[Federal Register Volume 76, Number 207 (Wednesday, October 26, 2011)]
[Rules and Regulations]
[Pages 66442-66504]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-26816]



[[Page 66441]]

Vol. 76

Wednesday,

No. 207

October 26, 2011

Part III





Department of Labor





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 Office of Labor-Management Standards





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29 CFR 404





 Labor Organization Officer and Employee Reports; Final Rule

  Federal Register / Vol. 76 , No. 207 / Wednesday, October 26, 2011 / 
Rules and Regulations  

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DEPARTMENT OF LABOR

Office of Labor-Management Standards

29 CFR Part 404

RIN 1215-AB74
RIN 1245-AA01


Labor Organization Officer and Employee Reports

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

ACTION: Final rule.

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SUMMARY: The Office of Labor-Management Standards of the Department of 
Labor (Department) is revising the Form LM-30 Labor Organization 
Officer and Employee Report and its instructions upon review of the 
comments received in response to its August 10, 2010 Notice of Proposed 
Rulemaking (NRPM). The Form LM-30 implements section 202 of the Labor-
Management Reporting and Disclosure Act of 1959 (LMRDA or Act), the 
purpose of which is to require officers and employees of labor 
organizations (unions) to publicly disclose possible conflicts between 
their personal financial interests and their duty to the labor union 
and its members. The rule revises the Form LM-30 and its instructions, 
based on an examination of the policy and legal justifications for, and 
utility of, changes enacted in the Form LM-30 Final Rule (2007 rule), 
published on July 2, 2007. The principal revisions are: Union leave and 
no docking payments are not required to be reported on the Form LM-30; 
union stewards and others representing the union in similar positions 
are not covered by the Form LM-30 reporting requirements; the 
requirement to report certain bona fide loans is limited, as is 
reporting of payments from certain trusts, unions, and employers in 
competition with employers whose employees are represented by an 
official's union; and the scope of reporting required of officers and 
employees of international, national, and intermediate body unions is 
revised. This rule also establishes a new form and instructions, as 
well as regulatory text concerning certain reporting obligations. This 
rule largely implements the Department's proposal in the NPRM, with 
modifications of several minor aspects of the layout of the form and 
instructions.

DATES: This rule is effective on November 25, 2011, and it is 
applicable to Form LM-30 filers with fiscal years beginning on or after 
January 1, 2012. For filers with fiscal years beginning prior to 
January 1, 2012, the Department will accept either the Revised Form LM-
30 published with this rule, the pre-2007 Form LM-30, or the 2007 Form 
LM-30.

FOR FURTHER INFORMATION CONTACT: Andrew R. Davis, Chief of the Division 
of Interpretations and Standards, Office of Labor-Management Standards, 
U.S. Department of Labor, 200 Constitution Avenue, NW., Room N-5609, 
Washington, DC 20210, [email protected], (202) 693-0123 (this is not 
a toll-free number), (800) 877-8339 (TTY/TDD).

SUPPLEMENTARY INFORMATION: The Regulatory Information Number (RIN) 
identified for this rulemaking changed with publication of the Spring 
2010 Regulatory Agenda due to an organizational restructuring. The old 
RIN (1215-AB74) was assigned to the Employment Standards 
Administration, which no longer exists; a new RIN (1245-AA01) has been 
assigned to the Office of Labor-Management Standards.

I. Background

A. Introduction

    This final rule, which revises the Form LM-30 and its instructions, 
is part of the Department's ongoing effort to effectively administer 
the reporting requirements of the LMRDA. The Form LM-30 Labor 
Organization Officer and Employee Report is designed to provide for the 
disclosure of payments to, and interests held by, union officers and 
employees, when such payments and interests pose an actual or potential 
conflict of interest. In developing the proposed rule and considering 
and responding to the comments submitted on the proposal, the 
Department has kept in mind that a fair and transparent reporting 
system for union officers and employees must consider the interests of 
unions, their members, and the public, and must balance the benefits 
served by disclosure with the burden placed on reporting individuals 
and labor organizations.
    The Form LM-30 implements section 202 of the LMRDA, 29 U.S.C. 432. 
Under section 202,\1\ union officers and employees (collectively, union 
officials) are required to file reports if they, or their spouses or 
minor children, engage in certain transactions or have financial 
holdings that may constitute a conflict of interest with their union 
responsibilities. The Act requires public disclosure of certain 
financial interests held, transactions engaged in, and income received. 
Subject to certain exclusions, these interests, transactions, and 
incomes include:
    1. Payments or benefits with monetary value from, or interests in, 
an employer whose employees the filer's union represents or is actively 
seeking to represent;
    2. Transactions involving any stock, bond, security, or loan to or 
from, or other interest in, an employer whose employees the filer's 
union represents or is actively seeking to represent;
    3. Income or any other benefit with monetary value from, or other 
interest in, a business a substantial part of which consists of buying 
from, selling or leasing to, or otherwise dealing with an employer 
whose employees the filer's union represents or is actively seeking to 
represent;
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    \1\ Unless otherwise stated all references to statutory 
provisions, e.g., ``section 202,'' are to provisions in the LMRDA. 
29 U.S.C. 401-531.
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    4. Income or any other benefit with monetary value from, or other 
interest in, a business any part of which consists of buying from, or 
selling or leasing directly or indirectly to, or otherwise dealing with 
the filer's union or a trust in which the filer's union is interested; 
\2\
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    \2\ These trusts are defined by section 3(l) of the Act as:
    a trust or other fund or organization (1) Which was created or 
established by a labor organization, or one or more of the trustees 
or one or more members of the governing body of which is selected or 
appointed by a labor organization, and (2) a primary purpose of 
which is to provide benefits for the members of such labor 
organization or their beneficiaries.
    Unless otherwise specified, references to ``trust'' in this 
preamble are to these statutorily defined trusts, which are 
sometimes referred to as ``section 3(l) trusts.''
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    5. Business transactions or arrangements with an employer whose 
employees the filer's union represents or is actively seeking to 
represent; and
    6. Payment of money or any other thing of value from any employer 
not covered under the above categories, or payment of money or other 
thing of value from a person who acts as a labor relations consultant 
to an employer.
    The Form LM-30 had remained essentially unchanged from 1963 until 
2007. In 2005, the Department published a Notice of Proposed Rulemaking 
that proposed far-reaching changes to the form. 70 FR 51165 (Aug. 29, 
2005). After a notice and comment period, the Department issued the 
2007 final rule. 72 FR 36105 (July 2, 2007). The 2007 rule brought 
significant changes to the LM-30 and its instructions and represented, 
in some instances, a sharp departure from the Department's previous 
interpretations of section 202. The rule completely revised the layout 
and overall structure of the Form LM-30, lengthening the form from two 
to nine pages with the creation of

[[Page 66443]]

five schedules, continuation pages, and various sections consisting of 
instructions and examples. (The 2007 form and instructions are 
available at http://www.dol.gov/olms.)
    Upon review of the 2007 rule, and input from the regulated 
community, the Department issued its proposed revisions to that rule on 
August 10, 2010, stating its view that many of the objectives sought to 
be met by the 2007 rule--including simplification of the reporting 
requirements and adherence to the reporting scheme intended by 
Congress--had not been accomplished. See 75 FR 48416. The Department, 
at 75 FR 48417, explained that the 2007 rule left unresolved 
fundamental questions about the reporting obligations of union 
officials and raised policy and legal issues warranting reexamination 
by the Department. These fundamental questions regarding the Form LM-30 
reporting requirements included--the coverage of stewards and other 
union representatives serving in similar positions; the reporting of 
certain loans and union leave and no docking payments; the reporting of 
payments from certain trusts and unions; the reporting of payments from 
businesses that compete with an employer whose employees are 
represented by an official's union or whose employees the union is 
actively seeking to represent; and reporting by higher level union 
officials about relationships with businesses and employers that pose 
conflicts concerning subordinate affiliates of their union. In 
addition, the Department identified questions concerning the layout of 
the 2007 Form LM-30 and instructions and whether they provided useful 
and adequate assistance to filers.
    Prompted by these uncertainties about the 2007 rule, the 
Department, on March 19, 2009, issued a non-enforcement policy 
regarding the 2007 Form LM-30 reporting requirements, allowing filers 
to use either the pre-2007 or 2007 Form LM-30 report.\3\ Further, the 
Department held a stakeholder meeting on July 21, 2009 to solicit 
comments regarding the 2007 rule and potential revisions to the Form 
LM-30. In the NPRM, the Department invited comment on the proposed 
changes with respect to their benefits, the ease or difficulty with 
which union officers and employees would be able to comply with these 
changes, and whether the changes would better implement the LMRDA. The 
Department invited general and specific comments on any aspect of this 
proposal; it also invited comment on specific points, as noted 
throughout the text of the notice.
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    \3\ The Department modifies this non-enforcement policy with the 
publication of today's rule. For filers with reportable payments or 
interests in fiscal years beginning prior to January 1, 2012, the 
Department will accept either the Revised Form LM-30 published with 
this rule, the 2007 Form LM-30, or the pre-2007 Form LM-30. For 
filers with reportable payments or interests in fiscal years 
beginning on or after January 1, 2012, the Department will accept 
only the Revised Form LM-30.
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B. History of the LMRDA's Reporting Requirements

    In enacting the LMRDA in 1959, a bipartisan Congress expressed the 
conclusion that in the labor and management fields ``there have been a 
number of instances of breach of trust, corruption, disregard of the 
rights of individual employees, and other failures to observe high 
standards of responsibility and ethical conduct which require further 
and supplementary legislation that will afford necessary protection of 
the rights and interests of employees and the public generally as they 
relate to the activities of labor organizations, employers, labor 
relations consultants, and their officers and representatives.'' 
Section 2(b), 29 U.S.C. 401(b).
    The LMRDA was the direct outgrowth of a Congressional investigation 
conducted by the Select Committee on Improper Activities in the Labor 
or Management Field, commonly known as the McClellan Committee. The 
LMRDA addressed various ills through a set of integrated provisions 
aimed at labor-management relations governance and management. These 
provisions include financial reporting and disclosure requirements for 
labor organizations, their officers and employees, employers, labor 
relations consultants, and surety companies. See 29 U.S.C. 431-36, 441.
    To highlight the potential conflicts of interest to which union 
officers and employees could be susceptible, the Senate Committee 
Report explained:

    [This section] requires a union officer or employee to disclose 
any securities or other interest which he has in a business whose 
employees his labor union represents or ``seeks to represent'' in 
collective bargaining. When a prominent union official has an 
interest in the business with which the union is bargaining, he sits 
on both sides of the table. He is under temptation to negotiate a 
soft contract or to refrain from enforcing working rules so as to 
increase the company's profits. This is unfair to both union members 
and competing businesses.

    Senate Report No. 187 (1959) (Senate Report) at 15, reprinted in 
NLRB Legislative History of the Labor-Management Reporting and 
Disclosure Act of 1959 (2 volumes) (Leg. History), 1 Leg. History, at 
411.
    The Senate Report presented ``three reasons for relying upon the 
milder sanction of reporting and disclosure [relative to establishing 
criminal penalties] to eliminate improper conflicts of interest,'' 
which can be summarized as follows:

    Disclosure discourages questionable practices. ``The searchlight 
of publicity is a strong deterrent.'' Disclosure rules should be 
tried before more severe methods are employed.
    Disclosure aids union governance. Reporting and publication will 
enable unions ``to better regulate their own affairs. The members 
may vote out of office any individual whose personal financial 
interests conflict with his duties to the members,'' and reporting 
and disclosure would facilitate legal action by members against 
``officers who violate their duty of loyalty to the members.''
    Disclosure creates a record. The reports will furnish a ``sound 
factual basis for further action in the event that other legislation 
is required.''

    Senate Report, at 16, reprinted in 1 Leg. History, at 412.
    The Report further stated:

    The committee bill attacks the problem [of conflicts of 
interest] by requiring union officers and employees to file reports 
with the Secretary of Labor disclosing to union members and the 
general public any investments or transactions in which their 
personal financial interests may conflict with their duties to the 
members. The bill requires only the disclosure of conflicts of 
interest as defined therein. The other investments of union 
officials and their other sources of income are left private because 
they are not matters of public concern. No union officer or employee 
is obliged to file a report unless he holds a questionable interest 
in or has engaged in a questionable transaction. The bill is drawn 
broadly enough, however, to require disclosure of any personal gain 
which an officer or employee may be securing at the expense of the 
union members.

    Senate Report, at 14-15, reprinted in 1 Leg. History, at 410-11.
    Both the Senate and House Reports recognized that a reportable 
interest was not necessarily an illegal practice. As the House Report 
stated:

    In some instances matters to be reported are not illegal and may 
not be improper but may serve to disclose conflicts of interest. 
Even in such instances disclosure will enable the persons whose 
rights are affected, the public, and the Government, to determine 
whether the arrangements or activities are justifiable, ethical, and 
legal.

    House Report No. 741 (House Report), at 4, reprinted in 1 Leg. 
History, at 762. See Senate Report, at 38, reprinted in 1 Leg. History, 
at 434 (``By requiring reports * * *, the committee is not to be 
construed as necessarily condemning the matters to be reported if they 
are not specifically declared to be improper or

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made illegal under other provisions of the bill or other laws'').
    Conflict-of-interest standards, including disclosure obligations of 
individuals and entities occupying positions of trust, are firmly 
established in U.S. law. As stated in the House Report, repeating 
almost verbatim the same point in the Senate Report:

    For centuries the law of fiduciaries has forbidden any person in 
a position of trust subject to such law to hold interests or enter 
into transactions in which self-interest may conflict with complete 
loyalty to those whom he serves. * * * The same principle * * * 
should be equally applicable to union officers and employees 
[quoting the AFL-CIO's ethical practices code]: ``[A] basic ethical 
principle in the conduct of union affairs is that no responsible 
trade union official should have a personal financial interest which 
conflicts with the full performance of his fiduciary duties as a 
worker's representative.''

    House Report, at 10-11, reprinted at 1 Leg. History, at 768-69. 
Senate Report, at 14, reprinted in 1 Leg. History, at 410. See 
generally Restatement (Second) of Trusts (1959) Sec. Sec.  170, 173; 
Restatement (Second) of Agency (1958) Sec. Sec.  381, 387-98.
    The reporting provisions of the Act represent, in part, an effort 
to codify various requirements contained in an extensive code of ethics 
voluntarily adopted by the AFL-CIO in 1957 and applied to its 
affiliated unions and officials. See Senate Report, at 12-16, reprinted 
in 1 Leg. History, at 408-12; House Report, at 9-12, reprinted in 1 
Leg. History, at 767-70. See also Archibald Cox, Internal Affairs of 
Labor Unions Under the Labor Reform Act of 1959, 58 Mich. L. Rev. 819, 
824-29 (1960). The following excerpts from this code demonstrate the 
similarities between a union official's fiduciary duty and the 
disclosure requirements of section 202.

    [A] basic ethical principle in the conduct of union affairs is 
that no responsible trade union official should have a personal 
financial interest which conflicts with the full performance of his 
fiduciary duties as a workers' representative.
    [U]nion officers and agents should not be prohibited from 
investing their personal funds in their own way in the American free 
enterprise system so long as they are scrupulously careful to avoid 
any actual or potential conflict of interest.
    In a sense, a trade union official holds a position comparable 
to that of a public servant. Like a public servant, he has a high 
fiduciary duty not only to serve the members of his union honestly 
and faithfully, but also to avoid personal economic interest which 
may conflict or appear to conflict with the full performance of his 
responsibility to those whom he serves.
    There is nothing in the essential ethical principles of the 
trade union movement which should prevent a trade union official, at 
any level, from investing personal funds in the publicly traded 
securities of corporate enterprises unrelated to the industry or 
area in which the official has a particular trade union 
responsibility.
    [These principles] apply not only where the investments are made 
by union officials, but also where third persons are used as blinds 
or covers to conceal the financial interests of union officials.

    Ethical Practices Code IV: Investments and Business Interests of 
Union, 105 Cong. Rec.*16379 (daily ed. Sept. 3, 1959), reprinted in 2 
Leg. History, at 1407-08. See also Ethical Practices Code II: Health 
and Welfare Funds, Id., 2 Leg. History, at 1406-07.
    The Act was crafted with particular regard for the unique function 
and status of labor unions. Then Senator John F. Kennedy, who was the 
chief sponsor of the Senate bill, S. 505, which served as the 
foundation for the LMRDA, stated that the legislation was ``designed to 
permit responsible unionism to operate without being undermined by 
either racketeering tactics or bureaucratic controls. It is designed to 
strike a balance between the dangers of to [sic] much and too little 
legislation in this field.'' 105 Cong. Rec. S816 (daily ed. Jan. 20, 
1959), reprinted in 1 Leg. History, at 969.
    As noted by Senator Kennedy, a balance of these interests was 
central to the enactment of the LMRDA. Congress sought to address 
legitimate concerns about illegal and undemocratic behaviors without 
permitting that concern to be used as an excuse for undermining 
organized labor. Further, Congress sought to address the importance of 
balancing necessary disclosure and regulation with undue intrusion on 
union operations and the protection of union officers' privacy 
interests. As stated in the Senate Report, ``[t]he committee recognized 
the desirability of minimum interference by Government in the internal 
affairs of any private organization * * * in establishing and enforcing 
statutory standards great care should be taken not to undermine union 
self-government or weaken unions in their role as collective-bargaining 
agents.'' Senate Report, at p. 7, reprinted in 2 Leg. History, at 403.
    Professor Archibald Cox played a pivotal role in drafting the 
legislation that ultimately became the LMRDA. His testimony before the 
Senate subcommittee that was considering this legislation presaged the 
language in the Senate Report, describing the reporting obligation as a 
limited one. He testified: ``The bill is narrowly drawn to meet a 
specific evil. It requires only the disclosure of conflicts of 
interest. The other investments of union officials and their other 
sources of income are left private because they are not matters of 
public concern.'' Hearings on S. 505 before the Subcommittee on Labor 
of the Senate Committee on Labor and Public Welfare (1959) (Senate 
Hearings), at 123; see Senate Report, at 15, reprinted in 1 Leg. 
History, at 411. Professor Cox additionally noted that because the 
reporting requirements were based, in part, upon the Ethical Practices 
Code formulated by the AFL-CIO, union officials who adhered to this 
code would have ``virtually nothing to disclose in his report to the 
public.'' Senate Hearings, at 123.

C. Statutory Language

    Section 202 provides in its entirety:
    SEC. 202. (a) Every officer of a labor organization and every 
employee of a labor organization (other than an employee performing 
exclusively clerical or custodial services) shall file with the 
Secretary a signed report listing and describing for his preceding 
fiscal year--

    (1) Any stock, bond, security, or other interest, legal or 
equitable, which he or his spouse or minor child directly or 
indirectly held in, and any income or any other benefit with 
monetary value (including reimbursed expenses) which he or his 
spouse or minor child derived directly or indirectly from, an 
employer whose employees such labor organization represents or is 
actively seeking to represent, except payments and other benefits 
received as a bona fide employee of such employer;
    (2) Any transaction in which he or his spouse or minor child 
engaged, directly or indirectly, involving any stock, bond, 
security, or loan to or from, or other legal or equitable interest 
in the business of an employer whose employees such labor 
organization represents or is actively seeking to represent;
    (3) Any stock, bond, security, or other interest, legal or 
equitable, which he or his spouse or minor child directly or 
indirectly held in, and any income or any other benefit with 
monetary value (including reimbursed expenses) which he or his 
spouse or minor child directly or indirectly derived from, any 
business a substantial part of which consists of buying from, 
selling or leasing to, or otherwise dealing with, the business of an 
employer whose employees such labor organization represents or is 
actively seeking to represent;
    (4) Any stock, bond, security, or other interest, legal or 
equitable, which he or his spouse or minor child directly or 
indirectly held in, and any income or any other benefit with 
monetary value (including reimbursed expenses) which he or his 
spouse or minor child directly or indirectly derived from, a 
business any part of which consists of buying from, or selling or 
leasing directly or indirectly to, or otherwise dealing with such 
labor organization;

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    (5) Any direct or indirect business transaction or arrangement 
between him or his spouse or minor child and any employer whose 
employees his organization represents or is actively seeking to 
represent, except work performed and payments and benefits received 
as a bona fide employee of such employer and except purchases and 
sales of goods or services in the regular course of business at 
prices generally available to any employee of such employer; and
    (6) Any payment of money or other thing of value (including 
reimbursed expenses) which he or his spouse or minor child received 
directly or indirectly from any employer or any person who acts as a 
labor relations consultant to an employer, except payments of the 
kinds referred to in section 302(c) of the Labor Management 
Relations Act, 1947, as amended.

    (b) The provisions of paragraphs (1), (2), (3), (4), and (5) of 
subsection (a) shall not be construed to require any such officer or 
employee to report his bona fide investments in securities traded on a 
securities exchange registered as a national securities exchange under 
the Securities Exchange Act of 1934, in shares in an investment company 
registered under the Investment Company Act or in securities of a 
public utility holding company registered under the Public Utility 
Holding Company Act of 1935, or to report any income derived therefrom.
    (c) Nothing contained in this section shall be construed to require 
any officer or employee of a labor organization to file a report under 
subsection (a) unless he or his spouse or minor child holds or has held 
an interest, has received income or any other benefit with monetary 
value or a loan, or has engaged in a transaction described therein. 29 
U.S.C. 432.

D. Rationale for Rulemaking on Form LM-30

    The Department is modifying the Form LM-30 for the following 
reasons, which the Department identified in the NPRM as the bases for 
its proposed changes:
    (1) The 2007 Form LM-30 rule created uncertainty for the regulated 
community, presented unresolved questions regarding the rule's 
reporting requirements, engendered strong objections to key aspects of 
the rule, such as the reporting of certain loans, including mortgages 
and student loans; the reporting of union leave and no docking 
payments; and the extension of the Form LM-30 reporting requirement to 
individuals serving as union stewards or in similar positions 
representing the union.
    (2) The revisions adopted in this rule better balance the 
disclosure of information and the burden imposed on union officials.
    (3) The revisions in this rule better clarify the form and 
instructions and organize the information in a useful format.
    As explained in the NPRM, the Department fully recognizes the 
importance of union officer and employee reporting and the disclosure 
of pertinent financial information to union members and the public. 
This rule effectuates these purposes and reflects a proper balancing of 
transparency with the need to maintain union autonomy and to avoid 
overburdening unions and their officials with unnecessary reporting 
requirements. Because the 2007 rule did not adequately consider this 
balance, it did not succeed in properly implementing the LMRDA. The 
Department has carefully considered the comments received from the 
regulated community and the public about the 2007 rule and the changes 
proposed by the Department. Generally, the Department has included in 
the final rule the changes proposed. Unless otherwise stated herein, 
the Department has made these changes for the reasons stated in the 
NPRM. Rather than restate in full the reasons set out at length in the 
NPRM, the Department has attempted to limit repetition to those 
instances where a more detailed discussion is needed to provide context 
to comments received on the proposed rule and the Department's response 
to those comments.

E. Review of General Comments Received in Response to NPRM

    The Department received 62 unique comments to the NPRM, from 286 
commenters.\4\ Of the 62 unique comments received, 39 expressed 
opposition to the Department's proposal to revise Form LM-30, 22 
supported the proposal, and an additional comment, from a labor 
organization, expressed neither support nor opposition to the proposal, 
but requested an industry-specific exemption to the LM-30 reporting 
requirement.\5\
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    \4\ One of the unique comments was a form letter submitted by 
225 individuals. Additionally, one commenter submitted two versions 
of the same comment.
    \5\ The labor organization suggested that the Form LM -30 
reporting obligation should not apply to union officials who receive 
free admission to performances for union-related purposes, or for 
purposes of voting for industry awards. The union offered clarifying 
language that would exempt these examples of free admission from 
Form LM-30 reporting. The issue will be addressed in section III.E. 
of the preamble.
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    Comments that expressed, in whole or in part, general support or 
opposition to the NPRM will be discussed in this section of the rule. 
Comments on specific changes and revisions to Form LM-30 will be 
addressed in subsequent sections, which are organized by topic.
Review of General Comments in Support of NPRM
    Comments submitted by 17 national/international unions, two 
federations of labor organizations, one local union, one law firm (on 
behalf of various clients, including unions, insurance companies, and 
service providers to unions and benefit plans), and one public policy 
organization generally expressed strong support for the Department's 
proposed revisions to Form LM-30.
    Multiple union commenters, a public policy organization, and a law 
firm generally supported the Department's NPRM, but expressed concerns 
about certain aspects of the proposal or suggested certain 
modifications. These issues and proposed modifications will be 
discussed later in this rule, in the relevant sections to which each 
topic applies.
Review of General Comments in Opposition to NPRM
    The comments submitted in opposition to the NPRM include the above-
referenced form letter, 36 additional comments submitted by 
individuals, and two comments submitted by public policy organizations. 
A third public policy organization opposed some aspects of the 
proposal.
    Most of the opposing comments, apart from those submitted by the 
public policy organizations, were general in nature and did not 
directly, if at all, address the Form LM-30 or the Department's 
proposed revisions. The above-referenced form letter stated that the 
proposed Form LM-30 regulations should be rejected because they would 
undermine efforts regarding recent changes made to unions' reporting 
and disclosure requirements, which were designed to increase 
transparency. The letter also stated that union members have relied on 
the LMRDA to ``discourage and expose'' corruption.
    Two individuals that identified themselves as union members 
asserted that conflict-of-interest reporting requirements should not be 
lessened, and voiced their support of transparency. While some private 
citizens limited their comments to expressing general dissatisfaction 
with the current political administration, other commenters expressed 
general anti-union sentiment, and did not refer to the proposed 
revisions to Form LM-

[[Page 66446]]

30 or any aspect of LMRDA reporting requirements. Additional commenters 
made general statements that unions should be held accountable for 
potential conflicts of interest, and generally should not be exempt 
from reporting requirements. Apparently misunderstanding the 
Department's proposal, multiple commenters erroneously characterized 
the NPRM as an effort to eliminate conflict-of-interest reporting 
altogether.
    In response to these comments, the Department notes that its 
proposal and this final rule have been drafted with the purpose of best 
effectuating the disclosure requirements of the LMRDA. The goal has 
been to revise the 2007 rule in a way that achieves that purpose. 
Contrary to the suggestions by several commenters, the Department's 
proposals are not designed to achieve arbitrary goals or political 
objectives. Indeed, many commenters appear to have overlooked that most 
aspects of the 2007 rule were left unchanged by the Department's 
proposal and this final rule. As a matter of policy and statutory 
interpretation, the Department believes that the approach adopted in 
this rule reflects an improvement over those aspects of the 2007 rule 
that have been revised.
    One public policy organization disputed the Department's statement 
that the 2007 rule raised ``significant policy and law questions.'' 
Rather, in the commenter's view, the objections to the 2007 rule are 
``political'' in nature, deriving from the ``regulated community.'' The 
commenter stated that the NPRM should be immediately withdrawn ``due to 
the Department's inconsistent application of the term ``employer'' to 
different parts of the LMRDA'' (discussed below in section III, part D, 
of this preamble). The commenter explained its view that the 2007 
changes were necessary additions to ensure needed transparency, and 
urged the Department to enforce the 2007 rule. The Department disagrees 
with these general comments. In the Department's view, it is evident 
from a cursory review of the 2007 rule, the compliance issues it 
presented, the history surrounding the Form LM-30 and its enforcement, 
and the comments received at the July 21, 2009 stakeholder meeting, 
that the 2007 rule presented fundamental policy and legal questions 
deserving of the Department's scrutiny. As a result of its review of 
the 2007 rule, the Department has developed an approach that more 
effectively targets actual or potential conflict-of-interest payments 
and balances the need for transparency with the legitimate interests of 
union officials and transparent labor-management relations.
    Another public policy organization voiced strong opposition to the 
NPRM, and stated that the NPRM ``provides no evidence that is 
consistent with LMRDA language'' to justify its proposed revisions to 
Form LM-30. The commenter stated that ``[s]ince 1959, the Department 
has essentially ignored Form LM-30 reporting and disclosures.'' The 
commenter argued that the NPRM proposes to ``hide [union-employer] 
collusions,'' and ``essentially abandons individual workers in its 
analysis.'' For the reasons mentioned above in response to a similar 
comment, the Department disagrees with the assertions. The interest of 
workers, union members, and the public in labor-management transparency 
is a significant goal of the statute, and has been a primary 
consideration in this rulemaking. The importance of balancing the 
benefits of disclosure against the burdens that recordkeeping and 
reporting imposed on the legitimate activities of unions and their 
officials likewise undergirds the proposal and the final rule. The 
Department fully explains in the sections that follow in this preamble 
the rationale for the changes made by this final rule and how they 
comport with the LMRDA's disclosure provisions.
    One public policy organization challenged the Secretary's authority 
to make the proposed revisions under section 208 of the LMRDA, and 
suggested that the proposed rule, therefore, is inval Id. Section 208 
of the LMRDA, 29 U.S.C. 438, authorizes the Secretary of Labor to 
issue, amend, and rescind rules and regulations to implement the 
LMRDA's reporting provisions. The commenter reads section 208 as a 
``one-way ratcheting mechanism'' that only permits the Secretary to add 
additional reporting requirements, not revise existing requirements. In 
its view, the changes proposed by the Department could be effectuated 
only if Congress amends the Act.
    The Department disagrees with the commenter's distinctive view of 
section 208. Section 208 grants the Secretary authority ``to issue, 
amend, and rescind rules and regulations prescribing the form and 
publication of reports required to be filed under Title II of the 
Act.'' The verbs ``amend'' and ``rescind'' do not constrain this 
authority; they allow the Secretary to make changes, but do not compel 
any particular modification. Further, the words themselves do not 
connote that amendments and rescissions must add to (rather than 
subtract from) the reporting requirements. The verb ``rescind,'' for 
example, suggests removal or abrogation in general, and is equally 
applicable to both reporting requirements and reporting exemptions.
    The Department fully understands that its ``rules and regulations 
prescribing the form and publication of reports required to be filed'' 
must conform to the statute. As explained throughout this preamble, the 
proposed changes, as adopted in this final rule, are entirely 
consistent with the language and purpose of the LMRDA. By revising the 
Form LM-30 to feature a simplified format and more concise, clear 
instructions, the final rule will facilitate filers' compliance with 
Form LM-30 reporting requirements and increase the form's utility to 
the public.
    The same commenter suggests that the Department has disregarded the 
intent of Congress and conferred upon itself the authority to create 
administrative exemptions in derogation of the statutory requirements. 
The Department disagrees, noting, as discussed throughout this 
preamble, that the changes are based upon the Department's reasoned 
interpretation of the Act. The Department additionally notes that while 
the term ``administrative exemption'' has long been used to describe 
certain exceptions from a general reporting obligation (as the term was 
also used in the 2007 rule), they have always been based on a 
reasonable interpretation of the statute. The commenter overlooks that 
the Department retains discretion under the statute in crafting rules, 
and that how this discretion is exercised is appropriately based on 
policy considerations.
    The commenter added that the Secretary may limit disclosure by 
utilizing de minimis thresholds, but argued that union officials must 
still adhere to record retention requirements in LMRDA section 206. 
While the intent of the comment is not clear, such recordkeeping 
requirements apply to records needed to verify required reports and the 
detail required to be included on the reports. They do not apply to 
information not required to be reported.
    Finally, the commenter suggested that a statement used in the 2010 
NPRM demonstrates the Department's intention to undermine congressional 
intent. The NPRM, at 75 FR 48416, states that the LMRDA reporting 
provisions ``are designed to empower labor organizations, their 
members, and the public.'' The commenter reads the statement as proof 
that ``DOL embraces a view that part of the LMRDA's purpose is to 
`empower labor unions'

[[Page 66447]]

when, in fact, its purpose is to shield union members and the public 
from corrupt union officials.'' In response, the Department in no way 
intended to intimate that the LMRDA was designed to ``empower labor 
organizations,'' as distinct from their membership. As the commenter 
also recognizes, the LMRDA's disclosure provisions provide information 
that empowers union members and the public by promoting union self-
governance and financial integrity. At the same time, and as recognized 
in the NPRM, the Department cannot disregard the burden that reporting 
places on unions and union officials. As stated in the 1959 Senate 
Committee Report and repeated in the NPRM: ``The committee recognized 
the desirability of minimum interference by Government in the internal 
affairs of any private organization * * * in establishing and enforcing 
statutory standards great care should be taken not to undermine union 
self-government or weaken unions in their role as collective-bargaining 
agents.'' Senate Report No. 187, at p. 7, reprinted in 2 Leg. History, 
at 403, quoted at 75 FR 48418. Thus, in regard to its impact upon 
unions, the intent of the LMRDA is not to intrude on the legitimate 
role of unions in labor-management relations, but, rather, to advance 
the interests of employees by furthering union and workplace democracy 
and reducing or eliminating labor-management financial corruption.
Comments on Reporting Burden Created by 2007 Rule
    Most union commenters asserted that the 2007 changes to the Form 
LM-30 reporting requirements are not justified in light of the burden 
they impose, and voiced support for the rescission of some of these 
requirements, which one commenter described as ``extremely burdensome 
to filers, and confusing and misleading to the public.'' Another 
international union commented that the 2007 revisions to Form LM-30 
``impose[d] a severe burden on union filers with no corresponding 
benefit to union members or the public and raised fundamental legal and 
policy questions with which OLMS is still struggling.''
    A federation of labor organizations stated that in challenging the 
2007 rule it had argued that the 2007 ``changes in the universe of 
potential Form LM-30 filers and in the scope of interests and receipts 
subject to reporting exceeded the Department's statutory authority.'' 
The commenter concurs with the NPRM that the 2007 changes to the Form 
LM-30, had they gone into effect, would have been unduly burdensome and 
could have deterred people from running for union office. One commenter 
concurred with the comments submitted by the federation, and stated 
that ``the prior regulatory scheme * * * was unduly burdensome and far 
beyond the original intent of the law.'' Another commenter stated that 
the 2007 LM-30 reporting requirements ``create a trap for even the most 
scrupulous and detail-oriented union official,'' adding that [``b]y 
setting [a]standard that in some respects is impossible to meet, the 
current rules discourage involvement in union activities.''
    Echoing the burden theme, one international union commenter stated 
that the Form LM-30 reporting requirements outlined in the 2007 rule 
require ``unnecessary reporting of many financial transactions and 
arrangements that pose no threat of a conflict of interest,'' and 
create a ``crushing burden on [its] officers and employees.'' It added 
that these new requirements ``discourage[ ] involvement in union 
activities to the detriment of both the union and its employer 
partners.'' Yet another commenter supported the Department's proposal, 
as it targeted the ``unnecessary over-complication, confusion, and 
burden caused by its 2007 rule.''
    One union commenter challenged the 2007 rule as claiming to enhance 
``transparency,'' but rather imposed ``expensive and time-consuming'' 
requirements, to the detriment of the members. Noting the increased 
volume of information required to be reported on the 2007 Form LM-30, 
another international union questioned whether such additional 
information would effectively reveal actual or potential conflicts of 
interest.
Comment on 2007 Rule's Impact on Compliance Assistance Efforts
    One local union commenter cited the intensive, multi-faceted 
training and compliance assistance efforts undertaken by the 
commenter's union when the 2007 rule was adopted, and supports the 
proposed changes, as they would reduce the ``complication associated 
with compliance.'' The commenter stated that its union ``would much 
rather devote these human resources to matters that have more 
widespread and direct benefits for our members,'' such as negotiating 
contracts, processing grievances, and organizing unrepresented workers 
to protect the wages and fringe benefits of its membership.
Comments on Striking a Fair Balance Between the Conflict-of-Interest 
Disclosure Requirement and Union Officials' Legitimate Privacy 
Interests
    Numerous commenters supported the Department's proposal in its 
effort to balance the legitimate needs and interests of unions and 
their officials with the need for conflict-of-interest reporting that 
advances labor-management relations, union democracy, and union 
financial integrity. For example, one commenter stated, ``The goal of 
the proposed Rule, to restore a fair balance between the interests of 
unions, their members and the public, is appropriate and necessary.'' 
Following this theme, another commenter stated that the Department's 
proposal better balances union officials' privacy interests with the 
need for members to have information concerning conflicts of interest 
that could undermine the union's ability to represent the employees. 
Another commenter, a federation of labor organizations, stated that it 
supported the Department's proposal ``because, in the main, the 
proposal accomplishes the Department's statutory purpose of striking 
the proper `balance' between `the interests of labor organizations, 
their members, and the public, including the benefits served by 
disclosure, the burden placed on reporting entities, and preserving the 
independence of unions and their officials from unnecessary government 
regulation.'' 75 FR at 48416. An international union commenter offered 
support for the proposed changes, stating that they are well grounded, 
consistent with congressional purpose in drafting the Act, and 
successful in striking an appropriate balance between the goals of 
greater conflict-of-interest transparency while not establishing 
unnecessary burden for union officials.

