[council] REPORT OF THE NAMES COUNCIL BUDGET COMMITTEE TO THE NAMES COUNCIL

["Cochetti, Roger" <RCochetti@verisign.com>]

The Budget Committee has two items to report to the Council:

First, a continuation of the Council's review of the recommendation
presented by the Committee in March regarding the failure of DNSO
Constituencies to pay their assessed dues to the DNSO.  A copy of the March
Committee report and proposal to the Council is attached.  It should be
viewed as a resolution placed before the Council by the Budget Committee.

Second, the Committee wishes to report that it has reached unanimous
agreement on a procedure that will be used to administer the funds
voluntarily donated to the DNSO.  The Council will recall that in April of
2000, the Budget Committee was asked to make arrangements for the collection
of voluntary donations to the DNSO (VeriSign had previously offered to match
any such donations that are used for professional support for the Council
and the DNSO up to $100,000.)  Many of those arrangements have been made by
the Committee, including the development of a "job description" for
professional support and the development of solicitation materials.  At the
March meeting of the Council, the Budget Committee reported that it had been
unable after several months of review to reach agreement on how the
voluntarily donated funds would be administered, however.  Among the options
it had had under review was to enter into a custodial arrangement with
either ICANN management or a newly created non-profit corporation
incorporated in the U.S. or France.  The Council expressed some frustration
that the effort to hire professional support for the DNSO had been held up
for several months because of the Committee's inability to take action on an
administrative matter (who would be custodian of the funds).  As a result, I
proposed that the Committee re-address this issue one more time and that if
it were unable to reach agreement, then it should be addressed by the full
Council.

The Committee's resolution, which primarily accepts an earlier proposal
presented to the Budget Committee by ICANN management but also contemplates
the use of a French non-profit corporation if the primary approach fails,
has now been communicated to ICANN management and we have asked them to
acknowledge our understanding and acceptance of their offer within five
days.

The notice to ICANN management and Budget Committee resolution are both
attached.

Our hope is that this action will now permit the solicitation of voluntary
donations to the DNSO to get underway fairly quickly. 





============================================================================
===============================================
MARCH 2001 REPORT AND RECOMMENDATION OF THE BUDGET COMMITTEE TO THE NAMES
COUNCIL

Regarding procedures to address the failure of DNSO Constituencies to
pay their assessed dues, the Committee proposes the following new
procedures:

>From the date that invoices are mailed/e-mailed to representatives of
Constituencies, if payment is not received by the DNSO or its agent by:

** 30 days, the Constituency is sent a reminder letter and another
invoice

** 60 days, the Constituency is sent a delinquency notice and the
delinquency notice is posted on the DNSO Website

** 90 days, the Constituency is sent a "show cause notice" (in which
they are asked to show cause as to why their voting rights in the Names
Council should not be suspended) and they are charged a 5% late payment
fee to cover the cost to the DNSO of the cost of money.  The 5% penalty
is added to that Constituency's dues for the next (not the current) DNSO
budget year and used only for the Names Council's "Reserve Fund."

** 120 days, the Constituency is sent a "final notice to pay" and
charged an additional 5% late payment fee, which is also due as a added
payment for their next year's DNSO dues and also used for the "Reserve Fund"

** 180 days, the voting rights, but not the right to participate, of
that Constituency's representatives to the Names Council are suspended
until such time as the DNSO or its agent receives all past due amounts
including the varies late payment fees.


These procedures are designed to conform with the attached sections of
the ICANN Bylaws and provide progressively greater pressure on
Constituencies that fail to pay their DNSO dues in a timely way.  They
are also designed to ensure that Constituencies that pay promptly do not
subsidize those who pay late or very late by imposing late payment fees
on late or very late payers.   


-----------------------------



Section 2. THE NAMES COUNCIL

(a) The NC shall consist of representatives, selected in accordance with
Section 3(c) of this Article, from each Constituency recognized by the
Board pursuant to the criteria set forth in Section 3 of this Article.

(b) The NC is responsible for the management of the consensus building
process of the DNSO. It shall adopt such procedures and policies as it
sees fit to carry out that responsibility, including the designation of
such research or drafting committees, working groups and other bodies of
the GA as it determines are appropriate to carry out the substantive
work of the DNSO. Each recognized Constituency shall be invited to
participate in each of such bodies. Each of such bodies shall provide
appropriate means, as determined by the NC, for input and such
participation as is practicable under the circumstances by other
interested parties. Any reports or recommendations presented to the NC
by such bodies shall be posted on a web site accessible by the public
for public review and comment; absent clear justification, which shall
be publicly stated at the time of any action, the NC shall not act on
any report or recommendation until a reasonable time for public comment
has passed and the NC has reviewed and evaluated all public comments
received. The NC is responsible for ensuring that all responsible views
have been heard and considered prior to a decision by the NC.

