[Ccwg-auctionproceeds] Auction Proceeds Mechanism A - Internal Department at ICANN

Erika Mann erika at erikamann.com
Wed Nov 20 06:14:06 UTC 2019


You’re absolutely right. We already said we would do this.

Erika 

Sent from my iPhone

> On Nov 19, 2019, at 8:50 PM, Alan Greenberg <alan.greenberg at mcgill.ca> wrote:
> 
> I agree that we should make a simple statement that ICANN's accountability measures cannot be used in relation to Auction Proceeds grant requests (regardless of who might file them). This has nothing to do with the approval of annual budgets. If the EC decides that the tranch allocated in the budget is not appropriate, it can still take action under its powers. We are proposing nothing related to the powers of the EC itself.
> 
> I presume the Board will ultimately approve whatever it approves contingent on the Fundamental Bylaw change being approved by the EC. If the EC does not approve it, we are back to square one (or somewhere, but do not have an Auction Proceeds plan that is workable).
> 
> If there are auction proceeds from further rounds, AND the ICANN Board decides they go into te same post as we have now, fine. If there are no auction proceeds or if they are designated for something else. fine.
> 
> Regarding Bylaws 25.4, note that the lead-in words are "for avoidance of doubt". The earlier section of 25 explicitly call out the process which is led by the Board. We have already approved a fundamental Bylaw change and the process is understood (I speak as a former member of the EC Administration).
> 
> Alan
> 
> At 19/11/2019 01:31 PM, Aikman-Scalese, Anne wrote:
>> Erika, Becky, et al,
>>  
>> Proposed Final Report and Consensus
>>  
>> I believe there was CCWG consensus regarding the need for a Fundamental ByLaws change as to the unavailability of Request for Reconsideration (RFR) and Independent Review Panel (IRP) in relation to applicants vis-à -vis  the grant-making process.  Here, the CCWG makes a NEW recommendation on page 23 of the Proposed Final report in relation to remedies available to applicants for grants.  This recommendation does not cover the possibility of RFR and IRP that might be filed by someone other than an applicant and I believe that risk must be controlled as well.  (It’s possible persons other than applicants could file an RFR or an IRP in relation to ICANN’s handling of the grant-making process.)  The Proposed Final Report should likely also reflect that this requires a Fundamental ByLaws change requiring approval by 3/4 of the EC because public commenters need to know this.
>>  
>> In the limited tracking I have done prior to becoming the voting rep for the CSG Chartering organization, I don’t recall any specific discussions in relation to a ByLaws amendment  relative to the powers of the Empowered Community established in the revisions to the ByLaws made in 2016 as a result of the Accountability Workstream 1 work.  Did the CCWG discuss these specific Empowered Community powers in relation to the Budget relative to use of Auction Proceeds?  Should the CCWG clarify that we are not recommending ByLaws changes in relation to EC powers? And if we do, does that make individual grants subject to EC powers (a result the CCWG does not want.)
>>  
>> To be specific, it does not appear to me from the Proposed Final Report that there has ever been a CCWG Consensus Recommendation in relation to (a)  availability of RFR and IRP to persons other than applicants for grants or (b) any effect on the EC powers memorialized in 2016 in relation to the use of Auction Proceeds funds.  
>> I sincerely hope we can clarify that  the CCWG is not recommending that the Empowered Community give up the Accountability processes contained in the ByLaws in relation to Budgeting of funds obtained via Auction Proceeds.  In my view as an active member of Subsequent Procedures, this is a long term concern since the Sub Pro WG is quite likely to confirm that auctions will remain the mechanism of last resort in string contention far into the future.   While I understand that “ability to Sunset” is important in relation to the principle of not trying to establish a long term principal endowment, it does seem appropriate to consider that future new gTLD rounds were always intended and are likely to proceed at some point.  Thus, future auctions are likely to result in additional auction proceeds.
>>  
>> Again, in order to be crystal clear on page 23 of the Proposed Final Report, it would also be helpful if Samantha could clarify how specific ByLaws amendments can be proposed based on the CCWG recommendations.  The ByLaws seem to provide in Article 25 that this cannot be “directly proposed”  by the CCWG itself so I assume that what the CCWG recommends would need to then lead to a formulation by the Board of a specific ByLaws amendment.  See attached section 25.4.  
