[Federal Register Volume 82, Number 111 (Monday, June 12, 2017)]
[Proposed Rules]
[Pages 26877-26883]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-11983]


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DEPARTMENT OF LABOR

Office of Labor-Management Standards

29 CFR Parts 405 and 406

RIN 1245-AA07


Rescission of Rule Interpreting ``Advice'' Exemption in Section 
203(c) of the Labor-Management Reporting and Disclosure Act

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

ACTION: Notice of proposed rulemaking; request for comments.

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SUMMARY: This Notice of Proposed Rulemaking proposes to rescind the 
regulations established in the final rule titled ``Interpretation of 
the `Advice' Exemption in Section 203(c) of the Labor-Management 
Reporting and Disclosure Act,'' effective April 15, 2016.

DATES: Comments must be received on or before August 11, 2017.

ADDRESSES: You may submit comments, identified by RIN 1245-AA07, only 
by the following method:
    Internet--Federal eRulemaking Portal. Electronic comments may be 
submitted through http://www.regulations.gov. To locate the proposed 
rule, use key words such as ``Labor-Management Standards'' or ``Advice 
Exemption'' to search documents accepting comments. Follow the 
instructions for submitting comments. Please be advised that comments 
received will be posted without change to http://www.regulations.gov, 
including any personal information provided. The Paperwork Reduction 
Act section of this preamble provides information about additional 
comment opportunities for the associated information collection 
requirements.

FOR FURTHER INFORMATION CONTACT: Andrew 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, (202) 693-0123 (this is not a toll-free number), 
(800) 877-8339 (TTY/TDD).

SUPPLEMENTARY INFORMATION:

I. Statutory Authority

    The Department's statutory authority is set forth in sections 203 
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 he may find 
necessary to prevent the circumvention or evasion of the reporting 
requirements. 29 U.S.C. 438. Section 203, discussed in more detail 
below, sets out the substantive reporting obligations.
    The Secretary has delegated his authority under the LMRDA to the 
Director of the Office of Labor-Management Standards and permitted 
redelegation of such authority. See Secretary's Order 03-2012 (Oct. 19, 
2012), published at 77 FR 69375 (Nov. 16, 2012).

II. Background

A. Introduction

    The proposal to rescind the March 24, 2016 Rule is part of the 
Department's continuing effort to fairly effectuate the reporting 
requirements of the LMRDA. The LMRDA generally reflects obligations of 
unions and employers to conduct labor-management relations in a manner 
that protects the rights of employees to exercise their right to choose 
whether to be represented by a union for purposes of collective 
bargaining. The LMRDA's reporting provisions promote these rights by 
requiring unions, employers, and labor relations consultants to 
publicly disclose information about certain financial transactions, 
agreements, and arrangements. The Department believes that a fair and 
transparent government regulatory regime must consider and balance the 
interests of labor relations consultants, employers, labor 
organizations, their members, and the public. Any change to a labor 
relations consultant's recordkeeping, reporting and business practices 
must be based on a demonstrated and significant need for information, 
consideration of the burden associated with such reporting, and any 
increased costs associated with the change.

B. The LMRDA's Reporting Requirements

    In enacting the LMRDA in 1959, a bipartisan Congress sought 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 their 
officers, employees, and representatives.
    Section 203(a) of the LMRDA, 29 U.S.C. 433(a), requires employers 
to report to the Department of Labor ``any agreement or arrangement 
with a labor relations consultant or other

[[Page 26878]]

independent contractor or organization'' under which such person 
``undertakes activities where an object thereof, directly or 
indirectly, is to persuade employees to exercise or not to exercise,'' 
or how to exercise, their rights to union representation and collective 
bargaining. 29 U.S.C. 433(a)(4).\1\ ``[A]ny payment (including 
reimbursed expenses)'' pursuant to such an agreement or arrangement 
must also be reported. 29 U.S.C. 433(a)(5). The report must be one 
``showing in detail the date and amount of each such payment, . . . 
agreement, or arrangement . . . and a full explanation of the 
circumstances of all such payments, including the terms of any 
agreement or understanding pursuant to which they were made.'' This 
information must be submitted on the prescribed Form LM-10 (``Employer 
Report'') within 90 days of the close of the employer's fiscal year. 29 
U.S.C. 433(a); 29 CFR part 405.
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    \1\ The LMRDA defines a ``labor relations consultant'' as ``any 
person who, for compensation, advises or represents an employer, 
employer organization, or labor organization concerning employee 
organizing, concerted activities, or collective bargaining 
activities.'' 29 U.S.C. 402(m).
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    LMRDA section 203(b) imposes a similar reporting requirement on 
labor relations consultants and other persons. It provides, in part, 
that every person who enters into an agreement or arrangement with an 
employer and undertakes activities where an object thereof, directly or 
indirectly, is to persuade employees to exercise or not to exercise, or 
how to exercise, their rights to union representation and collective 
bargaining ``shall file within thirty days after entering into such 
agreement or arrangement a report with the Secretary . . . containing . 
. . a detailed statement of the terms and conditions of such agreement 
or arrangement.'' 29 U.S.C. 433(b). This information must be submitted 
on the prescribed Form LM-20 (``Agreement and Activities Report'') 
within 30 days of entering into the reportable agreement or 
arrangement. See 29 U.S.C. 433; 29 CFR part 406.
    A third report is relevant here. Section 203(b) further requires 
that every labor relations consultant or other person who engages in 
reportable activity must file an additional report in each fiscal year 
during which payments were made as a result of reportable agreements or 
arrangements. The report must contain a statement (A) of the 
consultant's receipts of any kind from employers on account of labor 
relations advice or services, designating the sources thereof, and (B) 
of the consultant's disbursements of any kind, in connection with such 
services and the purposes thereof. This information must be submitted 
on the prescribed Form LM-21 (``Receipts and Disbursements Report'') 
within 90 days of the close of the labor relations consultant's fiscal 
year. See 29 U.S.C. 433(b); 29 CFR part 406.
    Since at least 1963, the reporting requirements have required 
reporting by the prescribed forms Form LM-10, Form LM-20, and Form LM-
21. 28 FR 14384, Dec. 27, 1963, See 29 CFR part 405, 406.
    LMRDA section 203(c) ensures that sections 203(a) and 203(b) are 
not construed to require reporting ``by reason of [the consultant] 
giving or agreeing to give advice.'' Section 203(c), referred to as the 
``advice'' exemption, provides in pertinent part that ``nothing in this 
section shall be construed to require any employer or other person to 
file a report covering the services of such person by reason of his 
giving or agreeing to give advice to such employer.'' 29 U.S.C. 433(c). 
Finally, LMRDA section 204 exempts from reporting attorney-client 
communications, which are defined as ``information which was lawfully 
communicated to [an] . . . attorney by any of his clients in the course 
of a legitimate attorney-client relationship.'' 29 U.S.C. 434.

III. Proposal To Rescind

    The Department proposes to rescind the March 24, 2016 Rule. 81 FR 
15924 (Mar. 25, 2016). This action would not affect the disclosure 
requirements currently in effect. The U.S. District Court for the 
Northern District of Texas issued a nationwide permanent injunction 
against enforcement of the Rule on November 16, 2016, which continued a 
preliminary injunction that had been entered on June 27, 2016. National 
Federation of Independent Business v. Perez (N.D. Tex. 5:16-cv-00066-
c). Although the Rule technically went into effect, its implementation 
was enjoined before its application became mandatory, and no reports 
were filed or are due under it. The Department has continued to enforce 
the longstanding and pre-existing interpretation of the advice 
exemption.

1. Administrative and Regulatory History

    In 1960, one year after passage of the Act, the Department issued 
its initial interpretation (the ``original interpretation'') of Section 
203(c)'s ``advice'' exemption. This interpretation was reflected in a 
technical assistance publication for employers. U.S. Dep't of Labor, 
Bureau of Labor-Management Reports,\2\ Technical Assistance Aid No. 4: 
Guide for Employer Reporting (1960). Under this original 
interpretation, the Department required employers to report any 
``[a]rrangement with a `labor relations consultant' or other third 
party to draft speeches or written material to be delivered or 
disseminated to employees for the purpose of persuading such employees 
as to their right to organize and bargain collectively.'' Id. at 18. By 
contrast, employers were not required to report ``[a]rrangements with a 
`labor relations consultant,' or other third parties related 
exclusively to advice, representation before a court, administrative 
agency, or arbitration tribunal, or engaging in collective bargaining 
on [the employer's] behalf.'' Id. Additionally, in opinion letters to 
members of the public, the Department stated that a lawyer's or 
consultant's revision of a document prepared by an employer constituted 
reportable activity. See 76 FR 36178, 36180 (June 21, 2011) (NPRM) 
(citing Benjamin Naumoff, Reporting Requirements under the Labor-
Management Reporting and Disclosure Act, in Fourteenth Annual 
Proceedings of the New York University Conference on Labor 129, 140-141 
(1961)).
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    \2\ The Bureau of Labor-Management Reports was the predecessor 
agency to the Office of Labor-Management Standards.
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    In 1962, the Department adopted a more limited view regarding the 
scope of disclosure under Section 203, construing the advice exemption 
of section 203(c) more broadly by excluding from reporting the 
provision of materials by a third party to an employer that the 
employer could ``accept or reject.'' \3\ In later years, the Department 
reiterated this position--sometimes referred to as the ``accept or 
reject'' test--though sometimes expressing doubts regarding its 
soundness. See Subcommittee on Labor-Management Relations, H. Comm. On 
Education and Labor, The Forgotten Law: Disclosure of Consultant and 
Employer Activity Under the L.M.R.D.A. (Comm. Print 1984) (statement of 
Richard Hunsucker, Director, Office of Labor-Management Standards 
Enforcement, Labor-Management Standards Administration, U.S. Department 
of Labor); Subcommittee on

