Trust Annual Reports

AGENCY:

Office of Labor-Management Standards, Department of Labor.

ACTION:

Notice of proposed extension of filing due date.

SUMMARY:

This proposed rule seeks public comment on a proposal to delay the filing due date of the Form T-1, Trust Annual Report. The Form T-1 is an annual financial disclosure report to be filed, pursuant to the Labor-Management Reporting and Disclosure Act (LMRDA), by labor unions with total annual receipts of $250,000 or more about certain trusts in which they are interested. Labor unions would use the Form T-1 to disclose financial information about the trusts, such as assets, liabilities, receipts, and disbursements. The Department established the Form T-1 with a final rule published on October 2, 2008, 73 FR 57412 (Oct. 2, 2008), with an effective date of January 1, 2009. Subsequently, the Department announced its intention to propose withdrawal of the Form T-1 (Spring 2009 Regulatory Agenda). The Department held a public meeting on July 21, 2009, and received comments from interested parties concerning provisions of the Form T-1 and its proposed rescission. The Department now seeks comments on a proposal to delay the filing due date of the initial Form T-1 reports, pending the outcome of the Department's proposal to withdraw the October 2, 2008 rule.

DATES:

This proposed rule proposes to delay for one calendar year the filing due dates for Form T-1 reports required to be filed during calendar year 2010. The comment period on this proposal will close on December 14, 2009.

ADDRESSES:

You may submit comments, identified by RIN 1215-AB75, 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 “Trust Annual 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 should be sent 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, 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:

On October 2, 2008, the Department of Labor, Office of Labor-Management Standards (OLMS), published a Final Rule establishing the Form T-1, Trust Annual Report. 73 FR 57411. The Form T-1 is an annual financial disclosure report to be filed by labor unions about certain trusts in which they are interested. For an organization or fund to be a labor union's trust subject to Form T-1 reporting, it must be established by the labor union or have a governing body that includes at least one member appointed or selected by the labor union, and a primary purpose of the trust must be to provide benefits to the members of the labor union or their beneficiaries. Examples of such trusts include building and redevelopment corporations, educational institutes, credit unions, labor union and employer joint funds, and job targeting funds. Labor unions currently are required to disclose financial information about the trust, such as assets, liabilities, receipts and disbursements through use of Form T-1.

Labor unions with total annual receipts of $250,000 or more (those required to file Form LM-2, Labor Organization Annual Report) are required to file the Form T-1 report. A labor union must file a Form T-1 report for each trust where the labor union, alone or in combination with other labor unions, appoints or selects a majority of the members of the trust's governing board or the labor union's contribution to the trust, alone or in combination with other labor unions, represents more than 50% of the trust's receipts. Contributions by an employer under a collective bargaining agreement are considered contributions by the labor union.

The Form T-1 rule also provides that unions will not be required to file a Form T-1 under certain circumstances, such as when the trust is a political action committee, if publicly available reports on the committee are filed with appropriate Federal or State agencies; an independent audit has been conducted for the trust, in accordance with standards set forth in the final rule; or the trust is required to file a Form 5500 with the Employee Benefits Security Administration (EBSA).

The Form T-1 final rule took effect on January 1, 2009. Filing due dates depend on the fiscal year ending dates of both the reporting union and the trust being reported. The fiscal year of both the labor union and its trust must begin on or after January 1, 2009, for a Form T-1 report to be owed, and the labor union must file any owed Form T-1 report within 90 days of the close of its own fiscal year. The earliest Form T-1 reports are required of unions that have, and whose trusts have, a fiscal year start date of January 1, 2009. These first Form T-1 reports are therefore due on or after January 1, 2010, but no later than March 31, 2010.

In the Spring 2009 Regulatory Agenda, the Department notified the public of its intent to initiate rulemaking proposing to rescind the Form T-1 and to require reporting of wholly owned, wholly controlled, and wholly financed (“subsidiary”) organizations on their Form LM-2 or LM-3 reports. See http://www.reginfo.gov/public/do/eAgendaViewRule?pubId=200904&RIN=1215-AB75 . Additionally, the Department held a public meeting on July 21, 2009, which allowed interested parties to comment on any aspect of the Form T-1. A draft proposed rule to withdraw the October 2, 2008 Form T-1 rule is currently under review by the Administration.

In view of its plan to propose rescission of the Form T-1 Trust Annual Report, the Department now proposes to extend the filing due dates of Form T-1 reports that would otherwise be due in 2010, pending review and consideration of comments on the proposal to rescind. Extension of the filing due dates will delay or eliminate the first year recurring and nonrecurring burdens on labor organizations associated with the reporting requirements of the Form T-1 rule, pending the outcome of the proposed withdrawal. Without this proposal to delay the filing date of the initial Form T-1 reports, many affected labor organizations likely will incur the reporting costs and burdens associated with filing the form, including the nonrecurring first year costs and burdens associated with implementing the reporting system for the Form T-1. In particular, the October 2, 2008 rule estimated that unions would incur 41.20 hours in reporting burden per Form T-1 filed during the first year of the rule's implementation, for a total first year reporting burden of 128,978.11 hours. The estimated reporting cost per form filed in the first year is $1,632.41, and the estimated reporting cost in the first year for all projected Form T-1 filings is $5,110,324.80. The Department notes that the first year burden is higher than that in later years, which is estimated to be 28.28 hours per form filed and 88,542.01 hours total. 73 FR 57444-5. If the proposal to rescind the rule ultimately is effectuated, these expenses, including upfront costs, will have been incurred unnecessarily.

This proposal to delay the filing dates for Form T-1 reports due in 2010 would not affect the filing due date of Form T-1 reports that would be owed in any subsequent year. The Department's proposal would not extend the filing due date of any Form T-1 report that normally would be due during calendar year 2011 or beyond. Further, in the event that the Department determines to retain the Form T-1 rule, the initial Form T-1 reports that would have been due during 2010 must be filed in 2011, in addition to those Form T-1 reports normally due in 2011.

For the foregoing reasons, the Department has determined to propose delay of the filing dates of Form T-1 reports due during calendar year 2010 and seeks comment on this proposal.