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Friday

,
December 27, 2002

Part III

Department of Labor
Office of Labor-Management Standards

29 CFR Parts 403 and 408
Labor Organization Annual Financial
Reports; Proposed Rule

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79280 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

DEPARTMENT OF LABOR and whether the information that would American workers are compensated has
be provided to union members, the also changed considerably. In 1966, over
Office of Labor-Management public, and the government if these 80% of total compensation consisted of
Standards changes were implemented would be wages and salaries, with less than 20%
meaningful, useful, and in accordance representing benefits. By 2000, wages
29 CFR Parts 403 and 408 with the purposes of the Act. dropped to 73% of total compensation
RIN 1215–AB34 DATES: Comments must be received on and benefits grew to 27% of the
or before February 25, 2003. compensation package. Id. at p. 76, 87.
Labor Organization Annual Financial ADDRESSES: Comments should be sent to Today’s workforce—which is better
Reports Victoria A. Lipnic, Assistant Secretary educated, more empowered, and more
for Employment Standards, U.S. familiar with financial data and
AGENCY: Office of Labor-Management transactions than ever before—expects
Standards, Employment Standards Department of Labor, 200 Constitution
Avenue, NW., Room N–5605, relevant and useful information in order
Administration, Department of Labor. to make fundamental career decisions,
ACTION: Notice of proposed rulemaking;
Washington, DC 20210.
All commenters are advised that U.S. evaluate options and exercise legally
request for comments. guaranteed rights. American workers
mail delivery in the Washington, DC
area has been slow and erratic due to rightly expect to receive such
SUMMARY: The Department of Labor’s
the ongoing concerns involving anthrax information not only from their
Employment Standards Administration
contamination. All commenters must government and their employers, but
(ESA) is proposing to revise forms LM–
take this into consideration when also from labor organizations that
2, LM–3, and LM–4, which are used by
preparing to meet the deadline for represent them or seek to represent
labor organizations to file the annual
submitting comments. As a convenience them in the workplace.
financial reports required under title II Labor organizations also have
of the Labor-Management Reporting and to commenters, comments may be
changed tremendously since the
Disclosure Act of 1959, as amended transmitted by e-mail to FormLM2-
enactment of the LMRDA in 1959. There
(LMRDA or Act) with ESA’s Office of comments@dol-esa.gov or by facsimile
are now far fewer small, independent
Labor-Management Standards (OLMS). (FAX) machine to (202) 693–1340. To
unions and more large unions affiliated
The purpose of this reform is to improve assure access to the FAX equipment,
with a national or international body. In
the transparency and accountability of only comments of five or fewer pages
2000, 5,426 unions, including 141
labor organizations to their members, will be accepted via FAX transmittal, national and international unions,
the public, and the government; to unless arrangements are made prior to reported $200,000 or more in total
increase the information available to faxing, by calling the number below and annual receipts—the threshold at which
members of labor organizations; and to scheduling a time for fax receipt by a labor organization must use form LM–
make the data disclosed in such reports OLMS. 2 to file the annual financial report
more understandable and accessible. It is recommended that you confirm
required by the LMRDA. In fact, many
The Department invites comment on receipt of your comment by contacting large unions today resemble modern
this proposed rule and the revised (202) 693–0122 (this is not a toll-free corporations in their structure, scope
forms, as well as on the instructions for number). Individuals with hearing and complexity. A large number of them
filling out the forms. impairments may call 1–800–877–8339 manage full-featured benefit plans for
Some of the reforms proposed include (TTY/TDD). their members, maintain close business
requiring form LM–2 filers to file reports Comments will be available for public
relationships with financial service
electronically (unless the labor inspection during normal business providers such as insurance companies
organization claims a temporary hours at the above address. and investment firms, offer multiple
hardship exemption or applies for and FOR FURTHER INFORMATION CONTACT: compensation opportunities to their
is granted a continuing hardship Victoria A. Lipnic, Assistant Secretary senior executives and officials, operate
exemption), to identify ‘‘major’’ receipts for Employment Standards, U.S. revenue-producing subsidiaries,
and disbursements, and to allocate Department of Labor, 200 Constitution conduct extensive government lobbying,
disbursements among several categories Avenue, NW., Room S–2321, and participate in foundations and
provided on the form. The proposal Washington, DC 20210, olms-mail@dol- charitable activities.
would also require all covered labor esa.gov, (202) 693–0122 (this is not a As labor organizations have become
organizations to report the assets, toll-free number). Individuals with more multifaceted and have created
liabilities, receipts, and disbursements hearing impairments may call 1–800– hybrid structures for their various
of organizations with annual receipts of 877–8339 (TTY/TDD). activities, the form used to report
$200,000 or more that meet the statutory SUPPLEMENTARY INFORMATION: financial information with respect to
definition of a ‘‘trust in which a labor these activities, which has remained
organization is interested’’ in order to I. Background significantly unchanged, has become a
ensure meaningful disclosure to union Over the course of the last century, barrier to the full and transparent
members and prevent the circumvention there have been tremendous changes in reporting intended by the Act.
of the reporting requirements of title II. the American workplace. Not only has Moreover, just as in the corporate sector,
Finally, the proposal would make the size of the American workforce there have been a number of financial
conforming changes, as described increased dramatically—roughly six- failures and irregularities involving
below, to the other labor organization fold—but the ‘‘composition of the labor pension funds and other member
annual financial reporting forms, form force shifted from industries dominated accounts maintained by labor
LM–3 and form LM–4, which are by primary production occupations, organizations. These failures and
affected in limited ways. The such as farmers and foresters, to those irregularities result in direct financial
Department invites comments with dominated by professional, technical, harm to union members. If the members
respect to the benefits of these changes, and service workers.’’ Report on the of labor organizations had more
the ease or difficulty with which labor American Workforce, U.S. Department complete, understandable information
organizations will be able to comply, of Labor, 2001, p. 3. The way in which about their unions’ financial

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79281

transactions, investments and solvency, with useful data that will enable them ‘‘if the powers conferred [in the
they would be in a much better position to be responsible and effective LMRDA] are vigorously and properly
than they are today to protect their participants in the democratic used, the reporting requirements will
personal financial interests and exercise governance of their unions. While it is make a major contribution towards the
their democratic rights of self- recognized that changes in the form elimination of corruption and
governance. LM–2 may impose some burden on the questionable practices.’’ George Meany,
In light of the changes in the largest unions, the burden of the Testimony before the House Labor
American workplace, the availability of proposed changes will dramatically Committee, June 1959. In light of the
technical improvements, and the diminish after the first year and the use changes discussed above, the purposes
increasing complexity of many union of electronic filing proposed by this of the Act could be better accomplished
financial activities reported under the rulemaking will alleviate much of the if the information that the statute
LMRDA, the Department believes that burden on filers. requires labor organizations to report
reasonable changes must be made to the The Department considered raising was provided in a more useful format
forms required under title II, and the the threshold at which unions are and ‘‘in such detail’’ as necessary to
means by which they are filed. First, the required to file form LM–2 as a way of provide union members with a more
most efficient way to provide limiting the burden of requiring accurate picture of their union’s
meaningful access to this information by electronic filing in greater detail. The ‘‘financial condition and operations.’’ 29
interested members of the public is to threshold was raised to its current level U.S.C. 431(b).
require that the reports filed by the of $200,000 in 1994. Adjusting for The Department developed reporting
largest labor organizations be filed in inflation, that amount would be forms to complement its enforcement
electronic form. In response to requests approximately $245,000 today. Raising responsibilities shortly after the
from union members, the media, the threshold to $250,000 in annual enactment of the LMRDA, but those
members of Congress, and other receipts would relieve 654 unions, with forms have remained substantially
interested parties for Internet access to combined receipts of approximately unchanged for four decades, and simply
reports filed by unions under the $150,000,000 per year, of the obligation have not kept pace with changes in
LMRDA, OLMS has recently to use the proposed form LM–2. Taking financial practices and with the growth
inaugurated a new website (http:// such action, however, would impact the in size of unions and their financial
www.union-reports.dol.gov) where amount of information available to more transactions. Major changes were
individuals may now view union than 950,000 members. Since it is attempted in 1992. 57 FR 49282
annual financial reports and conduct unclear whether such action would (October 30, 1992). Pursuant to that
data searches, displaying the results in substantially affect the burden imposed rule, unions were required to report
a number of preformatted listings, free without compromising the objective of total disbursements in eight categories
of charge. In order to provide this increasing transparency, it was decided and then to allocate those
access, however, OLMS currently must to specifically request comments on disbursements among six ‘‘functional’’
scan each report that is filed in paper whether the current $200,000 threshold categories. The Department, however,
format—a process that is expensive and for form LM–2 filers should be raised to rescinded this rule on December 21,
time-consuming. Requiring form LM–2 $250,000 or some other amount, or, 1993. 58 FR 67594.
reports to be filed electronically using instead, whether it should be left Since 1993, significant improvements
software provided by OLMS, and unchanged. in the software available to facilitate
making them available on the website, The LMRDA is effective only if union accounting make it possible to make a
will decrease the number of requests for members and the government are given new attempt to change the form LM–2
reports that must be handled manually, the information they need to determine in ways that will provide additional
freeing OLMS staff for other compliance how members’ dues are being spent. As useful information to union members
assistance and enforcement work. Representative Robert P. Griffin, a and the public without unduly
Finally, requiring electronic filing of cosponsor of the bill, stated, burdening reporting unions.
form LM–2 reports will provide OLMS Accordingly, in the process of making
with data that can be used more * * * the effectiveness of the Act will surely changes to take advantage of advances
depend upon the Secretary of Labor, who
effectively for enforcement and in electronic recordkeeping, filing and
bears a great responsibility for its
compliance assistance purposes. enforcement. However, in a larger sense, the disclosure technology, it is appropriate
In addition, the Department is effectiveness of the Act will depend also to consider changes that will enable
proposing a number of changes in the upon the rank-and-file union members union members to obtain more accurate
form LM–2 itself, including a themselves. For in the last analysis, it is they information about the financial
requirement that disbursements and who must make the law meaningful by taking operations of their unions. For example,
receipts not otherwise identified be hold of the tools of democracy and using union members currently have no
reported in specific categories that them to clean corruption out of their unions meaningful way to evaluate the
and to keep them clean.
provide union members with more appropriateness of large expenditures
detailed information about the activities Robert P. Griffin, Symposium on the for generalized purposes. Recent form
of their unions. The proposed revision Labor-Management Reporting and LM–2 reports filed with the Department
of form LM–2 will provide union Disclosure Act of 1959, edited by Ralph disclosed, for example, expenditures of
members and the public with Slovenko, Baton Rouge, Claitor’s $7,805,827 for ‘‘Civic Organizations,’’
information about the identity of Bookstore Publishers, Tulane University $3,927,968 for ‘‘Sundry Expenses,’’ and
individuals and entities who receive School of Law, 1961, pp. 30–31. The $7,863,527 for ‘‘Political Education.’’
major disbursements of union funds and LMRDA was passed with wide Amounts reported as ‘‘Other
from whom unions receive major bipartisan support, and placed Disbursements’’ and described generally
receipts not otherwise identified. This responsibility for enforcing its have been equally difficult to identify.
change is necessary to ensure that the provisions jointly on the Department of For example, recent reports disclosed
information required is reported in such Labor and rank-and-file union members. disbursements of $68,712,248 for grants
a way as to meet the objectives of the AFL–CIO President George Meany to joint projects with state and local
statute by providing union members offered his support for the Act, stating affiliates; $22,991,729 for financial

