Rescission of Labor Organization Annual Financial Report for Trusts In Which A Labor Organization Is Interested, Form T-1

CourtLabor-management Standards Office
Citation86 FR 74356
Record Number2021-28266
Publication Date30 December 2021
74356
Federal Register / Vol. 86, No. 248 / Thursday, December 30, 2021 / Rules and Regulations
(b) Affected ADs
This AD replaces AD 2021–24–06,
Amendment 39–21827 (86 FR 66934,
November 24, 2021) (AD 2021–24–06).
(c) Applicability
This AD applies to Airbus Helicopters
Model EC130T2 helicopters, certificated in
any category, as identified in European
Union Aviation Safety Agency (EASA)
Emergency AD 2021–0283–E, dated
December 17, 2021 (EASA AD 2021–0283–E).
(d) Subject
Joint Aircraft System Component (JASC)
Code: 5300, Fuselage Structure.
(e) Unsafe Condition
This AD was prompted by a report of
degradation of the rear transmission shaft
bearing support and the determination that
all of the attachment rivets of the
transmission shaft bearing support were
sheared. The FAA is issuing this AD to
address sheared attachment rivets of the
transmission shaft bearing support. This
condition, if not addressed, could lead to
failure of the tail rotor drive shaft and
subsequent loss of yaw control of the
helicopter.
(f) Compliance
Comply with this AD within the
compliance times specified, unless already
done.
(g) Requirements
Except as specified in paragraph (h) of this
AD: Comply with all required actions and
compliance times specified in, and in
accordance with, EASA AD 2021–0283–E.
(h) Exceptions to EASA AD 2021–0283–E
(1) Where EASA AD 2021–0283–E refers to
November 1, 2021 (the effective date of EASA
Emergency AD 2021–0235–E, dated October
28, 2021), this AD requires using December
9, 2021 (the effective date of AD 2021–24–
06).
(2) Where EASA AD 2021–0283–E refers to
its effective date, this AD requires using the
effective date of this AD.
(3) Where EASA AD 2021–0283–E requires
compliance in terms of flight hours, this AD
requires using hours time-in-service.
(4) Where paragraphs (1) and (2) of EASA
AD 2021–0283–E require accomplishing
inspections after each last flight of the day or
‘‘ALF,’’ this AD requires accomplishing those
inspections before each first flight of the day.
(5) Where the service information
referenced in EASA AD 2021–0283–E
specifies that certain inspections can be done
by a mechanical technician, a pilot with
correct training and accreditation, or a pilot-
owner, this AD requires that those
inspections be done by a qualified mechanic.
(6) Where paragraphs (3) and (4) of EASA
AD 2021–0283–E specify contacting Airbus
Helicopters to obtain approved repair
instructions and accomplishing those
instructions, this AD requires repair done in
accordance with a method approved by the
Manager, General Aviation & Rotorcraft
Section, International Validation Branch,
FAA; or EASA; or Airbus Helicopters’’ EASA
Design Organization Approval (DOA). If
approved by the DOA, the approval must
include the DOA-authorized signature.
(7) Where paragraph (6) of EASA AD 2021–
0283–E requires reporting inspection results
to Airbus Helicopters within 30 days after
each rivet replacement, this AD requires
reporting inspection results at the applicable
time in paragraph (h)(7)(i) or (ii) of this AD.
(i) If the inspection was done on or after
the effective date of this AD: Submit the
report within 10 days after each rivet
replacement.
(ii) If the inspection was done before the
effective date of this AD: Submit the report
within 10 days after the effective date of this
AD.
(8) This AD does not mandate compliance
with the ‘‘Remarks’’ section of EASA AD
2021–0283–E.
(i) Special Flight Permit
Special flight permits may be permitted to
accomplish the actions required by
paragraphs (1) and (2) of EASA AD 2021–
0283–E for the before each first flight of the
day compliance time only, provided that
there are no passengers on board. Special
flight permits are prohibited for any other
actions required by this AD.
(j) Alternative Methods of Compliance
(AMOCs)
(1) The Manager, International Validation
Branch, FAA, has the authority to approve
AMOCs for this AD, if requested using the
procedures found in 14 CFR 39.19. In
accordance with 14 CFR 39.19, send your
request to your principal inspector or local
Flight Standards District Office, as
appropriate. If sending information directly
to the manager of the International Validation
Branch, send it to the attention of the person
identified in paragraph (k) of this AD.
Information may be emailed to: 9-AVS-AIR-
730-AMOC@faa.gov.
(2) Before using any approved AMOC,
notify your appropriate principal inspector,
or lacking a principal inspector, the manager
of the local flight standards district office/
certificate holding district office.
(k) Related Information
For more information about this AD,
contact Andrea Jimenez, Aerospace Engineer,
COS Program Management Section,
Operational Safety Branch, Compliance &
Airworthiness Division, FAA, 1600 Stewart
Ave., Suite 410, Westbury, NY 11590;
telephone (516) 228–7330; email
andrea.jimenez@faa.gov.
(l) Material Incorporated by Reference
(1) The Director of the Federal Register
approved the incorporation by reference of
the service information listed in this
paragraph under 5 U.S.C. 552(a) and 1 CFR
part 51.
(2) You must use this service information
as applicable to do the actions required by
this AD, unless this AD specifies otherwise.
(i) European Union Aviation Safety Agency
(EASA) Emergency AD 2021–0283–E, dated
December 17, 2021.
(ii) [Reserved]
(3) For EASA AD 2021–0283–E, contact
EASA, Konrad-Adenauer-Ufer 3, 50668
Cologne, Germany; telephone +49 221 8999
000; email ADs@easa.europa.eu; Internet
www.easa.europa.eu. You may find the
EASA material on the EASA website at
https://ad.easa.europa.eu.
(4) You may view this service information
at the FAA, Office of the Regional Counsel,
Southwest Region, 10101 Hillwood Pkwy.,
Room 6N–321, Fort Worth, TX 76177. For
information on the availability of this
material at the FAA, call (817) 222–5110.
This material may be found in the AD docket
at https://www.regulations.gov by searching
for and locating Docket No. FAA–2021–1165.
(5) You may view this material that is
incorporated by reference at the National
Archives and Records Administration
(NARA). For information on the availability
of this material at NARA, email
fr.inspection@nara.gov, or go to: https://
www.archives.gov/federal-register/cfr/ibr-
locations.html.
Issued on December 22, 2021.
Lance T. Gant,
Director, Compliance & Airworthiness
Division, Aircraft Certification Service.
[FR Doc. 2021–28340 Filed 12–27–21; 4:15 pm]
BILLING CODE 4910–13–P
DEPARTMENT OF LABOR
Office of Labor-Management
Standards
29 CFR Parts 403 and 408
RIN 1245–AA12
Rescission of Labor Organization
Annual Financial Report for Trusts In
Which A Labor Organization Is
Interested, Form T–1
AGENCY
: Office of Labor-Management
Standards, Department of Labor.
ACTION
: Final rule.
SUMMARY
: This rule rescinds the final
rule published in the Federal Register
on March 6, 2020, (2020 Form T–1 rule),
which established the Form T–1, Trust
Annual Report, required to be filed by
labor organizations about certain trusts
in which they are interested pursuant to
the Labor-Management Reporting and
Disclosure Act (LMRDA). Upon further
review of the 2020 Form T–1 rule,
including the pertinent facts and legally
relevant policy considerations
surrounding that rulemaking, the
Department of Labor (Department)
withdraws the rule implementing the
Form T–1, because it has determined
that the 2020 rulemaking record,
particularly its analysis of the burden
and the benefit of the rule, was
insufficient as a matter of policy to
justify the trust reporting requirements
set forth in the 2020 Form T–1 rule.
Further, by requiring reporting on
entities not controlled or dominated by
VerDate Sep<11>2014 16:53 Dec 29, 2021 Jkt 256001 PO 00000 Frm 00004 Fmt 4700 Sfmt 4700 E:\FR\FM\30DER1.SGM 30DER1
khammond on DSKJM1Z7X2PROD with RULES
74357
Federal Register / Vol. 86, No. 248 / Thursday, December 30, 2021 / Rules and Regulations
labor unions, the Department has
determined that the trust reporting
required under the rule is overly
inclusive and is not necessary to
prevent the circumvention and evasion
of the Title II reporting requirements.
DATES
: This rule is effective on January
31, 2022.
FOR FURTHER INFORMATION CONTACT
:
Karen Torre, Chief of the Division of
Interpretations and Regulations, Office
of Labor-Management Standards, U.S.
Department of Labor, 200 Constitution
Avenue NW, Room N–5609,
Washington, DC 20210, (202) 693–0123
(this is not a toll-free number), (800)
877–8339 (TTY/TDD), OLMS-
Public@dol.gov.
SUPPLEMENTARY INFORMATION
:
I. Statutory Authority
The Department’s statutory authority
is set forth in section 208 of the
LMRDA, 29 U.S.C. 438. Section 208 of
the LMRDA provides that ‘‘[t]he
Secretary [of Labor] shall have authority
to issue, amend, and rescind rules and
regulations prescribing the form and
publication of reports required to be
filed under this title and such other
reasonable rules and regulations
(including rules prescribing reports
concerning trusts in which a labor
organization is interested) as he may
find necessary to prevent the
circumvention or evasion of such
reporting requirements.’’
The Secretary has delegated his
authority under the LMRDA to the
Director of the Office of Labor-
Management Standards (OLMS) and
permitted re-delegation of such
authority. See Secretary’s Order 03–
2012 (Oct. 19, 2012), published at 77 FR
69375 (Nov. 16, 2012).
II. Background
A. Introduction
In enacting the LMRDA in 1959,
Congress sought to protect the rights
and interests of employees, labor
organizations and the public generally
as they relate to the activities of labor
organizations, employers and their labor
relations consultants, and the officers,
employees, and representatives of these
entities. The LMRDA’s various reporting
provisions for labor organizations, their
officers, and their employees are
designed to empower labor organization
members by providing them the means
to maintain democratic control over
their labor organizations and ensure a
proper accounting of labor organization
funds. Labor organization members are
better able to monitor their labor
organization’s financial affairs and to
make informed choices about the
leadership of their labor organization
and its direction when labor
organizations disclose financial
information as required by the LMRDA.
By reviewing a labor organization’s
financial reports, a member may
ascertain the labor organization’s
priorities and whether they are in
accord with the member’s own priorities
and those of fellow members. At the
same time, this transparency promotes
both the labor organization’s own
interests as a democratic institution and
the interests of the public and the
government. Furthermore, the LMRDA’s
reporting and disclosure provisions,
together with the fiduciary duty
provision, 29 U.S.C. 501, which directly
regulates the primary conduct of labor
organization officials, operate to
safeguard a labor organization’s funds
from depletion by improper or illegal
means. While the vast majority of union
officers and employees do their work
diligently and without incident,
unfortunately civil and criminal
violations sometimes occur and, when
they do, the union is the victim. Timely
and complete reporting helps detect
instances of labor organization officers,
employees, or others embezzling or
otherwise making improper use of such
funds and obtain relief for the benefit of
the labor organization and its members
when such improper use occurs.
B. The LMRDA’s Reporting and Other
Requirements
The LMRDA was the direct outgrowth
of a Congressional investigation
conducted by the Select Committee on
Improper Activities in the Labor or
Management Field, commonly known as
the McClellan Committee, chaired by
Senator John McClellan of Arkansas. In
1957, the committee began a highly
publicized investigation of labor
organization racketeering and
corruption; and its findings of financial
abuse, mismanagement of labor
organization funds, and unethical
conduct provided much of the impetus
for enactment of the LMRDA’s remedial
provisions. See generally Benjamin
Aaron, The Labor-Management
Reporting and Disclosure Act of 1959,
73 HARV. L. REV. 851, 851–55 (1960).
During the investigation, the committee
uncovered a host of improper financial
arrangements between officials of
several international and local labor
organizations and employers (and labor
consultants aligned with the employers)
whose employees were represented by
the labor organizations in question or
might be organized by them. Similar
arrangements were also found to exist
between labor organization officials and
the companies that handled matters
relating to the administration of labor
organization benefit funds. See
generally Interim Report of the Select
Committee on Improper Activities in the
Labor or Management Field, S. Report
No. 85–1417 (1957); see also William J.
Isaacson, Employee Welfare and Benefit
Plans: Regulation and Protection of
Employee Rights, 59 COLUM. L. REV.
96 (1959).
Financial reporting and disclosure
from labor organizations were conceived
as partial remedies for these improper
practices. As noted in a key Senate
Report on the legislation, disclosure
would discourage questionable practices
(‘‘The searchlight of publicity is a strong
deterrent.’’), aid labor organization
governance (labor organizations will be
able ‘‘to better regulate their own
affairs’’ because ‘‘members may vote out
of office any individual whose personal
financial interests conflict with his
duties to members’’), facilitate legal
action by members against ‘‘officers who
violate their duty of loyalty to the
members’’, and create a record (‘‘the
reports will furnish a sound factual
basis for further action in the event that
other legislation is required’’). S. Rep.
No. 187 (1959) 16 reprinted in 1 NLRB
LEGISLATIVE HISTORY OF THE
LABOR-MANAGEMENT REPORTING
AND DISCLOSURE ACT OF 1959, 412.
The Department has developed
several forms for implementing the
LMRDA’s financial reporting
requirements. The annual reports
required by section 201(b) of the Act, 29
U.S.C. 431(b) (Form LM–2, Form LM–3,
and Form LM–4), contain information
about a labor organization’s assets;
liabilities; receipts; disbursements;
loans to officers, employees, and
business enterprises; payments to each
officer; and payments to each employee
of the labor organization paid more than
$10,000 during the fiscal year. The
reporting detail required of labor
organizations, as the Secretary has
established by rule, varies depending on
the amount of the labor organization’s
annual receipts. 29 CFR 403.4.
