Monday, July 2, 2007

Part II

Department of Labor Office of Labor–Management Standards

29 CFR Part 404 Labor Organization Officer and Employee Report, Form LM–30; Final Rule

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00001 Fmt 4717 Sfmt 4717 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES 36106 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

DEPARTMENT OF LABOR A. Statutory Authority Business With an Employer Whose B. Departmental Authorization Employees are Represented by the Office of Labor-Management C. Background to and Overview of Rule Official’s Union or the Union it is Standards 1. The Reasons for Today’s Revisions of the Actively Seeking to Represent Form LM–30 K. Why Payments and Other Financial 2. Legislative History 29 CFR Part 404 Benefits Received From Section 3(l) II. Discussion of Comments Received on Trusts and Service Providers to Such RIN 1215–AB49 Proposed Rule and Department’s Trusts Must Be Reported Response 1. Alleged Procedural Shortcoming Labor Organization Officer and A. Why the Changes to the Form Are 2. Routine Exceptions Employee Report, Form LM–30 Needed Now 3. Relationship With Other Statutes B. Why the Department Is Not Presently 4. Trusts as Employers and Businesses AGENCY: Office of Labor-Management Requiring Unions To Notify Their L. When Payments and Other Financial Standards, Employment Standards Officers and Employees (‘‘Officials’’) Benefits Received From a Union Other Administration, Department of Labor. About Their Annual Reporting Than an Official’s Own Union Must be Obligations Reported ACTION: Final rule. C. Why the De Minimis Exemption From M. How the Proposed Definitions Have Reporting Insubstantial Gifts and Other Been Clarified To Ease a Filer’s SUMMARY: The Employment Standards Financial Benefits Has Been Simplified Completion of the Form LM–30 Administration’s (‘‘ESA’’) Office of and Subjected to a $250 Limit, With an 1. Definitions Adopted by Today’s Rule Labor-Management Standards Exclusion for Gifts Valued at $20 or Less 2. Other Issues Related to Definitions (‘‘OLMS’’) of the Department of Labor and Certain Widely-Attended Gatherings N. Details Relating To Proposed and (‘‘Department’’) publishes this Final D. Why Reporting Exceptions Permitted Revised Form and Instructions Rule to revise the Form LM–30, Labor Under the Old Rule Have Been 1. Comparison of the ‘‘Old’’ and Proposed Organization Officer and Employee Eliminated or Modified To Provide More Forms Report, its instructions, and related Information to Union Members 2. Comments on Proposed Form 1. Regular Course of Business Exception 3. Completion of the Revised Form provisions in the Department’s 2. Bona Fide Employee Exception for regulations. The Form LM–30 III. Regulatory Procedures Transactions With an Employer Whose A. Executive Order 12866 implements section 202 of the Labor- Employees the Official’s Union B. Small Business Regulatory Enforcement Management Reporting and Disclosure Represents or Is Actively Seeking To Fairness Act Act of 1959 (‘‘LMRDA’’ or ‘‘Act’’), 29 Represent C. Unfunded Mandates Reform U.S.C. 432, whose purpose is to require 3. Exception for Bona Fide Loans or D. Executive Order 13132 (Federalism) officers and employees of labor Interest From a Banking Institution E. Regulatory Flexibility Act organizations to report specified 4. Exceptions Relating to Stocks F. Paperwork Reduction Act financial transactions and holdings to 5. Revision of Special Report Language G. Executive Order 13045 (Protection of E. Why Union Officials, as a General Rule, Children From Environmental Health effect public disclosure of any possible Must Report Payments Received as conflicts between their personal Risks and Safety Risks) Members of a Company’s Board of H. Executive Order 13175 (Consultation financial interests and their duty to the Directors and Coordination With Indian Tribal labor union and its members. This rule F. Why Officers of International, National, Governments) clarifies the Form LM–30 and its and Intermediate Labor Unions, in I. Executive Order 12630 (Governmental instructions by explaining key terms Addition to Their Obligation to Report Actions and Interference With and providing examples of the financial Payments and Other Financial Benefits Constitutionally Protected Property matters that must be reported, Received From Businesses and Rights) eliminates or modifies administrative Employers That Have a Direct J. Executive Order 12988 (Civil Justice Relationship With the Component of the Reform) exceptions in the old Form LM–30 that Union to Which They are Elected or impeded the full disclosure of financial K. Environmental Impact Assessment Appointed, Must Also Report Payments L. Executive Order 13211 (Actions matters that constitute conflicts, or and Other Financial Benefits Received Concerning Regulations That potential conflicts, of interest, and From Businesses and Employers Whose Significantly Affect Energy Supply, improves the usability of the reports by Relationship is With a Subordinate Body Distribution, or Use) union members and the public. of Their Union IV. Text of Final Rule G. Why Union Officials Must Report DATES: Effective Date: This rule will be Payments Under Union—Leave and No- Appendix effective August 16, 2007. Docking Practices Subject to an Note: Throughout this document, the FOR FURTHER INFORMATION CONTACT: Kay Exception for Payments of 250 Hours or Department refers to various statutory H. Oshel, Director, Office of Policy, Less Per Year Made in Accordance with provisions as ‘‘section ll.’’ All such Reports, and Disclosure, Office of Labor- a Collective Bargaining Agreement references, unless otherwise noted, are to Management Standards, U.S. H. What Payments and Other Financial Title 29 of the U.S. Code. Further, unless Department of Labor, 200 Constitution Benefits, Received From an Employer or otherwise noted, all the sections are part of Avenue, NW., Room N–5609, Business Whose Employees are not the Labor-Management Reporting and Represented by the Union and Which Disclosure Act of 1959, which is set forth in Washington, DC 20210, olms- Does Not Conduct Business With the Chapter 11 of Title 29, 29 U.S.C. 401–531. [email protected], (202) 693–1233 (this is Official’s Union, Must be Reported Following is a list of the most frequently not a toll-free number). Individuals with I. When is a Union ‘‘Actively Seeking To cited LMRDA provisions in this document hearing impairments may call 1–800– Represent’’ Employees, Thereby with corresponding citations to the U.S. 877–8339 (TTY/TDD). Triggering a Union Official’s Obligation Code: section 3(l), 29 U.S.C. 402(l); 201, 29 SUPPLEMENTARY INFORMATION: An outline To Report Payments and Other Financial U.S.C. 431; section 202, 29 U.S.C. 432; and of this information and a note regarding Benefits Received From the Employer section 203, 29 U.S.C. 433. The only other That is the Subject of the Organizing provision of the U.S. Code frequently referred the references to statutory provisions in Drive to in the document by the section number in this document follow: J. How Union Officials Will Determine the public law in which it was enacted is Whether an Entity From Which They ‘‘section 302(c),’’ a reference to a provision of Table of Contents Receive a Payment or Other Financial the Labor Management Relations Act, as I. Background Benefit Does a ‘‘A Substantial Part’’ of its amended, 29 U.S.C. 141–188. A reference to

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36107

section 302(c), 29 U.S.C. 186(c), appears in with monetary value (including reimbursed Organization Officer and Employee the text of section 202(a)(6) of the LMRDA, expenses) which he or his spouse or minor Report based on its review of public 29 U.S.C. 432(a)(6). child directly or indirectly derived from, a comments received in response to its business any part of which consists of buying Notice of Proposed Rulemaking I. Background from, or selling or leasing directly or indirectly to, or otherwise dealing with such (‘‘NPRM’’), 70 FR 51166 (Aug. 29, 2005). A. Statutory Authority labor organization; The Form LM–30 is used by officers and employees of labor organizations subject Section 208 of the LMRDA states in (5) Any direct or indirect business transaction or arrangement between him or to the LMRDA. Section 202 of the Act part: his spouse or minor child and any employer requires public disclosure of certain The [Department] shall have authority to whose employees his organization represents financial interests held, income issue, amend and rescind rules and or is actively seeking to represent, except received, and transactions engaged in by work performed and payments and benefits regulations prescribing the form and labor organization officers and publication of reports required to be filed received as a bona fide employee of such under this title and such other reasonable employer and except purchases and sales of employees (generally referred to herein rules and regulations (including rules goods or services in the regular course of as ‘‘union officials’’ or ‘‘officials’’) and prescribing reports concerning trusts in business at prices generally available to any their spouses and minor children. which a labor organization is interested) as employee of such employer; and Subject to exclusions, these interests, he may find necessary to prevent the (6) Any payment of money or other thing incomes, and transactions include: circumvention or evasion of such reporting of value (including reimbursed expenses) 1. Payments or benefits from, or requirements. which he or his spouse or minor child interests in, an employer whose received directly or indirectly from any 29 U.S.C. 438. Today’s rule prescribes employer or any person who acts as a labor employees the filer’s union represents the disclosure form required to be filed relations consultant to an employer, except or is actively seeking to represent; by a union officer or employee if such payments of the kinds referred to in section 2. Transactions involving interests in, an official, his or her spouse, or minor 302(c) of the Labor Management Relations or loans to or from, an employer whose child hold an interest in or receive Act, 1947, as amended. employees the filer’s union represents payments from certain entities. The (b) The provisions of paragraphs (1), (2), or is actively seeking to represent; (3), (4), and (5) of subsection (a) shall not be reporting requirements are contained in 3. Interests in, income from, or construed to require any such officer or transactions with a business a section 202, which provides in its employee to report his bona fide investments entirety: in securities traded on a securities exchange substantial part of which consists of dealing with an employer whose § 202. (a) Every officer of a labor registered as a national securities exchange organization and every employee of a labor under the Securities Exchange Act of 1934, employees the filer’s union represents organization (other than an employee in shares in an investment company or is actively seeking to represent; performing exclusively clerical or custodial registered under the Investment Company 4. Interests in, income from, or services) shall file with the Secretary a signed Act or in securities of a public utility holding transactions with a business that deals report listing and describing for his company registered under the Public Utility with the filer’s union or a trust in which preceding fiscal year— Holding Company Act of 1935, or to report the filer’s union is interested; any income derived therefrom. (1) Any stock, bond, security, or other 5. Transactions or arrangements with interest, legal or equitable, which he or his (c) Nothing contained in this section shall be construed to require any officer or an employer whose employees the spouse or minor child directly or indirectly filer’s union represents or is actively held in, and any income or any other benefit employee of a labor organization to file a with monetary value (including reimbursed report under subsection (a) unless he or his seeking to represent; and expenses) which he or his spouse or minor spouse or minor child holds or has held an 6. Payments from an employer or interest, has received income or any other child derived directly or indirectly from, an labor relations consultant to an benefit with monetary value or a loan, or has employer whose employees such labor employer. engaged in a transaction described therein. organization represents or is actively seeking As sometimes used herein, the short- to represent, except payments and other B. Departmental Authorization hand phrase ‘‘payments or other benefits received as a bona fide employee of financial interests’’ or its equivalent is such employer; Section 208 of the Act, 29 U.S.C. 438, (2) Any transaction in which he or his provides that the Secretary of Labor used to refer to the various payments, spouse or minor child engaged, directly or shall have the authority to issue, amend, transactions, arrangements and other indirectly, involving any stock, bond, and rescind rules and regulations monetary and financial interests that security, or loan to or from, or other legal or prescribing the form and publication of must be reported. Payments, as a general equitable interest in the business of an reports required to be filed under Title rule, include gifts, gratuities, restaurant employer whose employees such labor II of the Act and such other reasonable meals, and entertainment. organization represents or is actively seeking rules and regulations as she may find The Form LM–30 must be filed to represent; necessary to prevent the circumvention annually by a union officer or employee (3) Any stock, bond, security, or other (other than those solely engaged in interest, legal or equitable, which he or his or evasion of the reporting spouse or minor child directly or indirectly requirements. Secretary’s Order 4–2007, performing clerical or custodial duties) held in, and any income or any other benefit issued May 2, 2007, and published in if the official, the official’s spouse, or with monetary value (including reimbursed the Federal Register on May 8, 2007 (72 minor child (or children) receives a expenses) which he or his spouse or minor FR 26159), contains the delegation of payment or other financial interest from child directly or indirectly derived from, any authority and assignment of a business or employer in connection business a substantial part of which consists responsibility of the Secretary’s with certain activities, identified in of buying from, selling or leasing to, or functions under the LMRDA to the section 202. Section 202’s disclosure otherwise dealing with, the business of an Assistant Secretary for Employment obligations for union officials (as employer whose employees such labor embodied in the Form LM–30) are an organization represents or is actively seeking Standards and permits the redelegation to represent; of such authority. integral part of the Act’s reporting structure. The Act requires annual (4) Any stock, bond, security, or other C. Background to and Overview of Rule interest, legal or equitable, which he or his reports by unions as ‘‘institutions’’ spouse or minor child directly or indirectly In today’s rule, the Department under section 201 (Forms LM–2, LM–3, held in, and any income or any other benefit revises the Form LM–30, Labor and LM–4), by employers, who must

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES 36108 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

report payments to unions and their it has retargeted its resources to educate organizes the form and instructions by representatives under section 203 (Form the affected community about the Form the source of the reportable payment to LM–10), and by unions for trusts in LM–30 reporting obligation and to a union official. Thus, the form lists the which they have an interest (‘‘section increase its enforcement efforts. At the types of employer relationships that 3(l) trusts,’’ a reference to section 3(l) of same time as the Department was trigger a reporting requirement and the the Act defining such trusts) under working on the proposed rule, it types of business relationships that sections 201 and 208 (Form T–1). announced an initiative to improve trigger a reporting requirement. The In the NPRM the Department invited Form LM–30 compliance. As part of this instructions identify the types of comment with respect to the benefits of effort, the Department substantially payments and other financial interests the proposed changes, the ease or augmented its published guidance to that must be reported by a union official difficulty with which union officials Form LM–30 filers, primarily by posting if received from an employer, would be able to comply with these information on OLMS Web pages and by differentiating between payments changes, and whether the changes further disseminating this information received from an employer whose would be meaningful, useful, and in by notifying subscribers to its free, employees the filer’s union represents accord with the LMRDA disclosure automated list serve. On April 25, 2005, or is actively seeking to represent and purposes. The initial 60-day comment the Department announced a special those received from certain other period provided for in the NPRM was enforcement policy under which new employers. The instructions also subsequently extended to January 26, Form LM–30 filers, absent extraordinary identify the types of payments that must 2006. 70 FR 61400 (Oct. 24, 2005). The circumstances, would not have to be reported if received from businesses Department received over 1,000 submit reports for prior years, even if that maintain business dealings with the comments. Of these comments about 50 such reports should have been filed. official’s union, a trust in which the were unique; the rest were form letters. Specifically, the Department advised the official’s union is interested, or certain Almost 300 of the comments were from regulated community that it would not employers. In the NPRM, the unions or union members, most of require a new filer to submit reports Department requested comment on whom were critical of all or parts of the covering the same financial interest for whether labor organizations should be proposal; about 700 were from required to notify their officers and any prior years absent extraordinary individuals who generally supported employees of their Form LM–30 circumstances. To take advantage of this the proposal, about 25 were from reporting obligations. After review of grace period, the new filer had to submit business or trade organizations, who the comments and the number of recent his or her initial report voluntarily expressed diverse views on the filers, the Department has decided to during a ‘‘grace period,’’ which ended proposal; about 10 were from law firms, not require unions at this time to August 15, 2005. With the substantial on their own behalf or their clients, who provide such notification to their voluntary assistance of the AFL–CIO mostly opposed the proposal; two were officials. from benefit fund administrators, who and other labor organizations to educate In the NPRM, the Department opposed the proposal; and one was from union officials about their reporting proposed to revise its longstanding de an academic who reported on his obligations, the Department experienced minimis exception by adopting a limited study of the reactions of union a large upsurge in the number of Form quantitative standard of $25 as the officials to the proposed form and LM–30 filings over historical levels. To amount that would trigger a reporting instructions from which he concluded help union officials better understand obligation. Numerous comments these documents needed substantial their filing obligations, the Department attacked the $25 threshold as improvement. Over 280 of the union proposed to change the instructions to unreasonably low, while other commenters were members of one local. the old form by defining and explaining commenters argued that there should be In their form letters, they urged rejection key concepts and terms used by the no de minimis level at all. The of the rule ‘‘in its entirety.’’ They statute and the form, and providing Department adopts $250 as the amount characterized the proposed examples of situations where reporting above which a report is required and requirements as ‘‘frivolous.’’ They is required. The Department also $20 as the amount above which asserted that the existing form was proposed to redesign the reporting payments or benefits must be counted adequate to ensure ‘‘due diligence’’ by format to better assist filers and improve when calculating whether the union union officials, adding that the the utility of the collected information official’s $250 reporting threshold has proposed union-leave and no-docking to union members, the Department, and been met. The rule also includes a requirements would turn shop stewards the general public. Following its review limited exclusion for widely attended into accountants because of the duty to of the comments and taking into gatherings, allowing union officials to ‘‘calculate their time.’’ Of the account the Department’s recent Form attend two such gatherings without individuals supporting the proposal, the LM–30 filing experience—as requested incurring a reporting obligation Department received about 660 form by some commenters, the Department provided the employer or business letters. These individuals asserted that remains convinced that this approach is paying for the gathering spent $125 or such reforms were long overdue, noting sound and therefore today’s rule less per attendee per gathering. that under the current form it is difficult preserves the overall approach outlined One provision of the Act, section to determine when a report is required in the NPRM. At the same time, the 202(a)(6), may be read to impose a and that the proposed form’s inclusion comments were helpful in reconsidering requirement on union officials to report of clear definitions and examples would some aspects of the rule and improving payments from all employers. The improve reporting. the content of the instructions and the Department’s proposal to construe this The historically low filing rates form. The Department has revised the obligation in this manner was opposed during the years preceding the initiation layout of the form. Instead of the by most of the comments that discussed of this rulemaking process demonstrated subsection-by-subsection approach in this point. In light of these comments, substantial non-compliance with the the proposed form and instructions that today’s rule clarifies the scope of the Act. The Department recognized that its parallels the structure of section 202 reporting obligation under section own compliance assistance efforts in and its subsections (i.e., sections 202(a)(6), identifying particular this area needed improvement and thus 202(a)(1) through 202(a)(6)), the rule situations that pose a conflict of interest

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36109

that otherwise would not be captured by for 250 or fewer hours during the year In light of the comments, however, the other five subsections of section then there is no reporting obligation. today’s rule clarifies that a payment by 202(a). The meaning given ‘‘labor a trust is treated no differently than The Department also proposed to organization’’ defines the scope of a other payments by an employer or a remove certain administrative union official’s obligation to report business to union officials. exceptions that were available to filers interests in or payments by certain Section 202(a)(3) imposes a limited under the old rule: Purchases and sales employers and businesses. Essentially reporting obligation on a union official in the regular course of business at the question presented by the who has an interest in or receives prices generally available to any Department’s proposal is whether this payments from a business that buys, employee of the employer; work obligation applies to only an official’s sells, leases, or otherwise deals with the performed and payments and benefits immediate organization, e.g., a local business of an employer if the latter’s received as a bona fide employee of the union or international union in which employees are represented by the employer; certain loans; and specified he or she holds office, or whether it official’s union or it is actively seeking interests relating to stock ownership. extends to situations involving to represent these employees. The The rule generally adopts the proposals organizations affiliated with the obligation attaches only if the vendor’s as set forth in the NPRM to narrow the immediate organization. For instance, is dealings with the employer comprise a scope of these exceptions and thus an international officer required to ‘‘substantial part’’ of the vendor’s makes reportable interests and report payments received from a business. The Department proposed to payments that present previously business that sells products or services define ‘‘substantial’’ as more than 5% of unreported potential conflicts of to intermediate and local affiliates or the vendor’s business. Most of the interest. from employers whose employees are comments criticized the threshold as too The Department requested comment represented by a subordinate union? low. Today’s rule sets the threshold at on whether to retain the distinction Under today’s rule, an international 10%. between securities traded on a union officer must report such In addition to some of the terms registered national stock exchange and payments. The same obligation exists discussed above, the Department has securities traded elsewhere, such as the under the old rule. Today’s rule further clarified some of the proposed NASDAQ stock market, notwithstanding clarifies that the same reporting definitions. By clarifying these terms the language in the Act limiting the obligation applies to payments received and the concepts that underlie the Act’s exception to registered securities by an intermediate union officer. The reporting provisions, the rule ensures exchanges. See section 202(b) (ties Department, however, does not impose transparency in the personal financial exception to such exchanges registered a reporting obligation on local or affairs of union officials that may pose under the Securities Exchange Act of intermediate union officials who receive conflicts between the official’s duty to 1934 and other enumerated statutes). payments from an entity that does their union and its members and the After reviewing the comments, the business with a higher affiliated official’s personal interests. Department retains its interpretation organization. The rule also excepts A number of comments were received that it should not extend this limited employees of international, national, from employer and industry exception to exchanges that have not and intermediate unions from this associations. Most of these comments been registered. The Department, reporting requirement. Further, the focused on the obligation of employers however, notes that on July 15, 2006, reporting obligation on officers of to file a Form LM–10 on certain the Securities and Exchange national and intermediate unions does payments made by employers or labor Commission (‘‘SEC’’) approved not extend to payments received as relations consultants to unions or union NASDAQ’s application for registration employment compensation by their officials. Today’s rule is specific to as a national securities exchange, spouse or minor child that otherwise Form LM–30 filers. It does not amend effective July 31, 2006. would be reportable because of the the Department’s current regulations or Payments received by union officials payer’s relationship with a subordinate guidance specific to the Form LM–10. from employers for work done on the union. The Department, however, has carefully union’s behalf are reportable because Although the Department’s old rule considered all the comments submitted such payments are not received as a applies to payments received from a by these groups and addresses them bona fide employee of the employer section 3(l) trust and the Department herein insofar as they address particular making the payment. The Department proposed no departure from this rule, aspects of the Form LM–30 proposal. explained in its proposal that union numerous comments were received Form LM–10 Frequently Asked officials must report any payments for arguing that the Form LM–30 reporting Questions (FAQs) on the OLMS Web other than ‘‘productive work’’ for the obligation has never been applied to site at http://www.olms.dol.gov informs employer, including union-leave and payments by trusts to union officials. the public that the Department will not no-docking payments. Similarly, the These commenters are mistaken. The enforce certain Form LM–10 reporting proposed definition of ‘‘labor Department always has maintained the requirements until both the Form LM– organization employee’’ clarified that an position that payments from trusts and 30 rulemaking is completed and further individual who is paid by an employer vendors to such trusts enjoy no special written guidance is issued on the Form to perform union work is an employee excepted status under the Act’s LM–10. This written guidance will be of the union if he or she is under the reporting provisions. Some commenters issued in revisions to the FAQs that will control of the union, while so engaged. argued that such reporting would only be announced through the OLMS list Today’s rule adopts the proposed be duplicative of reporting already serve which can be subscribed to at definition of ‘‘bona fide employee’’ and required by ERISA and could discourage http://www.dol.gov/esa/aboutesa/org/ ‘‘labor organization employee,’’ making union trustees from attending olms/olms-mailinglist.htm. union-leave and no-docking payments conferences designed to educate trustees reportable. However, today’s rule about their duties as trustees. The 1. The Reasons for Today’s Revisions of stipulates that if such payments are Department believes that the concerns the Form LM–30 made pursuant to a collective bargaining about burden and overlap with ERISA The Form LM–30 has remained agreement and the payments are made disclosure requirements are overstated. essentially unchanged since 1963.

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES 36110 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

During this time, there have been many his wife received almost $75,000 in union’s annual financial report, see significant changes in the ways in profits, expense reimbursements, and section 201(b), 29 U.S.C. 431(b), cast which unions operate and conduct their salary from the business. more informed votes at internal union financial affairs. Individuals too have • A union president owned the elections, see sections 401–403, 29 more and varied financial interests than building in which the union rented U.S.C. 481–483, employ union was the case forty years ago. As office space. procedures for removal of officers guilty explained in the NPRM, many unions • A union employee’s spouse owned of serious misconduct, see section manage benefit plans for their members, an advertising company that printed 401(h), 29 U.S.C. 481(h), and exercise maintain close business relationships materials for the union and its funds. In their right to obtain judicial relief for with financial service providers such as one year, the company received over violations of the official’s fiduciary insurance companies and investment $245,000 as payment for her company’s responsibilities. See section 501(b), 29 firms, operate revenue-producing services. U.S.C. 501(b). subsidiaries, and participate in • Four local officers formed a In other instances, as described in the foundations and charitable activities. company that provided payroll services NPRM, compliance with Form LM–30 The complexity of these financial to the local as well as to theatrical requirements would have revealed practices, including business companies that employed members of criminal conduct. For example, the relationships with outside firms and the local. Two other officers of the local president of a national union had the vendors, increases the likelihood that received over $20,000 as employees of sole authority to appoint or remove union officials may have interests in, or the company. attorneys from a list of ‘‘Designated receive income from, these businesses. • The spouse of a union officer Legal Counsel.’’ These attorneys As more labor organizations conduct owned a company that provided represented injured union members their financial activities through cleaning and maintenance services to who sought compensation from the sophisticated trusts, increased numbers the union and a trust in which the railroad for on-the-job injuries. Rather of businesses have commercial union was interested. In one year, the than selecting attorneys on the basis of relationships with such trusts, creating company received over $94,000 from their skills, the president awarded the financial opportunities for union the union and the trust. designation to attorneys who gave the officers and employees who may • A union officer’s spouse owned a union president cash or other things of operate, receive income from, or hold an janitorial business that provided daily value. In another instance, contractors interest in such businesses. In addition, janitorial services to the union at $800 were hired to make repairs and employers also have fostered multi- per month. improvements to the offices of a local • faceted business interests, creating A union officer was part-owner, union. The contractors also performed further opportunities for financial along with his wife and daughter, of a work on the officers’ homes. All the relationships between employers and copier supply company. He was an expenses of the work, including about union officers and employees. In this officer of several unions, including one $1.2 million for work on the officers’ context, disclosure is critical to that employed his daughter as a benefit homes, was charged to and paid by the promoting good union governance, representative and union trustee. All of union. A third example involved a fostering ethical behavior, and deterring the unions purchased office equipment contractor, an investment firm that and detecting self-dealing. and services from the family’s company. managed pension and investment As noted in the NPRM, on many • During a campaign for a State accounts for unions. This company occasions the Department has government office, a business agent collapsed in September 2000, costing its discovered during an audit or received contributions from employers clients about $355 million. The investigation that a union officer or who were covered by the union’s company’s former chairman was employee received a reportable payment collective bargaining agreement. indicted on counts of fraud, money • or other financial benefit but had failed A union employee owned a heating laundering, witness tampering, and to file the Form LM–30 as required. The and air conditioning business that making illegal payments to union Department identified several such performed HVAC work for the union. benefit plan trustees. As part of its situations in the NPRM, including the In these instances, compliance with scheme to buy the influence of pension following: the Form LM–30 requirements would fund trustees, who were union officers, • A local president owned 50% of a have provided union members with the investment firm hired relatives of business that resurfaced the union’s valuable information concerning pension trustees as well as provided parking lot. Over two years, the business financial practices of their unions’ plan trustees with gifts including rifles, received $9,000 from the union. officials. This information would have season tickets to sporting events, and • A union designated certain assisted union members in evaluating fishing and hunting trips to various attorneys to represent injured members. the efficacy of the work performed by locations in the western U.S., Canada, Some of these attorneys, who were union employees and the leadership Africa, Argentina and Mexico. employers, furnished cash or items of provided by union officers. As the above incidents demonstrate, a value such as trips and golf clubs to Furthermore, the information would statement made in 1986 continues to union officials. have alerted them to potential conflicts ring true: ‘‘The plunder of union • A union hired the accounting firm of interests and guided them as to which resources remains an attractive [target of an employee’s spouse. The firm actions or decisions of their officers and for certain individuals and received over $29,000 from the union employees might require greater organizations]. * * * The most over two years. scrutiny in order to determine whether successful devices are the payment of • An officer of a union, whose the conflicts had affected the union excessive salaries and benefits to * * * members worked at a theater, formed a official’s service to the union. Armed union officials and the plunder of business with two partners. He put his with this information, union members workers’’ health and pension funds.’’ share of the business in his wife’s name could express their concerns at President’s Commission on Organized although he actually managed the membership meetings, see section Crime, Report to the President and business, which employed members of 101(a), 29 U.S.C. 411(a), evaluate the Attorney General, The Edge: Organized his local to work for the theater. He and use of union monies as reported on the Crime, Business, and Labor Unions

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36111

(1986), at 12. Added transparency about 2. Legislative History integrated provisions aimed at union a union official’s conflicts of interest To better understand the purposes governance and management. These will help ensure that all union officials served by disclosure, a brief review of included a ‘‘bill of rights’’ for union keep paramount the interests of their the history of the LMRDA’s reporting members, which provides for equal union and its members. Most union and disclosure requirements for union voting rights, freedom of speech and officials will never be tempted to officials is appropriate. As explained in assembly, and other basic safeguards for subordinate their union’s interests to the NPRM, at 70 FR 51166, the LMRDA union democracy, see sections 101–105 their own financial interests; the rule was passed in 1959 by a bipartisan of the LMRDA, 29 U.S.C. 411–415, will help them avoid the perception that Congress that found: In labor and financial reporting and disclosure their financial interests, left unreported management fields: requirements for unions, union officers through inadvertence or and employees, employers, labor [T]here have been a number of instances of relations consultants, and surety misunderstanding, may engender unfair breach of trust, corruption, disregard of the suspicion. Others, though tempted, will rights of individual employees, and other companies, see sections 201–206 and be deterred from taking such action. See failures to observe high standards of 211 of the LMRDA, 29 U.S.C. 431–436, Archibald Cox, Internal Affairs of Labor responsibility and ethical conduct which 441; detailed procedural, substantive, Unions Under the Labor Reform Act of require further and supplementary legislation and reporting requirements relating to 1959, 58 Mich.L.Rev. 819, 827 (1960) that will afford necessary protection of the union trusteeships, see sections 301– (‘‘Internal Affairs of Labor Unions’’) rights and interests of employees and the 306 of the LMRDA, 29 U.S.C. 461–466; (‘‘The official whose fingers itch for a public generally as they relate to the detailed procedural requirements for the activities of labor organizations, employers, conduct of elections of union officers, ‘‘fast buck’’ but who is not a criminal labor relations consultants, and their officers will be deterred by the fear of and representatives. see sections 401–403 of the LMRDA, 29 prosecution if he files no report and by U.S.C. 481–483, safeguards for unions, Section 2(a). including bonding requirements, the fear of reprisal from the members if he The legislation was the direct does’’). establishment of fiduciary outgrowth of a Congressional responsibilities for union officials and The Form LM–30 has been redesigned investigation conducted by the Select to facilitate full and accurate completion other representatives; and criminal Committee on Improper Activities in the penalties for embezzlement from a by the filer and review by members of Labor or Management Field, commonly the filer’s union and the public. The union, for loans over $2,000 by a union known as the McClellan Committee, to officers or employees, for a union’s instructions now contain useful chaired by Senator John McClellan of employment of certain convicted felons definitions of key terms and concepts Arkansas. In 1957, the committee began or permitting them to hold union office, required to complete the form and a highly publicized investigation of and for payments to employees for numerous practical examples to assist union racketeering and corruption; its prohibited purposes by an employer or filers in completing the form. Union findings of financial abuse, labor relations consultant, see sections officials will also better understand the mismanagement of union funds, and 501–504 of the LMRDA, 29 U.S.C. 501– disclosure obligations relating to actual unethical conduct provided much of the 504; and prohibitions against retaliation or potential conflicts of interest and will impetus for enactment of the LMRDA’s for exercising protected rights, see be mindful of their duty to hold their remedial provisions. See generally sections 601–611 of the LMRDA, 29 union’s interests above their own Benjamin Aaron, The Labor- personal financial interests. Financial Management Reporting and Disclosure U.S.C. 521–531. The reporting requirement for union transparency, as noted above, also may Act of 1959, 73 Harv. L. Rev. 851, 851– officials operates in tandem with the deter fraud and self-dealing and 55 (1960). During the investigation, the Act’s establishment of a fiduciary duty facilitates discovery of such misconduct committee uncovered a host of improper for union officials and representatives. when it occurs. Transparency promotes financial arrangements between officials Section 501, 29 U.S.C. 501. Congress the unions’ own interests as democratic of several international and local unions addressed conflicts of interest in both institutions. By these improvements, and employers (and labor consultants sections 202 and 501(a) of the Act. The union members will obtain a more aligned with the employers) whose latter section provides in part: accurate picture of the personal employees were represented by the financial interests of their union’s unions in question or might be The officers, agents, shop stewards, and officers and employees, as those organized by them. Similar other representatives of a labor organization interests may bear upon their actions on occupy positions of trust in relation to such arrangements also were found to exist organization and its members as a group. It behalf of the union and its members. between union officials and the is, therefore, the duty of each such person, With this information, union members companies that handled matters relating taking into account the special problems and will be better able to understand any to the administration of union benefit functions of a labor organization, to hold its financial incentives or disincentives funds. See generally, Interim Report of money and property solely for the benefit of faced by their union’s officers and the Select Committee on Improper the organization and its members and to employees and to make more informed Activities in the Labor or Management manage, invest, and expend the same in choices about the leadership of their Field, S. Report No. 85–1417 (1957) accordance with its constitution and bylaws and any resolutions of the governing bodies union and its management of its affairs. (‘‘Interim Report’’). For examples of adopted thereunder, to refrain from dealing Through these actions, the Department some of the improper arrangements with such organization as an adverse party or advances the LMRDA’s declared directly or indirectly involving officials in behalf of an adverse party in any matter purpose ‘‘that labor organizations, of these unions, see Interim Report, pp. connected with his duties and from holding employers, and their officials adhere to 42–86, 122–30, 150–57, 222–55, 376– or acquiring any pecuniary or personal the highest standards of responsibility 420, 441–50. See also Robert F. interest which conflicts with the interests of and ethical conduct in administering Kennedy, The Enemy Within (1960) such organization * * *. the affairs of their organizations.’’ (discussing the committee’s Both provisions address the potential Section 2(a). As such, today’s rule will investigation). and actual conflict between a union better achieve the purposes of the The statute was designed to remedy representative’s personal interests and LMRDA than the old reporting regimen. these various ills through a set of his or her duty to the union and its

