[Federal Register Volume 63, Number 241 (Wednesday, December 16, 1998)]
[Proposed Rules]
[Pages 69224-69229]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-33317]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 63, No. 241 / Wednesday, December 16, 1998 /
Proposed Rules
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FEDERAL ELECTION COMMISSION
11 CFR Parts 100 and 114
[Notice 1998--17]
Definition of ``Member'' of a Membership Association
AGENCY: Federal Election Commission.
ACTION: Notice of Proposed Rulemaking.
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SUMMARY: The Commission is seeking comments on further proposed
revisions to its rules governing who qualifies as a ``member'' of a
membership association. A membership association can solicit
contributions from its members to a separate segregated fund
established by the association, and can include express electoral
advocacy in communications to its members. The revised proposal would
largely address the internal characteristics of an association that,
coupled with certain financial or organizational attachments, would be
sufficient to confer this status.
DATES: Comments must be received on or before February 1, 1999.
ADDRESSES: All comments should be addressed to Susan E. Propper,
Assistant General Counsel, and must be submitted in either written or
electronic form. Written comments should be sent to the Federal
Election Commission, 999 E Street, NW., Washington, DC 20463. Faxed
comments should be sent to (202) 219-3923, with printed copy follow-up.
Electronic mail comments should be sent to members@fec.gov. Commenters
sending comments by electronic mail should include their full name and
postal service address within the text of their comments. Electronic
comments that do not contain the full name, electronic mail address and
postal service address of the commenter will not be considered.
FOR FURTHER INFORMATION CONTACT: Ms. Susan E. Propper, Assistant
General Counsel, or Ms. Rita A. Reimer, Attorney, 999 E Street NW.,
Washington, DC 20463, (202) 219-3690 or (800) 424-9530.
SUPPLEMENTARY INFORMATION: Although the Federal Election Campaign Act
of 1971 as amended (``FECA'' or ``Act''), 2 U.S.C. 431 et seq.,
prohibits direct corporate contributions in connection with federal
campaigns, 2 U.S.C. 441b(a), it permits corporations, including
incorporated membership associations, to solicit contributions from
their restricted class to a separate segregated fund (``SSF''). In the
case of membership associations, the restricted class consists of the
members of each association, their executive and administrative
personnel, and their families. These contributions can be used for
federal political purposes. The Act also allows membership associations
to communicate with their members on any subject, including
communications that include express electoral advocacy. 2 U.S.C.
441b(b)(2)(A), 441b(b)(4)(C). The Commission's implementing regulations
defining who is a ``member'' of a membership association are found at
11 CFR 100.8(b)(4)(iv) and 11 CFR 114.1(e).
The Commission's original ``member'' rules, which had been adopted
in 1977, were the subject of a 1982 United States Supreme Court
decision, FEC v. National Right to Work Committee (``NRWC''), 459 U.S.
196 (1982). In 1993, following a series of advisory opinions in this
area, the Commission revised the text of the rules to reflect that
decision. 58 FR 45770 (Aug. 30, 1993), effective Nov. 10, 1993. 58 FR
59640. The revised rules were held to be unduly restrictive by the
United States Court of Appeals for the District of Columbia Circuit in
Chamber of Commerce of the United States (``Chamber'') v. FEC, 69 F.3d
600 (D.C. Cir. 1995), amended on denial of rehearing, 76 F.3d 1234
(D.C. Cir. 1996). This rulemaking followed.
History of the Rulemaking
On February 24, 1997, the Commission received a Petition for
Rulemaking from James Bopp, Jr., on behalf of the National Right to
Life Committee, Inc. The Petition urged the Commission to revise its
member rules to reflect the Chamber decision. The Commission published
a Notice of Availability (``NOA'') in the Federal Register on March 29,
1997, 62 FR 13355, and received two comments in response.
