8001 BRADDOCK ROAD, SUITE 600, SPRINGFIELD, VIRGINIA 22160·(703) 321-8510 April 5, 2010 Ms. Denise M. Boucher Director of the Office of Policy, Reports and Disclosure Office of Labor-Management Standards United States Department of Labor 200 Constitution Avenue, NW Room N-5609 Washington, D.C. 20210 RE: RIN 1215-AB75 Rescission of Labor Union Financial Disclosure Form T-1 and the Elimination of Financial Disclosure of Certain Intermediate Labor Organizations of LMRDA Covered National and International Labor Organizations Dear Ms. Boucher: The National Right To Work Legal Defense Foundationi (The Foundation) submits the following objections to the United States Department of Labor (DOL) proposed rescissions of statutory protections guaranteed by the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA). The proposed rescissions nullify Section 208, specifically repealing the paramount phrase: “to prevent the circumvention or evasion of such reporting requirements.” 29 U.S.C. 438. (Emphasis added) Secretary of Labor Hilda Solis’s proposed loophole to the financial disclosure requirements now embodied in the Labor Union Trust Financial Reporting Form T-1 (Form T-1) will clearly allow the circumvention of these requirements and allow billions of dollars in National Education Association and American Federation of State, County, and Municipal Employees (to name just two labor unions) transactions to remain hidden from public scrutiny. Sunlight Guiding Principle of LMRDA The proposed revision is premised on the ipse dixit belief “that the trust reporting required under the rule is overly broad.” No other justification is offered as support for this extra-statutory transformation. In contrast, the present Form T-1 implements the statutory edict “to prevent the evasion or circumvention of … reporting requirements” by providing verifiable disclosure. Just as astronomical black holes devour light, the Department’s proposed revision would allows the use of forced-dues collected by LMRDA covered labor unions to be devoured and concealed when commingled with public sector associated intermediate bodies. Defending America’s working men and women against the injustices of forced unionism since 1968. April 5, 2010 Page 2 April 5, 2010 Page 2 Now, DOL intends to take-away LMRDA protections from millions of teachers and state employees. The Department’s “amendment” enables “the circumvention or evasion” that the LMRDA was intended to prevent. The Department’s action will not only reduce transparency for millions of forced-dues payers who are victims of exclusive monopoly bargaining, it will foster an atmosphere that will lead to additional avenues for the evasion and circumvention of the LMRDA. National Education Association Headquarters (NEAHQ) The NEAHQ is an LMRDA covered labor organization that receives money from LMRDA and non-LMRDA covered labor organizations. In 2009, it reported receiving $355,334,165 dues and fees from members and agency fee payers who are indistinguishably associated with LMRDA and non-LMRDA labor unions. The NEAHQ commingled this $355,334,165 with a multitude of other resources and funds, and then transferred over $235 million to intermediate state bodies according to its 2009 DOL LM-2 report. Except for the few NEA state bodies such as in Michigan that file LM-2 reports with the Department; this $235 million dollar largesse disappeared behind an imaginary wall that the Department extended in 2009, and now proposes to rebuild. DOL’s Historical Reference As if a willful 40-year failure to properly effectuate an act is a legitimate justification, DOL mentions that “Historically, the Department’s LMRDA reporting program had not provided for separate trust reporting by unions. However, there was a long history of reporting on ‘subsidiary organization[s]’ Part VIII of the 1962 Instructions for Form LM–2 provided for reporting concerning these entities, which were defined in the Form LM–2 instructions as ‘any separate organization in which the ownership is wholly vested in the labor organization or its officers or its membership, which is governed or controlled by the officers, employees or members of the labor organization, and which is wholly financed by the labor organization.’”