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Employee Ownership Blog


DOL Releases Two Proposed Rules on the Valuation of ESOP Shares

January 20 update: The new Trump administration has put all pending regulations on hold, including the proposed rules on ESOP valuation discussed below. The second executive order signed by the President today states that all executive departments and agencies shall "immediately withdraw any rules that have been sent to the OFR [Office of the Federal Register] but not published in the Federal Register." The two proposed rules that affect ESOPs have both been released as public inspection documents but have not been published. The proposed rules could be withdrawn and rewritten, modified, or retained, but the executive order means that they may not advance "until a department or agency head appointed or designated by the President after noon on January 20, 2025, reviews and approves the rule." The executive order does offer an exception from the withdrawal, but only if the head of the Office and Management and Budget "deems [it] necessary to address emergency situations or other urgent circumstances." The NCEO will issue an analysis of the proposal in the coming days.
 

At 8:45 am Eastern time on January 16, the Federal Register released the public inspection versions of two proposed rules, both of which would affect the determination of the value of shares in ESOP transactions.  Both proposed rules are from the Employee Benefits Security Administration (EBSA) at the Department of Labor (DOL).

Both proposed regulations are currently available as unpublished public inspection documents, and both are expected to be officially published on January 22. The Federal Register includes the disclaimer that, for unpublished public inspection pages like the above, “Although we make a concerted effort to reproduce the original document in full on our Public Inspection pages, in some cases graphics may not be displayed, and non-substantive markup language may appear alongside substantive text…. Only official editions of the Federal Register provide legal notice of publication to the public and judicial notice to the courts.”

Both proposed rules call for a 75-day comment period, starting on the date of their official publication in the Federal Register. If published as expected, the comment period for both will end on April 7, 2025.

EBSA simultaneously released a Fact Sheet: Notice of Proposed Rulemaking Relating to Application of the Definition of Adequate Consideration.

The NCEO and many others have begun reading these rules and will provide comments and observations as we do. Your own comments and observations are welcome—please send them to Nan Fitzgerald (NFitzgerald@nceo.org) with the subject line “Input on proposed rules.”