On July 31, 1997, the Commission published in the Federal Register
an Advance Notice of Proposed Rulemaking (``ANPRM'') addressing these
rules. 62 FR 40982. Because the Chamber decision, the petition for
rulemaking, and the comments received in response to the NOA provided
few specific suggestions as to how the rules should be amended to
comport with the decision, the Commission did not propose specific
amendments to the rules. Rather, it sought general guidance on the
factors to be considered in determining the existence of this
relationship. The Commission received 14 comments in response to the
ANPRM.
On December 22, 1997, the Commission published a Notice of Proposed
Rulemaking (``NPRM'') on this matter, 62 FR 66832, and received 22
comments in response. Comments were received from the Alliance for
Justice; the American Federation of State, County and Municipal
Employees (``AFSCME''); the American Federation of Labor and Congress
of Industrial Organizations (``AFL-CIO''), the American Hospital
Association and Political Action Committee (``AHAPAC''); the American
Hotel and Motel Association (``AH&MA''); the American Society of
Association Executives (``ASAE''); the Americans Back in Charge
Foundation; Jan Witold Baran; The Chicago Mercantile Exchange; the
College of American Pathologists (``CAP''); the Free Speech Coalition,
Inc.; the James Madison Center for Free Speech; the National Lumber and
Building Material Dealers Association; the National Citizens Legal
Network; the National Rural Electric Cooperative Association; the
National Right to Work Committee; the Opticians Association of America
(``OAA''); Daniel M. Schember; Donald J. Seaman; the U.S. Chamber of
Commerce; the Washington State Farm Bureau; and the Wholesaler-
Distributor Political Action Committee.
On April 29, 1998, the Commission held a public hearing on this
rulemaking at which 10 witnesses testified. The witnesses included
representatives from AFSCME; the AFL-CIO; AH&MA; ASAE; Americans Back
in Charge, Inc.; the Free Speech Coalition, Inc.; the James Madison
Center for Free Speech; the National Citizens Legal Network; OAA; and
Mr. Schember.
[[Page 69225]]
After further considering this matter, the Commission has now
decided to reconsider the rules with a slightly different focus from
that proposed in the original NPRM. Accordingly, the Commission is
seeking comments on a second NPRM proposing further revisions to these
rules. This new proposal primarily addresses the required
characteristics of membership associations. The Commission is
publishing this second NPRM because it did not propose any changes to
these provisions in the original NPRM. See 62 FR 68834 (Dec. 22, 1997).
Background
In its NRWC decision, the Supreme Court rejected an argument by a
nonprofit, noncapital stock corporation, whose articles of
incorporation stated that it had no members, that it should be able to
treat as members individuals who had at one time responded, not
necessarily financially, to an NRWC advertisement, mailing, or personal
contact. The Supreme Court rejected this definition of ``member,''
saying that to accept it ``would virtually excise from the statute the
restriction of solicitation to `members.' '' Id. at 203. The Court
determined that ``members'' of nonstock corporations should be defined,
at least in part, by analogy to stockholders of business corporations
and members of labor unions. Viewing the question from this perspective
meant that ``some relatively enduring and independently significant
financial or organizational attachment is required to be a `member' ''
for these purposes. Id. at 204. The NRWC's asserted members did not
qualify under this standard because they played no part in the
operation or administration of the corporation, elected no corporate
officials, attended no membership meetings, and exercised no control
over the expenditure of their contributions. Id. at 206. The 1993
revisions to the Commission's rules were intended to incorporate this
standard.
The Current Rules
The current rules require an organization to meet three preliminary
requirements before it can qualify as a membership association. These
requirements are that it (1) expressly provide for ``members'' in its
articles and by-laws; (2) expressly solicit members; and (3) expressly
acknowledge the acceptance of membership, such as by sending a
membership card or including the member on a membership newsletter
list. 11 CFR 100.8(b)(4)(iv)(A), 114.1(e)(1). If these preliminary
requirements are met, a person may qualify as a member either by having
a significant financial attachment to the membership association (not
merely the payment of dues), or the right to vote directly for all
members of the association's highest governing body. However, in most
instances a combination of regularly-assessed dues and the right to
vote directly or indirectly for at least one member of the
association's highest governing body is required. The term ``membership
association'' includes membership organizations, trade associations,
cooperatives, corporations without capital stock, and local, national
and international labor organizations that meet the requirements set
forth in these rules.