. This reporting lacuna was intentional not accidental. Thus after bi-partisan passage of the statute in 1959, agency implementation was delayed due to the 1960 Presidential Election. Following the 1960 election, the former General Counsel of the United Steelworkers union and the former General Counsel of the Congress of Industrial Organizations who served as a negotiator and chief legal adviser in the merger of the American Federation of Labor and CIO in 1955, AFL-CIO Special Counsel Arthur J. Goldberg was appointed Secretary of Labor. AFL-CIO lawyer Goldberg oversaw the creation of the ineffective LMRDA financial disclosure reports that the Department now extols. Defending America’s working men and women against the injustices of forced unionism since 1968 April 5, 2010 Page 3 April 5, 2010 Page 3 Under the 1962 reporting scheme that the Department refers, billions of dollars in contract negotiated funds and union dues that are transferred to outside entities controlled by union officials will remain undisclosed to members because numerous union dominated and controlled joint ventures, funds, and trusts do not meet the 100% domination test of the past – a “subsidiary” disclosure scheme to which the Department now intends to return. By weakening this tool of self-governance, the Department forces individuals to plea to a reduced LMRDA enforcement office for help. DOL’s actions here are completely inconsistent with the purposes of the LMRDA. Departments Action Unjustified The Department of Labor postponed financial disclosure Form T-1 reporting dates to prevent a report that would have included the Secretary of Labor’s name in an AFL-CIO T-1 report required last yearii. Now, Secretary Solis intends to eliminate these union financial disclosures entirely and allow billions in union assets to remain hidden. One labor union with a long history of organized crime control and influence, the Laborers International Union of America (LIUNA), has already commented in support of the Secretary’s decision for non-disclosure. But, LIUNA’s recent comment actually provides a plethora of reasons not to rescind the Form T-1: To begin, filing a Form T-l report is a significant task and a form must be filed reporting on each individual trust in which a union has an interest through board appointments, direct financial contributions or employer contributions imputed to the union. Examples of trusts that trigger Form T-l filing, as indicated by DOL, are extraordinarily numerous and include, among others: building and redevelopment corporations; investment groups; educational institutes; credit unions; labor union and employer joint funds; apprenticeship programs; strike funds; and job targeting funds. Without the T-1, LIUNA members will not know what happened to their funds in these “extraordinarily numerous” trusts, nor will they know the value or lack of value of their union bosses spending time, talent, and treasure on activities related to each of those “extraordinarily numerous” trusts. Without the current Form T-1, labor union controlled funds and trusts will remain black holes for union members and the public. The Department’s proposed amendment of labor union reporting requirements will keep state and local public employees in the dark about the billions of dollars that these public-sector related unions funnel through LMRDA covered labor organizations. Defending America’s working men and women against the injustices of forced unionism since 1968 April 5, 2010 Page 4 April 5, 2010 Page 4 The Department’s proposed ultra vires actions undermine worker protections from financial mismanagement and malfeasance. Workers should never be forced to pay their money to a compulsory union shop as a condition of acquiring or keeping a job. The LMRDA was the statutory “deal” struck with congress to allow unions to keep their unconscionable quasi-governmental ability to force workers to pay fees to Big Labor as a condition of employment. The Department’s paramount statutory mission is to protect workers and more specifically those workers who are forced to pay union dues and fees as a job condition. Effectively, this mission necessarily requires the Secretary to immediately cancel this proposed rule-making and begin her delayed enforcement of the Act. Respectfully submitted, Mark Mix President Defending America’s working men and women against the injustices of forced unionism since 1968 April 5, 2010 Page 5 April 