II. Authority

A. Legal Authority

    The legal authority for this rule is set forth in sections 202 and 
208 of the LMRDA, 29 U.S.C. 432, 438. Section 208 of the LMRDA provides 
that the Secretary of Labor shall have authority to issue, amend, and 
rescind rules and regulations prescribing the form and publication of 
reports required to be filed under Title II of the Act and such other 
reasonable rules and regulations as she may find necessary to prevent 
the circumvention or evasion of the reporting requirements. 29 U.S.C. 
438.

B. Departmental Authorization

    Secretary's Order 08-2009, issued November 6, 2009, contains the

[[Page 66448]]

delegation of authority and assignment of responsibility for the 
Secretary's functions under the LMRDA to the Director of the Office of 
Labor-Management Standards and permits re-delegation of such authority. 
See 74 FR 58835 (Nov. 13, 2009).

III. Revisions to the 2007 Form LM-30 Reporting Requirements

    This rule implements five changes to the Form LM-30 reporting 
requirements, as proposed in the NPRM: (1) The elimination of reporting 
of union leave and no docking payments, and, more broadly, a revised 
interpretation of the bona fide employee exception; (2) the removal 
from coverage of individuals serving as union stewards or in similar 
positions representing the union, such as a member of a safety 
committee or a bargaining committee; (3) the elimination of reporting 
for certain bona fide loans and other financial transactions on Parts A 
and B of the form; (4) the limitation on reporting of payments from 
employers competitive to the represented employer, certain trusts, and 
unions; and (5) a revision of the reporting required of national, 
international, and intermediate union officers and employees.
    First, this rule returns to the historical practice whereby union 
officers and employees were not required to report compensation they 
received under union leave and no docking policies established under 
collective bargaining agreements or pursuant to a custom and practice 
under such collective bargaining agreements. These payments are made by 
a represented employer to its employees who are serving on behalf of 
the union on labor-management relations matters. Under a union leave 
policy, the employer continues the pay and benefits of an individual 
who often works full time on such matters. Under a no docking policy, 
the employer permits individuals to devote portions of their work day 
or work week to labor-management relations business, such as processing 
grievances, with no loss of pay. The requirement in the 2007 rule that 
union officials must report union leave and no docking payments has 
been strongly criticized as unduly burdensome. The Department agrees 
that this reporting requirement imposes undue burden and may impede 
individuals from running for union office and otherwise serving in 
important union roles. The 2007 rule was based on the premise that such 
payments are for work performed on the union's behalf, rather than the 
employer's, and are thus not payments made under the ``bona fide 
employee'' exception of section 202 of the LMRDA. Upon reconsideration, 
the Department has determined that the term ``bona fide employee,'' as 
used in that section, is most naturally read to distinguish between, on 
the one hand, payments that are made to a union official by virtue of 
his or her employment by the company making the payment, and, on the 
other hand, payments that are made to union officials without regard to 
such employment. This interpretation better accords with the purposes 
of the statute than the interpretation embodied in the 2007 rule that 
focuses on whether the union or the employer making the payment 
exercises primary control over an individual's discrete, temporal 
activities as a union official.
    Second, this rule returns to the historical practice of excluding 
union stewards and similar union representatives from Form LM-30 
reporting. The Department believes that this practice comports with the 
language of section 202 and better effectuates labor-management 
relations than the interpretation embodied in the 2007 rule.
    Third, this rule establishes administrative exemptions for Parts A 
and B of the form, whereby union officials generally need only report 
loans from bona fide credit institutions if such loans are on terms 
more favorable than those available to the public. The 2007 rule 
required more extensive reporting and made confusing and complex 
distinctions among various relationships and credit institutions. This 
rule also incorporates the clarification, as set forth in 2007 Form LM-
30 Frequently Asked Question (FAQ) 70, that union officials as a 
general rule are not required to report on savings accounts, 
certificates of deposit (CD), credit cards, etc. where such instruments 
contain the same terms offered to other customers without regard to an 
individual's status as a union official.\6\
---------------------------------------------------------------------------

    \6\ See the 2007 Form LM-30 FAQs at http://www.dol.gov/olms/regs/compliance/RevisedLM30_FAQ.htm.
---------------------------------------------------------------------------

    Fourth, this rule limits the reporting obligation with respect to 
interests in and payments from employers that compete with employers 
represented by the official's union or that the union actively seeks to 
represent. Disclosure of such payments is important, but only where an 
official is involved with the organizing, collective bargaining, or 
contract administration activities related to a particular represented 
employer, or possesses significant authority or influence over such 
activities. Establishing such limitation on disclosure ensures that 
meaningful information will be provided to union members without 
imposing undue burden on officials who do not occupy positions of 
influence over the union's organizing, collective bargaining, or 
contract administration activities related to the represented employer. 
Similarly, this rule modifies the scope of reporting insofar as 
payments from certain trusts and unions are concerned. The Department 
returns to its historical practice of not requiring officials to report 
on payments they receive from trusts or, as a general rule, from 
unions. Officials of a staff union are, however, still required to 
report on Part A any payments they receive from the union-employer 
whose employees the staff union represents.
    Finally, this rule revises and clarifies the scope of ``top-down'' 
reporting for officials of international, national, and intermediate 
unions. This rule effectuates the Department's proposal in the NPRM 
that officers and certain employees of these higher level unions must 
look at payments they receive from employers and businesses with 
relationships with lower levels of their unions (e.g., a local or other 
subordinate body), as well as with their own level of the union, when 
applying the Form LM-30 reporting requirements. However, based on a 
review of the comments, the Department has determined to adopt a 
modification of its proposed expansion of the scope of top-down 
reporting for union employees of national, international, and 
intermediate body labor organizations. All higher-level union employees 
that have significant authority or influence with respect to affiliates 
will also need to report these matters in relation to subordinate 
affiliates. Higher-level union employees without such significant 
authority or influence over affiliates or officials of affiliates will 
not be subject to these top-down reporting obligations.
    The 2007 rule also established confusing exceptions to the ``top-
down'' reporting obligations. Payments from businesses that dealt with 
represented employers were exempt, while the instructions did not 
specify the reportability of payments from businesses that dealt with 
lower level unions. Further, these officials were not required to 
report any payments or other financial benefits received by their 
spouses and minor children from employers and businesses involved with 
a lower level union. This rule effectuates the Department's proposal to 
remove these exceptions.
    In developing this rule, the Department has reviewed the reporting

[[Page 66449]]

examples utilized in the 2007 rule and the substantial guidance issued 
after the rule's publication as answers to FAQs in order to identify 
the extent to which, if at all, reporting will be changed under this 
rule. This rule supersedes any inconsistent interpretation or other 
guidance. The Department identifies in the margin those instances where 
the rule does not change the reporting obligations under the examples 
and FAQs.\7\ As discussed later in the text, examples will generally 
not be included in the revised instructions.
---------------------------------------------------------------------------

    \7\ Most of the examples in the 2007 instructions continue to 
accurately reflect reporting requirements as articulated in this 
rule. Thus, the following continue to accurately reflect reporting 
requirements: Examples 2-15, at pp. 3-4 of the instructions; 
examples 1-2, 4-5, at p. 6 of the instructions; examples 1 and 2, at 
p. 7 of the instructions; and examples 1, 3-15, and 17, at pp. 8-9 
of the instructions. Note that the NPRM had incorrectly stated that 
example 3, at p. 6 of the instructions would continue to accurately 
reflect reporting under this rule. Several of the FAQs are based on 
requirements that the Department changes with this rule.The 
following FAQs, however, continue to accurately reflect reporting 
requirements: 2-10, 12-26, 28, 30-37, 39, 44, 47, 49-50, 54, 56-59, 
72-76, and 79-88. It should be noted however, that some of the 
comments and FAQs, such as FAQs 49 and 73, while remaining accurate, 
were intended to illustrate issues that are less likely to arise 
under the revised rule. Others, such as FAQs 1 and 77, while largely 
accurate, contain some statements that are based on or refer to 
interpretations that are superseded by this rule.
---------------------------------------------------------------------------

A. The Bona Fide Employee Reporting Exception Under Section 202

    This rule effectuates the Department's proposal to return to its 
historical position that union officials should not report union leave 
and no docking payments. 75 FR 48421. As discussed above, these 
payments are made by a represented employer to its employees who are 
serving on behalf of the union on labor-management relations matters in 
accordance with the parties' collective bargaining agreement. First, 
the historical interpretation under which such compensation was not 
reported--to which this rule returns--comports more readily with the 
language in section 202, than the interpretation underlying the 
Department's 2007 interpretation. Second, such reporting imposes a 
substantial burden on union officials on matters unlikely to pose 
conflicts of interest and removing this burden ensures that there will 
be no undue interference with the internal workings of labor unions and 
labor-management relations. Third, there is no persuasive reason, as a 
matter of policy, why union officials must report such payments, while 
employers making such payments are under no similar obligation. See 75 
FR 48421-48423.
    Sections 202(a)(1) and (5) of the LMRDA require a labor 
organization officer or employee to report payments that the official, 
his or her spouse, or minor children receive from an employer whose 
employees the labor organization represents or is actively seeking to 
represent, ``except payments and other benefits received as a bona fide 
employee of such employer.'' 29 U.S.C. 432(a)(1) & (5) (emphasis 
added).
    Until the 2007 rule, the Department's policy had been to exclude 
from reporting payments and other benefits received for activities 
undertaken on behalf of the union, as well as for any other 
``activities other than productive work,'' but paid for by the 
employer. Thus, the instructions for the 1963 Form LM-30 stated that 
the following payments and benefits were exempt from Form LM-30 
reporting:

    [p]ayments and benefits received as a bona fide employee of the 
employer for past or present services, including wages, payments or 
benefits received under a bona fide health, welfare, pension, 
vacation, training or other benefit plan; and payments for periods 
in which such employee engaged in activities other than productive 
work, if the payments for such period of time are: (a) Required by 
law or a bona fide collective bargaining agreement, or (b) made 
pursuant to a custom or practice under such a collective bargaining 
agreement, or (c) made pursuant to a policy, custom, or practice 
with respect to employment in the establishment which the employer 
has adopted without regard to any holding by such employee of a 
position with a labor organization.

    Pre-2007 Form LM-30 Instructions, Part A (Items 6 and 7) at (iv). 
See 28 FR 14384 (Dec. 27, 1963).
    The 2007 rule narrowed the exemption in the Form LM-30 
instructions, as quoted above, by limiting it to situations where such 
payments were made pursuant to a bona fide collective bargaining 
agreement and totaled 250 or fewer hours during the filer's fiscal 
year.
1. Review of Comments Received
    The Department received 17 substantive comments on the issue of the 
union leave and no docking payments. Of these 17 comments, 14 supported 
the removal of reporting for such payments: 12 unions, one law firm, 
and one public policy organization. Additionally, three comments 
opposed the change, including two public policy groups, and 225 
individuals who sent in form letters.
a. Comments in Support of NPRM
    The Department received 13 comments that provided general support 
for removing union leave and no docking payments from the Form LM-30 
reporting requirements, with about one-half providing specific comments 
in support of the changes. One international union commenter concurred 
with the view that the ``legitimacy'' of such payments is established 
when they are included in a collective bargaining agreement or 
employment practice, and that they do not pose conflict-of-interest 
problems like ``no show work, featherbedding, or similar practices.'' 
The commenter further stated that requiring reporting for such payments 
for union officials, and not employers, imposes an ``unnecessary 
burden'' on the officials and deters employees from serving as 
representatives. A national union concurred with the Department's view, 
as expressed in the NPRM, that such payments do not pose a conflict of 
interest, and also noted that employers are not required to report such 
payments on the Form LM-10.
    Another international union maintained that such reporting would be 
burdensome, unrelated to the purpose and intent of the statute, and 
``disruptive of many well-established labor-management relationships.'' 
The commenter also stated that such arrangements are known to the 
employees, who benefit along with the employer from this practice, and 
it presented evidence of the burdensome nature of reporting such 
payments. It explained that union officials would be required to keep 
track of all hours worked under union leave or no docking arrangements 
and calculate benefits as well as wages earned, adding that such 
information would not easily be obtained from the employer, who may not 
desire to release it. Such reporting, the commenter contended, may 
discourage employee participation in the union, and would not disclose 
conflicts of interest in that no docking arrangements are already known 
to employees in a bargaining unit either by being required by a 
collective bargaining agreement or being made pursuant to a custom 
under a collective bargaining agreement. Further, the commenter stated 
that members know that when stewards or other union representatives 
``administer the contract, process grievances, or represent members in 
disciplinary actions,'' they are receiving payment from the employer.
    A national union discussed the burden and disincentive that 
reporting union leave and no docking payments would have on employees' 
willingness to serve the union. Another national union emphasized that 
such payments, received pursuant to a collective bargaining agreement, 
are made with full knowledge of the employees and

[[Page 66450]]

thus reporting is not needed to provide transparency. The union 
explained that the burden that such reporting would impose would 
discourage members from representing their fellow employees in 
``grievances, serving on safety and health committees, and 
participating in collective bargaining.'' An international union 
stressed that such payments do not pose conflicts of interests, as they 
``primarily serve'' the employers by promoting ``prompt and fair 
resolution of grievances and other workplace issues so that work 
continues and morale remains high.''
    Further, a national union stated that in determining whether or not 
a payment is received ``as a bona fide employee,'' a distinction must 
be made between payments made ``by virtue'' of a union official's 
employment with the employer and payments made without regard to such 
relationship. In this union's experience, employees volunteer to serve, 
on their own personal time, on joint labor-management, safety and 
health, and other committees, with the collective bargaining agreement 
only ensuring that they do not lose any compensation or benefits.
    Finally, a law firm supported the Department's proposed return to 
its historical position that union leave and no docking payments are 
not reportable. It urged the Department to clarify that employers are 
not required to report such payments under section 203 of the Act. The 
firm asserted that such payments should be considered to be made as 
``compensation for, or by reason of, [an employee's] service as an 
employee for such employer.'' \8\ It stated that without such 
clarification an employer may feel obligated to report such payments, 
even though union officials are not required to report their receipt of 
such payments. As the Department discusses in later sections of the 
preamble, this rulemaking solely addresses reporting under section 202 
of the Act and that interpreting section 203 requirements would be 
beyond its scope.
---------------------------------------------------------------------------

    \8\ The Department of Justice, not this Department, is 
responsible for interpreting and enforcing section 302 of the Taft-
Hartley Act. The language quoted is from section 302(c) of the 
statue.
---------------------------------------------------------------------------

b. Comments in Opposition to NPRM
    The three comments opposing this aspect of the Department's 
proposal offered arguments in support of the 2007 rule's premise that 
union leave and no docking payments presented a conflict of interest 
for union officials and must be reported to ensure appropriate 
transparency. Two of the commenters argued that the Department's 
proposal was based on an impermissible reading of the statute.
    A public policy organization offered some specific observations 
regarding the effect of allowing union leave and no docking to go 
unreported. It claimed that the Department lacked authority under the 
Act to excuse union officials from reporting such payments, suggesting 
that the proposed rule was based simply on the new Administration's 
dissatisfaction with the reporting requirement rather than a considered 
view of the statute's requirements. The comment argued that payments 
for work done for the union cannot be received as a ``bona fide 
employee.''
    Additionally, the public policy organization claimed that by 
eliminating reporting, ``de facto no-show jobs'' and ``featherbedding'' 
would be concealed and substantial payments to union officials would go 
unreported. Such payments, in its view, constitute an improper 
``subsidy'' for union activity. Another commenter, a public policy 
organization, argued that the Department's proposal would conceal 
instances of ``no-show jobs,'' and other fraudulent arrangements. This 
public policy organization also asserted that, in proposing to remove 
union leave and no docking payments from Form LM-30 reporting, the 
Department was ignoring the structure of the statute and establishing 
an ``administrative exemption.''
    The individuals who commented by form letter also addressed this 
issue and stated that no docking reporting should not be removed 
because most stewards receive no extra compensation for their duties, 
which could make them susceptible to ``other forms of rewards.''
    The two public policy organizations stated that the burden 
associated with the 2007 rule is significantly overstated. One 
organization stated that the Department's proposal overlooked how the 
2007 rule mitigated burden by establishing a 250-hour reporting 
threshold. One of the organizations argued, albeit without further 
support, that most union officials would not have to report their union 
leave or no docking payments, because these payments would not meet the 
250-hour threshold.
    The organization also argued that the Department's burden estimates 
in the 2010 NPRM demonstrated the absence of any significant burden 
associated with reporting union leave and no docking payment, noting 
that the Department estimated that the proposed changes would only 
reduce recordkeeping time by five minutes (15 minutes in the proposed 
rule as opposed to 20 minutes in the 2007 rule) and the overall 
reporting by 30 minutes (90 minutes in the proposed rule as opposed to 
120 minutes in the 2007 rule).
    A public policy organization also objected to the Department's 
assessment of the burden associated with the 2007 rule, as discussed in 
the NPRM. It stated, on one hand, that any burden is not the result of 
the 2007 rule but has existed since the enactment of the statute (even 
if the Department, in the commenter's opinion, did not always enforce 
the Form LM-30 requirements), and, on the other hand, that the 2007 
rule created no additional burden because only ``atypical financial 
arrangements that benefit some union officials'' were reportable under 
the rule.
    Taking issue with the view that union leave and no docking payments 
pose no conflict of interest where required by a collective bargaining 
agreement or made pursuant to a custom under a collective bargaining 
agreement, another public policy organization argued that these 
payments create ``the definite possibility of becoming a conflict of 
interest.'' In this regard, it cited a dissenting opinion in 
Caterpillar v. UAW, 107 F.3d 1052, 1060 (3d\.\ Cir. 1997)(Alito, J. 
dissenting), where the dissenting judge stated such payments create a 
conflict, because ``union negotiators * * * may agree to reduced 
benefits for employees in exchange for financial support for the 
union.''
    One public policy organization acknowledged that the courts have 
determined that union leave and no docking are not unlawful under LMRA 
Section 302, but it nevertheless contends that the courts have 
``misconstrued'' such provision, and that such payments, as well as the 
granting of ``super-seniority'' to union officials, do create a 
conflict of interest for the union officials, as the officials could 
exchange benefits for the bargaining unit as a whole for benefits for 
themselves. The comment asserted that ``any special benefit'' creates a 
conflict of interest, and it cites United States v. Phillips, 19 F.3d 
1565, 1566-69 (11th Cir. 1994), to illustrate this point. It also 
contended that disclosure furthers the public's and government's 
ability ``to determine the validity of the financial transaction.'' 
Additionally, the commenter rejected the idea that union leave and no 
docking provided value to the employer, insisting, for example, that 
the payments did not increase the speed of handling grievances, and 
that, in any event, such considerations have no relevance to the 
statute.

[[Page 66451]]

    The public policy organization also contended that any conflict of 
interest should be disclosed so members can ``exercise their democratic 
rights'' when choosing representatives, and that the Department will 
hamper members' ability to exercise such rights by establishing a Form 
LM-30 that will provide ``less information on the financial activities 
of their representatives.'' Another public policy organization 
similarly argued that the Department is proposing to reduce the 
``amount of information'' made available to members, the government, 
and the public regarding payments to union officials.
    Additionally, the public policy organization argued that the effect 
of the union leave and no docking payments is to shift costs of union 
officer, employee, and steward training to the employer and to defray 
costs involved in the union's political activities. Thus, the commenter 
contended that reporting is needed for the public to be made aware of 
these effects. Furthermore, the commenter insisted that the effect of 
the NPRM's ``new definition of `bona fide employee''' will require the 
filing of other LMRDA reports, including ``persuader reports'' under 
section 203 of the Act.
    Finally, both public policy organization commenters disagreed with 
the Department's position that, as a matter of policy, there was no 
persuasive reason why union officials should report union leave and no 
docking payments while employers are not required to do so pursuant to 
the Form LM-10, Employer Report, and section 203 of the statute.
2. Response to Comments
    In response to the comments received, and for the reasons stated in 
the NPRM and discussed herein, this rule effectuates the Department's 
proposal to rescind the requirement in the 2007 rule that union 
officials report compensation and benefits they receive under employer 
union leave and no docking policies. In the NPRM, as noted above, the 
Department advanced three reasons for its proposal: (1) The historical 
interpretation under which such compensation was not reported comports 
more readily with the language in section 202 than the interpretation 
in the 2007 rule; (2) the 2007 rule imposes a substantial burden on 
union officials to report on matters unlikely to pose conflicts of 
interest and this burden could unduly interfere with the internal 
workings of labor unions and labor-management relations; and (3) the 
absence of any persuasive policy reason why union officials must report 
receiving such payments while employers making such payments are under 
no similar obligation.
    With regard to the language of section 202, the Department believes 
it is best read to require reporting of payments only when a union 
official is not a bona fide employee of the employer making the 
payment. This reading departs from the 2007 rule's approach, which 
sought to equate payments to ``bona fide employees'' with payments made 
to union officials for ``productive work'' on the employer's behalf. In 
the 2010 NPRM, the Department made the additional points, discussed 
below, in rejecting the position taken in the 2007 rule. An 
individual's status as an employee is based on the various factors 
articulated in the common law. See Nationwide Mutual Ins. v. Darden, 
503 U.S. 318 (1992). ``Bona fide'' is synonymous with ``good faith'' or 
``genuine,'' i.e., without fraud or deceit.\9\ Thus, section 202(a)(1) 
is most naturally read to except from reporting union leave and no 
docking payments to a current or former employee of the company making 
the payment unless made under the guise of employment, such as where 
payment is for a no-show job with the company, in an amount that 
unreasonably exceeds the value or amount of the work performed, or the 
payment is made on terms inconsistent with the parties' negotiated 
agreement or the workplace custom and practice under the agreement. In 
contrast, where a payment made to an individual working on behalf of 
the union by his current or past employer is sanctioned by a collective 
bargaining agreement or by custom or practice of the workplace pursuant 
to the collective bargaining agreement, the legitimacy or ``bona 
fides'' of the payment, received as a result of a genuine employment 
relationship, is established.
---------------------------------------------------------------------------

    \9\ See Black's Law Dictionary (8th ed. 2004), which defines the 
term as: ``1. Made in good faith; without fraud or deceit. 2. 
sincere; genuine''; The Random House Dictionary of the English 
Language, Unabridged (2d ed. 1987), which defines the term as: ``1. 
made, presented, etc. in good faith; without deception or fraud * * 
*. 2. genuine.--syn. 1. honest, sincere, lawful, legal. 2. 
genuine.--ant. spurious, deceitful, false.'' See also Black's ``bona 
fide operation,'' defined as ``[a] real, ongoing business''; and 
``bona fides,'' defined as ``1. Good faith. 2. Roman law. The 
standard of conduct expected of a reasonable person, esp. in making 
contracts ands similar actions; acting without fraudulent intent or 
malice.'' See 75 FR 48422.
---------------------------------------------------------------------------

    In response to the comments received, the Department notes that 
payments received as bona fide employees may include wages and other 
benefits received as compensation for service as an employee of the 
employer, and other compensation, such as jury duty leave, military 
leave, and maternity and paternity leave. It is not relevant whether or 
not the payments made to employees are for work or other activities 
engaged in under the control or direction of the employer, as employers 
routinely provide payments to employees as bona fide employees in such 
circumstances, which the 2007 rule also recognized. See the definition 
of ``bona fide employee,'' in the 2007 Form LM-30 Instructions, which 
exempts, in part, payments or benefits received for ``leave for jury 
duty.'' Further, the Department does not recognize any difference 
between union leave and no docking payments from other types of leave 
payments that are not for ``productive work,'' assuming that they are 
all bona fide, or good faith, payments.
    The Department disagrees with the commenters' conclusions that 
unless union leave and no docking payments to union representatives are 
reported there will be no disclosure of de facto ``no-show jobs,'' 
``featherbedding,'' or similar abuses of the employment 
relationship.\10\ Contrary to this commenter's view, such payments are 
reportable on the pre-2007 Form LM-30, the 2007 Form LM-30, and the 
revised Form LM-30, as they are payments that are not received as a 
bona fide, i.e., good faith, employee. See IM entry 248.200; see also 
the NPRM at 75 FR 48422.\11\ Nothing in the Department's proposal 
suggested otherwise. Regardless of the label the commenter might 
attach, e.g., de facto ``no-show job,'' what is relevant is whether or 
not the payment was received as a bona fide employee. Further, as 
mentioned, the legitimacy of the payment is established when it is made 
pursuant to the terms of a collective bargaining agreement. Thus, the 
determination of whether or not such payments are made pursuant to a 
collective bargaining agreement, or a custom or practice made pursuant 
to a

[[Page 66452]]

collective bargaining agreement, is not only relevant but statutorily 
necessary. ``Bona fide'' means ``genuine'' or in ``good faith,'' the 
application of which, in a unionized workplace, must be made in part by 
analyzing the collective bargaining agreement.\12\
---------------------------------------------------------------------------

    \10\ The Department disagrees with the assertion that a union 
official remaining on an employer's rolls under a grant of ``super-
seniority'' would have had an obligation, simply upon that status, 
under the Act to report all payments received from an employer. Like 
any union official, an official with this status would have been 
required to report union leave or no docking payments under the 2007 
rule. However, payments made to an official for his regular 
production work have never been reportable under the Act. Payments 
received for production work are not reportable because they are 
received as a bona fide employee of the employer making the payment. 
An employee's super-seniority status does not change this analysis. 
See 72 FR 36127-28.
    \11\ The Department states that, as a general matter, union 
leave and no docking payments are received by union officials as 
bona fide employees, but it will evaluate the factual circumstance 
concerning any type of payment to a union official, on a case-by-
case basis, if there is any question whether or not the bona fide 
nature of the arrangement has been established.
    \12\ See Caterpillar, Inc. v. UAW, 107 F.3d 1052 (3d Cir. 1997) 
(employer's payments of salary and benefits to union grievance 
chairpersons did not violate section 302 of the LMRA). The majority 
stated that the collective bargaining agreement ``does not immunize 
otherwise unlawful subjects but, by defining the basis for the 
payments, speaks directly to the question posed by the statute as to 
whether the payments are ``compensation for, or by reason of * * * 
service as an employee.'' Id. at 1057.
---------------------------------------------------------------------------

    Further, the Department disagrees with a commenter's suggestion 
that no docking and union leave payments are a type of 
``featherbedding'' or ``no show jobs'' and as such are unlawful or at 
least subject to disapproval on public policy grounds.\13\ Indeed, as 
just discussed, ``no-show jobs,'' ``featherbedding,'' and similar 
improper payments are distinct from those payments that an employee of 
the employer receives as a bona fide employee of such employer. 
Moreover, it is longstanding Departmental policy that the bona fide 
employee exemption can only be applied to union officials if they are 
current or former employees of the employer. See IM entry 243.200 
(based on an opinion rendered on August 17, 1962). As stated, the bona 
fide nature of the payments is established by virtue of the collective 
bargaining agreement or by custom and practice under the collective 
bargaining agreement, or by policy, custom, or practice without regard 
to an employee's position within a labor organization. The Department 
emphasizes that it did not propose to exempt any payment from an 
employer to a union official pursuant to a collective bargaining 
agreement, nor did it propose to exempt any payment from an employer to 
a union official simply because the official is also a current or 
former employee of such employer. Rather, the Department proposed and 
here adopts the position that payments and other benefits from an 
employer to a union official are exempt if such payments and other 
benefits are ``received as a bona fide employee of such employer'' 
(emphasis added). See section 202(a)(1).
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    \13\ The commenter may have its own distinctive notion of how 
these terms may be used, but its suggestion that union officials 
receiving compensation or union leave benefits for the work they 
perform on labor-management matters is somehow improper or tainted 
is misplaced. Simply put, the terms ``featherbedding'' and ``no show 
jobs'' cannot be fairly applied to the work undertaken by union 
officials in representing the union and its members in administering 
the contract between the union and the employer. The term 
``featherbedding,'' is usually associated with practices to keep 
workers on a company's payroll, even though the jobs are no longer 
needed because of changes in production methods. See Robert's 
Dictionary of Industrial Relations. As there defined, the term 
refers to ``make work for [a union's] members through the limitation 
of production, the amount of work to be performed, or other make-
work arrangements.'' Id., 251. See also 29 U.S.C. 158(b)(6) (making 
it an unfair labor practice for a union ``to cause or attempt to 
cause an employer to pay or deliver or agree to pay or deliver any 
money or other thing of value, in the nature of an exaction, for 
services which are not performed or not to be performed''). ``No-
show jobs'' is a term more commonly associated with extortion or 
shakedown by criminal elements, rather than as a means of preserving 
a worker's livelihood in the face of technological change or a 
payment with the object of promoting constructive labor-management 
relations. Unlike ``no-show jobs'' where an individual receives pay 
for no work, union officials are performing the work for which they 
are being compensated, work deemed to be in the mutual interest of 
the union and the employer. Clearly, ``featherbedding'' and ``no-
show jobs,'' as these terms are commonly understood, cannot fairly 
be applied to union leave and no docking arrangements in which union 
officials engaged in activities that advance the collective 
interests of a company's workers represented by the union. While 
featherbedding and no-show jobs are reportable on the revised Form 
LM-30, union leave and no docking payments are not.
---------------------------------------------------------------------------

    Additionally, as stated in the NPRM and noted in the 2007 rule, 
union leave and no docking payments were common at the time the LMRDA 
was enacted. 72 FR at 36126. As set out in the NPRM, these payments 
were not an issue of concern in the hearings before the McClellan 
Committee or in any of the legislative materials relating to the LMRDA, 
unlike payments such as for no-show work or featherbedding. 75 FR at 
48422. As noted in the 2007 rule, the legislative history does not shed 
light on whether Congress had a specific intention to require or not 
the reporting of such payments by union officials. See 72 FR at 36126. 
While, as noted in the 2007 rule, legislative silence is not generally 
a conclusive guide to interpreting statutory text, it is notable, as 
explained in the 2010 NPRM, at 75 FR 48422, that Congress did not 
identify union leave or no docking payments as requiring disclosure to 
union members and the public as a matter of course. See 72 FR at 36126. 
Equally significant, such payments were not in any way proscribed by 
the AFL-CIO codes of ethics that strongly influenced the reporting 
provisions of the LMRDA. See 72 FR at 36112-13. See Senate Hearings, at 
123 (statement by Professor Cox that union officials who followed the 
AFL-CIO Ethical Practices would have ``virtually nothing to disclose in 
his report to the public'').
    With regard to the second reason advanced in the NPRM for removing 
union leave and no docking from the Form LM-30 reporting requirements, 
the Department continues to believe, as explained below, that such 
reporting imposes a substantial burden for union officials on matters 
unlikely to pose conflicts of interest, and thus unduly interferes with 
the internal workings of labor unions and labor-management relations. 
In response to those commenters who argued that the Department is 
downplaying the importance of section 202 reporting, the Department has 
acknowledged repeatedly in the various LM-30 rulemakings that section 
202 is intended to capture payments that, although not necessarily 
illegal, are ``atypical financial arrangements'' that should 
nevertheless be disclosed to union members and the public if they 
present a potential conflict of interest. Such disclosure aids union 
democratic self-governance and assists government agencies and the 
public to identify potential corruption. The Department has also 
acknowledged that a ``special benefit'' received by a union official 
from a represented employer should be disclosed if it would likely 
constitute an actual or potential conflict of interest. At the same 
time, however, the Department is mindful that section 202 does not 
require general reporting of union officials' financial information.
    In the Department's view, union leave and no docking payments, like 
other payments received by a bona fide employee, reflect ordinary 
arrangements, mutually agreed upon by the employer, the union, and the 
employees, that do not present such a danger of a conflict of interest 
or corruption. As articulated in the NPRM, the Department does not view 
union leave and no docking payments as presenting the type of danger 
that Congress intended to highlight through reporting. Such payments, 
where established by virtue of the collective bargaining agreement, or 
by custom and practice under the collective bargaining agreement, or by 
policy, custom, or practice without regard to an individual's position 
within a labor organization, do not present the sort of conflicts of 
interest presented by other payments to union officers and employees. 
Rather, they serve the mutual goals of employers and unions. They help 
ensure that individuals with first-hand knowledge of an employer's 
workplace will be able to take a position with the union, a benefit not 
only to the union and employer but also the represented employees. Such 
payments are voluntary; without the assent of both management and 
labor, the payments

[[Page 66453]]

cannot be made. They are not kept secret from employees.\14\
---------------------------------------------------------------------------

    \14\ These payments are usually made under the terms of a 
collective bargaining agreement and tied to the same rate of pay 
that the union official would have received under the agreement for 
time worked at his or her trade. Indeed, the court in Caterpillar 
Inc. v. UAW, stated ``each rank-and-file employee has the 
opportunity to vote'' on the collective bargaining agreement, which 
is ratified by the union membership, and which provides the 
membership a means to hold officials receiving the payments 
accountable. The court asserted that such payments thus differ from 
``bribery, extortion, and other corrupt practices conducted in 
secret.'' See Caterpillar 107 F.3d at 1057. Moreover, under section 
104 of the LMRDA, each bargaining unit member may receive and 
inspect a copy of the collective bargaining agreement.
---------------------------------------------------------------------------

    Moreover, the Department is persuaded that an employer's agreement 
to pay its employees to work for or serve the union does not, in and of 
itself, have an influence on the duties or loyalties of the union 
official, since union leave and no docking payments are on the same 
terms as the payments the bona fide employee would otherwise receive if 
he or she continued work performed for and under the control of the 
employer. Indeed, the members themselves are paid by the same employer. 
Furthermore, when the union official or representative no longer serves 
in such a labor-management capacity he or she could return to regular 
full-time production work for the employer receiving the same payments 
and benefits received while working as a union official or 
representative.\15\
---------------------------------------------------------------------------

    \15\ The Department also notes that a union official or 
representative who receives union leave or no docking payments from 
an employer, as a bona fide employee of the employer, does not, 
thereby, owe any allegiance to such employer in conflict with any 
duty to the union and its members, as the union appoints or elects 
its own representatives.
---------------------------------------------------------------------------

