assessing benchmark comparability); Determination of Royalty Rates for Digital Performance Right in
Sound Recordings and Ephemeral Recordings (Web
III Remand), 79 Fed. Reg. 23102, 23111 (Apr. 25,
2014) (same). Indeed, among noncommercial webcasters, NPR and religious webcasters are the only
significant noncommercial groups with online
audiences above the 218-average-listener threshold.
D.C. Cir. J.A.1363–64 & n.312, 1846–47.
Yet the Board rejected Petitioner’s proposal and
instead adopted SoundExchange’s suggested $1,000
minimum fee per channel for 159,140 aggregate tuning hours (“ATH”)/month (where one ATH generally
is one programming hour transmitted to one listener,
37 C.F.R. 380.7) plus commercial-level rates for additional webcasting—currently $0.0025/performance,
where a performance generally is one sound recording
transmitted to one listener, App.499a. So religious
webcasters pay commercial-level rates above an
average of only 218 listeners. App.500a.
By contrast, the average NPR per-performance
fee is a tiny fraction of what religious broadcasters
pay above this 218-listener threshold. On behalf of
NPR, the federal government through the Corporation for Public Broadcasting (CPB) pays $800,000
annually for hundreds of NPR stations to use one
massive pool of “Music ATH”—i.e., ATH “of website
Performances of sound recordings”—and that pool
increases by 10,000,000 Music ATH each year. 37
C.F.R. 380.30, 380.31. The 2024 allotment is
390,000,000 Music ATH, an average price of
10
$0.00205/Music ATH, or $0.000137/performance. 2 37
C.F.R. 380.31(a)(4).
So the Board compelled religious broadcasters to
pay above-threshold fees that are over 18 times higher
than the fees the Board set for secular NPR-affiliated
broadcasters. 3 In real terms, a noncommercial Christian station webcasting 15 songs per hour to an
average audience of only 1,000 people must pay over
$257,000 annually. 4 By contrast, the average annual
fee for secular NPR stations to reach that same
audience is less than $18,0005—a 93% discount. This
rate disparity widens each year of the license term, as
NPR stations’ per-Music-ATH rates decrease while
religious broadcasters’ rates increase with inflation.
Compare 37 C.F.R. 380.31(a) (constant fee for annual
increases in NPR stations’ webcasting), with id.
380.10(c) (noncommercial religious broadcasters pay
annual inflation increases). What’s more, NPRaffiliated webcasters do not even pay this lower
royalty fee—the federal government pays it for them
through CPB. 37 C.F.R. 380.32(a); D.C. Cir. J.A.926.
The rate disparity between secular NPR stations
and religious webcasters was not the only problem in
these proceedings. The Board also interpreted 17
2 $800,000/390,000,000 Music ATH equals $0.00205/Music ATH.
Using SoundExchange’s ATH-to-performance conversion factor
of 15 performances/Music ATH, $0.00205/Music ATH equals
$0.000137/performance ($0.00205/15). D.C. Cir. J.A.1844 n.31.
3 18.25 = ($0.0025/$0.000137).
4 $257,887 = $1,000 + [$0.0025/performance * 15 performances/
hour * 24 hours/day * 365 days/year * (1,000-218) listeners].
5 $17,958 = $0.00205/Music ATH * 24 ATH/day * 365 days/ year
* 1,000 listeners.
11
U.S.C. 114(f)(4)’s bar on considering WSA agreements
to prohibit a mere analysis of NPR stations’ non-WSA
rates, in conflict with a binding Register of Copyrights
ruling that only “WSA agreements themselves” are
barred. Mem. Op. on Novel Material Questions of Law
at 3-4, 11, Docket No. 14-CRB-0001-WR (Sept. 18,
2015), https://bit.ly/49eQ1xF (Register Op.). And the
Board imposed a higher burden of proof on parties
seeking to modify prior rates (i.e., buyers) than on
parties seeking to perpetuate them (i.e., sellers),
despite Congress instructing the Board to set rates
anew each five-year term. Compare D.C. Cir. J.A.
1371–80, with D.C. Cir. J.A.1380–81, 1391; 17 U.S.C.
114(f)(1)(B) (the Board “shall establish” willingbuyer-willing-seller rates for each “5-year period”).
Finally, the Board departed from several longstanding practices without explanation. The Board
imposed a new per se requirement that parties
present expert testimony that a proffered rate benchmark is comparable to the target market. App.520a–
22a. And the Board inverted the burden of proof by
requiring the proponent of a rate benchmark to predict and quantify any adjustments to that benchmark
a challenger might raise, even though the Board had
long required benchmark challengers to bear that
burden. App.521a–22a, 535a.
III.
The D.C. Circuit’s ruling
Religious broadcasters appealed to the D.C.
Circuit, which has exclusive jurisdiction over the
Board’s rulings. 17 U.S.C. 803(d)(1). Petitioner
NRBNMLC challenged the Board’s noncommercial
rates under the Religious Freedom Restoration Act
(RFRA), the First Amendment, the Copyright Act,
and the Administrative Procedure Act (APA).
12
As to RFRA and the Free Exercise Clause, the
D.C. Circuit found no substantial burden on religion
imposed by the disparate rates. Its rationale was that,
even though rates are simple computations that can
be calculated and understood by anyone, the Board
made “no record finding” that religious broadcasters
paid a “higher … rate” than secular “NPR” stations.
App.668a. “Without making that initial showing of
unfavorable treatment of religious webcasters,” the
court said, Petitioner could not “establish a violation
of the RFRA or the First Amendment.” App.669a. The
effect of the Board’s failure to make the computation
was to insulate its ruling from judicial review.
The D.C. Circuit also said it didn’t matter “if the
above-threshold noncommercial webcasters [paying
commercial-level, above-threshold rates] are almost
exclusively religious” because the Board’s “overall
rate structure … applies to all noncommercial
webcasters.” App.669a (quotation omitted). In other
words, formally treating some secular non-NPR
stations as poorly as religious broadcasters forestalled any RFRA or free exercise problem. The D.C.
