The best way to ensure that the Department of Labor’s fiduciary rule doesn’t see the light of day may be to amend a government spending bill this fall to do just that, according to Erik Rust, senior legislative assistant for financial services affairs to Rep. Ann Wagner, R-Mo.

Wagner, a House Financial Services Committee member, has introduced H.R. 1090, a bill to stop DOL from issuing its fiduciary rulemaking under ERISA, but Rust said that internal Democratic party politics will make passage of that bill—and any veto override—unlikely. However, should Congress make progress this year in writing and passing a broader spending bill, not a Continuing Resolution (CR), to fund the government, President Obama would be loath to veto the spending bill even if it contained a rider that would stop DOL from issuing its controversial rule.

“We’re operating under a CR right now” through the beginning of December, Rust said, so there’s “no changing of spending or policy priorities.” However, if “you’re passing an appropriations bill, you can attach spending riders to change policy. So at the end of the year, as DOL is close to issuing its rule, we could insert a legislative rider to prevent DOL from issuing the rule” at all, or to get a one-year delay to the rule.

Wagner’s bill, the Retail Investor Protection Act, was passed Sept. 30 by the financial services panel and referred to the full House.

Rust was speaking on a conference call sponsored by Americans for Annuity Protection (AAP), a 501c(4) advocacy group founded this year, according to its website, “by insurance and annuity veterans to ensure a diverse and competitive annuity marketplace serving Americans across the economic spectrum.” The group’s motto is “Annuities protect America; we protect annuities.”

AAP’s CEO, Kim O’Brien, said Wagner was “at the forefront” in protecting consumers from the effects of the DOL rule, which Rust said would “upend” retirement planning for many lower- and middle-income Americans. The rule would “raise prices for retirement planning advice and shut out many Americans” who wish to purchase an annuity to get guaranteed income for life. “This is not a Wall Street issue,” which Democrats have tried to make of the DOL rule, Rust said, rather “this is a Main Street issue affecting every congressman’s district.”

Rust said that for now, it appears that the DOL will issue its final rule in the first quarter of 2016, with eight months for the industry to implement the rule. “They want to get this out the door before a potential Republican president, say a President Trump” will be in office to prevent its implementation. “It will be on the books.”

Rust said that the concern of his “boss” — Rep. Wagner — over the DOL rule is that DOL is taking the lead in implementing a fiduciary duty on advice givers rather than the Securities and Exchange Commission.

“Back in 2010 when the Dodd-Frank Act was passed, a provision [Section 913] was included to look at the standard of care to see if there should be a uniform fiduciary rule. Congress wanted to see if there were regulatory gaps” that could be closed, Rust said. So under Dodd-Frank, in 2011 the SEC said “it would be appropriate to bring brokers from a suitability standard to a fiduciary standard.” Rust said not just Rep. Wagner but “many in Congress thought the SEC should go first rather than DOL” to help prevent “market disruptions.” After all, “sometimes you get agencies competing with each other,” Rust said, and having the SEC move first on any fiduciary rules is “the message of the congresswoman’s bill.” Moreover, the SEC is a “bipartisan five-member committee rather than one secretary” making decisions, as with Thomas Perez at Labor. “They take longer,” Rust said, referring to the SEC, “and that’s a good thing,” and reminded listeners that the SEC has said its staff is “actively working on those regulations.”

As for the current DOL rule and its implementation schedule, Rust said “We’ve had over 100 meetings — my boss and me — on this issue and we haven’t heard a single person say they could implement” the rule’s disclosure, ongoing reporting to clients and instituting contracts provisions, especially to operate under the best interest contract exemption. Those new disclosures are “much more extensive than what’s required today; it would take three years to bring it online,” he predicted.

“It’s unclear that you could get those customers back after implementing this expensive” process, Rust said. “We can’t let the risk of this rule [becoming] final without any substantive changes. The DOL lacks the expertise to get this done, and maybe even the willingness.”

O’Brien brought up an underreported issue: that the DOL rule would affect not just variable annuities — which could be sold by advisors under the BIC  exemption — but also fixed annuities, under the rule’s “impartial conduct standards” provision PTE 84-24. O’Brien said “even proponents of the rule are saying ‘No one has a problem with fixed annuities.’” She said that as the rule is currently written, it will “significantly curtail education on annuities,” and would lead to “serious abandonment” of the fixed annuity sales space because of its “enormous and very expensive” compliance requirements.

For DOL fiduciary rule proponents, Rust mentioned that final line of defense would be in the courts. “If Congress can’t stop the rule, there’s a pending lawsuit” being prepared to challenge it under the Administrative Procedures Act. The contention is that since DOL “rolled out this rule so quickly, have they followed the guidelines on getting and listening to [the public’s] feedback? That’s something else to watch for.”

— Check out Investors Want Financial Advisors, but Don’t Dare Call Yourself a Fiduciary on ThinkAdvisor.