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In a saga that has been in the making for nearly twenty years, the Biden administration last week realized yet another priority for organized labor when the Department of Labor announced it planned to rescind the Form T-1, an obscure financial report for trusts in which a labor union has an interest. The May 27 announcement will stop (again) one of the signature financial disclosure reform efforts of former Secretary of Labor Elaine L. Chao, who made improving union transparency a priority during her tenure from 2001-2009.
As this blog recounted in 2019, the Form T-1 has had a tortured history since it was first promulgated in 2003 along with the revised Form LM-2, which required more detailed reporting about union financial practices that had largely escaped scrutiny for decades. The final rule also included the Form T-1 for “trusts in which a labor organization is interested,” such as training funds, that historically did not have to disclose such information but are known sources of improprieties.
In a move that surprised nobody, the AFL-CIO sued the Department, arguing that the Secretary did not have the authority to require the detailed disclosure from trusts required by the new Form T-1. In 2004, the United States District Court for the District of Columbia upheld the final rule in part and found that the Secretary did possess the authority to require trust reports, but the following year the D.C. Circuit Court of Appeals vacated the Form T-1 because it was too broad.
The merciless bureaucratic meandering continued, however, with more promulgations and challenges. After the D.C. Circuit’s decision, the Department elected to reissue in December 2006 a revised Form T-1 relying on the public comments that had been received from the original Notice of Proposed Rulemaking (NPRM). The AFL-CIO sued over that move as well since the Department did not solicit public comments, and in June 2007, the D.C. District Court agreed to vacate the final Form T-1 rule because it violated the Administrative Procedures Act.
It then took the Department until March 2008—almost nine months, including an extension for comments—to issue a proposed rule for a revised Form T-1. After notice and comment, DOL issued the 2008 Form T-1 final rule October 2, 2008, with an effective date of January 1, 2009. The delay opened the door for the incoming Obama administration to do away with the Form T-1 altogether, which is precisely what it did in 2010.
With the arrival of the Trump administration, many observers of labor policy expected a return of the Form T-1, and four years seemed like more than enough time to lock it into place to prevent a repeat of the first episode. Yet, the Department did not publish an NPRM to reinstate the Form T-1 until July 2019—an inexplicable, two-and-a-half-year delay for a proposal that had been vetted multiple times.
Nevertheless, ostensibly there still could have been time to issue a final rule in order to have an effective date of January 1, 2020, but that was not to be. Instead, the Department issued its final rule in March 2020, with the first reports being due after the conclusion of a union’s first fiscal year beginning on or after June 4, 2020. Any such report would have been due later this year, which gave opponents of the T-1 all the time they needed to kill it yet again. Time will tell if a future administration decides to once again promote transparency around these trusts, but if that comes to pass the recommendation would be to move quickly.