(c) Constituencies or GA participants may propose that the NC consider
domain name policies or recommendations. If the NC undertakes
consideration of a domain name topic, or if a Constituency so requests,
the NC shall designate one or more research or drafting committees, or
working groups of the GA, as appropriate to evaluate the topic, and
shall set a time frame for the report of such committee or working
group. Following the receipt of a report or recommendation from such a
body, the NC may accept the report or recommendation for submission to
the Constituencies for comment and consultation, or return the report or
recommendation to the body from which it originated for further work.
After the report or recommendation is submitted to the Constituencies
and the comment period for the Constituencies has expired, the NC shall
evaluate the comments to determine whether there is a basis for a
consensus recommendation to the Board.

(d) If two-thirds (2/3) of the members of the NC determine that the DNSO
process has produced a community consensus, that consensus position
shall be forwarded to the Board as a consensus recommendation, along
with all materials or other information that could reasonably be
relevant to the Board's review of that determination, including (but not
limited to) the dissenting statement(s) of any member(s) of the NC. If
more than one-half (1/2) but less than two-thirds (2/3) of the members
of the NC determine that the DNSO process has produced a community
consensus, that position may be forwarded to the Board as a NC
recommendation, along with statements of majority and minority views,
and any separate or dissenting statement(s) of any member(s) of the NC.
Any proposed recommendation that is not supported by an affirmative vote
of one-half (1/2) of the members of the NC may be returned to the body
from which it originated, or may be assigned to a new body, for further
work. In such a case, the NC may report to the board the lack of a
consensus and the steps, if any, it plans to take from this point
forward with respect to this particular recommendation. The NC is
responsible for ensuring that the Board is informed of any significant
implementation or operational concerns expressed by any responsible
party.

(e) The NC shall forward to the Board, from among those persons
nominated by the GA, its selection(s) for the Director(s) to fill any
open Board position(s) reserved for the DNSO. Any such selection(s) must
have the affirmative votes of at least one-half (1/2) of all the members
of the NC. At any given time, no two Directors serving on the Board
selected by the NC shall be citizens of the same country or of countries
located in the same Geographic Region.

(f) Unless shortened by the Board in its recognition of a Constituency,
the term of office for each member of the NC shall be two years.

(g) No more than one officer, director or employee of a corporation or
other organization (including its subsidiaries and affiliates) shall
serve on the NC at any given time.

(h) Meetings of the NC may be held (i) in person or via teleconference,
at the discretion of the NC, so long as all members of the NC
participating can speak to and hear one another or (ii) via electronic
video screen communication or other communication equipment; provided,
that (a) all members of the NC participating in such a meeting can speak
to and hear one another, (b) all members of the NC are provided the
means of fully participating in all matters before the NC and (c) the NC
adopts and implements means of verifying that (x) a person participating
in such a meeting is a member of the NC or other person entitled to
participate in the meeting and (y) all actions of, or votes by, the NC
are taken or cast only by the members of the NC or other persons
entitled to cast votes. A majority of the total number of NC members
then in office shall constitute a quorum for the transaction of
business, and the act of a majority of the NC members present at any
meeting at which there is a quorum shall be the act of the NC, unless
otherwise provided herein. Advance notice of such meetings shall be
posted on a web site that is available for public access and, if
reasonably practicable, at least 14 days in advance of the meeting.
Except where determined by a majority vote of members of the NC present
that a closed session is appropriate, meetings shall be open to physical
or electronic attendance by all interested persons. The NC shall post
minutes of its meetings to a web site that is available for public
access as soon as practicable following the meeting, and no later than
21 days following the meeting.

(i) The NC shall elect the Chairman of the GA annually.

(j) Administrative and operational costs of the DNSO shall be funded by
DNSO participants in a manner to be determined by the NC, consistent
with Section 4(c) below.

Section 3. THE CONSTITUENCIES

(a) Each Constituency shall self-organize, and shall determine its own
criteria for participation, except that no individual or entity shall be
excluded from participation in a Constituency merely because of
participation in another Constituency, and constituencies shall operate
to the maximum extent feasible in an open and transparent manner and
consistent with procedures designed to ensure fairness. The Board shall
recognize a Constituency (including the initial Constituencies described
in (b) below) by a majority vote, whereby the Constituency shall be
deemed to exist for purposes of these Bylaws.

