OPENNESS & TRANSPARENCY

Leon Koay
(lkoay@law.harvard.edu)
and Michael Richardson
(mrichard@law.harvard.edu)
Harvard Law School

A. INTRODUCTION

Openness and transparency. What relevance do these words have to ICANN as an entity and in the way that it goes about its business? Two primary references are perhaps instructive. Firstly, the now-famous White Paper prepared by the US Department of Commerce (DOC), which contemplated that the new corporation taking over DNS management should be "governed on the basis of a sound and transparent decision-making process, which protects against capture by a self-interested faction." Secondly, the Memorandum of Understanding (MOU) between DOC and ICANN, which provides for both parties to cooperate towards achieving management of the functions set out in the White Paper "in a transparent, non-arbitrary, and reasonable manner."

Current Steps towards Transparency

How far has ICANN moved towards achieving this goal of transparency in the course of its operations? In its status report to DOC dated June 15, 1999, ICANN stated the steps taken towards this aim. These comprised (a) procedures in ICANN bylaws to "ensure that all points of view be considered before any decisions are taken", including "extensive notice and comment requirements"; (b) holding a public meeting immediately prior to regular quarterly Board meetings; and (c) immediately publicizing and explaining decisions taken after Board meetings. More recently, ICANN has expressed its commitment in the form of contractual stipulations in (a) its Registry Agreement with Network Solutions, Inc; and (b) the prospective Registrar Accreditation Agreement to be signed with all domain name registrars, in which ICANN assumes a general obligation to "exercise its responsibilities in an open and transparent manner."(NSI Registry Agreement, Section 4(A); Registrar Accreditation Agreement, Section II(C)(1))

Criticism of ICANN Steps

These measures towards transparency seem unsatisfactory to many, however. There has been much clamor about ICANN's decision-making methods; many criticize the closed Board meetings and argue that the processes leading up to Board decisions, which have so much potential impact on the (nowadays) high-stakes, many-interests game that is the Internet, should (a) be opened up for all to see; and (b) incorporate reasonable and fair opportunities for public/stakeholder input. Others take issue with the basis for Board decisions, and would like to see greater disclosure and accountability as to the rationale and policy underlying any Board action, e.g. how the Board measured the existence of consensus on any one issue. The cumulative of the clamor is a perception among many that ICANN decision-making is less-than-transparent at best, and 'secret' or 'clandestine' at worst. These perceptions are obvious impediments to any effort to build up legitimacy for, and trust in, ICANN.

The challenge for ICANN is, perhaps, to constructively address the concerns that underlie these perceptions and to figure out a way forward that balances or incorporates these concerns. As mentioned previously, the root concern of many complaints pertaining to current ICANN decision-making is that its disclosure model is wanting in many respects. There are arguments that ICANN should adopt procedures that are in line with state and federal open meeting laws (sunshine laws), by virtue, inter alia, of the fact that ICANN owes its raison d'etre to a government-sponsored initiative, or that it is effectively a government contractor. Alternatively, references are made to the types of disclosure mandated under securities laws of a publicly traded corporation (the diversity and variety of stakeholders being a strikingly similar feature of both ICANN and a publicly traded corporation).

A Consideration of Disclosure Models

Today's panel hopes to consider the following:
1. the disclosure model of a nonprofit public benefit corporation under California law (being the corporation law governing ICANN) and how ICANN's bylaws deal with this model
2. the essential features of state and federal sunshine laws
3. the essential features of public traded corporation disclosure under Securities Exchange Commission (SEC) regulation
4. how the features of 2 & 3 may relate to, or take shape within, ICANN
5. a possible roadmap towards meaningful openness & transparency

B. DISCLOSURE MODELS

1. Nonprofit Public Benefit Corporation

ICANN is incorporated as a nonprofit public benefit corporation under the California Nonprofit Public Benefit Corporations Law (NPBCL). This means, among other things, that ICANN is not organized for the private gain of any person. It is to be operated exclusively for charitable, educational and scientific purposes, and is intended to operate for the benefit of the Internet community as a whole. Unlike an ordinary corporation, the NPBCL does not envisage shareholders for a corporation. Instead, it provides for membership of a nonprofit public benefit corporation, which members are empowered with voting rights, generally similar to those accorded the shareholders of any ordinary corporation. The NPBCL also incorporates rights and mechanisms to provide member access to information and decision-making (much along the lines of, but not entirely similar to, ordinary corporation law), and specifies these as the minimum framework that a nonprofit public benefit corporation must offer its members. A summary of the features of member access to information and decision-making under the NPBCL is set out in Appendix A.