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79282 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

assistance paid to local and district complete and submit the form. A union category, in which expenses are
lodges; and $19,322,938 for organizing that chooses the first option will be able reported as a single aggregated total
and servicing. While the activities to ‘‘copy and paste,’’ or manually type, with no description. Although the
described appear to be those for which information from their own record fraudulent reporting was ultimately
a union might be expected to spend keeping system directly into the form uncovered, the lack of supporting detail
money, the current form does not using a commercial off-the-shelf form in the latter category enabled the
require the union to disclose the filler application. A union that chooses officials to hide in excess of $1.5 million
identity of the recipient of the funds, the second option will use technical in personal dining, drinking and
making it difficult to determine whether standards provided by the Department entertainment expenses from 1992 to
these amounts were actually spent for to make adjustments to their own 1999. This case demonstrates that
the described activities. accounting programs that will enable detailed reporting can be an effective
The large dollar amount and vague them to seamlessly export data from the deterrent, and that more detail
description of such entries make it union’s accounting system into the throughout the form LM–2 would
essentially impossible for members to form. Once the data reconfiguration is further discourage malfeasance.
determine whether or not their dues complete, the union will simply use the The foregoing changes will be made
were spent appropriately, which is reconfigured format for its normal only to the form LM–2, which must be
precisely the reason that the statute bookkeeping. This method will be filed by the largest labor organizations.
requires reporting. The Senate Report on particularly helpful to larger form LM– An additional change, which is needed
the version of the bill later enacted as 2 filers inasmuch as each transaction to ensure that union members the
the LMRDA stated clearly, ‘‘the will not have to be reentered by hand. government, and the public can obtain
members who are the real owners of the Whether the union enters the information on organizations affiliated
money and property of the organization information by hand into the form, or with unions, as the statute requires, will
are entitled to a full accounting of all exports data at the end of the year to the apply to all labor organizations. The
transactions involving their property.’’ filing software, the software provided by current forms LM–2 and LM–3 require
A full accounting was described as ‘‘full the Department will check for that unions report ‘‘subsidiary’’
reporting and public disclosure of union typographical and mathematical errors, organizations and define such
internal processes and financial and other discrepancies, which must be organizations as ‘‘wholly owned, wholly
operations.’’ Senate Report No. 187 on corrected before the union may file the controlled, and wholly financed by the
S. 1555, submitted by Senator John F. report electronically. reporting union.’’ Because unions may
Kennedy from the Committee on Labor also have substantial financial dealings
and Public Welfare, 86th Cong., 1st OLMS case files demonstrate that with, or through, funds or organizations
Sess., reprinted in 1959 U.S. Code Cong. union members would also benefit from that are not wholly owned, but that
& Admin. News 2318, pp. 2324 & 2318. changes in the way financial meet the statutory definition of a ‘‘trust
Technological advances have made it information is reported by the largest in which a labor organization is
possible to provide the level of detail labor organizations on form LM–2 since interested,’’ the proposed revision will
necessary to give union members a more the availability of more detailed require all unions to report the assets,
accurate picture of their union’s information would provide a deterrent liabilities, receipts, and disbursements
financial condition and operations to fraud and embezzlement by corrupt of all such other organizations that have
without imposing an unwarranted officials. Over the past five fiscal years annual receipts of $200,000 or more on
burden on reporting unions. Although (FY 1998 to FY 2002), OLMS a new form T–1 (Trusts Annual Report)
no specific data exist regarding the investigations of alleged fraud and in order to fulfill the purpose of the
extent to which unions have already embezzlement by union officials and statutory reporting requirements.
embraced the technology necessary to related parties resulted in over 640 These separate organizations pose the
provide reports in electronic form, criminal convictions. Although courts same transparency challenges as ‘‘off-
OLMS staff who review the filed reports ordered the responsible officials to pay the-books’’ accounting procedures in the
and provide compliance assistance have $15,446,896 in restitution, in addition to corporate setting: large-scale, potentially
determined that the vast majority of debarring them from union service for a unattractive financial transactions can
unions required to file form LM–2 use combined total of almost ten thousand be shielded from public disclosure and
computerized recordkeeping systems. years, unions and their members lost far accountability through artificial
Several OLMS field offices have noted more money as a result of this criminal structures, classification and
that even smaller unions that file form activity than could be recovered by the organizations. The proposed reform
LM–3 keep electronic books. In Department on behalf of aggrieved would substantially improve
addition, in the first year in which members. In many of the serious cases transparency of significant organizations
software was available to prepare the investigated by OLMS, the broad that are financially connected to
current forms for filing, approximately aggregated categories on the existing reporting labor organizations. Currently,
40% of all filers (forms LM–2, LM–3 forms made it possible to hide if a union transfers funds to another
and LM–4) have used the software. embezzlements, self-dealing, organization, but does not disclose
Information regarding the burden overspending and financial disbursements made by that
imposed by making the proposed mismanagement. For example, organization, union members may have
changes and the benefit to be gained is accountants recently pled guilty to no way to determine whether the funds
most likely to be obtained by proposing criminal charges related to the in question were actually spent for the
the changes for comment so that unions falsification of form LM–2 reports filed benefit of members. Union members
who file these reports, union members, by an international union. In order to have a similar interest in obtaining
and other groups that represent workers avoid detailed reporting, officials had information about funds provided for
can express their views. shifted disbursements from the ‘‘Office the benefit of members by employers
Software to be provided by the and Administrative Expenses’’ category, pursuant to collective bargaining
Department will facilitate use of the which has a supporting schedule that agreements, even if those funds are
proposed revised form LM–2. The requires some detail, to the provided to a separate, jointly
software will offer filers two options to ‘‘Educational and Publicity Expense’’ administered account rather than

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directly to the union. Since the money requested information without success question but, under the existing rules,
an employer contributes to such a because the organizations were not their union was not required to report
‘‘trust’’ for union members’ benefit wholly owned by the union and, these activities in its form LM–2. Under
might otherwise have been paid directly therefore, the union was not required to the proposed reform, a credit union
to workers in the form of increased report the organization as a subsidiary. established by a union primarily for the
wages and benefits, the members on In one example, OLMS found that 29 benefit of its members is an organization
whose behalf the financial transaction local unions contributed an average of that meets the statutory definition of a
was negotiated have a right to know $62,000 per month to a statewide strike ‘‘trust in which a labor organization is
what funds were contributed, how the fund. Although union members are interested’’ and the union will be
money is managed and how it is being likely to have an interest in how such required to report financial information
spent. funds are invested and spent, no single for the benefit of members on form
However, if annual audits or financial union wholly owned the fund, and T–1.
reports providing the same information therefore no union was required to These reforms will provide union
and a similar level of detail are report disbursements made by the fund. members, the public, and the
otherwise available for organizations Strike funds typically fall within the government the information they need
that meet the statutory definition of a statutory definition of a ‘‘trust in which to properly ensure union democracy,
trust, the only additional information a a labor organization is interested,’’ but fiscal integrity and transparency in a
union would be required to report on may not be required to report under manner consistent with the intent of
form LM–2 is a statement that such a ERISA or the LMRA. Under the Congress in enacting the LMRDA. The
report or audit has been filed and is proposed revision, each union that revised form LM–2 will provide detailed
freely available on demand, and where contributes $10,000 or more to such a information about financial transactions
it can be obtained. Thus, if reports are fund will be required to file a form T– of labor organizations in an easily
filed pursuant to 26 U.S.C. 527, or the 1 with respect to the fund, if the strike understood format. The new reports will
requirements of the Employee fund has annual receipts of $200,000 or be usefully organized according to the
Retirement Income Security Act of 1974, more, thereby providing union members services and functions provided to
29 U.S.C. 1023 (ERISA), or if annual much more information about the union members and the members will
audits are available under § 302(c)(5)(B) financial activities of their union and be able to identify major receipts and
of the Labor Management Relations Act, the fund in which it has an interest. disbursements for a variety of activities.
29 U.S.C. 186(c)(5)(B) (LMRA), or if the In another case, local union officials The new form LM–2 strengthens
organization files publicly available had established a building fund enforcement of the LMRDA by giving
reports with a Federal or state agency as financed partly with union members’ members, the government, and the
a Political Action Committee (PAC), no pension funds. The union was not public a full account of their union’s
form T–1 will be required. The reporting required to report financial information financial operations, which is made
labor organization will be required to about the building fund, because the much more feasible and less costly by
state where the specific alternative union did not wholly own it; part of the technological advances that enable
reports are available for inspection, building fund’s financing was provided electronic recordkeeping, filing and
however. Only those reports listed in by the union’s pension fund. Whether or disclosure of financial information.
the Instructions as satisfying the not the separate contributions made by Because the information will be
disclosure requirement will be the pension fund are required to be provided electronically and in more
considered sufficient to relieve a union reported under ERISA, the building detail than the current forms require,
of the obligation to file a form T–1 for fund itself is a ‘‘trust in which a labor the proposed revision will substantially
a trust in which a labor organization is organization is interested’’ under the enhance the Department’s ability to
interested that meets the reporting definition in the LMRDA. The proposed review the information provided and to
threshold. The Department invites revision of form LM–2 will require that
enforce other provisions of the LMRDA.
comments on whether these reports, or information for such entities be reported
Finally, the proposed reform will also
others, provide sufficient information to on form T–1, if the union’s contribution
require additional reporting by all
dispense with the requirement that the during the reporting year is $10,000 or
unions for trusts in which a labor
labor organization also file a form T–1 more and the entity’s annual receipts
organization is interested, providing
for a trust or other fund in which it is from all sources total $200,000 or more.
A third case illustrates the current substantially more information than is
interested.
Members have a direct financial barriers to disclosure: one union local now available to union members, the
interest in obtaining detailed, reliable accounted for 97% of the funds on public, and the government.
information on significant trusts’ deposit at a credit union; membership II. Authority
financial operations, so they can in the credit union was limited to
determine whether funds are being members of the Local and two other A. Legal Authority
spent in ways that benefit the members union locals, and all of the credit union The legal authority for the notice of
for whom they were created. There have directors were Local officials and proposed rule-making is sections 201,
been reports, for example, that joint employees. The credit union made large 208, and 301 of the Labor-Management
training funds have been used to pay loans, many near $20,000, to union Reporting and Disclosure Act of 1959, as
union officials supplementary salaries officials, employees and their family amended (LMRDA), 29 U.S.C. 431, 438,
or host extravagant parties for trustees. members. Four loan officers, three of and 461.
Without adequate financial disclosure, whom were officers of the Local,
received 61% of the credit union’s B. Departmental Authorization
it is impossible for union members to
assess these trusts and fully exercise loans. Union members did not have Section 208 of the LMRDA provides
their self-governing democratic ready access to information about these that the Secretary of Labor shall have
membership rights. loans because the Local did not wholly authority to issue, amend, and rescind
OLMS case files also indicate that own the credit union. Again, the rules and regulations prescribing the
there are a number of organizations members had an interest in the financial form and publication of reports required
about which union members have operations of the organization in to be filed under title II of the Act and

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79284 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

such other reasonable rules and hardship exemption or applies for and other, larger unions. Those smaller
regulations as she may find necessary to is granted a continuing hardship unions may not, therefore, be in a
prevent the circumvention or evasion of exemption. The hardship exemption position to require the entity to provide
the reporting requirements. Secretary’s procedures are modeled after the information necessary on the financial
Order 4–2001, issued May 24, 2001, and procedures used by the Securities and operations of the trust. In such
published in the Federal Register on Exchange Commission (17 CFR circumstances, provided that a union’s
May 31, 2001 (66 FR 29656), continued 232.201–202) and are explained in the financial contribution to a trust, or a
the delegation of authority and instructions to the form that accompany contribution made on the union’s behalf
assignment of responsibility to the this notice. The Department invites or as a result of a negotiated agreement
Assistant Secretary for Employment comments regarding whether the to which the union is a party, is less
Standards in Secretary’s Order 5–96 of hardship exemption procedures are than $10,000 during the union’s
those functions to be performed by the appropriate and whether there are any reporting year, the union need only
Secretary of Labor under the LMRDA. alternative procedures that might better report the existence of the trust and the
address legitimate problems without amount of the contribution. A labor
III. Overview of the Revised Form LM–
permitting unions to avoid electronic organization that is providing
2 and Instructions
filing where it is feasible for them to file significant funds to a trust, on the other
This is a ‘‘section-by-section’’ electronically. hand, should be able to require the trust
discussion of the sections, items and Section X. Trusts in Which a Labor to provide a more detailed accounting of
schedules of the form LM–2 and Organization is Interested: Labor the trust’s financial activities.
instructions to which significant organizations must disclose certain Accordingly, if the contribution of the
revisions are proposed: financial information of a significant reporting union, or the contribution
Section I. Who Must File: The trust in which the labor organization is made on the union’s behalf or as a result
instructions to form LM–2 adopt the interested in order to fulfill and prevent of a negotiated agreement to which the
recent holding of the U.S. Court of the circumvention of the statutory union is a party, to the trust is $10,000
Appeals for the Ninth Circuit in Chao v. reporting requirements. Similarly, or more during the union’s reporting
Bremerton Metal Trades Council, AFL– financial information concerning year, the labor organization will be
CIO, 294 F.3d 1114 (2002), interpreting significant funds placed under a labor required to report certain financial
section 3(j) of the LMRDA, because that organization’s control, for the benefit of information of the trust on the proposed
interpretation gives full meaning to the its members, must be made available to new separate form (form T–1), if the
plain language of the statute. In that members if they are to have a complete trust has annual receipts of $200,000 or
case, the Court ruled that an and reliable picture of the organization’s more.
intermediate labor organization that has financial condition and operation. Form T–1 must be filed within 90
no dealings itself with private A trust in which a labor organization days of the end of the trust’s fiscal year.
employers and no members who are is interested is defined by statute as The Department welcomes comments
employed in the private sector may regarding alternative deadlines for filing
a trust or other fund or organization (1)
nevertheless be a labor organization which was created or established by a labor the trust report.
engaged in commerce within the organization, or one or more of the trustees Form T–1 contains various types of
meaning of section 3(j) of the LMRDA if or one or more members of the governing financial information that is intended to
the intermediate body is ‘‘subordinate to body of which is selected or appointed by a discourage circumvention or evasion of
a national or international labor labor organization, and (2) a primary purpose the reporting requirements in title II
organization which includes a labor of which is to provide benefits for the while imposing minimal burden. In
organization engaged in commerce.’’ members of such labor organization or their particular, the reporting union will be
Accordingly, the Instructions will beneficiaries.
required to report the amount of its
clarify that any ‘‘conference, general 29 U.S.C. 402(l). This definition of a contribution and of any contribution
committee, joint or system board, or trust in which a labor organization is made on its behalf, as well as the total
joint council’’ that is subordinate to a interested may include, but is not receipts and liabilities of the trust.
national or international labor limited to: joint funds administered by Unions will be required to separately
organization will be required to file an a union and an employer pursuant to a identify any individual or entity from
annual financial form if the national or collective bargaining agreement, which the trust receives $10,000 or
international labor organization is a educational or training institutions, more during the reporting year, any
labor organization engaged in an credit unions created for the benefit of individual disbursement of $10,000 or
industry affecting commerce within the union members, and redevelopment or more during the reporting period, as
meaning of section 3(j) of the LMRDA. investment groups established by the well as any entity or individual that
Section IV. How to File: This section union for the benefit of its members. received disbursements that aggregate to
replaces Section IV. Where to File in the The determination of whether a $10,000 or more from the trust during
existing form LM–2 instructions to particular entity is a trust in which a the reporting period.
implement mandatory electronic filing. labor organization is interested must be Consideration was given to requiring
Mandatory electronic filing will based on the facts in each case. A trust a union to file separate form LM–2
minimize the burdens for unions that will be considered significant, and reports for trusts or other organizations
file form LM–2, and increase efficiency therefore must be reported, if it has in which it has an interest or to require
for the Department of Labor as it annual receipts of $200,000 or more. a union to separately identify
processes the reports and makes the In some instances, a union may have disbursements in the same amounts as
reports available to union members and a limited interest in a trust, but not ‘‘major’’ disbursements that unions
the public. The software necessary to extensive control over the trust, or themselves are required to report. In
record information in the form will be complete information regarding all of order to reduce the burden on unions
provided by the Department to all the financial transactions of the trust. that may not have as ready access to
reporting unions. A union will be For example, some smaller unions may trust records as to their own, it was
permitted to file a paper format form provide limited funding for a training decided to place the reporting threshold
LM–2, however, if it claims a temporary center or other enterprise created by sufficiently high that a union might be

