The long-awaited ruling from a Texas federal court on thelegality of the Labor Department’s fiduciary rule may be relegated tothe dustbin of history before anyone reads the decision.

According to Erin Sweeney, a Washington, D.C.-based attorneywith Miller & Chevalier, the Departments of Justice and Laborintend to stop defending the case and are in settlement discussionswith plaintiffs and the court.

Judge Barbara Lynn, the chief U.S. district judge for theNorthern District of Texas, issued a statement last week saying herdecision would be released no later than Friday, February 10.

Judge Lynn’s statement was issued one day before the Trump administration released a draft of aPresidential memorandum that included instructions for the agenciesto consider staying defense of pending litigation of the rule infour federal courts. That instruction was stripped from the finalmemorandum.

Sweeney said she expects an announcement that the agencies willstop defending the rule before Judge Lynn’s decision is released.If that is the case, the public will never view the ruling, whichSweeney said is already written.

Two federal courts have already upheld the rule, and one suitbrought by the National Association of Fixed Annuities is beingappealed in the District of Columbia Circuit Court.

The claim in Texas, brought by the U.S. Chamber of Commerce anda consortium of trade organizations, is the most wide-ranging ofall the cases. The plaintiffs brought eight counts under the suit,alleging the Labor Department exceeded its statutory authority inpromulgating the rule, among other claims.

Options for rule’s proponents

There is precedent for the government to stop defending lawsuitsunder Presidential instructions.

In 2011, the Justice Department stopped defending cases broughtunder the Defense of Marriage Act at the behest of PresidentObama.

In that case, a third party stepped in to file a motion tointervene, allowing the lawsuits to continue.

A similar action was taken last December, when the Texas AFL-CIOfiled a motion to intervene and take over the defense of the LaborDepartment’s overtime rule, which was blocked by the District Courtfor the Eastern District of Texas.

In its motion to intervene, the AFL-CIO argued that theintervention by a third party was necessary, given “grave concerns”that the Trump Administration would not forcefully defend thelawsuits against the overtime rule.

Speculation that the Justice and Labor Departments may droptheir defense of the fiduciary rule litigation has been commonsince President Trump’s election in November.

“We’re aware there have been discussion of that and that’s whatwe’ve been worried about,” said Alison Zieve, director of thelitigation group at Public Citizen, an advocacy for consumerrights. Zieve said she was unaware of speculation that the agencieswere preparing to drop their defense in the Texas Court.

“We’ve been given no indication the DOJ is backing down so far,but we are in a new normal under this administration,” said MicahHauptman, financial services counsel at the Consumer Federation ofAmerica. “It would be troubling to say the least if the DOJ decidedto flip flop.”

Zieve said there are numerous interest groups that would havestanding to file for a motion to intervene to continue the defenseof the rule, but that she was unaware of formal plans. Any effortto do so may come down to a question of resources and timing. “Itwould have to be done quickly,” she said.

Notice to delay April 10 implementation date

Absent from President Trump’s memorandum instructing the LaborDepartment to undertake a new economic and legal analysis of thefiduciary rule was a directive to delay the April 10 implementationdate. That language was also removed from an earlier draft of thememo.

Sweeney says guidance delaying the implementation date by sixmonths will be issued by the Labor Department, possibly by week’send. A Labor Department spokesperson reiterated a statement fromthe agency’s acting Secretary last week, saying “DOL is looking atoptions to delay the applicability date” of the rule.

A six-month delay is likely to be subject to a short commentperiod, she Sweeney. That would be followed by a request forinformation from stakeholders to facilitate the Labor Department’snew economic and legal analysis of the rule.

“There is going to be pressure to get the new analysis of therule done in a six-month period so Labor doesn’t expose itself toaccusations that it is not enforcing the rule,” said Sweeney.

From there, Labor could begin to write a new proposed rule forpublic comment.

In a client alert issued today, attorneys at Drinker Biddle alsosaid the Labor Department is taking steps to issue a delay.

“We expect an announcement, possibly within a matter of days,that steps are being taken to delay the April 10 applicabilitydate,” the alert said.

Related: See our Fiduciary Rule page