The Office of Management and Budget has closed its review of a proposed rule that would delay the April 10 implementation date of the Labor Department’s fiduciary rule.

Publication of the proposed delay is expected in the Federal Register within days.

During the more than two-week review of the proposed delay, officials from OMB, the Labor Department, and the White House’s Council of Economic Advisors held meetings with proponents of the rule, including robo-advisor Betterment, the Consumer Federation of America, AFL-CIO, the CFP Board, and the Committee for the Fiduciary Standard.

While the specifics of the proposed delay will not be known until publication in the Federal Register, some have speculated that it will call for a 180-day delay.

Also unknown is whether the proposed delay will be subject to a comment period, and how long a comment period would be.

What is known is that OMB changed the classification of the proposed delay to “economically significant.”

Under the Administrative Procedure Act, proposed rules expected to have an annual economic impact of $100 million or more are economically significant, and must be accompanied by a detailed economic analysis justifying the rule.

Micah Hauptman, an attorney with the Consumer Federation of American who was one of the fiduciary rule’s proponents that met with OMB, says re-classifying the proposed delay as economically significant creates a higher legal bar for delaying the April 10 implementation date.

“It means OMB has to engage in a heightened cost-benefit analysis and may have to quantify the benefits of delaying the rule, as well the alternatives,” said Hauptman.

“It’s a regulatory action and a delay changes the rule,” he added. “Considering the consequences of a delay, I don’t see how it is not economically significant.”

Hauptman said it is unclear if the proposed delay will be open for public comment but has heard rumors that OMB will field written input from stakeholders for up to 15 days.

A final rule delaying the April 10 implementation date that violates the APA would be subject to legal challenges, said Hauptman.

“To the extent that a rule delaying the date cuts corners, there will be challengeable issues,” he said.

Precedent for legal challenges of final rules that simply delay a regulation’s implementation date is extremely rare, according to one administrative law expert.

“To my knowledge, no one has successfully challenged a final rule delaying a compliance date,” said Leland Beck, a former senior counsel at the Departments of Justice and Homeland Security who is now in private practice. “If all the rule does is delay the date then I don’t see a way of challenging it.”

During its meeting with OMB, Betterment for Business, the record-keeping arm of robo-advisory Betterment, argued a delay of the April 10 implementation date would perpetuate investors’ exposure to conflicted advice.

“The fiduciary rule is the only realistic hope for prompt action to improve the quality of retirement advice,” said Seth Rosenbloom, associate general counsel for Betterment for Business, in a statement.

“And the rule can always be revised and improved once it is implemented,” he added.

Delaying the implementation date will give the Labor Department time to conduct the legal and economic analysis of the rule ordered in a memorandum by President Trump.

If that new analysis finds the rule will prohibit access to retirement advice, raise the cost of retirement investments, or generate onerous litigation under the rule’s Best Interest Contract Exemption, then the Labor Department could propose a re-written fiduciary rule.

“A delay would be bad enough, but it would be even worse if the delay is used as an opportunity to dilute the rule or remove it altogether,” said Rosenbloom.

Other attorneys who counsel financial institutions have told BenefitsPro that they expect the rule to ultimately be withdrawn and re-proposed.

“There are clear benefits to this rule, and financial institutions are not adverse to working with something that improves protections for retirement investors,” said Lawrence Cagney, chair of the firm’s Executive Compensation & Employee Benefits Group practice at Debevoise & Plimpton.

“But as it’s written it will invite an inordinate amount of litigation,” said Cagney.

But Hauptman of the CFA, which was a lead advocate for the fiduciary rule throughout the six-year rulemaking process, thinks the new standard that holds advisors and service providers to a fiduciary standard of care on retirement assets is facing an uncertain future, at best.

“Industry opponents have made it clear that they want to kill this rule at all costs,” said Hauptman. “And the highest levels of the Trump administration have also made that objective clear.”

Instant Insights /

Proposed delay of fiduciary rule expected in coming days

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