[Federal Register Volume 62, Number 245 (Monday, December 22, 1997)]
[Proposed Rules]
[Pages 66832-66838]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-33305]
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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. 62, No. 245 / Monday, December 22, 1997 /
Proposed Rules
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FEDERAL ELECTION COMMISSION
11 CFR Parts 100 and 114
[Notice 1997-20]
Definition of ``Member'' of a Membership Association
AGENCY: Federal Election Commission.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Commission is proposing revisions to its rules governing
who qualifies as a ``member'' of a membership association to reflect
the decision of the United States Court of Appeals for the District of
Columbia Circuit in Chamber of Commerce of the United States v. Federal
Election Commission. 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 proposed rules would describe a
range of financial and organizational attachments that would be
sufficient to confer this status.
DATES: Comments must be received on or before January 21, 1998. If the
Commission receives sufficient requests to testify, it will hold a
hearing in early 1998. The precise date and time of the hearing will be
announced in the Federal Register. Persons wishing to testify should so
indicate in their comments.
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, N.W., 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. Comments that
do not contain the full name, electronic mail address and postal
service address of the commenter will not be considered. The hearing
will be held in the Commission's ninth floor meeting room, 999 E Street
N.W., Washington, D.C.
FOR FURTHER INFORMATION CONTACT: Ms. Susan E. Propper, Assistant
General Counsel, or Ms. Rita A. Reimer, Attorney, 999 E Street N.W.,
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).
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. The Commission received two comments in response to
the NOA.
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.
Commenters included the American Association of Meat Processors
(``AAMP''); the American Dental Association (``ADA''); the American
Federation of State, County and Municipal Employees, AFL-CIO
(``AFSCME''); the American Society of Association Executives
(``ASAE''); the Chicago Board of Trade; the Chicago Mercantile
Exchange; the Connecticut Veterinary Medical Association; the
Metropolitan Kansas City Board of Realtors; the National Association of
Realtors; the National Citizens Legal Network; the National Right to
Life Committee, Inc.; Michael A. Schoenfield; the United States Chamber
of Commerce; and the Wholesaler-Distributor Political Action Committee
(``WDPAC''). After reviewing these comments, the Commission is now
seeking further comment on the specific amendments to the member rules
described below.
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
[[Page 66833]]
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 provide that either 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 is sufficient in and of itself to
confer membership rights. 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 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. In addition, the Commission believes it is
appropriate to include in the text of the rules more guidance
consistent with the Chamber decision. The effect of the proposed rules
should be to expand the class of persons considered as ``members.''
Proposed Revisions
General Considerations
One commenter argued that, since the NRWC decision involved an
entity whose by-laws specifically stated that it had no members, the
Supreme Court's reasoning in that decision applies only to similar
entities. That commenter urged the Commission to reinstate its original
definition of ``member,'' which included ``all persons who are
currently satisfying the requirements for membership in a membership
organization.''
However, the Court's discussion makes clear that the NRWC's failure
to provide for members in its by-laws was not the main focus of its
reasoning. It was not until after the Court noted that the NRWC's
asserted ``members'' had no governance rights or significant other
attachments to the organization, supra, that it reiterated an earlier
statement that the ``NRWC's own articles of incorporation and other
publicly filed documents explicitly disclaimed the existence of
members.'' 459 U.S. at 558-59. The Commission believes that the lack of
financial or organizational attachments, as well as the failure to
provide for members in its bylaws, led to the Court's conclusion that
the asserted members did not so qualify.
One commenter, noting that it is possible to buy a single share of
stock over the telephone, and sell it later that same day, argued that
the analogy to stock ownership did not necessarily imply a strong bond.
However, ownership of even a single share of stock permits the owner to
attend stockholder meetings and thereby participate in the governance
of the corporation during whatever time period the stock is held.
Some commenters argued that the Commission should look to the laws
of the individual states where membership associations are incorporated
to determine who qualifies as their members. The NRWC Court assumed,
``since there is no body of federal law of corporations, [] Congress
intended at least some reference to the laws of the various states
dealing with nonprofit corporations.'' Id. at 558 (citation omitted).
However, that statement was in response to the argument that the
Commission should have acted without reference to state law. The Court
explained that, ``[g]iven the wide variety of treatment of the subject
of membership in state incorporation laws,
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and the focus of the Commission's regulation on the corporation's own
standards, we think it was entirely permissible for the Commission in
this case to look to NRWC's corporate charter under the laws of
Virginia and the bylaws adopted in accordance with that charter.'' Id.