The labor organization’s president
and treasurer (or its corresponding
officers) are personally responsible for
filing the reports and for any statement
in the reports known by them to be
false. 29 CFR 403.6. These officers are
also responsible for maintaining records
in sufficient detail to verify, explain, or
clarify the accuracy and completeness of
the reports for not less than five years
after the filing of the forms. 29 CFR
403.7. A labor organization ‘‘shall make
available to all its members the
information required to be contained in
such reports’’ and ‘‘shall . . . permit
such member[s] for just cause to
VerDate Sep<11>2014 16:53 Dec 29, 2021 Jkt 256001 PO 00000 Frm 00005 Fmt 4700 Sfmt 4700 E:\FR\FM\30DER1.SGM 30DER1
khammond on DSKJM1Z7X2PROD with RULES
74358
Federal Register / Vol. 86, No. 248 / Thursday, December 30, 2021 / Rules and Regulations
1
The Form LM–2 Instructions define a
‘‘subsidiary’’ of a labor organization: Within the
meaning of these instructions, a subsidiary
organization is defined as any separate organization
of which the ownership is wholly vested in the
reporting labor organization or its officers or its
membership, which is governed or controlled by
the officers, employees, or members of the reporting
labor organization, and which is wholly financed by
the reporting labor organization. A subsidiary
organization is considered to be wholly financed if
the initial financing was provided by the reporting
labor organization even if the subsidiary
organization is currently wholly or partially self-
sustaining. https://www.dol.gov/sites/dolgov/files/
olms/regs/compliance/GPEA_Forms/2020/efile/LM-
2_instructionsRevised2020.pdf.
examine any books, records, and
accounts necessary to verify such
report[s].’’ 29 CFR 403.8(a).
The reports are public information. 29
U.S.C. 435(a). The Secretary is charged
with providing for the inspection and
examination of the financial reports, 29
U.S.C. 435(b). For this purpose, OLMS
maintains: (1) A public disclosure room
where copies of such reports filed with
OLMS may be reviewed and; (2) an
online public disclosure site, where
copies of such reports filed since the
year 2000 are available for the public’s
review.
In addition to prescribing the form
and publication of the LMRDA reports,
the Secretary is authorized to issue
regulations that prevent labor unions
and others from avoiding their reporting
responsibilities. Section 208 authorizes
the Secretary of Labor to issue, amend,
and rescind rules and regulations to
implement the LMRDA’s reporting
provisions, including ‘‘prescribing
reports concerning trusts in which a
labor organization is interested’’ as the
Secretary may ‘‘find necessary to
prevent the circumvention or evasion of
[the LMRDA’s] reporting requirements.’’
29 U.S.C. 438. In other words, the
Secretary may require separate trust
reporting only if: (1) The union has an
interest in a trust and (2) reporting is
determined to be necessary to prevent
the circumvention or evasion of LMRDA
reporting requirements. 29 U.S.C. 438.
The phrase ‘‘trust in which a labor
organization is interested’’ is defined
the LMRDA. It ‘‘means a trust or other
fund or organization (1) which was
created or established by a labor
organization, or one or more of the
trustees or one or more members of the
governing body of which is selected or
appointed by a labor organization, and
(2) a primary purpose of which is to
provide benefits for the members of
such labor organization or their
beneficiaries.’’ 29 U.S.C. 402(l)
III. Rescission of the March 6, 2020
Final Rule Establishing the Form T–1
A. History of the Form T–1
The Form T–1 report was first
proposed on December 27, 2002, as one
part of a proposal to extensively change
the Form LM–2. 67 FR 79280 (Dec. 27,
2002). The rule was proposed under the
authority of Section 208, which permits
the Secretary to issue such rules
‘‘prescribing reports concerning trusts in
which a labor organization is
interested’’ as he may ‘‘find necessary to
prevent the circumvention or evasion of
[the LMRDA’s] reporting requirements.’’
29 U.S.C. 438. Following consideration
of public comments, on October 9, 2003,
the Department published a final rule
enacting extensive changes to the Form
LM–2 and establishing a Form T–1. 68
FR 58374 (Oct. 9, 2003) (2003 Form T–
1 rule). The 2003 Form T–1 rule
eliminated the requirement that unions
report on subsidiary organizations on
the Form LM–2,
1
but it mandated that
each labor organization filing a Form
LM–2 report also file a separate report
to ‘‘disclose assets, liabilities, receipts,
and disbursements of a significant trust
in which the labor organization is
interested,’’ increasing labor
organizations’’ reporting requirements
generally and expanding the types of
trusts for which reporting would be
required. 68 FR at 58477. The reporting
labor organization would make this
disclosure by filing a separate Form T–
1 for each significant trust in which it
was interested. Id. at 58524.
To address the statutory requirement
that trust reporting be ‘‘necessary to
prevent the circumvention or evasion of
[the LMRDA’s] reporting requirements,’’
the 2003 Form T–1 rule developed the
‘‘significant trust in which the labor
organization is interested’’ test. It used
the section 3(l) statutory definition of ‘‘a
trust in which a labor organization is
interested’’ coupled with an
administrative determination of when a
trust is deemed ‘‘significant.’’ 68 FR at
58477–78. A labor organization would
be required to report on an entity only
if both sets of criteria were met.
The 2003 Form T–1 rule set forth an
administrative determination that stated
that a ‘‘trust will be considered
significant’’ and therefore subject to the
Form T–1 reporting requirement under
the following conditions:
The labor organization had annual receipts
of $250,000 or more during its most recent
fiscal year, and (2) the labor organization’s
financial contribution to the trust or the
contribution made on the labor organization’s
behalf, or as a result of a negotiated
agreement to which the labor organization is
a party, is $10,000 or more annually.
Id. at 58478.
The portions of the 2003 rule relating
to the Form T–1 were vacated by the
D.C. Circuit in AFL–CIO v. Chao, 409
F.3d 377, 389–391 (D.C. Cir. 2005). The
court held that the form ‘‘reaches
information unrelated to union
reporting requirements and mandates
reporting on trusts even where there is
no appearance that the union’s
contribution of funds to an independent
organization could circumvent or evade
union reporting requirements by, for
example, permitting the union to
maintain control of the funds.’’ Id. at
389. The court also vacated the Form T–
1 portions of the 2003 rule because its
significance test (the second set of
criteria for trust status, set forth above)
failed to establish reporting based on
domination or managerial control of
assets subject to LMRDA Title II
jurisdiction.
The court reasoned that the
Department failed to explain how the
test—i.e., selection of one member of a
board and a $10,000 contribution to a
trust with $250,000 in receipts—could
give rise to circumvention or evasion of
Title II reporting requirements. Id. at
390. In so holding, the court
emphasized that Section 208 authority
is the only basis for LMRDA trust
reporting, that this authority is limited
to preventing circumvention or evasion
of Title II reporting, and that ‘‘the
statute doesn’t provide general authority
to require trusts to demonstrate that
they operate in a manner beneficial to
union members.’’ Id. at 390.
However, the court recognized that
reports on trusts that reflect a labor
organization’s financial condition and
operations are within the Department’s
rulemaking authority, including trusts
‘‘established by one or more unions or
through collective bargaining
agreements calling for employer
contributions, [where] the union has
retained a controlling management role
in the organization,’’ and also those
‘‘established by one or more unions
with union members’’ funds because
such establishment is a reasonable
indicium of union control of that trust.’’
Id. The court acknowledged that the
Department’s findings in support of its
rule were based on particular situations
where reporting about trusts would be
necessary to prevent evasion of the
related labor organizations’’ own
reporting obligations. Id. at 387–88. One
example included a situation where
‘‘trusts [are] funded by union members’
funds from one or more unions and
employers, and although the unions
retain a controlling management role, no
individual union wholly owns or
dominates the trust, and therefore the
use of the funds is not reported by the
related union.’’ Id. at 389 (emphasis
added). In citing these examples, the
VerDate Sep<11>2014 16:53 Dec 29, 2021 Jkt 256001 PO 00000 Frm 00006 Fmt 4700 Sfmt 4700 E:\FR\FM\30DER1.SGM 30DER1
khammond on DSKJM1Z7X2PROD with RULES
74359
Federal Register / Vol. 86, No. 248 / Thursday, December 30, 2021 / Rules and Regulations
court explained that ‘‘absent
circumstances involving dominant
control over the trust’s use of union
members’ funds or union members’
funds constituting the trust’s
predominant revenues, a report on the
trust’s financial condition and
operations would not reflect on the
related union’s financial condition and
operations.’’ Id. at 390. For this reason,
while acknowledging that there are
circumstances under which the
Secretary may require a report, the court
disapproved of a broader application of
the rule to require reports by any labor
organization simply because the labor
organization satisfied a reporting
threshold (a labor organization with
annual receipts of at least $250,000 that
contributes at least $10,000 to a section
3(l) trust with annual receipts of at least
$250,000). Id.
In light of the decision by the D.C.
Circuit, the Department issued a revised
Form T–1 final rule on September 29,
2006. 71 FR 57716 (Sept. 29, 2006)
(2006 Form T–1 rule). Following an
ensuing lawsuit, the U.S. District Court
for the District of Columbia vacated this
rule due to a failure to provide a new
notice and comment period. AFL–CIO v.
Chao, 496 F. Supp. 2d 76 (D.D.C. 2007).
The district court did not engage in a
substantive review of the 2006 rule, but
the court noted that the AFL–CIO
demonstrated that ‘‘the absence of a
fresh comment period . . . constituted
prejudicial error’’ and that the AFL–CIO
objected with ‘‘reasonable specificity’’
to warrant relief vacating the rule. Id. at
90–92.
The Department issued a proposed
rule for a revised Form T–1 on March
4, 2008. 73 FR 11754 (Mar. 4, 2008).
After notice and comment, the 2008
Form T–1 final rule was issued on
October 2, 2008. 73 FR 57412. The 2008
Form T–1 rule took effect on January 1,
2009. Under that rule, Form T–1 reports
would have been filed no earlier than
March 31, 2010, for fiscal years that
began no earlier than January 1, 2009.
Following dicta in AFL–CIO v. Chao,
the 2008 Form T–1 rule stated that labor
organizations with total annual receipts
of $250,000 or more must file a Form T–
1 for those section 3(l) trusts in which
the labor organization, either alone or in
combination with other labor
organizations, had management control
or financial dominance. 73 FR at 57412.
For purposes of the rule, a labor
organization had management control if
the labor organization alone, or in
combination with other labor
organizations, selected or appointed the
majority of the members of the trust’s
governing board. Further, for purposes
of the rule, a labor organization had
financial dominance if the labor
organization alone, or in combination
with other labor organizations,
contributed more than 50 percent of the
trust’s receipts during the annual
reporting period. Significantly, the rule
treated contributions made to a trust by
an employer pursuant to CBA as
constituting contributions by the labor
organization that was party to the
agreement.
Additionally, the 2008 Form T–1 rule
provided exemptions to the Form T–1
filing requirements. No Form T–1 was
required for a trust: (1) Established as a
political action committee (PAC) fund if
publicly available reports on the PAC
fund were filed with Federal or state
agencies; (2) established as a political
organization for which reports were
filed with the IRS under section 527 of
the IRS code; (3) required to file a Form
5500 under the Employee Retirement
Income Security Act of 1974 (ERISA); or
(4) constituting a federal employee
health benefit plan that was subject to
the provisions of the Federal Employees
Health Benefits Act (FEHBA), 5 U.S.C.
8901 et seq. Similarly, the rule clarified
that no Form T–1 was required for any
trust that met the statutory definition of
a labor organization, 29 U.S.C. 402(i),
and filed a Form LM–2, Form LM–3, or
Form LM–4, constituted a subsidiary
organization (i.e., a separate
organization that is wholly owned,
controlled, and financed by a single
labor organization), or was an entity that
the LMRDA exempts from reporting. Id.
In the Spring 2009 and Fall 2009
Regulatory Agendas, the Department
notified the public of its intent to
initiate rulemaking proposing to rescind
the Form T–1 and to require reporting
of wholly owned, wholly controlled,
and wholly financed (‘‘subsidiary’’)
organizations on their Form LM–2 or
LM–3 reports. See http://
www.reginfo.gov/public/do/eAgenda
ViewRule?pubId=200904&RIN=1215-
AB75 and http://www.reginfo.gov/
public/do/eAgendaViewRule?pubId=
200904&RIN=1215-AB75.
Due to the proposed rescission, on
December 3, 2009, the Department
issued a notice of proposed extension of
filing due date to delay for one calendar
year the filing due dates for Form T–1
reports required to be filed during
calendar year 2010. 74 FR 63335. On
December 30, 2009, following comment,
the Department published a rule
extending for one year the filing due
date of all Form T–1 reports required to
be filed during calendar year 2010. 74
FR 69023.
Subsequently, on February 2, 2010,
the Department published a Notice of
Proposed Rulemaking (NPRM)
proposing to rescind the Form T–1. 75
FR 5456. After notice and comment, the
Department published the final rule on
December 1, 2010. In its rescission, the
Department stated that it considered the
reporting required under the rule to be
overly broad and not necessary to
prevent circumvention or evasion of
Title II reporting requirements. The
Department concluded that the scope of
the 2008 Form T–1 rule was overbroad
because it covered many trusts, such as
those funded by employer
contributions, without an adequate
showing that reporting for such trusts is
necessary to prevent the circumvention
or evasion of the Title II reporting
requirements. See 75 FR 74936.