The Chamber of Commerce Decision
The United States District Court for the District of Columbia held
that the current rules were not arbitrary, capricious or manifestly
contrary to the statutory language, and therefore deferred to what the
court found to be a valid exercise of the Commission's regulatory
authority. Chamber of Commerce of the United States v. FEC, Civil
Action No. 94-2184 (D.D.C. Oct. 28, 1994)(1994 WL 615786). However, the
D.C. Circuit Court of Appeals reversed this ruling.
The case was jointly brought by the Chamber of Commerce and the
American Medical Association (``AMA''), two associations that do not
provide their asserted ``members'' with the voting rights necessary to
confer this status under the current rules. The circuit court held that
the ties between these members and the Chamber and the AMA are
nonetheless sufficient to comply with the Supreme Court's NRWC
criteria, and therefore concluded that the Commission's rules are
invalid because they define the term ``member'' in an unduly
restrictive fashion. 69 F.3d at 604.
The Chamber is a nonprofit corporation whose members include 3,000
state and local chambers of commerce, 1,250 trade and professional
groups, and 215,000 ``direct business members.'' The members pay annual
dues ranging from $65 to $100,000 and may participate on any of 59
policy committees that determine the Chamber's position on various
issues. However, the Chamber's Board of Directors is self-perpetuating
(that is, Board members elect their successors); so no member entities
have either direct or indirect voting rights for any members of the
Board.
The AMA challenged the exclusion from the definition of member
44,500 ``direct'' members, those who do not belong to a state medical
association. Direct members pay annual dues ranging from $20 to $420;
receive various AMA publications; and participate in professional
programs put on by the AMA. They are also bound by and subject to
discipline under the AMA's Principles of Medical Ethics. However, since
state medical associations elect members of the AMA's House of
Delegates, that organization's highest governing body, direct members
do not satisfy the voting criteria set forth in the current rules.
The Chamber court, in an Addendum to the original decision, noted
that the Commission ``still has a good deal of latitude in
interpreting'' the term ``member.'' 76 F.3d at 1235. However, in its
original decision, the court held the rules to be arbitrary and
capricious as applied to the Chamber, since under the current rules
even those paying $100,000 in annual dues cannot qualify as members. As
for the AMA, the rule excludes members who pay up to $420 in annual
dues and, among other organizational attachments, are subject to
sanctions under the Principles of Medical Ethics. The court explained
that this latter attachment ``might be thought, [] for a professional,
[to be] the most significant organizational attachment.'' 69 F.3d at
605 (emphasis in original).
The current rules provide a ``safe harbor'' for membership
associations, since those who meet the requirements set forth in these
rules clearly enjoy ``member'' status. Associations can also seek
advisory opinions pursuant to 2 U.S.C. 437f to determine how the rules,
as interpreted in the Chamber of Commerce decision, apply to their
particular situations. However, the Commission believes it is
appropriate to include in the text of the rules additional guidance
consistent with the Chamber decision.
The December 1997 NPRM
The 1997 NPRM sought comments on three alternative proposals,
referenced as Alternatives A, B, and C. None of the alternatives
proposed any changes to the three preliminary requirements, or to the
provisions in the current rules that recognize as members persons who
have a stronger financial interest in an association than the payment
of annual dues, such as those who own or lease seats on stock exchanges
or boards of trade. 11 CFR 100.8(b)(4)(iv)(B)(1), 114.1(e)(2)(i), AO
1997-5.
Under Alternative A, all persons who paid $50 in annual dues or met
specified organizational attachments would be considered members. The
NPRM suggested such attachments as
[[Page 69226]]
the voting rights contained in the current rules; the right to serve on
policy-making boards of the association; eligibility to be elected to
the governing positions in the association; and the possibility of
disciplinary action against the member by the association. A lesser
dues obligation coupled with weaker organizational attachments would
also be sufficient for this purpose.