Far from requiring the Commission to take that action, the Court merely
said this was a permissible option under the former ``member''
definition.
The Commission is now proposing to revise this definition, to
provide greater guidance to the regulated community in light of the
NRWC decision. While under that decision the Commission may choose to
examine state law in connection with a particular situation, it does
not believe this is an appropriate standard to include in the
regulatory language.
Overview
The current rules set out three preliminary requirements that an
entity must meet before it qualifies as a ``membership association''
for purposes of these rules: It must expressly provide for ``members''
in its articles and by-laws; it must expressly solicit members; and it
must 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). These three
requirements were not challenged in the litigation and the Commission
is not proposing any changes to this language.
The current rules also recognize as members those who have a
stronger financial interest in an association than paying dues (for
example, the ownership of a stock exchange seat). 11 CFR
100.8(b)(4)(iv)(B)(1), 114.1(e)(2)(i). The Commission is not proposing
that these rules be changed. However, it is proposing three
alternatives (Alternatives A, B, and C) to the other requirements
contained in the current rules.
Preliminary Requirements
The Chamber of Commerce and some of the commenters argued that the
three general requirements should in and of themselves be sufficient to
confer membership status. However, the Commission questions whether
these attachments, standing alone, are sufficient to meet the
``relatively enduring and independently significant financial or
organizational attachment'' standard articulated by the NRWC Court.
While that Court did not discuss what it considered to be a significant
financial attachment, these three requirements contain no financial
attachment. With reference to organizational attachments, the Court
cited such attachments as the right to play some part in the operation
or administration of the corporation; the right to elect corporate
officers; and the right of members to exercise control over the
expenditure of their contributions. 459 U.S. at 558. The three
requirements fall far short of any such attachments. For this reason
none of the alternatives would provide that these three requirements,
standing alone, be sufficient to confer membership status.
Financial Attachments
All three alternatives would also retain the current rule
recognizing as members persons who have a stronger financial interest
in an association than the payment of annual dues, such as those owning
seats on stock exchanges or boards of trade. 11 CFR
100.8(b)(4)(iv)(B)(1); 114.1(e)(2)(i). While in most instances such
persons would qualify under the other proposed requirements, the
Commission believes it is appropriate to retain this separate category.
On May 16, 1997, the Commission determined in Advisory Opinion
(``AO'') 1997-5 that, based on the facts presented, both owners and
lessees of seats on the Chicago Mercantile Exchange could be considered
``members'' of the CME for purposes of these rules. The member-owners,
by virtue of their ownership stake, qualify as members under 11 CFR
100.8(b)(4)(iv)(B)(1) and 114.1(e)(2)(i). In addition, the Commission
found, member-lessees have sufficient rights and obligations to also
qualify as members. These attachments include substantial financial
obligations to the CME, the right to serve on policy-formulating
committees, and the possibility of sanctions by the CME that would
impact on their professional status. AO 1997-5 overruled AO 1988-39 and
1987-31 (in part), which had concluded that, because only one seat was
involved, only one membership in the Exchange existed with respect to
each leased membership.
The Commission sought comments in the ANPRM on whether to include
the holding of AO 1997-5 in the regulatory text. While both the Chicago
Board of Trade and the Chicago Mercantile Exchange urged the Commission
to do this, the Commission has determined that this is unnecessary,
since the proposed rules would so clearly cover both owned and leased
memberships. Further, AO 1997-5 remains in effect, should the regulated
community require additional guidance on this point. Therefore, the
Commission has not included language to this effect in the text of the
proposed rules.
Dues
The ANPRM suggested that a certain level of annual dues might be
considered in and of itself sufficient to establish membership. Those
who paid this amount would be considered members regardless of whether
they had any organizational attachments to the association. The ANPRM
suggested that any amount of annual dues set by an association might be
a sufficient financial attachment, regardless of amount; or,
alternatively, that $200 per year might be an appropriate cut-off
point, since $200 is the amount that Congress has decided is such a
significant attachment to a political committee that itemized
disclosure is required for contributions to a political committee.
Some commenters supported the proposal that any amount of dues set
by an association would be sufficient to confer membership; while
others suggested that a nominal amount, such as $5 per year, should be
sufficient. No commenter who addressed this part of the ANPRM agreed
with the proposed $200 per year figure.
