83 FR 33826 - Rescission of Rule Interpreting “Advice” Exemption in Section 203(c) of the Labor-Management Reporting and Disclosure Act
DEPARTMENT OF LABOR
Office of Labor-Management Standards Federal Register Volume 83, Issue 138 (July 18, 2018)
Office of Labor-Management Standards
Federal Register Volume 83, Issue 138 (July 18, 2018)
| Page Range | 33826-33842 | |
| FR Document | 2018-14948 |
[Federal Register Volume 83, Number 138 (Wednesday, July 18, 2018)] [Rules and Regulations] [Pages 33826-33842] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-14948] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF LABOR Office of Labor-Management Standards 29 CFR Parts 405 and 406 RIN 1245-AA07 Rescission of Rule Interpreting ``Advice'' Exemption in Section 203(c) of the Labor-Management Reporting and Disclosure Act AGENCY: Office of Labor-Management Standards, Department of Labor. ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: This final rule rescinds the regulations established in the final rule titled ``Interpretation of the `Advice' Exemption in Section 203(c) of the Labor-Management Reporting and Disclosure Act,'' effective April 25, 2016. DATES: This final rule is effective on August 17, 2018. FOR FURTHER INFORMATION CONTACT: Andrew Davis, Chief of the Division of Interpretations and Standards, 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: I. Statutory Authority Sections 203 and 208 of the LMRDA, 29 U.S.C. 432, 438, set forth the Department's authority. Section 208 gives the Secretary of Labor authority to issue, amend, and rescind rules and regulations prescribing the form and publication of reports required under Title II of the Act and such other reasonable rules and regulations as necessary to prevent circumvention or evasion of the reporting requirements. 29 U.S.C. 438. Section 203, discussed in more detail below, sets out the substantive reporting obligations. The Secretary has delegated his authority under the LMRDA to the Director of the Office of Labor-Management Standards and permitted redelegation of such authority. See Secretary's Order 03-2012 (Oct. 19, 2012), published at 77 FR 69375 (Nov. 16, 2012). II. Background A. Introduction In this final rule, the Office of Labor-Management Standards of the Department of Labor revises the Form LM-20 Agreement and Activities Report and the Form LM-10 Employer Report upon reviewing the comments the Department received in response to a June 12, 2017 Notice of Proposed Rulemaking. 82 FR 26877. The NPRM proposed to rescind the regulations established in the final rule titled ``Interpretation of the `Advice' Exemption in Section 203(c) of the Labor-Management Reporting and Disclosure Act,'' effective April 25, 2016. 81 FR 15924 (Mar. 24, 2016) (``Persuader Rule''). This Persuader Rule revised the Department's interpretation of the ``advice'' exemption to the reporting requirements of Labor-Management Reporting and Disclosure Act Section 203. Sections 203(a) and (b) require employers and consultants to file reports when they reach an agreement [[Page 33827]] that the consultant will perform activities to persuade employees about how or whether to exercise their collective bargaining rights. But Section 203(c) excepts agreements by consultants who ``give advice'' to the employer. The Persuader Rule sought to require employers and their consultants to file a report not only when they make agreements or arrangements pursuant to which a consultant directly contacts employees, but also when a consultant engages in activities ``behind the scenes'' if an object of those activities is to persuade employees concerning their rights to organize and bargain collectively. Id. at 15925. Such ``behind the scenes'' activity included, for instance, recommending drafts of or revisions to an employer's speeches and communications if those drafts or revisions were designed to influence employees' exercise of their organizational rights. In the NPRM, the Department proposed to rescind the Persuader Rule to further its consideration of the legal and policy objections raised by the federal courts that have reviewed the Rule and by other stakeholders. A number of comments objected to rescinding the Persuader Rule with a view toward engaging in further consideration. [LMSO-2017- 0001-0543, AFL-CIO pages 9-10; LMSO-2017-0001-0797, NABTU, page 4, LMSO-2017-0001-1126, UFCW, page 4]. In accordance with these comments, the Department has now conducted its ultimate review of the objections to the Persuader Rule and has concluded that the Rule must be rescinded. The Rule relied on an inappropriate reading of Section 203(c) that required reporting based on recommendations that constitute ``advice'' under any reasonable understanding of the term. That fact alone requires rescission. Even if the statute does not unambiguously forbid the Persuader Rule, strong policy reasons--in particular, the Persuader Rule's effect on the attorney-client relationship--militate in favor of rescission. Pursuant to today's final rule, the reporting requirements in effect are the requirements as they existed before the Persuader Rule. Due to an intervening court order that enjoined the Persuader Rule nationwide, National Federation of Independent Business v. Perez (N.D. Tex. 5:16-cv-00066-c) (filed Mar. 31, 2016), 2016 WL 3766121, 206 L.R.R.M. 35982016 (granting preliminary injunction); 2016 WL 8193279 (filed Nov. 16, 2016) (granting permanent injunction) (NFIB), no reports were ever filed or due under the Persuader Rule. This final rule is considered an E.O. 13771 deregulatory action. For a perpetual time horizon, the annualized cost savings are the same at $92.89 million with a discount rate of 7 percent. Details of the estimated cost savings of this final rule can be found in the Rule's economic analysis. B. The LMRDA's Reporting Requirements In enacting the LMRDA in 1959, a bipartisan Congress sought to protect the rights and interests of employees, labor organizations, employers, and the public generally as they relate to collective bargaining. Section 203(a) of the LMRDA, 29 U.S.C. 433(a), requires employers to report to the Department ``any agreement or arrangement with a labor relations consultant or other independent contractor or organization'' under which such person ``undertakes activities where an object thereof, directly or indirectly, is to persuade employees to exercise or not to exercise,'' or how to exercise, their rights to union representation and collective bargaining. 29 U.S.C. 433(a)(4).\1\ ``[A]ny payment (including reimbursed expenses)'' pursuant to such an agreement or arrangement must also be reported. 29 U.S.C. 433(a)(5). The report must be one ``showing in detail the date and amount of each such payment, . . . agreement, or arrangement . . . and a full explanation of the circumstances of all such payments, including the terms of any agreement or understanding pursuant to which they were made.'' An employer must submit this information on the prescribed Form LM-10 within 90 days of the close of the employer's fiscal year. 29 U.S.C. 433(a); 29 CFR part 405.\2\ --------------------------------------------------------------------------- \1\ The LMRDA defines a ``labor relations consultant'' as ``any person who, for compensation, advises or represents an employer, employer organization, or labor organization concerning employee organizing, concerted activities, or collective bargaining activities.'' 29 U.S.C. 402(m). \2\ The statute and the Form LM-10 also require disclosure of financial activities that do not constitute persuader activities, such as payments or loans from an employer to a labor union or a labor union's official. Id. --------------------------------------------------------------------------- LMRDA Section 203(b) imposes a similar reporting requirement on labor relations consultants and other persons. It provides, in part, that every person who enters into an agreement or arrangement with an employer and undertakes activities where an object thereof, directly or indirectly, is to persuade employees to exercise or not to exercise, or how to exercise, their rights to union representation and collective bargaining ``shall file within thirty days after entering into such agreement or arrangement a report with the Secretary . . . containing . . . a detailed statement of the terms and conditions of such agreement or arrangement.'' 29 U.S.C. 433(b). Covered individuals must submit this information on the prescribed Form LM-20 (``Agreement and Activities Report'') within 30 days of entering into the reportable agreement or arrangement. See 29 U.S.C. 433; 29 CFR part 406. A third report is relevant here. Section 203(b) further requires that every labor relations consultant or other person who engages in reportable activity must file an additional report in each fiscal year during which payments were made as a result of reportable agreements or arrangements. The report must contain a statement (A) of the consultant's receipts of any kind from employers on account of labor relations advice or services, designating the sources thereof, and (B) of the consultant's disbursements of any kind, in connection with such services and the purposes thereof. The consultant must submit the information on the prescribed Form LM-21 (``Receipts and Disbursements Report'') within 90 days of the close of the labor relations consultant's fiscal year. See 29 U.S.C. 433(b); 29 CFR part 406. Since at least 1963, the reporting requirements have required reporting by the prescribed forms, Form LM-10, Form LM-20, and Form LM- 21. 28 FR 14384, Dec. 27, 1963; See 29 CFR part 405, 406. Section 203(c), referred to as the ``advice'' exemption, provides in pertinent part that ``nothing in this section shall be construed to require any employer or other person to file a report covering the services of such person by reason of his giving or agreeing to give advice to such employer.'' 29 U.S.C. 433(c). Finally, LMRDA Section 204 exempts from reporting attorney-client communications, which are defined as ``information which was lawfully communicated to [an] . . . attorney by any of his clients in the course of a legitimate attorney- client relationship.'' 29 U.S.C. 434. Even if a report is triggered by persuader activity, and a report must therefore be filed, material that is advice is not to be reported on the form. C. Administrative and Regulatory History In 1960, one year after the LMRDA's passage, the Department issued its initial interpretation of Section 203(c)'s advice exemption. This interpretation appeared in a technical assistance publication for employers. U.S. Dep't of Labor, Bureau of Labor-Management [[Page 33828]] Reports,\3\ Technical Assistance Aid No. 4: Guide for Employer Reporting (1960). Under this original interpretation, the Department required employers to report any ``[a]rrangement with a `labor relations consultant' or other third party to draft speeches or written material to be delivered or disseminated to employees for the purpose of persuading such employees as to their right to organize and bargain collectively.'' Id. at 18. By contrast, employers were not required to report ``[a]rrangements with a `labor relations consultant,' or other third parties related exclusively to advice, representation before a court, administrative agency, or arbitration tribunal, or engaging in collective bargaining on [the employer's] behalf.'' Id. Additionally, in opinion letters to members of the public, the Department stated that a lawyer's or consultant's revision of a document prepared by an employer constituted reportable activity. See 76 FR 36178, 36180 (June 21, 2011) (NPRM) (citing Benjamin Naumoff, Reporting Requirements under the Labor-Management Reporting and Disclosure Act, in Fourteenth Annual Proceedings of the New York University Conference on Labor 129, 140-141 (1961)). --------------------------------------------------------------------------- \3\ The Bureau of Labor-Management Reports was the predecessor agency to the Office of Labor-Management Standards. --------------------------------------------------------------------------- Just two years later, the Department revisited its interpretation, adopting the view that it was to hold for the next several decades. The Department's revised interpretation construed the advice exemption of Section 203(c) so as to no longer trigger reporting upon the provision of materials by a third party to an employer that the employer could ``accept or reject.'' \4\ But a consultant who did present materials for the employer to accept or reject could trigger disclosure obligations by interacting with employees, either directly or through an agent. See Interpretative Manual section 265.005 (Scope of the Advice Exemption).\5\ --------------------------------------------------------------------------- \4\ See 81 FR at 15936 (quoting the agency's 1962 LMRDA Interpretive Manual as stating: ``In a situation where the employer is free to accept or reject the written material prepared for him and there is no indication that the middleman is operating under a deceptive arrangement with the employer, the fact that the middleman drafts the material in its entirety will not in itself generally be sufficient to require a report.'') (emphasis omitted). \5\ In 2001, the Department temporarily altered its interpretation of Section 203(c), expanding the scope of reportable activities by focusing on whether an activity has persuasion of employees as an object, rather than categorically exempting activities in which a consultant has no direct contact with employees. See 66 FR 2782 (Jan. 11, 2001). However, later that year, that interpretation was rescinded, and the Department returned to its prior view. See 66 FR 18864 (Apr. 11, 2001). --------------------------------------------------------------------------- On June 21, 2011, the Department issued a notice of proposed rulemaking to revise its interpretation of Section 203(c). 76 FR 36178. The Department received approximately 9,000 comments. 81 FR at 15945. On March 24, 2016, the Department issued its final Rule, addressing the comments it received. See 81 FR at 15945-16,000 (Mar. 24, 2016). The Persuader Rule--the subject of this final rule--altered the prior, decades-long interpretation. The preamble to the Persuader Rule and the instructions on the relevant forms defined ``advice,'' which does not give rise to a reporting obligation, as ``an oral or written recommendation regarding a decision or a course of conduct.'' Id. at 15,939, 16,028 (LM-10 instructions), 16,044 (LM-20 instructions). The Persuader Rule then defined four new categories of non-contact conduct that triggered reporting obligations when done with an object to persuade: Directing supervisor activity, providing material for employers to disseminate to employees, conducting tailored seminars on the issue of unionization, and developing or implementing personnel policies designed to influence unionization. 81 FR at 15938. (These categories were in addition to contact of employees by a consultant or a consultant's agent, which the Rule continued to cover.) Among the activities covered by the Persuader Rule's four new categories were providing messaging on unionization to employers, 81 FR at 15970; developing policies for employers to dissuade employees as to the need for a union (such as a longer lunch break or a more generous leave policy), 81 FR at 15973; drafting or revising written materials regarding unionization for employers to disseminate to employees, 81 FR at 15971; or planning ``captive audience'' meetings or scripting interactions between supervisors and employees, 81 FR at 15970. The Department thus construed the ``advice'' exemption more narrowly than it had done previously. In particular, it abandoned the position that developing speeches, communications, policies, and other proposals that an employer may decide to accept or reject constituted ``advice'' that did not trigger the reporting requirement. Under the new rule, the fact that the employer itself delivered the message or carried out the policy developed by a consultant would no longer exempt a consulting arrangement from reporting. The stated purpose of this change was to ``more closely reflect the employer and consultant reporting intended by Congress in enacting the LMRDA.'' 81 FR at 16001. The Persuader Rule cited evidence that the use of outside consultants to contest union organizing efforts had proliferated, while the number of reports filed remained consistently small. 81 FR at 16001. The Department concluded that its previous ``broad interpretation of the advice exemption ha[d] contributed to this underreporting.'' Id. D. Litigation Surrounding the Rule Shortly after it was issued, the Persuader Rule was challenged in three district courts and eventually enjoined on a nationwide basis. Plaintiffs in those suits contended that the Rule conflicts with the LMRDA, is arbitrary and capricious, violates the First Amendment, and is void for vagueness. Associated Builders & Contractors of Arkansas v. Perez (E.D. Ark. 4:16-cv-169); Labnet, Inc. v. U.S. Dep't of Labor, 197 F. Supp. 3d 1159 (D. Minn. 2016); Nat'l Fed'n of Indep. Bus. v. Perez, 2016 WL 3766121 (N.D. Tex.). On June 22, 2016, the federal district court in Minnesota found that the plaintiffs were likely to establish that the Persuader Rule violated the LMRDA, in at least some of its applications, but denied their request for preliminary relief on the ground that plaintiffs had not shown the threat of irreparable harm. Labnet, 197 F. Supp. 3d at 1175-76. On June 27, 2016, a federal district court in Texas granted the challengers' motion for injunctive relief--finding that the plaintiffs were likely to prevail on the merits of both their statutory and constitutional claims--and issued a nationwide preliminary injunction, which was later converted to a permanent injunction. NFIB, 2016 WL 3766121, at *46; see also NFIB, 2016 WL 8193279 (granting permanent injunction). The Department appealed to the Fifth Circuit, which has held the matter in abeyance pending this rulemaking. See NFIB, Dkt. No. 00514035358 (Dec. 27, 2017). The other two court cases have also been stayed. III. Determination To Rescind While the NPRM proposed rescission of the Persuader Rule to enable the Department to engage in further analysis, a further review of the record, including several comments urging that the Department complete its final analysis of the Persuader Rule now, have convinced the Department that the best course of action is to achieve [[Page 33829]] finality at this time.\6\ The Department's NPRM notified the public of the possible rescission of the Persuader Rule, and the concerns animating that proposed rescission, including the Department's concerns about ``alternative interpretations of the statute,'' ``the potential effects of the Rule on attorneys and employers seeking legal assistance,'' the potential increased ``burden of the Form LM-20,'' and ``the impact of shifting priorities and resource constraints.'' 82 FR 26879. The Department received 1,160 comments submitted via the www.regulations.gov website in response to its NPRM. Of this total, 1,111 constituted non-substantive comments, including seven form letters.\7\ The remaining 49 comments were substantive in nature, submitted by labor organizations, trade associations, business and professional federations, law firms, public policy groups, and four Members of Congress. Many of the substantive comments, both supporting and opposing rescission, discussed the merits of the Persuader Rule's consistency with Section 203(c) and provided the commenters' views on the Department's prior interpretation of the advice exemption. A number of comments objected to the Department's proposal to rescind with a view to further consideration rather than making a final substantive determination at this time.\8\ Also, this same issue was evaluated at length in the Persuader Rule NPRM and final rule. The Department thus believes that it has received comments fully airing the substantive issues raised by the Persuader Rule, has completed its analysis of those issues, and will not engage in further analysis regarding its interpretation of Section 203(c) at this time. --------------------------------------------------------------------------- \6\ Several commenters noted that no further statutory analysis is needed given the Department's years of extensive analysis and study that initially led to the promulgation of the Persuader Rule. See Communication Workers of America [pp. 1-2]; Economic Policy Institute [pp. 4-5]; Ranking Members Scott and Sablan [p. 3]. \7\ Additionally, the Department received 1,433 comments submitted via mail or email, all of which were duplicative of form letters that the Department also received properly via www.regulations.gov. \8\ LMSO-2017-0001-0543, AFL-CIO pages 9-10; LMSO-2017-0001- 0797, NABTU, page 4, LMSO-2017-0001-1126, UFCW, page 4. --------------------------------------------------------------------------- Based on the comments received, and in light of the Department's legal and policy analysis, the Department has decided to rescind the Persuader Rule. The Department will continue to apply the longstanding interpretation of the advice exemption that predated the Persuader Rule. Four primary reasons lead the Department to its rescission decision. First, the Department has determined that Section 203(c)'s plain text clearly forbids the interpretation on which the Persuader Rule in part rested. Second, the Department has determined that the Persuader Rule unduly causes disclosure of client confidences that are at the heart of the attorney-client relationship. Third, the Department has concluded that the Form LM-21's requirements substantially increased the burden on filers of the Form LM-20--a cost that the Persuader Rule declined to factor into its analysis. Fourth, the Department has determined to allocate its scarce resources to other priorities rather than to addressing the substantial fiscal burdens that the Persuader Rule imposed on the Department. A. The Persuader Rule Rested on a Misinterpretation of Section 203(c) Section 203(c) provides that the LMRDA's reporting obligation is not triggered by a consultant's ``giving or agreeing to give advice'' to an employer. The plain meaning of the term ``advice,'' as the Persuader Rule found, is ``an oral or written recommendation regarding a decision or course of conduct.'' 81 FR at 15926. Decisions about speech and written communications are among the subjects on which such ``recommendations'' are frequently made. Sometimes such advice may take the form of a general discussion about what the employer should or should not say to its employees. But it may also consist of drafts of speeches or written communications. Such drafts, if given to an employer to accept or reject, are simply recommendations to the employer to communicate as laid out in the draft. The employer remains free to disregard these recommendations and communicate in any manner it sees fit. Because the employer in such a scenario is the one communicating with employees, and the consultant simply proffers recommendations about those communications, the consultant renders only ``advice'' as that term is used in Section 203(c). The Persuader Rule required reporting based on such advice. For instance, the Persuader Rule explained that reporting is required when a consultant, who has no direct contact with employees, ``provides material or communications to the employer, in oral, written, or electronic form, for dissemination or distribution to employees.'' 81 FR at 16027 (Mar. 24, 2016). Likewise, the Rule required reporting for ``drafting, revising, or providing speeches'' and ``written material . . . for presentation, dissemination, or distribution to employees.'' Id. The Persuader Rule maintained that the ``preparation of persuader materials [such as speeches and written communications] is more than a recommendation to the employer that it should communicate its views to employees on matters affecting representation and their collective bargaining rights,'' 81 FR at 15951 (Mar. 24, 2016), but that analysis was mistaken. If the employer retains the ability to accept or reject the proffered communication, the consultant has not tendered ``more than a recommendation,'' even if his recommendation is made with the purpose to persuade employees. Id. That is because ``the maker of a statement is the person or entity with ultimate authority over the statement, including its content and whether and how to communicate it.'' Janus Capital Grp. v. First Derivative Traders 564 U.S. 135, 142 (2011). Janus is instructive. There, plaintiffs claimed that a mutual fund's allegedly misleading prospectuses were prepared by the fund's investment advisor, and sought to hold the investment advisor liable under SEC Rule 10b-5 for ``mak[ing] an[] untrue statement of a material fact in connection with the purchase or sale of securities.'' Id. at 137 (first alteration in original; internal quotation marks omitted). The Supreme Court rejected plaintiffs' claims, holding that, as the alleged misstatements had been issued solely on the authority and under the name of the mutual fund, the advisor could not be held liable even if it had prepared the prospectuses that the mutual fund ultimately adopted. Id. at 142-47. The Court explained that the mutual fund, rather than the investment advisor, exercised ``ultimate authority'' over whether to adopt any communication prepared by the advisor; the advisor, ``[w]ithout control, . . . can merely suggest what to say, not `make' a statement in its own right.'' Id. at 142. The same rationale applies here: A consultant's draft of, or revisions to, speeches or other communications, constitute recommendations about how the employer should communicate with its employees. As long as the ``ultimate authority'' to decide whether to make such communications rests with the employer, such recommendations by a consultant are merely ``advice'' within the meaning of Section 203(c). The Persuader Rule rejected this interpretation based in significant part on the desire to give more effect to Section 203(c)'s reporting requirement for agreements to undertake activities ``where an object thereof, directly or [[Page 33830]] indirectly, is to persuade employees'' with respect to their collective bargaining rights. 29 U.S.C. 433(a)(4) (emphasis added); see also id. Sec. 433(b) (likewise covering ``indirect'' persuasion). The Persuader Rule reasoned that, unless the drafting of speeches and communications were deemed ``indirect'' persuasion (in assistance of the employer's ``direct'' dissemination of the statements to its employees), the term ``indirect'' would have little independent meaning. See 57 FR at 15926, 15933, 15936-37, 15949 fn 39. The Department is now convinced, after a review of the statute's text, the intervening court decisions, and the submitted comments, that this reading of Section 203(c) is improper. First, the Department's prior longstanding interpretation comports with the general principle ``that Congress, when drafting a statute, gives each provision independent meaning,'' Torres v. Lynch, 136 S. Ct. 1619, 1628 (2016) That presumption tells against the Persuader Rule. The Persuader Rule interpreted section 203(c) as having no independent meaning, merely ``making explicit what sections 203(a) and (b) make implicit: That consultant activity undertaken without an object to persuade employees, such as advisory and representative services for the employer, do not trigger reporting.'' 81 FR at 15951; see also id. at 15952 (advice exemption is simply a ``rule of construction'' that ``underscore[s] that advice qua advice . . . does not trigger a reporting obligation simply because it arguably concerns a potential employer action that has an object to persuade''). In other words, the Persuader Rule read Section 203(c) merely to clarify what already lies outside the scope of Sections 203(a) and (b)--depriving Section 203(c) of independent meaning. Both federal courts to have reviewed the Persuader Rule rejected this interpretation, and the D.C. Circuit long ago accepted the Department's view that ``[t]he very purpose of section 203's exemption prescription . . . is to remove from the section's coverage certain activity that otherwise would have been reportable.'' UAW v. Dole, 869 F.2d 616, 618 (DC Cir. 1989) (R. Ginsburg, J.). The reading that the Department reinstates today, by contrast, gives robust and independent meaning to Section 203(c).