Non-Statutory Membership and Access to Information/Decision-Making

One notable feature of the NPBCL is that it allows a nonprofit public benefit corporation, not to have members; and in such situation, for the board of the corporation to be vested with the decision-making power that would otherwise be the domain of its members. This is the case with ICANN. ICANN's bylaws currently contemplate no membership. The bylaws do however, envisage setting up a mechanism for 'membership', albeit not members in the statutory sense of the NPBCL, and the provision of such 'membership' rights as the ICANN Board may deem appropriate. The effect of pre-emption of membership within the statutory sense is that the stakeholders of ICANN are not entitled to exercise any of the 'safety net' rights afforded by the NPBCL, and are reliant on ICANN bylaws per se to define their access to information and decision-making. While some may view this as undesirable, such a side effect is perhaps only one facet of the larger, more difficult equation that led to membership pre-emption in the ICANN context (the complexity of defining and identifying membership at the onset being another factor). Further, an ICANN-defined 'membership' (as opposed to a NPBCL one) may offer the opportunity to create a form of stakeholder participation (and, ipso facto, forms of decision-making processes) that fit the context, rather than apply a straitjacket.

2. Sunshine Laws

Policy

The Federal Government and most state governments have recognized a need on the part of the public to have access to the records and meetings of governmental agencies. "The overriding public policy is that government is the public's business and should be conducted in public so that the basis and rationale for government decisions as well as the decisions themselves are easily accessible to the people." (Schwing, 24) This policy has come to life in the Federal Freedom of Information Act (FOIA), the Federal Sunshine Act, and various state sunshine laws. Although there are differences in these laws in terms of who and what they apply to and in terms of the exemptions from disclosure that they allow, at their heart is the basic belief that openness and transparency lead to accountability and debate and that this in turn fosters better governance.

FOIA

The FOIA makes every federal agency record available to the public, unless the record falls within the ambit of one of the act's exemptions. These exemptions represent tradeoffs where the value of the information to the public had to be balanced against other concerns that were also of valuable interest to the public-- "such as the public's interest in the effective and efficient operations of government; in the responsible governmental use of limited fiscal resources; and in the preservation of the confidentiality of sensitive personal, commercial, and governmental information." (Kavass, 3). For example, exemption one of the FOIA prevents the disclosure of national security information, for the obvious reason that the secrecy of this information is vital to our country's security. Exemption two exempts from mandatory disclosure records "related solely to the internal personnel rules and practices of an agency." (Kavass, 53) One reason for this exemption is that the value of the information is less than the value in resources and finances that would have to be expended to make the information available. The other exemptions were enacted because of similar underlying reasons.

Federal Sunshine Act

The purpose behind the Federal Sunshine Act is to enhance the "public access to and understanding of government decision-making beyond that offered by the FOIA." (Adler, 303) The act accomplishes this by opening the meetings of multi-member federal agencies to the public. The importance of having open meetings is that they give the public an even greater opportunity to "learn how or why government officials make the important policy decisions which they do." (Adler, 303) It is important to note that although the meetings are open to the public, the public does not have a right to participate at these meetings. There are ten exemptions to the openness requirement. These exemptions are similar to the exemptions within the FOIA.

Sunshine in California

The state sunshine laws open local legislative body meetings to the general public. In California, for example, the Ralph M. Brown Act guarantees the public's right to attend and participate in meetings of local legislative bodies. The lawmakers of California believe that openness will lead to broad participation by the citizenry and this in turn will provoke debate and discussion from which "the best ideas will emerge." (The Brown Act) However, like the FOIA and the Federal Sunshine Act, California also recognizes that there are instances where the public's best interests are served by meetings being held in private. For example, California has an exemption for personnel meetings. These are meetings in which the discussion concerns the appointment, employment, evaluation of performance, discipline or dismissal of a public employee. (CA Gov't Code sec. 54957) A legislative body can also conduct a closed meeting to discuss pending litigation "when discussion in open session concerning those matters would prejudice the position of the local agency in the litigation." (CA Gov't Code sec. 54956.9) There are several other exemptions which are basically in place to protect either financial or security interests of the legislative body.

A brief outline of the essential features of sunshine laws in general is set out in Appendix B.

