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Federal Register / Vol. 86, No. 248 / Thursday, December 30, 2021 / Rules and Regulations
examine any books, records, and accounts necessary to verify such reports. 29 CFR 403.8a.
The reports are public information. 29
U.S.C. 435a. The Secretary is charged with providing for the inspection and examination of the financial reports, 29
U.S.C. 435b. For this purpose, OLMS
maintains: 1 A public disclosure room where copies of such reports filed with OLMS may be reviewed and; 2 an online public disclosure site, where copies of such reports filed since the year 2000 are available for the publics review.
In addition to prescribing the form and publication of the LMRDA reports, the Secretary is authorized to issue regulations that prevent labor unions and others from avoiding their reporting responsibilities. Section 208 authorizes the Secretary of Labor to issue, amend, and rescind rules and regulations to implement the LMRDAs reporting provisions, including prescribing reports concerning trusts in which a labor organization is interested as the Secretary may find necessary to prevent the circumvention or evasion of the LMRDAs reporting requirements.
29 U.S.C. 438. In other words, the Secretary may require separate trust reporting only if: 1 The union has an interest in a trust and 2 reporting is determined to be necessary to prevent the circumvention or evasion of LMRDA
reporting requirements. 29 U.S.C. 438.
The phrase trust in which a labor organization is interested is defined the LMRDA. It means a trust or other fund or organization 1 which was created or established by a labor organization, or one or more of the trustees or one or more members of the governing body of which is selected or appointed by a labor organization, and 2 a primary purpose of which is to provide benefits for the members of such labor organization or their beneficiaries. 29 U.S.C. 402l
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III. Rescission of the March 6, 2020
Final Rule Establishing the Form T1
A. History of the Form T1
The Form T1 report was first proposed on December 27, 2002, as one part of a proposal to extensively change the Form LM2. 67 FR 79280 Dec. 27, 2002. The rule was proposed under the authority of Section 208, which permits the Secretary to issue such rules prescribing reports concerning trusts in which a labor organization is interested as he may find necessary to prevent the circumvention or evasion of the LMRDAs reporting requirements.
29 U.S.C. 438. Following consideration of public comments, on October 9, 2003,
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the Department published a final rule enacting extensive changes to the Form LM2 and establishing a Form T1. 68
FR 58374 Oct. 9, 2003 2003 Form T
1 rule. The 2003 Form T1 rule eliminated the requirement that unions report on subsidiary organizations on the Form LM2,1 but it mandated that each labor organization filing a Form LM2 report also file a separate report to disclose assets, liabilities, receipts, and disbursements of a significant trust in which the labor organization is interested, increasing labor organizations reporting requirements generally and expanding the types of trusts for which reporting would be required. 68 FR at 58477. The reporting labor organization would make this disclosure by filing a separate Form T
1 for each significant trust in which it was interested. Id. at 58524.
To address the statutory requirement that trust reporting be necessary to prevent the circumvention or evasion of the LMRDAs reporting requirements, the 2003 Form T1 rule developed the significant trust in which the labor organization is interested test. It used the section 3l statutory definition of a trust in which a labor organization is interested coupled with an administrative determination of when a trust is deemed significant. 68 FR at 5847778. A labor organization would be required to report on an entity only if both sets of criteria were met.
The 2003 Form T1 rule set forth an administrative determination that stated that a trust will be considered significant and therefore subject to the Form T1 reporting requirement under the following conditions:
The labor organization had annual receipts of $250,000 or more during its most recent fiscal year, and 2 the labor organizations financial contribution to the trust or the contribution made on the labor organizations behalf, or as a result of a negotiated agreement to which the labor organization is a party, is $10,000 or more annually.

Id. at 58478.
The portions of the 2003 rule relating to the Form T1 were vacated by the 1 The Form LM2 Instructions define a subsidiary of a labor organization: Within the meaning of these instructions, a subsidiary organization is defined as any separate organization of which the ownership is wholly vested in the reporting labor organization or its officers or its membership, which is governed or controlled by the officers, employees, or members of the reporting labor organization, and which is wholly financed by the reporting labor organization. A subsidiary organization is considered to be wholly financed if the initial financing was provided by the reporting labor organization even if the subsidiary organization is currently wholly or partially selfsustaining. https www.dol.gov/sites/dolgov/files/
olms/regs/compliance/GPEA_Forms/2020/efile/LM2_instructionsRevised2020.pdf.

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D.C. Circuit in AFLCIO v. Chao, 409
F.3d 377, 389391 D.C. Cir. 2005. The court held that the form reaches information unrelated to union reporting requirements and mandates reporting on trusts even where there is no appearance that the unions contribution of funds to an independent organization could circumvent or evade union reporting requirements by, for example, permitting the union to maintain control of the funds. Id. at 389. The court also vacated the Form T
1 portions of the 2003 rule because its significance test the second set of criteria for trust status, set forth above failed to establish reporting based on domination or managerial control of assets subject to LMRDA Title II
jurisdiction.
The court reasoned that the Department failed to explain how the testi.e., selection of one member of a board and a $10,000 contribution to a trust with $250,000 in receiptscould give rise to circumvention or evasion of Title II reporting requirements. Id. at 390. In so holding, the court emphasized that Section 208 authority is the only basis for LMRDA trust reporting, that this authority is limited to preventing circumvention or evasion of Title II reporting, and that the statute doesnt provide general authority to require trusts to demonstrate that they operate in a manner beneficial to union members. Id. at 390.
However, the court recognized that reports on trusts that reflect a labor organizations financial condition and operations are within the Departments rulemaking authority, including trusts established by one or more unions or through collective bargaining agreements calling for employer contributions, where the union has retained a controlling management role in the organization, and also those established by one or more unions with union members funds because such establishment is a reasonable indicium of union control of that trust.
Id. The court acknowledged that the Departments findings in support of its rule were based on particular situations where reporting about trusts would be necessary to prevent evasion of the related labor organizations own reporting obligations. Id. at 38788. One example included a situation where trusts are funded by union members funds from one or more unions and employers, and although the unions retain a controlling management role, no individual union wholly owns or dominates the trust, and therefore the use of the funds is not reported by the related union. Id. at 389 emphasis added. In citing these examples, the
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