Board of Trustees Meeting Minutes - 24 May 2018 [Archived]

Teleconference

Attendees:

• Paul Andersen, Chair
• Bill Sandiford, Vice Chair
• Dan Alexander, Trustee
• Nancy Carter, Treasurer
• John Curran, President & CEO
• Patrick Gilmore, Trustee
• Aaron Hughes, Trustee

Note Taker:

• Nate Davis

ARIN Staff:

• Nate Davis, COO
• Richard Jimmerson, CIO

ARIN Counsel:

• Stephen M. Ryan, Esq.,

1. Welcome & Agenda Review

The Chair called the meeting to order at 2:02 p.m. EDT. The presence of a quorum was noted.

2. Consent Agenda

1. Approval of the Board Minutes of 16 April 2018. (Exhibit A)
2. Informational Item - Overdue Expenses (Exhibit B)

It was moved by Aaron Hughes and seconded by the Treasurer, that:

“The ARIN Board of Trustees approves the Consent Agenda, as presented.”

The Chair called for any comments. There were no comments.

The motion carried with no objections.

3. 2018 Board Appointment Committee Report

As the Appointment Committee Chair had not joined the meeting at this time this update was delayed until further in the meeting.

4. 2017 IRS Form 990

(Exhibit C)

On 18 May 2017, the ARIN Finance Committee (FinCom) met to review ARIN’s 2017 IRS Form 990 in order to recommend that the Board accept it for filing with the IRS.

The Treasurer indicated that the full Board received the materials and that the Finance Committee previously met to review the IRS Form 990. The FinCom was guided through ARIN’s 990 form by Yong Zhang with RSM LLC. The FinCom requested some minor corrections to the presented 990 form. The revised and final 990 form was presented to the Board for their review.

It was moved by the Treasurer, and seconded by the President, that:

“The ARIN Board of Trustees, based on the recommendation of the ARIN Finance Committee, and having reviewed the 2017 IRS Form 990, accepts this form and directs the President to file it with the IRS.”

The Chair called for discussion. There were no comments.

The motion carried unanimously via roll call vote.

5. ARIN 2017 Financial Audit Report

(Exhibit D , Exhibit E , Exhibit F)

On 11 May 2018, the ARIN Audit Committee (AuditCom) met to review ARIN’s 2017 Financial Audit Report in order to recommend that the Board accept it.

The Chair of the AuditCom noted that this year’s audit report had no significant deficiencies and had passed with ‘flying colors’. There was one noted item from last year regarding the 401K, and one new item noted for 2017 related to an accrual. The 401K item had been discussed at prior Board meetings and had been corrected.

The AuditCom Chair further noted that the AuditCom had previously requested that RSM LLC consider and make recommendations to the Committee for a financial controls audit for ARIN. At the recent AuditCom meeting, RSM indicated that a detailed and full financial controls audit a) is typically not done for an organization of this size, b) may cost up to $150K, and c) may require considerable staff time in hundreds, if not thousands, of hours. RSM suggested a middle ground proposal by auditing a few key financial control areas, which would be less costly, require less staff involvement, and would not require as many hours compared to a detailed controls audit. The estimated cost would be between $30K to $50K.

The Treasurer believed it was a good idea to conduct such a financial controls audit. The President agreed that a controls audit review for $30K-$50K is a good idea, and a good thing to do on a rotation basis - along with the other audits that ARIN has performed.

It was moved by Patrick Gilmore, and seconded by Aaron Hughes, that:

“The ARIN Board of Trustees, based on the recommendation of the ARIN Audit Committee, accepts the ARIN 2017 Financial Audit Report, as presented.”

The Chair called for discussion. There were no further comments.

The motion carried unanimously via roll call vote.

The Treasurer noted that what was approved was the annual financial audit review. The question that came up during her own review was that the financial reports are not reviewed and approved. The Chair asked for clarity on the review stating that the financial reports are implicitly accepted as part of the audit. The Treasurer further indicated that a review of the financial statements with the auditors stepping through the financials, and an explicit acceptance of those financial reports would be best.

The President noted that the current process of accepting the auditor’s report is standard practice, but an explicit adoption of the financial statements is also possible, and in the end the Board should do what they believe is best. The Chair requested that the AuditCom review the process and make a recommendation to the Board regarding next year’s financials - bringing a recommendation of the process to the Board in a timely manner.

The AuditCom Chair asked if the AuditCom should continue pursuing the internal controls audit and, if so, confirm that the Board was in agreement with a spend in the $30K-$50K range periodically for conducting an audit of selected financial controls by the auditors. The Board indicated its agreement with the proposal.

The Treasurer asked about the deferred accrual issue. The President indicated that he would speak to both issues: the accrual issue and the 401K issue. He provided background regarding the accrual issue, noting it was related to a bonus that he had received in 2017 as a matter of his employment contract. He further indicated that it had been a set of circumstances that will most likely not occur again. Regardless, staff will conduct a review of accruals during the monthly financial closings.

Regarding second item, the 401K had to be corrected with regard to payments being made to the President, and to the COO as previously discussed.

Bill Sandiford joined the teleconference at this time (2:13 p.m. EDT).

6. ARIN Fee Schedule Change

((Exhibit G , Exhibit H , Exhibit I)

The President noted that the slide deck regarding the proposed fee schedule change was the same one as originally provided to the Board with select changes made to the slide deck noted in green. He explained that during the ARIN 41 Public Policy Meeting, there was considerable feedback from legacy registrants. There are currently 528 Legacy Registration Services Agreement (LRSA) signatories and, of those, 492 are signatories to versions 1.X and 2.X, while the remaining 36 are signatories to versions 3 and 4. Fee changes were not going to greatly affect 492 LRSA signatories, as these earlier LRSA agreements contain a cap on the total legacy maintenance fees per organization per year. The other 36 later LRSA signatories that will be impacted by the proposed fee change and, of those, several were quite vocal regarding the impact of the maintenance fee change.

The President noted that the logic behind this revised fee change proposal is to address this concern by treating all LRSA holders the same and extend the present annual fee limit to the LRSA holders under later agreements. We will set the total maintenance fee cap at $1and raise it $25 a year as allowed per the agreements. Under this revised plan, we will still raise maintenance fees from $100 to $150 per object as planned; but, due to the extension of the legacy annual maintenance fee cap, the increase will have little (or favorable) net effect on legacy resource holders. This revision to the fee schedule change does not substantially change revenue overall; and, ARIN’s outlook for net to reserves after implementation remain essentially break-even as planned. The President noted that he plans to come to the Board each year with a $25 increase to the annual legacy maintenance fee cap, which over the long-term will result in legacy resource holders paying the same fees as end users.

The Treasurer indicated 2018 expenses do not match the 2018 budget expenses on the 5-year outlook, page 6 of the slide deck. The President and Nate Davis, clarified that they presentation contains the present forecasted expenses, not original budget expenses. The Chair requested clarification of that distinction in presented materials going forward. The Chair asked for clarification on the number of organizations who hold large number of objects and thus may be greatly impacted and what mitigation had been put in. The President indicated the vast majority of end-users hold one, perhaps two objects, but that there are approximately a dozen organizations holding many objects that would be significantly impacted by the fee increase, and that he will report back if any situations arose that warranted Board consideration of phase-in of the new fee schedule.

The Chair expressed reservations in proceeding with the fee. He noted a long-term goal of the organization was to move everyone to a single pricing plan, i.e., the Registration Services Plan (RSP), and ensure that plan offers very low entry points. He further asked that staff remain vigilant and investigate what end users perceive as a hindrance to adopting the RSP.

The President noted that the raising fees is independent of on-going tight cost management and staff will continue to effectively manage costs while looking for opportunities to move organizations to the RSP.

It was moved by President, and seconded by Aaron Hughes, that:

“The ARIN Board of Trustees hereby adopts the revised ARIN Fee Schedule, as presented.”

The Chair called for discussion. There were no further comments.

The motion carried unanimously via roll call vote.

7. ARIN Policy Matters

A) At their meeting on 18 April 2017, the ARIN Advisory Council recommended a proposed editorial change to ARIN’s Number Resource Policy Manual (Formerly 2017-11: Reallocation & Reassignment Language Cleanup), to the Board for adoption. The community review period for the editorial changes ended on 23 March 2018. ((Exhibit L)

It was moved by President, and seconded by Aaron Hughes, that:

“The ARIN Board of Trustees, based on the recommendation of the ARIN Advisory Council and having reviewed the editorial changes made to the ARIN Number Resource Policy Manual with regard to its reallocation & reassignment language, hereby adopts said changes.”