\9\ --------------------------------------------------------------------------- \9\ The Eighth Circuit, which canvassed the legislative history of section 203 in a case involving a different question, reached a conclusion that supports the Department's longstanding reading of section 203(c). That case involved the question whether a consultant who engages in reportable persuasion on behalf of one client must include in its LM-21 report information about advice given to other clients for whom it performed no persuader activity. Although the Department does not here opine on this issue, the Department notes that the Eighth Circuit exhaustively examined Section 203's legislative history and rejected the view that Section 203(c) merely clarifies the meaning of Sections 203(a) and (b), concluding that the view of the advice exception as ``broader than a mere proviso'' more closely reflects congressional intent. Donovan v. Rose Law Firm, 768 F.2d 964, 974 (8th Cir. 1985). The Eighth Circuit also persuasively explained how previous courts of appeals that reached the opposite conclusion on this question misread the intent of Section 203(c). See, e.g., Humphreys, Hutcheson and Mosely v. Donovan, 755 F.2d 1211 (6th Cir. 1985); Price v. Wirtz, 412 F.2d 647 (5th Cir. 1969) (en banc). These cases have limited relevance with regard to the question presented by the Persuader Rule and this proceeding. As the D.C. Circuit explained in UAW, the question considered in these cases differed from ``the threshold question presented by this [rulemaking]: what is the appropriate characterization of activity that can be viewed as both advice and persuasion?'' UAW, 869 F.2d at 618 n.3. Nevertheless, the Eighth Circuit's well-reasoned conclusion that Section 203(c) does not serve merely to make explicit the implicit contours of Sections 203(a) and (b) is consistent with the Department's longstanding interpretation that it reinstates today and is at least somewhat inconsistent with the Persuader Rule. --------------------------------------------------------------------------- Second, the Persuader Rule is not needed to save the words ``or indirectly'' from redundancy, and the Department's longstanding interpretation did not render the words ``or indirectly'' redundant. These words bear independent meaning, under the Department's previous interpretation, if construed to cover cases in which a consultant communicates with employees through a third party, such as an agent or independent contractor. Thus, for instance, reporting requirements would attach when a consultant hires a spokesman to spread its message to employees or to pass out to employees advocacy materials the consultant had prepared. In such cases, the consultant--rather than the employer--retains final authority over the message to be delivered to employees, thus depriving the consultant of the advice exemption. The words ``or indirectly'' ensure that reporting requirements attach to such conduct, which has long been the Department's position. At least as far back as 1989, the Department's Interpretative Manual asserted that a consultant who employs an agent to contact employees falls within Section 203's reporting requirement. Interpretative Manual section 265.005 (Scope of the Advice Exemption) (``Moreover, the fact that such material may be delivered or disseminated through an agent would not alter the result.'').\10\ Even if the Department's longstanding interpretation rendered the words ``or indirectly'' redundant, the redundancy to which the Persuader Rule reduced Section 203(c) means that one of the Persuader Rule's principal rationales--the asserted need to avoid rendering the words ``or indirectly'' redundant--cannot stand. When either of two interpretations would create redundancy, the canon against redundancy cannot constitute a basis for choosing between the interpretations, because neither interpretation avoids redundancy. If anything, rendering the words ``or indirectly'' redundant is preferable to rendering the entirety of Section 203(c) redundant, as the Persuader Rule did. --------------------------------------------------------------------------- \10\ The Persuader Rule rejected the view that the term ``indirectly'' could be given meaning by attributing to it coverage of a consultant's retention of a third party to interact with employees, because, according to the Persuader Rule, such indirect persuasion by a consultant would be covered even absent the words ``or indirectly.'' 57 FR at 15949, fn. 39. Absent any definitive authority on how the statute would be interpreted in the absence of those words, the Department finds persuasive the suggestion that Congress included the words `or indirectly' to make clear something that might well not be implicit in the statute otherwise: That a consultant's use of a third party to contact employees triggers reporting requirements. --------------------------------------------------------------------------- All that has been said above with respect to communications prepared by a consultant for final acceptance or rejection by the employer also applies to conduct and policies that a consultant advises an employer to implement, an activity that triggered reporting requirements under the Persuader Rule. Planning meetings with employees and developing personnel policies, like drafting a speech, consist of making recommendations that the employer is free to accept or reject. Planning such conduct or policies fits within the traditional meaning of ``advice.'' See Labnet, 197 F. Supp. 3d at 1169. While the Department's own reading of the plain statutory text plays the principal role in supporting the interpretation of Section 203(c) taken here, the Department also notes that the only federal courts to have pronounced on the Persuader Rule found that it violates the text of the LMRDA or likely does so. One federal district court permanently enjoined the Persuader Rule after finding that it impermissibly required reporting based on advice within the meaning of Section 203(c) and indeed read Section 203(c) out of the statute. NFIB, 2016 WL 3766121, at *28; see also NFIB, 2016 WL 8193279 (converting preliminary injunction to permanent injunction). The other district court to consider the Persuader Rule similarly held that it ``categorizes conduct that clearly constitutes advice as reportable persuader activity'' and concluded that the plaintiffs in that case ``have a strong likelihood of success on their claim that the [Persuader Rule] conflicts with the plain language of the [[Page 33831]] statute.'' Labnet, 197 F. Supp. 3d at 1170. A number of commenters agreed that the Persuader Rule incorrectly read Section 203(c). For instance, the Retail Industry Leaders Association [p. 5], Council on Labor Law Equality [pp. 20-21], and Coalition for a Democratic Workforce [pp. 7-8], as well as several others, contended that Congress intended to give the term ``advice'' broad scope and the Persuader Rule's interpretation of Section 203(c) effectively eviscerated that advice exemption. The American Bar Association [p. 4] stated that the proposed interpretation of ``advice'' in the Persuader Rule would thwart the will of Congress. Other commenters opposed rescission, but failed to grapple with the fundamental statutory problem with the Persuader Rule. For example, one commenter [LMSO-2017-0001-0543; AFL-CIO page 9-10] urged the Department to retain the Persuader Rule because it ``has multiple valid applications,'' citing Labnet, Inc., 197 F. Supp. 3d at 1168. But rejection of the Department's longstanding accept-or-reject test stands at the heart of the Persuader Rule's legal analysis, see 81 FR at 15941, and that rejection is based on a fundamentally flawed interpretation of section 203. The Department accordingly is not rescinding the Persuader Rule because it has some invalid applications. The Department is rescinding the Persuader Rule because the Rule as a whole rested on an improper reading of Section 203(c). Two Members of Congress serving on the House of Representatives' Committee on Education and the Workforce opined that ``a single district court decision should not be enough to justify rescinding a rule. [LMSO-2017-0001-1097; Ranking Members Scott and Sablan Comment Letter page 3.] \11\ But the Department is not rescinding the Persuader Rule simply because a district court enjoined it. It is rescinding the Persuader Rule because the Department has concluded, after considering the arguments made by those challenging the Rule in litigation, the opinions of the two district courts to have pronounced on the Persuader Rule's merits, the comments that have been submitted, and the plain meaning of the statutory text, that the Persuader Rule read Section 203(c) improperly. --------------------------------------------------------------------------- \11\ A think tank [LMSO-2017-0001-0800; Economic Policy Institute p.5) raised a similar issue, asserting that the related litigation does not compel rescission. --------------------------------------------------------------------------- Several commenters opposed rescission on the ground that the Persuader Rule is needed to address underreporting. [AFL-CIO, page 10; Economic Policy Institute, page 4; Communications Workers of America, page 2; North America's Building Trades Union, page 5; National Nurses United, page 2; Screen Actors Guild, page 2; and United Food and Commercial Workers, page 2] They noted that the Department cited underreporting under its prior interpretation--that a consultant incurs a reporting obligation only when it directly communicates with employees with an object to persuade them--as part of the rationale for promulgating the Persuader Rule. 81 FR 15933 (Mar. 24, 2016) (``Indeed, the prior interpretation did not properly take into account the widespread use of indirect tactics . . . and thus did not result in the reporting of most persuader agreements.''). But activities such as drafting speeches, proposing policies, and other recommendations that a business can accept or reject fall within the plain meaning of the ``advice'' that Congress exempted from its reporting requirements. Failure to report these activities accordingly is not ``evasion'' of the LMRDA; rather, such activities fall within the unambiguous scope of the term ``advice'' that Congress expressly excepted from triggering Section 203's reporting requirements, and thus declining to report based on such activities constitutes compliance with the LMRDA. Even if a court were to disagree with the Department's view that its interpretation of the statute, as laid out in this rulemaking, is mandated by the statute, the Department's reasonable reading of the statute should still be given deference under Chevron. Chevron, USA, Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 844 (1984). And, as discussed in more detail in the next sections, several policy considerations support rescission of the Persuader Rule and the Department's prior longstanding interpretation of the statute. Even if the interpretation adopted herein were only one permissible interpretation of Section 203(c), the Department would nevertheless adopt it based on these compelling policy considerations. B. The Persuader Rule Impinged on the Attorney-Client Relationship A second, independent, reason supports rescission: The Persuader Rule would have interfered with longstanding protections of the attorney-client relationship. The duty to safeguard client confidences has long formed the bedrock of the attorney-client relationship. One hundred years ago, the American Bar Association's first set of model ethics rules accepted as already established ``[t]he obligation . . . not to divulge [a client's] secrets or confidences.'' Code of Professional Ethics No. 6 (1908). Today, the ABA's Model Rules instruct that, absent specific exceptions, a ``lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent . . . .'' Model Rule 1.6. The duty not to disclose confidences plays a vital role in encouraging businesses and individuals alike to seek counsel. Potential clients who fear their decision to retain counsel, or facts about the representation, will become public may hesitate before consulting a lawyer. Such hesitation would run counter to society's interest in fostering legal compliance, as more citizens and businesses would be forced to act based on an uninformed interpretation of the law. Perhaps even more importantly, the disincentive built into the Persuader Rule in consulting an attorney is particularly troubling given that the Rule is vague regarding the activities that would be newly reportable. Pressuring Americans to act in ignorance of the law imperils a ``fundamental principle in our legal system[, which] is that laws . . . must give fair notice of conduct that is forbidden or required.'' FCC v. Fox Television Stations, Inc., 567 U.S. 239 (2012). For better or worse, such fair notice as a practical matter often requires consulting legal counsel. The Department finds generally persuasive the American Bar Association's comments submitted in response to this rulemaking. One of these comments, on which the court in Texas relied, states that the Persuader Rule called for disclosure of important client confidences and would undermine the attorney-client relationship: [The Persuader Rule] . . . would require lawyers (and their employer clients) to disclose a substantial amount of confidential client information, including the existence of the client-lawyer relationship and the identity of the client, the general nature of the legal representation, and a description of the legal tasks performed. By requiring lawyers to file [such reports], the Proposed Rule could chill and seriously undermine the confidential client-lawyer relationship. In addition, by imposing these unfair reporting burdens on both the lawyers [[Page 33832]] and the employer clients they represent, the Proposed Rule could very well discourage many employers from seeking the expert legal representation that they need, thereby effectively denying them their fundamental right to counsel. NFIB, 2016 WL 3766121, at *7-9. LMSO-2017-0001-0111, American Bar Assn., page 7.] Even a comment from several law professors in support of retaining the Persuader Rule did not dispute that the Rule required disclosure of information that would, absent the Rule, be shielded by rules of confidentiality. [LMSO-2017-0001-088127; 27 Law Professors page 5-7]. These concerns are not hypothetical; as the court in Texas found based on witness testimony, ``law firms around the country have already started announcing their decisions to cease providing advice and representations that would trigger reporting under DOL's New Rule,'' which ``decrease[s] employers' access to advice from an attorney of one's choice.'' Id. at *10. The court further noted the Persuader Rule's likely negative effect on organizations' ability to offer unionization-related training and seminars to employers (including small businesses) because would-be trainers and attendees ``will not want their attendance reported and made publicly available.'' Id. at *11. After analyzing these and other considerations, the court ultimately held that the Persuader Rule was likely ``arbitrary, capricious, and an abuse of discretion'' in part because ``the rule unreasonably conflicts with state rules governing the practice of law.'' Id. at *29. Several commenters shared similar concerns that the Texas court noted. [Chairwoman Foxx and Walberg, p. 8; Associated General Contractors of America, p. 8; Retail Industry Leaders Association, p. 3; Independent Electrical Contractors, p. 6; Seyfarth Shaw, p. 4; National Association of Homebuilders, p. 5; Coalition for a Democratic Workforce, p. 13; Employment Law Alliance, p. 7]. The Persuader Rule acknowledged the potential impact on attorney- client confidences, but simply concluded that the interpretation of the LMRDA advanced in the Rule, ``as federal law, must prevail over any conflicting . . . rules governing legal ethics'' and that Model Rule 1.6 and state laws modeled on it permit disclosure when required by law. 81 FR at 15998 (Mar. 24, 2016). Those arguments are beside the point. The Department agrees that federal law preempts state law and does not dispute that many state ethics laws permit disclosures required by law. But the state laws at issue enshrine, and bear witness to the importance of, certain principles of confidentiality--principles that the Persuader Rule, by requiring disclosure of client confidences, endangers irrespective of whether attorneys could be administratively disciplined for making such disclosures.\12\ --------------------------------------------------------------------------- \12\ For these reasons, the Department was not persuaded by a comment that advocated retaining the Persuader Rule on the grounds that the Rule's disclosure requirements by their own force exempted lawyers from confidentiality obligations that would otherwise apply. [LMSO-2017-0001-088127; 27 Law Professors page 5-6]. --------------------------------------------------------------------------- This is not the first time the Department has recognized the need for confidentiality to protect the attorney-client relationship in the organizing context. The largest labor unions (those with annual receipts of $250,000 or more) must under certain circumstances disclose and itemize disbursements to lawyers, but that rule does not apply when disclosure would expose the union's prospective organizing strategy or provide a tactical advantage to a party in contract negotiations. See the Instructions for the Form LM-2, p22. The Persuader Rule included no similar exemption for employers' consultation with attorneys. Rescinding the Persuader Rule continues to recognize the importance of confidentiality in the attorney-client relationship, consistent with the Instructions for the Form LM-2. One comment [LMSO-2017-0001-088127; 27 Law Professors page 2] advocated against rescission and noted the difficulty in obtaining evidence on how particular activities would affect the behavior of lawyers. The comment asserted that rescinding the Persuader Rule would preclude obtaining data on its effects and that input from lawyers on how they would change their practices could be ``nothing more than speculative and self-serving.'' \13\ Because the Department rescinds the Persuader Rule on the merits rather than with a view to further consideration, this comment's concerns about whether rescission would facilitate a future merits consideration is no longer apropos.\14\ --------------------------------------------------------------------------- \14\ This comment also contended that the Persuader Rule did not compel disclosure of client confidences. [LMSO-2017-0001-088127; 27 Law Professors page 4]. The comment asserts that there is ``no conflict between the regulatory regime administered by the DOL and the ethical responsibilities of lawyers.'' The comment notes that section 204 of the LMRDA expressly exempts ``information that was lawfully communicated to such attorney by any of his clients,'' citing 29 U.S.C. 434. Reporting is required only when the lawyer provides services other than legal services, the comment continues. The comment identifies several other reporting and disclosure requirements imposed on lawyers and concludes that there is ``little evidence'' that these regimes have chilled attorneys from serving their clients. The Department is not persuaded by these arguments. First, it is notable that the comment does not dispute that the Persuader Rule did require disclosure of information that, absent the Persuader Rule, would be entitled to the protections of confidentiality. The portions of the Persuader Rule that did not infringe on confidential communications, such as the exemption for communications from a client to an attorney under 29 U.S.C. 434, do not negate those that do, such as the requirement that guidance provided from an attorney to an employer with an intent to persuade employees triggers reporting. The assertion of ``little evidence'' of chilling in other statutory contexts is bare and unquantified and therefore not persuasive and, here, not only did several commenters raise this concern, but a U.S. Distric Court found evidence of actual chilling. NFIB, 2016 WL 3766121, at \*\10; [Chairwoman Foxx and Walberg, p. 8; Associated General Contractors of America, p. 8; Retail Industry Leaders Association, p.3; Independent Electrical Contractors, p. 6; Seyfarth Shaw, p. 4]. --------------------------------------------------------------------------- Commenters offered conflicting policy and fact-based arguments about the effects of the Persuader Rule on reporting under the LMRDA. One think tank [Economic Policy Institute, pages 7-8], for example, asserted that the proposed rescission would ``let[] America's working people down'' because, in its view, the Persuader Rule constituted merely a ``modest step toward leveling the playing field for workers by making sure they receive the information they deserve before making a decision on forming a union.'' Id. Multiple labor unions made similar comments. A representative of the building trades characterized the accept-or-reject rule as a ``loophole'' that ``resulted in vast underreporting of persuader activities.'' [See LMSO-2017-0001-0797 North America's Building Trades Unions, p3]; [LMSO-2017-0001-0543 AFL- CIO, p. 3-4.] An international union stated, `While the Department will undoubtedly be inundated with comments from those who assert that the 2016 Rule was a sop to organized labor, the real beneficiaries of this proposal are the employees--the class of individuals for which the protections in Section 203 were intended.'' LMSO-2017-0001-1104 International Brotherhood of Teamsters, p3.] [SAG-AFTRA, pg. 2; UFCW, pg. 2] The Department is not persuaded. First, some Form LM-20 information would have been stale. As the commenters noted, the 30 day filing deadline for a Form LM-20 is not much shorter than the 38-day median timeframe between the filing of an NLRB petition and the ensuing election, and 90% of the elections are held within 56 days. See 79 FR 74307. Although the Persuader Rule estimated that employers engage consultants at the first signs of union organizing, indicating the persuader agreement [[Page 33833]] would precede the petition, such promptness is very unlikely to be present in all cases; in cases where it is not, the Form LM-20 may not be filed early enough to be useful. Second, it is vital to distinguish between information that helps employees make an informed decision about their right to form a union, on the one hand, and information that is significantly less useful, on the other. Information as to whether a person with whom an employee comes into contact is actually working for the employee's employer can help an employee evaluate whether to trust the arguments that that person may advance on the question of unionization. The additional disclosures that the Persuader Rule would have required, by contrast, are likely to be much less helpful. That is because, for any message or conduct that the Persuader Rule newly deemed to be indirect persuasion, employees already know that the employer stands behind that message or conduct, because the employer conveys the message or undertakes the conduct at issue. Knowing which advisor, if any, recommended a particular message or conduct is less likely to help employees make an informed decision than knowing that a seemingly-independent third-party is actually in the pay of his or her employer. It is the Department's conclusion that the serious concerns regarding attorney-client confidentiality discussed in this section outweigh any assistance the former knowledge might render. Third, the relative paucity of LM-20 reports under the Department's longstanding interpretation of the advice exemption does not necessarily indicate under-reporting. Some commenters [Council on Labor Law Equality, p. 9; Independent Electrical Contractors, p. 7; Retail Industry Leaders Association, p. 7] argued that there is no indication that employers or consultants have engaged in misconduct or otherwise circumvented or evaded the LMRDA's reporting requirements under the Department's longstanding prior interpretation. The Department agrees: When comparatively few reports are filed, this can be an indication of non-compliance with the reporting rule or it can be an indication of relatively little reportable activity. The latter indicates compliance, not evasion, and, absent further information indicating that the filing of comparatively few reports instead indicates evasion, it provided no basis for the Persuader Rule and its mandatory reporting of activities such as recommending communications or courses of conduct for an employer to accept or reject. C. The Costs of Additional Use of Form LM-21 Further Support Rescission A third reason for rescission involves the additional regulatory burdens involving Forms LM-20 and LM-21 imposed by the Rule. The obligation to file the Form LM-20 and the Form LM-21 result from the same event: Persuader activity. Under section 203(b), every person who enters into an agreement or arrangement to undertake persuader activities must file a report with the Secretary that includes a detailed statement of the terms and conditions of such arrangement within 30 days of entering into the agreement, currently accomplished by filing a Form LM-20. The person must then also file annually a report containing a statement of the person's ``receipts of any kind from employers on account of labor relations advice or services, designating the sources thereof,'' and a statement of its disbursements of any kind, in connection with those services and their purposes, currently accomplished by filing a Form LM-21. See also 29 CFR 406.3 (Form LM-21 requirements). 57 FR 15929. Thus, by statute, the filing of a Form LM-20 necessitates the filing of a Form LM-21, so long as any disbursement is made pursuant to the reportable persuader agreement or arrangement. An increase in the range and number of activities that constitute ``persuader activity'' would increase the number of Form LM-20 and Form LM-21 filers. Each form imposes a unique recordkeeping and reporting burden on the filer. For example, a consultant/law firm that contracted with an employer and engaged in persuader activity under the Rule would have to file a Form LM-20 disclosing the arrangement with the employer. According to the instructions, the consultant would also have to file a Form LM-21 on which it reports the full name and address of employers from whom receipts were received directly or indirectly on account of labor relations advice or services, as well as the total amount of receipts. In addition, the consultant's disbursements to officers and employees would be disclosed when made in connection with such labor relations advice or services. And the consultant would report in the aggregate the total amount of the disbursements attributable to this labor relations services and advice, with a breakdown by office and administrative expenses, publicity, fees for professional service, loans, and other disbursement categories. Finally, the consultant would be required to itemize its persuader-related disbursements, the recipient of the disbursements, and the purpose of the disbursements.\15\ --------------------------------------------------------------------------- \15\ The Department does not opine here on whether the statute requires consultants who have entered into persuader agreements or arrangements to list on the Form LM-21 non-persuader clients, i.e., employers with whom they did not into persuader agreements or arrangements. See Donovan v. Rose Law Firm, 768 F.2d 964, 974 (8th Cir. 1985). --------------------------------------------------------------------------- The Department recognized in the final rule that the Persuader Rule would make some labor relations consultants and employers who had previously not been required to file at all under the LMRDA responsible for filing both forms LM-20 and LM-21, but did not fully consider that burden. Instead, it considered only the burden arising from the Form LM-20 and deferred consideration of the burden arising from Form LM-21 to a separate rulemaking. It did so, in part, because it intended to engage in parallel rulemaking for reform of the scope and detail of the Form LM-21. 57 FR 15992, fn 88. In the meantime, the Department issued a separate special enforcement policy that addressed the potential that new filers might have unique difficulties in filing the Form LM-21. Under that special enforcement policy, the filers of Form LM-20 who were also required to file a Form LM-21 were not required to complete two parts of that form. See https://www.dol.gov/olms/regs/compliance/ecr/lm21_specialenforce.htm. The Department has now considered the burdens that the Persuader Rule would have imposed on the expanded Form LM-21 filers and concluded that they would have been substantial. As described below, under the Persuader Rule, many more labor relations consultants would have had to complete the Form LM-21, and they would have needed to devote additional time and resources to do so. As discussed in the Economic Analysis below, the Department estimates that total number of Form LM-20 filers would have been 2,149. Consequently, there would also have been 2,149 Form LM-21 reports filed. This is an increase from the previously estimated 358 Form LM-21 reports. Thus the Persuader Rule would have created more filers of the Form LM-21. See https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=201604-1245-001. These filers would have spent additional time completing the form, far more than the 35 minutes previously estimated by the Department.\16\ Each filer of Form LM-21 is assumed to have already read the Form LM-20 form and [[Page 33834]] instructions and therefore knows whether it must file the Form LM-21. No additional reading time is therefore necessary to make this determination. Nevertheless, the completion of the Form LM-21 would have been complicated by the Persuader Rule because the statutory term ``advice'' was broadened and expanded by the Persuader Rule, with no explanation of how the revised definition applied to the Form LM-21. This lack of clarity increases the burden of the Form LM-21. Due to this increased complexity, completing the form would have thus consumed 154.5 minutes. This equals a $631,181 Form LM-21 burden arising from the Persuader Rule and this burden was not considered by the Department when issuing that rule. --------------------------------------------------------------------------- \16\ See https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=201604-1245-001. --------------------------------------------------------------------------- These additional costs of more than $631,000--which the Persuader Rule did not properly quantify or consider--are substantial and constitute an additional and important policy factor prompting rescission of the Persuader Rule to avoid unnecessary burden on the private sector. D. Rescinding the Persuader Rule Will Preserve Limited Departmental Resources for Competing Priorities A fourth reason for rescission of the Persuader Rule is the allocation of scarce resources to different priorities. The Department has the ``right to shape [its] enforcement policy to the realities of limited resources and competing priorities.'' Int'l Union, United Auto., Aerospace & Agr. Implement Workers of Am. v. Dole, 869 F.2d 616, 620 (D.C. Cir. 1989). Under the prior interpretation of the advice exemption, there were significantly fewer reports due and accordingly fewer investigative resources needed for enforcing the rules on filing timely and complete reports. Further, under the prior interpretation, case investigations generally involved obtaining and reviewing the written agreement and interviewing employees. In contrast, enforcement of the Persuader Rule would likely have involved a lengthier and more complicated investigation, examining in detail the actions of consultants, their interactions with the employers' supervisors and other representatives, and the content of attorney communications. The investigator would have been required to review both the direct reporting category and the four indirect persuader categories. This would have been a substantially more resource-intensive process that pulled limited resources away from other vital priorities. The Department does not believe that this allocation of resources is warranted.