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ESA Final Rules

Labor Organization Annual Financial Reports   [2/20/2009]
[PDF]
FR Doc E9-3721
[Federal Register: February 20, 2009 (Volume 74, Number 33)]
[Rules and Regulations]               
[Page 7814-7816]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20fe09-18]                         

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DEPARTMENT OF LABOR

Office of Labor-Management Standards

29 CFR Parts 403 and 408

RIN 1215-AB62

 
Labor Organization Annual Financial Reports

AGENCY: Office of Labor-Management Standards, Employment Standards 
Administration, Department of Labor.

ACTION: Final rule; delay of effective date.

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SUMMARY: This final rule delays the effective date of new regulations 
pertaining to the filing by labor organizations of annual financial 
reports required by the Labor-Management Reporting and Disclosure Act 
of 1959, as amended (LMRDA). The regulations were published in the 
Federal Register on January 21, 2009. They revised Labor Organization 
Annual Report Form LM-2 and established a procedure whereby the 
Department may revoke, when warranted, a labor organization's 
authorization to file the simplified Labor Organization Annual Report 
Form LM-3. This final rule postpones the effective date of the 
regulations from February 20, 2009, until April 21, 2009, to allow 
additional time for the agency and the public to review questions of 
law and policy concerning the regulations and, meanwhile, to permit 
unions to delay costly development and implementation of any necessary 
new accounting and recordkeeping systems and procedures pending this 
further consideration.

DATES: The effective date of the rule amending 29 CFR Parts 403 and 
408, published January 21, 2009, at 74 FR 3678, is delayed until April 
21, 2009. Comments on matters of law and policy raised by the 
regulations published on January 21, 2009, at 74 FR 3678, will be 
accepted until March 5, 2009.

FOR FURTHER INFORMATION CONTACT: Denise M. Boucher, Director, Office of 
Policy Reports and Disclosure, Office of Labor-Management Standards, 
Employment Standards Administration, U.S. Department of Labor, 200 
Constitution Avenue, NW., room N-5609, Washington, DC 20210, (202) 693-
1185. This is not a toll-free number.

SUPPLEMENTARY INFORMATION: 

I. Background and Overview

    Section 201(b) of the Labor-Management Reporting and Disclosure Act 
of 1959, as amended (LMRDA) (Pub. L. 86-257, 73 Stat. 519), requires 
each covered labor organization to file annually with the Secretary of 
Labor a financial report, signed by its president and treasurer or 
corresponding principal officers, containing information in the detail 
necessary to disclose accurately its financial condition and operations 
for the preceding fiscal year. The Secretary of Labor has delegated the 
Secretary's authority under the LMRDA to the Assistant Secretary for 
Employment Standards.
    The requirements of LMRDA section 201 apply to all labor 
organizations in the private sector including those representing 
employees under the provisions of the National Labor Relations Act, as 
amended, and the Railway Labor Act, as amended. Section 1209(b) of the 
Postal Reorganization Act made the LMRDA applicable to labor 
organizations representing employees of the U.S. Postal Service. 
Section 701 of the Civil Service Reform Act of 1978 (CSRA) and section 
1017 of the Foreign Service Act of 1980 (FSA), as implemented by 
Department of Labor

[[Page 7815]]

