Department of Labor, Employee Benefits Security Administration: Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights


B-334848

December 13, 2022

Honorable Pattie Murray
Chairman
Honorable Richard Burr
Ranking member
Welfare, Education, Labor and Pension Committee
United States Senate

honorable bobby scott
Chairman
Honorable Virginia Fox
Ranking member
Board of Education and Labor
House of Representatives

subject: Department of Labor, Employee Benefits and Security Management: Prudence and Honesty in Selecting Plan Investments and Enforcing Shareholder Rights

Pursuant to Section 801(a)(2)(A) of Title 5 of the U.S. Code, this relates to the principal rule entitled “Prudence and Loyalty in Choice” promulgated by the Department of Labor’s Employee Benefits Administration (EBSA). Report. Planning Investments and Exercising Shareholder Rights” (RIN: 1210-AC03). I received the rules on December 1, 2022. Federal Gazette As a final rule on December 1, 2022. 87 Fed. Registration 73822. Effective date is January 30, 2023.

According to EBSA, the final rule clarifies the application of the Employee Retirement Income Security Act of 1974, 29 USC § 1001. and sequenceThis includes selecting eligible default investment alternatives, exercising shareholder rights such as voting, and using written voting policies and guidelines. EBSA further said the final rule reverses and amends certain amendments to the investment tax rules he adopted in 2020.

Enclosed is an assessment of EBSA’s compliance with the procedural steps required by Sections 801(a)(1)(B)(i) through (iv) of Title 5 with respect to the Regulations. If you have any questions about this report, or would like to contact her GAO staff responsible for evaluation work related to the subject matter of the rule, please contact Shari Brewster, Assistant General Counsel at (202) 512-6398.

Shirley A. Jones
Managing Associate General Counsel

enclosure

cc: Lisa M. Gomez
Assistant Secretary
Employee benefits management
labor bureau

enclosure

Reporting Under 5 USC § 801(a)(2)(A) of the Core Rules
The issuer
Ministry of Labor,
Security management of benefits
entitled
“Prudence and loyalty in choosing planned investments
exercise the rights of shareholders
(also: 1210-AC03)

(i) Cost-benefit analysis

The Department of Labor, Employee Benefits and Services Administration (EBSA), under the final rule, will charge $135.4 million in total costs attributable to the cost of reviewing planned investment practices, the cost of reviewing voting practices, and the cost of updating voting policies. We estimate it to be $7458. The EBSA will also provide $18,222,207 in the first year and $6,072,526 in the second year due to the elimination of the special secured benefit documentation requirement under the tiebreaker rule and the elimination of the special recordkeeping requirement for proxy voting. We estimate that it will save us a dollar. Elimination of “safe harbors” for proxy voting.

(ii) agency actions related to the Regulatory Flexibility Act (RFA), 5 USC §§ 603–605, 607, and 609;

EBSA has produced a Final Regulatory Flexibility Analysis. The analysis: (1) the need and purpose of the Regulation; (2) Comments on Proposed Rules. (3) A description of the affected small entity. (4) Effect of Final Rule. (5) Regulatory Alternatives. (6) Duplicate, Duplicate, or Related Federal Regulations.

(iii) agency actions related to Sections 202-205 of the Unfunded Mission Reform Act of 1995, 2 USC §§ 1532-1535;

EBSA has determined that the final rule does not contain federal obligations that EBSA expects to result in such expenditures by state, local, tribal, or private sector governments.

(iv) other relevant information or requirements under laws and administrative orders;

Administrative Procedure Act, 5 USC §§ 551 and sequences.

On 14 October 2021, the EBSA published its proposed rules. 86 Fed Register 57272. EBSA said he received over 895 written comments and he received over 21,469 form letters during the open comment period. EBSA acknowledges that the Comments were made by a variety of stakeholders, including plan sponsors and other plan fiduciaries, individual plan participants and beneficiaries, financial services firms, academics, elected government officials, trade associations, and trade associations. It says it was sent by someone.

Paperwork Reduction Act (PRA), 44 USC §§ 3501–3520

EBSA said the final rule eliminates the information collection requirements associated with Office of Management and Budget (OMB) Control Numbers 1210-0162 and 1210-0165.

Statutory approval of the rules

EBSA has issued final rules pursuant to Sections 1101, 1104, 1108, 1112, and 1135 of Title 29 of the United States Code, and Public Laws 107-16 and 109-280.

Executive Order 12866 (Regulatory Planning and Review)

EBSA said OMB determined that the final rule was economically material.

Executive Order No. 13132 (Federal)

EBSA has determined that the final rule will not affect federalism. This is because it does not directly affect the states, central-state relations, or the distribution of power and responsibility between different levels of government.

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