\17\ --------------------------------------------------------------------------- \17\ While the Department could avoid some or all of this burden by declining to enforce, or enforcing on a limited basis, the Persuader Rule, rescinding the Persuader Rule will afford the regulated community greater certainty than simply adopting a non- enforcement policy. --------------------------------------------------------------------------- One comment [LMSO-2017-0001-1097; Ranking Members Scott and Sablan Comment Letter page 4] stated that the Department's concern for limited resources ``does not account for the discrepancy between unions' broad disclosure requirements and employers' meager obligations,'' but that comment did not assess the Persuader Rule's burden on the Department. The comment asserted that ``the Form LM-2 that unions must file often consumes hundreds of pages, whereas employers' LM-10, LM-20 and LM-21 are four, two and two pages, respectively.'' But the resources filers spend completing their reports are not the same as the resources the Department spends administering the program. In addition, the length of the report does not correlate with the investigatory burden on the Department. The greater number of reports and the increased complexity of the investigations under the Persuader Rule mean persuader reports would have been resource intensive for the Department. In contrast to labor unions, which must file an annual report, persuader reports are required only when an employer or labor relations consultant actually engages in the identified persuader activities in the fiscal year. At the end of the fiscal year, the Department cannot know whether a particular employer or consultant owes a report, which substantially increases the time and expense of monitoring for delinquent employer and consultant reports.\18\ --------------------------------------------------------------------------- \18\ A labor union raised concern that the rescission of the rule would also rescind the requirement that Form LM-10 and Form LM- 20 be filed electronically. (LMSO-2017-0001-0110; American Federation of Teachers pp 2-3). ``While, perhaps, reasonable minds may differ on the application of the advice exemption, one is hard pressed to think of a fair reason why persuaders should not have to file timely, intelligible forms via electronic means--just as unions have had to do for over a decade.'' The comment stated that paper filing is more costly for the Department and results in delays in public disclosure. The commenter states, ``full repeal of the original Rule does workers, the public, and researchers a real disservice,'' and concludes that the Department should retain mandatory electronic filing of LM-10, LM-20, and LM-21 reports. Although outside the scope of the regulatory action, the Department will consider this request, as it moves to making all forms available for electronic filing. --------------------------------------------------------------------------- Ultimately, the Department has determined that its scarce resources are better allocated elsewhere than on the enforcement of the Persuader Rule. The Department has wide ranging priorities and responsibilities, including helping Americans find the jobs they need, closing the skills gap, protecting employees from hazardous working conditions, enforcing child labor protections, and many other critical initiatives. Among its other priorities, the Department promotes union democracy and financial integrity in private sector labor unions through standards for union officer elections and union trusteeships and safeguards for union assets, and it promotes labor union and labor-management transparency through reporting and disclosure requirements for labor unions and their officials, employers, labor relations consultants, and surety companies. Reporting by employers and labor relations consultants who make arrangements to persuade employees with regard to their rights to organize and bargain collectively is an important piece of this effort and DOL's broader mission, but it is just one piece. Rescission of the expansion of the advice exemption will not change the Department's robust enforcement of these core reporting requirements, which have protected the LMRDA's vital objectives for decades. IV. Effect of Rescission The reporting requirements in effect under this rescission are the same as they existed before the rescission. The Forms and Instructions, available on the Department's website, are those pre-existing the Rule. These are the Forms and Instructions currently being used by filers, in light of the litigation and court order discussed in section 2(A), above. See National Federal of Independent Business v. Perez (N.D. Tex. 5:16-cv-00066-c), Slip Op. p.89-90; 2016 WL 3766121; 2016 WL 8193279. V. Analysis Conducted in Accordance With Executive Order 12866, Regulatory Planning and Review, Executive Order 13563, Improved Regulation and Regulatory Review, and Executive Order 13771, Reducing Regulation and Controlling Regulatory Costs Under Executive Order 12866, the Office of Management and Budget's (OMB's) Office of Information and Regulatory Affairs determines whether a regulatory action is significant and, therefore, subject to the requirements of the Executive Order and review by OMB. 58 FR 51735. Section 3(f) of Executive Order 12866 defines a ``significant regulatory action'' as an action that is likely to result in a rule that: (1) Has an annual effect on the economy of $100 million or more, or adversely affects in a material way a [[Page 33835]] sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local or tribal governments or communities (also referred to as economically significant); (2) creates serious inconsistency or otherwise interferes with an action taken or planned by another agency; (3) materially alters the budgetary impacts of entitlement grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or (4) raises novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order. Id. OMB has determined that this final rule is a significant regulatory action under section 3(f)(1) of Executive Order 12866. Executive Order 13563 directs agencies to propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs; it is tailored to impose the least burden on society consistent with achieving the regulatory objectives; and in choosing among alternative regulatory approaches, the agency has selected the approach that maximizes net benefits. Executive Order 13563 recognizes that some benefits are difficult to quantify and provides that, where appropriate and permitted by law, agencies may consider and discuss qualitatively values that are difficult or impossible to quantify, including equity, human dignity, fairness, and distributive impacts. A. The Need for Rulemaking As explained above in Part II, Section A, today's final rule to rescind the Persuader Rule is part of the Department's continuing effort to effectuate the reporting requirements of the LMRDA. The LMRDA generally reflects the obligation of unions and employers to conduct labor-management relations in a manner that protects employees' rights to choose whether to be represented by a union for purposes of collective bargaining. The LMRDA's reporting provisions promote these rights by requiring unions, employers, and labor relations consultants to publicly disclose information about certain financial transactions, agreements, and arrangements. The Department believes that a fair and transparent government regulatory regime must consider and balance the interests of labor relations consultants, employers, labor organizations, their members, and the public. It should reflect close consideration of possible statutory interpretations and both direct and indirect burdens flowing from the Rule, particularly in sensitive areas, such as the attorney-client relationship. Any change to a labor relations consultant or employer's recordkeeping, reporting and business practices should be based on a demonstrated and significant need for information, along with consideration of the burden associated with such reporting and any increased costs associated with the change. In its Notice of Proposed Rulemaking, the Department assumed the position that the rescission of the Persuader Rule would result in a burden reduction equal to the difference between the rule as it stood prior to the Persuader Rule and the Persuader Rule. 82 FR 26881. In utilizing this methodology, the Department estimated that the rescission of the Persuader Rule would result in annual cost savings of $1,198,714.50. In response to the Notice of Proposed Rulemaking, the Department received a number of comments disagreeing with the Department's cost analysis. Specifically, commenters insisted that the Department failed to arrive at a realistic calculation of the actual cost of compliance and the cost of familiarization. A number of commenters pointed to a lack of definitiveness in the Persuader Rule in identifying whether a report would be required, who would be responsible for submitting a report, and whether sensitive issues would have to be disclosed through the information requested in the report. The commenters argued that these matters were significant determinations that would inevitably result in higher costs. Additionally, in an order granting the issuance of a preliminary injunction enjoining the Persuader Rule, the U.S. District Court for the Northern District of Texas addressed the burden of the Persuader Rule and the increased costs associated with its implementation. Though the district court did not conduct its own methodology, the court cited and relied upon a third-party report to conclude that the Persuader Rule ``could cost the U.S. economy between $7.5 billion and $10.6 billion during the first year of implementation, and between $4.3 billion and $6.5 billion per year thereafter; the total cost over a ten-year period could be approximately $60 billion--and this would not include the indirect economic effects of raising the cost of doing business in the United States.'' Nat'l Fed. of Indep. Bus. v. Perez, Case No. 5:16-cv-00066-C, 2016 WL 3766121, at *15 (N.D. Tex. June 27, 2016).\19\ --------------------------------------------------------------------------- \19\ The rulemaking record contains five comments that cite a study that supports these figures. Diana Furchtgott-Roth, The High Costs of Proposed New Labor-Law Regulations, MANHATTAN INSTITUTE, Jan. 2016. --------------------------------------------------------------------------- While the Department does not conclude that the Persuader Rule would have resulted in the burden identified by the NFIB court, the Department is cognizant of the concerns raised by the commenters in response to the NPRM and has thoroughly analyzed and examined these comments. After a thorough evaluation, the Department agrees that the previous figure failed to account for a number of significant considerations. Concerning burden, the overarching difficulty associated with the Persuader Rule was the broadening of persuader reporting to certain categories of indirect contact where the employer remained free to accept or reject the recommendations of the consultant. That increase in scope would have made it more difficult to determine whether a report was required and what information the report should contain. In particular, the Persuader Rule would have required close consideration of sensitive matters such as privilege and confidentiality that might have affected how information should be entered onto the forms. And filers would have required more time to review the instructions in detail because of the difficulty in accurately and comprehensively completing such complex forms.\20\ To the extent that the expanded reporting requirement would have potentially disclosed sensitive information or chilled efforts to seek help, the impact would have been greater and even more time would have been allocated to completing the forms. For all these reasons, the Department no longer believes it would be accurate to measure the reduced burden simply by comparing the burden figures in the Persuader Rule to the figures that it has replaced. --------------------------------------------------------------------------- \20\ The NPRM for the Persuader Rule proposed that non-filing entities would require an hour to read the instructions and to determine that the rule does not apply to them. It also determined that no ``initial familiarization'' costs would be estimated. 81 FR 16003. --------------------------------------------------------------------------- B. Economic Analysis For the reasons discussed below, and as relevant here, the Department rejects the following assumptions as made in the Persuader Rule:Non-filing employers, human resources firms, and law firms would have spent one hour in total reading instructions (10 minutes) and determining that the rule does not apply to them or their clients (50 minutes) (81 FR 16003); [[Page 33836]] The number of employers that would have filed Form LM-10 reports would have been 2,777 (81 FR 16004); The number of Form LM-10 reports filed would have been 2,777 (81 FR 16004); The total burden hours per Form LM-10 filer would have been 147 minutes. (81 FR 16014); The number of consultants that would have filed Form LM-20 reports would have been 358 (81 FR 16004); The number of Form LM-20 reports filed would have been 4,194 (81 FR 16004); The total burden hours per Form LM-20 filer would have been 98 minutes (81 FR 16012); The number of consultants that would have filed Form LM-21 reports would have been 358 (81 FR 16004); The number of Form LM-21 reports filed would have been 358 (81 FR 16004); Issues arising from the reporting requirements of the Form LM-21 would not have been appropriate for consideration under the Persuader Rule (81 FR 1600); As relevant here, the Department accepts the following assumptions made in the Persuader Rule: Employers, business associations, and consultants (human resources firms, law firms, and labor relations consultants) would not have borne ``initial familiarization'' costs (81 FR 16003); Non-filing entities would have comprised those employers, business associations, and consultants (human resources firms, law firms, and labor relations consultants) that are not otherwise estimated to be filing (81 FR 16003); The number of non-filing consultants would have been 39,298 (81 FR 16016-17); The number of non-filing employers would have been 185,060 (81 FR 16017); Attorneys would have filed reports on behalf of consultants and employers (81 FR 16003); The estimated recordkeeping and reporting costs should be based on Bureau of Labor Statistics (BLS) data of the average hourly wage of a lawyer, including benefits (81 FR 16003); A lawyer (SOC 23-1011) has a fully-loaded wage of $114 (median hourly base wage of $56.81 plus fringe benefits and overhead costs of 100% of the base wage) \21\ --------------------------------------------------------------------------- \21\ Source: Bureau of Labor Statistics, Occupational Employment Statistics, May 2016 National Employment and Wages Estimates. (https://www.bls.gov/oes/current/oes_nat.htm). --------------------------------------------------------------------------- Based on the comments received, the Department makes the following assumptions: Non-filing employers, human resources firms, and law firms would have spent 2.75 hours in total reading instructions (45 minutes) for the Form LM-10 or the Form LM-20 and determining that the rule does not apply to them or their clients (120 minutes); The number of employers that would have filed Form LM-10 reports would have been 13,297; The number of Form LM-10 reports filed would have been 13,297; The total burden hours per Form LM-10 would have been 930 minutes; The number of consultants that would have filed Form LM-20 reports would have been 2,149; The number of Form LM-20 reports filed would have been 14,714; The total burden hours per Form LM-20 would have been 900 minutes; The number of consultants that would have filed Form LM-21 reports would have been 2,149; The number of Form LM-21 reports filed would have been 2,149; The total burden hours per Form LM-21 would have been 154.5 minutes. Based on the comments received, and upon review of the litigation, the Department concludes that the Persuader Rule underestimated the burden with regard to the amount of time necessary for non-filers to read the form and instructions, the number of filers of Form LM-10 and Form LM-20, and the number of hours necessary to complete these forms. It also erred in failing to estimate the increase in the number of Form LM-21 filers and the increased burden the Persuader Rule caused through the Form LM-21. The Burden on Non-Filers to Read the Forms In the Persuader Rule, non-filing entities (employers and law firms/consultants) were estimated to need one hour in total to read the instructions (10 minutes) and determine that the rule does not apply to them or their clients (50 minutes). 57 FR 16003, 16007. This was not accurate. ``A more realistic assessment of the costs of these new forms to business would estimate a higher number of hours per firm, since businesses will need to spend time each year determining whether they are obligated to file.'' [Diana Furtchgott Roth, The High Costs of Proposed New Labor-Law Regulations, Manhattan Institute, Jan. 2016, at 8 n.16]. The U.S. District Court accepted as fact that the Department failed to adequately consider potential filers, concluding that ``[t]he department should have examined what the cost would be if all potentially affected employers and advisers were to file,'' and therefore that the Department did not provide ``an honest assessment of the potential effect of the proposed rule.'' Nat'l Fed. of Indep., 2016 WL 3766121, at *15. The Department estimates that, under the Persuader Rule, non-filing entities would have spent 2.75 hours total reading the instructions of the Form LM-10 or the Form LM-20 (45 minutes) to determine that the rule does not apply to them or their clients (120 minutes). The additional reading time would have been necessary because of the vagueness of the Persuader Rule. The Persuader Rule broadened persuader reporting to certain categories of indirect contact where the employer remained free to accept or reject the recommendations of the consultant. That increase in scope would have made it more difficult to determine whether a report was required. One commenter reported, for example, ``DOL's new Rule creates a regulatory scheme that is so confusing and convoluted, with so many illogical exceptions and mandates, that neither employers nor their advisors, including labor law experts, can understand how to comply with it.'' [Associated Builders and Contractors of Arkansas LMSO-2017-0001-1096, p.13]. Another commenter noted, ``most of the cost of compliance will come from learning about the new rule and preparing the information to be recorded on the form.'' [Furchgott-Roth, p7, see fn 16.] Because the rule was vague as to the activities that resulted in reporting obligations, it would have taken more than an hour for an employer or a consultant to read, understand, and apply it to determine whether filing was required. Besides vagueness, the sensitivity of the information to be included on the form would also have increased the amount of time required of non-filers. The Persuader Rule would have required close consideration of sensitive matters such as privilege and confidentiality that might have affected how information should be entered onto the forms. And filers would have required more time to review the instructions in detail because of the difficulty in accurately determining whether a report was owed. To the extent that the expanded reporting requirement would have potentially disclosed sensitive information or chilled efforts to seek help, the impact would have been greater and even more time would have been allocated to the determination. The Department now [[Page 33837]] concludes that non-filers would have spent 2.75 hours in total reading instructions (45 minutes) and determining that the rule does not apply to them or their clients (120 minutes). The Department has not altered the time spent by non-filing employers on reading the Form LM-21 to determine that filing is not required. The review time spent on reading the Form LM-20 will provide employers with information on the regulatory regime and non-filers of Form LM-10 will have no obligation to file the Form LM-21. The Number of Filers The Department erred in its estimate of the number of filers. The Department had largely derived its estimates of the number of filers of both the LM-20 and LM-10 forms from the total number of representation and decertification elections supervised by the NLRB and the NMB. The Department assumed that, in 75% of such cases, the employer would utilize a consultant who will engage in reportable activity.\22\ [81 FR 15964-65, 16004]. The Department considered only representation elections, but acknowledged that other reports will result from ``activities related to collective bargaining and other union avoidance efforts outside of representation petitions, such as organizing efforts that do not result in the filing of a representation petition.'' Id at 160004. The burden analysis would have benefited from the Department estimating a number from this acknowledged additional source of reports. Today, the Department estimates that five times the number of reports as those coming from election petitions would have resulted from non-election cases. As noted by the Department in the Persuader Rule, there is no reliable basis for estimating reports in the many areas outside of representation petitions. A commenter provided, however, ``given the narrow view the Department intends to take with respect to the advice exemption and the broad view of reporting obligations, it is likely that the vast majority of reportable activity will not involve representation or decertification campaigns at all.'' [U.S. Chamber of Commerce LMSO-2017-0001-1147]. As 2,104 reports are associated with representation elections we assume that there would have been another 10,520 (2,104 x 5 = 10,520) associated with non- election activity, thus making the non-election activity akin to a ``vast majority.'' See id.; 81 FR 16004. Adding this to the election related reports equals a total of 12,624 reports (2,104 + 10,520 = 12,624). Adding this to the projected number of seminars, which is 2,090, the total number of reports would have been 14,714.\23\ See 81 FR 16005. Assuming that there are 5.875 reports per filer, a determination made by the Persuader Rule (81 FR 16005),\24\ the total number of Form LM-20 filers would have been 2,149 (12,624 \ 5.875 = 2,148.7).\25\ This is an increase from the 358 filers determined by the Persuader Rule and is the result of counting the number of reports arising from non-representation/decertification persuader activity. --------------------------------------------------------------------------- \22\ The Department separately estimated the number of reports attributable to seminars. 81 FR 16005. \23\ The Persuader Rule explained the basis of the determination that 2,090 Form LM-20 reports would report the holding of a seminar. 81 FR 16004. To estimate the number of reportable seminars the Department utilized the reporting data for ``business associations'' from the U.S. Census Bureau's North American Industry Classification System Codes (NAICS), NAICS 813910, which includes trade associations and chambers of commerce. Of the 15,808 total entities in this category, the Department assumed that each of the 1,045 business associations that operate year round and have 20 or more employees would sponsor, on average, one union avoidance seminar for employers. Additionally, the Department assumed that all of the 1,045 identified business associations would contract with a law or consultant firm to conduct that seminar. Each of these parties would file a report, resulting in 2,090 reports. \24\ The Persuader Rule explained the relationship between the number of filers and the number of reports. The Department used its existing data on Form LM-20 reports. It determined that consultants, including law firms, file an annual average of approximately 5.875 reports a year. 81 FR 16004. Having determined the number of reports, the Department derived the number of filers. \25\ The number of reports of seminars are not counted when calculating the number of filers because, as determined in the Persuader Rule, the same law firms and consultants that handle organizing campaigns will be the ones that present (and report) seminars. 81 FR 16005. --------------------------------------------------------------------------- To determine the number of Form LM-10 filers, the Department combines the estimated 12,624 non-seminar persuader agreements between employers and law firms or other consultant firms, calculated for the Form LM-20, with 672.6 (the annual average number of Form LM-10 reports registered from FY 10-14 submitted pursuant to sections 203(a)(1)-(3), the non-persuader agreement or arrangement provisions). Seminar persuader agreements are not included because employers who attend a seminar were not required, under the Persuader Rule, to file a Form LM- 10. This yields a total estimate of approximately 13,297 revised Form LM-10 reports (12,624 + 672.6 = 13,296.6) and thus 13,297 form LM-10 filers. Firms that file LM-20 forms are also required by law to file LM-21 forms. ``Many law firms have never filed an LM-21 form because of the previous Interpretation from the Department. Under the New Interpretation, such firms would be required to file LM-21 forms with the Department.'' [Worklaw Network, LMSO-2017-0001-0253, p10]. As each filer of Form LM-20 reporting persuader activity must also file a Form LM-21, so long as receipts and disbursements were attributable to the persuader agreement or arrangement, the Department estimates that 2,149 Form LM-21 reports will be filed. Time Necessary To Complete the Forms The Persuader Rule underestimated the time necessary for filers to complete the forms. The rule's complexities not only increased the amount of time necessary for non-filing entities to read the instructions to understand whether to file, it also increased the amount of time it would require of filing entities to complete the form. As one commenter stated ``the lawyer or consultant must guess as to whether the client's object, in whole or in part, directly or indirectly, was to persuade or influence employees.'' [Seyfarth Shaw, LMSO-2017-0001-1062, p4]. As the table below shows, for Form LM-10, maintaining and gathering records and reading the instructions to determine applicability of the form and how to complete it was estimated by the Persuader Rule to take a total of 50 minutes. Upon reflection and review of the comments, it is clear that the time would have been much higher: A total of 306 minutes. The increased time was necessary because of the difficulty in categorizing activity as advice or persuader activity. ``Instructions . . . meant to clarify the rule demonstrate the lack of a clear distinction between reportable `persuader activity' and exempt `advice' under the new rule.'' House Report 114-739 (REPORT together with MINORITY VIEWS [To accompany H.J. Res. 87) LMSO-2017-0001-1151]. This lack of clarity increased the amount of time it would have taken to complete the Form LM-10 and Form LM-20. In addition, the difficulty in discerning state of mind would have exacerbated the difficulty in completing the forms. The reporting obligation of an employer and its consultant would have turned on the subjectively perceived determination of each as to whether the policies developed were for the purpose of persuading employees with regard to unionizing and collective bargaining. As a commenter noted, ``In reality, there is no way to make this determination with any degree of confidence--particularly where both the employer and the [[Page 33838]] lawyer/consultant have to make their own independent determination as to whether the work performed is reportable.'' [Proskauer, LMSO-2017- 0001-0851, p10]. Although ``intent to persuade'' is and has always been an element in Form LM-20 and Form LM-10 reporting, the structure of the Persuader Rule made this difficult determination more frequent. Under the accept-or-reject test, issues of intent need not be considered absent direct contact between consultant and employee. Without such a clear delineation, the determination of intent would have come up routinely. This analysis is complicated where here, by definition, there are multiple parties involved, each with its own views and its own purpose in making the arrangement or agreement. As a result, in the Form LM-20 and LM-10 tables below, the Department increased the time estimated for the categories of questions that require analysis of the terms, objects and activities of the arrangement or agreement. The Form LM-21 The burden of the Form LM-21 would also have been increased by the Persuader Rule. The Department recognizes that many difficult questions with regard to identifying persuader activity and how to fill out the form would have been undertaken for the Form LM-20 and resolved by the time the Form LM-21 must be completed. Nevertheless, the completion of the Form LM-21 would have been complicated by the Persuader Rule. The instructions required consultants to make efforts to allocate between ``receipts in connection with labor relations advice or services'' (which are subject to a reporting obligation) and other receipts for employers other than persuader clients. The same is true for disbursements. See Form LM-21, sections B and C. \26\ Nevertheless, the term ``advice'' was narrowed by the Persuader Rule, with no explanation of how the revised definition applied to the Form LM-21. Under the Form LM-21, receipts and disbursement in connection with ``labor relations advice and services,'' must be reported. Under the reporting structure, labor relations advice is distinct from persuader activity but under the Persuader Rule there was no category of activity that was persuasive but nevertheless exempt (as advice). Further complicating the matter, the Department gave no guidance as to whether the revised definition of ``advice'' applied, or did not apply, to the Form LM-21. This lack of clarity increases the burden of the Form LM-21. Completing the form would have consumed 154.5 minutes. --------------------------------------------------------------------------- \26\ The Form LM-21's Part B (Statement of Receipts) requires the filing law firm/consultant to report all receipts from employers in connection with labor relations advice or services regardless of the purposes of the advice or services. Part C (Statement of Disbursements) requires the filer to report all disbursements made by the reporting organization in connection with labor relations advice or services rendered to the employers listed in Part B. --------------------------------------------------------------------------- The analysis covers a 10-year period (2018 through 2027) to ensure it captures major cost savings that accrue over time. In this analysis, we have sought to present cost savings discounted at 7 and 3 percent, respectively, following OMB guidelines.