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Federal Register / Vol. 86, No. 248 / Thursday, December 30, 2021 / Rules and Regulations number of small entities. See 85 FR
13439. Given that this rulemaking merely eliminates even those nonsubstantial costs, this rule cannot constitute a substantial cost.
Therefore, a regulatory flexibility analysis under the Regulatory Flexibility Act is not required. The Secretary has certified this conclusion to the Chief Counsel for Advocacy of the Small Business Administration.
Unfunded Mandates Reform This final rule does not include any Federal mandate that may result in increased expenditures by State, local, and tribal governments, in the aggregate, of $100 million or more, or in increased expenditures by the private sector of $100 million or more.
Paperwork Reduction Act
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A. Summary of the Final Rule The following is a summary of the need for and objectives of the final rule.
A more complete discussion of various aspects of the proposal is found in the preamble.
The final rule rescinds the Form T1
Trust Annual Report established by final rule on March 6, 2020.
The LMRDA was enacted to protect the rights and interests of employees, labor organizations and the public generally as they relate to the activities of labor organizations, employers, labor relations consultants, and labor organization officers, employees, and representatives. Provisions of the LMRDA include financial reporting and disclosure requirements for labor organizations and others as set forth in Title II of the Act. See 29 U.S.C. 431
36, 441. Under Section 201b of the Act, 29 U.S.C. 431b, labor organizations are required to file for public disclosure annual financial reports, which are to contain information about a labor organizations assets, liabilities, receipts, and disbursements.
The Department has developed several forms to implement the union annual reporting requirements of the LMRDA. The reporting detail required of labor organizations, as the Secretary has established by rule, varies depending on the amount of the labor organizations annual receipts. The Form LM2 Annual Report is the most detailed of the annual labor organization reports, and is required to be filed by labor organizations with $250,000 or more in annual receipts. The Form LM
2 requires certain receipts and disbursements to be reported by functional categories, such as representational activities; political
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activities and lobbying; contributions, gifts, and grants; union administration;
and benefits. Further, the form requires labor organizations to allocate the time their officers and employees spend according to functional categories, as well as the payments that each of these officers and employees receive, and it requires the itemization of certain transactions totaling $5,000 or more. It must include reporting of loans to officers, employees and business enterprises; existence of any trusts;
payments to each officer; and payments to each employee of the labor organization paid more than $10,000, in addition to other information. The Secretary also has prescribed simplified annual reports for smaller labor organizations. Form LM3 may be filed by unions with $10,000 or more, but less than $250,000 in annual receipts, and Form LM4 may be filed by unions with less than $10,000 in annual receipts. A local union that has no assets, liabilities, receipts, or disbursements, and which is not in trusteeship, is not required to file an annual report if its parent union files a simplified annual report on its behalf. In order to be eligible for this simplified annual reporting, the local must be governed solely by a uniform constitution and bylaws filed with OLMS by its parent union and its members must be subject to uniform fees and dues applicable to all members of the local unions for which the parent union files simplified reports. The parent union must submit annually to OLMS certain basic information about the local, including the names of all officers, together with a certification signed by the president and treasurer of the parent union.
On March 6, 2020, the Department issued a final rule establishing the Form T1 Trust Annual Report, which prescribes the form and content of annual reporting by unions concerning entities defined in Section 3l of the LMRDA as trusts in which a labor organization is interested. 85 FR
13414. The objective of this final rule is to rescind the Form T1 Trust Annual Report, as the Department has determined that it is overbroad and not necessary to prevent the circumvention and evasion of the Title II requirements.
Further, the Department has reviewed the 2020 rulemaking record and no longer views the separate reporting requirements as set forth in the 2020
Form T1 rule as justified in light of the burden they impose. The rescission of the Form T1 constitutes a decrease in reporting burdens for those labor organizations associated with reportable trusts. As detailed in the 2020 Form T

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1 rule, the Form T1 represented a total burden, for the estimated 810 Form LM
2 filers affected by the rule, of approximately 251,257 hours in the first year and 174,128 in the subsequent years. 85 FR at 13433. Additionally, the projected total cost on filers in the first year was approximately $15 million in the first year and approximately $10.4
million in subsequent years. 85 FR at 13437. This final rule eliminates these burdens and costs for future years. This final rule would also eliminate any firstyear costs that unions have not yet incurred.
B. Overview of Trust Reporting on Form T1
Every labor organization whose total annual receipts are $250,000 or more and those organizations that are in trusteeship must currently file an annual financial report using the current Form LM2, Labor Organization Annual Report, within 90 days after the end of the labor organizations fiscal year, to disclose their financial condition and operations for the preceding fiscal year.
The current instructions state that receipts of an LMRDA section 3l trust in which the labor organization is interested as described in Information Item 10 should not be included in the total annual receipts of the labor organization when determining which form to file, unless the 3l trust is a subsidiary organization of the union.
See Form LM2 Instructions, Part II:
What Form to File.
The current Form LM2 consists of 21
questions that identify the labor organization and provide basic information in primarily a yes/no format; a statement of 11 financial items on different assets and liabilities Statement A; a statement of receipts and disbursements Statement B; and 20 supporting schedules Schedules 1
10, Assets and Liabilities related schedules; Schedules 1112 and 1420, receipts and disbursements related schedules; and Schedule 13, which details general membership information.
The Form LM2 requires such information as: Whether the labor organization has any trusts Item 10;
whether the labor organization has a political action committee Item 11;
whether the labor organization discovered any loss or shortage of funds Item 13; the number of members Item 20; rates of dues and fees Item 21; the dollar amount for seven asset categories, such as accounts receivable, cash, and investments Items 2228; the dollar amount for four liability categories, such as accounts payable and mortgages payable Items 3033; the dollar
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