    The Department disagrees with the view of a public policy 
organization that any ``special benefit'' received by a union official 
must be reported, or that any ``special benefit'' nurtures an 
environment in which self interest takes priority over the interests of 
a bargaining unit. Relying on United States v. Phillips, 19 F.3d 1565 
(11th Cir. 1994), the commenter suggested that union leave, no docking 
payments, and ``special benefits'' create not only a hypothetical 
conflict of interest, but reflect ``in fact, how labor unions 
operate.'' As an initial matter, the Department strongly disagrees with 
the notion that financial self-interest on the part of union officials 
animates how unions represent the interests of their members. 
Additionally, the commenter's reliance on Phillips is misplaced.
    The Phillips decision does not concern union leave and no docking 
arrangements. In that case, an employer and union officials were 
convicted, in part, for violating the LMRA by ignoring a collective 
bargaining agreement and granting retroactive leaves of absences, and 
thus pension benefits, to the officials. The Department believes the 
court reached the right result in that case. Further, the opinion in 
that case cannot be read to suggest that the improper conduct there 
involved was at all symptomatic of how union officers conduct their 
activities on behalf of their members, nor does it affect the reporting 
of union leave and no docking arrangements. Moreover, the result in 
that case lends support to the Department's proposal. In Phillips, the 
payments received were by union officials who were no longer employees 
of the employer at the time the benefits were arranged, and the 
retroactive leave was not provided for in the collective bargaining 
agreement. Because the benefits there at issue were not received 
pursuant to union leave or no docking arrangements or otherwise 
received by union officials as bona fide employees of the employer, the 
benefits would have to be reported under both the Department's proposal 
and the 2007 rule. Moreover, the commenter's reliance on Phillips is 
further undercut by that court's recognition, citing BASF Wyandotte 
Corporation v. Local 227, 791 F.2d 1046, 1049 (3d Cir. 1986), that no 
docking payments are not unlawful under the LMRA. See Phillips, 19 F.3d 
at 1575.
    The Department finds instructive the discussion concerning union 
leave and no docking payments in Caterpillar, Inc. v. UAW, 107 F.3d 
1052,1056 (3d Cir. 1997), where the court recognized that such 
payments, while not compensation ``for hours worked in the past, 
certainly were `by reason of' that service.'' The court also noted that 
the union leave and no docking are arrangements in which ``every 
employee implicitly gave up a small amount in current wages and 
benefits in exchange for a promise that, if he or she should someday be 
elected grievance chairperson,'' the employer would continue to pay his 
or her salary. Id. Thus, such payments only benefit those union 
officials who are members of the bargaining unit, and all members of 
the bargaining unit have the potential of receiving such payments if 
they become union officials. Further, all represented employees benefit 
from the work of their fellow employees who represent them.
    In response to the commenter who asserted that union leave and no 
docking payments constitute an improper ``subsidy'' to the union, the 
Department disagrees. These payments are provided by mutual agreement 
of the union and the employer to facilitate labor-management relations. 
The payments are made to current or former employees who have been 
selected by the union to perform this service to the bargaining unit, a 
practice that provides benefits to both labor and management. These 
payments are similar to other benefits provided to employees 
represented by the union such as payment for jury duty, military 
service, and other situations as discussed above.
    In response to the commenter who questioned the impact of union 
leave and no docking reporting on labor-management relations, the 
Department is particularly concerned about the potential consequence of 
requiring reporting of payments received under union leave or no 
docking policies (i.e., union members will be discouraged from running 
for union office and others from serving as stewards). The Department 
believes that its historical position to except union leave and no 
docking payments from reporting is consistent with the purposes of the 
LMRDA and with the Congressional plan that the government avoid 
unnecessary intrusion into internal union affairs. Cf. Wirtz v. Local 
153, Glass Bottle Blowers Assn., 389 U.S. 463, 470-71 (1968). Employers 
have historically agreed to compensate stewards, safety and health 
committee representatives, and others for such work because they see it 
as adding value to their organizations. As explained in the 2010 NPRM, 
a number of states require the establishment of joint labor-management 
safety and health committees. 75 FR 48424. Having employees serve on 
employee assistance programs and wellness committees is also seen as a 
cost-effective business decision by many employers. Id. The Department 
concurs with those commenters who stated that union leave and no 
docking arrangements increase the speed of grievance adjustments, and 
otherwise benefit labor-management relations. The Department does not 
view the section 202 reporting provisions as requiring the reporting of 
such mutually beneficial arrangements between employers and employees.
    Regarding the Department's characterization of the reporting burden 
as ``substantial,'' the union commenters generally agreed with this 
assessment. However, some public policy groups disagreed, with one 
focusing upon the 250-hour threshold.\16\ As discussed

[[Page 66454]]

below, such burden is substantial, even with the 250-hour exemption.
---------------------------------------------------------------------------

    \16\ The Department also disagrees with the comments regarding 
the significance of the 250-hour threshold, as it is not clear why 
the number of hours worked pursuant to a union leave or no docking 
arrangement affects a potential conflict of interest. See 
Caterpillar, Inc. v. UAW at 1056., in which the majority questions 
why Congress would sanction multiple employees receiving less than 
eight hours per day of no-docking payments but would criminalize 
eight hours of union leave payments per day for a single employee.
---------------------------------------------------------------------------

    As noted above, one commenter criticized the Department's 
description of the burden associated with the 2007 rule, noting that 
the proposed rule reflected only a five-minute recordkeeping savings. 
This commenter overlooked that the significant number of union 
officials who would be excluded from filing under the proposed and 
final rules will be saved the 120-minute burden imposed by the 2007 
rule and, for those who do file, the reporting burden has been reduced 
by 25 minutes. Further, the burden estimate for the 2007 rule only 
tracks the number of and burden upon respondents (i.e., filers) to the 
2007 rule. As such, the 2007 rule did not include the number of and 
burden on union officials, stewards, and other union representatives 
who, although not reaching the 250-hour union leave threshold, would 
need to keep track of such hours to determine whether or not filing 
would be required for their union leave or no docking payments. See 75 
FR 48424, n. 9. Moreover, the burden on respondents and non-respondents 
is heightened because such payments are not likely to generate a 
conflict of interest and may discourage individuals from serving as 
representatives for their fellow workers.
    Additionally, as articulated by some of the commenters, it may 
prove difficult for union officials and representatives to obtain 
information concerning benefit compensation from their employers in 
order to comply with the union leave and no docking reporting required 
under the 2007 rule. These practical problems faced by union officials, 
stewards, and other representatives in maintaining records necessary to 
meet the reporting burden placed on them were not fully considered in 
the 2007 rule. Unless the employer has a payroll reporting system that 
allows the union stewards to clock in and out every time they have to 
perform union work, the stewards would have to keep their own records. 
A member's work on behalf of the union is not always performed during a 
series of discrete intervals where it is easy to determine when union 
work begins and ends. Sometimes, such representatives will briefly 
engage in union work when a co-worker comes and speaks to the on-duty 
steward. Sometimes the conversation occurs when the representative is 
on the way to the break room or at lunch. Sometimes union work occurs 
during a work-related conversation with a supervisor or manager and a 
grievance question comes up. Thus, the amount of time required to 
perform steward and similar functions may vary significantly from day 
to day and week to week and is therefore not easy to predict. For 
example, in the building and construction trades, with its very mobile 
workforce and short-term employment on construction projects, stewards 
will change from job to job, not just from week to week.
    As the Department explained in the NPRM, there is no persuasive 
policy reason why union officials must report such union leave and no 
docking payments, and thus bear the burden of such reporting, while 
employers making such payments are under no similar obligation or 
burden. As stated in the NPRM, the Department has reexamined the policy 
underlying the current requirement and has concluded that the 
inconsistent application is unreasonable regarding the imposition of 
these reporting requirements on union officials but not employers. 75 
FR 48423. The Department disagrees with the commenters' statement that, 
in making this determination, the Department was ignoring the structure 
and language of the statute. To the contrary, the Department's view is 
entirely consistent with the statute. The specific reference in section 
203 excepting from reporting ``payments of the kind referred to in 
section 302(c) of the [LMRA]'' does not require that section 202 be 
read to mandate such reporting where such payments are received by an 
employee.\17\ Indeed, there would appear to be no reason why such 
payments, regularly made by some employers in the ordinary course of 
conducting labor relations, would require union officials, as the 
recipients of such payments, to report their receipt but not require 
employers making the payments to report them. The commenters have 
provided no persuasive argument to counter this observation. 
Additionally, the instructions, as drafted, mitigate any concern that 
such payments are concealed from union members. Under the rule, union 
leave and no docking payments must be reported unless they are made 
pursuant to a collective bargaining agreement, or by custom and 
practice under a collective bargaining agreement, or by policy, custom, 
or practice without regard to an individual's position within the 
union.
---------------------------------------------------------------------------

    \17\ See LMRDA Interpretative Manual, at section 241.600. This 
section states that the reporting exceptions in section 203 do not 
affect the reporting by union officers and employees in section 202, 
``where the applicable provision of section 202 does not provide a 
pertinent exception.'' (emphasis added). Section 202, however, 
contains a pertinent exception: the bona fide employee exception.
---------------------------------------------------------------------------

    Finally, the Department notes that a commenter suggested that the 
proposed change would create other potential consequences affecting 
election law, labor-management matters unrelated to the LMRDA, 
persuader activity reports under section 203 of the Act, and other 
matters involving public policy. The commenter did not fully explain 
its concerns, but it appears that some of these issues involve statutes 
over which the Department has no authority and that none of these 
concerns are material to the changes proposed by this rulemaking. While 
the discussion of other LMRDA provisions is obviously necessary to 
address some issues, this rule only addresses the scope of reporting 
required by union officers and employees pursuant to LMRDA section 202. 
As discussed below, other commenters have asked the Department to use 
this rulemaking to resolve issues that may arise under the Act's other 
reporting provisions. While these comments are helpful to the 
Department in identifying concerns among the various regulated 
communities and informing the Department about how it might best direct 
its compliance resources, the Department cannot resolve those concerns 
in this rule.

B. Coverage of Stewards and Similar Union Representatives Under Section 
202

    The Department is effectuating its proposal to return to its 
longstanding policy that union stewards and similar volunteer union 
representatives are not as a general rule covered by the Form LM-30 
reporting requirements. A union steward is responsible for informing 
employees of their rights under the collective bargaining agreement and 
applicable law, investigating grievances filed by union members, 
representing union members in presenting those grievances to 
management, and otherwise enforcing the collective bargaining 
agreement. See generally Herman Erickson, The Steward's Role in the 
Union 29-54 (1971).
    As proposed in the NPRM, 75 FR 48423-25, and as articulated below, 
the Department rescinds the definition of ``labor organization 
employee'' in the 2007 Form LM-30 that extends Form LM-30 coverage to 
such union representatives and inserts the following language in the 
revised Form LM-30

[[Page 66455]]

Instructions in Section II, Who Must File.\18\
---------------------------------------------------------------------------

    \18\ The definition of ``labor organization employee'' in the 
NPRM included the word ``exclusively'' prior to ``as a union steward 
* * *''

    For purposes of the Form LM-30, an individual who serves the 
union as a union steward or as a similar union representative, such 
as a member of a safety committee or a bargaining committee, is not 
considered to be an employee of the union by virtue of service in 
---------------------------------------------------------------------------
such capacity.

    In the final rule, the Department added the last phrase, in 
italics, for clarity. As explained in the NPRM, individuals serving as 
stewards or in other volunteer positions would be subject to the same 
reporting obligations as other officers and employees, if they are 
officers pursuant to their union's constitution or bylaws--an atypical 
situation--or otherwise qualify as a union employee. The italicized 
words better convey this point than the language proposed in the NPRM, 
which had used the adverb ``exclusively'' to qualify the statement.
    In extending the union officer and employee reporting obligation to 
union stewards in the 2007 rule, the Department determined that a union 
steward receiving no docking or union leave payments would be 
considered to be a labor organization employee within the meaning of 
the Form LM-30. As stated in the preamble to that rule: ``An individual 
who is paid by an employer to perform union work is an employee of the 
union if he or she is under the control of the union, while so 
engaged.'' 72 FR at 36109. Stewards were deemed to be ``labor 
organization employees'' by virtue of their receiving union leave or no 
docking payments from an employer.
    As stated in the 2010 NPRM and upon further review, the Department 
believes that the 2007 rulemaking did not satisfactorily address or 
adequately support the expansion of the Form LM-30 reporting 
requirements to include stewards. Rather, the rule focused on the 
``bona fide employee'' exception of section 202, which, as mentioned, 
was revised to require the reporting of no docking and union leave 
payments. (See the discussion above concerning this change to the 
``bona fide employee exception.'') The rule also provided, almost in 
passing, that stewards as well as union officers and employees needed 
to report such payments, based upon whether or not the official 
qualified as a bona fide employee of the payer-employer during the time 
for which payment was made. 72 FR 36124. (emphasis added).
    Upon review and reconsideration, the Department took the position 
in the 2010 NPRM that the Form LM-30 reporting requirements should not 
be expanded to include stewards. As there noted, requiring ``stewards'' 
to file Form LM-30 reports as ``employees,'' solely on the basis of 
having received union leave, ``no docking,'' or ``lost time'' payments, 
raises policy, interpretative, and practical concerns.
    First, from a policy perspective, imposing obligations on union 
stewards and other volunteers (e.g., those who serve on health and 
safety, productivity improvement, and bargaining committees) intrudes 
in internal union affairs. Union stewards and other representatives 
perform valuable tasks and extending reporting requirements to them 
would significantly hamper union efforts to recruit and retain stewards 
and other representatives.
    Second, an examination of the text of the relevant provisions of 
Title II of the LMRDA suggests that Congress did not intend that 
stewards be considered to be union employees. While section 202 
requires reporting from ``every officer of a labor organization and 
every employee of a labor organization (other than an employee 
performing exclusively clerical or custodial services),'' it does not 
require reporting from stewards. In contrast, however, Congress 
expressly required employer payments to stewards to be reportable, 
pursuant to section 203, subject to certain exceptions. The Department 
explained in the 2010 NPRM that the absence of similar language in 
section 202 is a strong indication of Congressional intent to exclude 
agents, stewards, and similar representatives from the prescribed 
reporting requirements. Additional support for this position can be 
gleaned from the LMRDA's legislative history, as explained in the NPRM. 
Congress, revealingly, did not include the term ``stewards'' in 
describing the regulated class established by section 202, despite 
inserting the term in other LMRDA sections, thus indicating that those 
members who serve as ``shop stewards'' are of a different category than 
``labor organization employees.'' When Congress wanted financial 
payments made to stewards to be reported, it knew how to do so.
1. Review of Comments Received
    The Department received 16 comments that specifically addressed 
this particular issue. Of these 16 comments, 13 supported the return to 
the historical interpretation that such individuals are not considered 
union employees for reporting purposes under section 202, 12 unions, 
and one law firm. Three comments opposed the change, including a public 
policy group, a legal defense foundation, as well as 225 individuals 
who sent in a form letter.
a. Comments in Support of NPRM
    There were 13 comments in support of the proposal to rescind 
required reporting by union stewards. A federation of labor unions 
stated that the 2007 rule significantly increased the universe of 
potential filers, noting especially the addition of stewards and other 
``on-the-job union representatives,'' as employees of the union. In the 
commenter's view, this imposed Form LM-30 requirements on ``tens of 
thousands of union members who voluntarily'' perform representation 
functions for fellow workers during the regular workday.
    An international union supported the Department's view that steward 
reporting is not required based on legislative intent. The commenter 
stressed the NPRM's analysis of the structure of the LMRDA, which 
recognized that ``stewards'' are not included in section 202, as well 
as the legislative history and intent, such as a prior draft of section 
202 that specified their inclusion. The commenter characterized the 
removal of stewards reporting to be ``reasonable'' and consistent with 
the intent of the Act, and agreed that the inclusion of stewards would 
hinder members' willingness to volunteer to serve their fellow workers 
and would be a loss to labor-management relations.
    A national union stated that subjecting stewards to the reporting 
requirements would discourage employees from volunteering to serve in 
that capacity. Another national union also maintained that the 2007 
rule greatly expanded the Form LM-30 reporting requirements, and stated 
that stewards are members who volunteer to ``play a key role'' in 
ensuring smooth workplace operations. Thus, they should be 
``encouraged'' to serve the union and not ``punished with onerous 
reporting.''
    An international union emphasized that requiring stewards to file 
the Form LM-30 would discourage members from serving in this important 
position. Further, according to the commenter, stewards benefit 
management as well as the employees and the union, and removing them 
from potential reporting obligations furthers labor-management 
relations. The commenter expressed its view that the Department should 
not discourage this involvement. Another international union stressed 
that this change in steward coverage ``will end considerable 
confusion'' over the

[[Page 66456]]

reporting requirements, which, combined with the burden associated with 
the form, has, in the commenter's experience, ``deterred aspirants'' 
for steward and similar volunteer positions crucial for unions and the 
workplace.
    A national union described stewards and similar positions as 
``voluntary, unpaid positions'' that are filled by members who are not 
officers or employees of the union. Stewards generally handle 
grievances during breaks or before or after their regular working 
hours, while they also often receive union leave or no docking payments 
for union work during the employer's time. Regardless, the commenter 
contended that imposing coverage on such individuals would ``seriously 
undermine cooperative labor-management relations and productivity.'' 
Not only would individuals be discouraged from volunteering to serve, 
but those that do may be deterred from doing so during work hours, 
delaying grievance adjustments.
    Some union commenters acknowledged that individuals who are union 
stewards may be required to report ``in the unusual circumstances'' 
when the steward is a constitutional officer position, is a paid 
position in the union, or is an employee of the union under 
circumstances distinct from his or her status as steward.
    Further, a law firm also agreed with the Department's view as 
stated in the NPRM that, if Congress had intended that stewards would 
be subject to the reporting requirements of section 202, it would have 
indicated that intention in fashioning the terms of section 202 as it 
did under section 203. In contrast to section 202, employers are 
required by the express terms of section 203 to report payments made to 
stewards.
b. Comments in Opposition to NPRM
    In response to the NPRM, OLMS received a form letter signed by 225 
individuals in opposition to the Department's proposal. The letter 
stated that stewards are an ``essential part of union representation,'' 
elected by coworkers, to ``responsible positions,'' and have the status 
of a ``union official.'' The letter also noted that because most 
stewards receive no compensation for performing their duties, they may 
be more sensitive to other forms of reward, suggesting to these 
individuals the need for conflict-of-interest reporting by stewards.
    A few public policy groups also opposed the Department's proposal 
to rescind the general reporting requirement for stewards. One public 
policy organization agreed with the Department insofar as union leave 
and no-docking payments are concerned, but it argued that the NPRM went 
too far in exempting stewards and similar representatives from all 
reporting. This commenter stated that these union representatives 
should report all income received directly or indirectly from employers 
that is not related to their representation role, such as payments 
received for mowing the lawn of a management representative or painting 
the representative's house.
    Finally, a public policy group claimed, without elaborating, that 
most stewards perform functions of union officers and therefore are 
``officers'' within the meaning of the LMRDA required to report 
pursuant to LMRDA section 202.\19\ Moreover, the commenter contended 
that the Department has no authority to exempt from coverage of the Act 
as many as 80,000 individuals who, in its view, are covered by the 
reporting provisions of section 202; this commenter also concurred with 
the view that stewards are union employees.
---------------------------------------------------------------------------

    \19\ The commenter further argued that if the Department 
classifies stewards as ``essentially employees of an employer,'' 
then agency fee payers would have no union fees to pay. The 
commenter offers no further explanation for its conclusion, which is 
not self-evident. However, as the Department has noted in a previous 
rule, the Department does not regulate payments by agency fee payers 
or reports prepared by unions showing how they compute costs that 
are allocated to agency fee payers. See 68 FR 58395.
---------------------------------------------------------------------------

2. Response to Comments
    The Department concurs with the comments affirming the central and 
important role that stewards and similar union representatives play in 
the labor-management context. As stated by many of the commenters, 
stewards and similar union representatives differ from union officers 
and employees in that they are union members who volunteer portions of 
their time to union representation without additional compensation. 
Additionally, unlike officers, stewards are often appointed; in many 
construction unions, they are appointed (or removed) by the Business 
Manager of the local union. Stewards, safety and health, and bargaining 
committee members are typically created and empowered by the collective 
bargaining agreement, not by the union's constitution and by-laws. 
Additionally, the Department concurs with the numerous commenters who 
confirmed the Department's position in the NPRM that imposing 
obligations on union stewards and other volunteers may also 
significantly intrude in internal union affairs and labor-management 
relations.
    The Department also concurs with the unions that stated that the 
2007 rule increased burden on stewards, in part, through the confusion 
surrounding their coverage, thus also significantly intruding in 
internal union affairs and labor-management relations. Although the 
2007 rule denied such a chilling effect would be created, the 
Department has reconsidered this position. The Department has concluded 
that the impact on those who would have to file, coupled with the 
confusion and uncertainty created by extending all of the Form LM-30 
reporting obligations to stewards and similar union representatives--
even for those that actually had no payments or interests to report--
invariably would dissuade some individuals from continuing in, or later 
volunteering for, those positions. Moreover, independent of the 
reporting required by the 2007 rule, union stewards and other 
representatives perform valuable tasks and extending onerous reporting 
requirements to them would ``chill'' future offers to serve. Imposing 
reporting burdens on such individuals clearly will temper the 
willingness of individuals to volunteer to serve in such positions--a 
loss to the union, the employer, and these individuals' fellow 
employees, as well as to the effective conduct of labor-management 
relations.
    Section 202 does not refer to stewards as union officers or 
employees. Because other sections of the LMRDA expressly apply to 
stewards, the Department views their omission from section 202 as an 
intention to exclude them from its application. As noted in the NPRM, 
75 FR 48424, employers must report payments to stewards pursuant to 
section 203; and stewards are explicitly covered by the fiduciary 
responsibilities provision of section 501 and the bonding provisions of 
section 502. The Department acknowledges the central role that stewards 
play and responsibilities that they exhibit within labor organizations, 
as demonstrated by the provisions of the LMRDA that apply to them. 
However, as stated, the statutory structure indicates that Congress 
deliberately did not apply the section 202 requirements to stewards, 
presumably because it did not want to unduly interfere with legitimate 
labor-management relations.
    Furthermore, the statute provides for disclosure of payments to 
stewards without imposing reporting obligations on the stewards 
themselves. Section 203 of the statute requires employers to disclose 
any payment, subject to certain exemptions, to any ``officer, agent, 
shop steward, or other representative of a labor organization.'' Thus, 
the concerns

[[Page 66457]]

of the commenter that was troubled by the prospect that payments to 
stewards other than those for no docking or union leave would be 
undisclosed are unwarranted.
    The Department disagrees with the comment that most union stewards 
necessarily must be considered union officers and, as such, required to 
file reports pursuant to section 202. The Act defines union officers as 
``any constitutional officer * * * and any member of [the union's 
executive board or similar governing body.'' LMRDA, section 3(n). As 
noted earlier, a steward generally is responsible for informing 
employees of their rights under a collective bargaining agreement, 
investigating and presenting grievances, and otherwise enforcing the 
collective bargaining agreement. These are not executive 
responsibilities normally associated with union officer positions, as 
described in union constitutions and bylaws; rather, they draw their 
essence from the collective bargaining agreement. In unusual 
situations, the position of steward is a constitutional office in the 
union (or is authorized to perform the functions of an officer). In 
other instances, an individual, although serving as a steward, is an 
employee of the union under circumstances distinct from his or her 
status as steward. In those circumstances, such individuals, both 
historically and under this rule, are subject to the reporting 
requirements of the Form LM-30, as union officers or union employees. 
The Department notes that several union commenters concurred with this 
position as well.
    Finally, the Department disagrees with the suggestion that the 
Secretary's proposal is inconsistent with the Act and that the 
Department, in effect, lacks discretion to disregard what the commenter 
views as the clear command that stewards are employees of the union 
when they act on the union's behalf. Until the 2007 rule, stewards had 
not been required to file reports under section 202, and the 2007 rule 
was based on an interpretation of the ambiguous statutory term ``labor 
organization employee.'' 72 FR 36144. The rule did not claim that 
coverage of stewards was required by the terms of the statute, and 
indeed it did not place coverage of stewards in the category of revoked 
``administrative exceptions.'' 72 FR 36156.
    The structure of section 202, itself, demonstrates that Congress 
did not intend that stewards be considered to be union employees by 
virtue of service in such capacity. Again, the position of `steward' is 
not enumerated in section 202 as it is in other provisions of the 
statute. No commenter challenged this view of the statutory language, 
and several comments supported it. Rather, under section 202, only 
union employees and officers are required to submit reports. In sum, 
for the reasons stated in the NPRM and earlier in this preamble, 
stewards and other volunteers, as a general rule, are neither officers 
nor employees of a union. The commenters offer no persuasive argument 
that the Department has departed from the Act's reporting mandates.

C. Reporting of Loans and Other Transactions With Credit Institutions

    This rule effectuates the Department's proposal to amend the Form 
LM-30 to exempt from reporting marketplace transactions with bona fide 
credit institutions, including loans, interest, dividends, and payments 
and credit extended through credit card transactions, provided that 
they are arm's length transactions in accordance with usual business 
practice. In so doing, the Department establishes the appropriate 
balance between privacy and disclosure intended under the LMRDA--to 
disclose only a union official's actual or potential conflicts of 
interests, while keeping private bona fide investments ``because they 
are not matters of public concern.'' Senate Report, at 15, reprinted in 
1 Leg. History, at 411. See 75 FR 48425.
    The 2007 rule established the general requirement that union 
officials report the details of any loan received from any business 
that deals with the official's union, the union's trust, or represented 
employer (in substantial part). 72 FR at 36133-38. This aspect of the 
rule engendered strong protests from union officials and some segments 
of the financial services industry as intrusive and unduly complex. 
Thus, shortly after the rule's publication, the Department issued 
guidance to reduce the complexity in the rule and the confusion about 
its requirements. The Department issued this guidance through a series 
of Form LM-30 Frequently Asked Questions (FAQs), posted on the 
Department's Web site,\20\ which identified several kinds of payments 
from credit institutions that did not require reporting so long as they 
were arm's length transactions in accordance with usual business 
practice. These payments included interest and dividends involving 
savings and checking accounts and certificates of deposit and credit 
card arrangements.
---------------------------------------------------------------------------

    \20\ http://www.dol.gov/olms/regs/compliance/RevisedLM30_FAQ.htm. FAQs 70-73 deal with issues surrounding payments from 
credit institutions. FAQ 70 stated, in part, that union officials do 
not need to report ``credit card transactions (including unpaid 
balances) and interest and dividends paid on savings accounts, 
checking accounts or certificates of deposit if the payments and 
transactions are based upon the credit institution's own criteria 
and are made on terms unrelated to the official's status in the 
labor organization.'' FAQs 71 and 72 outlined the obligations of 
union officials regarding home loans, which clarified that such 
loans must be reported if received from a trust in which the 
official's union is interested, a business that deals with the 
official's union or a trust in which the union has an interest, or a 
business a substantial part of which deals with an employer the 
official's union represents or is actively seeking to represent. 
Finally, FAQ 73 affirmed that the de minimis exemption applies to 
transactions, interests, and dividends from a financial institution, 
even if it had dealings with the official's union.
---------------------------------------------------------------------------

    In the 2010 NPRM, the Department explained that the 2007 rule 
reflected a policy choice in favor of the disclosure of information, 
even without a showing of a likely conflict of interest, and even with 
the risks concerning burden upon and intrusion into the private affairs 
of union officials. 75 FR 48425. In the 2010 NPRM, the Department 
further explained that it may not have given sufficient weight in 
fashioning the 2007 rule to Congress's concern that the LMRDA should 
not unnecessarily regulate unions and their officials, and that the 
burden of reporting such routine transactions would outweigh the value 
of any additional information disclosed. Id.
    The Department explained that loans and other transactions made on 
market terms are usual, regular transactions, unrelated to the 
officials' status in the union, and are therefore unlikely to pose a 
conflict of interest with the officials' duties to the union. 75 FR 
48426. In contrast to these loans and transactions, a loan, gift, or 
other benefit obtained from a transaction other than at arm's length 
provides the union official with a net monetary gain, and consequently 
a potential motive to deal with a business in a way contrary to the 
interests of the union. Thus, the Department concluded that the better 
policy is to require the reporting of loans and other bona fide 
financial transactions from a credit institution only where the 
transaction is on other than market terms. Id.
    Furthermore, as discussed in the NPRM, the proposed bona fide 
financial transaction reporting exemption under sections 202(a)(3) and 
(4) would prevent the submission of superfluous reports that would 
overwhelm the public with unnecessary information, thus impeding the 
discovery of true conflict-of-interest payments. 75 FR 48425. The 
proposal also would prevent unnecessary burdens on union officers and 
employees and avoid interference with the privacy of such officials. 
Id.

[[Page 66458]]

    Additionally, the Department there explained, at 75 FR 48426, that 
in the 2007 rule the Department excepted from reporting under section 
202(a)(6) such bona fide financial transactions with a credit 
institution because of the burden associated with reporting what ``are 
among the most common financial transactions undertaken by 
individuals.'' 72 FR 36118. The NPRM stated the Department's belief 
that this reasoning also must apply to the reporting of marketplace 
loan transactions under sections 202(a)(3) and (4). 75 FR 48426.
    The NPRM explained that the proposed revision was limited to bona 
fide loans from legitimate credit institutions. 75 FR 48426. The 
Department has not changed other longstanding interpretations of 
section 202 that require union officers and employees to report other 
payments from vendors, service providers, credit institutions, and 
other businesses that deal in substantial part with the represented 
employer or in any part with either the official's union or any trust 
in which the official's union is interested or loans received from 
employers or businesses that are not credit institutions.\21\ Id. As 
explained below, the Department has determined to adopt, without 
change, the position set forth in the NPRM regarding bona fide 
financial transactions with credit institutions on Part B of the 
revised Form LM-30:
---------------------------------------------------------------------------

    \21\ As stated in the 2010 NPRM:
    The proposed modification does not relax the obligation to 
report on loans or other financial transactions (including credit 
card arrangements and interest-bearing accounts) where a union 
official receives terms more favorable than the market allows, where 
for example a union official receives a loan because of the 
official's status despite a credit history that would normally 
prevent an individual from receiving credit, or payments on the loan 
are extended or forgiven because of preferential treatment as a 
union official.
    75 FR 48426, n. 11.
---------------------------------------------------------------------------

    Bona fide loans. Do not report bona fide loans, including 
mortgages, received from national or state banks, credit unions, 
savings or loan associations, insurance companies, or other bona fide 
credit institutions, if the loans are based upon the credit 
institution's own criteria and made on terms unrelated to the 
official's status in the labor organization. Additionally, do not 
report other marketplace transactions with such bona fide credit 
institutions, such as credit card transactions (including unpaid 
balances) and interest and dividends paid on savings accounts, checking 
accounts or certificates of deposit if the payments and transactions 
are based upon the credit institution's own criteria and are made on 
terms unrelated to the official's status in the labor organization.
1. Review of Comments Submitted Concerning the Proposed Changes to the 
Reporting of Loans Under LMRDA Sections 202(a)(3) and (4)
    The Department received 14 comments about the proposed exemption 
regarding the reporting of loans. Of these 14 comments, two were from 
public policy organizations, 11 were from national/international 
unions, and one comment was from a federation of international labor 
unions.
a. Comments in Support of the Proposed Exemption Regarding Reporting of 
Loans
    Comments submitted by all eleven national/international unions and 
the federation of international labor unions supported the Department's 
proposal to exempt the reporting of bona fide market rate loans from 
credit institutions. There comments expressed many common themes, 
including union officials' right to privacy in personal, routine 
financial matters unrelated to their union role, the undue burden 
associated with reporting bona fide arm's length transactions, and the 
absence of any link between these transactions and conflict-of-interest 
concerns.
    Three commenters agreed that the Department's proposal achieves a 
correct balance between the privacy of union officers and employees and 
the Act's goal of disclosing actual or potential conflicts of interest. 
Another commenter stated that the requirements established by the 2007 
rule (apparently as distinct from the interpretation in the FAQs) 
``intru[des] into [union officials'] private affairs, and would produce 
information which is irrelevant to their union duties and the purposes 
of the LMRDA.'' As expressed by another commenter, the 2007 rule's 
``broad requirement does not comport with the Act's intent to require 
only the disclosure of transactions in which there is actual or 
potential conflict of interest with an official's duties to his/her 
union and delves into personal matters that are of absolutely no public 
concern.''
    Another commenter noted a parallel between the Department's 
proposal and the approach used in other ``ethics regimes,'' such as the 
financial disclosure rules established by each body of Congress. It 
explained that Congress does not require its members to report on loans 
that are made on terms generally available to the public, and that it 
made sense to treat similarly loans made to union officials on such 
terms.
b. Comments Opposing the Proposed Section 202(a)(3) and (4) Exemption 
Regarding Reporting of Loans From Bona Fide Credit Institutions
    The two public policy organizations disagreed with the Department's 
proposal, arguing that such loans should be disclosed by union 
officials on the Form LM-30. One of these organizations stated that 
``the fear that seemingly private mortgage information will somehow 
become public due to the reporting requirements of the Form LM-30 is 
misplaced,'' in that mortgages are public documents that can be 
obtained from a state recorder's office or, in some cases, accessed 
online. The same commenter addressed the Department's statement in its 
proposal, 75 FR 48425, that its revised interpretation ``would prevent 
the submission of superfluous reports that would overwhelm the public 
with unnecessary information,'' expressing its view that this concern 
is misplaced due to the technological developments of the 21st century. 
It characterized the Department's view as meaning that ``more 
information actually means less useful information.'' The commenter 
added that OLMS computer systems could easily handle all Form LM-30 
reports, and allow cross-checking other forms, and stated that the 
public can view Form LM-30 data on http://www.unionreports.gov to 
``find whatever information they seek.''
    Another public policy organization commented that the Department's 
proposed administrative exemption for bona fide loans with terms no 
more favorable than those available to the public ``misses the point of 
disclosure and the need for it.'' The commenter added that, while the 
loan terms may not be more favorable than those available to the 
public, there is no ``guarantee that the loan was given to a qualified 
individual union official (e.g., the union official may have a very low 
credit score or income insufficient to make the payments).'' The 
commenter also stated that ``union officers have been known to have 
their loans completely forgiven or paid off by another source,'' and 
added, ``* * * if there is no disclosure of the loan, then no one will 
know that a loan should perhaps not have been given or even that a 
possibly questionable loan exists.'' Additionally, this commenter 
referenced a media report concerning a public official's ``special 
loan'' arrangements with a particular mortgage company, asserting that 
just as voters benefit from such disclosure, union

[[Page 66459]]

members would benefit from the disclosure of such loans.
c. Other Comments
    Although the Department did not propose to eliminate the 
requirement that a union official must report loans from a represented 
employer that is a credit institution, such as a bank whose employees 
are represented by the official's union, some commenters submitted 
comments requesting the elimination of this requirement. Such a request 
is beyond the scope of this rule, but the Department, for completeness, 
discusses these comments below.
    A federation of international labor unions urged the Department to 
create a reporting exemption, under section 202(a)(5) of the LMRDA, for 
bona fide loans and other bona fide financial transactions between a 
union official and a credit institution employer whose employees the 
official's union represents or is actively seeking to represent. An 
international union concurred with this request. These unions argued 
that by not applying the same arm's length exemption, as proposed 
generally in the 2010 NPRM,\22\ to transactions involving credit 
institutions whose employees are represented by an official's union, 
the Department would be ignoring the regular course of business 
exemption in section 202(a)(5), which they assert relieves any 
reporting on any ``regular course of business'' transactions.\23\
---------------------------------------------------------------------------

    \22\ Union officials must report, pursuant to section 202(a)(5), 
``any direct or indirect business transaction or arrangement between 
him or his spouse or minor child and any employer whose employees 
his organization represents or is actively seeking to represent, 
except work performed and payments and benefits received as a bona 
fide employee of such employer and except purchases and sales of 
goods or services in the regular course of business at prices 
generally available to any employee of such employer.''
    \23\ The commenter notes correctly that the Department did not 
address its section 202(a)(5) argument in the 2010 NPRM. The 
Department there noted that any loans from an employer represented 
by the official's union (or whose employees it actively seeks to 
represent) must be reported pursuant to section 202(a)(2) of the 
LMRDA--including bona fide loans from a credit institution employer. 
See 75 FR 48426., n. 11.
---------------------------------------------------------------------------

    The commenter asserted that the section 202(a)(5) marketplace 
transactions exemption should be applied to bona fide financial 
transactions with credit institutions. The commenter argued that the 
Department should give effect to what it sees as the same statutory 
interests involving routine transactions that would otherwise be 
reportable under other provisions of section 202. The commenter relied, 
in part, on its general reading of the Act's legislative history, which 
it reads to express an intention by Congress to not discourage any 
arm's length business transactions, which are not ``questionable in 
nature,'' illegal, or pose actual or potential conflicts of interests. 
This, according to the commenter, would also impose a significant 
burden on union officials whose unions represent or seek to represent 
employees of credit institutions. The commenter also stated that bona 
fide loans and other bona fide financial transactions between a credit 
institution employer and a union official are not reportable by the 
credit institution employer under section 203, citing the LMRA section 
302(c)(3) exemption, 29 U.S.C. 186(c)(3). The commenter argues that, 
since credit institution employers are not required to report such 
loans and transactions on the Form LM-10 (Employer Report), then union 
officials should not be required to report such loans and transactions 
on Form LM-30.
1. Response to Comments
    Upon consideration of the comments received on this issue, the 
Department has determined to revise the reporting obligation for union 
officials by adopting an exemption to the reporting of bona fide loans 
and other financial transactions made on market terms with credit 
institutions. In the Department's view, loans made on market terms are 
of little or no interest to union members, yet they disclose to members 
and the general public matters about which union officials, no less 
than other individuals, have a legitimate expectation of privacy.\24\ 
But for the Department's guidance and the position adopted in today's 
rule, a union official would have to report each mortgage or other bank 
loan received from any credit institution that deals with his union, a 
section 3(l) trust, or, in substantial part, with the represented 
employer. In the Department's view, the burden associated with such 
requirement would far outweigh the value of any information disclosed. 
In the 2007 rule, the Department excepted from reporting under section 
202(a)(6) arm's length loans, interest, and dividends earned during the 
regular course of business with a credit institution, because of the 
burden associated with reporting what ``are among the most common 
financial transactions undertaken by individuals.'' 72 FR 36118. The 
Department believes that this reasoning also must apply to the 
reporting of marketplace loan transactions under sections 202(a)(3) and 
(4).
---------------------------------------------------------------------------