Relevance to ICANN

While ICANN does not readily fit into the definition of an agency or legislative body in the way that the Acts and courts have defined those terms, there are arguments that would place ICANN within the ambit of at least the federal sunshine laws, on account of its contractual relationship with DOC, and the unique nature of its task, i.e. the administration and management of systems with inextricable links to deep public and international interests. Even if ICANN were not subject to these laws, it would appear from the unique nature of its task, and the mandates of the White Paper and the MOU, that ICANN is indeed compelled to strive for standards that reflect the public character of its obligations.

In this regard, the Acts provide a wealth of information and knowledge which could be useful to ICANN in its struggle to determine the substance of the openness and transparency requirements found within its Articles of Incorporation and Bylaws. Specifically, ICANN can look to the history and reasoning behind these acts to help it answer some critical questions. For example, should "openness" mean that all meetings of the Board of Directors must be open to the public; and should the public be able to participate in these meetings? Should transparency be interpreted to mean that all of the documents and records produced by ICANN have to be made available to the public? What exceptions should there be to any disclosure rules that ICANN adopts? What, if any, procedural safeguards should be in place to ensure that ICANN lives up to its disclosure goals?

Questions of Application

(a) Should openness mean that all meetings of the Board of Directors must be open to the public? Although the Bylaws currently dictate that the annual meeting must be open to the public, regular meetings and special meetings face no such requirement. As was stated, the Sunshine Acts, both state and federal, require certain defined meetings to be open to the public in the belief that this openness results in more public awareness of the issues and decisions that effect them. Furthermore, in California the public has the right, within time restrictions enacted to ensure reasonable access, to provide testimony on the particular issues under discussion. This is done to stimulate discussion and debate and to hopefully create an environment in which the best ideas will emerge. If ICANN were to institute a similar policy, it would have to tackle the following questions. (i) What constitutes a meeting of the Board of Directors? (ii) Should the public be allowed to attend meetings held by Supporting Organization? And if so, should it be able to participate at those meetings? (iii) How much speaking time should be allotted to individual members of the public? (iv) How much notice should the public be given of an upcoming meeting, and how should this notice be given? (v) What exceptions to this openness should there be?

(b) Should transparency be interpreted to mean that all the documents and records produced by ICANN have to be made available to the public? The Bylaws currently mandate that the minutes of any Board, Supporting Organization, or Committee meeting be approved no later than 21 days after the meeting and then made available to the public via the Web Site or otherwise. They also stipulate a power for the Board to restrain or censor disclosure of the minutes pertaining to particular topics (save by a general or cursory reference). (i) Should there be a maximum non-disclosure period for those minutes that the Board has restrained or censored, so that they can eventually be opened up to scrutiny? (ii) What procedures will be in place to ensure the validity of Board determinations regarding restraint or censorship of minutes?

3. Publicly Traded Corporations Regulated by the SEC

The Securities Laws and SEC

Federal securities laws (the Securities Act of 1933 (SA), and the Securities Exchange Act of 1934 (SEA)) provide for, and empower the Securities Exchange Commission (SEC) to regulate, the kind of disclosure required of corporations whose stock or securities are publicly traded (the SEC disclosure model). The rationale for such a regulated disclosure model is perhaps well explained by the legislative history of the SEA, which states as follows: "No investor…can safely buy and sell securities…without having an intelligent basis for forming his judgment as to the value of the securities he buys or sells. The idea of a free and open public market is built upon the theory that competing judgments of buyers and sellers as to the fair price of the security brings about a situation where the market price reflects as nearly as possible a just price. Just as artificial manipulation tends to upset the true function of an open market, so the hiding and secreting of important information obstructs the operations of the markets as indices of real value. There cannot be honest markets without honest publicity." (Regulation of Corporate Disclosure, 2-5) It is perhaps interesting to note that Justice Brandeis, one of the staunchest proponents of a developed disclosure model for the stock market, argued the virtues of 'sunlight as the best disinfectant' against market abuse (Brandeis, 92).

A brief outline of the essential features of the SEC disclosure model is set out in Appendix C.

Relevance to ICANN

What does the SEC disclosure model have to offer ICANN? One feature of SEC disclosure is that it attempts to ensure availability and access to information that caters to the needs and interests of the varied and diverse stakeholders of a publicly traded corporation. The information disclosed in a Form 10-Q quarterly report would be sufficient to satisfy a day-trader holding 100 shares (who may only be interested in whether the company is still in the black) and a fund manager (who may wish to examine the financial data and prepare his own projections). The SEC rules incorporate a system of widespread public dissemination of such information, at a less than prohibitive cost. The regularity and predictability of the disclosure required creates an in-built alarm mechanism. The disclosure system has been crafted in a flexible enough manner to be capable of evolution, modification and adjustment over time, in tandem with the needs and interests of stakeholders at large. Also, the role of the SEC as overseer and enforcer of the disclosure rules provides third party review, thereby facilitating the balance between stakeholder interests in disclosure and genuine corporate compliance.