The Chamber of Commerce stated that a $200 cut-off would exclude
approximately 58% of its members, who pay annual dues ranging from $65
through tens of thousands of dollars. ASAE pointed out that an
association may charge an initial rate for the first person who joins
from an organization, and a reduced rate for subsequent joiners. AAMP
noted that membership associations sometimes offer a reduced rate for
the first year of membership, in hopes of attracting members who will
continue their membership notwithstanding the higher dues for
subsequent years.
The three alternatives take different approaches to this question.
Alternative A would set this level at $50 per year; Alternative B would
retain the $200 level proposed in the ANPRM for those entities not
formed to further business or economic interests; while under
Alternative C any amount of annual dues set by the association would be
sufficient.
Alternative A, which proposes that $50 in annual dues be sufficient
to confer membership status, if no organizational attachments exist
other than the three preliminary requirements, reflects the Supreme
Court's language in the NRWC decision making it clear that more than a
token commitment is required to qualify as a significant financial
attachment. The
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Commission notes that it is also likely that many persons with lesser
dues obligations would qualify as members through the organizational
attachments discussed below.
Alternative B would distinguish between the types of organizations
addressed by the Chamber of Commerce decision and ideological, social
welfare, and political organizations. The first category would include
organizations formed to further business or economic interests or to
implement a system of self-discipline or self-regulation within a line
of commerce, such as business leagues, trade associations, labor
organizations, and self-regulating professional associations. These
types of organizations clearly provide, as enunciated by the Supreme
Court in the NRWC case, ``some relatively enduring and independently
significant financial or organizational attachment.'' 459 U.S. at 204.
Persons paying regular dues of any amount could be treated as members
of these organizations without doing violence to the intent of the
statute. Such persons join to foster their business or economic
interests and, thus, create an attachment that is independent of any
political attachment. This is in contrast to persons who join
ideological, social welfare, or political organizations. In the latter
case, there is a far greater risk that ``dues'' are nothing more than
political support indistinguishable from such support from the general
public. In other words, there is a far greater risk that the Commission
would ``open the door to all but unlimited corporate solicitation and
thereby render meaningless the statutory limitation to members.'' NRWC,
459 U.S. at 204.
For organizations that do not fall in the categories of ``business
leagues, trade associations, labor organizations, or self-regulating
professional associations,'' this alternative would provide that a dues
payment obligation by itself would suffice as an indication of
``relatively enduring and independently significant financial or
organizational attachment'' if it exceeds $200 per year. This is the
amount Congress chose as the associational level of significance for
donor disclosure. Also, although this ``$200 dues alone'' provision for
organizations other than business leagues, trade associations, labor
organizations, and self-regulating professional associations would be
more restrictive than Alternative A, it still would be more forgiving
than the current rule whereunder there is no allowance for ``member''
status based solely on a dues obligation.
Alternative C would provide that an organization that qualified as
a membership association could consider as ``members'' all persons who
paid the amount of annual dues set by the association, regardless of
amount. This alternative would not distinguish between economic and
ideological associations, reasoning that, for example, an emotional
commitment to an organization such as Mothers Against Drunk Driving
(``MADD'') is as significant to their members as the economic
attachments discussed with regard to Alternative B, supra. Also, a
number of organizations that clearly qualify as membership
associations, including the American Association of Retired Persons
(``AARP''), have annual dues of less than $50 and provide none of the
organizational attachments discussed below.
Organizational Attachments
The ANPRM proposed that, for a lesser dues obligation than that
which would automatically confer membership, the rules might specify
other factors the Commission would consider per se sufficient to
provide the required organizational attachment, provided that some
level of dues was also required. Suggested factors included such
attachments as the voting rights contained in the current rule; the
right to serve on policy-making boards and/or vote on policy issues;
eligibility to be elected to governing positions in the organization;
and whether the member could be subject to disciplinary action by the
association. The right to vote directly for all members of the highest
governing body, contained in current 11 CFR 100.8(b)(4)(A)(3) and
114(e)(1)(iii), was not included in this listing because the other
proposed attachments would cover this situation. No commenter suggested
additional attachments for inclusion in this list.
Alternative A proposes that, consistent with the NRWC decision,
certain organizational attachments be considered per se sufficient for
membership, even where the association charges no dues. Of the above
listing, this alternative would provide that the right to vote on
policy matters, taken alone, does not provide the significant
attachment envisioned by the NRWC Court. However, each of the other
organizational attachments would be sufficient to confer membership
status even where no dues are required. As noted, under this
alternative, payment of less than $50 per year in predetermined annual
dues, coupled with a lesser organizational attachment, such as the
right to vote on policy issues of interest to the membership
association, also would be sufficient to confer membership status.