Circuit did not discuss RFRA’s requirement that the
government satisfy strict scrutiny even when a
substantial burden on the free exercise of religion
“results from a rule of general applicability.” 42
U.S.C. 2000bb–1(a). Nor did it address this Court’s
holding that it is no answer to a free exercise violation
that the government “treats some comparable secular
businesses or other activities as poorly as or even less
favorably than the religious exercise at issue.”
Tandon, 593 U.S. at 62 (citation omitted). And the
court did not address the free-speech argument the
religious broadcasters raised. NRBNMLC Final Br.
52–55 (D.C. Cir. Jan. 12, 2023).
13
As to the Copyright Act, the D.C. Circuit affirmed
the Board’s ruling “that it was statutorily barred from
considering … an internal SoundExchange document” that valued NPR rates applicable in a nonWSA period because “the rate structure came from an
old settlement agreement negotiated” under the 2009
WSA. App.662a. The statute on which the court
relied—17 U.S.C. 114(f)(4)—bars the admissibility of
WSA agreements in future rate proceedings. But the
SoundExchange document was not a WSA agreement,
only an internal analysis of rates adopted for a nonWSA term. The court failed to explain how the statute
barred such a document.
The D.C. Circuit also affirmed the Board’s imposition of a lopsided burden of proof on parties seeking
to change prior rates rather than to perpetuate them.
App.647a–48a; accord App.656a, 665a n.6. The court
did so even though the Copyright Act requires the
Board to “determine” rates anew every five years that
“most clearly represent” willing-buyer-willing-seller
rates for that period. 17 U.S.C. 114(f)(1)(A)–(B).
Finally, the D.C. Circuit affirmed the Board’s new
per se rule that proposed benchmark rates must now
be supported by expert evidence of comparability.
App.659a–60a. And the court affirmed the Board’s
unexplained departure from precedent that (1) requires the challenger of a benchmark to quantify any
requested adjustments to that benchmark and
(2) accepts the benchmark without adjustments if the
challenger failed to do so. App.660a–61a & n.5. The
court blessed the Board’s new rule requiring the
benchmark’s proponent to anticipate and quantify
any adjustments a challenger may raise. Ibid.
14
REASONS FOR GRANTING THE WRIT
The Court should grant the petition and review
the D.C. Circuit’s and Board’s actions, which effectively create a two-tier noncommercial rate structure
that favors secular speech over religious expression.
In the top tier, the Board allows secular NPRaffiliated stations to reach a large internet audience
at modest royalty rates paid by the federal government. On the bottom tier, the Board forces religious
stations to pay exponentially higher royalty fees to
reach more than 218 average monthly listeners—with
no public subsidy.
Applying a highly deferential standard of review,
the D.C. Circuit affirmed the Board in toto. The result
is government suppression of religious speech online,
skewing “the modern public square” in favor of
secular content in violation of RFRA and the First
Amendment. Packingham v. North Carolina, 582 U.S.
98, 107 (2017).
What’s more, the lower court approved the
Board’s misconstruction of a key evidentiary bar in
the Copyright Act, in defiance of a binding Register of
Copyrights decision. And the court of appeals
affirmed the Board’s arbitrary and unexplained
decision to change the rate-setting rules midstream in
violation of the APA. This Court’s review is needed to
prevent religious voices from being priced out of the
marketplace and to ensure the Board’s decisions
receive the same level of judicial scrutiny given other
agencies.
15
I.
The Court should review the D.C. Circuit’s
refusal to apply strict scrutiny to the
Board’s discriminatory rates under RFRA or
the First Amendment.
A. The D.C. Circuit’s refusal to apply strict
scrutiny under RFRA conflicts with this
Court’s precedent and rulings by the
Seventh, Ninth, and Tenth Circuits.
The D.C. Circuit deemed the Board’s “overall rate
structure” generally applicable because it nominally
“applies to all noncommercial webcasters.” App.669a
(emphasis added). So the court refused to engage in
strict scrutiny under RFRA and applied highly
deferential review. E.g., App.658a–59a.
But RFRA demands strict scrutiny “even if the
burden [on religious exercise] results from a rule of
general applicability.” 42 U.S.C. 2000bb-1(a) (emphasis added). And the D.C. Circuit ignored the substantial burden imposed by forcing religious stations to
pay more than NPR stations. This is just the latest
instance in which the D.C. Circuit has refused to take
RFRA seriously. E.g., Archdiocese of Wash. v. Wash.
Metro. Area Transit Auth., 897 F.3d 314 (D.C. Cir.
2018); Priests for Life v. U.S. Dep’t of Health &
Human Servs., 772 F.3d 229 (D.C. Cir. 2014). The
Court’s review is imperative to ensure the enhanced
judicial scrutiny that Congress intended.
Under RFRA, when a federal agency like the
Board “substantially burden[s]” religious exercise, the
agency must show that applying that burden to
believers like religious noncommercial webcasters
furthers “a compelling governmental interest” and is
“the least restrictive means of furthering that …
interest.” 42 U.S.C. 2000bb-1(b). This heightened
16
standard applies to “all Federal law, and the
implementation of that law,” regulatory or otherwise,
42 U.S.C. 2000bb-3(a) (emphasis added), and to every
“department, agency, instrumentality, and official …
of the United States,” 42 U.S.C. 2000bb-2(1).
Here, the Board denied the same royalty rates
enjoyed by secular NPR stations to religious
broadcasters—which exist to communicate faithbased messages—and imposed rates that are over 18
times higher when their audience surpasses a modest
218-listener threshold. That substantially burdens
religious stations’ religious exercise by forcing them
to suppress their faith-based message or pay far more
to share it. Under RFRA, that triggers strict scrutiny.
