http://www.news.com/News/Item/0,4,0-38955,00.html

ICANN defensive in letter to Commerce** 
 By Courtney Macavinta

[...]
     Countering NSI's complaints that ICANN is trying
     to regulate its business as well as those of the
     new registrars through operating agreements, the
     nonprofit insisted today that it is a grassroots
     organization, not a policy-setting body.

     "If they come into existence, these contracts will
     be the product of voluntary agreements; since
     ICANN has no governmental power, and indeed no
     existence outside the context of community
     consensus, it cannot coerce cooperation," ICANN
     told the Commerce Committee.

     Still, legal experts and other observers have said
     that ICANN has to ability to "make law" on the Net
     through its agreements. That's because to enter
     NSI's business, new registrars have to promise to
     comply with numerous terms and conditions, such
     adopting an impending domain name dispute
     procedure that could give offline trademark holders
     special rights to Net names even if they already
     are in use by someone else.

[...]
     "NSI must fulfill its obligation to recognize ICANN,"
     Commerce stated. "The transition of DNS
     management to the private sector can succeed
     only if all participants in the domain name
     system--including NSI--subject themselves to
     rules emerging from the consensus-based,
     bottom-up process spelled out in the White
     Paper."

=======
**
ICANN's (40 page) reply to the House Cmte on Commerce is at
http://www.icann.org/correspondence/bliley-response-08july99.htm



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