ICANNTransitionisPremature

UnansweredQuestionsRequireanExtension1

byBerinSzóka,2BrettSchaefer3&PaulRosenzweig4

September8,2016

1TheviewsexpressedinthiswhitepaperreflectthoseofTechFreedomandtheindividualauthors,butnotnecessarilythoseofTheHeritageFoundation.

2Berin Szóka is President of TechFreedom. 3Brett Schaefer is the is Jay Kingham Senior Research Fellow in International Regulatory Affairs at The Heritage Foundation. 4Paul Rosenzweig is a Visiting Fellow at The Heritage Foundation and formerly served as Deputy Assistant Secretary for Policy in the Department of Homeland Security.

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I. IntroductionIstheInternetreadyfortheU.S.governmenttogiveupitshistoricroleastheultimateguarantorofInternetgovernance?Yes,insiststheObamaAdministration.Globalstakeholders—users,businesses,technicalexpertsandcivilsocietygroups—willremainfirmlyincontrol,theyassureus.

We’reskeptical.Butbeforewetellyouwhy,let’smakeafewthingsclear.Wesupportthemulti-stakeholdermodel.WedonotbelieveanygovernmentshouldcontrolorowntheInternet.Wedonotopposethe“Transition”—whereinmulti-stakeholderswouldassumethecurrentU.S.oversightresponsibilitiesovertheInternetCorporationforAssignedNamesandNumbers(ICANN).ButwedoopposerushingtheTransitionbeforecriticalquestionsareresolved.Werecommendextendingthecontractforayearortwotovettheproposalandcompleteallofthereformssoughtbythecommunity.

Administrationofficialshavestatedrepeatedlythat“itismoreimportanttogetthisissuerightthanitistosimplygetitdone.”5However,asweneartheendofPresidentObama’ssecondterm,itishardnottoconcludethattheAdministrationhasbecomemoreconcernedwithgettingthisdonerightnowthaningettingitright.WewonderbecauseofthemanyseriousconcernssurroundingtheTransitionthatremainunresolvedevenastheAdministrationappearsdead-setonmovingforwardregardlessofthepotentialconsequences.

WeworrythatapprovingtheTransitionprematurelywillsetthemulti-stakeholdermodeluptofail.WefearthatgovernmentswillgainnewinfluenceovertheInternet,thatInternetfreedomwillsuffer,andthattheICANNleadership(CEOandstaff)willcontinueitstroublingpatternofcavalierlyignoringitsbylawsandprocedureswhiletheICANNCommunityprovestoofractioustoholdtheleadershipaccountable.

What’sneedednowisa“testdrive”—atrialperiodofayearortwoinwhichtheU.S.withdrawsandallowsthenewICANNtooperateautonomously,butwiththepossibilityofreassertingitstraditionalroleifunforeseenproblemsarise,ifICANNresistsadditionalreforms,orifthemulti-stakeholdercommunitydeterminesthatthenewbylawsorgovernancestructureareinsufficienttoholdICANNaccountable.

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TheTransitionstartedinMarch2014.TheCommerceDepartment’sNationalTelecommunicationsandInformationAdministration(NTIA)announcedthatitintendedtoendthecontractualrelationshipoverthetechnicalheartoftheInternetbetweentheU.S.governmentandICANN.6ThecontractrequiredNTIAtosignoffonchangestotheauthoritativerootzonefileandtheInternetAssignedNumbersAuthority(IANA)functions,whichtietogetherthedomainnamesystem(DNS)

5JeffElder,U.S.DelaysGivingUpOversightofInternetAdministratorIcann,TheWallStreetJournal,(Aug.18,20152:09p.m),http://www.wsj.com/articles/u-s-delays-giving-up-oversight-of-internet-administrator-icann-1439851721.

6PressRelease,TheNationalTelecommunicationsandInformationAdministration(NTIA),NTIAAnnouncesIntenttoTransitionKeyInternetDomainNameFunctions(March14,2014),https://www.ntia.doc.gov/press-release/2014/ntia-announces-intent-transition-key-internet-domain-name-functions.

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—who’swhoontheglobalnetworkofnetworks.NTIA’srolemeanttheDNScouldnotbehijacked:theU.S.governmentwastheultimateguarantoroffreedomonthenetwork.

ICANN,aCalifornianonprofitcorporation,wascreatedin1998asatechnicalcoordinatingbody,buthasacquiredincreasinglyquasi-governmentalpowerstoregulate,tax,andspend.TheU.S.haslargelykeptahandsoffapproachtoICANN,butthemerepossibilitythatNTIAmightawardtheIANAcontracttosomeotherorganizationhashelpedcheckICANNandmakesureitdidnotstraybeyonditsnarrowmissionorabuseitsposition.Indeed,NTIAusedthatthreateffectivelybackin2012whenitrejectedICANN’sbidtorenewtheIANAcontractandcanceleditsRequestforProposals,sayingithad“receivednoproposalsthatmettherequirementsrequestedbytheglobalcommunity.”7

ButthatwasbeforeEdwardSnowdendramaticallychangedthedynamicinJune2013.Foryears,theU.S.hadworkedwithlike-mindedcountriestoresisteffortstohavetheInternationalTelecommunicationUnion(ITU)assumearoleinInternetgovernance,butfearedthatsomeofitsalliesmightchangetheirpositionaftertheextentofNSAsurveillancewasmadepublic.EventhoughtheU.S.relationshipwithICANNhadnothingtodowithNSAsurveillance,theU.S.sawanopportunitytochangethediscussionpriortotheApril2014NETMundialconferenceonInternetgovernanceinBrazil.InMarch2014,NTIAannouncedthatthatitwouldseekendthehistoricalcontractualrelationshipwithICANNandTransitionthatoversightroletothemulti-stakeholdercommunity.8

Overthepasttwoyears,atonofworkhasgoneintoaproposalforICANNtofulfillitsresponsibilitieswithoutNTIAoversightandempowerthecommunitytoholdanautonomousICANNaccountable.9Butitsleadershipknewthat,foralltheloftytalkaboutreform,theAdministrationhadalreadycommitteditselftocompletingtheTransition.Inaddition,muchofthemulti-stakeholdercommunitywaseagertocompletetheprocessbeforetheelection,becauseanewadministrationmightnotsupporttheTransition.

ICANN’sleadershipheldtherealleverage.Allitneededtodowastorundowntheclock—andputtogetherreformsthatlookedjustgoodenoughtosatisfytheWhiteHouseandthecommunity.Andthatisprecisely—andverypredictably—whathappened.InJune,NTIAreleasedalengthyreport

7PressRelease,NTIA,Notice-CancelledInternetAssignedNumbersAuthority(IANA)Functions-RequestforProposal(RFP)SA1301-12-RP-IANA(March10,2012),http://www.ntia.doc.gov/other-publication/2012/notice-internet-assigned-numbers-authority-iana-functions-request-proposal-rf.SeealsoKevinMurphy,NTIAsaysICANN“doesnotmeettherequirements”forIANArenewal,(March10,2012),http://domainincite.com/8091-ntia-says-icann-does-not-meet-the-requirements-for-iana-renewal.

8Seesupranote2.

9NTIA,IANAFunctions'StewardshipTransition:ICANNBoardTransmitsIANAStewardshipTransitionProposalandEnhancingICANNAccountabilityRecommendationstoNTIA,ICANN,(March10,2016),https://www.icann.org/stewardship.

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concludingthattheproposalmetitscriteriafortheTransitionlaidoutinMarch2014.10OnAugust16,NTIAinformedICANNthatitintendedtoallowthecontracttoexpireonSeptember30.11

Indoingso,theAdministrationhaswavedawayconcernsabouttheTransition.AttheInternetGovernanceForumUSAthispastJuly,AssistantSecretaryStricklingoftheNTIArespondedtosomeconcerns,butofferedlittlesubstanceaboutmany.Hebreezilyconcluded:“OtherclaimskeeppoppingupandIdonothavetimetodaytocorrecteverymisstatementbeingmadeabouttheTransition.”12Intruth,thepointsarenot“claims”or“misstatements”,theyareunresolvedconcernsandunansweredquestions.

Herearejustthemostprominentofourremainingconcerns—andwhytheymatter.Westartwithpracticalconcernsandconcludewithlegalones.Here’sahigh-levellist:

1. WhateverhappenswiththeTransition,there’snoreasonwhatsoevertothinkauthoritariancountrieslikeRussiaandChinawon’ttrytoexertgreatercontrolovertheInternetandthelong-termimpactoftheTransitiononpositionsofothergovernmentsvis-à-visU.N.governanceoftheInternetareunknown.

2. Itisunclearatbestwhetherthemulti-stakeholdercommunityhasthecohesionandresolvenecessarytoserveasaneffectivecheckontheICANNBoardpost-Transition.

3. Governmentswillhavemorepowerpost-Transitionthantheydocurrently,anditisunclearhowthiswillaffectICANN.

4. RecenteventsrevealedthatICANNhasserioustransparencyandgovernanceproblems,whichcouldmakeitvulnerabletocorruptionandabuse.

5. TheU.S.government’sroleisamajorreasonwhytheICANNBoardhasbeenwillingtoacceptaccountabilitymeasures,becausetheTransitionisdependentontheiradoption.ButanumberofimportantadditionalreformswillnotbecompleteduntilaftertheTransition,and.failingtoextendthecontractmayjeopardizetheirimplementation.

6. SubstantialquestionsonICANN’sjurisdiction,includingwhereICANNwillbeheadquarteredandincorporatedandtowhichlawsICANNwillbesubject,remainunanswered.

7. TheU.S.failedtosecurelegalownershipandcontrolofthe.MILand.GOVdomains,whichcouldcreatenationalsecurityconcernsinthefuture.

8. ThenewICANNbylawsmaynotbeinlinewithCalifornialaw,whichcouldleadtolegalandpoliticalchallenges.

9. IftheTransitioninvolvesatransferofproperty,endingthecontractwithoutcongressionalauthorizationwouldviolatetheConstitution.

10NationalTelecommunicationsandInformationAdministrationU.S.DepartmentofCommerce,IANAStewardshipTransitionProposalAssessmentReport(June9,2016),https://www.ntia.doc.gov/report/2016/iana-stewardship-transition-proposal-assessment-report.

11LetterfromLawrenceStrickling,AssistantSecretaryforCommunicationsandInformation,U.S.DepartmentofCommerce,toGoranMarby,PresidentandCEOofICANN(Aug.16,2016)(onfilewiththeauthor),availableathttps://www.ntia.doc.gov/files/ntia/publications/20160816marby.pdf.