    \24\ As discussed in the text, the proposed modification does 
not relax the obligation to report on loans or other financial 
transactions (including credit card arrangements and interest-
bearing accounts) where a union official receives terms more 
favorable than the market allows, where for example a union official 
receives a loan because of the official's status despite a credit 
history that would normally prevent an individual from receiving 
credit, or payments on the loan are extended or forgiven because of 
preferential treatment as a union official. Moreover, loans received 
from employers or businesses that are not financial institutions 
will have to be reported as will any loans on other than market 
terms from employers or businesses that have a relationship with the 
official's union.
---------------------------------------------------------------------------

    The Department notes that union commenters agreed with the approach 
proposed in the 2010 NPRM, as well as the supporting rationale the 
Department offered. These commenters agreed that any benefit associated 
with disclosing arm's length transactions was heavily outweighed by the 
burden, loss of privacy, and limited utility that such disclosure would 
entail.
    Only two policy organizations submitted comments in opposition to 
the proposal. One asserted that the Department had overstated the 
impact that the rule would have on an official's privacy. In this 
regard, it asserted that some of the same personal financial data that 
would be reported under the terms of the 2007 rule, such as mortgage 
information, may already be accessible to the public. However, the 
Department notes in response to this comment that such information is 
not made public in a reporting regime intended to disclose actual or 
potential conflicts of interest, as would be the case with the Form LM-
30. That some mortgage information may be available publicly by people 
with easy access to that data does not excuse the intrusion that 
results from making public what most people still consider to be 
private financial information. Requiring a union official to collect 
and, in effect, publish all such information in the Form LM-30 
certainly magnifies the intrusion. Further, that certain financial 
information can already be accessed by the public does not justify 
requiring that such information be reported on Form LM-30. Moreover, as 
discussed, the reporting of routine bona fide loans and similar 
transactions does not advance the disclosure purposes served by section 
202 and therefore the burden associated with such reporting is not 
warranted.
    One commenter stated that the Department was mistaken in its view 
that requiring bona fide loan-type information to be reported on the 
Form LM-30 could impede the utility of the form to union members and 
the public. The commenter pointed out that the Department's Form LM-30 
Web site employs technology allowing data to be effectively managed and 
searched. The Department does not disagree with this

[[Page 66460]]

characterization of the efficiency of the OLMS Web site, but this 
observation is not relevant to the issue presented in the NPRM, as the 
Form LM-30 does not require general financial disclosure. Rather, its 
purpose is to highlight actual or potential conflicts of interest 
involving union officials. Thus, collecting large amounts of 
information with little or no utility can obscure other information 
concerning possible or actual conflicts of interest, as each report 
submitted must be searched separately in order to find information 
relevant to actual or potential conflicts of interest. Intermixing 
meaningful reports with thousands of innocuous reports impedes easy 
review of the reports that disclose actual or potential conflicts. 
Eliminating superfluous information removes an unnecessary burden on 
union officials and promotes the objective of section 202 to disclose 
actual and potential conflicts of interests.
    The commenters expressed understandable concern that any loans or 
other transactions with terms preferential to union officials be 
reported. The Department's proposal, however, ensures that any such 
loans will be disclosed. Only loans and other transactions that reflect 
market rates are excepted from reporting. These transactions do not 
carry with them any indicia of a conflict, actual or apparent, between 
the union official and his or her duty to the union. As discussed in 
the 2010 NPRM and expressly stated in the Form LM-30 instructions, 
transactions not ``based upon the credit institution's own criteria,'' 
according to ``usual business practice,'' or ``made on terms related to 
the official's status in the labor organization'' must be reported on 
the revised Form LM-30. For example, if a loan is given to a union 
official with a low credit score, if a loan is extended or forgiven, if 
the loan does not reflect market terms, including usual fees, or if it 
otherwise evinces preferential treatment based upon the officials' 
union status, it must be reported. Any relaxation of the loan's terms, 
repayment requirements, or forgiveness must also be reported if based 
on preferential treatment because of the official's union status. 
Furthermore, loans received from employers or businesses that are not 
credit institutions must be reported. The same considerations apply to 
other transactions with credit institutions, including credit cards and 
interest-bearing accounts.
    Finally, as noted, two commenters requested the Department to 
exempt from reporting loans and related transactions from credit 
institutions that are represented employers. Because the Department did 
not propose to eliminate this requirement, no extensive discussion is 
required. As noted in the NPRM, the Department acknowledged that it was 
not changing this aspect of the 2007 rule. Further, the Department 
notes that, historically, the Department has held that any loan to an 
official from an employer whose employees are represented by the 
official's union are reportable pursuant to 202(a)(2), without any 
statutory or other exceptions (other than the de minimis threshold). 
See IM sections 244.100 and 244.120; see also the pre-2007 Form LM-30 
Instructions, Part A, exemption (iii).\25\ The 2007 rule upheld this 
principle, and the Department stated in the preamble to the 2010 NPRM 
that a union official would need to report any loans from an employer 
represented by the official's union (or whose employees it actively 
seeks to represent).'' See 75 FR at 48426 n. 11. Additionally, the 
Department notes that the appearance of a conflict of interest and any 
temptation to curry favor by offering what appears to be an arm's 
length loan or related transaction on favored terms is much greater 
where the official's union represents (or seeks to represent) the 
institution's employees than where a loan is made by an institution 
that has a more attenuated relationship with the official's union.
---------------------------------------------------------------------------

    \25\ The exemption (iii) of Part A of the pre-2007 Form LM-30 
Instructions exempts transactions ``involving purchases and sales of 
goods and services in the regular course of business at prices 
generally available to any employee of the employer. This does not 
apply to transactions involving stocks, bonds, securities, or loans, 
for example.''
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D. Scope of Reporting Requirements Under Section 202(a)(6)

    In the NPRM, the Department proposed to narrow the scope of 
reporting required under section 202(a)(6) with respect to (1) Payments 
from business competitors to the employer whose employees the union 
official's union represents or actively seeks to represent; (2) 
payments received from trusts; and (3) payments from unions. In this 
final rule, the Department has adopted its proposals on these points.
    As explained in the NPRM, sections 202(a)(1)-(5) of the LMRDA 
establish conflict-of-interest reporting requirements concerning 
payments received by union officers and employees from two sets of 
entities: (1) Employers that a union represents or is actively seeking 
to represent; and (2) businesses, such as vendors and service 
providers, that buy or sell to the represented and potentially 
represented employers, the union official's union, or trusts in which 
the official's union is interested. In each case, the reporting 
obligation is triggered by the particular relationship between an 
official's union and the entity from which the official receives a 
payment or in which the official holds an interest.
    By contrast, section 202(a)(6) does not specify any relationship 
between an entity and an official's union, nor does it express when 
payments must be reported. Rather, it more broadly requires union 
officials to report any payment of money or other thing of value from 
``any employer or any person who acts as a labor relations consultant 
to an employer'' (except payments of the kinds referred to in section 
302(c) of the Labor Management Relations Act of 1947, as amended 
(LMRA)). As noted in the NPRM and discussed in the 2007 rule, the 
Department has long interpreted section 202(a)(6) as a ``catch-all'' 
that captures conflict-of-interest payments from employers not 
otherwise reportable in the previous five subsections of 202. Thus, 
LMRDA Interpretative Manual section 248.005 states, in part: 
``[Section] 202(a)(6) is designed for those situations which pose 
conflict-of-interest problems which are not covered in the previous 
five sections of 202.'' 72 FR at 36129. Further, the 2007 rule made 
clear that section 202(a)(6) can be read to encompass disclosure of any 
employer payment that could present a financial conflict of interest 
for the union official. Id. The Department did not propose to change 
this requirement.
    After a review of the comments received, the Department retains the 
general requirement, as earlier proposed, that officials report 
payments from employers and labor relations consultants from whom a 
payment would create an actual or potential conflict between the 
filer's personal financial interests and the interests of the filer's 
labor organization (or the filer's duties to the labor organization). 
As proposed, the Department included a non-exhaustive list in the 
instructions for the revised Form LM-30 of examples of such actual or 
potential conflicts of interest. These examples included payments from 
business competitors of the employer whose employees the union 
official's union represents or whose employees the union is actively 
seeking to represent. Further, to ensure that only actual or potential 
conflict-of-interest payments are reported, the Department has 
qualified this requirement so that a union official, as a general rule, 
must report such financial interests only if the official is

[[Page 66461]]

involved with the union's organizing, collective bargaining, or 
contract administration activities or possesses significant authority 
or influence over such activities. As explained in the NPRM, an 
official will be required to report such payments where he or she 
possesses such authority or influence by virtue of his or her position, 
even if such authority has not been exercised. This rule also 
effectuates the proposal to retain the requirement that union officials 
must report payments received from an employer that is a not-for-profit 
organization that receives or is actively and directly soliciting 
(other than by mass mail, telephone bank, or mass media) money, 
donations, or contributions, from the official's labor organization.
    The Department is revising, as proposed, the reporting requirements 
insofar as payments from certain trusts and labor unions pursuant to 
section 202(a)(6) are concerned. In contrast to the 2007 rule, which 
required payments from trusts to be reported, the Department proposed 
to return to its historical position that such payments are not 
reportable because they do not pose an apparent or actual conflict of 
interest between the official's personal financial interests and his 
duty to the union and its members. As explained in the 2010 NPRM and 
based upon the considered analysis in the Department's 1967 opinion on 
this issue, the Department believed that these payments pose ``no 
conflict with which Congress was concerned.'' 75 FR 48428. Further, the 
Department believes, as stated in the NPRM, that the better reading of 
section 202(a)(6) of the LMRDA is that labor unions and trusts are not 
within the universe of ``employers'' from which union officials should 
report payments, as both entities are treated separately from other 
``employers'' under the Act. In drafting the LMRDA reporting and 
disclosure requirements, Congress delineated separate requirements for 
these discrete statutory actors (unions and trusts), and reporting of 
labor organization disbursements is set forth in section 201 of the 
statute, not section 202. Moreover, the Department maintains that this 
reading of the statute better implements the labor union and labor-
management reporting requirements of the LMRDA.
    Finally, the Department also retains, as proposed, the requirement 
that union officials must report five types of payments received from 
an employer, regardless of the relationship the employer has with the 
filer's union. These reportable payments to a union official (or the 
official's spouse or minor child) from any employer or labor relations 
consultant to an employer are payments for the following purposes: (1) 
Not to organize employees; (2) to influence employees in any way with 
respect to their rights to organize; (3) to take any action with 
respect to the status of employees or others as members of a labor 
organization; (4) to take any action with respect to bargaining or 
dealing with employers whose employees the filer's union represents or 
whose employees the union is actively seeking to represent; and (5) to 
influence the outcome of an internal union election. 72 FR at 36128, 
36173. These payments, per se, create an actual or potential conflict 
between the filer's financial interests and his or her duties to the 
labor organization.
    The Department received 15 comments on the scope of section 
202(a)(6), with 12 supporting all of the changes,\26\ one supporting 
the changes in part and opposing in part, and two comments opposing all 
of the proposed modifications to this aspect of the NPRM. The comments 
on specific aspects of the rule are addressed below.\27\ As a 
preliminary matter, however, the Department believes it important to 
address the view expressed by two commenters that none of the proposed 
changes to reporting under section 202(a)(6) are justified.
---------------------------------------------------------------------------

    \26\ Seven of these commenters supported the proposed changes to 
the 2007 rule but also opposed other portions and thus suggested 
additional modifications to the form.
    \27\ Two commenters suggested that the Department should further 
revise the section 202(a)(6) requirements to limit reportable 
interests solely to those payments made by employers that would 
impact the labor-management relationship between a union and a 
represented employer. Thus, for example, they would exempt from 
reporting payments to a union official from a charity to which the 
official's union contributes. Because the Department did not propose 
such change, the comments are outside the scope of the rule. The 
Department briefly notes, however, that the suggestion is at odds 
with the general ``catch-all'' purpose of section 202(a)(6), would 
leave undisclosed conflicts of interest, and is not compelled by the 
language of section 202(a)(6) or the Act's structure.
---------------------------------------------------------------------------

    In essence, these commenters read section 202(a)(6) as a mandate to 
require a union official to report on his or her financial interests 
with virtually all employers. The Department disagrees. It remains of 
the view that its interpretation is sound as a matter of law and 
policy. Granted, the terms of section 202(a)(6) are expansive, 
requiring a union official to report ``any payment of money or other 
thing of value * * * which he or his spouse or minor child received 
directly or indirectly from any employer.'' In contrast to the breadth 
of section 202(a)(6), however, each of the other paragraphs of section 
202(a) addresses payments by particular employers or businesses that 
have dealings with the official's labor organization (202(a)(4)) or an 
employer whose employees are represented by the official's union or the 
union actively seeks to represent, (202(a)(1), (2), (3), (5)). The 
actual or potential conflict of interest for payments from and 
interests in such entities is evident.
    The literal language of section 202(a)(6), if applied as the 
commenters advocate, would render superfluous the limiting language in 
the other subsections, as it would potentially require reporting from 
any entity that is an employer, regardless of whether or not the entity 
had any connection with the union and its represented employers. Given 
the absurdity of such construction, the Department, mindful of the 
statute's language and legislative history, has interpreted section 
202(a)(6) as a ``catch-all'' provision, intended by Congress to capture 
various payments that would pose apparent conflicts of interest, even 
though outside the literal terms of subsections (a)(1)-(5). The 
Department has never interpreted this section in the way these two 
commenters apparently would prefer--as a mandate to require a union 
official to report on his or her financial interests from virtually all 
employers. The 2007 rule outlines this longstanding approach by the 
Department, 72 FR at 36128-30, and the Department has continued the 
same basic approach in this rulemaking, see 75 FR48426-29, 48434-35. As 
recognized in the 2007 rule and the 2010 NPRM, the Secretary must 
interpret the statute to clarify the intended reach of section 
202(a)(6). 72 FR 36139-41; 75 FR 48429-30. Here, in contrast to the 
2007 rule, the Secretary, in exercising her discretion to interpret 
that section, has concluded that it does not require union officials to 
report on certain payments received from employers that compete with 
represented employers, section 3(l) trusts, and labor organizations.
1. Obligation To Report Payments From Business Competitors of the 
Employer Whose Employees the Union Official's Union Represents or Whose 
Employees the Union Is Actively Seeking to Represent
    As explained in the 2010 NPRM and reiterated here, the Department 
has historically viewed subsection 202(a)(6) differently than the other 
subsections of section 202(a). The relationships addressed in 
202(a)(6), such as that between a union official and a competitor 
employer to a represented employer, are further removed from the

[[Page 66462]]

activities of the union than those involving the represented employer 
and the other business relationships addressed in the first five 
subsections of section 202. In particular, the competitor employer does 
not have a current and ongoing relationship with the union; indeed, 
neither is actively seeking such a relationship (if it did, sections 
202(a)(1), (2), and (5) would likely apply). Further, any payment made 
by a competitor or other employer to not organize or otherwise affect 
the union official's responsibilities with the union is per se 
reportable under Part C of the instructions. Moreover, the Department 
believes that in the outside chance that there could be a conflict 
concerning a union official and a competitor employer, the Department's 
``significant authority or influence'' test, as shown in italics and 
discussed below, would ensure its reporting.
    The instructions to the Form LM-30, as revised in this rule, 
provide:

    Complete Part C if you, your spouse, or your minor child 
received, directly or indirectly, any payment of money or other 
thing of value (including reimbursed expenses) from any employer 
(other than a Represented Employer under Part A or Business covered 
under Part B above) from whom a payment would create an actual or 
potential conflict between these \28\ financial interests and the 
interest of your labor organization or your duties to your labor 
organization. Such employers include, but are not limited to, an 
employer in competition with an employer whose employees your labor 
organization represents or whose employees your union is actively 
seeking to represent, if you are involved with the organizing, 
collective bargaining, or contract administration activities or 
possess significant authority or influence over such activities. You 
are deemed to have such authority and influence if you possess 
authority by virtue of your position, even if you did not become 
involved in these activities.

    \28\ The NPRM stated, ``between your financial interests * * *'' 
The Department modified this phrase to read ``between these 
financial interests,'' so filers are aware that they must look at 
the payments and interests of their spouse and minor children as 
well as their own.
---------------------------------------------------------------------------

    An example illustrates the difference between the 2007 Form LM-30 
and the narrower reporting requirement implemented here. First, assume 
that an individual employed by a union to handle computer problems also 
works for a technology company that is a competitor of a company whose 
employees are represented by the union. Under the 2007 rule, the 
individual would have to file a Form LM-30 to report gifts, gratuities, 
or other non-exempt payments he or she receives from the technology 
company.\29\ Under this rule, the individual would not have to report 
these payments. In contrast, assume that an individual employed by a 
union as an organizer also works for a technology company that is a 
competitor of a company whose employees are represented by the union. 
Under both this rule and the 2007 rule, the individual would have to 
file a Form LM-30 to report gifts, gratuities, or other non-exempt 
payments he or she receives from the technology company.
---------------------------------------------------------------------------

    \29\ It should be noted that such employee would not be required 
to report his regular wages from the employer. LMRDA, section 
202(a)(6), which exempts payments of the kinds referred to in LMRA 
section 302(c)(1), excepts these payments from reporting. A public 
policy organization, which offered general opposition to the 
proposed changes to the reporting of payments from competitor 
employers, noted that the NPRM indicated that the wages paid by the 
technology company would be reportable under the 2007 rule, and that 
this mistake cast doubt on the entire NPRM. The text has been 
clarified to make plain that regular wage payments are not to be 
reported.
---------------------------------------------------------------------------

    Multiple commenters offered support for the proposal. One national/
international union supports the change as it reduces burden on 
officials and focuses reporting on actual or potential conflict-of-
interest scenarios. With respect to burden, the commenter stressed the 
``layers'' of subsidiaries and affiliates that must be researched to 
identify the represented employer's competitors in order to determine 
if reporting is required. Moreover, the commenter contended that this 
information may not be publicly available.\30\
---------------------------------------------------------------------------

    \30\ The concerns of the commenters pertaining to the level of 
``research'' that must be conducted in order to determine what 
payments are reportable are unsubstantiated and exaggerated. As 
discussed in greater detail in the top-down reporting section of 
this preamble, III.E., the scope of the official's inquiry is 
limited to considering non-exempt, atypical payments received from 
an employer and only then must the official look at the relationship 
that the employer has with the official's union. Nevertheless, by 
limiting this aspect of reporting to officials that possess actual 
authority or influence over subordinate affiliates, the rule should 
ameliorate concerns among some filers.
---------------------------------------------------------------------------

    One international union supported the change, but also suggested 
that it should be narrowed further to require reporting of a ``gift'' 
only when an official has ``actual knowledge'' of an employer being a 
competitor to a represented employer. It explained that such a change 
would reduce a filer's burden because it would be unnecessary to 
``research potentially complex chains of business ownerships through 
webs of subsidiaries and affiliates.'' The Department does not concur 
with this suggestion, as determining if an official had actual 
knowledge would hinge reporting on a subjective assessment. Rather, a 
reporting obligation is triggered by objective circumstances that 
create an actual or potential conflict, or an appearance of one, and 
then, upon its disclosure, allows members and the public to assess the 
implications. As discussed in section V.C. of the preamble, the 
asserted burden associated with this aspect of the rule is overstated. 
As the Department explains in that section, the rule allows most filers 
to compile the necessary information through a relatively easy three-
step process.
    Two public interest organizations opposed the change. The first 
stated that restricting reporting to officials involved in organizing, 
collective bargaining, or contract administration is contrary to the 
statutory text and the views Congress expressed in the legislative 
history. The commenter maintained that this change would remove a 
``significant amount of disclosure by employers and union officials'' 
who do not engage in these activities. Another public interest 
organization similarly questioned why the Department would limit 
reporting to situations ``where an official is involved with 
organizing, collective bargaining,'' or so forth, as proposed. The 
commenter argued that this limitation would run counter to the purposes 
of the Form LM-30, which is to disclose conflicts of interest, and it 
does not accurately reflect the administration of most unions, in which 
any payments to any official, regardless of the formal title, could 
``easily'' influence all the others. The commenter stated that, ``any 
representative in any capacity should be required to report relevant 
payments from any employer.''
    The Department disagrees with the contention that this change to 
section 202(a)(6) reporting is not based in the statute or is contrary 
to the legislative history. To the contrary, the Department has 
consistently held that section 202(a)(6) is a ``catch-all'' for 
conflicts of interests not otherwise captured in the previous 
subsections of section 202. The Department's interpretation is 
consistent with section 202(a)(6), its legislative history, and the 
purposes served by the Act's disclosure requirements. The Department's 
proposal, as adopted in the final rule, provides clear examples to the 
public as to what circumstances trigger reporting, without 
overburdening union officers and employees. It triggers reporting on 
the core, essential functions of a labor organization: organizing, 
collective bargaining, and contract administration. In this regard, the 
Department notes, contrary to the commenters' apparent suggestion, that 
the Congressional goal in enacting section 202 was not to require 
wholesale ``disclosure by

[[Page 66463]]

employers and union officials,'' but, rather, conflict-of-interest 
disclosure; the revisions contained in this rule effectuate this 
purpose.
    The restriction of reporting to those with influence over 
organizing and similar areas applies only to the broad ``catch-all'' 
provision of section 202(a)(6), and not to the other provisions of 
section 202. Indeed, pursuant to these other provisions, the Department 
will continue to require reporting by union officers and non-exempt 
employees of payments from represented employers and the enumerated 
businesses with close relationships with the officials' union.\31\ 
However, the Department does not interpret section 202(a)(6) in the 
same manner, as a competitor employer is further removed in 
relationship to the union. The Department notes, though, that Part C of 
Form LM-30 still requires the reporting of any payment to any covered 
union officer or employee, if the payment constitutes a per se 
reportable activity, pursuant to the Revised Form LM-30 Instructions, 
Part C: Other Employer or Labor Relations Consultant (reportable per se 
activities). This position is consistent with the Department's 
longstanding approach treating the broad section 202(a)(6) language as 
a ``catch-all'' to capture likely conflict-of-interest payments not 
otherwise captured by sections 202(a)(1)-(5).
---------------------------------------------------------------------------

    \31\ The Department notes that, in interpreting the scope of 
``top-down'' reporting, the Department is only requiring reporting 
by employees of intermediate and national/international unions of 
payments from and interests in entities with requisite relationships 
with lower-level unions, when such employees have significant 
authority or influence over such lower-level unions. See Part III.E. 
herein. The Department's approach here with respect to reporting 
interests in and payments from a competitor of a company whose 
employees are represented by the union is similar.
---------------------------------------------------------------------------

    The Department also notes that a national union objected to the 
Department's general ``catch-all'' requirement, retained in the NPRM, 
that a union official must report any payment from an employer that 
creates an actual or potential conflict of interest. The commenter 
described the requirement as confusing and too broad. The commenter 
objected that the Department's proposal would require reporting of 
transactions that will have no effect on labor relations or union 
administration. In response to this comment, the Department cannot 
delineate every conceivable conflict-of-interest scenario, nor could 
Congress, which is why it established section 202(a)(6). Generally, 
entities from which payments are reportable are described in the 
instructions, and the Department will provide compliance assistance to 
filers with questions about specific circumstances.
2. Obligation To Report Payments Received From Trusts
    In the 2010 NPRM, the Department proposed to return to its 
longstanding interpretation that union officials are not required to 
report payments received from trusts in which their unions have an 
interest. These trusts are defined by section 3(l) of the LMRDA as a 
``trust or other fund or organization (1) That was created or 
established by a labor organization, or one or more of the trustees or 
one or more members of the governing body of which is selected or 
appointed by a labor organization, and (2) a primary purpose of which 
is to provide benefits for the members of such labor organization or 
their beneficiaries.'' See Form LM-30 Instructions, p. 13.
    As explained in the NPRM, this interpretation is reflected in a 
1967 opinion signed by the head of OLMS's predecessor agency and the 
Department's Solicitor. As there stated:

    Congress was concerned with arrangements with the primary 
employer, that is, the one whose employees the union represents or 
seeks to represent, which might impair the union officer's loyalty 
as a representative of that organization [vis-[agrave]-vis] the 
employer. Even assuming that a trust fund could successfully be 
characterized as a primary employer, which we doubt, we fail to 
perceive the existence of a conflict where a union official received 
payments from a trust fund for which he also works, even if this 
arrangement is approved by employer representatives on the trust. 
The employer representatives are acting in their role as trustees 
and thus no conflict-of-interest situation with which Congress was 
concerned arises.

    Id., p. 4-5. As the letter notes, payments from trusts to union 
officers and employees--wages to employees or reimbursed expenses--are 
payments reported elsewhere and, more importantly, pose ``no conflict 
with which Congress was concerned.'' Kleiler-Donahue Ltr., p. 5.
    A federation of unions, eight national/international unions, and 
one law firm offered support for the Department's proposal regarding 
payments from trusts and its stated rationale in the NPRM. In 
particular, these commenters stressed that payments from section 3(l) 
trusts to union officials do not pose an actual or potential conflict 
of interest. One international union emphasized that such trusts are 
created to benefit the members and their beneficiaries, so a payment 
from the trust would not pose a conflict of interest for a union 
official. Another international union added that Congress did not 
intend union trusts to be treated as employers and other businesses 
under section 202(a)(6). An international union commented that 
reporting of expense reimbursements for serving as a trustee of a union 
benefit fund had never been required, expressing support for the 
Department's proposal to return to the former practice.
    Further, one international union stated that the removal of such 
reporting would eliminate an inconsistency between what union trustees 
would report and management trustees were not required to report. An 
international union stressed that reimbursements to union trustees 
should not be reportable. Another international union offered two 
technical corrections to the revised Form LM-30 Instructions, in Part 
C, to make explicit that payments from trusts are not reportable. The 
Department will address these suggestions later in the preamble section 
on the revised form and instructions. See Part IV.
    Two commenters opposed the Department's proposal to eliminate the 
reporting of payments made by section 3(l) trusts to union 
officials.\32\ A public interest organization asserted that the 
Department offered ``no good reason'' for the return to its 
``historical position''; that the Department had ``found no problem 
that will be solved'' by the modification; and that the proposal was 
``primarily based on a very old internal'' opinion. This commenter, 
however, provided no basis for rejecting the Department's rationale, 
nor did it offer any rationale as support for the position taken in the 
2007 rule. In the 2010 NPRM, the Department cited the Kleiler-Donahue 
letter to emphasize the longstanding nature of the position, as well as 
to explain the letter's reasoning. 75 FR 48428. To reiterate the point 
made in the NPRM, the preamble to the 2007 rule merely cited the letter 
without refuting it, and the Department now returns to the position and 
rationale stated in the letter. 72 FR 36154. Payments received from a 
section 3(l) trust do not establish a conflict of interest, as the 
interests of the trust and union, or an official's duties to the union, 
do not diverge. Indeed, a section 3(l) trust must exist for the primary

[[Page 66464]]

purpose of providing benefits to the union members and their 
beneficiaries. Moreover, requiring Form LM-30 reporting in situations 
that do not pose a conflict of interest would be inconsistent with the 
balanced reporting regimen intended by Congress.
---------------------------------------------------------------------------

    \32\ These organizations also asserted that the Department's 
proposal as it applies to the reportability of payments to trusts 
and unions is inconsistent with the Act's language, its structure, 
and relevant case law. One of the commenters also asserted that the 
proposal was contrary to the position that the Department has taken 
in enforcement litigation under section 203 of the Act. Because 
these assertions are focused primarily on the Department's proposal 
to revise the reportability of certain payments from unions, these 
arguments are discussed in the section that follows in the text.
---------------------------------------------------------------------------

    Another public interest organization opposed the proposed change 
contending that a conflict of interest arises and public disclosure is 
required when an entity spends lavishly on union officials. The comment 
cited examples of payments from several entities to union officials, 
including two from filed LM-30 reports that, it asserted, would not be 
disclosed under the Department's proposal.
    In response to this comment, the Department again emphasizes that 
section 202, and the Act as a whole, do not provide for general 
reporting of any payment by an employer, business, or trust to a union 
official that may have an undefined, arguable, or even subjective 
``disclosure value.'' To be reportable, a payment must create a 
divergence between the financial interest of the official and the 
interests of the official's labor organization. See Revised Form LM-30 
Instructions, Part C. Such circumstances do not generally arise 
regarding a section 3(l) trust, as the union and the trust have a 
common interest in ensuring that the trust operated for the benefit of 
their common beneficiaries, the union's members. With regard to the 
commenter's characterization of certain payments, this rulemaking is 
not the appropriate place for issuing determinations regarding 
disclosure in specific factual situations. However, as discussed below, 
there are reporting requirements that apply in situations such as those 
described by the commenter.\33\
---------------------------------------------------------------------------

    \33\ Although the commenter has identified information that may 
be of interest to union members, it has provided no information that 
indicates that those payments, in fact, pose a real or apparent 
conflict with the official's duty to his union. The information that 
the union reported just as readily evinces the symbiotic 
relationship that exists between the official's union and the trust 
and a unity of interest, rather than divided loyalty. Furthermore, 
the commenter provides no information to indicate that the reported 
information would be unavailable to members of the public through 
public documents required of the trust by other regulatory 
authorities such as the IRS or banking authorities. Moreover, 
compliance assistance, not this rulemaking, is the appropriate 
mechanism to address specific factual circumstances.
---------------------------------------------------------------------------

    First, full disclosure is required concerning the financial 
operations of certain entities previously considered to be section 3(l) 
trusts that are wholly owned, controlled, and financed by a single 
labor organization. These are ``subsidiary organizations'' of a labor 
organization, and the financial transactions of such subsidiaries would 
generally need to be reported on the labor organization's annual 
financial disclosure report, thus providing disclosure. See the Labor 
Organization Annual Report Form LM-2 Instructions, Section X \34\ and 
the Labor Organization Annual Report Form LM-3 Instructions, Section X. 
Second, although not covered by LMRDA section 202, many section 3(l) 
trusts, such as pension and welfare plans, including many Taft-Hartley 
plans, are covered by the Employee Retirement Income Security Act 
(ERISA), which provides reporting and disclosure requirements as well 
as other financial safeguards for employee benefit funds. Third, 
pursuant to a longstanding interpretation retained in the 2007 rule and 
this rule, while payments from a trust are not reportable by a union 
official on the revised Form LM-30, payments from and interests in any 
business that deals with the official's section 3(l) trust are 
reportable.
---------------------------------------------------------------------------

    \34\ The Department notes that reporting for subsidiary 
organizations on the Form LM-2, the annual financial disclosure form 
for the largest labor unions, was removed from the reporting 
requirements for that form as a result of revisions made in 2003. 
See 68 FR 58374 (Oct. 9, 2003). Subsequently, in 2010, the 
Department returned subsidiary reporting to the Form LM-2 reporting 
requirements for fiscal years beginning on or after January 1, 2011. 
See 75 FR 74936 (Dec. 1, 2010).
---------------------------------------------------------------------------

3. Obligation To Report Payments From Unions
    In the 2010 NPRM, the Department proposed to modify specific 
aspects of the general requirement that union officials report payments 
they received from labor organizations. 75 FR 48428. In support of the 
proposal, the Department relied on its statutory analysis of the Act's 
reporting provisions, concluding that section 202(a)(6) is better read 
as limited to payments by employers--distinct from labor unions--
notwithstanding the acknowledgment, in discussing the reporting 
obligations of an official of a staff union, that a union may be an 
employer. 75 FR 48428-29. Further, as explained in the NPRM, the 
Department's proposal would not affect a staff union official's 
obligation to report payments he or she receives from a union-employer 
whose employees the official's union represents or actively seeks to 
represent.
    The Department, in reconsidering the position taken on this 
question in the 2007 rule, has concluded that a better reading of the 
LMRDA is that a ``labor organization'' is distinct from an 
``employer,'' as that term is used in section 202(a)(6). As stated in 
the NPRM:

    In drafting the LMRDA reporting and disclosure requirements, 
Congress mandated separate requirements for the discrete statutory 
actors: ``labor organizations,'' ``labor organization officers'' and 
``labor organization employees,'' ``employers,'' ``labor relations 
consultants,'' and ``trusts in which a labor organization is 
interested.'' (While there are no reporting requirements for section 
3(l) trusts, section 208 authorizes the Secretary to establish such 
requirements for labor organizations concerning such entities.) 
Further, the statute separately defined five of these six terms. See 
sections 3(e), 3(i), 3(l), 3(m), and 3(n) of the LMRDA.

