Department of Commerce

Pursuant to a legislative requirement, GAO reviewed the relationship between the Department of Commerce and the Internet Corporation for Assigned Names and Numbers (ICANN), focusing on: (1) whether the formation of ICANN was in accordance with the Administrative Procedure Act (APA) and the Government Corporation Control Act; (2) how ICANN's interim board was selected and what role Commerce played in the selection of board members; (3) whether Commerce has the authority to enter into agreements with ICANN and to participate in ICANN activities; (4) what the legal basis is for the expenditures of funds by the Department for its participation in ICANN proceedings; (5) whether, under Office of Management and Budget Circular A-25, ICANN, as a project partner with Commerce, has authority to impose fees on Internet users to cover ICANN's operating costs; and (6) whether Commerce has the legal authority to transfer control of the authoritative root server to ICANN.

GAO noted that: (1) ICANN was formed by private parties in response to a policy statement issued by Commerce advising the public that the U.S. government was prepared to enter into an agreement with a new not-for-profit corporation formed by private sector Internet stakeholders to administer the domain name system; (2) before issuing the policy statement, Commerce had indicated that the privatizing of the domain name system management would be conducted under a rulemaking proceeding subject to the notice and comment procedures of the APA; (3) however, Commerce ultimately chose to issue a policy statement rather than continue with a rulemaking on privatizing the domain name system; (4) according to ICANN, the late Dr. Junpostel was primarily responsible for the selection of ICANN's interim board; (5) Commerce has entered into three major agreements with ICANN: (a) the memorandum of understanding for a joint domain name system project; (b) a cooperative research and development agreement; and (c) a sole source contract to perform certain technical functions relating to the coordination of the domain name system; (6) although the coordination of the domain name system has largely been done by or subject to agreements with agencies of the U.S. government, there is no explicit legislation requiring that the government exercise oversight over the domain name system; (7) regarding the cost of its involvement with ICANN, Commerce reports that during the period October 1998 through April 2000 it spent just under $250,000 on salaries and expenses arising from this relationship; (8) Office of Management and Budget Circular A-25, which relates to cost recovery through user charges by federal agencies, is not applicable to a nongovernmental entity such as ICANN; (9) however, ICANN is a project partner with Commerce under the memorandum of understanding, and it is Commerce's policy to allow project partners to recover only actual project costs; (10) Commerce has no specific statutory obligations to manage the domain system or to control the authoritative root server; (11) it is uncertain whether transferring control would also include transfer of government property to a private entity; (12) to the extent that transition of the management control to a private entity would involve the transfer of government property, it is unclear if Commerce has the requisite authority to effect such a transfer; and (13) currently, under the cooperative agreement with Network Solutions, the Department has reserved final policy control over the authoritative root server.