In the Spring and Fall Regulatory
Agendas for 2017 and 2018, the
Department notified the public of its
intent to initiate rulemaking reinstating
the Form T–1 Trust Annual Report. See
https://www.reginfo.gov/public/do/
eAgendaViewRule?pubId=201704&
RIN=1245-AA09, https://
www.reginfo.gov/public/do/
eAgendaViewRule?pubId=201710&
RIN=1245-AA09, https://
www.reginfo.gov/public/do/eAgenda
ViewRule?pubId=201804&RIN=1245-
AA09, and https://www.reginfo.gov/
public/do/eAgendaViewRule?pubId=
201810&RIN=1245-AA09. On May 30,
2019 the Department proposed to
establish a Form T–1 Trust Annual
Report to capture financial information
pertinent to ‘‘trusts in which a labor
organization is interested’’ (‘‘section 3(l)
trusts’’). See 84 FR 25130. After notice
and comment, the Department
published the 2020 Form T–1 final rule
on March 6, 2020. 85 FR 13414.
Under the 2020 rule, and similar to
the 2008 rule, the Department requires
a labor organization with total annual
receipts of $250,000 or more (and,
which therefore is obligated to file a
Form LM–2 Labor Organization Annual
Report) to file a Form T–1, under certain
circumstances, for each trust of the type
defined by section 3(l) of the LMRDA,
29 U.S.C. 402(l) (defining ‘‘trust in
which a labor organization is
interested’’). 85 FR 13417. Such labor
organizations must file where the labor
organization during the reporting
period, either alone or in combination
with other labor organizations, (1)
selects or appoints the majority of the
members of the trust’s governing board
or (2) contributes more than 50 percent
of the trust’s receipts. Id. When
applying this financial or managerial
dominance test, contributions made
pursuant to a collective bargaining
agreement (CBA) shall be considered the
labor organization’s contributions. Id. In
its final rule, the Department stated that
VerDate Sep<11>2014 16:53 Dec 29, 2021 Jkt 256001 PO 00000 Frm 00007 Fmt 4700 Sfmt 4700 E:\FR\FM\30DER1.SGM 30DER1
khammond on DSKJM1Z7X2PROD with RULES
74360
Federal Register / Vol. 86, No. 248 / Thursday, December 30, 2021 / Rules and Regulations
2
See https://www.irs.gov/charities-non-profits/
annual-filing-and-forms.
3
The 10-year annualized cost of the rule would
be $10,285,704 at a 3 percent discount rate and
$9,608,788 at a 7 percent discount rate. 85 FR
13438.
the rule helped bring the reporting
requirements for labor organizations and
section 3(l) trusts in line with
contemporary expectations for the
disclosure of financial information and
prevent the circumvention or evasion of
the LMRDA’s reporting requirements
through funds over which labor
organizations exercise domination. 85
FR 13415.
Like the 2008 rule, exemptions are
provided for a trust that is a political
action committee (‘‘PAC’’) or a political
organization (the latter within the
meaning of 26 U.S.C. 527). No T–1 form
is required for federal employee health
benefit plans subject to the provision of
the Federal Employees Health Benefits
Act (FEHBA), any for-profit commercial
bank established or operating pursuant
to the Bank Holding Act of 1956, 12
U.S.C. 1843, or credit unions. 85 FR
13418. Similar to the 2008 rule, but
unlike the 2003 or 2006 rules, the 2020
Form T–1 rule includes an exemption
for section 3(l) trusts that are part of
employee benefit plans that file a Form
5500 Annual Return/Report under
ERISA. Id. Additionally, a partial
exemption is provided for a trust for
which an audit was conducted in
accordance with prescribed standards
and the audit is made publicly
available. A labor organization choosing
to use this option must complete and
file the first page of the Form T–1 and
a copy of the audit. Id.
Unlike the 2008 rule, the 2020 rule
exempts unions from reporting on the
Form T–1 their subsidiary
organizations, retaining the requirement
that unions must report their
subsidiaries on the union’s Form LM–2
report. Id. Also unlike the 2008 rule, the
2020 rule permits the parent union (i.e.,
the national/international or
intermediate union) to file the Form T–
1 report for covered trusts in which both
the parent union and its affiliates meet
the financial or managerial domination
test. Id. The affiliates must continue to
identify the trust in their Form LM–2
report, and also state in their Form LM–
2 report that the parent union will file
a Form T–1 report for the trust. Id. The
2020 rule also allows a single union to
voluntarily file the Form T–1 on behalf
of itself and the other unions that
collectively contribute to a multiple-
union trust, relieving the Form T–1
obligation on the other unions. Id.
On May 27, 2021, the Department
published an NPRM to withdraw the
March 6, 2020 final rule. 85 FR 13414.
The Department stated its view that the
trust reporting required under the rule
is overly broad and is thus not necessary
to prevent the circumvention and
evasion of the Title II reporting
requirements. Moreover, upon further
consideration, the Department
expressed concern that the 2020
rulemaking record was insufficient to
justify the separate trust reporting
requirements as set forth in the 2020
Form T–1 rule.
B. Reasons for Rescission of the March
6, 2020 Form T–1 Final Rule
In its NPRM, the Department
proposed to rescind the 2020 Form T–
1 rule for two reasons. First, the
Department stated its view that the trust
reporting required under the rule is
overly broad, as it includes trusts that
are exclusively funded by employers.
Accordingly, required reporting of such
employer-funded trusts is not necessary
to prevent the circumvention and
evasion of a union’s Title II reporting
requirements. Second, the Department
reviewed the 2020 rulemaking record
and stated its concern that, as a matter
of policy, the reporting requirements set
forth in the 2020 Form T–1 rule are not
justified in light of the burden they
impose.
The Department received nine
comments in response to the proposal,
with six comments supporting the
rescission. Out of the three opposition
comments, only one was substantive in
nature. As explained below, the
Department adopts its proposal to
rescind the Form T–1, based upon the
rationales provided in the NPRM. First,
the Department will explain why the
reporting requirements set forth in the
2020 Form T–1 rule, as a matter of
policy, are not justified in light of the
heavy burden they impose and the
negligible benefits they offer. Second,
the Department will explain why, even
if the benefits could be said to justify
the burdens, the Form T–1 rule is fatally
over-inclusive, in that it requires
reporting on entities that could not be
used to circumvent and evade the
LMRDA reporting requirements and is
therefore outside the rulemaking
authority established by the LMRDA.
Stated Benefits of 2020 Rule Do Not
Support Form T–1 Rule in Light of
Burden Imposed
As a matter of policy, the Department
finds that the 2020 Form T–1 final rule’s
stated benefits fail to justify the
extensive costs imposed. More
specifically, the Form T–1 requirements
capture largely redundant information
already captured by the Form 990 filed
with the Internal Revenue Service
(IRS)
2
and the existing Forms LM–2,
LM–10, and LM–30 reporting regimes
under LMRDA sections 201, 202, and
203. Accordingly, even to the extent that
the 2020 Rule may have provided some
intangible benefits, as a matter of policy,
the Department now views those
benefits as outweighed by the tangible
and concrete costs imposed by the 2020
Rule. Moreover, the information
collected is not necessary for preventing
circumvention and evasion of the
LMRDA’s reporting requirements.
Finally, the burdens on the agency are
substantial and will divert necessary
resources from more core activities
under the statute. The Department thus
rescinds the Form T–1 with today’s rule.
As discussed in the NPRM to rescind,
the 2020 rule imposed significant,
quantifiable burdens on Form LM–2
filing labor organizations. The
Department estimated that there will be
at least 810 Form LM–2 organizations
filing a Form T–1 report. 85 FR 13437.
In the first year of reporting, Form T–
1 filers would spend approximately
121.38 hours per report, which results
in a total of 251,257 burden hours. 85
FR 13433. In subsequent years, Form T–
1 filers would spend approximately
84.12 hours per report, which would
result in 174,128 additional burden
hours. Id. The total expected first-year
costs of the Form T–1 are $15,009,801,
and in subsequent years the total cost
would be $10,385,820.
3
85 FR 13437.
Multiple commenters—in connection
with both the current NPRM and the
2020 NPRM—agreed with the
Department’s current policy judgment,
that the burden created by the 2020
Form T–1 is unacceptably high in
relation to the rule’s benefits. As one
commenter indicated, over $15 million
in costs imposed upon plans (and then
reimbursed by the unions) in the first
year would be ‘‘depriving [union
members and fund participants] of
benefits that would otherwise be paid to
or on their behalf, benefits needed
especially during the ‘‘economic
uncertainty due to the COVID–19
pandemic.’’ One training fund
commenter also disputed the estimates
of annual burden hours. The commenter
estimated that it would take twice as
long as the Department determined to
acquire and report the information,
stating that the estimates fall short
especially for unions facing the
significant difficulties associated with
determining whether they need to file
and who will file in multiple union
situations.
VerDate Sep<11>2014 16:53 Dec 29, 2021 Jkt 256001 PO 00000 Frm 00008 Fmt 4700 Sfmt 4700 E:\FR\FM\30DER1.SGM 30DER1
khammond on DSKJM1Z7X2PROD with RULES
74361
Federal Register / Vol. 86, No. 248 / Thursday, December 30, 2021 / Rules and Regulations
4
Additionally, the general public, including
members of labor organizations, already has access
to reports containing similar, if not identical,
information that would be included on the Form T–
1. For example, the NTC filed a Form 990 with the
Internal Revenue Service (IRS) that listed three of
the six UAW officials who took unlawful payments
from FCA under Part VII (Compensation of Officers,
Directors, Trustees, Key Employees, Highest
Compensated Individuals, and Independent
Contractors), and the trust should have reported
payments to two other UAW officials’’ sham
charities on Schedule I (Grants and Other
Assistance to Organizations, Governments, and
Individuals in the United States). See OLMS FY 18
Annual Report. While the Form 990s filed by the
trust did not properly report these payments, the
Department of Justice secured indictments covering
conspiring to defraud the United States by
preparing and filing false tax returns for the NTC
that concealed millions of dollars in prohibited
payments directed to UAW officials.
5
See https://www.irs.gov/charities-non-profits/
annual-filing-and-forms.
These burdens are in addition to
existing Form LM–2 recordkeeping and
reporting burdens, and union members
ultimately bear these costs.
In the 2020 rule, the Department
declared, ‘‘[t]he Department’s position
in this Final Rule and in the NPRM is
that there will be a burden on unions
created by the rule but that it will be
outweighed and thereby justified by the
benefits of the rule.’’ 85 FR 13414,
13433. When attempting to articulate
the benefits, the Department did not
articulate with specificity the benefits
that would justify the policy underlying
the new Form T–1. The preamble
discussed the need ‘‘to curb
embezzlement’’ and ‘‘to safeguard
democratic procedures’’ and ‘‘to
promote labor organization self-
government’’ and to ‘‘expand the
benefits of labor organization financial
transparency to the members of all Form
LM–2 filing labor organizations that
utilize trusts to expend funds for the
members’’ benefit.’’ Id. The narrative
did not, however, adequately explain
how these intangible benefits justified
the burden imposed by the Form T–1’s
reporting requirements, given that the
Form T–1 would provide a largely
redundant reporting regime to the
existing Form 990, as well as the
existing Form LM–2, LM–10, and LM–
30 reporting regimes under LMRDA
sections 201, 202, and 203.
For example, as stated in the NPRM
to rescind, the 2020 rule failed to
adequately demonstrate how the Form
T–1 would actually provide benefits in
terms of detecting and deterring fraud.
To the extent that the 2020 rule cited
examples that purportedly demonstrate
how the Form T–1 would help detect
and deter fraud or prevent the
circumvention and evasion of Title II
reporting obligations, the 2020 rule did
not sufficiently demonstrate how the
Form T–1 would further these goals.
A general criticism by commenters
was that the 2020 Form T–1 rule
suffered from a lack of supporting
evidence and examples, a position with
which the Department now agrees, even
concerning its primary example, UAW-
Fiat Chrysler of America (FCA). While
the 2020 rule relied heavily on UAW-
FCA convictions as grounds for
adopting the Form T–1, after
consideration, the Department now
believes, as both a matter of policy and
a factual consideration, that the cited
cases do not provide support for the
2020 rule. That those convictions were
secured without a Form T–1 reporting
regime instead demonstrates that the
ability to obtain necessary results to
adequately protect against bribery and
other violations of the labor-
management process already exists,
undermining the need to impose the
additional costs of compliance with the
Form T–1. Thus, rather than reinforcing
the rationale behind the 2020 rule, that
argument substantially undercuts the
purported need for the new reporting
burden.
Indeed, in recent years and as
discussed in the 2020 rule, the
Department played a key role in
investigating and in securing over a
dozen indictments and convictions in
the UAW-FCA National Training Center
(NTC) bribery and embezzlement
scheme, all without the Form T–1. See
85 FR 13421. Working jointly with the
Department of Justice and others, the
Department of Labor helped secure
convictions of management and union
officials associated with the NTC,
pursuant to the Taft-Hartley Act, for
unlawful employer payments to UAW
officials. See 29 U.S.C. 186. The 2020
rule offered no explanation as to what
additional benefit, if any, the Form T–
1 would have provided in this context.
Indeed, OLMS already has a well-
established history of effectively
enforcing the LMRDA by combatting
labor-management fraud without a Form
T–1. See the OLMS enforcement results
for the period 2001–present: https://
www.dol.gov/agencies/olms/criminal-
enforcement. As discussed below more
fully, having to invest in the collection
and enforcement of an unnecessary
Form T–1 report may actually be
detrimental to detecting fraud, because
it would require that the Department
redirect limited resources away from
proven, effective means of uncovering
and prosecuting such instances of
possible financial corruption.
While the 2020 rule acknowledged
existing transparency safeguards, it
stated that the Department needed to
‘‘add necessary safeguards intended to
deter circumvention or evasion of the
LMRDA’s reporting requirements.’’ See
85 FR 13420. However, upon review,
existing OLMS reporting requirements
already provide sufficient information
that enables OLMS to detect financial
misconduct and deter circumvention or
evasion of the existing reporting
requirements. The Form T–1 added
substantial burdens but no readily
discernible benefits to the agency’s
responsibility to deter circumvention or
evasion of the statute’s reporting
requirements. Since the LMRDA Section
202 and 203 reporting requirements
would require disclosure of the FCA
and similar payments, and require the
parties to file reports pursuant to the
Department’s Form LM–30 Labor
Organization Officer and Employee
Report and Form LM–10 Employer
Report, the Department already had
investigatory authority and access to
necessary financial information to
effectively investigate this FCA and will
continue to have that authority to
investigate similar matters, all without a
Form T–1. See 29 U.S.C. 432–433 and
531.
4
Further, even if the Form T–1
provided a marginal increase in
transparency, the clear, quantified
burdens would far outweigh such
intangible and small benefits.
Moreover, in terms of the benefits of
general transparency to union members
and union self-governance, the
Department now believes that the 2020
rule did not provide sufficient reason to
establish that the information provided
by the Form T–1 would be significantly
greater than what members currently
enjoy. Consequently, the Department
now believes that the Form T–1
established a redundant reporting
regime.
More precisely, the rule did not
identify any significant, concrete
benefits gained through general
transparency that were not already
largely available through existing,
publicly-available sources. Even
without the 2020 rule, union members
will continue to definitively benefit
from transparency via mechanisms
outside of the Form T–1 reporting
regime. Members will continue to
receive detailed information about their
union’s finances, including the identity
and contact information of their union’s
trusts, through the annual Form LM–2
report available on the OLMS website.
In particular, members will see whether
the trust already files a report with
another agency, such as the Form 990
filed with the IRS, which provides
reporting comparable to the Form T–1.
5
The IRS Form 990 requires
comprehensive reporting of financial
information such as assets, liabilities,
VerDate Sep<11>2014 16:53 Dec 29, 2021 Jkt 256001 PO 00000 Frm 00009 Fmt 4700 Sfmt 4700 E:\FR\FM\30DER1.SGM 30DER1
khammond on DSKJM1Z7X2PROD with RULES
74362
Federal Register / Vol. 86, No. 248 / Thursday, December 30, 2021 / Rules and Regulations
6
See id. The Form 990 includes simplified filing
options for smaller organizations that require less
disclosure of financial information than their more
detailed versions or the Form T–1. The Form 990–
N is for organizations with annual gross receipts
that are normally $50,000 or less. However, the
Form T–1 does not have an assets schedule and a
very small entity or an entity with less than $50,000
in gross receipts is unlikely to have transactions to
itemize on the Form T–1. Therefore, the Department
has concluded that the marginal potential benefit
gained from additional information about these
smaller entities on a Form T–1 does not justify the
burden imposed by the Form T–1.
7
See: https://www.irs.gov/forms-pubs/about-
schedule-l-form-990.
8
Like the Form 990 and Form 5500, the Form
1065 is an information return used to report the
income, gains, losses, deductions, credits, and other
information from the operation of a partnership. A
partnership does not pay tax on its income, but
passes through any profits or losses to its partners.
Partners must include partnership items on their
tax or information returns. https://www.irs.gov/
forms-pubs/about-form-1065. The term
‘‘partnership’’ includes a limited partnership,
syndicate, group, pool, joint venture, or other
unincorporated organization, through or by which
any business, financial operation, or venture is
carried on.
9
See https://www.dol.gov/agencies/ebsa/
employers-and-advisers/plan-administration-and-
compliance/reporting-and-filing/form-5500.
officer and director payments, leases,
and other financial transactions.
6
This
form provides the type of financial
information that interested parties, such
as union members, could use to monitor
the use of trust funds in order to prevent
circumvention or evasion of Title II
reporting obligations and to detect and
deter fraud.
Additionally, the examples provided
in the 2020 rule illustrate the
redundancies. In particular, the 2020
rule cited examples of fraud involving
apprenticeship and training plans and
other ERISA-covered entities, all of
which EBSA uncovered with its existing
enforcement authority pursuant to
ERISA. See 85 FR 13419–20. The 2020
rule provided other examples and
hypothetical situations as purportedly
demonstrating the need for the Form T–
1 to detect and deter fraudulent activity.
However, upon additional review, these
examples do not demonstrate a need for
the Form T–1. For example, the 2020
rule offered a hypothetical example of a
trust making a $15,000 payment to a
printing company owned by a union
official. In such a situation, the
ownership of the printing company
would not actually appear on the Form
T–1, but the 2020 rule postulated that
members or the public would notice the
connection. See 85 FR 13418–19. It is
just as likely, however, that union
members or the public would already
recognize this financial connection
more directly via the IRS Form 990,
Schedule L (Transactions with
Interested Persons).
7
The Form 990
actually provides greater transparency
in this regard than would the Form T–
1, because Schedule L of the 990
directly relates to payments to
interested parties, whereas the Form T–
1 would rely on union members to make
inferences and then conduct separate
inquiries to establish union connections
to the recipients of trust payments. This
greater transparency on the Form 990
undercuts this rationale as a basis for
supporting a Form T–1 reporting
requirement.
The 2020 rule reviewed Form LM–2
reports from FY 17 and offered
examples purportedly justifying the
rule, but after careful consideration, the
Department believes that such examples
do not adequately support the
rulemaking. See 85 FR 13419. For
example, the 2020 rule cited a local
union that made expenditures to a
credit union. However, the 2020 rule
exempted credit unions from the Form
T–1 reporting requirements because
existing law already provides detailed
transparency and oversight. The 2020
rule also mentioned a local union
making payments to a trust that
constitutes an information technology
(IT) service corporation established by
the local union to provide it with IT
services. But after further review, the
local union reported on its Form LM–2
that the trust already files the IRS Form
1065.
8
Another example discussed
payments from a union to a labor
college; but the labor college files a
Form 990, which provides the necessary
transparency the Form T–1 sought. After
the rescission of the Form T–1 provided
for by this rule, the Department will
continue to require unions to identify
their trusts on the Form LM–2 report,
along with information that would
enable the public to locate the Form 990
or other reports covering such trusts.
In sum, the Department does not
identify any significant benefits derived
from the Form T–1, but, even if the 2020
rule provided some benefits that might
be used by union members and the
Department to prevent circumvention or
evasion of Title II reporting obligations,
the concrete, quantified burdens
outweigh such marginal benefits. The
following observations about the 2020
rule’s burdens support that conclusion
and, thus, support rescission.
First, the 2020 rule’s failure to
consistently apply exemptions increases
the burdens associated with the rule
without providing commensurate
benefits. In particular, the 2020 rule did
not adequately explain why the Form
T–1 exempted unions from submitting
Form T–1 reports covering trusts that
already file the EBSA Form 5500
9
and
certain IRS filings, such as those filed by
political organizations under 26 U.S.C.
527, but not trusts that file the Form 990
with the IRS.
The 2020 rule focused on the unique
nature of union financial reporting
required under the LMRDA. The
Department continues to hold that IRS
Form 990 reporting by labor
organizations does not provide a
substitute for Form LM–2, LM–3, and
LM–4 reporting by labor organizations,
since the LM reports provide
information tailored to the unique labor-
management purposes of the LMRDA.
See 68 FR 58375, 58395 (2003).
However, the 2020 rule did not provide
an adequate justification as to why such
Form 990 reporting is not a sufficient
substitute for Form T–1 reporting. See
85 FR 13425–26.
Commenters largely agreed with the
Department’s reasoning, set forth in the
NPRM, that the inclusion of a Form
5500 exemption and a Form 990 non-
exemption, was unexplained and
unsupported. One commenter
confirmed that ‘‘a majority (if not all) of
the trusts that will be reported under the
rule are tax exempt entities that are
required to file an annual Form 990
with the Internal Revenue Service.’’ As
the commenter explained, in the 2020
rule, the Department did not indicate
what information was needed beyond
what would be contained in the Form
990, and because there was no evidence
of need beyond that information, ‘‘any
burden imposed by the rule is
unwarranted.’’
The Department drew an arbitrary and
unexplained line between Form 5500
and the Form 990. To be consistent, the
Department should have also exempted
Form 990 filers; however, such an
exemption would encompass nearly the
entire universe of Form T–1 filers. Thus,
if it had included a Form 990
exemption, the resulting Form T–1
would then have failed to capture any
reportable activity and the Form 990
would have captured that activity—as it
does without the rule. Such an
underlying failure supports the
withdrawal of this fundamentally
flawed form.
Even when the Department used an
existing form to create an exemption
from the 2020 rule, the exemption was
inconsistent with other Department
policies. As one union commenter
noted, the Form 5500 exemption failed
to protect trusts from undue burdens,
particularly apprenticeship and training
plans. ERISA gives the Department the
ability to exempt filers from the long
Form 5500 when it is ‘‘unnecessarily
burdensome and costly,’’ which EBSA
has done by allowing certain
apprenticeship and training plans to file
VerDate Sep<11>2014 16:53 Dec 29, 2021 Jkt 256001 PO 00000 Frm 00010 Fmt 4700 Sfmt 4700 E:\FR\FM\30DER1.SGM 30DER1
khammond on DSKJM1Z7X2PROD with RULES
74363
Federal Register / Vol. 86, No. 248 / Thursday, December 30, 2021 / Rules and Regulations
10
While the 2020 rule argued that such concerns
of fiduciary obligation would be resolved by the
union fully compensating the trust for the resources
and time it spent, a trust might nonetheless refuse
to comply. Staff time and resources would
nonetheless be delayed in real time, being kept from
their usual usage in furtherance of the trust’s
business of providing benefit to its members for the
sake of another entity’s legal obligation. A trustee
with a fiduciary obligation could reasonably decline
to comply merely so that staff and resources were
not diverted from their duties. In other words,
while the union might be able to compensate for
lost time, and despite the longstanding adage to the
contrary, money is not time. Work hours will be
consumed, which could result in a trust being
delayed in meeting its own financial filing
obligations, such as completing the IRS 990 or the
Form 5500. The trustee faced with the complicating
factors could choose to avoid the complications and
delays entirely.
a short notice instead. Thus, in
recognizing the Form 5500 as a nearly
identical form, OLMS has through the
Form T–1, the commenter argued,
indirectly required the sort of financial
reporting that EBSA has already decided
is not necessary due to the burden it
creates.
Second, adding to the burden on the
filing unions, the information necessary
to complete the report is not in the
control of the reporting union; it is in
the control of the trust. Notwithstanding
that many, if not most, of the trusts on
which unions are required to report are
operated jointly and equally with
employers, the unions alone are forced
to seek trust cooperation when such
trusts are under no legal obligation to
cooperate. The union has no ability to
compel the trust to provide its records
to the union for the sake of the union’s
reporting requirement. The 2020 rule
offered no factual support suggesting
that trusts, whose trustees have a
fiduciary obligation to the trust
participants and beneficiaries and not to
the union, would agree to provide their
records to the union. Compiling such
records and providing them to the union
could constitute a significant annual
expense and a significant amount of lost
time that should be devoted to the
administration of the trust. It is unclear
why trustees would approve complying
with union requests, and it is equally
unclear how a union could compel a
trust that refuses to provide records to
provide them.
In that regard, a number of union
commenters indicated that the
Department has underestimated the
costly complications that arise from
requiring labor organizations to acquire
and accurately report information from
trusts that are not required to comply
with the LMRDA, making such a rule
unjustified. One commenter indicated
that the trust may simply choose not to
comply. As the commenter explained,
the trust is under no obligation to fulfil
the union’s request, and, therefore, the
union may through no fault of its own
be unable to comply with the Form T–
1 reporting requirements despite a
desire to do so. A trust could reasonably
refuse to provide the union with the
information requested based on its
fiduciary obligation to beneficiaries if it
were to ‘‘determine that it is not an
appropriate use of resources to track the
necessary information or to turn that
information over to the union.’’
10
Another commenter cited how the
preamble for the 2020 Form T–1
justified the Form T–1 reporting using
cases where the administrators of plans
on which unions would be required to
report were guilty of ‘‘ ‘preparing and
filing false tax returns . . . and
deliberately providing misleading and
incomplete testimony.’ ’’ The very
premise of the Form T–1, the
commenter reasoned, is flawed because
the information supplied by the
‘‘assertedly corrupt plans cannot be
relied upon.’’
One commenter indicated how
auditing the Form T–1 will be
practically impossible because the
officers will not possess knowledge of
the accuracy and completeness of
information provided by the trust
(assuming it agrees to provide
information) and the union will not
possess the underlying financial records
that support the information the union
was given by the trust. In such
situations, the commenter argues, it is
likewise unclear how labor organization
officers are thus reasonably held
‘‘responsible for maintaining records in
sufficient detail to verify, explain, or
clarify the accuracy and completeness of
the reports,’’ as the final rule required.
A union officer must sign the Form T–
1 and do so under penalty of perjury;
however, as another commenter stated,
officers would be forced to certify,
under oath, as to their knowledge of the
accuracy and completeness of
information provided by a trust, even
though they lack a sufficient basis to
vouch for its accuracy. Ignoring these
concerns, as the commenter put it,
‘‘grossly discounts the costs of filing
Form T–1 reports on apprenticeship
plans.’’
Third, in the NPRM, the Department
considered and still considers the Form
T–1 reporting regime as imposing
substantial and unjustified burdens
from the perspective of multiple labor
unions filing for a single shared trust.
The Department rejects this outcome as
a matter of policy in light of the
substantial burdens labor unions will
face to submit these redundant reports,
which in turn will impose significant
costs on the Department in terms of time
and agency resources necessary to
review those redundant reports. And
even if, instead of multiple unions filing
redundant, and thus unnecessary, forms
for a single trust, the Department
determined a means by which just a
single union would file for the others,
the result would be an arbitrary choice.
The Department would be forcing one
union to take on all the legal obligations
associated with the completion and
signing of the form, even in situations
where it would be especially arbitrary to
do so, such as when the selected union
has no more a share of authority over
the trust than any of the other, non-
filing unions. This outcome would also
impose costs on the Department in
terms of needing to review redundant
reports, which the Department now
finds that, as a matter of policy, are not
justified in light of those resource costs.