Developments over the past year have already made obvious how varied and diverse are stakeholders' interests in the Internet and DNS management. Perhaps the formulation of periodic reports, with structurally accepted and satisfactory content, may be one way to openness. ICANN may also wish to examine the workings of 'Management Discussion & Analysis' (MD&A) and apply the scope and depth of MD&A reporting to its own reports, or as part of an expanded explanation of Board decision-making. In addition, the incorporation of documents and proposals submitted by Internet stakeholders into ICANN periodic reports (along the lines of proxy statements or shareholder proposals under the SEC rules), coupled with widespread dissemination of the same, may serve as a signal of ICANN's openness and acceptance of varying and diverse views. Cumulatively, these possibilities may help signify clear commitment to candor, and submission to scrutiny in decision-making. .

C. CONFLICTS

As with any process, there exist conflicts. The following are salient aspects of the main poles of tension.

Flexibility vs Trusteeship
One concern about openness requirements has been that it sometimes hamstrings the decision-making process. A decision-maker often needs to decide very quickly on pressing issues, or to advocate several positions in order to achieve compromise. Disclosure or openness requirements in such situations may only serve to slow down decision-making, or to prejudice the decision-maker's ability to compromise. On the other hand, entities such as ICANN shoulder enormous tasks that are of interest to the general polity, and are consequentially viewed as trustees with the duty of acting in the best interest of the public at large. The public, accordingly, must always have the right to know, and to have power-holders account for the discharge of their trusteeship.

Free & Easy vs Check & Balance
Another aspect of conflict is the notion that closed meetings are conducive to uninhibited deliberation and discussion. The rationale is that decision-makers would be more inclined in a closed, familiar proceeding to be honest and candid with their views (instead of perhaps trying to sound moderate), and that this would facilitate truer, more substantive evaluations of the issues at hand. This needs to be balanced off against the desire of stakeholders to know the actual (and possibly diverse) views of their designated decision-makers, in the process leading up to the final determination. The ability for a stakeholder to know the thoughts of a particular ICANN director on topics at hand, and the director's rationales, facilitates stakeholder evaluation of the individual director's competency and contribution to the process.

Megaphone Advocacy vs Minority Marginalization
There are also concerns that too much openness could leave decision-makers too much at the mercy of factional/interest group pressures, i.e. subjugation to megaphone advocacy. The converse situation, unfortunately, is also unpalatable - where a lack of openness leaves valid, relevant minority opinions unheard, unconsidered and ultimately marginalized.

Too Much Too Early vs Too Deep Too Late
Openness at all points of the decision-making process also runs the risk of undeservedly early focus on an issue or potential course of action, to the extent that such early debates kill off the issue/course of action (on account of their perceived unpopularity) before decision-makers have had adequate opportunity to bring the underlying (and possibly brilliant) idea to full maturity. The counterbalance is the worry that, in the absence of transparency and early scrutiny, power-holders may have ample opportunity to skew decision-making or indulge in irresponsible/arbitrary determination, the consequences of which do not (due to lack of transparency) become discernible or manifest until much later.

Necessary Exemptions vs Transparency sans Mojo
Even in a scenario of transparent decision-making, there will be pressures to exclude and exempt various categories of information or proceedings from open scrutiny. The sunshine law exemptions are a case in point. The challenge is to discern and ascertain such exclusions as may be necessary (if at all), and in so doing continue to ensure that transparency as a tool/disinfectant, does not lose its bite.

Information Abuse vs Right to Know
Finally, a valid fear of open access to information and decision-making is the irresponsible use or abuse of the same, characterized by distortions of the information available, or quotes out of context that serve to unfairly demonize power-holders or the institution. While undesirable and regrettable, these still constitute free speech (in the absence of libelous elements), and must somehow sit with the overarching public demand to the right of scrutiny of its institutions.

D. THE GLOBAL/GEOGRAPHIC ASPECT

As if there did not already exist enough food for thought on the transparency/openness plate, ICANN must face one more hurdle in striving for the goals of its commitment to openness and transparency. This presents itself in the form of the global and geographically diverse origins of its stakeholders and contemplated participants. While it may be one thing to run an open-microphone town hall meeting (which, among others, presupposes that most interested citizenry would be able to either walk or drive to attend), it sure is another to convene a meeting that is open and accessible to interested Netizens from all over the world. Indeed, whatever solution emerges from the ICANN experience may be the pioneer of many geographically-emancipated forums in the future.

