PUBLIC LAW 110–26—MAY 11, 2007 121 STAT. 103

Public Law 110–26

110th Congress

An Act

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.

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 whistle blower 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—

36 USC 300101

note.

The American

National Red

Cross

Governance

Modernization

Act of 2007.

36 USC 101 note.

May 11, 2007

[H.R. 1681]

121 STAT. 104 PUBLIC LAW 110–26—MAY 11, 2007

(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;

(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

PUBLIC LAW 110–26—MAY 11, 2007 121 STAT. 105

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—

121 STAT. 106 PUBLIC LAW 110–26—MAY 11, 2007

(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:

‘‘§ 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).

PUBLIC LAW 110–26—MAY 11, 2007 121 STAT. 107

‘‘(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.

121 STAT. 108 PUBLIC LAW 110–26—MAY 11, 2007

‘‘(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.

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:

PUBLIC LAW 110–26—MAY 11, 2007 121 STAT. 109

‘‘§ 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:

‘‘§ 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.

121 STAT. 110 PUBLIC LAW 110–26—MAY 11, 2007

LEGISLATIVE HISTORY—H.R. 1681 (S. 655):

HOUSE REPORTS: No. 110–87 (Comm. on Foreign Affairs).

CONGRESSIONAL RECORD, Vol. 153 (2007):

Apr. 17, considered and passed House.

Apr. 23, considered and passed Senate.

Æ

‘‘§ 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.’’.

Approved May 11, 2007.