regulations at 29 CFR parts 457-459, extended the LMRDA reporting 
requirements to labor organizations representing certain employees of 
the Federal government.
    Section 208 of the LMRDA authorizes the Secretary to issue rules 
prescribing the form and publication of the annual financial reports 
required by section 201, and to provide a simplified report for labor 
organizations for which the Secretary finds that by virtue of their 
size a detailed report would be unduly burdensome. Under regulations 
issued pursuant to section 208, the Secretary has prescribed Form LM-2 
for labor organizations with total annual receipts of $250,000 or more, 
and the simplified Form LM-3 for labor organizations with total annual 
receipts of $10,000 or more, but less than $250,000.
    On January 21, 2009, the Department of Labor's Office of Labor-
Management Standards (OLMS) published in the Federal Register (74 FR 
3677) regulations making revisions to the Form LM-2 (used by the 
largest labor organizations to file their annual financial reports). 
The regulations, when effective, will require labor unions to report 
additional information on Schedules 3 (Sale of Investments and Fixed 
Assets), 4 (Purchase of Investments and Fixed Assets), 11 (All Officers 
and Disbursements to Officers) and 12 (Disbursement to Employees). The 
regulations also would add itemization schedules corresponding to 
categories of receipts, and establish a procedure and standards by 
which the Secretary of Labor may revoke a particular labor 
organization's authorization to file the simplified annual report, Form 
LM-3, where appropriate, after investigation, due notice, and 
opportunity for a hearing. The regulations were scheduled to take 
effect on February 20, 2009.
    Consistent with the memorandum of January 20, 2009, from the 
Assistant to the President and Chief of Staff, entitled ``Regulatory 
Review'' and the memorandum of January 21, 2009, from the Director of 
the Office of Management and Budget (OMB), entitled ``Implementation of 
Memorandum Concerning Regulatory Review,'' on February 3, 2009, OLMS 
published in the Federal Register a document seeking comment on a 
proposed 60 day extension of the effective date and requesting comment 
on legal and policy questions relating to the regulations, including on 
the merits of rescinding or retaining the regulations. The document was 
available for public inspection at the Federal Register on January 29, 
2009 and was published on February 3, 2009 (74 FR 5899).
    Public comment on the proposed extension was invited, with the 
comment period ending on February 13, 2009. Public comment was also 
invited generally on the regulations, including the merits of 
rescinding or retaining them, with this comment period ending on March 
5, 2009.
    For the reasons discussed below, the Department has decided to 
postpone, for 60 days, the effective date of the regulations published 
on January 21, 2009, until April 21, 2009, for additional public 
comment and agency review of questions of law and policy.

II. Comments on the Proposal and the Department's Responses and 
Decision

    The Department received 24 comments on its proposal to postpone the 
effective date of the new Form LM-2/LM-3 regulations for 60 days 
pending further review of questions of law and policy. Eight were 
received from individuals, five of these expressed support for the Form 
LM-2/LM-3 regulations, but took no position on the proposed delay; 
three opposed delay, but without further explanation. Three public 
policy organizations (one of which submitted two separate comments) 
opposed the delay. An employer association also opposed the delay. Nine 
national or international labor organizations and two federations of 
labor organizations argued in support of the delay.
    Commenters opposing the delay asserted the need for greater union 
transparency provided by the new regulations. Two commenters opined 
that this greater transparency is consistent with the President's 
stated emphasis on oversight and accountability. One of these 
commenters advised that such transparency is particularly needed in the 
context of new economic stimulus funds that soon will impact 
workplaces. The Department recognizes the objectives of transparency in 
the context of the LMRDA. The purpose of this stage of the proceedings 
is not, however, to reconsider the merits of the regulations. It is to 
determine whether they raise substantial questions of law and policy, 
necessitating additional review. The Department has in place a well-
utilized and fully-operational labor union reporting and disclosure 
system. The system will not be affected or delayed in any way. In 
addition, under the original effective date, annual reports due under 
the new regulation would not be available in any event until September 
of 2010, at the earliest. Consequently, a 60-day delay before the rule 
goes into effect does no discernable or quantifiable damage to the 
transparency objectives of the LMRDA. The implementation date of the 
regulations is not so time sensitive that it forecloses present day 
policy and legal review.
    A public policy organization stated that the effective date of the 
new Form LM-2/LM-3 regulations should not be postponed because 
organizations have had adequate time to prepare for implementation of 
the regulations and any further delays are unnecessary. The Department 
disagrees. The purpose of extending the effective date of the 
regulations is to prevent labor organizations from incurring 
potentially unnecessary expense and effort in modifying accounting 
systems and procedures in the event that the regulations are modified 
or rescinded, not to provide more time to implement the changes the 
regulation requires. One commenter expressed the view that any needed 
accounting changes would be insignificant. That viewpoint is not, 
however, supported by the burden analysis published with the 
regulations. 74 FR 3702-3719. As there stated, the ``Department assumes 
that most of the burden associated with the changes will occur in the 
first year due to needed changes to the accounting software and staff 
training.'' 74 FR 3708. Several national and international labor 
organizations stated that the Department correctly recognized the 
appropriateness in delaying the effective date of the regulations 
pending further review of the regulations. Some of these labor 
organizations stated that postponement of the regulations to permit 
their review was appropriate because the regulations require unions to 
incur substantial additional reporting and recordkeeping costs for a 
second time within only a few years time.
    Three public policy organizations stated their opposition to any 
delay in the effective date of the new Form LM-2/LM-3 regulations, 
citing the sufficiency of the public comment and regulatory process 
that led to their adoption. These commenters also challenged the basis 
for the Department's review of these regulations. One expressed concern 
that delay in the disclosure of perquisites and benefits to officials 
of unions that supported the Administration during last fall's national 
elections creates an appearance of impropriety that alone should 
prevent this action. The Department strongly disagrees with this 
assessment. The Department's proposal to delay the effective date of 
the regulations is consistent with the request of the Assistant to the 
President