Alternative B distinguished between the types of organizations
addressed by the Chamber decision, i.e., those formed to further
business or economic interests or to implement a system of self-
discipline or self-regulation within a line of commerce; and
ideological, social welfare, and political organizations. Persons
paying any amount of annual dues would be considered members of the
first category of organizations, while annual dues of $200 or more
would be required for membership in the second category, unless the
purported members had the same voting rights required by the current
rule.
Under Alternative C, an organization that qualified as a membership
association by meeting the three preliminary requirements could
consider as members all persons who paid the amount of annual dues set
by the association, regardless of amount.
The 1997 NPRM also proposed that direct membership in any level of
a multitiered association be construed as membership in all tiers of
the association for purposes of these rules. All three alternatives set
out in that NPRM would adopt this approach, and the Commission is not
now proposing further changes in this area.
As was the case with the ANPRM, the comments and testimony received
in response to the NPRM expressed a wide range of views--there was no
consensus on how best to address this situation. After further
consideration, the Commission is now seeking comments on a slightly
different approach, one that would address more fully the attributes of
membership associations, in addition to members' required financial or
organizational attachments.
The New Proposal
First, the Commission is proposing that the term ``membership
association'' in 11 CFR 100.8(b)(4)(iv)(A) and 114.1(e)(1) be replaced
by ``membership organization.'' The Commission believes it is
appropriate to refer to the covered entities as ``membership
organizations'' because that is the term used in the Act. See, 2 U.S.C.
431(9)(B)(iii) and 441b(b)(4)(C). ``Membership organization'' is also
referred to in 11 CFR 100.8(b)(4), which describes the entities
entitled to the ``internal communication'' exception to the Act's
definition of expenditure.
The Commission is therefore proposing to replace the term
``membership association'' with ``membership organization'' in
paragraphs 100.8(b)(4)(iv)(A) and 114.1(e)(1). The revised definitions
would provide that, for purposes of these rules, membership
organization means a trade association, cooperative, corporation
without capital stock, or local, national or international labor
organization.
The other newly-proposed revisions to the member rules primarily
focus on attributes of membership organizations, the term used in
current 11 CFR 100.8(b)(4). Since the purpose of the Act's ``membership
communications'' exception is to allow bona fide membership
organizations to engage in political communications with their members,
the new rule would prevent individuals from establishing ``sham''
membership organizations in an effort to circumvent the Act's
contribution and expenditure limits. The Commission believes it is
appropriate to focus on the structure of the membership organization as
well as on who qualifies as a member, and is therefore proposing the
following amendments to 11 CFR 100.8(b)(4)(iv)(A) and 114.1(e)(1), the
so-called ``preliminary requirements'' an entity must meet to qualify
as a membership organization.
First, since it is axiomatic that membership organizations should
be composed of members, the Commission is proposing to replace the
language at 11 CFR 100.8(b)(4)(iv)(A)(1) and 114.1(e)(1)(i), stating
that an organization must expressly provide for members in its articles
and bylaws, with this more general requirement.
The second additional requirement would be that the organization be
self-governing, that is, that the power and authority to direct and
control the organization be vested in some or all members, pursuant to
the organization's articles, bylaws, and other formal organizational
documents. However, the organization would be able to delegate these
responsibilities to smaller committees or other groups of members--the
Commission is not proposing that all members be required to approve all
organization actions. Membership associations with self-perpetuating
boards would meet this requirement as long as all members of the board
were themselves members of the organization, assuming that the
organization had chosen this structure and that it met all other
requirements of these regulations.
Further, as noted above, the Supreme Court's language in the NRWC
decision, 459 U.S. at 204, pointed to the need for members to have
``relatively enduring and independently significant financial or
organizational attachments.'' However, those attachments can hardly be
meaningful if the members are unaware of their rights and obligations.
Therefore, as a corollary to the proposal that only members constitute
the organization, the Commission is proposing that membership
organizations be required to inform members of their rights,
qualifications and obligations under the organization's articles,
bylaws and other formal organizational documents. In addition,
organizations would be required to make their articles, bylaws and
other formal organizational documents freely available to their
members.
