Recommended Draft Policy ARIN-2016-9: Streamline Merger & Acquisition Transfers [Archived]

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Status: Implemented

Tracking Information

Discussion Tracking

Mailing List:

Formal introduction on PPML on 20 December 2016

Origin - ARIN-prop-234

Draft Policy - 20 December 2016

Recommended - 21 March 2017

Moved to Last Call: 10 April 2017

Recommended to Board: 23 May 2017

Adopted by Board - 22 June 2017

Implemented by staff - 8 August 2017

Public Policy Mailing List

ARIN Public Policy Meeting:

ARIN 39

ARIN Advisory Council:

AC Shepherds:
John Springer, Leif Sawyer

ARIN Board of Trustees:

22 June 2017

Revisions:

Revised - 24 January 2017

Implementation:

Recommended Draft Policy ARIN-2016-9: Streamline Merger & Acquisition Transfers

Version Date: 10 April 2017

AC’s Statement Regarding Edits Made to 2016-9 Prior to Last Call

In its meeting on 05-APR-2017, the ARIN AC voted to advance 2016-9 Streamline Merger & Acquisition Transfers to Last Call, with the following changes:

In the “list of conditions for clarity”, strike the word “additional” and change “an” to “a”, so that the revised text reads: “The Internet number resources being transferred as part of an 8.2 transfer will not be subject to a needs-based assessment during the process of the 8.2 transfer.”

Concern was expressed by members of the community at the microphone at ARIN 39, and echoed by Staff, that the word “additional” was likely to confuse casual readers. The prevailing opinion was that its removal would result in greater clarity without affecting the plain meaning of the policy statement. Removal of “additional” necessesitated changing “an” to “a” for grammatical correctness.

Problem Statement:

In some 8.2 transfer situations, the current policy has the unwanted side effect of encouraging organizations not to update registration data, thus leaving the number resource in the name of a now defunct entity.

It is not uncommon for an entity which has bought another entity (with existing number resources) to leave Organizational data (Whois) in the name of the acquired company. The requirements in Section 8.2 put a justification burden on the acquiring organization, which was a legitimate protection while free pool assignments were available. It is worth revisiting Section 8.2 and looking for opportunities to simplify the policy in the interest of improving the registry data.

Consider the following:

In the case where both organizations (acquirer, acquired) have justified their existing number resources from an issuer (e.g. SRI-NIC, GSI, ARIN) under the policies that were in force at the time of issuance, the number resources have already been justified once.
ARIN does not customarily require organizations holding address space to document utilization except when they are asking ARIN to issue more space.
Section 8.2 M&A is not asking ARIN to issue more space or provide authorization to acquire space in an 8.3 transfer. It is simply updating ARIN’s database to reflect the current reality, that control of a company has changed.

Language that speaks of required return or transfer of space is of questionable enforceability in the context of the current RSA (section 6, “ARIN has no right to revoke any Included Number Resources under this Agreement due to lack of utilization by Holder”).

Clauses that serve to scare organizations away from updating their information are counter to the goal of maintaining good data in Whois.

Policy should allow ARIN staff to concentrate finite resources on ascertaining chain of custody so as to minimize the chance of fraudulent transfers rather than auditing space already issued.

Policy statement:

Delete the bullet point in NRPM 8.2 that reads:

For mergers and acquisition transfers, the recipient entity must provide evidence that they have acquired assets that use the resources to be transferred from the current registrant. ARIN will maintain an up-to-date list of acceptable types of documentation.

Add this statement to list of conditions for clarity:

“The Internet number resources being transferred as part of an 8.2 transfer will not be subject to a needs-based assessment during the process of the 8.2 transfer.”

Add this conditional to the bottom of 8.2 for linguistic clarity:

“AND one or more of the following:

The recipient must provide evidence that they have acquired the assets that use the resources to be transferred from the current registrant.

The recipient must show that they have acquired the entire entity which is the current registrant.”

Remove the following paragraph from Section 8.2 of the NRPM:

ARIN will proceed with processing transfer requests even if the number resources of the combined organizations exceed what can be justified under current ARIN transfer policy as defined in section 8.5. In that event, ARIN will work with the resource holder(s) to transfer the extra number resources to other organization(s) or accept a voluntary return of the extra number resources to ARIN.

These four changes will leave Section 8.2 looking like this:

8.2. Mergers and Acquisitions

ARIN will consider requests for the transfer of number resources in the case of mergers, acquisitions, and reorganizations under the following conditions:

The current registrant must not be involved in any dispute as to the status of the resources to be transferred.

The new entity must sign an RSA covering all resources to be transferred.

The resources to be transferred will be subject to ARIN policies.