    In the Department's view, section 201 requires ``labor 
organizations'' to disclose, among other financial transactions and 
information, disbursements to many individuals and entities, including 
employers, businesses, their own officers and employees and, 
potentially, those of other labor organizations. Section 203, on the 
other hand, requires ``employers'' to file certain reports. As applied 
to section 202, ``labor organization'' officers and employees must 
report payments from ``employers'' and ``businesses'' that have 
established certain relationships with the official's ``labor 
organization.'' The statute's reporting provisions thus establish 
``employers'' and ``labor organizations'' as distinct and separate 
entities. There is nothing in the statute that indicates that Congress 
intended, for reporting purposes, that the category of employers also 
would include labor organizations, or that Congress meant for officers 
and employees to report transactions with labor organizations acting as 
such. If Congress had intended that result, it seems apparent that in 
drafting section 202 it would have explicitly identified payments from 
labor organizations as reportable.\35\
---------------------------------------------------------------------------

    \35\ This reasoning is consistent with LMRDA Interpretative 
Manual section 260.005. This section provides that no report is 
required for activities performed by an attorney on behalf of a 
union (distinct from activities performed for an employer), even 
though the attorney meets the definition of ``labor relations 
consultants'' under section 3(m), because the only section of the 
Act which requires reports from labor relations consultants is 
section 203(b), which provides for reports from every person who has 
an agreement with an employer for certain purposes.
---------------------------------------------------------------------------

    The Department holds the view that this reading of the statute 
better implements the labor union and labor-management reporting 
requirements of the LMRDA. First, as stated above, conflict-of-interest 
payments from labor organization-employers represented by staff unions 
are reportable under sections 202(a)(1), (2), and (5). Second, the 
various reports required under section 201--Form LM-2, LM-3, and LM-4 
Labor Organization Annual

[[Page 66465]]

Reports--require all covered labor organizations to disclose any 
disbursements, including those to officers and employees of other 
unions. Such disbursements include those addressed in Part B, Schedule 
3, Employer's Relationship 5(b)-(e), of the 2007 Form LM-30 that 
required filers to report payments from certain unions. See 72 FR 
36163. All of these disbursements constitute payments from labor 
organizations in their capacity as the representative of employees, not 
as an employer of employees. A union member or a member of the public 
would naturally look to the labor organization's annual financial 
disclosure report, and not the Form LM-30 reports, to view 
disbursements from a particular union. Further, pursuant to section 
201(c), union members can view the underlying records of their union's 
reports to ascertain further information related to the payments to 
third-party union officials.
    Multiple commenters offered support for the proposal regarding 
payments from unions and the stated rationale in the NPRM. In 
particular, multiple national/international union commenters stated 
that the statute does not allow the reading of ``employers'' to include 
``labor organizations,'' outside of the staff union context. One 
international union stressed that section 201 provides for reporting 
from unions, and that a ``plain reading'' of the Act clearly 
distinguishes between ``labor organizations'' and ``employers'' for 
purposes of financial reporting and, with the exception of payments to 
staff union officials, does not require union officials to report 
payments received from a union. This union points out that payments by 
a union are captured on the union's own reports, as prescribed by 
section 201 of the Act. Two unions emphasized the Act's legislative 
history as well as the statutory language. One international union also 
offered support for IM section 260.005. None of these commenters 
disagreed with the Department's analysis that union-employer payments 
to staff union officials should be reportable.
    One commenter based its opposition to the Department's proposal on 
the LMRDA's definitions of ``employer'' and ``employee.'' The commenter 
contends that these ``clearly defined terms'' apply to the whole of the 
Act, and they must include labor organizations and labor organization 
employees, as one cannot be an ``employee'' under the Act unless one 
works for an ``employer.'' According to the commenter, the 2007 Form 
LM-30 defined these terms pursuant to the statutory definitions without 
removing a ``subset'' of employers from the definition, namely ``labor 
organizations'' and section 3(l) trusts. The commenter also asserted 
that the Department's interpretation in the NPRM causes ``structural'' 
problems, as the Department ``ignored'' that unions are ``employers'' 
in areas other than section 202. The commenter cited rules of statutory 
construction and case law articulating these rules to argue that terms 
within a statute must be applied consistently throughout the statute. 
To do otherwise, it asserted would create a ``Pandora's Box'' of 
problems, as unions must report payments to their ``employees'' 
pursuant to section 201 and union ``employees'' must comply with the 
section 202 reporting requirements.
    Further, the commenter stated that Congress would have excluded 
``labor organizations'' from the definition of ``employer'' in the 
LMRDA if it intended for unions to not be covered by section 202(a)(6). 
The commenter also contended that the Department's ``discrete statutory 
actors'' argument was inconsistent with the Department's litigation 
position in Warshauer v. Solis, 577 F.3d 1330 (11th Cir. 2009) and the 
court's holding in that case.\36\ In the commenter's view, the 
Department there argued that ``employer'' is not just the represented 
employer, but any private sector employer. The commenter concluded that 
the Department cannot have it ``both ways,'' that ``employers,'' 
``labor organizations,'' and ``labor relations consultants'' cannot be 
discrete actors under the Department's theory in Warshauer. The 
commenter also states its view that under the Department's analysis a 
union-employer and its consultants could be required to file reports 
under the persuader activity language of section 203.
---------------------------------------------------------------------------

    \36\ In that case, the court held that an attorney who was 
designated legal counsel (DLC) (designated by the union to provide 
legal services to its members for claims relating to workplace 
injuries) is subject to the LMRDA's section 203 reporting 
requirements as an ``employer'' if it has employees and makes 
reportable payments to unions or union officials.
---------------------------------------------------------------------------

    Another public interest organization criticized the position taken 
by the Department in the NPRM, stating that there is ``little basis'' 
for excluding unions from the ``employers'' of section 202(a)(6). The 
commenter rejected the idea that ``employers'' and ``labor 
organizations'' are discrete statutory actors, arguing instead that the 
definition of ``employer'' is ``broad and inclusive'' and does not 
exclude labor organizations. The commenter also rejected the notion 
that Congress would have included the term ``labor organization'' in 
section 202 if it intended for payments from them to be reported by 
union officials. In its view, such intention is negated because the Act 
``neither narrowly defines'' when a union is an employer, nor 
``specifically excludes'' unions from the definition of the term, thus 
indicating that the ``plain reading'' of the statute is that labor 
organizations can be employers. Further, the commenter cites the 
National Labor Relations Act (NLRA) definition of employer, which 
excludes labor organizations (except when acting as an employer). The 
commenter also asserts that the Department ``argues against'' itself by 
asserting that labor organizations can be employers in the context of 
staff unions. Finally, the commenter referred to the removal of unions 
and trusts from the scope of ``employer'' under section 202, as an 
effort to eliminate ``unions and labor union-controlled trusts'' from 
the section LMRDA section 203 reporting requirements concerning 
employer and labor relations consultants.
    With regard to the particular contentions by the two commenters, 
the Department concurs with the observation that ``labor 
organizations'' and ``employers'' are not mutually exclusive. Indeed, 
labor organizations often act in a dual capacity, as both labor 
organizations and as employers. Further, the statute does not define 
``employer'' in a manner that excludes ``labor organizations'' from its 
definition, which facilitates coverage of staff unions under the Act 
and labor organization ``employees'' in various parts of the statute, 
several of which the commenters cited, including section 202. The 
Department also acknowledges that the LMRDA defines the term ``labor 
organization'' differently than does the NLRA.
    The Department disagrees with the assertion that it utilizes 
``employer'' inconsistently throughout the Act. As stated in the NPRM, 
the Department considers that the better application of section 
202(a)(6) is to exclude payments from ``labor organizations,'' as the 
LMRDA establishes separate reporting requirements for ``labor 
organizations'' and ``employers,'' a statutory construction that 
reduces redundancy in the reporting requirements and burden on unions 
and their officials. Indeed, payments from labor organizations are 
reportable pursuant to section 201, while union officials must report 
conflicts of interest pursuant to section 202, and employers and labor 
relations consultants must report under certain circumstances pursuant 
to section 203. Thus, the ``plain reading'' of the term ``employer'' 
within section 202 does not include labor organizations acting as labor 
organizations. If Congress

[[Page 66466]]

intended for payments from labor organizations to be reported pursuant 
to sections 202(a)(6) or 203(a)(1), then it would have included the 
term ``labor organization'' along with ``employer.''
    Contrary to the commenters' view, the Department's position is 
consistent with the structure of the Act. For example, section 201 
establishes initial and annual reporting requirements for entities that 
meet the statutory definition of ``labor organization,'' and when 
section 201 refers to an ``employee'' of a labor organization, then it 
clearly is referring to the subset of labor organizations that also 
qualify as an ``employer,'' as this is the only reading of the statute 
in which labor organizations can have employees. Further, in section 
504(a), the statute uses the terms ``employer'' and ``labor 
organization'' separately and explicitly, to enumerate each situation 
in which a person is barred from serving a union or employer, or as a 
labor relations consultant for either entity. In section 504(a)(3), the 
statute bars an individual from serving as a labor relations consultant 
or adviser to a ``person engaged in an industry or activity affecting 
commerce,'' a term that is broader than both ``employer'' and ``labor 
organization.'' See LMRDA section 3(d). Thus, the approach articulated 
in this rule does not establish any ``structural'' problems identified 
by the commenters, nor does it open any ``Pandora's Box,'' as one 
commenter suggested.
    The commenter is mistaken in its understanding of the Department's 
position in Warshauer v. Solis. In that case, the court held that the 
Department did not act arbitrarily and capriciously in determining that 
the term ``employer'' in section 203(a)(1) included employers who did 
not participate in persuader or other labor relations activities. In 
Warshauer, the plaintiff, an attorney providing legal services to 
members of a union, conceded that he was an ``employer'' but argued 
that only employers who persuade employees about their right to 
organize and bargain collectively must file reports, and that he did 
not engage in this activity. The pertinent statute, section 203, 
contained five reporting provisions, four of which were triggered by 
persuader activity. The remaining provision was not so limited, 
requiring reporting based solely on certain financial payments, and the 
Department contended that its plain language required the plaintiff to 
file a report without regard to whether he engaged in persuader 
activity. In Warshauer, like here, the Department interpreted the 
language in light of the other requirements imposed on filers by the 
statute (there on ``employers,'' here on labor union officials), the 
Department's longstanding interpretation, and, secondarily, on the 
Act's legislative history. See Brief for Appellee, 2008 WL 526954, 
Argument at I.A.1. & 2., B. 3.a. & b., C. 1. (brief is without 
pagination on Westlaw); 577 F.3d 1330, 1335-36 (upholding Secretary's 
interpretation after considering the language of section 203(a)(1) and 
its context among the five subsections of section 203).
    In Warshauer, the Department did not assert that the term 
``employer'' must be read in a way that would require a labor union 
with employees to be treated as an employer for all purposes under the 
Act. Both the Department's brief and the court's opinion focus on the 
particular language of section 203((a)(1)), there at issue. While the 
Department argued in that case that section 3(e) of the Act ``defines 
the universe of employers'' encompassed by section 203(a)(1)'s employer 
reporting requirements, neither the Department's brief nor the court's 
opinion is in any way inconsistent with the Department's interpretation 
of section 202(a)(6). Further, while the Department argued that 
``employer'' encompassed the universe of employers encompassed in 
section 3(e) of the Act, it did not assert that every payment from all 
such employers was reportable. Rather, in additional guidance, the 
Department delineated the kinds of relationships that employers must 
have with unions to trigger reporting for payments to such unions and 
their officials. See Form LM-10 FAQ 10. The Department's position here 
is consistent with Warshauer. The court did not address the issue 
whether the term ``employer'' included ``labor organizations,'' either 
in section 202 or 203, but instead recognized that Congress 
specifically limited the ``employers'' in other subsections of 203, but 
chose not to in section 203(a)(1). See Warshauer v. Solis, 577 F.3d at 
1335. While Warshauer stands for the principle that ``employer'' in 
section 203(a)(1) is broader than merely employers who participate in 
persuader or other labor relations activities, it does not address the 
different question as to whether ``labor organizations'' acting as such 
are included within this term, given that the statute delineates 
separate reporting provisions for ``labor organizations'' and 
``employers.'' The reasoning in Warshauer supports the Department's 
determination here that if Congress intended to include payments from 
``labor organizations'' acting as such in section 202(a)(6), then it 
would have included the term ``labor organization'' alongside 
``employer.''
    Further, the Department's analysis on this point is also consistent 
with the one case that addressed the scope of the section 202 reporting 
requirements. In U.S. v. McCarthy, 300 F. Supp. 716, 720-21 (S.D.N.Y. 
1969), the court held that a union officer must report a salary 
received from a labor relations consultant to an employer, pursuant to 
section 202(a)(6). The union officer argued that such payments were 
exempt under LMRA section 302(c)(1) (the section 302 exemptions are 
relevant because section 202(a)(6) refers to section 302(c)), but the 
court held that a ``labor relations consultant'' is not a statutory 
``employer'' under the LMRDA. Otherwise, the court recognized, the 
intent of section 202, to disclose conflict-of-interest payments, would 
be circumvented. Hence, the court held that the provision exempting 
regular wage payments from an employer was not applicable to regular 
wage payments from the labor relations consultant.
    There is no merit to the contention that the Department's proposal 
unreasonably distinguishes between staff unions and other unions that 
also have employees. The distinction is based on the fact that the 
payments (such as gratuities) must be reported under sections 
202(a)(1)(2), and (5)--as payments by a represented employer to a union 
official--while in the other circumstances enumerated in the 2007 rule, 
the union is not making the payments as an employer. This treatment 
ensures that the Form LM-30 reporting requirements apply to staff union 
officials as they would to officials of other LMRDA-covered unions.
    Regarding the commenter's concern that the changes proposed would 
deny union members any information about payments made by a union to 
union officials, the Department reiterates the point made in the NPRM 
that any such payments would be included in the payor-union's annual 
financial disclosure report, either in the aggregate or, in specified 
circumstances, itemized when they reach $5,000. See 75 FR 48428-29. If 
payments in question are exclusively benefits, then they would be 
included in Schedule 20 of the Form LM-2. Members of the local could 
also examine the underlying documents related to the reporting, for 
just cause, pursuant to section 201(c). As stated, the reporting and 
disclosure of labor organization expenditures are pursuant to LMRDA 
section 201, not section 202.
    As to the comment that alleged the Department lacks understanding 
of the Act, the Department first reiterates that

[[Page 66467]]

``labor organizations'' can be employers when acting as employers. 
Thus, payments from a union-employer to a staff union official are 
reportable on the Form LM-30 pursuant to section 202(a)(1). The result 
is the same, even if the union-employer is a non-LMRDA covered union, 
evidencing the consistency in the Department's approach. Moreover, the 
commenter's argument does not flow logically, as, under the 2007 rule, 
not all non-exempt payments from LMRDA covered ``labor organizations'' 
to union officials were reportable pursuant to section 202(a)(6); just 
those from ``labor organizations'' with employees were reportable.
    Finally, regarding the contention that the Department's 
interpretation will affect reporting under the persuader activity 
provisions of section 203, this area is outside the scope of this rule. 
The Department notes that the suggested problems are not self-evident. 
See LMRDA Interpretative Manual section 260.005 (discussed earlier in 
this section) for guidance on the application of section 203 in this 
respect.
4. Obligation To Report Payments From Charities and Other Not-for-
Profit Organizations
    In the NPRM, the Department proposed no changes concerning the 
reporting of payments received by union officials from not-for-profit 
organizations. Nonetheless, the Department received four comments from 
unions, asserting that such payments should not be reportable because 
they do not arise out of labor-management relations. The commenters 
contend, in essence, that section 202(a)(6), should not be applied to 
payments that do not take place within this context. Such a request is 
beyond the scope of this rule, but the Department, for completeness, 
discusses these comments below.
    One federation of unions praised the Department's narrowing of 
reporting on payments received by union officials from trusts and 
unions. It agreed with the Department's assessment that each entity is 
a discrete actor not named in section 202. It also contended, however, 
that the text and legislative history and purpose of section 202 
require that ``employer'' in section 202(a)(6) be read to include only 
labor relations conflicts of interest not covered in sections 
202(a)(1), (2), and (5). The federation asserted that the ``employer'' 
in section 202(a)(6) included employers in the same ``labor market'' or 
``likely organizing targets.'' The comment presented three arguments 
supporting this view: section 202(a)(6) uses the term ``an employer,'' 
like sections 202(a)(1) and (5); the section also uses ``labor 
relations consultant'' to an employer, rather than more broadly ``any 
person who acts as a labor relations consultant to an employer''; and 
the subsection cites the LMRA section 302(c) exceptions, which apply in 
a labor-management context. An international union stated that 
extensive reporting concerning charities and other not-for-profit 
organizations exists elsewhere, citing the Form 990 filed with the IRS 
and the reporting of payments to such entities from unions on the Form 
LM-2. Thus, Form LM-30 reporting of payments from such entities to 
unions, in its view, would be redundant, burdensome, and without a 
statutory basis.
    The Department addresses these concerns only briefly. As noted, the 
Department proposed only limited changes to reporting under section 
202(a)(6). Similar arguments directed at restricting the reach of that 
section were considered and rejected by the Department in the 2007 
rule. 72 FR 36130. The Department has not reconsidered this position, 
but notes that the interpretation suggested by the commenters is not 
compelled by the language of section 202(a)(6) or the legislative 
history relied upon by the commenters. Furthermore, the Department 
notes that payments from a charitable organization to a union official, 
including director's fees and reimbursed expenses, are potential 
conflicts of interest, as the union official could be influencing the 
union to donate to the charity in order to maintain the position and 
income associated with his or her position on the charity's board, and 
not based upon the union's best interests. The commenters have offered 
no persuasive reason why union members should be denied information 
that allows them to make a determination about a potential conflict of 
interest. Additionally, while some reporting may be duplicated by other 
reporting frameworks, the Form LM-30 enables members and the public to 
view potential conflict-of-interest payments to union officials in one 
location, which justifies any marginal, additional burden on the union 
official.
    Another commenter, a law firm, offered recommendations on reporting 
regarding payments from charities and other not-for-profit 
organizations. The commenter argued that requiring reporting of 
reimbursed expenses would discourage union officials from providing 
volunteer services to such organizations. The Department considers that 
any payment, including a payment for expenses incurred in voluntary 
service, must be reported to serve the conflict-of-interest reporting 
obligation intended in the Form LM-30 rule. The requirement to report 
does not apply universally to payments from all charities and non-
profits, but only to payments from a charity or other non-profit that 
``receives or is actively and directly soliciting (other than by mass 
mailing, telephone bank, or mass media) money, donations, or 
contributions from the official's labor organization.'' In such 
circumstances, the need for conflict-of-interest reporting is apparent.
    The commenter also urged the Department to state that a non-profit 
organization is not actively seeking contributions from a union in 
receiving a membership dues payment from the union or a payment for 
advertising in the non-profit's publication. The effect of such a 
construction would be to exempt union officials from reporting payments 
from a non-profit under these circumstances, thereby defeating the 
intended conflict-of-interest disclosure purposes. It should be noted 
that the issue of what constitutes solicitation of donations is not 
relevant in the situation posed by the commenter. As presented by the 
commenter, the non-profit organization actually receives money or 
contributions from the union. The Form LM-30 rule provides that a union 
official must report payments received from a charity or non-profit 
organization if that organization receives money or contributions from 
the official's union or is actively and directly soliciting donations. 
Thus, the issue of what constitutes solicitation of donations for 
purposes of applying the Form LM-30 rule is not relevant. Further, it 
is beyond the scope of this rulemaking to make a determination 
concerning what activity constitutes solicitation of donations of union 
funds.

E. Scope of ``Top-Down'' Form LM-30 Reporting by National, 
International, and Intermediate Body Labor Organization Officers and 
Employees

    In the NPRM, the Department proposed to extend the top-down 
reporting requirements, expressly established for officers of 
international, national, and intermediate unions by the 2007 rule, to 
employees of such organizations, who had been excepted from reporting 
under the 2007 rule. Under the proposal, employees of parent and 
intermediate unions, like the officers of such unions, would be 
required to report on financial interests in, and payments from, 
companies that have dealings with their union's subordinate affiliates 
and their trusts, as well as certain companies doing business with a 
represented employer. The NPRM also proposed to eliminate

[[Page 66468]]

two limited exceptions established by the 2007 rule (sometimes referred 
to as ``carve-outs'') whereby union officers, when applying the top-
down reporting requirements, were not required to report on: (1) 
Payments received by the officer's spouse or minor children as bona 
fide employees; and (2) financial interests held in companies that did 
business with an employer whose employees were represented by 
subordinate affiliates. 72 FR 36122. Apart from eliminating these 
exemptions, the Department proposed no changes to top-down reporting by 
officers of parent and intermediate unions.
    Based on a review of the comments, the Department has modified its 
proposal insofar as it affects reporting by employees of parent and 
intermediate unions. In the final rule, the Department requires these 
employees to report on ``top-down'' financial interests and payments 
where they hold positions of significant authority or influence over 
the subordinate affiliates. The ``significant authority or influence'' 
trigger is similar but not identical to the Department's proposal in 
the 2010 NPRM to reduce the burden associated with the reporting of 
payments from companies that are in competition with a represented 
employer.\37\ Comments on the NPRM suggested that a similar approach 
would eliminate some of the uncertainty and burden surrounding top-down 
reporting. As discussed in greater detail below, the Department concurs 
with the suggested approach. It ensures that employees of parent and 
intermediate unions generally will report any financial interests that 
could pose a conflict of interest, while eliminating the uncertainty 
regarding reporting on matters that pose little or no risk of a 
conflict of interest.
---------------------------------------------------------------------------

    \37\ In the NPRM, the Department proposed to limit reporting 
interests in, and payments from, competitors to represented 
employers. Under the proposal, officers and employees--without 
regard to their place in the overall hierarchy of their unions--
would only have to report on interests and payments from such 
employers if they hold a position with significant authority or 
influence over organizing, collective bargaining, or contract 
administration activities. The Department has adopted this proposal 
in the final rule. This issue is more fully discussed above in 
section III. D.1.
---------------------------------------------------------------------------

    Additionally, the Department has adopted the proposed elimination 
of the carve-outs. The Department has accordingly modified the scope of 
top-down reporting for union officers and employees to read:

    When applying the Form LM-30 reporting requirements, you are 
required to look at employers and businesses that have specified 
relationships with the level of the union in which you serve as an 
officer or employee. However, if you are an officer of a national, 
international, or intermediate union, you must also look at 
employers and businesses that have specified relationships with 
subordinate affiliates (e.g., a local union or other subordinate 
body), as well as your own level of the union. These relationships 
are identified below in the instructions for completing Parts A, B, 
and C of the form. If you are an employee of a national, 
international, or intermediate union and possess significant 
authority or influence (whether or not exercised) over a subordinate 
affiliate's activities (e.g., its organizing, collective bargaining, 
contract enforcement, spending or investment decisions, or union 
administration), you are also required to look at employers and 
businesses that have specified relationships with such affiliate, as 
well as your own level of the union. See instructions below.

1. Background
    Many labor organizations consist of a three-tier hierarchy: local 
labor organizations, intermediate bodies, and a ``parent'' national or 
international labor organization. This section of the rule concerns the 
obligation of a union officer or employee of a higher-level union 
(intermediate or national/international) to report his or her interests 
in and payments (and those of the filer's spouse and minor children) 
from employers and businesses that have a relationship with subordinate 
affiliates of the employee's union.
    Under sections 202, union officers and employees must report 
payments from, holdings in, or transactions with:
     An employer whose employees the filer's labor organization 
represents or is actively seeking to represent;
     A business a substantial part of which consists of dealing 
with an employer whose employees the filer's labor organization 
represents or is actively seeking to represent; or
     A business that deals with the filer's labor organization 
or, as interpreted by the Department, a trust in which the filer's 
labor organization is interested.
    The scope of the reporting obligation thus depends on which 
organizations constitute the filer's ``labor organization.'' The issue 
here is the disclosure obligation of potential conflicts of interests 
that arise between a union official and his or her responsibility to 
his or her immediate organization as well to any subordinate labor 
organization(s) within the union's structure.
    In the rulemaking that culminated in the 2007 final rule, the 
Department interpreted the language of section 202 to require top-down 
reporting. In reaching this conclusion, the Department relied on the 
structure of the statute, the findings by the McClellan Committee 
concerning conflicts of interest between higher-level officers and 
subordinate unions, the stated purpose of the LMRDA to redress the 
problems identified in the McClellan hearings, and the Department's 
longstanding interpretation in the LMRDA Interpretative Manual that 
certain top-down reporting was required. 72 FR 36121-24.
    Although the instructions to the Form LM-30 had historically been 
silent on this point, there has been longstanding administrative 
precedent applying the section 202 requirements to higher-level union 
officials. For example, in Section 241.100 of the LMRDA Interpretative 
Manual, the Department addressed the reporting standards for 
international union officers, as follows:

    Section 202(a)(3) of the Act requires reports from ``every 
officer of a labor organization'' of income derived from ``any 
business a substantial part of which consists of buying from, 
selling or leasing to, or otherwise dealing with, the business of an 
employer whose employees such labor organization represents or is 
actively seeking to represent.'' An international union officer must 
report his income from such a business even though he is not an 
officer of the local which represents the employees of the business, 
and even though his duties as an international officer do not 
include representation activities.

2. Overview of Comments Received and Department's Response
    Twelve comments, all from unions, including one federation of 
unions, specifically discussed the top-down reporting requirement. An 
additional three union commenters expressed overall support for 
comments submitted by the federation of unions, which included 
recommendations on top-down reporting. One international union 
supported the Department's proposed top-down reporting requirement as 
articulated in the NPRM. All others expressed opposition, asserting 
that the Department's proposed top-down approach creates undue burden, 
and represents a considerable expansion of the scope of top-down 
reporting requirements set forth in the 2007 rule.
Comments To Eliminate the Top-Down Reporting Requirement and 
Department's Response
    Six of the commenters who opposed the proposed top-down reporting 
requirement asserted that this reporting requirement should be 
eliminated altogether in light of the burden that it imposes. One 
international union asserted that it not only opposed the

[[Page 66469]]

NPRM's proposed expansion to the top-down reporting requirement, but 
also believes that the 2007 rule's top-down reporting requirement is 
unnecessary and ``of little value in disclosing real conflicts of 
interest.'' Another commenter asserted that both labor organization 
officers and employees should have to report only in relation to 
matters involving the level of the union hierarchy that they serve and 
not any subordinate affiliate.
    The Department disagrees with this view and does not support the 
elimination of a top-down reporting obligation. As explained below, the 
reporting burden associated with top-down reporting has been overstated 
and is insufficiently supported by the commenters. Further, such a 
restricted rule on top-down reporting would eliminate all disclosure of 
any potential conflicts of interests of higher-level union officers and 
employees concerning subordinate organizations, a position never 
previously taken by the Department. For example, similar to the 
situation presented in IM section 241.100, international union officers 
and employees may encourage subordinate unions to purchase goods or 
services from a business in which they have an interest, or a business 
from which they received a gratuity, such as a printing company or 
travel agency. The subordinate affiliate, fearing repercussions if it 
does not do business with this vendor, may engage its services, even 
though other vendors may offer better rates, services, or products.
    As a further example, a national union officer or employee whose 
spouse is an employee of a service provider may influence lower-level 
unions to do business with this provider. Top-down reporting, as well 
as the other aspects of section 202 of the LMRDA, is intended to obtain 
disclosure of this kind of conflict-of-interest situation, and such 
reporting is of value to members and the public. Several commenters 
acknowledged that higher-level union officers and employees may engage 
in conduct raising actual or potential conflicts of interest with lower 
levels of their unions. Eliminating the top-down reporting obligation 
in its entirety would circumvent the intent of the LMRDA to provide 
disclosure of actual or potential conflicts of interest.
Comments To Limit Top-Down Reporting to Trusteeship Situations and 
Department's Response
    Two international unions commented that they favored the 
elimination of the top-down reporting requirement, but suggested 
alternatively that the requirement should be limited to situations in 
which a parent union has placed a subordinate union under trusteeship. 
They argued that a trusteeship represents the only situation in which 
parent body officers and employees have financial and managerial 
control over subordinate affiliates. The Department disagrees with this 
approach because it would be unduly restrictive in its exclusion of 
other scenarios--beyond trusteeships--that could present a conflict 
between union officials' personal financial interests and their duty to 
the labor union and its members.
Comments on Burden and Department's Response
    Several commenters stated that top-down reporting requires union 
officers and employees to conduct research, often extensive, to 
identify employers or businesses with which lower-level affiliates 
bargain or otherwise deal. One commenter described the proposed top-
down reporting requirement as ``unreasonable and overly burdensome'' 
and expressed concern that inadvertent failure to file Form LM-30 
reports could represent a possible Federal law violation. Another 
commenter expressed concern about the inability of international union 
officers and employees to obtain information necessary to comply with 
the reporting obligation, and predicted that, by being overly 
inclusive, ``the result will likely be widespread, though unwitting and 
unintentional, noncompliance, with no useful information for the 
public.''
    Additionally, some commenters stated that the expansion of top-down 
reporting imposes a far greater burden than the reductions otherwise 
associated with the proposed rule. Although acknowledging the 
possibility of potential conflicts of interest between higher-level 
union officers and employees and business conducted with subordinate 
affiliates, another commenter stated that such potential conflict does 
not justify the reporting burden, especially in the absence of a 
central repository of businesses whose relationships with subordinates 
could trigger reporting. This commenter noted that compiling and 
updating such a list would be costly and burdensome.
    Seven international unions opposed the Department's proposal to 
eliminate certain top-down reporting exclusions that were established 
in the 2007 rule. One commenter asserted that ``while `top-down' 
reporting by officers is unnecessary and overly burdensome, expanding 
such reporting to now include employees is even further removed from 
capturing the types of conflict-of-interest payments envisioned by the 
LMRDA.'' The commenter added that the requirement places LM-30 filers 
in a ``severely compromising and legally tenuous position,'' and 
expressed concern about the additional reporting and recordkeeping 
burden associated with the elimination of the ``carve-outs'' from the 
2007 rule.
    Another commenter expressed concern that the proposal expands the 
top-down reporting obligation beyond even what the 2007 rule deemed 
feasible and necessary,'' and disagrees with the proposed elimination 
of the 2007 rule's ``three critical narrowing principles'' associated 
with top-down reporting. With respect to the proposal to eliminate the 
reporting exemption in the 2007 rule for bona fide employee payments to 
spouses and minor children an international union stated, ``It is 
unreasonable to require that all such things of value, legitimately 
received by the spouse in the course of his or her own employment, be 
subject to scrutiny and reporting solely because of some inadvertent 
common connection to a separate local union or related trust fund, at 
least where the international officer or employee in question has no 
authority or ability to influence the local union or trust fund 
decision-making process.'' \38\
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    \38\ Three international unions stated that the burden 
associated with the top-down reporting requirements was greatly 
compounded by the Department's decision to retain the 2007 
definitions of ``substantial part'' and ``actively seeking to 
represent,'' by requiring greater research by union officers and 
employees to determine how the definitions of the terms would apply 
to lower levels of the officer or employee's union.
    Section 202(a)(3) requires a union official to report income and 
benefits from and interests in businesses that deal in ``substantial 
part'' with an employer whose employees the official represents or 
is ``actively seeking'' to represent. Sections 202(a)(1), (2), and 
(5) require the reporting of payments from, interests in, and 
transactions with employers whose employees the official's union 
represents or is ``actively seeking to represent.''
    The 2007 rule defines ``substantial part'' as 10% of the 
entity's business, and provides that the labor union must take 
concrete steps that demonstrate that it is ``actively seeking'' to 
represent employees of an employer. This rule does not substantively 
alter these definitions, which affect numerous aspects of reporting 
pursuant to sections 202(a)(1)-(5), independent of the top-down 
reporting issue. These issues are also discussed above at section 
III.F.1. (``substantial part'') and III.F.2 (``actively seeking to 
represent'').
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    The Department disagrees with these commenters that the burden 
imposed by full top-down reporting is not justified by the actual or 
potential conflicts of interest that will be reported. Initially, the 
Department emphasizes, as articulated above, that top-down reporting is 
necessary to disclose certain actual or potential conflict-of-interest 
situations. Further, to illustrate the

[[Page 66470]]

Department's contention that the commenters' view of top-down burden is 
overstated, it is helpful to look at the methodology involved in 
determining whether a top-down report is owed. The first step is for a 
union officer or employee to look at the types of interests in, income 
and benefits received, and transactions engaged in during his or her 
fiscal year. The second step is to eliminate from this list those that 
are exempted by the general exclusions, if applicable, such as publicly 
held stock, income received by the union officer or employee as a bona 
fide employee of a represented employer, and the de minimis threshold. 
This step likely will reduce the number of potential reportable 
transactions. The third step is to then determine whether any of the 
remaining financial transactions were derived from represented 
employers, as well as service providers and vendors of the represented 
employer, the union, and the union's trusts.\39\ The commenters appear 
to be suggesting that the inquiry would skip the first two steps and go 
directly to the third.
---------------------------------------------------------------------------

    \39\ A fourth step could involve the ``catch-all'' Part C of the 
revised Form LM-30, pursuant to section 202(a)(6), which would 
require reporting of any payments from any other employer (other 
than one already identified in sections 202(a)(1)-(5)) from whom the 
receipt of the payment by an official would create an actual or 
potential conflict of interest. But OLMS proposed restricting the 
reporting of payments from employers in competition with represented 
employers to union officers and employees with significant influence 
over organizing, collective bargaining, or contract administration 
activities related to a particular represented employer, see 75 FR 
48427, and this rule adopts that limitation for employees. See 
discussion above in section III.D.1. This eliminates the top-down 
issue for most employees of parent and intermediate unions. For 
those that must report, it is only because they possess the 
significant authority or influence out of which a conflict may 
arise.
---------------------------------------------------------------------------

    Indeed, officers and employees of parent and intermediate unions 
will not be required to look at every relationship that lower-level 
entities have, but, rather, only those that relate to the few, if any, 
employers and businesses identified in step three of the process. The 
Form LM-30 report is to be completed by union officers and employees 
only when reportable transactions occur during a reporting period, 
usually a calendar year. Reporting is self-initiated. Reportable 
transactions are generally not the norm. In determining whether a 
report is owed, an officer or employee of a parent or intermediate 
union would consider the nature of a transaction or interest of which 
he or she has knowledge, rather than consider information about the 
operations of every subordinate affiliate. Moreover, with regard to an 
officer or employee's dealings with vendors and service providers, not 
all transactions with such entities must be reported. Instead, only 
those matters involving financial situations in which one has an 
interest or derives income or other benefits with monetary value, as 
required by sections 202(a)(3) and (4), must be reported. Reportable 
benefits would include gratuities, such as complimentary hotel rooms, 
but not regular business or commercial transactions in which no such 
gratuity is conferred. See IM section 246.400. Thus, an officer or 
employee would not be required to report the value of the hotel room 
for which he or she paid market value on terms available to the public.
    Union officers and employees, like most individuals, do not 
generally receive large gifts and gratuities in connection with their 
business dealings, and therefore are unlikely to have any reporting 
obligations. Further, those who do receive such gifts and gratuities 
are likely to have received them as a result of a vendor or service 
provider's intent to influence the union officer or employee. In any 
event, if gifts or other benefits are conveyed or received, a union 
officer or employee would be in position to seek further information 
concerning the entity providing the gift or other benefit, and, if the 
requisite relationships exist, the reporting requirements dictate 
disclosure so members and the public can determine whether or not a 
potential conflict of interest exists. Additionally, a union officer or 
employee with a significant interest in a business, like any similar 
individual with such an interest, is likely in a position to know the 
entities with which the business deals. The same risk of conflict 
exists where a spouse or minor child of an officer or employee with 
significant authority or influence over a subordinate affiliate works 
for a company that has business dealings with those affiliates or 
business with or involving an employer whose employees are represented 
by the affiliates. Under the 2007 rule, an international officer whose 
spouse works on commission for a business supply/printing company that 
sells personal computers, office furniture, and printing services 
throughout the country to locals affiliated with the international 
union would not report the spouse's income, even though the potential 
conflict of interest that such a relationship poses is apparent. Under 
the revised rule, such income is reportable.
    Thus, potential filers are not required to engage in extensive 
research or create a ``central repository'' to determine the 
applicability of the Form LM-30 reporting requirements in top-down 
situations. In instances where the union officer or employee or his or 
her spouse or minor child is an employee of a vendor or service 
provider, receives an occasional payment, such as a gift or gratuity or 
a discount on a purchase, or otherwise has difficulty determining the 
applicability of the top-down or other reporting requirements, the 
Department is available to provide compliance assistance. In this 
regard, the Department advises that any officer or employee who 
encounters such difficulty should request necessary information in 
writing from the union, vendor, service provider, or employer. If the 
entity refuses to provide the information, the officer or employee 
should contact the Department for assistance in obtaining the 
information. In the meantime, the union officer or employee should make 
a good faith determination, based on the information reasonably 
available, whether reporting is required for the matter involved. If 
the union officer or employee determines that no report is required, 
the officer or employee should retain the written request for 
information that he or she presented to the business, employer, or 
union and any related documentation.
    If an investigation is conducted, there is no risk of prosecution 
absent unusual circumstances calling into doubt the legitimacy of the 
good faith determination. See 72 FR at 36133. The Department emphasizes 
that criminal liability only results from a willful action or from 
knowingly making a false statement or representation of a material fact 
or knowingly failing to disclose a material fact. See LMRDA Section 
209, 29 U.S.C. 439.
    The Department disagrees with the concern expressed by some 
commenters that top-down reporting, as prescribed in the 2007 rule, 
would result in ``widespread * * * non-compliance.'' The Department 
expects that union officers and employees will undertake the task 
responsibly and without undue burden, as the rule reasonably achieves 
conflict-of-interest reporting without undue burden on filers. In 
particular, the Department anticipates that the ``significant authority 
or influence'' modification it has adopted in the rule will reduce the 
general level of concern that the proposal may have created among 
employees of parent and intermediate unions. The Department expects 
that only a small fraction of such individuals will have any top-down 
reporting obligations.