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES 36112 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

members. See Theodore Clark, Jr., The As explained in the Senate Committee In some instances matters to be reported Fiduciary Duties of Union Officials Report, S. Rep. No. 187 (1959) (‘‘Senate are not illegal and may not be improper but under Section 501 of the LMRDA, 52 Report’’), at 15, reprinted in 1 Leg. may serve to disclose conflicts of interest. Minn. L. Rev. 437, 458–60 (1962). Even in such instances, disclosure will History, at 411: ‘‘The hearings before the enable the persons whose rights are affected, The McClellan Committee hearings McClellan committee brought to light a the public, and the Government, to determine disclosed a history of self-dealing by number of instances in which union whether the arrangements or activities are certain union officials, often at the officials gained personal profit from a justifiable, ethical, and legal. expense of their union’s membership. business which dealt with the very same House Report, at 4, reprinted in 1 Leg. Then Senator John F. Kennedy was the employer with whom they engaged in History, at 762. See Senate Report, at 38, chief sponsor of the Senate bill, S. 505, collective bargaining on behalf of the reprinted in 1 Leg. History, at 434 (‘‘By which served as the foundation for the union.’’ Id. The committee endorsed the requiring reports * * *, the committee LMRDA. In introducing the bill for the concern expressed in the AFL–CIO’s is not to be construed as necessarily Senate’s consideration, Senator Ethical Practices Code that the union condemning the matters to be reported Kennedy addressed concerns about the official ‘‘may be given special favors or if they are not specifically declared to be involvement of union officials in contracts by the employer in return for improper or made illegal under other matters that blurred their personal less than a discharge of his obligations provisions of the bill or other laws’’). interests and their union’s interests, as a trade-union leader.’’ Id. ‘‘Reports are required as to matters which concerns would be remedied by In explaining the purpose of the which should be public knowledge so the legislation. Senator Kennedy used disclosure rules for union officers and that their propriety can be explored in the experience of the Teamsters union, employees, the Senate Report presented the light of known facts and as revealed by the investigation of the ‘‘three reasons for relying upon the conditions.’’ Id. As stated by Senator McClellan Committee, to underscore the milder sanction of reporting and Barry Goldwater after the LMRDA had purposes to be achieved by the Act: disclosure [relative to establishing been passed: First. It will no longer be possible for the criminal penalties] to eliminate Briefly, what must be reported are holdings dues of Teamster members to be * * * used improper conflicts of interest,’’ which of interest in or the receipt of economic by [the union’s] officers to build their own we summarize as follows: benefits from employers who deal or might personal financial empires without the • deal with such union official’s union, or knowledge of the members themselves—or Disclosure discourages questionable without investigation by the press and public practices. ‘‘The searchlight of publicity holdings in or benefits from enterprises authorities. is a strong deterrent.’’ Disclosure rules which do business with such union official’s Second. [A union official] would be should be tried before more severe union. required to disclose all his business dealings methods are employed. 105 Cong. Rec. A8512 (daily ed. Oct. 2, with insurance agents handling the union’s • Disclosure aids union governance. 1959), reprinted in 2 Leg. History, at welfare funds, his private arrangements with Reporting and publication will enable 1846. employers, his hidden partnerships in Conflict of interest standards, business ventures foisted upon his members, unions ‘‘to better regulate their own and all other possible conflicts of interest. affairs. The members may vote out of including disclosure obligations of office any individual whose personal individuals and entities occupying * * * * * positions of trust, are well grounded in Sixth. [Union officials] will find future financial interests conflict with his collusion with employers vastly restricted— duties to members,’’ and reporting and U.S. law. As stated in the House Report, with no more loans from employer groups, disclosure would facilitate legal action repeating almost verbatim the same no more attacks on rival unions through by members against ‘‘officers who point in the Senate Report: middlemen * * *, and no more secrecy violate their duty of loyalty to the For centuries the law of fiduciaries has shrouding the use of union funds to bail out members.’’ forbidden any person in a position of trust a collaborating employer. • Disclosure creates a record. The subject to such law to hold interests or enter into transactions in which self-interest may 105 Cong. Rec. S817 (daily ed. Jan. 20, reports will furnish a ‘‘sound factual 1959), reprinted in 2 NLRB Legislative conflict with complete loyalty to those whom basis for further action in the event that he serves. * * * The same principle * * * History of the Labor-Management other legislation is required.’’ Reporting and Disclosure Act of 1959 should be equally applicable to union officers and employees [quoting the AFL– (‘‘Leg. History’’), at 969. Senate Report, at 16, reprinted in 1 Leg. History, at 412. CIO’s Ethical Practices Code]: ‘‘[A] basic The improper dealings by the ethical principle in the conduct of union Teamsters officials, to which Senator The Report further stated: ‘‘No union affairs is that no responsible trade union Kennedy refers, are detailed in the officer or employee is obliged to file a official should have a personal financial Interim Report, at e.g., 48, 59–60, 64–86, report unless he holds a questionable interest which conflicts with the full 222–54, 443–50. These dealings, like interest or has engaged in a questionable performance of his fiduciary duties as a those identified by officials of other transaction. The bill is drawn broadly worker’s representative.’’ unions in the Interim Report, included enough, however, to require disclosure Senate Report, at 11, reprinted in 1 Leg. actions undertaken by national officers, of any personal gain which an officer or History, at 769. See generally or others acting at their behest, employee may be securing at the Restatement (Second) of Trusts (1959) involving matters affecting not only the expense of the union members.’’ Senate §§ 170, 173; Restatement (Second) of national union’s operation but also Report, at 14–15, reprinted in 1 Leg. Agency (1958) §§ 381, 387–98. matters of importance to local and History, at 410–11. The House Section 202 is an effort, in part, to intermediate bodies of their union. See Committee Report, H.R. Rep. No. 741 make effective the disclosure e.g., Interim Report, at 4–7, 46–49, 51, (1959) (‘‘House Report’’), at 11, requirements associated with the 55, 59–60, 63, 69, 74, 81, 87, 122–25, reprinted in 1 Leg. History, at 769, fiduciary standards applied to union 128, 130, 179, 186–87, 224, 228, 230–40, conveyed the same message. Both the officials in Title V of the LMRDA, a duty 244, 250, 252, 264–66, 268, 281, 284–85, Senate and House Reports recognize that includes an obligation to report 295, 297, 300, 444–48. See also The that a reportable interest is not potential conflicts of interest. Both Enemy Within, at 97, 99, 104–05, 106, necessarily an illegal practice. As the Titles II and V of the Act represent an 221–24. House Report stated: effort to codify various requirements

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36113

contained in an extensive code of ethics problem with the old form. Another commenter argued that no new voluntarily adopted by the AFL–CIO in asserted that the affected community requirements should be imposed on 1957 and applied to its affiliated unions has spent a ‘‘huge amount of time service providers until rulemaking on and officials. See Senate Report, at 12– getting up to speed on the present the Form LM–10 is completed. Another 16, reprinted in 1 Leg. History, at 408– form,’’ arguing that the proposed form is commenter argued that no changes in 12; House Report, at 9–12, reprinted in more confusing than the current form reporting should occur any sooner than 1 Leg. History, at 767–70. See also because it requires filers to identify for a filer’s fiscal year that begins after the Internal Affairs of Labor Unions, 58 each reportable interest the particular final rule takes effect. Mich. L. Rev. at 824–29. The following statutory provision to which it relates. DOL is applying these changes excerpts from this code demonstrate the A labor educator, noting the upsurge prospectively only. This final rule will similarities between a union official’s in Form LM–30 filings about the time of apply to fiscal years beginning on or fiduciary duty and the disclosure the comment period on the proposed after lll, 2007. Therefore, no report requirements of section 202. rule, suggested that the Department subject to today’s rule will be due until should postpone any changes until it at least lll, 2008. There is ample [A] basic ethical principle in the conduct of trade union affairs is that no responsible completed a thorough analysis of these time from publication of this final rule trade union official should have a personal submissions. Although this commenter until lll, 2008 for all filers to obtain financial interest which conflicts with the acknowledged that the old form any information they need to comply full performance of his fiduciary duties as a presents some challenges to a filer’s with the filing requirements. workers’ representative. easy understanding of the reporting B. Why the Department Is Not Presently [U]nion officers and agents should not be requirements, he asserted that the Requiring Unions to Notify Their prohibited from investing their personal proposed form poses greater Officers and Employees (‘‘Officials’’) funds in their own way in the American free opportunity for mistake and confusion. About Their Annual Reporting enterprise system so long as they are Two commenters argued: ‘‘[R]adically scrupulously careful to avoid any actual or Obligations changing the form at the same time as potential conflict of interest. In the NPRM, the Department In a sense, a trade union official holds a the Department provides comprehensive position comparable to that of a public guidance on what is considered requested comments on whether the servant. Like a public servant, he has a high reportable [on the old form] will only Department should require unions to fiduciary duty not only to serve the members impede the efforts to encourage accurate provide notice of the filing requirements of his union honestly and faithfully, but also and full reporting.’’ to their officers and employees. The to avoid personal economic interest which The old Form LM–30 posed NPRM discussed possible notification may conflict or appear to conflict with the substantial challenges to filers. As options. Under one option, unions full performance of his responsibility to those discussed in the NPRM and as would be required to notify their whom he serves. demonstrated by comments on the officers and employees of their Form There is nothing in the essential ethical LM–30 obligations within 30 days of principles of the trade union movement proposal, filers have been unsure about which should prevent a trade union official, the kinds of payments that trigger the their installation into office or hire, at any level, from investing personal funds in need to file a Form LM–30. See 70 FR respectively. Unions would be required the publicly traded securities of corporate 51172–73, 51175. Keeping the status to provide initial notification within 60 enterprises unrelated to the industry or area quo would leave in place exceptions days of the enactment of the regulation, in which the official has a particular trade that permit union officials to avoid and annually thereafter to all officers union responsibility. disclosing payments that would and employees. Under the proposal, a [These principles] apply not only where otherwise be reportable under the union could meet this requirement by the investments are made by union officials, statute, denying union members providing a copy of the Form LM–30 but also where third persons are used as and its instructions. E-mail notification blinds or covers to conceal the financial information about their officials’ interests of union officials. interests in and payments by employers might be considered. As an alternative, and businesses that raise conflict of a general notice, provided in a union Ethical Practices Code IV: Investments interest questions. Deferring the final publication addressed to each officer and Business Interests of Union, 105 rule for an exhaustive analysis of all the and employee, might be adequate for Cong. Rec.*16379 (daily ed. Sept. 3, Form LM–30 filings during the April this purpose. 1959), reprinted in 2 Leg. History, at through mid-August 2006 ‘‘grace A number of comments were received 1408. See also Ethical Practices Code II: period,’’ numbering about 13,000 would on the notification question. Health and Welfare Funds, id., 2 Leg. cause undue delay with little additional Commenters were divided on the History, at 1406–07. gain. The Department’s preliminary and question. Some commenters strongly The Department intends by today’s ongoing review of these filings supported mandatory notification, rule to better achieve the purposes of demonstrates that the old form is pointing to low numbers of past filers as the LMRDA, as reflected by its unclear and that today’s rule will rectify evidence that notification is essential. legislative history. many of the problems observed in those No union commenter supported the II. Discussion of Comments Received on filings. proposal. Commenters were divided as Proposed Rule and Department’s One commenter recommended that to whether the Department has authority Response the Department, well in advance of the to require notification under sections filing deadline, ‘‘should grant a 105 or 208 of the LMRDA. One A. Why the Changes To the Form Are reasonable extension for filing and/or commenter asserted that the Department Needed Now make any aspects of the final rule that lacks authority to issue a notification Several commenters recommended are more restrictive than the current rule requirement under section 105, arguing that the Department should evaluate its prospective only. DOL should only that this provision does not allow recent compliance experience with apply any changes prospectively, and it imposition of a detailed code of union Form LM–30 reports submitted by should provide a reasonable conduct. Another commenter used union officials using the old form before opportunity for necessary recordkeeping section 105 to illustrate its position that considering any changes to the form. and related efforts to facilitate accurate Congress knew how to establish a One commenter stated that there is no reports and compliance.’’ Another notification requirement, arguing that its

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00009 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES 36114 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

failure to so provide in section 202 mandatory notification requirement is to the recipient’s status in a labor evinces the intention to excuse unions unnecessary on the present record to organization.’’ This exemption applies from any obligation to provide such effectuate the disclosure purpose served by its terms to all reports due under notice. Another commenter argued to by section 202 of the Act. After unions section 202. The LMRDA Interpretative the contrary, stating that mandatory and their counsel became aware of the Manual (‘‘LMRDA Manual’’), as revised notification is consistent with section Department’s increased emphasis in in March 2005, states that anything with 105 which states, ‘‘[e]very labor securing compliance with section 202, a value of $25 or less will be considered organization shall inform its members many contacted their officers and de minimis and therefore not reportable concerning the provisions of this Act.’’ employees to inform or at least remind if it is given on an ‘‘infrequent or While acknowledging that section 208 them of their obligation to file a Form sporadic’’ basis under circumstances arguably permits a notification LM–30 if they engaged in any of the unrelated to the recipient’s status in a requirement, a commenter argued that activities identified by the form and its labor organization. LMRDA Manual, the Department must first demonstrate instructions. While in previous years § 241.700. that such a rule is necessary to prevent less than 100 forms were typically filed The Department sought comments on the circumvention or evasion of the each year, during the 2005 grace period the de minimis exception generally and reporting obligation. It argued that contemporaneous with this rulemaking, specifically on whether the $25 ‘‘circumvention’’ and ‘‘evasion’’ connote 13,326 reports were filed. During FY threshold is appropriate, whether the a willful disregard of the filing 2006, 4,348 Form LM–30 reports were burden is reasonable, and whether obligation, actions that require as a filed. Given the historic increases in reporting of all transactions should be premise that the filer already is aware of Form LM–30s during the grace period required without regard to their value. the filing obligation. with stepped up Departmental 70 FR 51175. In November 2005, A commenter argued that the compliance assistance and voluntary following a review of Form LM–30 Department should impose a broader efforts by major unions to educate reports filed during the Department’s notification requirement on unions. affiliates and officials, there is currently grace period, which revealed the Unions should be required, in its view, not a sufficient record to conclude that reporting of numerous payments that to provide notice to both officials and a mandatory requirement is needed. union members and the public would their members about both the filing The Department applauds the regard as trivial, and based on obligations of union officials and the voluntary efforts by the AFL–CIO and comments from union representatives union’s own reporting obligations to file other unions to apprise union officials that the threshold was too low, the a Form LM–2, 3 or 4. Another about their Form LM–30 reporting Department issued guidance advising commenter viewed notification as a obligations. However, insufficient time that ‘‘gifts, gratuities or loans with a ‘‘first-step in the right direction.’’ It has passed to conclude that union value of $250 or less’’ would be stated a preference for a system whereby officials, without receiving regular considered insubstantial for the the Department would provide annual notice by their union of these purposes of Form LM–30 reporting. reminders about Form LM–30; each obligations, will remain aware of these In the NPRM, the Department noted union would be required to file with the obligations. If future compliance figures the inclusive language used by Congress Department the names and addresses of indicate that new union officials are in defining the scope of the reporting all its officers and employees. On the uninformed about their Form LM–30 obligation and the absence of any other hand, several commenters argued filing obligations or that others appear general substantiality test for the that reliance on voluntary efforts would to have forgotten their obligations, the LMRDA’s reporting provisions. See better achieve the goal of informing Department may then reassess the need section 202(a)(3); 29 U.S.C. 432(a) officials about their filing obligation. for imposing a notification requirement. (limiting reports specific to certain One of these commenters stated that ‘‘substantial’’ dealings). The Department C. Why the De Minimis Exemption From voluntary education works better than also noted that exceptions based on Reporting Insubstantial Gifts and Other mandatory notification given that insubstantiality are commonly read into Financial Benefits Has Been Simplified unions have a variety of governance statutes that do not expressly contain and Subjected to a $250 Limit, With an structures and that they operate, in them and that the financial disclosure Exclusion for Gifts Valued at $20 or Less effect, in different industries calling for reports for certain Federal government and Certain Widely-Attended different approaches. Another employees contain a de minimis Gatherings commenter suggested that DOL ‘‘work exemption. informally’’ to obtain compliance. This Section 202(a) of the LMRDA calls for The Department in today’s rule commenter explained that under the old disclosure of ‘‘any’’ stock, bond or other retains a de minimis exemption. Under regulation, unions take various steps to interest, ‘‘any’’ income, ‘‘any’’ loan, and this exemption, payments or gifts inform their officials about Form LM–30 ‘‘any’’ payment or other thing of value totaling $250 or less from any one requirements, such as by holding received by a union official, his or her source during the reporting year need meetings or providing written notices. spouse, or minor child[ren] from not be reported. In addition, the The commenter argued that the choice employers and businesses as defined in Department decides that payments or of a method to inform union members sections 202(a)(1) through 202(a)(6). gifts valued at $20 or less need not be should be left to the union. Several While this inclusive language may be included in determining whether the commenters argued that notification read to require a report on any such $250 threshold has been met. The was unnecessary in light of new payments regardless of amount, the Department has concluded that a dollar- Department guidance, pointing to the Department always has excepted from specific test for de minimis payments is rise in filings to support its claim. reporting payments of insubstantial or preferable to one that requires filers to The Department believes it possesses de minimis value. Thus, the old make a fact-specific determination of the authority to impose a notification instructions to the Form LM–30 inform what is ‘‘insubstantial’’ or ‘‘unrelated to requirement. However, the Department filers: ‘‘You do not have to report any the filer’s status in a labor organization’’ has concluded, based on its review of sporadic or occasional gifts, gratuities, or ‘‘sporadic and occasional.’’ The the comments and the recent experience or loans of insubstantial value, given Department also has crafted a limited with Form LM–30 filers, that a under circumstances or terms unrelated reporting exclusion for a union official’s

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36115

attendance at ‘‘widely attended requested the Department to provide at materials and seminars provided union gatherings.’’ If during the year, an officer least an illustrative dollar figure and to trustees by vendors offering or or employee attends one or two widely- explain the meaning it attributes to the providing services to welfare and attended gatherings for which an terms ‘‘unrelated to the filer’s status in pension plans. These commenters employer has spent $125 or less per a labor organization’’ and ‘‘sporadic and argued that even a high de minimis attendee per gathering, the officer or occasional.’’ Some specifically level would have a chilling effect employee has no Form LM–30 requested the Department to provide because union trustees would refuse the obligation with regard to tracking or additional examples so that filers could materials or decline to attend a seminar disclosing these events. A gathering will better understand the de minimis in order to avoid the recordkeeping and be considered ‘‘widely attended’’ if it is exception. Others argued for a test that reporting burden or the perception by expected that a large number of persons was solely tied to the dollar value of any union members that the trustee’s will attend and that attendees will gift or payment. attendance would be inappropriate. One include both union officials and a As acknowledged in the NPRM, the commenter suggested that no report substantial number of individuals with qualitative aspects of the rule have should be required for educational no relationship to a union or its section proved difficult to apply. Based on its resources provided to union officials, so 3(l) trust. consideration of the comments and long as the sponsoring organization The Department received numerous further review of this question, the retained a statement of the educational comments on the de minimis question, Department has concluded that the purpose of the resource, a list of its total mostly in favor of retaining the purposes of section 202 can best be expenses relating to the otherwise exemption and the adoption of a achieved by modifying the test so that reportable event, and if a seminar, the quantitative threshold substantially the value of the payment or gift is the list of attendees. higher than the $25 figure discussed in sole consideration affecting its The Department declines to create any the NPRM. Particular comments are disclosure. Additional conditions for suggested broad category of exceptions. discussed below. claiming the exception would often Creating the broad exceptions suggested A few commenters argued that no de present filers with the burden and would frustrate the purpose of the minimis level should be adopted at all. expense of undertaking a fact-specific statute to make transparent possible One commenter stated that full inquiry even though the amount of the conflicts and would deny union disclosure was appropriate because it gift or payment, as recognized by the members the ability to evaluate any allowed a union’s members to decide dollar threshold, is insubstantial. whether a gift to a union official Some commenters favored replacing concerns they might have about the presented a negligible conflict of or at least supplementing the de possibility that a union official might interest or not. The Department minimis rule with the creation of broad put his or her own interests above those acknowledges that there would be some exceptions to the various reporting of the union and its members. benefit in eliminating the exception; requirements. These commenters Educational seminars and resources this change would allow individual requested exceptions for what they may benefit trustees to pension or union members to determine whether a viewed as routine activities necessary welfare plans and the workers whom particular payment poses a conflict of for conducting business. Thus, the plan is meant to benefit. The same interest and more importantly could exceptions, among others, were event, however, may well include gifts, lead to further inquiry about a union proposed for the following: any meals, travel, lodging and entertainment official’s actions. As stated in the expenses related to an employee benefit provided by service providers, or NPRM, there is no statutory requirement plan including educational benefits, potential service providers, to these for a de minimis level. See receptions and meals, routine business plans. By requiring reporting, the Environmental Defense Fund, Inc. v. functions and luncheons, all marketing Department need not attempt the highly EPA, 82 F.3d 451, 466 (D.C. Cir. 1996). expenses, marketing and entertainment difficult task of crafting a rule that will Nonetheless, abandoning a de minimis expenses provided equally to union and identify the questionable payments. threshold altogether would be a sharp management trustees, and any Rather, union members and the public departure from the Department’s promotional or branded good containing can evaluate the situation on a case-by- historical practice. Moreover, as further a company name or logo. Most of these case basis, and make their own discussed below, the Department comments were from employers or decisions on the choices made by their believes that elimination of the de industry associations that anticipate that officials. Furthermore, these minimis exception would only union officials will rely on the vendors commenters fail to recognize that the marginally increase meaningful to keep track of any gifts or payments Secretary’s authority to fashion a de transparency. Furthermore, the absence so that they can readily determine minimis exception is a limited one. The of a specific de minimis exception in whether they have incurred a reporting LMRDA does not confer on the section 202 is not determinative; obligation. Another commenter Secretary the authority to except from exceptions based on insubstantiality are suggested that no report should be reporting matters which Congress has commonly read into statutes that do not required for any gratuity that would be evinced no intention to withhold from expressly contain them, and this considered a ‘‘business expense’’ by the disclosure and the de minimis practice demonstrates their practical IRS. One commenter characterized the principle, as evidenced by its name, value. See Wisconsin Dept. of Revenue rule as ‘‘incredibly burdensome’’ and an only applies to matters of relative v. William Wrigley, Jr., Co., 505 U.S. ‘‘unprecedented imposition’’ on service insignificance. Although the disclosure 214, 231 (1992). For these reasons, the providers to trusts. Another commenter rules for Federal employees provide an Department retains the de minimis suggested, in effect, that the Department alternative system for reporting exception. should adopt the rules and exceptions financial interests that may pose a Many commenters noted the difficulty provided under the disclosure rules for conflict with an individual’s duties, that of applying the vague de minimis Federal employees in place of the system was designed to meet the special standard in the old instructions and the Department’s proposed de minimis rule. needs and interests of Federal historical absence of helpful guidance in Several comments expressed concern employment and the various laws that applying the exception. Several about the need to report educational govern such employment. The

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00011 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES 36116 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

Department has borrowed some ideas records of coffee and pastry service, some union officials will choose not to from the disclosure rules for Federal modest lunches, or similar ‘‘hospitality attend some widely-attended gatherings employees but to adopt the Federal gifts.’’ of value to them and their union’s disclosure rules wholesale would be Some commenters expressed the members. However, the Department also impracticable. concern that requiring large numbers of believes that reporting attendance at Most of the commenters advocated a reports on relatively small amounts of legitimate educational gatherings will dollar threshold substantially higher payments ‘‘buries’’ from view reports of also benefit the filer by showing their than the $25 figure mentioned in the greater value. The Department believes union members that the filer is taking NPRM; many urged a figure higher than this fear is unfounded, especially in steps to learn and advance the skills $250. These commenters and others light of the $250 aggregate threshold needed for their position. As stated requested the Department to exclude established by today’s rule. Even at a above, the Department’s authority to from the aggregate amount ‘‘hospitality much lower figure, the number of fashion a de minimis exception is gifts’’ of nominal value, variously reports of interest to a particular union constrained by the language of section defined by particular commenters. member would constitute only a small 202. In the Department’s view, however, Several commenters urged the fraction of the total number of reports the Department is within the bounds of Department to adopt a two-tier approach filed and these reports could easily be its discretion to craft a limited reporting similar to Federal conflict of interest culled electronically from the other exception for such gatherings. Thus, the disclosure requirements for Office of reports. Department concludes that no union Government Ethics (OGE) Form 450 and The Department does not find official need report their attendance at Form SF 278. In general, these persuasive the comments urging that one or two such gatherings annually commenters recommended that gifts payments higher than $20 should be provided the expense incurred by the totaling $250 or less from any one excluded from the $250 reporting employer or business holding the source need not be reported and that threshold. While there may be merit to gathering is $125 or less per expected ‘‘insubstantial’’ gifts (ranging from $75 some arguments urging a somewhat attendee. The Department believes this to $250) should not be included in higher or lower amount, a $20 initial change meets the concern of some determining whether the $250 threshold threshold minimizes reporting burden commenters that union officials and has been met. Otherwise, many and ensures disclosure of financial trustees would be discouraged from commenters argued, the recordkeeping relationships that may pose a conflict of attending educational seminars related burden would be unreasonable because interest. The Department, however, to their union or trustee duties if they union officials would have to track rejects the suggestion that items valued were required to report such activities. every cup of coffee and every lunch to substantially more than $20 should go The Department considered, but determine whether and when the $250 unreported. While in the Department’s rejected as impractical and perhaps level was met. The general rule for view, a single gift of $75 or even $100 beyond the Department’s authority, a employees covered by the Federal is unlikely to be a matter of substantial broader qualitative exception for disclosure rules is that they are concern to some members, even a few meetings. None of the comments prohibited from accepting any gift gifts of this magnitude would be of provided a ready basis for because of their government position. concern to most members. And almost distinguishing between the purposes of Examples of prohibited gifts are those every member would be concerned if a various meetings that would reduce the that come from persons or firms that union official received several gifts of reporting burden without impeding the have contracts, grants, or other business such value. By setting the amount at disclosure of information relevant to with the employee’s agency, or are $100, for example, a union official could assessing the potential conflict of seeking such contracts, grants or other receive a respectable set of golf clubs, interest from the value of attendance at business. These employees are also gloves, shoes, and other golfing attire several meetings or a single meeting of prohibited from accepting gifts from through a series of $100 gifts without significant economic value to a union entities that are either regulated by the filing a Form LM–30. Most union official present at the meeting. employee’s agency or may be affected by members and members of the public, the performance of the employee’s the Department believes, would view D. Why Reporting Exceptions Permitted duties. An exception to this general rule the gift of a complete set of clubs or Under the Old Rule Have Been applies to unsolicited non-cash gifts of other serial or packaged gifts as posing Eliminated or Modified To Provide More $20 or less up to a maximum of $50 per a potential conflict of interest between Information to Union Members year from a single source. 5 CFR the union duties of the recipient and In the NPRM, the Department 2635.204(a). matters affecting the donor of the gifts. proposed the elimination of regulatory The Department believes that, by The purpose of the de minimis exceptions from the reporting setting the threshold at $250 and exception is to minimize reporting requirements of section 202. One of providing that payments or gifts valued burden. A filer may not use the these exceptions relates to the reporting at $20 or less need not be included in exception to hide the receipt of a series by union officials of payments received determining whether the $250 threshold of payments or gifts that are purposely under ‘‘union-leave’’ and ‘‘no-docking’’ has been met, it has achieved the set at $20 or less to avoid reaching the policies; this exception is discussed appropriate balance between ensuring $250 reporting threshold. For example, separately. Although each exception is transparency of potential conflicts and a filer would have to report his or her based on statutory language excepting minimizing the reporting burden. This receipt of individual tickets worth $20 the reporting of specific interests in or two-tier approach has precedent in the or less to all of a professional baseball payments from an employer, the old Federal employee disclosure regime. By team’s home games that are provided Form LM–30 and its instructions apply excluding expenses of $20 or less from before each game rather than given as a these specific exceptions more generally the $250 computation, the Department complete package at the start of the to other matters that otherwise would substantially reduces the burden season. The Department is sensitive to have to be reported. As discussed in the associated with aggregating gifts or the concern that by setting the de NPRM, by administratively enlarging payments from a particular employer or minimis level at $250 today’s rule could exceptions to reporting, the Department business. There will be no need to keep lead to the unintended consequence that deprived union members of information

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00012 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36117

to which they were entitled under Department’s proposal in the statutory those specific provisions by a vague particular provisions of section 202. 70 language, noting that the ‘‘regular course reference to another statute. FR 51175–78. The Department also of business/employee discount’’ Union members have an interest in proposed to eliminate a provision in its exception is found only in section knowing of such holdings, transactions regulations, 29 CFR 404.4, which now 202(a)(5) and not in sections 202(a)(1) in holdings, loans, and income so they states that the Department may require and 202(a)(2). Therefore, this can evaluate whether each is significant a union official to file a special report commenter contended, ‘‘the current enough, or of such a nature, to in situations where the administrative instructions create an exception for constitute a conflict of interest. The exceptions departed from the language transactions under the latter two statutory exemption for payments and of the statute. 70 FR 51178. subsections that Congress did not other benefits received as a bona fide Under today’s rule, as discussed envision.’’ Numerous commenters employee of the employer is sufficient below, the Department generally has objected generally to reporting related to to exempt all the ordinary payments adopted the proposals set forth in the the routine conduct of business, received as part of an employment NPRM to narrow the scope of these especially in connection with business relationship; the exemption in the exceptions in order to better adhere to conducted between section 3(l) trusts current form, the Department finds, may the statutory design. The Department and service providers, including provide a means to exclude other items also has eliminated the ‘‘special financial institutions. For example, one that present conflicts of interest for reports’’ language as unnecessary given commenter asserted that the Department union officials. For example, a union the Department’s express statutory should not focus on ‘‘routine business officer who receives income from the mandate to conduct investigations transactions conducted at arms length,’’ employer of union members for contract under the Act. but rather on those transactions that work could, at least arguably, avoid 1. Regular Course of Business Exception may be evidence of a potential conflict disclosing the payment by relying on of interest. Section 202(a)(5) of the LMRDA this exemption. A union employee who requires union officials to report any One commenter offered a general purchases certain types of ownership ‘‘business transaction or arrangement’’ argument against reporting of what it interests could avoid disclosing the with an employer whose employees the considers to be routine business holding by relying on this exemption. A union represents or is actively seeking transactions, including payments or union official with an employer as a to represent. This section excepts from loans to union officials. The commenter client has a conflict between personal reporting two categories of transactions argued, in effect, that the proviso in interests and union loyalties, as does an and arrangements: (1) Payments and section 202(a)(6), excepting reporting on official with an ownership interest in benefits received as a bona fide ‘‘payments of the kinds referred to in the employer. The change is consistent employee of an employer whose section 302(c) of the Labor Management with the plain language of the statute, employees the official’s union Relations Act,’’ should be applied which applies this exception only to represents or is actively seeking to broadly to all the subsections of section financial matters reportable under represent; and (2) ‘‘purchases and sales 202(a). Thus, this commenter argues section 202(a)(5), not to section of goods or services in the regular course implicitly that section 302(c) of the 202(a)(1) or 202(a)(2). The elimination of business at prices generally available Labor Management Relations Act of this exemption will result in more to any employee of such employer.’’ excepts from the section’s criminal detailed and transparent reporting of (Emphasis added). Sections 202(a)(1) prohibition the payment of money or financial information that union and 202(a)(2) require union officers and other thing of value ‘‘with respect to the members may find helpful in employees to report payments from and sale or purchase of an article or determining whether their union’s other financial interests with such an commodity at the prevailing market officers and employees are subject to employer. These sections do not contain price in the regular course of business.’’ financial pressures inconsistent with this ‘‘employee discount in the regular 29 U.S.C. 186(c)(3). This commenter their responsibilities to the union and course of business’’ exception, but the apparently believes that Congress also its members. intended to exclude such payments prior instructions applied it to financial 2. Bona Fide Employee Exception for from any reporting by union officials, matters covered by these subsections. Transactions With an Employer Whose notwithstanding the absence of such The Department adopts its proposal to Employees the Official’s Union exception from subsections (a)(1)–(5) of limit the exception to financial matters Represents or Is Actively Seeking To section 202. reportable under section 202(a)(5). Represent Thus, this exception will no longer The Department disagrees that apply to matters reportable under Congress intended the section 302(c) Sections 202(a)(1) and 202(a)(5) sections 202(a)(1) or 202(a)(2). It will proviso in section 202(a)(6) to supplant include language that specifically not be applicable to (1) Holdings in an the specific reporting obligations excepts ‘‘payments and other benefits employer whose employees the union prescribed by the other five subsections received as a bona fide employee of represents or is actively seeking to of section 202(a), several which have such employer’’ from reporting. Under represent, (2) transactions in such unique exceptions narrowly applicable the old Form LM–30 and the holdings, (3) loans to or from such to the types of payments for which instructions, however, this exception employer, and (4) income or any other reports must be filed. The Department also was applied to matters for which benefit with monetary value (including concludes that this construction is reports were required under section reimbursed expenses) received from contrary to the plain language of the 202(a)(2). Section 202(a)(2) requires such an employer. Act, and would render superfluous union officials to report: (1) The Department received a few specific exclusions Congress crafted for Transactions in holdings in an employer comments specific to this issue. One particular types of payments. It would whose employees the union represents commenter supported the proposal to make no sense for Congress to craft a or is actively seeking to represent, and remove the exception, while two others disclosure-specific statute with explicit (2) loans to or from such an employer. objected to the proposal. One reporting obligations and explicit Section 202(a)(2) does not include the commenter based its support of the exceptions and, at the same time, undo ‘‘bona fide employee’’ exception.

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00013 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES 36118 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

The Department proposed to limit this employers, and the Department; mortgage or other bank loan received exception only to reports due under interfere with the privacy of the from any financial institution in sections 202(a)(1) and 202(a)(5), thereby employees as well as the financial competition with a financial institution eliminating the old exception for reports institutions by revealing confidential that deals with the official’s union. A (on payments other than loans) due information; and fail to advance the goal union official would first have to under section 202(a)(2). See 70 FR of disclosing potential conflicts of identify all the financial transactions 51176–78, 51188. The Department interest. One commenter argued that the with the official, his or her spouse or received only one comment on this Department’s proposal to eliminate the minor children and then look at the issue. It supported the proposal. Today’s exception was an ‘‘unwarranted corresponding institutions to see rule adopts the proposal, which is intrusion on privacy,’’ while providing whether they do business with the consistent with the plain language of the only minimal benefit to union members. official’s union, or compete with those statute. A union official’s decision to This commenter questioned why the that deal with the official’s union. In the purchase or divest holdings in the public should be made aware of a ‘‘bona Department’s view, the burden would employer could be of significant fide mortgage’’ from a financial outweigh the value of the additional importance to union members and its institution unrelated to the union and information disclosed. reporting would prevent a possible given on terms generally offered to the The current exception has kept conflict from escaping the scrutiny of public. Most mortgages along with other improper transactions from being members. As noted in the proposal, encumbrances on property must be disclosed. As noted in the NPRM, the sales and purchases of an ownership recorded with a government office, Department only belatedly became interest in the employer are unlikely to typically at the county level, to be aware of a situation where a credit constitute payments received as a bona effective. These filings are publicly union controlled by a local union made fide employee; by eliminating this available and as such the insinuation 61% of its loans to four of its loan exception, a union official must now, that the Department is now making officers, three of whom were officers of for example, report payments made to public information that was secret is the local. 70 FR 51177. If the officials officials as stock options where the unfounded. Further, the vast majority of had been required to report these loans, employer buys back such options. these loans will be made on neutral the members would have learned that criteria not related to the filer’s status their credit union was making loans for 3. Exception for Bona Fide Loans or with a labor organization and as such reasons related to union status, not on Interest From a Banking Institution will not be reportable. The rare instance a borrower’s ability to repay the debt, Section 202(a)(6) requires union where the filer’s status with the labor which posed a risk to the credit union officials to report ‘‘any payment of organization is a criterion for issuance by failing to spread the lending risk money or other thing of value (including of the loan is exactly the type of more broadly. In short, the members reimbursed expenses)’’ received from situation where a possible conflict of would have been able to determine ‘‘any employer’’ or any labor relations interest exists. As such, reporting on whether the officials had placed their consultant to an employer. Under the transactions of this type is warranted. own personal interests above the old Form LM–30 and its instructions, Another commenter recommended union’s interest in the credit union that the following are excepted from that the Department only require it ostensibly controlled. By eliminating reporting: ‘‘[B]ona fide loans, interest or reporting of loans made to employees in the exception for institutions that are dividends from national or state banks, whole or in part due to their union trusts, valuable information regarding credit unions, savings or loan status. The commenter expressed potential conflicts of interest will be associations, insurance companies, or concern over the volume and diversity publicly disclosed. other bona fide credit institutions.’’ See of new transactions that would come While the Department recognizes that Part C (ii) of the instructions to the old under the scope of the new Form LM– an official’s interest in preserving the form. The Department proposed to 30, such as payroll advances, and the confidentiality of such information may eliminate the exemption. burdensome recordkeeping be considerable; nonetheless, this Upon review of the comments, the requirements that would accompany the interest is outweighed by the need for Department retains the general elimination of this exception. One union members and the public to know exception but limits its scope because commenter argued that the of transactions between union officials the Department has determined that the ‘‘overwhelming majority’’ of the and related organizations. Thus, here exception is too broad. Under the final estimated 206,000 union officers and the balance tips in favor of disclosure in rule, this exception will not apply to employees would now have to report the limited situations proposed by ‘‘national or state banks, credit unions, under the new Form LM–30. today’s rule. savings or loan associations, insurance The Department has concluded that This exception applies, and has companies, or other bona fide credit the exception as drawn in the always applied, only to reports due institutions that constitute a ‘trust in instructions to the old Form LM–30 is under section 202(a)(6). Where the which your labor organization is too broad. While there is a strong financial institution is an employer interested’.’’ argument that elimination of the whose employees the filer’s union The Department received two exception would best serve the represents or is actively seeking to comments in support of the proposal to disclosure purposes of the Act, the total represent, the exception would not eliminate this exception in toto. One burden associated with requiring reports apply. Nor would it apply where the commenter argued that the exception in on payments received from all financial financial institution is a business that the Form LM–30 instructions had no institutions would be considerable. buys, sells, leases or otherwise deals statutory basis, and that its existence Loans, interest, and dividends earned with the union, a trust in which the tended to shield transactions that during the regular course of business union is interested, or in substantial should be reported. The Department with a bona fide financial institution are part with the employer of the union received four comments opposed to this among the most common financial members. proposal. These commenters stated that transactions undertaken by individuals. One commenter ‘‘strongly’’ disagreed the elimination of this exception would For example, without this exception, a with the proposal, arguing that it would burden union officers and employees, union official would have to report each impose a reporting obligation on union