>>  
>> Accordingly, in relation to the Proposed Final Report, I believe that the Recommendation (NEW) on page 23 should be reworked to clarify the CCWG Recommendations in relation to the needed ByLaws amendments.
>>  
>> Choice of Mechanism and Survey
>>  
>> Separately, in regard to the description of risk management I will need to provide to the CSG, I am trying to clarify whether it would be advisable (for the Board, ICANN org, the Community, and the grant recipients themselves)   to structure as follows:
>>  
>> (1) Fundamental ByLaws change to remove RFR and IRP from (a) remedies for applicants for the funds (b) remedies for anyone else who may have standing to file against ICANN decisions about Budgeting re use of funds inside the org and (b) ICANN decisions about how much to allot to grant-making in “tranches”.
>>  
>> (2) Preserve EC Powers as they stand in the ByLaws in relation to general Budgeting for both (a) the ICANN org use of the Auction Proceeds funds and (b) ICANN org budgeting of “tranches” for grant-making purposes.  EC powers as to the Budget process have a much higher threshold for challenging ICANN’s accountability than do RFR and IRP.  A challenge is not easily mounted and a forum must be convened, etc, etc. But I don’t think anyone would want the EC powers to apply to any individual grant.  So it seems we need to choose a structure that keeps the “Budget” aspect of an overall line item for grants within the EC Accountablity provisions but puts the individual grant-making outside the EC Accountablity powers.  (Perhaps I am wrong that individual grant-making could be subject to EC general powers if Mechanism A is utilized and if so, please advise.  I just don’t think the CCWG actually has a Consensus on recommending a ByLaws change in relation to the EC accountability powers.)
>>  
>> (3) To preserve the EC powers as to Budget, it would seem “cleaner” to  place the actual individual grant-making processes outside ICANN org and have the CCWG recommend and the EC acknowledge that specific individual grants are not subject to  the EC Budgeting powers if 
>> (a) they are made by a pre-existing non-profit with expertise in grant-making working under the guidelines provided by the work of the CCWG and in accordance with the Board’s oversight responsibilities and fiduciary duties.  (Mechanism B)
>> (b) or they are made by an ICANN Foundation formed with an independent Board of Directors similar to the manner in which PTI was formed with ICANN as the sole member of the corporation and thus well able to conduct oversight and fiduciary responsibilities.  
>>  
>> I appreciate any observations other CCWG members may have that will help bring me up to speed.
>>  
>> Thank you,
>> Anne
>>  
>> Anne E. Aikman-Scalese
>> Of Counsel
>> 520.629.4428 office
>> 520.879.4725 fax
>> AAikman at lrrc.com
>> _____________________________
>>  
>> Lewis Roca Rothgerber Christie LLP
>> One South Church Avenue, Suite 2000
>> Tucson, Arizona 85701-1611
>> lrrc.com
>>  
>> Because what matters
>> to you, matters to us.™
>>  
>>  
>>  
>>  
>>  
>>  
>> From: Erika Mann <erika at erikamann.com> 
>> Sent: Tuesday, November 19, 2019 7:52 AM
>> To: Becky Burr <becky.burr at board.icann.org>
>> Cc: Aikman-Scalese, Anne <AAikman at lrrc.com>; ccwg-auctionproceeds at icann.org
>> Subject: Re: [Ccwg-auctionproceeds] Auction Proceeds Mechanism A - Internal Department at ICANN
>>  
>> [EXTERNAL]
>> Becky - That’s what we agreed upon but in the light of Anne’s points raised, we should evaluate whether our judgement will not be contestable. 
>> Erika 
>> Sent from my iPhone
>> 
>> On Nov 19, 2019, at 3:33 PM, Becky Burr < becky.burr at board.icann.org> wrote:
>> Anne,
>>  
>> I think Sam is saying that Mechanisms A, B, and C would ALL require a fundamental bylaws change to eliminate the availability of IRP and Reconsideration with respect to individual grant awards.  I think we had strong consensus that decisions on individual grants should not be appealable using Reconsideration and IRP, and that a bylaws change should be pursued.  Inasmuch as the EC agreed to a fundamental bylaws change in Montreal, it seems all members have established the necessary processes.  
