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Progress on Point

Volume 16, Issue 21 August 2009

Choosing the Right Path to a Permanent
Accountability Framework for ICANN
by Michael Palage & Berin Szoka*

The first major challenge confronting ICANN’s new CEO Rod Beckstrom is the pending
expiration of ICANN’s Memorandum of Understanding/Joint Project Agreement (MOU/JPA)
with the U.S. Government (USG)’s Department of Commerce.1 The situation became more
complex when House Energy & Commerce Committee Chairman Henry Waxman (D-CA),
Internet Subcommittee Chairman Rick Boucher (D-VA) and Committee Chairman emeritus Rep.
John Dingell (D-MI) released a letter on August 4, 2009 expressing their concern about what will
follow the MOU/JPA. The global Internet community will watch Beckstrom closely to see not
only how he handles this challenge, but also whether he’s able to manage it without falling still
further behind on ICANN’s growing list of important but unresolved decisions that have
significant implications for all uses of the Internet, e.g., proposed introduction of new ASCII and
internationalized Top-Level Domains, DNSSEC, IPv-6.

I. The House Energy & Commerce Letter
The Congressional letter clearly articulated widespread concerns about improving ICANN’s
accountability—concerns voiced by many ICANN stakeholders in response to the USG’s recent
Notice of Inquiry2 as well as in the community’s consultations with the ICANN President’s
Strategy Committee.3 In echoing these well-founded concerns, the letter deserves applause
especially its call for a permanent solution to hold ICANN “perpetually accountable to the public
and to all its global stakeholders.”
But this call, while well-intended, may ultimately undermine ICANN’s long-term independence
and credibility within the broader global Internet community. Rarely does anything within the

* Michael Palage is an Adjunct Fellow at the Center for Internet Freedom (CIF) at The Progress & Freedom
Foundation (PFF). Berin Szoka is a PFF Senior Fellow and CIF Director. The views expressed in this report are their
own, and are not necessarily the views of the PFF board, fellows or staff.
1. See generally Comments on the NTIA’s ICANN Notice of Inquiry, Michael Palage, June 2009,
2. See NTIA’s ICANN Notice of Inquiry, available at and collected responses, available at
3. See generally (linking to collected community comments).

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ICANN ecosystem happen within a vacuum or by happenstance: ICANN Staff and the USG are
likely already working to develop a solution to address concerns about the pending expiration
of the MoU/JPA while also addressing the specific recommendations of this letter.
In fact, ICANN CEO Rod Beckstrom will provide a JPA Progress Report at the upcoming special
meeting of the ICANN Board scheduled for August 27, 2009. The pending expiration of the
MoU/JPA and the Congressional letter’s “permanent instrument” will also likely be discussed at
length when the ICANN Board convenes for its retreat in early September, just weeks before
the current MoU/JPA is set to expire.
In 2006, Beckstrom co-authored the book The Starfish and the Spider: The Unstoppable Power
of Leaderless Organizations, explaining the advantages of organizations with highly de-
centralized “nervous systems” (managerial structures) like Wikipedia (a “starfish”) over highly
centralized organizations like Encyclopædia Britannica (a “spider”). Now, as leader of an
organization that sits like a spider at the center of a tangled web of issues that together are a
key part of “Internet Governance,” Beckstrom has the opportunity to address the accountability
conundrum that has dogged ICANN since its creation with a little starfish-like leadership.

II. Available Options
In the upcoming weeks Beckstrom and his staff will be briefing the ICANN Board on the likely
options available to the organization as expiration of the MOU/JPA approaches.

Option 1: Allow Time for ICANN and the Global Internet Community to Develop
a Permanent Accountability Framework
Since taking over the reins at ICANN, Beckstrom has demonstrated exactly the kind of
pragmatic approach to leadership one would expect from someone who co-authored an entire
book about the problems created by rigid, centralized management. So he may see the
prudence in extending the current MoU/JPA as long as necessary to allow the broader Internet
community to develop a permanent accountability framework. This approach also makes sense
given a number of other ongoing developments that may impact the future evolution of
ICANN’s accountability mechanisms.4
Instead of rubber-stamping a “permanent instrument” sketched-out by the Congressional letter
or simply walking away from the MoU/JPA, the ICANN Board should instead seek a temporary
extension, under whatever name, of the current agreement (months not years) while it engages

