Daily Rules, Proposed Rules, and Notices of the Federal Government
Section 201(b) of the Labor-Management Reporting and Disclosure Act of 1959, as amended (LMRDA) (Pub. L. 86-257, 73 Stat. 519), requires each covered labor organization to file annually with the Secretary of Labor a financial report, signed by its president and treasurer or corresponding principal officers, containing information in the detail necessary to disclose accurately its financial condition and operations for the preceding fiscal year. The Secretary of Labor has delegated the Secretary's authority under the LMRDA to the Assistant Secretary for Employment Standards.
The requirements of LMRDA section 201 apply to all labor organizations in the private sector including those representing employees under the provisions of the National Labor Relations Act, as amended, and the Railway Labor Act, as amended. Section 1209(b) of the Postal Reorganization Act made the LMRDA applicable to labor organizations representing employees of the U.S. Postal Service. Section 701 of the Civil Service Reform Act of 1978 (CSRA) and section 1017 of the Foreign Service Act of 1980 (FSA), as implemented by Department of Labor regulations at 29 CFR parts 457-459, extended the LMRDA reporting requirements to labor organizations representing certain employees of the Federal government.
Section 208 of the LMRDA authorizes the Secretary to issue rules prescribing the form and publication of the annual financial reports required by section 201, and to provide a simplified report for labor organizations for which the Secretary finds that by virtue of their size a detailed report would be unduly burdensome. Under regulations issued pursuant to section 208, the Secretary has prescribed Form LM-2 for labor organizations with total annual receipts of $250,000 or more, and the simplified Form LM-3 for labor organizations with total annual receipts of $10,000 or more, but less than $250,000.
On January 21, 2009, the Department of Labor's Office of Labor-Management Standards (OLMS) published in the
Consistent with the memorandum of January 20, 2009, from the Assistant to the President and Chief of Staff, entitled “Regulatory Review” and the memorandum of January 21, 2009, from the Director of the Office of Management and Budget (OMB), entitled “Implementation of Memorandum Concerning Regulatory Review,” on February 3, 2009, OLMS published in the
Public comment on the proposed extension was invited, with the comment period ending on February 13, 2009. The Department received 24 comments on the proposal to extend the effective date for 60 days. Public comment was also invited generally on the regulations, including the merits of rescinding or retaining them, with this comment period ending on March 5, 2009. The Department published a final rule on February 20, 2009, which postponed for 60 days the effective date of the regulations published on January 21, 2009 until April 21, 2009, for additional public comment and agency review of questions of law and policy (74 FR 7814).
On March 19, 2009, OLMS published a notice seeking public comment on a proposal to delay for an additional 180 days the April 21, 2009, effective date of the regulations published on January 21, 2009. This notice proposed to further delay the effective date until October 19, 2009. Additionally, this notice proposed to delay the applicability date of the regulations (establishing the start of the fiscal year for which the new reporting requirements would apply) set for July 1, 2009, until January 1, 2010. As discussed in that notice, the Department indicated that it would not able to complete its final review of the issues raised by the January 21 rule before April 21, 2009, the current effective date of the rule. Since that time, however, the Department has determined that the January 21 rule was promulgated without adequate review of experience under the Department's 2003 Form LM-2 rule, including the burden of reporting requirements and whether the requirements reflect a proper balance of the need for transparency and union autonomy. Thus, in a separate document published in this issue of the
The Department received comments from 27 individuals or associations on its proposal to postpone the effective date and applicability date of the new Form LM-2/LM-3 regulations. Five union commenters supported the extension as appropriate, arguing that it would enable effective review of the rule while avoiding the unnecessary burden on union resources in the event that the Department does rescind the regulations. One international union also offered additional comments on the merits of the regulations, and urged their rescission. Five commenters expressed general support for union transparency and the January 21 regulations, and they opposed any delay in their effective or applicability dates. Additionally, 17 commenters submitted form letters generally supporting the greater public disclosure of pay and
Two Congressmen expressed concern that continued delay suggests political favoritism to a select constituency rather than regulatory integrity. They noted, as did two other commenters, that President Obama has emphasized the importance of public disclosure and financial accountability and that such accountability is no less needed for labor organizations than for the business sector.