Cf. Burwell v. Hobby Lobby Stores, Inc., 573 U.S. 682,
691 (2014) (significant monetary disadvantage imposed a substantial burden).
To be clear, religious webcasters do not claim that
paying royalty fees alone burdens their exercise of
religion. The substantial burden comes from the
government’s discriminatory rate structure, which
suppresses faith-based stations’ religious speech
through exponentially higher royalty costs and
amplifies NPR stations’ secular expression through
lower costs and subsidies. The Board is free to “make
an exception” from its noncommercial-webcasting
rates for secular NPR stations, but if it does, RFRA
requires the Board to make an exception for religious
stations, too. Gonzales v. O Centro Espirita Beneficente Uniao do Vegetal, 546 U.S. 418, 436 (2006).
“RFRA provides very broad protection for
religious liberty,” Little Sisters of the Poor Saints
Peter & Paul Home v. Pennsylvania, 140 S. Ct. 2367,
2383 (2020) (cleaned up). It “operates as a kind of
17
super statute, displacing the normal operation of
other federal laws.” Bostock v. Clayton Cnty., 590 U.S.
644, 682 (2020). So this Court accords great solicitude
to believers’ requests for religious exemptions from
general agency rules under RFRA. E.g., Hobby Lobby,
573 U.S. at 735; Zubik v. Burwell, 578 U.S. 403, 408
(2016) (per curiam); Wheaton Coll. v. Burwell, 573
U.S. 958 (2014); Little Sisters of the Poor Home for the
Aged, Colo. v. Sebelius, 571 U.S. 1171 (2014).
Other circuits follow suit and conduct a particularized exemption inquiry under RFRA. For example,
the Seventh Circuit has explained that “RFRA creates
a broad statutory right to case-specific exemptions
from laws that substantially burden religious exercise
…, unless the government can satisfy the compellinginterest test.” Korte v. Sebelius, 735 F.3d 654, 671 (7th
Cir. 2013). The Seventh Circuit holds that “once …
RFRA claimant[s] [like religious broadcasters]
make[ ] a prima facie case that the application of a
law or regulation substantially burdens [their] religious practice, the burden shifts to the government to
justify the burden under strict scrutiny.” Id. at 673.
The Ninth Circuit also says that “RFRA gives
each person a statutory right not to have his sincere
religious exercise substantially burdened by the
government, save for cases expressly denominated
exceptional.” United States v. Christie, 825 F.3d 1048,
1055 (9th Cir. 2016) (cleaned up). And that means
“RFRA allows the federal government to” apply its
default rules to religious believers “only if [it] meets a
two-part [compelling-interest and least-restrictivemeans] test.” Id. at 1055.
18
Similarly, the Tenth Circuit recognizes that
“[o]nce a defendant shows … applying a statute to him
will substantially burden his religion, the government
must justify the burden by establishing a sufficiently
compelling interest and showing that it could not
accommodate religion more without serving that
interest less.” United States v. Friday, 525 F.3d 938,
946 (10th Cir. 2008).
So if Board decisions were subject to review
outside the D.C. Circuit, the Seventh, Ninth, and
Tenth Circuits would require the Board’s 18x rate
disparity for religious webcasters to meet RFRA’s
“exceptionally demanding” test. Hobby Lobby, 573
U.S. at 728. The Board’s rates are highly unlikely to
meet that standard. In fact, the government effectively conceded the point below by failing to argue
that applying exponentially higher above-threshold
rates to religious webcasters is the least restrictive
means of achieving a compelling interest. Yet the D.C.
Circuit applied deferential review anyway and
effectively gave the Board’s disparate rates a free
pass. And it did so even though laws that “operate[ ]
so as to make the practice of … religious beliefs more
expensive in the context of business activities impose[ ] a burden on the exercise of religion.” Id. at 710.
The D.C. Circuit said it could not apply strict
scrutiny because the Board made “no record finding”
of a rate disparity between religious stations and NPR
stations. App.668a–69a. In other words, the Board
insulated itself from judicial review by not calculating
a figure that showed the discrimination against
religious webcasters vis-à-vis secular NPR webcasters. The D.C. Circuit was incorrect for four
reasons.
19
First, where “First Amendment issues” are at
stake, “an appellate court has an obligation to make
an independent examination of the whole record.”
Bose Corp. v. Consumers Union of U.S., Inc., 466 U.S.
485, 499 (1984) (quoting N.Y. Times Co. v. Sullivan,
376 U.S. 254, 284–86 (1964)); accord Hurley v. IrishAm. Gay, Lesbian & Bisexual Grp. of Bos., 515 U.S.
557, 567 (1995) (court had “a constitutional duty to
conduct an independent examination of the record as
a whole, without deference”). Had the lower court
conducted such an independent review here, it would
have readily discerned the fee disparity simply by
comparing the Board’s NPR and non-NPR rates,
published in federal regulations. And religious stations demonstrated the rate disparity using the similar 2016-2020 rate structures in their briefing below.
NRBNMLC Final Opening Br. 9–10. So the D.C.
Circuit did not need to engage in complex analysis.
The regulations show this disparity increases
over time because NPR stations’ per-Music-ATH rates
decrease annually, while religious broadcasters’ rates
increase with inflation. Compare 37 C.F.R. 380.31(a),
with id. 380.10(c). And the disparate burden on religious expression is only heightened by the government’s complete subsidization of NPR stations’ fees,
removing even their modest fee burden. 37 C.F.R.
380.32(a); D.C. Cir. J.A.926. This Court’s oversight is
imperative to ensure that the D.C. Circuit takes its
independent-review obligation under RFRA seriously
instead of blindly deferring to agency discretion. Only
this Court can correct the D.C. Circuit’s legal errors,
which harm hundreds of religious broadcasters
nationwide and also the public by skewing “the
modern public square” in favor of secular messaging.
