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Federal Register / Vol. 86, No. 248 / Thursday, December 30, 2021 / Rules and Regulations
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Department. emphasis added 84 FR
25416.11
Further, the Department rescinded the Form T1 in 2010 because it lacked statutory authority, but the 2020 rule did not adequately address this legal concern. See 75 FR 74938. Indeed, while acknowledging that employer contributions to a trust do not constitute the circumvention or evasion of labor organization funds, the 2020 rule argued that Form T1 reporting for Taft-Hartley trusts could nonetheless prevent the circumvention of employer or labor organization officer or employee reporting under LMRDA Sections 202
and 203. See 85 FR 13422. However, as noted in the NPRM, 86 FR 28510, the 2020 rule provided no evidence that employer or labor organization officials circumvented or evaded their reporting requirements through a trust. Moreover, none of the comments opposing rescission addressed the issue of potential circumvention or evasion of employer or labor organization officer or employee reporting requirements.
Nor did the 2020 rule justify its imposition of the T1 requirement solely on labor organizations. In that regard, one commenter in support of rescission agreed with the NPRMs conclusion that if the Department were to require reporting on payments made from an employer to a trust pursuant to a CBA, then such reporting requirements should be placed on the employer, not the labor organization.
Because such financial reporting should be required of an employer and not the union, any failure to report employer payments made to a trust pursuant to a CBA could not constitute a unions circumvention or evasion of its LMRDA
reporting requirements. The same commenter also observed how the 2020
Form T1 rule relied in part on the LMRDAs employer reporting requirements, and not the union reporting requirements, such as when the employer diverted unlawfully funds intended for the trust to a union official, again raising the question of why the filing of the Form T1 reports, at least in the instance of apprenticeship 11 To the extent the rule was premised simply on the proposition that workers ought to know what employer payments were made to Taft-Hartley funds and whether those payments could be characterized as diversions from wages, the Department notes that Section 104 of the Act requires that unions forward a copy of each collective bargaining agreement made by such labor organization with any employer to any employee who requests such a copy and whose rights as such employee are directly affected by such agreement.
Those collective bargaining agreements set out the measure of contributions employers have agreed in bargaining to contribute to Taft-Hartley funds.

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plans, fell solely on labor organizations and not employers.
Further, in addition to the Form T1
reaching beyond the scope of Title II
because of its application to Taft-Hartley plans, its overbreadth renders the rule unnecessary as a matter of policy, since the transparency benefits to the public and enforcement authority for the Department already exist concerning such plans. As stated above, the public already has access to disclosure for such plans through the IRS Form 990 and EBSA Form 5500. Further, the Forms LM10 and LM30 would capture unlawful payments from employers to unions or union officials through TaftHartley plans, thus ensuring that the Department has enforcement authority concerning such payments. In that regard, the Department has an extensive and successful enforcement history of over 60 years without the Form T1, as evidenced by the FCA enforcement activities. See: https www.dol.gov/
agencies/olms/criminal-enforcement.
Moreover, the 2020 rule focused primarily on capturing non-exempt TaftHartley plans, and, indeed, the rulemaking record suggested that most Form T1 reports filed would cover Taft-Hartley plans. However, even if the Form T1 would capture some non-Taft Hartley plans, as detailed above in the discussion of the Departments policy justifications for rescinding the Form T
1, the burden to both the regulated community and the Department to comply with and enforce the Form T
1 reporting regime do not justify any marginal benefit.
Consequently, from a policy perspective, the Department will rescind the 2020 Form T1 rule because its application to Taft-Hartley plans was overly broad and any marginal, unquantifiable benefit is eclipsed by the immense burden imposed. Separately, the Department will rescind the 2020
rule because its application to TaftHartley plans exceeds the Departments scope of authority under Title II. In the Taft-Hartley context, a unions reporting or failure to report on the Form T1
could not prevent a unions use of a trust to circumvent or evade its own reporting requirement because it is the employers, and not the unions, finances that are being contributed to the Taft-Hartley plan at issue.
Other Comments Regarding the 2020
Form T1 Final Rule First, as one union commenter observed, the rule also set up the prospect of creating confusion by failing to provide a de minimis exemption for funds. A unions contribution of a single dollar could potentially trigger the rules
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stringent standards, if that contribution, in combination with contributions from other unions, establishes financial domination over the trust as defined in the rule, thus requiring reporting on trusts that may be of minimal or no interest to members. Such minimal contributions may also lead to unions filing multiple reports, again for trusts that may not be of interest to members.
Furthermore, if the contribution is less than $10,000, there would be greater confusion than before, because members would know that some amount of money was contributed but would not know the exact figure, whether $1 or $9,999. The Department agrees that this possibility would support a de minimis exemption, and the lack of one further demonstrates that the burden of the Form T1 outweighs its potential benefits.
Two anonymous comments offered general arguments against rescission.
One argued for greater governance and accountability and in favor of total transparency, without any evidence justifying why existing reporting does not provide the necessary governance and accountability. Further, even if true, this reasoning does not provide legal support for the Form T1, as it does not demonstrate how the form would prevent the circumvention or evasion of the reporting requirements required by the statute. The commenter did not address this point. Nor did the commenter balance transparency with burden. The other anonymous comment inquired into whether the Department would bring reporting requirements for labor organizations and section 3l trusts in line with contemporary expectations for the disclosure of financial information. As stated, after further review, the Department has determined that existing reporting requirements already provide the necessary disclosures, so the duplicative reporting offered by the Form T1 does not justify the significant burdens on unions.
One commenter, a union member, commented against the rescission of the Form. The commenter argued that rescission would serve as a disadvantage in combating corruption and a hinderance sic to self governance, and the commenter supported this argument by providing three real examples in which the commenter asserted that the 2020 Form T1 would have been helpful. However, as the commenter indicated, each entity discussed in the examples, which included two betterment funds and a market recovery fund, filed the Form 990, a form that, as the Department concluded, and many commenters
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