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expected to require its trusts or other if unions were required to report the that must be checked for labor
organizations to provide it with assets, liabilities, receipts, and organizations filing a report according to
information about financial transactions disbursements of entities that are the hardship exemption procedures, and
in these amounts. The Department dominated or controlled by the labor to eliminate the box for ‘‘subsidiary
invites comments on whether a union organization to such a degree that assets, organizations.’’ The new entry will help
that contributes $10,000 to an liabilities, receipts and disbursements of union members and members of the
organization meeting the statutory the entity effectively are those of the public discern whether a report filed
definition of a trust should be required union itself. Whether the putatively after the deadline was delinquent or was
to file a form T–1 or whether the reporting entity is, in fact, a ‘‘single filed according to the hardship
necessary information regarding trusts entity’’ with the union would be exemption procedures. It will also help
will be disclosed if such a report is determined by the degree to which there OLMS process the reports. The
required only if the amount contributed is common ownership, common subsidiary box was eliminated because
by or on behalf of the reporting union directors and/or officers, de facto subsidiary organizations are replaced by
is a significant percentage (for example, exercise of control, unity of personnel trusts in the new form LM–2.
5%, 10% or 25%) of the total receipts policies emanating from a common Schedules 1 Through 12: Discussion
of the organization. The Department source, and dependency of operations. of the new and revised schedules
also invites comments on whether the Under this analysis, unions would be follows.
threshold for separately identifying required to report financial information Schedule 1—Accounts Receivable
receipts and disbursements of trusts is for any entity with respect to which Aging Schedule: This new schedule,
placed at the appropriate level. there is such a substantial degree of which does not exist in the current form
No separate report will be required for integration of operations and common LM–2, requires labor organizations to
Political Action Committee (PAC) funds management. Similar analyses are used report: (1) The individual accounts that
if publicly available reports on the PAC to determine whether multiple are valued at $1,000 or more and that
funds are filed with a Federal or State companies constitute a ‘‘single entity’’ are more than 90 days past due at the
agency, or for a political organization for pursuant to Executive Order 11246 (See, end of the reporting period or were
which reports are filed with the Internal e.g., Beverly Enterprises, Inc. v. Herman, liquidated, reduced or written off during
Revenue Service pursuant to 26 U.S.C. 130 F. Supp. 2d 1, 22 (D.D.C. 2000)), the reporting period; and (2) the total
527, or for a fund described in sections and to determine whether two or more aggregated value of all other accounts
302(c)(5) through (9) of the LMRA, 29 companies constitute a single employer (that is, those that are less than $1,000)
U.S.C. 186(c)(5) through (9), or for a for the purpose of imposing obligations that are more than 90 days past due at
plan that filed complete annual under the National Labor Relations Act the end of the reporting period or were
financial reports, returns and schedules (See, e.g., N.L.R.B. v. Browning-Ferris liquidated, reduced or written off during
pursuant to the requirements of ERISA, Industries of Pennsylvania, Inc., 691 the reporting period. The threshold of
29 U.S.C. 1023 and 29 CFR 2520.103– F.2d 1117 (3d Cir. 1982); Local 627, Int’l $1,000 eliminates the burden of
1, for the plan year ending with or Union of Operating Engineers v. individually reporting routine
within the year preceding the year N.L.R.B., 518 F.2d 1040, 1045–46 (D.C. collections of dues and other fees.
covered by the reporting union’s LM–2, Cir. 1975), aff’d on this issue sub nom. This schedule will provide
LM–3 or LM–4, or if annual audits are South Prairie Construction Co. v. Local information to union members regarding
made freely available on demand for 627, Int’l Union of Operating Engineers, how effectively the union collects debts
inspection by interested persons under 425 U.S. 800 (1976)). owed to the union. For example, union
section 302(c)(5)(B) of the LMRA, 29 Commenters are invited to address, in members have an interest in knowing
U.S.C. 186(c)(5)(B)). particular, whether requiring unions to whether their union continues to do
The Department invites comments report the financial activities of entities business with an entity or individual
with respect to whether the procedures that meet a ‘‘single entity’’ test would that does not pay its debts. The
for reporting trusts are appropriate and provide better information to union Department specifically invites
sufficient, and whether there are members than the requirement to report comments regarding the question
alternate or additional means to achieve the financial activities of trusts in which whether $1,000 is an appropriate level
full disclosure while minimizing the unions have an interest, and whether it at which to require that such accounts
burden on reporting entities. In would be easy for a union to identify be individually reported.
particular, the Department has entities that meet such a test. Schedule 5—Investments Other Than
considered whether information about Commenters addressing this issue may U.S. Treasury Securities: This revised
the immense numbers of financial also wish to comment on the fact that schedule, which is schedule 2 of the
transactions that currently go since assets and receipts of a ‘‘single current form LM–2, changes the
unreported, but in which union entity’’ with the union would be thresholds for reporting the book value
members have a substantial personal reportable as assets and receipts of the of individual marketable securities and
interest, could be better obtained by union itself (rather than assets of an other investments from those that have
expanding the definition of subsidiaries organization in which the union has an a book value of at least $1,000 and
for which unions are required to report interest), unions that might not exceed 20% of the total book value of
assets, liabilities, receipts, and otherwise have $200,000 in receipts all marketable securities or other
disbursements. Under the current rule, would have to use the proposed form investments of the labor organization to
labor organizations are required to LM–2 to file their annual report if their $5,000 and 5% respectively. The change
report on the finances of only those receipts plus those of the organization is necessary because $1,000 can now be
subsidiary organizations that are 100% with which the union is determined to considered a de minimis amount and
owned, controlled and financed by the be a ‘‘single entity’’ exceed $200,000. 20% of book value is unreasonably high.
labor organization. Commenters are Section XI. Completing form LM–2. It would be possible for unions to invest
invited to comment on whether Information items 1 through 24. a significant amount of money and still
information that is useful to union Item 3. Amended, Hardship not exceed 20% of the total book value
members, the government, and the Exempted, or Terminal Report: This of the union’s investments. For
public might be more readily obtained item was revised to include a new box example, an international union with

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79286 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

$20 million in investments may own $1 that such accounts be individually salaries based on estimated time spent
million in stock of a certain company, reported. on activities provides sufficient
which would be 5% of the total book Schedule 11—All Officers and information or whether there is an
value of the union’s investments. Under Disbursements to Officers: There are two alternative means of allocating the
the existing requirements, the significant changes to this schedule in salaries of officers that would provide as
investment would not be reported the new form LM–2: (1) The reporting much or more information to union
because it does not exceed 20% of the union will be required to estimate the members without imposing undue
total book value, and yet $1 million is percentage (rounded to the nearest 10%) burden on the filers. In particular, the
certainly a significant investment of of time spent performing duties related Department invites comments on
union members’ assets. The dollar to the categories listed in schedules 15 whether labor organizations should be
threshold was raised to prevent through 22, and to allocate the relevant required to exactly calculate the time
unnecessary reporting of small percentage of the total disbursement to spent by officers in performing duties
investments that might be picked up as that officer to the appropriate category; related to specific categories in order to
a result of lowering the percentage and (2) the categories of disbursements provide information that is useful to
threshold to 5%. The Department to officers are broadened so that all members, rather than rounding to 10%
invites comments with respect to withholdings will be allocated to the estimates.
whether the thresholds for reporting the disbursement schedules with the Schedule 12—Disbursements to
value of investments are appropriate. relevant percentage of the net salary of Employees: This schedule is used to
Schedule 8—Accounts Payable Aging the officer. The time allocated among report the salaries, allowances, and
Schedule: This new schedule, which the categories for each officer should disbursements to each employee of the
does not exist in the current form LM– total 100% of that officer’s time. The labor organization who received more
2, requires labor organizations to report: existing forms list the compensation for than $10,000 in the aggregate, during
(1) The individual accounts that are each officer of the union, but there is no the reporting period, from the labor
valued at $1,000 or more that are more indication of what services the officer organization and any other labor
than 90 days past due at the end of the provided for the members of the union. organization affiliated with it or with
reporting period or were liquidated, Salary and other forms of which it is affiliated, or which is
reduced or written off during the compensation to officers are often a affiliated with the same national or
reporting period; and (2) the total significant percentage of the total international labor organization. There
aggregated value of all other accounts disbursements of the union and, as are two primary changes to this
(that is, those that are less than $1,000) fiduciaries of the union, the officers take schedule in the new form LM–2: (1) The
that are more than 90 days past due at an active role in the services provided reporting union will be required to
the end of the reporting period or were by the union to its members. Union estimate the percentage (rounded to the
liquidated, reduced or written off during members should therefore be able to nearest 10%) of time spent performing
the reporting period. find out from the form LM–2 how their duties related to the categories listed in
This schedule will provide critical elected officers are spending their time, schedules 15 through 22, and to allocate
information to union members regarding so they can be held properly the relevant percentage of the total
the solvency and financial reliability of accountable to the interests and disbursement to that employee to the
their union. OLMS case files reveal that priorities of the members. These appropriate category; and (2) the
when a union local falls behind in changes will give union members much categories of disbursements to
paying its debts, it is often having cash more useful and detailed information on employees are broadened so that all
flow problems and these problems may the services performed by the union and withholdings will be allocated to the
be due to embezzlement, overspending the operations of the union during the disbursement schedules with the
or mismanagement. In one case, an reporting period. relevant percentage of the net salary of
international union reported that an This proposal varies significantly the employee. The time allocated among
intermediate body was placed in from the rule promulgated in 1992 and the categories for each employee should
trusteeship because the union had rescinded in 1993 in that labor total 100% of that employee’s time. The
repeatedly failed to pay its per capita organizations are not required to existing forms list the compensation for
tax. An OLMS investigation determine with precision what portion each employee of the union who earned
subsequently found that the of each officer’s time is spent on each $10,000 or more during the reporting
intermediate union was delinquent on a activity. Rather, the reporting labor period, but there is no indication of
wide range of accounts because an organization need only estimate, to the what services the employee provided for
officer of the union had been nearest 10%, the time spent by each the members of the union.
embezzling funds. Under the new officer on duties that fall within one of The reasons for this change are
schedule, these accounts would have the categories and to allocate the essentially the same as in schedule 11.
been disclosed, in detail, on the annual appropriate percentage of the officer’s Salary and other forms of compensation
report and the problem may have been gross salary to that category. This to employees are often a significant
discovered and addressed before the proposal does not present the percentage of the total disbursements of
international was forced to put the local difficulties inherent in the 1992 rule the union, and union employees take an
in trusteeship. The Department believes with respect to determining how to active role in the services provided by
this new schedule is a vital ‘‘early allocate the ‘‘incidental’’ activities in the union to its members. Union
warning system’’ to help union which union officers might engage on members should therefore be able to
members assess the financial viability of their own time or while spending the find out from the form LM–2 how the
their union and detect cases of major portion of a workday on activities union’s employees are spending their
mismanagement and malfeasance in that fall within a different category, time, so the employees can be held
time to prevent substantial and since the amount of time spent on each accountable to the members’ interests
unrecoverable losses of union members’ activity is estimated and reported only and priorities. These changes are an
funds. The Department invites as a percentage of total salary. integral part of providing reports to
comments regarding whether $1,000 is The Department invites comments union members that reflect the services
an appropriate level at which to require regarding whether the allocation of performed by the union and further

