Confusion about the Trump administration’s announcement calling for a review of the DOL fiduciary rule less than three months before it’s due to take effect could find some resolution this week.
“We’re expecting to see a very short, simple notice in the Federal Register that will delay the rule most likely by 180 days,” said Erin Sweeney of the Washington, DC-based law firm Miller & Chevalier. Her best guess: a notice published on Tuesday.
In that case the notice would likely occur before a ruling by Dallas federal judge Barbara M.G. Lynn on a pending lawsuit opposing the rule. On Thursday, the judge issued a one-sentence notice to parties to the to the suit, which include the U.S. Chamber of Commerce, the Securities Industry and Financial Markets Association, the Financial Services Institute and others, that she intends to rule no later than Feb. 10. That may be one reason the Trump administration issued the memorandum as soon as it did, before its new secretary of labor was confirmed.
The 180-day delay that Sweeney says is most likely is the same timeframe included in a draft version of a White House memorandum that circulated early Friday morning. By the time the final version of the memorandum was released later Friday afternoon, however, there was no mention of a time frame or a directive for the DOL to work with the Justice Department to halt pending litigation over the rule, which was also included in the draft order.
Also excluded from the final memorandum, but included in the draft, was a specific order for the DOL to analyze prohibited transaction exemptions, which were an integral part of the rule, and to consult with DOJ about whether the fiduciary rule violates the “Administrative Procedure Act or any other applicable statute.” The APA governs the way federal administrative agencies may propose and establish regulations.
Following release of the final memorandum on Friday, acting Labor Secretary Ed Hugler, in a statement, said, “The Department of Labor will now consider its legal options to delay the applicability date as we comply with the president’s memorandum.”
“We’re back to where we were in the beginning,” said Sweeney.