12LawrenceStrickling,AssistantSecretaryforCommunicationsandInformation,NationalTelecommunicationsandInformationAdministration,U.S.DepartmentofCommerce,RemarksatTheInternetGovernanceForumUSA(July14,2016),https://www.ntia.doc.gov/speechtestimony/2016/remarks-assistant-secretary-strickling-internet-governance-forum-usa.

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10. NTIAmayhaveviolatedafundingprohibitionifitfailstoextendthecontract.11. ItisunclearthatU.S.antitrustlawwillactuallybeaneffectiveremedy(ordeterrent)against

anti-competitivebehaviorbyICANN,eventheTransitiondoesn’tchangeitslegalstatus.YetforeignantitrustlawscouldbeusedstrategicallytoportrayICANNasacartel,andthusmakethecaseforashifttoU.N.control.

12. NTIAmayhaveviolatedadministrativelawbyfailingtoadequatelyconsiderpubliccommentsontheTransitiondirectly,andinsteadrelyingonICANNtodosoonitsbehalf.

II. UnresolvedConcerns

A. TheTransitionWon’tStopanITUTakeoverMostproponentsandskepticsoftheTransitionagreethattheworstpossibleoutcomewouldbeforauthoritariangovernmentstoexertmorecontroloverInternetcontentthroughcontrolviatheUnitedNationsoraU.N.specializedagencyliketheInternationalTelecommunicationUnion(ITU)whereInternetgovernancewouldbedecidedonaonaone-country-one-votebasis.Themulti-stakeholderprocess,forallitsflaws,isafarbetteralternative.

SinceitannouncedtheTransition,theAdministrationhasstronglyimpliedthattheTransitionannouncementhasunderminedattemptstoincreasegovernmentalcontroloftheInternetthroughtheITUortheUnitedNations.Forinstance,inJuly2014,AssistantSecretaryStricklingdeclared,

We firmlybelieve thatourannouncementwillhelppreventanygovernmentorgroup of governments to take over the domain name system. Our continuedstewardshipof the IANAfunctionshasbeenasourceof frictionandusedasanexcuse by Russia and others to push for organizations like the InternationalTelecommunicationUniontotakeovertheIANAfunctions. Ourannouncementtakes that argument off the table, and affirms the role of the global Internetcommunity,whichiscommittedtoatrulyinclusivemultistakeholderprocessforInternetgovernance.13

Whenpressed,AssistantSecretaryStricklinghasadmittedthatauthoritariancountrieswillcontinuetotryandassertcontrolovertheInternetregardlessoftheTransition.Still,heargued,theTransitionmightconvincesomecountriesnottosupportthatgoal.InJuly,hestatedthat“almost30of[the89countriessupportingU.N.governanceoftheinternetin2012]havenowdemonstratedtheirsupportformultistakeholdergovernanceofthedomainnamesystembyjoiningintheGovernmentalAdvisoryCommittee’s[GAC’s]consensuspositiontomovethetransitionproposalforward.”14Ofcourse,thismeansthatroughly60countrieshavenotendorsedthemulti-stakeholdermodel.

Butmorefundamentally,supportfortheproposalintheGACdoesnotipsofactomeanthattheywouldnotpreferU.N.governance.Infact,someofthesecountriesmayseetheTransitionasthe 13LawrenceStrickling,AssistantSecretaryforCommunicationsandInformation,NationalTelecommunicationsandInformationAdministration,U.S.DepartmentofCommerce,KeynoteAddressattheAmericanEnterpriseInstitute,(July22,2014),https://www.ntia.doc.gov/speechtestimony/2014/keynote-address-assistant-secretary-strickling-american-enterprise-institute.

14SeeStricklingRemarks,supranote11.

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firststepinatwo-stepprocessofassertingU.N.governanceovertheInternet.Inotherwords,theTransitionmayofferonlytemporaryreprieveanditslong-termimpactongovernmentpositionsvis-à-visU.N.governanceoftheInternetisunknown—andunknowable.NoristhereanyreasonwhatsoevertothinkthattheTransitionwillrestraintheeffortsofauthoritariancountrieslikeRussiaandChinatoexertgreatercontrolofthenetwork.ThemostthatcanbesaidisthattheTransitionmakesushopethatourallieswillbelessangryaboutSnowdenandwillsupporttheU.S.inrejectinganITUtakeover—andthatisapredictivejudgmentwithoutanyfactualsupport.

B. CantheCommunityGovernICANNPost-Transition?InhisJulycomments,AssistantSecretaryStricklingfalselyconflatedthegoalofprivatization,firstannouncedin1998,withthefarmorerecentdevelopmentofabrandnewgovernancemodelforICANN.15JustbecausetheTransitionmaybeagoodideainprincipledoesnotmeanthatthisparticularTransitionproposalissoundorthatthetimingisright.

TheentirepremiseoftheTransitionisthatanewEmpoweredCommunity,comprisedofrepresentativesfromthemulti-stakeholdercommunity,willactasaneffectivecheckonBoardabuseandcorporatemisconduct.Butitisimportanttonotethatthesepowersarelessthanthoseoriginallysoughtbythemulti-stakeholdercommunity.WhentheICANNCommunityfirstdraftedaproposalforgoverningICANNabsentU.S.oversight,itproposedmakingICANNintoamembershiporganization—meaningthatstakeholderswouldhaveclearlydefinedrightsunderCalifornianon-profitcorporatelaw.

TheBoardrejectedthisrequestbecauseitdidnotwanttogranttheCommunitytoomuchauthority.InthefaceofthisoppositionfromtheBoard,theCommunitybackeddownanddidnotinsistonmembership.Instead,theICANNCommunitysettledforaweaker“designator”modelthatgivesstakeholdersfewerstatutoryrightsunderCalifornialawandprovidesotherpowersonlythroughnewbylaws,whichcanbechanged.

Toillustratetheimportanceofthisdifference,underamembershipgovernancestructure,theICANNCommunitywouldhavehadtoaffirmativelyapprovekeydecisionslikethoseregardingICANN’sbudgetandallbylawchanges.Butunderthedesignatorgovernancemodel,approvaloftheEmpoweredCommunityisnecessaryonlytoapprovechangestofundamentalbylaws(adefinedsubsetoftheoverallbylaws).Exerciseoftheotherpowers,suchasrejectingthebudgetorregularbylawchanges,ispossibleonlyifapetitionbyonepartofthecommunitypassesseveralthresholdsofsupport.ThisisasignificantshiftinthepowerrelationshipinfavoroftheBoardandStaffversustheICANNCommunity.

Intheory,thenewbylawsprovidepowerstoenabletheCommunitytoholdICANNaccountable.Butthereisanenormousgapbetweenprovidingthisauthorityandtheabilitytouseit.ICANN’s“multi-stakeholder”communityisoftenfractiousandirresolute.Thevariousmulti-stakeholderconstituencieseachhaveseparateinterestsandprioritiesandtendnottotakepositionsonmattersthatdonotdirectlyaffectthem.Historyindicatesthatthemulti-stakeholdercommunitywillnotbethestrongoversightmechanismneeded.Indeed,ICANNCommunityrepresentativesbackeddown

15Id.

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whenconfrontedbytheBoardatkeymomentsduringtheTransition.16Thisconcernisexacerbatedbythegenerallysteepthresholdsnecessaryforthecommunitytoactuallyexerciseitspowers.Reluctantly,webelievethatmulti-stakeholderoversightpost-TransitionwillbetoodifficulttousetobeaneffectivecheckontheICANNBoard.

However,evenifwearewrong,thenewICANNgovernancemodelisuntestedandrepresentsamajorchangeinhowICANNwillbegoverned.WhentheICANNCommunityfirstproposedamembershipmodelforgoverningICANNabsentU.S.oversight,theBoardwarnedthatgiventhe“potentialforchangesinthebalanceofpowersbetweenstakeholdergroupsinICANN’smultistakeholdermodel…itmaybeprudenttodelaytheTransitionuntiltheSoleMembershipModelisinplaceandICANNhasdemonstrateditsexperienceoperatingthemodelandensuringthatthemodelworksinastablemanner.”17AlthoughtheBoardmadethisstatementasacalculatedmovetogettheICANNCommunitytoabandonitsmembershipproposal—muchoftheICANNCommunityisworriedthatadelaymightendangerthepossibilityoftheTransition—itswarningwasnotincorrect.Althoughthecurrentproposalestablishesadesignatorratherthanamembershipgovernancemodel,thepost-TransitionICANNsimilarlywouldimplementchangesinICANNgovernanceandshiftsinthebalanceofpowerandinfluenceamonggroupswithinICANN.ItwouldbesimilarlyprudenttoprovethatitisastablemodelbeforeformallycompletingtheTransition.

C. IncreasedInfluenceforGovernmentsinICANNPost-TransitionAssistantSecretaryStricklinghasstatedthat“thetransitionproposaldoesnotexpandtheroleofgovernmentsvis-à-visotherstakeholders.”18Thisargumentisbothfalseandacalculateddistraction.Theundeniablerealityisthatgovernmentswillhavemorepowerinthepost-TransitionICANNthantheydocurrently.

Underthecurrentbylaws,governmentshaveaprivilegedadvisoryroleinICANN,whereingovernmentadvicecanonlyberejectedthroughoppositionofamajorityoftheICANNBoard.Inthepost-TransitionICANN,thethresholdforrejectingGACadviceisincreasedto60percent.Governmentswillalsoparticipateasvotingmembersinthenew“EmpoweredCommunity”thatisvestedwiththeauthoritytodismisstheBoardorindividualdirectors,approveorrejectbylawchanges,andotherpowers.Governmentshavenothadasayinthesemattersbefore.Whiletheywillmostlybeonparwithotherstakeholders,nofairobservercanarguethatgovernmentpowerisnotincreasedbytheTransition.

Whilethisexpandedauthorityisnottothelevelsoughtbyauthoritariangovernmentsandwouldnotestablishgovernment“control”overICANN,itisunclearhowthemorepowerfulroleofgovernmentswillaffectICANN.19Indeed,governmentsarealreadyassertingthemselves.Thedraft 16BrettD.Schaefer,TestimonybeforetheU.S.SenateCommitteeonCommerce,Science,andTransportation,(May24,2016),http://www.heritage.org/research/testimony/examining-the-multi-stakeholder-plan-for-transitioning-the-internet-assigned-number-authority.