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00014 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36119

officials, even though financial a public utility holding company exceptions for transactions involving institutions are expressly relieved from registered under the Public Utility the stock of the employer, regardless of reporting such loans by section 203(a)(1) Holding Company Act of 1935, or to whether the stock is traded on a of the Act. Section 203(a)(1) specifically report any income derived therefrom.’’ registered securities exchange. This exempts ‘‘payments or loans made by The NPRM listed all of the stock commenter expressed concern about the any national or State bank, credit union, exchanges currently registered under potential for insider trading by union insurance company, savings and loan the Securities and Exchange Act of officials who have knowledge about the association or other credit institution.’’ 1934: ‘‘The American Stock Exchange, position of the company that the rank The commenter pointed out the Chicago Board Options Stock Exchange, and file members do not have. In potential ‘‘reporting inequities’’ of the International Securities Exchange, support of his position, the commenter Department’s proposal and argued that National Stock Exchange (formerly the provides an example in which members the inconsistent reporting obligation Cincinnati Stock Exchange), New York of a union executive board sell stock would make comparative analysis of Stock Exchange, Pacific Exchange, and options in a national exchange or Forms LM–10 and LM–30 impossible. Philadelphia Stock Exchange.’’ The private exchange shortly before The Department acknowledges that by proposal noted that NASDAQ was not authorizing a strike against the company modifying the exception, union officials registered as a national securities that issued the stock. will be required to report on matters exchange. Other commenters argued that the about which the financial institutions Two commenters favored the existing exception for securities traded themselves have no LMRDA reporting complete elimination of the on a registered, national stock exchange responsibility. However, the commenter insubstantiality exception for securities should be continued and extended to overlooked the limited scope of the not meeting the registration cover stock transactions for shares divergence. Section 203(a)(1)’s requirements. One of these commenters traded on NASDAQ. All of the union exception for ‘‘credit institutions’’ does argued that the insubstantiality commenters, along with a labor not extend to any payments or loans exception flies in the face of clear educator, favored the exception and made by such institutions to persuade statutory intent to require the reporting supported broadening it. A commenter or otherwise interfere with employee of all stock transactions apart from bona supported maintaining the exception for collective bargaining or representation fide investments in securities traded on stock that is held in a company rights. See 29 U.S.C. 203(a)(2) and (3). a national securities exchange. The unrelated to the filer’s labor Furthermore, strong policy reasons exist other commenter argued that union organization because, in its view, there for requiring union officials to report members, not this Department, should is no potential for a conflict of interest. their arrangements with financial determine what is and is not In support of their position, they argued institutions in the limited circumstances insubstantial. One commenter also that the LMRDA’s legislative history required by today’s rule. supported the exception for small demonstrates that Congress did not holdings of unregistered securities as want to burden officials with reporting 4. Exceptions Relating to Stocks long as the holdings are too small to holdings of publicly traded or regulated The Department invited comments give rise to a controlling interest. stocks ‘‘because of the unlikelihood that about whether to remove or retain the Focusing on the comprehensibility of such holdings will amount to a administratively created exception the exceptions to ‘‘end-user’’ union substantial or controlling interest * * * related to the reporting of holdings, officials and members, another in the company in question. The transactions or receipts of income from commenter stated that the ‘‘$1,000/100’’ argument follows that because NASDAQ securities that do not meet the and ‘‘publicly-traded securities’’ securities are publicly regulated and registration requirements of the Act, are exceptions are specific and easily publicly traded, they fall within the of insubstantial value, and occur under understood. By contrast, all of the union purview of what Congress sought to terms unrelated to an employee’s status commenters, along with a labor exempt from reporting under section in a labor organization. The old rule educator, favored the exception and 202(b). One commenter illustrated its states: ‘‘For purposes of this exclusion, supported its broadening. position with the different reporting holdings or transactions involving The Department believes that the requirements that would apply if a $1,000 or less and receipt of income of $1,000/$100 exception is warranted, union official owned both Gateway and $100 or less in any one security shall be and therefore it is retained in today’s Dell stock: the Dell stock (traded on considered insubstantial.’’ 70 FR 51176. rule. Where the value of securities and NASDAQ) would be reported, whereas On a related issue, the Department any interest thereon is less than these the Gateway stock (traded on the NYSE) sought comments on whether to retain threshold amounts, there is little risk of would not be reported. According to the distinction between, on the one potential conflict between an official’s this commenter, there is no conflict of hand, securities traded on a registered personal interests and his or her duties interest in either instance, and national stock exchange and, on the to the union. Moreover, any such risk is accordingly neither transaction should other hand, securities that while traded outweighed by the burden associated be reported. Another commenter noted on a high volume exchange, are not with such reporting. Thus, for these and that when the LMRDA was enacted in traded on a registered national exchange the reasons already expressed more 1959, the shares of large corporations (as was the case with NASDAQ until generally herein on the application of were exclusively traded on registered recently). 70 FR 51177. Section 202(b) the de minimis principle to the exchanges. It explains that now, provides that a union official is not reporting obligation, today’s rule retains however, the shares of many of those required ‘‘to report his bona fide this limited reporting exception. same large corporations are traded on investments in securities traded on a One commenter objected to the NASDAQ and that shares traded on securities exchange registered as a maintaining the exception for stock NASDAQ are subject to Federal national securities exchange under the traded on other than a registered, registration requirements. Securities Exchange Act of 1934, in national stock exchange on the ground The Department retains the rule set shares in an investment company that the statute does not provide for forth in the instructions to the old rule, registered under the Investment such an exception. Another commenter continuing the obligation of union Company Act of 1940, or in securities of argued that there should be no officials to report transactions with any

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00015 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES 36120 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

exchange unless and until they meet the registration status of NASDAQ has You are a national union president and a requirements embodied in section largely eliminated the need for a lengthy trustee of a jointly administered health care 202(b). As a pure matter of policy, the discussion of this point in the trust that insures union members through an instructions. For this reason, the final insurance company. Premiums for coverage argument for adding securities traded on are paid by the trust to the insurance a highly regulated, albeit instructions more closely follow the company. You are a member of the board of ‘‘unregistered,’’ market to the general abbreviated discussion of this point in directors of the health insurance company, exception for stock traded on a the current instructions, without the which pays you an annual fee and registered, national stock exchange may need for a separate definition of reimburses expenses for your attendance at have merit. However, such argument ‘‘publicly-traded securities’’ or an board meetings. * * * As the insurance founders on the plain language used by equivalent term. company is doing business with a trust in Congress to craft the exception for which your union is interested, you must 5. Revision of Special Report Language report your annual fee and reimbursed securities traded on a registered As noted, the old Form LM–30 expenses under this subsection. The dealings exchange as provided in the statute. By between the health insurance company and conditioning a reporting exception on administratively excepts union officials the trust must also be reported. from reporting various matters that registration, Congress obviously 70 FR 51215. considered whether unregistered stocks otherwise would have to be reported under the particular subsections of The Department only received one should be similarly exempted and comment on this point. The commenter decided against it. Similarly, the section 202(a). A special report was intended to be used to obtain such opposed the proposal, arguing that the statutory language prevents the Department should confirm its 1986 Department from adopting a rule, as information about such unreported matters upon demand of the opinion that directors’ fees paid to suggested by one commenter, to require union officers serving on a corporate officials to report their holdings in such Department. See 29 CFR 404.4. The Department proposed to delete the board need not be reported ‘‘so long as securities that he or she has purchased the corporation pays the union officer/ in a company whose employees the special report provision. At the time the Form LM–30 was director at the same rate it pays the official’s union represents or is actively created, the Department apparently other directors, for the same services.’’ seeking to represent. believed that more complete reporting, The opposition was based on the Although the commenters have consistent with the reporting commenter’s broader premise that demonstrated that the exception crafted requirements of section 202, could be Congress intended to generally except by Congress, differentiating between realized through an ad hoc special any payments to union officials that are certain kinds of stock depending upon report that could be selectively required made in the regular course of business. how they are traded, may lead to some by the Department. See 29 CFR 404.4. The Department disagrees. perceived anomalies, they do not show As discussed in the NPRM, these reports In the commenter’s view, the old that this reporting obligation will would allow the Department to require Form LM–30, in effect, applies language impose any undue burden on filers. the disclosure of the information that in section 202(a)(5)—excepting from Furthermore, on July 15, 2006, the SEC was exempted from disclosure by reporting certain transactions involving approved NASDAQ’s application for operation of the administrative the ‘‘purchases and sales of goods or registration as a national securities exceptions. No procedures were services in the regular course of exchange, effective July 31, 2006. In established, however, to identify the business at prices generally available to announcing its decision, the SEC stated circumstances for which a special report any employee of [the] employer’’ who that the ‘‘vast majority’’ of the would be required; and apparently the sold the goods or service—to modify companies listed on NASDAQ have Department has never requested a union generally the reporting obligations previously registered their securities official to provide a special report. As under section 202. The commenter under the Exchange Act. Press Release, noted in the NPRM, the elimination of argued that the instructions to the old SEC (July 31, 2006), available at the special report provision does not Form LM–30 also apply, in effect, http://www.sec.gov/news/press/2006/ diminish the Department’s authority to language in section 202(a)(6)—excepting 2006–127.htm (last visited on Nov. 21, assess each Form LM–30 report for from reporting certain payments ‘‘of the 2006). Thus, under today’s rule, the sufficiency, require amended reports, kinds referred to in section 302(c) of the exception provided by section 202(b) and to commence investigations where Labor Management Relations Act’’—to applies to registered stocks traded on it is necessary to determine whether any modify generally the reporting NASDAQ; and the instructions have person has or is about to violate any obligations of section 202. The been revised to reflect this change. As provision of the Act. 29 U.S.C. 440, 521. commenter, in essence, asserts that the some of the commenters suggested, the instructions to the old form, like the distinction between highly regulated E. Why Union Officials, as a General 1986 opinion on directors’ fees, which stocks that are traded on a national, but Rule, Must Report Payments Received as draws on similar language in section unregistered exchange, and those traded Members of a Company’s Board of 302(c), properly effectuate the intent of on a registered national exchange is not Directors Congress and therefore should be immediately apparent to many filers, If a union official serves as a director preserved. The commenter further particularly insofar as NASDAQ-traded for an employer and receives asserts that there is no justification for securities were concerned. The compensation or reimbursement for additional recordkeeping and reporting Department believes that its proposed attendance at meetings, the official must if the union representatives are being definition of ‘‘publicly-traded report such payments. Such payments treated the same as their fellow directors securities’’ (albeit something of a may not have been reported on the old on a corporate board. misnomer in that registration of a Form LM–30 because of an official’s The Department disagrees with this national exchange, not ‘‘public trading,’’ reliance on an earlier opinion by the commenter’s opposition to this is the distinguishing characteristic for Department on this issue. In the NPRM, reporting requirement. The commenter’s reporting purposes) accurately set forth the proposed instructions provided the reference to the 1986 opinion on the statutory reporting obligation. At the following example of a transaction to be directors’ fees refers to a letter by a same time, however, the change in the reported under section 202(a)(4): senior Department official responding to

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00016 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36121

a request for an opinion concerning recipient’s union represents or is parent or subordinate bodies. The directors’ fees paid to union officers actively seeking to represent, or any part NPRM noted that the LMRDA Manual serving on a corporate board. The of which consists of buying, selling, or provides that an officer at the highest official concluded that ‘‘so long as the otherwise dealing with the recipient’s tier of a three-tier labor organization corporation pays the union officer/ union, or a trust in which the recipient’s must report payments from businesses director at the same rate that it pays the union is interested. Section 202(a)(4). that deal with employers whose other directors, for the same services,’’ Finally, as discussed in greater detail, employees are represented by a the payments are not reportable. The the official must report his or her receipt subordinate union local. ‘‘An opinion letter reversed a 1983 of directors’ fees from an employer international union officer must report determination by another senior defined by this rule under 202(a)(6) his income from [a] business [that has Department official that the fees must be including an employer in competition dealings with an employer whose reported. After again carefully reviewing with an employer whose employees the employees a local union represents] this question and the example discussed payment recipient’s union represents or even though he is not an officer of the above in the NPRM, the Department is actively seeking to represent. local which represents the employees of concludes that the NPRM correctly the business, and even though his duties F. Why Officers of International, illustrated a payment that is required as an international officer do not National, and Intermediate Labor under section 202(a)(4) (a business include representation activities.’’ Unions, in Addition to Their Obligation dealing directly or indirectly with an LMRDA Manual, § 241.100. The to Report Payments and Other Financial official’s union) and section 404.2 of the proposed rulemaking noted that Benefits Received From Businesses and Department’s regulations on reporting members of an LMRDA-covered labor Employers That Have a Direct by union officials (a business dealing organization would have an interest in Relationship With the Component of the with a section 3(l) trust that involves the knowing if a subordinate labor Union to Which They are Elected or official’s union). organization purchases goods or Appointed, Must Also Report Payments If a union official serves on an services from a business entity owned and Other Financial Benefits Received employer’s board of directors and by a higher level labor organization From Businesses and Employers Whose receives a fee, the employer has made a officer because local union personnel Relationship Is With a Subordinate payment to a union official. Such may choose to deal with this business Body of Their Union payments are typically not of the kind entity out of fear of alienating the higher referred to in section 302(c) because the In the NPRM, the Department level officer. 70 FR 51183. exception concerning compensation to proposed to clarify the obligation of a The old instructions are silent about employees is not applicable unless the union official to report his or her the obligation of an officer or employee director is employed by the company on interests in and payments (and those of to report interests or income from whose board he or she sits, an atypical the official’s spouse and minor children) businesses that have a relationship with status for a corporate director. Further, from employers and businesses that parent or subordinate labor directors’ fees are not an article or have a relationship with the official’s organizations of the filer’s immediate commodity, and it is questionable union, albeit at a different hierarchical union body, i.e., the particular whether such payments for these types level than the level at which the official component of the official’s union in of personal services can be said to have serves as an officer or employee. Under which he or she holds office or is a prevailing market price. Significantly, sections 202(a)(1) through (a)(5), union employed. See 29 U.S.C. 432(a)(4). In these payments raise potential questions officers and employees must report the same way, the instructions are silent of a conflict of interest, due to the payments from, holdings in, or as to whether labor unions affiliated employer’s role in selecting the transactions with: (1) An employer with that of the union officer or directors and setting the amount of the whose employees the filer’s labor employee are encompassed by the fee. A union member has an interest in organization represents or is actively phrase ‘‘an employer whose employees knowing whether decisions made by his seeking to represent; (2) a business a such labor organization represents or is or her union officials may have been substantial part of which consists of actively seeking to represent.’’ See 29 affected by the official’s competing dealing with an employer whose U.S.C. 202(a)(1), (2), (5) (emphasis personal financial interest. The employees the filer’s labor organization added). The Department proposed to commenter’s contention that no report represents or is actively seeking to establish a rule requiring a union should be filed where union-affiliated represent; or (3) a business that deals official to report payments he or she directors receive the same compensation with the filer’s labor organization or a received from a business or employer as non-union directors is not persuasive. trust in which the filer’s labor that had a relationship with any The LMRDA’s reach extends only to organization is interested. The scope of component of the overall union regulating the conduct of union the reporting obligation thus depends hierarchy to which the official belongs officials, not to setting general standards on what organization constitutes the or whose employees any components of of corporate governance. filer’s ‘‘labor organization.’’ As that union represent or are actively Thus, under today’s rule, no separate explained in the NPRM, many labor seeking to represent. To accomplish this reporting exception is made for organizations consist of a three-tier result, the Department proposed to directors’ fees. A union official must hierarchy, such as a local labor define ‘‘labor organization,’’ for report his or her receipt of directors’ organization, an intermediate body, and purposes of Form LM–30 reporting as fees when made by an employer whose a national or international labor ‘‘the local, intermediate, or national or employees the payment recipient’s organization. 70 FR 51182. The NPRM international labor organization that union represents or is actively seeking explained that the Department’s employed the filer, or in which the filer to represent. Sections 202(a)(1), (2) and proposal clarifies the reach of the held office, during the reporting period, (5). Such fees will also be reportable disclosure obligation to include and any parent or subordinate labor when made by a business, a substantial conflicts that arise between a union organization of the filer’s labor part of which consists of buying, selling, official and his or her responsibility to organization.’’ 70 FR 51174. or otherwise dealing with an employer both the immediate unit of the union Commenters were divided on the whose employees the payment that he or she serves and any of its proposal, with most opposed to what

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00017 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES 36122 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

they viewed as an expanded reporting financial benefits received by their spouses representation committee, group, association, obligation. Representative of the or minor children as bona fide employees of or plan so engaged in which employees comments favoring the proposal is the a business or employer involved with a lower participate and which exists for the purpose, following: Union members deserve to level of the officer’s labor organization. in whole or in part, of dealing with c. For employees of a national or employers concerning grievances, labor know whether union officers or international labor organization. disputes, wages, rates of pay, hours, or other employees ‘‘receive benefits from Your national or international labor terms and conditions of employment, and businesses whose employees are organization. any conference, general committee, joint or represented by, or are actively seeking d. For officers of intermediate bodies. system board, or joint council so engaged to be represented by, a parent or Your intermediate body and all of its which is subordinate to a national or subordinate union, to form an opinion affiliated local labor organizations. international labor organization, other than a about whether a conflict of interests But note: An officer of an intermediate state or local central body. body does not have to report payments from exists.’’ Representative of the opposing or interests in businesses that deal with Section 3(i); 29 U.S.C. 402(i). This viewpoint is the following: Union employers represented by, or actively being definition, broad in scope, does not officers do not have the resources to organized by, any lower level of the officer’s answer the question posed by the ‘‘trace the repercussions of each labor organization. Such officers are also not Department’s proposal. Section 3(i) potentially reportable interest * * * up required to report payments and other serves mostly a functional purpose, to or down the organizational hierarchy financial benefits received by their spouses distinguish labor organizations from and throughout the national or minor children as bona fide employees of a business or employer involved with a lower other groups or associations to which marketplace.’’ As discussed below, the level of the officer’s labor organization. employees may belong by focusing on Department has decided to modify the e. For employees of an intermediate body. the organization’s purpose and activities reporting obligation by excluding local Your intermediate body. to collectively represent the employees officials from reporting financial The first sentence of the definition is in their dealings with employers about interests in businesses and employers also adopted as part of the definitions matters affecting various aspects of its that are involved with higher level section of the Department’s regulations members’ employment. Section 3(j) of components of their union’s hierarchy (to be codified as 29 CFR 404.1(f)). A the Act, 29 U.S.C. 402(j), albeit focused and clarifying and reducing the summary of the principal comments on on the nexus between an organization reporting obligation of officials of this issue and the Department’s and its effect on interstate commerce, is national, international, and intermediate response to the comments follows. more helpful in discerning whether level unions. Thus, the Department has Some commenters expressed a belief Congress proceeded upon a general narrowed the reporting obligation from that the proposed definition is not premise that it was creating rights and that proposed in the NPRM by adopting supported by the statutory definition of obligations that would be specific to the existing ‘‘top-down’’ approach. See ‘‘labor organization’’ at section 3(i). only a particular component of a larger LMRDA Manual, § 241.100. Instead, they argued that the term ‘‘labor organization, i.e., legislating on a The Department adopts a revised organization’’ refers to the immediate separate, component-by-component definition of ‘‘labor organization,’’ labor organization of the filer, exclusive basis. If Congress had that intent, the which reads in the instructions as of any parent and subordinate entities. Act should provide precise boundaries follows: A commenter claimed support for its between entities that otherwise are often Labor organization means the local, argument in the legislative history of the combined in everyday usage. The intermediate, or national or international LMRDA, specifically the Senate Report, statute, however, does not contain such labor organization that employed the filer, or which discusses the conflict of interest precision. Congress instead took an in which the filer held office, during the approach, consistent with the common reporting period, and, in the case of a that develops when a union officer is national or international union officer or an involved in collective bargaining with a understanding of the term ‘‘labor intermediate union officer, any subordinate business in which he or she has a organization’’ and its flexible usage in labor organization of the officer’s labor financial interest. Id., at 15, reprinted in which the existence and overlapping organization. Item 6 of the Form LM–30 1 Leg. History, at 411. Some commenters responsibilities of entities that identifies the relationships between argued that interests and payments that constitute or comprise a labor employers and ‘‘your labor organization’’ or would be reported under the organization are inferred unless ‘‘your union’’ that trigger a reporting Department’s proposal do not present otherwise indicated. Thus, Congress requirement. Item 7 of the Form LM–30 understood that a union engages in identifies the direct and indirect conflicts of interest; one commenter relationships between a business (such as a explained that transactions involving representation through various means, goods vendor or a service provider) and parent and subordinate organizations including certification, or through the ‘‘your labor organization’’ that trigger a are not reportable because the union employer’s ‘‘recognition or acting as the reporting requirement. The terms ‘‘your labor officer is not bargaining on behalf of representative of employees.’’ Id. This organization’’ and ‘‘your union’’ mean: those organizations. section also recognizes that the term a. For officers and employees of a local The Department is not persuaded that ‘‘labor organization’’ includes a ‘‘local labor organization. or subordinate body’’ to such an Your local labor organization. the language of the statute compels, or b. For officers of an international or even that it can be best read to support, organization and a higher body of which national labor organization. the conclusion that Congress intended it is part. See sections 3(j)(1) through Your national or international labor to confine a union official’s reporting 3(j)(5). organization and all of its affiliated obligation solely to the entity of a As section 3(j) recognizes, the term intermediate bodies and all of its affiliated national or international union to which ‘‘labor organization’’ requires a flexible local labor organizations. a particular union official is elected, meaning, depending upon the particular But note: A national or international union appointed, or hired. As defined by the context in which it is used. For officer does not have to report, payments example, while section 101 of the Act from, or interests in businesses that deal with Act: employers represented by, or actively being ‘‘Labor organization’’ means a labor establishes a bill of rights conferring on organized by, any lower level of the officer’s organization engaged in an industry affecting ‘‘every member’’ of a labor organization labor organization. Such officers are also not commerce and includes any organization of ‘‘equal rights and privileges within such required to report payments and other any kind, any agency, or employee organization,’’ it obviously does not

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00018 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36123

create for every member of a national Department’s own experience bear out, an international, national, or ‘‘labor organization,’’ the same rights as national and international unions often intermediate union officer receives members of a particular component of exercise authority that affects payments and benefits from, or holds an the organization in voting for that subordinate bodies (and their members) ownership interest in, a business that component’s officers, but it does confer in their relationship with employers deals with subordinate labor such rights insofar as they are exercised even though a subordinate union holds organizations or trusts in which these within the ‘‘larger organization.’’ In the certification or recognition with the labor organizations are interested. The contrast, section 104 takes a different employer and may have retained formal national or international officer could approach; in imposing on a ‘‘labor authority over such matters. Given the use his or her position to influence organization’’ the duty to provide copies broad reach of the term labor subordinate labor organizations to of collective bargaining agreements, it organization section 202’s use of the utilize the services of that business. distinguishes between the particular term ‘‘such’’ in combination with ‘‘labor Moreover, his or her financial interests duty ‘‘in the case of a local labor organization’’ does not qualify or restrict in those businesses create the same organization’’ and the duty ‘‘in the case the reporting obligation. potential for putting the official’s of a labor organization other than a local The argument, in effect, that Congress personal financial interests above his or labor organization.’’ This approach intended to restrict a union official’s her duties to the union and its members. obviously contrasts with the approach reporting obligation to the particular The proposed instructions include taken by Congress in crafting the component of the union he or she serves several examples of situations that reporting obligation to file labor as an officer or employee also is belied would create a tension between a union organization annual financial reports in by the legislative history of the LMRDA. official’s duty to the ‘‘larger union’’ section 201 of the Act. Although the As discussed in greater detail herein, which the official serves and his or her filing obligation is cast in terms of ‘‘each the genesis of the LMRDA’s reporting own personal finances. See 70 FR labor organization,’’ the context makes provisions was the conflicts of interest 51189–91. Union members are entitled clear that the obligation applies to the between the personal financial interests to this information in order to determine financial affairs of a particular of national and international union if their interests are best served where component of a labor organization. With officials and their duty to promote the a union official has such financial ties. respect to section 202, the context does interest of all the members of their Without such disclosure, it is unlikely not make clear whether the obligation is union. The hearings of the McClellan that a union member would be able to limited to a particular component of the Committee revealed numerous instances determine whether such payments union or not. Each of the particular whereby such officials took actions to reflected a ‘‘cut’’ of the union’s funds requirements may be applied to an advance the interests of employers with that were advanced for a particular official’s ‘‘immediate labor whom they had obtained financial purchase or to disguise a payment for organization’’ or the ‘‘larger labor benefits or the officials’ own personal services rendered by the official in favor organization’’ to which the official financial interests, overriding local of an employer whose employees are belongs. As discussed below, the officials and the interests of these locals. represented by or may be the target of Department believes that this ambiguity, See Interim Report, at 4–5, 69–70, 73– organizing by a subordinate union of the based on its review of the statute’s 74, 85–86, 122–28, 130–31, 228, 230, official’s union. Such reporting also legislative history and public policy 240–41, 250, 252, 262, 265–66, 298, prevents circumvention or evasion of 441–45; The Enemy Within, at 26, 94, considerations, should be resolved in the Act’s other reporting obligations. 97–98, 104–06, 219–20. At the same favor of disclosure. At the same time, as Requiring union officials to report such time, the hearing did not show a discussed below, the Department has payments not only allows members to reciprocal pattern whereby local taken into account the burden which ‘‘follow the money’’ that otherwise officials were able to interject such a reporting obligation may entail would be identified in the union’s Form themselves into matters handled at and has crafted a rule that achieves a LM–2, but also increases the likelihood higher levels of their union to advance balance between disclosure and undue that the employer making the payment the interests of an employer with whom burden. also will comply with its own the local official had a financial obligations under section 203 of the Act. Although some commenters relationship. apparently would argue that the Apart from the question of legal The concern about the conflicts language in section 202 evinces an authority, several commenters between the personal financial interests intention to restrict the reporting expressed concern about the wisdom of of national and international officials obligation to the official’s immediate the Department’s proposal, suggesting and the interests of the union’s members union, this contention begs the question that the information sought by the at all levels of the union underlies the of what was intended by the referent, Department did not pose a conflict of Department’s interpretation in the ‘‘such labor organization,’’ as used in interest and that, even if it did, the LMRDA Manual, at § 241.100, quoted that section. As explained above, the burden of reporting outweighed any above. After carefully considering the structure of the LMRDA does not benefit from obtaining the information. comments received on this point and compel nor even strongly suggest that For example, a commenter asserted that reevaluating the legislative history, the intention. The Department believes that filers will be confused by the Department has decided to impose the the disclosure purposes of the Act are requirements and many individuals will reporting obligation only on union best met by giving the term ‘‘labor unintentionally fail to report officers who have dealings with organization’’ its broader reach in transactions because ‘‘they lack businesses and employers that deal with applying the reporting obligation. As knowledge of any connection between components of the union subordinate to discussed above, section 3(j) recognizes the employer involved and the newly the level of the union which the official that representation of employees is expanded ‘labor organization’ of which serves as an officer. In reaching this exercised in different ways, not merely the individual is considered to be an decision, the Department recognized through a union component that holds officer or employee.’’ that a much greater probability exists ‘‘certified’’ status. Moreover, as the The Department believes that union that an official with a position higher in statute’s legislative history and the members have an interest in knowing if the union hierarchy would be able to

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00019 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES 36124 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

wield influence on matters affecting a impose a substantial burden on union full time for a union. Under a no- subordinate entity than the reverse officials, requiring them to identify the docking policy, the employer permits situation, and that officials in higher ‘‘spider web like’’ connections between individuals to devote portions of their positions are more readily able to obtain the various components of their union day or work week to union business, the information needed to meet this and the businesses and employers who such as processing grievances, with no obligation than someone lower placed are represented by any of the loss of pay. The Department proposed in the union hierarchy. For similar components or who any of the that an officer or employee would have reasons, the Department has determined components is actively seeking to to report any payments for other than to limit the reporting obligation to the represent. As a general rule, local ‘‘productive work,’’ including union- national or international union’s officials need only report payments leave and no-docking payments. The officers; under today’s rule, employees from and other financial interests in Department explained in its proposed of the national or international union businesses that sell products or services definition of bona fide employee that are not required to report payments or to the local or the local’s section 3(l) these payments are not received as a other financial interests that solely trusts and employers whose employees bona fide employee of the employer; relate to subordinate entities of the are represented by the local or it is rather, they are received as a international. Although section 202 actively seeking to represent. The only representative or employee of the union. would allow such reporting, the other payments or interests that they Under the instructions to the old Department believes that potential must report are those from ‘‘other Form LM–30, such payments are not conflicts are much more likely to arise employers’’ that involve identified reportable if they are: ‘‘(a) Required by where a payment or other financial conflicts of interest. Thus, for reporting law or a bona fide collective bargaining interest is received by a union officer purposes, the local official need only agreement, or (b) made pursuant to a rather than by an employee. identify those entities which he or she custom or practice under such a Furthermore, given the typically much holds an interest in or receives a collective bargaining agreement, or (c) larger number of employees than payment from and the relationship made pursuant to a policy, custom, or officers in national and international between these entities and the official’s practice with respect to employment in unions, the overall reporting burden of local. the establishment which the employer the rule is minimized by excepting The burden is potentially greater for has adopted without regard to any employees from this particular reporting an officer of an international, national, holding by such employee of a position obligation. To further reduce the overall or intermediate labor organization, but with a labor organization.’’ See reporting burden, the Department has so too, as evidenced by the McClellan instructions, Part A, exception (iv); see decided to except from reporting Committee hearings discussed above, is also LMRDA Manual § 248.005. This payments or other financial interests the potential for a conflict between the section of the Manual, as noted in the received, as a bona fide employee, by an officer’s personal finances and his or her NPRM, discusses the situation where a officer’s spouse or minor child in duty both to the component of the union union officer ‘‘is excused from his connection with dealings relating to in which he or she serves and its regular work to handle grievances and subordinate components of the officer’s subordinate bodies. In the Department’s [is] paid his regular wages while union—payments that if made to the view, when officers have an ownership handling grievances.’’ The Manual officer would be reportable. In this way, interest in a business, they should either states: ‘‘Such a situation will not the rule also represents a reduction in have personal knowledge of whether the normally require reports from the union burden from the prior rule, which business deals with subordinate labor officer * * * on the theory that the required officers of international unions organizations or the ability to obtain this employee officer is being paid for work to report all payments to their spouses information from the business. While performed of value to the employer who and minor children from vendors to the information may be more difficult to is interested in seeing to it that subordinate locals. obtain where the officer is an employee grievances are immediately adjusted.’’ As noted, the cited interpretation in of the entity in question, rather than an LMRDA Manual, § 248.005. See 70 FR the Department’s LMRDA Manual only owner, any burden is outweighed by the 51181. refers to officers of an international benefit to union members of obtaining In the NPRM, the Department union (and by extension to national reports of their official’s conflicts of explained that the exception for unions); however, the same concerns interests. payments made to a bona fide employee that require such officers to report is required by statute, but that the G. Why Union Officials Must Report possible conflicts involving subordinate statute is silent on the scope of the Payments Under Union-Leave and No- components of the union counsel for exception and specifically its Docking Practices Subject to an requiring intermediate union officers to applicability to ‘‘union-leave,’’ ‘‘no- Exception for Payments of 250 Hours or report possible conflicts involving locals docking,’’ and similar payments. The Less Per Year Made in Accordance With or members that the intermediate union Department explained that under its a Collective Bargaining Agreement oversees. The same potential for proposal ‘‘to be exempt from reporting, conflicts and manipulation exists as to The Department proposed to require payments and other benefits received as the relationship between intermediate union officials to report payments a bona fide employee of the employer union officers and businesses and received from employers for activities must be attributable to work performed employers dealing with local labor engaged in by the officials on the for, and subject to the control of, the organizations. For example, local union union’s behalf. The most common employer.’’ personnel may choose to deal with a payments by employers to individuals The Department also stated that the business entity owned or controlled in for conducting union business are made LMRDA Manual improperly focused on whole or in part by an intermediate or pursuant to ‘‘union-leave’’ or ‘‘no- whether the employer feels the money national or international union officer docking’’ policies established in is well-spent; the correct issue is out of fear of alienating the higher level collective bargaining agreements or by whether or not the official is a bona fide officer. 70 FR 51183. customary practice. Under a union-leave employee of the payer-employer during Some commenters expressed concern policy, the employer continues the pay the time for which payment was made. that the Department’s proposal would and benefits of an individual who works In making its proposal, the Department

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00020 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36125

endorsed the statement: ‘‘Union-leave,’’ hour threshold has been met. For purposes of were ‘‘not forbidden by the AFL–CIO and ‘‘no-docking’’ payments may pose a Form LM–30, stewards receiving union-leave/ Code of ethical practices.’’ Hearings on conflict of interest since there are no-docking payments from an employer or Union Financial and Administrative lost time payments from a labor organization ‘‘union negotiators who may agree to are considered employees of the labor Practices and Procedures before the reduced benefits for the employees in organization. Subcommittee on Labor and Public exchange for financial support for the Welfare (1958) (‘‘1958 Senate union.’’ Caterpillar v. UAW, 107 F.3d The filer will report, separately, for Hearings’’), at 349. Many of these 1052, 1060 (3d Cir. 1997) (Mansmann, each such employer the total payments commenters stressed the ‘‘long-standing J., dissenting). The Department noted its received from the employer during the nature’’ of such practices by employers, view that such payments should be filer’s fiscal year for the work performed and they particularly emphasized how disclosed to union members to enable on the union’s behalf. The filer must ‘‘commonplace’’ it is to find these them to evaluate the effect such also calculate the hourly monetary value provisions in collective bargaining payments might have on an official’s of any fringe benefits received, and agreements. One commenter asserted performance of his or her duties to the include this figure in the total. that at the time the LMRDA was The Department sought comments union. enacted, just over half of all collective about any problems (or their absence) The Department adopts a revised bargaining agreements involving that have arisen by not requiring the definition of ‘‘bona fide employee,’’ as reporting of payments received for manufacturers contained no-docking set forth in the next paragraph. Under union-leave, no-docking, and similar provisions. Several comments focused today’s rule, payments to a union officer situations where a union official was upon the Labor Management Relations or employee under a union-leave or no- paid for unproductive time, and Act and its interaction with the LMRDA, docking arrangements set forth in a whether or not there should be and argued that national labor policy is collective bargaining agreement are quantitative and/or qualitative to encourage collective bargaining and a exempt from reporting unless payment distinctions to the disclosure obligation. ‘‘productive and harmonious is for greater than 250 hours of union Numerous comments, mostly opposed workplace.’’ They noted that no-docking work during the filer’s fiscal year. to the Department’s proposal, were and union-leave provisions have been Payments for union work totaling received on this question. found lawful by the courts when they greater than 250 hours over the course A few commenters favored the are part of a collective bargaining of the filer’s fiscal year are reportable as Department’s proposed definition of agreement. Some commenters are any payments that are not made bona fide employee and the reporting of maintained that sections 202(a)(1) and pursuant to arrangements set forth in a payments received by a filer in union- 202(a)(5) are parallel to section 302 of collective bargaining agreement. leave or no-docking situations. One the Labor Management Relations Act The revised definition of ‘‘bona fide commenter maintained that any because each is concerned with the employee’’ reads: payments made by an employer as part same kind of employer payments to Bona fide employee is an individual who of no-docking or union-leave union officials. They further argued that performs work for, and subject to the control arrangements could result in union because section 302 has been of, the employer. officials agreeing to trade off contract interpreted by the courts to provide that Note: A payment received as a bona fide provisions that might benefit the entire ‘‘payments pursuant to union-leave or employee includes wages and employment bargaining unit in exchange for no-docking arrangements are payments benefits received for work performed for, and privileges that would benefit only union ‘by reason of’ an officer or employee’s subject to the control of, the employer service as an employee of an employer,’’ making the payment, as well as officials. Another commenter stated that compensation for work previously union members may be unaware of such sections 202(a)(1) and 202(a)(5) should performed, such as earned or accrued wages, payments. His statement was based on be similarly interpreted to allow for the payments or benefits received under a bona his knowledge that one of his union’s time union officers spend on union- fide health, welfare, pension, vacation, officers received payment from the related work to be considered the work training or other benefit plan, leave for jury employer for union-related work and of bona fide employees. See Caterpillar, duty, and all payments required by law. that such payment was not provided for Inc., 107 F.3d at 1052. Compensation received under a ‘‘union- in the collective bargaining agreement. Another commenter suggested that leave,’’ or ‘‘no-docking’’ policy is not received as a bona fide employee of the He stated that other members of his work performed under no-docking and employer making the payment. Under a union did not know that the official union-leave scenarios is indirectly, if union-leave policy, the employer continues received these payments from the not directly, performed for the the pay and benefits of an individual who employer. employer, and further stated that such works full time for a union. Under a no- A large majority of the comments pay by an employer is analogous to docking policy, the employer permits argued in favor of retaining the no- other employee benefits such as sick individuals to devote portions of their day or docking and union-leave exception. One leave, military leave, jury leave, and workweek to union business, such as commenter argued that the Department similar fringe benefits. Many processing grievances, with no loss of pay. was abandoning a ‘‘long-standing commentators argued that union-leave, Such payments are received as an employee of the union and thus, such payment must position without adequate justification.’’ no-docking, and similar payments are be reported by the union officer or employee This commenter cited a lack of statutory usually made under the terms of a unless they (1) totaled 250 or fewer hours authority or legislative history of collective bargaining agreement and that during the filer’s fiscal year and (2) were paid Congressional intent to require union such payments are usually tied to the pursuant to a bona fide collective bargaining officials to report such payments, same rate of pay that the union agreement. If a filer must report payments for adding that any benefit from such representative would receive under the union-leave or no-docking arrangements, the disclosure was outweighed by the agreement for time worked at his or her filer must enter the actual amount of increased burden on filers. One trade. One commentator argued, in compensation received for each hour of union work. If union-leave/no-docking commenter cited the Senate effect, that there was no conflict because payments are received from multiple subcommittee hearings on the LMRDA the union would pay for the employers, each such payment is to be to support its position that bargained representative’s time if it was not considered separately to determine if the 250 no-docking and union-leave provisions provided for under the parties’