Packingham, 582 U.S. at 107.
20
Second, the government conceded the rate disparity in its brief below, admitting that religious
broadcasters pay “higher” rates than those “agreed to
by the settling noncommercial services,” i.e., secular
NPR stations. Final Br. for Appellees 85. The government cannot seriously dispute that disparity now. In
the D.C. Circuit, the government’s only excuse for
disfavoring religious webcasters was that the NPR
rates are a “settlement” and thus distinct from the
Board’s statutory rates. E.g., id. at 6, 19. That is
inaccurate and irrelevant. Though the NPR rates
were proposed as statutory rates by certain parties,
the Board adopted them as statutory rates binding
nonparties. App.5a–6a; accord D.C. Cir. J.A.1105. So
the published NPR rates are not private settlement
rates but public statutory rates. And the Board
cannot, “directly or indirectly,” give “[p]rivate biases”
against noncommercial religious broadcasters
“effect.” Palmore v. Sidoti, 466 U.S. 429, 433 (1984).
Third, the Board had no reason to find a rate
disparity below, so that absence is irrelevant. The
default royalty rates for noncommercial webcasters
were set—and susceptible of comparison with NPR
rates—only after the Board issued the final
determination at issue here. So Petitioner did not
know, and could not contest, the current rate
disparity before the Board, though Petitioner did note
a wide disparity in the Board’s 2016–2020 rates for
secular
NPR
versus
religious
webcasters.
NRBNMLC’s Corrected Proposed Findings of Fact
and Conclusions of Law, Docket No. 19-CRB-0005WR (2021–2025), Doc. 22819, Part II.D (Oct. 15,
2020).
21
Last, a RFRA or Free Exercise Clause violation
does not depend on an official “finding” of unequal
treatment or substantial burden on religion.
App.668a. Government bureaucrats regularly deny
both. But that has never stopped the Court from
looking beyond “facial discrimination” to protect the
free exercise of religion. Church of the Lukumi Babalu
Aye, Inc. v. City of Hialeah, 508 U.S. 520, 534 (1993).
Take Lukumi, where the City of Hialeah claimed
ordinances banning animal killings were “[f]acial[ly]
neutral” and thus constitutional. Ibid. The Court
disagreed because many “secular killings” were, in
fact, exempt from the ban and “religio[us] [killings]
alone [bore] the burden of the ordinances.” Id. at 544.
Yet despite Lukumi, the D.C. Circuit perpetuated the
Board’s error, saying it makes no difference to the
court under RFRA or the Free Exercise Clause “if the
above-threshold noncommercial webcasters [paying
commercial rates] are almost exclusively religious.”
App.669a (quotation omitted).
Or consider Hobby Lobby, where federal agencies
said the contraception mandate promulgated under
the Affordable Care Act did not burden objectors’
religious exercise. Hobby Lobby, 573 U.S. at 723. This
Court rejected that claim because the regulations had
“substantial economic consequences” for people of
faith seeking “to conduct business in accordance with
their religious beliefs.” Id. at 686 (emphasis omitted).
The same is true here, as federal regulations show,
because the Board’s rates force religious broadcasters
to pay exponentially higher fees—a ratio of 18:1 that
worsens every year— to reach a moderate audience
than the fees secular NPR stations pay.
22
Federal agencies “wield[ ] vast power and touch[ ]
almost every aspect of daily life.” Free Enter. Fund v.
Pub. Co. Accounting Oversight Bd., 561 U.S. 477, 499
(2010). And the D.C. Circuit reviews many of their
decisions. This Court’s guidance is imperative to
correct the D.C. Circuit’s legal errors and ensure that
agencies’ substantial burdens on religion receive the
enhanced judicial scrutiny that RFRA demands.
B. The Court should grant review to correct
the D.C. Circuit’s disregard of Tandon
and resolve the conflict between the
decision below and rulings by the
Second, Sixth, and Ninth Circuits.
Review is also warranted to correct the D.C.
Circuit’s failure to apply the Free Exercise Clause
standard this court articulated in Tandon.
Under the First Amendment, government may
not “prohibit the free exercise” of religion. U.S. Const.
amend. I. This Court’s decision in Employment
Division v. Smith, 494 U.S. 872 (1990), construed this
language to stop government from “burden[ing] …
sincere religious practice pursuant to a policy that is
not ‘neutral’ or ‘generally applicable.’” Kennedy v.
Bremerton Sch. Dist., 597 U.S. 507, 525 (2022)
(quoting Smith, 494 U.S. at 881). For decades, this
Court addressed Smith’s standard in only one other
case, Lukumi, where the government’s departure
from neutrality and general applicability was
obvious.
As a result, “confusion and disagreement” reigned
in the lower courts as to “how [to] apply [the] generalapplicability test when a government edict falls in
between a regulation that was obviously general (as
23
in Smith) and one that was obviously not (as in
Lukumi).” Pleasant View Baptist Church v. Beshear,
78 F.4th 286, 305 (6th Cir. 2023) (Murphy, J.,
concurring in the judgment) (quoting Calvary Chapel
Dayton Valley v. Sisolak, 140 S. Ct. 2603, 2611 (2020)
(Kavanaugh, J., dissenting from denial of application
for injunctive relief)).
This Court attempted to resolve that confusion in
Tandon. There, California imposed restrictions to
combat the COVID-19 pandemic. But these restrictions treated “at-home religious exercise” worse than
“some comparable secular activities,” such as “hair
salons, retail stores, [and] movie theaters.” Id. at 63.
That was true even though those “comparable secular
activities” posed an equal risk to California’s stated
goals as “at-home religious exercise.” Ibid. This Court
clarified that “government regulations are not neutral
and generally applicable … whenever they treat any
comparable secular activity more favorably than
religious exercise.” Ibid.
