The Fifth Circuit Court of Appeals rejected an appeal by a trio of states today, clearing the way for the controversial Department of Labor fiduciary rule to be officially killed.
The final action appears to be for the court to issue a mandate to vacate the rule. With all appeals exhausted, that mandate could come quickly. The government technically has until June 13 to appeal to the Supreme Court, but the Trump administration passed on all appeals to date.
California, New York and Oregon filed its long-shot appeal last week for the court to reconsider its request for a full review. The Fifth Circuit had denied the states' request for appeal in a May 2 decision.
In its appeal, the states' attorneys noted that the federal government is not appealing the Fifth Circuit's March 15 decision tossing out the controversial Obama-era fiduciary rule.
"Given that posture, the exceptional importance of the issues, and the grave harm the States will suffer as a result of the panel opinion -- billions of dollars in lost retirement income to their residents and tens of millions of dollars in lost tax revenue -- the States respectfully request that the Court reconsider its decision," the appeal read.
The court was unmoved. In addition to denying the appeal a second time, the court denied state's request to file a petition seeking a full court review.
The states sought a full review in front of the entire Fifth Circuit court, known as an en banc review. The Fifth Circuit's 2-1 decision came down March 15, reversing several losses by industry opponents in courts from Kansas to Washington, D.C.
Judge Edith H. Jones wrote in the majority opinion that the DOL rule "fails the reasonableness test" of the Administrative Procedures Act by extending the department's ERISA authority to one-time IRA rollovers and similar transactions.
The decision went on to admonish the DOL for exceeding its authority and re-affirmed the role of Congress and the Securities and Exchange Commission in regulating agents and advisors.
The DOL rule was created by the Obama administration, but President Donald J. Trump ordered the DOL to delay and further study the rule soon after taking office.
Parts of the rule went into effect June 9, but the more stringent exemptions needed to sell variable and fixed indexed annuities were delayed until July 2019.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected].