[arin-ppml] ARIN-prop-173 Revisions to M&A Transfer Requirements (Updated Version)

[David Farmer]

I do not support this policy as written.

However, I do support removing needs justification for all M&A transfers.

I believe this can be simplified significantly, the legacy resource 
language is not necessary and can be eliminated.  All M&A transfers 
should not be required to demonstrate need as long as the transfer in 
question is a name or organization structure change, or a merger or 
acquisition were the number resources are transferred with all other 
assets or with a substantial portion of the assets an organization, 
especially including the equipment that utilizes the number resources in 
question.  If the number resources are the sole asset or the only 
substantial asset being transferred then an 8.3 transfer with needs 
justification should be required.

I don't not believe it is necessary to make a distinction between legacy 
and non-legacy resources to accomplish the intended result of removing 
needs justification for M&A transfers.

I do agree that needs justification on M&A transfers creates a 
significant disincentive for legacy resources holders to keep the 
registry properly updated.  But the policy change shouldn't be specific 
to legacy resources or resource holders, it should apply equally to all 
resources and resource holders.

On 7/5/12 11:08 CDT, ARIN wrote:
> ARIN-prop-173 Revisions to M&A Transfer Requirements
>
> The proposal originator revised the proposal.
>
> Regards,
>
> Communications and Member Services
> American Registry for Internet Numbers (ARIN)
>
>
> ## * ##
>
>
> ARIN-prop-173 Revisions to M&A Transfer Requirements
>
> Proposal Originator - Marc Lindsey
>
> Date - 5 July 2012
>
> Policy type - Modification to existing policy
>
> Policy term - Permanent
>
> Policy Statement
>
> Delete sections 8.1. and 8.2 in their entirety and replace them with the
> following:
>
> 8.1 Principles
>
> ARIN will not change its registration databases to record the transfer
> of number resources between organizations unless such transfer complies
> with this Section 8. ARIN is tasked with making prudent, fair and
> expeditious decisions when evaluating registration transfer requests.
>
> It should be understood that number resources directly assigned or
> allocated by ARIN are not 'sold' under ARIN administration. Rather, such
> number resources are assigned by ARIN to an organization for its
> exclusive use, provided the terms of the applicable Registration
> Services Agreement between ARIN and the organization governing use of
> such number resources continue to be met by such organization.  Number
> resources administered and assigned by ARIN are done so according to
> ARIN's published policies.
> ARIN directly assigns and allocated number resources, based on justified
> need, to organizations, not to individuals representing those
> organizations.
>
> The transfer policies in this Section 8 create certain exceptions and
> exclusions for legacy numbers ("grandfather policies").  The grandfather
> policies are intended to satisfy key policy objectives while promoting
> greater participation in the ARIN community by organizations holding
> legacy numbers.  The grandfather policies allow organizations holding
> legacy numbers to retain some of the historic benefits attached to their
> legacy numbers.
>
> The benefits of the grandfather policies are not available for legacy
> numbers if:
>
> (a) they are voluntarily and permanently released by the original
> registrant or its successor (or assign) to an RIR for re-issue to other
> organizations; where such releases are supported by reliable evidence
> retained by ARIN or the applicable RIR of the organization's informed
> and voluntary consent or agreement to permanently release the numbers; or
> (b) the original registrant or its successor (or assign) of such number
> enters into an LRSA or RSA expressly referencing the legacy numbers as
> governed by the terms and conditions of an LRSA or RSA.
>
> 8.2. Mergers and Acquisitions
>
> When the transfer of any number resource is requested by the current
> registrant or its successor or assign (the "new entity"), ARIN will
> transfer the registration of such number resources to the new entity
> upon receipt of evidence that the new entity has lawfully acquired the
> number resources from the current registrant as the result of a merger,
> acquisition, reorganization or name change.  ARIN will maintain an
> up-to-date list of acceptable types of documentation.  Transfers under
> this Section 8.2 shall not be contingent upon the new entity's
> justification of need for the transferred numbers.
>
> 8.2.1  If the transfer request pertains to non-legacy numbers or legacy
> numbers governed by an LRSA or RSA at the time such transfer request is
> first submitted to ARIN, the new entity shall be required to execute, in
> its own name, an RSA covering the transferred numbers, and pay the
> applicable registration fees.
>
> 8.2.2 If the transfer request pertains to legacy numbers that are not,
> as of the date that the request is first submitted to ARIN, governed
> expressly by an existing RSA or LRSA, the transfer shall not be
> contingent upon the new entity entering into or complying with an RSA,
> LRSA or any other form of written agreement with ARIN.
>
> For each transfer of legacy numbers under this Section 8.2.2, ARIN shall
> assess, and the new entity shall pay, a one-time change charge as set
> forth in the fee schedule unless the new entity elects, in its
> discretion, to enter into an LRSA covering the transferred legacy
> numbers and pays the applicable registration fees.
>
> Add the following new definition to Section 2:
>
> A "legacy number" means any number resource that meets the following two
> conditions:
>
> (1) the number resource was issued to an entity (other than a Regional
> Internet Registry) or individual (either, the "original legacy holder")
> prior to ARIN's inception on Dec 22, 1997 by or through an organization
> authorized by the United States to issue such number resources; and
>
> (2) the original legacy holder (or its legal successor or assign) of
> such number resource has not voluntarily and permanently released the
> number to a Regional Internet Registry for subsequent allocation and
> assignment in accordance with such RIR's number resource policies and
> membership (or service) agreements.
>
> Rationale
>
> The current version of 8.2 actually discourages legacy holders from (a)
> updating the WHOIS database, and (b) paying fees to assist with records
> management associated with the WHOIS database.  Some entities that
> currently control resources do not attempt to update the WHOIS records
> because the current transfer process puts at risk their ability to
> retain and use their numbers.
>
> Under the current process, a legacy holder or its lawful successor must
> first prove that it is the lawful successor (which is necessary and
> appropriate).  But it then must also justify its need to continue using
> the numbers it obtained prior to ARIN's existence.  Once the successor
> entity passes the needs hurdle, it is required by ARIN to execute an RSA
> (not an LRSA) as if the numbers were newly allocated from ARIN's  free
> pool.   The RSA (and LRSA) substantially alters the rights conveyed to
> the successor and subjects its numbers to audit and possible revocation
> under then-current policy.  There is, therefore, very little incentive
> for an M&A successor entity to update the ARIN registry database records.
>
> For non-legacy registrants, the process should also be less burdensome
> and uncertain.  Ensuring the continuity of a company's IP addressing
> scheme as part of an M&A transaction should be within the control of the
> entities directly involved.  ARIN's discretionary approval of transfers
> in this context introduces an undesirable and unnecessary contingency.
>
> Entities concerned about whether their M&A related registration database
> record update request will be rejected by ARIN simply do not attempt to
> fully update the records.
> Minimizing the barriers for both legacy and non-legacy holders to update
> the WHOIS database when changes are required to accurately reflect
> normal corporate reorganization activities will help increase the
> accuracy of the WHOIS database, which benefits the community as a whole.
>
> Timetable for implementation - Immediate

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David Farmer               Email:farmer at umn.edu
Networking & Telecommunication Services
Office of Information Technology
University of Minnesota	
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