17ICANN,supplementaryandfinalcommentstotheCCWG-Accountability2ndDraftProposalPublicCommentforum,availableathttp://forum.icann.org/lists/comments-ccwg-accountability-03aug15/pdfjl8SFyc7XR.pdf.

18SeeStricklingRemarks,supranote8.

19SeeSchaeferTest.,supranote12.

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IANANamingFunctionAgreementwouldcodifythethe2005GovernmentalAdvisoryCommitteePrinciplesandGuidelinesfortheDelegationandAdministrationofCountryCodeTopLevelDomains(GAC2005ccTLDPrinciples)andrequirethecontractorto“respect”thoseprincipleseventhoughtheyarenotacceptedasbindingbytheccNSOandhavenotbeenformallyadoptedbyICANN.20

D. ICANN’sTroublingRecordofIgnoringitsCorporateLegalObligations

RecenteventshaverevealedthatICANNhasserioustransparencyandgovernanceproblems.Earlierthisyear,ICANNwaschallengedinU.S.courtregardingitsfailuretofollowproperproceduresinawardingthe.AFRICAdomainname.21ThedilemmaarosefromtheICANNBoard’sattempttoimproperlyappeasegovernmentswhohadobjectedtotheoriginalallocationoftheTLD.22Morerecently,anIndependentReviewPanel(anarbitralpanelfordisputeresolution)condemnedICANNinnouncertaintermsforitsactionsinvolvingapplicationsfordomainsbyacompanycalledDotRegistry.23Accordingtothepanel,“ICANNfailedtoapplytheproperstandardsinthereconsiderationsatissues,andthattheactionsandinactionsoftheboardwereinconsistentwithICANN’sArticlesofIncorporationandBylaws.”

ThiscavalierattitudebecomesallthemoreconcerninggiventhepotentialpowerandresourcesofICANN.ICANNhasthedefactopowertotaxdomainnames.Itisflushwithcashfromaflurryoftopleveldomainnameapplications(e.g.,.APP,.SHOP).Justrecently,acompanywontheactionforthe.WEBTLDwithabidof$135million.SinceJune2014,ICANNhasearnedover$240millioninauctionproceeds.24Itisincreasinglyexercisingessentiallyregulatorypowers(e.g.,whomayuse.WINEor.AMAZON).Resources,powerandwillfuldisregardofexistingrulesisnotacomfortingcombination.

ThefactthatICANNleadershipactedinsuchahigh-handedmannerinconflictwithitsbylawswhileknowingthattheTransitionwasstillinquestionsaysvolumesaboutthepresumptuousnessofICANN’sstaffandleadership.ThisshouldbeofgreatconcerntotheICANNCommunity.NobodycancolorablyarguethattheprospectofICANNBoardorstaffmisconductwillbelessenedoncethereisnolongeranypossibilityoftheU.S.governmentputtingtheIANAcontractoutforre-bid(toanentityotherthanICANN),orusingtheIANAcontracttoexerciseoversight.Absentstrong

20ICANN,IANANamingFunctionAgreementProposal,(Aug.10,2016),availableathttps://www.icann.org/en/system/files/files/proposed-iana-naming-function-agreement-10aug16-en.pdf.

21DotConnectAfricaTrustv.InternetCorporationforAssignedNamesandNumbers(ICANN),DocketNo.CV16-00862-RGK(JCx),(UnitedStatesDistrictCourt,C.D.California,WesternDivision).

22DotConnectAfricaTrustv.InternetCorporationforAssignedNamesandNumbers(ICANN),InternationalCentreForDisputeResolutionIndependentReviewPanelFinalDeclaration,Case#502013001083,availableathttps://www.icann.org/en/system/files/files/final-declaration-2-redacted-09jul15-en.pdf.

23DotConnectAfricaTrustv.InternetCorporationforAssignedNamesandNumbers(ICANN),InternationalCentreForDisputeResolutionIndependentReviewPanelDeclaration,Case#502013001083,at59,https://regmedia.co.uk/2016/08/03/irp-dot-registry-final-declaration-redacted-29jul16-en.pdf.

24ICANN,NewGTLDAuctionResults,https://gtldresult.icann.org/application-result/applicationstatus/auctionresults(lastvisitedSept.8,2016).

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oversightbyancohesiveICANNCommunitywiththepowersandtoolsnecessarytoadequatelychecktheICANNBoardandstaff,thecorruptionandmisgovernancescandalswitnessedinFIFAandWIPOcouldhappenatICANN.25Unfortunately,asdescribedabove,thedispersedanddividednatureoftheICANNCommunityandthelimitedpowersgrantedtoitunderthecurrentproposalcastdoubtonwhetherICANNwillhaveadequategovernancepost-Transition.26

It’salsoworthnotingthatICANNhasfailedtoenforceintellectualpropertyrightsembeddedinitscontracts,eventhoughICANNhasremediesavailabletoitandaresponsibilitytorespondtoreportsofabuseonsiteswithintheirdomains.27EvenIPskepticsshouldfindthistroublingbecause,ifICANNcanchoosenottoenforcetheserights,itcandothesameforothercontractualobligations.

E. LettingtheContractLapsein2016UnderminesIncentivestoImplementWorkStreamTwoReforms

Earlyon,NTIAaffirmedthattheIANAstewardshiptransition—thetechnical,procedural,andstructuralchangestoICANNandtheIANAprocessnecessarytoreplacetheU.S.contractualrole—wouldbedirectlylinkedtoimprovedaccountabilitymeasuresforICANNandthatbothissuesmustbeaddressedbeforetheTransition.28TheICANNCommunityidentifiedanumberofseriousreformsthatitdeemedcriticaltomakeICANNaccountable,butitwasclearthatnotallofthereformscouldbefullydevelopedorimplementedundertheoriginalprojecteddeadlinefortheTransition:September2015.Therefore,theICANNcrosscommunityworkinggrouponaccountabilitydividedthereformsinto“WorkStream1”reformsthathadtobeinplacepriortotheTransitionand“WorkStream2”reformsthatcouldbeimplementedaftertheTransition.Thedifferencebetweenthetwowasnottheirimportance,butwhetherornottheydirectlyinvolvedreplacingtheU.S.roleintheIANAprocess.

WhenNTIAblessedtheTransition,itwassigningoffonWorkStream1reforms,whichhadbeendevelopedandareexpectedtobefullyimplementedinthecomingweeks.But“WorkStream2”reformsarenotexpectedtobefullyresolvedandimplementeduntilthesummerof2017—wellaftertheTransitionifNTIAproceeds.ImportantissuesyettobesettledincludethenatureandextentofICANN’scommitmenttohumanrights,makingICANNmoretransparenttothecommunity,adoptingmeasurestomakethestaffmoreaccountable.Thisisworthhighlighting

25AustinKnoblauchandBarryStavro,A timeline on the FIFA scandal, L.A. Times (June 2, 2015), http://www.latimes.com/sports/soccer/la-sp-fifa-scandal-timeline-20150603-story.html.

26BeaEdwards,ContinuingCover-upattheUN’sWorldIntellectualPropertyOrganization,GovernmentAccountabilityProject,(Aug.26,2016),https://www.whistleblower.org/blog/033526-continuing-cover-un%E2%80%99s-world-intellectual-property-organization.

27SeeKristianStout,GeoffreyA.Manne,&R.BenSperry,InICANNWeTrust:AssuringAccountableInternetGovernance(ICLEInnovationPolicyResearchProgramWhitePaper2016-1,Mar.17,2016),availablathttp://laweconcenter.org/images/articles/icle-icann_accountability_short_final.pdf.

28TestimonyofLawrenceStrickling,AssistantSecretaryforCommunicationsandInformation,U.S.DepartmentofCommerce,BeforetheCommitteeonCommerce,Science,andTransportationUnitedStatesSenate:“PreservingtheMultistakeholderModelofInternetGovernance”,(Feb.25,2015),availableathttps://www.commerce.senate.gov/public/_cache/files/3abbe751-4440-4c5f-83bd-382b38cbdc05/3DDFE90301F5AE41ED2489DB98E32F84.ntia-testimony-02-25-15-scc-hearing.pdf.

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becauseeachofthesecoulddevelopinapositiveornegativedirection.Forinstance,thereformstoICANNtransparencyorstaffaccountabilitycouldbecosmeticratherthansubstantive.Or,thosewhowishtouseacommitmenttohumanrightsasagatewayforICANNtocontrolcontentcouldsucceed.

AmajorreasonwhytheICANNBoardhasbeenwillingtoacceptaccountabilitymeasuresisthattheU.S.governmenthassaidthattheTransitionisdependentontheiradoption.Eventhen,theBoardhasbeenrecalcitrantattimesandforcedthecommunitytoretreatfromreformsthatitsought.Butsignificantreformsremainincomplete.AftertheTransition,theICANNBoardwilllikelybelessaccommodatingtocommunitydemandsforgreateraccountabilityandtransparency.AddingtothisconcernisthefactthatICANNhassignificantlycurtailedthebudgetforindependentlegaladviceforWorkStream2versusWorkStream1.29Inshort,thereisreasontodoubtthattheWorkStream2reformswillbeimplementedtotheleveldesiredbythemuchoftheICANNCommunityasexpressedduringthepasttwoyears.AnextensionofthecontractforayearortwowouldplacetheICANNCommunityinamuchstrongerpositiontodemandfullimplementationofWorkStream2reforms.

F. ICANNJurisdictionRemainsUncertainDefendersoftheTransitionnotethat,whileitmeansthattheU.S.governmentwouldgiveupitscontractualrelationshipwithICANN,thecorporationwouldremainsubjecttoU.S.lawbecauseICANNisanon-profitincorporatedinCalifornia.So,ifnothingelse,thosewhoobjectedtohowICANNmadedecisions,spentmoney,andsooncouldappealtoarobustbodyofAmericancorporatelaw,andhavetheirdayinAmerica’simpartial,professionalcourtsystem.