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79287

explain the operations of the union information to union members who a new contract or in a union election,
during the reporting period. want to know the breakdown of the and voting status may vary by type of
This proposal varies significantly union’s membership by specific membership. Most local unions must
from the rule promulgated in 1992 and categories. pay per capita tax to a parent body, and
rescinded in 1993 in that labor A detailed breakdown of membership per capita tax rates may vary by type of
organizations are not required to will help union members obtain a clear membership. In each case, the union
determine with precision what portion understanding of the financial condition must already track membership
of each employee’s time is spent on and operations of the union, and enable information by categories.
each activity. Rather, the reporting labor members to assess the union’s financial The Department invites comments
organization need only estimate, to the stability today and in the future. For regarding the question whether this
nearest 10%, the time spent by each example, it would be useful for union information should be required and
employee on duties that fall within one members to know if the union has a whether certain membership categories
of the categories and to allocate the high percentage of retired members should be included or excluded from
appropriate percentage of the compared to active members, because the list. The Department also invites
employee’s gross salary to that category. this may be indicative of the union’s comments on the question whether a
This proposal does not present the future financial viability. The number of labor organization should also be
difficulties inherent in the 1992 rule apprentice members may provide a required to report the total amount of
with respect to determining how to useful prospective on how many new dues paid by each of the various
allocate the ‘‘incidental’’ activities in members the union acquired. This can categories of members and fee payers
which union employees might engage be critical information because a union and the amount that the union paid or
on their own time or while spending the with few new members may be less received in per capita for each category.
major portion of a workday on activities likely to prosper; therefore members Schedules 14 Through 22: Schedules
that fall within a different category, might want their union to allocate more 14 through 22 will greatly improve the
since the amount of time spent on each resources to recruit new members. It is quality and quantity of information
activity is estimated and reported only also important to know how many provided to union members regarding
as a percentage of total salary. members are inactive due to seasonal the financial operation of their union.
The Department invites comments unemployment or layoffs, which are Schedule 14 requires labor
regarding whether the allocation of often affected by the terms of a organizations to report the total amount
salaries based on estimated time spent collective bargaining agreement. of ‘‘other’’ receipts during the reporting
on activities provides sufficient Associate members are similar to retired period (‘‘other receipts’’ are all receipts
information or whether there is an members in that they pay dues but are other than those that must be reported
alternative means of allocating the not represented by the union in a elsewhere in statement B of form LM–
salaries of union employees that would collective bargaining agreement; 2). The labor organization will also be
provide as much or more information to however, they do represent a category of required to separately identify any
union members without imposing dues-paying member and may exercise ‘‘major’’ receipts during the reporting
undue burden on the filers. In influence in a union. Finally, agency fee period. A ‘‘major’’ receipt includes: (1)
particular, the Department invites payers are not members of the union, Any individual receipt of $5,000 or
comments on whether labor but the union represents them in the more; or (2) total receipts from any
organizations should be required to collective bargaining process and they single entity or individual that aggregate
exactly calculate the time spent by make payments to the union for that to $5,000 or more during the reporting
employees in performing duties related representation. Accordingly, agency fee period.
to specific categories in order to provide payers are not included in the total Schedules 15 through 22 require labor
information that is useful to members, number of members of the union but organizations to report the total amount
rather than rounding to 10% estimates. they are an important source of revenue, of disbursements made during the
Schedule 13—Membership Status and the schedule would be incomplete reporting period for each of the
Information: This new schedule if it omitted the number of such following categories: Contract
requires that unions report the total individuals. Each category provides negotiation and administration;
number of union members by type of unique information that will help union organizing; political activities; lobbying;
membership. The membership members determine the current position contributions, gifts and grants; benefits;
categories include active members, of the union, its relative member general overhead; and other
inactive members, associate members, interests and influence, and its likely disbursements. Labor organizations will
apprentice members, retired members, future directions, in a way that is not also be required to separately identify
other members, and agency fee payers. clear by simply examining current all ‘‘major’’ disbursements during the
Unions will enter ‘‘0’’ or ‘‘N/A’’ for any financial data. reporting period in the various
category in the schedule that does not In rescinding the 1992 rule, the categories. A ‘‘major’’ disbursement
apply. The existing forms do not Department asserted that ‘‘it would be includes: (1) Any individual
provide a breakdown of any kind, and burdensome and confusing to attempt to disbursement of a certain amount,
the definition of ‘‘member’’ in the require labor organizations to clarify the which should be from $2,000 to $5,000;
instructions is too broad to ensure reported information by eliminating or (2) total disbursements to any single
consistency. ‘‘Member’’ is currently certain categories or breaking the total entity or individual that aggregate to the
defined as ‘‘all categories of members number of dues paying members into same amount during the reporting
who pay dues.’’ Consequently, a union component parts.’’ 58 FR 67598. No period. The Department requests
member has no way of knowing what support was provided for this assertion, comments on the actual amount, in the
criteria the union is using to define however, and it seems to be at odds $2,000 to $5,000 range, at which a
‘‘member,’’ and there is no way to with the fact that unions must already disbursement should be considered
discern the demographics of the track this information in order to collect ‘‘major.’’ If an entity or individual
membership or to compare these dues, conduct union elections, and receives a number of payments from the
statistics to other unions. The new calculate per capita taxes. All unions union during the reporting period that
schedule will provide specific must currently know who can vote on are properly allocated to separate

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79288 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

categories, the union need only organizations. Based on the experience in specific organizing campaigns may be
separately identify those payments of of OLMS field offices, it is expected that detrimental to the union in those or
the specified amount ($2,000–$5,000) or unions large enough to be required to future campaigns. At the same time, if
more in the specific category. For report using the form LM–2 already no itemization were required with
example, if a union pays a total of perform most, or all, financial respect to such a major category of
$10,000 to a printer during the reporting recordkeeping electronically. expenditures by unions, the category
year and determines that $9,000 of that As explained above and in the could easily become susceptible to
bill should be allocated to lobbying Instructions for filling out form LM–2, abuse. Because unions are expected to
costs, that amount must be identified in unions will be able to choose either to spend large amounts for organizing, it
schedule 18. If the remaining $1,000 type in or copy and paste disbursements would be relatively easy to hide fraud
paid to the same printer over the course manually or to seamlessly export and embezzlement within the lump sum
of the year was attributable to contract financial data from the union’s reported for organizing disbursements.
administration expenses, that amount recordkeeping system by using software In addition, the fact that union members
will be reported in the total under that will be made available by OLMS. should expect their unions to spend
schedule 15, but need not be separately The Department assumes that labor money on organizing does not diminish
identified. organizations with annual receipts of their interest in knowing how that
The Department specifically invites $200,000 follow standard business money is spent. In order to minimize
comments regarding whether the practices and keep track of the purposes any impact of reporting on the success
definition of a ‘‘major’’ receipt, as an for which money is spent. The of organizing efforts, however, neither
individual receipt that is $5,000 or Department, therefore, has endeavored the name of the employer nor the
more, or receipts from the same entity to identify specific categories that are specific bargaining unit that is the
or individual that aggregate to $5,000 or likely to describe the most common subject of the organizing activity need
more during the reporting period, is important purposes for which unions be identified. The Department invites
either too high or too low. The spend money and that are likely to be comments regarding any other means by
Department also specifically invites useful and meaningful to the labor which unions’ legitimate interests may
comments regarding the exact threshold, organization and to its members. The be safeguarded while at the same time
within the $2,000 to $5,000 range, that Department does not believe that this advancing the twin goals of enhanced
should be used to determine whether a requirement will impose any undue enforcement and complete
disbursement is ‘‘major,’’ either as an burden on reporting labor organizations transparency.
individual disbursement, or with because this sort of allocation is Schedule 17—Political Activities: The
respect to disbursements to the same consistent with standard business proposed schedule for political
entity or individual that aggregate to a practices and is already required to activities will include political
certain amount during the reporting some degree in the existing forms. disbursements or contributions that are
period. The Department also requests Unions must already track the purpose intended to influence the selection,
comments on the question whether a for each disbursement in order to nomination, election, or appointment of
union should be required to separately appropriately aggregate them into the anyone to a Federal, State, or local
identify disbursements that, in the categories on the current form. Unions executive, legislative or judicial public
aggregate, total less than that threshold are also required to categorize office, or office in a political
amount in a particular category to an disbursement in order to complete organization, or the election of
individual or entity once the threshold Internal Revenue Service form 990 or Presidential or Vice Presidential
has been reached either in another form 990–EZ, which all labor electors, and support for or opposition
category or in a combination of organizations that file form LM–2 are to ballot referenda. It does not matter
categories. also required to file if they are exempt whether the attempt succeeds. Included
This individual identification of from taxation under 26 U.S.C. 501(c)(5). are disbursements for political
receipts and disbursements will enable The proposed new categories are communications with members (or
union members to meaningfully assess reflected in the following new agency fee paying nonmembers) and
the financial operations of the union, disbursement schedules: their families, registration, get-out-the-
but will not require unnecessary Schedule 15—Contract Negotiation vote and voter education campaigns, the
reporting of all minor receipts and and Administration: The proposed expenses of establishing, administering
disbursements. The existing forms schedule for contract negotiation and and soliciting contributions to union
provide only aggregate totals of receipts administration will include preparation segregated political funds (or PACs),
and disbursements that offer an for, and participation in, the negotiation and other political disbursements.
unhelpful and vague picture of the of collective bargaining agreements and Schedule 18—Lobbying: The
financial condition and operations of the administration and enforcement of proposed schedule for lobbying will
the union. The new form LM–2 will collective bargaining agreements, include dealing with the executive and
organize these receipts and including the administration and legislative branches of the Federal,
disbursements in useful categories that arbitration of union member grievances. State, and local governments and with
more accurately reflect the services Schedule 16—Organizing: The independent agencies and staffs to
provided to the members by the union. proposed schedule for organizing will advance the repeal of existing laws, or
Moreover, this form of reporting is include disbursements for efforts to the passage or defeat of new legislation,
facilitated by modern developments in become the exclusive bargaining or the promulgation of rules or
electronic recordkeeping, filing, and representative for any unit of regulations (including litigation
disclosure that will increase the employees, or to keep from losing a unit expenses). It does not matter whether
accountability and responsiveness of in a decertification election or to the lobbying attempt succeeds.
unions to their members. Because another labor organization, or to recruit Schedule 21—General Overhead: The
electronic recordkeeping is now new members. The Department is proposed schedule for general overhead
relatively simple and the software sensitive to the anticipated concerns of will include disbursements for overhead
required is inexpensive, it is used labor organizations that the disclosure that do not support a specific function,
routinely even by very small of information regarding amounts spent such as support personnel at the union’s