[[Page 66471]]

Comments To Narrow the Scope of Top-Down Reporting to Individuals 
Having ``Significant Authority or Influence'' and Department's Response
    A federation of national and international labor unions proposed 
narrowing the scope of top-down reporting by limiting reporting to 
situations in which the filer has ``significant authority or 
influence'' over the subordinate labor union. The commenter noted that 
the Department had proposed under Part C of the instructions to limit 
reporting payments from employers in competition with represented 
employers to situations in which an employee possessed significant 
authority or influence over certain union functions, such as 
negotiations, contract administration, or organizing. The federation 
noted that the Department justified this Part C limitation by stating 
that it relieves ``the undue burden'' of requiring the filer ``to 
undertake research in order to discover'' who are ``competitors to 
their union's represented employers.'' 75 FR 48427.\40\ The commenter 
asserted that requiring all national or international union officers 
and employees to conduct research to identify employers or businesses 
with which lower-level affiliates bargain or otherwise deal would 
impose a similar ``undue burden.''
---------------------------------------------------------------------------

    \40\ The commenter is referring to the following statement 
(implementing section 202(a)(6) of the Act):
    [An officer or employee must report a payment received from 
certain employers, including] an employer in competition with an 
employer whose employees your organization represents or whose 
employees your labor organization is actively seeking to represent, 
if you are involved with the organizing, collective bargaining, or 
contract administration activities or possess significant authority 
or influence over such activities. You are deemed to have such 
authority and influence of you possess authority by virtue of your 
position, even if you did not become involved in these activities.
    75 FR 48450. See 75 FR 48420, 48427, 48434 (discussing this part 
of the instructions). The 2007 rule required that officers and 
employees report such payments even if they had no involvement with 
the activities identified above or possessed no significant 
authority or influence over such activities.
---------------------------------------------------------------------------

    Three national/international unions specifically concurred with the 
federation's proposal to narrow top-down reporting to those officers 
and employees with ``significant authority or influence.'' Advocating 
for limiting the top-down requirement to a ``more rational level,'' one 
commenter stated that narrowing the requirement by the ``significant 
authority or influence'' variable would ``help to lessen the 
considerable burden of requiring officers or staff to know all the 
business relationships involving * * * more than a hundred subsidiary 
entities.'' Another commenter stated that a vast majority of its 
international union officers and employees have no responsibilities or 
authority with respect to the union's numerous local unions and 
intermediate bodies, and described the idea of limiting reporting to 
officers and employees with ``significant authority or influence'' as 
``far more practicable, yet still burdensome, and more in tune with the 
Act's ultimate objective of limiting reporting to areas where there 
exists an actual or potential conflict of interest.'' \41\
---------------------------------------------------------------------------

    \41\ This commenter proposed using criteria set forth under the 
Fair Labor Standards Act (FLSA) to determine, on a case-by-case 
basis, if an individual has ``significant authority or influence'' 
over the subordinate entity. The commenter, apparently, is referring 
to the test used for the FLSA's administrative exemption. See 29 CFR 
541.201-.203. The Department disagrees with this suggestion 
regarding the application of the FLSA factors, as these factors will 
not easily correspond to the activities of union officers and 
employees and the purpose of the determination regarding such 
significant authority or influence.
---------------------------------------------------------------------------

    Upon consideration of these comments and a further consideration of 
how best to achieve the Act's intended disclosure without imposing 
unreasonable burden, the Department has concluded that the federation's 
suggestion is a better approach than the approaches taken in the 2007 
rule and the 2010 NPRM. While the Department disagrees with the view of 
certain commenters that top-down reporting is not justified--however 
limited--because of the burden associated with it, the Department 
concurs that most union employees do not have significant authority or 
influence over matters related to lower-level unions and therefore 
would not present the kind of conflict between their personal interests 
and their responsibilities to the union that the LMRDA intended to 
disclose. The Department also acknowledges that such employees are 
likely to be less familiar with the Form LM-30 requirements than 
officers and employees with significant authority or influence over 
these affiliates. \42\
---------------------------------------------------------------------------

    \42\ The Department recognizes that some might see a unified 
approach for officers and employees as preferable to the approach 
adopted in the final rule. The Department notes, however, that it 
did not propose any change to the basic approach established for 
officers in the 2007 rule and supplanting this approach now could be 
perceived as unfair to commenters. Furthermore, on a practical 
level, the Department believes that disclosure is equally well 
served by the approach adopted in the final rule. Generally, an 
officer of a parent or intermediate union, by virtue of his or her 
office, exercises significant authority or influence over 
subordinate affiliates. While the same is not true of most employees 
of parent and intermediate unions, in those instances where an 
employee possesses such authority, he or she has the same reporting 
obligation as an officer.
---------------------------------------------------------------------------

    Additionally, those employees who exercise significant authority or 
influence over subordinates, unlike most employees, are positioned to 
affect relationships involving subordinate affiliates and to be 
influenced by a represented employer or a potential or current vendor 
or service provider of a lower-level union. Thus, the Department is 
interpreting section 202 in a manner that targets Form LM-30 top-down 
reporting to those employees with significant authority or influence 
over lower-level unions, as a reasonable way to capture conflict-of-
interest situations while avoiding possible confusion for those 
employees who are unlikely to have conflicts of interest involving 
lower-level bodies. This approach ensures that the Form LM-30 reporting 
requirements do not unnecessarily intrude upon the legitimate internal 
operations of unions, and thus better implements the Congressional 
purpose behind section 202. In the Department's view, this approach 
effectuates the statute's disclosure purpose while limiting unnecessary 
intrusion on unions and their employees. Further, because of other 
aspects of this final rule that exempt from reporting such transactions 
as mortgages, car loans, and similar transactions--so long as they are 
based on market rates and prices--the burden associated with top-down 
reporting, as have all aspects of Form LM-30 reporting, has been 
substantially reduced from the requirements established in the 2007 
rule.
    By requiring employees who exercise authority or influence over 
subordinate affiliates to report on interests and payments in companies 
that do business with these affiliates or with represented employers, 
the Department brings top-down reporting into greater congruence with 
the language of section 202, which requires conflict-of-interest 
reporting by both officers and employees. Although there is an 
inferential basis for the distinction made in the 2007 rule between 
union officers and union employees, i.e., that only relatively few 
employees (compared to union officers) wield the influence that would 
give rise to potential conflicts of interest, neither the statute nor 
the 2007 rule distinguishes between the two categories in any other 
respect for reporting purposes. Moreover, there is little basis for a 
blanket exclusion of higher-level union employees, because such 
individuals (e.g., union organizers) could exercise significant 
authority or influence over matters relating to subordinate affiliates.
    Furthermore, regarding the other 2007 carve-outs to top-down 
reporting

[[Page 66472]]

(payments received by the officer's spouse or minor children as bona 
fide employees and financial interests held in companies that did 
business with an employer whose employees are represented by a 
subordinate affiliate), the statute also does not distinguish between, 
on one hand, financial interests held by officers and employees, and, 
on the other hand, financial interests held by their spouses and minor 
children. Additionally, there is little basis for excluding interests 
in and income and benefits derived from a business that deals with the 
employer but not the union and its trusts, and the 2007 rule did not 
explain any perceived distinction. In the Department's view, this 
exclusion creates confusion regarding the scope of top-down reporting, 
as indicated in the comments to the NPRM, which reflected a 
misunderstanding by the commenters about this aspect of the 2007 rule. 
It also illustrated potential under-inclusiveness of the ``bona fide 
employee'' exception to top-down reporting in the 2007 rule, such as 
the example of the higher-level union officer who influences affiliates 
to do business with the company that employs the spouse of the officer 
or employee. Finally, section 241.100 of the LMRDA Interpretative 
Manual, upon which reporting by higher level officers was based, 
involved a conflict-of-interest scenario that would not have been 
reported under the rule.\43\ Reporting will now be required for that 
scenario.
---------------------------------------------------------------------------

    \43\ In short, this section, which had been issued in 1962, 
provided that an international union officer must report interests 
that the officer and his spouse had in a company that dealt in 
substantial part with a represented employer of a subordinate body, 
despite the officer's lack of specific authority for representation 
activities. While the interpretation was specific to income received 
for an entity that had dealings with a subordinate affiliate, 
neither the interpretation nor the language of the statute supports 
an argument that limits reporting to these specific factors. The IM 
section is also consistent with the purpose of the statute, which 
requires officers and employees to publicly disclose possible 
conflicts between their personal financial interests and their duty 
to the labor union and its members.
---------------------------------------------------------------------------

    The Department is also not applying the identical standard utilized 
in Part C of the revised instructions for payments received under 
section 202(a)(6), regarding payments received from an employer in 
competition with a represented employer. There, an officer or employee 
must report a payment from such a competitor employer, if the 
individual is involved with the organizing, collective bargaining, or 
contract administration activities or possesses significant authority 
or influence over such activities. This standard is appropriate under 
such circumstances, as section 202(a)(6) employers (and particularly 
the competitor employer example) are further removed from the union 
than the closer relationships described in section 202(a)(1)-(5).
    In the top-down reporting scenario, the potential conflicts of 
interest of union officers and employees with significant authority or 
influence extend to any area of union activity engaged in by 
subordinate affiliates.\44\ These higher-level union employees may 
exercise control over the actions and decisions of lower-level unions 
in any area of union activities, including not only organizing, 
collective bargaining, and contract enforcement, but also including 
spending or investment decisions and union administration. Further, 
such higher-level employees may have substantial communication or 
interaction with officers and employees of subordinate bodies whereby 
they ``significantly influence'' the actions by such lower-level 
bodies. Moreover, union officers of a higher-level body possess 
significant authority and influence by virtue of their position, and 
they are covered under this rule's top-down reporting requirements 
without exception. Such higher-level officers are elected directly by 
members at lower levels of the union, or indirectly through 
representatives chosen by such lower-level unions, and thus are 
accountable to those members and can influence the officers and 
employees of the lower-level unions.
---------------------------------------------------------------------------

    \44\ Section 202 assumes that all union officers and employees 
(other than exclusively clerical or custodial employees) possess 
sufficient authority and influence, at their level of the union, 
without reference to specific duties and responsibilities, to 
warrant conflict of interest reporting if the official receives a 
payment from or has an interest in the statutorily-enumerated 
entities. However, the statute is not explicit, in the case of 
higher-level union officials, as to whether reporting is required 
with respect to potential conflicts of interest in relation to 
subordinate affiliates within the union's hierarchy. Nevertheless, 
it is the Department's view that top-down reporting is necessary to 
ensure that conflict of interest payments are captured, as 
illustrated above. Some union commenters, as identified above, 
explicitly acknowledged that conflict of interest scenarios are 
possible with transactions involving lower levels of the union.
---------------------------------------------------------------------------

    Finally, the Department does not adopt a limitation of the 
``significant authority or influence'' requirement to ``a matter 
potentially implicated by the transaction in question,'' as recommended 
by one commenter, because the potential conflict of interest for an 
officer (or an employee with significant authority or influence over a 
subordinate affiliate) is clearly implicated without any further 
clarification.

F. Other Issues Concerning the Form LM-30 Reporting Requirements

    While the Department proposed changes to only five substantive 
areas of the 2007 rule's reporting requirements, the comments to the 
NPRM addressed other areas related to Form LM-30 reporting. These 
issues include: the definitions of ``substantial part'' and ``actively 
seeking to represent'' in LMRDA section 202 (a)(3); the definition of 
``labor organization officer'' in section 202; the reporting of 
director's fees; the de minimis reporting exemptions; value range 
reporting; and alternative statutory constructions of section 202. For 
completeness, the comments on these areas are addressed below. While 
these comments are helpful to the Department in identifying concerns 
among the various regulated communities and directing compliance 
resources, the comments address matters that are beyond the scope of 
this rule.
1. The Definition of ``Substantial Part'' in Section 202(a)(3)
    LMRDA section 202(a)(3) requires union officials to report any 
interests in and payments from, ``any business a substantial part of 
which consists of buying from, selling or leasing to, or otherwise 
dealing with, the business of an employer whose employees such labor 
organization represents or is actively seeking to represent'' (emphasis 
added). In the 2007 rule, the Department determined that 10% or more of 
a business's annual receipts will be considered ``a substantial part'' 
of its business. See Definition 15, ``substantial part,'' in the 2007 
Form LM-30 Instructions; 72 FR 36133. In the 2010 NPRM, the Department 
stated it was retaining the 2007 definition of ``substantial part.'' 
See 75 FR 48434.
    Three national/international union commenters asserted that the 
definition of ``substantial part'' in the 2007 rule unnecessarily 
complicates compliance with the Form LM-30. One commenter, noting the 
difficulty it poses for top-down reporting by officials of parent and 
intermediate unions, stated that it unfairly requires a union official 
to ``take affirmative steps to investigate.'' Another national/
international union commenter argued that defining ``substantial part'' 
as 10% or more creates too low a threshold for reporting. The commenter 
instead suggested that a larger percentage (it did not suggest a 
particular percentage) would be a more appropriate threshold, citing to 
section 245.200 in the LMRDA Interpretative Manual, which addresses 
whether a company's dealings with an employer

[[Page 66473]]

that amounted to some 80% of its business was ``substantial'' within 
the meaning of section 202(a)(3).\45\ In the commenter's view, setting 
the threshold at 10% requires reporting about payments received from 
companies only doing a modest amount of business with a covered 
employer, requiring, in its view, ``an inordinate amount of time to 
survey and evaluate every single business,'' which an official, his or 
her spouse, or minor child have transactions with or holdings in during 
the fiscal year. The commenter cited the unfairness in not limiting 
reporting to situations in which the filer has ``actual knowledge.'' 
The commenter added that the filer is at the ``mercy of the business'' 
where the information is not publicly available, and that businesses do 
not have a legal obligation to provide the data and may even be legally 
obligated to not disclose such information. The two other commenters 
generally agreed with this commenter's observations.\46\
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    \45\ 245.200 Substantiality of Dealing Union Officers A and B of 
a local union are co-owners of a building corporation. The 
corporation, through intermediaries who are regular meat 
wholesalers, sold meat to employers who bargain with the local 
union. In 1962, some 80% of the corporation's business of 
approximately $100,000 was with such employers. Both A and B owe 
reports for the year 1962 with regard to their interest in and their 
income from the building corporation pursuant to section 202(a)(3), 
since both the interest and the income are ``derived from, any 
business a substantial part of which consists of buying from, 
selling or leasing to, or otherwise dealing with, the business of an 
employer whose employees such labor organization represents or is 
actively seeking to represent.''
    \46\ The same theme is repeated in the comments submitted on the 
Form LM-30 definition of ``actively seeking to represent,'' as 
discussed in the next section of the text.
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    The Department does not agree that the definition of 
``substantial'' adds any additional burden, or requires an 
``inordinate'' amount of time to apply, separately from the top-down 
reporting obligation. The statute establishes reporting in certain 
enumerated situations involving interests or income or benefits from 
vendors or service providers, such as where the vendors or service 
providers deal in substantial part with a represented employer. The 
purposes served by section 202(a)(3) require a reporting threshold that 
balances the burden associated with reporting insubstantial matters and 
the benefit served by the disclosure of any potential conflicts, no 
matter how small. In this regard, a quantitative approach is 
appropriate in analyzing the level of business engaged in for a vendor 
or service provider, and it is relatively easy for a filer to apply, 
thus reducing burden.
    A filer does not need to investigate the relationship of every 
vendor or service provider to each represented employer of his or her 
union; the filer only needs to look at those in which he or she has an 
interest or from which he or she has received income or other benefit. 
Further, the commenter presented no evidence that the 10% threshold 
constitutes only a ``modest'' rather than ``substantial'' percentage of 
business for most entities, and is therefore unlikely to target likely 
conflict-of-interest scenarios.
    As discussed in the preamble to the 2007 rule, 72 FR 36133-34, 
section 245.200 of the LMRDA Interpretative Manual (set forth in the 
margin), does not define a reporting threshold. It does not specify or 
imply that reports would not be required of union officials if the 
corporation derived less than 80% of its business from the employer. 
The example's inclusion of the 80% figure illustrates only one 
``substantial business'' relationship that would require a report--not 
a threshold to use in determining whether a reporting obligation is 
triggered. Furthermore, no commenter suggested an alternative 
percentage threshold to 10%.
    There is no merit to the suggestion that a reporting obligation 
attaches only where a union official possesses actual knowledge that 
the vendor's volume of business with a relevant employer was greater 
than the reporting threshold. This approach would provide an incentive 
for a union official to remain willfully ignorant of the business 
relationship between a vendor in which he or she holds an interest or 
from which he or she receives a payment and a represented employer. A 
subjective standard in which actual knowledge of the amount of business 
triggers reporting would also be difficult to implement.
    The Department recognizes that some union officials may encounter 
difficulty in learning the amount of business a vendor conducts with 
the represented employer. The Department, however, believes that the 
likelihood of such difficulty is overstated, and the filer is not at 
the ``mercy'' of a business to determine whether or not the 
substantiality threshold has been met. This is especially true where 
the union official holds an ownership or operating interest in the 
vendor. In those instances, there should be little trouble in obtaining 
the needed information.
    There may be some instances where the union official encounters 
some difficulty in obtaining information, such as where the official is 
an employee of the vendor or receives a gift or gratuity from, or a 
discount on a purchase provided by, the vendor. In such instances, the 
union official should request information in writing from the vendor. 
If the vendor refuses to provide the information, the official should 
contact the Department for assistance in obtaining the information. In 
the meantime, the union official should make a good faith estimate, 
based on the information reasonably available, of whether the 10% 
threshold has been met. If such estimate exceeds the 10% threshold, 
then the union official should file the report and explain that the 
vendor failed to provide requested information. If the estimate yields 
a figure less than 10%, no report is required, but the union official 
should retain the written request for information he or she presented 
to the vendor and any work sheet used to arrive at the less than 10% 
figure. See 72 FR at 36133.
    With regard to the concerns expressed about potential criminal 
liability from a filer's failure to identify all companies that have 
conducted substantive business with a represented employer, the 
Department emphasizes that criminal liability only results from a 
willful action or from knowingly making a false statement or 
representation of a material fact or knowingly failing to disclose a 
material fact. See LMRDA Section 209, 29 U.S.C. 439. Thus, a filer who 
makes a good faith, conscientious effort to comply with the reporting 
requirements should have no concern about criminal liability.
2. Definition of ``Actively Seeking To Represent'' in Section 202
    LMRDA sections 202(a)(1), (2), and (5) require union officials to 
report certain payments, interests, transactions, and arrangements from 
an employer whose employees its union represents or is actively seeking 
to represent. Additionally, LMRDA section 202(a)(3) requires union 
officials to report any interests in, and payments from, ``any business 
a substantial part of which consists of buying from, selling or leasing 
to, or otherwise dealing with, the business of an employer whose 
employees such labor organization represents or is actively seeking to 
represent'' (emphasis added). The 2007 rule created a definition for 
``actively seeking to represent,'' a term not previously defined in the 
Form LM-30 and its instructions as follows:
    ``Actively seeking to represent'' means that a labor organization 
has taken steps during the filer's fiscal year to become the bargaining 
representative of the employees of an employer, including but not 
limited to:

[[Page 66474]]

     Sending organizers to an employer's facility;
     Placing an individual in a position as an employee of an 
employer that is the subject of an organizing drive and paying that 
individual subsidies to assist in the union's organizing activities;
     Circulating a petition for representation among employees;
     Soliciting employees to sign membership cards;
     Handing out leaflets;
     Picketing; or
     Demanding recognition or bargaining rights or obtaining or 
requesting an employer to enter into a neutrality agreement (whereby 
the employer agrees not to take a position for or against union 
representation of its employees), or otherwise committing labor or 
financial resources to seek representation of employees working for the 
employer. Where a filer's union has taken any of the foregoing steps, 
the filer is required to report a payment or interest received, or 
transaction conducted, during that reporting period.

    Note:  Leafleting or picketing, such as purely ``informational'' 
or ``area standards'' picketing, that is wholly without the object 
of organizing the employees of a targeted employer will not alone 
trigger a reporting obligation. For example, if a union pickets a 
sporting goods retailer solely for the purpose of alerting the 
public that the retailer is selling goods that are made by children 
working in oppressive conditions in violation of accepted 
international standards, the picketing would not meet the ``actively 
seeking to represent'' standard.

    The 2007 Form LM-30 Instructions, Definition 1. In the 2010 NPRM, 
the Department stated that it was leaving unchanged the 2007 definition 
of ``actively seeking to represent.'' See 75 FR 48434.
    The Department received five comments on the Department's 2007 
definition of ``actively seeking to represent.'' One public policy 
organization supported the definition. Three national/international 
labor unions criticized the definition, and a federation of 
international labor unions offered a clarification of the definition.
    Three national/international union commenters urged the Department 
to reevaluate the ``actively seeking to represent'' definition, arguing 
that the proposed rule's expanded top-down reporting obligation, 
coupled with this definition, significantly adds to the overall burden 
on filers. One of these commenters called the 2007 rule's definition 
``absurdly broad.''
    One commenter argued that ``[i]t is unfair to subject union 
officers and employees to prosecution for failing to track vaguely-
defined activities at every subordinate level of their union.'' The 
commenter urged the Department to adopt a revised definition that is 
``narrower'' and ``more objective,'' and that is ``limited to discrete 
and enumerated activities that clearly constitute organizing employees, 
such as a labor organization demanding recognition from an employer or 
filing an NLRB petition during the reporting period.'' Another 
commenter echoed the concern about the definition's ``vague triggers,'' 
and ``urge[d] the [Department] to remember that the LMRDA and the LM-30 
reporting obligation are subject to criminal penalties.'' This 
commenter suggested that revising the definition to include 
``unequivocal conduct, such as filing a petition with the NLRB or 
demanding representation or bargaining rights'' would avoid creating a 
chilling effect for ``workers seeking to associate to protect and 
advance their economic interests.'' Further, the commenter noted that 
the absence of a ``durational limit on conduct'' will make it even more 
difficult to determine the reporting obligation, and suggested that 
``any conduct that constitutes actively seeking to represent should be 
limited to actions undertaken during the reporting period about which a 
union official is filing and not extend to conduct completed in prior 
reporting years.''
    The Department disagrees with these commenters' criticism of the 
definition of ``actively seeking to represent.'' First, the matters 
related to top-down reporting have been addressed in the previous 
section on that topic, and the Department reiterates that the limiting 
of such reporting to union officials with significant authority or 
influence over lower level unions (all officers and those employees 
with such influence or authority) will alleviate much of the 
commenters' concern. Second, the criticism of the definition as 
overbroad, with ``vague triggers,'' and without ``objective'' criteria, 
is unpersuasive. The definition is narrowly tailored to acts that 
constitute concrete steps towards organizing, as opposed to merely 
having an interest in organizing. See the 2007 rule at 72 FR 36131. The 
enumerated acts are objective in nature, as they are activities that 
unions as a whole generally take to seek recognition, and they 
illustrate ``concrete steps'' toward acquiring exclusive bargaining 
representative status. Pursuant to the terms of the definition, the 
activities, as well as the payments to be reported, must occur during 
the particular fiscal year in question. Limiting ``actively seeking to 
represent'' to ``demanding recognition or filing an NLRB petition'' 
does not constitute the entire universe of ``concrete steps'' that a 
union can take to actively seek representation. Thus, creating such a 
limitation would unduly limit reporting.
    Moreover, while the activities listed are specific, the ``otherwise 
committing labor or financial resources to seek representation of 
employees working for the employer'' language is necessary, as the 
Department cannot enumerate every conceivable scenario that constitutes 
a situation in which a union is ``actively seeking to represent'' 
employees. In this regard, the term ``actively seeking to represent'' 
derives from the statute, and the definition is a reasonable attempt to 
give meaning to the term. The definition of ``actively seeking to 
represent'' will aid filers in complying with the reporting 
requirements, and, as with the definition of ``substantial part,'' a 
filer can request assistance from the Department if he or she is having 
difficulty determining if reporting is required. Again, pursuant to the 
statute, criminal liability is triggered only upon a showing of 
willfulness.
    A federation of international labor unions urged the Department to 
make two changes to the definition of ``actively seeking to 
represent.'' First, the commenter suggested that the word ``concrete'' 
be added before the word ``steps,'' so that the first sentence of the 
definition would begin,
    ``Actively Seeking to Represent--means that a labor organization 
has taken Concrete steps during your fiscal year to become the 
bargaining representative of the employees of an employer, including 
but not limited to * * *'' (emphasis added).
    The commenter noted that adding the word ``concrete'' would make 
the definition consistent with the Department's rationale for the 
definition as stated in the 2007 rule,\47\ and would ``advance both the 
public interest in clarifying the Department's intent and the 
legitimate interests of union officials subject to the rule.''
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    \47\ In the 2007 rule, the Department explained ``that the term 
`actively seeking to represent' is intended to distinguish between 
situations where a union has taken concrete steps to organize and 
those where the union merely has an interest in organizing employees 
of the employer in question.'' 72 FR 36131 (emphasis added).
---------------------------------------------------------------------------

    Second, the commenter stated that two examples of union ``steps'' 
that would constitute ``actively seeking to represent'' are in conflict 
with the Department's stated rationale for the definition in the 2007 
rule. The commenter urged the Department to revise the examples as 
follows (note that the commenter's suggested additions are

[[Page 66475]]

in italics): (1) Sending organizers to an employer's facility to 
solicit employee support for the union; and (2) Handing out leaflets 
seeking or urging employee support for the union.''
    The Department believes that the federation's first suggestion, to 
insert the term ``concrete'' into the definition of ``actively seeking 
to represent,'' would provide filers with additional clarity. The 
Department considers such addition to be consistent with the stated 
purpose of the definition, which is to view only concrete steps as 
constituting ``actively'' seeking to represent. The Department does not 
view this change as a material revision to the current rule and is 
making the change.
    The second suggestion would require the rule to be modified in a 
substantial way and therefore is beyond the scope of this rule. The 
Department, however, notes its disagreement with the commenter's 
suggestions, as there are concrete steps that a union can take in 
actively seeking to represent employees other than sending organizers 
to an employer's facility expressly soliciting employee support for the 
union or handing out leaflets expressly seeking or urging employee 
support for the union.
3. Definition of ``Labor Organization Officer'' in Section 202
    The LMRDA defines ``labor organization officer'' in section 
3(n).\48\ The 2007 Form LM-30 Instructions further clarifies this 
definition as set out in the margin.\49\
---------------------------------------------------------------------------

    \48\ ``Officer'' means any constitutional officer, any person 
authorized to perform the functions of president, vice president, 
secretary, treasurer, or other executive functions of a labor 
organization, and any member of its executive board or similar 
governing body. LMRDA section 3(n).
    \49\ Labor organization officer means any constitutional 
officer, any person authorized to perform the functions of 
president, vice president, secretary, treasurer, or other executive 
functions of a labor organization, and any member of its executive 
board or similar governing body. An officer is (1) a person 
identified as an officer by the constitution and bylaws of the labor 
organization; (2) any person authorized to perform the functions of 
president, vice president, secretary, or treasurer; (3) any person 
who in fact has executive or policy-making authority or 
responsibility; and (4) a member of a group identified as an 
executive board or a body which is vested with functions normally 
performed by an executive board.
    Note: Under this definition, an officer includes a trustee 
appointed by the national or international union to administer a 
local union in trusteeship. If you are a trustee elected or 
appointed by the local union to audit and/or hold the assets of the 
union, you may or may not be a union officer, depending on your 
union's constitution and other factors. If you serve in your union 
in any capacity and you are unsure if your position is an officer 
position, you are likely an officer of a labor organization if any 
one of the following applies:
     Your union's constitution or bylaws refers to your 
position as an officer of the union
     Your union's constitution or bylaws states that your 
position has the authority to make executive decisions for the union 
or that you are authorized to perform the functions of president, 
vice president, secretary, treasurer, or other constitutionally 
designated officer
     Your union's annual Form LM-2 or Form LM-3 lists your 
position as an officer of the union
     In your position, you serve on your union's executive 
board or similar governing body
    See Definition 12, 2007 Form LM-30 Instructions.
---------------------------------------------------------------------------

    One national/international union commenter requested that the 
Department amend the definition of ``labor organization officer'' so 
that it is limited to ``individuals who are named officers holding 
positions given policy-making authority pursuant to the union 
constitution and bylaws.'' The commenter stated that the Department's 
definition is overbroad and could result in the Form LM-30 reporting 
requirements extending to a union member who was unaware that he would 
be subject to Form LM-30 reporting requirements, including the top-down 
reporting obligation. The commenter views the current definition as 
reaching individuals the statute did not intend to reach, such as 
``unsuspecting rank-and-file members.''
    The Department disagrees with the commenter's views on this issue. 
The rule's definition of ``labor organization officer'' is derived 
directly from section 3(n) of the statute, and merely provides further 
clarification of the term and, as an example, states under what 
circumstances a trustee may be a union officer. The Department does not 
view the definition as exceeding the scope or intent of section 3(n). 
Moreover, the Department notes that pursuant to section 3(n) and the 
``retained'' Form LM-30 definition, rank-and-file union members and 
other volunteers, such as stewards, would not ordinarily be covered 
union officers.
4. Reporting of Director's Fees
    The 2007 rule requires that a union official who receives 
``director's fees'' from an employer generally must report these 
payments. The Department did not propose to eliminate this requirement. 
A law firm opposed the requirement to director's fees to be reported on 
Form LM-30. The Department rejects the suggestion to remove this 
requirement, as this was not a change proposed in the NPRM, and, 
furthermore, a union official's service on a board of directors, and 
the accompanying fee, may influence the official's duties to the union.
5. De Minimis Exemptions
    The 2007 rule adopted several de minimis exemptions, including: A 
$250 reporting threshold; a $20 recordkeeping threshold; and a 
``widely-attended gathering'' standard. The widely-attended gathering 
provision exempts reporting of payments or gifts received while in 
attendance at up to two of such gatherings per fiscal year for which an 
employer or business has spent $125 or less per employee per gathering. 
See the 2007 Form LM-30 Instructions, page 2. The Department has long 
had a de minimis exemption for Form LM-30 reporting, which derives from 
LMRDA Interpretative Manual sections 241.700 and 241.710, although 
historically the exemption there applied to payments of ``insubstantial 
value,'' without providing a quantitative threshold.\50\ The 2007 rule 
retained a prior $100 exemption for unregistered securities, which 
existed in the pre-2007 Form LM-30 Instructions. The Department 
proposed no change to this exemption or the de minimis thresholds.
---------------------------------------------------------------------------

    \50\ In 2005, a reporting exemption of $25 was established, 
which the 2007 rule subsequently raised to $250. Additionally, IM 
section 241.700 requires that the payments of insubstantial value be 
``given under circumstances unrelated to the recipient's status in a 
labor organization.'' Neither the 2007 rule nor the revised rule 
have this requirement.
---------------------------------------------------------------------------

    Three commenters were pleased that the Department had not proposed 
to eliminate the de minimis exemption, but suggested that the 
Department consider revising the dollar thresholds for reporting and 
linking them to a cost-of-living or other automatic adjustment 
mechanism. A law firm expressed support for the 2007 rule's de minimis 
exemptions,\51\ but suggested that the de minimis thresholds be 
revised. The commenter urged the Department to increase the $20 and 
$250 de minimis thresholds to $50 and $500, respectively, and to 
increase the widely-attended gathering exclusion from $125 to $150.
---------------------------------------------------------------------------

    \51\ This commenter also urged the Department to implement the 
same de minimis thresholds for Form LM-10 reporting. Since this 
issue is beyond the scope of this rule, the Department acknowledges 
this suggestion, but will not address it in this rule.
---------------------------------------------------------------------------

    Although the suggestions are beyond the scope of this rule, the 
Department is not persuaded that a $50 recordkeeping threshold, a $500 
reporting threshold, and a $150 widely-attended gathering threshold are 
more appropriate than the current $20, $250, and $125 thresholds, 
respectively. The Department views the current levels, based on dollar 
values, as providing a reasonable distinction, applied nationally, 
between gifts that may create a conflict of interest and those that do 
not. The commenter did not provide any persuasive justification for why 
the increased amounts would better distinguish between gifts that may 
``conflict'' and those that do not.

[[Page 66476]]

    A national/international union commenter urged the Department to 
revise the de minimis thresholds, arguing that they are too low given 
the steep costs of meals and entertainment charged by hotels located in 
large metropolitan areas. The commenter provided examples of conference 
rates at hotels where meetings are held, and listed examples of the 
lowest cost food items available, many of which exceed the $20 de 
minimis threshold.
    The commenter also expressed concern that reporting such conference 
and meal rates on Form LM-30 ``would very likely mislead union members 
and provide fodder for anti-union consultants.'' The commenter added, 
``To many union members, disclosing such large sums received for meals 
might well call to mind lavish entertainment and cause concern about 
possible susceptibility to improper influence * * * However, the 
reality would [be] quite different--literally nothing more than a few 
bagels and sandwiches, which the membership would not care about if 
they knew the true facts. But under current rules, those members would 
see a formal Government filing, presumably to deal with something 
significant, and get exactly the wrong impression about their 
representatives.''
    The commenter noted that inflation will decrease the value of all 
de minimis thresholds contained in the proposed Form LM-30, and 
cautioned that the de minimis threshold problem will become more 
significant with time. Finally, the commenter urged the Department to 
adopt a method for establishing de minimis thresholds that reflect the 
realities of union officials' circumstances, and cited the per diem 
rates paid by government agencies as an example.
    The Department disagrees with this commenter's suggestion to use 
different de minimis thresholds, varying by locality or setting them to 
a level based on the charges assessed for ``meals and entertainment * * 
* by hotels located in large metropolitan areas.'' In the Department's 
view, it would be impractical to establish varying rates by locality, 
and pegging them to the most expensive charges for modest meals and 
other gratuities would create too high of a dollar threshold, thus 
potentially excluding from reporting actual or potential conflicts of 
interest. Moreover, ``steep costs'' and ``large sums'' provided by a 
represented employer and certain key businesses to union officials are 
precisely the types of payments that should be reported on the Form LM-
30, to enable the members and the public to determine the impact, if 
any, on the officials' duties.
    The members should have information concerning these payments in 
order to evaluate for themselves the effect on the officials' duties to 
the union, such as whether or not they constitute ``lavish 
entertainment'' and create possible ``susceptibility to improper 
influence.'' An official concerned with the appearance of a particular 
charge or charges could also provide further information on the Form 
LM-30 to provide increased context to the payments, which would 
diminish or eliminate the problem of members being misled or confused 
by the payments.
    The Department does not concur with the suggestions to index the de 
minimis exemption thresholds with inflation or other quantitative or 
qualitative mechanisms. The exemption is provided to ensure that 
individuals are not required to report, and in some cases even track, 
payments that are of insubstantial value and not likely to constitute 
an actual or potential conflict of interest. Further, establishing a 
quantitative assessment for determining de minimis amounts is superior 
to a qualitative approach, as filers will easily know whether or not a 
payment is exempt, without asking the Department to apply a set of 
factors and determine whether or not the exemption is appropriate. 
Indexing the thresholds and establishing a fluctuating standard would 
jeopardize the convenience of the quantitative assessment and 
unnecessarily risk increasing the burden on union officials--with no 
apparent benefit in terms of transparency.
    A law firm suggested that the Department clarify the exemption for 
attendance at widely-attended gatherings. In its view, the Department 
should revise the exemption so that ``individuals associated with 
service providers to multiemployer plans, employers who contribute to 
such plans, and employer-appointed trustees of plans that are unrelated 
to the Form LM-30 filer's union may all be considered to be among the 
`substantial number of individuals with no relationship to a union or a 
trust in which a labor organization is interested.' '' The commenter 
argues that, without such clarification, the widely-attended gathering 
exception would be overly narrow, and union officials would need to 
``identify by sight the service providers to plans and employer-
appointed trustees of plans with no relationship to their union or its 
affiliated plans in order to ascertain whether an event qualifies as a 
widely attended gathering.'' The Department acknowledges the 
commenter's concern, but this rulemaking does not lend itself to 
addressing a particular activity that does not involve a change 
proposed by the Department. Without expressing a view on this matter, 
the Department notes that it is available to provide compliance 
assistance and guidance to filers on a case-by-case basis.
    Additionally, a federation of international labor unions suggested 
that the exclusion of income from unregistered securities (on page 5, 
exclusion (ii)) be raised from $100 to $250 to achieve consistency with 
the General Exclusion for payments of $250 or less (page 4) of the 
instructions. A national/international labor union concurred with this 
suggestion. The Department disagrees with this proposal. In the 
Department's view, the $100 exemption for unregistered securities is 
reasonable and consistent with past exclusions provided by the 
Department. Further, there is no basis for concluding that the de 
minimis threshold for unregistered securities must be identical to the 
threshold for payments, such as gifts and gratuities, received.
6. Value Range Reporting of Financial Arrangements and Interests
    A national union commenter suggested that item 7(b) in Part A of 
the revised form, and item 12(b) in Part B, be modified to include 
valuation categories (covering different ranges of dollar values, such 
as between $5,000 and $10,000 or $10,000 to $15,000) that filers would 
use to disclose the estimated value of financial arrangements and 
interests. The commenter stated that ``the applicable statutory 
language in the LMRDA is completely silent regarding whether union 
officials have to report the exact value of a financial interest, or 
whether an approximate range is sufficient.'' The commenter stated 
that, for example, requiring the reporting of a ``value range'' of a 
particular stock would adjust for possible fluctuation in the stock's 
value, and noted the difficulty of determining ``a good faith 
estimate'' due to the potential for significant fluctuation in the 
value of a financial transaction or asset. The commenter also indicated 
that Congress and the Office of Government Ethics apply these types of 
valuation categories to the disclosure requirements concerning 
presidential appointees' financial interests.
    The Department disagrees that this approach to reporting would 
increase the utility of the form. Introducing a complex requirement 
actually may increase the reporting burden on filers. Additionally, the 
commenter presented

