Approved Minutes - Regular Meeting of the PTI Board | 10 March 2019

A Regular Meeting of the PTI Board of Directors was held in Kobe, Japan on 10 March at 12:00 p.m. local time.

The following Directors participated in all or part of the meeting: Lise Fuhr (Chair), David Conrad, Kim Davies (PTI President), Trang Nguyen and Wei Wang.

PTI Secretary: Samantha Eisner (PTI Secretary).

The following Executives and Staff participated in all or part of the meeting: Aaron Jimenez (Board Operations Senior Coordinator (ICANN)); Becky Nash (PTI Treasurer); and Wendy Profit (Board Operations Specialist (ICANN)).

The PTI Secretary called the meeting to order and introduced the agenda.

1. Minutes from Prior Meetings

   The PTI Board considered the minutes produced from the prior PTI Board meetings, including an amendment proposed by the Chair. The PTI Board approved the minutes for posting through the following action:

   Resolved PTl.2019.03.10.01 the minutes of the 21 September 2018 and 20 December 2018 are approved.

   All PTI Board members in attendance approved of Resolution PTl.2019.03.10.01.

2. Appointment of Independent Auditor

   The PTI Treasurer introduced the resolution to the PTI Board, noting that the PTI Audit Committee recommended to the PTI Board that it appoint BDO as the independent auditor for the fiscal year 30 June 2019. The PTI Audit Committee had reviewed the prior year's engagement and considered the process well managed. In addition, the ICANN Board will be considering the appointment of BDO as the independent auditor for ICANN, and there are efficiencies in having the same auditor performing ICANN and PTl's audit given the affiliate membership structure of PTI.

   The PTI Treasurer explained that from a governance perspective, there are best practices as it relates to rotating either a partner within a firm and/or a firm change every five years. The PTI Treasurer informed the PTI Board that BDO's lead audit partner on rotation this year happens to be the lead nonprofit expert within the West Coast region for BDO.

   The PTI Board then took the following action:

   Whereas, ARTICLE 9 Section 9.1 of the PTI Bylaws (http://www.PTl.org/general/bylaws.htm) requires that after the end of the fiscal year, the books of PTI must be audited by certified public accountants, which shall be appointed by the Board.

   Whereas, the Board Audit Committee has discussed the engagement of the independent auditor for the fiscal year ending 30 June 2019 and has recommended that the Board authorize the President, or his designee(s), to take all steps necessary to engage BDO LLP.

   Resolved (PTI2019.03.10.02), the Board authorizes the PTI President, or his designee(s), to take all steps necessary to engage BDO LLP and BDO member firms as the auditors for the financial statements for the fiscal year ending 30 June 2019.

   RATIONALE FOR RESOLUTION PTl2019.03.10.02:

   The audit firm BDO LLP and BDO member firms were engaged for the ICANN annual independent audits of the fiscal year end 30 June 2014 through fiscal year end 30 June 2018. Based on the report from staff and the Audit Committee's evaluation of the rationale, the committee has unanimously recommended that the Board authorize the PTI President, or his designee(s), to take all steps necessary to engage BDO LLP as PTl's annual independent auditor for the fiscal year ended 30 June 2019 for any annual independent audit requirements in any jurisdiction.

   The engagement of an independent auditor is in fulfilment of PTl's obligations to undertake an audit of PTl's financial statements. This furthers PTl's accountability to its Bylaws and processes, and the results of the independent auditor's work will be publicly available. There is a fiscal impact to the engagement that has already been budgeted. There is no impact on the security or the stability of the ONS as a result of this appointment.

   This is an Organizational Administrative Function not requiring public comment.

   All Board members in attendance approved of Resolution PTI2019.03.10.02.

3. Operational Updates

   IANA Stewardship Transition Deliverables

   The PTI President discussed the status of meeting the contractual requirement that the employees seconded to PTI were to be transferred to PTI's direct employ by PTI by October 2019. The PTI President reported that effective 1 January 2019, the transfer of all but one employee has been completed, and that the transition of all employees will be completed by the deadline of 1 October 2019.

   The PTI President also provided inputs on two deliverables related to the performance of the root zone maintainer agreement with VeriSign:

   1. Emergency root DNNSEC rollover plan: In the event that either the Key-Signing Key (managed through the IANA functions) or the Zone-Signing Key (managed by VeriSign) is compromised, steps need to be established in order to resolve the issue. IANA and VeriSign are to mutually agree on a set of procedures and plans for emergency rollovers. The PTI President noted that it would take approximately one to two months to finalize the development, and Trang Nguyen commented that a draft document is currently being finalized and will be delivered to ICANN. Responding to a question from the PTI Chair, the PTI President clarified that no external consultation will be required for the plan, nor are there external parties that would need to participation in IANA's obligations under the contemplated plans or processes.
   2. Caretaker root zone maintainer plan: PTI and ICANN are currently discussing internally on developing a plan, in the event that VeriSign is unable to fulfill its obligations. Trang Nguyen commented that ICANN and PTI will review and discuss the draft document internally within the next several months.

   Finance Update

   The PTI Treasurer provided the PTI Board with the PTl's quarterly financial report for the six month period ending 31 December 2018. The quarterly financials are distributed to the PTI Board and thereafter published on the PTl's website.

   The PTI Treasurer explained that for the first six months of FY19, the total cash expenses are USD3.6 million as compared to the budget for the same period of six months ending December 2018 of USD4.5 million - reflecting a consolidation of the direct resources, and allocated resources from the affiliate sole member, ICANN.

   The PTI Treasurer further elaborated that the total cash expenses are below budget by USD1 million, and the primary drivers for the positive variance are lower than budgeted expenses, related to personnel expenses being under budget on the consolidated level of USD0.7 million (based on average IANA headcount being lower than budget due to unfilled position, as well as lower expenses at the shared services level). Many of the positions have now been backfilled.

   The PTI Treasurer highlighted that based on feedback received, the quarterly financial report now includes the three different components as separate schedules to provide more transparency to the variances. The PTI Treasurer also informed the PTI Board that the additional appendix provides the break out costs by the different cost pools, for the PTI Board's ease of reference.

   The PTI Chair sought clarification on the timing of the legal. The PTI Chair clarified that there is a negative variance, or it is higher than the budget, which is due to timing as it pertains to legal professional services that are allocated to PTI (part of the direct shared services).

   The PTI Chair also sought confirmation on the timing of the upcoming audit. The PTI Treasurer confirmed that the annual financial audit would kick off after the fiscal year end, 30 June 2019. Based on the current timeline, the preparation for the independent audit process would take place until end of September 2019, with the preliminary audit report and conclusions available in early October 2019. An annual audited financial statement is to be completed by end October 2019 under the bylaws and the laws of California. A preliminary audit report will be presented to the PTI Audit Committee. The PTI Treasurer emphasized that the independent auditors report to the PTI Audit Committee, and therefore the Chair of the PTI Audit Committee will engage directly with the independent auditors.

   Upon the acceptance of the audit results by the PTI Audit Committee, the same will be shared with the PTI Board and then published on PTl's website.

   PTI Operations

   The PTI President provided an update. First, with the numbering functions, the PTI President reported that PTI met 100% of the time for the reporting cycle. Notably, at the beginning of March 2019, the last blocks of IPv4 addresses were allocated, which demonstrates that the iPv4 space has been exhausted.

   For the numbering functions, the IANA Review Committee meets annually to review the prior 12 months of performance of the IANA numbering function and make an assessment if any changes are needed. The IANA Review Committee issued its annual report on 6 March 2019, which indicates that there were no concerns regarding the performance of the IANA Number Service Operations to meet the needs and expectations of its customers.

   For the protocol parameters functions, there is a monthly SLA that has been met 100% of the time. There is an annual review of the MOU with IETF and is currently revising the language of the MOU, to reflect recent change in the IETF's legal structure i.e., it has been incorporated as its own stand-alone nonprofit organization. Responding to Trang Nguyen's question as to the estimated timeline for the execution of the annual SLA for the upcoming year, the PTI President stated that it will potentially be executed at the IETF meeting in March 2019.

   The PTI President continued that in the last few weeks, a notable operational incident occurred. Some system upgrades were carried out internally which resulted in some old data being published temporarily that was noticed by the RIRs and rectified by PTI once notified. While the incident has not impacted the customers, the PTI is in discussion with the RIRs about potential remediations and also identified some improvements internally to avoid the same issue in the future.

   For the naming function, the PTI President reported that PTl's performance was either satisfactory or excellent for the last six months, owing to some minor non­ adherence to the SLAs. The issues have been identified as an issue with the CSC, which agrees that the SLA is too tight, and the CSC is reviewing how to update those SLAs. Prior to the last six months, PTI met its SLAs 100% of the time for the reporting cycle. The PTI President reiterated that these performance reports are not problematic or reflective of poor performance by the PTI team.

   The PTI President further informed the PTI Board that there has been an uptick in emergency change requests, owing to the "DNSpionage" in early 2019. In essence, a set of identified attacks occurred where accounts were compromised and allowed individuals to change configuration of domain names; and it is possible that some of these were used to impact nameservers that are used by TLDs. Therefore, as remediation, some TLDs requested for emergency change requests to change their nameservers to different ones. The PTI President emphasized that there is no vulnerability in ICANN or PTl's systems, and there is no indication that the root zone itself was compromised. The PTI Chair inquired as to whether the PTI is well-equipped to focus on this issue. The PTI President responded that ICANN is looking at the threat at a more holistic level and there is motivation to improve the general security posture of the industry as a result of the attack. While there is no remediation as a direct consequence of this type of attack, the PTI is mindful that such attacks impact PTl's customer base. Thus, PTI will study and identify any considerations that need to be included into the design of the systems.

   Wei Wang queried as to the PTI Board's position on the DNS Flag Day. The PTI President explained that recently, a DNS Flag Day 2019 was held with the aim of removing older DNS systems that are not in compliance with DNS standards, to ensure further sustainability of the system. This change will make most DNS operations slightly more efficient, and also allow operators to deploy new functionality, including new mechanisms to protect against DDos attacks. DNS software and certain service providers have agreed to coordinate removing accommodations for non-compliant DNS implementations from their software or services, on or around 1 February 2019. This change will affect only sites operating non-compliant software. The PTI President commented that the PTI was neither impacted nor involved in the DNS Flag Day. However, it is worth noting that the PTI takes a very conservative approach in managing the root zone.

   Trusted Community Representative Replacement:

   The PTI President reported that the KSK operations have been operating successfully following a key ceremony on 27 February 2019. Currently, PTI is in the process of appointing new community volunteers, based on a newly developed selection process. The process will be finalized, and a selection will be made in the coming weeks.

   IANA Functions Customer Survey Results:

   The progress has been 100% satisfaction across all non-question categories to date.

   As a continuation of the PTI Board's previous discussions on this topic, the PTI President informed the PTI Board that after ICANN63, a new tool was launched to measure customer satisfaction with the PTl's service i.e. a post-ticket survey at the end of an interaction. Based on several months' worth of data, the results have been encouraging. The PTI President noted that unsurprisingly, the PTI responds to a lot of question regarding the IANA which the IANA is not in the position to resolve. When the PTI team is unable to resolve their issues, the customers will rate the PTI negatively. At this juncture, the PTI team is trying to formulate a methodology to have a clear demarcation between questions that have been resolved that are within or beyond the PTl's remit.

   Internal Staffing:

   The PTI President reported that the PTI currently has 17 employees (one extra headcount that is planned, but not implemented). Three positions have been filled since the last PTI Board meeting, and all of them are internal transfers from ICANN. PTI is working with Human Resources to fill the remaining open position, taking the necessary steps to advertise for this position with a goal to fill the open position within the coming months.

   Additionally, PTI will work with Human Resources on some pending actions, i.e. planned promotions within the PTI team, and minor restructuring of reporting lines within PTI team.

   KSK Rollover:

   The PTI President reported that the KSK rollover is being executed as planned. During ICANN64 in Kobe, the PTI team will engage and obtain feedback from the community for purposes of developing an operational plan to manage and execute future rollovers.

   Wei Wang inquired as to when the next KSK rollover would take place. The PTI President responded that future rollovers will be modeled on the first rollover, subject to additional considerations e.g. changing the algorithm of the key. David Conrad added that the DPS suggests rolling the key after five years of use, which would presumably mean that the next KSK rollover would take place five years after the 2017 KSK was put into use. Additionally, David Conrad commented that OCTO has a write-up on the KSK rollover, and he is able to share a copy of the document to interested PTI Board members.

   IANA Naming Function Review (IFR):

   The PTI Secretary provided a brief update on the status of the IFR and the diversity-related issues for the composition of the IFR Team:

   • The Bylaws require that candidates for the IFR Team shall not be from countries from the same ICANN Geographic Region: Previously, there were no identified members from the APAC region. The ICANN organization has highlighted this issue to the appointing organizations and requested each to reassess their processes to ascertain whether they are able to fulfil the Bylaws' requirement. This issue has been addressed.
   • Appointment of a non-ccNSO ccTLD manager to the IFR Team: The ccNSO is required to appoint two ccNSO members and one non-ccNSO member ccTLD representative to the IFR Team. However, it faced difficulty in finding a non-ccNSO ccTLD manager, and thus has appointed a third ccNSO-member ccTLD representative on an interim basis until a non-member can be identified. The ICANN organization has communicated to the ccNSO that the ICANN organization is not able to agree with a proposal that does not comply with the Bylaws. However, if the other appointing organizations do not object to the interim appointment, the ICANN organization does not take issue with such appointment. The ccNSO requested the ICANN organization to seek confirmation from the appointing organizations whether they have any objection to the interim appointment of the ccNSO ccTLD representative.

   The ICANN organization received one objection among the appointing organizations, stating that the interim appointment is not aligned with the Bylaws.

   To kickstart the IFR as soon as possible, the ICANN Board is proposing the following options to the appointing organizations:

   1. The appointing organizations to agree to the interim appointment of the ccNSO ccTLD representative;
   2. The ccNSO to identify a non-ccNSO ccTLD representative; or
   3. To consider modifying the Bylaws.

   The ICANN CEO will also be advised to support the ccNSO in its outreach efforts in order to identify a non-ccNSO ccTLD representative. The PTI Secretary reiterated that the PTI will ensure that the IFR will take place as quickly as practicable, once this remaining issue is resolved.

   ICANN organization has also initiated discussion with all appointing organizations to discuss the Bylaws requirements and the proposed solutions. The process of amending the Bylaws would take approximately 6 months to complete.

   The ccNSO has been requested to submit a formal letter to the PTI, stating their request to amend the bylaws and the rationale for it.

   The Chair called the meeting to a close.