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headquarters, and that, therefore, cannot for any significant trust in which it has labor organization will also be required
be reasonably allocated to the other an interest. If the reporting union to file a form T–1 for any trust in which
disbursement schedules. contributes $10,000 or more to the trust it has an interest that has annual
The Department invites comments on during the union’s reporting year, or a receipts of $200,000 or more if it
the question whether the categories contribution of $10,000 or more is made contributes $10,000 or more to the trust
added to form LM–2 by the proposed on the union’s behalf or as a result of during the union’s reporting year, or a
revision would provide information to a negotiated agreement to which the contribution of $10,000 or more is made
union members that will be useful and union is a party during the union’s on the union’s behalf or as a result of
will assist them in participating in the reporting year, and the trust has annual a negotiated agreement to which the
governance of their unions. In addition, receipts of $200,000 or more, the union union is a party during the union’s
the Department invites comments on will be required to file a form T–1 for reporting year. Since unions that qualify
whether other categories should be the trust. According to year 2000 report to file a form LM–4 have less than
added to, or whether any categories data, 545 unions with receipts less than $10,000 in annual receipts, it is unlikely
should be eliminated from, form LM–2. $200,000 that filed a form LM–3 that such a union would contribute
Statement B—Receipts and reported having an interest in a trust,
Disbursements: Cash Disbursements: $10,000 to a trust in which they have an
but were not required to quantify their interest, although $10,000 might be
Item 65. Strike Benefits: The proposed interest, or to report any financial
category of strike benefits will include contributed on their behalf by another
information with respect to these
all disbursements made to the members organization. Commenters are invited to
entities. Commenters are invited to
(or agency fee paying nonmembers) of comment on the question whether form
comment on the question whether the
the labor organization associated with Department’s proposal strikes an LM–4 filers should be required to file a
strikes (including recognitional strikes), appropriate balance between the need form T–1 for any trust in which they
work stoppages and lockouts, including for transparency with respect to the have an interest.
payments to or on behalf of members financial relationships that involve VI. Effective Date
and others. significant amounts of union funds and
IV. Overview of the Revised Form LM– the burden on smaller unions. In order to provide sufficient time to
3 and Instructions develop and test the required software,
V. Overview of the Revised Form LM–
as well as enhancements to the
Section I. Who Must File: The 4 and Instructions
Electronic Labor Organization Reporting
instructions to form LM–3 also adopt Section I. Who Must File: The System (e.LORS), and to assist all labor
the recent holding of the U.S. Court of Instructions to form LM–4 also adopt organizations in making any necessary
Appeals for the Ninth Circuit in Chao v. the recent holding of the U.S. Court of adjustments to their own bookkeeping
Bremerton Metal Trades Council, AFL– Appeals for the Ninth Circuit in Chao v. systems that may be required to use the
CIO, 294 F.3d 1114 (2002), interpreting Bremerton Metal Trades Council, AFL–
section 3(j) of the LMRDA. Accordingly, new software, the Department proposes
CIO, 294 F.3d 1114 (2002), interpreting to make the use of revised forms LM–
the Instructions will clarify that any section 3(j) of the LMRDA. Accordingly,
‘‘conference, general committee, joint or 2, LM–3, and LM–4 and form T–1
the Instructions will clarify that any
system board, or joint council’’ that is mandatory for reports for fiscal years
‘‘conference, general committee, joint or
subordinate to a national or that commence after the publication of
system board, or joint council’’ that is
international labor organization will be a final rule revising the form. If a final
subordinate to a national or
required to file an annual financial form international labor organization will be rule revising these forms were
if the national or international labor required to file an annual financial form published on May 30, 2003, for
organization is a labor organization if the national or international labor example, no union would be required to
engaged in an industry affecting organization is a labor organization use the revised form for any report that
commerce within the meaning of engaged in an industry affecting is due before August 29, 2004. For
section 3(j) of the LMRDA. commerce within the meaning of purposes of example, Table 1 shows
The only other change that is section 3(j) of the LMRDA. when unions with specific filing due
proposed to the form LM–3 used by The only other change that is dates would be required to use the
labor organizations that have gross proposed to the form LM–4 used by revised form if the final rule were
annual receipts of between $10,000 and labor organizations that have gross published on May 30, 2003. Similarly,
$200,000 is the elimination of the annual receipts of less than $10,000 is a reporting union will be required to file
question whether they have a wholly the addition of a question whether the a form T–1 for any significant trust in
owned, controlled, or financed union created or participated in the which it has a qualifying interest for
subsidiary. Instead, such a union will be administration of a trust, as defined fiscal years of the trust that commence
required to report financial information above and in the instructions. Such a after the publication of a final rule.

TABLE 1
Due dates for the union’s first re-
Due dates for filing using the current form LM–2,
End of union’s fiscal year port using the revised form LM–
LM–3, or LM–4 2, LM–3, or LM–4

March 31, 2003 ............................................................ June 29, 2003 & June 29, 2004 ................................. June 29, 2005.
June 30, 2003 .............................................................. September 28, 2003 ................................................... September 28, 2004.
September 30, 2003 ..................................................... December 29, 2003 .................................................... December 29, 2004.
December 31, 2003 ...................................................... March 31, 2004 ........................................................... March 31, 2005.

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79290 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

The Department invites comments on Unfunded Mandates Reform standard set by the SBA seems
whether one year is an appropriate time For purposes of the Unfunded unreasonably high since approximately
period before labor organizations are Mandates Reform Act of 1995, this rule 80% of all labor organizations in the
required to use the new form and does not include a Federal mandate that United States have annual receipts of
whether labor organizations should be might result in increased expenditures less than $200,000 a year. In fact, the
required to use the revised form to largest unions—those that have over $1
by State, local, and tribal governments,
report information for a fiscal year that million in annual receipts—control over
or increased expenditures by the private
begins within 30 days of the date that 83.7% of the total receipts of all unions;
sector of more than $100 million in any
a final rule is issued. 92.9% of the total dollar receipts
one year.
reported by all labor organizations in
VII. Regulatory Procedures Executive Order 13132 (Federalism) 2000 were received by labor
Executive Order 12866 The Department has reviewed this organizations that filed their annual
rule in accordance with Executive Order report on form LM–2. It would seem
This proposed rule has been drafted 13132 regarding federalism and has more accurate to characterize the
and reviewed in accordance with determined that the rule does not have approximately 21,000 labor
Executive Order 12866, section 1(b), organizations that have less than
federalism implications. Because the
Principles of Regulation. The $200,000 in annual receipts and,
economic effects under the rule will not
Department has determined that this therefore, are not required to use form
be substantial for the reasons noted
proposed rule is not an ‘‘economically LM–2 as ‘‘small’’ organizations.
above and because the rule has no direct
significant’’ regulatory action under Nevertheless, the Department
effect on States or their relationship to
section 3(f)(1) of Executive Order 12866. determined that performing a regulatory
the Federal government, the rule does
Based on a preliminary analysis of the flexibility analysis with respect to this
not have ‘‘substantial direct effects on
data the rule is not likely to: (1) Have proposed rule is a better use of
the States, on the relationship between
Department resources than proceeding
an annual effect on the economy of $100 the national government and the States,
with a formal request to change the SBA
million or more or adversely affect in a or on the distribution of power and standard determination. Accordingly,
material way the economy, a sector of responsibilities among the various the following analysis assesses the
the economy, productivity, competition, levels of government.’’ impact of these regulations on small
jobs, the environment, public health or entities as defined by the applicable
Initial Regulatory Flexibility Analysis
safety, or state, local, or tribal SBA size standards.
governments or communities; (2) create The Regulatory Flexibility Act of
a serious inconsistency or otherwise 1980, 5 U.S.C. 601 et seq., requires (1) Reasons Why Action by Agency Is
interfere with an action taken or agencies to prepare regulatory flexibility Being Considered
planned by another agency; or (3) analyses, and to develop alternatives The Department is proposing to revise
materially alter the budgetary impact of wherever possible, in drafting the forms labor organizations use to file
entitlements, grants, user fees, or loan regulations that will have a significant the annual financial reports required by
programs or the rights and obligations of impact on a substantial number of small the Labor-Management Reporting and
recipients thereof. As a result, the entities. The Small Business Disclosure Act of 1959, as amended
Department has concluded that a full Administration (SBA) determined, in a (LMRDA or Act). This proposed rule
economic impact and cost/benefit regulation that became effective on modifies form LM–2, which is the report
analysis is not required for the rule October 1, 2000, that the maximum required to be filed by the largest labor
under section 6(a)(3) of the Order. annual receipts allowed for a labor organizations, and makes minor changes
However, because of its importance to union or similar labor organization and to forms LM–3 and LM–4, which are
the public the rule was treated as a its affiliates to be considered a small used by smaller labor organizations. All
significant regulatory action and was organization or entity under section of these forms are prescribed by the
601(4), (6) of the Regulatory Flexibility Secretary of Labor to implement the Act
reviewed by the Office of Management
Act was $5 million. 13 CFR 121.201 and incorporated by reference in the
and Budget.
(Code Listing 813930). This amount was applicable regulations.
Small Business Regulatory Enforcement adjusted for inflation to $6 million by a Over the past 40 years, the functions
Fairness Act regulation that became effective on and operations of unions have evolved
February 22, 2002. Thus, while most of while the forms used by unions to file
For similar reasons, the Department the changes proposed by this rule will annual financial reports required by the
has concluded that this proposed rule is apply to only the largest labor LMRDA have remained substantially
not a ‘‘major’’ rule under the Small organizations, which are required to file unchanged. This has undermined the
Business Regulatory Enforcement form LM–2, it is estimated that many of goal of the statute because the forms are
Fairness Act of 1996 (5 U.S.C. 801 et these labor organizations would be insufficient to solicit information that is
seq.). It will not likely result in (1) an classified as small entities under the relevant in light of the financial
annual effect on the economy of $100 SBA regulation because nearly all have complexity of modern unions. As noted
million or more; (2) a major increase in annual receipts of between $200,000 previously, it is impossible for union
costs or prices for consumers, and $6 million. members to evaluate in any meaningful
individual industries, Federal, State or It does not appear that any party has way the management of their unions
local government agencies, or challenged the SBA determination that when the financial disclosure reports
geographic regions; or (3) significant labor organizations with receipts of over filed with OLMS simply report large
adverse effects on competition, $200,000 a year should be considered expenditures (e.g., $62 million) for
employment, investment, productivity, ‘‘small,’’ nor does it appear that any broad, general categories like ‘‘Grants to
innovation, or on the ability of United party has requested that the SBA make Joint Projects with State and Local
States-based enterprises to compete an individualized inquiry into the Affiliates.’’ The large dollar amount and
with foreign-based enterprises in appropriateness of that standard. The vague description of such entries make
domestic or export markets. Department believes that the $6 million it essentially impossible for anyone to

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determine with any degree of specificity prevent the circumvention or evasion of unions may also need to make
what their dues are spent on, which is the reporting requirements. adjustments in their bookkeeping
precisely what the Act was intended to The objective of this proposal is to procedures and, in some instances, to
provide. require that labor organizations that use make changes in computing hardware or
Today’s union members, more than form LM–2 file their annual financial software. None of these expenses are
ever before, need relevant information reports electronically unless they obtain expected to be substantial, in large part
provided in a usable format in order to a hardship exemption and to update and because labor organizations, like most
make the decisions necessary to exercise revise the LMRDA disclosure forms to small entities following standard
their rights as members of democratic take advantage of modern technology business practices, already maintain
institutions. The Department is and to increase the transparency of records of their receipts and
committed to maintaining union financial reporting for labor expenditures. Labor organizations may
accountability and promoting full and organizations with annual receipts of not now be estimating the percentage of
fair disclosure by labor organizations. $200,000 or more. This will enable time spent on various types of functions
Institutions, such as labor organizations, workers to be responsible, informed, by officers and employees, as they will
in which the public places its trust, and effective participants in the be required to do in order to complete
should not be permitted to utilize governance of their unions; discourage the revised form LM–2. Although the
technicalities of structure to avoid embezzlement and financial estimation required is only a rough
disclosure. Providing additional detail mismanagement; prevent the approximation, rounded to the nearest
on form LM–2 and requiring disclosure circumvention or evasion of the 10%, the Department has considered
on the new form T–1 of trusts in which statutory reporting requirements; and both the time that will be required to
the labor organization has an interest is strengthen the effective and efficient make this estimation, and additional
necessary to give union members an enforcement of the Act by OLMS. training that may be necessary to do so,
accurate picture of their labor (3) Number of Small Entities Covered in calculating the burden that will likely
organization’s finances. Under Rule be imposed by the use of the new form
The revision of form LM–2 is also LM–2. Once the necessary adjustments
The primary impact of this notice of
necessary to improve its usefulness as a have been made to existing accounting
proposed rule-making will be on the
deterrent to financial fraud and systems, the Department estimates that
largest labor organizations, defined as
mismanagement. OLMS case files the average recordkeeping and reporting
those that have $200,000 or more in
repeatedly demonstrate that this goal of burden, and costs associated with such
annual receipts. There are
the Act is not being met. Over the past recordkeeping, will increase. See the
approximately 5,514 labor organizations
five years, OLMS investigations resulted following Paperwork Reduction Act
of this size that are required to file form
in over 640 criminal convictions. As a LM–2 reports under the LMRDA. section for greater detail. The changes
remedy, the courts ordered the Smaller unions that file form LM–3 or may also have economic significance
responsible officials to pay $15,446,896 LM–4 will be affected only by the that is difficult to measure because
in restitution, in addition to debarring requirement to file a form T–1 for increased transparency in union
them from union service for a combined certain trusts in which they have an financial affairs will result in less
total of almost ten thousand years. In interest. The Department estimates that embezzlement and financial
many cases the broad aggregated 490 labor organizations that are mismanagement, and increased public
categories on the existing forms enabled permitted to use form LM–3 to file their trust.
union officers to hide embezzlements annual financial report will file a form (5) Relevant Federal Requirements
and financial mismanagement. More T–1 and that 25 labor organizations that Duplicating, Overlapping or Conflicting
detailed reporting of all financial are permitted to use form LM–4 to file With the Rule
transactions is likely to discourage and their annual financial report will file a
reduce corruption because it would be form T–1. To the extent that there are federal
more difficult to hide financial rules that duplicate, overlap, or conflict
mismanagement from members. (4) Reporting, Recordkeeping and Other with this proposed rule, a specific
Compliance Requirements of the Rule exemption from the requirements of this
(2) Objectives of and Legal Basis for
This proposed rule is not expected to rule has been provided, with one
Rule
have a significant economic impact on exception. Labor organizations are
The legal authority for the notice of a substantial number of small entities. currently required to report some
proposed rule-making is sections 201 The LMRDA is primarily a reporting similar information to the Internal
and 208 of the LMRDA, 29 U.S.C. 431, and disclosure statute. It establishes Revenue Service on form 990 or form
438. Section 201 requires labor various reporting requirements for labor 990–EZ if they are exempt from taxation
organizations to file annual financial organizations, labor organization under 26 U.S.C. 501(c)(5). A copy of the
reports and to disclose certain financial officers, employers, and employer labor organization’s filed form LM–2
information, including all assets, consultants pursuant to title II of the may currently be submitted in lieu of
receipts, liabilities, and disbursements Act. Accordingly, the primary economic answering certain questions on form 990
of the labor organization. Section 208 impact of the proposed rule will be the or form 990–EZ. The Department
provides that the Secretary of Labor cost to reporting unions of compiling, anticipates that a similar arrangement
shall have authority to issue, amend, recording, and reporting additional will be possible with respect to the
and rescind rules and regulations information. The proposed rule revised form LM–2. Aside from those
prescribing the form and publication of establishes a new set of reporting areas of potential duplication
reports required to be filed under title categories for those labor organizations mentioned in the notice of proposed
II of the Act, including rules prescribing with receipts of $200,000 or more. In rulemaking, there is no duplication of
reports concerning trusts in which a order to comply with the requirement existing labor organization reporting
labor organization is interested, and that reports be filed electronically, requirements, nor is similar information
such other reasonable rules and reporting unions will be required to use required by any other federal agency or
regulations as she may find necessary to software provided by OLMS. Reporting statute.