“In effect … Tandon adopted a ‘most-favored
nation status’ for religious exercise: the government
must treat religious conduct as favorably as the leastburdened comparable secular conduct.” Pleasant View
Baptist Church, 78 F.4th at 303–04 (Murphy, J., concurring in the judgment) (citing Calvary Chapel
Dayton Valley, 140 S. Ct. at 2611 (Kavanaugh, J.,
dissenting)). It provided “clear guidance on how to
decide whether a regulation is neutral and generally
applicable.” Id. at 303. This Court later confirmed
Tandon’s rule, explaining that a law triggers strict
scrutiny “if it ‘prohibits religious conduct while permitting secular conduct that undermines the government’s asserted interests in a similar way.’” Kennedy,
24
597 U.S. at 526 (quoting Fulton v. City of
Philadelphia, 593 U.S. 522, 534 (2021)).
Under Tandon’s “clear guidance,” Pleasant View
Baptist Church, 78 F.4th at 303 (Murphy, J., concurring in the judgment), the Board’s discriminatory
rates fail constitutional muster. The Board imposed
an above-threshold royalty rate on religious broadcasters that is over 18 times higher than the rate the
Board applies to secular NPR-affiliated broadcasters.
The government even conceded in briefing that
religious broadcasters pay “higher” rates than those
“agreed to by the settling noncommercial services,”
i.e., secular NPR stations. Final Br. for Appellees 85.
So the Board does not treat religious broadcasters as
favorably as secular NPR stations even though both
noncommercial groups are engaged in the same
activity—webcasting programming to their listeners.
Other factors exacerbate the discrimination. The
disparity between NPR stations’ and religious stations’ rates worsens over time because NPR stations’
per-Music-ATH rates decrease, while religious
broadcasters’ rates increase with inflation. Compare
37 C.F.R. 380.31(a), with id. 380.10(c). And NPR
stations do not even pay the modest royalty fees the
Board established—the federal government foots the
bill through CPB. 37 C.F.R. 380.32(a); D.C. Cir.
J.A.926–27. (Whether this favorable treatment is
itself a Free Exercise problem is an open question. See
Carson v. Makin, 596 U.S. 767, 778 (2022) (noting
that this Court has “repeatedly held” that government “violates the Free Exercise Clause when it
excludes religious observers from otherwise available
public benefits”).)
25
The Board’s disparate rates trigger strict
scrutiny, as religious webcasters do not enjoy the
same privileges as NPR stations who are the leastburdened comparable secular webcasters. In other
words, the Board’s rates “treat [NPR stations’]
comparable secular activity more favorably than
[faith-based stations’] religious exercise.” Tandon,
593 U.S. at 62. So “[t]his case falls outside Smith” and
strict scrutiny applies. Fulton, 593 U.S. at 533.
The D.C. Circuit turned this requirement on its
head, reasoning that the Board’s “overall rate
structure … applies to all noncommercial webcasters,” App.669a (emphasis added), i.e., not just
religious stations but secular stations, too. But that’s
incorrect. The Board adopted lower rates for both
secular NPR stations and secular student-run
stations. App.5a–6a. Beyond that, “[i]t is no answer
that [the government] treats some comparable
secular … activities as poorly as … religious exercise.”
Tandon, 593 U.S. at 62. And “categories of selection
are of paramount concern when a law has the
incidental effect of burdening religious practice.”
Lukumi, 508 U.S. at 542. Here, the Board approved
far lower royalty rates for hundreds of NPR-affiliated
stations and exponentially higher above-threshold
rates for religious stations. When the government
treats “any comparable secular activity more favorably than religious exercise,” it “trigger[s] strict
scrutiny.” Tandon, 593 U.S. at 62.
By applying deferential review instead of strict
scrutiny, the court of appeals contravened this Court’s
precedents and created a conflict with the rulings of
at least three other circuits. These courts recognize
that “it does not suffice for [officials] to point out that,
as compared to [religious entities], some secular
26
[organizations] are subject to similarly severe or even
more severe” treatment. Roman Catholic Diocese of
Brooklyn v. Cuomo, 592 U.S. 14, 29 (2020)
(Kavanaugh, J., concurring).
In Antonyuk v. Chiumento, 89 F.4th 271, 349–50
(2d Cir. 2023), the Second Circuit addressed a
challenge to a New York law that banned carrying
firearms in places of worship but not in shopping
malls. Shopping malls were also potentially subject to
“shootings,” “a site for constitutionally protected free
speech,” and locations where “vulnerable persons and
children may gather.” Ibid. So, the court said, “[t]hat
[secular] example alone would perhaps be enough to
subject the place of worship provision to strict
scrutiny under Tandon.” Id. at 350. Yet here the D.C.
Circuit wholly disregarded the NPR exception.
Or consider Resurrection School v. Hertel, 35
F.4th 524, 527 (6th Cir. 2022) (en banc), in which the
en banc Sixth Circuit resolved a private school’s
challenge to Michigan’s mask mandate. The court
deemed the case moot but recognized, in contemplating “future masking order[s],” that free-exercise law
is substantially different after this Court’s decision in
Tandon. Id. at 529. Now, the court said, “‘government
regulations’ are subject to strict scrutiny … ‘whenever
they treat any comparable secular activity more
favorably than religious exercise.’” Ibid. (quoting
Tandon, 593 U.S. at 62). So any favored secular
“exceptions” to the general rule—like NPR’s—are key
to the free-exercise analysis. Ibid.; accord Clark v.
Governor of N.J., 53 F.4th 769, 780 (3d Cir. 2022). But
again, the D.C. Circuit ignored the exception for
secular NPR stations.