\27\ --------------------------------------------------------------------------- \27\ OMB Circular No. A-4, ``Regulatory Analysis,'' M-03-21 (Sept. 2003). --------------------------------------------------------------------------- The Department has undertaken an analysis of the cost savings to covered employers, labor relations consultants, and others associated with complying with the requirements which are being rescinded by this rule. These cost savings are associated with both reporting and recordkeeping for Forms LM-10, LM-20, and LM-21. The Persuader Rule was enjoined before it became applicable, so if the impacts of this final rule are assessed relative to current practice, the result would be that there is no impact. If, on the other hand, the Rule's effects are assessed relative to a baseline in which regulated entities comply with the Rule, the rescission would result in annualized cost savings of $92.89 million (with a 3 and 7 percent discount rate). Under the Rule, employers would have needed to devote additional time and resources to the task of determining their responsibilities for complying with the rule. The Department used: (1) The number of private sector firms with 5 or more employees in addition to the number of consulting and lawyer offices; (2) the median hourly wage of a chief executive and a lawyer; and (3) the number of hours necessary to comply with the Rule. According to data from the U.S. Census Bureau's Statistics of U.S. Businesses, in 2015, there were 5,900,731 private firms in the United States. Of these businesses, 2,256,994 had five or more employees.\28\ There are 6,461 Human Resource Management Consultant service firms (NAICS code 511612) and 165,435 Offices of Lawyers firms (NAICS code 541110).\29\ --------------------------------------------------------------------------- \28\ Source: U.S. Census Bureau, Statistics of U.S. Businesses, 2015. (https://www.census.gov/data/tables/2015/econ/susb/2015-susb-annual.html). \29\ Source: U.S. Census Bureau, Statistics of U.S. Businesses, 2015. (https://www.census.gov/data/tables/2015/econ/susb/2015-susb-annual.html). --------------------------------------------------------------------------- The Department determined that 185,060 \30\ of the 2,256,994 private sector firms with five or more employees would have to review the rule and determine whether or not they have any obligation to file a Form LM-10 report. For this analysis, we estimated that for each of the 185,060 firms, a labor relations specialist (SOC 13-1075) with a fully-loaded wage of $60 (median hourly base wage of $29.96 plus fringe benefits and overhead costs of 100% of the base wage) would have spent 2.75 hours determining the firm's obligations relating to Form-10. The annualized cost for assessing compliance requirements for these potential filers would have been $30.53 million with 3 and 7 percent discount rate (185,060 x $60 x 2.75 hours). --------------------------------------------------------------------------- \30\ The Department's methodology for estimating 185,060 is explained in the 2016 Final Rule, 81 FR at 16016-16017. In summary, the estimate is based on multiplying the ratio of estimated filing employers to filing consultants (7.76) by the total number of non- filing law firms and consultants (23,848), which is composed of the number of labor and employment firms (17,387) and human resources consultants (6,461). Other methodologies not described in detail herein can be referenced in the 2016 final rule. --------------------------------------------------------------------------- Once these employers determined that they needed to file Form LM- 10, they would have also incurred reporting and recordkeeping costs associated with filling out the form. The Department estimates lawyers (SOC 23-1011) at a fully-loaded wage of $114 (median hourly base wage of $56.81 plus fringe benefits and overhead costs of 100% of the base wage) \31\ for 13,297 firms would have spent 15.5 hours to complete the form. Using the methodology discussed above, the annualized recordkeeping cost for those who actually file Form LM-10 would therefore have been $23.50 million with 3 and 7 percent discount rate (13,297 x $114 x 15.5 hours). --------------------------------------------------------------------------- \31\ Source: Bureau of Labor Statistics, Occupational Employment Statistics, May 2016 National Employment and Wages Estimates. (https://www.bls.gov/oes/current/oes_nat.htm). --------------------------------------------------------------------------- The Department estimates that 39,298 of 171,896 consulting and law offices would have to review the rule to determine whether or not they have any obligation to file a Form LM-20 report. For this analysis, we assume that for the 39,298 consulting and law offices, a lawyer with a fully-loaded wage of $114 (median hourly base wage of $56.81 plus fringe benefits and overhead costs of 100% of the base wage) \32\ would have spent 2.75 hours determining their obligations relating to Form- 20. The annualized cost for assessing [[Page 33839]] compliance requirements for potential Form LM-20 filers would have been $12.32 million with 3 and 7 percent discount rate (39,298 x $114 x 2.75 hours). --------------------------------------------------------------------------- \32\ Source: Bureau of Labor Statistics, Occupational Employment Statistics, May 2016 National Employment and Wages Estimates. (https://www.bls.gov/oes/current/oes_nat.htm). --------------------------------------------------------------------------- Once the consulting and law offices determined that they needed to fill out Form LM-20, they would have also incurred reporting and recordkeeping costs associated with completing the form. The Department assumes labor relations specialists completing 14,714 forms would take 15 hours to complete the form. Using the methodology discussed above, the annual recordkeeping cost for those who actually file form LM-20 would therefore have been $25.16 million with 3 and 7 percent discount rate (14,714 x $114 x 15 hours). The Department estimates that 39,298 consulting and law offices would have to review the rule to determine whether or not they have any obligation to file a Form LM-21 report. For this analysis, we assume that, for the 39,298 consulting and law offices, a lawyer (SOC 23-1011) with a fully-loaded wage of $114 would have spent ten minutes determining the office's obligations relating to Form-21. The annualized cost for assessing compliance requirements for potential Form LM-21 filers would have been $0.75 million with 3 and 7 percent discount rate (39,298 x $114 x 0.167 hours). Once the consulting and law offices determined that they needed to fill out Form LM-21, they would have also incurred reporting and recordkeeping costs associated with completing the form. The Department assumes labor relations specialists completing 2,149 forms would take 2.58 hours to complete the form. Using the methodology discussed above, the annual recordkeeping cost for those who actually file Form LM-21 would therefore have been $0.63 million with 3 and 7 percent discount rates (2,149 x $114 x 2.58 hours). Summary The total annualized cost savings associated with this rule can be calculated by adding together the savings to potential filers of both Form LM-10, Form LM-20, and Form LM-21. There are also savings to actual filers of Form LM-10, Form LM-20, and Form LM-21. As shown in Table A, the total annualized cost savings are $92.89 million with a discount rate of 3 and 7 percent. For a perpetual time horizon, the annualized cost savings are the same at $92.89 million with a discount rate of 7 percent. Table A--Total Cost Savings ---------------------------------------------------------------------------------------------------------------- Cost savings summary ----------------------------------------------------------------------------------------------------------------- 10-Year annualization Perpetual -------------------------------- annualization --------------- 7% Discount 3% Discount 7% Disount rate rate rate ---------------------------------------------------------------------------------------------------------------- Form LM-10 Potential Filers (determining whether to file Form- $30,534,900 $30,534,900 $30,534,900 10)............................................................ Reporting and Recordkeeping for Form LM-10 reports.............. 23,495,799 23,495,799 23,495,799 Form LM-20 Potential Filers (determining whether to file Form- 12,319,923 12,319,923 12,319,923 20)............................................................ Reporting and Recordkeeping for Form LM-20 reports.............. 25,160,940 25,160,940 25,160,940 Form LM-21 Potential Filers (determining whether to file Form- 748,155 748,155 748,155 21)............................................................ Reporting and Recordkeeping for Form LM-21 reports.............. 632,064 631,181 631,181 ----------------------------------------------- Total Cost Savings.......................................... 92,891,781 92,890,898 92,890,898 ---------------------------------------------------------------------------------------------------------------- Table B--Form LM-10 Recordkeeping and Reporting Burden ---------------------------------------------------------------------------------------------------------------- Persuader rule Recurring recurring burden hours Burden description: Form LM-10 Section of form burden (in (in minutes) minutes) revised ---------------------------------------------------------------------------------------------------------------- Maintaining and gathering records............. Recordkeeping Burden............ 25 126 Reading the instructions to determine Reporting Burden................ 25 180 applicability of the form and how to complete it. Reporting LM-10 file number................... Item 1.a........................ 0.5 0.5 Identifying if report filed under a Hardship Item 1.b........................ 0.5 0.5 Exemption. Identifying if report is amended.............. Item 1.c........................ 0.5 0.5 Fiscal Year Covered........................... Item 2.......................... 0.5 0.5 Reporting employer's contact information...... Item 3.......................... 2 2 Reporting president's contact information if Item 4.......................... 2 2 different than 3. Identifying Other Address Where Records Are Item 5.......................... 2 2 Kept. Identifying where records are kept............ Item 6.......................... 0.5 2 Type of Organization.......................... Item 7.......................... 0.5 0.5 Reporting union or union official's contact Item 8.......................... 4 4 information (Part A). Date of Part A payments....................... Item 9.a........................ 0.5 0.5 Amount of Part A payments..................... Item 9.b........................ 0.5 0.5 Kind of Part A payments....................... Item 9.c........................ 0.5 0.5 Explaining Part A payments.................... Item 9.d........................ 5 5 Identifying recipient's name and contact Item 10......................... 4 4 information. Date of Part B payments....................... Item 11.a....................... 0.5 0.5 Amount of Part B payments..................... Item 11.b....................... 0.5 0.5 Kind of Part B payments....................... 11.c............................ 0.5 0.5 Explaining Part B payments.................... 11.d............................ 5 5 Part C: Identifying object(s) of the agreement Part C.......................... 1 360 or arrangement. [[Page 33840]] Identifying name and contact information for Item 12......................... 4 4 individual with whom agreement or arrangement was made. Indicating the date of the agreement or Item 13.a....................... 0.5 0.5 arrangement. Detailing the terms and conditions of Item 13.b....................... 5 90 agreement or arrangement. Identifying specific activities to be Item 14.a....................... 5 60.5 performed. Identifying period during which performed..... Item 14.b....................... 0.5 0.5 Identifying the extent performed.............. Item 14.c....................... 1 1 Identifying name of person(s) through whom Item 14.d....................... 2 2 activities were performed. Identify the Subject Group of Employee(s)..... Item 14.e....................... 5 5 Identify the Subject Labor Organization(s).... Item 14.f....................... 1 1 Indicating the date of each payment pursuant Item 15.a....................... 0.5 0.5 to agreement or arrangement. Indicating the amount of each payment......... Item 15.b....................... 0.5 0.5 Indicating the kind of payment................ Item 15.c....................... 0.5 0.5 Explanation for the circumstances surrounding Item 15.d....................... 5 30 the payment(s). Part D: Identifying purpose of expenditure(s). Part D.......................... 1 1 Part D: Identifying recipient's name and Item 16......................... 4 4 contact information. Date of Part D payments....................... Item 17.a....................... 0.5 0.5 Amount of Part D payments..................... Item 17.b....................... 0.5 0.5 Kind of Part D payments....................... Item 17.c....................... 0.5 0.5 Explaining Part D payments.................... Item 17.d....................... 5 5 Checking Responses............................ N/A............................. 5 5 Signature and verification.................... Items 18-19..................... 20 20 Total Recordkeeping Burden Hour Estimate Per ................................ 25 126 Form LM-10 Filer. Total Reporting Burden Hour Estimate Per Form ................................ 122 804 LM-10 Filer. Total Burden Estimate Per Form LM-10 Filer.... ................................ 147 930 ---------------------------------------------------------------------------------------------------------------- Table C--Form LM-20 Recordkeeping and Reporting Burden ---------------------------------------------------------------------------------------------------------------- Persuader rule Recurring recurring burden hours Burden description: Form LM-20 Section of revised form burden (in (in minutes) minutes) revised ---------------------------------------------------------------------------------------------------------------- Maintaining and gathering records............. Recordkeeping Burden............ 15 126 Reading the instructions to determine Reporting Burden................ 20 180 applicability of the form and how to complete it. Reporting LM-20 file number................... Item 1.a........................ 0.5 0.5 Identifying if report filed under a Hardship Item 1.b........................ 0.5 0.5 Exemption. Identifying if report is amended.............. Item 1.c........................ 0.5 0.5 Reporting filer's contact information......... Item 2.......................... 2 2 Identifying Other Address Where Records Are Item 3.......................... 2 2 Kept. Date Fiscal Year Ends......................... Item 4.......................... 0.5 0.5 Type of Person................................ Item 5.......................... 0.5 0.5 Full Name and Address of Employer............. Item 6.......................... 10 10 Date of Agreement or Arrangement.............. Item 7.......................... 0.5 0.5 Person(s) Through Whom Agreement or Items 8(a) and (b).............. 2 2 Arrangement Made. Object of Activities.......................... Item 9.......................... 1 360 Terms and Conditions.......................... Item 10......................... 5 120 Nature of Activities.......................... Item 11.a....................... 5 61 Period During Which Activity Performed........ Item 11.b....................... 0.5 0.5 Extent of Performance......................... Item 11.c....................... 0.5 0.5 Name and Address of Person Through Whom Items 11.d...................... 2 2 Performed. Identify the Subject Group of Employee(s)..... Item 12.a....................... 5 5 Identify the Subject Labor Organization(s).... Item 12.b....................... 1 1 Checking Responses............................ N/A............................. 5 5 Signature and verification.................... Items 13-14..................... 20 20 Total Recordkeeping Burden Hour Estimate Per ................................ 15 126 Form LM-20 Filer. Total Reporting Burden Hour Estimate Per Form ................................ 83 774 LM-20 Filer. Total Burden Estimate Per Form LM-20 Filer.... ................................ 98 900 ---------------------------------------------------------------------------------------------------------------- [[Page 33841]] Table D--Form LM-21 Recordkeeping and Reporting Burden ---------------------------------------------------------------------------------------------------------------- Persuader rule Recurring recurring burden hours Burden Description Form LM-21 Section of form burden (in (in minutes) minutes) revised ---------------------------------------------------------------------------------------------------------------- Maintaining and gathering records............. Recordkeeping Burden............ 10 10 Reading the instructions to determine Reporting Burden................ 10 10 applicability of the form and how to complete it. Reporting LM-21 file number................... Item 1.......................... 0.5 0.5 Period covered by report...................... Item 2.......................... 0.5 0.5 Part A: Reporting filers information.......... Item 3.......................... 0.5 0.5 Identifying Other Address where Records Are Item 4.......................... 0.5 0.5 Kept. Part B: Identifying Employer Name and Address. Item 5a......................... 0.5 120 Termination Date.............................. Item 5b......................... 0.5 0.5 Amount of Receipts............................ Item 5c......................... 0.5 0.5 Total of Receipts from All Employers.......... Item 6.......................... 0.5 0.5 Part C: Disbursements to Officers and Item 7.......................... .............. .............. Employees. Name(s)....................................... Item 7a......................... 0.5 0.5 Salary........................................ Item 7b......................... 0.5 0.5 Expenses...................................... Item 7c......................... 0.5 0.5 Total for Each Officer and Employee........... Item 7d......................... 0.5 0.5 Total Disbursements to All Officers and Item 8.......................... 1 1 Employees. Office and Administrative Expense............. Item 9.......................... 0.5 0.5 Publicity..................................... Item 10......................... 0.5 0.5 Fees for Professional Services................ Item 11......................... 0.5 0.5 Loans Made.................................... Item 12......................... 0.5 0.5 Other Disbursements........................... Item 13......................... 0.5 0.5 Total Disbursements for Reporting Period...... Item 14......................... 1 1 Part D: Schedule of Disbursements for ................................ .............. .............. Reportable Activity. Name of Employer.............................. Item 15a........................ 0.5 0.5 Trade Name (if applicable).................... Item 15b........................ 0.5 0.5 Identify to whom payment was made............. Item 15c........................ 0.5 0.5 Amount of Payment............................. Item 15d........................ 0.5 0.5 Purpose of Payment............................ Item 15e........................ 0.5 0.5 Total Disbursements for Reporting Period...... Item 16......................... 1 1 President Signature and Date.................. Item 17......................... 0.5 0.5 Treasurer Signature and Date.................. Item 18......................... 0.5 0.5 Total Burden Estimate Per Form LM-21 Filer.... ................................ 35 154.5 ---------------------------------------------------------------------------------------------------------------- VI. Regulatory Flexibility Analysis (RFA) The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601 et seq., as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, Public Law 104-121 (March 29, 1996), requires federal agencies engaged in rulemaking to consider the impact of their proposals on small entities, to consider alternatives to minimize that impact, and to solicit public comment on their analyses. The RFA requires the assessment of the impact of a regulation on a wide range of small entities, including small businesses, not-for-profit organizations, and small governmental jurisdictions. Agencies must determine whether a proposed or final rule would have a significant economic impact on a substantial number of those small entities. 5 U.S.C. 603 and 604. As part of a regulatory proposal, the RFA requires a federal agency to prepare, and make available for public comment, an initial regulatory flexibility analysis that describes the impact of the proposed rule on small entities. 5 U.S.C. 603(a). The Final Rule will result in cost savings to small consultants and employers because it contains no new collection of information and relieves the additional burden that would have been imposed upon employers and labor relations consultants by the regulations published on Mar. 24, 2016. From the regulatory impact analysis above, the annualized cost savings per employer who filed Form LM-10 are estimated at $1,932.\33\ The annualized cost savings per labor relation consultant who filed Form LM-20 and Form LM-21 is $2,337.\34\ The cost savings to small entities, however, are not significant and below one percent of their annual gross revenues. The average annual gross revenue for the smallest businesses with 5 to 9 employees ranges from $389,846 for Accommodation and Food Services (NAICS code: 11) to $4.91 million for Wholesale Trade (NAICS code: 53). Therefore, the Department certifies that this rule does not have a significant economic impact on a substantial number of small entities. --------------------------------------------------------------------------- \33\ The annualized cost savings (with a 7 percent discount rate) for an employer from relieving the reporting and recordkeeping requirements for Form LM-10 is $1,932 ($60 x 2.75 hours + $114 x 15.5 hours). \34\ The annualized cost savings (with a 7 percent discount rate) for a consulting and law office from relieving the reporting and recordkeeping requirements for Form LM-20 and Form LM-21 is $2,337 ($114 x 17.75 hours + $114 x 2.747 hours). --------------------------------------------------------------------------- VII. Paperwork Reduction Act (PRA) The Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501 et seq., provides that no person is required to respond to a collection of information unless it displays a valid OMB control number. In order to obtain PRA approval, a Federal agency must engage in a number of steps, including estimating the burden the collection places on the public and seeking public input on the proposed information collection. This rule contains no new information collection requirements for purposes of the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq.). The Department notes that, consistent with the previously mentioned injunction, the agency has already amended the information collection approval for Forms LM-10 and LM-20 and their instructions to reapply the pre-2016 versions. When [[Page 33842]] issuing its approval, the OMB issued clearance terms providing the previously approved versions of these forms will remain in effect until further notice. See ICR Reference Number 201604-1245-001. As the rule still requires an information collection, the Department is submitting, contemporaneous with the publication of this document, an information collection request (ICR) to revise the PRA clearance to address the clearance term. A copy of this ICR, with applicable supporting documentation, including among other things a description of the likely respondents, proposed frequency of response, and estimated total burden may be obtained free of charge from the RegInfo.gov website at https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=201710-1245-001 (this link will only become active on the day following publication of this document) or from the Department by contacting Andrew Davis on 202-693-0123 (this is not a toll-free number) / email: OLMS-Public@dol.gov. Type of Review: Revision of a currently approved collection. Agency: Office of Labor-Management Standards. Title: Labor Organization and Auxiliary Reports. OMB Number: 1245-0003. Affected Public: Private Sector--businesses or other for-profits and not-for-profit institutions. Total Estimated Number of Respondents: 2,488,213. Number of Annual Responses: 2,488,528. Frequency of Response: Varies. Estimated Total Annual Burden Hours: 6,362,032. Estimated Total Annual Other Burden Cost: $0. VIII. Regulatory Impact A. Unfunded Mandates Reform This 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. B. Small Business Regulatory Enforcement Fairness Act of 1996 This rule is not a major rule as defined by section 804 of the Small Business Regulatory Enforcement Fairness Act of 1996. This rule will not result in an annual effect on the economy of $100,000,000 or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of the United States-based companies to compete with foreign-based companies in domestic and export markets. List of Subjects in 29 CFR Parts 405 and 406 Labor management relations, Reporting and recordkeeping requirements. Text of Rule Accordingly, for the reasons provided above, the Department amends parts 405 and 406 of title 29, chapter IV of the Code of Federal Regulations as set forth below: PART 405--EMPLOYER REPORTS 0 1. The authority citation for part 405 continues to read as follows: Authority: Secs. 203, 207, 208, 73 Stat. 526, 529 (29 U.S.C. 433, 437, 438); Secretary's Order No. 03-2012, 77 FR 69376, November 16, 2012. Sec. 405.5 [Amended] 0 2. Amend Sec. 405.5 by removing the phrase ``the instructions for Part A of the Form LM-10'' and adding in its place ``the second paragraph under the instructions for Question 8A of Form LM-10''. Sec. 405.7 [Amended] 0 3. Amend Sec. 405.7 by removing the phrase ``Part D of the Form LM- 10'' and adding in its place ``Question 8C of Form LM-10''. PART 406--REPORTING BY LABOR RELATIONS CONSULTANTS AND OTHER PERSONS, CERTAIN AGREEMENTS WITH EMPLOYERS 0 4. The authority citation for part 406 continues to read as follows: Authority: Secs. 203, 207, 208, 73 Stat. 526, 529 (29 U.S.C. 433, 437, 438); Secretary's Order No. 03-2012, 77 FR 69376, November 16, 2012. 0 5. Amend Sec. 406.2(a) by revising the last two sentences of the paragraph to read as follows: Sec. 406.2 Agreement and activities report. (a) * * * The report shall be filed within 30 days after entering into an agreement or arrangement of the type described in this section. If there is any change in the information reported (other than that required by Item C. 10, (c) of the Form), it must be filed in a report clearly marked ``Amended Report'' within 30 days of the change. * * * * * Signed in Washington, DC, this 9th day of July, 2018. Arthur F. Rosenfeld, Director, Office of Labor-Management Standards. [FR Doc. 2018-14948 Filed 7-17-18; 8:45 am] BILLING CODE P
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litigation and meets the criteria of interest. Similarly because this final rule Exemption in Section 203(c) of the
section 3(b)(2) requiring that all makes no substantive changes and Labor-Management Reporting and
regulations be written in clear language merely reflects a change of address and Disclosure Act,’’ effective April 25,
and contain clear legal standards. updates to titles in the existing 2016.
