February 1, 1999
By Fax to (202) 219-3923 and by Mail

Susan E. Propper, Esquire
Assistant General Counsel
Federal Election Commission
999 E Street, N.W., Room 657
Washington, D.C. 20463

Re: Comments Regarding FEC Proposal to Revise the Definition of “Member” of a Membership Organization

Dear Ms. Propper:

Thank you for another opportunity to comment on behalf of the Free Speech Coalition &emdash; and thereby participate in the Commission's continuing efforts to define the "member" of a "membership organization" in 11 CFR Sections 100.8(b)(4) and 114.1(e), implementing the Federal Election Campaign Act of 1971. As you may recall, the Free Speech Coalition ("FSC") has been sending to your attention comments regarding the definition of a "member" of a membership "association" since November 1992 and I have testified on this matter before the Commission twice.

The Free Speech Coalition is a nonpartisan group of ideologically diverse nonprofit organizations and for-profit organizations that help nonprofits raise funds and implement programs. Our membership ranges from the American Conservative Union and English First to the Coalition to Stop Gun Violence and the Feminist Majority.

As you know, the definition of "member" is quite important to nonprofit organizations. Status as a "member" not only dictates who may receive solicitations from a membership organization's Separate Segregated Fund (11 CFR section 114.7), but also who the organization may contact with partisan communications regarding federal elections (11 CFR section 100.8(b)(4)(iv)).

A. Definition of a “Member”
n the Free Speech Coalition's 1998 comments and its testimony, FSC encouraged the Commission to adopt a modified "Alternative C" from the Commission's 1997 Notice of Proposed Rulemaking ("NPRM") &emdash; defining individuals as members so long as they "are required to pay on a regular basis a specific amount of annual dues that are predetermined by the association" &emdash; because this alternative better protected the free speech, freedom of association, and other rights of American citizens, as identified by the courts. It is gratifying to see that last year's "Alternative C" provides the basis for this year's proposed rulemaking (i.e., that persons who pay a specific amount of annual dues as predetermined by the organization would qualify as members, without any additional requirements). The absence of a minimum dues level is particularly welcome. However, the proposed regulation would not restore fully the pre-1993 status quo, which had permitted an organization to waive the dues criterion in appropriate instances according to predetermined specific criteria (such as financial hardship) approved by the organization's governing body. It is our view that this failure should be corrected in the final version.

B. Definition of a “Membership Organization”
Until the 1993 amendments to 11 CFR redefined "member," the regulations did not define a membership organization/association. With those amendments, the Commission created three requirements: that such associations expressly provide for "members" in their organizational documents; that they expressly solicit members; and that they expressly acknowledge membership. These standards were generally in keeping with common practice among membership organizations/associations, as best explained in A.O. 1977-67.

In the proposed regulations, the Commission would expand the requirements imposed on membership organizations. For example, a membership organization would be required to state expressly the rights, qualifications, obligations, and requirements for membership in its articles, bylaws and other formal organizational documents. (See Proposed Sec. 114.1(e)(1)(ii).) Additionally, such organizations would be required to make their articles, bylaws, and other formal organizational documents freely available to its members. (See Proposed Sec. 114.1(e)(1)(iv).)

The Commission cannot accurately state (as it has certified in the Notice of Proposed Rulemaking) that these provisions would not have a significant economic impact on a substantial number of small entities &emdash; or that the rules would not require any expenditure of funds, as it has represented. This is not true, as there are innumerable membership organizations which provide for members in their formal organizational documents, without expressly stating &emdash; with the Commission's new and preferred level of specificity &emdash; the rights, qualifications, obligations, and requirements for membership. (Presumably the Commission is aware of this reality; otherwise it would not impose this requirement.) For some membership organizations, the amendment of such organizational documents, including bylaws, can only occur by a meeting of the entire membership. Further, while organizations may already make certain organizational documents freely available to its members, the Commission's catch-all "and other formal organizational documents" would, no doubt, create confusion and extra burdens, and extra expenses. The very process of amendment is likely to stimulate additional demands for such documentation, resulting in additional costs. Moreover, such a regulatory requirement would appear to be an unusually intrusive interjection by the Commission into the governance of membership organizations. Finally, enforcement of such a provision would appear to be quite problematic. Therefore, the Free Speech Coalition recommends that these requirements be stricken from the final regulations promulgated by the Commission.

The proposed Sections 100.8(b)(4)(iv)(F) and 114.1(e)(7) also explicitly reject state law definitions of "membership organization" and "member," which appears to be consistent with prior Commission misreadings of the U.S. Supreme Court's decision in Federal Election Commission, et al. v. National Right to Work Committee, et al., 459 U.S. 196 (1982) ("NRWC"). For example, the 1997 NPRM quoted the Supreme Court: "'since there is no body of federal law of corporations... Congress intended at least some reference to the laws of the various states dealing with nonprofit corporations.' Id. at 558." Dismissing this quote as an assumption of the "NRWC Court," the Commission concluded in the NPRM that a reference to state law "is not an appropriate standard to include in the regulatory language." 62 Fed. Reg. 66833-34. Actually, the Commission's current assertion that NRWC dictated changes in the definition of "member" directly contradicts the language of the decision itself, in which the Supreme Court characterized the Commission's then-existing standard as "sufficiently tailored ... to avoid undue restriction on the associational interests asserted by respondent." 459 U.S. at 208.

Particularly in light of the Commission's having consistently lost in the federal courts on matters relating to the First Amendment, it is urged that the Commission retain such definitions as have received approbation from the Supreme Court. Thus, the proposed Sections 100.8(b)(4)(iv)(F) and 114.1(e)(7) should be removed from the final regulations.

C. Conclusion
The Free Speech Coalition applauds the proposed changes to the language of these regulations, insofar as they would lessen the Commission's excessively burdensome standards (struck down by the U.S. Court of Appeals for the District of Columbia Circuit in Chamber of Commerce of the United States v. FEC, 69 F.3d 600 (D.C. Cir. 1995). The Free Speech Coalition therefore supports the adoption of the proposed regulations, so long as the changes set out above are incorporated in the adopted regulations.

Sincerely yours,

William J. Olson
Legal Co-Counsel
Free Speech Coalition, Inc.