InJuly,AssistantSecretaryStricklingconfidentlydeclared“ICANNisaCaliforniacorporationandwillremainso,”notingthatathree-quartersvoteoftheBoardwouldberequiredtochangethisrequirementofICANN’sArticleofIncorporation,ortoamendthe“fundamental”bylawrequiringICANNtomaintainitsprimaryplaceofbusinessinCalifornia.30

Yettheseamendmentsarepossible—andICANNisverymuchkeepinghopealiveinternationallythattheycouldstillhappen.ThefinalreportoftheCCWG-Accountabilitydescribes“jurisdictionisamulti-layeredissue.”31ICANN’sannouncementofthelaunchofWorkStream2attherecentHelsinkimeetingclaimsthat

ThemainissuesthatneedtobeinvestigatedwithinWorkStream2relatetotheinfluencethatICANNsexistingjurisdictionmayhaveontheactualoperationofpoliciesandaccountabilitymechanisms.ThisrefersprimarilytotheprocessforthesettlementofdisputeswithinICANN,involvingthechoiceofjurisdictionand

29IANAStewardshipTransition,FY17activities,SuggestedCostcontrolmechanisms(forapprovalbyCharteringOrganizations),(onfilewithauthor),availableathttps://community.icann.org/download/attachments/61608072/CCWG%20-%20Budget%20ownership.pdf?version=1&modificationDate=1471871529000&api=v2.

30SeeStricklingRemarks,supranote8.

31FinalofoftheCCWG-Accountability,Annex12,ICANN(lastvisitedSept.8,2016),https://community.icann.org/pages/viewpage.action?pageId=58723723&preview=/58723723/58725532/Annex%2012%20-%20FINAL.pdf#page=7.

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of the applicable laws, but not necessarily the location where ICANN isincorporated.32

However,ICANNleftthedooropentoreconsideringwhattheCCWG-Accountabilityreportcalledthefirstlayerofjurisdiction:“Placeandjurisdictionofincorporationandoperations,includinggovernanceofinternalaffairs,taxsystem,humanresources,etc.”Inotherwords,theverythingweareconcernedabout.

IfwhereICANNisincorporatedwereactuallyasettledissue,ICANNwouldnothaveusedthequalified“necessarily.”Theannouncementwouldsimplyhavesaid“butnotthelocationwhereICANNisincorporated”—period,fullstop.Infact,therewasseriousdiscussionofthejurisdictionissuebothatICANN’sHelsinkimeetinginJuneandongoingmeetingsanddiscussionsinajurisdictionworkinggroup.

TheideathatICANNwouldpackupandmovehasbeencontemplatedbyICANN’sleadership.BackinJune2014,ICANNCEOFadiChehadeannounced,intestimonytotheFrenchSenate,thattheBoardhadauthorizedhimtobegin,asoneoffivemajorinitiatives,thecreationofa“parallellegal,internationalstructure(maybeinSwitzerland)forICANN.”33InJuly,theFrenchSenatepublishedalengthyreport(inFrench),buildinguponChehade’stestimony.34Thereportproposedthe“SwissModel”thatwould,insteadoftransferringInternetgovernancetoaone-country,one-votesystemliketheITU,haveICANNassumeinternationallegalpersonalityasa“WorldICANN”inthemodeloftheRedCross.Thereportlamentedthatthisideahadbecomea“deadletter”sinceNTIA’sannouncementthatMarchthatICANNwould,instead,beexpectedtoreformitself.

ButChehade’sideamayliveon—asaroadmapforhowthejurisdictionissueactuallyplaysout.MoreimportantthanthefactthatChehadegottheBoardtoapprovethe“SwissModel”ishowitwouldhaveworked:notasaone-time,pack-up-in-the-middle-of-the-night-and-leave-townthing,butasamoregradualprocess.SettingupaparallelstructurecouldmakeitfareasierforICANNtoeventuallyleavetheU.S.Evenifthattakesa¾voteoftheBoard,itmightjustbeaquestionofwaitinguntilthenextpoliticalcrisis,alaEdwardSnowden.

WillICANNchangeitsjurisdiction?It’shardtosay.ButtheanswerwillbecleareraftertheWorkStream2processiscomplete.

32PressRelease,ICANN,LaunchingWorkStream2inHelsinki,(June23,2016),

https://www.icann.org/news/blog/launching-work-stream-2-in-helsinki.

33FadiChehade,CEOofICANN,TestimonybeforetheSénat(FrenchSenate):WillICANNMovetoSwitzerland,(May4,2014),http://www.domainmondo.com/2014/05/fadi-chehade-will-icann-move-to.html.

34CatherineMorin-Desailly,Report,Rapportd'informationn°696(2013-2014)L'Europeausecoursdel'Internet:démocratiserlagouvernancedel'Internet en s'appuyant sur une ambition politique et industrielle européenne (July 8, 2014), http://www.senat.fr/rap/r13-696-1/r13-696-1_mono.html(English:EuropetotheRescueoftheInternet:DemocratizingInternetGovernance,BasedonaEuropeanPolitical&IndustrialAmbition…”),availableathttps://www.senat.fr/fileadmin/Fichiers/Images/commission/MCI_nouvelle_gouvernance_de_l_internet/EUROPE_TO_THE_RESCUE_OF_THE_INTERNET_english_summary.pdf.

12

G. U.S.Controlof.MILand.GOVRemainsUncertainToday,theUnitedStateshasexclusiveuseofthe.MILand.GOVtopleveldomains,butthatmightnotbeascertainpost-Transition.AllowingothergovernmentsortheprivatesectortousetheseTLDsposessecurityrisks.Whenaskedata2015hearingaboutthismatter,AssistantSecretaryStricklingtestified,“WearegoingtotakealookatthemandmakesurethatifthereisawaywecanstrengthentheU.S.Government’srightstothosenames,wewilldoso.”35Sincethen,however,NTIAhasdemonstratedacuriouscomplacenceover.MILand.GOV.AccordingtoNTIA,

[P]er the policies, procedures, and practices in place, .mil and .gov cannot betransferredwithout explicit agreement first from the current administrators ofthosedomains–namely,theU.S.government.Howevertoaddressconcernsthathave been raised, NTIA and ICANN have formally reaffirmed that the U.S.government is theadministratorof .miland .govandthatanychangesmadeto.milor.govcanonlybemadewiththeexpressapprovaloftheU.S.government.36

Thisreaffirmationwasmadethroughanexchangeofletters.37Theselettersarenon-bindingandlackthecertaintyofalegalcontractthatwouldguaranteeU.S.controlandownershipinperpetuity.Thisisaseriousmatter.InitslettertoICANN,NTIAacknowledgesthatrequestsforreconsiderationofthe.MIL,.GOV,.EDU,and.USdomainsispossibleandthatICANNcouldre-delegatethem.Further,NTIAstateditneededtobenotifiedifaSeparationCross-CommunityWorkingGroupthatcouldleadtoarecommendationthatICANNseparatethenaming-relatedInternetAssignedNumbersAuthority(IANA)functionsfromICANNisformedbecause:

It is critical to the stable and secure operation of the U.S. GovernmentAdministeredtopleveldomainsthatanypotentialsuccessoroperatorcommitinwriting that it will honor andmaintain ICANN’s commitments with respect totheseU.S.Government-administeredTLDs.

Whywouldn’ttheU.S.wantmaximumlegalcertaintyoversomethingthatis“criticaltothestableandsecureoperationoftheU.S.governmentadministeredtopleveldomains”?ThelessformalarrangementoverU.S.administeredTLDswasacceptableaslongastheU.S.contractualrelationshipremainedinplace.NowthattheNTIAhasannounceditsintentiontoapprovethetransition,thiscontractualleveragewillnolongerbeinplaceandcollegialassurancesarenolongersufficient.

35TestimonyofLawrenceStrickling,AssistantSecretaryforCommunicationsandInformation,NationalTelecommunicationsandInformationAdministration,U.S.DepartmentofCommerce,BeforetheU.S.HouseofRepresentatives,SubcommitteeonCommunicationsandTechnology,CommitteeonEnergyandCommerce,53(July8,2015),availableathttp://docs.house.gov/meetings/IF/IF16/20150708/103711/HHRG-114-IF16-20150708-SD006.pdf.

36NTIA,QandAonIANAStewardshipTransition,(Aug.16,2016),https://www.ntia.doc.gov/other-publication/2016/q-and-iana-stewardship-transition-0.

37NTIA,ExchangeofLetters-U.S.GovernmentAdministeredTLDs,June2016,https://www.ntia.doc.gov/page/exchange-letters-us-government-administered-tlds.

13

III. UnresolvedLegalIssues

A. NewICANNBylawsFaceLegalChallengesTwocriticalprovisionsofthenewbylawsmaybechallengedunderCalifornianon-profitcorporationslaw.

Underthenewbylaws,a60%supermajorityoftheICANNBoardisnecessarytorejecttheadviceoftheGovernmentalAdvisoryCommittee(GAC)whentheGAChasreachedaconsensus.38IftheBoardreachesthisthreshold,itandtheGACmustworktogetherto“try,ingoodfaithandinatimelyandefficientmanner,tofindamutuallyacceptablesolution.”39Ifthatfails,theBoardneedonlyexplainwhyitdidnotfollowtheGAC’sadvice.

ButwhatiftheBoardfailstoreachthe60%threshold?AnexpertonCaliforniacorporatelawhiredtoadvisetheCCWG-AccountabilityexpressedherconcernaboutthispossibilityduringaCCWG-AccountabilitycallforlawyersinJanuary:

[I]f theGAC is able to comeupwith consensusadvice, that theBoard canonlyrejectwithatwo-thirds[sic]vote,thatmeansthatyoucouldhavemorethanhalfthe Board believe that something is not a good idea and not good for thecorporationandallofthosethings,andstillhavetodoit.40

ShequestionedwhetherthisrequirementwouldbelegalunderCalifornialaw:“TheBoardunderCaliforniaCorporateLawhastobeinchargeorrunningtheorganizationsofhowitcanexerciseitsfiduciaryduties.Andthat’sabasicrequisiteofcorporatestructure.”41Althoughthereisnopublicrecord,ICANNandoutsidelawyersdiscussedthisandconcludedthatthisbylawwaslegal.Butthatisanopinion,notacertainty.Thereareanumberofmechanismsbywhichthisbylawcouldbechallenged,potentiallybyICANNstakeholders,Boardmembers,contractedpartiesortheCaliforniaAttorneyGeneral.Ifthebylawwereinvalidated,ICANNwould,presumably,reverttoanormalmajorityrequirementforhandlingboardadvice.That’sgood,becauseitwouldpartiallyreversetheincreasedpowerofgovernmentsunderthenewbylaws(althoughtheGACwouldstillbeavotingmemberoftheEmpoweredCommunity).

Butthatwouldalsobreakacarefullybalancedpoliticalconsensus.Ataminimum,thatwouldprovidetheperfectpretextforthosearguingforachangeofICANN’sjurisdiction.That,inturn, 38BylawforInternetCorporationForAssignedNamesAndNumbers,12.2(a)(x),adoptedbyICANNBoardon27May2016(“AnyGovernmentalAdvisoryCommitteeadviceapprovedbyafullGovernmentalAdvisoryCommitteeconsensus…mayonlyberejectedbyavoteofnolessthan60%oftheBoard”),availableathttps://www.icann.org/en/system/files/files/adopted-bylaws-27may16-en.pdf.

