[Congressional Record Volume 153, Number 61 (Tuesday, April 17, 2007)]
[House]
[Pages H3429-H3432]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  THE AMERICAN NATIONAL RED CROSS GOVERNANCE MODERNIZATION ACT OF 2007

  Mr. LANTOS. Madam Speaker, I move to suspend the rules and pass the 
bill (H.R. 1681) to amend the Congressional Charter of The American 
National Red Cross to modernize its governance structure, to enhance 
the ability of the board of governors of The American National Red 
Cross to support the critical mission of The American National Red 
Cross in the 21st century, and for other purposes, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 1681

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as ``The American National Red Cross 
     Governance Modernization Act of 2007''.

     SEC. 2. FINDINGS; SENSE OF CONGRESS.

       (a) Findings.--Congress makes the following findings:
       (1) Substantive changes to the Congressional Charter of The 
     American National Red Cross have not been made since 1947.
       (2) In February 2006, the board of governors of The 
     American National Red Cross (the ``Board of Governors'') 
     commissioned an independent review and analysis of the Board 
     of Governors' role, composition, size, relationship with 
     management, governance relationship with chartered units of 
     The American National Red Cross, and whistleblower and audit 
     functions.
       (3) In an October 2006 report of the Board of Governors, 
     entitled ``American Red Cross Governance for the 21st 
     Century'' (the ``Governance Report''), the Board of Governors 
     recommended changes to the Congressional Charter, bylaws, and 
     other governing documents of The American National Red Cross 
     to modernize and enhance the effectiveness of the Board of 
     Governors and governance structure of The American National 
     Red Cross.
       (4) It is in the national interest to create a more 
     efficient governance structure of The American National Red 
     Cross and to enhance the Board of Governors' ability to 
     support the critical mission of The American National Red 
     Cross in the 21st century.
       (5) It is in the national interest to clarify the role of 
     the Board of Governors as a governance and strategic 
     oversight board and for The American National Red Cross to 
     amend its bylaws, consistent with the recommendations 
     described in the Governance Report, to clarify the role of 
     the Board of Governors and to outline the areas of its 
     responsibility, including--
       (A) reviewing and approving the mission statement for The 
     American National Red Cross;
       (B) approving and overseeing the corporation's strategic 
     plan and maintaining strategic oversight of operational 
     matters;
       (C) selecting, evaluating, and determining the level of 
     compensation of the corporation's chief executive officer;
       (D) evaluating the performance and establishing the 
     compensation of the senior leadership team and providing for 
     management succession;
       (E) overseeing the financial reporting and audit process, 
     internal controls, and legal compliance;
       (F) holding management accountable for performance;
       (G) providing oversight of the financial stability of the 
     corporation;
       (H) ensuring the inclusiveness and diversity of the 
     corporation;
       (I) ensuring the chapters of the corporation are 
     geographically and regionally diverse;
       (J) providing oversight of the protection of the brand of 
     the corporation; and
       (K) assisting with fundraising on behalf of the 
     corporation.
       (6)(A) The selection of members of the Board of Governors 
     is a critical component of effective governance for The 
     American National Red Cross, and, as such, it is in the 
     national interest that The American National Red Cross amend 
     its bylaws to provide a method of selection consistent with 
     that described in the Governance Report.
       (B) The new method of selection should replace the current 
     process by which--
       (i) 30 chartered unit-elected members of the Board of 
     Governors are selected by a non-Board committee which 
     includes 2 members of the Board of Governors and other 
     individuals elected by the chartered units themselves;

[[Page H3430]]