[[Page 7816]]

and Chief of Staff and the Office of Management and Budget directed to 
all Executive branch agencies, without regard to particular agencies or 
program areas, to determine whether it might be appropriate to delay 
the effective date of regulations to permit their review for matters of 
law and policy before taking effect. This process is being undertaken 
in a fully transparent manner, and the instant rulemaking has been, and 
will continue to be, undertaken in full compliance with the 
requirements of the Administrative Procedure Act. Moreover, the 
Department's current action in publishing this final rule is limited to 
delaying the regulations' effective date to April 21, 2009.
    An employer association expressed concern that the postponement of 
the rule's effective date could be used by labor organizations as an 
excuse for filing incomplete Form LM-2s in 2009. The Department 
disagrees with this assessment. Absent further action by this 
Department, labor organizations will be required to comply with the 
regulations published on January 21, 2009. These regulations will apply 
to labor organizations whose fiscal year begins on or after July 1, 
2009. Moreover, even if the effective date of these regulations were to 
be further delayed, labor organizations would still be required to 
comply with the Form LM-2 requirements that have been in place since 
2003. Thus, any concern about incomplete reports is misplaced.
    A public policy organization requested the Department to extend the 
March 5, 2009 date prescribed in the February 3, 2009 NPRM for the 
submission of comments on legal and policy questions relating to the 
Form LM-2-3 regulations. The organization stated that members of the 
public who may be adversely affected by the possible rescission of the 
regulations require at least an additional 120 days to submit comments, 
additionally requesting that the Department specifically identify legal 
and policy questions raised by the regulations. The Department declines 
to extend the comment period. The regulations as published will take 
effect on April 21, 2009 absent further action by the Department. If 
the Department determines to propose the rescission of the regulations, 
such proposal will be subject to notice and comment, thereby providing 
the public an ample opportunity to express its views on the 
regulations, including any grounds identified by the Department in 
support of rescission.
    No commenter identified any substantial harm that would arise from 
delaying the regulations for 60 days. After carefully considering the 
comments, the Department remains of the view that a delay of the 
regulations is appropriate. The delay will reduce the risk that 
unnecessary expense and effort may be undertaken to comply with the 
regulations under review.
    The Department has invited comments on matters of law and policy 
raised by the regulations, and it will continue to accept comments 
until March 5, 2009.

    Dated: February 17, 2009.
Andrew D. Auerbach,
Deputy Director, Office of Labor-Management Standards.
[FR Doc. E9-3721 Filed 2-19-09; 8:45 am]

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