39Id.

40CWGIANAMeetingTranscript,ModeratorBrendaBrewer,January8,2016,21-22https://community.icann.org/download/attachments/56989655/Transcript%20_CCWG%20ACCT_CoChairs-Lawyer%20Meeting_8%20Jan.doc?version=1&modificationDate=1453041576000&api=v2.ItisworthnotingthedepthofRosemaryFei’sexpertiseinsuchmattersasCo-ChairoftheSubcommitteeonPolitical&LobbyingActivities&OrganizationsoftheExemptOrganizationsCommitteeoftheTaxSectionoftheAmericanBarAssociation.

41Idat21.

14

couldleadtootherbylawchangesor,intheworstcasescenario,anITUtakeover.It’simpossibletosay.ThepointisthatthereformproposalblessedbyNTIAcouldbeapoliticalhouseofcards:takeawayonepartoftheTransitionpackageandtherestcollapses.

Indeed,thesamechallengecouldbemadetotheBylaws’requirementthattheBoardfollowPolicyDevelopmentProcess(PDP)recommendationsapprovedbyasupermajorityvoteoftheGenericNamesSupportingOrganization(GNSO)unlesstheBoarditselfcanreachatwo-thirdssuper-majority.42Sincethesamelegalissueappliesinbothcases,itislikelythatbothprovisionswouldfalltogether.Ifso,thiscouldmakeforaperfectstormtoforceeitherasignificantrevisionoftheICANNbylawsorashiftinjurisdictionwherethisrequirementwouldnotapply,becauseitwouldcreatethepotentialforgovernmentstoallywithmembersoftheGNSO—ICANN’sbroadestconstituency,includingtheCommercialStakeholderGroup(includingtheBusinessConstituency,theIntellectualPropertyConstituency,theInternetServiceProvidersandConnectionProvidersConstituency),theNon-CommercialStakeholderGroup,theRegistrarsStakeholderGroup,andtheRegistriesStakeholderGroup.

B. IsThereaGovernmentAssetInvolved?TheTransitionmaynotbelegalwithoutaffirmativeCongressionalauthorization.Lastyear,Rep.ChuckGrassley,Rep.BobGoodlatte,Rep.DarrellIssaandSen.TedCruzaskedtheU.S.GovernmentAccountabilityOffice(GAO)toreviewandaddressspecificquestions,includingthisone:whethertheterminationoftheU.S.contractwithICANNwould“causeGovernmentproperty,ofanykind,tobetransferredtoICANN.”43Nearlyayearlater,theGAOhasnotyetreleaseditsreport.Althoughsome44dismissthispossibilityoutofhand,andNTIAinsiststheansweris“no,”thefactthattheGAOhasspentnearlyayearexaminingthequestionindicatesthattheanswerisnotsimpleorclearcut.

IftheTransitiondoesinvolveatransferofproperty,endingthecontractwithoutcongressionalauthorizationwouldviolatetheConstitution.ArticleIV45requiresexpressCongressionalapprovaltodisposeofU.S.property.Ifso,aU.S.courtcouldunwindtheTransitionafterthefact—by

42ICANNBylaws,AnnexA,Section9(a):

AnyPDPRecommendationsapprovedbyaGNSOSupermajorityVoteshallbeadoptedbytheBoardunless,byavoteofmorethantwo-thirds(2/3)oftheBoard,theBoarddeterminesthatsuchpolicyisnotinthebestinterestsoftheICANNcommunityorICANN.IftheGNSOCouncilrecommendationwasapprovedbylessthanaGNSOSupermajorityVote,amajorityvoteoftheBoardwillbesufficienttodeterminethatsuchpolicyisnotinthebestinterestsoftheICANNcommunityorICANN.

43LetterfromRep.ChuckGrassley,Rep.BobGoodlatte,Rep.DarrellIssaandSen.TedCruztoComptrollerGeneral,GeneDodaro,theU.S.GovernmentAccountabilityOffice(GAO)(Sept.22,2015)(onfilewiththeauthor),availableathttp://www.cruz.senate.gov/files/documents/Letters/20150922%20Grassley%20Cruz%20Goodlatte%20Issa%20GAO%20Request%20ICANN.pdf.

44MiltonMueller,DoesTheIANATransitionConstituteaTransferOfUSGovernmentProperty?,InternetGovernanceProject(Sept.29,2015),http://www.internetgovernance.org/2015/09/29/does-the-iana-transition-constitute-a-transfer-of-us-government-property/

45U.S. Const. Art. IV.

15

declaringthatnon-renewalofthecontractmeanttheIANAfunctionrevertedtoNTIA,notICANN.NTIAwouldthenhavetonegotiateanewcontractwithICANN—ortakeoveradministrationoftherootserveritself.NTIA’sdecisiontoproceedwiththeTransitionbeforetheGAOweighedinonthisquestionwas,atbest,highlyirresponsible.

EveniftheGAO’sreportisinconclusive,thistheriskoflitigation—andajudicialstayorreversal—remains.And,ofcourse,acourtwouldnotbeboundbytheGAO’sopinioneveniftheGAOsaidtherewasnopropertyinterestinvolved.

C. IsNTIAViolatingAppropriationsLaw?JustasArticleIVoftheConstitutionrequiresCongressionalapprovaltotransfergovernmentproperty,ArticleIvestsallspendingpowerinCongress.46

Congresstwiceenactedappropriationsridersprohibitinganyuseoftaxpayerfunds“torelinquishtheresponsibilityoftheNationalTelecommunicationsandInformationAdministration[NTIA]...withrespecttoInternetdomainnamesystemfunctions,includingresponsibilitywithrespecttotheauthoritativerootzonefileandtheInternetAssignedNumbersAuthority[IANA]functions.”47Inotherwords,CongressorderedNTIAnottoletthegovernmentcontractlapse.AssistantSecretaryStrickling,inresponsetoawrittenquestionfromSenatorJohnThune,acknowledgedthisinFebruary2015,“TheActrestrictsNTIAfromusingappropriateddollarstotransitionkeyInternetdomainnamefunctionsduringfiscalyear2015,whichcoincideswiththeendofthebaseperiodoftheIANAcontractonSeptember30,2015.”48

Thesamelanguagewasincludedintheappropriationsbillforfiscalyear2016.Yet,ifNTIAdecidesnottoextendthecontract,thereisnoquestionthatNTIAwillhaveusedappropriatedfundsduringfiscalyear2016toarriveat,andmake,thedecision.

InJune,NTIAissueda172-pagereportfindingthatthepackageofreformsproposedbyICANNtoitsgovernancestructure“meetsthecriterianecessarytocompletethelong-promisedprivatizationoftheIANAfunctions.”49Thisreportwasbased,inpart,onathirdpartystudyofICANN’sproposalcommissionedbyNTIA.Taxpayersfundednotonlythisstudy,butalsothesalariesofNTIAemployeeswhocommissionedandreviewedthosestudies,andwhowrotethefinalNTIAreport.50

46U.S. Const. Art. I, § 9, Cl. 7. (“No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law”).

47ConsolidatedAppropriationsAct,2016,Pub.L.114–113,Sec.539(2015),https://congress.gov/114/plaws/publ113/PLAW-114publ113.pdf.

48QuestionsandAnswersfromSenatorJohnThunetoLawrenceStrickling,AssistantSecretaryforCommunicationsandInformation,U.S.DepartmentofCommerce,(Feb.2015),https://www.commerce.senate.gov/public/_cache/files/893c7447-6ed3-495e-ae0f-bd99283e592b/29EA1DCC9B2EEF9EC20C84919898D353.wr---ntia-qfr.pdf.

49NationalTelecommunicationsandInformationAdministrationU.S.DepartmentofCommerce,IANAStewardshipTransitionProposalAssessmentReport,(June2016),https://www.ntia.doc.gov/files/ntia/publications/iana_stewardship_transition_assessment_report.pdf.

50IndependentReviewofInternetAssignedNumbersAuthority(IANA)StewardshipTransition,NTIA,“AwardSB1335-16-SE-0091,”(March22,2016),

16

NTIAarguesthatCongressdidnotbaritfrommerelystudyingtheissue,citinglanguageinaSenateReportcontemplatingthatNTIAwould“conductathoroughreviewandanalysisofanyproposedtransition.”51Ofcourse,itisthetextofthestatutethatcontrols,notanisolatedpieceoflegislativehistory.Butinanyevent,NTIAdidnotstopatmerelystudyingtheissue.NTIAstaff,includingtheAssistantSecretaryinparticular,informedICANNinwritingthat“barringanysignificantimpediment”theywouldnotexerciseNTIA’soptiontorenewthecontract.52Itisametaphysicalimpossibilitythatmakingthisdecision—asopposedtorenewingthecontractagain,asNTIAdidin2015—didnotrequireatleastsometimeofNTIAemployees.Obviously,itdid—whichmeansthatNTIAspenttaxpayerdollarsonthedecisiontorelinquishNTIA’scontractualrights.Asonescholarofappropriationsriderhasnoted,“thereisnodeminimisexceptiontoappropriationlimitations,justasthereisnodeminimisexceptiontotheconstitutionalappropriationsrequirement.”53

Makingthisdecisionalsochangedthecharacterofthosestudies,sincetheywereobviouslynotmerelyacademicstudiesofICANN’sreformproposalbutpartofNTIA’sdecision-makingastowhethertorelinquishitsrights.Technically,thisisirrelevant,because“thereisnodeminimisexceptiontoappropriationlimitations,”soeventhetimespentmakingthedecisionnottorenewwouldsuffice,butitdoesincreasethemagnitudeoftheviolationoftheappropriationsrider.54

Finally,NTIAarguesthattheriderprohibitsitonlyfromcompletingrelinquishmentduringfiscalyear2016—leavingNTIAfreetomakethedecisiontorelinquishitscontractualrightsduringfiscalyear2016providedthatthecontractdidnotlapsewithinfiscalyear2016.NTIA’sannouncementthatitwouldcompletetheTransitionattemptstoframetherelinquishmentashappeninginfiscalyear2017bysayingthatthecontractwilllapseatmidnightSeptember30,2016andthattheTransitionwillhappenonthefirstdayoffiscalyear2017.

https://www.fbo.gov/index?s=opportunity&mode=form&tab=core&id=0f5669edb5105610cd99f011edc643fd&_cview=0.