Under Alternative B, persons affiliated with ideological, social
welfare, or political organizations who paid less than $200 per year in
annual dues would be considered members for purposes of these rules if
they had some right to participate in the governance of the
organization. Such rights would include a right to vote for at least
one individual on the highest governing body or for the officers of the
organization; a right to vote on policy questions where the highest
governing body is obligated to abide by the results (a binding
referendum, for example, rather than a mere informational survey) or to
approve or disapprove the results (a resolution that must be acted
upon, for example); a right to join (not just the opportunity to be
selected for) a committee, board, or section within the organization
that can make policy recommendations which the highest governing body
must approve or disapprove (a resolution that must be acted upon, for
example); or (if the opportunity to be selected for such a committee,
board, or section is involved) the right to participate on such
committee, board or section because of being selected. To round out the
rules, this alternative would provide that even without any dues
obligation, persons could be considered ``members'' if they have the
right to vote for at least a majority of the individuals on the highest
governing body.
These ``dues plus governance rights'' provisions, although not as
loose as Alternative A, would be more forgiving than the current rule
because several options other than voting for at least one member of
the highest governing body would suffice. The ``vote for a majority
alone'' rule would be more forgiving than the current rule because
voting for all persons on the highest governing body would not be
required.
The standards proposed in Alternative B would permit virtually all
the organizations represented by the commenters to treat those they
consider members as ``members'' under federal election law. At the same
time, they would screen out ideological/social welfare/political
organizations that are not willing to provide for a dues requirement
and minimal governance rights. These organizations must be held to a
standard that clearly demonstrates that members have a ``relatively
enduring and independently significant financial or organizational
attachment.''
Alternative C does not address the situation where persons pay no
dues but have significant organizational attachments to an association.
[[Page 66836]]
Case by Case Determinations
The current rules at 11 CFR 100.8(b)(4)(iv)(C) and 114.1(e)(3)
provide that persons who do not meet the precise membership
requirements set out elsewhere in the rules may nevertheless be
considered members on a case by case basis. The examples given include
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. However, the current rules require
that such persons may qualify as members only if they retain voting
rights in the association. Consistent with the Chamber decision, the
Commission is proposing that this voting requirement be dropped. The
language would also be modified to refer to an organizational or
financial attachment, rather than an organizational and financial
attachment. This approach is included only in Alternatives A and B, as
it would not be needed if Alternative C were adopted.
Multi-tiered Associations
The current rules at 11 CFR 100.8(b)(4)(iv)(B) and 114.1(e)(2) that
require both a financial and an organizational attachment for members
of most membership associations clearly include two-tiered
associations, such as those in which members vote for delegates to a
convention, and those delegates elect those who serve on the
association's highest governing body. At the time of the 1993
amendment, the Commission explained that multi-tiered associations
could solicit across all tiers, as long as the various tiers met the
same criteria that govern solicitations by two-tiered associations.
Explanation and Justification for Regulations on the Definition of
``Member'' of a Membership Association, 58 FR 45770 (1993). In
addition, the Commission authorized farm cooperatives as defined in the
Agricultural Marketing Act of 1929 (12 U.S.C. 1141j) and those entities
eligible for assistance under the Rural Electrical Act of 1936 as
amended (7 U.S.C. 901-950aa-1) to solicit across all tiers even though
the precise attachments set forth at 11 CFR 100.8(b)(4)(iv)(B) and
114.1(e)(2) might not always be present. 11 CFR 114.7(k)(1).
Federations of trade associations had earlier been given this same
right, 11 CFR 114.8(g), as had labor organizations, 11 CFR 114.1(e)(4).
The Chamber of Commerce court, in discussing the AMA's organizational
attachments, cited these exceptions as another basis for its ruling
that the AMA should be able to cross-solicit across multiple tiers even
where no voting rights were present. 69 F.3d at 606.
If the Commission expands the membership definition, many multi-
tiered associations that do not presently qualify for cross-tier
solicitation would likely be able to do so. In addition, all three
alternatives would provide that direct membership in any level of a
multi-tiered association be construed as membership in all tiers of the
association for purposes of these rules. ASAE, in recommending this
approach, noted that a person who joins one tier of a multi-tiered
association clearly demonstrates an intention to associate with the
entire organization. This approach would also make enforcement easier
and prevent what could otherwise be a large number of requests for
advisory opinions from multi-tiered associations.