4. First, the ICANN Board is currently considering proposals to incorporate new accountability mechanisms
into ICANN’s bylaws, despite the fact that some of the existing bylaw accountability mechanisms are just now
being tested for the first time. Second, the first-ever Independent Review Panel began work earlier this year to
resolve a complaint filed by ICM Registry, LLC, concerning the ICANN Board’s rejection of their adult-oriented TLD
(.XXX). See A five-day hearing is scheduled to commence in Washington,
D.C., next month: September 21-25, 2009. Third, Lead Networks just filed for arbitration challenging ICANN’s
decision to let its Registrar Accreditation Agreement (RAA) with Lead Networks expire without renewal because of
Lead Networks’ failure to comply with the requirements of the agreement. See
Progress on Point 16.21 Page 3

in a proper consultation with the broader ICANN community on what the arrangement
currently being discussed between ICANN Staff and the USG should look like. And let’s not kid
ourselves: ICANN and the USG probably already have a working draft of just such a document.
The only question is whether the ICANN Board will consult with the broader Internet
community as their bylaws require, or will they unilaterally act in executing this document and
then answer questions later.
There are several provisions in the ICANN bylaws that explicitly mandate such consultation.
Specifically, Article III, Section requires that ICANN “shall operate to the maximum extent
feasible in an open and transparent manner.”5 Additionally, Article III, Section 6 of ICANN’s
bylaws mandates such a community consultation before agreeing to a new agreement or
walking away from the existing MoU/JPA, given the important public policy considerations at
1. With respect to any policies that are being considered by the Board for
adoption that substantially affect the operation of the Internet or third parties,
including the imposition of any fees or charges, ICANN shall:
a. provide public notice on the Website explaining what policies are being
considered for adoption and why, at least twenty-one days (and if practical,
earlier) prior to any action by the Board;
b. provide a reasonable opportunity for parties to comment on the adoption of
the proposed policies, to see the comments of others, and to reply to those
comments, prior to any action by the Board; and
c. in those cases where the policy action affects public policy concerns, to
request the opinion of the Governmental Advisory Committee and take duly
into account any advice timely presented by the Governmental Advisory
Committee on its own initiative or at the Board's request.
2. Where both practically feasible and consistent with the relevant policy
development process, an in-person public forum shall also be held for
discussion of any proposed policies as described in Section 6(1)(b) of this Article,
prior to any final Board action.
3. After taking action on any policy subject to this Section, the Board shall
publish in the meeting minutes the reasons for any action taken, the vote of
each Director voting on the action, and the separate statement of any Director
desiring publication of such a statement.6
ICANN’s legal counsel will likely dismiss these concerns by classifying any new document as a bi-
lateral agreement between ICANN and the USG, which therefore falls outside ICANN’s

5. (emphasis added)
6. Id. (emphasis added)
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transparency obligations under its Bylaws. But rather than blindly following this advice of
counsel, the ICANN Board should ask itself the following two questions:

If a document designed to “ensure that ICANN remains perpetually accountable to the
public and all of its global stakeholders” is not an important policy that will
“substantially affect the operation of the Internet or third parties,” what is?
Article XI, Section 2, subparagraph 1 requires the ICANN Board to notify the
Governmental Advisory Committee (GAC) “in a timely manner of any proposal raising
public policy issues” and to “duly take into account” that advice. Before, the ICANN
Board unilaterally determines that this new arrangement does not involve important
public policy considerations “that substantially affect the operation of the Internet or
third parties” should it not consult with the GAC?
Obviously the USG has no desire to negotiate a bi-lateral contract in a public forum. Similarly,
ICANN wants to put this issue in its rear view mirror and move on to other pressing issues.
Moreover, the noise likely to be generated within the broader Internet community regarding
this arrangement would be sure to test the limits of Rod Beckstrom’s ability to hear a symphony
within the cacophony of noise likely to be generated from such a public consultation. 7
However, if ICANN and the USG want to declare the ICANN model a success to the world,
shouldn’t the execution of this bilateral declaration comply with the very bylaws that it is
seeking to promote?

Option 2: Agree to a “Permanent Instrument”
But for ICANN’s recent change of CEO,8 current negotiations between ICANN Staff and the USG
would most likely have resulted in a “permanent instrument” modeled on the Congressional
letter’s six requirements. To better understand how this solution would have been “sold” to
the ICANN Board, the following analysis of the Congressional letter’s requirements provides a
“play-by-play” of how “a spoonful of sugar can make the medicine go down.”
1. “Ensure that the Department of Commerce continue in its present relationship with
respect to ICANN.”
At first blush, this may seem to be the most problematic of the letter’s requirements, but in
fact, the “present relationship” under the MoU/JPA provides the Department of Commerce no
real substantive power over ICANN. The MoU/JPA is simply a paper tiger with no teeth:
Maintaining the MoU/JPA façade is nothing more than “eye candy” for politicians in
Washington eager to score points with constituents that have been so vocal in their concerns
about ICANN’s accountability.