51LetterfromSteveHaro,AssistantSecretaryforLegislativeandIntergovernmentAffairs,UnitedStatesDepartmentofCommerce,toSenatorCruz,SenatorLankford,SenatorLee,SenatorDuffy,(June29,2016),(onfilewiththeauthor),availableathttps://www.ntia.doc.gov/files/ntia/publications/20160629_-_haro_response_to_cruz_lankford_lee_duffy_-_iana_0.pdf.

52SeeStricklingRemarks,supranote7.

53KateStith,Congress'PowerofthePurse,97YaleL.J.1343,1343(1988),http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?article=2282&context=fss_papers.

Andsalariesareclearlypartsubjecttoriders:

WhereCongressthusdeniesappropriations,thedenialisnotmerelyadeterminationthatthepublicfisccannotaffordspendinganymoneyonthatactivity.Bysuchappropriationslegislation,Congressdecidesthat,underourconstitutionalscheme,forthedurationoftheappropriationsdenial,thespecificactivityisnolongerwithintherealmofauthorizedgovernmentactions.

ThislegislativeactiondeniestheExecutiveallmeansofengagingintheprohibitedactivitybecauseemployeesalariesandotheroverheadcostsarealmostinvariablypaidoutofappropriatedfunds.

Id.at1361.AllofNTIA’ssalariesarepaidoutofappropriatedfunds.

54Id.at1362.

17

WebelieveNTIAismisreadingthestatuteforseveralreasons.Tostart,NTIA’sreadingwouldmeanthat,whenCongressoriginallyenactedtheriderin2014,itwasnot,infact,categoricallypreventingNTIAfromimplementingtheTransitionannouncedearlierthatyear;itwasmerelypreventingNTIAfromterminatingthecontractearlierthanAugust,2015—whenthecontractspecifiedthatNTIAmustprovidewrittennoticetoICANNofitsintenttoextendthecontract.Thisreadingisimplausibleonitsownterms,butitgrowsevenmoreimplausibleconsideringthatCongress,inSeptember2015,extendedtheriderintofiscalyear2016.SurelyCongressdidnotpasstwoeleven-monthlongprohibitions,eachwithamonth-longwindowattheendinwhichNTIAcoulddowhatwasforbiddentoitforthepreviouselevenmonths.Moreover,sincetheissuehasalwaysinvolveddecisionsthatmustbemadeinAugust,ratherthanterminatingitearlierineachone-yearcycle,NTIA’sreadingwouldrenderthestatuteeffectivelymeaningless.

Moreover,thewordingofthestatutesuggeststhatCongressintendedtotiethefiscalyearwindowtotheuseoftaxpayerfunds(i.e.,whenthedecisionnottoexercisetherenewaloptionwasmade),nottotherelinquishment(i.e.,whenthecontractactuallylapsed).Thecriticalphraseinthestatute,“duringfiscalyear2016,”issetoffbycommas.Grammatically,thesecommaswouldbeunnecessaryifthetimingclausereferredtoitsimmediateantecedent(relinquishment).Suchcommasservetoclarifythattheantecedentof“during”istheentirepreviousclause,whichis“[n]oneofthefundsmadeavailablebythisActmaybeusedtorelinquishtheresponsibilityoftheNationalTelecommunicationsandInformationAdministration”—and“used,”inthiscontext,canonlymean“makethedecisionnottoexercisetherenewaloption.”

Nootherreadingmakessenseinlightofthenatureofappropriationsriders,which,afterall,focusonwhattaxpayerfundsmaybeusedtodo.Andtheuseoftaxpayerfundsherewasinthedecisionoverrelinquishment,nottherelinquishmentdirectly.Thus,theridercanonlybeunderstoodtobaranydecisiontoexpendtaxpayerfundsduringfiscalyear2016inmakingadecisiontorelinquish,regardlessofwhentherelinquishmenthappens.

Andofcourse,CongressmayvotethisSeptembertoextendtheriderintofiscalyear2017—justastheydidlastSeptember.Ifso,willtheAdministrationreallythumbitsnoseatCongressandsay,“Sorry,toolate!”?

Thismayseem,especiallytonon-lawyers,likesomanyangelsontheheadofapin.ButthefundamentalissueatstakeisnothinglessthanthebalanceofpowersbetweenCongressandtheExecutive.OurreadingofthestatutedoesnotbartheTransitionforever.Itmerelysaysthat,solongasCongresschoosestorenewtherider,theNTIAcannotmakeadecisionnottoexercisetherenewaloptionduringthatfiscalyear.

IfaU.S.courtfindsthatNTIAviolatedtheappropriationsrider,theconsequencescouldbeserious.First,itcouldeffectivelyforceareversal,orderingNTIAtorenewthecontractorreplaceitwithanewone—whichwouldbemoredisruptivethansimplynegotiatinganotherextension.Second,NTIAofficialswouldalsobeinviolationofFederalcriminallaw,55andcouldbeprosecutedorimpeached.56

5531U.S.C.§1341(a)(1)(A)(“[a]nofficeroremployeeoftheUnitedStateGovernment...maynot...makeorauthorizeanexpenditureorobligationexceedinganamountavailableinanappropriationorfundfortheexpenditureorobligation”).

5631U.S.C.§1349(a).KnowingandwilfulviolationsoftheActresultinfinesofupto$5,000andimprisonmentofuptotwoyears.31U.S.C.§1350.

18

D. AntitrustLitigationWillBeUsedtoUndermineICANNICANNhasalwaysbeeninanawkwardposition.Itwascreatedtomaintainaunified,globallyinteroperableInternet.Ensuringthatdomainnamesworkthesamewayallovertheplanetisobviouslyagoodthing.ButithasalsoledtoclaimsthatICANNisessentiallyacartel.ThoseconcernshavegrownsignificantlyasICANNhasbecomeembroiledinfightsoverexpandingtheDomainNamespacetocreatenewTopLevelDomains(TLDs).ICANN’sfundamentalpoweristodecidewhogetscontroloverTLDs,bothnewoneslike.CPAandoldoneslike.COM.Astheamountofmoneyatstakehasincreasedoverall,andICANN’sbudgetexploded,fueledbyauctionswhoserulesaresetbyICANN,allegationsoveranti-competitiveconductabound.

Forinstance,ICANNrecentlyreceivedawhopping$135millionforauctioningoffthe.WEBTLD.57Undernormalauctionrules,theauctionproceedswouldhavebeensplitamongallthebidders.ButonebidderofferedtogivetheauctionproceedsdirectlytoICANN.ICANNgladlyagreedtothiswindfall—morethanits2016budget,$113million,whichisitselfastaggeringbudgetforanorganizationthatwascreatedtobeahumbletechnicalcoordinatingbody.Afterwinningtheauction,thatbidderwasacquiredbyVerisign,operatorofthe.COMregistry,raisingconcernsthatVerisignhadbeenwillingtopayahugepremiumforcontrolof.WEBastheclearestthreattoits.COMcashcow,andthatICANNwasalltoowillingtoplayball.Inthisandothersuchfuturefights,aplaintiffmightwellarguethatICANNwasinvolvedinaconspiracytofixpricesandperpetuateaVerisignmonopolyoverpremiumwebproperties.

Despiteclaimsbysome,itappearslikelythatICANNlostitsantitrustimmunityasa“stateactor”in2009,whenNTIAsignificantlyweakeneditspolicyoversightoftheIANAfunction.58Ifso,theTransitionwouldn’tchangeanything—legally:ICANNwassubjecttoantitrustsuitintheU.S.before,andwillremainso—andcouldprobablyhavebeensuedincertainforeignjurisdictionsanywaywherestateactorsaresubjecttosuit.Nonetheless,othersignificantantitrustissuesdoremainunanswered.Andthesamebasicconcernremains:thatantitrustlitigationcouldbeusedstrategicallybythosewhowanttomoveInternetgovernancetotheITU,ortoaWorldICANN.

Tostart,it’stroublingthattheAdministrationdoesn’tseemtohavethoughtthroughtheseissues.AsarecentWallStreetJournaleditorialnotes,theAdministrationwassentaFOIArequestregarding“allrecordsrelatingtolegalandpolicyanalysis...concerningantitrustissuesfor[ICANN]”thathavebeenraisedabouttheTransition.Theadministrationrepliedithad“conductedathoroughsearchforresponsiverecordswithinitspossessionandcontrolandfoundnorecordsresponsiveto[that]request.”

Inresponse,ICANN’sGeneralCounselwrotealettertotheWSJeditorreiteratingwhatCommercesaidbackin1998,whenitcreatedICANN:"ApplicableantitrustlawwillprovideaccountabilitytoandprotectionfortheinternationalInternetcommunity."Thisisanimportantclaim,becausethosedefendingtheTransitionpointtoantitrustlawasoneofthekeymeansbywhichU.S.courtscandisciplineICANN,punishinganticompetitiveconductanddeterringitfromhappeninginthefirstplace.Butit’snotclearhowtrueitreallyis.

57ICANN,ResultsAvailablefor27July2016NewgTLDProgramAuction(July28,2016),https://www.icann.org/news/announcement-2-2016-07-28-en.

58L.GordonCrovitz,,AnInternetGiveawaytotheU.N.,Aug.28,2016,TheWallStreetJournal,

http://www.wsj.com/articles/an-internet-giveaway-to-the-u-n-1472421165.

19

It’sadifficultquestionbecauseitrequiresthinkingthroughnotjustwhetherICANNcanbesuedintheU.S.(itcan)orevenwhetherthosesuitswouldsucceed,butwhethertheyshouldsucceed.Putdifferently,mightICANNbeabletogetawaywithanticompetitiveconduct?Orwouldantitrustdowhatit’ssupposedto:striketherightbalancebetweenover-andunder-enforcement,recognizingpro-competitivejustificationsforwhatmightlookanti-competitive,butproperlydismissingspeciousarguments.

ThemostrelevantlawreviewarticleonpointexplainswhyICANNlikelylostitsstateactorimmunitybackin2009,whentheAffirmationofCommitmentsdefinedICANN’sprimarycommitmentascoordinating“theInternetDNSattheoveralllevel”59—inotherwords,“greatlyrelax[ing]DOC’spolicyoversightoverICANN.”60EvenifLeppisrightthattheTransitionwon’tchangeICANN’stechnicallegalstatus,itwillatleastmakeiteasierforplaintiffstoovercomethestateactorimmunitydefenseifICANNraisesit.Andthat,inturn,willincreasethelikelihoodoflawsuitsagainstICANN,atleastonthemargins—simplybecauselawsuitsareexpensivetomanageandlessworthbringingifthechanceofgettingtossedoutisgreater.

