Responding to withering criticism from his friends in the business community for allowing the Obama administration’s “fiduciary rule” to go into partial effect next month, Labor Secretary Alex Acosta has taken to the pages of the Wall St. Journal to reassure his corporate supporters that he (and President Trump) are, in fact, “committed—and rightly so—to roll back unnecessary regulations that eliminate jobs, inhibit job creation, or impose costs that exceed their benefits.” The fiduciary rule simply requires financial advisers to act in the best interests of their clients in retirement accounts.
Acosta could have just stopped right there. Because every protection that the Department of Labor issued during the Obama administration has already gone through rigorous analysis, public comment and OMB review to ensure that they would not, in fact, eliminate jobs or inhibit job creation, and that their benefits exceeded their costs.
— Secretary Acosta (@SecretaryAcosta) May 22, 2017
Acosta defends DOL’s efforts to roll back Obama’s “Persuader Rule” (which requires law firms to publicly disclose any work they do for employers to oppose union organizing efforts) because the courts have declared it illegal and the American Bar Association opposes it. Unfortunately, he doesn’t have those excuses to justify rolling back the fiduciary rule. Acosta admits that the “courts have upheld this rule as consistent with Congress’s delegated authority,” so the only excuse he has to roll it back is that the “rule as written may not align with President Trump’s deregulatory goals.”
But Acosta has come under fire from the financial industry and Republican members of Congress for not further delaying the “fiduciary rule” that, after one delay, is scheduled to come partially into effect on June 9. Unfortunately, despite the impassioned objections of the financial industry, he’s found that “the rule of law” stands in his way to a further postponement of the rule’s effective date beyond June 9. It seems that the Administrative Procedure Act, which governs all government rulemaking, prohibits DOL from further delaying the rule without a notice and comment period that would take them beyond the June 9 date:
We have carefully considered the record in this case, and the requirements of the Administrative Procedure Act, and have found no principled legal basis to change the June 9 date while we seek public input. Respect for the rule of law leads us to the conclusion that this date cannot be postponed. Trust in Americans’ ability to decide what is best for them and their families leads us to the conclusion that we should seek public comment on how to revise this rule….This process is not red tape. It is what ensures that agency heads do not act on whims, but rather only after considering the views of all Americans.
Of course, what Acosta fails to mention is that DOL has already considered the views of all Americans. The fiduciary rule may not “align with President Trump’s deregulatory goals,” but the American people have already had an opportunity to decide what is best for them and their families. The rule has already gone through lengthy public comment and three days of public hearings, and the American people decided that that it was in their best interests to be protected against shady financial advice.
What we’re seeing here is not a public minded desire to “trust in Americans’ ability to decide what is best for them and their families,” but a brazen attempt to turn the clocks back in order to overturn a rule that has already determined, under the requirements of the Administrative Procedure Act, to be in the best interests of the American people.
Those of us who spent years in the Obama administration developing protections for American workers found that the wheels of government work slowly. The Trump administration is now finding, to their great surprise and disappointment, that the wheels of government work slowly backwards as well as forward — and not only in their attempt to roll back the fiduciary rule. They also foundered last week in their attempt to quickly issue a proposed regulation that would roll back parts of OSHA’s beryllium standard before it took effect, after a delay, on June 20. It turns out that rulemaking is harder than it looks and the beryllium rollback proposal has yet to emerge from the Office of Management and Budget.
And, of course, even when DOL gets around to launching proceedings to repeal the fiduciary rule — or any of DOL’s other worker or consumer protections — they will have a high bar to top. Secretary Acosta may want to listen to Phyllis Borzi, Obama’s head of the Employee Benefits Security Administration which issued the fiduciary rule, when she warns the financial community about the difficulties that lie ahead. Noting that financial service industry opponents have already been unsuccessful in three legal challenges to the regulation, Borzi warned in a speech to the annual Fi360 Conference that:
If the rule is repealed, consumer groups will challenge the action in court…,Borzi told more than 700 advisers attending the Conference that…the regulation’s opponents “have no new evidence” on which to stake their case, and won’t be able to meet the court’s high standards for repeal.
Borzi said she and her staff constructed the regulation to withstand any eventual court challenges. “We were extremely meticulous in the way we approached the evidence,” she said in her keynote address. “They [the rule’s opponents] need to create a record that is as strong as the record we created over six years.”
Borzi’s warning about the need to create a record and develop new evidence applies to any regulation that Acosta — or any federal agency — attempts to repeal. Acosta may also want to heed his own warning: “Admittedly, this means deregulation must find its way through the thicket of law.” Indeed.
Instead, he concludes his public-spirited article by then prejudging the entire process: “The Labor Department will roll back regulations that harm American workers and families.”
Damn the record and the best interests of the American people, full speed ahead!