>>  
>> Please correct me if I am wrong, Sam.
>>  
>> Becky
>>  
>> On Mon, Nov 18, 2019 at 5:20 PM Aikman-Scalese, Anne <AAikman at lrrc.com> wrote:
>> Thank you Samantha.  I want to make sure I understand the implications for Accountability mechanisms and ByLaws amendments when presenting the options to the CSG.  As an initial matter,  could you please clarify one question as to Article 25.4 OTHER AMENDMENTS.  “Neither the EC, the Decisional Participants, the Supporting Organizations, the Advisory Committees nor any other entity or person shall have the power to directly propose amendments to these Bylaws”.  In this regard, I gather that the CCWG recommends and then the  Board itself will specifically propose a Fundamental ByLaws amendment in relation to Auction Proceeds.    Is that your understanding? 
>>  
>> It seems a bit unlikely that the EC will want to give up its powers in relation to the Budgeting process as regards the use of Auction Proceeds for (a) use for grant-making purposes (regardless of the mechanism chosen) OR (b) internal use by ICANN Org in its own budget.  (Perhaps that is why there is a bullet point in Board comment relative to the cost of complying with Accountability mechanisms.  However, this cost is identified in that Board comment that now appears on page 10 of the Proposed Final Draft as a cost associated ONLY with Mechanism A.   The other mechanisms are listed in the Board input as requiring the further development of independent Accountability mechanisms so that is a bit confusing.)  However, overall Budgeting is of course different from the making of individual grants per se.  I think we definitely need to protect individual grants from being revoked by the EC.
>>  
>> Fundamental ByLaws Changes
>> It appears that eliminating Request for Reconsideration (RFR) and Independent Review Panel  (IRP) Accountability mechanisms would be a Fundamental ByLaws change requiring 3/4 approval from the Empowered Community members (some of whom may not have implemented EC processes yet?)  Can you confirm this? (Article 25).
>>  
>> Mechanism B
>> In Mechanism B, ICANN works with an outside contractor already set up for non-profit grant-making.  In that case, it would seem that although overall Budget allocation and tranches may still be subject to Empowered Community processes, individual grants made by the pre-existing expert  non-profit would not necessarily be subject to being revoked through an EC process.  In other words, working with a qualified expert grant-making organization could reduce risk, including the risk to recipients of grants.  (EC processes could theoretically be used to affect or influence the choice of the independent expert non-profit organization and the amount being allocated in any “tranche”.)
>>  
>> Mechanism C
>> Re Mechanism C, when PTI was formed, the structure chosen was ICANN as sole member of a California non-profit public benefit corporation (Article 16.2).  I believe actions by the  PTI Board of Directors remain subject to Empowered Community accountability processes, but not to RFR and IRP, but am not sure.  Can you confirm?  If this is the case, could another California non-profit public benefit corporation be set up in the same manner for purposes of grant-making pursuant to Mechanism C?  (I am also wondering if outside legal resources were used to set up PTI or if this was done in-house.)  In other words, could another CA non-profit formed pursuant to Mechanism C be exempted from RFR and IRP, but NOT be exempted from other EC accountability mechanisms, in the same manner as the PTI formation was handled?
>>  
>> Many thanks for your patience with respect to questions which may already have been addressed in prior deliberations of the CCWG.  
>>  
>> Anne
>>  
>> .  
>> .
>>  
>> From: Samantha Eisner < Samantha.Eisner at icann.org> 
>> Sent: Monday, November 18, 2019 1:13 PM
>> To: Aikman-Scalese, Anne <AAikman at lrrc.com>; ccwg-auctionproceeds at icann.org
>> Subject: Re: [Ccwg-auctionproceeds] Auction Proceeds Mechanism A - Internal Department at ICANN
>>  
>> [EXTERNAL]
>> One other note - to your final question of "Has legal advice been provided as to whether the formation of an independent foundation might avoid the need to amend the ICANN ByLaws with respect to IRP, RFR, and Empowered Community provisions?​" 
>> 
>>  
>> 
>> From the legal perspective, we considered the interplay of the Bylaws/accountability processes with the different mechanisms and our conclusion is that, absent a Bylaws change to exclude individual grant actions from the IRP/Reconsideration processes, there still remains a risk of the use of ICANN accountability processes whether the grant disbursements are completed through Mechanisms A, B or C. With that, the need to address the scope of the accountability mechanisms through Bylaws changes exists across all three mechanisms.
