Attorneys general from three states are asking a federal court to reconsider its decision to vacate the Department of Labor's fiduciary rule, one of a dwindling number of procedural moves available to supporters of the regulation.
Earlier this month, the 5th U.S. Circuit Court of Appeals denied a motion from the attorneys general of California, New York and Oregon asking for a rehearing on the matter. That court had vacated the fiduciary rule on March 15.
Now, citing the federal government's apparent decision to throw in the towel on the regulation, they are trying again.
"The federal government is no longer pursuing this appeal," the AGs write in their motion. "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."
Spokespeople for the Department of Labor and Department of Justice did not immediately respond to questions on the government's plans to defend or abandon the rule.
The attorneys general request to intervene in the case was rejected by a 2-1 margin, the same split in the decision to scrap the rule in March. The AARP had aligned itself with the states in seeking its own motion to interview to save the rule. Leading financial-services trade groups like SIFMA, FSI and the Financial Services Roundtable opposed those motions and asked the court to leave the rule vacated.
If the court rejects the AGs' latest motion to intervene, they will seek to bring the matter before the full court in what is known as an en banc proceeding.
"The fiduciary rule is worth fighting for ― plain and simple. American families saving their hard-earned money for retirement deserve to know that the investment advice they receive is unbiased and in their best interest," California Attorney General Xavier Becerra says in a statement. "We hope to be given the chance to defend the fiduciary rule in court."
But it's getting into the late innings, observes Duane Thompson, senior policy analyst at Fi360, a fiduciary training firm. He sees the court's restoration of the rule as a dim prospect.
"I don't think you can close the book on this rule with 100% certainty," Thompson says, "but nonetheless the latest motion is a very long shot."