B-237546, Jan 12, 1990

B-237546: Jan 12, 1990

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The Library of Congress is authorized to charge subscribers of MARC tapes and records a fee equal to its cost plus ten percent. The Library is not presently authorized to charge a fee in an amount greater than its cost plus ten percent or to vary its fees among subscribers. The Library is authorized to set fees to reflect its direct and indirect costs. We are of the opinion that while the Library is authorized to set fees to reflect its direct and indirect costs. The Library is not presently authorized either to charge a fee in an amount greater than its cost plus ten percent or to vary its fees among subscribers. The Library's authority to charge a fee for its MARC tapes and records is found in 2 U.S.C.

B-237546, Jan 12, 1990

MISCELLANEOUS TOPICS - Federal Administrative/Legislative Matters - Congress - Library services - Fees DIGEST: Under 2 U.S.C. Sec.150, the Library of Congress is authorized to charge subscribers of MARC tapes and records a fee equal to its cost plus ten percent. The Library is not presently authorized to charge a fee in an amount greater than its cost plus ten percent or to vary its fees among subscribers. The Library is authorized to set fees to reflect its direct and indirect costs.

Dr. James H. Billington Librarian of Congress Dr. Billington:

In your letter of October 17, 1989, you requested our opinion on the authority of the Library of Congress (Library) to charge fees to subscribers of MARC tapes and records. In subsequent telephone conversations with your office, we agreed to address the following three questions. First, does either section 150 of title 2 or section 9701 of title 31, United States Code, authorize the Library to charge a fee in an amount greater than the Library's cost plus ten percent? Second, may the Library vary the amount of the fee among subscribers depending either upon a subscriber's ability to pay or the commercial use of the Library's data? And third, do the above provisions authorize the Library to base its fees on all direct and indirect costs associated with the production and preparation of MARC tapes and records?

As discussed below, we are of the opinion that while the Library is authorized to set fees to reflect its direct and indirect costs, the Library is not presently authorized either to charge a fee in an amount greater than its cost plus ten percent or to vary its fees among subscribers.

Fees Greater Than Cost Plus Ten Percent

Your first question stems from your proposal to charge a fee greater than the Library's cost plus ten percent to subscribers of MARC tapes and records who plan to commercially distribute the Library's data. The Library's authority to charge a fee for its MARC tapes and records is found in 2 U.S.C. Sec.150 (1988). This provision authorizes the Librarian of Congress

"to furnish to such institutions or individuals as may desire to buy them, such copies of the card indexes and other publications of the Library as may not be required for its ordinary transactions, charge for the same a price which will cover their cost and ten per centum added, and all moneys received by him shall be deposited in the Treasury and shall be credited to the appropriation for necessary expenses for the preparation and distribution of catalog cards and other publications of the Library."

2 U.S.C. Sec.150 (1988) /1/ The statute clearly authorizes the Library to sell the MARC tapes and records for a fee equal to the Library's "cost and ten per centum added." There is nothing in either the language of the statute or its legislative history to suggest that the Library is authorized to charge a fee in any greater amount. "There is no safer nor better settled canon of interpretation than when language is clear and unambiguous it must be held to mean what it plainly expresses." Sutherland Stat. Const. Sec. 46.01 (4th ed. 1984), citing Swarts v. Siegel, 117 F. 13, 18-19 (1902) and United States v. McFillin, 487 F.Supp. 1130, 1132-33 (D. Md. 1980). Your fee proposal, therefore, would need other statutory authority.

In this regard, you cite section 9701 of title 31, United States Code, as authority for the Library to charge a fee in an amount greater than cost plus ten percent. Section 9701, commonly referred to as the User Charge Statute, authorizes federal agencies to prescribe and collect fees for their services. The statute generally provides that fees are to be fair and based on "the costs to the government," "the value of the service or thing to the recipient," "public policy or interest served," and "other relevant facts". 31 U.S.C. Sec.9701(b).

You argue that because section 9701(b) authorizes fees based on the value of the service to the recipient, you may charge a "redistribution" fee in addition to the cost plus ten percent fee authorized by section 150. disagree.

As you point out, section 9701(c) /2/ authorizes an agency to redetermine charges calculated under other authority so long as the other authority does not expressly constitute the only source of assessments for a service. See 55 Comp.Gen. 456, 461 (1975); 48 Comp.Gen. 24 (1968). See also Yosemite Park and Curry Co. v. United States, 686 F.2d 925 (Ct. Cl. 1982). Although not entirely clear, we can concede, for purpose of discussion, that Congress did not intend section 150 to be the exclusive source of authority to the Library for the assessment of fees. However, in our view, regardless of the profit a subscriber may derive from distributing the MARC tapes and records, section 9701 does not authorize the Library to charge a fee greater than its cost of preparing and producing the MARC tapes and records.

Courts have consistently construed section 9701 to limit fees to an amount reflecting the agency's cost of rendering "a specific benefit ... to a particular entity." Florida Power & Light Co. v. United States, 846 F.2d 765, 767 (D.C. Cir. 1988), cert. denied *** U.S. ***, 109 S.Ct. 1952 (1989). In practical terms, the fee may not exceed the agency's cost of providing the service. Central S. Motor Freight Tariff Ass'n v. United States, 777 F.2d 722, 729 (D.C. Cir. 1985); Electronic Indus. Ass'n v. FCC, 554 F.2d 1109, 1114-15 (D.C. Cir. 1976) (holding that section 9701 authorizes full cost recovery). The fee must reasonably relate to, and may not exceed the value of the service provided the recipient, whatever the agency's cost may be. Miss. Power & Light v. NRC, 601 F.2d 223, 230 (5th Cir. 1979), cert. denied, 444 U.S. 1102 (1980). However, the value of a service provided a recipient is measured by the cost to the agency of providing the benefit, not by the derivative value in the hands of the recipient of the benefit provided. Electronic Indus. at 117; National Ass'n of Broadcasters v. FCC, 554 F.2d 1118, 1133 (D.C. Cir. 1976). Indeed, courts have specifically rejected the argument that section 9701 authorizes an agency to set fees based on the profit, or "value," the recipient may immediately or eventually derive from the benefit conferred. See National Cable Television Ass'n v. United States, 554 F.2d 1094, 1107- 08 (D.C. Cir. 1976).

