Eisenhower Executive Office Building, home to the Office of Science and Technology Policy (Official White House photo, by Carlos Fyfe; Public Domain; Source: Wikimedia Commons)
Authors Alliance and SPARC have released the second of four planned white papers addressing legal issues surrounding open access to scholarly publications under the 2022 OSTP memo (the “Nelson Memo”). The white papers are part of a larger project (described here) to support legal pathways to open access.
This first paper discussed the “Federal Purpose License” and how it supports federal public access policies under the Nelson Memo. This second paper discusses legal landscape surrounding the Federal Purpose License and the public access policies in light of concerns that the policies are not permissible government actions. The white paper explains why they are.
The White Paper is available here. Supporting materials, previous papers, and other formats are available here.
In the last couple of months there has been a lot of change in the Federal grants space, but so far the public access policies, including the latest announced by the Nelson Memo, are still in place. Several agencies have already implemented their responses to the Nelson Memo through regulation; the rest are due to finish the task later this year.
For Federal agencies to act permissibly, their actions must be grounded in valid Congressional delegation of authority. Congress can’t escape its limitations by delegating beyond its own authority, so to be valid delegation the actions also must be permissible actions for Congress. The first part of the paper examines Congress’s constitutional power to provide grants for research and development, finding support under both the Spending and Progress clauses.
The Federal Purpose License places a condition on acceptance of grant funds. Congress doesn’t have unlimited power to place conditions on grants, as established by the Supreme Court in South Dakota v. Dole. However, the Federal Purpose License safely falls within the limitations placed by Dole. In particular, the Federal Purpose License as a condition does not violate either the First Amendment’s Speech Clause or the Fifth Amendment’s Takings Clause.
The second part of the paper looks at Congress’s delegation of authority and the agencies’ development of the policies. The paper explains how Congress expressly—and permissibly—delegated power and obligation to create the prototype of the public access policy to the National Institutes of Health, and how subsequent application of the policy to the rest of the grant-making agencies is strongly supported by principles of implicit delegation, and were established through appropriate rulemaking. Though the recent case of Loper Bright Enterprises v. Raimondo may require agencies to satisfy a somewhat higher burden when defending their actions, the Supreme Court’s abandonment of the “Chevron doctrine” does nothing to change the permissibility of the public access policies or the use of the Federal Purpose License.
The next paper will examine the interaction between institutional intellectual property policies and federal public access policies, and the final paper will discuss issues surrounding article versioning. Watch this space for more!
NIH cuts are an emergency for hospitals (Photo: Eric Harbeson, CC-BY)
A little over a week ago, the National Institutes of Health issued a new guidance policy on indirect costs in Federal grant awards. Presently, NIH negotiates the indirect cost rate with individual institutions through a carefully regulated process that ensures an appropriate rate for a given institution’s unique circumstances, while also providing robust safeguards and auditing requirements to ensure that the rate is no greater than necessary. The new policy—similar to what the previous Trump administration proposed in 2017—would replace the negotiated rates with a standard rate of 15%. For comparison, the average rate among grantee institutions is around 27%, and many of the top research institutions currently have negotiated rates exceeding 50% or even 60%, which amount to tens of millions of dollars in some cases. The rate cap would apply both prospectively to new grants, as well as to all in-progress grants.
Indirect costs are the institutional expenditures that cannot be attributed to a particular research project. These are the costs of keeping the lights on, and the lab clean, and the MRI machine running. They pay for biocontainment labs, or clinical testing facilities, or computer systems to analyze data, facilities each of which might be shared by multiple NIH-funded projects. Though indirect, they are significant costs incurred by the institution and are an unavoidable part of conducting grant-funded research. From a government efficiency standpoint they are also highly desirable, in that they reduce unnecessary redundancy as well as exceedingly time-consuming and expensive bookkeeping.
Support for indirect costs in grant funds is essential to institutions’ ability to take part in Federal grant-making. If the new guidance policy is allowed to stand, universities collectively expect to lose many hundreds of millions of dollars from the move, losses which in turn will lead to decreases in important, sometimes life-saving research. This new policy has raised serious concerns among affected institutions.