regulations, this final rule is not subject DATES: This final rule is effective on
H. Consultation With Indian Tribes
to the effective date limitation of 5 August 17, 2018.
(E.O. 13175)
U.S.C. 553(d). FOR FURTHER INFORMATION CONTACT:
The Department strives to strengthen
its government-to-government List of Subjects in 25 CFR Part 83 Andrew Davis, Chief of the Division of
Interpretations and Standards, Office of
relationship with Indian Tribes through Administrative practice and
Labor-Management Standards, U.S.
a commitment to consultation with procedures, Indians-tribal government.
Department of Labor, 200 Constitution
Indian Tribes and recognition of their For the reasons stated in the Avenue NW, Room N–5609,
right to self-governance and Tribal preamble, the Department of the Washington, DC 20210, (202) 693–0123
sovereignty. We have evaluated this rule Interior, Bureau of Indian Affairs, (this is not a toll-free number), (800)
under the Department’s consultation amends part 83 in Title 25 of the Code 877–8339 (TTY/TDD).
policy and under the criteria in of Federal Regulations as follows: SUPPLEMENTARY INFORMATION:
Executive Order 13175 and have
determined there are no potential effects PART 83—PROCEDURES FOR I. Statutory Authority
on federally recognized Indian Tribes FEDERAL ACKNOWLEDGMENT OF Sections 203 and 208 of the LMRDA,
and Indian trust assets. INDIAN TRIBES 29 U.S.C. 432, 438, set forth the
I. Paperwork Reduction Act ■ 1. The authority citation for part 83 Department’s authority. Section 208
gives the Secretary of Labor authority to
This rule does not contain any continues to read as follows:
issue, amend, and rescind rules and
information collections requiring Authority: 5 U.S.C. 301; 25 U.S.C. 2, 9, regulations prescribing the form and
approval under the Paperwork 479a–1; Pub. L. 103–454 Sec. 103 (Nov. 2, publication of reports required under
Reduction Act (PRA), 44 U.S.C. 3501 et 1994); and 43 U.S.C. 1457.
Title II of the Act and such other
seq.
■ 2. Revise § 83.20 to read as follows: reasonable rules and regulations as
J. National Environmental Policy Act necessary to prevent circumvention or
§ 83.20 How does an entity request evasion of the reporting requirements.
This rule does not constitute a major Federal acknowledgment?
Federal action significantly affecting the 29 U.S.C. 438. Section 203, discussed in
Any entity that believes it can satisfy more detail below, sets out the
quality of the human environment
the criteria in this part may submit a substantive reporting obligations.
because it is of an administrative,
documented petition under this part to: The Secretary has delegated his
technical, and procedural nature. See,
Department of the Interior, Office of the authority under the LMRDA to the
43 CFR 46.210(i). No extraordinary
Assistant Secretary—Indian Affairs, Director of the Office of Labor-
circumstances exist that would require
Attention: Office of Federal Management Standards and permitted
greater review under the National
Acknowledgment, Mail Stop 4071 MIB, redelegation of such authority. See
Environmental Policy Act.
1849 C Street NW, Washington, DC Secretary’s Order 03–2012 (Oct. 19,
K. Effects on the Energy Supply (E.O. 20240. 2012), published at 77 FR 69375 (Nov.
13211) Dated: June 14, 2018. 16, 2012).
This rule is not a significant energy John Tahsuda, II. Background
action under the definition in Executive Principal Deputy Assistant Secretary—Indian
Order 13211. A Statement of Energy A. Introduction
Affairs, Exercising the Authority of Assistant
Effects is not required. Secretary—Indian Affairs. In this final rule, the Office of Labor-
[FR Doc. 2018–15334 Filed 7–17–18; 8:45 am] Management Standards of the
L. Determination To Issue Final Rule Department of Labor revises the Form
BILLING CODE 4337–15–P
Without the Opportunity for Public LM–20 Agreement and Activities Report
Comment and With Immediate Effective and the Form LM–10 Employer Report
Date upon reviewing the comments the
DEPARTMENT OF LABOR
BIA is taking this action under its Department received in response to a
authority, at 5 U.S.C. 552, to publish Office of Labor-Management June 12, 2017 Notice of Proposed
regulations in the Federal Register. Standards Rulemaking. 82 FR 26877. The NPRM
Under the Administrative Procedure proposed to rescind the regulations
Act, statutory procedures for agency 29 CFR Parts 405 and 406 established in the final rule titled
rulemaking do not apply ‘‘when the ‘‘Interpretation of the ‘Advice’
agency for good cause finds . . . that RIN 1245–AA07
Exemption in Section 203(c) of the
notice and public procedure thereon are Labor-Management Reporting and
Rescission of Rule Interpreting
impracticable, unnecessary, or contrary Disclosure Act,’’ effective April 25,
‘‘Advice’’ Exemption in Section 203(c)
to the public interest.’’ 5 U.S.C. 2016. 81 FR 15924 (Mar. 24, 2016)
of the Labor-Management Reporting
553(b)(3)(B). BIA finds that the notice (‘‘Persuader Rule’’).
and Disclosure Act
and comment procedure are This Persuader Rule revised the
impracticable, unnecessary, or contrary AGENCY: Office of Labor-Management Department’s interpretation of the
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to the public interest, because: (1) These Standards, Department of Labor. ‘‘advice’’ exemption to the reporting
amendments are non-substantive; and ACTION: Final rule. requirements of Labor-Management
(2) the public benefits for timely Reporting and Disclosure Act Section
notification of a change in the official SUMMARY: This final rule rescinds the 203. Sections 203(a) and (b) require
agency address, and further delay is regulations established in the final rule employers and consultants to file
unnecessary and contrary to the public titled ‘‘Interpretation of the ‘Advice’ reports when they reach an agreement
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that the consultant will perform This final rule is considered an E.O. arrangement a report with the Secretary
activities to persuade employees about 13771 deregulatory action. For a . . . containing . . . a detailed
how or whether to exercise their perpetual time horizon, the annualized statement of the terms and conditions of
collective bargaining rights. But Section cost savings are the same at $92.89 such agreement or arrangement.’’ 29
203(c) excepts agreements by million with a discount rate of 7 U.S.C. 433(b). Covered individuals must
consultants who ‘‘give advice’’ to the percent. Details of the estimated cost submit this information on the
employer. The Persuader Rule sought to savings of this final rule can be found prescribed Form LM–20 (‘‘Agreement
require employers and their consultants in the Rule’s economic analysis. and Activities Report’’) within 30 days
to file a report not only when they make of entering into the reportable
B. The LMRDA’s Reporting
agreements or arrangements pursuant to agreement or arrangement. See 29 U.S.C.
Requirements
which a consultant directly contacts 433; 29 CFR part 406.
employees, but also when a consultant In enacting the LMRDA in 1959, a A third report is relevant here.
engages in activities ‘‘behind the bipartisan Congress sought to protect Section 203(b) further requires that
scenes’’ if an object of those activities is the rights and interests of employees, every labor relations consultant or other
to persuade employees concerning their labor organizations, employers, and the person who engages in reportable
rights to organize and bargain public generally as they relate to activity must file an additional report in
collectively. Id. at 15925. Such ‘‘behind collective bargaining. each fiscal year during which payments
the scenes’’ activity included, for Section 203(a) of the LMRDA, 29 were made as a result of reportable
instance, recommending drafts of or U.S.C. 433(a), requires employers to agreements or arrangements. The report
revisions to an employer’s speeches and report to the Department ‘‘any must contain a statement (A) of the
communications if those drafts or agreement or arrangement with a labor consultant’s receipts of any kind from
revisions were designed to influence relations consultant or other employers on account of labor relations
employees’ exercise of their independent contractor or organization’’ advice or services, designating the
organizational rights. under which such person ‘‘undertakes sources thereof, and (B) of the
In the NPRM, the Department activities where an object thereof, consultant’s disbursements of any kind,
proposed to rescind the Persuader Rule directly or indirectly, is to persuade in connection with such services and
to further its consideration of the legal employees to exercise or not to the purposes thereof. The consultant
and policy objections raised by the exercise,’’ or how to exercise, their must submit the information on the
federal courts that have reviewed the rights to union representation and prescribed Form LM–21 (‘‘Receipts and
Rule and by other stakeholders. A collective bargaining. 29 U.S.C. Disbursements Report’’) within 90 days
number of comments objected to 433(a)(4).1 ‘‘[A]ny payment (including of the close of the labor relations
rescinding the Persuader Rule with a reimbursed expenses)’’ pursuant to such consultant’s fiscal year. See 29 U.S.C.
view toward engaging in further an agreement or arrangement must also 433(b); 29 CFR part 406.
consideration. [LMSO–2017–0001– be reported. 29 U.S.C. 433(a)(5). The Since at least 1963, the reporting
0543, AFL–CIO pages 9–10; LMSO– report must be one ‘‘showing in detail requirements have required reporting by
2017–0001–0797, NABTU, page 4, the date and amount of each such the prescribed forms, Form LM–10,
LMSO–2017–0001–1126, UFCW, page payment, . . . agreement, or Form LM–20, and Form LM–21. 28 FR
4]. arrangement . . . and a full explanation 14384, Dec. 27, 1963; See 29 CFR part
In accordance with these comments, of the circumstances of all such 405, 406.
the Department has now conducted its payments, including the terms of any Section 203(c), referred to as the
ultimate review of the objections to the agreement or understanding pursuant to ‘‘advice’’ exemption, provides in
Persuader Rule and has concluded that which they were made.’’ An employer pertinent part that ‘‘nothing in this
the Rule must be rescinded. The Rule must submit this information on the section shall be construed to require any
relied on an inappropriate reading of prescribed Form LM–10 within 90 days employer or other person to file a report
Section 203(c) that required reporting of the close of the employer’s fiscal year. covering the services of such person by
based on recommendations that 29 U.S.C. 433(a); 29 CFR part 405.2 reason of his giving or agreeing to give
constitute ‘‘advice’’ under any LMRDA Section 203(b) imposes a advice to such employer.’’ 29 U.S.C.
reasonable understanding of the term. similar reporting requirement on labor 433(c). Finally, LMRDA Section 204
That fact alone requires rescission. Even relations consultants and other persons. exempts from reporting attorney-client
if the statute does not unambiguously It provides, in part, that every person communications, which are defined as
forbid the Persuader Rule, strong policy who enters into an agreement or ‘‘information which was lawfully
reasons—in particular, the Persuader arrangement with an employer and communicated to [an] . . . attorney by
Rule’s effect on the attorney-client undertakes activities where an object any of his clients in the course of a
relationship—militate in favor of thereof, directly or indirectly, is to legitimate attorney-client relationship.’’
rescission. persuade employees to exercise or not to 29 U.S.C. 434. Even if a report is
Pursuant to today’s final rule, the exercise, or how to exercise, their rights triggered by persuader activity, and a
reporting requirements in effect are the to union representation and collective report must therefore be filed, material
requirements as they existed before the bargaining ‘‘shall file within thirty days that is advice is not to be reported on
Persuader Rule. Due to an intervening after entering into such agreement or the form.
court order that enjoined the Persuader
Rule nationwide, National Federation of 1 The LMRDA defines a ‘‘labor relations C. Administrative and Regulatory
Independent Business v. Perez (N.D. consultant’’ as ‘‘any person who, for compensation, History
advises or represents an employer, employer
Tex. 5:16–cv–00066–c) (filed Mar. 31, In 1960, one year after the LMRDA’s
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organization, or labor organization concerning
2016), 2016 WL 3766121, 206 L.R.R.M. employee organizing, concerted activities, or passage, the Department issued its
35982016 (granting preliminary collective bargaining activities.’’ 29 U.S.C. 402(m). initial interpretation of Section 203(c)’s
2 The statute and the Form LM–10 also require
injunction); 2016 WL 8193279 (filed advice exemption. This interpretation
disclosure of financial activities that do not
Nov. 16, 2016) (granting permanent constitute persuader activities, such as payments or
appeared in a technical assistance
injunction) (NFIB), no reports were ever loans from an employer to a labor union or a labor publication for employers. U.S. Dep’t of
filed or due under the Persuader Rule. union’s official. Id. Labor, Bureau of Labor-Management
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![33828 Federal Register / Vol. 83, No. 138 / Wednesday, July 18, 2018 / Rules and Regulations
Reports,3 Technical Assistance Aid No. On June 21, 2011, the Department to ‘‘more closely reflect the employer
4: Guide for Employer Reporting (1960). issued a notice of proposed rulemaking and consultant reporting intended by
Under this original interpretation, the to revise its interpretation of Section Congress in enacting the LMRDA.’’ 81
Department required employers to 203(c). 76 FR 36178. The Department FR at 16001. The Persuader Rule cited
report any ‘‘[a]rrangement with a ‘labor received approximately 9,000 evidence that the use of outside
relations consultant’ or other third party comments. 81 FR at 15945. On March consultants to contest union organizing
to draft speeches or written material to 24, 2016, the Department issued its final efforts had proliferated, while the
be delivered or disseminated to Rule, addressing the comments it number of reports filed remained
employees for the purpose of received. See 81 FR at 15945–16,000 consistently small. 81 FR at 16001. The
persuading such employees as to their (Mar. 24, 2016). Department concluded that its previous
right to organize and bargain The Persuader Rule—the subject of
‘‘broad interpretation of the advice
collectively.’’ Id. at 18. By contrast, this final rule—altered the prior,
exemption ha[d] contributed to this
employers were not required to report decades-long interpretation. The
preamble to the Persuader Rule and the underreporting.’’ Id.
‘‘[a]rrangements with a ‘labor relations
consultant,’ or other third parties related instructions on the relevant forms D. Litigation Surrounding the Rule
exclusively to advice, representation defined ‘‘advice,’’ which does not give
before a court, administrative agency, or rise to a reporting obligation, as ‘‘an oral Shortly after it was issued, the
arbitration tribunal, or engaging in or written recommendation regarding a Persuader Rule was challenged in three
collective bargaining on [the decision or a course of conduct.’’ Id. at district courts and eventually enjoined
employer’s] behalf.’’ Id. Additionally, in 15,939, 16,028 (LM–10 instructions), on a nationwide basis. Plaintiffs in those
opinion letters to members of the 16,044 (LM–20 instructions). The suits contended that the Rule conflicts
public, the Department stated that a Persuader Rule then defined four new with the LMRDA, is arbitrary and
lawyer’s or consultant’s revision of a categories of non-contact conduct that capricious, violates the First
document prepared by an employer triggered reporting obligations when Amendment, and is void for vagueness.
constituted reportable activity. See 76 done with an object to persuade: Associated Builders & Contractors of
FR 36178, 36180 (June 21, 2011) Directing supervisor activity, providing Arkansas v. Perez (E.D. Ark. 4:16-cv-
(NPRM) (citing Benjamin Naumoff, material for employers to disseminate to 169); Labnet, Inc. v. U.S. Dep’t of Labor,
Reporting Requirements under the employees, conducting tailored 197 F. Supp. 3d 1159 (D. Minn. 2016);
Labor-Management Reporting and seminars on the issue of unionization, Nat’l Fed’n of Indep. Bus. v. Perez, 2016
Disclosure Act, in Fourteenth Annual and developing or implementing WL 3766121 (N.D. Tex.). On June 22,
Proceedings of the New York University personnel policies designed to influence 2016, the federal district court in
Conference on Labor 129, 140–141 unionization. 81 FR at 15938. (These
Minnesota found that the plaintiffs were
(1961)). categories were in addition to contact of
likely to establish that the Persuader
employees by a consultant or a
Just two years later, the Department Rule violated the LMRDA, in at least
consultant’s agent, which the Rule
revisited its interpretation, adopting the some of its applications, but denied
continued to cover.) Among the
view that it was to hold for the next their request for preliminary relief on
activities covered by the Persuader
several decades. The Department’s the ground that plaintiffs had not shown
Rule’s four new categories were
revised interpretation construed the the threat of irreparable harm. Labnet,
providing messaging on unionization to
advice exemption of Section 203(c) so as employers, 81 FR at 15970; developing 197 F. Supp. 3d at 1175–76. On June 27,
to no longer trigger reporting upon the policies for employers to dissuade 2016, a federal district court in Texas
provision of materials by a third party employees as to the need for a union granted the challengers’ motion for
to an employer that the employer could (such as a longer lunch break or a more injunctive relief—finding that the
‘‘accept or reject.’’ 4 But a consultant generous leave policy), 81 FR at 15973; plaintiffs were likely to prevail on the
who did present materials for the drafting or revising written materials merits of both their statutory and
employer to accept or reject could regarding unionization for employers to constitutional claims—and issued a
trigger disclosure obligations by disseminate to employees, 81 FR at nationwide preliminary injunction,
interacting with employees, either 15971; or planning ‘‘captive audience’’ which was later converted to a
directly or through an agent. See meetings or scripting interactions permanent injunction. NFIB, 2016 WL
Interpretative Manual section 265.005 between supervisors and employees, 81 3766121, at *46; see also NFIB, 2016 WL
(Scope of the Advice Exemption).5 FR at 15970. 8193279 (granting permanent
3 The Bureau of Labor-Management Reports was
The Department thus construed the injunction). The Department appealed
the predecessor agency to the Office of Labor- ‘‘advice’’ exemption more narrowly than to the Fifth Circuit, which has held the
Management Standards. it had done previously. In particular, it matter in abeyance pending this
4 See 81 FR at 15936 (quoting the agency’s 1962 abandoned the position that developing rulemaking. See NFIB, Dkt. No.
LMRDA Interpretive Manual as stating: ‘‘In a speeches, communications, policies,
situation where the employer is free to accept or
00514035358 (Dec. 27, 2017). The other
reject the written material prepared for him and
and other proposals that an employer two court cases have also been stayed.
there is no indication that the middleman is may decide to accept or reject
operating under a deceptive arrangement with the constituted ‘‘advice’’ that did not trigger III. Determination To Rescind
employer, the fact that the middleman drafts the the reporting requirement. Under the
material in its entirety will not in itself generally
new rule, the fact that the employer While the NPRM proposed rescission
be sufficient to require a report.’’) (emphasis
itself delivered the message or carried of the Persuader Rule to enable the
omitted).
