Labor Organization Officer and Employee Report, Form LM-30, 36106-36190 [07-3155]

Agencies

• DEPARTMENT OF LABOR
• Office of Labor-Management Standards
• Labor-Management Standards Office

[Federal Register Volume 72, Number 126 (Monday, July 2, 2007)]
[Rules and Regulations]
[Pages 36106-36190]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 07-3155]



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Part II





Department of Labor





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Office of Labor-Management Standards



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29 CFR Part 404



 Labor Organization Officer and Employee Report, Form LM-30; Final Rule

Federal Register / Vol. 72, No. 126 / Monday, July 2, 2007 / Rules 
and Regulations

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DEPARTMENT OF LABOR

Office of Labor-Management Standards

29 CFR Part 404

RIN 1215-AB49


Labor Organization Officer and Employee Report, Form LM-30

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

ACTION: Final rule.

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SUMMARY: The Employment Standards Administration's (``ESA'') Office of 
Labor-Management Standards (``OLMS'') of the Department of Labor 
(``Department'') publishes this Final Rule to revise the Form LM-30, 
Labor Organization Officer and Employee Report, its instructions, and 
related provisions in the Department's regulations. The Form LM-30 
implements section 202 of the Labor-Management Reporting and Disclosure 
Act of 1959 (``LMRDA'' or ``Act''), 29 U.S.C. 432, whose purpose is to 
require officers and employees of labor organizations to report 
specified financial transactions and holdings to effect public 
disclosure of any possible conflicts between their personal financial 
interests and their duty to the labor union and its members. This rule 
clarifies the Form LM-30 and its instructions by explaining key terms 
and providing examples of the financial matters that must be reported, 
eliminates or modifies administrative exceptions in the old Form LM-30 
that impeded the full disclosure of financial matters that constitute 
conflicts, or potential conflicts, of interest, and improves the 
usability of the reports by union members and the public.

DATES: Effective Date: This rule will be effective August 16, 2007.

FOR FURTHER INFORMATION CONTACT: Kay H. Oshel, Director, 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, olms-public@dol.gov, (202) 693-1233 (this is not 
a toll-free number). Individuals with hearing impairments may call 1-
800-877-8339 (TTY/TDD).

SUPPLEMENTARY INFORMATION: An outline of this information and a note 
regarding the references to statutory provisions in this document 
follow:

