Aon Washington Report
February 6, 2017
Secretary of Labor Directed to Review Fiduciary Rule
On February 3, 2017, President Trump issued a memorandum to the secretary of labor directing him to examine and prepare an "updated economic and legal analysis” of the final fiduciary investment advice rule. The secretary is directed to consider the following three factors, among other considerations:
- Whether the anticipated application of the fiduciary rule has harmed or is likely to harm investors;
- Whether the retirement services industry has been disrupted by the anticipated application of the rule in a manner that may adversely affect investors or retirees; and
- Whether the rule is likely to increase litigation and costs that investors and retirees must pay to gain access to retirement services.
If the secretary finds that at least one of the three factors above is true (or if he makes an adverse finding based on other, more general criteria outlined elsewhere in the memorandum), he is directed to publish a proposed regulation (for notice and comment) that would rescind or revise the fiduciary rule.
In response to President Trump’s memorandum, Acting U.S. Secretary of Labor Ed Hugler issued a statement on February 3 indicating that “The Department of Labor will now consider its legal options to delay the applicability date as we comply with the President’s memorandum.”
The Presidential memorandum on the fiduciary rule is available here.
A news release from the Department of Labor is available here.
Guidance on One In/Two Out Rule for Regulations and Regulatory Freeze Issued
On February 2, 2017, the White House issued interim guidance implementing part of the Executive Order (EO) issued on January 30, 2017 that addressed the reduction of the number of regulations and their costs. The January 30 EO requires that two federal regulations be rescinded for every new federal regulation that is implemented. The February 2 guidance clarifies that the EO applies only to regulations that are “significant," as defined under EO 12866 (issued in 1993). Agencies issuing significant regulations on or before September 30, 2017, must identify two existing regulatory actions to eliminate or propose for elimination on or before September 30, 2017, and the total incremental cost of the new regulation must be fully offset as of September 30, 2017. Regulations overturned by Congress may count as eliminated regulations exchanged for the new regulations, but not regulations issued prior to January 20, 2017, that were vacated or remanded by a court. The interim guidance also discusses how costs are to be measured.
In addition, on January 24, 2017, the Office of Management and Budget (OMB) sent guidance on the January 20 regulatory freeze memorandum to executive branch departments and agencies. The OMB directs the agencies to begin by identifying regulations that have been published but have not yet taken effect and postponing their effective dates for at least 60 days and provides a procedure for withdrawing regulations that were sent to the Office of the Federal Register but were not yet published.
The February 2 memorandum containing interim guidance on the EO dated January 30, 2017, is available here.
The January 30 EO on "Reducing Regulation and Controlling Regulatory Costs" is available here.
The January 24 OMB memorandum (M-17-16) on the regulatory freeze is available here.
EO 12866 is available here.
CMS Sends Proposed Regulations to OMB to Stabilize Affordable Care Act Markets
On February 1, 2017, the Department of Health and Human Services' Centers for Medicare and Medicaid Services (CMS) sent proposed regulations to the Office of Management and Budget (OMB) that are intended to stabilize the Affordable Care Act insurance market. The regulations are entitled "Patient Protection and Affordable Care Act; Market Stabilization." At this time, the text of the regulations is unavailable.
The OMB notice for the proposed regulation is available here.
PBGC Increases Maximum Penalty Amounts
On January 30, 2017, the Pension Benefit Guaranty Corporation (PBGC) issued a regulation that increases the maximum penalty amount for the failure to provide certain notices or other material information under ERISA Section 4071 as required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. The amount is increased from $2,063 to $2,097 per day. The PBGC also increased the maximum penalty amount for the failure to provide certain multiemployer plan notices under ERISA Section 4302, from $275 to $279 per day. The increases apply to penalties assessed after January 31, 2017.
The final regulation is available here.