Department to engage in further
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5 In 2001, the Department temporarily altered its out the policy developed by a
interpretation of Section 203(c), expanding the consultant would no longer exempt a analysis, a further review of the record,
scope of reportable activities by focusing on consulting arrangement from reporting. including several comments urging that
whether an activity has persuasion of employees as
The stated purpose of this change was the Department complete its final
an object, rather than categorically exempting analysis of the Persuader Rule now,
activities in which a consultant has no direct
contact with employees. See 66 FR 2782 (Jan. 11, was rescinded, and the Department returned to its have convinced the Department that the
2001). However, later that year, that interpretation prior view. See 66 FR 18864 (Apr. 11, 2001). best course of action is to achieve
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finality at this time.6 The Department’s Four primary reasons lead the dissemination, or distribution to
NPRM notified the public of the Department to its rescission decision. employees.’’ Id.
possible rescission of the Persuader First, the Department has determined The Persuader Rule maintained that
Rule, and the concerns animating that that Section 203(c)’s plain text clearly the ‘‘preparation of persuader materials
proposed rescission, including the forbids the interpretation on which the [such as speeches and written
Department’s concerns about Persuader Rule in part rested. Second, communications] is more than a
‘‘alternative interpretations of the the Department has determined that the recommendation to the employer that it
statute,’’ ‘‘the potential effects of the Persuader Rule unduly causes should communicate its views to
Rule on attorneys and employers disclosure of client confidences that are employees on matters affecting
seeking legal assistance,’’ the potential at the heart of the attorney-client representation and their collective
increased ‘‘burden of the Form LM–20,’’ relationship. Third, the Department has bargaining rights,’’ 81 FR at 15951 (Mar.
and ‘‘the impact of shifting priorities concluded that the Form LM–21’s 24, 2016), but that analysis was
and resource constraints.’’ 82 FR 26879. requirements substantially increased the mistaken. If the employer retains the
The Department received 1,160 burden on filers of the Form LM–20— ability to accept or reject the proffered
comments submitted via the a cost that the Persuader Rule declined communication, the consultant has not
www.regulations.gov website in to factor into its analysis. Fourth, the tendered ‘‘more than a
response to its NPRM. Of this total, Department has determined to allocate recommendation,’’ even if his
1,111 constituted non-substantive its scarce resources to other priorities recommendation is made with the
comments, including seven form rather than to addressing the substantial purpose to persuade employees. Id. That
letters.7 The remaining 49 comments fiscal burdens that the Persuader Rule is because ‘‘the maker of a statement is
imposed on the Department. the person or entity with ultimate
were substantive in nature, submitted
authority over the statement, including
by labor organizations, trade A. The Persuader Rule Rested on a its content and whether and how to
associations, business and professional Misinterpretation of Section 203(c) communicate it.’’ Janus Capital Grp. v.
federations, law firms, public policy
Section 203(c) provides that the First Derivative Traders 564 U.S. 135,
groups, and four Members of Congress.
LMRDA’s reporting obligation is not 142 (2011).
Many of the substantive comments, both Janus is instructive. There, plaintiffs
supporting and opposing rescission, triggered by a consultant’s ‘‘giving or
claimed that a mutual fund’s allegedly
discussed the merits of the Persuader agreeing to give advice’’ to an employer.
misleading prospectuses were prepared
Rule’s consistency with Section 203(c) The plain meaning of the term ‘‘advice,’’
by the fund’s investment advisor, and
and provided the commenters’ views on as the Persuader Rule found, is ‘‘an oral
sought to hold the investment advisor
the Department’s prior interpretation of or written recommendation regarding a
liable under SEC Rule 10b–5 for
the advice exemption. A number of decision or course of conduct.’’ 81 FR at
‘‘mak[ing] an[] untrue statement of a
comments objected to the Department’s 15926. Decisions about speech and
material fact in connection with the
proposal to rescind with a view to written communications are among the
purchase or sale of securities.’’ Id. at 137
further consideration rather than subjects on which such
(first alteration in original; internal
making a final substantive ‘‘recommendations’’ are frequently quotation marks omitted). The Supreme
determination at this time.8 Also, this made. Sometimes such advice may take Court rejected plaintiffs’ claims, holding
same issue was evaluated at length in the form of a general discussion about that, as the alleged misstatements had
the Persuader Rule NPRM and final what the employer should or should not been issued solely on the authority and
rule. The Department thus believes that say to its employees. But it may also under the name of the mutual fund, the
it has received comments fully airing consist of drafts of speeches or written advisor could not be held liable even if
the substantive issues raised by the communications. Such drafts, if given to it had prepared the prospectuses that
Persuader Rule, has completed its an employer to accept or reject, are the mutual fund ultimately adopted. Id.
analysis of those issues, and will not simply recommendations to the at 142–47. The Court explained that the
engage in further analysis regarding its employer to communicate as laid out in mutual fund, rather than the investment
interpretation of Section 203(c) at this the draft. The employer remains free to advisor, exercised ‘‘ultimate authority’’
time. disregard these recommendations and over whether to adopt any
communicate in any manner it sees fit. communication prepared by the advisor;
Based on the comments received, and
Because the employer in such a scenario the advisor, ‘‘[w]ithout control, . . . can
in light of the Department’s legal and
is the one communicating with merely suggest what to say, not ‘make’
policy analysis, the Department has
employees, and the consultant simply a statement in its own right.’’ Id. at 142.
decided to rescind the Persuader Rule.
proffers recommendations about those The same rationale applies here: A
The Department will continue to apply
communications, the consultant renders consultant’s draft of, or revisions to,
the longstanding interpretation of the
only ‘‘advice’’ as that term is used in speeches or other communications,
advice exemption that predated the
Section 203(c). constitute recommendations about how
Persuader Rule.
The Persuader Rule required reporting the employer should communicate with
6 Several commenters noted that no further based on such advice. For instance, the its employees. As long as the ‘‘ultimate
statutory analysis is needed given the Department’s Persuader Rule explained that reporting authority’’ to decide whether to make
years of extensive analysis and study that initially is required when a consultant, who has such communications rests with the
led to the promulgation of the Persuader Rule. See no direct contact with employees, employer, such recommendations by a
Communication Workers of America [pp. 1–2];
Economic Policy Institute [pp. 4–5]; Ranking
‘‘provides material or communications consultant are merely ‘‘advice’’ within
to the employer, in oral, written, or the meaning of Section 203(c).
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Members Scott and Sablan [p. 3].
7 Additionally, the Department received 1,433 electronic form, for dissemination or The Persuader Rule rejected this
comments submitted via mail or email, all of which distribution to employees.’’ 81 FR at interpretation based in significant part
were duplicative of form letters that the Department 16027 (Mar. 24, 2016). Likewise, the on the desire to give more effect to
also received properly via www.regulations.gov.
8 LMSO–2017–0001–0543, AFL–CIO pages 9–10; Rule required reporting for ‘‘drafting, Section 203(c)’s reporting requirement
LMSO–2017–0001–0797, NABTU, page 4, LMSO– revising, or providing speeches’’ and for agreements to undertake activities
2017–0001–1126, UFCW, page 4. ‘‘written material . . . for presentation, ‘‘where an object thereof, directly or
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![33830 Federal Register / Vol. 83, No. 138 / Wednesday, July 18, 2018 / Rules and Regulations
indirectly, is to persuade employees’’ Second, the Persuader Rule is not longstanding interpretation rendered the
with respect to their collective needed to save the words ‘‘or words ‘‘or indirectly’’ redundant, the
bargaining rights. 29 U.S.C. 433(a)(4) indirectly’’ from redundancy, and the redundancy to which the Persuader
(emphasis added); see also id. § 433(b) Department’s longstanding Rule reduced Section 203(c) means that
(likewise covering ‘‘indirect’’ interpretation did not render the words one of the Persuader Rule’s principal
persuasion). The Persuader Rule ‘‘or indirectly’’ redundant. These words rationales—the asserted need to avoid
reasoned that, unless the drafting of bear independent meaning, under the rendering the words ‘‘or indirectly’’
speeches and communications were Department’s previous interpretation, if redundant—cannot stand. When either
deemed ‘‘indirect’’ persuasion (in construed to cover cases in which a of two interpretations would create
assistance of the employer’s ‘‘direct’’ consultant communicates with redundancy, the canon against
dissemination of the statements to its employees through a third party, such redundancy cannot constitute a basis for
employees), the term ‘‘indirect’’ would as an agent or independent contractor. choosing between the interpretations,
have little independent meaning. See 57 Thus, for instance, reporting because neither interpretation avoids
FR at 15926, 15933, 15936–37, 15949 fn requirements would attach when a redundancy. If anything, rendering the
39. The Department is now convinced, consultant hires a spokesman to spread words ‘‘or indirectly’’ redundant is
after a review of the statute’s text, the its message to employees or to pass out preferable to rendering the entirety of
intervening court decisions, and the to employees advocacy materials the Section 203(c) redundant, as the
submitted comments, that this reading consultant had prepared. In such cases, Persuader Rule did.
of Section 203(c) is improper. the consultant—rather than the All that has been said above with
First, the Department’s prior employer—retains final authority over respect to communications prepared by
longstanding interpretation comports the message to be delivered to a consultant for final acceptance or
with the general principle ‘‘that employees, thus depriving the rejection by the employer also applies to
Congress, when drafting a statute, gives consultant of the advice exemption. The conduct and policies that a consultant
each provision independent meaning,’’ words ‘‘or indirectly’’ ensure that advises an employer to implement, an
Torres v. Lynch, 136 S. Ct. 1619, 1628 reporting requirements attach to such activity that triggered reporting
(2016) That presumption tells against conduct, which has long been the requirements under the Persuader Rule.
the Persuader Rule. The Persuader Rule Department’s position. At least as far Planning meetings with employees and
interpreted section 203(c) as having no back as 1989, the Department’s developing personnel policies, like
independent meaning, merely ‘‘making Interpretative Manual asserted that a drafting a speech, consist of making
explicit what sections 203(a) and (b) consultant who employs an agent to recommendations that the employer is
make implicit: That consultant activity contact employees falls within Section free to accept or reject. Planning such
undertaken without an object to 203’s reporting requirement. conduct or policies fits within the
persuade employees, such as advisory Interpretative Manual section 265.005 traditional meaning of ‘‘advice.’’ See
and representative services for the (Scope of the Advice Exemption) Labnet, 197 F. Supp. 3d at 1169.
employer, do not trigger reporting.’’ 81 (‘‘Moreover, the fact that such material While the Department’s own reading
FR at 15951; see also id. at 15952 may be delivered or disseminated of the plain statutory text plays the
(advice exemption is simply a ‘‘rule of through an agent would not alter the principal role in supporting the
construction’’ that ‘‘underscore[s] that result.’’).10 Even if the Department’s interpretation of Section 203(c) taken
advice qua advice . . . does not trigger here, the Department also notes that the
a reporting obligation simply because it other clients for whom it performed no persuader only federal courts to have pronounced
arguably concerns a potential employer activity. Although the Department does not here on the Persuader Rule found that it
opine on this issue, the Department notes that the violates the text of the LMRDA or likely
action that has an object to persuade’’). Eighth Circuit exhaustively examined Section 203’s
In other words, the Persuader Rule read legislative history and rejected the view that does so. One federal district court
Section 203(c) merely to clarify what Section 203(c) merely clarifies the meaning of permanently enjoined the Persuader
already lies outside the scope of Sections 203(a) and (b), concluding that the view Rule after finding that it impermissibly
of the advice exception as ‘‘broader than a mere required reporting based on advice
Sections 203(a) and (b)—depriving proviso’’ more closely reflects congressional intent.
Section 203(c) of independent meaning. Donovan v. Rose Law Firm, 768 F.2d 964, 974 (8th within the meaning of Section 203(c)
Both federal courts to have reviewed the Cir. 1985). The Eighth Circuit also persuasively and indeed read Section 203(c) out of
Persuader Rule rejected this explained how previous courts of appeals that the statute. NFIB, 2016 WL 3766121, at
reached the opposite conclusion on this question *28; see also NFIB, 2016 WL 8193279
interpretation, and the D.C. Circuit long misread the intent of Section 203(c). See, e.g.,
ago accepted the Department’s view that Humphreys, Hutcheson and Mosely v. Donovan, (converting preliminary injunction to
‘‘[t]he very purpose of section 203’s 755 F.2d 1211 (6th Cir. 1985); Price v. Wirtz, 412 permanent injunction). The other
exemption prescription . . . is to remove
F.2d 647 (5th Cir. 1969) (en banc). These cases have district court to consider the Persuader
limited relevance with regard to the question Rule similarly held that it ‘‘categorizes
from the section’s coverage certain presented by the Persuader Rule and this
activity that otherwise would have been proceeding. As the D.C. Circuit explained in UAW, conduct that clearly constitutes advice
reportable.’’ UAW v. Dole, 869 F.2d 616, the question considered in these cases differed from as reportable persuader activity’’ and
618 (DC Cir. 1989) (R. Ginsburg, J.). The
‘‘the threshold question presented by this concluded that the plaintiffs in that case
[rulemaking]: what is the appropriate ‘‘have a strong likelihood of success on
reading that the Department reinstates characterization of activity that can be viewed as
today, by contrast, gives robust and both advice and persuasion?’’ UAW, 869 F.2d at 618 their claim that the [Persuader Rule]
independent meaning to Section n.3. Nevertheless, the Eighth Circuit’s well- conflicts with the plain language of the
reasoned conclusion that Section 203(c) does not
203(c).9 serve merely to make explicit the implicit contours persuasion by a consultant would be covered even
of Sections 203(a) and (b) is consistent with the absent the words ‘‘or indirectly.’’ 57 FR at 15949,
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9 The Eighth Circuit, which canvassed the Department’s longstanding interpretation that it fn. 39. Absent any definitive authority on how the
legislative history of section 203 in a case involving reinstates today and is at least somewhat statute would be interpreted in the absence of those
a different question, reached a conclusion that inconsistent with the Persuader Rule. words, the Department finds persuasive the
supports the Department’s longstanding reading of 10 The Persuader Rule rejected the view that the
suggestion that Congress included the words ‘or
section 203(c). That case involved the question term ‘‘indirectly’’ could be given meaning by indirectly’ to make clear something that might well
whether a consultant who engages in reportable attributing to it coverage of a consultant’s retention not be implicit in the statute otherwise: That a
persuasion on behalf of one client must include in of a third party to interact with employees, because, consultant’s use of a third party to contact
its LM–21 report information about advice given to according to the Persuader Rule, such indirect employees triggers reporting requirements.
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![Federal Register / Vol. 83, No. 138 / Wednesday, July 18, 2018 / Rules and Regulations 33831
statute.’’ Labnet, 197 F. Supp. 3d at Several commenters opposed The duty to safeguard client
1170. rescission on the ground that the confidences has long formed the
A number of commenters agreed that Persuader Rule is needed to address bedrock of the attorney-client
the Persuader Rule incorrectly read underreporting. [AFL–CIO, page 10; relationship. One hundred years ago,
Section 203(c). For instance, the Retail Economic Policy Institute, page 4; the American Bar Association’s first set
Industry Leaders Association [p. 5], Communications Workers of America, of model ethics rules accepted as
Council on Labor Law Equality [pp. 20– page 2; North America’s Building already established ‘‘[t]he obligation
21], and Coalition for a Democratic Trades Union, page 5; National Nurses . . . not to divulge [a client’s] secrets or
Workforce [pp. 7–8], as well as several United, page 2; Screen Actors Guild, confidences.’’ Code of Professional
others, contended that Congress page 2; and United Food and Ethics No. 6 (1908). Today, the ABA’s
intended to give the term ‘‘advice’’ Commercial Workers, page 2] They Model Rules instruct that, absent
broad scope and the Persuader Rule’s noted that the Department cited specific exceptions, a ‘‘lawyer shall not
interpretation of Section 203(c) underreporting under its prior reveal information relating to the
effectively eviscerated that advice interpretation—that a consultant incurs representation of a client unless the
exemption. The American Bar a reporting obligation only when it client gives informed consent . . . .’’
Association [p. 4] stated that the directly communicates with employees Model Rule 1.6.
with an object to persuade them—as The duty not to disclose confidences
proposed interpretation of ‘‘advice’’ in
part of the rationale for promulgating plays a vital role in encouraging
the Persuader Rule would thwart the
the Persuader Rule. 81 FR 15933 (Mar. businesses and individuals alike to seek
will of Congress.
24, 2016) (‘‘Indeed, the prior counsel. Potential clients who fear their
Other commenters opposed decision to retain counsel, or facts about
interpretation did not properly take into
rescission, but failed to grapple with the the representation, will become public
account the widespread use of indirect
fundamental statutory problem with the may hesitate before consulting a lawyer.
tactics . . . and thus did not result in
Persuader Rule. For example, one Such hesitation would run counter to
the reporting of most persuader
commenter [LMSO–2017–0001–0543; society’s interest in fostering legal
agreements.’’). But activities such as
AFL–CIO page 9–10] urged the compliance, as more citizens and
drafting speeches, proposing policies,
Department to retain the Persuader Rule businesses would be forced to act based
and other recommendations that a
because it ‘‘has multiple valid on an uninformed interpretation of the
business can accept or reject fall within
applications,’’ citing Labnet, Inc., 197 F. law. Perhaps even more importantly, the
the plain meaning of the ‘‘advice’’ that
Supp. 3d at 1168. But rejection of the disincentive built into the Persuader
Congress exempted from its reporting
Department’s longstanding accept-or- Rule in consulting an attorney is
requirements. Failure to report these
reject test stands at the heart of the particularly troubling given that the
activities accordingly is not ‘‘evasion’’
Persuader Rule’s legal analysis, see 81 Rule is vague regarding the activities
of the LMRDA; rather, such activities
FR at 15941, and that rejection is based that would be newly reportable.
fall within the unambiguous scope of
on a fundamentally flawed Pressuring Americans to act in
the term ‘‘advice’’ that Congress
interpretation of section 203. The ignorance of the law imperils a
expressly excepted from triggering
Department accordingly is not ‘‘fundamental principle in our legal
Section 203’s reporting requirements,
rescinding the Persuader Rule because it system[, which] is that laws . . . must
and thus declining to report based on
has some invalid applications. The give fair notice of conduct that is
such activities constitutes compliance
Department is rescinding the Persuader forbidden or required.’’ FCC v. Fox
with the LMRDA.
Rule because the Rule as a whole rested Television Stations, Inc., 567 U.S. 239
on an improper reading of Section Even if a court were to disagree with (2012). For better or worse, such fair
203(c). the Department’s view that its notice as a practical matter often
interpretation of the statute, as laid out requires consulting legal counsel.
Two Members of Congress serving on in this rulemaking, is mandated by the
the House of Representatives’ The Department finds generally
statute, the Department’s reasonable persuasive the American Bar
Committee on Education and the reading of the statute should still be
Workforce opined that ‘‘a single district Association’s comments submitted in
given deference under Chevron. response to this rulemaking. One of
court decision should not be enough to Chevron, USA, Inc. v. Nat. Res. Def.
justify rescinding a rule. [LMSO–2017– these comments, on which the court in
Council, Inc., 467 U.S. 837, 844 (1984). Texas relied, states that the Persuader
0001–1097; Ranking Members Scott and And, as discussed in more detail in the
Sablan Comment Letter page 3.] 11 But Rule called for disclosure of important
next sections, several policy client confidences and would
the Department is not rescinding the considerations support rescission of the
Persuader Rule simply because a district undermine the attorney-client
Persuader Rule and the Department’s relationship:
court enjoined it. It is rescinding the prior longstanding interpretation of the
Persuader Rule because the Department [The Persuader Rule] . . . would
statute. Even if the interpretation require lawyers (and their employer
has concluded, after considering the adopted herein were only one
arguments made by those challenging clients) to disclose a substantial amount
permissible interpretation of Section of confidential client information,
the Rule in litigation, the opinions of 203(c), the Department would
the two district courts to have including the existence of the client-
nevertheless adopt it based on these lawyer relationship and the identity of
pronounced on the Persuader Rule’s compelling policy considerations.
merits, the comments that have been the client, the general nature of the legal
submitted, and the plain meaning of the B. The Persuader Rule Impinged on the representation, and a description of the
legal tasks performed.
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statutory text, that the Persuader Rule Attorney-Client Relationship
By requiring lawyers to file [such
read Section 203(c) improperly.