The 2020 rule acknowledged this
problematic dynamic. The rule includes
a provision allowing one union to file
the Form T–1 report for the other
unions. However, the Department now
considers that solution unworkable as a
matter of policy. As one commentator
explained, different unions will
interpret the Form T–1 reporting
requirements differently and may
therefore ‘‘refuse to cede control of the
reporting requirement to another for fear
the report would be done incorrectly,’’
resulting in the filing of duplicative
reports despite the purported
workaround. Furthermore, the due date
for the Form T–1 for different unions
may be different because the
contributing unions are not on the same
fiscal year and thus unions are unlikely
to ‘‘risk noncompliance and substantial
penalties by agreeing to let another
union file on its behalf’’ on a date after
the first date any union related to a
particular trust would be obligated to
file the Form T–1 were it solely
responsible for filing. Another
commenter indicated also how the
burden on a minimally contributing
union in such joint situations is patently
unfair, their officers then being as
‘‘personally responsible for the filing of
a report and to require them to maintain
data necessary to verify the reported
information for at least five years . . .
[even] in situations where the labor
organization’s contribution is minimal.’’
Another concern is that, with many
trusts that have multiple, non-affiliated
unions contributing, the individual
unions would likely be unable to
determine if they together with the
others effectively ‘‘dominate’’ the fund.
As one commenter indicated, unions in
such arrangements ‘‘will commonly not
know the extent of another labor
VerDate Sep<11>2014 16:53 Dec 29, 2021 Jkt 256001 PO 00000 Frm 00011 Fmt 4700 Sfmt 4700 E:\FR\FM\30DER1.SGM 30DER1
khammond on DSKJM1Z7X2PROD with RULES
74364
Federal Register / Vol. 86, No. 248 / Thursday, December 30, 2021 / Rules and Regulations
organization’s involvement or
contribution to the entity.’’
The Department believes that this,
and the other practical complications
mentioned above, could result in a
substantial number of delinquencies,
many through no fault of the unions.
Such a result would force the
Department to direct substantial
amounts of valuable, scarce resources to
investigate these delinquencies, even
where the Department reasonably
predicts that the substantial of such
cases would not involve efforts to
circumvent or evade Title II reporting
requirements, but rather, technical or
procedural missteps resulting from
unworkable policy decisions. Further,
the Department would need to expend
significant resources creating and
maintaining an electronic Form T–1 and
database; provide compliance assistance
to unions and trusts on such filing and
related recordkeeping requirements; and
pursue delinquent Form T–1 reports,
particularly for unions unable to obtain
timely and complete necessary
information from the trust. The
resources would thus inevitably be
pulled away from other, well-settled
areas of enforcement, such as officer
elections, alleged financial malfeasance,
delinquent reporting on unions’’ annual
financial reports, among many others.
From the standpoint of promoting
sound agency policy decision-making
and resource allocation, the 2020 rule
falls far short. Such unreasonable policy
decisions and the ensuing unjustified
costs to both the regulated community
and Department justify rescission of the
2020 Form T–1 final rule.
Consequently, for all the reasons
above, the Department rescinds the 2020
Form T–1 rule. The reporting
requirements set forth in the 2020 Form
T–1 rule are not justified in light of the
heavy burden they impose and the
negligible benefits they offer.
The 2020 Form T–1 Rule Is Overbroad
Because It Requires Reporting on
Certain Trusts That Cannot Be Used To
Circumvent or Evade LMRDA Reporting
In addition to the foregoing policy
reasons which alone justify rescission of
the Form T–1, it is also appropriate to
rescind the 2020 Form T–1 rule because
it is overbroad and inconsistent with
Title II’s mandate. The only statutory
basis for requiring reporting on the
activities of entities that are not labor
organizations as defined by the LMRDA
is if the Department determines that
such reporting is necessary to prevent
circumvention or evasion of the statute’s
reporting requirements. See 29 U.S.C.
438. The 2020 rule is deficient because
it requires reporting on certain entities,
such as Taft-Hartley funds, without the
requisite showing that such reporting is
necessary to prevent circumvention or
evasion of the reporting requirements.
This over-breadth requires the rule to be
rescinded. It is not enough that the
Form T–1 may capture some
transactions that could prevent the
circumvention or evasion of the
LMRDA’s reporting requirements. The
rule is defective if it necessarily
captures transactions as to which there
is no statutory basis permitting the
capture. American Federation of Labor
& Congress of Industrial Organizations
v. Chao, 409 F.3d 377, 389 (D.C. Cir.
2005) (finding that although ‘‘[t]here can
be little doubt that some of the trust
reporting the Secretary has required on
Form T–1 is tied to a union’s financial
reporting requirements under LMRDA
Title II,’’ and therefore lawful, the rule
also ‘‘reaches information unrelated to
union reporting requirements and
mandates reporting on trusts even
where there is no appearance that the
union’s contribution of funds to an
independent organization could
circumvent or evade union reporting
requirements,’’ and thus must be
vacated).
Under the Act, the Secretary’s
rulemaking authority is limited. The
Secretary has the authority to ‘‘issue,
amend, and rescind rules and
regulations prescribing the form and
publication of reports required to be
filed under this title and such other
reasonable rules and regulations
(including rules concerning trusts in
which a labor organization is interested)
as he may find necessary to prevent the
circumvention or evasion of such
reporting requirements.’’ 29 U.S.C. 438.
The Secretary’s regulatory authority
thus includes the reporting mandated
by the Act and discretionary authority
to require reporting on trusts falling
within the statutory definition of a trust
‘‘in which a labor organization is
interested.’’ 29 U.S.C. 402(l). The
Secretary’s discretion to require separate
trust reporting applies to trusts if, and
only if: (1) The union has an interest in
a trust as defined by 29 U.S.C. 402(l)
and (2) reporting is determined to be
necessary to prevent the circumvention
or evasion of Title II reporting
requirements. 29 U.S.C. 438. As both the
Department and the court recognized,
this is a two-part requirement. See AFL–
CIO v. Chao, 409 F.3d 377, 386–87 (D.C.
Cir. 2005) (discussion of two-part test).
A key feature of the Secretary’s
discretionary authority to regulate trust
reporting is the requirement that the
Secretary conclude that such reporting
is ‘‘necessary’’ to prevent circumvention
or evasion of a labor organization’s
requirement to report on its financial
condition and operations under the
LMRDA. The Department now believes
that the 2020 Form T–1 rule was overly
broad, requiring financial reporting by
many types of trusts, including trusts
funded by employers pursuant to
collective bargaining agreements,
without an adequate showing that such
a change is necessary to prevent
circumvention or evasion of the
reporting requirements.
In particular, the rule provides that,
for purposes of evaluating whether
payments to a trust indicate that the
union is financially dominant over the
trust, payments made by employers to
fund trusts under section 302(c) of the
Labor Management Relations Act
(LMRA), 29 U.S.C. 186(c) (Taft-Hartley
funds) should be treated as funds of the
union. Taft-Hartley funds are created
and maintained through employer
contributions paid to a trust fund,
pursuant to a collective bargaining
agreement, and must have equal
numbers of union and management
trustees, who owe a duty of loyalty to
the trust. Taft-Hartley funds are
established for the ‘‘sole and exclusive
benefit of the employees’’ and are
exempt from the statutory prohibition
against an employer paying money to
employees, representatives, or labor
organizations. See 29 U.S.C. 186(a) and
(c)(5).
The Department recognizes that the
section 3(l) ‘‘trusts in which a union is
interested’’ term is sufficiently broad to
encompass Taft-Hartley plans. However,
as explained above, this is only the first
part of the section 208 analysis. The
second part of the analysis requires that
the Secretary determine that the
reporting is necessary to prevent
circumvention or evasion of the
reporting of union money subject to
Title II.
As explained in the 2020 Form T–1
rule, section 201 of the LMRDA requires
that unions ‘‘file annual, public reports
with the Department, detailing the
union’s cash flow during the reporting
period, and identifying its assets and
liabilities, receipts, salaries and other
direct or indirect disbursements to each
officer and all employees receiving
$10,000 or more in aggregate from the
union, direct or indirect loans (in excess
of $250 aggregate) to any officer,
employee, or member, any loans (of any
amount) to any business enterprise, and
other disbursements.’’ 85 FR at 13414
(citing 29 U.S.C. 431(b)). Further,
section 201 requires that such
information shall be filed ‘‘in such
detail as may be necessary to disclose [a
labor organization’s] financial condition
and operations.’’ 85 FR at 13414 (citing
VerDate Sep<11>2014 16:53 Dec 29, 2021 Jkt 256001 PO 00000 Frm 00012 Fmt 4700 Sfmt 4700 E:\FR\FM\30DER1.SGM 30DER1
khammond on DSKJM1Z7X2PROD with RULES
74365
Federal Register / Vol. 86, No. 248 / Thursday, December 30, 2021 / Rules and Regulations
Id.). Significantly, each financial
transaction to be reported is one that
reflects upon the union’s financial
condition and operations. 29 U.S.C.
201(b). Consequently, trust reporting is
only permissible to prevent a labor
union from using a trust to circumvent
reporting of the labor union’s finances.
However, money contributed to a
Taft-Hartley plan does not bear on the
labor union’s finances and is not by law
required to be reflected on a labor
union’s Title II reporting; accordingly,
the T–1 Form cannot be deemed
necessary to prevent circumvention or
evasion of the reporting of union money
subject to Title II. The 2020 Form T–1
rule presumes that employer
contributions to Taft-Hartley plans
establish labor union financial
domination of a trust. After review, the
Department has determined that money
contributed by an employer to a Taft-
Hartley fund is not property of the
union. Thus, its disclosure does not
‘‘disclose [the union’s] financial
condition and operations.’’ 29 U.S.C.
201(b). Conversely, a union’s
nondisclosure of such funds would not
be an evasion of the union’s reporting
requirement as ordinary employer
funds—even if placed into such a
trust—are not within the control of the
union, and would in no instance be
reported by a union under the LMRDA
reporting requirements.
One union commenter in particular
agreed with the Department’s position
in the NPRM that the 2020 Form T–1 is
overbroad because it is not targeted at
preventing evasion or circumvention of
the labor organization’s reporting
requirement. It argued that the rule
attempts to ‘‘erase the distinction
between benefit plan and labor
organization reporting,’’ in defiance of
the will of Congress, which chose to
address the McClellan Committee
concerns regarding labor organization
pension, health, and welfare fund
reporting in the Welfare and Pension
Fund Act of 1958 and later superseded
by ERISA.
Another union commenter argued that
the 2020 Form T–1 is not necessary to
prevent circumvention or evasion of
LMRDA reporting requirements because
properly structured Taft-Hartley funds
are by definition not controlled by
unions. Because Taft-Hartley fund assets
are not—and could not be—assets of the
union, the Form T–1 cannot be said to
be necessary to prevent circumvention
of union reporting requirements.
Commenters also supported the
Department’s view that counting
employer contributions towards union
financial dominance is not justifiable.
As one union commenter stated,
‘‘[e]mployers are separate business
entities that have their own assets,
management, employees, and business
operations.’’ Further, the commenter
pointed out, even in consideration of an
employer’s failure to contribute
according to the terms of a CBA with a
union, the union will file a grievance
under the CBA’s arbitration clause or
will file a suit under LMRA section 301
for violating the contract, demonstrating
that the union does not have control or
authority over the disposition of the
employer’s assets. Rather, ‘‘the dispute
is treated [under LMRA Section 301] as
one involving the employer’s breach of
its contractual obligation to contribute
to the fund, not as a dispute over the
employer holding on to the union’s
money.’’ The commenter went on to
explain, as did other commenters, that
the idea of employer contributions being
union controlled funds is expressly
contradicted by the logic of section 302
of the LMRA; the employer willfully
giving funds to the union in such a
manner would be illegal, but for the
explicit exception made in part (c) of
that section, which acknowledges such
contributions as still being employer
funds. However, even when employer
funds reach the plan, as one commenter
reminded, under EBSA regulation and
advisory opinions the assets
immediately become assets of the plan.
Thus, at no point in the lifecycle of the
employer’s contribution do the funds
become ‘‘union funds.’’ See DOL ERISA
Advisory Opinion 93–14A; Preamble to
Prohibited Transaction Exemption 76–1,
41 FR 12740 at 12741 (Mar. 26, 1976).
In addition, by definition, Taft-
Hartley funds may not have union
managerial dominance because
‘‘employees and employers are equally
represented in the administration of
such fund[s], together with such neutral
persons as the representatives of the
employers and the representatives of
employees may agree upon.’’ See 29
U.S.C. 186(c)(5)(B). Disclosure of such
funds is thus unnecessary to ensure that
unions comply with their own financial
reporting requirements under the
LMRDA. One commenter argued
specifically that this rationale also
applied to Labor Management
Cooperation Committee funds. Another
union commenter made the observation
that technically (and nonsensically)
under the 2020 Form T–1, a fund in
which 100% of the funds came from the
employer and was wholly governed by
an equal number of employers and
union officials would nonetheless still
be counted as proof of ‘‘union
dominance,’’ a result that simply does
not comport with the facts. Finally, the
2020 Form T–1 rule’s preamble failed to
establish that the Form T–1 would be
‘‘necessary to prevent circumvention
and evasion’’ of the LMRDA reporting
requirements.
First, the 2020 rule states that the
Form T–1 ‘‘will make it more difficult
for a labor organization to avoid, simply
by transferring money from the labor
organization to a trust, the basic
reporting obligation that applies if the
funds had been retained by the labor
organization.’’ 85 FR 13418. However,
the rule provided no evidence that labor
organizations were transferring their
own funds to Taft-Hartley trusts, an
objection cited by a number of
comments. And, of course, if a union
transferred funds to a Taft-Hartley trust,
the transaction itself would be
reportable on the union’s LM report.