5, 2010 Page 5 The Foundation is a non-profit, legal aid organization that provides information and legal assistance to employees who have suffered violations of their rights as a result of compulsory unionism. See Auto Workers v. National Right to Work Legal Defense Found., Inc., 781 F.2d 928, 934-35 (D.C. Cir. 1986) (Foundation is a "bona fide, independent legal aid organization"); National Right to Work Legal Defense Found., Inc. v. United States, 487 F. Supp. 801 (E.D.N.C. 1979) (Foundation is a charitable organization under § 501(c)(3) of the Internal Revenue Code). Foundation attorneys have served as counsel in most of the major United States Supreme Court cases involving the right to refrain from joining or supporting a labor organization as a condition of employment. See, e.g., Locke v. Karass, 129 S.Ct. 798 (2009); Davenport v. Washington Educ. Ass’n, 551 U.S. 177 (2007)Lehnert v. Ferris Faculty Ass’n, 500 U.S. 507 (1991); Communications Workers of America v. Beck, 487 U.S. 735 (1988); Chicago Teachers Union, Local No. 1 v. Hudson, 475 U.S. 292 (1986); Ellis v. Railway Clerks, 466 U.S. 435 (1984); Abood v. Detroit Bd. of Educ., 431 U.S. 209 (1977). Through this and other litigation, the Foundation has acquired extensive experience regarding the financial disclosures that unions must provide to employees. Through its Staff Attorneys, the Foundation provided legal assistance in the leading cases requiring unions to provide audited financial information to employees who are compelled to pay union dues as a condition of employment. See, e.g., Hudson, 475 U.S. 292; Penrod v. NLRB, 203 F.3d 41 (D.C. Cir. 2000); Ferriso v. NLRB, 125 F.3d 865 (D.C. Cir. 1997); Abrams v. Communications Workers, 59 F.3d 1373 (D.C. Cir. 1995); Tierney v. City of Toledo, 824 F.2d 1497 (6th Cir. 1987), further proceedings, 917 F.2d 927 (6th Cir. 1990); Wessel v. City of Albuquerque, 299 F.3d 1186 (10th Cir. 2002); Cummings v. Connell, 316 F.3d 886 (9th Cir. 2003). Foundation’s Staff Attorneys have developed a wealth of expertise in reviewing union books and records, and in ferreting out the waste, fraud and corruption that are common in these largely unregulated organizations. See Bromley v. Michigan Educ. Ass’n-NEA, 82 F.3d 686, 696 (6th Cir. 1996) (commenting on the "wealth of relevant experience" the Foundation-provided expert witness brought to the case); Miller v. Air Line Pilots Ass’n, 108 F.3d 1415 (D.C. Cir. 1997), aff’d, 523 U.S. 866 (1998) (Foundation-provided experts raised a genuine issue of material fact about the union’s financial records). Here, the Foundation submitted comments to the Department of Labor concerning the promulgation of the LM-2 Regulations on June 22, 2009. ii Secretary Solis’ Personal Conflict – The Secretary’s failure to disclose her obvious conflict of interest undermines the Secretary’s unsupported reasoning provided for her actions. In fact, Secretary Solis and Solis’ Senior Advisor Mary Beth Maxwell are both former officers of an AFL-CIO labor union funded entity called American Rights at Work (ARAW). Thanks to the Secretary’s decision to rescind the reporting, the AFLCIO is no longer required to disclose ARAW’s financial activities on its T-1 financial reports. The current proposed rescission of the Form T-1 that would have disclosed ARAW use of forced-union dues creates an indisputable conflict of interest for the Secretary who formerly maintained ARAW’s financial records as Treasurer. As ARAW’s Executive Director for many years, Maxwell is chiefly responsible for its expenditures that will remain concealed by the Secretary’s actions to immediately delay T1 disclosure and her proposal to rescind T-1 financial disclosure entirely. In addition, DOL continues to ignore the spirit as well as the letter of President Barack Obama’s Executive Order 13490 that prohibits conflicts like the Secretary’s ARAW-conflict regarding this rulemaking. Revolving Door Ban — All Appointees Entering Government. I will not for a period of 2 years from the date of my appointment participate in any particular matter involving specific parties that is directly and substantially related to my former employer or former clients, including regulations and contracts. Executive Order 13490. (Emphasis added) Defending America’s working men and women against the injustices of forced unionism since 1968