House Republicans Target EBSA in Heated Hearing on Transparency, Oversight 

Republicans in the House of Representatives took aim at retirement benefit oversight during a July 22 hearing, “Restoring Trust: Enhancing Transparency and Oversight at EBSA,” held by the House Committee on Education and the Workforce.

The session focused on alleged mismanagement and lack of accountability at the Employee Benefits Security Administration, and representatives discussed the agency’s use of common interest agreements and its general enforcement practices. A common interest agreement is when EBSA shares information it learns during an investigation with plaintiffs involved in litigation related to the Employee Retirement Income Security Act, a practice plan sponsor lawyers argue is unfair to fiduciaries.  

Two bills have been proposed this year by House Republicans to increase oversight on the agency: the Balance the Scales Act and the EBSA Investigations Transparency Act.  The Balance the Scales Act would require EBSA to file an annual report about its use of common interest agreements and require the agency to provide a copy of the agreement to affected fiduciaries. The EBSA Investigations Transparency Act would force EBSA to file an annual report to Congress that provides a status update about its pending investigations, such as which office is in charge of the investigation and when it began. The agency would also have to justify any investigation that lasts more than three years. 

Subcommittee Chairman Rick Allen, R-Georgia, opened the hearing by criticizing EBSA’s practices under the administration of former President Joe Biden for “inefficient employee benefit plan investigations that lasted for years” and hurt Americans, he said. 

At the center of the debate was growing Republican frustration with what representatives described as a lack of transparency, politically motivated enforcement and protracted investigations into employee benefit plans. Multiple GOP lawmakers said that reforms were necessary, such as those contained in the two proposed bills. 

In addition to several scathing remarks from House Republicans, Jim Bonham, president and CEO of the ESOP Association, testified to what he said were longstanding regulatory challenges faced by employee ownership plans. 

In January, President Donald Trump signed an executive order withdrawing any proposed federal rules that had not been published in the Federal Register prior to January 20, causing proposed rules regarding employee stock ownership plans to be withdrawn. 

Andrew Banducci, a senior vice president at the ERISA Industry Committee, also testified, arguing that “EBSA’s investigations are taking too long” and comparing its investigations to “fishing expeditions.”  

Ali Khawar, the former deputy head of EBSA, defended the agency’s actions during the Biden administration, indicating that there were only 12 common interest agreements in the last 15 years, and said ERISA grants the agency the right to share information with interested parties.  

As for the accusations of unnecessarily long investigations, Khawar said that nearly 3% of investigations went on for more than 4 years, as of November 2023, with most of the lengthier cases not involving retirement issues.