[Congressional Record (Bound Edition), Volume 153 (2007), Part 5]
[Senate]
[Pages 6569-6573]
[From the U.S. Government Publishing Office, www.gpo.gov]




        CONGRESSIONAL CHARTER OF THE AMERICAN NATIONAL RED CROSS

  Mr. REID. Mr. President, I ask unanimous consent that the Senate 
proceed to calendar No. 71, S. 655.
  The PRESIDING OFFICER. The clerk will report the bill by title.
  The assistant legislative clerk read as follows:

       A bill (S. 655) 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.

  There being no objection, the Senate proceeded to consider the bill, 
which had been reported by the Committee on the Judiciary with an 
amendment, as follows:
  [Omit the part struck through and insert the part printed in italic].

                                 S. 655

       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 ``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) providing oversight of the protection of the brand of 
     the corporation; and
       (J) 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;
       (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; 
     and
       (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.

[[Page 6570]]



     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 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.

       Paragraph (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.

[[Page 6571]]

       ``(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.--The Office of the Ombudsman shall submit a 
     report annually to Congress concerning any trends and 
     systemic matters that the Office of the Ombudsman has 
     identified as confronting the corporation.''.]
       ``(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.''.

  Mr. LEAHY. Mr. President, I am pleased the Judiciary Committee 
approved and the Senate is considering S. 655, the American National 
Red Cross Governance Modernization Act of 2007. I thank my colleagues, 
Senator Grassley and Senator Kennedy, for their hard work on this issue 
and for introducing this important bill.
  Since its founding by Clara Barton in 1881, the American Red Cross 
has provided crucial relief services to those affected by famine, 
floods, and natural and manmade disasters. Last year alone, the 
American Red Cross responded to approximately 75,000 disasters with the 
help of more than 1 million volunteers and 35,000 employees. As a key 
participant in the U.S. disaster relief plan, the American Red Cross is 
charged with helping the United States prevent, prepare and respond to 
national emergencies. Over the past several years, however, the 
American Red Cross has been strained by disasters of an unparalleled 
scope: the terrorist attacks of September 11, 2001, the December 2004 
Asian tsunami, and the 2005 hurricane season that included the 
enormously destructive Hurricanes Katrina, Rita, and Wilma. These 
events all challenged the Red Cross's ability to respond to disasters 
quickly and effectively.
  In order to improve its disaster relief services, the American Red 
Cross's Board of Governors unanimously voted to accept recommendations 
given by an independent advisory board, which examined the American Red 
Cross's governance structure and practices. S. 655 reflects these 
recommendations and would improve the American Red Cross's governance 
structure by centralizing and reorganizing its infrastructure. Some 
notable enhancements include reducing its board size from 50 members to 
20 in order to facilitate emergency action, giving the board all the 
powers in governing and managing the American Red Cross, and 
establishing a Presidential Advisory Council composed of 8 to 10 
principal officers of the executive departments and senior officers of 
the Armed Forces to provide governmental input and support. 
Additionally, the modernized charter would enhance congressional 
oversight and transparency by creating an ombudsman who would provide 
an annual report to Congress articulating any concerns of volunteers, 
employees, donors, clients and the public.
  According to the American Red Cross's end of the year report, 
Hurricane Katrina created a record of 1.4 million families, or around 4 
million people, who needed emergency assistance such as food, clothing, 
and other necessities. My wife Marcelle was one of hundreds of 
thousands of volunteers dedicated to providing these essential relief 
services to victims of Katrina. No one knows when the next disaster 
will strike. Congress must do everything in our power to ensure that 
the American Red Cross can continue and improve upon the essential 
humanitarian work on which the United States and the world relies. I 
commend the Red Cross for taking important action to reform itself, and 
I urge my colleagues to support this important legislation.
  Mr. REID. Mr. President, I ask unanimous consent that the committee 
amendment be agreed to, the bill, as amended, be read a third time and 
passed, the motion to reconsider be laid upon the table, with no 
intervening action or debate, and that any statements relating to the 
bill be printed in the Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The committee amendment was agreed to.
  The bill (S. 655), as amended, was ordered to be engrossed for a 
third reading, was read the third time, and passed, as follows:

                                 S. 655

       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 ``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

[[Page 6572]]

     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) providing oversight of the protection of the brand of 
     the corporation; and
       (J) 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;
       (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; 
     and
       (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.

     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

[[Page 6573]]

     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 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.

       Paragraph (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.''.

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