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00021 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES 36126 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

negotiated agreement. Many argued that the Department’s own research has services not actually rendered for it, there is nothing private or secretive uncovered none. As noted in the since those employees are already about such payments because the terms comments, the practice whereby a union receiving their regular hourly wages and of the payments are disclosed by official employed by an employer would benefits for their production line work. reading the negotiated agreement and receive his or her regular compensation Yet, no-docking arrangements have been that union members know that their while engaged in contract consistently upheld by the courts as not representatives are paid for the time administration on behalf of the union in violation of § 302’’). See also Herrera involved in contract administration. was commonplace at the time the v. United Auto Workers, 73 F.3d 1056 Many commenters explained that union LMRDA was enacted. Contrary to the (10th Cir. 1996) (adopting the reasoning stewards and other union view of some that the absence of any of Herrera v. United Auto Workers, 858 representatives perform valuable tasks discussion in the legislative history F. Supp. 1529, 1546 (D. Kan. 1994)); for the union and the employer; they about this common practice evinces an NLRB v. BASF Wyandotte Corp., 798 at expressed the concern that by imposing intention to foreclose the reporting of 855–57. At the same time, however, the a reporting obligation on such payments such payments, the Department believes courts have signaled that they may be future attempts to establish or continue that this silence suggests that Congress less inclined to treat payments for these roles would ‘‘be chilled’’ which, simply did not consider such practices union-leave as beyond criminal in turn, could lead to ‘‘a breakdown in to be prohibited under the LMRDA or sanction. See Toth v. USX Corp., 883 labor-management relations.’’ A few the Labor Management Relations Act F.2d 1297, 1305; NLRB v. BASF commenters were concerned that if the and it did not express a view one way Wyandotte Corp., 798 F.2d at 856 n. 4; Department’s proposal was adopted or another on the question of BASF Wyandotte Corp. v. Local 227, 791 employees would be less likely to reportability. Moreover, the logic of the F.2d at 1050. None of the cases, volunteer for such positions and that ‘‘intention by silence’’ argument would however, address the different, but union officials would be less likely to require the exclusion of a myriad of immediate, question of whether such engage in workplace activities that are payments and other financial benefits payments, without regard to their mutually beneficial to employers and received by union officials, such as lawfulness, should be excepted from unions. ‘‘featherbedding’’ or ‘‘no show’’ reporting under section 202 of the Act. Some comments suggested that payments, that were not explicitly The Department believes it significant requiring reporting of payments identified by the language of section 202 that Congress in enacting the LMRDA included in collective bargaining or its legislative history, uses the term ‘‘bona fide employee’’ agreements would burden employers. In notwithstanding their inclusion under only in section 202. Elsewhere it simply this regard, a commenter stated that if any reasonable reading of the section’s uses the term ‘‘employee’’ to designate the Department’s proposal is adopted in language. a duty or obligation. See, e.g., section the final rule, unions will ‘‘inevitably 203(a), 203(e), section 502(a), section want to negotiate a practice pursuant to The Department has reviewed the 503, section 609. Thus, the Department which employers track and code any no- case law that has developed from concludes that Congress intended to docking time on pay records of union employer challenges to the legality of limit the exception to individuals who, officers and employees.’’ Another employer payments to union officials in fact, are receiving payment for commented that the filing of ‘‘numerous for work performed on the union’s activities performed on the payer- pointless reports’’ would defeat the behalf. Most courts that have considered employer’s behalf. The Department’s purpose of uncovering conflicts of the question have found that such reading also is consistent with the interest. payments are not subject to criminal meaning generally given ‘‘employee’’ Two commenters offered possible sanctions. For example, one court has under the common law, where alternative arrangements to the existing stated that: ‘‘we see nothing in the ‘‘control’’ over an individual’s work is exception. One recommended that if the language or logic of section 302(c)(1) [of the essential component of this status. Department established a reporting the Labor Management Relations Act] to See, e.g., Nationwide Mut. Ins. Co. v. obligation it should not require reports suggest that Congress did not intend to Darden, 503 U.S. 318, 322–24 (1992). for activities that are less than two hours allow an employer to grant a bona fide The position adopted by the in length. This commenter explained employee who is a union official paid Department better comports with the that thirty minutes or less is usually time off in order that he may attend to language of the statute, and its inferred required to resolve a question under a union duties.’’ BASF Wyandotte Corp. v. intended application, as discussed parties’ agreement and that meetings Local 237, International Chemical above, than an alternative reading that only rarely extend beyond two hours. Workers Union, Local 227, 791 F.2d would interpret the term ‘‘bona fide By modifying the proposal in this way, 1046, 1050 (2d Cir. 1986). See also employee’’ to include payments made it argued, the reporting burden would be NLRB v. BASF Wyandotte Corp., 798 by an employer for work performed on minimal. The second commenter F.2d 849 (5th Cir. 1986) quoting behalf of the union. Members have an recommended that no reports be H.R.Rep. No. 245, 80th Cong., 1st Sess. interest in knowing the amount paid to required of any payments unless they 28–29 (1947), ‘‘At the time of enactment union officers or employees by the totaled $10,000 per year, an amount, it of § 302, Congress was well aware that employer for time spent on union suggested, approximates about one- ‘‘[e]mployers generally * * * allow business. This information would be quarter of a union steward’s annual pay. representatives of the union, without significant for members in assessing the The LMRDA does not specifically losing pay, to confer not only with the effectiveness of union officers and address either the legality of payments employer but as well with employees, employees and in evaluating candidates made under union-leave or no-docking and to transact other union business in for union office. For example, during arrangements or the obligation, if any, the plant.’’ See Caterpillar, Inc. v. collective bargaining negotiations, an for union officials to report such United Auto Workers, 107 F.3d 1052, official who enjoys union-leave or no- payments under section 202 of the Act. 1056 (3d Cir. 1997) (‘‘By paying docking payments may agree, or feel None of the commenters have identified production workers for the part-time pressure to agree, to reduced benefits for any legislative history that would shed hours when they leave their regular employees in exchange for increases in any light on this specific question, and duties, the company is paying for his or her employer payments as a

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00022 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36127

union representative. Similarly, where has considered carefully the comments those who perform a significant amount the continuation of the no-docking or suggesting that its reporting proposal of union work from those who do not. union-leave practice in the agreement would interfere with the effectiveness of For example, a union officer who becomes a possible issue in such arrangements. spends only four hours per week, or less negotiations, the official might be The Department concludes that its than an hour per day, on union business motivated, for personal reasons and proposal will not have a significant would not have to report no-docking contrary to the union’s best interest, to effect on labor-management relations payments, because his union activities maintain what the official views as a practices. No commenter claimed that would correspond to 200 hours per year meaningful and beneficial diversion any single employer, never mind (subtracting two weeks for vacation), from work at his or her trade. It also is employers generally, authorizes fewer than the 250-hour threshold. On conceivable that a union official may payments to union officials without the other hand, a steward, who is also feel pressure to forego the zealous accounting at least informally for the a union officer or employee, who works pursuit of a grievance on behalf of a time expended by such individuals in 2 hours per day on union business must union member for fear of alienating the conducting union business. Employers report the payments he or she receives. employer and jeopardizing the no doubt have a wide range of practices In a five-day work week this would continued availability of these in tracking such payments, with varying convert to 10 hours of union work per payments. In such instances, the union levels of scrutiny, but the rule adopted week and 500 hours per year official’s personal financial interests requires no special procedures or (subtracting two weeks for vacation). pose a clear conflict with the official’s expense, and nothing any more Here, the value of the officer’s union- duty to the union and its members. burdensome than keeping a log of the related work exceeds the 250-hour The Department received a number of amount of time expended and threshold and is reportable. The comments indicating that union compensation received while on union Department believes this approach to be members already know that some of business paid by the employer. better than one that would trigger a their union officials are paid by their Moreover, by excepting any reporting report if a particular meeting lasted employer for union-related activities. At where payments approved under a longer than a prescribed amount of time the same time, other comments collective bargaining agreement do not or if an official’s pay for union-related indicated that such information is not as exceed payment for over 250 hours, activities exceeded a particular dollar common or as complete as suggested. union officials can work for over 30 value, such as the $10,000 suggested by Other comments received by the days with nothing to report. one commenter. (Based on the Department indicate that some Additionally, the Department finds commenter’s estimate of a typical payments occur without members’ unpersuasive the comments that a steward’s annual pay, the 250-hour rule knowledge and that members have reporting requirement will significantly requires less reporting than a flat incomplete information about the impede the ability of unions to obtain $10,000 threshold.) The former would amount of such payments. The members willing to perform the jobs of depend upon establishing an average for Department agrees that many union stewards or other union positions in the amount of time taken to resolve a members are aware that some of their which they receive compensation from particular contract administration issue, officials receive employer payments for their employer for union-related a difficult task even if the data necessary union-related activities, especially activities. As noted, the Department is to establish such a benchmark existed where such payments are expressly not imposing any specific method of and an impossible task on the current provided for in a collective bargaining recordkeeping or accounting on union rulemaking record. The latter would agreement, but it seems doubtful that officials to comply with the disclosure impose a burden on higher paid union such members are aware of the obligation. Moreover, this practice will officials without distinguishing between magnitude of such payments and other supplement the existing obligation of a the amount of time they perform work members are likely unaware that this union to report ‘‘lost time payments’’ it for which they were hired and work for practice exists. As noted by one makes to officials and other members, the union. commenter, it is unlikely that members either identified by a particular member will be aware of such payments where (if he or she is paid more than $10,000 A commenter requested the the collective bargaining agreement is per annum by the union) or otherwise Department to require union officials to silent about the practice Reporting such in aggregated form. See section report any ‘‘super-seniority’’ protection payments will allow union members to 201(b)(3). they receive by virtue of their union assess whether this arrangement could The Department took into office. Some collective bargaining tempt a union official to put his consideration the various concerns agreements provide layoff and similar personal interests in maintaining the about the effect of its proposal in benefits to union officials allowing them arrangement above his or her duty to the arriving at the reporting threshold of to continue on the employer’s payroll, union. A union official may well prefer 250 hours per year. Although union ahead of other more senior employees, to spend his or her time engaged in officers and employees will need to in order to provide continued contract administration duties than, for keep records to determine whether the representation of union members. The example, performing manual work on a 250-hour threshold is exceeded, there is Department believes that this request, in construction site or the shop floor, or no reporting burden for those who do part, is beyond the scope of the processing insurance claims. not exceed this threshold. Further, the Department’s proposal, which, by its The Department recognizes that a recordkeeping time needed to determine terms, is only concerned with employer reporting requirement may impose some whether the threshold is exceeded payments for work performed on a burden on union officials and consists of nothing more than keeping union’s behalf. Super-seniority, as employers that have ‘‘union-leave’’ and track of the time one spends performing commonly understood, allows a union ‘‘no-docking’’ practices. The Department union work, and the amount paid, with official to remain on the employer’s acknowledges that payments by no need, for example, to consult with payroll for ‘‘production purposes,’’ not employers to union representatives third parties or obtain records merely to receive payment for work often will benefit both union members maintained by others. The threshold of undertaken on the union’s behalf. A and employers. Thus, the Department 250 hours per year will help separate union official who receives pay from his

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00023 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES 36128 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

nominal employer for union activities is to require a union official to report all The discussion below addresses the subject to the general requirements set employment compensation paid by any principal comments submitted on this forth above without regard to the employer to his or her spouse or minor issue and the Department’s response to official’s super-seniority status. child. those comments. After its review of the comments, the No comments were received on the H. What Payments and Other Financial Department adopts a rule that is Department’s proposal to require Benefits, Received From an Employer or narrower than the proposal. Under reporting in the circumstances Business Whose Employees Are Not today’s rule, where a payment or identified in the bulleted points above. Represented by the Union and Which financial interest is not reportable under As noted, these situations are included Does not Conduct Business With the subsections (a)(1) through (a)(5) of in the instructions to the old form and Official’s Union, Must Be Reported section 202, it is reportable as follows. are retained. The additional point In the NPRM, the Department A report must be filed for any payment requiring disclosure where a union described section 202(a)(6) as a ‘‘catch- of money or other thing of value official receives a payment ‘‘to influence all’’ for interests held in or payments to (including reimbursed expenses) from the outcome of an internal union a union official (or his or her spouse or (1) An employer that is in competition election’’ has been added to clarify a minor child) by an employer that would with an employer whose employees the point already encompassed by ‘‘take any not otherwise be reportable under filer’s labor organization represents or is action with respect to the status of subsections 202(a)(1) through 202(a)(5). actively seeking to represent; (2) an employees * * * as members of a labor 70 FR 51192. Under the proposal, any employer that is a trust in which the organization.’’ such interest in or payment by any filer’s labor organization is interested as Two commenters supported an employer would have to be reported, defined in section 3(l) of the LMRDA; expansive reading of section 202(a)(6) to except for those ‘‘payments of the kind (3) an employer that is a non-profit require a union official to report any referred to in section 302(c) of the Labor organization that receives or is actively and all interests in or payments from Management Relations Act,’’ the and directly soliciting (other than by any employer. They argued that only by exception expressly provided in section mass mail, telephone bank, or mass strictly limiting exceptions could the 202(a)(6). media) money, donations, or Department achieve the Act’s goal of The NPRM thus proposed as a general contributions from the filer’s labor full disclosure. A third commenter rule that any payments by any employer organization; (4) an employer that is a asserted that only an expansive reading to any union official would have to be labor union that (a) Has employees of section 202(a)(6) would provide reported except for payments expressly represented by the filer’s union, (b) has union members and the public with the excepted under section 302(c) of the employees in the same occupation as information necessary for them to Labor Management Relations Act. A those represented by the filer’s union; determine whether an interest in or union official would have to report the (c) claims jurisdiction over work that is payment by an employer could pose a payment without regard to whether a also claimed by the filer’s union; (d) is conflict of interest. This commenter collective bargaining or other direct a party to or will be affected by any stated that Congress did not intend relationship existed between the proceeding in which the filer has voting section 202(a)(6) to be given such a official’s union and the employer in authority or other ability to influence limited reading and that even if such a question. In addition, the proposal the outcome of the proceeding; or (e) gloss was added to the statutory identified some particular payments has made a payment to the filer for the language filers would likely be unable to that would have to be reported: purpose of influencing the outcome of ‘‘honestly, fairly, and accurately’’ payments not to organize employees, to an internal union election; or (5) an determine whether a conflict exists. influence employees in any way with employer whose interests are in actual Several commenters expressed a respect to their rights to organize, to or potential conflict with the interests of contrary point of view. They asserted take any action with respect to the the filer’s union or the filer’s duties to that unless section 202(a)(6) was status of employees or others as his or her union. This rule recognizes narrowly applied, the Department members of a labor organization, and to that it is impossible to specifically would be creating a ‘‘general reporting’’ take any action with respect to identify all potential conflict-of-interest mandate, something that Congress bargaining or dealing with employers payments. intended to avoid in crafting section 202 whose employees your organization Today’s rule also adopts the rule set of the Act. As stated in one comment represents or is actively seeking to forth in the NPRM and the instructions (citing to Senate Report, at 15, reprinted represent. See 70 FR 51192. to the old Form LM–30, at Part C, in 1 Leg. History, at 411): ‘‘The bill In the NPRM, the Department invited requiring a report for any payment from requires only the disclosure of conflicts comments on this proposal as a general any employer or a labor relations as defined therein. The other matter and more particularly whether consultant to any union official for the investments of union officials and their section 202(a)(6) limits the reporting following purposes: sources of income are left private obligation to only payments that present • Not to organize employees; because they are not matters of public an actual conflict of interest, whether • To influence employees in any way concern.’’ The same commenter saw such an interpretation is a permissible with respect to their rights to organize; evidence of a narrow construction from reading of the statute, and, if so, how • To take any action with respect to a statement in the House Report that the instructions could be written to the status of employees or others as section 202(a)(6) was intended to reach implement this interpretation, without members of a labor organization; both ‘‘the union official who may granting impermissible discretion to the • To take any action with respect to receive a payment from an employer not filer to determine which financial bargaining or dealing with employers to organize the employees,’’ and matters are reportable. The Department whose employees your organization payments that may conflict with the also requested comments regarding the represents or is actively seeking to official’s ‘‘fiduciary duties as a worker’s reporting of ordinary payments of wages represent. representative.’’ Other commenters and salaries of the spouse and/or minor Today’s rule adds to this list the relied on statements by Senator children of the officer/employee following: ‘‘To influence the outcome of Goldwater as support for a narrow because section 202(a)(6) could be read an internal union election.’’ reading of section 202(a)(6). See 105

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00024 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36129

Cong. Rec. A5812 (daily ed. Oct. 2, that a better reading is one which avoids captures payments by ‘‘employers.’’ 1959), reprinted in 2 Leg. History, at redundant reporting of matters already Thus, the Department cannot require a 1846) (the reporting requirements were included in the previous five union official to report payments under directed at those transactions ‘‘which subsections but ensures that all section 202(a)(6) from an individual or would constitute a conflict of interest,’’ significant transactions and other an entity that is not an ‘‘employer.’’ such as ‘‘holdings or interest in or the payments to the official, his or her A relationship between, on the one receipt of economic benefits from spouse, or minor children that may hand, a union official and, on the other employers who deal or might deal with impact upon the responsibilities of a hand, a section 3(l) trust, labor such union official’s union’’). union official to the union he or she organization, and not-for-profit One commenter cited to testimony by represents are reported. The Department organization, including charities, along Professor Archibald Cox before the believes that its construction of section with ‘‘competitors’’ to employers whose Senate subcommittee that was 202(a)(6) hews to the accepted premise employees the union represents or considering this legislation: ‘‘The bill is that Congress did not intend that union would seek to represent, may trigger a narrowly drawn to meet a specific evil. officials would have to disclose reporting obligation under today’s rule. It requires only the disclosure of virtually all their financial affairs, while These entities usually are ‘‘employers,’’ conflicts of interest. The other also ensuring that members receive but sometimes not. A union official is investments of union officials and their information about situations other than under no obligation to report these other sources of income are left private those identified in sections 202(a)(1) payments unless they are received from because they are not matters of public through 202(a)(5) that may pose an employer. As noted, section 202(a)(6) concern.’’ See Senate Report, at 15, potential conflicts of interest for union excepts ‘‘payments of the kinds referred reprinted in 1 Leg. History, at 411. Cox officials. The Department’s construction to in section 302(c) of the Labor was a Harvard law professor who played reasonably targets employers that could Management Relations Act.’’ These a pivotal role in drafting the legislation influence the conduct of union officers payments notably include payments that ultimately became the LMRDA. and employees and requires the received as compensation for services as Professor Cox also noted that the disclosure of an official’s financial a current or former employee of the Kennedy bill that presaged the LMRDA information only in those situations. employer making the payment and as a was based, in part, upon the Ethical Four of the first five subsections of general rule payments made to or Practices Code formulated by the AFL– section 202(a) have as their focus received from a trust fund set up for the CIO. Professor Cox stated that an officer transactions and interests, on the one sole and exclusive benefit of employees who followed this Code would have hand, between a union official (or and their dependents. See sections ‘‘virtually nothing to disclose to the indirectly through his or her spouse or 302(c)(1) and (5) (note that the latter public.’’ Hearings on S. 505 before the minor child) and, on the other, the contains several provisions that could Subcommittee on Labor of the Senate official’s own union or an employer affect reportability in some specific Committee on Labor and Public Welfare whose employees the union represents circumstances). As implied by the (1959) (‘‘1959 Senate Hearings’’), at 123. or seeks to represent. The other section 302(c) proviso to section A few commenters conceded that the subsection (section 202(a)(3)) has a 202(a)(6), Congress presumed that a statute does not refer to ‘‘conflicts of similar focus, but requires reporting on payment that arises from a bona fide interest,’’ but noted that forty years of interests and payments involving a employment relationship between an Department enforcement have limited business that conducts a substantial part employer and its employee typically this section to conflict of interest of its business with an employer whose will be above board with little potential situations. In this connection, they cited employees the union represents or seeks to pose a conflict between the union LMRDA Manual § 248.005 that states, in to represent. official’s personal interests and the part: ‘‘[Section] 202(a)(6) is designed for The Department believes that the official’s duty to his or her union. For those situations which pose conflict of focus of these provisions is instructive the same reasons, a union official is not interest problems which are not covered in discerning the scope of the reporting required under today’s rule to report in the previous five sections of 202.’’ obligation encapsulated by section payments received by the official’s Other commenters argued that the 202(a)(6). In each instance, the object of spouse or minor child as regular inclusion of ‘‘labor relations consultant’’ the reporting is the official’s union compensation from their employer or as and the reference to section 302(c) of the status and an employer whose a benefit under the arrangements Labor Management Relations Act evince employees the union represents or seeks permitted under section 302(c). an intention to tie the reporting to represent. From this, the Department Thus, under this interpretation of obligation to matters that directly infers that section 202(a)(6) also has as section 202(a)(6), a union official would involve labor-management activities. its object the relationship between the have to report a payment received from Two comments expressed opposition to official’s union and a particular an employer that competes with a the reporting of ordinary payments of employer that could pose a conflict company whose employees are wages and salaries to the spouse and/or between the official’s own personal represented by the official’s union minor children of the officer/employee. interests and the obligation his or her unless it was received by the official as The Department is persuaded that union holds to employees it represents regular compensation for his current or section 202(a)(6) is best read to require or is actively seeking to represent, or past employment. For example, if a reporting by union officials only where who provide a suitable target for union official receives a benefit such as such interests in or payments by representation. Thus, from this vantage a paid vacation or a gift of golf clubs employers have the evident potential to section 202(a)(6) can be seen to target from an employer that competes with an pose a conflict between the official’s payments by or interests held in an employer whose employees the official’s own financial interests and the official’s employer only when the employer has union represents or is actively seeking duty to his or her union and which a direct interest in the relationship to represent, the official must report the would not otherwise be captured by the between the official’s union and an benefit. In this example, the union other provisions of section 202(a). While employer whose employees the union official would have to disclose the gift, the language of the statute can be read represents or would seek to represent. even if the official is an employee of the more broadly, the Department believes And by its terms, section 202(a)(6) only donor, except in the unlikely event that

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00025 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES 36130 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

such benefit is part of the official’s international union, or it actively seeks I. When Is a Union ‘‘Actively Seeking To regular compensation as an employee of to represent; Represent’’ Employees, Thereby the donor. In this situation, the union • Has employees in the same Triggering a Union Official’s Obligation official faces an obvious potential occupation as those represented by the To Report Payments and Other conflict between his personal finances official’s union; Financial Benefits Received From the and the duties he or she owes to the • Claims jurisdiction over work that Employer That Is the Subject of the union and its members. Where, for is also claimed by the official’s union; Organizing Drive example, the union’s negotiations will • Is a party to or will be affected by The term ‘‘actively seeking to set the going wage rate for particular represent’’ appears several times in work within the relevant market, an any proceeding in which the official has section 202; this term does not appear official may be more attuned to voting authority or other ability to elsewhere in the LMRDA. The old concerns about rising labor costs if he or influence the outcome of the instructions do not define this term. In she is receiving payments from a proceeding; the NPRM, the Department proposed to company whose operations are less • Has made the payment to the filer define ‘‘actively seeking to represent’’ to efficient than those of the represented for the purpose of influencing the mean that a labor organization has taken employer. Similarly, a union official outcome of an internal union election. steps during the filer’s fiscal year to may be less vigilant in challenging a In each of these situations, a payment become the bargaining representative of represented employer’s decision to could serve as an inducement to receive the employees of an employer, withdraw employer-paid dental favorable treatment from a union whose coverage if he or she holds an interest including but not limited to: interests are clearly adverse to the • Sending an organizer to an in or receives payments from a vendor official’s own union—either in their employer’s facility; that would provide alternative coverage labor-management relationship, as • Placing an individual in a position sponsored by the official’s union. actual or potential competitors for the Similarly, a union official must report as an employee of an employer that is same members or work for such the subject of an organizing drive and a payment he or she receives from a members, or actual or potential trust that is an employer unless it is a paying that individual subsidies to protagonists on disputes or other inter- assist in the union’s organizing ‘‘payment[ ] of the kind referred to in union matters. In the first situation, any section 302(c) of the Labor Management activities; payment could serve as an inducement • Circulating a petition for Relations Act.’’ As just discussed, a to agree to lower negotiated wages for union official will not have to report representation among employees; the members of the official’s own union. • Soliciting employees to sign compensation received as an employee In the second and third situations, the of a trust or as a general rule payments membership cards; two unions are ‘‘competitors’’ for the • Handing out leaflets; received as a beneficiary of the trust. same or potential members and the • Any ‘‘special payments’’ or gifts, Picketing; or work they perform, thus placing them in • Demanding recognition or however, will have to be reported unless an adversarial position. In the fourth they are insubstantial as defined in bargaining rights or obtaining or situation, the payment could reflect an requesting an employer to enter into a today’s rule. inducement for favorable treatment in Under today’s rule, a union official neutrality agreement (whereby the the proceeding at the expense of the will have to report a payment or other employer agrees not to take a position official’s own union that may have an financial interest he or she receives from for or against union representation of its interest adverse to the party making the a not-for-profit employer that receives or employees); or otherwise committing payment. In the last situation, the union is actively and directly soliciting (other labor or financial resources to seek than by mass mail, telephone bank, or official, either directly or indirectly, has representation of employees working for mass media) money, donations, or received a personal benefit (gaining the employer. contributions from the official’s union. money to advance the official’s own Comments were invited as to the The potential conflict arises because political agenda within his or her own merit and clarity of the listed activities such a payment could influence the organization) that could serve as an and whether other examples would be official’s activities in approving or inducement to advance the interests of helpful. 70 FR 51180. Comments were overseeing the union’s contribution to the party making the payment at the sought as to whether it is appropriate to the charity. expense of the interests of the official’s trigger the reporting obligation on the The remaining situations for which a own union. decision to organize an employer’s report will be required relating to an The Department has attempted to workforce distinct from taking the first employer (other than one whose clarify the form by describing these concrete step to organize. After review relationship is described by sections situations that present actual or and consideration of the comments, the 202(a)(1) through 202(a)(5)) involve potential conflicts of interest. Union Department has concluded that the payments received by a union official officials who receive payments in these definition should be modified to clarify from a union-employer (other than his situations can know, without ambiguity, that a report need only be filed where or her own) where the official’s personal of the need to file Form LM–30. It is the active steps have occurred during financial situation poses a plain conflict impossible, however, to delineate with the filer’s fiscal year. As discussed with his or her duties to the union in precision all potential conflict-of- below, this clarification partly addresses which the official serves as an officer or interest payments. For that reason, the the concern of some commenters that employee. Payments must be reported Department has chosen to retain its rule such reporting may disclose where the payment received by the that, under section 202(a)(6), all prematurely a union’s efforts to organize union official is made by a union- payments from employers whose an employer. The Department has also employer that interests are in actual or potential modified the definition to clarify that • Has employees represented by the conflict with the interests of a filer’s leafleting and picketing by a union, official’s union, e.g., the official’s union labor organization or a filer’s duties to though presumptive evidence of represents the support and professional his or her labor organization must be actively seeking to represent employees staff at the headquarters of a national or reported. of an employer whose operations are

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00026 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36131

targeted by the union, will not trigger Some commenters expressed concern obligation. The Department believes that the reporting obligation with respect to about the difficulty of applying the there is a reasonable basis for treating the targeted employer if the union’s general requirement to report payments leafleting and picketing by a union as activity is entirely without any that arise after a union ‘‘otherwise evidence that a union is ‘‘actively organizational object. Otherwise, the commits labor or financial resources to seeking to represent’’ the employees of definition of ‘‘actively seeking to seek representation of employees the targeted employer and for triggering represent’’ is identical to that proposed. working for a particular employer.’’ a reporting obligation where there are As noted in the NPRM, the proposed They also argue that this proviso may go other indicia of a union’s effort to definition, in large part, is based on a beyond the asserted limitation intended ‘‘actively seeking to represent’’ such statement from the legislative history. by Congress in describing this aspect of employees. In this regard, the See Senate Report, at 15, reprinted in 1 the reporting obligation to ‘‘specific Department notes that there is no Leg. History, at 411 (The phrase organizational activities.’’ The evidence that Congress intended a ‘‘actively seeking to represent’’ denotes Department recognizes that this factor limited application of the reporting ‘‘more than that the union hopes some lacks the specificity of the other factors obligation to situations where the day to become the bargaining used to describe the reach of the term leafleting or picketing is solely representative of a group of employees ‘‘actively seeking to represent.’’ Its undertaken for the object of organizing or claims jurisdiction to organize them. wording, however, is deliberate in order an employer’s workforce. Moreover, It requires specific organizational to capture the general purpose of the although the commenter suggests activities such as sending organizers test and reduce any prospect that a filer otherwise, it is the Department’s view into a community, handing out leaflets, would read the list of factors as that in many instances informational or picketing, or demanding recognition exhaustive. At the same time, this factor standards picketing reflects a union’s and bargaining rights’’). House Report, was designed to distinguish between first concrete steps to organize an at 11; reprinted in 1 Leg. History, at 769. general union strategizing or planning, employer and, as such, is an action As noted in the NPRM, the Department which would not be reportable, and within the intended reach of ‘‘actively believes that the term ‘‘actively seeking concrete activities that have been seeking to represent.’’ At the same time, to represent’’ is intended to distinguish directed at a particular employer. In this the Department recognizes that there are between situations where a union has connection, one commenter raised a instances where such picketing or taken concrete steps to organize and concern that the test proposed by the leafleting is wholly unrelated to those where the union merely has an Department failed to clearly indicate organizational or representational interest in organizing employees of the whether a decision by the union to objectives. For example, if a union employer in question. For example, a undertake organizing activity in the pickets a sporting goods retailer solely union may wish to represent employees future triggers the reporting obligation for the purpose of alerting the public of a certain employer, and may even or whether the concrete, future action that the retailer is selling goods that are have finalized an organizing plan, but triggers the reporting requirement. The made by children working in oppressive has not yet begun to implement the instructions have been clarified to make conditions in violation of accepted plan. The Department explained that in plain that the former does not trigger the international labor standards, the such circumstances the union is not yet reporting obligation. picketing in these circumstances would actively seeking to represent employees Another commenter asserts that the not meet the ‘‘actively seeking to of this employer. Department should establish ‘‘a bright represent’’ standard. The revised Form Commenters argued that the line rule’’ where the Department would LM–30 instructions in today’s rule alert Department’s proposal would define ‘‘actively seeking to represent’’ as filers to this distinction. improperly impede a union’s organizing (1) Having a pending election petition A commenter endorses the inclusion efforts. One commenter stated that before the NLRB during the reporting of ‘‘requesting an employer to enter into Congress intended to limit this term to period at issue, or (2) demanding a neutrality agreement’’ in the proposed only those instances where the union voluntary recognition from the definition as a concrete example of had instituted some kind of employer during the reporting period ‘‘actively seeking to represent’’ an organizational activity, either sending involved. The Department disagrees that employer’s employees. It asserted that organizers into the plants or picketing or the bright line suggested above would neutrality agreements have become the distributing leaflets within the plant. be beneficial. The suggested rule is preferred method of organizing The Department disagrees with the unnecessarily narrow and would fail to employees. No comments were received suggestion that its proposal departs from effectuate the clearly expressed suggesting that entry into a neutrality the legislative history. The Department’s intention to include other concrete steps agreement does not reflect an active step proposal is consistent with the that evidence ‘‘actively seeking to to represent the employer’s employees. illustrations provided in the Houses and represent,’’ including leafleting and Thus, the Department will continue to Senate reports on the LMRDA, as quoted picketing, as identified in the House and recognize the execution of such in the NPRM. These reports explicitly Senate reports discussed in the NPRM. agreements as evidence that a union is recognize that this reporting obligation Commenters suggest that payments actively seeking to represent the is not solely triggered by in-plant and activities relating to ‘‘area employees of the employer with whom activity. Among the illustrated standards’’ picketing should not be the agreement was reached. situations that would trigger a reporting considered as steps taken to actively Some commenters expressed the obligation is where a union ‘‘send[s] represent an employer’s workers. concern that exposing a union’s use of organizers out into the community.’’ In Instead, these commenters asserted ‘‘salts’’ in an organizing campaign context, it is plain that this term refers leafleting and picketing often are used would make the employer aware of the to a community in the sense of the in area pay and benefit standards campaign and hinder organizing efforts geographic area within which an disputes, serving as just a preliminary and might target the official, his or her employer’s facilities are located, not a step to determine whether or not to spouse, or minor child for dismissal by limited application to employees initiate an organizing campaign. the employer if any of them are working comprising a community delimited by Therefore, according to the commenter, as the ‘‘salt.’’ As reflected in the the employer’s facilities. such steps should not trigger a reporting Department’s proposal, the term ‘‘salt’’

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00027 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES 36132 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

refers to an individual who applies for about the premature disclosure of their arise while a union is actively seeking a position with an employer that is the organizing tactics, established reporting to represent employees. The same subject of an organizing drive intending categories and itemization rules concern is the basis for the Department’s to surreptitiously work on the ‘‘inside’’ designed to minimize similar risks, determination, as a matter of policy, that in support of the union’s organizing while at the same time adhering to the such payments pose serious questions activities and as it directs. requirements of section 202 of the Act, regarding conflicted loyalties (including The Department recognizes that some 29 U.S.C. 431. See 68 FR 58395–97. the possibility of collusion in some organizing activities are initiated Although, for example, the Department instances). As such this information is without notice to the public or an chose to allow the disaggregated particularly important to union employer, but there would appear to be reporting of some organizing members, the Department, and the few situations, where the disclosure of expenditures, it rejected the option to public. The need for transparency, thus a reported interest on the Form LM–30 shield from disclosure all expenditures outweighs, in the Department’s view, would be the first open related to ‘‘salts.’’ The Department any risk to a union’s covert organizing acknowledgment of the union’s active recognized that section 201(b)(3) activities by requiring the disclosure of efforts to represent employees. In expressly provided that unions annually any interests, transactions, and payment response to the concern that the report the ‘‘salary, allowances, and other that arise while the filer’s union is disclosure of a reportable interest would direct or indirect disbursements actively seeking to represent the alert an employer to the presence of a (including reimbursed expenses) to each targeted employees. Further, the statute ‘‘salt’’ in the employer’s workforce, the officer and also to each employee who authorizing the Form LM–30, 29 U.S.C. Department notes that payments from * * * received more than $10,000 in 432, contains no provision that would the employer for whom the salt the aggregate from such labor mitigate the lack of transparency caused performs the manufacturing or other organization and any other labor by crafting a filing exemption for work for which he was hired are organization affiliated with it or with payments that would disclose the use of payments to a bona fide employee; as which it is affiliated * * *.’’ 29 U.S.C. salts in organizing. Unlike the statute such, these payments would not be 431(b)(3). Thus, as recognized in the authorizing the Form LM–2, 29 U.S.C. reportable. Likewise, any payments by preamble to the Form LM–2: ‘‘[I]f a 431, there is no statutory provision for the union to the salt as an employee of ‘‘salt’’ is paid $10,000 or more per year union members to obtain records from the union also would not be reportable as an employee of the union, the union union officers and employees necessary on the Form LM–30. The Department is obliged by statute to list him by name to verify the Form LM–30. recognizes that there may be some on the Form LM–2 and to report the Two commenters argued that the instances, however, where an official amount of his compensation.’’ The would have to file a Form LM–30 proposed definition poses particular statutory language added support to the difficulties for a local official who may because of the employment of salts by policy determination in the Form LM– a particular employer. For example, if a be unaware of organizing activities 2 context that ‘‘salt’’ information was undertaken by his or her international union official owns a cleaning service necessary for union members to be that does substantial business with a union or an international official that is properly informed about their union’s unaware of a local’s efforts to organize company in which the official’s union finances. In contrast, the same policy has placed ‘‘salts,’’ the union official a particular employer. Similarly, several reasons did not, in the Department’s officers from large construction unions would have to file a report, disclosing view, compel that a union itemize payments from the company to the felt that the reporting requirement was organizational expenses (other than official’s cleaning service. Although this too broad since it would be difficult for these payments to union officials). The report if it came to the attention of the officers and employees to know about Department reasoned that even without target employer would disclose the all instances of picketing, billing and such itemization, the particular union’s objective to organize its other initial organizing efforts that go on information would be available to union employees, if and when the employer in a single reporting year. The members upon request pursuant to becomes aware of such information, the Department recognizes that the section 201(c), 29 U.S.C. 431(c). See 68 employer likely would already have expanded scope of reporting may pose FR 58397; see also 68 FR 58386–87. learned of the union’s campaign. There some difficulties for particular union Thus, the Department decided to allow would ordinarily be a substantial delay officials. In consideration of this between the salt activity and the report’s Form LM–2 filers the option to report concern, as reflected in the comments filing. Form LM–30s are filed annually such payments without itemization, summarized above, the Department has and are due 90 days after the end of the recognizing that the information relating narrowed the scope of the reporting filer’s fiscal year. Thus, the definition of to these expenditures would be made obligation for local and intermediate actively seeking to represent is not available to union members under officers from that proposed in the expected to significantly compromise section 202(c) of the LMRDA. NPRM. They do not have to report on the use of salts in organizing. With regard to the immediate Form matters affecting higher levels within The Department acknowledges, LM–30 reporting issue, the Department their union. Officers of a national or however, that the timely submission of is guided by the language of section international union, however, remain the Form LM–30, in some instances, 202(a)(1), (2) & (5) of the LMRDA, responsible for reporting activities may put at risk the secrecy of a union’s requiring union officials to disclose affected by picketing or leafleting by organizing campaign and the specified conflicts of interest, including subordinate units of their organization. relationship that gives rise to the ‘‘any income or other benefit with Further, union officers and employees reporting obligation. For this reason, the monetary value * * * derived * * * voluntarily receive reportable payments Department has carefully considered from an employer whose employees from or hold reportable interests in whether it would be appropriate to take such labor organization * * * is employers. The union officer or steps to minimize the risks from such actively seeking to represent.’’ 29 U.S.C. employee is perfectly free to refrain disclosure. 432(a)(1), (2) & (5). In the Department’s from taking such payments or holding In crafting the Form LM–2, the view, this language evinces a particular such interests. If there is a fear that an Department, sensitive to union concerns concern by Congress about conflicts that organizing campaign could possibly be