[[Page 66477]]

no information or analysis as to how this would increase transparency 
regarding actual or potential conflicts of interest.
7. Alternative Views of Reporting Required by Section 202
    An international union representing professional athletes, 
supported by a federation of unions, provided statutory analysis in 
support of an argument that an endorsement arrangement is not 
reportable on Form LM-30. The commenter asserted that sections 
202(a)(3) and (4) should be interpreted to apply only to businesses in 
which the union official has an ownership interest. The commenter's 
position, at bottom, reduces to a claim that the use by Congress of the 
word ``derives,'' rather than ``received'' in these sections evinces a 
plain intention that the interests to be reported are solely 
``ownership interests.''
    As a general matter, the language of sections 202(a)(3) and (4) 
does not provide for this limitation. First, a union officer must file 
``a signed report listing * * * any * * * interest * * * and any income 
or other benefit with monetary value (including reimbursed expenses) * 
* * derived from, any business.'' 29 U.S.C. 432(a)(3), (4) (emphasis 
added). The term ``any business'' cannot easily be read to mean ``any 
business in which the union officer or employee owns an interest.'' 
Second, the commenter asserts that in normal usage the word ``derives'' 
is used ``in lieu of * * * received from'' and indicates that the 
payment is from a business to an individual who holds an ownership 
interest. But the statute uses the term ``derived'' to describe a 
category of income that includes ``payments and other benefits received 
as a bona fide employee.'' 29 U.S.C. 432(a)(1), (2). As income 
``derived'' includes ``payments received,'' Congress was not using 
``derived'' in the limited sense suggested by the commenter. 
Additionally, the Department notes that the crucial distinction between 
``derives'' and ``receives'' that the commenter attributes to these 
terms is not borne out by their common understanding as synonyms. See, 
e.g., ``Derive'' ``to take, receive, or obtain, esp. from a specified 
source.'' Merriam-Webster's Collegiate Dictionary (10th ed. 2002); 
``Receive'' ``to come into possession of: ACQUIRE < ~ a gift >''. Id. 
There is simply no persuasive argument that the plain language of these 
sections evinces the ``ownership'' delimited meaning the commenter 
would attribute to the use of ``derived.''
    Further, the interpretation would exclude from reporting payments 
and gratuities provided by a vendor or service provider to a union 
official seeking to generate business with the official's union. This 
plain potential conflict of interest would go unreported, unless the 
union official held an ownership interest in the business.
    The Department has also considered the additional arguments 
advanced by the commenter, including its assertion that the legislative 
history supports its narrow view of what must be reported under these 
sections. Upon review, the legislative history relied upon by the 
commenter cannot be fairly read to reflect the narrow construction it 
would force upon these sections. The commenter also suggests that its 
preferred reading of sections 202(a)(3) and (4) and the legislative 
history is embodied in the Department's own early interpretation of 
these provisions. The commenter relies on a general discussion in the 
Department's 1961 annual report about its then recent filing experience 
under the Act. In context, however, it is clear that the Department, in 
making these statements, was not offering an interpretation of sections 
202(a)(3) and (4). Instead, the Department was merely reporting on its 
early experience with reports under sections 202 and 203 of the Act. 
Further, in any event, these statements do not evince an interpretation 
that limits an official's reporting obligation under section 202 to 
``ownership interests.''
    The commenter candidly acknowledges that the meaning it attributes 
to the ``1961 interpretation'' is at odds with the Department's 
published interpretation that states: ``Union officers who receive 
complimentary hotel rooms and other gratuities of substantial value 
from the hotel at which the union holds its convention are required to 
report pursuant to section 202(a)(4).'' Interpretative Manual, section 
246.400. Although the commenter indicates that this interpretation was 
issued by the Department sometime after 1984, the interpretation, in 
fact, was issued in 1964.\52\ Thus, the position set forth in the LMRDA 
Interpretative Manual demonstrates that the position taken by the 
Department in the 2007 rule was not a new one.
---------------------------------------------------------------------------

    \52\ The LMRDA was enforced by various offices within the 
Department prior to 1984, when OLMS was established. The commenter 
inferred that since the interpretation was contained in a 
publication issued by OLMS, it could not have predated 1984. The 
Department's internal files show that the interpretation is dated 
July 1964.
---------------------------------------------------------------------------

    The Department believes that its interpretation that requires union 
officials to report gifts, gratuities, and other payments received by 
union officials from companies that do business with the official's 
union or represented employees is faithful to congressional intent. For 
the same reasons, the Department rejects the commenter's alternative 
request that even if the Department disagrees with its statutory 
arguments, the Department should create an exception for its members 
due to what it considers an unnecessary and undue burden on its 
officials.\53\ Another commenter representing employees working in the 
entertainment industry requested that its officials be exempted from 
reporting certain gratuities, which it claimed were unique to the union 
and its members' industry. This exemption request is outside of the 
scope of the rule, would seemingly require a fact-based analysis, and 
could not in any event be resolved on this limited record.
---------------------------------------------------------------------------

    \53\ The commenter states that ``out of an excess of caution'' 
the union's officials have been reporting these payments because of 
the difficulty they have in determining whether the companies they 
receive payments from conduct substantial business (10% or greater) 
with the league. The Department emphasizes that payments from a 
company doing business with a represented employer are reportable 
only if the business is greater than 10% or more of the company's 
annual receipts. The Department notes that the commenter does not 
state whether filers have made any inquiries regarding the extent of 
business conducted between the companies making payments and the 
league. As stated in the preamble to the 2007 rule, the Department 
is available to assist filers in obtaining such information if their 
own efforts are unsuccessful. See 72 FR 36134.
---------------------------------------------------------------------------

IV. Revisions to the Regulations, Form, and Instructions 54

    This final rule revises the Form LM-30 in order to simplify its use 
by filers by reducing the length of the form (from nine pages to two 
pages) and its instructions (from 22 pages to 13 pages) and eliminating 
or modifying some reporting requirements. The Department identifies 
below the various changes effectuated by the final rule to the 
Department's regulations implementing section 202, 29 CFR 404.4, the 
Form LM-30, and its accompanying instructions, which are incorporated 
into the regulations by reference. 29 CFR 404.3.
---------------------------------------------------------------------------

    \54\ For the convenience of LM-30 filers and the public, this 
section restates most of the information contained in the comparable 
section of the NPRM, revised as necessary to reflect differences 
between the proposed and final rules. See 74 FR 48430-35.
---------------------------------------------------------------------------

A. Regulations

    Only one change has been made to the regulatory text. 29 CFR 
404.1(f). In section 404.1(f), the Department removes the definition of 
``labor organization,'' which had been added in the 2007 rule to 
establish the scope of reporting required of higher-level union 
officers. Paragraphs (g) through (j) of

[[Page 66478]]

section 404.1 also will be re-designated as (f) through (i), 
respectively. The term ``labor organization'' is separately defined in 
the LMRDA, and language regarding the scope of reporting for national, 
international, and intermediate union officers and employees has been 
added to the revised instructions.

B. Revised Form

    The revised Form LM-30 utilizes a simplified format that will 
better facilitate filers' compliance with Form LM-30 reporting 
requirements and increase the form's utility to the public. Unless 
otherwise noted, the revised form and instructions adopted by this rule 
are the same as those proposed in the NPRM. Further, the Department 
will address below comments received on the layout of the form and 
instructions.
    With respect to layout, the revised form more closely resembles the 
pre-2007 form than the lengthier 2007 form. The revised form, which is 
two pages in length, contains four sections: a section that contains 
basic identifying information on the filer and his or her labor 
organization, and Parts A through C. Part A is designed to capture 
reportable transactions between union officials and represented 
employers. Part B captures reportable transactions with businesses that 
deal with the official's union or a trust in which the union has an 
interest, or that have substantial dealings with a represented 
employer. Part C covers transactions with other employers or labor 
relations consultants. The form has been simplified by removing 
numerous schedules, checklists, and examples. While the inclusion of 
this information in the 2007 form was intended to assist filers, it is 
the Department's present view that these additions made the form more 
confusing and difficult to complete.
    The revised form does not contain the summary schedule that was on 
the first page (item 5) of the 2007 form. The Department does not 
believe that requiring a summary schedule to report ``total reported 
income or other payments'' and ``total reported assets'' is useful 
information, by itself, and may be misleading. Without knowing the 
context of the reportable transaction or transactions, a viewer does 
not have a basis to assess the actual or potential conflict of interest 
and the impact such a conflict would have on the official's duties to 
the labor organization. For a filer with multiple payments, a summed 
total on the front page of the form is misleading, even if the totals 
are separated by assets and other payments, since a viewer of the form 
can only judge a conflict of interest by looking at the monetary value 
of the payment or interest along with its source and other pertinent 
information. A sum of money or other payment or asset, in and of 
itself, has no meaning, and can lead to confusion for the viewer and 
reflect unfairly on the filer. Further, presenting a figure for ``total 
reported income or other payments'' gives the impression that this 
total represents payments received by the filer, when in fact, this 
figure might also include items such as interest in personal or real 
property, insurance, or share holdings.
    The revised form does not contain sections on Employer and Business 
Relationships (items 6 and 7, respectively, on the 2007 form). The 
Department does not believe that this general information adds to the 
usefulness of the form, because this information is reported on each 
schedule. A bulleted checklist listing various reportable relationships 
has also been eliminated.
    The revised form's contact information sections in Parts A, B, and 
C generally collect the same information requested in Schedule 1 of the 
2007 form, except that the revised form does not ask whether the filer, 
filer's spouse, or minor child had a relationship with the employer, 
business, or labor relations consultant at the end of the reporting 
period. The Department received no comments on this proposed change. 
The revised form also eliminates the requirement that a filer provide 
the Web site address of the employer, business, or labor relations 
consultant in which the filer holds an interest or receives a payment. 
The Department does not believe that the Web site address is necessary, 
since viewers of the form can independently locate this information.
    In place of the separate Additional Information Schedule, which was 
included in the 2007 form, the revised instructions simply provide 
guidance on how to provide additional information. Filers who choose to 
complete the Form LM-30 in paper format are instructed to attach a 
separate letter-size page, with identifying information. Filers who 
complete the Form LM-30 electronically will be able to add additional 
information as needed.
    In response to the NPRM, ten labor organizations--one federation of 
labor organizations and nine international unions--submitted comments 
on the content and layout of the LM-30 form and instructions. All ten 
commenters expressed support of the Department's proposed revisions and 
endorsed the decision to adopt a form similar to the pre-2007 form. 
Multiple commenters described this earlier form as ``simpler'' and 
``more straight-forward'' than the 2007 form. The commenters that 
generally opposed any changes to the 2007 rule did not comment on the 
content and layout of the form and instructions.
    The federation of labor organizations expressed support for the 
Department's proposed revisions to the form and instructions, with 
noted exceptions. The commenter stated that its experience providing 
training to union officials on their reporting obligations ``indicates 
that the vastly more complicated form and instructions adopted by the 
2007 rule would have been very difficult for union officials to 
understand and complete,'' and would likely have resulted in a lower 
level of compliance than under a simpler report. This commenter also 
suggested several changes to the proposed form and instructions. These 
suggested modifications will be discussed below, in the specific form/
instructions sections to which they pertain. Two international union 
commenters concurred with the comments submitted by the federation of 
labor organizations, including suggested changes to the form and 
instructions.
    Three international union commenters expressed support for the 
Department's proposal, but suggested some additional modifications to 
the form and instructions. These suggestions will be discussed in the 
relevant form/instructions sections below.
    Multiple commenters asserted that the 2007 Form LM-30 reporting 
requirements were overly burdensome, confusing, and complicated, and 
questioned the purpose of the increased disclosure obligation. An 
international union commenter stated that ``[t]he 2007 form was 
extremely burdensome to filers, and confusing and misleading to the 
public.'' Another international union commenter described the 2007 form 
as ``virtually indecipherable.'' Another international union commenter 
stated that the trainings for union officers and employees would have 
been ``unnecessarily complicated--to no useful purpose--had the 
Department determined to use the new form and instructions proposed in 
2007.''
    An additional international union stated that ``[t]he Department's 
proposal correctly recognizes the unnecessary over-complication, 
confusion, and burden caused by its 2007 rule. The new form and 
instructions strike the correct balance between the Act's twin goals of 
requiring disclosure of conflict transactions and not creating 
unnecessary reporting burdens for union officials.''

[[Page 66479]]

    Another international union commenter stated that ``the changes to 
the form[ ] and instructions improve clarity, eliminate redundancy, and 
reduce the amount of unnecessary information currently required to be 
filed.'' The commenter added that the changes ``permit the DOL to more 
effectively fulfill the goals of the LMRDA reporting requirements in 
disclosing conflicts of interest.'' This commenter also stated its view 
that the changes will help filers comply with the LM-30 reporting 
obligation more ``efficiently'' and ``cost effectively'' than under the 
2007 rule.

Section-by-Section Discussion of Revised Form

    A section-by-section discussion of the revised form follows:
First Section--Basic Identifying Information (Items 1-5)
    The first section of the revised form gathers basic information 
about the filer and his or her labor organization. Item 1 requests the 
Form LM-30 file number, and item 2 calls for the fiscal year covered in 
the report. Item 3 provides a box to identify whether the form is being 
filed as an amended report. The filer must provide his or her contact 
information in item 4, which includes lines for his or her name and 
street address (both required), and an email address (optional). In 
item 5, the filer provides identifying information about his or her 
labor organization, indicates whether he or she is an officer or 
employee, and notes his or her officer position or job title. If the 
filer serves as an officer or employee in more than one labor 
organization, this information is captured on an item 5 Continuation 
Page.
    Below the first section, the revised form states, ``Complete Part 
A, B, or C if, during the past fiscal year, you or your spouse or minor 
child directly or indirectly had a reportable interest in, transaction 
or arrangement with, or received income, payment, or benefit from the 
entities described below.''
Part A--Represented Employer (Items 6 and 7)
    In the revised form, ``Represented Employer'' is defined as ``an 
employer whose employees your labor organization represents or it is 
actively seeking to represent.'' If the filer had a reportable 
interest, transaction, benefit, arrangement, income, or loan from his/
her ``Represented Employer,'' he or she must provide in item 6 the 
employer's contact information, including the name and telephone number 
of a contact person. In item 7a, the filer provides the nature of the 
interest, transaction, benefit, arrangement, income, or loan; in item 
7b, the filer enters its amount or value. As stated above, the 
Department has removed the requirement that filers report the Web site 
address for the employer.
    As will be explained in the Revised Instructions section below, the 
filer must complete a separate Part A for each transaction reported. A 
Continuation Button is located below Part A if the filer needs to 
complete one or more additional Part As.
Part B--Business (Items 8-12)
    The revised form requires the filer to complete Part B if he or she 
had a reportable interest in, transaction or arrangement with, or 
received income, payment, or benefit from ``[a] business, such as a 
vendor or service provider, (1) A substantial part of which consists of 
buying from, selling or leasing to, or otherwise dealing with the 
business of a Represented Employer described in Part A or (2) any part 
of which consists of buying from or selling or leasing directly or 
indirectly to, or otherwise dealing with your labor organization or 
with a trust in which your labor organization is interested.''
    If the filer has reportable activity with such a business, he or 
she must provide in item 8 the contact information for the business, 
including the name and telephone number of a contact person. In item 9, 
the filer must indicate the entity the business deals with by checking 
the box for (a) Labor organization, (b) trust, or (c) employer. If the 
filer checks the box for trust or employer, he or she must provide the 
trust or employer's name and contact information in item 10. The filer 
must describe the nature of the dealings in item 11a, and report the 
value of the dealings in item 11b. Additionally, the filer must 
describe in item 12a the nature of the interest, benefit, arrangement, 
or income and report in item 12b the amount or value of the interest, 
benefit, arrangement, or income. As stated above, the Department has 
removed the requirement that filers report the Web site address for the 
business. As will be explained in the Revised Instructions section 
below, the filer must complete a separate Part B for each transaction 
reported. A Continuation Button is located below Part B if the filer 
needs to complete one or more additional Part Bs.
Part C--Other Employer or Labor Relations Consultant (Items 13 and 14)
    The revised form requires the filer to complete Part C if he or she 
had a reportable interest in, transaction or arrangement with, or 
received income, payment, or benefit from ``an employer (other than a 
Represented Employer or Business covered under Parts A and B above) 
from whom a payment would create an actual or potential conflict 
between your personal financial interests and the interests of your 
labor organization (or your duties to your labor organization); or a 
labor relations consultant to such an employer or to the Represented 
Employer listed in Part A.''
    If the filer has reportable activity with such an employer or labor 
relations consultant, he or she must provide in item 13a the contact 
information for the employer or labor relations consultant. In item 
13b, the filer must indicate whether the entity is an employer or 
consultant. The filer must describe the nature of the payment in item 
14a, and report the amount or value of the payment in item 14b. As 
stated above, the Department has removed the requirement that filers 
report the Web site address for the employer or labor relations 
consultant.
    As will be explained in the Revised Instructions section below, the 
filer must complete a separate Part C for each transaction. A 
Continuation Button is located below Part C if the filer needs to 
complete one or more additional Part Cs.
    In its comments submitted in response to the NPRM, a federation of 
labor organizations suggested that ``Contact name'' and ``Telephone'' 
be removed from Part A (item 6), Part B (items 8 and 10), and Part C 
(item 13a). The commenter stated that filers are not in the position to 
designate a contact person for employers and businesses. The commenter 
added that ``inviting inquiries to the employer or business from 
members of the general public seems inadvisable,'' especially since the 
Department could make such inquiries. The Department disagrees. In its 
view, filers should be able to easily ascertain the contact information 
for an employer or business from which they have received income, a 
gift, or another benefit, or in which the filer has an interest, or 
otherwise has engaged in a business transaction or arrangement. 
Further, the reporting of this contact information will assist union 
members and the public to cross-check information reported on Forms LM-
10 and Forms LM-30, and assist the Department in determining reporting 
compliance.
Signature and Verification (Item 15)
    The filer must provide his or her signature, date, and telephone 
number in item 15, which is located on the

[[Page 66480]]

bottom of the first page. As explained in the instructions, filers are 
instructed to view the OLMS Web site for further information on how to 
electronically sign and submit the Form LM-30. The signature line on 
the revised form is identical to that on the 2007 form, except that the 
revised form assigns the heading ``Signature and Verification'' to item 
15. The signature line on the 2007 form did not include a heading.

C. Revised Form LM-30 Instructions

1. General
    The revised instructions reflect significant changes in both layout 
and content from the 2007 form. The content has been changed to reflect 
the specific changes adopted by this rule, as discussed earlier in this 
preamble. Other changes have been made to add clarity and eliminate 
unnecessary repetition. The discussion immediately below highlights 
significant changes between the revised and 2007 instructions.
    As noted above, the revised form and instructions reinstate the 
general ``Parts A, B, and C'' format featured in the pre-2007 form and 
instructions, replacing the multiple-schedule format introduced by the 
2007 rule. The revised format is clearer and more streamlined and will 
make the form much easier for filers to understand and complete, 
without affecting the usefulness of the information disclosed.
    The revised instructions do not include a separate ``Definitions'' 
section, which was included in the 2007 instructions. The revised 
instructions instead present definitions and clarifications of key 
terms in the context of the sections in which they first appear in the 
document. When a definition follows a section of the instructions, the 
term to be defined is italicized. Further, if a defined term is used in 
multiple places, the later references refer back to the section in 
which the term is first used and defined. This approach will help 
filers understand key terms as they read through the instructions, and 
will eliminate the need for filers to frequently refer to a separate 
``Definitions'' section to determine what must be reported and how it 
must be reported.
    The Department has removed the examples that are dispersed 
throughout the 2007 instructions. These examples, many of which 
involved situations confronted by a very small number of filers, made 
the form unnecessarily complex and difficult to complete, without 
meeting the intended goal of providing helpful guidance. Following the 
publication of a revised Form LM-30, the Department intends to provide 
compliance assistance support to Form LM-30 filers.
    Additionally, the Department has substantively modified the 
definitions of some key terms that are found in the 2007 Form LM-30 
Instructions. First, the Department has removed the definition of 
``bona fide employee'' as used in the 2007 rule and added the bona fide 
employee exemption found in the instructions for the pre-2007 form, 
with minor edits for clarity, as explained below. The language that was 
added reads:

    Payments and benefits received as a bona fide employee of the 
employer for past or present services, including wages, payments or 
benefits received under a bona fide health, welfare, pension, 
vacation, training or other benefit plan; and payments for periods 
in which such employee engaged in activities other than productive 
work, if the payments for such period of time are: (a) Required by 
law or a bona-fide collective bargaining agreement, or (b) made 
pursuant to a custom or practice under such collective bargaining 
agreement, or (c) made pursuant to a policy, custom or practice with 
respect to employment in the establishment which the employer has 
adopted without regard to such employee's position with a labor 
organization.\55\ (emphasis added).
---------------------------------------------------------------------------

    \55\ The final part of the instructions read, in the pre-2007 
Form LM-30 Instructions and in the NPRM, as: ``or (c) made pursuant 
to a policy, custom or practice which the employer has adopted 
without regard to any holding by such employee of a position with a 
labor organization.'' The Department made changes in the final rule 
to this language to ensure clarity.

    Second, the Department has modified the definition of ``labor 
organization employee.'' As a result, the Department has inserted the 
following language into the revised Form LM-30 Instructions in Section 
II, Who Must File: ``For purposes of the Form LM-30, an individual who 
serves the union as a union steward or as a similar union 
representative, such as a member of a safety committee or a bargaining 
committee, is not considered to be an employee of the union, by virtue 
of service in such capacity.'' (emphasis added). Note that the 
definition has been slightly modified from the NPRM for clarity 
purposes, as explained in Part III, Section B, with the addition in 
italics and removal of the word ``exclusively'' before the phrase ``as 
a union steward.''
    Third, the Department has removed the definition of ``labor 
organization'' (Part III, D10), which had been added to the 2007 rule 
in order to describe the top-down reporting obligation of national, 
international, and intermediate body officers under section 202 of the 
LMRDA. As explained earlier in this preamble, the term ``labor 
organization'' is separately defined in the LMRDA.
    Fourth, the instructions have been revised to reflect that, under 
this rule, employees of parent and intermediate unions have top-down 
reporting obligations if they have significant authority or influence 
over subordinate affiliates. Two exemptions for top-down reporting, 
established by the 2007 rule, have been eliminated. The Department had 
proposed that the top-down reporting obligation would apply to all 
employees of parent and intermediate unions, as had been established 
for all officers of such unions by the 2007 rule. In response to 
comments submitted on the proposal, the final rule has modified this 
requirement. Under the rule, only employees who possess significant 
authority or influence over subordinate affiliates must report on 
financial interests in, and payments from, companies that deal with the 
subordinate affiliates or companies that deal with or involve employers 
whose employees are represented by the affiliates.
    The reasons for these changes are discussed in detail in section 
III of this rule.
2. Particular Sections and Parts
    Section I, Why File: This section presents general information 
about the reporting requirements of section 202. This information is 
identical to that presented in the 2007 instructions, except that it 
has been simplified to refer to the individual completing the form as 
``you,'' instead of ``filer.''
    Section II, Who Must File: The 2007 instructions presented a 
lengthy Section II, Who Must File and What Must Be Reported (located on 
pages 1-9). The revised instructions have divided this into two 
separate, concise sections, Section II, Who Must File and Section III, 
What Must Be Reported. The Department believes that this change will 
enable filers to more easily understand this basic information. This 
section states that ``(a)ny officer or employee of a labor organization 
(other than an employee performing clerical or custodial services 
exclusively), as defined by the LMRDA, must file Form LM-30 if, during 
the past fiscal year, the officer or employee, or spouse, or minor 
child, either directly or indirectly, held any legal or equitable 
interest, received any payments, or engaged in transactions or 
arrangements (including loans) of the types described in these 
instructions.'' ``Labor organization employee'' is defined as ``any 
individual (other than an individual performing exclusively clerical or 
custodial services) employed by a labor

[[Page 66481]]

organization within the meaning of any law of the United States 
relating to the employment of employees.'' It also provides: ``For 
purposes of the Form LM-30, an individual who serves the union as a 
union steward or as a similar union representative, such as a member of 
a safety committee or a bargaining committee, is not considered to be 
an employee of the union by virtue of service in such capacity.'' The 
term ``minor child'' is also defined as someone younger than 21 years 
of age.
    The reporting exceptions for insubstantial payments and gifts, 
including attendance at widely attended gatherings, are unchanged from 
the 2007 instructions, but their discussion has been moved to Section 
X, Completing Form LM-30.
    Section III, What Must Be Reported: This revised section simply 
refers filers to Parts A, B, and C of the instructions for information 
about financial transactions and interests that must be reported.
    Section IV, Who Must Sign the Report: This section specifies that 
the labor organization officer or employee is required to sign the 
completed Form LM-30.
    Section V, When to File: The information in this section is 
substantively identical to the information in Section IV, When to File 
in the 2007 instructions.
    Section VI, How to File: The revised Form LM-30 may be submitted in 
paper format or electronically. Filers will be able to choose between 
the two options. Section VI provides information regarding these filing 
options, including how to obtain the form and instructions on 
submitting it from the OLMS Web site.
    The Department has significantly improved the electronic process 
for submitting the various LMRDA-required reports, including the Form 
LM-30, which simplifies the electronic signature procedure and 
eliminates the associated costs to filers. Specifically, the Department 
has implemented a simplified electronic signature that only requires 
the filer to acquire a Personal Identification Number (PIN) and 
password, which the Department provides at no cost to the filer. The 
Department believes that electronic reporting generally is easier for 
filers, and that it will enable the Department to better incorporate 
submitted forms into its Electronic Labor Organization Reporting System 
(e.LORS), ensuring easy access to information for the public.
    Section VII, Public Disclosure: With the exception of a slight 
change in wording, this section is unchanged from the Public Disclosure 
section in the 2007 instructions.
    Section VIII, Officer and Employee Responsibilities and Penalties: 
With the exception of a slight change in wording in the first sentence 
(changed ``required to file'' to ``required to sign''), this section of 
the revised instructions is identical to the information in the Section 
VII, Officer or Employee Responsibilities and Penalties in the 2007 
instructions.
    Section IX, Recordkeeping: This section contains information 
identical to that in the Recordkeeping section of the 2007 
instructions.
    Section X, Completing Form LM-30: This section presents detailed 
instructions on completing all of the information items in the Form LM-
30. The Department believes that the placement of this section on page 
3 of the revised instructions represents a significant improvement over 
the 2007 instructions, which did not provide this information until 
page 14.
    This section begins by providing information on electronically 
completing the form and explains that the Department will provide 
compliance assistance support for both paper format and electronic 
filing. The 2007 instructions did not provide this information. This 
section also provides information on completing Information Items 1 
through 5, which gather basic identifying information about the filer 
and his or her labor organization. With the exception of minor changes 
in wording, these ``basic identifying'' information items are the same 
as in the 2007 instructions.
    Next, the revised instructions feature the heading, ``Information 
Items--Parts A, B, and C.'' The revised form features the simpler 
``Parts A through C'' approach, as opposed to the multiple-schedule 
format introduced in the 2007 form.
    First, the subsection ``General Instructions for Reportable 
Transactions and Interests'' begins with: ``You must report if, during 
the past fiscal year you or your spouse or minor child, directly or 
indirectly: (1) Held an interest; (2) engaged in a transaction or 
arrangement (including loans); or (3) received income, payment or other 
benefit with monetary value covered by the Act.''
    Next, the instructions provide information on the scope of filing 
for national, international, and intermediate union officers and 
employees, which (as explained above in section III, part E, of this 
notice) requires some union employees (where they have significant 
authority or influence over subordinate affiliates) to report the same 
top-down information now required of union officers. This change is 
discussed in greater detail in section III, part E, of this notice.
    The definition of ``directly or indirectly'' is presented 
immediately after this introductory language. This definition, 
including its two examples, is unchanged from the 2007 rule.
    The revised subsection, General Exclusions, describes the general 
reporting exemptions, ``insubstantial payments and gifts'' and 
``widely-attended gatherings,'' both of which are unchanged from the 
2007 rule. In response to a suggestion submitted by a federation of 
labor organizations, the Department has moved the definition of ``trust 
in which a labor organization is interested'' from the General 
Instructions section (page 4) to the definition section in Part B (page 
7) because the trust definition is relevant only to Part B. An 
international labor union also commented that the placement of the 3(l) 
trust definition in the General Exclusions section is confusing. The 
Department has made this change to eliminate any possible confusion 
about this point. This commenter also suggested that the instructions 
would benefit from adding a general exclusion to page 4 to indicate 
that filers do not have to report benefits received from a trust in 
which their labor organization is interested. The Department has also 
made this change, in order to clarify the removal of reporting of 
payments from trusts pursuant to section 202(a)(6).
    A federation of labor organizations also suggested that the 
sentence referring to ``director's fees, including reimbursed 
expenses'' should be removed as ``redundant and confusing'' from the 
General Exclusions section of the General Instructions section on page 
4, because it also appears in the instructions for Parts A and B. The 
Department disagrees because the instruction on reporting ``director's 
fees'' is a general requirement that applies to all three sections of 
the revised form. An international union commenter also stated that the 
sentence about ``director's fees, including reimbursed expenses'' that 
immediately follows the section 3(l) trust definition in the proposed 
instructions gives the erroneous impression that reporting such 
benefits from such trusts is required. The Department disagrees, noting 
that any such concern has been alleviated by moving the section 3(l) 
trust definition to the instructions for Part B.
    Filers are also instructed to complete a separate Part A, B, and/or 
C if they are reporting more than one entity or transaction. The 
instructions explain

[[Page 66482]]

that additional Parts A, B, and C are available by clicking the 
Continuation Button on the electronic form or attaching a separate Part 
A, B, or C, if the filer is using a paper format.
    A federation of labor organizations suggested that this section, 
beginning with ``Complete a separate Part A, B, and/or C'' (page 4, 
left column), should be placed immediately before the ``General 
Exclusions'' instruction (page 4, left column). The commenter stated 
that the typeface and position of the headings make the ``Complete a 
separate Part A, B, and/or C'' section erroneously appear to be an 
exclusion. The Department agrees that this change would add clarity, 
and it has thus moved the ``Complete a separate Part A, B, and/or C'' 
title and instructions to before the ``General Exclusions'' section.
    The commenter suggested that the ``loan'' example be removed from 
the instruction regarding completing separate Parts A, B or C (page 4, 
right column), because its inclusion here may cause confusion for 
filers because of the final rule's general exclusion for reporting bona 
fide loans. Instead, the commenter suggested using another reportable 
receipt, such as a ``gift,'' in the example. The Department has made 
this change in order to improve clarity.

PART A (ITEMS 6 AND 7): REPRESENTED EMPLOYER

    The revised instructions for Part A present information on how to 
complete items 6 and 7, which pertain to the Represented Employer. 
Specifically, the instructions state: ``Complete Part A if you (1) Held 
an interest in, (2) engaged in transactions or arrangements (including 
loans) with, or (3) derived income or other economic benefit of 
monetary value from, an employer whose employees your labor 
organization represents or is actively seeking to represent.'' The 
instructions state that payments received as ``director's fees'' must 
be reported. This requirement was contained in the 2007 instructions.
    Next, the definition for ``actively seeking to represent'' is 
provided. This definition has been slightly revised in response to a 
comment by a federation of labor unions. As explained earlier in this 
preamble, the change adds clarity to the definition, which requires 
concrete steps towards organizing. The Department has not made any 
substantive changes to the definition as some commenters had suggested.
    The subsection, Part A Exclusions, lists items that do not need to 
be reported in Part A. The first three exclusions--(i), (ii), and 
(iii)--are substantively unchanged from the 2007 instructions. These 
relate, respectively, to holdings, transactions, and income from bona 
fide investments in securities traded on a national securities 
exchange; holdings, transactions, and income from other designated 
securities--of $1,000 or less; and transactions involving the purchases 
and sale of goods and services in the regular course of business at 
prices generally available to any employee of the employer (excluding 
loans or transactions involving interests in the employer).\56\ The 
fourth exclusion, ``Payments and benefits received as a bona fide 
employee'' (emphasis added), has been modified to incorporate the 
historical interpretation given payments received by union officials 
under union leave and no docking policies established by collective 
bargaining agreements, practice under such agreements, or policy, 
custom, or practice adopted by an employer without regard to an 
employee's position with a union.
---------------------------------------------------------------------------

    \56\ The exclusions, as published in the instructions to the 
2010 NPRM are identical to those in the instant rule. See 75 FR 
48450. The description of the exclusions in the preamble to the 
NPRM, however, did not accurately summarize the instructions. See 75 
FR 48434.
---------------------------------------------------------------------------

    Since the first Part A Exclusion refers to ``bona fide 
investments,'' this term is defined in this section. The definition for 
``bona fide investment'' is unchanged from the 2007 rule. The 
instructions here advise that filers should not include bank account 
numbers, policy numbers, social security numbers, or similar 
identifying information in completing the form.
    In the revised instructions, the following definitions are 
presented in connection with Information item 7: ``arrangement,'' 
``benefit with monetary value,'' ``income,'' and ``legal or equitable 
interest.'' All of these definitions are unchanged from the 2007 rule. 
A clarifying note relating to the definition of ``arrangement'' has 
been revised to eliminate an example that is irrelevant to the 
definition.
    A commenter suggested that the definition of ``income'' in the Part 
A, item 7 instruction (page 6) be modified to reference the exclusion 
of payments and benefits received as a ``bona fide employee'' (page 5). 
The commenter explained its view that defining ``income'' as ``all 
income from whatever source derived, including but not limited to, 
compensation for services'' could be confusing for filers as it appears 
to contradict the ``bona fide employee'' exclusion. The Department 
disagrees. Because the exclusions, including those paid to filers as 
bona fide employees, are first discussed in the instructions, it will 
be clear to filers that such payments are not reportable. Additionally, 
specific instructions are provided on how to complete items 6 and 7, 
which are described in the above subsection, Section-by Section 
Discussion of Revised Form.
    This commenter suggested that the two examples preceding the 
``Other transactions or arrangements'' heading in Part A (pages 6-7) be 
moved to Part B since they concern businesses that deal with the labor 
organization, not employers. The Department disagrees with the comment, 
as the examples, which derive from the 2007 instructions, are provided 
as part of the definition, and are intended to illustrate the 
application of the term ``legal or equitable interest.'' Moving the 
examples could create confusion because the term first appears in Part 
A of the form. While they contain examples of Part B businesses, the 
term ``legal or equitable interest'' appears also in Part A, and the 
Department believes that definitions should be placed in the part of 
the instructions where the term first appears.

PART B (ITEMS 8-12): BUSINESS

    In the revised instructions, the filer is instructed:

    Complete Part B if you held an interest in or derived income or 
other benefit with monetary value, including reimbursed expenses, 
from a business (1) A substantial part of which consists of buying 
from, selling or leasing to, or otherwise dealing with the business 
of an employer whose employees your labor organization represents or 
is actively seeking to represent, or (2) any part of which consists 
of buying from or selling or leasing directly or indirectly to, or 
otherwise dealing with your labor organization or with a trust in 
which your labor organization is interested. Report payments 
received as director's fees, including reimbursed expenses.

    Definitions for ``substantial part'' and ``dealing'' are provided. 
These definitions are unchanged from the 2007 rule.
    The subsection, Part B Exclusions, lists items that do not need to 
be reported in Part B. Two of the Part B exclusions are retained from 
the 2007 rule (relating to holdings, transactions and income from bona 
fide investments in securities traded on a national securities exchange 
and other designated securities; and holdings or income of $1,000 or 
less from bona fide investments in other securities). These two Part B 
exclusions are the same as the exclusions set forth in (i) and (ii) in 
Part A. However, this rule excepts from reporting marketplace 
transactions from

[[Page 66483]]

bona fide credit institutions, as explained in greater detail in 
section III, part C, of this notice. Specifically, the revised 
instructions read:
    Bona fide loans. Do not report bona fide loans, including 
mortgages, received from national or state banks, credit unions, 
savings or loan associations, insurance companies, or other bona fide 
credit institutions, if the loans are based upon the credit 
institution's own criteria and made on terms unrelated to your status 
in the labor organization. Additionally, do not report other 
marketplace transactions with such bona fide credit institutions, such 
as credit card transactions (including unpaid balances) and interest 
and dividends paid on savings accounts, checking accounts or 
certificates of deposit if the payments and transactions are based upon 
the credit institution's own criteria and are made on terms unrelated 
to your status in the labor organization.
    Additionally, specific instructions are provided on how to complete 
items 8 through 12, which are described in the above subsection, 
Revised Form.

