January 25, 2011 

Employee Benefits Security Administration 

Department of Labor 

Re: DOL Proposed ESOP Rule Change 

IIW Project No.: 10000-018

Gentlemen: 

It has come to our attention that the October 22nd edition of the Federal Register includes 

Department of Labor (DOL) proposed rules that will significantly revise its current regulation on the 

definition of a “fiduciary” under the Employee Retirement Income Security Act of 1974 (ERISA). The 

proposed rule will make individuals and/or firms providing appraisal services to Employee Stock 

Ownership Plans (ESOPs) fiduciaries, reversing 34 years of DOL policy that appraisers of ESOP 

stock are not fiduciaries. 

IIW, P.C. has been an ESOP since 1999. The group of five (5) individuals who act as our ESOP 

Trustees, and bear the fiduciary responsibility for the ESOP, has remained constant since that time. 

Our ESOP administrator, legal counsel, and appraiser have also remained constant. We believe 

this provides stability to our ESOP, assuring our employee owners that the value they have helped 

build is determined on a consistent, objective, and legitimate basis. I am one of the ESOP Trustees 

and I personally work with IIW’s staff and accountant to provide all of the necessary information to 

our appraiser each year, then thoroughly review their annual report and convey the critical 

information and insight it contains to the ESOP Trustees and our Board of Directors. 

While the intent of the DOL’s proposed rule change may appear to have merit, its effect is more 

likely to be damaging to ESOPs in general. While we find it unlikely that our appraiser would 

terminate this line of business, forcing us to find another appraiser, their added liability would 

undoubtedly increase the fees IIW pays to comply with the mandatory annual appraisal 

requirement. 

If our appraiser does decide to terminate this line of business due to the added liability exposure, 

IIW would be forced to expend significant additional time and effort to find another business 

appraisal provider. Business appraisers have a limited number of accepted valuation methods 

available to them; however, with a different perspective their ultimate conclusion could differ 

significantly because numerous judgment calls are required in the valuation process. This further 

increases the possibility that IIW could be subjected to needless lawsuits and overhead expenses, 

thus reducing our capacity to conduct our core business and enhance the value of the company for 

the benefit of our employee owners.

While our concern for additional ESOP-related expense is significant, more important to us is the 

clear singular fiduciary responsibility of the ESOP Trustees. Introducing another fiduciary creates 

the potential for deflecting responsibility, increasing the potential for unnecessary legal exposure. In 

our opinion it is inappropriate for an ESOP appraiser to be considered a fiduciary. They exercise no 

power to make decisions or direct the activities of an ESOP, they simply evaluate the information 

provided to them to determine a fair market value of an active closely-held business entity. They 

are state-licensed professionals with an ethical obligation to exercise objectivity. Increasing their 

liability by arbitrarily adding a fiduciary responsibility is inappropriate in our opinion. IIW’s ESOP 
DOL ESOP Rule 

January 25, 2011 

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appraiser is compensated for their time and expertise. Their fees are not connected in any way with the conclusions they reach. 

Assigning a fiduciary responsibility to an ESOP appraiser is functionally contradictory. How can they determine the business value to 

the sole benefit of the employee owners who include both the parties responsible for making payments based on the appraisal (the 

lower the appraisal the less danger to the on-going operations of the company) and the parties receiving payments based on the 

appraisal (the higher the appraisal the more they receive)? Who is the proposed rule change intended to protect? The appraiser’s 

objectivity is fundamentally crucial to the validity of their conclusions, and we believe that introducing a fiduciary responsibility into the 

equation could endanger their objectivity. 

Further we believe the DOL’s proposed rules are contrary to the law which stipulates that Federal agencies are not to hinder the 

creation or operation of ESOPs. In our opinion this rule change would significantly hinder the operation of IIW’s ESOP, adding 

unnecessary expense and legal exposure. It could ultimately have the effect of eliminating existing ESOPs and reducing the potential 

for the creation of new ESOPs. In our opinion it is in the best interest of ESOPs and their employee owners to maintain the 

consistency of the current fiduciary structure that has served ESOPs appropriately for decades. 

Sincerely, 

IIW, P.C. 

Ronald Balmer, P.E. 

Vice President of Finance 

On behalf of IIW’s other ESOP Trustees: 

Dennis Waugh, Charles Cate, Gary Sejkora, and Michael Jansen 

And IIW’s employee owners:

Deb Juno Mike Duehr Mary Abbott

Laurie Wehrspann Robert Timmons Wray Childers

Michele Nemmers-Knief Adam Moris Thomas Oster

Robin Walter Darin Jargo James Kaune

Amanda Kennedy John Tranmer Cody Austin

Brad Mootz Jeff Winter Bill Heiken

John Berns Steve Fuerst Alicia Cram

Monica Kehren Chris Huseman Ryan Obrecht

Robert Blok Mark Nicholas James Bousley

Russ Vernon Jeffry Brandt John Wandsnider

Craig Elskamp Robert Baumhover Geoff Blandin

David Schwarz Tim O'Brien Mark Jobgen

Tim Tranel Daniel Schlueter Marc Ruden

Lauren Ray Dawn Rick Paul Winkler

Patrick Young Stuart Summer Troy Christianson

Nate Miller Timothy Bahl Lynn Neal

Nick Schneider Terrence Kluesner Julie Neebel

Luke Runde Michael Busch