(b) The initial Constituencies shall consist of (in alphabetical order):

1. ccTLD registries;

2. commercial and business entities;

3. gTLD registries;

4. ISP and connectivity providers;

5. non-commercial domain name holders;

6. registrars; and

7. trademark, other intellectual property and anti-counterfeiting
interests.

(c) Each Constituency shall select up to three individuals to represent
that Constituency on the NC, no two of whom may be citizens of the same
Geographic Region, as defined in Article V, Section 6, except that, with
the consent of the Board, this latter requirement may be suspended for
the term of a particular individual upon a showing that it is
impracticable for the Constituency to obtain such geographic diversity.
Any such waiver shall be granted only upon a commitment by the
constituency to a substantive plan to diversify its membership, thereby
minimizing the likelihood of the need for future waivers from the Board.
Notwithstanding the foregoing, no Constituency may have more
representatives on the NC than there are members of the Constituency.

(d) Any group of individuals or entities may petition the Board for
recognition as a new or separate Constituency. Any such petition will be
posted for public comment pursuant to Article III, Section 3. The Board
may create new Constituencies in response to such a petition, or on its
own motion, if it determines that such action would serve the purposes
of the Corporation. In the event the Board is considering acting on its
own motion it shall post a detailed explanation of why such action is
necessary or desirable, set a reasonable time for public comment, and
not make a final decision on whether to create such new Constituency
until after reviewing all comments received. Whenever the Board posts a
petition or recommendation for a new Constituency for public comment, it
will notify the names council and will consider any response to that
notification prior to taking action.


============================================================================
=======================================


ACTION BY THE BUDGET COMMITTEE REGARDING THE ADMINISTRATION OF FUNDS
COLLECTED FROM VOLUNTARY DONATIONS TO THE DNSO

NOTE TO ICANN MANAGEMENT

TO: STUART LYNN AND LOUIS TOUTON


Stuart and Louis-

As you will recall, over the past several months, the DNSO Names Council's
Budget Committee has been designing a structure for the administration of
the funds that we expect to be voluntarily donated later this year to the
DNSO. During our consideration of this subject, ICANN management represented
to us that it would be willing to enter into an agreement with the Names
Council under which ICANN management would be willing to serve as a
custodian for the DNSO of the funds that are voluntarily donated to the
DNSO.  Under this custodial relationship, as the Budget Committee discussed
it with ICANN management, ICANN management would be responsible for
faithfully executing financial decisions of the Names Council or its
designee, unless ICANN management feels that the execution by ICANN
management of any particular instruction would either be illegal or would
jeopardize ICANN's tax exempt status.  These decisions would mainly involve
the deposit or release of funds donated to the DNSO.

The Council has asked the Committee to resolve this administrative matter
quickly in order that the solicitation and generation of funds for the
voluntary fund can get underway.  Accordingly, the NC Budget Committee
approved the attached resolution last week in which we accept ICANN's offer
to administer these voluntarily-collected funds under defined circumstances.
Because we are anxious to proceed with this matter, the Committee asks that
you both confirm that you accept our understanding of your offer; and
acknowledge our acceptance of your offer within five days of today.

As an aside, I would note that the administration of these voluntary funds
is distinct from  -- but not entirely un-related to -- the administration of
the funds that are collected from the DNSO Constituencies for dues payments
to the DNSO.  The funds generated by the dues paid annually by the DNSO's
seven Constituencies have been administered by ICANN management since 1999
(without any formal agreement) and the Budget Committee will now begin an
examination of the administration of the funds generated by assessed
Constituency dues.

Thanks for your cooperation on this,

Roger Cochetti,
Chair
Names Council Budget Committee


============================================================================
========================================= 



The NC Budget Committee resolves to accept the offer by ICANN to administer
DNSO funds on the understanding that:
* ICANN will charge no administration fee
* ICANN management will dispense these funds according to instructions
from the Names Council or its designee, unless ICANN formally notifies the
Names Council and its Budget Committee that  to do so would either be
illegal or jeopardize ICANN's tax status.

To ensure that arrangements for the administration of DNSO funds are
completed in a timely manner, the Budget Committee requests ICANN
confirmation within 5 days to the arrangements outlined above.

The Budget Committee further resolves that, in the event that ICANN is no
longer willing to manage DNSO funds, it will  proceed with the establishment
of a custodial relationship for its voluntary funds by a non-profit
corporation that would be organized in, and under the laws of, France;
recognizing that this French non-profit organization may establish a bank
account for the DNSO's voluntary fund with a bank either inside or
outside of France.


============================================================================
============================================