March 31, 2011 The Honorable Phil Roe Chairman Subcommittee on Health, Employment, Labor and Pensions House

Committee on Education and the Workforce 2181 Rayburn House Office Building Washington, DC 20515 Dear Chairman Roe and Ranking Member Andrews: On behalf of Associated Builders and Contractors (ABC), a national association with 75 chapters representing more than 23,000 merit shop construction and construction-related firms with nearly two million employees, I am writing in regard to the subcommittee hearing on, The Future of Union Transparency and Accountability. In remarks made at the White House on January 21, 2009, President Obama referred to the beginning of a new era of openness in our country. The President emphasized his administrations dedication to implementing a new standard of openness, stating, [t]ransparency and the rule of law will be the touchstones of this presidency. However, during the Obama Administration, the U.S. Department of Labors (DOL) Office of LaborManagement Standards (OLMS), has delayed and rescinded implementation of finalized regulations that would have ensured union financial transparency and accountability, including the Form LM-2, Labor Organization Annual Financial Report and the Form T-1, Trust Annual Report rules. ABC vehemently opposed OLMS actions and stressed the need for stringent oversight and enforcement of union expenditures. The Form LM-2 and the Form T-1 finalized rules were issued in an effort by the previous administration to better implement the reporting requirements of the Labor Management Reporting and Disclosure Act (LMRDA). Congress passed the LMRDA because of rampant corruption and undemocratic practices in several major unions. ABC expressed the following concerns regarding OLMS rescission of the Form LM-2 and the Form T-1 finalized rules:
Form LM-2, Labor Organization Annual Financial Report. The original rule would have revised the

The Honorable Robert Andrews Ranking Member Subcommittee on Health, Employment, Labor and Pensions House Committee on Education and the Workforce 2101 Rayburn House Office Building Washington, DC 20515

current Form LM-2 and established a procedure to revoke the Form LM-3 filed by smaller unions in instances where filers submit delinquent or erroneous reports. The Form LM-2 is the primary financial reporting document of larger labor unions those with reported annual revenues of more than $250,000. It is used to track union finances and to police mismanagement and misappropriation of union funds. ABC argued that OLMS action to rescind the LM-2 rule was a major blow to transparency, accountability and the rights of workers. The rule would have served to strengthen the

Form LM-2 and further deter the potential for union fund embezzlement. Additionally, its implementation was needed in order to better carry out DOLs statutory mandate to combat unionrelated corruption. Form T-1, Trust Annual Report. In 2008, the OLMS published a rule that would have required annual financial reporting on Form T-1 for trusts in which a labor organization is interested. Under the rule, union-controlled trustswhich include apprenticeship and training programs, as well as building and strike fundswould be required for the first time to publicly disclose receipts and disbursements that currently take place outside the reach of established accounting practices. ABC opposed and questioned OLMS decision to reverse its initial position on the need for full trust reporting and roll back a fully-vetted disclosure rule that already completed the public noticeand-comment rulemaking process. ABC expressed support for OLMS original goal of increasing union transparency by making it more difficult for labor organizations to avoid reporting requirements simply by transferring money into a trust. Requiring the disclosures would have served as a deterrent against impropriety by labor organizations by enabling the public to see how union trust funds are being used. ABC has long advocated the importance and benefit of ensuring that the financial transactions of organized labor are transparent. As with the publics demand for transparency in banks and other corporate entities, there is an equally compelling need for the public to have the same benefit of transparency when it comes to the receipts and expenditures of labor organizations. We commend the subcommittee for holding this hearing and appreciate the opportunity to comment. Sincerely,

Corinne M. Stevens Senior Director, Legislative Affairs