U.S. Dept. of Labor Rule on Adequate Consideration Being Submitted to OMB For Interagency Review

The ESOP Association has been informed that a proposed rule from the U.S. Department of Labor regarding what is known as the “adequate consideration exemption” for ESOP transactions has been drafted and is being submitted to OMB imminently.

OMB is the agency that “oversees the implementation of the President’s vision across the Executive Branch.” This is the first step taken before a regulation can be made public for a notice and comment period.

The Office of Information and Regulatory Affairs (OIRA) at OMB is tasked with reviewing all major regulations and has up to 90 days to review a rule, although there is no minimum period of review. The ESOP Association expects the review process to be toward the shorter end of this timeframe given the Biden Administration likely wants to publish the rule before the end of the President’s term.

When the review process is completed, OMB will send the proposed rule back to the Department of Labor for publication in the Federal Register, at which point the public can read the rule and provide comments. It is unclear at this time how long the notice and comment period will be for this rule, however the Federal Register’s guide to the rulemaking process says it is typically 30-60 days but may be longer for complex rules.

This is the beginning of the next stage of the process for finalizing a rule on adequate consideration for the ESOP community. The ESOP Association will keep our members informed of any new developments as the regulatory process nears its completion.