To say things are moving quickly in Washington, these days, would be an understatement. The administration has, of course, been releasing a flurry of sometimes sweeping executive orders. The pace is dizzying. In this case, in the space of just four days—two of which were a weekend—the NIH issued its guidance; at least threedifferentlawsuits were filed, each in the District of Massachusetts; and a judge entered a temporary restraining order on the guidance. A hearing on the restraining order is scheduled for February 21 (the cases have not yet been consolidated, though they almost certainly will be if they proceed).
In our view, there are multiple clear violations of law in the guidance, both of statute and of the Constitution. While we await the hearing, we thought it worthwhile to highlight to authors some of legal challenges it will face. Many others have already written on this topic—for more responses to the guidance policy, we recommend COGR’s collection of responses from the grantee community, as well as this post by Holden Thorpe in Science and this post from Lisa Janicke Hinchliffe in Scholarly Kitchen (which draws important connections to scholarly publishing).
Some Fact-Checking
At the outset, an examination of the issuing guidance reveals holes in the chain of authority that anticipate problems with the new order. For example, the guidance asserts that “NIH may, however, use ‘a rate different from the negotiated rate for either a class of Federal awards or a single Federal award.’ 45 C.F.R. 75.414(c)(1).” The citation at the end refers to Title 45, part 75 of the Code of Federal Regulations, where NIH’s parent agency, the Department of Health and Human Services (HHS), codifies its grant guidelines. Here is the entire paragraph:
“Negotiated indirect cost rates must be accepted by all Federal agencies. A Federal agency may use a rate different from the negotiated rate for either a class of Federal awards or a single Federal award only when required by Federal statute or regulation, or when approved by the awarding Federal agency in accordance with paragraph (c)(3) of this section.” 45 C.F.R. § 75.414(c)(1) (emphasis added).
Note that this paragraph doesn’t say NIH generally may use a different rate, as the guidance appears to claim. Rather, it states the exception—they may not do so unless they are required to by statute or another regulation. Alternatively, under paragraph (c)(3) of the regulation, NIH must “implement, and make publicly available, the policies, procedures and general decision making criteria that their programs will follow to seek and justify deviations from negotiated rates.” (emphasis added). The paragraph doesn’t give NIH general permission, it constrains them.
The notice’s very next sentence provides arguably its most egregious claim, namely that the cap may be applied retroactively to existing grants, in defiance of institutions’ reliance on their contractually negotiated rates. The notice states that “NIH may deviate from the negotiated rate both for future grant awards and, in the case of grants to institutions of higher education (‘IHEs’), for existing grant awards. See 45 CFR Appendix III to Part 75, § C.7.a; see 45 C.F.R. 75.414(c)(1).” The citation, to Appendix III of Part 75, purports to support the claim that NIH may unilaterally, and retroactively, alter the terms of a contract. Here is the cited paragraph, in its entirety:
“Except as provided in paragraph (c)(1) of § 200.414, Federal agencies must use the negotiated rates in effect at the time of the initial award throughout the life of the Federal award. Award levels for Federal awards may not be adjusted in future years as a result of changes in negotiated rates. “Negotiated rates” per the rate agreement include final, fixed, and predetermined rates and exclude provisional rates. “Life” for the purpose of this subsection means each competitive segment of a project. A competitive segment is a period of years approved by the Federal awarding agency at the time of the Federal award. If negotiated rate agreements do not extend through the life of the Federal award at the time of the initial award, then the negotiated rate for the last year of the Federal award must be extended through the end of the life of the Federal award.” (emphasis added)
Once again, the cited text not only does not support the claim, but if anything forecloses it. This paragraph does not purport to give permission to change an existing agreement. To the contrary, the paragraph requires NIH to respect the negotiated rate for the life of the award. (Sec. 200.414(c)(1), referenced in the appendix, points to the OMB Uniform Guidance, and is essentially the same as HHS’s Sec. 75.414(a), which is discussed above).
The end result is that the notice rests its legal authority to carry out the policy on regulations that in fact work against the new policy. Not a great start.
Violation of law and policy
Though federal agencies are ultimately under the direction of the President, this does not give the executive branch unfettered authority to dictate an agency’s policies. Agencies act as agents for carrying out the laws passed by Congress. This means that Congress has the last word as to what an agency is authorized to do or not do, or must do or not do. In fact, every act of an agency must, in some way, be tied to an act of Congress (admittedly, the connection is often fairly loose).
Congress has actually prohibited the president—this president—from capping the negotiated indirect cost rates. In 2017, when the president pressed Congress to limit indirect costs to 10% of the grant award, Congress not only rejected the idea, but in Sec. 226 of the Consolidated Appropriations Act of 2018 (p.394) they forbade the president from pursuing the policy. Under Sec. 226 rider, Congress provided that the existing regulations pertaining to indirect costs are to continue, and that the department may not expend funds in pursuing a policy to the contrary. The rider has persisted in every appropriations bill since, including the most recent one.
The policy also is contrary to HHS’s own regulations that govern new policies such as this one. The notice purports to “implement, and make publicly available, the policies, procedures and general decision making criteria” as required by 45 CFR 75.414(c)(3) (discussed above), but in fact it only satisfies one of the three requirements. The notice publishes a policy (the 15% rate cap), but it does not make the procedures or general criteria available as required by the regulation. And publication must occur prior to the policies’ effective date, not simultaneously with it.
Under the Administrative Procedure Act (APA), in place since 1946, Congress has established the courts’ jurisdiction to review agency actions, such as this one, and to “decide all relevant questions of law.” The courts are empowered to set aside agency actions that are not in accordance with law, whether because they are contrary to the agency’s own regulations, acts of Congress, or the Constitution. As the three complaints observe, Congress has forbidden NIH from changing the system of negotiated indirect costs, and the new policy is also in violation of the agency’s own regulations.
Constitutional violations
The Constitution also has something to say about the guidance. In addition to the separation of powers problems, related to Congress’s actions discussed above, the retroactive nature of the guidance raises problems under the Fifth Amendment’s due process and takings clauses. These problems arise because the guidance professes to alter the indirect costs for existing grants, effectively unilaterally rewriting the grant agreements without regard to the institutions’ justified reliance on the binding nature of the agreements.
Contracts are a form of property, and contracts are binding on the U.S. Government to the same extent that they are on private parties. Though grant agreements are not formally contracts per se, the Supreme Court has observed that legislation enacted under the Spending Clause, as all grants are, is “much in the nature of a contract.” The grant agreements bind the grantee institution to numerous terms and conditions (some of which could be said to be consideration for the award) in return for federal financial support for the project. The grant agreements are clearly binding on both parties, and renegotiation of a contract requires consent of both parties.
States, for their part, are explicitly forbidden from legislating their way out of contractual agreements, such as the NIH purports to do, under the Constitution’s Contracts Clause, but that clause does not apply to the Federal government. Still, the Federal government is prohibited, under the Fifth Amendment, from taking private property (and again, contracts are property) for public use without just compensation, and from depriving a party of property (for any purpose) “without due process of law.” Grantee institutions rely on the government’s promise to follow through on the agreed upon, negotiated indirect cost rate, and that reliance interest is in some cases hundreds of millions of dollars. NIH’s implementing this new policy, and with no notice (much less a hearing or opportunity to comment as the APA would require) sounds a lot like deprivation of property without due process.
Conclusion
NIH-funded research has produced an astonishing amount of highly significant, impactful research, and its role in the biomedical research ecosystem is pivotal. The authors NIH has funded have won every major prize in the field many times over, and their research has saved and improved countless lives. But NIH’s track record is only as strong as its grantees—authors who do the research and the institutions that employ them. If NIH is permitted to recklessly cut its promised support to those grantees, the inevitable resulting loss of research will be a great detriment to the scientific community, both home and abroad, and to Americans in general.
Every January 1st the United States adds a new crop of works to its public domain. Though the term of copyright is very long, the Constitution provides that it must—eventually—end. This transition is arguably the most important moment in the life of a creative work, excepting only its initial creation. The end goal of copyright in the first place is to encourage the creation of new works, and the public domain is the shared pool out of which those new works may be freely forged. For a great explainer about the value of the public domain, check out the annual Public Domain Day post by our friends at the Center for the Study of the Public Domain! In this post, we thought we would do something a little different from our normal fare and spend some time talking about sound recordings, which only started entering the public domain in the last few years.
As a general rule, works published prior to 1978 have a maximum copyright term of 95 years. Thus (because copyright terms run through the end of the calendar year) on January 1 all works first published in 1929 will be free to use. Well, almost all works. From a copyright perspective, sound recordings are a bit different in several ways, and one way is they are subject to somewhat longer protection. The discrepancy illustrates the curious space sound recordings occupy in US copyright law.
The history of why sound recordings are treated differently is very interesting. It is also too involved to do it justice in a blog post. For thorough treatments of the subject, check out the fascinating articles by Bruce Epperson and Zvi S. Rosen. Each goes into depth on the legal conflicts that arose as artists, scholars, inventors, and policymakers struggled to understand and form policy around the emergence of two new media—sound recordings and piano rolls—that were unlike anything previously known in history.
In short, federal copyright law has only protected sound recordings since February 15, 1972, which was the effective date of the Sound Recordings Act of 1971. Recordings made since that date have been subject to the same laws as any other copyrightable work from the moment they were fixed. However, the Act was not retroactive, so recordings fixed before that date were excluded from federal protection. The Copyright Act of 1976, which completely revised U.S. copyright law, preserved that dichotomy: recordings fixed after 1972 were included; pre-1972 recordings were not.
Though pre-1972 recordings were not protected by federal law, states were free to protect them. States protected pre-1972 recordings perpetually through their common law (as though they unpublished works, which prior to the 1976 act were also protected by state common law), with most states then codifying that protection in criminal statutes. Though state protection was in theory perpetual, the 1976 Act nonetheless put a time limit on that protection—all state protection for pre-1972 recordings was to be preempted and cease in 2047 (75 years after the Sound Recordings Act). The Copyright Term Extension Act later extended that date by 20 years. Thus, all pre-1972 recordings, regardless of how old they were, would remain under state protection until 2067. Had the situation not changed, by the time any domestic recordings entered the public domain, the oldest recording would have been more than 200 years old!
The cabining of pre-1972 recordings was narrowed in 1994, when the Uruguay Round Agreements Act (URAA) took effect. The URAA amended the Copyright Act to provide retroactive copyright to foreign works that had entered the public domain due to failure to non-compliance with formalities, lack of national eligibility, or because they were pre-1972 recordings. This Act inspired the case of Golan v. Holder, which challenged (and eventually affirmed) Congress’s ability to remove works from the public domain. Among other things, the URAA brought pre-1972 foreign recordings (which were not actually in the public domain) under federal copyright. Meanwhile, domestic pre-1972 recordings remained under the exclusive care of the states, with a true public domain only in the distant future.
One result of leaving protection to the states was variations in treatment among the states. The term of protection is one good example. Most states protected recordings for the maximum term permitted by Congress; however, some states cut off protection earlier. One notable example is Colorado, which protected recordings only for 56 years—significantly shorter than in other states (Colorado was also one of only two states to refer to that protection as “copyright”). There were also differences in the nature of the protection. All but two states (Indiana and Vermont) enacted criminal statutes codifying protection; only one state (California) also codified civil penalties. Some states had exceptions for non-commercial use, or for libraries, or both; some had neither. Only one state (New York) had established a common law fair use doctrine for sound recordings, and none had codified the doctrine in a statute.
