February 17, 2017
If you have questions, please contact your regular
Groom attorney or one of the attorneys listed below:
Jon W. Breyfogle
[email protected]
(202) 861-6641
Erin K. Cho
[email protected]
(202) 861-5411
James V. Cole II
[email protected]
(202) 861-0175
Michael Del Conte
[email protected]
(202) 861-6657
Jennifer E. Eller
[email protected]
(202) 861-6604
Ellen M. Goodwin
[email protected]
(202) 861-6630
Allision Itami
[email protected]
(202) 861-0159
David C. Kaleda
[email protected]
(202) 861-0166
Michael P. Kreps
[email protected]
(202) 861-54115
Ian D. Lanoff
[email protected]
(202) 861-6638
Jason H. Lee
[email protected]
(202) 861-6649
David N. Levine
[email protected]
(202) 861-5436
Arsalan Malik
[email protected]
(202) 861-6658
Richard K. Matta
[email protected]
(202) 861-5431
Scott Mayland
[email protected]
(202) 861-6647
David C. Olstein
[email protected]
(202) 861-2609
Thomas Roberts
[email protected]
(202) 861-6616
Alexander P. Ryan
[email protected]
(202) 861-6639
Stephen M. Saxon
[email protected]
(202) 861-6609
George M. Sepsakos
[email protected]
(202) 861-0182
Andrée St. Martin
[email protected]
(202) 861-6642
Kevin Walsh
[email protected]
(202) 861-6645
Fiduciary Rule Update: Is the Applicability Date
Applicable?
Uncertainty continues to surround the fate of the Applicability Date of the Fiduciary Rule
(including both the regulation and the new and existing class exemptions).
Potential Timeline
Currently pending at the Office of Management and Budget (“OMB”) is a regulation that is
listed as “proposed” and entitled “Delay of Applicability Date.” The fact that the regulation
is listed as “proposed” indicates that the regulation will not have immediate effect (i.e., it is
not listed as an “interim final rule”). The proposed rule will be subject to notice and
comment before a final rule delaying the Fiduciary Rule’s Applicability Date can be
published. The release of the regulation has been held up as OMB meets with interested
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parties. OMB has taken at least three meetings through Thursday February 16 and has five
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more scheduled through the afternoon of Wednesday February 22 with groups that have
publicly opposed the delay or publically supported the Fiduciary Rule. It is possible that
additional meetings could be added to the schedule.
While the contents of the proposed regulation are not available for inspection, there have
been informal indications that the process used by the Department of Labor (“DOL”) in 2009
to delay (and eventually withdraw) the participant investment advice regulations and class
exemption is a likely example of the process occurring now. If that is true, there would be a
short (e.g., 14 day) comment period on the delay that runs from the publication of the
notice in the Federal Register. For example, if the delay notice is published in the Federal
Register on February 24, 2017, the comment period would likely close on March 10, 2017.
DOL is required to review and consider the comments before finalizing a rule to implement
the proposed delay. On February 4, 2009, the DOL published a notice seeking comments on
a delay of a rule’s effective date and opened a 14 day comment period. The agency received
28 comments and published the final notice delaying the rule on March 20, 2009. The whole
process took 44 days from publication in the Federal Register of the notice to publication of
a binding delay. Given the import of the Fiduciary Rule and the interest generated by the
2015 proposal which produced thousands of comments, it seems likely that the delay
proposal will generate significant comments from proponents and opponents of a delay.
Assuming a 44 day process would be sufficient for the current process, the proposed
regulation would have to be published in the Federal Register no later than February 24,
2017 in order for the delay notice to be published on April 10, the scheduled Applicability
Date of the Fiduciary Regulation. Of course, this timeline assumes that the DOL concludes a
delay is the proper outcome of the notice and comment rulemaking process.
Potential Content of the Notice of Proposed Rulemaking
The length of the proposed delay is currently unknown, although many believe it will be 180 days. Concurrent with
the delay proposal or after the delay decision, the DOL may decide to reopen the Fiduciary Rule for substantive
comments based upon the factors delineated in the Presidential Memorandum on the Fiduciary Duty Rule issued on
February 3, 2017. A lot of discretion is granted to agencies, as shown in the recent string of district court decisions
upholding the DOL’s 2016 rulemaking. Legal claims under the Administrative Procedure Act challenging any
subsequent final rule will confront the same judicial deference to the agency so long as the DOL provides a reasoned
analysis for why it no longer embraces the facts and circumstances that underlay the 2016 policy.
Political Appointees
The confirmation of Mick Mulvaney as the Director for OMB could potentially speed up OMB’s review of the
regulation, allowing the earliest possible publication of the regulation in the Federal Register. Alexander Acosta, the
new nominee for Secretary of Labor, has previously been Senate confirmed for three Executive Branch positions,
including service on the National Labor Relations Board. His Executive Branch experience and previous confirmations
may make his confirmation process smoother, but no concrete timeline has been announced. A smooth confirmation
process typically takes a few weeks. As a result, it is unclear whether Mr. Acosta will be in a position to lead the DOL
to swiftly act on comments regarding a delay of the Fiduciary Rule.
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This publication is provided for educational and informational purposes only and does not contain legal advice. The information should in no way be taken as an indication of future legal
results. Accordingly, you should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly
stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be used by any taxpayer to avoid penalties under the Internal Revenue Code, and such
advice cannot be quoted or referenced to promote or market to another party any transaction or matter addressed in this communication.
© 2017 Groom Law Group, Chartered • 1701 Pennsylvania Ave NW • Washington, DC 20006. All rights reserved.
3
This publication is provided for educational and informational purposes only and does not contain legal advice. The information should in no way be taken as an indication of future legal
results. Accordingly, you should not act on any information provided without consulting legal counsel. To comply with U.S. Treasury Regulations, we also inform you that, unless expressly
stated otherwise, any tax advice contained in this communication is not intended to be used and cannot be used by any taxpayer to avoid penalties under the Internal Revenue Code, and such
advice cannot be quoted or referenced to promote or market to another party any transaction or matter addressed in this communication.
© 2017 Groom Law Group, Chartered • 1701 Pennsylvania Ave NW • Washington, DC 20006. All rights reserved.