27
The en banc Ninth Circuit held much the same in
Fellowship of Christian Athletes v. San Jose Unified
School District Board of Education, 82 F.4th 664,
673–75 (9th Cir. 2023) (en banc), which involved a
public school’s derecognition of a Christian student
club. Tandon, the Ninth Circuit said, “clearly rejected
… a ‘targeting’ requirement for demonstrating a Free
Exercise violation.” Id. at 686. “Instead, favoring
comparable secular activity is sufficient” to render a
law not generally applicable and subject to strict
scrutiny. Ibid. “[R]equiring a showing of more,” in the
Ninth Circuit’s view, is “clearly irreconcilable with
intervening Supreme Court authority.” Ibid.
Yet “requiring more” is exactly what the lower
court did. The D.C. Circuit rejected Tandon’s rule that
“[o]nce you have even a single exception that cuts
against the justification of a regulation, religious
exercise must get that same treatment.” Canaan
Christian Church v. Montgomery Cnty., 29 F.4th 182,
205 (4th Cir. 2022) (Richardson, J., concurring in the
judgment). Only this Court may resolve the conflict
and course-correct the lower court, which alone
considers appeals from Board determinations.
C. The D.C. Circuit’s approval of rates
targeting the most effective noncommercial religious webcasters violates the
Free Speech Clause.
This Court also should grant review to correct the
D.C. Circuit’s refusal to apply strict scrutiny to rates
that target some, but not all, noncommercial online
speech. That ruling violates this Court’s precedent
construing the Free Speech Clause, including
Minneapolis Star & Tribune Co. v. Minnesota
Commissioner of Revenue, 460 U.S. 575 (1983).
28
Under the First Amendment, “the Free Exercise
Clause protects religious exercises, whether communicative or not, [and] the Free Speech Clause
provides overlapping protection for expressive religious activities.” Kennedy, 597 U.S. at 523. Religious
stations exist to broadcast faith-based content. So the
First Amendment “doubly protects” their “religious
speech.” Ibid. But that is far from the only free-speech
issue with the Board’s approved rates.
“Regulations that discriminate … among
different speakers within a single medium[ ] often
present serious First Amendment concerns.” Turner
Broad. Sys., Inc. v. FCC, 512 U.S. 622, 659 (1994).
That is especially true when a regulation “favor[s]
some speakers over others” and that “preference
reflects a content preference.” Reed v. Town of Gilbert,
576 U.S. 155, 170 (2015) (quotations omitted). Here,
the Board’s approved rates bolster NPR stations’
secular speech, allowing them to reach a large audience at little-to-no royalty cost, while suppressing
faith-based stations’ religious speech by charging
them exponentially higher rates to reach more than a
minimal audience (i.e., over 218 average listeners). So
the Board’s rates promote secular speech and depress
religious speech online, triggering “strict scrutiny.”
Ibid. (quotation omitted).
Further, the Free Speech Clause bars government
from imposing differential fees targeting a handful of
larger speech-producing entities. That was this
Court’s holding in Minneapolis Star, which invalidated an ink-and-paper tax on a small group of highvolume newspapers. 460 U.S. at 590–91. The Board’s
rates similarly target a subgroup of religious
webcasters who have more than a minimal audience,
i.e., those most effective in spreading their faith-
29
based message. Cf. id. at 591 (“Minnesota’s ink and
paper tax violates the First Amendment not only
because it singles out the press, but also because it
targets a small group of newspapers.”).
While this case involves royalty rates, that is no
impediment. The Court has applied Minneapolis
Star’s free-speech guidance in numerous contexts,
ranging from must-carry provisions for cable operators, Turner, 512 U.S. at 659–61, to laws barring mass
media from printing sexual assault victims’ names,
The Florida Star v. B.J.F., 491 U.S. 524, 540–41
(1989). Accord Pitt News v. Pappert, 379 F.3d 96, 110–
12 (3d Cir. 2004); Time Warner Cable, Inc. v. Hudson,
667 F.3d 630, 638–40 (5th Cir. 2012). So the principle
remains that the Board’s “differential treatment” of
secular and religious noncommercial webcasters “suggests that the goal of the regulation is not unrelated
to suppression of expression.” Minneapolis Star, 460
U.S. at 585. For when the Board’s default noncommercial webcasting above-threshold rates affect only
“a narrowly defined [and almost exclusively religious]
group,” the rates “resemble more a penalty for a few
of the largest [religious] webcasters” than a neutral
fee. Id. at 592.
The D.C. Circuit did not even acknowledge the
disparate targeting by the Board’s rate structure of
some, but not all, of the most effective noncommercial
online speakers by making it far more expensive for
successful religious speakers to communicate—much
less subject that structure to strict scrutiny. The
lower court’s decision thus violates this Court’s Free
Speech Clause jurisprudence prohibiting government
targeting of speaker subgroups. Absent review by this
Court, the Board’s unconstitutional rate structure is
likely to continue in perpetuity.
30
II. The Court should grant review to correct
the D.C. Circuit’s misconstruction of 17
U.S.C. 114(f)(4)’s exclusionary rule, which
conflicts with Copyright Office precedent.
Review is also warranted to correct the D.C.
Circuit’s misreading of 17 U.S.C. 114(f)(4)(C) to
preclude consideration of a rate analysis outside that
statute’s narrow exclusionary scope. Indeed, the
court’s statutory analysis is so deferential to the
Board that it is practically inscrutable. More is
required from Article III courts reviewing decisions by
“hundreds of federal agencies poking into every nook
and cranny of daily life.” City of Arlington v. FCC, 569
U.S. 290, 315 (2013) (Roberts, C.J., dissenting).
Section 114(f)(4)C) renders inadmissible agreements negotiated under various WSAs that were in
force, at the latest, only through 2015. 17 U.S.C.
114(f)(4)(A), (C)-(D); Webcaster Settlement Act of
2008, Pub. L. No. 110-435, 122 Stat. 4974; Webcaster
Settlement Act of 2009, Pub. L. No. 111-36, 123 Stat.
1926; Small Webcaster Settlement Act of 2002, Pub.