In AFL–CIO v. Chao, the Court of
Appeals for the D.C. Circuit held that
the 2003 Form T–1 ‘‘reaches
information unrelated to union
reporting requirements and mandates
reporting on trusts even where there is
no appearance that the union’s
contribution of funds to an independent
organization could circumvent or evade
union reporting requirements.’’ AFL–
CIO v. Chao, 409 F.3d at 389. The 2020
Form T–1 rule is overly broad in the
same manner, requiring many labor
organizations to file the Form T–1 for
independent Taft-Hartley trusts, even
where there is no apparent means by
which the union could use the trust as
a means of circumventing or evading its
Title II reporting requirements.
Second, the Department argued in the
2020 rule that ‘‘the money an employer
contributes to such trusts pursuant to a
CBA might otherwise have been paid
directly to a labor organization’s
members in the form of increased wages
and benefits, the members on whose
behalf the financial transaction was
negotiated have an interest in knowing
what funds were contributed, how the
money was managed, and how it was
spent.’’ 85 FR 13418. Assuming this is
so, these underlying wages and benefits
would not have been reported on a
Form LM–2. Therefore, it is not
apparent that payment of these potential
wages and benefits to a trust involves
the circumvention or evasion of Title II
reporting. Thus, with respect to these
funds, it is not clear from the 2020 Form
T–1 final rule how the Form T–1 would
have ‘‘close[d] a reporting gap where
labor organization finances related to
LMRDA section 3(l) trusts were not
disclosed to members, the public, or the
VerDate Sep<11>2014 16:53 Dec 29, 2021 Jkt 256001 PO 00000 Frm 00013 Fmt 4700 Sfmt 4700 E:\FR\FM\30DER1.SGM 30DER1
khammond on DSKJM1Z7X2PROD with RULES
74366
Federal Register / Vol. 86, No. 248 / Thursday, December 30, 2021 / Rules and Regulations
11
To the extent the rule was premised simply on
the proposition that workers ought to know what
employer payments were made to Taft-Hartley
funds and whether those payments could be
characterized as diversions from wages, the
Department notes that Section 104 of the Act
requires that unions ‘‘forward a copy of each
collective bargaining agreement made by such labor
organization with any employer to any employee
who requests such a copy and whose rights as such
employee are directly affected by such agreement.’’
Those collective bargaining agreements set out the
measure of contributions employers have agreed in
bargaining to contribute to Taft-Hartley funds.
Department.’’ (emphasis added) 84 FR
25416.
11
Further, the Department rescinded the
Form T–1 in 2010 because it lacked
statutory authority, but the 2020 rule
did not adequately address this legal
concern. See 75 FR 74938. Indeed,
while acknowledging that employer
contributions to a trust do not constitute
the circumvention or evasion of labor
organization funds, the 2020 rule argued
that Form T–1 reporting for Taft-Hartley
trusts could nonetheless prevent the
circumvention of employer or labor
organization officer or employee
reporting under LMRDA Sections 202
and 203. See 85 FR 13422. However, as
noted in the NPRM, 86 FR 28510, the
2020 rule provided no evidence that
employer or labor organization officials
circumvented or evaded their reporting
requirements through a trust. Moreover,
none of the comments opposing
rescission addressed the issue of
potential circumvention or evasion of
employer or labor organization officer or
employee reporting requirements.
Nor did the 2020 rule justify its
imposition of the T–1 requirement
solely on labor organizations. In that
regard, one commenter in support of
rescission agreed with the NPRM’s
conclusion that if the Department were
to require reporting on payments made
from an employer to a trust pursuant to
a CBA, then such reporting
requirements should be placed on the
employer, not the labor organization.
Because such financial reporting should
be required of an employer and not the
union, any failure to report employer
payments made to a trust pursuant to a
CBA could not constitute a union’s
circumvention or evasion of its LMRDA
reporting requirements. The same
commenter also observed how the 2020
Form T–1 rule relied in part on the
LMRDA’s employer reporting
requirements, and not the union
reporting requirements, such as ‘‘when
the employer diverted unlawfully funds
intended for the trust to a union
official,’’ again raising the question of
why the filing of the Form T–1 reports,
at least in the instance of apprenticeship
plans, fell solely on labor organizations
and not employers.
Further, in addition to the Form T–1
reaching beyond the scope of Title II
because of its application to Taft-Hartley
plans, its overbreadth renders the rule
unnecessary as a matter of policy, since
the transparency benefits to the public
and enforcement authority for the
Department already exist concerning
such plans. As stated above, the public
already has access to disclosure for such
plans through the IRS Form 990 and
EBSA Form 5500. Further, the Forms
LM–10 and LM–30 would capture
unlawful payments from employers to
unions or union officials through Taft-
Hartley plans, thus ensuring that the
Department has enforcement authority
concerning such payments. In that
regard, the Department has an extensive
and successful enforcement history of
over 60 years without the Form T–1, as
evidenced by the FCA enforcement
activities. See: https://www.dol.gov/
agencies/olms/criminal-enforcement.
Moreover, the 2020 rule focused
primarily on capturing non-exempt Taft-
Hartley plans, and, indeed, the
rulemaking record suggested that most
Form T–1 reports filed would cover
Taft-Hartley plans. However, even if the
Form T–1 would capture some non-Taft
Hartley plans, as detailed above in the
discussion of the Department’s policy
justifications for rescinding the Form T–
1, the burden to both the regulated
community and the Department to
comply with and enforce the Form T–
1 reporting regime do not justify any
marginal benefit.
Consequently, from a policy
perspective, the Department will
rescind the 2020 Form T–1 rule because
its application to Taft-Hartley plans was
overly broad and any marginal,
unquantifiable benefit is eclipsed by the
immense burden imposed. Separately,
the Department will rescind the 2020
rule because its application to Taft-
Hartley plans exceeds the Department’s
scope of authority under Title II. In the
Taft-Hartley context, a union’s reporting
(or failure to report) on the Form T–1
could not prevent a union’s use of a
trust to circumvent or evade its own
reporting requirement because it is the
employer’s, and not the union’s,
finances that are being contributed to
the Taft-Hartley plan at issue.
Other Comments Regarding the 2020
Form T–1 Final Rule
First, as one union commenter
observed, the rule also set up the
prospect of creating confusion by failing
to provide a de minimis exemption for
funds. A union’s contribution of a single
dollar could potentially trigger the rule’s
stringent standards, if that contribution,
in combination with contributions from
other unions, establishes financial
domination over the trust (as defined in
the rule), thus requiring reporting on
trusts that may be of minimal (or no)
interest to members. Such minimal
contributions may also lead to unions
filing multiple reports, again for trusts
that may not be of interest to members.
Furthermore, if the contribution is less
than $10,000, there would be greater
confusion than before, because members
would know that some amount of
money was contributed but would not
know the exact figure, whether $1 or
$9,999. The Department agrees that this
possibility would support a de minimis
exemption, and the lack of one further
demonstrates that the burden of the
Form T–1 outweighs its potential
benefits.
Two anonymous comments offered
general arguments against rescission.
One argued for greater ‘‘governance’’
and ‘‘accountability’’ and in favor of
‘‘total transparency,’’ without any
evidence justifying why existing
reporting does not provide the necessary
governance and accountability. Further,
even if true, this reasoning does not
provide legal support for the Form T–1,
as it does not demonstrate how the form
would prevent the ‘‘circumvention or
evasion’’ of the reporting requirements
required by the statute. The commenter
did not address this point. Nor did the
commenter balance transparency with
burden. The other anonymous comment
inquired into whether the Department
would bring reporting requirements for
‘‘labor organizations and section 3(l)
trusts in line with [c]ontemporary
expectations for the disclosure of
financial information.’’ As stated, after
further review, the Department has
determined that existing reporting
requirements already provide the
necessary disclosures, so the duplicative
reporting offered by the Form T–1 does
not justify the significant burdens on
unions.
One commenter, a union member,
commented against the rescission of the
Form. The commenter argued that
rescission would serve as ‘‘a
disadvantage in combating corruption
and a hinderance [sic] to self
governance,’’ and the commenter
supported this argument by providing
three real examples in which the
commenter asserted that the 2020 Form
T–1 would have been helpful. However,
as the commenter indicated, each entity
discussed in the examples, which
included two ‘‘betterment funds’’ and a
market recovery fund, filed the Form
990, a form that, as the Department
concluded, and many commenters
VerDate Sep<11>2014 16:53 Dec 29, 2021 Jkt 256001 PO 00000 Frm 00014 Fmt 4700 Sfmt 4700 E:\FR\FM\30DER1.SGM 30DER1
khammond on DSKJM1Z7X2PROD with RULES
74367
Federal Register / Vol. 86, No. 248 / Thursday, December 30, 2021 / Rules and Regulations
12
See 58 FR 51735 (September 30, 1993).
concurred, provides the necessary
transparency. Moreover, it appears that
the union ‘‘betterment fund’’ constitutes
a wholly-owned subsidiary of the
member’s union, which the union
already reports on its annual Form LM–
2 report. As for the market recovery
fund mentioned by the commenter, it
appears from a review of the
commenter’s union’s Form LM–2 report
that the fund constitutes a union fund
that the union already reports on the
Form LM–2. Thus, the Form T–1 would
not have covered those funds. Further,
the Form LM–2 actually provides
greater detail than the Form T–1 would
have provided, and OLMS retains
authority to pursue an amended Form
LM–2 report if the union did not submit
it accurately. OLMS also retains
investigative authority, in the event
union officials committed fraud in
maintaining the fund. The Form T–1
would also have not covered the
management-side ‘‘betterment fund,’’
since it would not appear to meet either
the Form T–1’s union managerial
control or financial domination test.
The commenter also indicated that he
‘‘attempts to keep track of the union’s
financial affairs,’’ and the Form T–1
would ‘‘help rank-and-file members to
put the pieces of [the] financial puzzle
together.’’ The Department appreciates
the commenter’s input but respectfully
disagrees. A separate trust is not, per se,
part of the union’s financial affairs,
unless the trust is being used to
circumvent or evade the union’s
reporting. The commenter did not
describe how the Form T–1 would serve
such a purpose, nor how existing
reporting requirements, such as the
Form 990, are inadequate to provide
general trust transparency (even
assuming that the LMRDA authorizes
such transparency, which it does not).
As shown, the 2020 rule’s rulemaking
record does not reflect the benefits of
the Form T–1 that would justify the
significant, additional burden on
unions, particularly since union trusts
typically already file the Form 990,
generally providing similar if not greater
detail than does the Form T–1. The
Department reiterates that greater
transparency alone is not sufficient to
justify LMRDA section 208 rulemaking.
Instead, there must be a showing that
the report is necessary to prevent
circumvention and evasion of the
statutory reporting requirements.
Finally, the commenter, seemingly
acknowledging the costs of the Form T–
1, suggested that the union could offset
those costs by forgoing purportedly
wasteful expenses. Even assuming that
unions could or should curtail certain
expenses, an assumption not supported
by the rulemaking record, this fact
would not independently justify the
cost and burden of the Form T–1 in light
of the limited benefits that the Form
would provide.
Therefore, in light of the foregoing
concerns, the Department rescinds the
rule implementing the Form T–1
because, after reviewing the 2020
rulemaking record as well as the current
rulemaking record, it no longer views
the separate reporting requirements as
set forth in the 2020 Form T–1 rule as
justified in light of the burden they
impose. Further, as it concerns Taft-
Hartley plans, the trust reporting
required under the rule is overly broad
and thus not necessary to prevent the
circumvention and evasion of the Title
II reporting requirements.
IV. Specific Changes to the Form LM–
2 Instructions and the LMRDA
Regulations
A. Changes to the Form LM–2
The Department received no
comments upon, and therefore
implements, the following changes to
the Form LM–2 Labor Organization
Annual Report, which implement the
rescission of the Form T–1:
1. Section IX—Labor Organizations In
Trusteeship: The Department revises
this section to remove any reference to
the Form T–1.
2. Section XI—Completing Form LM–
2: The Department changes the
instructions to Item 10 (Trusts or
Funds). The instructions for Item 10 are
changed to remove any reference to the
Form T–1, although basic information
about the trust would still be required,
as would a cite to any report filed for
the trust with another government
agency, such as the Department’s
Employee Benefits Security
Administration (EBSA) or the Internal
Revenue Service (IRS).
The public can view the Form LM–2
changes in the accompanying
Information Collection Request (ICR),
pursuant to the PRA. See Part V
(Regulatory Procedures), PRA section.
B. Changes to the LMRDA Regulations
As described in the below regulatory
procedures section, and in order to
implement the rescission of the 2020
Form T–1 rule, the Department also
removes the references to the Form T–
1 located in the Department’s LMRDA
regulations at 29 CFR Part 403.
Additionally, as described in the below
regulatory procedures section, and as
proposed, the Department will now
require mandatory electronic filing for
labor organizations that submit
simplified annual reports pursuant to 29
CFR 403.4(b). The Department’s
experience with Form LM–2, LM–3, and
LM–4 reporting demonstrates that labor
organizations can submit such reports
electronically with little difficulty and
with burden reductions for the labor
organization filers and the Department.
Further, the public benefits from more
timely disclosure on the OLMS website.
The Department anticipates such
benefits for electronic simplified annual
reports, as well. The Department did not
receive any comments on mandatory
electronic filing.
V. Regulatory Procedures
Executive Orders 12866 (Regulatory
Planning and Review) and 13563
(Improving Regulation and Review)
Under Executive Order (E.O.) 12866,
the Office of Management and Budget
(OMB)’s Office of Information and
Regulatory Affairs (OIRA) determines
whether a regulatory action is
significant and, therefore, subject to the
requirements of E.O. 12866 and OMB
review.