The Commission's rules currently list at 11 CFR 100.8(b)(4) the
entities entitled to the expenditure exemption and the types of
communications (i.e., express advocacy) that an exempted organization
may engage in without those communications being classified as an
expenditure. As this paragraph states, entities ``organized primarily
for the purpose of influencing the nomination for election, or
election, of any individual to Federal office'' are not entitled to the
membership communications exemption.
The Commission is proposing that this paragraph be revised to
delete the aforementioned language. In its place, this phrase would be
re-inserted in new paragraphs 11 CFR 100.8(b)(4)(iv)(A)(7) and
114.1(e)(1)(vii), the provisions that explicitly define a ``membership
organization.'' This would insure that an organization primarily
organized to influence a Federal election could not, by definition, be
classified as a membership organization under the Act.
Consistent with these changes, the Commission is also proposing to
amend 11 CFR 100.8(b)(4) to clarify that the membership communications
exception established by that section applies only to those
communications made at the direction and control of the membership
organization, and not of any other person.
As for the definition of ``member,'' the Commission believes that
the NRWC requirement that members of membership organizations have a
``relatively enduring and independently significant financial or
organizational'' attachment, supra, mandates that members have a
continuous, long term bond with the organization itself. As
Alternatives A and B in the 1997 NPRM suggest, ``relatively enduring''
attachments can be interpreted to mean
[[Page 69227]]
that an individual renews membership annually by meeting the
organization's dues requirement, so long as he or she continues to
satisfy the organization's provisions for membership. Similarly, the
Commission proposes that this requirement could be satisfied where a
member affirmatively and voluntarily renews his or her membership in
writing on an annual basis. In the Commission's view, the annual
payment of dues or voluntary annual reaffirmation of membership would
satisfy the ``relatively enduring'' aspect of the NRWC Court's test.
The proposal does not contain any threshold dues requirement, as the
Commission believes this decision is best made by the individual
membership organizations.
In reformulating the organizational attachments prong of this test,
the Commission is mindful of the broader implications of the Chamber
decision and the Supreme Court's decision in FEC v. Akins, 118 S.Ct.
1777, 1778 (1998). These decisions indicate that overly restrictive
definitions are less likely to survive judicial scrutiny.
Further, the comments and testimony received up to this point on
the rulemaking indicate that models of governance within membership
organizations are nearly as numerous as the number of organizations
themselves. Taking this organizational diversity into account, and in
the wake of the Akins and Chamber decisions, the Commission believes it
should avoid prescribing an extensive list of permissible
organizational attachments. For this reason the Commission is proposing
that, while certain types of activities included in Alternatives A and
B of the 1997 NPRM be included in the rules as instructive examples,
the new rule simply provides that members be given the right to play a
significant, non-advisory role in the organization's governance. Under
this approach, 11 CFR 100.8(b)(4)(iv)(B)(3) and 114.1(e)(2)(iii) would
be amended to require ``direct and enforceable participatory and
governing rights'' in the organization. The Commission notes that such
rights would be required only in the situation where members did not
pay a specific, predetermined amount of annual dues to the
organization.
Alternatives A and B would both provide that students and lifetime
members of certain entities could qualify as ``members'' of a
membership organization upon payment of lesser annual dues, and without
reference to voting rights. 62 FR 66837. The Commission is now
proposing to revise 11 CFR 100.8(b)(iv)(D) and 114.1(e)(5) to expressly
provide the same treatment to retired union members who have paid dues
as active members for at least ten years (in satisfaction of the
requirement of a significant financial attachment) but who are no
longer required to do so. The Commission believes that, upon
retirement, union members maintain a significant ``organizational
attachment'' to their unions by virtue of insurance policies and other
retirement benefits.
Finally, in those cases where state law does not allow certain
organizations to have ``members'' for policy reasons unrelated to the
FECA, the revised NPRM would add language to clarify that those
organizations still could be recognized as ``membership organizations''
for FECA purposes. The Commission is seeking specific comments on the
implications of this proposal and the relationship between state and
Federal law in this area.