PART C (ITEMS 13 AND 14): OTHER EMPLOYER OR LABOR RELATIONS 
CONSULTANT

    In the revised instructions, the filer is instructed:

    Complete Part C if you, your spouse, or your minor child 
received, directly or indirectly, any payment of money or other 
thing of value (including reimbursed expenses) from any employer 
(other than a Represented Employer under Part A or Business covered 
under Part B above) from whom a payment would create an actual or 
potential conflict between these financial interests and the 
interest of your labor organization or your duties to your labor 
organization. Such employers include, but are not limited to, an 
employer in competition with an employer whose employees your labor 
organization represents or whose employees your union is actively 
seeking to represent, if you are involved with the organizing, 
collective bargaining, or contract administration activities or 
possess significant authority or influence over such activities. You 
are deemed to have such authority and influence if you possess 
authority by virtue of your position, even if you did not become 
involved in these activities. Additionally, complete Part C if you 
received a payment of money or other thing of value from a labor 
relations consultant to a Represented Employer or Part C 
employer.\57\
---------------------------------------------------------------------------

    \57\ As stated earlier in the preamble to this rule, the NPRM 
stated, ``between your financial interests * * *.'' The Department 
has modified this phrase to ``between these financial interests,'' 
so filers are aware that they must look at the payments and 
interests of their spouse and minor children as well as their own.

    The italicized language represents a change from the 2007 
instructions, as explained in section III, part D, of this rule.\58\ 
The Department removed ``labor organizations'' and ``trusts in which 
your labor organization is interested'' from the scope of Part C, as 
explained in section III, part D, of this preamble.
---------------------------------------------------------------------------

    \58\ The Department notes that this quoted language is identical 
to the language in the proposed instructions see 75 FR 48450. The 
language was incorrectly set forth in the discussion of this point 
in the NPRM. See 75 FR 48434.
---------------------------------------------------------------------------

    The subsection, Part C Exclusions, lists items that do not need to 
be reported in Part C. The first administrative exemption in Part C--
relating to payments of the kind referred to in LMRA section 302(c)--
remains substantially the same as that in the 2007 instructions; the 
only change is that LMRA section 302(c) is not quoted in the 
instructions (instead, the reader is directed to a later part of the 
instructions where this section is set forth in full).
    The second administrative exemption in Part C--relating to bona 
fide loans, interests, or dividends from a bona fide credit 
institution--is modified slightly from the 2007 rule; specifically, the 
following sentence, present in the 2007 instructions, is not included 
in the revised instructions: ``This exception does not apply to 
national or state banks, credit unions, savings or loan associations, 
insurance companies, or other bona fide credit institutions that 
constitute a `trust in which your labor organization is interested.' '' 
Accordingly, this rule excepts from reporting under Part C:

    (ii) Bona fide loans (including mortgages), interest or 
dividends from national or state banks, credit unions, savings or 
loan associations, insurance companies, or other bona fide credit 
institutions, if such loans, interest or dividends are based upon 
the credit institution's own criteria and made on terms unrelated to 
your status in a labor organization. Additionally, do not report 
other marketplace transactions with such bona fide credit 
institutions, such as credit card transactions (including unpaid 
balances) and interest and dividends paid on savings accounts, 
checking accounts or certificates of deposit if the payments and 
transactions are based upon the credit institution's own criteria 
and are made on terms unrelated to your status in the labor 
organization.

    The third administrative exemption in Part C returns to the 
Department's historical interpretation, exempting:

    (iii) Interest on bonds or dividends on stock, provided such 
interest or dividends are received, and such bonds or stock have 
been acquired, under circumstances and terms unrelated to your 
status in a labor organization and the issuer of such securities is 
not an enterprise in competition with the employer whose employees 
your labor organization represents or actively seeks to represent.

    The Department believes that the 2007 rule did not adequately 
justify the removal of this exemption. Further, interest on bonds or 
dividends on stock are routine business transactions which do not 
ordinarily raise conflict-of-interest questions. Their inclusion would 
increase the burden on union officials, without any apparent benefit to 
the public. Indeed, the reporting of non conflict-of-interest payments 
could hide from scrutiny those payments that are in need of 
transparency. Finally, in order to ensure that actual or potential 
conflict-of-interest payments are reported, the Department has provided 
two qualifications on this exemption: the payments must be received 
under circumstances and terms unrelated to the recipient's status in a 
labor organization and the issuer of such securities is not an 
enterprise in competition with the represented employer.
    A federation of unions suggested that ``payments from trusts or 
other labor organizations'' should be included as a fourth express 
exclusion from Part C, and argued that including this express exclusion 
will eliminate confusion created by the Department's 2007 Frequently 
Asked Questions (FAQs 45, 46, 48, 51-53 and 55), which indicated that 
such payments may be reportable. The Department is persuaded by this 
suggestion, as it adds clarity to the potential filer on this issue. 
Thus, the Department has added a fourth exclusion to Part C, specifying 
that payments received from a section 3(l) trust or labor organization 
are not reportable. Also, in response to the comment, the Department 
clarifies that this rule rescinds any example in the 2007 instructions 
or FAQs that indicated that payments from trusts are reportable.\59\
---------------------------------------------------------------------------

    \59\ See n. 12 herein, which discusses the impact of the final 
rule on FAQs issues in connection with the 2007 rule and examples in 
the instructions to the 2007 form.
---------------------------------------------------------------------------

    Additionally, specific instructions are provided on how to complete 
items 13 and 14, which are described in the above subsection, Revised 
Form.
    The instructions retain the following requirements that an official 
report:
     Any payment of money or other thing of value from a labor 
relations consultant to a Part C employer;
     Payments from an employer that is a not-for-profit 
organization that receives or is actively and directly soliciting 
(other than by mass mail, telephone bank, or mass media) money,

[[Page 66484]]

donations, or contributions from the official's union; and
     Any payments from an employer (not covered by Parts A or 
B), or from any labor relations consultant to an employer, for the 
following purposes:
    (1) Not to organize employees;
    (2) To influence employees in any way with respect to their rights 
to organize;
    (3) To take any action with respect to the status of employees or 
others as members of a labor organization;
    (4) To take any action with respect to bargaining or dealing with 
employers whose employees your organization represents or seeks to 
represent; and
    (5) To influence the outcome of an internal union election.
    See 72 FR 36128, 36130, 36173.
Remainder of Instructions
    The instruction for item 15, Signature and Verification, states 
that the completed Form LM-30 must be signed by the officer or employee 
and that forms submitted electronically must use electronic signatures. 
The instructions indicate that the filer must enter the telephone 
number used by the filer to conduct official business, and note that 
the filer does not need to report a private, unlisted telephone number.
    The revised instructions then feature: ``Selected Definitions from 
the Labor-Management Reporting and Disclosure Act of 1959, as Amended 
(LMRDA)'' [LMRDA section 3]; ``Related Provisions of the Labor-
Management Reporting and Disclosure Act of 1959, as Amended (LMRDA)--
Report of Officers and Employees of Labor Organizations'' [LMRDA 
section 202]; Section 302(c) of the Labor Management Relations Act, 
1947, as Amended [Sec. 8(c) of the National Labor Relations Act, as 
Amended]; and an ``If You Need Assistance'' section, which includes a 
list of OLMS field offices and explains the information available on 
the OLMS Web site. This information is only slightly changed from the 
2007 instructions.

V. Regulatory Procedures

Executive Orders 12866 and 13563

    Executive Orders 13563 and 12866 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This rule has been designated a ``significant regulatory 
action'' although not economically significant, under section 3(f) of 
Executive Order 12866. Accordingly, the rule has been reviewed by the 
Office of Management and Budget.
    In the Paperwork Reduction Act (PRA) analysis below, the Department 
estimates that the rule will result in a total reporting and 
recordkeeping burden on filing labor organization officers and 
employees of 2,898 hours and a monetary burden on labor organization 
officers and employees of approximately $138,621, based on the value of 
a filer's time. This represents a 10,934 hour reduction from the 13,832 
hours estimated in the 2007 rule for filing labor organization officers 
and employees, and a $170,386 reduction in monetary burden from the 
estimated $309,007 in the 2007 rule. See 72 FR 36157. This analysis is 
intended to address the analysis requirements of both the PRA and the 
Executive Orders.
    The following is a summary of the need for and objectives of the 
rule. A more complete discussion of various aspects of the proposal is 
found elsewhere in the preamble.
    The LMRDA was enacted to protect the rights and interests of 
employees, labor organizations, and the public generally as they relate 
to the activities of labor organizations, employers, labor relations 
consultants, and labor organization officers, employees, and 
representatives. The LMRDA includes financial reporting and disclosure 
requirements for labor organizations and others as set forth in Title 
II of the Act. See 29 U.S.C. 431-36, 441. The Department has developed 
several forms to implement the union annual reporting requirements of 
the LMRDA. Under section 202 of the Act, 29 U.S.C. 432, union officers 
and employees are required to file reports if they, or their spouses or 
minor children, engage in certain transactions or have financial 
holdings that may constitute a conflict of interest. The Department has 
developed the Form LM-30, Labor Organization Officer and Employee 
Report, to implement section 202.
    This rule modifies the Form LM-30, as last revised in 2007. See 72 
FR 36106 (July 2, 2007). As discussed above, the revised form has been 
simplified and will no longer have to be filed by certain individuals, 
notably stewards, and certain interests and transactions, including 
most bona fide loans, will not have to be reported. The rule is part of 
the Department's efforts to meet the goals of greater transparency and 
disclosure, while mitigating burden on labor organization officers and 
employees by eliminating reporting on matters without demonstrated 
utility.
    The Form LM-30 provides transparency for those financial interests 
of union officers and employees that may pose conflicts between their 
own financial interests and their duty to their union and its members. 
The Act requires the reports to be made available to the public. The 
reports allow union members to view the information needed by them to 
monitor their union's affairs and to make informed choices about the 
leadership of their union and its direction. Accurate disclosure and 
increased transparency promote the unions' own interests as democratic 
institutions and the interests of the public and the government. 
Financial disclosure deters fraud and self-dealing and facilitates the 
discovery of such misconduct when it does occur.
    The revised financial disclosure form will promote increased 
compliance with the statute by clarifying the form and instructions, 
organizing the information in a more useful format, and modifying it to 
better meet the requirements of the LMRDA and the Department's policy 
judgments consistent with its discretion under the Act.
    Published at the end of this rule are the revised Form LM-30 and 
instructions. The revised Form LM-30 and instructions also will be made 
available via the Internet. The information collection requirements 
contained in this rule have been submitted to OMB for approval.

Unfunded Mandates Reform

    This rule will not include any Federal mandate that may result in 
increased expenditures by State, local, and tribal governments, in the 
aggregate, of $100 million or more, or in increased expenditures by the 
private sector of $100 million or more.

Small Business Regulatory Enforcement Fairness Act of 1996

    This rule is not a major rule as defined by section 804 of the 
Small Business Regulatory Enforcement Fairness Act of 1996. This rule 
will not result in an annual effect on the economy of $100,000,000 or 
more; a major increase in costs or prices; or significant adverse 
effects on competition, employment, investment, productivity, 
innovation, or on the ability of the United States-based companies to 
compete with foreign-based companies in domestic and export markets.

[[Page 66485]]

Executive Order 13132 (Federalism)

    The Department has reviewed this rule in accordance with Executive 
Order 13132 regarding federalism and has determined that the rule does 
not have federalism implications. Because the economic effects under 
the rule will not be substantial for the reasons noted above and 
because the rule has no direct effect on States or their relationship 
to the Federal government, the rule does not have ``substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.''

Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, requires 
agencies to prepare regulatory flexibility analyses, and to develop 
alternatives wherever possible, in drafting regulations that will have 
a significant impact on a substantial number of small entities, 
including ``small businesses,'' ``small organizations,'' and ``small 
governmental jurisdictions.'' This rule revises the reporting 
obligations of union officers and employees, who, as individuals, do 
not constitute small business entities. Accordingly, the final rule 
will not have a significant economic impact on a substantial number of 
small business entities. Therefore, under the Regulatory Flexibility 
Act, 5 U.S.C. 605(b), a regulatory flexibility analysis is not 
required.

Paperwork Reduction Act

    This rule establishes a new LM-30 reporting form which constitutes 
a ``collection of information'' within the meaning of the Paperwork 
Reduction Act of 1995 (PRA) [44 U.S.C. 3501-3520]. Under the PRA, an 
agency may not conduct or sponsor, and a person is not required to 
respond to, a collection of information unless it displays a currently 
valid control number assigned by the Office of Management and Budget 
(OMB). In accordance with the PRA, the Department submitted an 
information collection request (ICR) to OMB. On September 29, 2011, OMB 
approved the ICR through September 30, 2014, and assigned OMB Control 
Number 1245-0005 to this version of the LM-30 reporting form.
A. Review of the Comments Received in Response to the NPRM Regarding 
the Burden Estimate
    In accordance with the requirements of the PRA, the Department 
solicited public comments on the information collection included in the 
NPRM. Since this rule exclusively amends an information collection, all 
of the comments received by the Department in response to the NPRM 
addressed the collection. A discussion of the comments that addressed 
all aspects of the collection other than the Department's burden 
estimate is provided above. Here the Department provides a discussion 
of the comments that addressed the Department's burden estimate.
    In response to the NPRM, the Department received three comments 
that addressed the Department's burden analysis in the NPRM. All three 
comments were limited to the burden associated with top-down reporting. 
Additionally, as noted in the preamble, several commenters expressed 
support for the Department's proposals that, if adopted, would reduce 
the burden of compliance with the Form LM-30 requirements. These 
proposals included, in part, the return to the historical position that 
union leave and no docking payments were not reportable and that 
stewards and other representatives are not covered by the Form LM-30 
reporting requirements by virtue of their positions; and the reporting 
exception for bona fide loans and other credit arrangements with most 
credit institutions. Further, two commenters who generally are opposed 
to the Department's proposals expressed the view that the 2007 rule did 
not impose any undue burden on union officers and employees.
    As discussed in the NPRM and in earlier sections of this preamble, 
top-down reporting concerns conflicts of interest that may arise 
between the financial interests of officers and employees of parent and 
intermediate unions and business dealings involving their union's 
subordinate affiliates or employers whose employees are represented by 
the affiliates. In the NPRM, the Department proposed to require 
employees of parent and intermediate unions to report such interests; 
the 2007 rule excepted them from this requirement.
    Two commenters expressed the view that the increased burden 
associated with top-down reporting exceeded any burden savings 
associated with the other changes proposed in the NPRM. One national 
union took issue with the burden estimates in both the NPRM and the 
2007 rule, explaining that its own experience with the pre-2007 Form 
LM-30 revealed that 12 hours were needed to complete that much simpler 
form. It estimated that it can take one hour per week for ``organizing 
and categorizing receipts'' and another hour per week to confer with a 
spouse or minor child about links between their employer or other 
entities and the union. This tracking alone, the commenter states, 
would exceed the Department's total burden estimate in the 2007 rule 
and the 2010 NPRM. The commenter also estimates that top-down reporting 
itself could require 25 hours per year. Other commenters urged the 
Department to modify or eliminate top-down reporting, which they 
identified as the most burdensome aspect of LM-30 reporting. The 
Department has discussed and responded to these comments at length 
earlier in the preamble and does not restate them here.
    The Department believes that the NPRM reflects the best estimate of 
the burdens associated with completing the Form LM-30, as revised by 
this rule. The Department notes that none of the commenters provided a 
detailed explanation as to how their estimates were derived, and notes 
that the time estimates provided for the pre-2007 form and the 25-hour 
estimate for top-down reporting seem very high, even for the most 
atypical situations and could not reflect the average burden. The 
Department's estimate is for an average filer.
    Further, the Department does not believe that many union officials 
will be required to file under the top-down reporting framework, and 
those who do file are already included within the NPRM's estimate for 
the number of filers. (The Department notes that the estimate for the 
number of filers does not include a breakdown of the type of 
transaction being reported, such as a gift or a security or other 
interest, nor does it indicate whether or not the report is required 
pursuant to top-down reporting.) Further, none of the commenters 
challenged the estimated number of filers.
    Moreover, the burden hour estimates are averages for those who 
file. Some filers may take more or less time than the estimated 90 
minutes, and the Department considers the officials who file as a 
result of top-down reporting to be already included within the average 
burden hour estimate. More specifically, the Department does not 
believe that many, if any, of those who file will take more than 90 
minutes to complete the form as a result of the top-down requirements, 
nor does the Department consider the top-down reporting requirements as 
altering the 90-minute average. The commenters did not provide any 
specific information challenging this conclusion.
    The Department believes that the concerns regarding the burden 
associated with top-down reporting reflect, to a large extent, a

[[Page 66486]]

misunderstanding about what types of payments, interests, and 
transactions must be reported on the Form LM-30, and how a union 
official would determine reportability. Moreover, as explained earlier 
in the preamble, many of the concerns about top-down reporting have 
been alleviated by specifying that top-down reporting is required only 
of officers and those employees with ``significant authority or 
influence'' over lower-level unions. As stated in the preamble, it is 
helpful to look at the steps involved in determining whether a top-down 
report, or any report, is owed. The first step is for a union officer 
or employee to look at the types of interests held, income and benefits 
received, and transactions engaged in during the fiscal year. The 
second step is to eliminate those that are exempted by the general 
exclusions, such as publicly held stock, income received by the union 
official as a bona fide employee, and the de minimis threshold. This 
step will generally greatly reduce potential reportable transactions. 
The third step is to determine whether any remaining financial 
transactions were derived from represented employers, as well as 
service providers and vendors of the union, their trusts, and 
represented employers. As a part of this step, officers and certain 
employees of parent and intermediate unions will also have to consider 
holdings in and payments from entities that have relationships with 
subordinate affiliates.\60\ Thus, union officials, higher-level or not, 
have no obligation to research each and every relationship that a union 
has, at any level, but, rather, only those that relate to the few, if 
any, employers and businesses identified in step three of the process.
---------------------------------------------------------------------------

    \60\ A fourth step could involve review of activities to be 
reported pursuant to section 202(a)(6) in the ``catch-all'' Part C 
of the revised Form LM-30, but OLMS has limited the requirement to 
report in Part C payments from employers in competition with 
represented employers to only those union officials with significant 
influence over organizing. This eliminates the top-down issue 
involving such employers for most union officials. Further, 
regarding payments from charities pursuant to section 202(a)(6) and 
Part C of the proposed form, any payments received as a bona fide 
employee and as regular marketplace transactions would be excluded, 
pursuant to the statute.
---------------------------------------------------------------------------

    The Department is unpersuaded by the unsubstantiated assertion by 
one commenter that the top-down burden imposed on union employees 
exceeds any reduced burden associated with other changes proposed by 
the NPRM. The Department also disagrees with the assertion that filers 
are required to track routine financial transactions. Rather, the Form 
LM-30 only requires tracking and reporting of financial transactions 
that are actual or potential conflicts of interest, and most union 
officials will have few, if any, such transactions.
    Regarding the comment that suggested that the filers should be 
required to report only top-down interests or payments for which they 
have ``actual, subjective'' knowledge, the Department believes that 
top-down filers (parent and intermediate body union officers and those 
union employees with significant authority or influence over lower-
level unions) will generally have actual, subjective knowledge of the 
entity's relationship with the union or represented employer, or will 
be in a position to ascertain this information. Thus, filers will not 
generally need to contact lower levels of the union to determine 
reportability, or, if they do need to contact other levels of the 
union, they will be in position to effectively obtain any needed 
information.
    Regarding the comment that suggested that union officials have an 
``affirmative obligation'' to contact subordinate bodies of their union 
that do not have ``systematic records,'' the Form LM-30 reporting 
requirements do not generally require union officials to contact lower 
level entities of the union. Further, all affiliated unions subject to 
section 206 of the LMRDA must have adequate records to ``provide in 
sufficient detail'' the ``necessary basic information and data'' from 
which the annual financial disclosure forms (such as the Form LM-2, 
Form LM-3, and Form LM-4) submitted to the Department can be verified.
    Other commenters expressed concern about the burden that an officer 
or employee of an international, national, or intermediate union would 
face in determining whether he or she has received a payment from a 
business a substantial part of which consists of dealing with an 
employer whose employees the filer's union represents or is actively 
seeking to represent. Regarding the application of the ``substantial 
part'' provision to top-down reporting, the Department notes that this 
provision actually operates as a general limitation on reporting that 
applies independently from top-down requirements, as does the 
``actively seeking to represent'' condition for reporting interests in 
and payments from represented employers. Again, union officials are not 
generally required to engage in research to identify potential 
conflict-of-interest relationships. Further, as explained earlier in 
the preamble, filers should request guidance from the Department if 
they are unable to determine the application of the reporting 
requirements, such as the ``substantial part'' and ``actively seeking 
to represent'' provisions.
D. Methodology for the Burden Estimates
    The Department first estimated the number of Form LM-30 filers that 
will submit the revised form. Then, it estimated the number of minutes 
that each filer will need to meet the reporting and recordkeeping 
burden imposed by the revised form, as well as the total burden hours. 
The Department next estimated the cost to each filer for meeting those 
burden hours, as well as the total cost to filers. The Federal costs 
associated with the revised rule were also estimated. Please note that 
some of the burden numbers included in this PRA analysis will not add 
up due to rounding. Except as noted, the burden analysis in the final 
rule is substantively identical to that set forth in the NPRM.
1. Number of Revised Form LM-30 Filers
    The Department estimates that 1,932 union officers and employees 
will submit the revised Form LM-30. This figure represents the total 
pre-2007 and 2007 Form LM-30 reports submitted during Fiscal Year 2009. 
In that fiscal year, the Department established an enforcement policy 
that enabled union officers and employees to use either the pre-2007 
form or the more complex 2007 version in satisfying their reporting 
obligation under section 202 of the LMRDA.
2. Hours To Complete and File Revised Form LM-30: Reporting and 
Recordkeeping
    The Department has estimated the number of minutes that each Form 
LM-30 filer will need for completing and filing the revised form 
(reporting burden), as well as the minutes needed to track and maintain 
records necessary to complete the form (recordkeeping burden). The 
estimates are included in Table 1, which describes the information 
sought by the revised form and instructions, where the particular 
information is to be reported, if applicable, and the amount of time 
estimated for completion of each item of information. The revised 
reporting regime more closely resembles the pre-2007 Form LM-30, in 
both form and content, than the 2007 form.
    Not all union officers and employees will be required to file the 
Form LM-30, nor will all of those who file need to complete each Part 
of the form. However, for purposes of assessing an average burden per 
filer, the Department

[[Page 66487]]

assumes that the average filer serves as an officer or employee for one 
labor organization, and that the filer receives reportable payments or 
interests for a single entity on Parts A, B, and C, respectively.
    Additionally, the below estimates are for all filers, including 
first-time filers and subsequent filers. While the Department 
considered separately estimating burdens for first-time and subsequent 
filers, the nature of Form LM-30 reporting militates against this 
approach. Union officers may serve for relatively short periods of time 
and reportable transactions may not be reported in subsequent years for 
a variety of reasons. Where the Department has reduced burden estimates 
for subsequent year filings of LMRDA reports, it generally did so with 
regard to required annual reports, specifically labor organization 
annual reports, Forms LM-2, LM-3, and LM-4. In contrast, the Form LM-30 
is only required for union officers and employees in years that they 
engage in reportable transactions. Further, these officials do not have 
the same familiarity with reporting as other LM filers. See 72 FR 
36157, n. 4. As such, the burden estimates assume that the union 
officer or employee has never before filed a Form LM-30.
    Recordkeeping Burden. The recordkeeping estimate of 15 minutes per 
filer represents a 5-minute change from the 20-minute estimate for the 
2007 Form LM-30. 72 FR at 36157. This estimate reflects new exemptions 
from reporting for union leave and no docking payments, and mortgages 
and other loans, as well as the decision to eliminate reporting from 
trusts and unions under section 202(a)(6), which reduce the complexity 
of the recordkeeping requirements. Additionally, most of the financial 
books and records needed to complete the form are maintained in the 
filer's normal course of business, both union and personal. Finally, 
the 15 minutes accounts for the 5-year retention period required by 
statute. See section 206, 29 U.S.C. 436.
    Reporting Burden. The total reporting burden of 75 minutes per 
respondent addressed in Table 1 reflects the time required to read the 
Form LM-30 instructions to discover whether or not a report is owed and 
determine the correct manner to report the necessary information. Of 
that total amount, it should be noted the Department estimates that the 
average filer will need 30 minutes to read the instructions, which is 
substantially less than the 55 minutes estimated for the 2007 Form LM-
30. 72 FR 36157.\61\ This reduction is due in part to the reduced scope 
of required reporting. In particular, the Department has eliminated the 
requirement to report union leave and no docking payments, bona fide 
loans, and payments from trusts and unions pursuant to section 
202(a)(6). Further, the creation of a more concise and consolidated 
form and instructions, with definitions and other explanations placed 
in a more readily accessible format, will enable filers to more quickly 
ascertain the necessary reporting requirements.
---------------------------------------------------------------------------

    \61\ Additionally, the Department estimates that those union 
officers and employees who are not required to file will spend ten 
minutes reading the instructions. This burden is not included in the 
total reporting burden, since these officials do not file and are 
thus not respondents.
---------------------------------------------------------------------------

    In developing the 75-minute estimate, the Department also believes 
that the simple data entry required by items 1-3 will only require 30 
seconds each. A filer will be able to enter his or her own contact 
information in only two minutes, in item 4. Generally, filers will only 
need three minutes to enter contact information, such as for their 
labor organization, in item 5, as well as the contact information for 
the trust or employer with which the business deals, in item 10. The 
Department believes, however, that filers will need five minutes, 
respectively, to enter the contact information for the represented 
employer in item 6, the business that deals with a labor organization, 
trust, or employer in item 8, and the ``other employer'' or labor 
relations consultant in item 13. Filers will need one minute to 
complete item 9, which asks filers to indicate whether the business 
identified deals with a labor organization, trust, or employer.
    Additionally, filers will need 3 minutes to enter the financial 
data required in items 7, 12, and 14, and 3.5 minutes to report the 
nature and value of the dealings in item 11. The Department also 
believes each filer will spend an average of 5 minutes to check the 
answers. Finally, the Department estimates that a filer will utilize 
five minutes to check responses and review the completed report, and 
will require two minutes to sign and verify the report in item 15. For 
Form LM-2 Labor Organization Annual Report filers, the Department last 
year introduced a cost-free and simple electronic filing and signing 
protocol. The Department intends to provide this feature to Form LM-30 
filers in 2012. For this reason, the burden estimate remains constant 
whether the form is electronically signed, or signed by hand.
    As a result, the Department estimates that a filer of the revised 
Form LM-30 will incur 90 minutes in reporting and recordkeeping burden 
to file a complete form. This compares with the 2007 estimate of 120 
minutes per filer.

               Table 1--Reporting and Recordkeeping Burden
                              [In minutes]
------------------------------------------------------------------------
                                    Section of       Recurring  burden
      Burden description          proposed form            hours
------------------------------------------------------------------------
Maintaining and gathering       Recordkeeping      15 minutes.
 records.                        Burden.
Reading of the instructions to  Report Burden....  30 minutes.
 determine applicability of
 the form and how to complete
 it.
Reporting LM-30 file number...  Item 1...........  30 seconds.
Reporting covered fiscal year.  Item 2...........  30 seconds.
Identifying if report is        Item 3...........  30 seconds.
 amended.
Reporting filer's contact       Item 4...........  2 minutes.
 information.
Reporting labor organization    Item 5...........  3 minutes.
 contact information.
Part A: Reporting name and      Item 6...........  5 minutes.
 contact information for
 employer in Part A of form.
Part A: Reporting the nature    Items 7a and 7b..  3 minutes.
 of the interest, transaction,
 arrangement, benefit, or
 income, as well as the
 amount, received from the
 employer identified in Part A.

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Part B: Reporting contact       Item 8...........  5 minutes.
 information for business.
Part B: Identifying if the      Item 9...........  1 minutes.
 business deals with a labor
 organization, trust, or
 employer.
Part B: Reporting the contact   Item 10..........  3 minutes.
 information for the trust or
 employer with which the
 business deals.
Part B: Reporting the nature    Items 11a and 11b  3 \1/2\ minutes.
 and value of the dealings
 between the business and
 employer, union, or trust.
Part B: Reporting the nature    Items 12a and 12b  3 minutes.
 and amount of interest held
 or income received from the
 business.
Part C: Reporting the contact   Items 13a and 13b  5 minutes.
 information for the employer
 or labor relations
 consultant, and identifying
 the entity as an employer or
 labor relations consultant.
Part C: Reporting the nature    Items 14a and 14b  3 minutes.
 and amount of payment from
 the employer or labor
 relations consultant.
Checking responses............  N/A..............  5 minutes.
Signature and verification....  Item 15..........  2 minutes.
                               -----------------------------------------
    Total Recordkeeping Burden  .................  15 minutes.
     Estimate Per Filer.
                               -----------------------------------------
    Total Reporting Burden      .................  75 minutes.
     Estimate Per Filer.
                               -----------------------------------------
    TOTAL BURDEN HOUR ESTIMATE  .................  90 minutes.
     PER FILER.
------------------------------------------------------------------------

    Total Reporting and Recordkeeping Burden. As stated, the Department 
estimates that there are 1,932 union officers and employees that will 
be annually filing the Form LM-30. Thus, the estimated recordkeeping 
burden for all filers is 28,980 minutes (15 x 1,932 = 28,980 minutes) 
or 483 hours (28,980/60 = 483). The total estimated reporting burden 
for all filers is 144,900 minutes (75 x 1,932 = 144,900 minutes) or 
approximately 2,415 hours (144,900/60 = 2,415 hours). The total 
estimated burden for all filers is, therefore, 173,880 minutes or 
approximately 2,898 hours. See Table 2 below.

     Table 2--Total Reporting and Recordkeeping Burden for All 1,932
                            Estimated Filers
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Total Recordkeeping Burden................  483 hours.
Total Reporting Burden....................  2,415 hours.
Total Burden..............................  2,898 hours.
------------------------------------------------------------------------

3. Calculation of Total Monetized Burden Hours Costs for Labor 
Organization Officers and Employees to Complete the Revised Form LM-30
    The Department estimates the dollar cost to filers to complete the 
Form LM-30 by using fiscal year (FY) 2009 data derived from Form LM-2, 
Labor Organization Annual Reports, filed with the Department pursuant 
to section 201 of the LMRDA. The Form LM-2 is the annual financial 
disclosure report filed by the largest labor organizations, those with 
$250,000 or more in total annual receipts. The Department notes that 
many Form LM-30 reports are filed by lower level labor organization 
officers and employees, whose labor organizations file the less 
detailed Form LM-3 and Form LM-4 Labor Organization Annual Reports, and 
who are often part-time officials earning lower salaries than parent 
body labor organizations that file the more comprehensive Form LM-2. 
However, because only part-time annual salaries are reported by part-
time officers on the Form LM-3 (and individual salaries are not 
reported on the LM-4), but not the hours upon which those part-time 
annual salaries are based, it is impractical to calculate an average 
hourly wage for union officers from the Form LM-3. This contrasts with 
a Form LM-2 filer, where it can be assumed that the annual salaries for 
officers are primarily for full-time duties, which makes it possible to 
determine average hourly wages. Therefore, the Form LM-2 provides the 
Department with more comprehensive data by which to ascertain a 
reasonable estimate of union officer and employee salaries.
    The Department also assumes, as it did for burden estimates under 
the pre-2007 Form LM-30, that one-third of the forms will be filed by 
union presidents, secretary-treasurers, and international 
representatives (the last designation as a proxy for union employees), 
respectively. The Department derived the average hourly wage for each 
of these categories by utilizing data from FY 2009 Form LM-2 reports.
    With respect to the international representative analysis, the 
salary data derived from the Department's Electronic Labor Organization 
Reporting System (e.LORS) included only international or national 
unions and only those employee titles and gross salary data from Form 
LM-2, Schedule 12 of those international/national unions that included 
words like ``national'' or ``international'' and ``representative.'' 
The Department then eliminated blank salary entries (either nothing was 
listed in the Form LM-2 or a zero was listed) because there are a 
variety of reasons why the salary can be blank or zero and their 
inclusion in the calculation of the average would skew the average 
calculation. Finally, the Department calculated the average hourly wage 
by dividing the average annual salary by 2,080 hours (40 hours per week 
times 52 weeks per year). Next, the Department increased these figures 
by 43.00% to account for total compensation.\62\
---------------------------------------------------------------------------

    \62\ See Employer Costs for Employee Compensation Summary, from 
the Bureau of Labor Statistics (BLS), at http://www.bls.gov/news.release/ecec.nr0.htm. The Department increased the average 
hourly wage rate for employees ($20.49 in 2008) by the percentage 
total of the average hourly compensation figure ($8.90 in 2008) over 
the average hourly wage.
---------------------------------------------------------------------------

    The methodology and assumptions are somewhat similar for the 
president and secretary-treasurers averages. Here, the Department had 
data from FY 2009 for all Form LM-2 filers with $800,000 or more in 
annual receipts. The $800,000 figure was selected because it represents 
roughly the average of all Form LM-2 filers, and we hypothesized that 
these larger than average Form LM-

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2 filers are more likely to have presidents and secretary-treasurers 
who file the Form LM-30.
    As a result, the Department estimates that union presidents earn an 
average hourly wage of $34.65 ($49.55 after adjusting by 43.00% for 
total compensation); union secretary-treasurers, $31.87 ($45.57 after 
adjusting by 43.00% for total compensation); and international 
representatives, $33.83 ($48.38 after adjusting by 43.00% for total 
compensation). The Department also estimated that each of these 
categories of union officials accounted for one-third of the Form LM-30 
reports submitted and thus one-third of the total burden hours (2,898 
hours divided by three equals 966). Therefore, the total cost was 
$138,621 (966 x $49.55 = $47,865.30; 966 x $45.57 = $44,020.62; and 966 
x $48.38 = $46,735.08). The estimated cost per filer is approximately 
$71.75 ($47,865.30 + $44,020.62 + $46,735.08 = $138,621; $138,621/1932 
= $71.75).
4. Other Costs (Start-up, Capital, Maintenance, and Operations)
    The Department associates no costs with this information 
collection, beyond the value of a filer's time.
5. Federal Costs
    Finally, in its recent submission for revision of OMB 
1245-0003 (formerly OMB 1215-0188), which contains 
all LMRDA forms (except the pre-2007 Form LM-30, 1245-0002, which was 
approved under OMB 1215-0205, and the 2011 Form LM-30), the 
Department estimated that its costs associated with the LMRDA forms are 
$2,710,726 for the OLMS national office and $3,779,778 for the OLMS 
field offices, for a total Federal cost of $6,490,504. Federal 
estimated costs include costs for contractors and operational expenses 
such as equipment, overhead, and printing as well as salaries and 
benefits for the OLMS staff in the National Office and field offices 
who are involved with reporting and disclosure activities. These 
estimates include time devoted to: (a) Receipt and processing of 
reports; (b) disclosing reports to the public; (c) obtaining delinquent 
reports; (d) reviewing reports, (e) obtaining amended reports if 
reports are determined to be deficient; and (f) providing compliance 
assistance training on recordkeeping and reporting requirements.

List of Subjects in 29 CFR Part 404

    Labor union officers and employees; reporting and recordkeeping 
requirements.

Text of Rule

    Accordingly, the Department amends part 404 of 29 CFR Chapter IV as 
set forth below:

PART 404--LABOR ORGANIZATION OFFICER AND EMPLOYEE REPORTS

0
1. The authority citation for part 404 is revised to read as follows:

    Authority:  Labor-Management Reporting and Disclosure Act Secs. 
202, 207, 208, 73 Stat. 525, 529 (29 U.S.C. 432, 437, 438); 
Secretary's Order No. 08-2009, Nov. 6, 2009, 74 FR 58835 (Nov. 13, 
2009).


Sec.  404.1  [Amended]

0
2. In Sec.  404.1, paragraph (f) is removed and paragraphs (g) through 
(j) are redesignated as (f) through (i), respectively.

    Signed in Washington, DC, this 6th day of October, 2011.
John Lund,
Director, Office of Labor-Management Standards.

    Note: The following appendix will not appear in the Code of 
Federal Regulations.

Appendix: Revised Form and Instructions

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[FR Doc. 2011-26816 Filed 10-25-11; 8:45 am]
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