       (ii) 12 at-large members of the Board of Governors are 
     nominated by a Board committee and elected by the Board of 
     Governors; and
       (iii) 8 members of the Board of Governors are appointed by 
     the President of the United States.
       (C) The new method of selection described in the Governance 
     Report reflects the single category of members of the Board 
     of Governors that will result from the implementation of this 
     Act:
       (i) All Board members (except for the chairman of the Board 
     of Governors) would be nominated by a single committee of the 
     Board of Governors taking into account the criteria outlined 
     in the Governance Report to assure the expertise, skills, and 
     experience of a governing board.
       (ii) The nominated members would be considered for approval 
     by the full Board of Governors and then submitted to The 
     American National Red Cross annual meeting of delegates for 
     election, in keeping with the standard corporate practice 
     whereby shareholders of a corporation elect members of a 
     board of directors at its annual meeting.
       (7) The United States Supreme Court held The American 
     National Red Cross to be an instrumentality of the United 
     States, and it is in the national interest that the 
     Congressional Charter confirm that status and that any 
     changes to the Congressional Charter do not affect the rights 
     and obligations of The American National Red Cross to carry 
     out its purposes.
       (8) Given the role of The American National Red Cross in 
     carrying out its services, programs, and activities, and 
     meeting its various obligations, the effectiveness of The 
     American National Red Cross will be promoted by the creation 
     of an organizational ombudsman who--
       (A) will be a neutral or impartial dispute resolution 
     practitioner whose major function will be to provide 
     confidential and informal assistance to the many internal and 
     external stakeholders of The American National Red Cross;
       (B) will report to the chief executive officer and the 
     audit committee of the Board of Governors; and
       (C) will have access to anyone and any documents in The 
     American National Red Cross.
       (b) Sense of Congress.--It is the sense of Congress that--
       (1) charitable organizations are an indispensable part of 
     American society, but these organizations can only fulfill 
     their important roles by maintaining the trust of the 
     American public;
       (2) trust is fostered by effective governance and 
     transparency, which are the principal goals of the 
     recommendations of the Board of Governors in the Governance 
     Report and this Act;
       (3) Federal and State action play an important role in 
     ensuring effective governance and transparency by setting 
     standards, rooting out violations, and informing the public;
       (4) while The American National Red Cross is and will 
     remain a Federally chartered instrumentality of the United 
     States, and it has the rights and obligations consistent with 
     that status, The American National Red Cross nevertheless 
     should maintain appropriate communications with State 
     regulators of charitable organizations and should cooperate 
     with them as appropriate in specific matters as they arise 
     from time to time; and
       (5) while The American National Red Cross is and will 
     remain a Federally chartered instrumentality of the United 
     States, and it has the rights and obligations consistent with 
     that status, The American National Red Cross nevertheless 
     should maintain appropriate communications and collaborations 
     with local, community, and faith-based non-profit 
     organizations, including those organizations that work within 
     minority communities.

     SEC. 3. ORGANIZATION.

       Section 300101 of title 36, United States Code, is 
     amended--
       (1) in subsection (a), by inserting ``a Federally chartered 
     instrumentality of the United States and'' before ``a body 
     corporate and politic''; and
       (2) in subsection (b), by inserting at the end the 
     following new sentence: ``The corporation may conduct its 
     business and affairs, and otherwise hold itself out, as the 
     `American Red Cross' in any jurisdiction.''.

     SEC. 4. PURPOSES.

       Section 300102 of title 36, United States Code, is 
     amended--
       (1) by striking ``and'' at the end of paragraph (3);
       (2) by striking the period at the end of paragraph (4) and 
     inserting ``; and''; and
       (3) by adding at the end the following paragraph:
       ``(5) to conduct other activities consistent with the 
     foregoing purposes.''.

     SEC. 5. MEMBERSHIP AND CHAPTERS.

       Section 300103 of title 36, United States Code, is 
     amended--
       (1) in subsection (a), by inserting ``, or as otherwise 
     provided,'' before ``in the bylaws'';
       (2) in subsection (b)(1)--
       (A) by striking ``board of governors'' and inserting 
     ``corporation''; and
       (B) by inserting ``policies and'' before ``regulations 
     related''; and
       (3) in subsection (b)(2)--
       (A) by inserting ``policies and'' before ``regulations 
     shall require''; and
       (B) by striking ``national convention'' and inserting 
     ``annual meeting''.

     SEC. 6. BOARD OF GOVERNORS.