ICANN has already made an effort to address this challenge by holding its board meetings in different locations around the world. But any location on the planet will always be half-way around the world from somewhere, so the challenge has to be in creating a form or forms of meeting procedures and mechanisms that can adequately ensure:

consistently accessible participation and access to ICANN meetings, information and data
parity of access among stakeholders and interested parties from different geographic locations
that deficiencies in resources or technology do not hamstring or marginalize stakeholder / interested party participation.

Harnessing the very technology with which ICANN's existence is intertwined may be one answer. With the help of the Berkman Center, ICANN enabled remote participation with the use of webcasting and real-time comment submission by text for its meetings in Singapore, Berlin and Santiago, archives of which are available on the Berkman Center website (http://cyber.law.harvard.edu/icann). These efforts, though nascent and experimental, appear to be positive steps towards the ultimate aim of facilitating widespread stakeholder access.

Perhaps then, the response may be to enhance and widen the use of technology in the process, so that remote comments along the lines of videoconferencing become a norm, and remote online participation gradually develops and evolves to the stage that it becomes no less effective than the microphone at the town hall. These however give rise to concerns as to the availability of such participatory technology to all sections of the Netizen polity, and if ICANN is to fund the costs of such participation, or indeed their development. A converse argument may also require consideration, i.e. if there is adequate participatory technology, do ICANN meetings need to be nomadic at all?

D. CONCLUSION & ROADMAP

Whither the road to openness and transparency? The examples of the sunshine law and SEC-regulated models offer many leaves for ICANN’s book (an overview of ICANN meeting/disclosure procedures in comparison to those of the sunshine laws and SEC regulation is set out in Appendix D). How well (and indeed, if at all) these leaves can fit into the book will depend on how ICANN chooses to address the conflicts that surround any journey towards open and transparent decision-making, and the commitment of the parties involved towards achieving a meaningful concretization of the White Paper mandate.

For starters, enclosed to this commentary is a collection of existing ICANN bylaws which relate to openness and transparency, together with proposed bullet point comments and proposals for discussion. See Appendix E. Participants are invited to consider these bullets in tandem with the following questions:

(a) What actions should ICANN publicize in advance?
(b) Which actions require feedback and consideration of feedback? How should the feedback be acknowledged?
(c) Which actions should ICANN publicize after taking action? In what form?
(d) What information should ICANN offer and in what form or regularity?
(e) Which actions should ICANN take without disclosure? For what purpose (e.g., protect third parties' confidentiality)?
(f) What form should ICANN's meetings take? Should there be several forms of meetings?
(g) Who should have access to ICANN's books and records? Is there are need for third party independent/governmental certification or review?

E. APPENDICES

http://cyber.law.harvard.edu/icann/workshops/la/papers/appendix.html

Whither the road to openness and transparency? The examples of the sunshine law and SEC-regulated models offer many leaves for ICANN's book (an overview of ICANN meeting/disclosure procedures in comparison to those of the sunshine laws and SEC regulation is set out in Appendix D). How well (and indeed, if at all) these leaves can fit into the book will depend on how ICANN chooses to address the conflicts that surround any journey towards open and transparent decision-making, and the commitment of the parties involved towards achieving a meaningful concretization of the White Paper mandate. For starters, enclosed to this commentary is a collection of existing ICANN bylaws which relate to openness and transparency, together with proposed bullet point comments and proposals for discussion. See Appendix E.

Participants are invited to consider these bullets in tandem with the following questions: (a) What actions should ICANN publicize in advance? (b) Which actions require feedback and consideration of feedback? How should the feedback be acknowledged? (c) Which actions should ICANN publicize after taking action? In what form? (d) What information should ICANN offer and in what form or regularity? (e) Which actions should ICANN take without disclosure? For what purpose (e.g., to protect third parties' confidentiality)? (f) What form should ICANN's meetings take? Should there be several forms of meetings? (g) In the context of global participation, how should ICANN ensure equal or fair access among its stakeholders / participants to its transparency processes? (h) Who should have access to ICANN's books and records? Is there are a need for third party independent/governmental certification or review? Should an international entity be entrusted with such certification/ review duty?

Acknowledgments to Tamar Frankel for initial guidance; and Diane Cabell and Ben Edelman for comments.