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00028 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36133

exposed by filing a Form LM–30 the dealings with the employer. 70 FR obligation; and (2) whether a filer will union officer or employees does not 51186. be able, without undue burden, to have to take the payment or hold the The Department did not receive many obtain information needed to make the reportable interest. comments on this proposal. Most of the threshold determination. comments, as discussed below, either One commenter recommended that In the NPRM, the Department opposed the quantification of the Department clarify that payments explained that ‘‘substantial part,’’ as ‘‘substantial’’ or suggested that it be set from employers not to organize an used in section 202(a)(3) and the at an amount higher than 5%. After employer, i.e., attempts at ‘‘labor instructions, refers to the magnitude of review of the comments, the Department peace,’’ should be reported. Another the business transacted between any suggested that neutrality agreements has determined that 10% or more of a business’s annual receipts will be business in which a union official holds ‘‘are especially ripe for sweetheart an interest or receives payment from deals’’ where union officers and union considered ‘‘a substantial part’’ of its business. (referred to herein as ‘‘the vendor’’) and employees can benefit at the expense of the employer whose employees the bargaining unit employees as, without Two commenters recommended that the Department not define ‘‘substantial filer’s labor organization represents or is reporting requirements for these actively seeking to represent, as a instances, ‘‘it is nearly impossible’’ for part’’ in quantitative terms. A labor educator stated that his study percentage of all business transacted by workers to learn what gifts an employer participants characterized the 5% the business. 70 FR 51186. The purpose has given a union or the union’s threshold as too low; he also stated that of the ‘‘substantial part’’ language is to officials during an organizing drive. the participants were concerned about relieve union officials from having to Apart from the asserted vulnerability of the potential difficulty of obtaining report income or transactions that do neutrality agreements to manipulation information about the percentage of not have potential conflict-of-interest by employers and union officials, these business a vendor conducts with a implications. In the NPRM, the commenters express a concern oft particular employer. Another Department expressed its view that an repeated in the comments that union commenter expressed the same concern, official who has an interest in, or officials should be required to report all noting that information about a vendor’s receives income from, a vendor that payments they receive from employers. receipts is generally not publicly receives 5% or more of its income from As discussed herein, Congress did not available and employers would be the employer of the union members may intend to impose such a sweeping reluctant to provide such confidential well face a conflict. The Department obligation. Moreover, the Department is information. The same commenter explained that a business with 5% of its confident that today’s final rule requires expressed the view that a 5% threshold receipts from a single client would have the disclosure of any payments that likely would be too low for a union the opportunity and inclination to make would impede the collective bargaining officer to be aware of a vendor-employer demands or offer inducements to retain or internal union rights of a union’s relationship that required reporting. that business. In negotiations with the members. Two commenters suggested that that the union, the employer could use its J. How Union Officials Will Determine Department should define ‘‘substantial relationship with the business as a Whether an Entity From Which They part’’ as a ‘‘sufficient magnitude of bargaining tool, either threatening to Receive a Payment or Other Financial business that its loss would materially end the relationship or promising to Benefit Does a ‘‘A Substantial Part’’ of affect the financial well-being of the provide additional business its Business With an Employer Whose business enterprise in question.’’ While opportunities. Employees Are Represented by the this statement may be helpful as a The Department is not persuaded that Official’s Union or the Union It Is capsule view of the purpose underlying there is any benefit in leaving the term Actively Seeking To Represent this particular reporting obligation, the ‘‘substantial part’’ undefined. The statement does not provide filers a ready Department acknowledges that, in other Section 202(a)(3) requires union gauge to determine when a report must contexts, statutes and regulations leave officials to report any interests in and be filed. Further, such an approach ‘‘substantial’’ undefined or use payments from, ‘‘any business a would make relevant facts that would be qualitative factors to give content to the substantial part of which consists of difficult for union officials to ascertain. term, e.g., 18 U.S.C. 1093 (defining buying from, selling or leasing to, or For a precarious business with substantial as ‘‘such numerical otherwise dealing with, the business of overwhelming debt to service, the loss significance,’’ the loss of which would an employer whose employees such of 2% of revenue could be devastating. destroy the ‘‘group as a viable entity’’). labor organization represents or is A different business, in an environment For reporting purposes, however, the actively seeking to represent’’ (emphasis in which demand outstrips its utility of a less subjective approach is added). The old rule does not define production capacity, the loss of clients ‘‘substantial part.’’ The Department constituting a much higher percentage obvious. A definition that pegs proposed to define this term as 5% or of its business may not be as much of ‘‘substantial’’ to the volume of business more of the business’s annual receipts. a concern. It is difficult to imagine how conducted by a vendor with a particular The Department requested comments on a union official could learn the facts entity as a percentage of all business various aspects of this proposal, necessary to determine whether the loss provides a ready, easy to understand including whether a percentage of a client would materially affect the gauge to determine a union official’s threshold should be imposed, whether business enterprise. Thus, in the reporting obligation. the percentage threshold should be Department’s view, the questions posed One commenter asserted that the 5% higher or lower than 5%, whether a by its proposal are (1) What volume of threshold represents a significant percentage of receipts is the appropriate business, expressed as a percentage of departure from the Department’s earlier consideration, and whether union the vendor’s annual receipts, is interpretation of ‘‘substantial part.’’ In officials with holdings in, or income necessary to achieve the proper balance support of this assertion, the commenter from, a business would be able to between insubstantial dealings and cited to a provision in the LMRDA determine the percentage of the those that pose a risk of a conflict of Interpretative Manual (‘‘LMRDA business’s income that comes from interest, and thus, trigger the reporting Manual’’), which provides as follows:

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00029 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES 36134 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

245.200 Substantiality of Dealing official’s union represents or is actively investigation is conducted, there is no Union Officers A and B of a local union are seeking to represent. risk of prosecution absent unusual co-owners of a building corporation. The The Department does, however, circumstances calling into doubt the corporation, through intermediaries who are accept the proposition that increasing legitimacy of the good faith estimate. regular meat wholesalers, sold meat to the threshold decreases the burden on employers who bargain with the local union. filers by reducing the number of K. Why Payments and Other Financial In 1962, some 80% of the corporation’s reportable transactions. For that reason, Benefits Received From Section 3(l) business of approximately $100,000 was with the Department is persuaded that an Trusts and Service Providers to Such such employers. Both A and B owe reports upward adjustment is appropriate. As Trusts Must be Reported for the year 1962 * * *, since both the Numerous unions, law firms, and interest and the income are ‘‘derived from noted, the purposes served by section any business a substantial part of which 202(a)(3) require a reporting threshold organizations representing financial consists of buying from, selling or leasing to, that balances the burden associated with service providers submitted comments or otherwise dealing with, the business of an reporting insubstantial matters and the urging the Department to modify or employer whose employees such labor benefit served by the disclosure of any eliminate aspects of its proposed rule as organization represents or is actively seeking potential conflicts between a union it would affect a union official’s to represent.’’ official’s personal finances and the obligation to report payments and other LMRDA Manual § 245.200. (Emphasis duties owed by him or her to the union financial benefits received from section in original). The commenter reads this and its members. To the extent there is 3(l) trusts. In the NPRM, the Department stated that it had received compliance provision to establish 80% as the some uncertainty as to where best to inquiries about whether payments from threshold for reporting about a union strike the balance, the Department a union to a trust in which the union is official’s interest in or payments from a believes that a lower threshold best interested constitute ‘‘dealing[s]’’ vendor. He suggested that the ensures that disclosure will serve a between the trust and the union under Department should adopt the same prophylactic purpose. Based on the section 202(a)(4). quantitative threshold in the final rule. comments and a reassessment of the potential difficulties posed to filers in In the NPRM, the Department also Noting his concerns about the difficulty invited comment on whether trusts set a potential filer would face in obtaining obtaining information from a vendor, the Department has decided to double up by unions to provide benefits to their information about the measure of a members, such as pension or welfare vendor’s dealings with a target the reporting threshold to 10%. The Department believes that setting the plans, constitute ‘‘employers’’ under employer, he further proposed that no threshold level at 10% will achieve the section 202(a)(6) or ‘‘business[es]’’ report need be filed unless the filer balance required by the statute. under section 202(a)(3) and section possesses actual knowledge that the The Department recognizes that some 202(a)(4) so that payments from such vendor performs 80% or more its union officials with a reportable interest organizations to union officials would business for the target employer. or payment may encounter difficulty in be reportable. 70 FR 51182. Several The Department rejects the suggestion obtaining information about the amount commenters expressed the view that the that the above-quoted section of the of business a vendor conducts with the Department was improperly extending LMRDA Manual can be fairly read to employer whose employees are the reporting obligation to payments establish a reporting threshold. The represented by the official’s union. The received from service providers to Manual indicates only that an officer Department, however, believes that the trusts. In a similar vein, several who receives a payment from a business burden is overstated, especially where commenters suggested that the that receives 80% of its receipts from the union official holds an ownership or Department was improperly requiring the employer of the union members operating interest in the vendor. In reports by labor union officials serving must file a report. It does not state that those instances, there should be little as employees or representatives of trusts receipts of less than 80% from the trouble in obtaining the needed on matters for which reporting already employer would be unreportable. The information. In instances where the is required by ERISA. As part of their 80% figure in the example reflects a union official is an employee of the concerns, several commenters objected rather obvious situation where a vendor or receives an occasional to the proposal on procedural grounds. substantial business relationship exists payment, some problems are more likely In essence, they asserted that service thus requiring a report. The illustration to arise. In such instances, the union providers and other potential Form LM– provides no assistance in determining official should request such information 10 filers will be bound by the the minimum volume of business that in writing from the vendor. If the vendor Department’s final Form LM–30 rule, would trigger the reporting obligation. refuses to provide the information, the denying them the full opportunity for Similarly, the Department finds no official should contact the Department notice and comment. merit to the suggestion that a reporting for assistance in obtaining the A summary of the principal obligation attaches only where a union information. In the meanwhile, the comments on these various points official possesses actual knowledge that union official should make a good faith concerning a union official’s obligation the vendor’s volume of business with a estimate, based on the information to report payments and other financial relevant employer was greater than the reasonably available, whether the 10% benefits received from section 3(l) trusts reporting threshold. The folly of this threshold has been met. If such estimate and the interplay between ERISA and approach is obvious where the reporting exceeds the 10% threshold, then the the LMRDA and the Department’s threshold is set at 80%; it would allow union official should file the report and response to these comments follows. a union official to avoid a conspicuous explain that the vendor failed to provide The Department first briefly addresses reporting obligation and provide an requested information. If the estimate the contention that the Department’s incentive for a union official to remain yields a figure less than 10%, no report proposal is procedurally flawed because willfully ignorant of the business is required, but the union official should it prescribes rules that must be followed relationship between a vendor in which retain the written request for by employers under section 203 of the he or she holds an interest or from information he or she presented to the Act without providing that community which he or she receives a payment and vendor and any work sheet used to the full opportunity for notice and an employer whose employees the arrive at the less than 10% figure. If an comment. The Department next

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00030 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36135

discusses the concern that requiring view, the statute does not impose from reporting payments from union officials to report their interests reporting obligations on financial employers and businesses that have in or payments by trusts as employers institutions or service provider activities such extensive and ongoing activities or vendors providing services to those that have no connection to the union’s with unions and section 3(l) trusts. trusts represents a departure from the labor-management relationship. A Given the continuity in the Department’s asserted longstanding variant of the theme, unique to financial Department’s interpretation, a more policy excepting reports about payments institutions, is that no reporting accurate characterization might be the by trusts and their vendors and the obligation exists for union officials who longstanding inattention to reporting contention that the Department’s receive payments from financial such payments received from trusts and position is contrary to ERISA or, at the institutions. Their position is based on their service providers. Many unions least, impedes that Act’s proper the language of section 203, which and their section 3(l) trusts manage administration. The Department, in the excepts financial institutions from benefit plans for their members, final paragraphs of this section, reporting ‘‘payments or loans’’ made to maintaining close business relationships discusses the issue whether trusts and union officials. This issue is discussed with financial service providers such as other not-for-profit entities constitute below. insurance companies and investment businesses, followed by the separate, yet The suggestion that the Department is firms. As discussed in greater detail related question, whether trusts and imposing a new reporting obligation on herein, contemporary business and other not-for-profit entities constitute union officials for payments received by financial practices increase the prospect ‘‘employers.’’ them from service providers to trusts is that union officials may receive incorrect. A union official’s obligation 1. Alleged Procedural Shortcoming payments from or hold financial to report such payments has been interests in these businesses. Given Today’s rule is specific to Form LM– plainly stated for over forty years in these practices, the Department believes 30 filers. It does not amend or modify instructions to the Form LM–30. Indeed, that disclosure is critical to promoting in any way the Department’s current the old Form LM–30 includes the good union governance and fostering rules specific to the Form LM–10. Any explicit statement that ‘‘every [union ethical behavior. Thus, the Department interpretation or guidance issued on the official] must file a detailed report disagrees, on both legal and policy Form LM–10 remains in effect unless describing certain financial transactions grounds, with the notion that payments later changed by the Department. Any engaged in, and interests held by, the from service providers or financial interpretation, guidance or amendment [official] or his/her spouse or minor institutions should be excepted from to Form LM–10 will conform to legal child [including] * * * legal and reporting. Such payments carry with requirements appropriate to the nature equitable interests in, transactions with, them a particular potential for conflict of any such changes, including notice and economic benefits from certain and as such warrant particular scrutiny and comment rulemaking where businesses * * * which deal[ ] with the by union members and the public. required. Thus, the Department finds union or a trust in which the [union] is that any concerns that the Department’s interested.’’ Instructions, Part III. The The asserted historical grounds for proposal is procedurally flawed are first Form LM–30 promulgated by the excepting payments by service misplaced. Department required filers to disclose providers and financial institutions from reporting are unpersuasive. The 2. Routine Exceptions ‘‘An interest in or derived income or economic benefit with monetary value legislative history establishes that Many commenters urged the from a business * * * any part of which Congress intended that union officials Department to not ‘‘extend’’ the consists of buying from or selling or report any gifts or payments from reporting requirements to include leasing directly or indirectly to, or employers seeking to profit from their payments to union officials by trusts or otherwise dealing with your labor relationship with a union or its officials. their service providers. Several asserted organization or with a trust in which Congress understood that the bill that that the Department had never required your labor organization is interested.’’ became the LMRDA ‘‘is drawn broadly union officials (or employers under See BNA, Daily Labor Report, No. 192: enough * * * to require disclosure of Form LM–10) to report such payments. A–6, E–1 (Oct. 2, 1963). (Emphasis any personal gain which an officer or Numerous commenters objected added). Similarly, the LMRDA Manual employee may be securing at the generally to any reporting of gifts specifically identifies payments from expense of the union members.’’ Senate. associated with the routine conduct of insurance companies to union officials Report, at 15, reprinted in 1 Leg. business, especially in connection with as matters reportable on Form LM–30. History, at 411. As stated by Professor marketing by service providers to gain As there stated: ‘‘A union officer, who Cox, ‘‘the basic theory [underlying the and maintain business with union- is an employee of an insurance Act’s conflict of interest provisions] is related trusts. Some objected generally, company from which the union welfare [that all] payments made by employers on the ground that Congress never fund procures insurance, is required to to labor organizations or union officials intended that routine business expenses report that money which he receives as are prima facie questionable. Some may would be the subject of reporting. Some an employee of the insurance company, be justified. The bill does not forbid the commenters offered a variation of this inasmuch as he derives income from a payments. [The bill] simply requires argument, asserting that Congress business which sells to or otherwise that they be covered by public reports intended a general reporting exception deals with a labor organization of which so that the employees affected and the for payments made in the regular course he is an officer.’’ LMRDA Manual public may know what has occurred.’’ of business. A common theme in the § 246.600. 1959 Senate Hearings, at 127. The comments is the claim that the affected The commenters cite no authority for legislative history illustrates how community has understood that the their broad claim that the Department’s Congress believed the LMRDA would LMRDA focuses solely on financial position is a departure from a operate. The principal focus of the transactions involving unions and longstanding policy, nor do they McClellan Committee was on the employers whose employees are provide a well-reasoned argument for activities of the Teamsters Union and represented by a union or a union has how the statute would permit the the conduct of three of its highest targeted for representation. In their Department the discretion to except ranking officials: Dave Beck, Frank

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00031 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES 36136 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

Brewster, and Jimmy Hoffa. Each official specifically identified as improper in savings and loan association or other engaged in unlawful activities that those codes. Against this backdrop, the credit institution * * *.’’ These could not have been accomplished argument that the legislative history commenters assert that all payments without the complicity of banks and supports the contention that the received by union officials from banks, insurance companies. Banks and Department’s view of reporting is both including lunches and dinners to meet insurance companies were used by novel and unintended by Congress fails. with clients, and marketing and these officials, often to the mutual While most commenters appeared to promotional expenses incurred to keep benefit of the officials and the recognize the obvious potential of or to secure business, among other commercial entities, to carry out such circumvention and evasion of the Act’s expenses, are excepted from reporting. activities and to otherwise provide reporting requirements if union officials did not report any payments they The Department disagrees. Section unlawful gain to the officials. As 203(a)(1) cannot be read as a limitation explained by Senator Kennedy: ‘‘Mr. received from trusts, some argued that the relationship between the official’s on a union official’s obligation to report Hoffa would be required to disclose all interests in or payments from any of his business dealings with insurance union and the trust did not allow for that possibility. The commenters appear particular segment of employers. In both agents handling the union’s welfare sections 202 and 203, Congress set forth funds, his private arrangements with to argue that because the relationship specific, distinct rules including distinct employers, his hidden partnerships in between a section 3(l) trust and a exceptions to those rules, particular, on business ventures foisted upon his participating union should be the one hand, to union officials and, on members, and all other possible symbiotic, there is no conflict of interest the other hand, to employers. Neither conflicts of interest.’’ 105 Cong. Rec. presented by such payments and thus the statute nor its legislative history S817 (daily ed. Jan. 20, 1959), reprinted no circumvention or evasion is possible. evinces an intention to create a in 2 Leg. History, at 969. This argument overlooks that the focus of section 202 is conflict between a completely uniform system of reports The AFL–CIO Ethical Practices Codes, union official’s personal financial for all filers, union officials and which served as the foundation for the interests and the duties he or she owes employers alike, and neither infers that LMRDA conflict of interest reporting to the union and its members, one that an exception unique to a particular provisions, contained a specific code for exists without regard to the often provision was intended as a general union ‘‘health and welfare funds.’’ See congruent interests of a trust and its exception to other reporting 105 Cong. Rec.*16379 (daily ed. Sept. 3, participating unions. Moreover, this requirements. As discussed herein the 1959) reprinted in 2 Leg. History, at argument overlooks that the money a Department acknowledges that its 1406–07. It expressly stated: ‘‘No union participating union pays into a trust, interpretation requires union officials to official who already receives full-time either directly from the union or report a loan or payment made by a pay from his union shall receive fees or indirectly by an employer on the financial institution, but that the salaries of any kind from a fund union’s behalf, is money that otherwise financial institution is not required to established for the provision of a health, would be maintained in the union’s file a report. Although generally the Act welfare, and retirement program. Where own account and, as such, any proceeds establishes a reciprocal reporting a salaried union official serves as paid to a union official would be obligation on union officials and employee representative or trustee disclosed in reports filed by the union. employers—both the payer and the * * * such service * * *should not [be Without requiring a union official to payee report on a covered payment—in considered] an extra function requiring report payments he or she receives from this instance, the language of the two further compensation from the welfare a trust, an official would be able to sections calls for a different result. fund.’’ 2 Leg. History, at 1406. Of circumvent and evade the disclosure Although today’s rule does not interpret particular import, it states: ‘‘No union that would have occurred if the funds section 203(a), the Department notes official, employee, or other person had remained in the union’s coffers. By that Congress may have held the belief acting as agent or representative of a requiring a union official to report that banks would be constrained to union, who exercises responsibilities or payments from the trust, the Department report these payments under laws influence in the administration of is simply ‘‘following the money,’’ regulating financial institutions and welfare programs or in the placement of ensuring that disclosure of such insurance contracts, should have any wished to avoid redundant reporting. payments cannot be avoided. Further, The Department takes no position in compromising personal ties, direct or since the union official’s obligation to indirect, with outside agencies such as today’s rule on the separate question as submit a Form LM–30 overlaps with the to whether the breadth of the exception insurance carriers, brokers, or congruent responsibility of a union to consultants doing business with the provided financial institutions from disclose payments received by the reporting obligations under section 203 welfare plan. Such ties cannot be official from a section 3(l) trust if certain reconciled with the duty of a union is as expansive as suggested by some conditions are met, the prospect that commenters. official to be guided solely by the best one party may report the payment interests of the membership in any increases the risk that a failure by the The LMRDA Manual specifically transaction with such agencies. Any other party to report the payment will identifies payments from financial agency official found to have such ties be detected. Thus, the reporting institutions to union officials as matters to his own [substantial] personal obligation helps check the evasion of reportable on Form LM–30: ‘‘If a credit advantage or to have accepted fees, reporting under the Act and, in some union grants loans to a labor union, a inducements, benefits, or favors of any instances, may deter the primary report would be required from an officer kind from any such outside agency, conduct that would trigger the reporting of that labor union who is also an should be removed [from office].’’ Id. obligation. employee of the credit union.’’ LMRDA Where Congress, in effect, established a As noted above, some financial Manual § 246.800. Further, a 1961 disclosure regime in section 202 for institutions have argued that section ‘‘Guide for Employer Reporting’’ issued matters addressed by the AFL–CIO 203(a)(1) excepts ‘‘payments or loans by the Department provides the Ethical Practices Codes, it would make made by any national or State bank, following examples of reportable no sense to exclude reports on activities credit union, insurance company, payments (italics in original):

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00032 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36137

A. Loans made to union representatives not obtain the knowledge and experience requiring union officials to report such employed by you, unless made in the regular needed to be a fiduciary * * * is payments, union members may course of business as a bank or other credit contrary to the interests of union determine for themselves whether some institution. members.’’ Several commenters payments are excessive or unnecessary B. Loans to employees, who are also union or arise in circumstances where the representatives, on terms more favorable than expressed concern that publishing those available to other employees, unless information for only union officers gives payments invite scrutiny to determine made in the regular course of business as a union members the impression they can whether the official’s personal benefits bank or other credit institution. influence an employee benefits plan’s from the arrangement have impeded or C. Loans to labor organizations, unless operation as part of the governance of may impede the official’s duty to the made in the regular course of business as a union affairs, which is contrary to union. bank or other credit institution. ERISA’s requirement that a fiduciary act One commenter argued that firms are Although today’s rule does not affect independent of union affairs. Other concerned that if Form LM–30 filers any current reporting obligation of any commenters stated that it was unfair to must report payments and gifts from Form LM–10 filers, the language quoted single out union officials for disclosing vendors to a section 3(l) trust, these belies any suggestion that the payments from a trust since filers will demand that the firms assume Department is imposing a novel management officials associated with the burden to keep records of such reporting obligation on Form LM–30 the trust receiving the same payments payments. The Department filers by requiring them to report the have no reporting obligation. acknowledges that this may create a customer relations challenge to some receipt of such payments. In the Department’s experience, union vendors, but, just as the decision to The LMRDA is a reporting statute members are savvy enough to ascertain make a payment, or accept a payment, directed at unions, union officials, and whether a union official’s payments is voluntary, so too is any decision by employers and businesses whose from or interests in a business pose a vendor to keep ‘‘gift records’’ for a interests intersect with each other’s conflicts of interest and to realize that union official. The vendor may freely interests; as such, it is obviously not trustees may need to obtain education choose to demur from assuming such a intended to broadly regulate the affairs and training to properly fulfill their burden, just as it may choose to change of financial institutions. The fact that roles as trustees. Thus, the Department its practice of making gifts to union financial institutions are regulated by believes that the concerns over reporting officials. The Form LM–30 reporting government agencies other than this such matters are overstated and that and recordkeeping obligations remain Department and that these institutions reporting will not impede trustees in squarely on the union official who holds may be required to disclose information attending educational and training an interest or receives a payment for under those laws does not mean that the seminars. The Department believes that which reporting is required. disclosure purposes of the LMRDA union members already understand or One commenter suggests that the conflict with those laws or that those will understand with minimal Department should change its proposal laws supersede the LMRDA’s reporting explanation that an official’s role as a to include a general exception for provisions. The purpose of LMRDA trustee is distinct from his position with reporting payments associated with an reporting is to give union members the union and requires that the official unsuccessful effort to obtain new or information about financial transactions act in the best interests of the trust and further business. Two commenters between union officials and employers. its beneficiaries; as such, the official would exclude reporting where any Reporting under securities and other cannot put his personal political payments were made to both union and laws serves other purposes; while some concerns or his union office or management appointed trustees. One of these purposes may complement the employment ahead of his fiduciary commenter, acknowledging that LMRDA’s disclosure provisions, none obligation to the trust. At the same time, marketing benefits were provided by all supplant the purpose of the LMRDA to the disclosure of such payments to the service providers seeking new business, provide relevant, readily available union official allows the union’s argues that the Department should information to union members, the members to determine whether the provide guidance as to where to draw public, and the Department about payments may tempt the official to put the line between routine matters and potential conflicts between the financial his or her own financial interests above payments intended as bribes. circumstances of a union official, his or the official’s duties to the union, duties The commenter who would except her spouse, or minor child and the distinct from those owed by the official from reporting any unsuccessful efforts official’s duty to the union and its to the trust. The Department disagrees to garner business by courting a union members. that it is unfairly singling out union- official acknowledged that union As noted, many commenters took the appointed trustees for reporting members have a legitimate interest in tack that even if the Department payments while allowing their knowing whether the businesses that are possessed the authority to require union management counterparts to refrain buying from or selling to their union are officials to report payments received from doing so. Section 202 extends to also engaged in private transactions from trusts and vendors, it would be bad reports by union officials, but not to all with union officers or employees. But in policy to do so. One commenter opined individuals who have a role in section his view, where no transaction actually that the Form LM–30 reporting 3(l) trusts. Thus, the Department is not takes place between the business and requirements will deter union trustees able to consider such an extension to the union, a union member would have from attending educational or other management trustees, whether or not it no interest in the payment. In the conferences that may be required for the might have merit. The Department also commenter’s view, up until an actual union trustee to properly discharge his believes that union members will transaction occurs, the business should or her duties under ERISA’s standard of understand this principle and not view not be considered to be ‘‘dealing with’’ care and to be informed about the the act of reporting by union officials as the labor organization. The logic behind services available to the trusts from the evidence of culpable conduct or the this position is not apparent. Other financial services community. One absence of reports by management comments disagree. A commenter commenter points out that ‘‘anything trustees as proof of conduct beyond explained that such payments to a that makes it more difficult or risky to reproach. At the same time, however, by union official should be reportable to

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00033 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES 36138 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

the extent that the business was which exceeded and expanded between union officers and employees ‘‘dealing with’’ the union or employer WPPDA’s requirements. and vendors to their union’s trusts. by attempting to convince the union or There is no merit to the implicit claim Contrary to an implicit premise employer to enter into commercial that ERISA was intended to supplant underlying many of the comments that relations with a competitor. This view the LMRDA insofar as payments to the ERISA and the LMRDA are co- also has support in the legislative union officials are concerned. Section extensive insofar as union-related trusts history. In an analysis of section 202(a), 514 of ERISA states: ‘‘Nothing in this are concerned, ERISA applies to only a Senator Goldwater states, ‘‘Briefly, what subchapter shall be construed to alter, subset of the section 3(l) trusts. Some must be reported are holdings of interest amend, modify, invalidate, impair, or section 3(l) trusts are not covered at all in or the receipt of economic benefits supersede any law of the United States by ERISA. ERISA covers only pension from employers who deal or might deal [with exceptions not here pertinent] or and ‘‘employee welfare benefit plans.’’ with such union official’s union.’’ 62 any rule or regulation issued under any 29 U.S.C. 1002. While there is Cong. Rec. 19,759 (1959), reprinted in 1 such law.’’ 29 U.S.C. 1144(d). The considerable overlap between section DOL, Legislative History of the Labor- WPPDA contained a similar provision, 3(l) trusts and ERISA ‘‘employee welfare Management Reporting and Disclosure undermining any attempt to use that benefit plans,’’ some funds in which Act of 1959 (emphasis added). statute to constrain the Department’s unions participate fall outside ERISA Furthermore, to the extent the authority under the LMRDA. See Pub. L. coverage, including strike funds, commenter may be suggesting that many 85–836, § 10(b) (1958) (this act does not recreation plans, hiring hall payments would be picked up if a exempt any person from any duty under arrangements, and unfunded business relationship is later any present or future law affecting the scholarship programs. 29 CFR 2510.3–1. consummated, the commenter fails to administration of employee welfare or Other section 3(l) trusts that are subject recognize that unless payments from pension benefit plans). In the to ERISA are not required to file the potential vendors are reported in the Department’s view, the LMRDA and the Form 5500 or file only abbreviated fiscal year in which they occur, a union ERISA serve complementary purposes, schedules. See 29 CFR 2520.104–20 officer could avoid disclosure by simply particularly insofar as their disclosure welfare (plans with fewer than 100 accepting payments in one fiscal year provisions overlap. There also is an participants); 29 CFR 2520.104–26 and awarding the union business to the evident similarity between the duty (unfunded dues financed welfare plans); vendor in a later year. union officials owe to their union and 29 CFR 2520.104–27 (unfunded dues financed pension plans). See also One commenter pointed out that the the duty trust officials owe to their trust. Reporting and Disclosure Guide for proposed rulemaking has no examples Today’s rule is not intended as an Employee Benefit Plans, U.S. related to trust funds reimbursing union interpretation of ERISA and it should Department of Labor (reprinted 2004), officers. Such examples have been not be construed as such. It does not available at http://www.dol.gov/ebsa/ added to the instructions. alter any statutory or regulatory pdf/rdguide.pdf. obligations that now exist under that 3. Relationship With Other Statutes The Department received several statute. comments that raise concerns with Although the Department notes that it The Department has determined that asserted duplicative reporting that did not receive a comment stating that Form LM–30 reporting and would exist if union officials had to any of its Form LM–30 proposals recordkeeping requirements do not report payments received from trusts or conflicts with an obligation under interfere with or unnecessarily vendors and that the burden to keep ERISA, many commenters oppose duplicate ERISA financial disclosure track of such payments likely would fall reporting on some or all of the trust- requirements. Thus, the Department is upon the trusts and vendors. Most of the related activities because the same requiring union officials to report commenters expressing concerns about matters are subject to ERISA and other certain payments they receive from these matters asserted that party-in- Federal reporting requirements relating trusts, notwithstanding any ERISA interest transactions (which they argue to security and business taxes. A typical reporting requirements that may apply encompass all potential conflict of comment was that ERISA already to trusts. On many occasions, the interest disclosures that may arise under regulates transactions that would be Department has discovered during an the LMRDA), are already covered by reported on Form LM–30. This audit or investigation that a union ERISA reporting and auditing commenter also argued that the IRS officer or employee was engaged in a requirements. Some commenters submit already oversees business expenses reportable situation with a trust but had that because ERISA identified those under the tax laws; it similarly argues not filed the required Form LM–30 until transactions which Congress determined that the IRS also oversees payments by the Department became involved. For were conflicts of interest, ERISA should tax exempt organizations that are made example, the spouse of a union officer be the standard against which all for improper private benefit. 26 U.S.C. owned a company that provided transactions involving jointly 501(c). cleaning and maintenance services to administered plans are judged. Two commenters submit that the the union and its trust. In one year, the Among the suggestions on this point, LMRDA was never intended to regulate company received over $94,000 from the commenters requested the multiemployer plans. They asserted that the union and the trust. Although this Department to except union officials the Welfare and Pension Plans information might or might not be from reporting a payment from a trust if Disclosure Act (‘‘WPPDA’’), P.L. 85–836 reported on a Form 5500, depending on the trust files a Form 5500. The (1958), which predated the LMRDA, the surrounding circumstances, this commenters appear to argue that no was enacted for this purpose. They information can be disseminated more payments associated with a union- assert that the WPPDA implemented readily to union members on the Form related trust covered by ERISA need be reporting and disclosure requirements LM–30 than through the Form 5500 reported by Form LM–30 or Form LM– for pension plans similar to the alone. The Form LM–30, since its 10 filers if the trust files a Form 5500. LMRDA’s requirements for unions. inception more than 45 years ago, has Two commenters pointed out that, in a When WPPDA proved inadequate to been the source for union members to prior rulemaking, the Department regulate trusts, Congress passed ERISA, learn of potential conflicts of interest recognized the merit of Form 5500 for

