[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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