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By Sean Forbes
Feb. 3 — The House Ways and Means Committee kept up the pressure on the Department of Labor's fiduciary rule by approving a bill that would prevent the regulation from taking effect unless Congress approved it.
The panel voted 26-12 on Feb. 3 to report the bill , the Strengthening Access to Valuable Education and Retirement Support (SAVERS) Act, out of committee.
The legislation, which would amend the tax code, is primarily designed to raise the standards for providing investment advice as an alternative to the DOL's rule. However, the legislation also includes a provision under which the rule wouldn't become effective unless Congress gave it a thumbs-up by a bill or joint resolution.
The bill was introduced in December by Rep. Peter Roskam (R-Ill.), and was reported out of the House Education & the Workforce Committee on Feb. 2, along with mirroring legislation (H.R. 4293) that would amend the Employee Retirement Income Security Act . Democratic Reps. Richard E. Neal (Mass.), one of the bill's co-sponsors; John B. Larson (Conn.); and Mike Thomson (Calif.) joined the Ways and Means panel's Republicans in approving the legislation.
“We can all agree that we need policies to root out bad actors in the retirement savings industry who are taking advantage of consumers to benefit their own financial interests. This bill does that,” Roskam said during the bill markup.
He said that unlike “the DOL proposal, this bill will not force savers into fixed-fee arrangements which can raise the cost of investing and investment advice, an approach that hurts those with moderate savings and lower incomes the most.”
Roskam said that if the final rule turns out to be “all sunshine and roses,” then Congress will approve it. But if not, then the bill includes the mechanism to prevent it from taking effect, he said.
The DOL sent its fiduciary rule (RIN 1210-AB32) to the White House's Office of Management and Budget on Jan. 29 for final review before it's released to the public . The OMB generally has up to 90 days to review a rule.
Besides Neal, Larson and Thomson, Democrats panned the bill, saying that it was premature and that legislators should wait to see the DOL's rule before judging it. “We should not be holding this markup today,” said Sander M. Levin (D-Mich.), the committee's ranking member. “It is essentially an attempted end-run around the rulemaking process,” he said.
Rep. Charles B. Rangel (D-N.Y.) was more blunt. “I don't see any reason why we can't wait for the rule,” he told Bloomberg BNA after the hearing.
A number of Democrats noted the speed with which H.R. 4294, and its cousin, H.R. 4293, were being considered. Both bills are about 1 month old, and until Feb. 2, hadn't come up for debate.
Urging his colleagues to consider the bill further, Rep. Jim McDermott (D-Wash.) said, “Before we vote on this, we need to do our homework,” adding that the bill was being rushed through to final consideration. “We're getting one shot, going 100 miles per hour to pass this bill. It's just not good legislation.”
The DOL may also be moving too quickly, Kent A. Mason, a partner with Davis & Harman LLP in Washington, told Bloomberg BNA. “We reviewed the major DOL retirement regulations over the last 10 years and found that DOL almost always spends far more time on far less complicated regulations. Measured a different way, the time DOL spent working on the final rule works out to less than one hour per comment letter, even counting nights, weekends and holidays. This is completely unprecedented in terms of the shortness of the time spent per comment letter,” Mason said.
The language in the legislation that would give Congress the ability to put a halt to the rule also has come in for questioning. The specific text was adapted from part of the Regulations from the Executive in Need of Scrutiny Act of 2015 (REINS Act, H.R. 427), which the House passed in July. The bill was placed on the Senate legislative calendar in December. The REINS Act would “ increase accountability for and transparency in the federal regulatory process by requiring Congress to approve all new major regulations,” according to a summary of the bill.
The REINS Act, moreover, is a switch on the Congressional Review Act of 1996. Under the REINS Act, any major rule would have to be approved by an affirmative vote of Congress, rather than the Congressional Review Act's provision that a proposed agency rule will go into effect unless Congress votes to nullify it.
“My main concern with the legislation,” referring to H.R. 4294, “is I think it sets a terrible precedent in terms of Congress passing a bill on a rule that has not yet been submitted,” Rep. Bill Pascrell (D-N.J.) said. “Once you start down that track, you're not only checking the administration, which I think we all should be doing, but I think it gets us into an uneasy” situation, he said. “And I would like us to think about that, because we don't know who the next president's going to be, or the next administration's going to be, and I think we ought to take time to think about this.”
The REINS Act also has raised questions as to its constitutionality, although the language used for purposes of H.R. 4294 appears to be less problematic, but could pose difficulties beyond the bill, Ronald M. Levin, a law professor at the Washington University School of Law, told Bloomberg BNA.
“I do not think the bill would raise a constitutional problem to the extent that it would actually address and resolve some of the policy questions in this area,” Levin said. “However, the bill would leave some other policy questions in limbo. It would not resolve those questions itself, yet it would also effectively block the Labor Department from issuing rules on those questions unless it got specific congressional approval. This would set a bad precedent, because it would greatly increase the risks of stalemate.”
Levin submitted to the House Education & the Workforce Committee on Feb. 2 a letter expressing his concerns about H.R. 4293 . Levin also penned a law review article on the REINS Act in which he said that it “would create an unmanageable workload for Congress, as well as unacceptable risks of stalemating the development of important regulations,” along with raising constitutional questions.
But Mason said the REINS Act language shouldn't be viewed as nettlesome as opponents of the bill fear.
“Concerns have been raised regarding the provision in the bills providing that if Congress does not affirmatively approve the DOL final rule, the DOL rule is voided,” he said. “Here is what the bills actually do. If Congress passes the bills, the new statutory definition of a fiduciary is applicable; the DOL rule would have no effect because it is interpreting the old repealed statutory language. Ironically, the provision giving rise to concerns is a provision that gives Congress the right to void the new statutory definition of a fiduciary and let the DOL rule go into effect. So if the concerning provision were deleted, it would not reinstate or help the DOL rule in any way.”
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