12
Section 3(f) of E.O. 12866
defines a ‘‘significant regulatory action’’
as an action that is likely to result in a
rule that (1) has an annual effect on the
economy of $100 million or more, or
adversely affects in a material way a
sector of the economy, productivity,
competition, jobs, the environment,
public health or safety, or State, local or
tribal governments or communities (also
referred to as economically significant);
(2) creates serious inconsistency or
otherwise interferes with an action
taken or planned by another agency; (3)
materially alters the budgetary impacts
of entitlement grants, user fees, or loan
programs, or the rights and obligations
of recipients thereof; or (4) raises novel
legal or policy issues arising out of legal
mandates, the President’s priorities, or
the principles set forth in E.O. 12866.
OMB has determined that this rule is
significant under section 3(f) of E.O.
12866. Pursuant to the Congressional
Review Act (5 U.S.C. 801 et seq. ), OIRA
has designated this rule as not a ‘major
rule’, as defined by 5 U.S.C. 804(2).
E.O. 13563 directs agencies to propose
or adopt a regulation only upon a
reasoned determination that its benefits
justify its costs; the regulation is tailored
to impose the least burden on society,
consistent with achieving the regulatory
objectives; and in choosing among
alternative regulatory approaches, the
agency has selected those approaches
that maximize net benefits. E.O. 13563
recognizes that some benefits are
difficult to quantify and provides that,
where appropriate and permitted by
VerDate Sep<11>2014 16:53 Dec 29, 2021 Jkt 256001 PO 00000 Frm 00015 Fmt 4700 Sfmt 4700 E:\FR\FM\30DER1.SGM 30DER1
khammond on DSKJM1Z7X2PROD with RULES
74368
Federal Register / Vol. 86, No. 248 / Thursday, December 30, 2021 / Rules and Regulations
13
To the extent they have not already incurred
those costs, the savings set out in text would be
greater.
14
For more details, see the Paperwork Reduction
Act section below.
15
Wage rates are derived from 2018 data; more
specifically, the president and treasurer wage rates
are determined from FY 19 Form LM–2 report
filings, while the accountant and bookkeeper wage
rates come from 2018 Bureau of Labor Statistics
(BLS) data available at: https://www.bls.gov/oes/
2018/may/oes_nat.htm.
16
The weighted average calculates the wage rate
per hour weighted according to the percentage of
time that the Form T–1’s completion will demand
of each official/employee: 90 percent of the Form
T–1 burden hours will be completed by an
accountant, 5 percent by the bookkeeper, 4 percent
by the union’s treasurer/secretary-treasurer, and 1
percent by the union president.
17
The use of 1.63 accounts for 17 percent for
overhead and 46 percent for fringe. In the case of
the 46 percent for fringe, see the following link to
BLS data showing that wages and salaries represent
68.6 percent (.686) of compensation (https://
www.bls.gov/news.release/ecec.t02.htm). Dividing
total compensation by the 68.6 percent represented
by wages and salaries is equivalent to a 1.46
multiplier. Adding a 17 percent multiplier (.17) for
overhead equals 1.63.
18
One comment in support of rescission
contended that the Form T–1 rule’s estimates of the
burden hours for the form should have been
doubled or more, and the commenter noted the
logistical difficulty of getting information from the
interested trust to the labor organization.
19
See https://www.sba.gov/document/support--
table-size-standards.
law, agencies may consider and discuss
qualitatively values that are difficult or
impossible to quantify, including
equity, human dignity, fairness, and
distributive impacts.
A. Costs of the Form T–1 for Labor
Organizations
As described in the 2020 Form T–1
final rule, the Form T–1 is filed by Form
LM–2 filing labor organizations with
trusts that meet the dominance test, if
those labor organizations are not
otherwise exempted from filing. Cost
savings discussed below concern the
costs incurred by labor organizations to
file the Form T–1 reports in subsequent
years (assuming that filers have already
incurred many of the first year costs
discussed in the 2020 rule).
13
As a result
of the Department rescinding the Form
T–1, the affected labor organizations
would save these future costs. Using
data from LM–2 filings, the Department
estimated, in the 2020 Form T–1 final
rule, that there are at least 810 total
affected labor organizations (i.e., LM–2
filers with trusts for which they must
submit at least one Form T–1). The
Department estimated in the 2020 rule
that each affected labor organization
would be responsible for an average of
2.56 Form T–1 filings. Additionally,
each affected labor organization would
spend approximately 84.12 hours in
each subsequent year to fill out the
Form T–1.
14
The average hourly wage
for Form T–1 filers, as with Form LM–
2 filers, includes: $37.89 for an
accountant, $20.25 for a bookkeeper or
clerk, $25.15 for a Form LM–2 filing
union secretary-treasurer or treasurer,
and $29.21 for the Form LM–2 filing
president, respectively.
15
The weighted
average hourly wage is $36.53.
16
To
account for fringe benefits and overhead
costs, as well as any other unknown
costs or increases in the wage average,
the average hourly wage has been
multiplied by 1.63, so the fully loaded
hourly wage is $59.54 ($36.53 × 1.63 =
$59.54).
17
Therefore, the cost for each Form T–
1 filer in subsequent years would be
$12,822 (2.56 × 84.12 × $59.54 =
$12,822), which would be eliminated if
the Department rescinds the Form T–1,
as proposed.
B. Summary of Costs
This final rule would save 810 Form
LM–2 filers a total of $10,385,820
annually. The 10-year annualized cost is
expected to be $10,285,704 at a 3
percent discount rate and $9,608,788 at
a 7 percent discount rate.
C. Benefits
As explained more fully in the
preamble to this final rule, the
Department rescinds the Form T–1, as
the 2020 Form T–1 final rule was
duplicative of other existing reporting
requirements, did not prevent the
circumvention or evasion of the LMRDA
reporting requirements, and provided
no evidence that it detected or deterred
labor-management fraud or corruption.
Rather, the Department believes that
existing reporting requirements
adequately address these concerns.
Further, rescission of the 2020 Form T–
1 rule provides labor organizations with
additional resources to devote to
existing reporting requirements.
D. Alternatives and Comments Received
As mentioned in the NPRM
concerning potential alternatives to
rescinding the Form T–1, the
Department could maintain the existing
Form T–1 or propose a scaled back
version. The retention of the Form T–1
would retain the burdens discussed in
the 2020 Form T–1 rule, and the
Department now considers that these
burdens are not justified by the
purported benefits. Rather, the
Department now believes that existing
reporting provides much if not all of the
potential benefits of the Form T–1.
Further, while a scaled back Form T–1
would reduce such burdens, the
Department did not consider this
approach, since the current Form T–1
already contains multiple exemptions
and burden-reduction components.
The Department did not receive any
comments that specifically address the
NPRM’s regulatory impact analysis.
18
Regulatory Flexibility Act
The Regulatory Flexibility Act of
1980, 5 U.S.C. 601 et seq., requires
agencies to prepare regulatory flexibility
analyses, and to develop alternatives
wherever possible, in drafting
regulations that will have a significant
impact on a substantial number of small
entities. The Department has
determined that this final rule will not
have a significant economic impact on
a substantial number of small entities
because the final rule contains no new
collection of information. Rather, it only
relieves the additional collection burden
imposed upon labor organizations
through the rescission of the regulations
published on March 6, 2020.
The 2020 Form T–1 rule’s Final
Regulatory Flexibility Analysis (FRFA)
considered whether it would place a
significant impact on a substantial
number of small business entities. That
rulemaking analysis considered a labor
organization a ‘‘small business entity’’ if
they had average annual receipts of less
than $8 million.
19
Based on previous
standards utilized in other regulatory
analyses, the threshold for significance
was set at 3% of annual receipts, while
a substantial number of small entities
would be 20 percent. The 2020 Form T–
1 final rule at the time would have
impacted 2,009 labor organizations at
least $250,000 in size by annual
receipts, with at least one trust,
resulting in approximately 2,070 Form
T–1 reports. Of these organizations,
1,667 had annual receipts less than $8
million. There were only 315 LM–2
filers with at least one trust whose
annual receipts were small enough that
the Form T–1 costs would amount to
more than a 3 percent impact. The
largest of the 315 had annual receipts of
$614,813 for a 3.01 percent impact. The
smallest of the filers had $253,475 in
annual receipts for a 7.30 percent
impact.
Thus, the rule would have impacted
18.90 percent of small business entities
in the first year. In all subsequent years,
the percentage of small entities
significantly impacted is 8.94 percent
(149 out of 1,667 small entities). Both
these figures would have been below the
threshold to constitute a ‘‘substantial’’
VerDate Sep<11>2014 16:53 Dec 29, 2021 Jkt 256001 PO 00000 Frm 00016 Fmt 4700 Sfmt 4700 E:\FR\FM\30DER1.SGM 30DER1
khammond on DSKJM1Z7X2PROD with RULES
74369
Federal Register / Vol. 86, No. 248 / Thursday, December 30, 2021 / Rules and Regulations
number of small entities. See 85 FR
13439. Given that this rulemaking
merely eliminates even those non-
substantial costs, this rule cannot
constitute a substantial cost.
Therefore, a regulatory flexibility
analysis under the Regulatory
Flexibility Act is not required. The
Secretary has certified this conclusion
to the Chief Counsel for Advocacy of the
Small Business Administration.
Unfunded Mandates Reform
This final rule does not include any
Federal mandate that may result in
increased expenditures by State, local,
and tribal governments, in the aggregate,
of $100 million or more, or in increased
expenditures by the private sector of
$100 million or more.
Paperwork Reduction Act
A. Summary of the Final Rule
The following is a summary of the
need for and objectives of the final rule.
A more complete discussion of various
aspects of the proposal is found in the
preamble.
The final rule rescinds the Form T–1
Trust Annual Report established by
final rule on March 6, 2020.
The LMRDA was enacted to protect
the rights and interests of employees,
labor organizations and the public
generally as they relate to the activities
of labor organizations, employers, labor
relations consultants, and labor
organization officers, employees, and
representatives. Provisions of the
LMRDA include financial reporting and
disclosure requirements for labor
organizations and others as set forth in
Title II of the Act. See 29 U.S.C. 431–
36, 441. Under Section 201(b) of the
Act, 29 U.S.C. 431(b), labor
organizations are required to file for
public disclosure annual financial
reports, which are to contain
information about a labor organization’s
assets, liabilities, receipts, and
disbursements.
The Department has developed
several forms to implement the union
annual reporting requirements of the
LMRDA. The reporting detail required
of labor organizations, as the Secretary
has established by rule, varies
depending on the amount of the labor
organization’s annual receipts. The
Form LM–2 Annual Report is the most
detailed of the annual labor organization
reports, and is required to be filed by
labor organizations with $250,000 or
more in annual receipts. The Form LM–
2 requires certain receipts and
disbursements to be reported by
functional categories, such as
representational activities; political
activities and lobbying; contributions,
gifts, and grants; union administration;
and benefits. Further, the form requires
labor organizations to allocate the time
their officers and employees spend
according to functional categories, as
well as the payments that each of these
officers and employees receive, and it
requires the itemization of certain
transactions totaling $5,000 or more. It
must include reporting of loans to
officers, employees and business
enterprises; existence of any trusts;
payments to each officer; and payments
to each employee of the labor
organization paid more than $10,000, in
addition to other information. The
Secretary also has prescribed simplified
annual reports for smaller labor
organizations. Form LM–3 may be filed
by unions with $10,000 or more, but
less than $250,000 in annual receipts,
and Form LM–4 may be filed by unions
with less than $10,000 in annual
receipts. A local union that has no
assets, liabilities, receipts, or
disbursements, and which is not in
trusteeship, is not required to file an
annual report if its parent union files a
simplified annual report on its behalf. In
order to be eligible for this simplified
annual reporting, the local must be
governed solely by a uniform
constitution and bylaws filed with
OLMS by its parent union and its
members must be subject to uniform
fees and dues applicable to all members
of the local unions for which the parent
union files simplified reports. The
parent union must submit annually to
OLMS certain basic information about
the local, including the names of all
officers, together with a certification
signed by the president and treasurer of
the parent union.
On March 6, 2020, the Department
issued a final rule establishing the Form
T–1 Trust Annual Report, which
prescribes the form and content of
annual reporting by unions concerning
entities defined in Section 3(l) of the
LMRDA as ‘‘trusts in which a labor
organization is interested.’’ 85 FR
13414. The objective of this final rule is
to rescind the Form T–1 Trust Annual
Report, as the Department has
determined that it is overbroad and not
necessary to prevent the circumvention
and evasion of the Title II requirements.
Further, the Department has reviewed
the 2020 rulemaking record and no
longer views the separate reporting
requirements as set forth in the 2020
Form T–1 rule as justified in light of the
burden they impose. The rescission of
the Form T–1 constitutes a decrease in
reporting burdens for those labor
organizations associated with reportable
trusts. As detailed in the 2020 Form T–
1 rule, the Form T–1 represented a total
burden, for the estimated 810 Form LM–
2 filers affected by the rule, of
approximately 251,257 hours in the first
year and 174,128 in the subsequent
years. 85 FR at 13433. Additionally, the
projected total cost on filers in the first
year was approximately $15 million in
the first year and approximately $10.4
million in subsequent years. 85 FR at
13437. This final rule eliminates these
burdens and costs for future years. This
final rule would also eliminate any first-
year costs that unions have not yet
incurred.
B. Overview of Trust Reporting on Form
T–1
Every labor organization whose total
annual receipts are $250,000 or more
and those organizations that are in
trusteeship must currently file an
annual financial report using the current
Form LM–2, Labor Organization Annual
Report, within 90 days after the end of
the labor organization’s fiscal year, to
disclose their financial condition and
operations for the preceding fiscal year.
The current instructions state that
receipts of an LMRDA section 3(l) trust
in which the labor organization is
interested (as described in Information
Item 10) should not be included in the
total annual receipts of the labor
organization when determining which
form to file, unless the 3(l) trust is a
subsidiary organization of the union.
See Form LM–2 Instructions, Part II:
What Form to File.