7. See Beckstrom’s address to the ICANN community in Syndey, Australia,
8. See Michael Palage, ICANN Regime Change: Exit Twomey, Enter Beckstrom, PFF Blog, July 10, 2009,
Progress on Point 16.21 Page 5

2. “Provide for periodic reviews of ICANN’s performance with respect to transparency and
accountability, the security and stability of the Internet, management of gTLDs and
implementation of any new gTLDs. These reviews would be in addition to the role the
Department exercises under the separate contract with ICANN for administration of the
IANA functions;”
Again, at first blush, this appears to give the USG substantial oversight authority over ICANN.
But again, the proposed “periodic reviews” are simply window-dressing. In fact, ICANN is
already essentially providing these reviews to the entire global Internet community in the form
of its current annual report, strategic and operational planning cycles; and ICANN’s periodic
review of its various Supporting Organization and Advisory Bodies. ICANN’s prior leadership
would also likely observe, to any reluctant ICANN Board members, that Article III of ICANN’s
Bylaws already requires ICANN to “operate to the maximum extent feasible in an open and
transparent manner.”9
3. “Outline the steps ICANN will take to maintain and improve its accountability;”
By now, the theme of the letter should be clear: All one needs to demonstrate to the Board to
“hit this one out of the park” is Article IV of ICANN’s Bylaws, which already requires that “ICANN
should be accountable to the community for operating in a manner that is consistent with these
Bylaws” and provides for specific procedures for ensuring “Accountability and Review.”10
Simply stated, the Congressional letter requires nothing more than ICANN is already required to
do under its existing by-laws.
4. “Create a mechanism for ICANN’s implementation of any new gTLDs and
internationalized domain names that ensures appropriate consultation with
ICANN has spent the past several years (and $30+ million) consulting the global community on
gTLDs through a small army of high-priced consultants, economists, staff and engineers. Next!
5. “Ensure that ICANN will adopt measures to maintain timely and public access to
accurate and complete WHOIS information, including registrant, technical, billing and
administrative contact information that is critical to the tracking of malicious websites
and domain names;”
This point would likely be the hardest to sell the Board, but with “four down and two to go,”
here’s how ICANN Staff’s sales pitch would likely unfold: WHOIS has been a “hot potato” since
the creation of ICANN and it’s highly unlikely that this proposal would bring peace and harmony
to the WHOIS Universe: A number of European directors would likely voice their concerns
about how this obligation might conflict with the European data privacy protection and
individual national laws. ICANN Staff would respond by noting that similar WHOIS language had
previously incorporated into the current JPA—yet this did not stop ICANN from exercising its

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authority to modify the WHOIS obligations under the .TEL registry to meet national data privacy
concerns, meaning that this requirement could easily be circumvented when expedient.
6. “Include commitments that ICANN will remain a not-for-profit corporation
headquartered in the United States.”
To complete this exercise in political kabuki theatre, the Board would be directed to past
representations made by ICANN officials that ICANN would remain headquartered in the U.S.
Despite these representations or the letter’s requirement, nothing would prevent ICANN from
creating additional legal presences in other countries as long as its headquarters remained in
the United States. Since this requirement was always going to be hard-coded into the much
more important IANA contract (ICANN’s other link to the U.S. Government), this requirement,
like the previous five requirements, is just another exercise in “smoke and mirrors.”
The above analysis of the Congressional letter demonstrates how easily a “permanent
instrument” could be sold to the ICANN Board—because the letter’s seemingly bold
requirements together amount to nothing more than a repackaged MoU/JPA, just as toothless
as the original, with some new multi-letter acronym yet to be invented that would enter the
already-overwhelming ICANN lexicon. And while some in the ICANN community may tout this
arrangement as a long-term solution to address ICANN governance and accountability, it is
merely kicking the same can down the road wrapped in a new acronym.
If, however, the ICANN Board succumbs to the pressure to sign off on a “permanent
instrument” that fails to comply with the openness, transparency, and accountability
requirements of ICANN’s Bylaws, the ICANN Board should at the very least incorporate a
provision into that document that acknowledges:

ICANN’s obligations under the bylaws to consult with the GAC and the broader Internet
community on important public policy considerations, and the recognition that this
agreement falls within that purview; and
The requirement that ICANN and the USG timely amend the agreement after its
execution to include any consensus points indentified within the broader Internet
community during subsequent public consultation.