Varying Fees

Your second question is whether the Library may vary its fees among subscribers. You propose to vary your fees based either on a subscriber's ability to pay or on a subscriber's commercial use of the data, including, for example, the amount and type of distribution planned for the Library's tapes and records. /3/ Assuming that the Library's cost of preparing the tapes and records is the same for each subscriber, the Library does not have authority to vary its fees.

Under 2 U.S.C. Sec.150, the Library may charge subscribers of its MARC tapes and records a fee equal in amount only to its cost plus ten percent. As we suggested earlier, there is nothing in the language of the statute or its legislative history to authorize the Library to vary its fees. To the contrary, the statute is clear that the basis of the Library's fee is the Library's cost, plus ten percent, and no distinction is made among purchasers. Section 150 authorizes the Library to sell the tapes, and prescribes the price the Library must charge for the transaction. Assuming then that the cost of preparing the Library material is the same for each subscriber, the Library has no authority under this provision to vary its fees based either on a subscriber's ability to pay or planned use of Library material.

Similarly, under 31 U.S.C. Sec.9701, the Library has no authority to vary its fees. As we noted earlier, the courts have construed section 9701 to preclude fees based solely on revenues, although graduated fees reflecting graduated costs are permissible. See, e.g., Electronic Indus. at 1116. Therefore, since we assume that the Library's costs are the same for each subscriber, the Library has no authority to vary its fees based on a subscriber's revenues or ability to pay.

Nor could the Library assess a user charge, such as in your proposal, to reflect the value of the subscriber's commercial use of the data. As we have already said, under the User Charge Statute, fees must bear a reasonable relationship to cost, see, e.g., Yosemite at 932, and courts have stated that "value to the recipient" is measured by the cost of providing the benefit. Electronic Indust. at 1117; National Ass'n of Broadcasters at 1133.

Direct and Indirect Costs

You explain that your current fees are well below the Library's actual cost. Your third question, then, is whether the Library is authorized to base its fees on all the direct and indirect costs to the Library associated with the production and preparation of MARC tapes and records. Either statute discussed above authorizes the Library to include in its fees all the Library's direct and indirect costs, including those you identified in your October letter.

With respect to the User Charge Statute, courts have permitted the inclusion of all direct and indirect costs as appropriate "costs". Miss. Power at 232; Electronic Indus. at 117. Indeed, as originally enacted, section 9701(b)(2)(A) authorized agencies' fees to be based on "direct and indirect costs to the Government." Congress omitted the phrase "direct and indirect" as surplusage in the 1982 recodification of title 31. Moreover, Office of Management and Budget Circular No. A 25, Sept. 23, 1959, endorsed by the Court as the proper construction of the User Charge Statute, Federal Power Comm'n v. New England Power Co., 415 U.S. 345, 351 (1976), states that the cost computation shall cover the direct and indirect costs to the government, such as salaries, a proportionate share of the agency's management and supervisory costs, and the cost of research.

Although we found nothing either in the statutory language or in the legislative history of 2 U.S.C. Sec.150 that addresses the definition of "cost" (and no court has addressed this issue), we think it similarly covers all direct and indirect costs to the Library associated with the sale of MARC tapes and records. We have repeatedly held, for example, that under the Economy Act, 31 U.S.C. Sec.1535, the phrase "actual cost" includes both direct and indirect costs. 56 Comp.Gen. 275 (1977) (administrative overhead included); 38 Comp.Gen. 734 (1959) (depreciation expense included), founded in law or policy to read "cost" as used in 2 U.S.C. Sec.150 differently.

To summarize, we are of the opinion that the Library is authorized to set fees to recover the direct and indirect costs associated with the production and preparation of MARC tapes and records. The Library does not have authority, however, either to charge a fee in an amount greater than its costs plus ten percent or to vary its fees among subscribers. the extent that 2 U.S.C. Sec.150 as we have construed it does not permit the Library to fully protect or recover the pecuniary value of its MARC tapes and records, your recourse is to pursue remedial action with Congress.

/1/ You explain in your letter that MARC tapes and records are the current equivalent of the card indexes referenced in 2 U.S.C. Sec.150 (1988).

/2/ Section 9701(c) provides that: "This section does not affect a law of the United States-- ...

(2) prescribing bases for determining charges, but a charge may be redetermined under this section consistent with the prescribed bases."

/3/ Any proposal to vary fees based on a subscriber's use of the data raises copyright law concerns. Federal copyright protection is not available for the Library's data in the United States since it is a "work of the United States." 17 U.S.C. Sec.105 (1988). The basic premise of this statutory provision is that works produced for the United States by its officers and employees should not be subject to copyright. See, e.g., Sony Corp. v. Universal City Studios, 464 U.S. 417, 443 n. 23 (1984). Thus, the enforcement of licensing agreements that would reimburse the Library for lost sales, i.e., commercial resales by subscribers, appear questionable in light of the policy announced in the Copyright Act.

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