As expected, the Department of Labor filed a notice Thursday with the Office of Management and Budget to delay implementation of its fiduciary rule via a Notice of Proposed Rulemaking.
OMB reviews generally take from 10 to 14 days and then once OMB approves the proposal, Labor will send the notice to the Federal Register for publication – generally within one day.
The notice filed at OMB Thursday does not say how long Labor plans to delay the rule’s April 10 compliance date, though 180 days has been widely discussed. Details of the plan won’t be revealed until OMB approves the notice, which could be published in the Federal Register by the end of February.
The notice of delay comes just a day after Texas federal trial Judge Barbara M.G. Lynn ruled in favor of the Labor Department in the case brought by nine plaintiffs against Labor’s fiduciary rule.
Lynn had promised a ruling by Friday; her ruling was the third court victory for Labor’s fiduciary rule.
The nine plaintiffs, including the U.S. Chamber of Commerce, the Securities Industry and Financial Markets Association and the Financial Services Institute, sued the DOL over its fiduciary rule in a federal court in Texas.
The nine plaintiffs in the Texas case are represented by former Labor Department solicitor Eugene Scalia, who’s a partner in Gibson, Dunn & Crutcher’s Washington office and a son of deceased Supreme Court Justice Antonin Scalia.
In a joint statement, the co-plaintiffs said: “We continue to believe that the Department of Labor exceeded its authority, and we will pursue all of our available options to see that this rule is rescinded.” President Donald Trump’s recent directive to the department to review the rule is “reflecting well-founded, ongoing and significant concerns about the rule, [and] is a welcome development.”
Said Lynn in her ruling: “In contrast to the situations in the cases cited by Plaintiffs, in [the Employee Retirement Income Security Act] Congress did speak clearly, and assigned the DOL the power to regulate a significant portion of the American economy, which the DOL has done since the statute was enacted.”
Congress, Lynn said, “gave the DOL broad discretion to use its expertise and to weigh policy concerns when deciding how best to protect retirement investors from conflicted transactions.”
Trump signed an executive order on Feb. 3 directing the Labor Department to undertake an assessment of its fiduciary rule, and if it deems appropriate, a proposal to revise the rulemaking, which industry officials say would delay the rule’s April 10 effective date.
Acting Labor Secretary Ed Hugler said in a statement the same day that the DOL would “consider its legal options to delay the applicability of the date as we comply with the president’s memorandum.”