At long last, the door has been opened for the Department of Labor (DOL) and the valuation profession to work together to develop guidance on ESOP valuations.

Crossroads: The DOL has just committed to move forward with long-awaited rule making with stakeholder input on the valuation of company shares to be bought by an ESOP, according to a release from The ESOP Association (TEA). The regulation will clearly define “adequate consideration” under Section 408(e) of the Employee Retirement Income Security Act of 1974 (ERISA). It’s been four decades since such regulations were proposed but never finalized.

Valuation experts have long maintained that the DOL has been playing by its own valuation rules in its aggressive enforcement of ESOPs—rules that are not consistent with accepted valuation standards. After a long winning streak, the courts rejected the DOL’s valuations in several recent and important cases alleging that the ESOPs overvalued (and thus overpaid for) the stock of the sponsoring companies.

Déjà vu? In the past, the DOL has indicated that it would finish up the rules, but the agency never followed through. Hopefully, this time will be different. “There is not much trust between ESOPs and the DOL, so we hope this isn’t a case of ‘fool me twice,’” said James Bonham, TEA president, in the release.