L. No. 107-321, 116 Stat. 2780. In addition, the
Register of Copyrights—in an opinion that binds the
Board, 17 U.S.C. 802(f)(1)(B)(i)—interpreted 17
U.S.C. 14(f)(4)(C) as barring only the consideration of
“WSA agreements themselves,” Reg. Op. 3–4.
According to the Register, the Board may consider the
“general effect on the marketplace or particular
negotiations” of WSA agreements, as well as nonWSA agreements even if “copied verbatim from,”
“substantively identical to,” or “influenced by” WSA
agreements. Reg. Op. 3–4, 11, 14. In other words, only
pre-2016 agreements themselves are inadmissible,
not analyses of their effects.
31
Yet the Board invoked section 114(f)(4)’s evidentiary bar to exclude not a WSA agreement but a
SoundExchange-described analysis of NPR royalty
rates for 2016-2020—after all WSA agreements had
expired. D.C. Cir. J.A.1569; accord D.C. Cir.
J.A.1376–77, 1568–70, 1616. That analysis reflected
SoundExchange’s attempt to place a dollar figure on
the value of the various fees and other benefits
reflected in 2016–2025 NPR rates—not rates in force
during any WSA period. D.C. Cir. J.A.1569. And the
non-WSA nature of SoundExchange’s document was
confirmed by the document’s own markings stating its
purpose. D.C. J.A.1616.
This rate analysis was key support for the religious broadcasters’ position. App.663a. Despite the
Register’s narrow construction of section 114(f)(4), the
Board applied the Copyright Act’s evidentiary bar in
expansive terms, refusing to consider SoundExchange’s rate analysis for NPR stations because it
used expired WSA rates to value non-WSA rates for
the 2016-2020 term. D.C. Cir. J.A.1376–77.
The D.C. Circuit affirmed, holding that “the
Board was not required to accept [the NRBNMLC’s]
inference that the rates were actually used” in
valuing “non-WSA” NPR rates. App.663a. But no
inference is needed to reach that conclusion—SoundExchange itself characterized the analysis as valuing
non-WSA NPR rates, and the document’s own
markings reinforce that conclusion. D.C. Cir.
J.A.1568–70, 1616. This Court should grant review to
correct the Board’s and lower court’s misconstruction
of 17 U.S.C. 114(f)(4), in conflict with the Register’s
binding interpretation. 17 U.S.C. 802(f)(1)(B)(i).
32
III. The D.C. Circuit’s affirmance of the Board’s
arbitrary and unexplained departures from
precedent on the burden of proof and expert
testimony violates the APA.
Finally, review is warranted to correct the Board’s
arbitrary and unexplained departures from its
precedent in violation of the APA. Under that statute,
courts “hold unlawful and set aside agency action,
findings, and conclusions” that are “arbitrary,
capricious, an abuse of discretion, or otherwise not in
accordance with law.” 5 U.S.C. 706(2)(A). Agency
action is arbitrary and capricious when it reflects “an
unexplained inconsistency” or “change from [prior]
agency practice.” Encino Motorcars, LLC v. Navarro,
579 U.S. 211, 222 (2016) (cleaned up). While “[a]gencies are free to change their existing policies,” they
must provide “a reasoned explanation for the change”
and “display awareness [they are] changing position.”
Id. at 221 (cleaned up). Agencies cannot “depart from
a prior policy sub silentio.” FCC v. Fox Television
Stations, Inc., 556 U.S. 502, 515 (2009).
The D.C. Circuit blessed two such arbitrary and
unexplained administrative changes: (1) a new per se
requirement of expert testimony to demonstrate a
proffered rate benchmark’s comparability and (2) the
burden of proof regarding adjustments to such
benchmarks. Review is warranted to correct these
APA violations and safeguard rate-setting participants against the Board changing its rules midstream
for no good reason, in ways that favor copyright
holders and disfavor religious webcasters.
33
A. The Court should grant review to correct
the lower court’s APA violation in allowing the Board to impose an unexplained
new expert-testimony requirement midstream.
The Board and its predecessor, the Copyright
Arbitration Royalty Panel (CARP), long held that
benchmark agreements involving comparable rights
to those valued in a rate-setting proceeding are the
best evidence of willing-buyer-willing-seller rates.
E.g., Report of the CARP at 38–39, 43, Docket No.
2000-9 CARP DTRA 1&2 (Feb. 20, 2002),
https://bit.ly/47TLmQM (CARP Report); Web II, 72
Fed. Reg. at 24091–92, 24095. The Board’s comparability test assesses whether a proposed benchmark
involves similar buyers, sellers, and statutory rights
as those involved in the current rate-setting
proceeding.
For instance, where “the buyers are DMCA
[Digital Millennium Copyright Act]-compliant services, the sellers are record companies, and the
product sold consists of blanket licenses for each
record company’s repertory of sound recordings,” the
CARP said that “the most reliable benchmark rate
would be established through license agreements
negotiated between these same parties for the rights
described.” 6 CARP Report at 24, 44. The rates agreed
to by SoundExchange and NPR—which the Board
adopted as statutory rates—easily satisfy this
Accord, e.g., Determination of Royalty Rates and Terms for
Transmission of Sound Recordings by Satellite Radio &
“Preexisting” Subscription Services, 83 Fed. Reg. 65210, 65214
(Dec. 19, 2018); Web III Remand, 79 Fed. Reg. at 23111; Web I,
67 Fed. Reg. at 45245.
6
34
comparability test vis-a-vis noncommercial webcasting rates, as they were agreed to by similar
noncommercial webcasters and identical record
company sellers, and they involve the same statutory
rights. App.5a–6a.