Table of Contents

I. Background
    A. Statutory Authority
    B. Departmental Authorization
    C. Background to and Overview of Rule
    1. The Reasons for Today's Revisions of the Form LM-30
    2. Legislative History
II. Discussion of Comments Received on Proposed Rule and 
Department's Response
    A. Why the Changes to the Form Are Needed Now
    B. Why the Department Is Not Presently Requiring Unions To 
Notify Their Officers and Employees (``Officials'') About Their 
Annual Reporting Obligations
    C. Why the De Minimis Exemption From Reporting Insubstantial 
Gifts and Other Financial Benefits Has Been Simplified and Subjected 
to a $250 Limit, With an Exclusion for Gifts Valued at $20 or Less 
and Certain Widely-Attended Gatherings
    D. Why Reporting Exceptions Permitted Under the Old Rule Have 
Been Eliminated or Modified To Provide More Information to Union 
Members
    1. Regular Course of Business Exception
    2. Bona Fide Employee Exception for Transactions With an 
Employer Whose Employees the Official's Union Represents or Is 
Actively Seeking To Represent
    3. Exception for Bona Fide Loans or Interest From a Banking 
Institution
    4. Exceptions Relating to Stocks
    5. Revision of Special Report Language
    E. Why Union Officials, as a General Rule, Must Report Payments 
Received as Members of a Company's Board of Directors
    F. Why Officers of International, National, and Intermediate 
Labor Unions, in Addition to Their Obligation to Report Payments and 
Other Financial Benefits Received From Businesses and Employers That 
Have a Direct Relationship With the Component of the Union to Which 
They are Elected or Appointed, Must Also Report Payments and Other 
Financial Benefits Received From Businesses and Employers Whose 
Relationship is With a Subordinate Body of Their Union
    G. Why Union Officials Must Report Payments Under Union--Leave 
and No-Docking Practices Subject to an Exception for Payments of 250 
Hours or Less Per Year Made in Accordance with a Collective 
Bargaining Agreement
    H. What Payments and Other Financial Benefits, Received From an 
Employer or Business Whose Employees are not Represented by the 
Union and Which Does Not Conduct Business With the Official's Union, 
Must be Reported
    I. When is a Union ``Actively Seeking To Represent'' Employees, 
Thereby Triggering a Union Official's Obligation To Report Payments 
and Other Financial Benefits Received From the Employer That is the 
Subject of the Organizing Drive
    J. How Union Officials Will Determine Whether an Entity From 
Which They Receive a Payment or Other Financial Benefit Does a ``A 
Substantial Part'' of its Business With an Employer Whose Employees 
are Represented by the Official's Union or the Union it is Actively 
Seeking to Represent
    K. Why Payments and Other Financial Benefits Received From 
Section 3(l) Trusts and Service Providers to Such Trusts Must Be 
Reported
    1. Alleged Procedural Shortcoming
    2. Routine Exceptions
    3. Relationship With Other Statutes
    4. Trusts as Employers and Businesses
    L. When Payments and Other Financial Benefits Received From a 
Union Other Than an Official's Own Union Must be Reported
    M. How the Proposed Definitions Have Been Clarified To Ease a 
Filer's Completion of the Form LM-30
    1. Definitions Adopted by Today's Rule
    2. Other Issues Related to Definitions
    N. Details Relating To Proposed and Revised Form and 
Instructions
    1. Comparison of the ``Old'' and Proposed Forms
    2. Comments on Proposed Form
    3. Completion of the Revised Form
III. Regulatory Procedures
    A. Executive Order 12866
    B. Small Business Regulatory Enforcement Fairness Act
    C. Unfunded Mandates Reform
    D. Executive Order 13132 (Federalism)
    E. Regulatory Flexibility Act
    F. Paperwork Reduction Act
    G. Executive Order 13045 (Protection of Children From 
Environmental Health Risks and Safety Risks)
    H. Executive Order 13175 (Consultation and Coordination With 
Indian Tribal Governments)
    I. Executive Order 12630 (Governmental Actions and Interference 
With Constitutionally Protected Property Rights)
    J. Executive Order 12988 (Civil Justice Reform)
    K. Environmental Impact Assessment
    L. Executive Order 13211 (Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use)
IV. Text of Final Rule

Appendix

    Note: Throughout this document, the Department refers to various 
statutory provisions as ``section ----.'' All such references, 
unless otherwise noted, are to Title 29 of the U.S. Code. Further, 
unless otherwise noted, all the sections are part of the Labor-
Management Reporting and Disclosure Act of 1959, which is set forth 
in Chapter 11 of Title 29, 29 U.S.C. 401-531. Following is a list of 
the most frequently cited LMRDA provisions in this document with 
corresponding citations to the U.S. Code: section 3(l), 29 U.S.C. 
402(l); 201, 29 U.S.C. 431; section 202, 29 U.S.C. 432; and section 
203, 29 U.S.C. 433. The only other provision of the U.S. Code 
frequently referred to in the document by the section number in the 
public law in which it was enacted is ``section 302(c),'' a 
reference to a provision of the Labor Management Relations Act, as 
amended, 29 U.S.C. 141-188. A reference to

[[Page 36107]]

section 302(c), 29 U.S.C. 186(c), appears in the text of section 
202(a)(6) of the LMRDA, 29 U.S.C. 432(a)(6).

I. Background

A. Statutory Authority

    Section 208 of the LMRDA states in part:

    The [Department] shall have authority to issue, amend and 
rescind rules and regulations prescribing the form and publication 
of reports required to be filed under this title and such other 
reasonable rules and regulations (including rules prescribing 
reports concerning trusts in which a labor organization is 
interested) as he may find necessary to prevent the circumvention or 
evasion of such reporting requirements.