Butifyoudon’tseeNTIAandICANNrushingtocitethisarticleonthispoint,it’llbebecausethemainthrustofthearticleisthatICANN,evenwithoutthestateactorimmunity,willbeverydifficulttoconstrainthroughtheantitrustlaws—hencethetitle,“ICANN'sEscapefromAntitrustLiability.”LeppexplainsanumberofreasonswhyU.S.antitrustlawsuitsagainstICANNwouldstumble.MostrelevantisICANN’sByzantinegovernancestructure.Whilethatis,intheory,designedtodiffuseinfluenceofparticularstakeholderstoensurethatICANNservestheoverallcommunityratherthanparticularinterests(good),thatstructurecouldjustaseasilybeusedtomasksuchinfluence(bad).SinceU.S.antitrustanalysishinges,inpart,ontheroleofcompetitorsindecision-making,thisopacitycouldbefataltoantitrustplaintiffs—eventheonesthathavelegitimateconcerns.

Moreover,whileICANN’sGeneralCounseldefinitivelydeclared,inthisWSJlettertotheeditor,that“ICANNisnot,andneverhasbeenexemptedfromantitrustlaws,”therearemajorcaveatstothatclaim.Underthesamegeneralcounsel,ICANNinvokedadifferentargumentbackin2012,whenitsoughttodismissanantitrustsuit61overfailingtoput.XXXupforcompetitiveauction,arguing:“ICANNcannot,asamatteroflaw,beliableundertheantitrustlawswithrespecttotheconductallegedintheComplaintbecauseICANNdoesnotengagein‘tradeorcommerce.’”62That’snotthesameasarguingthatICANNiscompletelyexemptasastateactor,sothetwoargumentsaren’texactlyinconsistent,butICANNislikelytomakethisargumentinallantitrustsuits.Totheextentitworks,U.S.antitrustlawwon’tdomuchtokeepICANNaccountable—ordeter,letalonepunish,anti-competitivebehavior.

59ICANN,AffirmationofCommitmentsbyTheUnitedStatesDepartmentofCommerceAndTheInternetCorporationforAssignedNamesAndNumbers,§8(Sept.30,2009),https://www.icann.org/resources/pages/affirmation-of-commitments-2009-09-30-en.

60JustinT.Lepp,“ICANN'sEscapefromAntitrustLiability”,Wash.U.L.Rev.,Vol.89,I.4955(2012),http://openscholarship.wustl.edu/cgi/viewcontent.cgi?article=1023&context=law_lawreview.

61ManwinLicensingInt'lS.A.R.L.v.ICMRegistry,LLC,2012U.S.Dist.LEXIS125126

62KevinMurphy,ICANN:antitrustlawdoesnotapplytous,DomainIncite(Jan.21,2012),

http://domainincite.com/7472-icann-antitrust-law-does-not-apply-to-us.

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Thisisn’ttosaythatICANNisnecessarilywrong,orthatitshouldloseanyparticularantitrustsuit.TherearegoodreasonswhyU.S.courtshavedismissedantitrustsuitsagainstumbrellagroupslikesportsleagues—becausetherearesolid,pro-competitivejustificationsforthingsthatseemanti-competitive.Limitingwhatindividualteamscando,howmuchtheypaytheirplayers,howtheydealwithbroadcasters,etc,canactuallymaketheoverallleaguehealthier.ButtheantitrustanalysisaroundICANNmaybemorecomplicated.Inpart,that’sbecauseofICANN’sparticularlyByzantinegovernancestructure.Aftersummarizingthatstructure,Leppconcludes,“Theopacityofthedecision-makingprocessobscureshowandwhyICANN’sdecisionsaremade….Thesourcesoftherecommendationsareburiedunderthismountainofbureaucracy.ICANN’scomplicatedproceduresmakeitdifficultforpotentialplaintiffstoproveantitrustabuses.”63Leppnotesthat“antitrustscholarsareincreasinglyskepticaloftheuseofintenttoevaluateantitrustabuses,”butalsothat“theSupremeCourtcontinuestoinvokeanticompetitiveintent.”64Inotherwords,anti-competitiveintentstillmattersinU.S.antitrustlaw,yetitcouldbehardtoproveinICANN’scase.

Totheextentthat’strue,thosewhoworrythatICANNmaybesubjecttocaptureandusedinanticompetitivewaysactuallyshouldworryabouttheTransition,notnecessarilybecausetheTransitionchangesthelegalanalysisoverwhetherICANNcanbesued,butbecauseifU.S.antitrustlawcan’tprovideaneffectiveremedy(ordeterrent),onecouldlegitimatelyworrythattheTransitionmeansgivinguptheleveragetheU.S.hasnow:thepossibilityofputtingtheIANAcontractoutforre-bid(toanorganizationotherthanICANN)ifICANNmisbehaves.

Andwhataboutforeignantitrustlaw?Foreigncourtsare,ingeneral,notonlymorewillingtoallowsuitagainststateactorsbutalsotodiscountpro-competitivejustificationsand,frankly,toallowfirmstobringsuitsagainsttheirrivals.Soit’sentirelypossiblethat,whileU.S.antitrustlawmightunder-enforce,ICANNcouldbevulnerabletoantitrustsuitinotherjurisdictions.

Onemightthinkthetwowouldbalanceout,andthatforeigncourtswouldallowvalidsuitsthatmightfailintheU.S.forwhateverlegalreason.Maybe.Buttherearesomanypotentialantitrustsuitsthatcouldbebrought.Whilethey’dall,nodoubt,beframedasprotectingconsumers,somemayreallyhavenarrowcorporateagendasorbroaderpoliticalagendas.

ChinaandRussiahavemadenosecretoftheirpushtogaingreatercontroloverInternetgovernance.Andthere’severyreasontothinktheywoulduseantitrustasaweapontothatend.Itwouldn’tbehardforthemtofind(orcreate)plaintiffstocarrytheirwater.Again,it’shardtosayexactlywhatthesuitswouldlooklike,butit’sclearwhattheirbasicobjectivewouldbe:toportrayICANNasacarteldominatedby,inparticular,Americancompanies.ThefactthatU.S.courtsmighthavetossedoutsuchsuitswouldsimplyhelpwiththepoliticalframing.ThegoalwouldbetosaythattheTransitionisn’tenough,thatInternetgovernanceshouldbetransferredtotheITU,whereitwouldbe“democraticallyaccountable”(i.e.,dictatedbygovernments).

Theoverallpointisthat,evenasICANNmaybesubjecttounder-enforcementintheU.S.,itmayyetbeveryvulnerabletoattacksabroadunderforeignantitrustlaw—whichmayhavelittledowithconsumerwelfare.AndweultimatelycanonlyknowthefateofICANNontheseissuesonlyafterICANNisactuallychallengedonthesegrounds.Thus,ataminimum,thetrialperiodforanindependentICANNshouldbeextendeduntilaseriousexaminationoftheantitrustimplicationsof

63SeeLepp,supranote54at953.

64Id.at953-954.

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ICANN’soperationisconductedbyNTIA.And,moreover,amajorelementofthisexaminationshouldbetheconsiderationofwhethertheU.S.shouldretainareversionaryinterestintherootzonefileshouldanypartysuccessfullychallengeICANN’soperationonantitrustgrounds.ThiswouldaccomplishthetwingoalsofbothcompletelyseparatingICANNfromtheU.S.whilealsoprovidingadisincentivetoforeigngovernmentswhothinkthattheycouldseizeoperationoftheDNSfollowingabusivelitigation.

E. DidNTIAViolateAdministrativeLaw?Insomeways,thisprocesshaslookedlikeanormaladministrativeproceeding:LastAugust,NTIAissuedaNoticeofPublicCommentseekingcommentontheIANAStewardshipTransitionPlanandEnhancementstoICANNAccountability.65ThisJune,NTIAissueditsreportonboth.66Sofar,thisistypicaladministrativeagencyprocess.

Butinbetween,somethingunusualhappened.That2015NoticeofPublicCommentdirectedcommenterstoprovideinputnottoNTIAitself,buttoIANAStewardshipTransitionCoordinationGroup(ICG)andtheCrossCommunityWorkingGrouponEnhancingICANNAccountability2ndDraftReport(CCWG-Accountability).NTIAdeclaredthatitwould“utilizetheinputprovidedinmakingitsdeterminationofwhethertheproposalshavereceivedbroadcommunitysupportandwhethertheplansatisfiesthecriteriarequiredtotransitionitsstewardshiprole.”

ThisisunusualbecauseNTIAeffectivelydelegatedthetaskofreviewingcommentstotwooutsidebodies.BoththeICGandCCWG-AccountabilitywerecreatedbyICANNatNTIA’srequest,butbothareclearlynon-governmental.It’salsoquiteclearfromNTIA’scorrespondencewiththesegroupsthatNTIAunderstoodwhatitdidasadelegationofauthority.67LessclearfromNTIA’sfinalreportishowthoroughlytheagencyactuallyconsideredthesubstanceofcomments—asopposedtosimplynotingthattheywerefiledandcongratulatingitselfforlisteningtoallstakeholders.

Forinstance,theNTIAreportbrieflydiscussestheSoleDesignatormodelbywhichthemulti-stakeholdercommunitywillindirectlygovernICANN(legalrightsarevestedinaseparateentity,theEmpoweredCommunity,whichappointstheICANNBoardofDirectorsandhasotherpowers)butsaysnothingatallaboutcommentsfromthecommunityrequestingthealternativestructure:theMembershipmodel,inwhichICANNstakeholderswouldhavehaddirectrightsasthevotingmembersofICANNunderCalifornialaw.Regardlessofthemeritsordrawbacksofeithermodel,thepointofadministrativelawisthattheagencyissupposedtoconsiderbothoptions—andexplainwhyitchoseoneovertheother.Onwhatmaywellbethemostfundamentalquestionfacingthe

65NTIA,InternetAssignedNumbersAuthorityStewardshipTransitionConsolidatedProposalandInternetCorporationforAssignedNamesandNumbersAccountabilityEnhancements(Aug.10,2015),availableathttps://www.federalregister.gov/articles/2015/08/10/2015-19525/internet-assigned-numbers-authority-stewardship-transition-consolidated-proposal-and-internet.

