MAURICE D. HINCHEY COMMITTEE ON APPROPRIATIONS
22n0 DISTRICT, NEW YORK suscommirress:

AGRICULTURE, RURAL DEVELOPMENT,

WASHINGTON OFFICE: FOOD AND DRUG ADMINISTRATION,
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vr aShncton ones Congress of the Anited States maven
ouse of Representatives INTERIOR AND ENUIRONMENT
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Washington, BC 20515-3222 aia
ENERGY AND MINERAL RESOURCES:
January 3, 2010 NATIONAL PARKS, FORESTS AND

PUBLIC LANDS

JOINT ECONOMIC COMMITTEE
The Honorable Hilda L. Solis

Secretary

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

Re: Department of Labor Employee Benefits Security Administration
29 CER Part 2510 RIN 1210-AB32

Dear Secretary Solis:

Americans across the country are feeling increasingly uncertain about their retirement security.
With fewer and fewer businesses providing pensions to their employees, Americans are forced to
put more of their income away for the future. One way the Congress and the Administration can
work to ensure that retirement security does not continue to decline in this country is by
encouraging businesses to utilize important programs like Employee Stock Ownership Plans
(ESOPs).

Businesses that utilize ESOPs engage in profit sharing by annually contributing to a trust and
then granting its employees shares of the trust. These shares accumulate throughout the course of
the employees’ careers and provide a significant benefit to the’ employee when cashed in upon
retirement or when they leave their companies. Businesses that exercise an. ESOP play a critical
rolein providing important retirement security for millions of Americans.

Historically, companies that engage in ESOPs provide more retirement benefits for their
employees and have higher rates of retention than companies without ESOPs. In addition,
Federal law mandates that ESOP sponsors have yearly independent stock valuations that reflect
accuracy and integrity and these businesses should be commended for their dedication to their
employees. .

For these reasons, J do not believe the Department of Labor (DOL) should require that all
ESOP's need to be assessed by an advisor with fiduciary responsibilities as now being considered
in the reference above. Fiduciaries can be held liable for their yearly valuation of ESOP stock
and as a result, services by fiduciaries would add considerable additional costs to these
businesses. Subjecting businesses with ESOPs to an additional financial burden will likely result
in fewer businesses opting into employee stock ownership plans in the future and may even
result in businesses shedding their current employee stock ownership plan.

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If the Department of Labor finds that a company's ESOP shares are wrongly valued, I encourage
the Department to use its enforcement power to address the particular ESOP at fault. The
Department may also consider imposing a fiduciary valuation on only those who have previously
overvalued their stock. Imposing new regulations on all ESOPs needlessly hurts the good actor
and reduces the corresponding retirement of its employees. I strongly urge the Department of
Labor to allow the good actors to maintain the current requirements regarding ESOP stock
valuation -- for the last 34 years this program has successfully provided retirement benefits for
millions of Americans and should be free to do:so into the future.

Best regards.

Sincerely,

ice D. Hinchey