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00034 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36139

purposes of trust disclosure. These there would be no disclosure relating to commenter argued: ‘‘although some commenters apparently refer to the those section 3(l) trusts that are not large trust funds happen to have Form T–1 rule that was published in subject to ERISA. employees—many do not—the statute 2003 as part of the ‘‘Form LM–2 As noted, a few commenters was intended to cover employers whose rulemaking.’’ See 68 FR 58374, 58524– suggested that the purposes served by potential relationship with a union 25(Oct. 9, 2003). This same exception is the reporting requirements for payments raises the risk of a conflict of interest in contained in the Form T–1 final rule made in the routine course of business some sense relevant to the union’s published in the Federal Register, at 71 are already met by the IRS rules on function as a collective bargaining FR 57716 (Sept. 29, 2006). Several business expenses. The Department representative.’’ One commenter argued commenters recommended as an disagrees. The IRS rules on ‘‘business that ‘‘while [section 203] is precise in its alternative that the Department expand expenses’’ are not designed to disclose applicability only to an employer whose Schedule C on Form 5500 to list by potential conflicts of interest; section employees are either represented by or company all payments, loans, or 202 is precisely designed for this a target of a union, Congress chose to gratuities from service providers to purpose. See IRS Publication 535. Many use the additional terms ‘businesses’ trustees and add a schedule that lists all of the expenditures that qualify as and ‘trust’ rather than ‘‘employer’’ in trustees who served during the year and ‘‘business expenses’’ for IRS purposes [section 202] dealing with the reporting their expenses, similar to the Form LM– would potentially create a conflict of obligation of a union official. Nothing in 2. interest for union officers and the statute reflects a Congressional As noted by many commenters, the employees. For instance, entertainment intent to subsume these broader terms Department has previously recognized expenses incurred in seeking new within the subset of employers subject the merit of filing a timely and complete business may be deductible in part to [section 203].’’ Form 5500 in lieu of a Form T–1. The under IRS rules. Further, the IRS Other commenters stated that a trust Form 5500 as a ‘‘surrogate Form T–1,’’ considers certain below market loans should not be considered an employer however, only partially overlaps with and transfers of property as ‘‘business because any union officials involved the Form LM–30, and is therefore not a expenses.’’ Such a loan or property with such funds do not negotiate with reliable substitute for the Form LM–30. transfer made to a union officer or such funds or their representatives, but The alternative suggested also presents employee is exactly the type of payment rather serve as trustees or shared problems. Expanding the Form 5500 the LMRDA was designed to disclose. employees in providing benefits or would require all covered entities, not Moreover, the commenters offer no enforcing collective bargaining just those engaged in reportable explanation how this approach would agreements. Another commenter agreed, transactions with labor union officers benefit union members who typically noting that any improper payment from and employees to shoulder an LMRDA- would never have access to such tax a trust to a union officer who is acting driven higher reporting burden. The filings or the underlying expense as a trustee would be considered a LMRDA addresses disclosure for labor documentation. Without such access, fiduciary breach of the trustee and not organizations and labor organization the prophylactic purposes served by a breach of the officer’s responsibilities officers and employees; it does not disclosure cannot be achieved. As such, to the union. impose general disclosure requirements the Department rejects this approach. Several commenters argued that on the larger ERISA reporting universe. treating a trust as an employer adds 4. Trusts as Employers and Businesses As such the Department’s efforts here in further administrative burdens on trust clarifying the Form LM–30 better fulfill As noted above, the NPRM sought funds, which are already subject to the full reporting mandate of the comment on whether a section 3(l) trust numerous reporting and regulatory LMRDA without imposing additional may constitute an ‘‘employer’’ under requirements. One commenter pointed burden on those entities and persons section 202(a)(6) or a ‘‘business’’ under out that some Taft-Hartley trusts are outside the scope of the LMRDA. sections 202(a)(3) and 202(a)(4) so that self-administered, in which case the Practical concerns also could impede payments from such organizations to trust itself may be an employer, while the use of the Form 5500 to capture union officials would be reportable. 70 other trusts employ third-party some of the information subject to FR 51182. After considering the administrators to administer the trust, today’s rule. Form 5500s are not comments received on this point, the denying employer status to the trust. He required to be filed until seven months Department has concluded that a implicitly suggests that given what he after the close of a plan’s fiscal year, and section 3(l) trust or other not-for-profit characterizes as an artificial distinction extensions are freely available, and organization with employees must be between third-party and self- there is a substantial lag time between treated as an ‘‘employer’’ under the Act, administered trusts Congress could not the submission of a Form 5500 and its but that they should not be treated as a have intended that payments by any availability for public review. Thus, ‘‘business’’ under the Act. trust would be covered. This there now exists no way for a union As noted above, commenters were commenter, like several others, further member to timely access such divided on the question whether a trust contended that trusts are not information, unless it is obtained via or other not-for-profit entity, including ‘‘businesses’’ for purposes of the Act. Form LM–30. By collecting such a labor organization, should be treated The LMRDA expressly defines information pertinent to a section 3(l) as an ‘‘employer’’ for reporting ‘‘employer’’ in broad terms. Included in trust, including payments by the trust to purposes. One commenter argued that that definition, at section 3(e) of the Act, union officials, and making it available trusts should not be regarded as are employers that are ‘‘with respect to at a single site, however, union ‘‘employers’’ because Congress only employees engaged in an industry members are afforded the means to intended reporting to ‘‘reach the union affecting commerce, an employer within properly oversee their union’s officials who may receive payment from the meaning of any law of the United operations and monitor any potential an employer not to organize the States relating to the employment of any conflicts between an official’s personal employees,’’ citing Senate Report, at 16. employees or which may deal with any monetary interests and the official’s According to the commenter, trust funds labor organization concerning duty to the union. Moreover, even if in which the union is interested do not grievances, labor disputes, wages, rates these problems could be overcome, fall into this category. Another of pay, hours of employment, or

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00035 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES 36140 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

conditions of work * * *.’’ 29 U.S.C. equates ‘‘business’’ with the terms status of trusts and other not-for-profit 402(e) (emphasis added). The statute ‘‘buying,’’ ‘‘selling,’’ ‘‘leasing,’’ and so entities. contains no indication that Congress forth. They argued that the phrase One commenter asserts that Congress intended a narrower application of that ‘‘otherwise dealing with’’ takes its intended that businesses would consist term in any of the Act’s provisions. meaning from these terms, citing to the only of entities that are likely organizing Indeed, the breadth of the term is Act’s legislative history (Senate Report, targets of a union. Another commenter illustrated not only by the italicized at 90, reprinted in 1 Leg. History, at states that the Department ‘‘should language of section 3(e) but by the 486). If Congress had intended to cover continue its current practice of not careful parsing of the remaining entities that have non-business dealings requiring payments to a union official or language in the provision to except with a labor organization, they argue, it employee from affiliated unions governmental entities from the Act’s would have drafted sections 202(a)(3) (including multi-trade councils such as application. See 29 U.S.C. 402(e) (the and 202(a)(4) to include ‘‘any entity,’’ building trades or metal trades councils) Act’s sole exceptions for entities is for not simply ‘‘a business.’’ to be reported on the LM–30.’’ the ‘‘United States or any corporation The LMRDA does not define Two commenters argued that ‘‘labor wholly owned by the Government of the ‘‘business,’’ leaving the Department to organizations’’ are not ‘‘businesses’’ United States or any State or political apply the term’s ordinary meaning because the latter term refers only to subdivision thereof.’’) For these reasons, unless the context in which it is used ‘‘commercial enterprises that engage in the Department is persuaded to give indicates that Congress intended a commercial transactions with unions or ‘‘employer’’ its full and natural unique or special meaning. See Brower unionized employers.’’ However, they construction, thus bringing within its v. Evans, 257 F.3d 1058, 1065 (9th Cir. add: ‘‘To the extent a labor organization reach any entity, including any section 2001). The American Heritage has employees who are represented by 3(l) trust and service providers to such Dictionary (2000) defines ‘‘business,’’ in another union, payments from the labor trusts, that is an ‘‘employer.’’ part, as ‘‘Commercial, industrial, or organization to officials of the union Commenters were divided on the professional dealings’’ and ‘‘Volume or representing its employees would be question whether trusts and other not- amount of commercial trade’’ and reportable under [sections] 202(a)(1) & for-profit entities constitute businesses ‘‘commercial dealings.’’ Under Black’s (5).’’ Each of these sections provides within the meaning of the LMRDA. One Law Dictionary (8th ed. 2004), a that a union official should report commenter noted that leaving trusts ‘‘business’’ is generally defined as ‘‘a payments from an employer whose outside the reporting requirements commercial enterprise carried on for employees the official’s union would minimize transparency and profit.’’ Black’s illustrates the term’s represents or is actively seeking to undermine the intent of the reforms. usage to distinguish between represent. Another asserted that ‘‘[t]he This commenter alleged that union ‘‘commercial enterprises’’ and non- risk of a union official obtaining special officials have long utilized ‘‘off the businesses, using academia as an favors from an affiliated labor books’’ accounting procedures for these example of the latter. Moreover, the IRS organization or labor-management programs. Most commenters, however, case law interpreting ‘‘trade or committee in return for his or her not asserted that trusts do not constitute business,’’ has consistently held that a discharging his [or her] obligations as a ‘‘businesses.’’ One commenter argued profit motive is a basic criterion of a union leader is simply not present.’’ that interpreting a trust in which a labor ‘‘business.’’ Nickeson v. Commissioner, The Department has decided that for organization is interested as a 962 F.2d 973 (10th Cir. 1992). Based on reporting purposes a union may ‘‘business’’ is incongruous with the these interpretations, the Department constitute an ‘‘employer’’ under section Department’s establishment of a believes it appropriate to treat trusts and 202, if the union meets the statutory reporting obligation by union officials other not-for-profit entities as distinct definition of the term. 29 U.S.C. 402(c). who hold interests in or receive from entities treated as businesses for The Department’s reasoning is basically payments from ‘‘businesses that deal Form LM–30 purposes. the same as discussed above in with a trust in which the labor connection with the ‘‘employer’’ L. When Payments and Other Financial organization is interested.’’ In this question posed with regard to trusts and Benefits Received From a Union Other commenter’s view, it would make no other not-for-profit entities. Than an Official’s Own Union Must Be sense to consider the trust as a Additionally, the Department rejects the Reported ‘‘business’’ at the same time as proposition that ‘‘labor organization’’ payments by either the labor In the NPRM, the Department asked and ‘‘employer’’ are mutually exclusive organization or the trust to a union for comment on the question whether terms for all purposes of the Act. This official must be reported by the official. ‘‘labor organizations’’ constitute proposition is inconsistent with the In effect, the commenter argues that the ‘‘businesses’’ under sections 202(a)(3) settled view that a ‘‘labor organization’’ union and the trust operate as one for and 202(a)(4), or constitute ‘‘employers’’ that is also an ‘‘employer’’ will be held reporting purposes and thus dealings by under section 202(a)(6). The Department to the same obligation as other the trust with the union cannot be received only a few comments on this employers unless Congress otherwise viewed as business dealings for question. Today’s rule clarifies that a provides. As noted, the Act provides reporting purposes. ‘‘labor organization’’ that has employees that the term ‘‘employer’’ is to be given Other commenters argued that since is an ‘‘employer’’ for purposes of Form the same application for all its purposes. trusts do not operate with a profit LM–30. As just discussed, there is no If a ‘‘labor organization’’ cannot be an motive, they cannot be considered indication that Congress intended to ‘‘employer,’’ then the various ‘‘businesses.’’ Several commenters except any entities other than prohibitions relating to employer echoed the sentiment that an entity can government agencies from the interference in union elections would be be a ‘‘business’’ only if it is a application of the Act’s provisions if unavailable where employees of a union commercial enterprise carried on for they occupy the status of ‘‘employer’’ are themselves represented by an profit; they infer support for this under any law of the United States. The autonomous staff union. There is no argument from their understanding of Department reaches this conclusion for evidence that Congress intended to deny the term as guided by the language in essentially the same reasons as LMRDA rights to these workers simply sections 202(a)(3) and 202(a)(4), which discussed above in connection with the because their employer is a labor

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00036 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36141

organization. This Department’s and its members. Readers are cautioned • Circulating a petition for longstanding position to treat unions as that the obligation to report or not report representation among employees; employers vis-a-vis staff unions is payments in the situations described • Soliciting employees to sign congruent with the similar treatment above does not affect the legality of such membership cards; accorded such relationships under the payments under the election provisions • Handing out leaflets; Labor Management Relations Act. See • Picketing; or of the LMRDA or other laws, such as the • National Education Ass’n, 206 N.L.R.B. Labor Management Relations Act, which Demanding recognition or 893 (1973). may regulate such matters. bargaining rights or obtaining or However, in the rule today, the requesting an employer to enter into a Department clarifies when a payment M. How the Proposed Definitions Have neutrality agreement (whereby the from a labor organization would be Been Clarified To Ease a Filer’s employer agrees not to take a position reportable under section 202(a)(6). No Completion of the Form LM–30 for or against union representation of its reports will be required where the As explained in the NPRM, the old employees), or otherwise committing payment is received from a union that regulations and instructions for the labor or financial resources to seek is affiliated with the union which the Form LM–30 failed to define or representation of employees working for officer or employee serves as an officer incompletely defined several terms the employer. Where a filer’s union has taken any of or employee; i.e., locals, intermediate whose meaning must be properly the foregoing steps, the filer is required bodies, and their parent national or understood for a union official to to report a payment or interest received, international union. To use a fictitious correctly complete the Form LM–30. or transaction conducted, during that example, an officer or employee of Local The Department therefore proposed reporting period. 1, National Union of Reporters (‘‘NUR’’), several new or revised definitions. The would not report a payment received terms defined included: Actively Note: Leafleting or picketing, such as from either the New England Council, seeking to represent, arrangement, purely ‘‘informational’’ or ‘‘area standards’’ NUR, Local 2, NUR, or the NUR, even benefit with monetary value, bona fide picketing, that is wholly without the object of organizing the employees of a targeted if they were employers. Similarly, no employee, bona fide investment, payment from the local to an NUR employer will not alone trigger a reporting dealing, directly or indirectly, filer/ obligation. For example, if a union pickets a national officer would be reported. Any reporting person/you, income, labor sporting goods retailer solely for the purpose such payment already will be reported organization, labor organization of alerting the public that the retailer is on the payer union’s Form LM–2, LM– employee, labor organization officer, selling goods that are made by children 3, or LM–4, albeit sometimes aggregated legal or equitable interest, minor child, working in oppressive conditions in violation with other payments. Moreover, in payer, publicly-traded securities, of accepted international standards, the instances where the union’s payment(s) picketing would not meet the ‘‘actively substantial part, and trust in which a seeking to represent’’ standard. to a particular official exceed $5,000, labor organization is interested. All of alone or in the aggregate over a one-year the proposed definitions with the As discussed, the definition was period, the reporting union’s payments exception of ‘‘publicly-traded modified by the addition of the note to will specifically identify the payee securities’’ have been adopted, some in inform filers that leafleting or picketing official on the Form LM–2. However, a revised form, in today’s rule. As wholly without the object of organizing union officer or employee unaffiliated discussed earlier in the preamble, the the employees of a targeted employer with the union that makes the payment Department has determined that it is will not trigger a reporting obligation must report the payment if the payer- unnecessary to include a definition for and make plain that a report need only union is an employer. For example, an ‘‘publicly-traded securities’’ or an be filed where a union official receives officer or employee of a regional council equivalent term in the rule. Comments a payment during the year in which the of multi-trade unions that receives a were received on only some of the official’s union takes a concrete step to payment from NUR or one of its locals definitions. To assist filers, however, all actively represent the employees of an would have to report the payment if the the definitions, as adopted by today’s employer that transacts business with NUR entity is an employer. rule, are set out below in italics. Where the union or other businesses for which The Department has created a reports are required because of their reporting rule for unions: A union comments have been received on a proposed definition, the comments are relationship to such employer. official will have to report payments Arrangement means any agreement or from a labor union other than his or her summarized and the Department’s responses are discussed below. A understanding, tacit or express, or any own if that union (1) Has employees plan or undertaking, commercial or represented by the official’s union; (2) number of the terms already have been discussed in this preamble. personal, by which the filer, spouse, or has employees in the same occupation minor child will obtain a benefit, as those represented by the official’s 1. Definitions Adopted by Today’s Rule directly or indirectly, with an actual or union; (3) claims jurisdiction over work potential monetary value. that is also claimed by the official’s Actively seeking to represent means union; (4) is a party to or will be that a labor organization has taken Note: The term ‘‘arrangement’’ is very broad and covers both personal and business affected by any proceeding in which the steps during the filer’s fiscal year to become the bargaining representative of transactions, including an unwritten official has voting authority or other understanding. For example, if during the ability to influence the outcome of the the employees of an employer, including reporting period an employer’s representative proceeding; or (5) has made a payment but not limited to: offered a union officer a job with the to the filer for the purpose of • Sending an organizer to an employer, the officer must report the offer influencing the outcome of an internal employer’s facility; unless he or she rejected it. A standing job union election. This rule, coupled with • Placing an individual in a position offer must be reported because it carries the the general provisions relating to section as an employee of an employer that is potential of monetary value to the filer. Another example of a situation requiring a 202(a)(6), will capture for reporting any the subject of an organizing drive and report is when an employer provided insider payments that could reasonably be paying that individual subsidies to information about a stock or other investment perceived as presenting a conflict with assist in the union’s organizing opportunity, unless the filer rejected the the official’s duty to their own union activities; advice and took no steps to act on it.

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00037 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES 36142 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

No comments were received on the not require disclosure of such payments for the time he or she is engaged in proposed definition. This definition is and that an officer’s receipt of such certain union activities provided it is adopted as proposed. As discussed in payments does not present a conflict of made pursuant to a collective bargaining the NPRM, the term encompasses both interest. The commenter recommends agreement and the compensation personal and business transactions, the Department either amend the reflects payment for union activities of including an unwritten understanding. definition or modify the instructions to 250 hours or less during the reporting For example, if an employer’s clarify that such payments do not have year. representative during the reporting to be reported under any of the sections. Bona fide investment means personal period solicits a union officer to accept The Department agrees that benefits assets of an individual held to generate a job with the employer, the filer must received as an employee of an employer, profit not acquired by improper means report the solicitation, unless the filer such as pension benefits, are generally or as a gift from (1) an employer, (2) a rejects the offer. A standing job offer not reportable. This point is clarified by business that deals with the filer’s union must be reported because it carries the the new third sentence added to the or a trust in which the filer’s union is potential of monetary value to the filer. definition. interested, (3) a business a substantial Another example of a situation Bona fide employee is an individual part of which consists of dealing with an requiring a report would be one in who performs work for, and subject to employer whose employees the filer’s which a covered employer provides the control of, the employer. union represents or is actively seeking to insider information about a stock or Note: A payment received as a bona fide represent, or (4) a labor relations other investment opportunity, unless employee includes wages and employment consultant to an employer. the filer rejects the advice and takes no benefits received for work performed for, and No comments were received on this steps to act on it. subject to the control of, the employer Benefit with monetary value means making the payment, as well as proposal. The primary purpose of this anything of value, tangible or intangible. compensation for work previously performed, definition is to alert filers that stock or It includes any interest in personal or such as earned or accrued wages, payments other securities received as a gift will real property, gift, insurance, retirement, or benefits received under a bona fide health, not constitute a ‘‘bona fide investment,’’ pension, license, copyright, forbearance, welfare, pension, vacation, training or other under the provision that exempts from bequest or other form of inheritance, benefit plan, leave for jury duty, and all reporting bona fide investments in payments required by law. office, options, agreement for securities when the gift is received from Compensation received under a ‘‘union- specified employers, businesses, or employment or property, or property of leave,’’ or ‘‘no-docking’’ policy is not received any kind. You do not need to report as a bona fide employee of the employer labor relations consultants. The only pension, health, or other benefit making the payment. Under a union-leave changes from the NPRM are the payments from a trust to you, your policy, the employer continues the pay and numbering of the different sources of spouse, or minor child that are provided benefits of an individual who works full time reportable payments and the pursuant to a written specific agreement for a union. Under a no-docking policy, the elimination of the cross-reference to the covering such payments. employer permits individuals to devote term ‘‘publicly-traded securities.’’ This definition has been revised by portions of their day or workweek to union Dealing means to engage in a business, such as processing grievances, with adding the new third sentence in the no loss of pay. Such payments are received transaction (bargain, sell, purchase, instructions to clarify that benefits as an employee of the union and thus, such agree, contract) or to in any way traffic received by a union official, his or her payment must be reported by the union or trade, including solicitation for spouse, or minor child as a participant officer or employee unless they (1) totaled business. in a trust or benefit plan will generally 250 or fewer hours during the filer’s fiscal Note: The term ‘‘traffic or trade’’ includes not be reportable on Form LM–30. The year and (2) were paid pursuant to a bona not only financial transactions that have same definition, with only a slight fide collective bargaining agreement. If a filer occurred but also the act of soliciting such must report payments for union-leave or no- change in the wording of the third business. Thus, for example, potential docking arrangements, the filer must enter sentence, is adopted as section 404.1(a) vendors or service providers attempting to the actual amount of compensation received win business with a union will be considered of the Department’s regulations (to be for each hour of union work. If union-leave/ to be ‘‘dealing’’ with the union to the same codified as 29 CFR 404.1(a)). no-docking payments are received from extent as vendors who are already doing A commenter voiced support for the multiple employers, each should be business with the union. Potential vendors Department’s proposed definition of this considered separately to determine if the must engage in the active and direct term and the related definitions 250-hour threshold has been met. For solicitation of business (other than by mass proposed for ‘‘benefit with monetary purposes of Form LM–30, stewards receiving mail, telephone bank, or mass media). A union-leave/no-docking payments from an value,’’ ‘‘income,’’ and ‘‘ directly or business that passively advertises its services employer or lost time payments from a labor indirectly,’’ arguing that the Department generally and would provide services organization are considered employees of the has broadly construed these terms to consumed by, for example, a union would labor organization. capture anything of value received by not meet this test. The potential vendor must the filer, his or her spouse, or minor Any individual working at the control be actively seeking the commercial child, including any payment or benefit and direction of a labor organization relationship. Under certain circumstances, held or received by a third party for will be an employee of the organization. the payment itself will be evidence of the their benefit. This commenter noted that A union steward or union official while solicitation of business, such as a potential the proposed definition is properly acting on behalf of the union is not vendor who treats a union official to a golf drawn from disclosure rules applicable acting as a bona fide employee of the outing and dinner to discuss the vendor’s products. to Federal employees. Another employer whose employees are commenter criticized the proposal represented by the steward’s union. Of The definition of this term has been because it appears to include pension particular import, however, today’s rule, revised slightly from the proposal by benefits that an officer receives from a as discussed herein, modifies the adding the phrase ‘‘including jointly administered trust as a result of proposed instruction to except from solicitation for business’’ and adding the prior service for an employer reporting on the Form LM–30 explanatory note to the instructions. participating in the trust. The compensation received from an The same definition, but without the commenter argues that the statute does employer for whom the official works note, is adopted as section 404.1(b) of

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00038 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36143

the Department’s regulations (to be representing XYZ Widgets employees. In a No comments were received on the codified as 29 CFR 404.1(b)) recent conversation with the XYZ Widgets proposed definition. This definition is Most of the comments on the human resources manager, you mention that adopted as proposed. you are placing your 15 year-old daughter in Income means all income from proposed term have been discussed a private school. XYZ Widgets sends you a already in connection with the meaning check for $1,000 with a note saying ‘‘Good whatever source derived, including, but to be given the terms ‘‘employer’’ and luck with the new school!’’ You have not limited to, compensation for ‘‘business.’’ See discussion herein. The received a direct benefit. services, fees, commissions, wages, new phrase and note were added to You are employed by XYZ Widgets and salaries, interest, rents, royalties, make clear that payments to union also serve as the president of the local union copyrights, licenses, dividends, officials must be reported even if they representing XYZ Widgets employees. In a annuities, honorarium, income and do not lead to a consummated business recent conversation with the XYZ Widgets interest from insurance and endowment human resources manager, you mention that transaction. The Department notes, as you are placing your daughter in a private contracts, capital gains, discharge of discussed herein, that some school. You receive a letter from your indebtedness, share of partnership commentators suggested that the term daughter’s new school stating that she has income, bequests or other forms of ‘‘dealing’’ should only encompass received a $1,000 scholarship through a inheritance, and gifts, prizes or awards. payments made to union officials in donation by XYZ Widgets. You have received The Department adopts the definition connection with marketing efforts that an indirect benefit. of ‘‘income,’’ as proposed, both in the lead to a completed business The definition of this term, as instructions and as section 404.1(e) of transaction. For the reasons discussed discussed above, has been revised from the Department’s regulations (to be herein the Department is not persuaded the proposal by including two codified at 29 CFR 404.1(e)). that there is anything in the language of examples. The examples have been Labor organization, means the local, section 202 or its legislative history to added in response to a comment by a intermediate, or national or suggest that either ‘‘routine marketing labor educator who suggested that the international labor organization that expenses’’ or the subset of those that do Department should include some employed the filer, or in which the filer not lead to a business agreement should examples to demonstrate the difference held office, during the reporting period, be excepted from the reporting between ‘‘direct’’ and ‘‘indirect.’’ As and, in the case of a national or obligation. noted in the NPRM, the purpose of the international union officer or an The Department believes that the definition is to clarify that filers must intermediate union officer, any definition it adopts for ‘‘dealing’’ is disclose any benefits received by them subordinate labor organization of the consistent with the intended meaning (or their spouse or minor child) from a officer’s labor organization. Item 6 of given it by Congress. Neither its use in third party where the third party is the Form LM–30 identifies the the statute nor the legislative history of acting on the behalf, or at the behest, of relationships between employers and the Act’s ‘‘dealing’’ provisions suggest an employer or business where the ‘‘your labor organization’’ or ‘‘your that the term should be given a unique benefit would have to be reported if union’’ that trigger a reporting meaning. As defined today, the term made by the employer or business requirement. Item 7 of the Form LM–30 accords with the meaning given the directly to the filer (or his or her spouse identifies the direct and indirect term in the American Heritage or minor child). Benefits received from relationships between a business (such Dictionary and Black’s Law Dictionary. an employee, agent, or representative of as a goods vendor or a service provider) In the American Heritage Dictionary an employer or business, or other entity and ‘‘your labor organization’’ that ‘‘deal’’ is defined, in part, as ‘‘[t]o sell’’ acting on behalf of the employer or trigger a reporting requirement. The and ‘‘[t]o do business; trade.’’ In Black’s, business should be considered received terms ‘‘your labor organization’’ and ‘‘deal’’ is defined as ‘‘an act of buying from the employer or business. ‘‘your union’’ mean: and selling’’ such as ‘‘the purchase and Payments to a third party to be held for a. For officers and employees of a local exchange of something for profit.’’ the use or benefit of the filer are also labor organization. Directly or indirectly means by any reportable. The definition is deliberately Your local labor organization. course, avenue, or method. Directly drawn broadly, consistent with the b. For officers of an international or encompasses holdings and transactions legislative history, ‘‘to require national labor organization disclosure of any personal gain which Your national or international labor in which the filer, spouse, or minor organization and all of its affiliated child receives a payment or other an officer or employee may be securing at the expense of union members.’’ As intermediate bodies and all of its affiliated benefit without the intervention or local labor organizations. involvement of another party. Indirectly also noted in the NPRM, the legislative But note: A national or international union includes any payment or benefit which history draws from the AFL–CIO Ethical officer does not have to report payments from is intended for the filer, spouse, or Practices Code: ‘‘The ethical principles or interests in businesses that deal with minor child or on whose behalf a apply not only where the investments employers represented by, or actively being transaction or arrangement is are made by union officials, but also organized by, any lower level of the officer’s undertaken, even though the interest is where third parties are used as blinds or labor organization. Such officers are also not required to report payments and other held by a third party, or was received covers to conceal the financial interests of union officials.’’ financial benefits received by their spouses through a third party, including or minor children as bona fide employees of instances in which the third party is Filer/Reporting Person/You mean any officer or employee of a labor a business or employer involved with a lower acting on the behalf, or at the behest, of level of the officer’s labor organization. an employer or business and the interest organization who is required to file c. For employees of a national or would have to be reported if made Form LM–30. international labor organization. directly to the filer, his or her spouse, or Note: These terms are used synonymously Your national or international labor minor child . The following examples and interchangeably throughout the organization. show the difference between ‘‘direct’’ instructions, and, when referring to d. For officers of intermediate bodies. Your intermediate body and all of its and ‘‘indirect’’: reportable interests, income, or transactions, these terms include interests, income, or affiliated local labor organizations. You are employed by XYZ Widgets and transactions involving the union officer’s or But note: An officer of an intermediate also serve as the president of the local union employee’s spouse or minor child. body does not have to report payments from

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00039 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES 36144 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

or interests in businesses that deal with would now have reportable transactions responsibility; and (4) a member of a employers represented by, or actively being when doing union work such as serving group identified as an executive board organized by, any lower level of the officer’s on a negotiating committee, serving as or a body which is vested with functions labor organization. Such officers are also not an arbitration witness, or organizing. required to report payments and other normally performed by an executive financial benefits received by their spouses The commenter identified as a specific board. or minor children as bona fide employees of problem the definition’s failure to Note: Under this definition, an officer a business or employer involved with a lower address how a filer should report the includes a trustee appointed by the national level of the officer’s labor organization. receipt of payments where he or she has or international union to administer a local e. For employees of an intermediate body. multiple employers, each with a union in trusteeship. If you are a trustee Your intermediate body. different practice or language with elected or appointed by the local union to As discussed at length herein, the respect to lost wages and to the payment audit and/or hold the assets of the union, you may or may not be a union officer, depending definition of ‘‘labor organization’’ for of benefits to part-time union officers, stewards, negotiating committee on your union’s constitution and other purposes of completing Form LM–30 factors. If you serve in your union in any has been modified from that proposed, members, and so forth. capacity and you are unsure if your position narrowing its scope consistent with the In general, where a union steward is an officer position, you are likely an officer Department’s existing ‘‘top down’’ receives union-leave/no-docking of a labor organization if any one of the approach and limiting the obligation of payments from an employer or lost time following applies: • officers of local and intermediate payments from the union, the steward Your union’s constitution or bylaws will be regarded as an employee of the refers to your position as an officer of the unions. The first sentence of the quoted union; material is adopted as section 404.1(f) of labor organization as the individual has • received compensation for performance Your union’s constitution or bylaws the Department’s regulations (to be states that your position has the authority to codified at 29 CFR 404.1(f)). of services for the union. The make executive decisions for the union or Labor organization employee means Department recognizes that some that you are authorized to perform the any individual (other than an individual stewards and other representatives have functions of president, vice-president, performing exclusively custodial or multiple employers, each with a secretary, treasurer, or other constitutionally different practice or language with designated officer; clerical services) employed by a labor • organization within the meaning of any respect to lost wages and payment of Your union’s annual Form LM–2 or Form benefits of part-time union officers, LM–3 lists your position as an officer of the law of the United States relating to the union; employment of employees. stewards, or negotiating committee • members. Thus, each employer is In your position, you serve on your Note: An individual who is paid by the union’s executive board or similar governing considered separately for reporting body. employer to perform union work, either purposes. under a ‘‘union-leave’’ or ‘‘no-docking’’ This definition adopted in today’s policy, is an employee of the union for Finally, unlike the proposed definition, today’s rule does not outline rule has been revised from that reporting purposes if the individual performs proposed by adding the above note in services for, and under the control of, the the factors that distinguish between the union. See definition of ‘‘bona fide status of individuals working for a the instructions. The same definition, employee.’’ union as independent contractors and but without the note, is adopted as a For purposes of Form LM–30, stewards those working as employees of the modification of the existing definition at receiving union-leave/no-docking payments union. As explained in the NPRM, section 404.1(b) of the Department’s from an employer or lost time payments from independent contractors of the union regulations (to be codified as a labor organization are considered are not required to file a Form LM–30. redesignated at 29 CFR 404.1(h)). As employees of the labor organization. In the Department’s view, the inclusion explained in the NPRM, the definition, Numerous comments were received of these factors in the definition of as proposed, tracks the definition of about the wisdom of requiring union ‘‘labor organization employee’’ added ‘‘officer’’ at section 3(n) of the LMRDA, officials to report payments they unnecessary length and possible 29 U.S.C. 402(n), and adds a new received under union-leave or no- confusion to the definition. If needed, second sentence to the old regulation’s docking policies. As discussed above, in the Department will provided guidance, definition, 29 CFR 404.1(b). The LMRDA today’s rule, the Department adopts a separate from the instructions, to assist Manual applies the definition to limited reporting obligation for such individuals unsure of their status as trustees appointed to oversee a labor payments. Concerns regarding the employees or independent contractors. organization. See LMRDA Manual, reporting burden of labor organization The same definition, but without the 241.200. employees under the ‘‘union-leave’’ and note, modifies section 404.1(g) of the One commenter agreed with the ‘‘no-docking requirements’’ are Department’s regulations (to be codified Department’s view that the group of addressed separately in this final rule. at 29 CFR 404.1(g)) union officials subject to section 202’s In addition to comments on that aspect Labor organization officer means any reporting requirements only partially of the proposed definition, the constitutional officer, any person overlaps with the larger group of Department also received comments authorized to perform the functions of individuals subject to the Act’s Title V inquiring about the application of the president, vice president, secretary, fiduciary duties. See 29 U.S.C. 501(a) definition to union stewards. treasurer, or other executive functions of (‘‘officers, agents, shop stewards, and One commenter, a labor educator, a labor organization, and any member other representatives’’). The commenter stated that his study’s participants of its executive board or similar noted that nevertheless the overlap was found the definition for ‘‘labor governing body. An officer is (1) a substantial. A labor educator stated that organization employee’’ to be confusing. person identified as an officer by the participants in his study group found He explained that many participants constitution and bylaws of the labor the definition unclear, adding that the viewed the proposed definition as a organization; (2) any person authorized explanatory notes to the definition were major shift from existing practice as a to perform the functions of president, unhelpful. He mentioned that some number of individuals, including vice president, secretary, or treasurer; participants were unsure whether stewards, bargaining committee (3) any person who in fact has executive ‘‘trustee’’ applied to the positions in members, and volunteer organizers, or policy-making authority or some local unions which hold auditing

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00040 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36145

and other responsibilities over the state. In the Department’s view, there is union represents or is actively seeking local’s assets or to an individual a need for a uniform, nationwide to represent. appointed by the national or meaning of ‘‘minor child’’ under the Trust in which a labor organization is international union to administer a LMRDA and without such a uniform interested means a trust or other fund or local’s affairs, or both. The commenter definition the objective of the LMRDA organization (1) which was created or explained that local union trustees do will be frustrated. Both filers and union established by a labor organization, or not see themselves as union officers and members who view filed reports require one or more of the trustees or one or are not de facto or de jure members of a known and easily applied single more members of the governing body of the executive board. The commenter standard regarding when reports are which is selected or appointed by a also explained that participants were required, and what a disclosure or its labor organization, and (2) a primary unsure whether stewards would be absence represents. purpose of which is to provide benefits considered union officers. The The Department only received a few for the members of such labor Department has concluded that the comments about the proposed definition organization or their beneficiaries. The proposed definition, along with the of ‘‘minor child.’’ One commenter noted term ‘‘section 3(l) trust’’ is used in the addition of the note, clarifies that the that the Department should exclude instructions as a shorthand reference to term ‘‘trustee,’’ as used in this from its definition a ‘‘child who has such trusts. definition, does not apply to those with married and moved away from the No comments were received on the auditing responsibility in the union. parental home.’’ Another suggested that Department’s proposed definition of this This definition also provides a test for 18 should be the cut off age unless the term. This definition is provided by determining whether any individual is a child is still claimed as a dependent for section 3(l) of the LMRDA. 29 U.S.C. union officer. Federal income tax purposes. The 402(l). The only change is the inclusion Legal or equitable interest means any Department agrees that the commenters of the second sentence to make plain property or benefit, tangible or offer valid alternatives to the that the term ‘‘section 3(l) trust ‘‘ is a intangible, that has an actual or Department’s proposal. Nevertheless, shorthand reference to ‘‘trust in which potential monetary value for the filer, the Department believes that the a labor organization is interested.’’ The spouse, or minor child without regard to proposed definition solely tied to a same definition is adopted as section whether the filer, spouse, or minor child child’s age offers the advantage of 404.1(j) of the Department’s regulations holds possession or title to the interest. simplicity and ease of application, (to be codified at 29 CFR 404.1(j)). See definition of income and benefit particularly because a child’s status may 2. Other Issues Related to Definitions with monetary value. For example: remain in a state of flux during his or • You are an officer of a union. You A commenter suggested the inclusion her late teens and early twenties. In and your spouse jointly own an of a definition for ‘‘transaction,’’ another 1959 when the LMRDA was enacted, it accounting business that provides tax term used in the Form LM–30 was well established that at common services to a number of clients, instructions. The Department believes law the age at which a person reached including your union. You hold a legal that the term has a plain meaning that his or her majority in the states was interest in the company providing applies across various contexts and twenty-one years. See, e.g., 5 Samuel services to your union. therefore its inclusion in the • You are an officer of a union. You Williston and Richard A. Lord, A instructions is unnecessary. form a tax preparation business with Treatise on the Law of Contracts § 9:3 The Department had proposed to use two partners and put your share of the n.15 (4th ed. 1993 & Supp. 1999). As the term ‘‘payer’’ to describe the business in your wife’s name. The explained in the NPRM, the Department employer, business, or labor relations business prepares tax returns and LM believes that in 1959 when Congress consultant that is the source of a reports for your union. You hold an used the term ‘‘minor child’’ in section reported payment on the Form LM–30. equitable interest in the business that 202(a), it intended a uniform Federal As explained in the NPRM, the deals with your union. standard to apply and referred to the Department recognized that the term This definition has been modified general common law meaning at that was imperfect, because in common from that proposed by adding the time, i.e., twenty-one years. The parlance a business in which a filer examples set forth in the above bullets. Department also believes that twenty- holds an interest would not ordinarily This change was suggested by the labor one is more suitable than an earlier age be considered a ‘‘payer’’ of the filer. educator whose study participants had to distinguish between a child’s relative Upon further consideration, the difficulty understanding the meaning of dependence upon, and independence Department has determined that the use the term. from, the finances of a parent. For these of the term, defined specifically for Minor child, means a son, daughter, reasons, the Department adopts the Form LM–30 reporting, is unnecessary stepson, or stepdaughter less than 21 definition of ‘‘minor’’ as proposed. and potentially confusing. For these years of age. Substantial part means 10% or more. reasons, the Department has withdrawn This definition is adopted as Where a business’s receipts from an the proposed definition. For similar proposed as part of the instructions and employer whose employees the filer’s reasons, as discussed above, the as section 404.1(i) of the Department’s labor organization represents or is Department has withdrawn the regulations (to be codified at 29 CFR actively seeking to represent constitute proposed definition of ‘‘publicly-traded 404.1(i)). As the Department noted in 10% or more of its annual receipts, a securities.’’ the NPRM, the old instructions, like the substantial part of the business consists LMRDA, are silent about the age at of dealing with this employer. N. Details Relating To Proposed and which a child reaches his or her As discussed herein, this term has Revised Form and Instructions majority. As explained in the NPRM, been changed by increasing the As explained in the NPRM, the broad state law definitions for the legal reporting threshold from 5% to 10% in purpose of Form LM–30 is to disclose concept of childhood and age of order to ease the burden on a filer to payments and other financial interests majority differ from state to state but determine the percentage of a vendor’s of a union official that may pose a also may differ widely from legal business that consists of dealing with an conflict between those personal context to legal context within the same employer whose employees the official’s interests and his or her duty to the