[[Page 26879]]

Labor-Management Relations, H. Comm. on Education and Labor, 4 
Pressures in Today's Workplace 5 (Comm. Print 1980) (statement of 
William Hobgood, Assistant Secretary of Labor for Labor-Management 
Relations). In 2001, the Department issued a revised interpretation of 
Section 203(c), expanding the scope of reportable activities by 
focusing on whether an activity has persuasion of employees as an 
object, rather than categorically exempting activities in which a 
consultant has no direct contact with employees. See 66 FR 2782 (Jan. 
11, 2001). However, later that year, that interpretation was rescinded, 
and the Department returned to its prior view. See 66 FR 18864 (Apr. 
11, 2001).
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    \3\ See 81 FR at 15936 (quoting the agency's 1962 LMRDA 
Interpretive Manual as stating: ``In a situation where the employer 
is free to accept or reject the written material prepared for him 
and there is no indication that the middleman is operating under a 
deceptive arrangement with the employer, the fact that the middleman 
drafts the material in its entirety will not in itself generally be 
sufficient to require a report.'') (emphasis omitted).
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    On June 21, 2011, the Department issued a notice of proposed 
rulemaking to revise its interpretation of section 203(c). 76 FR 36178. 
Approximately 9,000 comments were received. 81 FR at 15945. On March 
24, 2016, the Department issued its final Rule, addressing the comments 
it received. See 81 FR at 15945-16000.
    That Rule--the subject of this proposal--requires employers and 
their consultants to report not only agreements or arrangements 
pursuant to which a consultant directly contacts employees, but also 
where a consultant engages in activities ``behind the scenes,'' where 
an object is to persuade employees concerning their rights to organize 
and bargain collectively. Id. at 15925.
    The Rule construes the ``advice'' exemption more narrowly than the 
prior interpretation. In broadening the scope of reportable 
``persuader'' conduct, the Department abandoned its position that only 
direct communication between a consultant and employees triggered the 
reporting requirement, and that any other activity was exempt 
``advice.'' The fact that the employer itself delivers the message or 
carries out the policy developed by a consultant would no longer exempt 
a consulting arrangement from reporting. The stated purpose of this 
change was to ``more closely reflect the employer and consultant 
reporting intended by Congress in enacting the LMRDA.'' 81 FR at 16001. 
The Rule cited evidence that the use of outside consultants to contest 
union organizing efforts had proliferated, while the number of reports 
filed remained consistently small. 81 FR at 16001. The Department 
concluded that its previous ``broad interpretation of the advice 
exemption ha[d] contributed to this underreporting.'' Id.
    Both the preamble to the Rule and the instructions on the relevant 
forms define ``advice,'' which does not give rise to a reporting 
obligation, as ``an oral or written recommendation regarding a decision 
or a course of conduct.'' Id. at 15,939, 16,028 (LM-10 instructions), 
16,044 (LM-20 instructions). The Rule thus distinguishes between 
agreements to advise a client on a proposed course of conduct, e.g., 
warning an employer that a statement in an employer-drafted speech 
would constitute an unfair labor practice or identifying what other 
companies have done, which does not give rise to an obligation to 
report, and agreements to develop or direct that course of conduct via 
an activity that falls under one of five categories: Direct contact 
with employees, or four categories of indirect activity (directing 
supervisor activity, providing material for employers to disseminate to 
employees, conducting tailored seminars on the issue of unionization, 
and developing or implementing personnel policies designed to encourage 
unionization). 81 FR at 15938. This includes providing messaging on 
unionization, developing policies in order to dissuade employees as to 
the need for a union (such as a longer lunch break or a more generous 
leave policy), drafting or revising written materials regarding 
unionization for dissemination to employees, planning ``captive 
audience'' meetings, or scripting interactions between supervisors and 
employees, which do give rise to a reporting obligation.
    Reporting under the Rule is to be completed on the Form LM-10, 
which employers are required to file within 90 days of the end of their 
fiscal year, and the Form LM-20, which consultants are to file within 
30 days of entering into a persuader agreement and the instructions to 
those forms include the 2016 interpretations. See 81 FR at 16022-16051. 
The LM-10 form is a four-page form; the LM-20 form is two pages. Much 
of the LM-10 form concerns employer activities not at issue here. The 
only materials required to be submitted along with either form are 
written agreements to engage in persuader activities, should they 
exist. Both forms include check boxes listing common types of 
reportable persuader activities.

2. Reasons for Rescission of the Rule

    The Department proposes to rescind the Rule to provide the 
Department with an opportunity to give more consideration to several 
important effects of the Rule on the regulated parties. Rescission 
would ensure that any future changes to the Department's interpretation 
would reflect additional consideration of possible alternative 
interpretations of the statute, and could address the concerns that 
have been raised by reviewing courts. Rescission is further proposed 
because the burden of the Form LM-20 may have been substantially 
increased by the Form LM-21's requirements, and the Department 
considers it prudent to consider the effects of those requirements 
together. The Department will also consider the potential effects of 
the Rule on attorneys and employers seeking legal assistance. 
Rescission would also permit the Department to consider the impact of 
shifting priorities and resource constraints.
    A. The Department proposes to rescind the Rule to allow the 
Department to engage in further statutory analysis.
    Courts analyzing the statutory reporting requirement, both before 
and after promulgation of the March 24, 2016 Rule, have expressed 
uncertainty about the interaction ``between the coverage provisions of 
the LMRDA, and the Act's exemption for advice.'' UAW v. Dole, 869 F.2d 
616, 618 (D.C. Cir. 1989). Further, while some courts have viewed the 
statutory exemption in section 203(c) as making ``explicit what was 
already implicit in Sec.  203(b), to guard against misconstruction of 
Sec.  203(b),'' see Wirtz v. Fowler, 372 F.2d 315, 330 (5th Cir. 1966), 
other courts have taken a different view. See also Donovan v. Rose Law 
Firm, 768 F.2d 964, 970 (8th Cir. 1985) (``we note initially that a 
reading of the language of Sec. Sec.  203(b) and (c) does not plainly 
indicate which interpretation here advocated is to be preferred.''). 
Different courts of appeals have reached different conclusions on this 
question. Compare Fowler, 372 F.2d at 330 (adopting the former 
approach); Donovan v. Master Printers Ass'n, 532 F. Supp. 1140, 1145 
(1981), adopted by Master Printers Ass'n v. Donovan, 699 F.2d 370 
(same); Douglas v. Wirtz, 353 F.2d 30, 32 (4th Cir. 1965) (same); 
Humphreys, Hutcheson & Moseley v. Donovan, 755 F.2d 1211 (6th Cir. 
1985) (same) with Rose Law Firm, 768 F.2d at 973 (adopting the latter 
approach).
    Shortly after it was issued, the Rule was challenged in three 
district courts, and the challengers sought preliminary injunctive 
relief. Associated Builders & Contractors of Arkansas v. Perez (E.D. 
Ark. 4:16-cv-169); Labnet Inc. v. United States Department of Labor (D. 
Minn. 0:16-cv-00844); National Federal of Independent Business v. Perez 
(N.D. Tex. 5: l 6-cv-00066-c). On June 22, 2016, the Minnesota court 
denied the challengers' request for preliminary relief, though the 
court expressed doubt about some potential applications of the rule. 
197 F. Supp. 3d 1159 (D. Minn.