A second, independent, reason reports], the Proposed Rule could chill
11 A think tank [LMSO–2017–0001–0800;
supports rescission: The Persuader Rule and seriously undermine the
Economic Policy Institute p.5) raised a similar
would have interfered with confidential client-lawyer relationship.
issue, asserting that the related litigation does not longstanding protections of the attorney- In addition, by imposing these unfair
compel rescission. client relationship. reporting burdens on both the lawyers
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![33832 Federal Register / Vol. 83, No. 138 / Wednesday, July 18, 2018 / Rules and Regulations
and the employer clients they represent, witness to the importance of, certain Commenters offered conflicting policy
the Proposed Rule could very well principles of confidentiality—principles and fact-based arguments about the
discourage many employers from that the Persuader Rule, by requiring effects of the Persuader Rule on
seeking the expert legal representation disclosure of client confidences, reporting under the LMRDA. One think
that they need, thereby effectively endangers irrespective of whether tank [Economic Policy Institute, pages
denying them their fundamental right to attorneys could be administratively 7–8], for example, asserted that the
counsel. disciplined for making such proposed rescission would ‘‘let[]
NFIB, 2016 WL 3766121, at *7–9. disclosures.12 America’s working people down’’
LMSO–2017–0001–0111, American Bar This is not the first time the because, in its view, the Persuader Rule
Assn., page 7.] Even a comment from Department has recognized the need for constituted merely a ‘‘modest step
several law professors in support of confidentiality to protect the attorney- toward leveling the playing field for
retaining the Persuader Rule did not client relationship in the organizing workers by making sure they receive the
dispute that the Rule required context. The largest labor unions (those information they deserve before making
disclosure of information that would, with annual receipts of $250,000 or a decision on forming a union.’’ Id.
absent the Rule, be shielded by rules of more) must under certain circumstances Multiple labor unions made similar
confidentiality. [LMSO–2017–0001– disclose and itemize disbursements to comments. A representative of the
088127; 27 Law Professors page 5–7]. lawyers, but that rule does not apply building trades characterized the accept-
These concerns are not hypothetical; when disclosure would expose the or-reject rule as a ‘‘loophole’’ that
as the court in Texas found based on union’s prospective organizing strategy ‘‘resulted in vast underreporting of
witness testimony, ‘‘law firms around or provide a tactical advantage to a party persuader activities.’’ [See LMSO–2017–
the country have already started in contract negotiations. See the 0001–0797 North America’s Building
announcing their decisions to cease Instructions for the Form LM–2, p22. Trades Unions, p3]; [LMSO–2017–
providing advice and representations The Persuader Rule included no similar 0001–0543 AFL–CIO, p. 3–4.] An
that would trigger reporting under exemption for employers’ consultation international union stated, ‘While the
DOL’s New Rule,’’ which ‘‘decrease[s] with attorneys. Rescinding the Department will undoubtedly be
employers’ access to advice from an Persuader Rule continues to recognize inundated with comments from those
attorney of one’s choice.’’ Id. at *10. The the importance of confidentiality in the who assert that the 2016 Rule was a sop
court further noted the Persuader Rule’s attorney-client relationship, consistent to organized labor, the real beneficiaries
likely negative effect on organizations’ with the Instructions for the Form LM– of this proposal are the employees—the
ability to offer unionization-related 2. class of individuals for which the
training and seminars to employers One comment [LMSO–2017–0001– protections in Section 203 were
(including small businesses) because 088127; 27 Law Professors page 2] intended.’’ LMSO–2017–0001–1104
would-be trainers and attendees ‘‘will advocated against rescission and noted International Brotherhood of Teamsters,
not want their attendance reported and the difficulty in obtaining evidence on p3.] [SAG–AFTRA, pg. 2; UFCW, pg. 2]
made publicly available.’’ Id. at *11. how particular activities would affect The Department is not persuaded.
After analyzing these and other the behavior of lawyers. The comment First, some Form LM–20 information
considerations, the court ultimately asserted that rescinding the Persuader would have been stale. As the
held that the Persuader Rule was likely Rule would preclude obtaining data on commenters noted, the 30 day filing
‘‘arbitrary, capricious, and an abuse of its effects and that input from lawyers deadline for a Form LM–20 is not much
discretion’’ in part because ‘‘the rule on how they would change their shorter than the 38-day median
unreasonably conflicts with state rules practices could be ‘‘nothing more than timeframe between the filing of an
governing the practice of law.’’ Id. at speculative and self-serving.’’ 13 Because NLRB petition and the ensuing election,
*29. Several commenters shared similar the Department rescinds the Persuader and 90% of the elections are held
concerns that the Texas court noted. Rule on the merits rather than with a within 56 days. See 79 FR 74307.
[Chairwoman Foxx and Walberg, p. 8; view to further consideration, this Although the Persuader Rule estimated
Associated General Contractors of comment’s concerns about whether that employers engage consultants at the
America, p. 8; Retail Industry Leaders rescission would facilitate a future first signs of union organizing,
Association, p. 3; Independent Electrical merits consideration is no longer indicating the persuader agreement
Contractors, p. 6; Seyfarth Shaw, p. 4; apropos.14
National Association of Homebuilders, attorneys from serving their clients. The
p. 5; Coalition for a Democratic 12 Forthese reasons, the Department was not Department is not persuaded by these arguments.
Workforce, p. 13; Employment Law persuaded by a comment that advocated retaining First, it is notable that the comment does not
Alliance, p. 7]. the Persuader Rule on the grounds that the Rule’s dispute that the Persuader Rule did require
disclosure requirements by their own force disclosure of information that, absent the Persuader
The Persuader Rule acknowledged the exempted lawyers from confidentiality obligations Rule, would be entitled to the protections of
potential impact on attorney-client that would otherwise apply. [LMSO–2017–0001– confidentiality. The portions of the Persuader Rule
confidences, but simply concluded that 088127; 27 Law Professors page 5–6]. that did not infringe on confidential
the interpretation of the LMRDA 14 This comment also contended that the communications, such as the exemption for
advanced in the Rule, ‘‘as federal law, Persuader Rule did not compel disclosure of client communications from a client to an attorney under
confidences. [LMSO–2017–0001–088127; 27 Law 29 U.S.C. 434, do not negate those that do, such as
must prevail over any conflicting . . . Professors page 4]. The comment asserts that there the requirement that guidance provided from an
rules governing legal ethics’’ and that is ‘‘no conflict between the regulatory regime attorney to an employer with an intent to persuade
Model Rule 1.6 and state laws modeled administered by the DOL and the ethical employees triggers reporting. The assertion of ‘‘little
on it permit disclosure when required responsibilities of lawyers.’’ The comment notes evidence’’ of chilling in other statutory contexts is
that section 204 of the LMRDA expressly exempts bare and unquantified and therefore not persuasive
by law. 81 FR at 15998 (Mar. 24, 2016).
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‘‘information that was lawfully communicated to and, here, not only did several commenters raise
Those arguments are beside the point. such attorney by any of his clients,’’ citing 29 U.S.C. this concern, but a U.S. Distric Court found
The Department agrees that federal law 434. Reporting is required only when the lawyer evidence of actual chilling. NFIB, 2016 WL
preempts state law and does not dispute provides services other than legal services, the 3766121, at *10; [Chairwoman Foxx and Walberg,
comment continues. The comment identifies p. 8; Associated General Contractors of America, p.
that many state ethics laws permit several other reporting and disclosure requirements 8; Retail Industry Leaders Association, p.3;
disclosures required by law. But the imposed on lawyers and concludes that there is Independent Electrical Contractors, p. 6; Seyfarth
state laws at issue enshrine, and bear ‘‘little evidence’’ that these regimes have chilled Shaw, p. 4].
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![Federal Register / Vol. 83, No. 138 / Wednesday, July 18, 2018 / Rules and Regulations 33833
would precede the petition, such C. The Costs of Additional Use of Form recipient of the disbursements, and the
promptness is very unlikely to be LM–21 Further Support Rescission purpose of the disbursements.15
present in all cases; in cases where it is The Department recognized in the
not, the Form LM–20 may not be filed A third reason for rescission involves final rule that the Persuader Rule would
early enough to be useful. the additional regulatory burdens make some labor relations consultants
Second, it is vital to distinguish involving Forms LM–20 and LM–21 and employers who had previously not
between information that helps imposed by the Rule. The obligation to been required to file at all under the
employees make an informed decision file the Form LM–20 and the Form LM– LMRDA responsible for filing both
about their right to form a union, on the 21 result from the same event: Persuader forms LM–20 and LM–21, but did not
one hand, and information that is activity. Under section 203(b), every fully consider that burden. Instead, it
significantly less useful, on the other. person who enters into an agreement or considered only the burden arising from
Information as to whether a person with arrangement to undertake persuader the Form LM–20 and deferred
whom an employee comes into contact activities must file a report with the consideration of the burden arising from
is actually working for the employee’s Secretary that includes a detailed Form LM–21 to a separate rulemaking.
employer can help an employee statement of the terms and conditions of It did so, in part, because it intended to
evaluate whether to trust the arguments such arrangement within 30 days of engage in parallel rulemaking for reform
that that person may advance on the entering into the agreement, currently of the scope and detail of the Form LM–
question of unionization. The additional accomplished by filing a Form LM–20. 21. 57 FR 15992, fn 88. In the meantime,
disclosures that the Persuader Rule The person must then also file annually the Department issued a separate special
would have required, by contrast, are a report containing a statement of the enforcement policy that addressed the
likely to be much less helpful. That is person’s ‘‘receipts of any kind from potential that new filers might have
because, for any message or conduct employers on account of labor relations unique difficulties in filing the Form
that the Persuader Rule newly deemed advice or services, designating the LM–21. Under that special enforcement
to be indirect persuasion, employees sources thereof,’’ and a statement of its policy, the filers of Form LM–20 who
already know that the employer stands disbursements of any kind, in were also required to file a Form LM–
behind that message or conduct, connection with those services and their 21 were not required to complete two
because the employer conveys the purposes, currently accomplished by parts of that form. See https://
message or undertakes the conduct at filing a Form LM–21. See also 29 CFR www.dol.gov/olms/regs/compliance/ecr/
issue. Knowing which advisor, if any, 406.3 (Form LM–21 requirements). 57 lm21_specialenforce.htm.
recommended a particular message or FR 15929. Thus, by statute, the filing of The Department has now considered
conduct is less likely to help employees a Form LM–20 necessitates the filing of the burdens that the Persuader Rule
make an informed decision than a Form LM–21, so long as any would have imposed on the expanded
knowing that a seemingly-independent disbursement is made pursuant to the Form LM–21 filers and concluded that
third-party is actually in the pay of his reportable persuader agreement or they would have been substantial. As
or her employer. It is the Department’s arrangement. described below, under the Persuader
conclusion that the serious concerns An increase in the range and number Rule, many more labor relations
regarding attorney-client confidentiality of activities that constitute ‘‘persuader consultants would have had to complete
discussed in this section outweigh any activity’’ would increase the number of the Form LM–21, and they would have
assistance the former knowledge might Form LM–20 and Form LM–21 filers. needed to devote additional time and
render.
Each form imposes a unique resources to do so.
Third, the relative paucity of LM–20
recordkeeping and reporting burden on As discussed in the Economic
reports under the Department’s
longstanding interpretation of the the filer. For example, a consultant/law Analysis below, the Department
advice exemption does not necessarily firm that contracted with an employer estimates that total number of Form
indicate under-reporting. Some and engaged in persuader activity under LM–20 filers would have been 2,149.
commenters [Council on Labor Law the Rule would have to file a Form LM– Consequently, there would also have
Equality, p. 9; Independent Electrical 20 disclosing the arrangement with the been 2,149 Form LM–21 reports filed.
Contractors, p. 7; Retail Industry employer. According to the instructions, This is an increase from the previously
Leaders Association, p. 7] argued that the consultant would also have to file a estimated 358 Form LM–21 reports.
there is no indication that employers or Form LM–21 on which it reports the full Thus the Persuader Rule would have
consultants have engaged in misconduct name and address of employers from created more filers of the Form LM–21.
or otherwise circumvented or evaded whom receipts were received directly or See https://www.reginfo.gov/public/do/
the LMRDA’s reporting requirements indirectly on account of labor relations PRAViewDocument?ref_nbr=201604-
under the Department’s longstanding advice or services, as well as the total 1245-001.
prior interpretation. The Department amount of receipts. In addition, the These filers would have spent
agrees: When comparatively few reports consultant’s disbursements to officers additional time completing the form, far
are filed, this can be an indication of and employees would be disclosed more than the 35 minutes previously
non-compliance with the reporting rule when made in connection with such estimated by the Department.16 Each
or it can be an indication of relatively labor relations advice or services. And filer of Form LM–21 is assumed to have
little reportable activity. The latter the consultant would report in the already read the Form LM–20 form and
indicates compliance, not evasion, and, aggregate the total amount of the
absent further information indicating disbursements attributable to this labor 15 The Department does not opine here on
relations services and advice, with a whether the statute requires consultants who have
that the filing of comparatively few
amozie on DSK3GDR082PROD with RULES
entered into persuader agreements or arrangements
reports instead indicates evasion, it breakdown by office and administrative to list on the Form LM–21 non-persuader clients,
provided no basis for the Persuader Rule expenses, publicity, fees for professional i.e., employers with whom they did not into
and its mandatory reporting of activities service, loans, and other disbursement persuader agreements or arrangements. See
categories. Finally, the consultant Donovan v. Rose Law Firm, 768 F.2d 964, 974 (8th
such as recommending communications Cir. 1985).
or courses of conduct for an employer would be required to itemize its 16 See https://www.reginfo.gov/public/do/
to accept or reject. persuader-related disbursements, the PRAViewDocument?ref_nbr=201604-1245-001.
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![33834 Federal Register / Vol. 83, No. 138 / Wednesday, July 18, 2018 / Rules and Regulations
instructions and therefore knows does not believe that this allocation of and responsibilities, including helping
whether it must file the Form LM–21. resources is warranted.17 Americans find the jobs they need,
No additional reading time is therefore One comment [LMSO–2017–0001– closing the skills gap, protecting
necessary to make this determination. 1097; Ranking Members Scott and employees from hazardous working
Nevertheless, the completion of the Sablan Comment Letter page 4] stated conditions, enforcing child labor
Form LM–21 would have been that the Department’s concern for protections, and many other critical
complicated by the Persuader Rule limited resources ‘‘does not account for initiatives. Among its other priorities,
because the statutory term ‘‘advice’’ was the discrepancy between unions’ broad the Department promotes union
broadened and expanded by the disclosure requirements and employers’ democracy and financial integrity in
Persuader Rule, with no explanation of meager obligations,’’ but that comment private sector labor unions through
how the revised definition applied to did not assess the Persuader Rule’s standards for union officer elections and
the Form LM–21. This lack of clarity burden on the Department. The union trusteeships and safeguards for
increases the burden of the Form LM– comment asserted that ‘‘the Form LM– union assets, and it promotes labor
21. Due to this increased complexity, 2 that unions must file often consumes union and labor-management
completing the form would have thus hundreds of pages, whereas employers’ transparency through reporting and
consumed 154.5 minutes. This equals a LM–10, LM–20 and LM–21 are four, two disclosure requirements for labor unions
$631,181 Form LM–21 burden arising and two pages, respectively.’’ But the and their officials, employers, labor
from the Persuader Rule and this burden resources filers spend completing their relations consultants, and surety
was not considered by the Department reports are not the same as the resources companies. Reporting by employers and
when issuing that rule. the Department spends administering labor relations consultants who make
the program. In addition, the length of arrangements to persuade employees
These additional costs of more than the report does not correlate with the with regard to their rights to organize
$631,000—which the Persuader Rule investigatory burden on the Department. and bargain collectively is an important
did not properly quantify or consider— The greater number of reports and the piece of this effort and DOL’s broader
are substantial and constitute an increased complexity of the mission, but it is just one piece.
additional and important policy factor investigations under the Persuader Rule Rescission of the expansion of the
prompting rescission of the Persuader mean persuader reports would have advice exemption will not change the
Rule to avoid unnecessary burden on been resource intensive for the Department’s robust enforcement of
the private sector. Department. In contrast to labor unions, these core reporting requirements,
which must file an annual report, which have protected the LMRDA’s
D. Rescinding the Persuader Rule Will
persuader reports are required only vital objectives for decades.
Preserve Limited Departmental
when an employer or labor relations
Resources for Competing Priorities consultant actually engages in the IV. Effect of Rescission
A fourth reason for rescission of the identified persuader activities in the The reporting requirements in effect
Persuader Rule is the allocation of fiscal year. At the end of the fiscal year, under this rescission are the same as
scarce resources to different priorities. the Department cannot know whether a they existed before the rescission. The
particular employer or consultant owes Forms and Instructions, available on the
The Department has the ‘‘right to shape
a report, which substantially increases Department’s website, are those pre-
[its] enforcement policy to the realities
the time and expense of monitoring for existing the Rule. These are the Forms
of limited resources and competing
delinquent employer and consultant and Instructions currently being used by
priorities.’’ Int’l Union, United Auto.,
reports.18 filers, in light of the litigation and court
Aerospace & Agr. Implement Workers of
Ultimately, the Department has order discussed in section 2(A), above.
Am. v. Dole, 869 F.2d 616, 620 (D.C. Cir. See National Federal of Independent
determined that its scarce resources are
1989). Under the prior interpretation of better allocated elsewhere than on the Business v. Perez (N.D. Tex. 5:16-cv-
the advice exemption, there were enforcement of the Persuader Rule. The 00066-c), Slip Op. p.89–90; 2016 WL
significantly fewer reports due and Department has wide ranging priorities 3766121; 2016 WL 8193279.
accordingly fewer investigative
resources needed for enforcing the rules 17 While the Department could avoid some or all
V. Analysis Conducted in Accordance
on filing timely and complete reports. of this burden by declining to enforce, or enforcing With Executive Order 12866,
Further, under the prior interpretation, on a limited basis, the Persuader Rule, rescinding Regulatory Planning and Review,
case investigations generally involved the Persuader Rule will afford the regulated Executive Order 13563, Improved
community greater certainty than simply adopting
obtaining and reviewing the written a non-enforcement policy.
Regulation and Regulatory Review, and
agreement and interviewing employees. 18 A labor union raised concern that the rescission Executive Order 13771, Reducing
In contrast, enforcement of the of the rule would also rescind the requirement that Regulation and Controlling Regulatory
Persuader Rule would likely have Form LM–10 and Form LM–20 be filed Costs
electronically. (LMSO–2017–0001–0110; American
involved a lengthier and more Federation of Teachers pp 2–3). ‘‘While, perhaps, Under Executive Order 12866, the
complicated investigation, examining in reasonable minds may differ on the application of Office of Management and Budget’s
detail the actions of consultants, their the advice exemption, one is hard pressed to think (OMB’s) Office of Information and
interactions with the employers’ of a fair reason why persuaders should not have to
file timely, intelligible forms via electronic means—
Regulatory Affairs determines whether a
supervisors and other representatives, just as unions have had to do for over a decade.’’ regulatory action is significant and,
and the content of attorney The comment stated that paper filing is more costly therefore, subject to the requirements of
communications. The investigator for the Department and results in delays in public the Executive Order and review by
would have been required to review disclosure. The commenter states, ‘‘full repeal of
OMB. 58 FR 51735. Section 3(f) of
amozie on DSK3GDR082PROD with RULES
the original Rule does workers, the public, and
both the direct reporting category and researchers a real disservice,’’ and concludes that Executive Order 12866 defines a
the four indirect persuader categories. the Department should retain mandatory electronic ‘‘significant regulatory action’’ as an
This would have been a substantially filing of LM–10, LM–20, and LM–21 reports. action that is likely to result in a rule
more resource-intensive process that Although outside the scope of the regulatory action,
the Department will consider this request, as it
that: (1) Has an annual effect on the
pulled limited resources away from moves to making all forms available for electronic economy of $100 million or more, or
other vital priorities. The Department filing. adversely affects in a material way a
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![33836 Federal Register / Vol. 83, No. 138 / Wednesday, July 18, 2018 / Rules and Regulations
• The number of employers that Based on the comments received, the examined what the cost would be if all
would have filed Form LM–10 reports Department makes the following potentially affected employers and
would have been 2,777 (81 FR 16004); assumptions: advisers were to file,’’ and therefore that
• The number of Form LM–10 reports • Non-filing employers, human the Department did not provide ‘‘an
filed would have been 2,777 (81 FR resources firms, and law firms would honest assessment of the potential effect
16004); have spent 2.75 hours in total reading of the proposed rule.’’ Nat’l Fed. of
• The total burden hours per Form instructions (45 minutes) for the Form Indep., 2016 WL 3766121, at *15.
LM–10 filer would have been 147 LM–10 or the Form LM–20 and The Department estimates that, under
minutes. (81 FR 16014); determining that the rule does not apply the Persuader Rule, non-filing entities
• The number of consultants that to them or their clients (120 minutes); would have spent 2.75 hours total
would have filed Form LM–20 reports • The number of employers that reading the instructions of the Form
would have been 358 (81 FR 16004); would have filed Form LM–10 reports LM–10 or the Form LM–20 (45 minutes)
• The number of Form LM–20 reports would have been 13,297; to determine that the rule does not
filed would have been 4,194 (81 FR • The number of Form LM–10 reports apply to them or their clients (120
16004); filed would have been 13,297; minutes).
• The total burden hours per Form The additional reading time would
• The total burden hours per Form have been necessary because of the
LM–10 would have been 930 minutes;
LM–20 filer would have been 98 • The number of consultants that vagueness of the Persuader Rule. The
minutes (81 FR 16012); would have filed Form LM–20 reports Persuader Rule broadened persuader
• The number of consultants that would have been 2,149; reporting to certain categories of
would have filed Form LM–21 reports • The number of Form LM–20 reports indirect contact where the employer
would have been 358 (81 FR 16004); filed would have been 14,714; remained free to accept or reject the
• The number of Form LM–21 reports • The total burden hours per Form recommendations of the consultant.
filed would have been 358 (81 FR LM–20 would have been 900 minutes; That increase in scope would have
16004); • The number of consultants that made it more difficult to determine
• Issues arising from the reporting would have filed Form LM–21 reports whether a report was required. One
requirements of the Form LM–21 would would have been 2,149; commenter reported, for example,
not have been appropriate for • The number of Form LM–21 reports ‘‘DOL’s new Rule creates a regulatory
consideration under the Persuader Rule filed would have been 2,149; scheme that is so confusing and
(81 FR 1600); • The total burden hours per Form convoluted, with so many illogical
As relevant here, the Department LM–21 would have been 154.5 minutes. exceptions and mandates, that neither
accepts the following assumptions made Based on the comments received, and employers nor their advisors, including
in the Persuader Rule: upon review of the litigation, the labor law experts, can understand how
• Employers, business associations, Department concludes that the to comply with it.’’ [Associated Builders
and consultants (human resources firms, Persuader Rule underestimated the and Contractors of Arkansas LMSO–
law firms, and labor relations burden with regard to the amount of 2017–0001–1096, p.13]. Another
consultants) would not have borne time necessary for non-filers to read the commenter noted, ‘‘most of the cost of
‘‘initial familiarization’’ costs (81 FR form and instructions, the number of compliance will come from learning
16003); filers of Form LM–10 and Form LM–20, about the new rule and preparing the
• Non-filing entities would have and the number of hours necessary to information to be recorded on the
comprised those employers, business complete these forms. It also erred in form.’’ [Furchgott-Roth, p7, see fn 16.]
associations, and consultants (human failing to estimate the increase in the Because the rule was vague as to the
resources firms, law firms, and labor number of Form LM–21 filers and the activities that resulted in reporting
relations consultants) that are not increased burden the Persuader Rule obligations, it would have taken more
otherwise estimated to be filing (81 FR caused through the Form LM–21. than an hour for an employer or a
16003); The Burden on Non-Filers to Read the consultant to read, understand, and
• The number of non-filing Forms
apply it to determine whether filing was
consultants would have been 39,298 (81 required.