    29 U.S.C. 438. Today's rule prescribes the disclosure form required 
to be filed by a union officer or employee if such an official, his or 
her spouse, or minor child hold an interest in or receive payments from 
certain entities. The reporting requirements are contained in section 
202, which 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;
    (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.

B. Departmental Authorization

    Section 208 of the Act, 29 U.S.C. 438, provides that the Secretary 
of Labor shall have the 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. Secretary's 
Order 4-2007, issued May 2, 2007, and published in the Federal Register 
on May 8, 2007 (72 FR 26159), contains the delegation of authority and 
assignment of responsibility of the Secretary's functions under the 
LMRDA to the Assistant Secretary for Employment Standards and permits 
the redelegation of such authority.

C. Background to and Overview of Rule

    In today's rule, the Department revises the Form LM-30, Labor 
Organization Officer and Employee Report based on its review of public 
comments received in response to its Notice of Proposed Rulemaking 
(``NPRM''), 70 FR 51166 (Aug. 29, 2005). The Form LM-30 is used by 
officers and employees of labor organizations subject to the LMRDA. 
Section 202 of the Act requires public disclosure of certain financial 
interests held, income received, and transactions engaged in by labor 
organization officers and employees (generally referred to herein as 
``union officials'' or ``officials'') and their spouses and minor 
children. Subject to exclusions, these interests, incomes, and 
transactions include:
    1. Payments or benefits from, or interests in, an employer whose 
employees the filer's union represents or is actively seeking to 
represent;
    2. Transactions involving interests in, or loans to or from, an 
employer whose employees the filer's union represents or is actively 
seeking to represent;
    3. Interests in, income from, or transactions with 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;
    4. Interests in, income from, or transactions with a business that 
deals with the filer's union or a trust in which the filer's union is 
interested;
    5. Transactions or arrangements with an employer whose employees 
the filer's union represents or is actively seeking to represent; and
    6. Payments from an employer or labor relations consultant to an 
employer.

As sometimes used herein, the short-hand phrase ``payments or other 
financial interests'' or its equivalent is used to refer to the various 
payments, transactions, arrangements and other monetary and financial 
interests that must be reported. Payments, as a general rule, include 
gifts, gratuities, restaurant meals, and entertainment.
    The Form LM-30 must be filed annually by a union officer or 
employee (other than those solely engaged in performing clerical or 
custodial duties) if the official, the official's spouse, or minor 
child (or children) receives a payment or other financial interest from 
a business or employer in connection with certain activities, 
identified in section 202. Section 202's disclosure obligations for 
union officials (as embodied in the Form LM-30) are an integral part of 
the Act's reporting structure. The Act requires annual reports by 
unions as ``institutions'' under section 201 (Forms LM-2, LM-3, and LM-
4), by employers, who must

[[Page 36108]]

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

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

[[Page 36110]]

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

[[Page 36111]]

(1986), at 12. Added transparency about a union official's conflicts of 
interest will help ensure that all union officials keep paramount the 
interests of their union and its members. Most union officials will 
never be tempted to subordinate their union's interests to their own 
financial interests; the rule will help them avoid the perception that 
their financial interests, left unreported through inadvertence or 
misunderstanding, may engender unfair suspicion. Others, though 
tempted, will be deterred from taking such action. See Archibald Cox, 
Internal Affairs of Labor Unions Under the Labor Reform Act of 1959, 58 
Mich.L.Rev. 819, 827 (1960) (``Internal Affairs of Labor Unions'') 
(``The official whose fingers itch for a ``fast buck'' but who is not a 
criminal will be deterred by the fear of prosecution if he files no 
report and by fear of reprisal from the members if he does'').
    The Form LM-30 has been redesigned to facilitate full and accurate 
completion by the filer and review by members of the filer's union and 
the public. The instructions now contain useful definitions of key 
terms and concepts required to complete the form and numerous practical 
examples to assist filers in completing the form. Union officials will 
also better understand the disclosure obligations relating to actual or 
potential conflicts of interest and will be mindful of their duty to 
hold their union's interests above their own personal financial 
interests. Financial transparency, as noted above, also may deter fraud 
and self-dealing and facilitates discovery of such misconduct when it 
occurs. Transparency promotes the unions' own interests as democratic 
institutions. By these improvements, union members will obtain a more 
accurate picture of the personal financial interests of their union's 
officers and employees, as those interests may bear upon their actions 
on behalf of the union and its members. With this information, union 
members will be better able to understand any financial incentives or 
disincentives faced by their union's officers and employees and to make 
more informed choices about the leadership of their union and its 
management of its affairs. Through these actions, the Department 
advances the LMRDA's declared purpose ``that labor organizations, 
employers, and their officials adhere to the highest standards of 
responsibility and ethical conduct in administering the affairs of 
their organizations.'' Section 2(a). As such, today's rule will better 
achieve the purposes of the LMRDA than the old reporting regimen.
2. Legislative History
    To better understand the purposes served by disclosure, a brief 
review of the history of the LMRDA's reporting and disclosure 
requirements for union officials is appropriate. As explained in the 
NPRM, at 70 FR 51166, the LMRDA was passed in 1959 by a bipartisan 
Congress that found: In labor and management fields:

    [T]here 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(a).
    The legislation 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, chaired by Senator John McClellan of Arkansas. In 1957, the 
committee began a highly publicized investigation of union racketeering 
and corruption; its findings of financial abuse, mismanagement of union 
funds, and unethical conduct provided much of the impetus for enactment 
of the LMRDA's remedial provisions. See generally Benjamin Aaron, The 
Labor-Management Reporting and Disclosure Act of 1959, 73 Harv. L. Rev. 
851, 851-55 (1960). During the investigation, the committee uncovered a 
host of improper financial arrangements between officials of several 
international and local unions and employers (and labor consultants 
aligned with the employers) whose employees were represented by the 
unions in question or might be organized by them. Similar arrangements 
also were found to exist between union officials and the companies that 
handled matters relating to the administration of union benefit funds. 
See generally, Interim Report of the Select Committee on Improper 
Activities in the Labor or Management Field, S. Report No. 85-1417 
(1957) (``Interim Report''). For examples of some of the improper 
arrangements directly or indirectly involving officials of these 
unions, see Interim Report, pp. 42-86, 122-30, 150-57, 222-55, 376-420, 
441-50. See also Robert F. Kennedy, The Enemy Within (1960) (discussing 
the committee's investigation).
    The statute was designed to remedy these various ills through a set 
of integrated provisions aimed at union governance and management. 
These included a ``bill of rights'' for union members, which provides 
for equal voting rights, freedom of speech and assembly, and other 
basic safeguards for union democracy, see sections 101-105 of the 
LMRDA, 29 U.S.C. 411-415, financial reporting and disclosure 
requirements for unions, union officers and employees, employers, labor 
relations consultants, and surety companies, see sections 201-206 and 
211 of the LMRDA, 29 U.S.C. 431-436, 441; detailed procedural, 
substantive, and reporting requirements relating to union trusteeships, 
see sections 301-306 of the LMRDA, 29 U.S.C. 461-466; detailed 
procedural requirements for the conduct of elections of union officers, 
see sections 401-403 of the LMRDA, 29 U.S.C. 481-483, safeguards for 
unions, including bonding requirements, the establishment of fiduciary 
responsibilities for union officials and other representatives; and 
criminal penalties for embezzlement from a union, for loans over $2,000 
by a union to officers or employees, for a union's employment of 
certain convicted felons or permitting them to hold union office, and 
for payments to employees for prohibited purposes by an employer or 
labor relations consultant, see sections 501-504 of the LMRDA, 29 
U.S.C. 501-504; and prohibitions against retaliation for exercising 
protected rights, see sections 601-611 of the LMRDA, 29 U.S.C. 521-531.
    The reporting requirement for union officials operates in tandem 
with the Act's establishment of a fiduciary duty for union officials 
and representatives. Section 501, 29 U.S.C. 501. Congress addressed 
conflicts of interest in both sections 202 and 501(a) of the Act. The 
latter section provides in part:

    The officers, agents, shop stewards, and other representatives 
of a labor organization occupy positions of trust in relation to 
such organization and its members as a group. It is, therefore, the 
duty of each such person, taking into account the special problems 
and functions of a labor organization, to hold its money and 
property solely for the benefit of the organization and its members 
and to manage, invest, and expend the same in accordance with its 
constitution and bylaws and any resolutions of the governing bodies 
adopted thereunder, to refrain from dealing with such organization 
as an adverse party or in behalf of an adverse party in any matter 
connected with his duties and from holding or acquiring any 
pecuniary or personal interest which conflicts with the interests of 
such organization * * *.

    Both provisions address the potential and actual conflict between a 
union representative's personal interests and his or her duty to the 
union and its

[[Page 36112]]

members. See Theodore Clark, Jr., The Fiduciary Duties of Union 
Officials under Section 501 of the LMRDA, 52 Minn. L. Rev. 437, 458-60 
(1962).
    The McClellan Committee hearings disclosed a history of self-
dealing by certain union officials, often at the expense of their 
union's membership. Then Senator John F. Kennedy was the chief sponsor 
of the Senate bill, S. 505, which served as the foundation for the 
LMRDA. In introducing the bill for the Senate's consideration, Senator 
Kennedy addressed concerns about the involvement of union officials in 
matters that blurred their personal interests and their union's 
interests, which concerns would be remedied by the legislation. Senator 
Kennedy used the experience of the Teamsters union, as revealed by the 
investigation of the McClellan Committee, to underscore the purposes to 
be achieved by the Act:

    First. It will no longer be possible for the dues of Teamster 
members to be * * * used by [the union's] officers to build their 
own personal financial empires without the knowledge of the members 
themselves--or without investigation by the press and public 
authorities.
    Second. [A union official] would be required to disclose all his 
business dealings with insurance agents handling the union's welfare 
funds, his private arrangements with employers, his hidden 
partnerships in business ventures foisted upon his members, and all 
other possible conflicts of interest.
* * * * *
    Sixth. [Union officials] will find future collusion with 
employers vastly restricted--with no more loans from employer 
groups, no more attacks on rival unions through middlemen * * *, and 
no more secrecy shrouding the use of union funds to bail out a 
collaborating employer.

105 Cong. Rec. S817 (daily ed. Jan. 20, 1959), reprinted in 2 NLRB 
Legislative History of the Labor-Management Reporting and Disclosure 
Act of 1959 (``Leg. History''), at 969.
    The improper dealings by the Teamsters officials, to which Senator 
Kennedy refers, are detailed in the Interim Report, at e.g., 48, 59-60, 
64-86, 222-54, 443-50. These dealings, like those identified by 
officials of other unions in the Interim Report, included actions 
undertaken by national officers, or others acting at their behest, 
involving matters affecting not only the national union's operation but 
also matters of importance to local and intermediate bodies of their 
union. See e.g., Interim Report, at 4-7, 46-49, 51, 55, 59-60, 63, 69, 
74, 81, 87, 122-25, 128, 130, 179, 186-87, 224, 228, 230-40, 244, 250, 
252, 264-66, 268, 281, 284-85, 295, 297, 300, 444-48. See also The 
Enemy Within, at 97, 99, 104-05, 106, 221-24.
    As explained in the Senate Committee Report, S. Rep. No. 187 (1959) 
(``Senate Report''), at 15, reprinted in 1 Leg. History, at 411: ``The 
hearings before the McClellan committee brought to light a number of 
instances in which union officials gained personal profit from a 
business which dealt with the very same employer with whom they engaged 
in collective bargaining on behalf of the union.'' Id. The committee 
endorsed the concern expressed in the AFL-CIO's Ethical Practices Code 
that the union official ``may be given special favors or contracts by 
the employer in return for less than a discharge of his obligations as 
a trade-union leader.'' Id.
    In explaining the purpose of the disclosure rules for union 
officers and employees, 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 we summarize 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 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: ``No union officer or employee is 
obliged to file a report unless he holds a questionable interest 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. The House Committee Report, H.R. Rep. No. 741 (1959) (``House 
Report''), at 11, reprinted in 1 Leg. History, at 769, conveyed the 
same message. Both the Senate and House Reports recognize that a 
reportable interest is 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, 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 made illegal under other provisions of the 
bill or other laws''). ``Reports are required as to matters which 
should be public knowledge so that their propriety can be explored in 
the light of known facts and conditions.'' Id. As stated by Senator 
Barry Goldwater after the LMRDA had been passed:

    Briefly, what must be reported are holdings of interest in or 
the receipt of economic benefits from employers who deal or might 
deal with such union official's union, or holdings in or benefits 
from enterprises which do business with such union official's union.

105 Cong. Rec. A8512 (daily ed. Oct. 2, 1959), reprinted in 2 Leg. 
History, at 1846.
    Conflict of interest standards, including disclosure obligations of 
individuals and entities occupying positions of trust, are well 
grounded 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.''

Senate Report, at 11, reprinted in 1 Leg. History, at 769. See 
generally Restatement (Second) of Trusts (1959) Sec. Sec.  170, 173; 
Restatement (Second) of Agency (1958) Sec. Sec.  381, 387-98.
    Section 202 is an effort, in part, to make effective the disclosure 
requirements associated with the fiduciary standards applied to union 
officials in Title V of the LMRDA, a duty that includes an obligation 
to report potential conflicts of interest. Both Titles II and V of the 
Act represent an effort to codify various requirements

[[Page 36113]]

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 
Internal Affairs of Labor Unions, 58 Mich. L. Rev. at 824-29. 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 trade 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 1408. See also Ethical Practices Code II: Health and 
Welfare Funds, id., 2 Leg. History, at 1406-07.
    The Department intends by today's rule to better achieve the 
purposes of the LMRDA, as reflected by its legislative history.

II. Discussion of Comments Received on Proposed Rule and Department's 
Response

A. Why the Changes To the Form Are Needed Now

    Several commenters recommended that the Department should evaluate 
its recent compliance experience with Form LM-30 reports submitted by 
union officials using the old form before considering any changes to 
the form. One commenter stated that there is no problem with the old 
form. Another asserted that the affected community has spent a ``huge 
amount of time getting up to speed on the present form,'' arguing that 
the proposed form is more confusing than the current form because it 
requires filers to identify for each reportable interest the particular 
statutory provision to which it relates.
    A labor educator, noting the upsurge in Form LM-30 filings about 
the time of the comment period on the proposed rule, suggested that the 
Department should postpone any changes until it completed a thorough 
analysis of these submissions. Although this commenter acknowledged 
that the old form presents some challenges to a filer's easy 
understanding of the reporting requirements, he asserted that the 
proposed form poses greater opportunity for mistake and confusion. Two 
commenters argued: ``[R]adically changing the form at the same time as 
the Department provides comprehensive guidance on what is considered 
reportable [on the old form] will only impede the efforts to encourage 
accurate and full reporting.''
    The old Form LM-30 posed substantial challenges to filers. As 
discussed in the NPRM and as demonstrated by comments on the proposal, 
filers have been unsure about the kinds of payments that trigger the 
need to file a Form LM-30. See 70 FR 51172-73, 51175. Keeping the 
status quo would leave in place exceptions that permit union officials 
to avoid disclosing payments that would otherwise be reportable under 
the statute, denying union members information about their officials' 
interests in and payments by employers and businesses that raise 
conflict of interest questions. Deferring the final rule for an 
exhaustive analysis of all the Form LM-30 filings during the April 
through mid-August 2006 ``grace period,'' numbering about 13,000 would 
cause undue delay with little additional gain. The Department's 
preliminary and ongoing review of these filings demonstrates that the 
old form is unclear and that today's rule will rectify many of the 
problems observed in those filings.
    One commenter recommended that the Department, well in advance of 
the filing deadline, ``should grant a reasonable extension for filing 
and/or make any aspects of the final rule that are more restrictive 
than the current rule prospective only. DOL should only apply any 
changes prospectively, and it should provide a reasonable opportunity 
for necessary recordkeeping and related efforts to facilitate accurate 
reports and compliance.'' Another commenter argued that no new 
requirements should be imposed on service providers until rulemaking on 
the Form LM-10 is completed. Another commenter argued that no changes 
in reporting should occur any sooner than a filer's fiscal year that 
begins after the final rule takes effect.
    DOL is applying these changes prospectively only. This final rule 
will apply to fiscal years beginning on or after ------, 2007. 
Therefore, no report subject to today's rule will be due until at least 
------, 2008. There is ample time from publication of this final rule 
until ------, 2008 for all filers to obtain any information they need 
to comply with the filing requirements.