This resulted in some strange paradoxes in the law, with often sharp disparities. One such result was that recordings and the underlying musical composition they embodied might have different terms of protection. As one typical example, the sheet music for George M. Cohan’s 1917 song, “Over There,” entered the public domain at the end of 1992; however, Nora Bayes’s recording of the same song from the same year would have been protected in most states until 2067. Another example of disparity resulted from differences in federal and state treatment of public performances. Because no state explicitly provided exclusive rights to public performances, for example, no license was needed to publicly play the sound recording of Marvin Gaye’s 1971 hit, “What’s Going On,” but a license was required to play his recording of “Let’s Get It On,” recorded only two years later (licenses were still required for performance of the underlying musical works).
Musical Composition
Sound Recording
What’s Going On? (1971)
License required
No license required
Let’s Get It On (1973)
License required
License required
Licensing public performance of Marvin Gaye works before the Music Modernization Act.
The situation was unnecessarily complicated, and was frustrating to nearly everyone involved. Recording artists and labels disliked the disparity in performance rights between pre- and post-1972 recordings. Public interest groups, such as librarians and archivists, disliked the lack of uniformity and the only sporadic limitations and exceptions. The issue came to a head when Mark Volman and Howard Kaylan (aka Flo & Eddie), of The Turtles, brought a series of lawsuits attempting to establish that a public performance right existed under the common law of the states (though none had codified one). The failure of those lawsuits in part led to Congress’s passing the Music Modernization Act (MMA) of 2018, which, among other things, finally brought all pre-1972 recordings under federal law.
However, the MMA did not simply apply the existing federal copyright law to pre-1972 sound recordings. Instead, Congress opted to create a parallel statute, which looks very similar to the “normal” copyright laws but in fact comprises an independent scheme. The distinction is evident in the term of protection. Unlike other copyrightable works from the era, which are treated uniformly, the length of the term for sound recordings varies depending on the year of first publication. Recordings published between 1923 and 1946 are protected for 100 years, and recordings published between 1947 and 1956 are protected for 110 years from the date of publication. The recordings that are protected the longest—unpublished recordings—are ironically the ones that are the most threatened by extended protection. Those recordings will remain locked until 2067, regardless of their fixation date.
In addition to establishing limited terms and giving pre-1972 recordings some parity with post-1972 recordings as far as the public performance right, the MMA established that most important copyright limitations and exceptions—especially the fair use and first sale doctrines and the library and teaching exceptions—all apply to pre-1972 recordings. It also tried some new things! It established a mechanism for making noncommercial use of a recording that isn’t being commercially exploited—maybe testing the waters of orphan works legislation. It also expanded the Section 108(h) “last 20 years” exception for libraries to apply to all pre-1972 recordings, regardless of publication status.
There were many questions the MMA left open. For example, prior to the MMA, each state had their own definition of who the default owner of a sound recording was. Congress preserved the confusing and sometimes contradictory patchwork, leaving the state definitions in place. As a result, when ownership has not been established by contract—as is often the case, for example, with archival recordings—the ownership will need to be determined by courts. Congress also left in question the relationship between the MMA and pre-1972 foreign recordings, especially as to whether the MMA’s noncommercial use mechanism applies. Since Congress did not create criminal penalties under the MMA, there is also some question as to whether they left in place the state criminal statutes. But Congress did establish, very firmly, that all sound recordings should no longer be protected for at least another half-century.
Which brings us back to the public domain. As of January 1, most works first published in 1929 will be in the public domain in the USA. 1929 was an important year for sound recordings. It was the last year cylinder recordings were produced. It was the year the last recording studio switched from acoustic to electrical recording techniques (though most had switched a few years earlier). Because of the MMA, those recordings will enter the public domain in the near future, but as a result of the strange history of sound recordings copyright, it will not happen this year. Americans will have to wait five more years for the complete works from those eras to finish entering the public domain.
But thanks to the MMA, published recordings from 1924 are entering the public domain, which would otherwise not be! The class of 1924 includes several important recordings, including the very first recordings of George Gershwin’s Rhapsody in Blue, Al Jolson’s “California Here I Come,” and Isham Jones’s “It Had To Be You.” Despite sound recordings trailing other classes of works by a few years, the 2025 Public Domain Day is a good day for sound recordings enthusiasts!
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