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(6) Differing Compliance or Reporting to file these forms will be extremely impossible to quantify the actual
Requirements for Small Entities small. amount of money that unions and their
members lost as a result of criminal
The reporting, recordkeeping, and (7) Clarification, Consolidation and
activity that might have been prevented,
other compliance requirements apply Simplification of Compliance and
or discovered sooner, if form LM–2
equally to all labor organizations that Reporting Requirements for Small
provided more useful information than
are required to file a form LM–2 under Entities
it currently does. Nor is it possible to
the LMRDA. The Department expects OLMS has developed an electronic accurately quantify the cost of having
that only the largest labor organizations labor organization reporting system less transparency and accountability to
will have to make significant changes in (e.LORS) that utilizes electronic union members and the impact on
the level of detail with which financial technology to collect, maintain, and union democracy and the economy.
activity is reported in order to comply disclose the information it collects. The Another alternative would be to limit
with the requirements of the proposed objectives of e.LORS are: The electronic the new reporting requirements to
rule. Differences between the smaller filing of forms LM–2, LM–3, and LM–4 national and international parent labor
labor organizations that are large enough via the Internet; LMRDA program organizations. However, the Department
to be required to file form LM–2 and the enhancements to improve accuracy, has concluded that such a limitation
largest labor organizations are more completeness, and timeliness of forms would eliminate the availability of
likely to result from differences in the LM–2, LM–3, and LM–4; and the public meaningful information from local and
financial practices of the unions disclosure of reports with a searchable intermediate labor organizations, which
themselves. Only the largest filers, those database via the Internet. Labor may have far greater impact on and
that have annual receipts in the organizations are directed to use an relevance to union members,
millions, are likely to have extensive electronic reporting format and are particularly since such lower levels of
financial transactions and will require provided a CD–ROM disk by OLMS that union organizations generally set and
substantial changes in their accounting will enable them to maintain financial collect dues and provide
practices in order to report these information that can be electronically representational and other services for
transactions on the new form. Unions compiled in the proper format for their members. Such a limitation would
with receipts of between $200,000 and electronic filing. reduce the utility of the information to
$2 million, which account for over OLMS will provide compliance a significant number of union members.
4,400 of the 5,514 form LM–2 filers, are assistance for any questions or Of the 5,514 labor organizations that are
likely to have less difficulty using the difficulties that may arise from using the required to file form LM–2, just 141 are
revised form. software. A help desk is staffed during national and international labor
normal business hours and can be organizations. Limiting the new
Smaller unions with total annual reached by calling a toll-free telephone reporting requirements to these 141
receipts of less than $200,000 (79.5 number. labor organizations would save the other
percent of all LMRDA covered unions) The use of electronic forms makes it form LM–2 filers approximately $14
can still elect to file a simplified report. possible to download information from million over three years. However,
Over 49% of all labor organizations may previous filed reports directly into the nearly all of the OLMS investigations
file either a form LM–2 or a form LM– form; enables officer and employee cited above involve labor organizations
3, a form that entails a lesser information to be imported onto the other than the 141 that would be subject
recordkeeping and reporting burden form; makes it easier to enter to the improved reporting requirements.
than form LM–2. The only change to information; and automatically performs Requiring only national and
form LM–3 made by the proposed rule calculations and checks for international organizations to file more
is the elimination of the requirement typographical and mathematical errors detailed reports would not provide any
that the union filing such a form report and other discrepancies, which reduces deterrent to fraud and embezzlement by
the existence of a subsidiary. In the likelihood of having to file an local and regional officials. The
addition, form LM–3 filers will now amended report. The error summaries additional approximately $14 million
have to file a form T–1 reflecting provided by the software, combined cost over three years of applying the
expenditures and receipts of any trusts with the speed and ease of electronic new reporting requirements to all
or other organizations in which they filing, will also make it easier for both unions with annual receipts of $200,000
have an interest, if $10,000 or more is the reporting labor organization and or more should be offset by savings to
contributed to the trust or other OLMS to identify errors in both current union members as a result of this
organization on the reporting union’s and previously filed reports and to file deterrent effect.
behalf during the reporting year, and if amended reports to correct them. Another alternative could be to adjust
the trust has $200,000 or more in annual the form LM–2 $200,000 filing threshold
receipts. The very smallest unions, with (8) The Use of Performance Rather Than for inflation since it was last adjusted in
total annual receipts of less than Design Standards 1994. This would increase the threshold
$10,000 (30.1 percent of all LMRDA The Department considered a number to approximately $250,000 and exclude
covered unions), can elect to file an of alternatives to the proposed rule that about 650 labor organizations from
abbreviated report, form LM–4, which could minimize the impact on small having to file the new form LM–2
further reduces their recordkeeping and entities. One alternative would be not to (although they would still have to file a
reporting burden. Although form LM–4 change the existing forms LM–2, LM–3, form LM–3). These 650 unions would
filers will also be required to file form and LM–4. This alternative was rejected save an annual average $293 in
T–1 for any significant trusts or other because OLMS case files demonstrate reporting and recordkeeping costs, or a
funds in which they have an interest, if that the goals of the Act are not being total of nearly $190,000, by filing form
$10,000 or more is contributed to the met and that the broad aggregated LM–3 instead of the new form LM–2.
trust or other fund on the reporting reporting categories on the existing The total difference in reporting and
union’s behalf during the reporting year, forms enable some union officers to recordkeeping costs would be just 0.1
the Department expects that the number hide embezzlements and financial percent of their total annual revenue
of form LM–4 filers that will be required mismanagement. As noted above, it is (assuming each union has $225,000 in

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receipts). The Department has comments have been requested without imposing an unwarranted
concluded that these relatively low cost- concerning this alternative. burden on reporting unions. Supporting
savings do not justify eliminating the documentation need not be submitted
(9) Exemption From Coverage of the
availability of thorough financial with the forms, but labor organizations
Rule for Small Entities
information from these local labor are required to maintain, assemble, and
organizations, which may have far The current dollar threshold for form produce such documentation in the
greater impact on and relevance to LM–2 excludes 79.5 percent of all labor event of an inquiry from a union
union members, particularly given the organizations that file LMRDA annual member or an audit by an OLMS
typical role of such lower levels of reports with OLMS. As noted above, investigator.
union organizations in setting and smaller unions with total annual The Department estimates the average
collecting dues and providing receipts of less than $200,000, but more reporting and recordkeeping burden for
representational and other services for than $10,000, (49.4 percent of all the revised form LM–2 to be 104.03
their members. Because the current LMRDA covered unions) can elect to file hours per respondent in the first year,
reporting threshold significantly a simplified report (form LM–3) that 24.96 hours per respondent in the
reduces the reporting burden for smaller would reduce their average second year, and 21.81 hours per
unions, no change in the threshold is recordkeeping and reporting burden by respondent in the third year. The
proposed at this time. The existing 69.6 percent, from 21.81 hours to 6.64 Department estimates the average
$200,000 threshold exempts 79.5 hours per respondent in the third year reporting and recordkeeping burden for
percent of all labor organizations that (even more the first two years the the revised form LM–3 and revised form
file annual reports (forms LM–2, LM–3, proposed form would be in effect). The LM–4 to be 6.64 hours and 0.90 hours
and LM–4) from the requirement of very smallest unions with total annual per respondent in all three years. The
filing the more detailed form LM–2. receipts of less than $10,000 (30.1 Department estimates the average
Moreover, the current $200,000 percent of all LMRDA covered unions) reporting and recordkeeping burden for
threshold is already higher than the can elect to file an abbreviated report the new form T–1 to be 12.89 hours per
1959 ($20,000), 1962 ($30,000), and (form LM–4) that reduces their respondent in the first year, 5.79 hours
1981 ($100,000) thresholds when those recordkeeping and reporting burden by per respondent in the second year, and
thresholds are adjusted for inflation. 95.9 percent, from 21.81 hours to 0.90 5.15 hours per respondent in the third
However, the Department requests hours per respondent. year. The Department estimates the
public comments on what is the Paperwork Reduction Act annual cost to respondents for the
appropriate level of the dollar threshold revised form LM–2 to be $14.618
Summary: This proposed rule million in the first year, $3.281 million
for the largest unions that file form LM– modifies the annual reports required to
2. in the second year, and $2.867 million
be filed by the largest labor in the third year. The Department
Another alternative would be to organizations, prescribed by the estimates the annual cost to respondents
phase-in the effective date for the form Secretary of Labor to implement the Act for the revised form LM–3 and form
LM–2 changes that would provide and incorporated by reference in the LM–4 to be $1.797 million and $180,903
smaller form LM–2 filers with applicable regulations. The revised in all three years. The Department
additional lead time to modify their paperwork requirements are necessary estimates the annual cost to respondents
recordkeeping systems to comply with to enable workers to be responsible, for the new form T–1 to be $1.218
the new reporting requirements. The informed, and effective participants in million in the first year, $518,427 in the
Department has concluded that a one- the governance of their unions; second year, and $454,448 in the third
year period for all form LM–2 filers to discourage embezzlement and financial year. The annualized federal cost
adapt to the new reporting requirements mismanagement; prevent the associated with the revised form LM–2,
should provide sufficient time to make circumvention or evasion of the LM–3, LM–4, and the new form T–1 is
the necessary adjustments. OLMS also statutory reporting requirements; and estimated to be $7.187 million.
plans to provide compliance assistance strengthen the effective and efficient Pursuant to the Paperwork Reduction
to any labor organization that requests enforcement of the Act by the Act of 1995, the information collection
it. In addition, a review of the proposed Department. requirements contained in this NPRM
revisions was undertaken to reduce Published at the end of this notice are have been submitted to the Office of
paperwork burden for all form LM–2 four proposed forms and their Management and Budget for approval.
filers and an effort was made during the instructions that will implement the Background: Every labor organization
review to identify ways to reduce the new reporting requirements. One form whose total annual receipts are
impact on small entities. The is the revised form LM–2, one is the $200,000 or more and those
Department believes it has minimized revised form LM–3, one is the revised organizations that are in trusteeship
the economic impact of the form form LM–4, and the other is a new form must file an annual financial report on
revision on small unions to the extent T–1 for unions to report the assets, form LM–2, Labor Organization Annual
possible while recognizing workers’ and receipts, liabilities, and disbursements Report, within 90 days after the end of
the Department’s need for information of trusts in which a labor organization its fiscal year, to disclose its financial
to protect the rights of union members has an interest. The proposed revisions condition and operations for its
under the LMRDA. to form LM–2 are designed to take preceding fiscal year. Form LM–2 is also
Another alternative considered, and advantage of technology that makes it used by labor organizations with total
described in more detail above, was to possible to increase the detail with annual receipts of $200,000 or more that
retain the requirement that labor which information required to be cease to exist to file a terminal report.
organizations report financial reported can be provided, while at the The current form LM–2 consists of 24
information for their subsidiaries, but same time making it easier to file and questions that identify the labor
redefine the term ‘‘subsidiary’’ in a publish the contents of the reports. organization and provide basic
broader manner more consistent with its Union members are thus able to obtain information (in primarily a yes/no
use under other statutes. As explained a more accurate picture of their union’s format); a statement of 11 financial
above, this alternative was rejected, but financial condition and operations items on different assets and liabilities;