66NationalTelecommunicationsandInformationAdministrationU.S.DepartmentofCommerce,IANAStewardshipTransitionProposalAssessmentReport,(June9,2016)https://www.ntia.doc.gov/report/2016/iana-stewardship-transition-proposal-assessment-report.

67LetterfromLawrenceStrickling,AssistantSecretaryforCommunicationsandInformation,U.S.DepartmentofCommerce,toAlissaCooper,PatrickFaltstrom,MohamedElBashir,availableathttps://www.ianacg.org/icg-files/correspondence/Letter-to-ICG-May-6.pdf.

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newICANN,NTIAsimplydidnotdowhatadministrativeagenciesaresupposedtodo:avoidarbitraryandcapricious,orsimplyunexplained,action.68

ThisisclearlyaderelictionofNTIA’sresponsibilitiesasasupposedlyexpertagencyandbeliestheAdministration’sclaimstohavecarefullyconsideredthisissue.ButwhetheritactuallyviolatesadministrativelawisunclearbecauseNTIA’spenchantforutilizingmulti-stakeholderprocessesinrecentyearsfallsintosomethingofagrayzonenotclearlycontemplatedbyAmericanadministrativelawofwhichthecorewasenactedbackin1946.IfthereislitigationovertheTransition,thequestionwouldsurelyarise.NTIAwouldarguenotonly(i)thatithadfulfilledwhateverresponsibilitiesithadtoprovidereasoneddecision-makingbutalso(ii)thatitwasnotsubjecttotheAdministrativeProcedureAct.

TheAPAcoversall“rulemaking”(atermthathasbeeninterpretedquitebroadly)“excepttotheextentthatthereisinvolved—(1)a….foreignaffairsfunction…or(2)amatterrelatingto…publicproperty…orcontracts.”69NTIAwouldcertainlyinvokethefirstandthirdexceptions,whilevigorouslydenyingthattheTransitioninvolvedpublicproperty.Butwhilerecognizingthatanyagencymaypotentiallyclaimit,thecourtshaveinterpretedthe“foreignaffairs”exceptionnarrowly.70Thus,giventhattheIANATransitionwillhaveasignificanteffectupondomesticactivity(U.S.companiesandendusers),itseemsunlikelyacourtwouldallowNTIAtoclaimthisexception,lesttheoverallpurposeoftheAPA—toensurethatAmericanshaveanopportunitytocommentuponregulationthataffectsthem—bethwarted.

NTIAwouldhaveabetterclaimtothe“publiccontract”exception,sincetheTransitionrevolvesaroundagovernmentcontract.ButtheIANAfunctioncontractisthebedrockofacomplicatedstructureofInternetgovernancethatwouldhavebeenunfathomableasalegalorgovernanceconstructtotheCongressthatenactedtheAPAbackin1946(evensettingasidethetechnicaldetails).AndtheissuethatNTIAdelegatedtotheICGandCCWG-Accountabilityisn’tactuallythecontractortheTransition,butreformstoICANN’sgovernancestructure.NTIAhastiedthetwotogetherbysayingitwouldn’tcompletetheTransitionuntilthereformsweremade,butthey’redistinctissues—andit’sfarfromclearthatacourtwouldrulethatthisdelegationoftherulemakingprocessisexemptfromtheAPA.The“publiccontract”exceptioniswordedinaway—“excepttotheextentthatthereisinvolved...”)—toallowacourtampleroomtosaythattheissueNTIAdelegatedwasessentiallyarulemakingaboutInternetgovernance,ratherthanthenarrowerquestionofthecontract.

AndevenifacourtagreeswithNTIAthatthisiscoveredbythecontractexception,NTIAmayessentiallyhavewaivedthatargumentbyputtingthematteroutforpubliccommentinFederalRegisterinthefirstplace.Inotherwords,onceitdidso,itmayhavesubjecteditselftotheAPA’srequirementtodoitsownindependentreviewofthecomments—notmerelytoreviewICANN’sproposalbasedonthosecomments,orinlightofthem.

685U.S.C.§553(a)(1)-(2)

69Id.

70See,e.g.,VanessaK.Burrows&ToddGarvey,ABriefOverviewofRulemakingandJudicialReview,CongressionalResearchServiceReportforCongress,January4,2011,at6,http://goo.gl/lLCR0p(citingTomC.Clark,AttorneyGeneral,AttorneyGeneral’sManualOnTheAdministrativeProcedureAct,at26(1947),http://www.law.fsu.edu/library/admin/1947iii.html[hereinafterAGMANUAL].)

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IfNTIAdoessomehowsurvivetheseAPAissues,itfacesanotherlegalproblem:standingExecutiveOrdersgoverningagencyrulemaking,startingwithExecutiveOrder12866,issuedbyPresidentClinton,whichrequiresExecutiveagencieslikeNTIAtoconsideralternativestotheirregulatoryaction,andtoweighcostsandbenefits.71LiketheAPA,thisEOexcludes“foreignaffairs”functionsbut,unliketheAPA,doesapplytogovernmentcontracts.72IfacourtfindsthatNTIAfailedtomeetoneoftheEO’smanyrequirementsformorecarefullyconsideredrulemakings,itwouldblockNTIA’sactionasultravires—beyondthepowersgiventheagency.

Inbothcases,thelikelihoodthatacourtwouldfindaprocessviolationisgreatlyincreasedbythefactthattheviolationisprocedural—andsoistheremedy.AcourtwouldnotbesayingthatNTIAcouldn’tdoexactlywhatithasproposedtodo,onlythatitneedstodoabetterjobexplainingitself—bygivingthepublicachancetocommentconcernssuchaswe’veexpressedabove,andrespondingtothem.Thatwouldn’tstoptheTransition,butitwouldrequireatleastadelayofperhaps6-12months.

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IV. ConclusionWeinnowayquestionthecontinuedneedformulti-stakeholdergovernance.Justtheopposite;wearetryingtoensurethatmulti-stakeholdermodelisnotsetuptofaileitherbecausethemechanismscreatedtoempowertheICANNCommunityproveinadequateandICANNleadershipcontinuestobeunwillingtoacceptfurtherconstraintsuponitspowersorbecauseunansweredquestionsleadtocomplicationsdowntheroad.

AbsentinterventionbyCongressorU.S.courts,thecontractualrelationshipbetweentheU.S.governmentandICANNwillceaseattheendofSeptember.ThemanyoutstandingconcernsandquestionsshouldberesolvedbeforetheTransitionoccursbecause:

1. FailingtodosocouldputICANNInlegaljeopardy,creatinguncertaintythatthreatensthestabilityoftheDNS;

2. ThereformsdemandedbytheCommunityremainincomplete;3. AbsenttheU.S.contract,andthepossibilitythattheIANAfunctioncontractmightbere-bid

tosomeotherentity,theICANNBoardhasfarlessincentivetoyieldtocommunitydemandsforstrongeraccountabilityandtransparencygoingforward.

Forthesereasonswerecommenda“testdrive”periodto(i)resolvetheselegalquestions,(ii)verifythatthenewsystemworksasexpected,and(iii)toallowforthefullimplementationoftheremainingaccountabilityandtransparencymeasures.Forthetestdrivetoactuallytestthesemeasures,NTIAwouldindeedhaveto“transition”outofitscurrentroleinapprovingfinalchangestotheRootZonefile.73ButNTIAcandothatwhilealsoretainingtheauthoritytoreassertits

71Exec.OrderNo.12,866,C.F.R.Sec.1(Sept.30,1993),availableathttps://www.whitehouse.gov/sites/default/files/omb/inforeg/eo12866/eo12866_10041993.pdf.

72Id.

73PhilipS.Corwin,SenateOversightHearingExplores"TestDrive"ofIANATransition,CircleID(May27,20163:45PM),http://www.circleid.com/posts/20160527_senate_oversight_hearing_explores_test_drive_of_iana_transition.

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oversightroleandpreservingwhathasalwaysbeenitsmostfundamentalcheckonICANN:theabilitytorebidtheIANAfunctioncontract.

Inshort,werecommendapartialtransitionnow.“Trustbutverify,”beforecompletingthefulltransition.Isthatreallysoradical?

ManyintheICANNCommunitysharesomeofourconcernsorhavemisgivingsaboutvariousdetailsoftheproposalblessedbyNTIA—yethavekeptsilentinpublicforessentiallypoliticalreasons.They’vebeenconvincedbyU.S.politicalcommentatorsthathasteindevelopingandimplementingtheproposalisnecessarybecause,iftheTransitiondoesnothappennow,itwillneverhappen.Thisissimplynotcredible.Extendingthecontractwouldallowtimetoresolvesomeorallofourconcerns,butitwouldnotchangetheoutcome—atleastunderNTIA’slegaltheories.

HillaryClintonhasindicatedthatshesupportstheTransition.WearenotawareofDonaldTrumphavingexpressedapositionregardingtheTransition,butwenotethattheRepublicanPartyplatformopposesit.Inanycase,theTransitionisstillinevitableifNTIA’stwinlegaltheoriesarecorrect:(i)thattheU.S.GovernmenthasnopropertyinterestintheIANAfunction,and(ii)thattheappropriationsridercannotstoptherelinquishmentofwhatever“responsibilities”NTIAhas.Thecurrentcontractwillendin2019.After2019,continuedU.S.oversightwouldrequireanewcontract,whichICANNwouldhavetobepersuadedtoenterinto.Ifthemulti-stakeholdercommunityandmostoftheworld’scountriesarehappywithICANNandsupportICANNcontinuingitsroleabsentU.S.oversight,theU.S.won’tbeablecompelICANNtosignanewcontract.

Inotherwords,ifICANNfulfillsitspromisestotheCommunityonaccountabilityandperformsitsresponsibilitieswell,ICANNwillhavetheindependenceitdesiresby2019atthelatest.Buttheinterveningtimecouldbeinvaluableinvettingthisproposal,finishingincompletereforms,andresolvingoutstandinglegalconcerns.

AndifNTIA’slegaltheoriesarewrong,iftheTransitionrequiresCongressionalapproval,wewouldhaveavoidedafarmorecomplicatedsituation(litigationoverfailingtosatisfythatrequirement).Intheend,themostprudentpathistoengageCongress—theelectedrepresentativesoftheAmericanpeopleinoursystemofdividedpowers—andconvincethemthatconcernssuchasourshavebeenaddressed.Webelievethatcanhappenbutonlyafteratestperiodofonetotwoyears.

Eitherapproachwouldtaketime.ButtheInternetwillbestillaroundinayearortwo.Isn’titsfutureworthabitoftimetogetthisright?