Option 3: Walk Away
For much of the last year, ICANN Staff seemed unwilling to contemplate continuing any formal
contractual relationship with the USG.11 But in one of Rod Beckstrom’s first interviews as
ICANN’s new CEO, he declared that the current agreement should be renewed simply because
the current set-up had worked so well. Understandably, many in the global ICANN community
might assume the Congressional letter’s “permanent instrument” proposal originated with
Beckstrom. But in fact, it appears the concept actually originated with ICANN’s former CEO,

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Paul Twomey, shortly after his testimony before the House Commerce Committee this past
The problem with ICANN simply walking away from its relationship with the USG is that it raises
several difficult legal questions, the consequences of which could be significant for ICANN.
Some of these questions were originally laid out in the General Accounting Office (GAO) 2000
report13 and re-evaluated in our June 2009 response to the NTIA’s Notice of Inquiry regarding
the expiration of the MoU/JPA.14 Key among these questions are:
1. The ability of the USG’s Department of Commerce to transfer to ICANN the potential
“property rights” underlying the domain name system without Congressional
authorization to do so; and
2. ICANN’s continued ability to impose fees on registrars and registries as a “project
partner” of the USG on a cost recovery basis.
Even more pressing—in light of ICANN’s July 2009 amicus brief in the CFIT v. VeriSign
litigation—is whether ICANN enjoys immunity from U.S. antitrust suits under the Noerr-
Pennington doctrine.15 The appearance of this novel issue may, in part, be responsible for to
the prior ICANN administration’s embrace of a “permanent instrument” (that would preserve
ICANN’s immunity from suit).

III. A Starfish or Spider Resolution?
I (Palage) welcomed Rod Beckstrom selection as ICANN’s new CEO, noting that his speech at
ICANN’s Sydney meeting inspired the very sense of community once central to ICANN but lost
in recent years.16 For much of the last eighteen months, ICANN seemed to play a “game of
chicken” with the USG as to who would “blink first” regarding expiration of the MoU/JPA.17

13. Government Accountability Office, Department of Commerce: Relationship with the Internet Corporation
for Assigned Names and Numbers, July 7, 2000, available at
14. See supra note 1.
15. The Noerr-Pennington doctrine gives effect to the First Amendment right to lobby the government by
generally granting immunity under the antitrust laws for organizations that “petition” any government department
for redress for their petitioning conduct. Seeking to avoid antitrust liability for an alleged conspiracy involving
TLDS, ICANN argued that:
ICANN’s conduct in these decisions is not self-executing, but rather is implemented only by
proposing conduct to DOC, which, in turn, decides whether to adopt ICANN’s proposals. ICANN’s
conduct thus constitutes an “effort to influence government*+ action,” and is consequently
exempt from antitrust scrutiny.
ICANN Amicus Brief, Coalition for ICANN Transparency v. VeriSign, Inc., No. 07-16151 (9th Cir. filed July 13, 2009) at
13-14, available at
16. See supra note 8.
17. ICANN’s Game of Chicken with the USG & The Need for Adult (GAO) Supervision, Michael Palage, PFF
Blog, Dec. 22, 2008,
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Beckstrom could serve as a catalyst to recalibrate these discussions, and focus the ICANN
community on a permanent accountability framework that is more “starfish” than “spider.”
Instead of focusing on “spider”-esque permanent instruments with a single government,
Beckstrom and the ICANN Board should focus on more starfish-like solutions that both continue
the USG’s stewardship role and involve more governments that want to participate in the
unique private-public partnership known as ICANN—without compromising ICANN’s guiding
principles and commitment to private sector leadership. Only this outcome will ensure the
long-term viability of ICANN as a global trustee of the Internet’s unique identifiers.

Related PFF Publications
New gTLDs: Let the Gaming Begin, Part I: TLD Front-Running, Michael Palage, Progress
on Point 16.17, July 2009.
ICANN & Internet Governance: How Did We Get Here & Where Are We Heading?,
Michael Palage, Progress on Point 16.15, July 2009.
Comments on the NTIA’s ICANN Notice of Inquiry, Michael Palage, June 2009.
ICANN’s Economic Reports: Finding the Missing Pieces to the Puzzle, Michael Palage,
Progress Snapshot 5.4, June 2009.
ICANN’s Implementation Recommendation Team for New gTLDs: Safeguards Needed,
Michael Palage, Progress on Point 16.10, Mar. 25, 2009.
ICANN’s “Go/ No-Go” Decision Concerning New gTLDs, Michael Palage, Progress on
Point 16.3, Feb. 2009.
ICANN’s Game of Chicken with the USG & The Need for Adult (GAO) Supervision, Michael
Palage, PFF Blog, Dec. 22, 2008.
ICANN’s gTLD Proposal Hits a Wall: Now What?, Michael Palage, PFF Blog, Dec. 22,

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