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a statement of receipts and reporting system. Effective use of the although it is expected that some labor
disbursements; and 15 supporting system will reduce the burden on organizations will obtain hardship
schedules. The information that is reporting organizations, provide exemptions and file paper form LM–2
reported includes: Whether the union increased information to union reports while they update their
has any subsidiary organizations; members, and enhance LMRDA bookkeeping procedures.
whether the union has a political action enforcement by OLMS. The Department
Overview of Changes to Form LM–2
committee; whether the union is working towards to integrating other
discovered any loss or shortage of funds; LMRDA disclosure documents into The updated form LM–2 includes:
the number of members; rates of dues e.LORS in the future. The OLMS Three fewer questions (21 instead of 24)
and fees; the dollar amount for seven Internet Disclosure site is available for that identify the labor organization and
asset categories such as accounts public use. The site contains a copy of provide basic information (in the same
receivable, cash, and investments; the each labor organization’s annual general yes/no format); the same 11
dollar amount for four liability financial report as well as an indexed financial items on assets and liabilities;
categories such as accounts payable and computer database on the information an updated statement of receipts and
mortgages payable; the dollar amount for each report that is searchable disbursements that asks for information
for 16 categories of receipts such as dues through the Internet. on fewer categories of receipts (13
and interest; and the dollar amount for To ease the transition to electronic instead of 16) and disbursements (17
18 categories of disbursements such as disclosure, OLMS will include e.LORS instead of 18); and seven additional
payments to officers and repayment of information in its outreach program supporting schedules (22 instead of 15).
loans obtained. Five of the supporting through the OLMS Help Desk and The updated statement of receipts and
schedules include a detailed itemization through formal group sessions disbursements also drops seven old
of loans receivable and payable, the sale conducted for union officials regarding categories of disbursements and adds
and purchase of investments and fixed compliance. The new and revised forms six new categories that will provide
assets, and payments to officers. There will be provided on CD–ROM discs at more useful information to union
are also 10 supporting schedules for no cost to labor organizations. The members on the amount of union funds
receipts and disbursements that provide electronic form will also be available spent on contract negotiation and
union members with more detailed from OLMS field offices and from the administration, organizing, strike
information by general groupings or OLMS National Office. Unions will be benefits, general overhead, political
bookkeeping categories to identify their required, however, to pay a minimal fee activities, and lobbying.
purpose. to obtain electronic signature capability Many of the supporting schedules are
In 2001, 5,932 labor organizations for the two officers who sign the form. not changing; over half (8) of the 15
filed form LM–2 and the Department OLMS has implemented a system to current supporting schedules are either
estimates the recordkeeping and permit union officers to sign unchanged (7) or have been dropped
reporting burden to average 15.25 hours electronically submitted forms with from the updated form (1). Four of the
per respondent for a total of 82,564 digital signatures. Information about current supporting schedules have only
hours and $1.784 million. In developing this system can be obtained on the minor changes involving information
these estimates, the Department OLMS website at http://www.dol.gov/ that is maintained in the normal course
carefully considered the amount of time esa/regs/compliance/olms/digital- of business. For example, on the
it takes to: (a) Read the reporting signatures.htm. Digital signatures schedule for itemizing investments the
instructions; (b) gather books and ensure the authenticity of form LM–2 reporting threshold has changed from
records to complete the report; (c) reports without compromising $1,000 and 20 percent of the total book
organize the books and records to efficiency. value of the union’s investments to
respond to various reporting Filing labor organizations will find $5,000 and 5 percent of the total. On the
requirements; (d) complete the form; several advantages to electronic filing. two schedules for disbursements to
and (e) check the responses. The With e.LORS, information from officers and employees the reporting of
recordkeeping requirements are previously filed reports and officer or gross salary is changing to net salary
minimal because the majority of employee information can be directly and two new dollar amounts for direct
financial books and records required to imported to form LM–2. Not only is taxes withheld and other withheld
complete the reports are those that the entry of the information eased, the amounts have been added. On the
reporting organizations maintain in the software also makes mathematical fourth schedule that currently itemizes
normal course of business and are, calculations and checks for errors or all benefit disbursements, the reporting
therefore, not factored into the burden discrepancies. The efficiency gains from of name, description, and amount has
hours. Moreover, any capital investment electronic submission will alleviate been expanded to include address,
including computers and software that much of the burden of revised form LM– purpose, and date of the disbursement.
are usual and customary expenses 2’s new information requirements. One important change to form LM–2
incurred by persons in the normal Ready acceptance of the benefits of is the addition of three new separate
course of their business are excluded electronic filing is predictable based on schedules. The new schedules require
from the regulatory definition of burden. experience with software that OLMS has the reporting of (1) the name of any
The Department’s developed developed and distributed to labor entity or individual with which the
electronic reporting system, e.LORS, organizations for completing the current labor organization had an account
uses information technology to perform forms LM–2, LM–3, and LM–4. payable valued at $1,000 or more that
some of the administrative functions of Approximately 40% of unions that was more than 90 days past due at the
the reporting system. The objectives of currently file form LM–2, LM–3, and end of the reporting period or that was
e.LORS are electronic filing of forms LM–4 take advantage of the ability to liquidated, reduced or written off during
LM–2, LM–3, and LM–4, disclosure of enter data electronically on a the reporting period; (2) the name of any
reports via a searchable Internet computerized form. Enhancements of entity or individual with which the
database, improving the accuracy, e.LORS will make it possible for all labor organization had an account
completeness and timeliness of reports, labor organizations to submit the new receivable valued at $1,000 or more that
and creating efficiency gains in the and revised forms electronically, was more than 90 days past due at the

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end of the reporting period or that was Unions will also be required to organization is itself a labor
liquidated, reduced or written off during separately identify any individual organization under the LMRDA and will
the reporting period; and (3) the number disbursement of $10,000 or more during be required to file an annual financial
of union members by seven different the reporting period, as well as any form if the national or international
membership categories. The Department disbursements to the same entity or labor organization is a labor
believes that all of this reported individual that aggregate to $10,000 or organization engaged in an industry
information is maintained in the normal more during the reporting period. If affecting commerce within the meaning
course of business. While labor annual audits or financial reports are of section 3(j) of the LMRDA.
organizations have not previously been already made available for organizations
Overview of Changes to Forms LM–3
required to report all of this that meet the statutory definition of a
and LM–4
information, the development of trust, the only additional information
electronic software that will permit that a union will be required to report Changes proposed to forms LM–3 and
unions that keep their records on form LM–2 is a statement that such LM–4 involve a single question on each
electronically to import data from their a report or audit has been filed or is form, and the additional requirement of
programs to the form LM–2 software available, and where union members filing a form T–1 under certain
should reduce the burden of the revised can obtain the information. circumstances. The proposed revision of
reporting requirement. Labor Technological advances have made it form LM–3 is simply the elimination of
organizations that do not currently possible to provide the level of detail a question whether the union has a
maintain electronic books, or that use necessary for union members to have a subsidiary. The proposed revision of
accounting software that proves more accurate picture of their union’s form LM–4 is simply the addition of a
incompatible with the software financial condition and operations question whether the union has created
developed by the Department will without imposing an unwarranted or participated in the administration of
experience modest increased burden. burden on reporting unions. OLMS staff a trust, as defined in the Instructions,
Another important change to form LM– who review the reports filed and during the reporting year. The form T–
2 is the individual identification of provide compliance assistance have 1 filing requirement is the same for form
various receipts and disbursements for found that a majority of unions required LM–3 and form LM–4 filers as it is for
three of the current supporting to file form LM–2 use computerized form LM–2 filers.
recordkeeping systems and have The instructions to both form LM–3
schedules and five of the new
embraced the technology necessary to and LM–4 also adopt the recent holding
supporting schedules. Currently, three
provide reports in electronic form. of the U.S. Court of Appeals for the
of these supporting schedules provide
Several OLMS field offices report that Ninth Circuit in Chao v. Bremerton
some detail about various receipts and
even smaller unions that file form LM– Metal Trades Council, AFL–CIO, 294
disbursements by general groupings or
3 reports keep electronic books. The F.3d 1114 (2002), and clarify that any
bookkeeping categories to identify their
development of electronic software that ‘‘conference, general committee, joint or
purpose. The updated form LM–2 will
will permit unions that keep their system board, or joint council’’ that is
require these eight supporting schedules
records electronically to import data subordinate to a national or
to individually identify receipts of
from their programs to the form LM–2 international labor organization is itself
$5,000 or more or total receipts from an
software should reduce the burden of a labor organization under the LMRDA
entity or individual that aggregate to
reporting financial information with the and will be required to file an annual
$5,000 or more during the reporting
specificity required by the proposed financial form if the national or
period, and disbursements of a certain
rule. While labor organizations have not international labor organization is a
amount ($2,000–$5,000) or total
previously been required to report all of labor organization engaged in an
disbursements to an entity or individual
this information, they have been industry affecting commerce within the
that aggregate to a certain amount
required to make judgments regarding meaning of section 3(j) of the LMRDA.
($2,000–$5,000) during the reporting
the appropriate characterization of
period. Overview of the New Form T–1
expenditures in order to report those
The last major change to form LM–2 expenditures by category in the current The new form T–1 is structured
will require unions to report the major form. Once the necessary adjustments similarly to the revised form LM–2. It
receipts and disbursements of trusts in have been made to electronic includes: 21 questions that identify the
which the labor organization has an recordkeeping systems, no additional trust, provide basic information (in a
interest. If a union’s financial burden will be entailed by the need to yes/no format), and the total amount of
contribution to a trust, or a contribution make similar judgments with respect to assets liabilities, receipts and
made on the union’s behalf, is less than fewer categories. Labor organizations disbursements of the trust; a schedule
$10,000, the union only has to report that do not currently maintain that separately identifies any individual
the existence of the trust and the electronic books, or that use accounting or entity from which the trust receives
amount of the union’s contribution or software that proves incompatible with $10,000 or more during the reporting
the contribution made on the union’s the software developed by the year; a schedule that separately
behalf. If the contribution is $10,000 or Department, will experience an identifies any entity or individual that
more, the labor organization will be increased burden. received disbursements that aggregate to
required to report the receipts and Finally, as noted previously, the $10,000 or more from the trust during
disbursements of the trust on the instructions to form LM–2 adopt the the reporting period; a schedule of
proposed new form T–1. Unions will be recent holding of the U.S. Court of disbursements to officers and employees
required to separately identify each Appeals for the Ninth Circuit in Chao v. of the trust; and a schedule of loans
amount received by a trust from the Bremerton Metal Trades Council, AFL– receivable.
same entity or individual of $10,000 or CIO, 294 F. 3d 1114 (2002), and clarify Estimated Recordkeeping and
more during the reporting period, as that any ‘‘conference, general Reporting Burden: The burden hour
well as receipts from the same entity or committee, joint, or system board, or estimates associated with forms LM–2,
individual that aggregate to $10,000 or joint council’’ that is subordinate to a LM–3, LM–4, and T–1 are based on the
more during the reporting period. national or international labor latest available data and OLMS staff

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estimates. In developing these estimates, increase compared to previous years each year because most records required
the Department carefully considered the because of the implementation of the to complete the reports are maintained
amount of time it takes to: (1) Read and new reporting system. However, once in the normal course of business.
review the new reporting instructions; the new reporting system is in place the The Department estimates that 5
(2) gather books and records to complete Department anticipates that the burden percent of form LM–2 filers will submit
the report; (3) organize the books and will significantly decrease and will be a Continuing Hardship Exemption
records to respond to various reporting marginally higher than the present Request in the first year and that it will
requirements; (4) complete the form; estimated burden. The decrease in take 1 hour to prepare this request. The
and (5) check the responses for each burden will be a direct consequence of Department further estimates that 3
form. The Department has also allotted the efficiencies gained using the OLMS percent of form LM–2 filers will submit
an average burden hour estimate electronic system for filing the forms. a hardship request in the second year
associated with the first-year The Department determined the and that 1 percent will submit a request
implementation of the electronic form burden hours by estimating the time in the third year.
LM–2 and the new form T–1 for each required to complete each report and The Department also estimates the
respondent. In developing this estimate, the recordkeeping hours associated with annualized cost to respondents to be
the Department accounted for the each report. First year burden hour and $14.618 million in the first year, $3.281
additional time in the first year to: (a) cost estimates are broken out separately million in the second year, and $2.867
Install software; (b) test and review from ongoing burden hour and cost million in the third year. The average
software; (c) implement electronic estimates. See Table 2 below for a cost per respondent is estimated to be
signatures; (d) modify current summary of the burden hour estimates $2,651 in the first year, $595 in the
accounting systems; and (e) train associated with revised form LM–2. second year, and $520 in the third year.
employees. Although an OLMS survey The number of responses for revised The cost estimates are based on wage-
of its district offices reveals that the form LM–2 is based on the number of rate data obtained from the
large majority of form LM–2 forms submitted in calendar year 2001 Department’s Bureau of Labor Statistics
respondents already keep their records by labor organizations that submitted for personnel employed in service
electronically, the Department has form LM–2 and the latest available data. industries (i.e. accountant, bookkeeper,
allotted an average burden hour For the revised form LM–2, the etc.). The estimates used for salaries of
estimate associated with the first-year Department estimates an initial increase labor organization officers and
implementation of electronic in burden associated with installing, employees are obtained from the annual
recordkeeping and reporting. testing, and reviewing software, as well financial reports filed with OLMS.
As part of the ongoing e.LORS project, as adapting existing recordkeeping The annualized federal cost
OLMS plans to develop and distribute systems to the new reporting categories. associated with revised forms LM–2,
to labor organizations software for form There also is an increase in reporting LM–3, and LM–4 and the new form T–
LM–2 that will electronically import burden for the additional information 1 is estimated to be $7.187 million. This
data from their accounting systems into associated with individually identifying includes operational expenses such as
the form and then transmit it receipts and disbursements and training equipment, overhead, and printing as
electronically to OLMS. The process officers and employees. These increases well as salaries and benefits for the
will be similar to the popular off-the- are partially offset by the timesaving OLMS staff in the National Office and
shelf tax filing software packages that features of the software. In the first year, field offices that are involved with
are widely used by businesses, the Department estimates an average reporting and disclosure activities. The
accountants, and individuals. OLMS 104.03 hours of reporting burden per estimate also includes the annualized
also plans to increase the staff available respondent and 1.0 hours of cost for redesigning the forms,
for its compliance assistance outreach recordkeeping burden per respondent. developing and implementing the
efforts and to utilize its Help Desk and As noted above, the Department electronic software, and implementing
conferences to address any questions or assumes that the information required to digital signature capability.
difficulties filers may have using the be reported is already maintained by Estimated Burden for Forms LM–3
software. labor organizations in the normal course and LM–4: The Department estimates a
The on-going recordkeeping burden of business. The Department’s estimate small decrease in burden associated
associated with both forms are minimal of the recordkeeping burden includes with the elimination of the question on
because most of the information and only minimal time for keeping records form LM–3 regarding whether the union
records that are required to complete the regarding the calculation of the has a subsidiary. The Department also
reports are maintained in the normal percentage of officers’ and employees’ estimates a small increase in burden
course of business by the reporting salaries attributable to specific associated with the addition of a
organizations. The time for normal categories, which may not ordinarily be question on form LM–4 regarding
recordkeeping functions are not factored reflected in records already maintained, whether the union has created or
into the burden hours except to estimate because that calculation is based only participated in the administration of a
the time it would take an auditing clerk on an estimate and need not be trust, as defined in the instructions,
to make electronic entries regarding the demonstrated by actual records of time during the reporting year, both because
reporting category for a disbursement spent in each category. answering this question will take little
and the source of non-dues receipts. The reporting burden decreases in the time and because unions that are small
Moreover, any capital investment that is second year and continues to decrease enough to file a form LM–4 are unlikely
a usual and customary expense incurred significantly in the third year because of to have an interest in many trusts. See
by persons in the normal course of their the time saved from electronic filing. Table 2, below, for a summary.
business, including computers and The Department estimates the average Estimated Burden for Form T–1: Like
software, is excluded from the reporting burden to be 24.96 hours per form LM–2, the time to complete form
regulatory definition of burden. respondent in the second year and 21.81 T–1 will initially be higher for the first
Estimated Burden for Form LM–2: The hours per respondent in the third year. year compared to the second and third
Department estimates the time to The average recordkeeping burden years because of the implementation of
complete form LM–2 will initially remains at 1.0 hour per respondent in the new reporting system and electronic