B. Why the Department Is Not Presently Requiring Unions to Notify Their 
Officers and Employees (``Officials'') About Their Annual Reporting 
Obligations

    In the NPRM, the Department requested comments on whether the 
Department should require unions to provide notice of the filing 
requirements to their officers and employees. The NPRM discussed 
possible notification options. Under one option, unions would be 
required to notify their officers and employees of their Form LM-30 
obligations within 30 days of their installation into office or hire, 
respectively. Unions would be required to provide initial notification 
within 60 days of the enactment of the regulation, and annually 
thereafter to all officers and employees. Under the proposal, a union 
could meet this requirement by providing a copy of the Form LM-30 and 
its instructions. E-mail notification might be considered. As an 
alternative, a general notice, provided in a union publication 
addressed to each officer and employee, might be adequate for this 
purpose.
    A number of comments were received on the notification question. 
Commenters were divided on the question. Some commenters strongly 
supported mandatory notification, pointing to low numbers of past 
filers as evidence that notification is essential. No union commenter 
supported the proposal. Commenters were divided as to whether the 
Department has authority to require notification under sections 105 or 
208 of the LMRDA. One commenter asserted that the Department lacks 
authority to issue a notification requirement under section 105, 
arguing that this provision does not allow imposition of a detailed 
code of union conduct. Another commenter used section 105 to illustrate 
its position that Congress knew how to establish a notification 
requirement, arguing that its

[[Page 36114]]

failure to so provide in section 202 evinces the intention to excuse 
unions from any obligation to provide such notice. Another commenter 
argued to the contrary, stating that mandatory notification is 
consistent with section 105 which states, ``[e]very labor organization 
shall inform its members concerning the provisions of this Act.'' While 
acknowledging that section 208 arguably permits a notification 
requirement, a commenter argued that the Department must first 
demonstrate that such a rule is necessary to prevent the circumvention 
or evasion of the reporting obligation. It argued that 
``circumvention'' and ``evasion'' connote a willful disregard of the 
filing obligation, actions that require as a premise that the filer 
already is aware of the filing obligation.
    A commenter argued that the Department should impose a broader 
notification requirement on unions. Unions should be required, in its 
view, to provide notice to both officials and their members about both 
the filing obligations of union officials and the union's own reporting 
obligations to file a Form LM-2, 3 or 4. Another commenter viewed 
notification as a ``first-step in the right direction.'' It stated a 
preference for a system whereby the Department would provide annual 
reminders about Form LM-30; each union would be required to file with 
the Department the names and addresses of all its officers and 
employees. On the other hand, several commenters argued that reliance 
on voluntary efforts would better achieve the goal of informing 
officials about their filing obligation. One of these commenters stated 
that voluntary education works better than mandatory notification given 
that unions have a variety of governance structures and that they 
operate, in effect, in different industries calling for different 
approaches. Another commenter suggested that DOL ``work informally'' to 
obtain compliance. This commenter explained that under the old 
regulation, unions take various steps to inform their officials about 
Form LM-30 requirements, such as by holding meetings or providing 
written notices. The commenter argued that the choice of a method to 
inform union members should be left to the union. Se