The minimum transfer size is the smaller of the original allocation size or the applicable minimum allocation size in current policy.

The Internet number resources being transferred as part of an 8.2 transfer will not be subject to a needs-based assessment during the process of the 8.2 transfer.

AND one or more of the following:

The recipient must provide evidence that they have acquired the assets that use the resources to be transferred from the current registrant.

The recipient must show that they have acquired the entire entity which is the current registrant.

Timetable for implementation: Immediate

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Earlier Version

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Recommended Draft Policy ARIN-2016-9: Streamline Merger & Acquisition Transfers

Version Date: 21 March 2017

AC’s Statement of Conformance with ARIN’s Principles of Internet Number Resource Policy

The proposal is technically sound and enables fair and impartial number policy by ensuring that new organizations involved in mergers and acquisitions may conduct such activities with a reduced procedural burden from ARIN. The staff and legal review noted three issues, all of which have been addressed. There is support for the proposal on PPML and concerns that have been raised by the community regarding the proposal on PPML or elsewhere have also been addressed.

Problem Statement:

Consider the following:

In the case where both organizations (acquirer, acquired) have justified their existing number resources from an issuer (e.g. SRI-NIC, GSI, ARIN) under the policies that were in force at the time of issuance, the number resources have already been justified once.
ARIN does not customarily require organizations holding address space to document utilization except when they are asking ARIN to issue more space.
Section 8.2 M&A is not asking ARIN to issue more space or provide authorization to acquire space in an 8.3 transfer. It is simply updating ARIN’s database to reflect the current reality, that control of a company has changed.
Language that speaks of required return or transfer of space is of questionable enforceability in the context of the current RSA (section 6, “ARIN has no right to revoke any Included Number Resources under this Agreement due to lack of utilization by Holder”).

Clauses that serve to scare organizations away from updating their information are counter to the goal of maintaining good data in Whois.

Policy should allow ARIN staff to concentrate finite resources on ascertaining chain of custody so as to minimize the chance of fraudulent transfers rather than auditing space already issued.

Policy statement:

Delete the bullet point in NRPM 8.2 that reads:

Add this statement to list of conditions for clarity:

“The Internet number resources being transferred as part of an 8.2 transfer will not be subject to an additional needs-based assessment during the process of the 8.2 transfer.”

Add this conditional to the bottom of 8.2 for linguistic clarity:

“AND one or more of the following:

The recipient must provide evidence that they have acquired the assets that use the resources to be transferred from the current registrant.

The recipient must show that they have acquired the entire entity which is the current registrant.”

Remove the following paragraph from Section 8.2 of the NRPM:

These four changes will leave Section 8.2 looking like this:

8.2. Mergers and Acquisitions

ARIN will consider requests for the transfer of number resources in the case of mergers, acquisitions, and reorganizations under the following conditions:

The current registrant must not be involved in any dispute as to the status of the resources to be transferred.

The new entity must sign an RSA covering all resources to be transferred.

The resources to be transferred will be subject to ARIN policies.

The minimum transfer size is the smaller of the original allocation size or the applicable minimum allocation size in current policy.

The Internet number resources being transferred as part of an 8.2 transfer will not be subject to an additional needs-based assessment during the process of the 8.2 transfer.

AND one or more of the following:

The recipient must provide evidence that they have acquired the assets that use the resources to be transferred from the current registrant.

The recipient must show that they have acquired the entire entity which is the current registrant.

Timetable for implementation: Immediate

##########

Earlier Version

##########

ARIN- 2016-9: Streamline Merger & Acquisition Transfers

Version Date: 24 January 2017

Problem Statement:

In the case of a merger or acquisition, current policy encourages not updating registration data, thus leaving the number resource in the name of a now defunct entity.

Consider the following:

In the case where both organizations (acquirer, acquired) have justified their existing number resources from an issuer (e.g. SRI-NIC, GSI, ARIN) under the policies that were in force at the time of issuance, the number resources have already been justified once.
ARIN does not customarily require organizations holding address space to document utilization except when they are asking ARIN to issue more space.
Section 8.2 M&A is not asking ARIN to issue more space or provide authorization to acquire space in an 8.3 transfer. It is simply updating ARIN’s database to reflect the current reality, that being that control of a company has changed.

Clauses that serve to scare organizations away from updating their information are counter to the goal of good data in whois.

Policy should allow ARIN staff to concentrate finite resources on ascertaining corporate chain of custody so as to minimize the chance of fraudulent transfers rather than auditing space already issued.

Policy statement:

Delete the bullet point that reads:

Add this conditional to the bottom of 8.2 for linguistic clarity:

“AND one or more of the following:

The recipient must provide independently verifiable evidence that they have acquired the assets that use the resources to be transferred from the current registrant.