       Section 300104 of title 36, United States Code, is amended 
     to read as follows:

     ``Sec. 300104. Board of governors

       ``(a) Board of Governors.--
       ``(1) In general.--The board of governors is the governing 
     body of the corporation with all powers of governing and 
     directing, and of overseeing the management of the business 
     and affairs of, the corporation.
       ``(2) Number.--The board of governors shall fix by 
     resolution, from time to time, the number of members 
     constituting the entire board of governors, provided that--
       ``(A) as of March 31, 2009, and thereafter, there shall be 
     no fewer than 12 and no more than 25 members; and
       ``(B) as of March 31, 2012, and thereafter, there shall be 
     no fewer than 12 and no more than 20 members constituting the 
     entire board.
     Procedures to implement the preceding sentence shall be 
     provided in the bylaws.
       ``(3) Appointment.--The governors shall be appointed or 
     elected in the following manner:
       ``(A) Chairman.--
       ``(i) In general.--The board of governors, in accordance 
     with procedures provided in the bylaws, shall recommend to 
     the President an individual to serve as chairman of the board 
     of governors. If such recommendation is approved by the 
     President, the President shall appoint such individual to 
     serve as chairman of the board of governors.
       ``(ii) Vacancies.--Vacancies in the office of the chairman, 
     including vacancies resulting from the resignation, death, or 
     removal by the President of the chairman, shall be filled in 
     the same manner described in clause (i).
       ``(iii) Duties.--The chairman shall be a member of the 
     board of governors and, when present, shall preside at 
     meetings of the board of governors and shall have such other 
     duties and responsibilities as may be provided in the bylaws 
     or a resolution of the board of governors.
       ``(B) Other members.--
       ``(i) In general.--Members of the board of governors other 
     than the chairman shall be elected at the annual meeting of 
     the corporation in accordance with such procedures as may be 
     provided in the bylaws.
       ``(ii) Vacancies.--Vacancies in any such elected board 
     position and in any newly created board position may be 
     filled by a vote of the remaining members of the board of 
     governors in accordance with such procedures as may be 
     provided in the bylaws.
       ``(b) Terms of Office.--
       ``(1) In general.--The term of office of each member of the 
     board of governors shall be 3 years, except that--
       ``(A) the board of governors may provide under the bylaws 
     that the terms of office of members of the board of governors 
     elected to the board of governors before March 31, 2012, may 
     be less than 3 years in order to implement the provisions of 
     subparagraphs (A) and (B) of subsection (a)(2); and
       ``(B) any member of the board of governors elected by the 
     board to fill a vacancy in a board position arising before 
     the expiration of its term may, as determined by the board, 
     serve for the remainder of that term or until the next annual 
     meeting of the corporation.
       ``(2) Staggered terms.--The terms of office of members of 
     the board of governors (other than the chairman) shall be 
     staggered such that, by March 31, 2012, and thereafter, \1/3\ 
     of the entire board (or as near to \1/3\ as practicable) 
     shall be elected at each successive annual meeting of the 
     corporation with the term of office of each member of the 
     board of governors elected at an annual meeting expiring at 
     the third annual meeting following the annual meeting at 
     which such member was elected.
       ``(3) Term limits.--No person may serve as a member of the 
     board of governors for more than such number of terms of 
     office or years as may be provided in the bylaws.
       ``(c) Committees and Officers.--The board--
       ``(1) may appoint, from its own members, an executive 
     committee to exercise such powers of the board when the board 
     is not in session as may be provided in the bylaws;
       ``(2) may appoint such other committees or advisory 
     councils with such powers as may be provided in the bylaws or 
     a resolution of the board of governors;
       ``(3) shall appoint such officers of the corporation, 
     including a chief executive officer, with such duties, 
     responsibilities, and terms of office as may be provided in 
     the bylaws or a resolution of the board of governors; and
       ``(4) may remove members of the board of governors (other 
     than the chairman), officers, and employees under such 
     procedures as may be provided in the bylaws or a resolution 
     of the board of governors.
       ``(d) Advisory Council.--
       ``(1) Establishment.--There shall be an advisory council to 
     the board of governors.
       ``(2) Membership; appointment by president.--
       ``(A) In general.--The advisory council shall be composed 
     of no fewer than 8 and no more than 10 members, each of whom 
     shall be appointed by the President from principal officers 
     of the executive departments and senior officers of the Armed 
     Forces whose positions and interests qualify them to 
     contribute to carrying out the programs and purposes of the 
     corporation.
       ``(B) Members from the armed forces.--At least 1, but not 
     more than 3, of the members of the advisory council shall be 
     selected from the Armed Forces.
       ``(3) Duties.--The advisory council shall advise, report 
     directly to, and meet, at least

[[Page H3431]]

     1 time per year with the board of governors, and shall have 
     such name, functions and be subject to such procedures as may 
     be provided in the bylaws.
       ``(e) Action Without Meeting.--Any action required or 
     permitted to be taken at any meeting of the board of 
     governors or of any committee thereof may be taken without a 
     meeting if all members of the board or committee, as the case 
     may be, consent thereto in writing, or by electronic 
     transmission and the writing or writings or electronic 
     transmission or transmissions are filed with the minutes of 
     proceedings of the board or committee. Such filing shall be 
     in paper form if the minutes are maintained in paper form and 
     shall be in electronic form if the minutes are maintained in 
     electronic form.
       ``(f) Voting by Proxy.--
       ``(1) In general.--Voting by proxy is not allowed at any 
     meeting of the board, at the annual meeting, or at any 
     meeting of a chapter.
       ``(2) Exception.--The board may allow the election of 
     governors by proxy during any emergency.
       ``(g) Bylaws.--
       ``(1) In general.--The board of governors may--
       ``(A) at any time adopt bylaws; and
       ``(B) at any time adopt bylaws to be effective only in an 
     emergency.
       ``(2) Emergency bylaws.--Any bylaws adopted pursuant to 
     paragraph (1)(B) may provide special procedures necessary for 
     managing the corporation during the emergency. All provisions 
     of the regular bylaws consistent with the emergency bylaws 
     remain effective during the emergency.
       ``(h) Definitions.--For purposes of this section--
       ``(1) the term `entire board' means the total number of 
     members of the board of governors that the corporation would 
     have if there were no vacancies; and
       ``(2) the term `emergency' shall have such meaning as may 
     be provided in the bylaws.''.

     SEC. 7. POWERS.

       Subsection (a)(1) of section 300105 of title 36, United 
     States Code, is amended by striking ``bylaws'' and inserting 
     ``policies''.

     SEC. 8. ANNUAL MEETING.

       Section 300107 of title 36, United States Code, is amended 
     to read as follows:

     ``Sec. 300107. Annual meeting

       ``(a) In General.--The annual meeting of the corporation is 
     the annual meeting of delegates of the chapters.
       ``(b) Time of Meeting.--The annual meeting shall be held as 
     determined by the board of governors.
       ``(c) Place of Meeting.--The board of governors is 
     authorized to determine that the annual meeting shall not be 
     held at any place, but may instead be held solely by means of 
     remote communication subject to such procedures as are 
     provided in the bylaws.
       ``(d) Voting.--
       ``(1) In general.--In matters requiring a vote at the 
     annual meeting, each chapter is entitled to at least 1 vote, 
     and voting on all matters may be conducted by mail, 
     telephone, telegram, cablegram, electronic mail, or any other 
     means of electronic or telephone transmission, provided that 
     the person voting shall state, or submit information from 
     which it can be determined, that the method of voting chosen 
     was authorized by such person.
       ``(2) Establishment of number of votes.--
       ``(A) In general.--The board of governors shall determine 
     on an equitable basis the number of votes that each chapter 
     is entitled to cast, taking into consideration the size of 
     the membership of the chapters, the populations served by the 
     chapters, and such other factors as may be determined by the 
     board.
       ``(B) Periodic review.--The board of governors shall review 
     the allocation of votes at least every 5 years.''.

     SEC. 9. ENDOWMENT FUND.

       Section 300109 of title 36, United States Code is amended--
       (1) by striking ``nine'' from the first sentence thereof; 
     and
       (2) by striking the second sentence and inserting the 
     following: ``The corporation shall prescribe policies and 
     regulations on terms and tenure of office, accountability, 
     and expenses of the board of trustees.''.

     SEC. 10. ANNUAL REPORT AND AUDIT.