In addition, the Commission is proposing that the definition of
``membership organization,'' for purposes of section 100.8(b)(4) only,
also include unincorporated associations. The term ``unincorporated
association'' would cover those entities that are not trade
associations, cooperatives, corporations without capital stock, or
labor organizations, that nevertheless met the requirements set forth
in these rules. This change would address the situation under the
current rules in which, if an unincorporated membership group wishes to
support one of its member's campaign for Congress with a mailing to the
organization's members, the costs of that mailing would constitute a
contribution to that candidate, subject to the limit established at 2
U.S.C. 441a(a)(1)(A).
The application of the membership organization ``internal
communication'' exception to an unincorporated association is a
potentially significant change from current Commission policy, on which
the Commission welcomes comment. One possible ramification of this
proposal concerns the manner in which the costs of these communications
are reported. If a membership communication was made independently of
any candidate's campaign, section 431(9) only requires that the costs
be reported if they exceed $2000 per election and the communication is
not part of a publication that is primarily devoted to topics other
than express advocacy of a candidate's election or defeat. 11 CFR
100.8(b)(4). Moreover, only the costs, and not the sources of the funds
expended, must be reported. 11 CFR 104.6(c). In contrast, section
434(c) of the Act requires a person (other than a political committee)
to report independent expenditures once the costs exceed $250.
A second possible effect concerns internal communications that are
coordinated with a candidate. The Commission's current rules allow
corporations and labor organizations that wish to make internal
communications to their restricted class to coordinate the
communication with a candidate, although such coordination could
compromise the independence of later activity by that entity or its
SSF. See 11 CFR 114.2(c). An unincorporated association, unlike
corporations and labor organizations, is permitted to make
contributions from its treasury funds to candidates. If these
unincorporated associations are permitted to coordinate express
advocacy communications to their ``members'', the amount they could
spend on such communications would be unlimited rather than subject to
the Act's contribution limits under section 441a.
An argument can be made that the proposed addition of
unincorporated associations to the internal communications exception is
in conflict with the balancing approach adopted by Congress in crafting
the current statutory scheme. Under this approach, Congress gave the
corporations and unions who were subject to section 441b certain rights
in return for other obligations and restrictions, which are balanced by
other rights and restrictions in the law for individuals and
unincorporated entities.
Please note, however, that the Commission does not intend by this
proposed change to signal that unincorporated associations could begin
establishing, and paying the unlimited costs of, a separate segregated
fund. See 2 USC 441b(b)(2)(C). Cf. California Medical Association v.
FEC, 453 U.S. 182 (1981). For this reason, the proposal to add
unincorporated associations would only be made in section 100.8(b)(4)
of the regulations. To avoid any confusion, the Commission will make
conforming changes to Part 114 in the final rules to clarify that
membership organizations referred to in that part are limited to
``incorporated'' entities, if the proposal to add unincorporated groups
is approved by the Commission at the final rule stage.
The Commission also welcomes comments on any related topic.
Certification of No Effect Pursuant to 5 U.S.C. 605(b) [Regulatory
Flexibility Act]
These proposed rules would not, if promulgated, have a significant
economic impact on a substantial
[[Page 69228]]
number of small entities. The basis for this certification is that the
rules would broaden the current definition of who qualifies as a member
of a membership association, thus expanding the opportunity for such
associations to send electoral advocacy communications and solicit
contributions to their separate segregated funds, but would not require
any expenditure of funds. Therefore, no significant impact would result
for purposes of this requirement.
List of Subjects
11 CFR Part 100
Elections.
11 CFR Part 114
Business and industry, Elections, Labor.
For the reasons set out in the preamble, it is proposed to amend
Subchapter A, Chapter I of Title 11 of the Code of Federal Regulations
as follows:
PART 100--SCOPE AND DEFINITIONS (2 U.S.C. 431)
1. The authority citation for Part 100 would continue to read as
follows:
Authority: 2 U.S.C. 431, 438(a)(8).