The Chair called for discussion. The President provided background indicating that 10 pages of editorial changes were a lot, but they are relatively minor changes since there are many places that have inconsistent language. Because of these inconsistent use of terms throughout Number Resource Policy Manual (NRPM), the number of changes being made is large. Staff has reviewed the proposed changes, as has the Advisory Council (AC), and they are presented here for the Board’s adoption.

The motion carried unanimously via roll call vote.

B) At their meeting on 17 May 2018, the ARIN Advisory Council recommended that the following ARIN Recommended Draft Policy for adoption by the ARIN Board: Recommended Draft Policy ARIN-2017-3: Update to NRPM 3.6: Annual Whois POC Validation. ((Exhibit M)

It was moved by President, and seconded by Aaron Hughes, that:

“The ARIN Board of Trustees, based on the recommendation of the ARIN Advisory Council, and noting that the Policy Development Process has been followed, adopts the following ARIN Recommended Draft Policy: 2017-3: Update to NRPM 3.6: Annual Whois POC Validation (including suggested implementation guidance that POC validation emails continue to be sent as normal for one year after implementation.)”

The Chair called for discussion. The President noted this policy basically encourages folks to keep their Point of Contacts (POCs) up to date. Once implemented, organizations will have to pay attention to the POC update reminders. The note about the implementation is because we need to continue to send reminders for transition purposes for one year after the implementation. This policy was well supported by the Community, discussed and supported by the AC, and moved to a last call period after ARIN 41. It is a modest proposal with regard to impact on ARIN’s engineering resources.

The motion carried unanimously via roll call vote.

C) At their meeting on 17 May 2018, the ARIN Advisory Council recommended that the following ARIN Recommended Draft Policy for adoption by the ARIN Board: Recommended Draft Policy ARIN-2017-8: Amend Community Networks. ((Exhibit N)

It was moved by President, and seconded by Aaron Hughes, that:

“The ARIN Board of Trustees, based on the recommendation of the ARIN Advisory Council, and noting that the Policy Development Process has been followed, adopts the following ARIN Recommended Draft Policies: ARIN-2017-8: Amend Community Networks.”

The Chair called for discussion. The President noted that the existing Community Networks policy has been lightly used in the past and, at the end of the day, it was decided to clarify the definition of ‘community networks’. He noted that the policy has the support of the Community, as there were no objections to it, and it is supported by the AC.

The Chair asked if this policy created a loophole to the fee schedule since a community network organization may be able to qualify as an end-user. The President indicated that goal is to make the policy more usable for these very small community networks.

The motion carried unanimously via roll call vote.

D) At their meeting on 17 May 2018, the ARIN Advisory Council recommended that the following ARIN Recommended Draft Policy for adoption by the ARIN Board: Recommended Draft Policy ARIN-2017-10: Repeal of Immediate Need for IPv4 Address Space (NRPM Section 4.2.1.6). ((Exhibit O)

It was moved by the Chair, and seconded by Patrick Gilmore, that:

“The ARIN Board of Trustees, based on the recommendation of the ARIN Advisory Council, and noting that the Policy Development Process has been followed, adopts the following ARIN Recommended Draft Policies: ARIN-2017-10: Repeal of Immediate Need for IPv4 Address Space (NRPM Section 4.2.1.6)

The Chair called for discussion. The President noted that since ARIN no longer has a free pool, and that those interested in getting IPv4 address space via the wait-list cannot immediately qualify, it no longer makes sense to have an immediate need policy within NRPM. This policy strikes that policy language. This policy is highly recommended by the community as they were strongly in favor and it is supported by the AC.

The motion carried unanimously via roll call vote.

E) At their meeting on 17 May 2018, the ARIN Advisory Council recommended that following ARIN Recommended Draft Policy for adoption by the ARIN Board: Recommended Draft Policy 2017-12: Require New POC Validation Upon Reassignment. ((Exhibit P)

It was moved by the Chair and seconded by the President, that:

“The ARIN Board of Trustees, based on the recommendation of the ARIN Advisory Council, and noting that the Policy Development Process has been followed, adopts the following ARIN Recommended Draft Policies: ARIN-2017-12: Require New POC Validation Upon Reassignment.

The Chair called for discussion. The President stated that when organizations create reassignments, it can result in a new but unvalidated Point of Contact (POC). For example, the result may be that small changes for one POC can create multiple contacts for the same person. Contact information should be correct. This policy indicates that ARIN should reach out to the POC and validate it before the reassignment referencing the POC is accepted and applied to the database.

In support of this policy, there would be a fair amount of systems work that creates some interesting states going through the validation process. For example, a new reassignment is received while a previous reassignment for the same block, or one that includes the same POC information, is in the 10-day validation approval queue. Again, the queuing and related systems work will be considerable. The Community is in favor of this policy and the AC moved it to the Board for adoption. It is important to note that it will require significant engineering work – a minimum of six months of labor while doing other work. In response to a query by the Chair, the President noted that the Board could consider the matter at a later time if desired, and that the Board has several options in moving forward with consideration of this policy, including rejecting, remanding, or sending the policy proposal back to AC for further consideration.

The Chair indicated a preference for delaying adoption of this policy until the Board can better understand the impact to the organization. Aaron Hughes reminded the Board of his previous COI disclosures noting that one of his affiliated organizations has systems that have automated this process, and it will be a significant impact to the systems he provides to modify them for this policy. He further noted that he does not believe that this will be easy for ARIN to implement as it will be challenging, if not impossible, to manage the various states.

Dan Alexander indicated agreement with the Chair in that he heard the Community’s views, but given the impact of the implementation, prefers that staff provide a more detailed resource impact analysis to ARIN of the implementation and that it include consultation with those impacted. The President indicated that one approach regarding the complexity of the implementation and possible cleaner design would be to put the onus back on the organizations that are inputting the data into the ARIN database to validate their new POCs before use. He suggested that perhaps the Board could remand this policy back to the AC to explore why organizations cannot create and validate POCs themselves, and then subsequently have organizations submit reassignments for association with those validated POCs.

The Chair indicated concern on the matter stating that the Board did not have enough information on the implementation cost at this time. The President indicated that staff can produce the operational delivery impact estimates. Bill Sandiford echoed the next steps that the Chair suggested but wondered if going back to the AC will be useful.

Dan Alexander clarified that he wants to better understand the implementation time-line and impact before accepting the motion.

The Chair requested that the President prepare an operational impact assessment and provide that to the Board.

The Chair withdrew the motion and noted the intention to discuss this item further at a future Board meeting once the impact assessment is available.

F) At their meeting on 17 May 2018, the ARIN Advisory Council recommended the following ARIN Recommended Draft Policy for adoption by the ARIN Board: Recommended Draft Policy ARIN-2017-13: Remove ARIN Review Requirements for Large IPv4 Reassignments/Reallocations. ((Exhibit Q)

It was moved by the Chair and seconded by Dan Alexander, that:

“The ARIN Board of Trustees, based on the recommendation of the ARIN Advisory Council, and noting that the Policy Development Process has been followed, adopts the following ARIN Recommended Draft Policy: ARIN-2017-13: Remove ARIN Review Requirements for Large IPv4 Reassignments/Reallocations.

The Chair called for discussion. The President noted that existing policy has ARIN reviewing large reassignments, which made sense when ARIN had a free pool and the community wanted consistency in handling of large assignments. ARIN no longer has a free pool and this policy removes the requirement in its entirety. He noted that the policy process was followed, and this policy is supported by the Community and by the AC.

The motion carried unanimously via roll call vote.

G) At their meeting on 17 May 2018, the ARIN Advisory Council also recommended an editorial change to RWhois references in the Number Resource Policy Manual (NRPM) (Formerly ‘ARIN-Prop-251: Correct References to RWhois’). The community review period for the editorial changes ended on 19 April 2018. ((Exhibit R)

It was moved by the Chair and seconded by Patrick Gilmore, that:

“The ARIN Board of Trustees, based on the recommendation of the ARIN Advisory Council and having reviewed the editorial changes made to the ARIN Number Resource Policy Manual with regard to references to RWhois, hereby adopts said changes.”

The Chair called for discussion. The President noted that there is no reason for the NRPM to mention a specific implementation with regard to RWhois, and that the language should be more generalized. The AC and ARIN staff consider these changes of an editorial nature, and the Community is aware of the forthcoming changes. Staff will proceed with making these editorial changes to NRPM, with the Board’s approval.

The motion carried unanimously via roll call vote.

8. ARIN Trustee Expected Qualifications and Responsibilities

((Exhibit J)

The Chair noted that the proposed Qualifications document reflected some thought on the status quo and was intended to clarify what was expected of a Board member. He asked the Board if this document was ready for publication. Bill Sandiford indicated that when they went through the appointment process for a Caribbean candidate, they had used part of this document and found that it was quite useful for that process. The Chair noted it was the sense of the Board to publish this document. He requested that staff comb through the website for duplicate or similar references and make sure that information is consolidated and directed correctly to this document.

It was moved by the President, and seconded by Bill Sandiford, that:

“The ARIN Board of Trustees adopts the ‘ARIN Trustee Expected Qualifications and Responsibilities’ document, as presented.”

The Chair called for discussion. There were no further comments.

The motion carried with no objections

9. Questionnaire For Potential ARIN Board Members

((Exhibit K)

It was moved by the President, and seconded by Aaron Hughes, that:

“The ARIN Board of Trustees adopts the ‘Questionnaire for Potential ARIN Board Members’ document, as presented.”

The Chair called for discussion. Bill Sandiford noted that the questionnaire was used for the appointment process for a Caribbean candidate and worked well. The Treasurer suggested that the questionnaire include an explicit question and an acknowledgment of the time commitment required of a Board member. She further noted that the question regarding Board experience was limited to nonprofit experience. The Chair indicated that the questionnaire was intended to draw out similar experience. Aaron Hughes asked if the Nomination Committee (NomCom) still had the ability to add questions to this questionnaire if desired. The Chair indicated that the NomCom could add questions, and that this document is really the base questionnaire. Aaron Hughes further suggested that it be made very clear to NomCom that this questionnaire is the static base document but they have the ability to add questions. Dan Alexander mentioned that this questionnaire and the NomCom Charter are slightly out of sync in that the Board must approve the questionnaire but the NomCom has the ability to add to it.

The President suggested amending the motion to note that:

“The ARIN Board of Trustees adopts the ‘Questionnaire for Potential ARIN Board Members’ document as presented, noting the ARIN Nomination Committee may add questions to the Questionnaire.”

The Chair called for discussion. The President explained the suggestion was made to avoid the need to modify the NomCom Charter.

There were no objections, and the Chair indicated acceptance of the amended motion.

Patrick Gilmore raised a question regarding questions about the sections 9, b and d.
Dan Alexander suggested that if the order of the questions was reversed, would that help satisfy the concern. Patrick Gilmore replied that it probably would.

The Chair suggested that the Board accept the questionnaire version presented today,
and to let Steve Ryan, ARIN General Counsel, come back to the Board after further consideration of the Board’s input, if needed. Steve Ryan and the President indicated they were both comfortable with the draft questionnaire, and the President indicated he believed it a major step forward.

The amended motion carried with no objections.

10. AFRINIC Status Update

The President provided a confidential status update to the Board regarding AFRINIC matters.

11. ARIN Legal Update

Steve Ryan provided an attorney-client privileged briefing to the Board.

Upon completion of Steve Ryan’s briefing:

It was moved by the Chair and seconded by Aaron Hughes, that:

“Based on the General Counsel Report, the ARIN Board of Trustees directs the President to hold a reasonable reserve of recovered IPv4 number resources to manage organization risk.”

The Chair called for discussion. There were no comments.

The motion carried unanimously via roll call vote.

12. ARIN Leadership Program

The Chair requested that this item be considered at the next Board meeting.

13. Any Other Business

The Chair called for any other business items.

The chair noted that due to time constraints that there was not time to still consider the Caribbean Appointment and asked the Committee Chair to provide an update to the Board list by the end of the week.

14. Adjournment

The Chair entertained a motion to adjourn at 4:11 p.m. EDT. The meeting was adjourned with no objections.