Even though the buyers, sellers, and licensed
rights are plain from the face of the proposed NPR
rate agreement, the Board refused to take that benchmark agreement at face value. Instead, it invented a
new and previously unannounced requirement that
parties offer expert testimony to show a benchmark’s
comparability. App.520a–22a. That arbitrary decision
contravenes robust prior Board precedent, which
accepted similar benchmarks without requiring
expert testimony. Just one example is the Board’s
previous acceptance of Sound Exchange’s own settlement with a noncommercial entity as “persuasive
evidence that SoundExchange’s proposal satisfies the
willing buyer/willing seller standard” without discussing any expert testimony regarding comparability.
Web III Remand, 79 Fed. Reg. at 23111, 23120, 23123;
accord Web I, 67 Fed. Reg. 45252; Web IV, 81 Fed. Reg.
at 26355–56, 26393–94, 26405.
The Board’s new, per se rule mandating expert
testimony to establish a benchmark’s comparability is
arbitrary and capricious, for three reasons.
First, as explained above, agencies cannot change
the rules with no acknowledgment or explanation.
That principle is doubly true in circumstances like
those here, where the Board made the experttestimony change after-the-fact, and when parties
who relied on the existing rubric had no opportunity
to comply with the new standard.
35
Second, the Board’s expert-testimony requirement is the definition of arbitrary. Comparing buyers,
sellers, and licensed rights is not a matter of
economics or other special expertise. It simply
requires identifying parties to, and rights licensed in,
a benchmark. No expert is necessary.
Last, noncommercial and smaller entities,
including many religious webcasters, are hardpressed to pay for prohibitively expensive expert
testimony, which commercial giants may readily
afford. So the Board’s new rule effectively bars
entities lacking resources to hire such experts from
participating in rate-setting proceedings. That will
leave SoundExchange’s rate proposal uncontested by
this important segment of the marketplace.
Yet the D.C. Circuit affirmed the Board’s
arbitrary new per se rule, feigning that it should come
as no surprise because the Board “previously
demanded expert testimony in an analogous
situation.” App.660a (citing Web IV, 81 Fed. Reg. at
26,327). But the referenced scenario involved
analyses regarding the economic effect of webcasting
services on other forms of music consumption, a
technical matter where expert testimony was
warranted. Web IV, 81 Fed. Reg. at 26327. That
situation is not remotely analogous to this one, which
merely involves reading an agreement to identify the
parties and licensed rights, and comparing them with
the parties and rights in the current rate proceeding.
Here, the inquiry requires no economic expertise,
merely the sort of apples-to-apples comparing that
agencies (and courts) do all the time—a comparison
the Board performed routinely in the past without
expert testimony.
36
The Board’s imposition of a novel experttestimony rule midstream, with no explanation or
acknowledgment, was arbitrary and capricious. And
the lower court’s extreme deference to the agency was
legally erroneous and robbed the APA of its force. Cf.
Kisor v. Wilkie, 139 S. Ct. 2400, 2417–19 (2019) (rejecting courts’ unbounded deference to agencies); id.
at 2425 (Gorsuch, J., concurring in the judgment)
(same). This Court should grant review and hold the
Board to the same level of oversight that courts give
other agencies—not a blank check.
B. Review is needed to correct the Board’s
inversion of the burden of proof without
explanation by requiring benchmark
proponents, rather than challengers, to
quantify proposed adjustments.
When a party challenges a benchmark agreement
as noncomparable, the Board’s longstanding practice
was to place the burden of proof on the challenger to
quantify proposed adjustments to an otherwise proper royalty benchmark. The Board said that if a party
“seek[ing] to increase (or decrease) an otherwise
effective benchmark rate to account for other items of
potential value cannot or has not provided evidence of
such value,” the Board “cannot arbitrarily adjust or
ignore that otherwise proper and reasonable benchmark.” Web IV, 81 Fed. Reg. at 26386. In other words,
the Board’s established practice was to accept the
royalty benchmark without adjustment if a challenger had “not quantified or otherwise estimated the
monetary value of [any alleged] differences.” Web III
Remand, 79 Fed. Reg. at 23111–12, 23114. And the
D.C. Circuit affirmed this principle just six years ago.
37
E.g., SoundExchange, Inc. v. Copyright Royalty Bd.,
904 F.3d 41, 52 (D.C. Cir. 2018).
Yet here, the Board did an about-face in analyzing
Petitioner’s proposed rate benchmark. With no
prewarning or explanation, the Board required
NRBNMLC, the rate benchmark’s proponent, to
anticipate and quantify various adjustment factors
suggested by SoundExchange, the benchmark’s
challenger. App.521a–22a, 532a–36a. And the D.C.
Circuit affirmed this arbitrary departure from
precedent, even though the Board changed the
fundamental burden of proof in its final
determination—when it was too late for NRBNMLC
to offer any argument or evidence to meet the Board’s
newly inverted burden. App.659a–61a.
The lower court’s ruling is impossible to square
with the APA and this Court’s precedent. This Court’s
review is necessary to protect rate-setting participants’ basic procedural rights and forestall arbitrary
rule changes disfavoring religious broadcasters in
future rate-setting proceedings.
38
CONCLUSION
The petition for a writ of certiorari should be
granted.
Respectfully submitted,
KARYN K. ABLIN
FLETCHER, HEALD &
HILDRETH, PLC
1300 N. 17th Street
11th Floor
Arlington, VA 22209
(703) 812-0443
CODY S. BARNETT
ALLIANCE DEFENDING
FREEDOM
44180 Riverside Pkwy
Lansdowne, VA 20176
(571) 707-4655
cbarnett@adflegal.org
FEBRUARY 2024
JOHN J. BURSCH
Counsel of Record
ALLIANCE DEFENDING
FREEDOM
440 First Street NW
Suite 600
Washington, DC 20001
(616) 450-4235
jbursch@ADFlegal.org
RORY T. GRAY
ALLIANCE DEFENDING
FREEDOM
1000 Hurricane Shoals
Rd. NE, Ste. D-1100
Lawrenceville, GA 30043
(770) 339-0774
rgray@ADFlegal.org
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.