2. Section 100.8 would be amended by revising paragraphs (b)(4)
introductory text and (b)(4)(iv) to read as follows:
Sec. 100.8 Expenditure (2 U.S.C. 431(9)).
* * * * *
(b) * * *
(4) Any cost incurred for any communications by a membership
organization, including a labor organization, to its members, or by a
corporation to its stockholders or executive or administrative
personnel, is not an expenditure, as long as the communication is
subject to the direction and control of that entity and not any other
person, except that the costs directly attributable to such a
communication that expressly advocates the election or defeat of a
clearly identified candidate (other than a communication primarily
devoted to subjects other than the express advocacy of the election or
defeat of a clearly identified candidate) shall, if those costs exceed
$2,000 per election, be reported to the Commission on FEC Form 7 in
accordance with 11 CFR 104.6.
* * * * *
(iv) (A) For purposes of paragraph (b)(4) of this section
membership organization means an unincorporated association, trade
association, cooperative, corporation without capital stock, or a
local, national, or international labor organization that:
(1) Is composed of members;
(2) Expressly states the rights, qualifications, obligations and
requirements for membership in its articles, bylaws and other formal
organizational documents;
(3) Is self-governing, such that the power and authority to direct,
and control the association is vested in some or all members, pursuant
to its articles, by laws and other formal organizational documents;
(4) Makes its articles, bylaws and other formal organizational
documents freely available to its members;
(5) Expressly solicits members;
(6) Expressly acknowledges the acceptance of membership, such as by
sending a membership card or inclusion on a membership newsletter list;
and
(7) Is not organized primarily for the purpose of influencing the
nomination for election, or election, of any individual for Federal
office.
(B) For purposes of paragraph (b)(4) of this section, the term
members includes all persons who are currently satisfying the
requirements for membership in a membership organization, affirmatively
accept the membership organization's invitation to become a member,
affirm their membership on at least an annual basis and either:
(1) Have some significant financial attachment to the membership
organization, such as a significant investment or ownership stake;
(2) Are required to pay on a regular basis a specific amount of
annual dues of an amount predetermined by the organization; or
(3) Have a significant organizational attachment to the membership
organization which includes direct and enforceable participatory and
governing rights. For example, such rights could include the right to
vote directly or indirectly for at least one individual on the
membership organization's highest governing board; the right to vote
directly for organization officers; the right to vote on policy
questions where the highest governing body of the membership
organization is obligated to abide by the results; or the right to
participate directly in similar aspects of the organization's
governance.
(C) Notwithstanding the requirements of paragraph (b)(4)(iv)(B) of
this section, the Commission may determine, on a case by case basis,
that persons seeking to be considered members of a membership
organization for purposes of this section have a significant
organizational or financial attachment to the organization under
circumstances that do not precisely meet the requirements of the
general rule. For example, student members who pay a lower amount of
dues while in school or long term dues paying members who qualify for
lifetime membership status with little or no dues obligation may be
considered members.
(D) Notwithstanding the requirements of paragraphs (b)(4)(iv)(B)(1)
through (3) of this section, retired members of a local union who have
paid dues for a period of at least ten years are considered members of
the union; and members of a local union are considered to be members of
any national or international union of which the local union is a part
and of any federation with which the local, national, or international
union is affiliated.
(E) In the case of a membership organization which has a national
federation structure or has several levels, including, for example,
national, state, regional and/or local affiliates, a person who
qualifies as a member of any entity within the federation or of any
affiliate by meeting the requirements of paragraph (b)(4)(iv)(B)(1),
(2), (3) or (4) of this section shall also qualify as a member of all
affiliates for purposes of paragraph (b)(4)(iv) of this section. The
factors set forth at 11 CFR 100.5(g)(4) shall be used to determine
whether entities are affiliated for purposes of this paragraph.
(F) The status of a membership organization, and of members, for
purposes of paragraph (b)(4) of this section, shall be determined
pursuant to paragraph (b)(4)(iv) of this section and not by provisions
of state law governing unincorporated associations, trade associations,
cooperatives, corporations without capital stock, or labor
organizations.