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00041 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES 36146 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

union and its members. 70 FR 51166. In context of the other rights and themselves with the revised form and the NPRM, the Department identified obligations established by the Act. The instructions and avail themselves of the the difficulty in developing a self- proposed form also clarified that no compliance assistance readily available explanatory form to accomplish this form need be filed unless the filer, his from this Department. result. While the old Form LM–30 has or her spouse, or minor child held a A labor educator stated that several of a deceptively simple design, it fails to covered interest, received a covered his study participants found the fully capture information that Congress payment, or engaged in a covered language in the instructions to be too wanted disclosed. Filers often failed to transaction or arrangement during the ‘‘legalistic.’’ He suggested that the complete the form and, when they did reporting period. Department should wait to see what file, they seldom provided the detail The NPRM also requested comments problems arose in connection with the called for in the instructions. about the layout and clarity of the form, historic upsurge in Form LM–30 filings, including: ‘‘Would the form benefit particularly in light of his observation 1. Comparison of the ‘‘Old’’ and from adding additional text and, if so, that the biggest problem may actually be Proposed Forms what additions are recommended? Does ‘‘false positives’’ and not ‘‘false Items 1–4 of the old Form LM–30 the form have an intuitive feel to it? negatives’’ (i.e., individuals who have remained on the proposed form with Does the form request information in nothing to report are nonetheless filing only minor changes. Item 3 was logical progression? How can the form reports). The commenter’s point about modified to require an e-mail address of be improved?’’ The next paragraph the old form is valid. However, the the filer. Item 4 of the proposed form discusses the general comments revised form and instructions will combined Items 4 and 5 of the old form received on the proposed form and the resolve this problem. and it also required filers to report Department’s response. The following Item 2—Period Covered: One whether they held their position in the paragraphs summarize comments individual suggested that the union at the end of the reporting period. received on particular aspects of the instructions should make clear that the Item 5 on the proposed form was the proposed form and the Department’s filer’s fiscal year should be the fiscal signature box, which was otherwise the response to those comments. Comments year used by his union in filing its Form same as the old form. and responses are grouped by the LM–2, and another expressed confusion The proposed Form LM–30 included numbered items and schedules of the about whether reports should be based a Payer Detail Page to provide an proposed form. on the official’s fiscal year or his union’s itemized list of all payments, by payer. General Comments: Several fiscal year. The Department cannot The proposed form included three commenters applauded the inclusion of dictate to a filer his or her fiscal year. schedules, and it organized the definitions and examples; some The language of the statute states: ‘‘[the reportable matters by tables instead of commenters, however, expressed filer] shall file with the Secretary a the narrative boxes on the old form. The concern about some of the definitions signed report listing and describing for old form also displays reportable and argued that some of the examples his preceding fiscal year * * *.’’ 29 information in a three section format: were incorrect. As discussed, the U.S.C. 432(a). The instructions as Part A, Part B, and Part C. The filer must Department has clarified some of the proposed appear to leave some report payments from employers in Part definitions, modified some of the ambiguity as to what fiscal year should A, Items 6, 7a, and 7b; from businesses examples, and added others where be utilized by the filer. As such, the in Part B, Items 8–12; and from other requested. These changes are discussed Department has added language to Part employers and labor relations in other sections of this document. IX of the revised instructions indicating consultants in Part C, Items 13–14. One commenter stated that the that the fiscal year is that of the filer, The proposed form contained various proposed form is more confusing to which may differ from the fiscal year continuation pages for information filers and the public than the old form, utilized by the filer’s union for filing its supplementing required entries on other adding burden but no compensating annual financial report, Form LM–2, pages or otherwise as overflow space. benefit. The commenter recommended LM–3, or LM–4. Some of these pages existed in a that the Department should ‘‘leave well Item 3(I)—Contact Information of different format in the old form and enough alone’’ and that instead of Reporting Person: E-mail Address: One some were new pages. revising the form it should provide commenter expressed support for the The NPRM noted that the diversity of guidance that would ‘‘clarify[ ] and added contact information required by financial transactions made reportable simplify[ ] the reporting requirement Item 3. Other commenters voiced by section 202 of the Act requires itself.’’ The Department disagrees with opposition to the addition of the filer’s detailed instructions. The NPRM invited this recommendation. As noted in the e-mail address. The concern over e-mail comments as to the layout of the NPRM, flaws in the form itself and the addresses was that they are private and instructions, their clarity, and instructions to the form provided that their disclosure may lead to suggestions about how to better explain impetus for the proposed rule. Further, harassing e-mail, spam, unwanted the reporting obligations. The NPRM as discussed throughout this document, solicitation, and viruses. Further, the also noted that the first heading of the many of the modifications to the form commenters argued that the reporting of proposed instructions, ‘‘Why File,’’ was correspond to changes/clarifications in a filer’s office telephone number largely unchanged from the old form: it the reporting requirements themselves. eliminates the need for the e-mail addressed the basic reporting Although under the revised form a filer address. obligations. no longer needs to record the statutory Although several commenters voiced subsection under which a payment or concerns over the required inclusion of 2. Comments on Proposed Form other financial interest is received, the a filer’s e-mail address, none explained In an attempt to better inform Department has nevertheless conformed how this would violate the Privacy Act. potential filers about the purposes the form to the reporting requirements No violation of such Act is apparent; served by the Form LM–30, the of section 202 and the limited there does not appear to be any greater proposed form included an expanded exceptions to such requirements. privacy interest in a personal e-mail discussion of the LMRDA, placing the Finally, much of the asserted confusion address than in a personal mailing official’s reporting obligation in the will clear when filers familiarize address or phone number and such

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00042 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36147

information has long been required by be extremely difficult for a filer to locate was more difficult than necessary. The Form LM–30 filers without any payer information such as the state of Department believed that the challenge on privacy grounds. The old incorporation/registration and state subsection-by-subsection approach had Form LM–30 requires the address of the business ID number. the value of showing the filer, by filer and the telephone number where This schedule will no longer combine reference to the statutory language, the filer conducts official business, data from all ‘‘payers’’ regardless of its exactly what he or she must report. although a private, unlisted telephone classification as an employer, labor While the Department continues to number is not required to be reported. relations consultant, or business. The believe that this approach has value and At the same time, the Department is latter terms appear in the Act, unlike may have been preferable for use by sensitive to a filer’s concerns that by ‘‘payer,’’ and the Department has some filers, the Department is disclosing his or her e-mail address, the restructured Part II of the instructions to persuaded that this approach may lead official may become the target of detail the reporting requirements with to the perception that the Form LM–30 unsolicited e-mails or otherwise these distinctions in mind. is unnecessarily difficult to complete. impeded in the use and enjoyment of The Department has also eliminated Two commenters asserted that the his or her e-mail account. For this Items K and L (State of Incorporation/ proposed form, unlike the old form, reason, the Department has decided that Registration and State Business ID ‘‘fail[s] to collect interests and the filer has the option to disclose or not number) of Schedule 1, as proposed. transactions into coherent categories. disclose his or her e-mail address. The commenters’ assertions that the The proposed format, dependent on a Summary: The Department received inclusion of the business ID number and complicated coding system, adds one comment supporting the addition of incorporation information will add unnecessary complexity for filers.’’ a summary schedule to Form LM–30. significant burden to the reporting Another commenter, a labor educator, Other commenters opposed this requirements appear valid. A filer must generally opposed the use of the schedule, asserting that the summary report all transactions in an accurate ‘‘codes’’ A1–A6, because in his view it adds unnecessary burden, without and clear manner, as well as provide is possible to have more than one code adding any ‘‘significant value,’’ and basic contact and reference information; for a payment. He also stated that he creates confusion due to the lack of a the filer should not also be required to had found that potential filers had readily apparent relationship between perform research on the employer or difficulty synchronizing the sections of the payer and employer/union on the business for information beyond what is the form with the instructions. For summary. One commenter noted that needed to meet the statutory example, he stated that filers had to summarizing all payments in this requirements. Further, viewers of these continually ‘‘flip back and forth’’ from manner leads to the conclusion that the forms may be able to acquire such the instructions to the form. He believes total value is a ‘‘payment’’ when not all information on their own initiative if it that this diminishes the effectiveness of of the interests, such as share holdings, is of interest to them; they will have the the instructions. can be characterized as such. employer’s or business’ name and The Department has carefully This summary enables viewers to contact information to assist them in considered the concerns expressed quickly ascertain the payments and obtaining any desired additional about the subsection-by-subsection interests held in employers and information. approach of the proposed form. In place businesses that may constitute a Part B—Schedule 2: A labor educator of this approach, the Department has potential conflict of interest. This presented some specific suggestions for decided instead to organize the form in function is the essence of Form LM–30, this Schedule. He suggested that the a way that requests each filer to identify and thus the summary is a significant form spell out the coding ‘‘O/E/S/C’’ by employer and business the reportable improvement over the old form. The under Item B, Schedule 2, i.e., ‘‘officer,’’ interest, payment, loan, or transaction, comments express concern over the ‘‘employee,’’ ‘‘spouse,’’ and ‘‘[minor] and to identify whether it was held by confusion that would ensue from child.’’ Two other commenters or involved the filer, his or her spouse, aggregating different types of interests expressed a similar concern. The or minor child. This approach, similar and payments, and the Department has Department has modified the form to to the approach used in the old form, addressed this concern with the creation meet these concerns. adopts the targeted approach used by of the categories of ‘‘income or other This commenter also suggested that Congress to identify the types of payments’’ and ‘‘assets’’ on the the Department could use the relationships from which a conflict summary section of the form. Itemization Sheets and Schedules 15–19 between a filer’s personal interests and Part B—Schedule 1: Employer or in the Form LM–2, with a standardized his or her duty to the union arises. Business Identifying Information: One itemization sheet for all reportable Moreover, the classification of each commenter voiced general support for transactions that roll-up into a single- payer as an employer, labor consultant, the new schedules and applauded the summary sheet. The itemization sheets or business provides necessary context new contact information. Other for Schedules 15–19 of the Form LM–2 for a member or other viewer to commenters expressed opposition to the are not appropriate or necessary for properly analyze the potential conflict. changes, in particular the business ID purposes of the Form LM–30. A filer Except for this change, the revised number and incorporation information. using the electronic Form LM–30 will definitions and examples, the addition One commenter argued that the new be able to create as many copies of of some new examples, and the enlarged payer identifying information was Schedules 2 and 4 and of the additional exception for reporting insubstantial ‘‘unduly burdensome,’’ requiring filers information schedule as needed to payments, there have been no to conduct extensive research to complete the form. significant changes to the proposed form compile such information, and with Instructions—Categories A1–A6: The or instructions. little value to the members and other most critical comments concerned the The Department has also reduced the viewers. Another stated that only the subsection-by-subsection layout of the necessity to ‘‘flip back and forth’’ from payer telephone number was justified, proposed form. One commenter the instructions to the form by putting along with the payer name and address described it in hyperbolic terms, as more instructions and examples on the and the transactional information. ‘‘requiring an encyclopedic knowledge form itself (following the example of Further, a union commented that it will of the Act.’’ Others simply suggested it SF–278 required of Federal employees),

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00043 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES 36148 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

and by providing cross references, by criteria in each of the six subsection believes that it is easier for readers to page number of the instructions, for the categories. Another commenter process information in a two-column definition of any terms needed to characterized the revised instructions as format than by alternative presentation. complete a particular section of the an improvement over the old ones, The examples already stand out as form. Also, to help alleviate this describing the examples as ‘‘particularly they are numbered in bold type, so problem, the revised form utilizes Items useful.’’ boxes around them are not needed. The 6 and 7 to add clarity for both the filer Many of the specific comments Department has also consolidated many and the reviewer of the form by listing directed at examples have already been of the examples, based on its departure the conditions under which addressed in other sections of the from the A1–A6 format in the proposed arrangements, transactions, income or preamble. The Department believes that form. The Department has indented the other payments, interests, and loans these examples address typical ‘‘Note on the Definitions’’ sections to must be reported. These items help the reporting scenarios that will guide filers aid the filer; created a new part of the filer, in particular, by focusing him or in their effort to comply with the instructions for definitions (Part III); her on the pertinent provision in the reporting requirements. Nevertheless, numbered the definitions; and cited instructions. the Department has carefully reviewed them with page number references in Instructions Part II—Who must file all the examples, and in several cases Part II of the instructions. and what must be reported: One has added or modified language in an The Department disagrees with the commenter suggested that the ‘‘Do I effort to clarify or simplify the guidance suggestion that the instructions should have to file the LM–30’’ section of the presented in them. Other examples, include a discussion of the Act’s instructions should be revised to allow although reflecting a correct statement legislative history. The instructions are an individual to more easily identify of a filer’s obligations (with the intended to be straightforward and himself or herself as a Form LM–30 exception of example 1, at 70 FR 51217, directed solely at the completion of the filer. The Department has addressed this which omitted a key fact), have been form. A discussion of legislative history, concern by removing the A1–A6 eliminated as redundant. the language of the statute, and legal categories, restructuring Part II of the Commenters expressed concern about and policy questions would add instructions around the reporting the absence of examples involving additional, unnecessary length to the requirements, exceptions, and examples transactions between, on the one hand, instructions. A filer desiring additional of payments from employers and union officials and on the other section background information of this nature businesses; by revising some of the 3(l) trusts or service providers to such can easily obtain it by reviewing this definitions, and by adding page trusts. The Department has added preamble, the preamble to the proposed citations to the cross-references. Example 3 under ‘‘(2) Payments of rule as published in the Federal Another commenter acknowledged that Money or Other Thing of Value from Register, or through the Department’s the proposed form assisted potential Certain Other Employers or a Labor own Web site and other governmental filers by highlighting that no union Relations Consultant to Such an and publicly-accessible electronic official needs to file unless there has Employer’’ in Part II of the instructions, information portals. been reportable activity. The revised which relates to payments to a union The Department acknowledges that form contains the same statement. official from a trust in which that the revised form, like the proposed A commenter noted that the official’s union is interested. Further, form, may ‘‘feel less intuitive’’ than the definition of ‘‘substantial’’ should Part II of the instructions, ‘‘Reportable old form; however, it believes that the include the word ‘‘employer’’ and not Payments and Interests from revised form will better meet the goals ‘‘labor organization’’ at the end of the Businesses,’’ contains Examples 15 and of the LMRDA than the old form. second sentence of the definition. The 17, which each deals with payments to Moreover, to address the concerns of the Department has corrected this error by a union official from service providers commenters, the Department has made indicating that the end of the second to trusts. several changes to the form to facilitate sentence of that definition should read Instructions—General Stylistic its completion and use by union ‘‘employer’’ and not ‘‘labor Comments: An individual offered members and the general public. organization,’’ as ‘‘substantial part’’ is several specific recommendations in found in the language of 202(a)(3) (a regard to the instructions. He proposed 3. Completion of the Revised Form business that deals with the employer) that the Department utilize a single The first seven items on the revised and not in 202(a)(4) (a business that column rather than the double columns Form LM–30, as published in today’s deals with a labor organization). in the proposed form; the ‘‘Note on rule, provide basic information about Instructions—Examples and Definitions’’ should be indented below the filer and his or her labor union; the Definitions: A commenter opposed some each definition; and the examples number of employers and labor relations of the examples, suggesting that they are should be placed within graphic text consultants and the number of unreal ‘‘lawyer’’ hypotheticals, better boxes. He also suggested that the businesses with which the filer engaged used to establish the bounds of the Department should either include a in reportable activity; and the total Department’s authority than to provide discussion of the Act’s legislative reported income and the total reported practical assistance to filers. Another history in the instructions or separately assets of the filer involving those commenter stated that fewer, better publish such information to assist filers employers, labor relations consultants, examples should be developed. He in understanding what is to be reported and/or businesses. Item 8 is for the provided information to support his on the form. signature, date, and telephone number view that the definitions were The Department has made several of the filer. Items 1–8 have been confusing. He also suggested that the minor changes that add some clarity to designated as Part A of Form LM–30 for form should be redesigned to eliminate the instructions. As to changing the two- ease of reference. the need for filers to refer to different column format, the Department Both the proposed and revised forms places in the instructions in order to disagrees. All the old Form LM provide a plain notice to filers that they complete the form, and that the instructions utilize two columns, and no should carefully review the instructions instructions should include a section other commenter expressed concern to the form before completing it. The that brings together all the transaction over this format. The Department revised form contains the notice on the

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00044 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36149

first page: ‘‘You are not required to file relations consultants) and give a total to more easily complete the form. A this report unless you * * * have value of all dealings with that payer as separate Part B must be completed for received a payment, engaged in any had been proposed. As discussed herein each employer, business, or labor transactions or arrangements, or held an in greater detail, the aggregation of all relations consultant from which the filer interest of the types described in * * * types of dealings such as payments, received a reportable payment or in the instructions.’’ The revised share holdings, loans, and so forth was which he or she had a reportable instructions include, on the second determined to be confusing. Instead, the interest. page, a discussion of the reporting filer now totals the amounts in Schedule Part B—Schedule 1: Employer or exception for insubstantial payments 2, Item F, Column (1) (value of income Business Identifying Information: All and gifts to enable potential filers to or other payments) of all the Part Bs and filers must complete this schedule. The more quickly determine whether they enters the total in Item 5A. The filer schedule’s title has been changed from have a reporting obligation. To simplify likewise totals the amounts in Schedule the proposed form’s ‘‘Payer Identifying the form’s completion, the instructions 2, Item F, Column (2) (value of asset) of Information.’’ The proposed form identify particular terms that must be all the Part Bs and enters the total in combined three items on the old form understood for completing particular Item 5B. (Items 6, 8, and 13) that helped identify items. Page references are provided for Items 6 and 7—Employer the source of a payment or the specific these terms, which are now defined near Relationships and Business interest held by the filer, his or her the end of the instructions. By Relationships: To simplify reporting, spouse, or minor child. The proposed relocating the terms, a filer is able to Item 6 on the revised form identifies the form also required the filer to provide more quickly start completing the form relationships between, on the one hand, contact information for each ‘‘payer,’’ and focus only on those terms that affect a filer’s union and, on the other hand, including the telephone number, Web the filer’s circumstances. an employer or a labor relations site address, state of incorporation or The remainder of the form consists of consultant to an employer that will registration, and state business Schedules 1 through 4 and is designated trigger a reporting requirement. Its identification number. As noted in the as Part B. The filer must complete a counterpart, Item 7, identifies the types NPRM, the additional contact separate Part B in accordance with the of relationships, direct and indirect, information would make it easier for a instructions for each of the employers, between a business and the filer’s union person reviewing the report to identify labor relations consultants, or that will trigger a reporting requirement. the payer. The filer also would have to businesses with which the filer engaged These relationships are culled from the indicate whether he or she was in reportable activity. provisions of sections 202(a)(1) through associated with the payer at the end of Item 1—File Number: No changes 202(a)(5), supplemented by particular the reporting period, information that were proposed for this item, which is relationships that trigger a report under would be helpful to the Department in included in the old and revised forms. section 202(a)(6). Filers no longer have determining whether the filer may be Item 2—Period Covered: No changes to extract these relationships from the required to file a report the following were proposed for this item, which is statutory language. If the filer has year, thereby allowing the Department included in the old and revised forms. received a payment from or held an to conduct effective compliance Item 3—Contact Information of interest in such an employer or assistance. The revised form no longer Reporting Person: The addition of the business, the language on the form requests the filer to provide for each filer’s e-mail address was proposed. directs the filer to review Part II of the payer the state of incorporation/ However, the Department has decided instructions to determine whether or not registration or state business to allow filers the option to disclose or any of the exemptions apply to the identification number. The Department not disclose his or her e-mail address. filer’s situation. Items 6(a) and 7(a) each has determined that filers may not have Item 4—Labor Organization contain a box for the filer to indicate this information at hand and that asking Identifying Information: Both the whether or not he or she had any of the them to obtain such information would proposed form and today’s form listed relationships. If the filer answers impose an unnecessary burden. The combine two items of the old form. ‘‘Yes’’ to Item 6(a) or 7(a), Items 6(b) and Department has retained new items Items 4F, 4G, and 4H on the revised 7(b) ask for the number of employers such as the entity’s telephone number form ask for information about the filer’s (and consultants) or the number of (Item I) and Web site address (Item J). position in the union, whether it is an businesses with which the filer had a The schedule also requires the officer or employee position, and listed relationship. Items 6 and 7 clarify information that would be found in the whether the filer held this position at for both the filer and the reviewer of the old form. The Department has also the end of the reporting period. As form the entities from which payments preserved the proposed form’s noted in the NPRM, it is important as an and interests must be reported. requirement for the filers to indicate enforcement matter to know whether Item 8—Signature: The signature box whether the union official (or spouse or the filer can still be reached at the has been renumbered as Item 8, but it minor child) had a continuing union, and whether the filer may need has not otherwise changed from the old relationship with the employer, to file Form LM–30 the following year. or proposed forms. business, or labor relations consultant at Item 5—Summary: The revised form Part B: The ‘‘Payer Detail Page’’ from the end of the reporting period. adopted the concept of a summary the proposed form is now called Part B Part B—Schedule 2: Interests in, schedule of reported payments and and has four schedules. Schedules 1 and Payments From, Loans to or From, and interests contained in the proposed 2 will be completed for both employers Transactions or Arrangements with form, but the proposed summary has and businesses. Schedule 3 will be Employer or Business and Payments been simplified in response to completed for employers only and from a Labor Relations Consultant: All comments. The revised summary (now Schedule 4 will be completed for filers must complete this schedule. This Item 5) shows total reported income or businesses only, so only three schedules schedule replaces and renames other payments and total reported will be completed on each Part B, just Schedule 2 on the ‘‘Payer Detail Page’’ assets. The summary no longer requires as in the NPRM. Instructions and of the proposed form. The term ‘‘payer,’’ the filer to list each individual payer examples have been added to the as noted in the NPRM, was an awkward (employers, businesses, and labor schedules on the form to enable the filer phrase; it is no longer needed in the

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00045 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES 36150 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

revised form. The proposed form the filer’s labor organization. This will employers, asks filers to identify for required filers to identify reportable clarify the exact nature of the each reportable matter the source of the interests, payments, loans, transactions, relationship for both the filer and the payment or the specific interest, its and arrangements by the specific reviewer of the form. Item B of the recipient or holder (filer, spouse, or provisions of section 202 of the LMRDA. schedule asks for a detailed description minor child), a description of the As in the proposed form, the revised of the dealings between the two entities. reportable matter, and its value. Schedule 2 requires the reporting of the Item B(1) requests a dollar value of the Although the proposed form asked the date of each reportable payment and transactions between the entities. If the filer to designate for each reportable interest and whether it was received or employer’s relationship with the filer’s matter the subsection under which the held by the filer, his or her spouse, or labor organization is based on the labor report was triggered, the revised form his or her minor child; this information organization’s representation of the does not ask for such information. The was not always reported on the old employer’s employees or actively schedule, as revised, also includes form. Language on this schedule seeking to represent the employees or if examples of reportable items, which clarifies the information that must be the relationship cannot otherwise be should assist filers in determining the reported, the format in which the readily assigned a monetary value, the manner and detail in which reportable information must be reported, and filer should enter ‘‘N/A.’’ The need for items should be identified and references the instructions for further this schedule derives from the changes described. review of filing criteria. The layout of in the Department’s interpretation and Labor Organizations in Which the the schedule itself remains largely implementation of section 202(a)(6) as Reporting Person is an Officer or unchanged from the proposal, which in discussed elsewhere in this preamble. Employee—Continuation Page: This turn is derived from Items 7, 12, and 14 Together with Schedule 4 that page is a continuation of, and is of the old form. The most significant compiles similar information for identical to, Item 4 on the revised Form change in the revised form’s Schedule 2 reportable interests that arise from LM–30. It is for use by a filer who is an is the deletion of Item C of the proposed business relationships with a filer’s officer or employee of more than one form, which required the filer to union, this schedule, like the proposed labor organization. indicate the subsection of section 202 of Schedule 2, combines and simplifies Additional Information Schedule: the LMRDA (A1–A6) that required the information that is now collected in This schedule is identical in both the disclosure of each reported payment or multiple items of the old form. Both the proposed and revised forms. It allows interest. As explained in greater detail proposed form and the revision in filers to provide additional information elsewhere in this preamble, this today’s rule asks filers to provide for or explanations about other items in the requirement was deleted in response to each reportable matter the source of the form. This is similar to additional comments. Item C ‘‘Description of payment or the specific interest, its information items found on other OLMS Interest, Payment, Loan, Transaction, or recipient or holder (filer, spouse, or forms, but the old Form LM–30 does not Arrangement’’ on the revised form is minor child), a description of the contain such an item. identical to Item D on the proposed reportable matter, and its value. The Summary Schedule Continuation form. Item D, ‘‘Value’’ on the revised schedule, as revised, also includes Page: The Department has eliminated form (Item E on the proposed form), has examples of reportable items, which this continuation page that was part of been divided to include separate should assist filers in determining the the proposed form, as the revisions to columns for ‘‘Value of Income or Other manner and detail in which reportable Item 5, the Summary, have removed the Payments’’ and ‘‘Value of Asset.’’ The items should be identified and necessity for it. instructions for this item in Part IX described. Schedule 2 Continuation Page: The clarify what must be reported in each Part B—Schedule 4: Business’s Department has retained a continuation column of Item D. The filer must add Dealings with Union(s), Trust(s), or page for the new Schedule 2. the data in the income column and in Employer(s): This schedule must be Schedule 4 Continuation Page: The the asset column, and record these totals completed only by filers who are Department has added a continuation in Item F. completing Part B for payments from, or page for the new Schedule 4. Part B—Schedule 3: Employer’s interests in, a business that deals with Instructions Part I, Why File: This part Relationship with Your Labor the filer’s labor organization, a trust in of the instructions is largely unchanged Organization: This schedule must be which the filer’s labor organization is from the old and proposed forms. completed only by filers who are interested, or an employer whose Instructions Part II, Who Must File completing Part B for payments from, or employees the filer’s labor organization and What Must Be Reported and Part III, interests in, an employer (or a labor represents or is actively seeking to Definitions: Part II of the instructions relations consultant to an employer). It represent. This schedule replaces the has been amended in several significant replaces Schedule 3 from the proposed proposed Schedule 3, ‘‘Payer’s Dealings ways from the proposed form. The form, ‘‘Payer’s Dealings with Union(s), with Unions(s), Trusts(s), or Department has abandoned the layout of Trust(s), or Employer(s)’’ with respect to Employer(s),’’ with respect to the instructions in the ‘‘A1–A6’’ format, employers. This schedule, unlike the businesses. The new Schedule 4 largely and it has adopted an arrangement in old or proposed forms, provides a resembles its predecessor Schedule 3 in which the instructions guide the filer checklist of relationships between the the proposed form, which combined according to the reporting requirements filer’s union and employers and and simplified information reported in for payments from and interests in businesses that will trigger a reportable Items 9, 10, and 11 of the old form. Item employers (and labor relations interest. The relationships are culled B now reads ‘‘Union/Trust/Employer,’’ consultants) and businesses. Further, from the language of sections 202(a)(1) rather than ‘‘U/T/E.’’ Filers are no the Department has removed the through (a)(5) and from the longer required to compute and enter a definitions from Part II of the Department’s interpretation of section total on the form for the value reported. instructions, numbered them, and 202(a)(6). As noted above, this schedule, placed them in a new Part III. The In Item A the filer will check the combined with Schedule 3 that reporting requirements in Part II cite the appropriate box(s) describing the compiles similar information for number and page of each of the relationship between the employer and reportable interests and payments from definitions in Part III. Finally, the

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00046 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36151

Department has modified some of the regulatory action under the Executive or increased expenditures by the private definitions as earlier discussed in the Order and therefore, it was reviewed by sector of more than $100 million preamble. the Office of Management and Budget. (adjusted for inflation) in any one year. Instructions Part IV, When to File: The burden imposed by the revision D. Executive Order 13132 (Federalism) This part has been renumbered from the of the Form LM–30 is addressed in the old form, but no substantive changes Paperwork Reduction Act section, The Department has reviewed this have been made. below. rule in accordance with Executive Order Instructions Part V, Where to File: The Department believes that 13132 regarding federalism and has This part has been renumbered from the increased transparency for union determined that the rule does not have old form, but no substantive changes officers and employees will provide ‘‘federalism implications.’’ The have been made. substantial benefits to union members economic effects of the rule are not Instructions Part VI, Public and the union itself, as well as to substantial and the rule does not have Disclosure: This part has been outside academic researchers, members ‘‘substantial direct effects on the States, renumbered from the old form and of the public, and other stakeholders. on the relationship between the national updated information, including the Transparency promotes the unions’ own government and the States, or on the Internet Public Disclosure Room, has interests as democratic institutions. By distribution of power and been added. these improvements, union members responsibilities among the various Instructions Part VII, Officer or will obtain a more accurate picture of levels of government.’’ the personal financial interests of their Employee Responsibilities and E. Regulatory Flexibility Act Penalties: This part has been union’s officers and employees, as those renumbered from the old form, but it is interests may bear upon their actions on The Regulatory Flexibility Act of identical to the proposed form. behalf of the union and its members. 1980, 5 U.S.C. 601–612, requires Instructions Part VIII, Recordkeeping: With this information, union members agencies to prepare regulatory flexibility This part has been renumbered from the will be better able to understand any analyses, and to develop alternatives old form and a reference has been added financial incentives or disincentives wherever possible, in drafting to retaining electronic documents. A faced by their union’s officers and regulations that will have a significant impact on a substantial number of small similarly worded statement is adopted employees and to make more informed entities, including ‘‘small businesses,’’ as section 404.7 of the Department’s choices about the leadership of their ‘‘small organizations,’’ and ‘‘small regulations (to be codified at 29 CFR union and its management of its affairs. governmental jurisdictions.’’ Today’s 404.7)). This represents a clarification of Through these actions, the Department rule revises the reporting obligations of existing recordkeeping requirements, effectuates the reporting obligation union officers and employees, who, as and is not intended as any change in the established by section 202 of the individuals, do not constitute small law governing the maintenance and LMRDA and advances the Act’s business entities. Accordingly, the final retention of records. declared purpose ‘‘that labor Instructions Part IX, Completing Form organizations, employers, and their rule will not have a significant LM–30: The Department has modified officials adhere to the highest standards economic impact on a substantial this part of the instructions, the former of responsibility and ethical conduct in number of small business entities. Part VIII of the proposed instructions, to administering the affairs of their Therefore, under the Regulatory correspond to the changes made to the organizations.’’ Section 2(a) of the Flexibility Act, 5 U.S.C. 605(b), a revised Form LM–30. LMRDA, 29 U.S.C. 401. regulatory flexibility analysis is not required. III. Regulatory Procedures B. Small Business Regulatory Enforcement Fairness Act F. Paperwork Reduction Act A. Executive Order 12866 For similar reasons as those discussed This statement is prepared in This final rule has been drafted and in section A, the Department has accordance with the Paperwork reviewed in accordance with Executive concluded that this final rule is not a Reduction Act of 1995, 44 U.S.C. 3501 Order 12866. The Department has ‘‘major’’ rule under the Small Business (‘‘PRA’’). See 5 CFR 1320.9. As determined that this rule is not an Regulatory Enforcement Fairness Act of discussed in the preamble to this final ‘‘economically significant’’ regulatory 1996 (5 U.S.C. 801 et seq.). It will not rule and the analysis that follows below, action under section 3(f)(1) of Executive likely result in (1) An annual effect on the rule implements an information Order 12866. Because compliance with the economy of $100 million or more; collection that meets the requirements the rule can be achieved at a reasonable (2) a major increase in costs or prices for of the PRA in that: (1) The information cost to covered union officers and consumers, individual industries, collection has practical utility to labor employees, the rule is not likely to meet Federal, State or local government organizations, their members, other the 3(f)(1) definition of having an agencies, or geographic regions; or (3) members of the public, and the annual effect on the economy of $100 significant adverse effects on Department; (2) the rule does not million or more or adversely affect in a competition, employment, investment, require the collection of information material way the economy, a sector of productivity, innovation, or on the that is duplicative of other reasonably the economy, productivity, competition, ability of United States-based accessible information to the extent jobs, the environment, public health or enterprises to compete with foreign- practicable; (3) the provisions reduce to safety, or state, local or tribal based enterprises in domestic or export the extent practicable and appropriate governments or communities. As a markets. the burden on union officials who must result, the Department has concluded provide the information; (4) the form, that a full economic impact and cost/ C. Unfunded Mandates Reform instructions, and explanatory benefit analysis is not required for the For purposes of the Unfunded information in the eamble are written in rule under Section 6(a)(3) of the Order. Mandates Reform Act of 1995, this rule plain language that will be However, the Department determined does not include a Federal mandate that understandable by reporting officials; because of its importance to the public might result in increased expenditures (5) the disclosure requirements are that this final rule is a significant by State, local, and tribal governments, implemented in ways consistent and

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00047 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES 36152 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

compatible, to the maximum extent numbers and completeness of the forms 395–6974) to: Desk Officer for the practicable, with the existing reporting submitted to the Department. Department of Labor/ESA, Office of and recordkeeping practices of union The final rule more closely resembles Management and Budget. officials who must comply with them; the format of the old form than the form Summary: This final rule modifies the (6) the preamble and the instructions to proposed by the Department. Unlike the public financial disclosure reports that the Form LM–30 inform union officials proposed form, the form embodied in section 202 of the LMRDA requires to be of the reasons that the information will today’s rule may be completed without filed by labor union officers and be collected, the way in which it will be need for the filer to identify the employees for any fiscal year in which used, the Department’s estimate of the statutory provision that triggers a they have certain holdings, receive average burden of compliance, which is reportable interest. This change certain payments or income, or engage mandatory for officials with reportable eliminates a concern by many in certain financial transactions or interests, the fact that all information commenters that the proposed form arrangements. The revised paperwork collected will be made public, and the imposed unnecessary burdens on filers. requirements are necessary to reduce fact that officials need not respond Various other changes have been made the errors and deficiencies in the unless the form displays a currently to the form that was proposed and its reports, raise the number of union valid OMB control number; (7) the accompanying instructions. The officials that comply with the reporting Department has explained its plans for Department has achieved its goal of requirements, and increase the the efficient and effective management designing a rule that meets the transparency of the financial practices and use of the information to be disclosure purposes intended by of such officials. More accurate reports collected, to enhance its utility to the Congress—the complete and meaningful and increased transparency will allow Department and the public; (8) the reporting of information about actual or union members to view the information Department has explained why the potential conflicts of interest between a needed by them to monitor their union’s method of collecting information is union official’s personal financial affairs and to make informed choices ‘‘appropriate to the purpose for which interests and the official’s duty to his or about the leadership of their union and the information is to be collected’’; and her union and its members. Moreover, its direction. Such improvements (9) the changes implemented by this this goal has been achieved without promote the unions’ own interests as rule make extensive, appropriate use of imposing any unnecessary burden on democratic institutions and the interests information technology ‘‘to reduce union officials. While the Department of the public and the government. burden and improve data quality, believes that the form and instructions Financial disclosure deters fraud and agency efficiency and responsiveness to provide ready answers to typical self-dealing, and facilitates the the public.’’ See 5 CFR 1320.9; 44 U.S.C. questions that may rise in completing discovery of such misconduct when it 3506(c). the form, the Department has a robust does occur. Increased compliance will compliance assistance program in place be achieved by clarifying the form and As discussed throughout the to assist filers in timely and correctly instructions, offering numerous preamble, today’s rule provides various fulfilling their reporting obligations. examples to guide filers, deleting or benefits to unions, union members, this Most of the information collected by limiting exceptions that allowed some Department, and the public. The the form is unavailable in any other financial matters that posed conflicts of information has obvious utility for these public document; to the extent there interest to go unreported, and groups, among other reasons, by may be some overlap with reports organizing the information in a more ensuring more complete compliance by required by fiduciaries under other useful format. For a more detailed labor union officials with the LMRDA’s laws, the duplication, albeit minimal, is discussion of the purposes served, and reporting obligations. The rule provides unavoidable. The rule’s recordkeeping benefits achieved, by the changes to the for the collection of information in a requirements are identical to the old Form LM–30, its instructions, and way that is compatible with electronic rule with the exception of the related Department regulations, see the reporting and the dissemination of this requirement that filers preserve any discussion above at Section I.C.1. information to the interested electronic information used to complete The revised Form LM–30 and community of users. In so doing, it the form. This requirement is consistent instructions that will implement the better achieves the public disclosure with contemporary recordkeeping new reporting requirements are purposes served by the Act’s reporting standards and elicited no unfavorable published as an appendix to today’s provisions than the existing rule. comment. final rule. The electronic versions of the Although the effectiveness of today’s The Department’s NPRM in this revised Form LM–30 and instructions rule depends, in large part, on a set of rulemaking contained initial Regulatory are now available on the OLMS Web site instructions for the Form LM–30 that is Flexibility Act and PRA analyses, which at http://www.olms.dol.gov. longer than the instructions for the old were submitted to and reviewed by Background: The Form LM–30 is used form, the additional length is largely the OMB. Based upon careful consideration by officials of labor unions to comply result of the inclusion of numerous of the comments and the changes made with the Act’s requirement that such a definitions and examples, designed to to the Department’s proposal in this union official annually disclose assist filers in understanding their final rule, the Department has made specified payments or other financial reporting obligations. The absence of significant adjustments to its burden benefits received by the official, his or this information in the instructions to estimates. The costs to the Department her spouse, or minor children from the old form was a significant for administering the reporting employers and businesses where such impediment to compliance by filers and requirements of the LMRDA also were payments or other financial benefits the utility of reported data. The adjusted. pose actual or potential conflicts inclusion of this information in today’s Pursuant to the PRA, the information between an official’s personal financial rule benefits filers and the public; any collection requirements contained in interests and the interests of the additional time required to read the this final rule have been submitted to official’s union and its members. instructions is a small burden in OMB for approval. Within 30 days of Subject to specified exceptions, the comparison to the knowledge provided the date of publication of this final rule, interests, incomes, transactions, and filers and the predicted gains in the you may direct comments by fax (202– arrangements subject to reporting

