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Regulation and Compliance > Federal Regulation > DOL

DOL Appeals Two Rulings Halting Fiduciary Rule

By Melanie Waddell

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The Labor Department late Friday filed to the Fifth Circuit Court of Appeals to reverse two rulings from federal courts in Texas that temporarily stopped Labor’s new fiduciary rule from taking effect.

Before the stays were granted, the rule was set to take effect Monday.

In late July, the U.S. District Court for the Eastern District of Texas Tyler Division granted the request of the Federation of Americans for Consumer Choice and several independent insurance agents to delay the implementation of Labor’s new fiduciary rule, officially called the Retirement Security Rule.

A day after, the U.S. District Court for the Northern District of Texas issued its own stay of the fiduciary rule and the prohibited transaction exemptions 2020-02 on rollovers and 84-24 on annuities, as requested by nine insurance trade groups in American Council of Life Insurers, et. al. v. U.S. Department of Labor, et. al., filed on May 21.

Brad Campbell, partner at Faegre Drinker in Washington and a former head of Labor’s Employee Benefits Security Administration, told ThinkAdvisor Monday in an email that “the facts on the ground are still pretty thin beyond the fact that DOL is appealing the stay orders.”

Said Campbell: “We’ll know more after the 5th Circuit dockets the case.”

The bottom line: “Nothing has fundamentally changed in the near term — the rule remains on hold for the indefinite future,” Campbell said.

“DOL has filed the necessary paperwork within the right amount of time to challenge the district courts’ stays in the 5th Circuit, but we don’t yet know how long it will take for the 5th Circuit to decide whether the stays are valid, and they remain in place unless and until the 5th Circuit rules otherwise,” Campbell said.

“Filing the appeal of the stay order does not automatically stop the district courts from proceeding on the merits of the case while the stay appeal is pending, but it is likely that the parties will be discussing next steps, which could include slowing down the schedule for the district court cases,” Campbell relayed. “We will likely learn more by the end of the week or early next week.”

Melanie Waddell

@Think_MelanieW

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