The recipient must show that they have acquired the entire corporate entity which is the current registrant.”
Remove the following paragraph from Section 8.2 of the NRPM:

ARIN will proceed with processing transfer requests even if the number resources of the combined organizations exceed what can be justified under current ARIN policy. In that event, ARIN will work with the resource holder(s) to transfer the extra number resources to other organization(s) or accept a voluntary return of the extra number resources to ARIN.

These two changes will leave Section 8.2 looking like this:

8.2. Mergers and Acquisitions

ARIN will consider requests for the transfer of number resources in the case of mergers, acquisitions, and reorganizations under the following conditions:

The current registrant must not be involved in any dispute as to the status of the resources to be transferred.

The new entity must sign an RSA covering all resources to be transferred.

The resources to be transferred will be subject to ARIN policies.

The minimum transfer size is the smaller of the original allocation size or the applicable minimum allocation size in current policy.

AND one or more of the following:

The recipient must provide independently verifiable evidence that they have acquired the assets that use the resources to be transferred from the current registrant.

The recipient must show that they have acquired the entire corporate entity which is the current registrant.

Timetable for implementation: Immediate

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ARIN STAFF & LEGAL ASSESSMENT
Draft Policy ARIN-2016-9
STREAMLINE MERGER & ACQUISITION TRANSFERS

Date of Assessment: 24 January 2017

Summary (Staff Understanding)

Draft Policy 2016-9 allows for organizations to submit an 8.2 Merger & Acquisition specified transfer without the expectation that any of the resources will be revoked due to lack of justification for the resources continued use. This draft policy eliminates any wording that might suggest that resources may have to be divested by the organization seeking to update their information through the 8.2 specified transfer process.

NOTE: ARIN-2016-9 has not been entirely written against the NRPM coming out in February.

Specifically,

“ARIN will proceed with processing transfer requests even if the number resources of the combined organizations exceed what can be justified under current ARIN policy. In that event, ARIN will work with the resource holder(s) to transfer the extra number resources to other organization(s) or accept a voluntary return of the extra number resources to ARIN.”

has been changed by the February implementation of ARIN-2016-5 to read:

“ARIN will proceed with processing transfer requests even if the number resources of the combined organizations exceed what can be justified under current ARIN transfer policy as defined in section 8.5. In that event, ARIN will work with the resource holder(s) to transfer the extra number resources to other organization(s) or accept a voluntary return of the extra number resources to ARIN.”

Staff believes we can move forward with implementing the policy by removing the same paragraph (now slightly altered) noted above.

Comments

A. ARIN Staff Comments:

* If the intent of this policy is to ensure that the Internet number resources involved in the 8.2 transfer will not be subject to a “needs based” assessment then staff suggests that be made plain in the policy text, either as part of the list of conditions or as part of the accompanying language simply state that “The Internet number resources being transferred as part of an 8.2 transfer will not be subject to any needs-based assessment”

* Upon careful review, this policy could result in a “higher bar” for approval of transfers if ARIN staff were to implement precisely as written. If “independently verifiable” evidence is the only documentation that can be used to verify that organizations have sold a portion of their network, it could be difficult to find in some circumstances where ARIN would have relied in good faith upon documentation that could not readily be independently confirmed. For example, the recipient organization may have legal documentation that they can provide but are private organizations and therefore lack public information that could be used for verification. ARIN staff most commonly use documentation from the “list of acceptable types of documentation” that is maintained by ARIN and found here - https://www.arin.net/resources/transfers/index.html#mergers. ARIN staff does try to independently verify the information provided, but is not always able to do so. The suggested wording could cause some 8.2 specified transfers to not be approved, and staff suggests dropping “independently verifiable” if the goal is to match current procedures in this regard.

* Finally ARIN staff suggests that the first sentence of the Problem Statement would be more accurate if changed to “In some 8.2 transfer situations, the current policy might have an unexpected and unwanted side effect of not encouraging organizations to update registration data” rather than the current wording used, as the current problem statement wording makes a blanket generalization.

B. ARIN General Counsel – Legal Assessment

* Does not create material legal issues, presuming staff comments as outlined in this assessment are addressed.