>> 
>>  
>> 
>> ____
>> 
>> Samantha Eisner
>> 
>> Deputy General Counsel, ICANN
>> 
>> 12025 Waterfront Drive, Suite 300
>> 
>> Los Angeles, California 90094
>> 
>> USA
>> 
>> Direct Dial: +1 310 578 8631
>> From: Samantha Eisner
>> Sent: Monday, November 18, 2019 11:07 AM
>> To: Aikman-Scalese, Anne; ccwg-auctionproceeds at icann.org
>> Subject: Re: [Ccwg-auctionproceeds] Auction Proceeds Mechanism A - Internal Department at ICANN 
>>  
>> 
>> Thanks Anne.  For clarity as we look internally at the potential Bylaws changes that could be needed, when you are considering the potential for a Bylaws change to confirm that the EC's power "does not apply to such grant-making​", are there particular reserved powers that the EC holds to which you are referring? However the mechanism is formed (funding a supporting foundation through tranches or having an internal disbursement mechanism), there might be a need to consider the EC's ability to reject a budget/plan on the basis of ICANN fulfilling the program based on the CCWG's recommendations.  Are there other powers that you are also seeing as impacted?
>> 
>>  
>> 
>> ____
>> 
>> Samantha Eisner
>> 
>> Deputy General Counsel, ICANN
>> 
>> 12025 Waterfront Drive, Suite 300
>> 
>> Los Angeles, California 90094
>> 
>> USA
>> 
>> Direct Dial: +1 310 578 8631
>> From: Ccwg-auctionproceeds < ccwg-auctionproceeds-bounces at icann.org> on behalf of Aikman-Scalese, Anne <AAikman at lrrc.com>
>> Sent: Friday, November 15, 2019 4:41 PM
>> To: ccwg-auctionproceeds at icann.org
>> Subject: [Ccwg-auctionproceeds] Auction Proceeds Mechanism A - Internal Department at ICANN 
>>  
>> <image001.gif>
>> On the topics of “Accountability” and “Best Practices”, has anyone looked at whether the grant-making function placed inside an internal department of ICANN would be subject to review under the Empowered Community Accountablity rules?  On page 10 of the current draft, there is a bullet point called “On-going costs only in Mechanism A – Management and support of ICANN’s accountabiliity mechanisms triggered by the grant distribution activity (if any.)”  
>>  
>> In terms of risk assessment, I really can’t see the grant-making process being subject to the Empowered Community accountability procedures.  On the other hand, I don’t know that the EC will readily accept amending the ByLaws for purposes of getting the grant-making outside the EC process.   This is especially true in that all the Accountability work was done in CCWGs in two lengthy work-streams.   I apologize if this was previously discussed by the CCWG – doing my best to catch up.
>> <  
>> If we think that the ByLaws would need to be amended not only to remove the availability of the Request for Reconsideration (RFR) and the Independent Review Panel (IRP), but also to be amended to state that the power given to the Empowered Community does not apply to such grant-making, then we should say so in the  Proposed Final Report.
>>  
>> Has legal advice been provided as to whether the formation of an independent foundation might avoid the need to amend the ICANN ByLaws with respect to IRP, RFR, and Empowered Community provisions?
>>  
>> Thank you,
>> Anne
>>  
>>  
>> <image002.png>
>> Anne E. Aikman-Scalese
>> Of Counsel
>> 520.629.4428 office
>> 520.879.4725 fax
>> AAikman at lrrc.com
>> _____________________________
>> <image003.png>
>> Lewis Roca Rothgerber Christie LLP
>> One South Church Avenue, Suite 2000
>> Tucson, Arizona 85701-1611
>> lrrc.com [lrrc.com]
>> <image004.jpg>
>> Because what matters
>> to you, matters to us.™
>>  
>>  
>> 
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