* * * * *
PART 114--CORPORATE AND LABOR UNION ACTIVITY
3. The authority citation for Part 114 would continue to read as
follows:
Authority: 2 U.S.C. 431(8)(B), 431(9)(B), 432, 437d(a)(8),
438(a)(8), and 441b.
4. Section 114.1 would be amended by revising paragraph 114.1(e) to
read as follows:
Sec. 114.1 Definitions.
* * * * *
(e)(1) For purposes of paragraph (e) of this section membership
organization means a trade association, cooperative, corporation
without capital stock, or a local, national, or international labor
organization that:
(i) Is composed of members;
(ii) Expressly states the rights, qualifications, obligations and
[[Page 69229]]
requirements for membership in its articles, bylaws and other formal
organizational documents;
(iii) Is self-governing, such that the power and authority to
direct, and control the association is vested in some or all members,
pursuant to its articles, by laws and other formal organizational
documents;
(iv) Makes its articles, bylaws and other formal organizational
documents freely available to its members;
(v) Expressly solicits members;
(vi) Expressly acknowledges the acceptance of membership, such as
by sending a membership card or inclusion on a membership newsletter
list; and
(vii) Is not organized primarily for the purpose of influencing the
nomination for election, or election, of any individual to Federal
office.
(2) For purposes of paragraph (e) of this section, the term members
includes all persons who are currently satisfying the requirements for
membership in a membership organization, affirmatively accept the
membership organization's invitation to become a member, affirm their
membership on at least an annual basis and either:
(i) Have some significant financial attachment to the membership
organization, such as a significant investment or ownership stake;
(ii) Are required to pay on a regular basis a specific amount of
annual dues of an amount predetermined by the organization; or
(iii) Have a significant organizational attachment to the
membership organization which includes direct and enforceable
participatory and governing rights. For example, such rights could
include the right to vote directly or indirectly for at least one
individual on the membership organization's highest governing board;
the right to vote directly for organization officers; the right to vote
on policy questions where the highest governing body of the membership
organization is obligated to abide by the results; or the right to
participate directly in similar aspects of the organization's
governance.
(3) Notwithstanding the requirements of paragraph (e)(2) of this
section, the Commission may determine, on a case by case basis, that
persons seeking to be considered members of a membership organization
for purposes of this section have a significant organizational or
financial attachment to the organization under circumstances that do
not precisely meet the requirements of the general rule. For example,
student members who pay a lower amount of dues while in school or long
term dues paying members who qualify for lifetime membership status
with little or no dues obligation may be considered members.
(4) Notwithstanding the requirements of paragraphs (e)(2) (i)
through (iii) of this section, retired members of a local union who
have paid dues for a period of at least ten years are considered
members of the union; and members of a local union are considered to be
members of any national or international union of which the local union
is a part and of any federation with which the local, national, or
international union is affiliated.
(5) In the case of a membership organization which has a national
federation structure or has several levels, including, for example,
national, state, regional and/or local affiliates, a person who
qualifies as a member of any entity within the federation or of any
affiliate by meeting the requirements of paragraph (e)(2) (i), (ii),
(iii) or (iv) of this section shall also qualify as a member of all
affiliates for purposes of paragraph (e)(1) of this section. The
factors set forth at 11 CFR 100.5(g)(4) shall be used to determine
whether entities are affiliated for purposes of this paragraph.
(6) The status of a membership organization, and of members, for
purposes of this part, shall be determined pursuant to paragraph (e)(1)
of this section and not by provisions of state law governing trade
associations, cooperatives, corporations without capital stock, or
labor organizations.
* * * * *
Sec. 114.7 [Amended]
5. In Sec. 114.7, paragraph (k) would be removed.
Sec. 114.8 [Amended]
6. In Sec. 114.8, paragraph (g) would be removed and reserved.
Dated: December 11, 1998.
Scott E. Thomas,
Acting Chairman, Federal Election Commission.
[FR Doc. 98-33317 Filed 12-15-98; 8:45 am]
BILLING CODE 6715-01-P