[[Page 26880]]

2016). On June 27, 2016, the Texas court granted the challengers' \4\ 
motion, adopting their proposed order, and issuing a nationwide 
injunction against implementation of the Persuader Rule. NFIB, Slip Op. 
p.89-90; 2016 WL 3766121 (hereafter ``NFIB PI Order''). The preliminary 
injunction was made permanent by order of November 16, 2016. 2016 WL 
8193279. The matter before the Arkansas court has been stayed, and the 
court has not issued any substantive rulings. See Associated Builders & 
Contractors Dkt. No. 80 (Dec. 13, 2016).
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    \4\ The plaintiffs are a number of national, state, and local 
trade associations. Subsequently, on March 20, 2016, the states of 
Texas, Arkansas, Alabama, Indiana, Michigan, Oklahoma, South 
Carolina, Utah, West Virginia, and Wisconsin intervened.
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    The court's decision in NFIB was premised in significant part on 
its conclusion that the ``advice'' exception could be meaningful only 
if there were some activities that had an object to persuade but were 
nonetheless exempt as advice. The District of Minnesota court, though 
rejecting a facial challenge to the rule, also expressed concern that 
the Rule was problematic in some applications because of ``its 
insistence that persuader activity and advice are mutually exclusive 
categories.'' Labnet, Inc., 197 F. Supp. 3d at 1168.
    In the preamble to the 2016 Rule, the Department listed activities 
that it considered not to be reportable. See 81 FR 15939. These 
activities consisted of situations where a consultant: (1) Provides 
legal advice or other legal services (such as representing an employer 
in court or during collective bargaining) (id. at 15949); (2) offers a 
persuader-services sales pitch (id. at 15978); (3) conducts a 
vulnerability assessment or a survey (other than a push survey, i.e. 
one designed to influence participants and thus undertaken with an 
object to persuade) (id.); (4) revises materials, if the revisions are 
to ensure legality, clarity or grammatical correctness, not to increase 
the persuasiveness (id. at 15938); (5) develops or implements personnel 
policies or actions that improve employee pay, benefits, or working 
conditions, without any object to persuade employees (id. at 15938 n. 
26); (6) provides ``off-the-shelf'' materials to the employer (id. at 
15938); or (7) conducts a seminar without developing or assisting the 
employer in developing tactics or strategies on the unionization (id. 
at 15938-39).
    In setting forth this list, the Rule left unclear whether the 
activities were exempt as advice, were simply not persuader activities, 
or both. An activity may fall outside the compass of a statute or it 
may satisfy an exemption under the statute. Either way, no report is 
due. But further analysis of the reasons that activities are not 
reportable would provide further clarity to regulated entities and 
reviewing courts as they consider other circumstances in which 
reporting might or might not be required. The Department proposes 
rescinding the rule so that, if it elects to change the scope of 
reportable activity beyond what has been in place since 1962, it can 
provide as thorough an explanation of its statutory interpretation as 
possible.
    B. The Department also proposes to rescind the Rule to allow the 
Department to consider the interaction between Form LM-20 and Form LM-
21.
    The obligation to file the Form LM-20 and the Form LM-21 result 
from the same event: Persuader activity.
    Section 203(b) sets forth the statutory basis for the Form LM-21. 
That section requires every person who engages in persuader activities 
to file annually a report with the Secretary containing a statement of 
the person's ``receipts of any kind from employers on account of labor 
relations advice or services, designating the sources thereof,'' and a 
statement of its disbursements of any kind, in connection with those 
services and their purposes. See also 29 CFR 406.3 (Form LM-21 
requirements). 57 FR 15929. Thus, by statute the requirement to file a 
Form LM-20 invariably necessitates the obligation to file a Form LM-21, 
so long as any disbursement is made pursuant to the reportable 
persuader agreement or arrangement.
    Accordingly, an increase in the range and number of activities that 
constitute ``persuader activity'' will increase both the number of Form 
LM-20 filers and Form LM-21 filers. Each form imposes a unique 
recordkeeping and reporting burden on the filer. For example, a law 
firm that contracts with an employer and engages in persuader activity 
under the Rule will have to file a Form LM-20 disclosing the 
arrangement with the employer, among other information. The consultant/
law firm would also have to file a Form LM-21 on which it reported 
receipts from all employers in connection with labor relations advice 
or services regardless of the purpose of the advice or service. It 
would also report in the aggregate the total amount of the 
disbursements made from such receipts, with a breakdown by office and 
administrative expenses, publicity, fees for professional service, 
loans, and other disbursement categories. The filer would also itemize 
each persuader-related disbursement, the recipient of the disbursement, 
and the purpose of the disbursement. Its disbursements to officers and 
employees would be disclosed when made in connection with labor 
relations advice or services.
    The 2016 Rule made some labor relations consultants and employers 
who had previously not been required to file under the LMRDA 
responsible for filing under the LMRDA--both forms LM-20 and LM-21. The 
Department recognized and considered the effect of the burden arising 
from the Form LM-20. But it chose to defer consideration of Form LM-21 
issues to a separate rulemaking--one that concerned only the Form LM-
21.
    Deferral of consideration of Form LM-21 issues was motivated, in 
part, by the Department's intention to engage in parallel rulemaking 
for reform of the scope and detail of the Form LM-21. 57 FR 15992, fn 
88. The Department also issued a separate special enforcement policy 
that addressed the potential that new filers might have unique 
difficulties in filing the Form LM-21. https://www.dol.gov/olms/regs/compliance/ecr/lm21_specialenforce.htm. Under that special enforcement 
policy, the filers of Form LM-20 who must also file a Form LM-21 are 
not required to complete two parts of the LM-21.
    As of the date of this NPRM, due to shifting priorities and 
resource constraints, no proposal has been issued regarding Form LM-21. 
Although the enforcement policy addressed the immediate effects of the 
Rule at issue here on Form LM-21 filers, delays in a more plenary 
consideration of those issues weigh in favor of rescinding the Rule so 
that the consequences for both forms could be considered together in 
any future rulemaking, should the Department elect to change the 
reporting requirement.
    C. The Department proposes to rescind the Rule to allow more 
detailed consideration of attorneys' activities.
    Regulated entities have expressed concerns about the interaction 
between the new categories of ``indirect'' persuasion that were created 
by the rule and the role of attorneys in advising their clients. The 
new categories of ``indirect'' persuasion include:
     Drafting, revising, or providing written materials for 
presentation, dissemination, or distribution to employees;
     Drafting, revising, or providing a speech for presentation 
to employees;
     Drafting, revising, or providing audiovisual or multi-
media presentations for presentation, dissemination, or distribution to 
employees;

[[Page 26881]]

     Drafting, revising or providing Web site content for 
employees;
     Training supervisors or employer representatives to 
conduct individual or group employee meetings;
     Coordinating or directing the activities of supervisors or 
employer representatives;
     Developing employer personnel policies or practices;
     Conducting a seminar for supervisors or employer 
representatives; etc.
    81 FR 16051. Although the Department gave some general 
consideration to concerns that the Rule would have a ``chilling 
effect'' on clients' abilities to obtain representation by attorneys, 
81 FR 15999, the Department believes that the implementation of any 
changed reporting requirement in this area should include a more 
detailed and specific analysis of how each of these activities would, 
as a practical and factual matter, affect the behavior of the regulated 
community, with regard to furnishing and receiving legal services.
    D. The Department proposes to rescind the Rule in light of limited 
resources and competing priorities.
    In rejecting a challenge to the Department's prior interpretation--
that a consultant incurs a reporting obligation only when it directly 
communicates with employees with an object to persuade them--the U.S. 
Court of Appeals for the D.C. Circuit relied expressly on the 
Department's ``right to shape [its] enforcement policy to the realities 
of limited resources and competing priorities.'' International Union, 
United Auto., Aerospace & Agr. Implement Workers of Am. v. Dole, 869 
F.2d 616, 620 (D.C. Cir. 1989). The Department's resource constraints 
weigh in favor of rescinding the Rule. Under the prior interpretation, 
there are significantly fewer reports, which reduces the investigative 
resources devoted to enforcing the rules on filing timely and complete 
reports. Further, under the prior interpretation, those case 
investigations generally involve obtaining and reviewing the written 
agreement and interviewing employees only. In contrast, enforcement of 
the Rule would likely involve a lengthier and more complicated 
investigation, examining in more detail the actions of consultants and 
their interaction with the employers' supervisors and other 
representatives. The investigator would be required to review both the 
direct reporting category and the four indirect persuader categories. 
This is a more resource-intensive process, and the Department wishes to 
consider whether there are more productive uses for its limited 
resources.

3. Effect of Rescission

    If the Rule is rescinded, as proposed here, the reporting 
requirements in effect would be the requirements as they existed before 
the Rule. The Forms and Instructions, available on the Department's Web 
site, will be those pre-existing the Rule. These are also the Forms and 
Instructions currently being used by filers, in light of the litigation 
and court order discussed in section 2(A), above. See National Federal 
of Independent Business v. Perez (N.D. Tex. 5:l6-cv-00066-c), Slip Op. 
p.89-90; 2016 WL 3766121; 2016 WL 8193279.