The current Form LM–2 consists of 21
questions that identify the labor
organization and provide basic
information (in primarily a yes/no
format); a statement of 11 financial
items on different assets and liabilities
(Statement A); a statement of receipts
and disbursements (Statement B); and
20 supporting schedules (Schedules 1–
10, Assets and Liabilities related
schedules; Schedules 11–12 and 14–20,
receipts and disbursements related
schedules; and Schedule 13, which
details general membership
information).
The Form LM–2 requires such
information as: Whether the labor
organization has any trusts (Item 10);
whether the labor organization has a
political action committee (Item 11);
whether the labor organization
discovered any loss or shortage of funds
(Item 13); the number of members (Item
20); rates of dues and fees (Item 21); the
dollar amount for seven asset categories,
such as accounts receivable, cash, and
investments (Items 22–28); the dollar
amount for four liability categories, such
as accounts payable and mortgages
payable (Items 30–33); the dollar
VerDate Sep<11>2014 16:53 Dec 29, 2021 Jkt 256001 PO 00000 Frm 00017 Fmt 4700 Sfmt 4700 E:\FR\FM\30DER1.SGM 30DER1
khammond on DSKJM1Z7X2PROD with RULES
74370
Federal Register / Vol. 86, No. 248 / Thursday, December 30, 2021 / Rules and Regulations
amount for 13 categories of receipts
such as dues and interest (Items 36–49);
and the dollar amount for 16 categories
of disbursements such as payments to
officers and repayment of loans
obtained (Items 50–65).
Schedules 1–10 require detailed
information and itemization on assets
and liabilities, such as loans receivable
and payable and the sale and purchase
of investments and fixed assets. There
are also nine supporting schedules
(Schedules 11–12, 14–20) for receipts
and disbursements that provide
members of labor organizations with
more detailed information by general
groupings or bookkeeping categories to
identify their purpose. Labor
organizations are required to track their
receipts and disbursements in order to
correctly group them into the categories
on the current form.
The Form T–1 provides similar but
not identical reporting and disclosure
for section 3(l) trusts, currently
including subsidiaries, of Form LM–2
filing labor organizations. The Form T–
1 requires information such as: Losses
or shortages of funds or other property
(Item 16); acquisition or disposal of any
goods or property in any manner other
than by purchase or sale (Item 17);
whether or not the trusts liquidated,
reduced, or wrote-off any liabilities
without full payment of principal and
interest (Item 18); whether the trust
extended any loan or credit during the
reporting period to any officer or
employee of the reporting labor
organization at terms below market rates
(Item 19); whether the trust liquidated,
reduced, or wrote-off any loans
receivable due from officers or
employees of the reporting labor
organization without full receipt of
principal and interest (Item 20); and the
aggregate totals of assets, liabilities,
receipts, and disbursements (Items 21–
24). Additionally, the union must report
detailed itemization and other
information regarding receipts in
Schedule 1, disbursements in Schedule
2, and disbursements to officers and
employees of the trust in Schedule 3.
Although the Form T–1 has a higher
reporting threshold for receipts and
disbursements than does the Form LM–
2, it provides nearly identical
information regarding receipts and
disbursements as does the Form LM–2.
For example, unions must itemize
receipts of trusts with virtually identical
detail on Form T–1, Schedule 1, as on
the Form LM–2, Schedule 14. Further,
the information required on Form T–1
Schedules 2 and 3 correspond almost
directly to the information required on
Form LM–2 Schedules 15–20 and 11–
12, respectively, although the format
does not directly correlate. However, as
discussed earlier, Form T–1 does not
provide as much detail regarding assets
and liabilities of trusts as the Form LM–
2 requires. For example, although Form
T–1 Items 16 and 17 correspond directly
to Form LM–2 Items 13 and 15, and the
information required in Form T–1 Items
18–20 is required in a different format
in Form LM–2, Schedules 2 and 8–10,
there is also significant information
required on the Form LM–2 and not on
the Form T–1. Chief among the material
excluded on the Form T–1 is the
detailed information regarding assets
and liabilities required by Form LM–2,
Schedules 1–10. In sum, under the 2020
rule unions would need to report such
information on the Form LM–2, while
they would not need to do so under the
existing Form T–1.
Additionally, the Department
provided the public with separate
burden analyses for the Form LM–2 and
the Form T–1, in addition to the other
forms required to be filed with the
Department under the LMRDA. These
analyses include the time for reviewing
the respective set of instructions,
searching existing data sources,
gathering and maintaining data needed,
creating needed accounting procedures,
purchasing software, and completing
and reviewing the collection of
information. This rule eliminates the
need for a Form T–1 burden analysis, as
it proposes to eliminate that form and
its separate reporting regime. Thus,
many of the areas analyzed in other
LMRDA reporting and disclosure
burden analyses are not relevant to this
discussion, as the existence and basic
structure and procedures of the present
Form LM–2 reporting regime is not
amended by this final rule.
C. Methodology for the Burden
Estimates
Initially, as stated above, this
document proposes a reduction of
burden hours for respondents included
within ICR 1245–0003, as a result of the
rescission of the Form T–1. The
rescission of the Form T–1 results in a
reduction of 174,128.4 hours in future
years that an estimated 2,292 Form LM–
2 filers would incur. 85 FR 13433.
Additionally, the rule would eliminate
the total cost to filers of $10,385,820 in
subsequent years. See 85 FR at 13437.
The accompanying ICR discusses
changes to the other LMRDA forms and
instructions included within ICR 1245–
0003, which the Department will
implement as proposed. These changes
include mandatory electronic filing for
the simplified annual reports and Forms
LM–15, 15A, 16, 30, and Form S–1 as
well clarification concerning the OLMS
use of email addresses for the
signatories of each of the forms included
within the ICR. As explained in the ICR,
the Department does not believe that
such revisions will result in a change to
the burden estimates, since electronic
filing does not result in greater burden
than paper filing and filers already
provide email addresses as part of the
electronic filing process. The
Department did not receive any
comments on these proposed changes.
D. Conclusion
As this final rule requires a revision
to an existing information collection,
the Department is submitting,
contemporaneous with the publication
of this document, an ICR to remove the
Form T–1 and its associated burden
from OMB Control Number 1245–0003
and revise the PRA clearance to address
the clearance term. A copy of this ICR,
with applicable supporting
documentation, including among other
items a description of the likely
respondents, proposed frequency of
response, and estimated total burden
may be obtained free of charge from the
RegInfo.gov website at https://
www.reginfo.gov/public/do/
PRAOMBHistory?ombControlNumber=
1245-0003 (this link will be updated
following publication of this rule) or
from the Department by contacting
Andrew Davis on 202–693–0123 (this is
not a toll-free number)/email: OLMS-
Public@dol.gov.
Agency: DOL—Office of Labor-
Management Standards (OLMS).
Type of Review: Revision of a
currently approved collection.
OMB Control Number: 1245–0003.
Title of Collection: Labor Organization
and Auxiliary Reports.
Affected Public: Private Sector—
businesses or other for-profits and not-
for-profit institutions.
Estimated Number of Respondents:
33,021.
Estimated Number of Annual
Responses: 35,297.
Frequency of Response: Varies.
Estimated Total Annual Burden
Hours: 4,644,849.
Estimated Total Annual Other Burden
Cost: $0.
Small Business Regulatory Enforcement
Fairness Act of 1996
This rule would not constitute a major
rule as defined by section 804 of the
Small Business Regulatory Enforcement
Fairness Act of 1996. This rule will not
result in an annual effect on the
economy of $100,000,000 or more; a
major increase in costs or prices; or
significant adverse effects on
competition, employment, investment,
VerDate Sep<11>2014 16:53 Dec 29, 2021 Jkt 256001 PO 00000 Frm 00018 Fmt 4700 Sfmt 4700 E:\FR\FM\30DER1.SGM 30DER1
khammond on DSKJM1Z7X2PROD with RULES
74371
Federal Register / Vol. 86, No. 248 / Thursday, December 30, 2021 / Rules and Regulations
productivity, innovation, or on the
ability of the United States-based
companies to compete with foreign-
based companies in domestic and
export markets.
List of Subjects
29 CFR Part 403
Labor unions, Reporting and
recordkeeping requirements, Trusts.
29 CFR Part 408
Labor unions, Reporting and
recordkeeping requirements, Trusts and
trustees.
Accordingly, the Department amends
29 CFR parts 403 and 408 as set forth
below:
PART 403—LABOR ORGANIZATION
ANNUAL FINANCIAL REPORTS
1. The authority citation for part 403
continues to read as follows:
Authority: Secs. 201, 207, 208, 301, 73
Stat. 524, 529, 530 (29 U.S.C. 431, 437, 438,
461); Secretary’s Order No. 03–2012, 77 FR
69376, November 16, 2012.
§ 403.2 [Amended]
2. Amend § 403.2 by removing
paragraph (d).
3. Amend § 403.4 by revising
paragraphs (b)(3) and (b)(6) introductory
text to read as follows:
§ 403.4 Simplified annual reports for
smaller labor organizations.
* * * * *
(b) * * *
(3) The national organization with
which it is affiliated assumes
responsibility for the accuracy of a
statement filed electronically, through
the electronic filing system made
available on the Office of Labor-
Management Standards website,
covering each local labor organization
covered by this paragraph (b) and
containing the following information
with respect to each local organization:
(i) The name and designation number
or other identifying information;
(ii) The file number which the Office
of Labor-Management Standards has
assigned to it;
(iii) The mailing address;
(iv) The beginning and ending date of
the reporting period which must be the
same as that of the report for the
national organization;
(v) The names and titles of the
president and treasurer or
corresponding principal officers as of
the end of the reporting period;
* * * * *
(6) The national organization with
which it is affiliated assumes
responsibility for the accuracy of, and
submits with its simplified annual
reports filed electronically pursuant to
§ 403.4(b)(3) for the affiliated local labor
organizations, the following certification
properly completed and signed by the
president and treasurer of the national
organization:
* * * * *
§ 403.5 [Amended]
4. Amend § 403.5 by removing
paragraph (d).
§ 403.8 [Amended]
5. Amend § 403.8 by removing
paragraph (b)(3).
PART 408—LABOR ORGANIZATION
TRUSTEESHIP REPORTS
6. The authority citation for part 408
continues to read as follows:
Authority: Secs. 202, 207, 208, 73 Stat.
525, 529 (29 U.S.C. 432, 437, 438);
Secretary’s Order No. 03–2012, 77 FR 69376,
November 16, 2012.
7. Revise § 408.5 to read as follows:
§ 408.5 Annual financial report.
During the continuance of a
trusteeship, the labor organization
which has assumed trusteeship over a
subordinate labor organization, shall file
with the Office of Labor-Management
Standards on behalf of the subordinate
labor organization the annual financial
report required by part 403 of this
chapter, signed by the president and
treasurer or corresponding principal
officers of the labor organization which
has assumed such trusteeship, and the
trustees of the subordinate labor
organization on Form LM–2.
Signed in Washington, DC, this 22nd day
of December, 2021.
Jeffrey R. Freund,
Director, OLMS.
[FR Doc. 2021–28266 Filed 12–29–21; 8:45 am]
BILLING CODE 4510–86–P
ENVIRONMENTAL PROTECTION
AGENCY
40 CFR Part 31
[EPA-HQ–2020–03508; FRL–8540–01–
OECA]
On-Site Civil Inspection Procedures;
Rescission
AGENCY
: Environmental Protection
Agency (EPA).
ACTION
: Final rule; rescission of
regulations.
SUMMARY
: In accordance with the
Presidential directive of January 20,
2021, ‘‘Revocation of Certain Executive
Orders Concerning Federal Regulation,’’
and in order to ensure appropriate
flexibilities to site-specific inspection
work, the Environmental Protection
Agency (EPA) is rescinding its March 2,
2020 final rule describing certain
Agency procedures for conducting on-
site civil inspections. This rule applies
to on-site civil inspections conducted by
federally credentialed EPA civil
inspectors, federally credentialed
contractors and Senior Environmental
Employment employees conducting
inspections on behalf of EPA.
DATES
: This rule is effective on
December 30, 2021.
ADDRESSES
: The EPA has established a
docket for this action under Docket ID
No. EPA-HQ–2020–03508. All
documents in the docket are listed on
the https://www.regulations.gov
website. Although listed in the index,
some information is not publicly
available, e.g., CBI or other information
whose disclosure is restricted by statute.
Certain other material, such as
copyrighted material, is not placed on
the internet and will be publicly
available only in hard copy form.
Publicly available docket materials are
available electronically through https://
www.regulations.gov. For information
on the EPA Docket Center services and
the current status, please visit us online
at https://www.epa.gov/dockets.
FOR FURTHER INFORMATION CONTACT
:
Chad Carbone, Monitoring, Assistance,
and Media Programs Division, Office of
Enforcement and Compliance Assurance
(Mail Code 2221A), Environmental
Protection Agency, 1200 Pennsylvania
Avenue NW, Washington, DC 20460;
telephone number: 202–564–2523;
email address: carbone.chad@epa.gov.
SUPPLEMENTARY INFORMATION
:
I. General Information
A. What action is the Agency taking?
In accordance with E.O. 13992,
‘‘Revocation of Certain Executive Orders
Concerning Federal Regulation,’’ issued
by President Biden on January 20, 2021
(86 FR 7049, January 25, 2021), and in
order to ensure appropriate flexibilities
to site-specific inspection work, the EPA
is rescinding the final rule (85 FR
12224, March 2, 2020) that described
certain Agency procedures for
conducting on-site civil inspections.
The prior final rule was promulgated to
implement the now revoked E.O. 13892,
‘‘Promoting the Rule of Law Through
Transparency and Fairness in Civil
Administrative Enforcement and
Adjudication’’ (84 FR 55239, October 9,
2019).
VerDate Sep<11>2014 16:53 Dec 29, 2021 Jkt 256001 PO 00000 Frm 00019 Fmt 4700 Sfmt 4700 E:\FR\FM\30DER1.SGM 30DER1
khammond on DSKJM1Z7X2PROD with RULES

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT