The Office of Management and Budget is meeting with several groups, fueling speculation that its approval of the Labor Department’s plan to delay its fiduciary rule is coming as soon as this week.
The OMB scheduled a 2 p.m. meeting Tuesday with AARP to discuss the delay of Labor’s fiduciary rule implementation. On Wednesday afternoon, it is scheduled to meet with Better Markets, which supports more regulations on Wall Street, and Siegel Public Affairs, a consultant to local government groups and nonprofits.
Speculation is that Labor could file this week, after OMB approval, the much-anticipated 180-day delay of the rule’s April 10 compliance date, which will appear in the Federal Register.
Meanwhile, Sen. Lamar Alexander of Tennessee, chairman of the Senate Health, Education, Labor and Pensions Committee, said Tuesday that the nomination of R. Alexander Acosta, law dean at the public Florida International University, as President Donald Trump’s new Labor secretary “is off to a good start because he’s already been confirmed by the Senate three times.”
It’s been only two weeks since Labor filed with OMB to delay the fiduciary rule’s compliance date via a Notice of Proposed Rulemaking.
Because the proposed rulemaking is “marked as not economically significant may account for why OMB could review it quickly,” Kristina Zanotti, a partner at K&L Gates in Washington, said in a Tuesday interview with ThinkAdvisor. Any notice would simply likely be a delay of the rule’s compliance date, she added.
“Word is OMB could approve this week, but the proposed regulation won’t be published till next week,” said another attorney.
OMB also just recently got a new director, Rep. Mick Mulvaney, R-S.C.
Once OMB releases DOL’s proposal to the public in the Federal Register, “we will know the length of the delay of the rule’s applicability date and whether stakeholders will have an opportunity to provide comments before or after the delay is effective,” Zanotti along with her colleagues wrote in a recent client alert.
The question remains as to whether Labor’s proposal at OMB is a proposed rule or an interim final rule.
Step one “is delay the [DOL fiduciary] rule, which will happen, probably by an interim final rule that is effective upon issuance that solicits comment,” according to Dan Crowley, a partner at K&L Gates who leads the firm’s global financial services policy practice. “It’s a way to get six months for the SEC to review the issue.”
“There will almost certainly be a new [fiduciary] standard” issued by the SEC, Crowley added. “There will be a comprehensive [SEC] rulemaking–everybody wants that, including the new administration.”
A proposed rule allows for a “public comment period and the comments are then reviewed and taken into account before the rule is finalized. This is the normal process applied in most cases,” notes Joshua Waldbeser, a lawyer with Drinker Biddle & Reath. “An interim final rule is effective immediately, and public comments are then permitted after the fact. Interim final rules are usually issued where there is ‘good cause’ to issue a rule without first running it through the public comment process, which the Administrative Procedure Act requires as a general matter.”
Waldbeser adds that he’s “hoping that the delay becomes effective as soon as possible in advance of April 10. If it’s published at OMB this week, that would be very helpful. If the delay isn’t published at OMB within a couple of weeks, the timing is going to be uncomfortably tight.”
As directed by President Donald Trump, Labor is to prepare an updated economic and legal analysis concerning the fiduciary rule’s likely impact. K&L Gates attorneys opine that DOL “will seek to complete this analysis as quickly as possible to allow the DOL sufficient time to further propose rescinding or revising the rule, if the DOL deems such action is warranted.”
Any such proposal, the attorneys say, “will be subject to additional public comment. We anticipate many comments ‘for’ and ‘against’ the rule with the ultimate outcome uncertain.”
Alexander noted that Acosta “has an impressive work and academic background,” and that the HELP Committee “will schedule a hearing promptly after his nomination papers arrive in the Senate.”
He added: “I look forward to exploring his views on how American workers can best adjust to the rapidly changing workplace.”
A spokesperson for Alexander noted Tuesday that the HELP Committee “will not officially notice a confirmation hearing for Mr. Acosta until the committee has received his HELP committee paperwork and Office of Government Ethics agreement.”
— Check out DOJ Files to Halt Thrivent Case Against DOL Fiduciary Rule on ThinkAdvisor.