Executive Order 12866

    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 (OMB).
    The 2016 Final Rule was enjoined before it became applicable, so if 
the impacts of this NPRM are assessed relative to current practice, the 
results would be negligible. If, on the other hand, the NPRM's effects 
are assessed relative to a baseline in which regulated entities comply 
with the 2016 Final Rule, the rescission would result in annual cost 
savings of $1,198,714.50.
    Specifically, in the most recent Information Collection Request 
(ICR) for the pre-2016 Form LM-20, the Department estimated 387 Form 
LM-20 reports would be filed annually. 81 FR 15929, 16009. This 
estimate was raised to 4,194 reports for the 2016 Rule, with a total 
annual cost of $633,932.16. 81 FR 16015 (Table 5). The Department 
returns to the 387 figure, which is $13,130 in total annual costs, as 
estimated in the accompanying ICR submission to OIRA. The total annual 
cost savings relating the rescission of the Form LM-20 is therefore 
$620,802.16 ($633,932.16-$13,130 = $620,802.16).
    In the most recent ICR for the pre-2016 Form LM-10, the Department 
estimated 957 Form LM-10 reports would be filed annually. 81 FR 15929. 
This estimate was raised to 2,777 reports for the 2016 Rule, with a 
total annual cost of $629,567.34. 81 FR 16015 (Table 5). The Department 
returns to the 957 figure, which is $51,655 as estimated in the 
accompanying ICR submission to OIRA. The total annual cost savings 
relating the rescission of the Form LM-10 is $577,912.34 ($629,567.34-
$51,655 = $577,912.34)
    Thus, the total savings from rescission of Form LM-10 and Form LM-
20 is $1,198,714.50 ($620,802.16 + $577,912.34 = $1,198,714.50). 
Additionally, the Department returns to its previous estimate of 22 
minutes of reporting and recordkeeping burden per Form LM-20 form, as 
opposed to the 98 minutes in the 2016 Rule. See 81 FR 15929, 16014, and 
16015, Table 5. The Department returns to its previous estimate of 35 
minutes for reporting and recordkeeping burden per Form LM-10 form, as 
opposed to the 147 minutes in the 2016 Rule. See 81 FR 15929 and 16015, 
Table 5. Finally, the Department downward adjusts the number of Form 
LM-21 reports from 258, as estimated under the 2016 Rule, to the pre-
2016 level of 72. We note that the analysis of the 2016 final rule, 
which is the source of these estimates, did not include an overhead 
labor cost. There are several approaches to look at the cost elements 
that fit the definition of overhead and there are a range of overhead 
estimates--from 17 percent by the Environmental Protection Agency to an 
average of 77 percent by government contractors.
    The 2016 Rule described qualitative benefits arising from the rule, 
stating that it ``promotes the important interests of the Government 
and the public by ensuring that employees will be better informed and 
thus better able to exercise their rights.'' 57 FR 15929. These 
benefits were not quantified. As described above, the Department 
proposes to rescind the Rule to provide the Department with an 
opportunity to give more consideration to several important effects of 
modifying the scope of reporting on regulated parties. This 
consideration will include both benefits and burdens.

Executive Order 13771: Reducing Regulation and Controlling Regulatory 
Costs

    Consistent with Executive Order 13771 (82 FR 9339, February 3, 
2017), and as explained above in the Executive Order 12866 section, we 
have estimated the costs for this proposed rule to result

[[Page 26882]]

in an annual savings of $1,198,714.50 In the most recent Information 
Collection Request (ICR) for the pre-2016 Form LM-20, the Department 
estimated 387 Form LM-20 reports would be filed annually. This estimate 
was raised to 4,194 reports for the 2016 Rule. The Department returns 
to the 387 figure. Additionally, the Department returns to its previous 
estimate of 22 minutes of reporting and recordkeeping burden per Form 
LM-20 form, as opposed to the 98 minutes in the 2016 rule. See 81 FR 
15929, 16014, and 16015, Table 5.
    In its most recent ICR for the pre-2016 Form LM-10, the Department 
estimated 957 Form LM-10 reports. Thus, the Department adjusts to 957 
the Form LM-10 estimate of 2,777 reports set forth in the 2016 Rule. 
Additionally, the Department returns to its previous estimate of 35 
minutes for reporting and recordkeeping burden per Form LM-10 form, as 
opposed to the 147 minutes in the 2016 Rule. See 81 FR 15929 and 16015, 
Table 5. Finally, the Department downward adjusts the number of Form 
LM-21 reports from 258, as estimated under the 2016 Rule, to the pre-
2016 level of 72. Therefore, this action is expected to be an Executive 
Order 13771 deregulatory action.

Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980, 5 U.S.C. 601 et seq., 
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. The Department does not believe that this proposed rule will 
have a significant economic impact on a substantial number of small 
entities, as the rule contains no collection of information and 
relieves the additional burden imposed upon employers and labor 
relations consultants through the rescission of the regulations 
published on Mar. 24, 2016. See 81 FR 15924. Therefore, a regulatory 
flexibility analysis under the Regulatory Flexibility Act is not 
required. The Secretary has certified this conclusion to the Chief 
Counsel for Advocacy of the Small Business Administration.

Unfunded Mandates Reform

    This proposed 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.

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501 et seq., 
provides that no person is required to respond to a collection of 
information unless it displays a valid OMB control number. In order to 
obtain PRA approval, a Federal agency must engage in a number of steps, 
including estimating the burden the collection places on the public and 
seeking public input on the proposed information collection.
    This proposed rule contains no new information collection 
requirements for purposes of the Paperwork Reduction Act of 1995 (PRA) 
(44 U.S.C. 3501 et seq.). The Department notes that, consistent with 
the previously mentioned injunction, the agency already amended the 
information collection approval for Forms LM-10 and LM-20 and their 
instructions to reapply the pre-2016 versions. When issuing its 
approval, the OMB issued clearance terms providing the previously 
approved versions of these forms will remain effect until further 
notice. See ICR Reference Number 201604-1245-001.
    As the proposed rule still contains an information collection, the 
Department is submitting, contemporaneous with the publication of this 
notice, an information collection request (ICR) to revise the PRA 
clearance to address the clearance term. A copy of this ICR, with 
applicable supporting documentation, including among other things a 
description of the likely respondents, proposed frequency of response, 
and estimated total burden may be obtained free of charge from the 
RegInfo.gov Web site at http://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=201705-1245-001 (this link will only become active 
on the day following publication of this notice) or from the Department 
by contacting Andrew Davis on 202-693-0123 (this is not a toll-free 
number)/ email: [email protected].
    In addition to submitting comments on the information collections 
contained in this proposed rule or otherwise covered by the ICR 
directly to the Department, as discussed in the addresses portion of 
this preamble, written views about the request may also be submitted 
directly by mail to the Office of Information and Regulatory Affairs, 
Attn: OMB Desk Officer for DOL-OLMS, Office of Management and Budget, 
Room 10235, 725 17th Street NW., Washington, DC 20503; by Fax: 202-395-
6881 (this is not a toll-free number); or by email: 
[email protected]. Please note that comments submitted in 
response to this notice will be made a matter of public record and may 
be posted into the docket without redaction. The Department strongly 
encourages commenters not to include sensitive information such social 
security numbers or confidential business information in any comment.
    The Department and OMB are particularly interested in comments 
that:
     Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
     Evaluate the accuracy of the agency's estimate of the 
burden of the collection of information, including the validity of the 
methodology and assumptions used;
     Enhance the quality, utility, and clarity of the 
information to be collected; and
     Minimize the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology, e.g., by 
permitting electronic submission of responses.
    Type of Review: Revision of a currently approved collection.
    Agency: Office of Labor-Management Standards.
    Title: Labor Organization and Auxiliary Reports.
    OMB Number: 1245-0003.
    Affected Public: Private Sector--businesses or other for-profits 
and not-for-profit institutions.
    Number of Annual Responses: 31,501
    Frequency of Response: Varies.
    Estimated Total Annual Burden Hours: 4,580,114.45.
    Estimated Total Annual Other Burden Cost: $0.

Small Business Regulatory Enforcement Fairness Act of 1996

    This proposed 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 26883]]

List of Subjects in 29 CFR Parts 405 and 406

    Employers and labor relations consultants, Reporting and 
recordkeeping requirements.

    Accordingly, for the reasons stated herein, the Secretary proposes 
to amend parts 405 and 406 of title 29, chapter IV of the Code of 
Federal Regulations to read as the text at 29 CFR parts 405 and 406 
(2015).

    Signed in Washington, DC, this 5th day of June, 2017.
Andrew Auerbach,
Deputy Director, Office of Labor-Management Standards.
[FR Doc. 2017-11983 Filed 6-8-17; 4:15 pm]
BILLING CODE 4510-CP-P