The Commission is therefore proposing that new general language for
this purpose replace that currently found at 11 CFR 100.8(b)(4)(iv)(D)
and 114.1(e)(4). Current 11 CFR 114.7(k) and 114.8(g) would be
repealed. However, Alternative B would in addition retain the
Commission's long-standing regulations regarding federations of labor
organizations. See 11 CFR 100.8(b)(4)(iv)(D) and 114.1(e)(4). Those
rules relate to a situation where the federation is not affiliated with
the member organizations (i.e., according to explicit legislative
history, the PACs of the federation do not have to share contribution
limits with the PACs of the member unions, just as the PACs of a
business league or trade association do not have to share limits with
the PACs of member corporations, yet the federation is allowed to
solicit the members of the member organizations). See, e.g., H.R. Rep.
917, 94th Cong., 2d Sess. 8 (1976); FEC v. Sailors' Union of the
Pacific Political Fund, 624 F.Supp. 492, 495 (N.D. Cal. 1986), aff'd
828 F.2d 502 (9th Cir. 1987). This rule for labor federations is needed
to preserve a balance with trade associations which are given explicit
allowances to solicit persons associated with member corporations.
AO 1991-24 addressed the efforts of the Credit Union National
Association, Inc. (``CUNA'') and the Wisconsin Credit Union League to
make partisan communications across multiple tiers of the organization.
While the Commission approved the proposed procedures, these draft
rules would increase the options available to these and comparably-
situated multi-tiered organizations. In AO 1993-24, the Commission
determined that certain persons were not members of the National Rifle
Association for purposes of the current rules because they did not have
the required voting rights. The draft rules, if approved, would
supersede that portion of the AO that requires voting rights to
establish membership.
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 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 do 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 paragraph (b)(4)(iv)
to read as follows:
Sec. 100.8 Expenditure (2 U.S.C. 431(9))
* * * * *
(b) * * *
(4) * * *
(iv) (A) For purposes of paragraph (b)(4) of this section
membership association means a membership organization, trade
association, cooperative, corporation without capital stock, or a
local, national, or international labor organization that:
(1) Expressly provides for ``members'' in its articles and by-laws;
(2) Expressly solicits members; and
(3) Expressly acknowledges the acceptance of membership, such as by
[[Page 66837]]
sending a membership card or inclusion on a membership newsletter list.
(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 association, affirmatively
accept the membership association's invitation to become a member, and
either:
(1) Have some significant financial attachment to the membership
association, such as a significant investment or ownership stake (but
not merely the payment of dues);
Alternative A for paragraphs (b)(4)(iv)(B)(2)-(4).
(2) Are required to pay on a regular basis a specific amount of
dues of at least $50 per year that are predetermined by the
association;
(3) Have a significant organizational attachment to the membership
association. Such attachments include the right to vote directly either
for at least one member who has full participatory and voting rights on
the highest governing body of the membership association, or for those
who select at least one member of those on the highest governing body
of the membership association; the right to serve on policy-making
boards of the membership association; eligibility to be elected to
governing positions in the membership association; and the possibility
of disciplinary action against the member by the membership
association; or
(4) Are required to pay on a regular basis a specific amount of
dues of less than $50 per year that are predetermined by the
association and who have a lesser organizational attachment to the
membership association than those set forth in paragraph (b)(iv)(B)(3)
of this section, such as the right to vote on policy issues of interest
to the association.
Alternative B for paragraphs (b)(4)(iv)(B)(2)-(4).
(2) Are required to pay on a regular basis a specific amount of
dues of at least $200 per year that are predetermined by the membership
association;
(3) Are required to pay on a regular basis a specific amount of
dues less than $200 per year that are predetermined by the membership
association and either the association is a business league, trade
association, labor organization, or self-regulating professional
association or such persons also have:
(a) A right to vote for at least one individual on the highest
governing body of, or for the officers of, the membership association;
(b) A right to vote on policy questions where the highest governing
body of the membership association is obligated to abide by the results
(a binding referendum, for example, rather than a mere informational
survey) or to approve or disapprove the results (a resolution that must
be acted upon, for example);
(c) A right to join (not just the opportunity to be selected for) a
committee, board, or section within the membership association that can
make policy recommendations which the highest governing body must
approve or disapprove (a resolution that must be acted upon, for
example); or
(d) A right to participate by virtue of being selected to serve on
a committee, board, or section within the membership association that
can make policy recommendations which the highest governing body must
approve or disapprove (a resolution that must be acted upon, for
example); or
(4) Have the right to vote for at least a majority of the
individuals on the highest governing body.