The Department rejects the contention that a delay of the effective and applicability dates of the regulations suggests “political favoritism.” Rather, the Department proposed the initial 60 day delay of the effective date of the regulations and commenced a review of their merits in consideration of guidance from the Assistant to the President and Chief of Staff and the Office of Management and Budget (OMB) that was directed to all Executive branch agencies, without regard to particular agencies or program areas, to determine whether it might be appropriate to delay the effective date of regulations to permit their review for matters of law and policy before taking effect. Most commenters opposing the extension recognized that the Department's actions were triggered by this OMB guidance, and one association acknowledged that this review was necessary to provide the new Administration an opportunity to review rules issued during the waning days of the Bush Administration in order to prevent agencies from publishing rules that fail to meet the regulatory standards that OMB articulated in its guidance. The proposal to withdraw the regulations, and the decision made in this rulemaking to extend the effective and applicability dates derive from this review of the merits of the regulations, consistent with the OMB guidance. The Department has engaged in this process in a fully transparent manner, and the instant rulemaking has been, and will continue to be, undertaken in full compliance with the requirements of the Administrative Procedure Act.
One public policy organization argued that there is no justification for the extensions that outweigh the benefits to union members from the disclosure provided by the January 21 rule and asserted that a delay would “immediately” allow unions to avoid increased disclosure. However, even if the reporting revisions published on January 21, 2009, had not been postponed, there would have been no immediate changes in how unions report their finances. Rather, the initial applicability date for the regulations was July 1, 2009, and the first reports would not have been due until September 30, 2010. Notwithstanding the postponement of the effective date of the January 21 rule, an existing and effective labor organization reporting regime remains in place.
The Department reiterates the justification it offered in the notice proposing to extend the effective and applicability dates, namely that this additional time will enable the Department to complete a review of the issues raised by the January 21 rule, which the Department now proposes to withdraw, without exposing affected unions to undue burdens. Without the further extension, those unions with fiscal years beginning on or after July 1, 2009, would have to begin immediate preparations to comply with the rule, preparations that may entail significant burden and expense, but which may prove unnecessary. Further, since a decision has been made to propose withdrawal of the regulations, and if such proposal ultimately is effectuated, these expenses will have been incurred unnecessarily. While the Department strongly supports the need for union financial transparency, it also believes that preventing unions and the Department from incurring potentially unnecessary expenses and burdens outweighs any benefit gained from implementing the regulations a few months sooner.
A trade association defended union transparency and the January 21 regulations, and it argued against any delay or rescission of them by stressing the Administration's support of transparency, citing evidence that some individuals continue to abuse their union office by misappropriating and misusing members' money, and presenting an argument in support of the reporting of union payments made towards job targeting. The commenter also asserted that the Department's proposed extension upholds its prediction that the initial 60 day delay would be used by the regulations' opponents to justify an even further delay as a result of added administrative burdens required to implement the mandated changes, and it contended that an additional delay would only enable the labor community to have additional time to submit comments favorable to rescission. Additionally, the trade association stated its belief that, while the initial extension was understandable in light of the Administration directives, no further delay was warranted.
The Department disagrees with these contentions. As noted above, the Department has now proposed withdrawal of the January 21 rule. Delaying the implementation of the January 21 rule enables the Department to review comments on its proposal, while simultaneously preventing unions and the Department from incurring unnecessary costs and burdens in the event the regulations are withdrawn. Moreover, the proposed rescission is based on reasons that are consistent with the OMB guidance regarding regulatory review, in that the final rule did not reflect proper consideration of all relevant facts and was not based on reasonable judgment about the legally relevant policy considerations. As stated in the Department's proposal, the withdrawal of the January 21 rule is warranted because: