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AARP, attorneys general move to halt fiduciary rule expiration date

AARP and the attorneys general of New York, California and Oregon moved Thursday to intervene in a case vacating the Department of Labor's fiduciary rule, just days before the April 30 deadline for DOL officials to appeal.

Convinced that DOL officials would not fight the ruling, the states and AARP filed motions to intervene in the case, and to have all 17 judges of the 5th U.S. Circuit Court of Appeals in New Orleans review a March 15 decision where the court ruled 2-1 that the DOL had overstepped its legal authority to issue the fiduciary standard.

The court order stopping the fiduciary rule goes into effect May 7, unless the court grants the petitioners' motions to intervene.

"Until now, AARP's interests were aligned with those of the government, which had fully defended this and other challenges to the rule. But the government recently decided to veer off that path. That change now requires AARP to intervene to protect its interests, and the interests of millions of its members," the group's motion said. It also argued that the 5th Circuit decision creates an irreconcilable intra-circuit split and conflicts with Supreme Court precedent, which they argue has "consistently concluded that ERISA both supersedes and expands the common law definition of fiduciary."

In their petition, the attorneys general argued that New York and California "will lose more than $52 million in retirement investment income over the next 10 years" if the three-judge panel's decision is upheld. "Residents stand to lose billions of dollars in retirement investment gains," the petition said. "Intervention is necessary to prevent those results."

While the business and financial services groups that brought the lawsuit challenging the rule have indicated they will oppose the motions to intervene and for an en banc hearing, "counsel for the (federal) government takes no position on this motion to intervene," the attorneys general petition said.

The plaintiffs, the U.S. Chamber of Commerce, Financial Services Institute, Financial Services Roundtable, Insured Retirement Institute and Securities Industry and Financial Markets Association, said in a statement that "the 5th Circuit got it right in its March 15, 2018, opinion."

Backers of the rule note that 5th Circuit Chief Judge Carl E. Stewart issued a dissenting opinion, calling the new rule "an expansive-but-permissible shift in DOL policy," and that the DOL "acted well within the confines set by Congress in implementing the challenged regulatory package."