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Federal Register / Vol. 86, No. 248 / Thursday, December 30, 2021 / Rules and Regulations These burdens are in addition to existing Form LM2 recordkeeping and reporting burdens, and union members ultimately bear these costs.
In the 2020 rule, the Department declared, the Departments position in this Final Rule and in the NPRM is that there will be a burden on unions created by the rule but that it will be outweighed and thereby justified by the benefits of the rule. 85 FR 13414, 13433. When attempting to articulate the benefits, the Department did not articulate with specificity the benefits that would justify the policy underlying the new Form T1. The preamble discussed the need to curb embezzlement and to safeguard democratic procedures and to promote labor organization selfgovernment and to expand the benefits of labor organization financial transparency to the members of all Form LM2 filing labor organizations that utilize trusts to expend funds for the members benefit. Id. The narrative did not, however, adequately explain how these intangible benefits justified the burden imposed by the Form T1s reporting requirements, given that the Form T1 would provide a largely redundant reporting regime to the existing Form 990, as well as the existing Form LM2, LM10, and LM
30 reporting regimes under LMRDA
sections 201, 202, and 203.
For example, as stated in the NPRM
to rescind, the 2020 rule failed to adequately demonstrate how the Form T1 would actually provide benefits in terms of detecting and deterring fraud.
To the extent that the 2020 rule cited examples that purportedly demonstrate how the Form T1 would help detect and deter fraud or prevent the circumvention and evasion of Title II
reporting obligations, the 2020 rule did not sufficiently demonstrate how the Form T1 would further these goals.
A general criticism by commenters was that the 2020 Form T1 rule suffered from a lack of supporting evidence and examples, a position with which the Department now agrees, even concerning its primary example, UAWFiat Chrysler of America FCA. While the 2020 rule relied heavily on UAWFCA convictions as grounds for adopting the Form T1, after consideration, the Department now believes, as both a matter of policy and a factual consideration, that the cited cases do not provide support for the 2020 rule. That those convictions were secured without a Form T1 reporting regime instead demonstrates that the ability to obtain necessary results to adequately protect against bribery and other violations of the labor-

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management process already exists, undermining the need to impose the additional costs of compliance with the Form T1. Thus, rather than reinforcing the rationale behind the 2020 rule, that argument substantially undercuts the purported need for the new reporting burden.
Indeed, in recent years and as discussed in the 2020 rule, the Department played a key role in investigating and in securing over a dozen indictments and convictions in the UAW-FCA National Training Center NTC bribery and embezzlement scheme, all without the Form T1. See 85 FR 13421. Working jointly with the Department of Justice and others, the Department of Labor helped secure convictions of management and union officials associated with the NTC, pursuant to the Taft-Hartley Act, for unlawful employer payments to UAW
officials. See 29 U.S.C. 186. The 2020
rule offered no explanation as to what additional benefit, if any, the Form T
1 would have provided in this context.
Indeed, OLMS already has a wellestablished history of effectively enforcing the LMRDA by combatting labor-management fraud without a Form T1. See the OLMS enforcement results for the period 2001present: https
www.dol.gov/agencies/olms/criminalenforcement. As discussed below more fully, having to invest in the collection and enforcement of an unnecessary Form T1 report may actually be detrimental to detecting fraud, because it would require that the Department redirect limited resources away from proven, effective means of uncovering and prosecuting such instances of possible financial corruption.
While the 2020 rule acknowledged existing transparency safeguards, it stated that the Department needed to add necessary safeguards intended to deter circumvention or evasion of the LMRDAs reporting requirements. See 85 FR 13420. However, upon review, existing OLMS reporting requirements already provide sufficient information that enables OLMS to detect financial misconduct and deter circumvention or evasion of the existing reporting requirements. The Form T1 added substantial burdens but no readily discernible benefits to the agencys responsibility to deter circumvention or evasion of the statutes reporting requirements. Since the LMRDA Section 202 and 203 reporting requirements would require disclosure of the FCA
and similar payments, and require the parties to file reports pursuant to the Departments Form LM30 Labor Organization Officer and Employee Report and Form LM10 Employer
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Report, the Department already had investigatory authority and access to necessary financial information to effectively investigate this FCA and will continue to have that authority to investigate similar matters, all without a Form T1. See 29 U.S.C. 432433 and 531.4 Further, even if the Form T1
provided a marginal increase in transparency, the clear, quantified burdens would far outweigh such intangible and small benefits.
Moreover, in terms of the benefits of general transparency to union members and union self-governance, the Department now believes that the 2020
rule did not provide sufficient reason to establish that the information provided by the Form T1 would be significantly greater than what members currently enjoy. Consequently, the Department now believes that the Form T1
established a redundant reporting regime.
More precisely, the rule did not identify any significant, concrete benefits gained through general transparency that were not already largely available through existing, publicly-available sources. Even without the 2020 rule, union members will continue to definitively benefit from transparency via mechanisms outside of the Form T1 reporting regime. Members will continue to receive detailed information about their unions finances, including the identity and contact information of their unions trusts, through the annual Form LM2
report available on the OLMS website.
In particular, members will see whether the trust already files a report with another agency, such as the Form 990
filed with the IRS, which provides reporting comparable to the Form T1.5
The IRS Form 990 requires comprehensive reporting of financial information such as assets, liabilities, 4 Additionally, the general public, including members of labor organizations, already has access to reports containing similar, if not identical, information that would be included on the Form T
1. For example, the NTC filed a Form 990 with the Internal Revenue Service IRS that listed three of the six UAW officials who took unlawful payments from FCA under Part VII Compensation of Officers, Directors, Trustees, Key Employees, Highest Compensated Individuals, and Independent Contractors, and the trust should have reported payments to two other UAW officials sham charities on Schedule I Grants and Other Assistance to Organizations, Governments, and Individuals in the United States. See OLMS FY 18
Annual Report. While the Form 990s filed by the trust did not properly report these payments, the Department of Justice secured indictments covering conspiring to defraud the United States by preparing and filing false tax returns for the NTC
that concealed millions of dollars in prohibited payments directed to UAW officials.
5 See https www.irs.gov/charities-non-profits/
annual-filing-and-forms.

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