       Subsection (a) of section 300110 of title 36, United States 
     Code, is amended to read as follows:
       ``(a) Submission of Report.--As soon as practicable after 
     the end of the corporation's fiscal year, which may be 
     changed from time to time by the board of governors, the 
     corporation shall submit a report to the Secretary of Defense 
     on the activities of the corporation during such fiscal year, 
     including a complete, itemized report of all receipts and 
     expenditures.''.

     SEC. 11. COMPTROLLER GENERAL OF THE UNITED STATES AND OFFICE 
                   OF THE OMBUDSMAN.

       (a) In General.--Chapter 3001 of title 36, United States 
     Code, is amended by redesignating section 300111 as section 
     300113 and by inserting after section 300110 the following 
     new sections:

     ``Sec. 300111. Authority of the Comptroller General of the 
       United States

       ``The Comptroller General of the United States is 
     authorized to review the corporation's involvement in any 
     Federal program or activity the Government carries out under 
     law.

     ``Sec. 300112. Office of the Ombudsman

       ``(a) Establishment.--The corporation shall establish an 
     Office of the Ombudsman with such duties and responsibilities 
     as may be provided in the bylaws or a resolution of the board 
     of governors.
       ``(b) Report.--
       ``(1) In general.--The Office of the Ombudsman shall submit 
     annually to the appropriate Congressional committees a report 
     concerning any trends and systemic matters that the Office of 
     the Ombudsman has identified as confronting the corporation.
       ``(2) Appropriate congressional committees.--For purposes 
     of paragraph (1), the appropriate Congressional committees 
     are the following committees of Congress:
       ``(A) Senate committees.--The appropriate Congressional 
     committees of the Senate are--
       ``(i) the Committee on Finance;
       ``(ii) the Committee on Foreign Relations;
       ``(iii) the Committee on Health, Education, Labor, and 
     Pensions;
       ``(iv) the Committee on Homeland Security and Governmental 
     Affairs; and
       ``(v) the Committee on the Judiciary.
       ``(B) House committees.--The appropriate Congressional 
     committees of the House of Representatives are--
       ``(i) the Committee on Energy and Commerce;
       ``(ii) the Committee on Foreign Affairs;
       ``(iii) the Committee on Homeland Security;
       ``(iv) the Committee on the Judiciary; and
       ``(v) the Committee on Ways and Means.''.
       (b) Clerical Amendment.--The table of sections for chapter 
     3001 of title 36, United States Code, is amended by striking 
     the item relating to section 300111 and inserting the 
     following:

``300111. Authority of the Comptroller General of the United States.
``300112. Office of the Ombudsman.
``300113. Reservation of right to amend or repeal.''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
California (Mr. Lantos) and the gentlewoman from Florida (Ms. Ros-
Lehtinen) each will control 20 minutes.
  The Chair recognizes the gentleman from California.


                             General Leave

  Mr. LANTOS. Madam Speaker, I ask unanimous consent that all Members 
may have 5 legislative days to revise and extend their remarks and 
include extraneous material on the bill under consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from California?
  There was no objection.
  Mr. LANTOS. Madam Speaker, I yield myself such time as I may consume.
  I rise in strong support of this legislation. Wherever disaster 
strikes, the American Red Cross is on the scene to lend a helping hand 
in any immediate aftermath. In times of crisis, its staff of 35,000 and 
over 1 million Red Cross volunteers take on the daunting task of 
translating the compassion of the American people into shelter, 
clothing, medical help, and food. Be it a fire that puts a family out 
of its home or a tornado that tears through an entire community, the 
Red Cross responds immediately, answering the call of an astonishing 
75,000 incidents last year alone.
  The relief work of the Red Cross is not limited to our borders. The 
Red Cross responds to tsunamis and earthquakes and other natural 
disasters across the globe, providing much-needed assistance to 
victims. Earlier this month, the Red Cross quickly mobilized to provide 
the Solomon Islands with safe drinking water, medical care, and 
emergency shelter after that country was hit with a tsunami.
  But the American Red Cross, Madam Speaker, like so many disaster 
relief organizations, has come under heightened scrutiny after 9/11 and 
the gulf coast hurricanes of 2005. Particularly, the disaster that New 
Orleans and the gulf coast suffered and the response to it crystallized 
the need for reform of this venerable organization, which had not 
changed its governance structure in over half a century. The leadership 
of the American Red Cross undertook a 6-month, top-to-bottom 
comprehensive governance and performance audit. After over 100 
interviews of past and present Red Cross officers, volunteer chapter 
leaders, donors, and many others, the verdict was in: Red Cross 
governance required a major overhaul.
  Last October, Madam Speaker, the Red Cross board of governors 
unanimously approved a series of changes to improve the governance and 
the accountability of the organization. But such changes cannot be 
implemented

[[Page H3432]]

without amending the Red Cross charter, and for that to occur, 
congressional action is needed. That is the reason for our legislation.
  Last month the other body acted with urgency by passing the American 
National Red Cross Organization Act. This House aims to act with 
similar urgency as we consider this bill just 3 weeks after it was 
introduced by my good friend, Ileana Ros-Lehtinen of Florida, and 
myself.
  Madam Speaker, H.R. 1681 amends the Red Cross charter in a number of 
significant ways. First, the board of governors will be reduced to 25 
members. Where previously some board members were selected by local 
chapters, some elected by the board, others appointed by the President, 
our legislation requires governors to be elected solely by delegates to 
the Red Cross' annual meeting. The responsibilities for day-to-day 
operations will be delegated exclusively to the Red Cross management 
rather than to the board. Our legislation requires the Red Cross to 
establish an office of ombudsman, who will report to Congress, to raise 
the profile of the whistleblower process for employees and volunteers 
and to make improvements to it.
  Madam Speaker, while these changes would not directly affect the 
organization's disaster response, it will help promote the kind of 
leadership needed to make Red Cross management and operations run 
smoothly and effectively for the balance of this century.

                              {time}  1500

  I would like to express my appreciation to my friend and 
distinguished colleague, the ranking member of the Committee on Foreign 
Affairs, Ileana Ros-Lehtinen, for cosponsoring this legislation; and I 
want to thank her for her commitment to ensuring that the American Red 
Cross remains accountable to the American people.
  I strongly support this legislation, and I urge all of my colleagues 
to do the same.
  Madam Speaker, I reserve the balance of my time.
  Ms. ROS-LEHTINEN. Madam Speaker, I yield myself such time as I may 
consume.
  Madam Speaker, as always, it is a delight and a joy to work with our 
chairman, Tom Lantos of California. And I join him as an original co-
sponsor of The American Red Cross Governance Modernization Act of 2007.
  The American Red Cross, as Mr. Lantos has pointed out, is an 
institution with a unique status. It has been assigned the 
responsibility by Congress of fulfilling the obligations of the United 
States under the Geneva Convention for carrying out peacetime and 
disaster relief functions. This obligation has not been a small 
undertaking. The Red Cross has been helping victims of war and natural 
disasters since its founding in 1881.
  As a Member of Congress from Florida's 18th District, I am well aware 
of the great job, the amazing efforts of Red Cross as an organization 
made up of volunteers, and in the way that they have responded to 
numerous hurricanes in my State and tropical storms. And so on behalf 
of the residents of my district and my State, thank you to the Red 
Cross and its many volunteers.
  And it is precisely because of this, Madam Speaker, I applaud the Red 
Cross for the hard work that it has done to review its internal 
governance structures and proposed changes to its charter that will 
make it an even stronger organization so they can help more people that 
will reform the organization and take it into its next century of 
service.
  I am pleased that the Red Cross was willing to accept additional 
significant proposed changes that will provide even more accountability 
and transparency in the manner in which it will report its findings 
regarding audits and investigations to the general public.
  In the future, Madam Speaker, anyone will be able to log on to the 
Red Cross Web site and view the results of its finding for audits and 
investigations that are conducted by the ombudsman's office. This act 
alone will provide even further assurances necessary for the American 
public to feel confident that the Red Cross handles donations with the 
utmost care.
  I urge my colleagues to unanimously support H.R. 1681. And I thank 
the chairman for his leadership on this issue.
  Madam Speaker, I yield back the balance of my time.
  Mr. LANTOS. Madam Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from California (Mr. Lantos) that the House suspend the rules 
and pass the bill, H.R. 1681, as amended.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

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