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filing. See Table 2 below for a summary $200,000 annual receipt threshold Finally, although a labor organization
of the burden hour estimates associated reporting requirements. Finally, it was that is significantly involved in
with the new form T–1. assumed that just 0.3 percent of form directing the operations of a trust or
For the new form T–1 five LM–4 filers would have trusts that meet other fund in which it is interested is
assumptions were made to estimate the the $10,000 contribution and $200,000 likely to maintain records regarding
number of responses. First, it was annual receipt threshold reporting such a fund, other labor organizations
assumed that 10 percent of the 2,309 requirements. Because labor may be required to obtain and maintain
LM–2 filers with annual revenues of organizations have not previously records that they have not previously
from $200,000 to $499,999 would file reported information regarding many kept. In the first year, the Department
one form T–1. Second, it was assumed entities that fall within the definition of estimates an average 12.39 hours of
that 35 percent of the 3,162 form LM– trusts or funds in which they have an reporting burden per respondent and 0.5
2 filers with annual revenues of from interest, it is difficult to estimate how hours of recordkeeping burden per
$500,000 to $49.999 million would file many of such entities exist. respondent.
an average of 2.3 form T–1s. Third, it Accordingly, the Department invites
was assumed that 100 percent of the 43 comment on these assumptions and the The reporting burden decreases
form LM–2 filers with annual revenues potential number of responses to the significantly in the second year and
of $50 million or more would file an new form T–1. continues to decrease significantly in
average of five T–1 reports each. Fourth, For the new form T–1, the Department the third year because of the time saved
it was assumed that 90 percent of the estimates a higher initial burden from electronic filing. The Department
545 form LM–3 filers that report having associated with installing, testing, and estimates the average reporting to be
a trust, and that 90 percent of the reviewing software, as well as adapting 5.29 hours per respondent in the second
estimated 50 intermediate labor existing recordkeeping systems to the year and 4.65 hours per respondent in
organizations that will file form LM–3 new reporting categories. There also is the third year. The average
as a result of the recent decision of the a reporting burden for the information recordkeeping burden remains at 0.5
U.S. Court Appeals for Ninth Circuit in associated with individually identifying hours per respondent in each year
Chao v. Bremerton Metal Trades receipts and disbursements of the trust. because most records required to
Council, AFL–CIO, would have trusts These burdens are partially offset by the complete the reports are maintained in
that meet the $10,000 contribution and timesaving features of the software. the normal course of business.

TABLE 2.—REPORTING AND RECORDKEEPING BURDEN HOURS FOR FORM LM–2 AND FORM T–1
Record-
Reporting Total rec-
Number of Total report- keeping Total bur-
hours per ordkeeping
responses ing hours hours per den hours
respondent hours
respondent

Revised Form LM–2:
First Year .................................................................. 5,514 104.03 573,621 1.00 5,514 579,135
Second Year ............................................................. 5,514 24.96 137,629 1.00 5,514 143,143
Third Year ................................................................. 5,514 21.81 120,260 1.00 5,514 125,774
Revised Form LM–3:
First Year .................................................................. 13,290 6.39 84,923 0.25 3,323 88,246
Second Year ............................................................. 13,290 6.39 84,923 0.25 3,323 88,246
Third Year ................................................................. 13,290 6.39 84,923 0.25 3,323 88,246
Revised Form LM–4:
First Year .................................................................. 8,108 0.87 7,054 0.03 270 7,324
Second Year ............................................................. 8,108 0.87 7,054 0.03 270 7,324
Third Year ................................................................. 8,108 0.87 7,054 0.03 270 7,324
New Form T–1:
First Year .................................................................. 3,551 12.39 43,997 0.50 1,776 45,772
Second Year ............................................................. 3,551 5.29 18,785 0.50 1,776 20,560
Third Year ................................................................. 3,551 4.65 16,512 0.50 1,776 18,288

Executive Order 13045 (Protection of Order, and has determined that it does Protected Property Rights, because it
Children From Environmental Health not have ‘‘tribal implications.’’ The rule does not involve implementation of a
Risks and Safety Risks) does not ‘‘have substantial direct effects policy with takings implications.
on one or more Indian tribes, on the
In accordance with Executive Order relationship between the Federal Executive Order 12988 (Civil Justice
13045, the Department has evaluated government and Indian tribes, or on the Reform)
the environmental safety and health distribution of power and
effects of the rule on children. The This regulation has been drafted and
responsibilities between the Federal
Department has determined that the reviewed in accordance with Executive
government and Indian tribes.’’
final rule will have no effect on Order 12988, Civil Justice Reform, and
children. Executive Order 12630 (Governmental will not unduly burden the Federal
Actions and Interference With court system. The regulation has been
Executive Order 13175 (Consultation Constitutionally Protected Property written so as to minimize litigation and
and Coordination With Indian Tribal Rights) provide a clear legal standard for
Governments)
This rule is not subject to Executive affected conduct, and has been reviewed
The Department has reviewed this Order 12630, Governmental Actions and carefully to eliminate drafting errors and
rule in accordance with Executive Interference with Constitutionally ambiguities.

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Environmental Impact Assessment b. Adding paragraph (d) to read as (d) If a trust in which a labor
The Department has reviewed the follows: organization is interested loses its
final rule in accordance with the identity through merger, consolidation,
§ 403.2 Annual financial report.
requirements of the National or otherwise, the labor organization
* * * * * shall, within 30 days after such loss, file
Environmental Policy Act (NEPA) of (d) Every labor organization shall,
1969 (42 U.S.C. 4321 et seq.), the a terminal report on form T–1, with the
except as otherwise provided, file a Office of Labor-Management Standards,
regulations of the Council on report on form T–1 for every trust in
Environmental Quality (40 U.S.C. part signed by the president and treasurer or
which the labor organization is corresponding principal officers of the
1500), and the Department’s NEPA interested, as defined in section 3(l) of
procedures (29 CFR part 11). The final labor organization. For purposes of the
the Act, 29 U.S.C. 402(l), that has gross report required by this paragraph, the
rule will not have a significant impact annual receipts of $200,000 or more,
on the quality of the human period covered thereby shall be the
and to which $10,000 or more was portion of the trust’s fiscal year ending
environment, and, thus, the Department contributed during the reporting period
has not conducted an environmental on the effective date of the loss of its
by the labor organization or on the labor reporting identity.
assessment or an environmental impact organization’s behalf or as a result of a
statement. negotiated agreement to which the labor PART 408—LABOR ORGANIZATION
Executive Order 13211 (Actions organization is a party. A separate report TRUSTEESHIP REPORTS
Concerning Regulations That shall be filed on form T–1 for each such
Significantly Affect Energy Supply, trust within 90 days after the end of the 4. The authority citation for part 408
Distribution, or Use) trust’s fiscal year in the detail required is revised to read as follows:
This rule is not subject to Executive by the instructions accompanying the Authority: Secs. 202, 207, 208, 73 Stat.
Order 13211, because it will not have a form and constituting a part thereof, and 525, 529 (29 U.S.C. 432, 437, 438);
significant adverse effect on the supply, shall be signed by the president and Secretary’s Order No. 4–2001, 66 FR 29656,
distribution, or use of energy. treasurer, or corresponding principal May 31, 2001.
officers, of the labor organization. No
List of Subjects in 29 CFR Parts 403 and form T–1 need be filed for a trust if an § 408.5 [Amended]
408 annual audit or financial report 5. Section 408.5 is amended by:
Labor unions, Reporting and providing the same information and a
similar level of detail is otherwise a. Adding the words ‘‘and any form
recordkeeping requirements. T–1 reports’’ after the words ‘‘on behalf
available pursuant to federal or state
Text of Proposed Rule law, as specified in the instructions of the subordinate labor organization the
In consideration of the foregoing, the accompanying form T–1. If, on the date annual financial report’’ and before the
Office of Labor-Management Standards, for filing the annual financial report of words ‘‘required by part 403 of this
Employment Standards Administration, such trust, such labor organization is in chapter’’.
Department of Labor hereby proposes to trusteeship, the labor organization that b. Removing the words ‘‘together with
amend parts 403 and 408 of title 29 of has assumed trusteeship over such one true copy thereof’’ at the end of the
the Code of Federal Regulations as set subordinate labor organization shall file section and removing the comma
forth below. such report as provided in § 408.5 of preceding those words.
this chapter. Signed in Washington, DC, this 19th day of
PART 403—LABOR ORGANIZATION 3. Section 403.5 is amended by: December, 2002.
ANNUAL FINANCIAL REPORTS a. In paragraph (a), removing the Victoria A. Lipnic,
1. The authority citation for part 403 words ‘‘and one copy’’ and removing
Assistant Secretary for Employment
is revised to read as follows: the commas preceding and following Standards.
those words.
Authority: Secs. 202, 207, 208, 73 Stat. b. In paragraph (b), removing the Appendix
525, 529 (29 U.S.C. 432, 437, 438); words ‘‘and one copy’’ and removing
Secretary’s Order No. 4–2001, 66 FR 29656, Note: This appendix, which will not
May 31, 2001.
the commas preceding and following
those words. appear in the Code of Federal Regulations,
2. Section 403.2 is amended by: c. Adding a new paragraph (d) to read revises forms LM–2, LM–3, and LM–4, and
a. Removing the words ‘‘together with proposes a new form T–1 and revises or
as follows:
a true copy thereof’’ at the end of provides instructions for each form, provided
paragraph (a) and removing the comma § 403.5 Terminal financial report. in part 403, to read as follows:
preceding those words. * * * * * BILLING CODE 4510–CP–P

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79309

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79310 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79311

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79312 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79313

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79314 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79315

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79316 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79317

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79318 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79319

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79320 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79321

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79322 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79323

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79324 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79325

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79326 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79327

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79328 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79329

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79330 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79331

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79332 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79333

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79334 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79335

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79336 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79337

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79338 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79339

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79340 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79341

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79342 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79343

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79344 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79345

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79346 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79347

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79348 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79349

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79350 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79351

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79352 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79353

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79354 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79355

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79356 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79357

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79358 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79359

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79360 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79361

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79362 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79363

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79364 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79365

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79366 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79367

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79368 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79369

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79370 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79371

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79372 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79373

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79374 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79375

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79376 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79377

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79378 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79379

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79380 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79381

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79382 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79383

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79384 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79385

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79386 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79387

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79388 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79389

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79390 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79391

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79392 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79393

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79394 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79395

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79396 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79397

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79398 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79399

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79400 Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules

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Federal Register / Vol. 67, No. 249 / Friday, December 27, 2002 / Proposed Rules 79401

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[FR Doc. 02–32445 Filed 12–23–02; 2:44 pm]
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BILLING CODE 4510–CP–C

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