Resource Impact

Implementation of this policy would have minimal resource impact. It is estimated that implementation would occur within 3 months after ratification by the ARIN Board of Trustees. The following would be needed in order to implement:

* Updated guidelines and internal procedures

* Staff training

Proposal / Draft Policy Text Assessed

Draft Policy ARIN- 2016-9: Streamline Merger & Acquisition Transfers

Version Date: 24 January 2017

Problem Statement:

In the case of a merger or acquisition, current policy encourages not updating registration data, thus leaving the number resource in the name of a now defunct entity.
It is not uncommon for an entity which has bought another entity (with existing number resources) to leave Organizational data (Whois) in the name of the acquired company. The requirements in Section 8.2 put a justification burden on the acquiring organization, which was a legitimate protection while free pool assignments were available. It is worth revisiting Section 8.2 and looking for opportunities to simplify the policy in the interest of improving the registry data.

Consider the following:

In the case where both organizations (acquirer, acquired) have justified their existing number resources from an issuer (e.g. SRI-NIC, GSI, ARIN) under the policies that were in force at the time of issuance, the number resources have already been justified once.
ARIN does not customarily require organizations holding address space to document utilization except when they are asking ARIN to issue more space.
Section 8.2 M&A is not asking ARIN to issue more space or provide authorization to acquire space in an 8.3 transfer. It is simply updating ARIN’s database to reflect the current reality, that being that control of a company has changed.

Clauses that serve to scare organizations away from updating their information are counter to the goal of good data in whois.

Policy statement:

Delete the bullet point that reads:

Add this conditional to the bottom of 8.2 for linguistic clarity:

“AND one or more of the following:

The recipient must provide independently verifiable evidence that they have acquired the assets that use the resources to be transferred from the current registrant.

The recipient must show that they have acquired the entire corporate entity which is the current registrant.”

Remove the following paragraph from Section 8.2 of the NRPM:

These two changes will leave Section 8.2 looking like this:

8.2. Mergers and Acquisitions

ARIN will consider requests for the transfer of number resources in the case of mergers, acquisitions, and reorganizations under the following conditions:

The current registrant must not be involved in any dispute as to the status of the resources to be transferred.

The new entity must sign an RSA covering all resources to be transferred.

The resources to be transferred will be subject to ARIN policies.

The minimum transfer size is the smaller of the original allocation size or the applicable minimum allocation size in current policy.

AND one or more of the following:

The recipient must provide independently verifiable evidence that they have acquired the assets that use the resources to be transferred from the current registrant.

The recipient must show that they have acquired the entire corporate entity which is the current registrant.

Timetable for implementation: Immediate

END

##########

Earlier Version

##########

ARIN- 2016-9: Streamline Merger & Acquisition Transfers

Version Date: 7 December 2016

Problem Statement:

Consider the following:

Both organizations (acquirer, acquired) have justified their existing number resources from an issuer (e.g. SRI-NIC, GSI, ARIN) under the policies that were in force at the time of issuance. In short, the number resources have already been justified once.
ARIN does not customarily require organizations holding address space to document utilization except when they are asking ARIN to issue more space.
Section 8.2 M&A is not asking ARIN to issue more space or provide authorization to acquire space in an 8.3 transfer. It is simply updating ARIN’s database to reflect the current reality, that being that control of a company has changed.

Clauses that serve to scare organizations away from updating their information are counter to the goal of good data in whois.

This proposal suggests two changes: a paragraph change to better reflect current practice, harmonize nomenclature with 8.3 (“new entity” vs “recipient”) and remove an operationally-focused sentence, and a paragraph removal as it is the author’s opinion that this paragraph has outlived its usefulness.

Policy statement:

Replace the following paragraph:

with this conditional, moving it to the bottom of 8.2 for linguistic clarity:

AND one or more of the following:

The recipient must provide independently verifiable evidence that they have acquired the assets that use the resources to be transferred from the current registrant.

The recipient must show that they have acquired the entire corporate entity which is the current registrant.

Remove the following paragraph from Section 8.2 of the NRPM:

In the event that number resources of the combined organizations are no longer justified under ARIN policy at the time ARIN becomes aware of the transaction, through a transfer request or otherwise, ARIN will work with the resource holder(s) to return or transfer resources as needed to restore compliance via the processes outlined in current ARIN policy.

These two changes will leave Section 8.2 looking like this:

8.2. Mergers and Acquisitions

ARIN will consider requests for the transfer of number resources in the case of mergers, acquisitions, and reorganizations under the following conditions:

The current registrant must not be involved in any dispute as to the status of the resources to be transferred.
The new entity must sign an RSA covering all resources to be transferred.
The resources to be transferred will be subject to ARIN policies.
The minimum transfer size is the smaller of the original allocation size or the applicable minimum allocation size in current policy.

AND one or more of the following:

The recipient must provide independently verifiable evidence that they have acquired the assets that use the resources to be transferred from the current registrant.

The recipient must show that they have acquired the entire corporate entity which is the current registrant.

Timetable for implementation: Immediate