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00048 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36153

comprise: (1) Payments or benefits from, would result in filings. In making these Review of Public Comments on the or interests in, an employer whose estimates, the Department relied upon Estimated Universe of Filers and employees the filer’s union represents information it has previously used in Resulting Changes: or is actively seeking to represent; (2) determining paperwork estimates: the One commenter questioned the transactions involving interests in, or number of unions filing annual financial Department’s estimate of the proposed loans to or from, an employer whose reports (21,792) and the number of universe of filers, arguing that the employees the filer’s union represents officials (204,634) serving these Department does not have relevant or is actively seeking to represent; (3) unions.2 See 70 FR 51171. Applying this historic data on which to base its interests in, income from, or methodology as discussed below, the estimates, but is rather basing its transactions with a business a Department estimates that under today’s expectations on the limited study discussed in the NPRM. Both for the substantial part of which consists of rule, it will receive 3,450 additional proposed rule and today’s rule, the dealing with an employer whose Form LM–30 reports. Thus, the employees the filer’s union represents Department has forecast the number of Department estimates that a total of or is actively seeking to represent; (4) expected filers as accurately as possible 6,916 revised Form LM–30 reports will interests in, income from, or based on available data. The Department be filed annually. transactions with a business that deals has revised its initial estimates of the with the filer’s union or a trust in which In the NPRM, the Department number of expected filers by using data the filer’s union is interested; (5) estimated that the clarification of the on the number of reports filed with transactions or arrangements with an Form LM–30, the defined terms, the OLMS during fiscal year 2006. During employer whose employees the filer’s addition of examples that illustrate that time, the Department received union represents or is actively seeking reportable and nonreportable 4,348 Form LM–30 reports, 882 of to represent; and (6) payments from an transactions, and the removal of which were blank. As demonstrated employer or labor relations consultant. administrative filing exemptions would below, the Department has adjusted its See section 202(a)(1)–(6). increase the number of individuals who estimated universe of filers based on Overview of Changes to Form LM–30 file the Form LM–30. See 70 FR 51199. this figure and input received from and Summary of the Need for the Rule: Using the best data available, the commenters. The revised Form LM–30 and Department estimated that there are A number of commenters argued that instructions define terms used in the 204,634 union officers and employees. the proposed universe of filers and the form, provide examples to assist the Further, based on the Department’s corresponding reporting and filer in identifying reportable financial receipt of approximately 61 reports recordkeeping burdens, as discussed in events, and remove or limit certain annually (the annual average for fiscal the NPRM, were too low given that the proposed de minimis exception, i.e., the exceptions that allowed financial years 2001–2005), the Department threshold below which a payment matters of interest to union members to estimated a current filing rate of 0.03% go unreported under the current would not be reportable, was limited to (61/204,634 × 100 = 0.03%). Due to the reporting scheme. A detailed discussion payments of $25 or less. Commenters proposed reforms, as well as increased of the proposed and revised forms and suggested that a de minimis level set at compliance assistance and enforcement instructions is set forth at Section II.N. that amount would lead to a much herein. initiatives, the Department estimated higher incidence of filings than Estimated Universe of Filers: The that the filing rate would increase to anticipated by the Department. One Department initially estimated that it approximately 1%, or 2,046 reports filed commenter pointed out that a $250 de would receive 2,046 Form LM–30 annually. The NPRM estimate was minimis level, especially with a two- reports per year as a result of the final based on the opinion of some tiered approach, would result in a rule. This figure was based on the then stakeholders that relatively few union reduced compliance burden. In current estimated filing rate of 0.03% of officers and employees would be response to comments received on this all union officers and employees plus an engaged in covered transactions. Id. The point, the Department has replaced the expected increase in the Form LM–30 Department acknowledged the proposed $25 de minimis test with a filing rate to 1% as a result of the considerable uncertainty in this two-tiered approach. Under this proposal. See 70 FR 51199. For the final estimate and requested comment on the approach, a filer must report aggregated rule, a revised estimate, based on the number of reports that should be filed payments or other financial benefits public comment and the number of under the old requirements and that received from a single source that Form LM–30s filed with the Department may be filed as a result of the new exceed $250. Payments of $20 or less are during fiscal year 2006 has been used. requirements. Id. The comments excluded from this computation. During fiscal year 2006, the Department received on the proposed rule have Further, union officials will not have to received 4,348 Form LM–30 reports, 882 proven only marginally helpful in report hospitality benefits received of which did not contain information on predicting how today’s rule will affect while attending certain widely attended any transaction or interest, i.e., blank the future number of Forms LM–30 filed gatherings. As noted herein at Section reports, resulting in a total of 3,466 annually. II.C of the preamble, after the comment valid Form LM–30 reports filed during period for this rule closed, the 1 fiscal year 2006. As explained in the 2 Both figures have been obtained from the Department issued guidance alerting following paragraphs, the Department Department’s Electronic Labor Organization filers, in effect, that they need report considered key aspects of the final rule Reporting System database (‘‘eLORS’’), which stores only payments that exceeded $250. This and assessed the impact of the revised and automatically culls certain information, such as guidance was posted on the OLMS Web union officer and employee salaries, from annual reporting provisions by estimating the reports submitted by labor organizations. The total site on November 7, 2005 and relative frequency that such provisions number of labor organizations has been used in the disseminated through the OLMS e-mail Department’s submission to OMB for continuing listserv. Consequently, the Department 1 Through increased compliance assistance efforts PRA approval of OLMS forms. This information is has had a full year to gauge the impact explaining that a report need only be filed to report based on FY 2005 data. The number of union of a $250 filing threshold. Not certain transactions and that filing blank forms is officials was based on a query of applicable data in unnecessary, the Department intends to eliminate the eLORS system. This same figure was used in the surprisingly, as a result of the or minimize the filing of blank reports. NPRM’s PRA analysis. See 70 FR 51199. implementation of the $250 de minimis

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00049 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES 36154 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

approach, there have been fewer filers employers represented by, or actively LMRDA requires disclosure of payments reporting payments between $25 and being organized by, their local union. from trusts to union officials have $250. Thus, contrary to the suggestion of This tracks the reporting obligations evolved over time. In correspondence some commenters, no upward under the old rule, and does not issued in 1967, a high ranking adjustment to the recordkeeping and increase the reporting burden based on Department official responded to an reporting burden need be made for a broader definition of ‘‘labor inquiry concerning whether reporting is reasons associated with the de minimis organization.’’ See discussion at Section required of officers of labor unions who level, as proposed. Moreover, the $250 II.F of the preamble. receive payments from union and threshold and the exclusion of Officers of international unions and employer established pension and payments of $20 or less from this intermediate unions (but not employees) welfare plans. The letter concluded that threshold will lead to fewer filings than will also have to report any payments no report was required. On June 27, expected by commenters. they receive from (1) An employer 2005, OLMS placed on its Web site a In the NPRM, the Department whose employees any subordinate labor document titled ‘‘Trusts and Form LM– proposed that union officials must union represents or is actively seeking 30 and Form LM–10.’’ In this guidance, report all payments received from any to represent; (2) a business that buys OLMS indicated that payments from employer or vendor with a relationship from, sells to, or otherwise deals with trusts to union officers and employees with any level of his or her union or any subordinate labor union; and (3) a are reportable on Form LM–30 if the with any trust in which any level of his business that buys from, sells to, or trust is an employer or business. As part or her union is interested. This would otherwise deals with a trust in which of this rulemaking, the Department require, for example, that a local union any subordinate labor union is sought comments on whether a trust is, president report payments received interested, such as a pension or welfare or can constitute, an ‘‘employer’’ or a from a vendor that does business with plan or training fund. Employees of ‘‘business,’’ making such payments the official’s parent or intermediate national, international, and intermediate reportable on the Form LM–30. These union. The rule proposed to achieve this labor unions do not have to track and comments, and the determination that a result by defining the term ‘‘labor report payments resulting from actions trust or similar entity with employees is organization’’ broadly. Several involving subordinate levels of the an employer for purposes of the Act, are commenters submitted that the union. addressed in depth in the preamble at ramifications of implementing the As for the reporting impact of this section II.K. proposed definition of ‘‘labor provision, the Department estimates a No commenters provided estimates organization’’ could lead to requiring slight increase in the number of reports. for the number of trusts that constitute filers to account for transactions vastly The largest portion of this increase is ‘‘employers’’ and make reportable exceeding the estimated burden in the most likely to come from officers of payments. Although the comments NPRM. One of these commenters intermediate labor unions. For these provided some anecdotal information presented a hypothetical scenario that officers, the rule is new. Since 1962 particular to some unions, no would result in a union official having international officers have been required information was provided that would to account for possible transactions with to report on Form LM–30 income from allow the Department to estimate the over 10,000 employers or businesses for businesses dealing with subordinate total number of trusts that would be not only himself or herself, but for a unions of that international. Therefore, employers and none that would allow spouse and minor children as well. increased filing under this provision by an estimate of the numbers of union This comment appeared to be officers of international unions will be officials now receiving payments from premised on the belief that all attributable to increased compliance such entities. For example, one businesses and employers associated assistance and enforcement efforts, and international union stated that there are with any entity within a union’s not to the final rule. ‘‘380 Local or Council * * * Pension, hierarchy will need to be tracked by the Many of the same commenters Annuity, Health and Welfare, and officer or employee. This is not the case. asserted that the NPRM did not address training trusts in the U.S.’’ Another The union official does not need to compliance costs and time for commenter identified four trusts it co- research and maintain records with all businesses to enact internal controls, sponsored. Another international union involved businesses or employers, but which could entail substantial costs. indicated that ‘‘although some large only those with which he or she is in Employers, including service providers, trust funds happen to have employees, a reportable relationship or from which have been under the same reporting many do not.’’ Finally, yet another he or she has received a reportable requirements since 1963 and no changes international union explained that it payment. The maximum burden on an are being made to these requirements. and its affiliated district councils and officer or employee, in this regard, is to Employer reporting requirements are local unions participate in ‘‘numerous check the identity of these employers governed by section 203 of the LMRDA. benefit funds.’’ There is no basis to and businesses. Further, some This rulemaking adjusts union officer believe that other unions have trusts in commenters submitted that compliance and employee reporting under section the same proportion as theses unions. burdens would be substantially lessened 202 of the LMRDA. Therefore, not only Moreover, no information was received by modifying the proposed definition of is there no need to raise PRA estimates that would enable an estimate as to ‘‘labor organization’’ to eliminate the for employer recordkeeping, such what fraction of these trusts have language ‘‘and any parent or estimates are not within the scope of employees or the number of union subordinate labor organization of the this rulemaking. officials to whom reportable payments filer’s labor organization.’’ In response One commenter submits that are made. to comments received on this issue, the compliance burdens will be Payments received by an officer or final rule has reduced the reporting substantially lessened by determining employee of a labor union from the obligations from that proposed. The rule that trusts are not ‘‘businesses’’ or employer of the union’s members for requires that a local union official track ‘‘employers.’’ As explained in the work performed by the union officer or and report payments from only preamble, trusts with employees are union employee for the union will now businesses that deal with their local considered to be employers. The be reportable unless they are made union, trusts of their local union, and Department’s views on whether the pursuant to a collective bargaining

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00050 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36155

agreement and total 250 hours or less the clauses reviewed in 1980 by BLS of these payments are made outside of per year. For the proposition that such limited the amount of paid time a collective bargaining agreement or provisions are common, a federation of available (Id., at 7–9). The BLS Study, total more than 250 hours per year. labor organizations submitted a study, however, does not discuss provisions As discussed in the preamble, certain Major Collective Bargaining representative of such limitations or exceptions are no longer applicable to Agreements: Employer Pay and Leave otherwise indicate typical limits on the all provisions of the revised Form LM– for Union Business, U.S. Dept. of Labor, amount of time allowed for these 30; specifically, the ‘‘bona fide Bureau of Labor Statistics (October purposes. As there was no information employee’’ exception for reports due 1980) (‘‘BLS Study’’). Notwithstanding in the study or from commenters under section 202(a)(2) and the the significant period of time that has pertaining to the average amount of time ‘‘employee discount-regular course of passed since the study’s publication, it that an individual would be engaged in business’’ exception for reports due represents the most recent compilation union-leave or no-docking activity, the under sections 202(a)(1) and (2). Based of data on the union-leave/no-docking Department has no benchmark to gauge on the low number of comments question. Furthermore, more recent the number of filers that will submit received on the removal of these papers on this issue focus on public reports under today’s rule, i.e., those exceptions, which are addressed above, sector unions, which, as previously who receive employer compensation for and the absence of any comments noted, are generally not subject to the more than 250 hours of union activity estimating the number of reports this LMRDA, and thus such information is under a collective bargaining agreement change would result in, the Department not readily transferable to the particular or who receive compensation, in any does not foresee a substantial increase circumstances addressed by today’s amount, for such activity, where it is not resulting from the removal of these rule. The BLS Study (at pages indicated authorized by such agreement. It is the exceptions. As explained in the in parentheses) provides the following Department’s belief that with this preamble, sales and purchases of information: reporting threshold only a small fraction ownership interest in the employer, in • Of 1,765 agreements reviewed, 803, of union officials receiving such particular, are unlikely to constitute or 45 percent, granted pay for grievance payments will have to file reports. Such payments received as a bona fide time (6) officials likely will be serving in local or employee and thus the exception in the • Of 430 sample agreements intermediate union positions; again, current form for reports filed under examined in detail, 206 established pay however, the Department lacks data to section 202(a)(1) is all but superfluous for at least some grievance work (6) predict a percentage of such officials in the context of ownership interests. • Of 206 sample clauses, 188 limited that receive such compensation or the See Section II. D.2. Bona fide employees pay to either specific union smaller number that will receive typically do not routinely engage in representatives or to a fixed number of compensation in excess of 250 hours. transactions involving holdings or loans that could be characterized as a representatives (7) Similarly, as discussed in the • A substantial number of the 206 payment or benefit received as a bona preamble, union members who receive sample pay clauses limited the amount fide employee of the employer, and, as payments from an employer for work of paid time available for grievance a result, the filing burden will not be performed on behalf of the union will activity by type of activity or eligible onerous. The lack of comments now be considered union employees for personnel (7) or by the amount of time objecting to this change seems to Form LM–30 reporting purposes. A one could spend on union work (7–9) support these points. • Of the 1,765 agreements in the federation of labor organizations Similarly, only three comments were study, arbitration provisions appeared submitted that 100,000 union stewards received on the proposed removal of the in 95 percent, but pay to union out of 5.5 million members belonging to ‘‘employee discount-regular course of representatives for time spent appeared affiliated unions currently receive business’’ exception, for reports due in only 3% (11) union-leave or no-docking payments. under sections 202(a)(1) and (2), one of • Of 1,765 agreements, 139 This comment appears to have which was supportive of the removal. established time off with pay for union overstated the number of affected As discussed earlier in the preamble, negotiators (7.8%) (12) stewards as it included unions section 202(a)(5) of the LMRDA requires • Of 618 safety and health committee representing state and local government union officers and employees to report provisions reviewed, 281 referred to employees that are not subject to the any ‘‘business transaction or paid time for the activity (45%) (13) LMRDA. Another federation of labor arrangement’’ with an employer whose • Of 1,765 agreements, 93 referred to organizations, while not directly employees the union represents or is training related to union business; half commenting on the potential universe of actively seeking to represent. This of these provide company pay (93/2 = filers, stated that this provision could section exempts from reporting two 46.5) (46.5/1,765 = 2.6%) (17) result in ‘‘tens of thousands’’ of reports. categories of transactions and While it is clear from the BLS Study Further, while both federations submit arrangements: (1) Payments and benefits that the collective bargaining that there are many stewards who received as a bona fide employee of an agreements under review contained a receive payments for union activity, the employer whose employees are high number of union-leave/no-docking Department is unable to deduce from represented by the official’s union or the provisions, neither the study nor the these comments how many stewards union actively seeks to represent; and comments provide a basis for estimating would already be subject to Form LM– (2) ‘‘purchases and sales of goods or how many of these agreements will 30 reporting requirements because they services in the regular course of result in the filing of a Form LM–30. currently meet the definition of union business at prices generally available to The study demonstrates that 45% of officer or employee. Therefore, the any employee of such employer.’’ The these collective bargaining agreements Department is unable to use information current instructions apply this grant union leave in at least one provided in these comments to derive ‘‘employee discount—regular course of category (as outlined, 45% of provisions an estimate of the number of individuals business’’ exception to the requirement provided union leave for grievances and who will now be union employees that union officers and employees report health and safety). However, a because they receive union-leave or no- (1) Holdings, (2) transactions in substantial but unspecified number of docking payments, much less how many holdings, (3) loans, and (4) income or

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00051 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES 36156 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

any other benefit with monetary value higher estimated number of overall be reduced. Prior to this final rule, Form (including reimbursed expenses). In so filers. LM–30 was estimated to take filers doing, the instructions exempt from Review of Public Comments roughly 30 minutes while the proposed reporting certain matters that otherwise Regarding the Hour and Cost Burden revised form was estimated to require 90 would be reported under section Estimates for the Revised Form and minutes for completion, which is a 202(a)(1) or 202(a)(2). These sections do Resulting Changes: 300% increase in the allotted time. not contain this ‘‘regular course of In the NPRM, the Department One commenter submitted that business’’ exception, but the prior proposed five minutes as the estimated expanding the form to provide for six instructions made it applicable. Again, amount of time for filers to report the categories instead of three would add given the lack of comments regarding employer’s or business’s name, address, compliance burdens that are not these changes, the Department name of contact at the employer or accounted for in the NPRM. The anticipates only a slight increase in the business, telephone number, Web site Department has not implemented this number of reports received as a result of address, State of incorporation or proposed change; the six categories have this revision. registration, State business ID number, been eliminated from the form itself. and whether the filer had an association In summary, as discussed previously, Rather, the Form LM–30 will utilize one with the business, employer, or labor schedule, Schedule 2, to detail in the NPRM the Department estimated relations consultant at the end of the ‘‘interests in, payments from, loans to or a then current filing rate of .03% based reporting period. A number of from, and transactions or arrangements on the receipt of 61 Form LM–30 reports commenters submitted that it would be with an employer or business and (the average for fiscal years 2001 to especially burdensome, and possibly payments from a labor relations 2004) per 204,634 union officers and needless, to obtain the State of consultant.’’ No new information is employees. Due to the proposed reforms incorporation and State employer required as a result of the format as well as increased compliance identification number. As such, these change; instead of reporting information assistance and enforcement initiatives, commenters suggested that the time in one of three categories, filers will the Department estimated that the filing allotted to gather the required report the same information in one rate would increase to approximately information on an employer or business schedule, but with greater clarity as to 1%, or 2,046 reports filed annually. was insufficient. One commenter the nature of the transaction. Therefore, Subsequent to the NPRM, the submitted that providing a telephone there is no corresponding additional Department engaged in increased number and Web site address would not burden. compliance assistance and enforcement, add any substantial reporting burden. It is also worth noting the and the number of valid reports Based on comments received on this implementation of the $20 tiered de received in fiscal year 2006 reached issue, the Department has removed the minimis threshold, under which records 3,466. This results in an estimated requirement that filers report an need not be maintained for holdings or current filing rate of 1.69% (3,466 / × employer’s or business’s State of transactions, including aggregated 204,634 100 = 1.69%). incorporation and State employer transactions, of $20 and under. While Taking the concerns of commenters identification number. With these items this provision did not appear in the into account in regard to the removed, there is no need to provide for NPRM, commenters, as discussed above, implementation of substantive reporting corresponding additional recordkeeping nearly universally suggested that a requirements which were not previously and reporting time. tiered de minimis threshold would applicable, specifically union-leave/no- One commenter submitted that 90 reduce the recordkeeping burden, or docking, expanded obligations for minutes for completion of the Form alternatively, prevent the need for intermediate officers, removal of the two LM–30 is not an accurate estimate. increased recordkeeping estimates. The administrative exceptions, reporting by Another submitted that allowing 45 Department agrees with the latter union stewards paid by employers for minutes for reading the instructions is opinion. union work, and considering trusts, insufficient time as the filer must refer The following table describes the labor organizations, and other groups as back to earlier provisions in the information sought by the revised form employers in certain circumstances, the instructions and the instructions have and instructions and the amount of time Department estimates that the Form increased from 9 pages to 17. While this estimated for completion of each item of LM–30 filing rate will increase to as commenter argued that the proposed information. The time estimates include much as 3.38%, or 6,916 reports filed burden hour estimates were too low for the additional time burdens associated annually, double the current filing rate. the proposed requirements, no with the Department’s curtailment of It is worth noting that the alternative burden hour estimates were administrative exceptions, and the implementation of the $20 tiered de submitted for any area of the implementation of the revised minimis threshold, under which no rulemaking. The Department has definitions.3 transaction, including aggregated changed the Form LM–30 from the transactions (subject only to the NPRM proposal to add more 3 These figures assume that a filer will choose to exception for a tacit or express instructions to the form itself. Because use an electronic form, which provides greater agreement for the transfer of money, as the form itself will be clearer, the efficiency than completion by hand. The Department estimates that a filer who chooses to discussed in section II.C of the amount of time a filer must spend file by hand will need about ten additional minutes preamble), militates against an even studying the separate instructions will to complete the form.

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00052 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36157

Burden description Time

Maintaining and gathering records ...... 20 minutes. Reading the instructions to determine whether filer must complete the form ...... 15 minutes.4 Additional reading of the instructions to determine how to complete the form ...... 40 minutes.5 Reporting filer’s file number in Item 1 ...... 30 seconds. Reporting filer’s fiscal year in Item 2 ...... 30 seconds. Reporting filer’s name, address, and contact information in Item 3 (A–I) ...... 2 minutes. Reporting name, file number, and address of filer’s union or unions as well as filer’s current position in the union in Item 4 (A–H) 2 minutes. Adding the total value of all assets and the value of all income or other payments in all Schedules 2 (as described below) and 2 minutes. reporting the two totals in Item 5, Summary. Indicating whether there was a reportable involvement with an employer or labor relations consultant during the fiscal year, and 2 minutes. if so, recording the number of employer(s) and consultant(s), in Item 6. Indicating whether there was a reportable involvement with a business during the fiscal year, and if so, recording the number of 2 minutes. businesses in Item 7. Reporting name and address of the employer or business which the filer received a payment from or held an interest in, pro- 5 minutes. viding the contact name, telephone number, Web site address, and whether filer has an association with the business, em- ployer, or labor relations consultant at the end of the reporting period in Schedule 1. Reporting the nature and value of interests in, payments from, loans to or from, and transactions with an employer or business 5 minutes. and payments from a labor relations consultant (includes date, whether the party to the transaction is a union officer or em- ployee or spouse or minor child thereof, and a description and value of the interest or payment) in Schedule 2. Completing either Schedule 3 if an employer or labor relations consultant is reported in Schedule 1, providing details of the em- 8 minutes. ployer’s relationship with the filer’s labor union; or Schedule 4 if a business is reported in Schedule 1, providing details regard- ing the entity the business dealt with (union, trust, or employer) and a description of those dealings. Filer’s signature, date and telephone number in Item 8 ...... 1 minute. Checking responses ...... 5 minutes. Total Burden Hour Estimate Per Filer ...... 120 minutes.

The recordkeeping estimate of 20 address immediately accessible, the revised form and instructions to minutes reflects that the majority of Department estimates that a filer will determine whether they are required to financial books and records required to need to obtain this information either by file a report and 25 minutes reviewing complete the report are those that filers telephone or Internet search; however if any applicable receipts and determining would maintain in the normal course of a union officer receives a gift like that aggregated payments from an conducting business, personal, and sporting event tickets, the gift is likely employer or business did not exceed the union affairs, and thus should only take an effort to obtain business, therefore, $250 de minimis threshold. By five minutes to maintain and gather. the giver will likely make his or her deducting the 6,916 estimated filers The other 15 minutes have been business known to the recipient through whose preliminary review of the form estimated to be necessary to maintain a business card, e-mail, etc. has already been counted from the and gather the books and records that The resulting annualized reporting estimated 204,634 union officers and would not ordinarily be maintained, and recordkeeping burden for all Form employees, 197,718 officers and including those concerning the dealings LM–30 filings is 829,920 minutes (6,916 employees remain who will review the between a business and the filer’s × 120) or 13,832 hours (829,920/60). form and their records but determine union, a trust in which the filer’s union While annual salary information for that they are not required to file a is interested, or an employer whose labor union officers and employees is report. The annual reporting and employees the union represents or is available on annual financial reports recordkeeping hour burden for these actively seeking to represent. The filed with the Department (Forms LM– officers and employees will be estimated times are for the average filer: 2, LM–3, and LM–4), hourly rates are 5,931,540 minutes (30 × 197,718) or the Department assumes that an not reported. Further, officers and 98,859 hours (5,931,540/60). Using the individual who partially owns or employees receiving less than $10,000 $22.34 hourly wage, the Department receives income from a company will do not appear on every form; therefore, estimates that the annual reporting and know that company’s Web address. only the roughest estimates could be recordkeeping cost burden for non-filing Where a filer does not have a web made using these forms to determine the union officers and employees will be average hourly rate for covered officers $2,208,510 (98,859 × $22.34), or $11.17 and employees. Instead, the Department 4 This estimate is for all filers, including first time per non-filing union officer or employee filers and subsequent filers. While the Department used the $22.34 mean hourly earnings of ($2,208,510/197,718). considered reducing this estimate by about one- those engaged in white collar The resulting total annual reporting third for filers submitting reports in subsequent occupations as defined and published in and recordkeeping hour burden for both years following a first-time filing, the nature of the National Compensation Survey: filers and those who review the form Form LM–30 reporting militated against such a decision. Where the Department has previously Occupational Wages in the United and determine that a report need not be made reductions for subsequent year filings, it States (July 2004, Bureau of Labor filed will be 112,691 hours (13,832 generally applied to organizational reporting and Statistics, U.S. Department of Labor, (hours for filers) + 98,859 (hours for not individual reporting. LMRDA organizational August 2005). Using this figure, the non-filers)). The total annual reporting reporting, such as the Form LM–2 or Form LM–3, is a required annual event whereas an individual Department estimates that the annual and recordkeeping cost burden will be may not necessarily engage in Form LM–30 reporting and recordkeeping cost $2,517,517 (112.69 × $22.34). reportable transactions on an annual basis. Where burden for all filers will be $309,007 Federal Costs Associated with the an organization files required annual reports, a (10,374 × $22.34), or $44.68 per filer Rule: certain amount of ‘‘institutional memory’’ is present The estimated annualized Federal which may not be applicable to a filer who is only (309,007/6,916). required to file a report when certain criteria are In addition, the Department estimates cost of the Form LM–30 is $1,025,837. met. that all union officers and employees This represents estimated operational 5 See preceding note 4. will spend 15 minutes reading the expenses such as equipment, overhead,

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00053 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES 36158 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

and printing as well as salaries and requirements of the National The additions and revision read as benefits for the OLMS staff in the Environmental Policy Act (‘‘NEPA’’) of follows: National Office and field offices who are 1969 (42 U.S.C. 4321 et seq.), the involved with reporting and disclosure regulations of the Council on § 404.1 Definitions. activities. These estimates include time Environmental Quality (40 U.S.C. part (a) Benefit with monetary value devoted to: (a) Receipt and processing of 1500), and the Department’s NEPA means anything of value, tangible or reports; (b) disclosing reports to the procedures (29 CFR part 11). The final intangible, including any interest in public; (c) obtaining delinquent reports; rule will not have a significant impact personal or real property, gift, (d) obtaining amended reports if reports on the quality of the human insurance, retirement, pension, license, are determined to be deficient; (e) environment, and, thus, the Department copyright, forbearance, bequest or other auditing reports; and (f) providing has not conducted an environmental form of inheritance, office, options, compliance assistance training on assessment or an environmental impact agreement for employment or property, recordkeeping and reporting statement. or property of any kind. For reporting requirements. purposes, the following are excepted: L. Executive Order 13211 (Actions pension, health, or other benefit G. Executive Order 13045 (Protection of Concerning Regulations That payments from a trust that are provided Children From Environmental Health Significantly Affect Energy Supply, pursuant to a written specific agreement Risks and Safety Risks) Distribution, or Use) covering such payments. In accordance with Executive Order This final rule is not subject to (b) Dealing means to engage in a 13045, the Department has evaluated Executive Order 13211, because it will transaction (bargain, sell, purchase, the environmental safety and health not have a significant adverse effect on agree, contract) or to in any way traffic effects of the final rule on children. The the supply, distribution, or use of or trade, including solicitation of Department has determined that the energy. business. final rule will have no effect on * * * * * List of Subjects in 29 CFR Part 404 children. (e) Income means all income from Labor union officer and employees, whatever source derived, including, but H. Executive Order 13175 (Consultation Recordkeeping and reporting. not limited to, compensation for and Coordination With Indian Tribal IV. Text of Final Rule services, fees, commissions, wages, Governments) salaries, interest, rents, royalties, The Department has reviewed this I In consideration of the foregoing, the copyrights, licenses, dividends, final rule in accordance with Executive Office of Labor-Management Standards, annuities, honorarium, income and Order 13175, and has determined that it Employment Standards Administration, interest from insurance and endowment does not have ‘‘tribal implications.’’ The Department of Labor hereby amends contracts, capital gains, discharge of rule does not ‘‘have substantial direct part 404 of title 29 of the Code of indebtedness, share of partnership effects on one or more Indian tribes, on Federal Regulations as set forth below. income, bequests or other forms of the relationship between the Federal inheritance, and gifts, prizes or awards. government and Indian tribes, or on the PART 404—LABOR ORGANIZATION (f) Labor organization means the local, distribution of power and OFFICER AND EMPLOYEE REPORTS intermediate, or national or responsibilities between the Federal I 1. The authority citation for part 404 international labor organization that government and Indian tribes.’’ is revised to read as follows: employed the filer of the Form LM–30, or in which the filer held office, during I. Executive Order 12630 (Governmental Authority: Secs. 202, 207, 208, 73 Stat. the reporting period, and, in the case of Actions and Interference With 525, 529 (29 U.S.C. 432, 437, 438); a national or international union officer Constitutionally Protected Property Secretary’s Order No. 4–2001, 66 FR 29656 or an intermediate union officer, any Rights) (May 31, 2001). subordinate labor organization of the This final rule is not subject to § 404.1 [Amended] officer’s labor organization. Executive Order 12630, Governmental I 2. Section 404.1 is amended by: * * * * * Actions and Interference with I a. Redesignating existing paragraph (h) * * * Constitutionally Protected Property (b) as new paragraph (h) and adding the (1) A person identified as an officer by Rights, because it does not involve phrase ‘‘An officer is:’’ at the end the constitution and bylaws of the labor implementation of a policy with takings thereof; organization; implications. I b. Adding new paragraphs (h)(1) (2) Any person authorized to perform J. Executive Order 12988 (Civil Justice through (h)(4) to read as set forth below; the functions of president, vice I Reform) c. Adding a new paragraph (b) to read president, secretary, or treasurer; as set forth below; (3) Any person who in fact has This regulation has been drafted and I d. Redesignating existing paragraph executive or policy-making authority or reviewed in accordance with Executive (c) as new paragraph (g) and adding the responsibility; and Order 12988, Civil Justice Reform, and phrase ‘‘within the meaning of any law (4) A member of a group identified as will not unduly burden the Federal of the United States relating to the an executive board or a body which is court system. The regulation has been employment of employees’’ to the end vested with functions normally written so as to minimize litigation and of newly designated paragraph (g); performed by an executive board. provide a clear legal standard for I e. Redesignating existing paragraph (i) Minor child means a son, daughter, affected conduct, and has been reviewed (d) as new paragraph (c); stepson, or stepdaughter under 21 years carefully to eliminate drafting errors and I f. Redesignating existing paragraph (a) of age. ambiguities. as new paragraph (d); (j) Trust in which a labor organization I g. Adding a new paragraph (a) to read is interested means a trust or other fund K. Environmental Impact Assessment as set forth below; or organization: The Department has reviewed the I h. Adding new paragraphs (e), (f), (i) (1) Which was created or established final rule in accordance with the and (j) to read as set forth below. by a labor organization, or one or more

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00054 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36159

of the trustees or one or more members § 404.7 Maintenance and retention of five years after the filing of the of the governing body of which is records. documents based on the information selected or appointed by a labor Every person required to file any which they contain. organization, and report under this part shall maintain Signed at Washington, DC, this 22nd day (2) A primary purpose of which is to records on the matters required to be of June, 2007. provide benefits for the members of reported which will provide in Victoria A. Lipnic, such labor organization or their sufficient detail the necessary basic Assistant Secretary for Employment information and data from which the beneficiaries. Standards. documents filed with the Office of Signed at Washington, DC, this 22nd day § 404.4 [Removed and reserved] Labor-Management Standards may be of June, 2007. verified, explained or clarified, and Don Todd, I 3. Section 404.4 is removed and checked for accuracy and completeness, Deputy Assistant Secretary for Labor- reserved. and shall include vouchers, worksheets, Management Programs. receipts, financial and investment § 404.7 [Amended] statements, contracts, correspondence, Note: The following appendix will not appear in the Code of Federal Regulations: I 4. Section 404.7 is revised to read as and applicable resolutions, in their follows: original electronic and paper formats, and any electronic programs by which Appendix—Form LM–30 and they are maintained, available for Instructions examination for a period of not less than BILLING CODE 4510–CP–P

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00055 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES 36160 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00056 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.050 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36161

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00057 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.051 36162 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00058 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.052 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36163

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00059 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.053 36164 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00060 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.054 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36165

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00061 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.055 36166 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00062 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.056 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36167

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00063 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.057 36168 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00064 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.058 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36169

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00065 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.059 36170 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00066 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.060 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36171

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00067 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.061 36172 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00068 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.062 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36173

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00069 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.063 36174 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00070 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.064 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36175

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00071 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.065 36176 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00072 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.066 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36177

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00073 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.067 36178 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00074 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.068 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36179

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00075 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.069 36180 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00076 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.070 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36181

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00077 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.071 36182 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00078 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.072 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36183

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00079 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.073 36184 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00080 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.074 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36185

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00081 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.075 36186 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00082 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.076 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36187

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00083 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.077 36188 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00084 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.078 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations 36189

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00085 Fmt 4701 Sfmt 4725 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.079 36190 Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules and Regulations

[FR Doc. 07–3155 Filed 6–29–07; 8:45 am] BILLING CODE 4510–CP–C

VerDate Aug<31>2005 21:41 Jun 29, 2007 Jkt 211001 PO 00000 Frm 00086 Fmt 4701 Sfmt 4700 E:\FR\FM\02JYR2.SGM 02JYR2 sroberts on PROD1PC70 with RULES ER02JY07.080