FR 16016–17); In the Persuader Rule, non-filing Besides vagueness, the sensitivity of
• The number of non-filing employers entities (employers and law firms/ the information to be included on the
would have been 185,060 (81 FR 16017); consultants) were estimated to need one form would also have increased the
• Attorneys would have filed reports hour in total to read the instructions (10 amount of time required of non-filers.
on behalf of consultants and employers minutes) and determine that the rule The Persuader Rule would have
(81 FR 16003); does not apply to them or their clients required close consideration of sensitive
(50 minutes). 57 FR 16003, 16007. This matters such as privilege and
• The estimated recordkeeping and
was not accurate. ‘‘A more realistic confidentiality that might have affected
reporting costs should be based on
assessment of the costs of these new how information should be entered onto
Bureau of Labor Statistics (BLS) data of
forms to business would estimate a the forms. And filers would have
the average hourly wage of a lawyer,
higher number of hours per firm, since required more time to review the
including benefits (81 FR 16003);
businesses will need to spend time each instructions in detail because of the
• A lawyer (SOC 23–1011) has a
year determining whether they are difficulty in accurately determining
fully-loaded wage of $114 (median
obligated to file.’’ [Diana Furtchgott whether a report was owed. To the
hourly base wage of $56.81 plus fringe
Roth, The High Costs of Proposed New extent that the expanded reporting
amozie on DSK3GDR082PROD with RULES
benefits and overhead costs of 100% of
Labor-Law Regulations, Manhattan requirement would have potentially
the base wage) 21
Institute, Jan. 2016, at 8 n.16]. The U.S. disclosed sensitive information or
21 Source: Bureau of Labor Statistics,
District Court accepted as fact that the chilled efforts to seek help, the impact
Occupational Employment Statistics, May 2016
Department failed to adequately would have been greater and even more
National Employment and Wages Estimates. consider potential filers, concluding time would have been allocated to the
(https://www.bls.gov/oes/current/oes_nat.htm). that ‘‘[t]he department should have determination. The Department now
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![Federal Register / Vol. 83, No. 138 / Wednesday, July 18, 2018 / Rules and Regulations 33837
concludes that non-filers would have this to the election related reports ‘‘Many law firms have never filed an
spent 2.75 hours in total reading equals a total of 12,624 reports (2,104 + LM–21 form because of the previous
instructions (45 minutes) and 10,520 = 12,624). Adding this to the Interpretation from the Department.
determining that the rule does not apply projected number of seminars, which is Under the New Interpretation, such
to them or their clients (120 minutes). 2,090, the total number of reports would firms would be required to file LM–21
The Department has not altered the have been 14,714.23 See 81 FR 16005. forms with the Department.’’ [Worklaw
time spent by non-filing employers on Assuming that there are 5.875 reports Network, LMSO–2017–0001–0253, p10].
reading the Form LM–21 to determine per filer, a determination made by the As each filer of Form LM–20 reporting
that filing is not required. The review Persuader Rule (81 FR 16005),24 the persuader activity must also file a Form
time spent on reading the Form LM–20 total number of Form LM–20 filers LM–21, so long as receipts and
will provide employers with would have been 2,149 (12,624 \ 5.875 disbursements were attributable to the
information on the regulatory regime = 2,148.7).25 This is an increase from the persuader agreement or arrangement,
and non-filers of Form LM–10 will have 358 filers determined by the Persuader the Department estimates that 2,149
no obligation to file the Form LM–21. Rule and is the result of counting the Form LM–21 reports will be filed.
number of reports arising from non-
The Number of Filers Time Necessary To Complete the Forms
representation/decertification persuader
The Department erred in its estimate activity. The Persuader Rule underestimated
of the number of filers. The Department To determine the number of Form the time necessary for filers to complete
had largely derived its estimates of the LM–10 filers, the Department combines the forms. The rule’s complexities not
number of filers of both the LM–20 and the estimated 12,624 non-seminar only increased the amount of time
LM–10 forms from the total number of persuader agreements between necessary for non-filing entities to read
representation and decertification employers and law firms or other the instructions to understand whether
elections supervised by the NLRB and consultant firms, calculated for the to file, it also increased the amount of
the NMB. The Department assumed Form LM–20, with 672.6 (the annual time it would require of filing entities to
that, in 75% of such cases, the employer average number of Form LM–10 reports complete the form. As one commenter
would utilize a consultant who will registered from FY 10–14 submitted stated ‘‘the lawyer or consultant must
engage in reportable activity.22 [81 FR pursuant to sections 203(a)(1)–(3), the guess as to whether the client’s object,
15964–65, 16004]. The Department non-persuader agreement or in whole or in part, directly or
considered only representation arrangement provisions). Seminar indirectly, was to persuade or influence
elections, but acknowledged that other persuader agreements are not included employees.’’ [Seyfarth Shaw, LMSO–
reports will result from ‘‘activities because employers who attend a 2017–0001–1062, p4]. As the table
related to collective bargaining and seminar were not required, under the below shows, for Form LM–10,
other union avoidance efforts outside of Persuader Rule, to file a Form LM–10. maintaining and gathering records and
representation petitions, such as This yields a total estimate of reading the instructions to determine
organizing efforts that do not result in approximately 13,297 revised Form applicability of the form and how to
the filing of a representation petition.’’ LM–10 reports (12,624 + 672.6 = complete it was estimated by the
Id at 160004. The burden analysis 13,296.6) and thus 13,297 form LM–10 Persuader Rule to take a total of 50
would have benefited from the filers. minutes. Upon reflection and review of
Department estimating a number from Firms that file LM–20 forms are also the comments, it is clear that the time
this acknowledged additional source of required by law to file LM–21 forms. would have been much higher: A total
reports. Today, the Department of 306 minutes. The increased time was
estimates that five times the number of 23 The Persuader Rule explained the basis of the necessary because of the difficulty in
reports as those coming from election determination that 2,090 Form LM–20 reports categorizing activity as advice or
would report the holding of a seminar. 81 FR 16004. persuader activity. ‘‘Instructions . . .
petitions would have resulted from non- To estimate the number of reportable seminars the
election cases. As noted by the Department utilized the reporting data for ‘‘business
meant to clarify the rule demonstrate
Department in the Persuader Rule, there associations’’ from the U.S. Census Bureau’s North the lack of a clear distinction between
is no reliable basis for estimating reports American Industry Classification System Codes reportable ‘persuader activity’ and
(NAICS), NAICS 813910, which includes trade exempt ‘advice’ under the new rule.’’
in the many areas outside of associations and chambers of commerce. Of the
representation petitions. A commenter 15,808 total entities in this category, the
House Report 114–739 (REPORT
provided, however, ‘‘given the narrow Department assumed that each of the 1,045 business together with MINORITY VIEWS [To
view the Department intends to take associations that operate year round and have 20 or accompany H.J. Res. 87) LMSO–2017–
with respect to the advice exemption
more employees would sponsor, on average, one 0001–1151]. This lack of clarity
union avoidance seminar for employers. increased the amount of time it would
and the broad view of reporting Additionally, the Department assumed that all of
obligations, it is likely that the vast the 1,045 identified business associations would have taken to complete the Form LM–
majority of reportable activity will not contract with a law or consultant firm to conduct 10 and Form LM–20.
involve representation or decertification
that seminar. Each of these parties would file a In addition, the difficulty in
report, resulting in 2,090 reports. discerning state of mind would have
campaigns at all.’’ [U.S. Chamber of 24 The Persuader Rule explained the relationship
Commerce LMSO–2017–0001–1147]. As exacerbated the difficulty in completing
between the number of filers and the number of
2,104 reports are associated with reports. The Department used its existing data on the forms. The reporting obligation of an
representation elections we assume that Form LM–20 reports. It determined that employer and its consultant would have
there would have been another 10,520
consultants, including law firms, file an annual turned on the subjectively perceived
average of approximately 5.875 reports a year. 81 determination of each as to whether the
(2,104 × 5 = 10,520) associated with FR 16004. Having determined the number of
policies developed were for the purpose
amozie on DSK3GDR082PROD with RULES
non-election activity, thus making the reports, the Department derived the number of
non-election activity akin to a ‘‘vast filers. of persuading employees with regard to
majority.’’ See id.; 81 FR 16004. Adding
25 The number of reports of seminars are not unionizing and collective bargaining. As
counted when calculating the number of filers a commenter noted, ‘‘In reality, there is
because, as determined in the Persuader Rule, the
22 The Department separately estimated the same law firms and consultants that handle
no way to make this determination with
number of reports attributable to seminars. 81 FR organizing campaigns will be the ones that present any degree of confidence—particularly
16005. (and report) seminars. 81 FR 16005. where both the employer and the
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lawyer/consultant have to make their there was no category of activity that The Department determined that
own independent determination as to was persuasive but nevertheless exempt 185,060 30 of the 2,256,994 private
whether the work performed is (as advice). Further complicating the sector firms with five or more
reportable.’’ [Proskauer, LMSO–2017– matter, the Department gave no employees would have to review the
0001–0851, p10]. Although ‘‘intent to guidance as to whether the revised rule and determine whether or not they
persuade’’ is and has always been an definition of ‘‘advice’’ applied, or did have any obligation to file a Form LM–
element in Form LM–20 and Form LM– not apply, to the Form LM–21. This lack 10 report. For this analysis, we
10 reporting, the structure of the of clarity increases the burden of the estimated that for each of the 185,060
Persuader Rule made this difficult Form LM–21. Completing the form firms, a labor relations specialist (SOC
determination more frequent. Under the would have consumed 154.5 minutes. 13–1075) with a fully-loaded wage of
accept-or-reject test, issues of intent The analysis covers a 10-year period $60 (median hourly base wage of $29.96
need not be considered absent direct (2018 through 2027) to ensure it plus fringe benefits and overhead costs
contact between consultant and captures major cost savings that accrue of 100% of the base wage) would have
employee. Without such a clear over time. In this analysis, we have spent 2.75 hours determining the firm’s
delineation, the determination of intent sought to present cost savings obligations relating to Form–10. The
would have come up routinely. This discounted at 7 and 3 percent, annualized cost for assessing
analysis is complicated where here, by respectively, following OMB compliance requirements for these
definition, there are multiple parties guidelines.27 potential filers would have been $30.53
involved, each with its own views and The Department has undertaken an million with 3 and 7 percent discount
its own purpose in making the analysis of the cost savings to covered rate (185,060 × $60 × 2.75 hours).
arrangement or agreement. As a result, employers, labor relations consultants, Once these employers determined
in the Form LM–20 and LM–10 tables and others associated with complying that they needed to file Form LM–10,
below, the Department increased the with the requirements which are being they would have also incurred reporting
time estimated for the categories of rescinded by this rule. These cost and recordkeeping costs associated with
questions that require analysis of the savings are associated with both filling out the form. The Department
terms, objects and activities of the reporting and recordkeeping for Forms estimates lawyers (SOC 23–1011) at a
arrangement or agreement. LM–10, LM–20, and LM–21. fully-loaded wage of $114 (median
hourly base wage of $56.81 plus fringe
The Form LM–21 The Persuader Rule was enjoined
benefits and overhead costs of 100% of
The burden of the Form LM–21 would before it became applicable, so if the
the base wage) 31 for 13,297 firms would
also have been increased by the impacts of this final rule are assessed
have spent 15.5 hours to complete the
Persuader Rule. The Department relative to current practice, the result
form. Using the methodology discussed
recognizes that many difficult questions would be that there is no impact. If, on
above, the annualized recordkeeping
with regard to identifying persuader the other hand, the Rule’s effects are
cost for those who actually file Form
activity and how to fill out the form assessed relative to a baseline in which
LM–10 would therefore have been
would have been undertaken for the regulated entities comply with the Rule,
$23.50 million with 3 and 7 percent
Form LM–20 and resolved by the time the rescission would result in
discount rate (13,297 × $114 × 15.5
the Form LM–21 must be completed. annualized cost savings of $92.89
hours).
Nevertheless, the completion of the million (with a 3 and 7 percent discount The Department estimates that 39,298
Form LM–21 would have been rate). of 171,896 consulting and law offices
complicated by the Persuader Rule. The Under the Rule, employers would would have to review the rule to
instructions required consultants to have needed to devote additional time determine whether or not they have any
make efforts to allocate between and resources to the task of determining obligation to file a Form LM–20 report.
‘‘receipts in connection with labor their responsibilities for complying with For this analysis, we assume that for the
relations advice or services’’ (which are the rule. The Department used: (1) The 39,298 consulting and law offices, a
subject to a reporting obligation) and number of private sector firms with 5 or lawyer with a fully-loaded wage of $114
other receipts for employers other than more employees in addition to the (median hourly base wage of $56.81
persuader clients. The same is true for number of consulting and lawyer plus fringe benefits and overhead costs
disbursements. See Form LM–21, offices; (2) the median hourly wage of a of 100% of the base wage) 32 would have
sections B and C. 26 Nevertheless, the chief executive and a lawyer; and (3) the spent 2.75 hours determining their
term ‘‘advice’’ was narrowed by the number of hours necessary to comply obligations relating to Form-20. The
Persuader Rule, with no explanation of with the Rule. According to data from annualized cost for assessing
how the revised definition applied to the U.S. Census Bureau’s Statistics of
the Form LM–21. Under the Form LM– U.S. Businesses, in 2015, there were 30 The Department’s methodology for estimating
21, receipts and disbursement in 5,900,731 private firms in the United 185,060 is explained in the 2016 Final Rule, 81 FR
connection with ‘‘labor relations advice States. Of these businesses, 2,256,994 at 16016–16017. In summary, the estimate is based
and services,’’ must be reported. Under had five or more employees.28 There are on multiplying the ratio of estimated filing
employers to filing consultants (7.76) by the total
the reporting structure, labor relations 6,461 Human Resource Management number of non-filing law firms and consultants
advice is distinct from persuader Consultant service firms (NAICS code (23,848), which is composed of the number of labor
activity but under the Persuader Rule 511612) and 165,435 Offices of Lawyers and employment firms (17,387) and human
firms (NAICS code 541110).29 resources consultants (6,461). Other methodologies
26 The Form LM–21’s Part B (Statement of not described in detail herein can be referenced in
the 2016 final rule.
Receipts) requires the filing law firm/consultant to
amozie on DSK3GDR082PROD with RULES
27 OMB Circular No. A–4, ‘‘Regulatory Analysis,’’ 31 Source: Bureau of Labor Statistics,
report all receipts from employers in connection
with labor relations advice or services regardless of M–03–21 (Sept. 2003). Occupational Employment Statistics, May 2016
28 Source: U.S. Census Bureau, Statistics of U.S. National Employment and Wages Estimates.
the purposes of the advice or services. Part C
(Statement of Disbursements) requires the filer to Businesses, 2015. (https://www.census.gov/data/ (https://www.bls.gov/oes/current/oes_nat.htm).
report all disbursements made by the reporting tables/2015/econ/susb/2015-susb-annual.html). 32 Source: Bureau of Labor Statistics,
organization in connection with labor relations 29 Source: U.S. Census Bureau, Statistics of U.S. Occupational Employment Statistics, May 2016
advice or services rendered to the employers listed Businesses, 2015. (https://www.census.gov/data/ National Employment and Wages Estimates.
in Part B. tables/2015/econ/susb/2015-susb-annual.html). (https://www.bls.gov/oes/current/oes_nat.htm).
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![33842 Federal Register / Vol. 83, No. 138 / Wednesday, July 18, 2018 / Rules and Regulations
issuing its approval, the OMB issued competition, employment, investment, Signed in Washington, DC, this 9th day of
clearance terms providing the productivity, innovation, or on the July, 2018.
previously approved versions of these ability of the United States-based Arthur F. Rosenfeld,
forms will remain in effect until further companies to compete with foreign- Director, Office of Labor-Management
notice. See ICR Reference Number based companies in domestic and Standards.
201604–1245–001. export markets. [FR Doc. 2018–14948 Filed 7–17–18; 8:45 am]
As the rule still requires an BILLING CODE P
List of Subjects in 29 CFR Parts 405 and
information collection, the Department
406
is submitting, contemporaneous with
the publication of this document, an Labor management relations, DEPARTMENT OF HOMELAND
information collection request (ICR) to Reporting and recordkeeping SECURITY
revise the PRA clearance to address the requirements.
clearance term. A copy of this ICR, with Text of Rule Coast Guard
applicable supporting documentation,
including among other things a Accordingly, for the reasons provided 33 CFR Part 165
description of the likely respondents, above, the Department amends parts 405
and 406 of title 29, chapter IV of the [Docket Number USCG–2017–0914]
proposed frequency of response, and
estimated total burden may be obtained Code of Federal Regulations as set forth RIN 1625–AA00
free of charge from the RegInfo.gov below:
website at https://www.reginfo.gov/ Safety Zone; Taylor Bayou Turning
public/do/PRAViewICR?ref_ PART 405—EMPLOYER REPORTS Basin, Port Arthur, TX
nbr=201710-1245-001 (this link will 1. The authority citation for part 405
■ AGENCY: Coast Guard, DHS.
only become active on the day following continues to read as follows:
publication of this document) or from ACTION: Temporary final rule.
the Department by contacting Andrew Authority: Secs. 203, 207, 208, 73 Stat.
526, 529 (29 U.S.C. 433, 437, 438); SUMMARY: The Coast Guard is
Davis on 202–693–0123 (this is not a establishing a temporary safety zone for
Secretary’s Order No. 03–2012, 77 FR 69376,
toll-free number) / email: OLMS-Public@ November 16, 2012. the upper reaches of Taylor Bayou
dol.gov. Turning Basin in Port Arthur, TX. This
Type of Review: Revision of a § 405.5 [Amended] action is necessary to provide protection
currently approved collection. ■ 2. Amend § 405.5 by removing the for the levee and temporary protection
Agency: Office of Labor-Management phrase ‘‘the instructions for Part A of wall located at the north end of the
Standards. the Form LM–10’’ and adding in its turning basin until permanent repairs
Title: Labor Organization and place ‘‘the second paragraph under the can be effected. This regulation
Auxiliary Reports. instructions for Question 8A of Form prohibits persons and vessels from
OMB Number: 1245–0003.
LM–10’’. entering the safety zone unless
Affected Public: Private Sector—
authorized by the Captain of the Port
businesses or other for-profits and not- § 405.7 [Amended] Marine Safety Unit Port Arthur (COTP)
for-profit institutions.
■ 3. Amend § 405.7 by removing the or a designated representative.
Total Estimated Number of
phrase ‘‘Part D of the Form LM–10’’ and DATES: This rule is effective without
Respondents: 2,488,213.
adding in its place ‘‘Question 8C of actual notice from July 18, 2018 through
Number of Annual Responses:
Form LM–10’’. January 31, 2023. For the purposes of
2,488,528.
Frequency of Response: Varies. enforcement, actual notice will be used
PART 406—REPORTING BY LABOR from July 11, 2018 through July 18,
Estimated Total Annual Burden RELATIONS CONSULTANTS AND
Hours: 6,362,032. 2018.
OTHER PERSONS, CERTAIN
Estimated Total Annual Other Burden AGREEMENTS WITH EMPLOYERS ADDRESSES: To view documents
Cost: $0. mentioned in this preamble as being
VIII. Regulatory Impact ■ 4. The authority citation for part 406 available in the docket, go to http://
continues to read as follows: www.regulations.gov, type USCG–2017–
A. Unfunded Mandates Reform Authority: Secs. 203, 207, 208, 73 Stat. 0914 in the ‘‘SEARCH’’ box and click
This rule does not include any 526, 529 (29 U.S.C. 433, 437, 438); ‘‘SEARCH.’’ Click on Open Docket
Federal mandate that may result in Secretary’s Order No. 03–2012, 77 FR 69376, Folder on the line associated with this
increased expenditures by State, local, November 16, 2012. rule.
and tribal governments, in the aggregate, ■ 5. Amend § 406.2(a) by revising the FOR FURTHER INFORMATION CONTACT: If
of $100 million or more, or in increased last two sentences of the paragraph to you have questions on this rule, call or
expenditures by the private sector of read as follows: email Mr. Scott Whalen, Marine Safety
$100 million or more. Unit Port Arthur, U.S. Coast Guard;
§ 406.2 Agreement and activities report. telephone 409–719–5086, email
B. Small Business Regulatory (a) * * * The report shall be filed scott.k.whalen@uscg.mil.
Enforcement Fairness Act of 1996 within 30 days after entering into an SUPPLEMENTARY INFORMATION:
This rule is not a major rule as agreement or arrangement of the type
defined by section 804 of the Small described in this section. If there is any I. Table of Abbreviations
amozie on DSK3GDR082PROD with RULES
Business Regulatory Enforcement change in the information reported
(other than that required by Item C. 10, CFR Code of Federal Regulations
Fairness Act of 1996. This rule will not COTP Captain of the Port Marine Safety
result in an annual effect on the (c) of the Form), it must be filed in a
Unit Port Arthur
economy of $100,000,000 or more; a report clearly marked ‘‘Amended DHS Department of Homeland Security
major increase in costs or prices; or Report’’ within 30 days of the change. FR Federal Register
significant adverse effects on * * * * * NPRM Notice of proposed rulemaking
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Document Created: 2018-11-06 10:24:41
Document Modified: 2018-11-06 10:24:41
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Final rule. | |
| Dates | This final rule is effective on August 17, 2018. | |
| Contact | Andrew Davis, Chief of the Division of Interpretations and Standards, 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). | |
| FR Citation | 83 FR 33826 | |
| RIN Number | 1245-AA07 | |
| CFR Citation | 29
CFR
405 29 CFR 406 | |
| CFR Associated | Labor Management Relations and Reporting and Recordkeeping Requirements |
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