Alternative C for paragraph (b)(4)(iv)(B)(2).
(2) Are required to pay on a regular basis a specific amount of
annual dues that are predetermined by the association.
Alternatives A and B for paragraph (b)(4)(iv)(C).
(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
association for purposes of this section have a significant
organizational or financial attachment to the association 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.
Alternatives A, B and C for paragraph (b)(4)(iv)(D).
(D) In the case of a membership association 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 paragraphs (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.
* * * * *
Alternative B for paragraph (b)(4)(iv)(E).
(E) Notwithstanding the requirements of paragraphs (b)(4)(iv)(B)(1)
through (4) of this section, 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.
* * * * *
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 114.7(e) to
read as follows:
Sec. 114.1 Definitions.
* * * * *
(e) (1) Membership association means a membership organization,
trade association, cooperative, corporation without capital stock, or a
local, national, or international labor organization that:
(i) Expressly provides for ``members'' in its articles and by-laws;
(ii) Expressly solicits members; and
(iii) Expressly acknowledges the acceptance of membership, such as
by sending a membership card or inclusion on a membership newsletter
list.
(2) The term members includes all persons who are currently
satisfying the requirements for membership in a membership association,
affirmatively accept the membership association's invitation to become
a member, and either:
(i) Have some significant financial attachment to the membership
association, such as a significant investment or ownership stake (but
not merely the payment of dues);
Alternative A for paragraphs (e)(2)(ii)-(iv).
(ii) Are required to pay on a regular basis a specific amount of
dues of at least $50 per year that are predetermined by the
association;
(iii) Have a significant organizational attachment to the
membership association. Such attachments include the right to vote
directly either for at least one member who has full participatory and
voting rights on the highest governing body of the membership
association, or for those
[[Page 66838]]
who select at least one member of those on the highest governing body
of the membership association; the right to serve on policy-making
boards or vote on policy issues of interest to the membership
association; eligibility to be elected to governing positions in the
membership association; and the possibility of disciplinary action
against the member by the membership association; or
(iv) Are required to pay on a regular basis a specific amount of
dues of less than $50 per year that are predetermined by the
association and who have a lesser organizational attachment to the
membership association than those set forth in paragraph (e)(2)(iii) of
this section, such as the right to vote on policy issues of interest to
the association.
Alternative B for paragraphs (e)(2)(ii)-(iv).
(ii) Are required to pay on a regular basis a specific amount of
dues of at least $200 per year that are predetermined by the membership
association;
(iii) Are required to pay on a regular basis a specific amount of
dues less than $200 per year that are predetermined by the membership
association and either the association is a business league, trade
association, labor organization, or self-regulating professional
association or such persons also have:
(A) A right to vote for at least one individual on the highest
governing body of, or for the officers of, the membership association;
(B) A right to vote on policy questions where the highest governing
body of the membership association is obligated to abide by the results
(a binding referendum, for example, rather than a mere informational
survey) or to approve or disapprove the results (a resolution that must
be acted upon, for example);
(C) A right to join (not just the opportunity to be selected for) a
committee, board, or section within the membership association that can
make policy recommendations which the highest governing body must
approve or disapprove (a resolution that must be acted upon, for
example); or
(D) A right to participate by virtue of being selected to serve on
a committee, board, or section within the membership association that
can make policy recommendations which the highest governing body must
approve or disapprove (a resolution that must be acted upon, for
example); or
(iv) Have the right to vote for at least a majority of the members
on the highest governing body.
Alternatives A and B for paragraph (e)(3).
(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 association
for purposes of this section have a significant organizational or
financial attachment to the association 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.
Alternatives A, B and C for paragraph (e)(4).
(4) In the case of a membership association which has a national
federation structure or has several affiliated 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 paragraphs (e)(2)(i), (ii),
(iii) or (iv) of this section shall 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.
* * * * *
Alternative B for paragraph (e)(5).
(5) Notwithstanding the requirements of paragraphs (e)(2)(i)
through (iv) of this section, 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.
* * * * *
Sec. 114.7 [Amended]
5. In Section 114.7, paragraph (k) would be removed.
Sec. 114.8 [Amended]
6. In section 114.8, paragraph (g) would be removed and reserved.
Dated: December 17, 1997.
John Warren McGarry,
Chairman, Federal Election Commission.
[FR Doc. 97-33305 Filed 12-19-97; 8:45 am]
BILLING CODE 6715-01-U
