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Denny Rehberg Appropriations Committee
State of Montana Labor th and Human

Congress of the United States ne eres
House of Representatives

June 3, 2011

The Honorable Hilda L. Solis
Secretary

U.S. Department of Labor
200 Constitution Avenue, NW
Washington, DC 20210

Dear Secretary Solis:

As you know, the Employee Benefits Security Administration (EBSA) of the Department of
Labor has proposed to change the regulatory structure and definition of the term “fiduciary”
under the Employee Retirement Income Security Act of 1974 (ERISA). I understand that the
proposed regulation will affect much of the retirement and investment industry, and I want to
ensure that any changes to the existing investment regulatory structure are done in the most
cautious and practical manner.

The current ERISA regulatory structure, which has stood for 35 years, requires that an individual
satisfy a five-part test in order to be considered a fiduciary who can give investment advice.
Persons who meet the test of a fiduciary must refrain from engaging in certain prohibited
transactions. The Department’s proposed rule significantly expands the definition of who would
be considered a fiduciary, flipping the regulatory structure so that an individual would be
presumed to be a fiduciary.

The Department has been presented with many scenarios that describe the disruption this
proposed rule will have to the retirement and investment community. Those concerns are
centered on how the proposed definition of fiduciary would affect and limit the discussion of
everyday educational information and investment tools. At a time when we are trying to
encourage Americans to save for their future retirements, I share the fear detailed by both the
financial services industry and Members of Congress that the new rule may limit the access
everyday Americans have to low-cost investment advice.

I also have concerns about the economic analyses that were prepared for the proposed rule. The
Department is required by the Regulatory Flexibility Act (RFA) to prepare an economic analysis
if a regulatory proposal has significant economic impact upon a substantial number of small
entities. However, the Department looked only at a small segment of the service providers that
are listed on filed Form 5500s. With 600,000 defined contribution plans and almost 38,000
defined benefit plans with fewer than 100 participants, most likely sponsored by small
businesses, why has the Department not conducted any economic analysis on how the proposed
tule would affect small plans?

Finally, I share the concerns noted by the leaders of the committee of jurisdictions on this issue,
that the lack of coordination between government agencies and regulators on this issue is

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disconcerting. I ask that the Department suspend its rulemaking process until the full impact of
the proposal is determined. This should include thorough economic analyses about how a
proposed regulation would affect all retirement plan sponsors, plan participants and IRA holders,
including the affect the proposed rule may have on reducing access to investment tools and
advice. The economic analyses should consider the impact on all of the financial services
industry and should also include close coordination with other government agencies and
regulatory structures.

As millions of Americans dependent upon our nation’s retirement system, it is crucial that any
proposals seeking to change or improve the retirement system are done with the utmost caution
and care. Thank you for the opportunity to weigh in on this important issue. Should you have
any questions, please do not hesitate to contact my office.

Sincerely,

2.~~x QMarye

Denny Rehberg

Chairman

House Appropriations Committee

Subcommittee on Labor, Health and Human Services, Education and Related Agencies