[Federal Register Volume 74, Number 52 (Thursday, March 19, 2009)]
[Proposed Rules]
[Pages 11700-11701]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-5690]


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DEPARTMENT OF LABOR

Office of Labor-Management Standards

29 CFR Parts 403 and 408

RIN 1215-AB62


Labor Organization Annual Financial Reports

AGENCY: Office of Labor-Management Standards, Employment Standards 
Administration, Labor.

ACTION: Notice of proposed extension of effective date and 
applicability date.

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SUMMARY: This notice seeks public comment on a proposal to delay for 
180 days the April 21, 2009 effective date of the rule Labor 
Organization Annual Financial Reports, published in the Federal 
Register on January 21, 2009, and extended by a document published 
February 20, 2009; and delay the applicability date of the rule, now 
set for July 1, 2009, until January 1, 2010. The rule revised the Labor 
Organization Annual Report Form LM-2 and established a procedure 
whereby the Department of Labor may revoke, when warranted, the 
authorization to file the simplified Labor Organization Annual Report 
Form LM-3.

DATES: Following notice and comment, the Department delayed the subject 
rule, Labor Organization Annual Financial Reports, published in the 
Federal Register on January 21, 2009, and scheduled to take effect on 
February 20, 2009, from taking effect until April 21, 2009 (74 FR 
7814). This notice proposes to further delay the effective date until 
October 19, 2009. Additionally, the rule published on January 21, 2009, 
applied to labor organizations with fiscal years beginning on or after 
July 1, 2009. This notice also proposes to delay the applicability date 
of the rule to labor organizations reporting on fiscal years beginning 
on or after January 1, 2010. The comment period for the proposed delay 
of the effective date and applicability date will close on April 7, 
2009.

ADDRESSES: You may submit comments, identified by RIN 1215-AB62, only 
by the following methods:
    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 ``Labor 
Organization Annual Financial Reports'' 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.
    Delivery: Comments may also be hand-delivered or mailed to: Denise 
M. Boucher, Director of the Office of Policy, Reports and Disclosure, 
Office of Labor-Management Standards, U.S. Department of Labor, 200 
Constitution Avenue, NW., Room N-5609, Washington, DC 20210. Because of 
security precautions the Department continues to experience delays in 
U.S. mail delivery. You should take this into consideration when 
preparing to meet the deadline for submitting comments.
    The Office of Labor-Management Standards (OLMS) recommends that you 
confirm receipt of your delivered comments by contacting (202) 693-0123 
(this is not a toll-free number). Individuals with hearing impairments 
may call (800) 877-8339 (TTY/TDD). Only those comments submitted 
through http://www.regulations.gov, hand-delivered, or mailed will be 
accepted. Comments will be available for public inspection at http://www.regulations.gov and during normal business hours at the above 
address.

FOR FURTHER INFORMATION CONTACT: Denise M. Boucher, Director, Office of 
Policy, Reports and Disclosure, Office of Labor-Management Standards, 
Employment Standards Administration, U.S. Department of Labor, 200 
Constitution Avenue, NW., Room N-5609, Washington, DC 20210, (202) 693-
1185 (this is not a toll-free number), (800) 877-8339 (TTY/TDD).

SUPPLEMENTARY INFORMATION: The Department published a notice (74 FR 
5899) on February 3, 2009, seeking public comment on whether or not it 
should delay for 60 days the effective

[[Page 11701]]

date of the January 21 rule in order to provide the opportunity for 
further review and consideration of the questions of law and policy 
raised by the rule, including the merits of the rule and whether or not 
the Department should rescind or retain it. The period for public 
comment on the proposed extension closed on February 13, 2009, and the 
comment period on the merits of the rule closed on March 5, 2009. The 
Department received about 100 comments.
    On February 20, 2009, the Department published a final rule 
extending the effective date of the January 21 rule until April 21, 
2009, to provide an opportunity for that review (74 FR 7814). The 
Department is currently reviewing questions of law and policy raised by 
the rule, including consideration of the comments received from the 
public on these questions. This process will inform the Department in 
its determination whether or not to propose rescission of the January 
21 rule.
    This proposal to extend the effective date of the rule until 
October 19, 2009, and to extend the applicability date until January 1, 
2010, is based upon both the need to review the comments received as 
well as the considerations underlying the Department's initial proposal 
to extend the effective date of the rule. As there stated:

    Without this proposal to delay the effective date, affected 
labor organizations likely will undertake much effort and expense in 
changing their recordkeeping systems to meet the changes required by 
the rule. If a decision is made to propose changes and such changes 
are ultimately effectuated, these expenses will have been incurred 
unnecessarily. The tasks undertaken will have to be repeated, and 
costs duplicated, to comply with any further revisions to the rule. 
Additionally, the Department itself will incur significant start up 
costs in revising its electronic software to make the changes 
required by the rule; costs that will have to be duplicated if 
changes are later proposed and effectuated in a final rule. 
Furthermore, unless the Department now proposes to delay the 
effective date of the rule, the Department will have to begin 
answering questions and providing compliance assistance about how 
the final rule is to be implemented, guidance that will only confuse 
labor organizations if new guidance about a revised rule has to be 
provided in the near future. For the foregoing reasons, the 
Department has determined to propose delay of the effective date of 
the final rule and, by doing so, alert affected labor organizations 
that it may be advisable for them to delay preparations and 
financial commitments associated with the changes required by the 
final rule until a decision is made regarding the effective date of 
the final rule. The Department proposes the delay of the effective 
date to provide an opportunity for further review and consideration 
of the questions of law and policy raised by it.

74 FR at 5900.
    In addition, the Department is reviewing the comments it received 
on the merits of the rule and the question of whether to retain or 
rescind it. The Department received comments from individuals, labor 
unions, and public policy groups. Individuals and public policy groups 
opposed the rescission of the rule, explaining their views that the 
rule enhanced the transparency and accountability of labor unions. Two 
public policy groups and several individuals urged the Department to 
allow an extended comment period of not less than 120 days for the 
public to submit its view on the merits of the rule. Labor unions urged 
the Department to rescind the rule, many claiming that the Department 
underestimated the costs associated with the rule. Several labor 
organizations identified what they viewed as two fundamental flaws with 
the January 21, 2009 rule: (1) The rule had been promulgated without 
any meaningful review of the utility of the existing Form LM-2; and (2) 
the Department's burden estimates for the 2009 rule were based on 
unverified estimates rather than actual costs incurred. A federation of 
labor organizations stated that the Department has failed to 
demonstrate that the revised form will aid in the detection or 
prevention of corruption, noting its view that internal controls 
established by unions are the more effective approach. It also asserted 
that the Department's annual reports fail to demonstrate that enhanced 
reporting has assisted the Department's compliance efforts. Some labor 
unions expressed the view that the 2009 rule is based on a 
misapprehension about how unions receive dues payments and how 
organizing is conducted. Commenters expressed divergent views on the 
procedure for revoking the simplified reporting obligation for LM-3 
filers whose reports were delinquent or deficient. While some saw the 
procedure as a necessary tool to fix an obvious problem, other 
commenters viewed the approach as fundamentally misguided and punitive. 
In the view of the latter commenters, improved compliance is better 
achieved through cooperative efforts by the Department and national or 
international unions working with locals that find it difficult to file 
timely reports.
    The Department will not be able to complete its review of the 
January 21 rule, including consideration of the public comments on the 
merits of the rule, before April 21, 2009, the current effective date 
of the rule. The Department estimates that a further extension of 180 
days will enable the Department to complete such review, and if a 
determination is reached to propose rescission, to complete the notice 
and comment process required for rescinding a rule. Without a further 
extension, those unions with fiscal years beginning on or after July 1, 
2009, would have to begin immediate preparations to comply with the 
rule, preparations that entail significant burden and expense, but 
which may prove unnecessary. Furthermore, the Department itself would 
have to expend substantial financial and compliance resources to 
prepare for the rule, resources that could be directed to other 
purposes if the rule is subsequently rescinded. These front-end burdens 
most directly and substantially fall on labor unions that already file 
the Form LM-2. If a decision is made to propose rescinding the 
regulations, and such proposal ultimately is effectuated, these 
expenses will have been incurred unnecessarily. Moreover, the urgency 
of dealing with these front-end burdens is greater now than at the time 
of the February 3, 2009, proposal, as the applicability date of July 1, 
2009, is nearer.
    For the foregoing reasons, the Department has determined to propose 
delay of the effective date and applicability date of the January 21, 
2009, rule and, by doing so, to alert affected labor organizations that 
it may be advisable for them to delay any preparations and financial 
commitments associated with the changes required by the rule until a 
decision is made regarding the proposed extension of the effective and 
applicability dates of the final rule.

    Signed in Washington, DC, this 11th day of March, 2009.
Andrew D. Auerbach,
Deputy Director, Office of Labor-Management Standards.
Shelby Hallmark,
Acting Assistant Secretary for Employment Standards.
[FR Doc. E9-5690 Filed 3-18-09; 8:45 am]
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