Two Texas federal court decisions have stalled the U.S. Department of Labor’s (“DOL”) “investment advice fiduciary rule” under Section 3(21) of the Employee Income Security Act of 1974, as amended (the “Fiduciary Rule”) from its September 23, 2024 effective date (see our previous alert).

On July 25, 2024, in Federation of Americans for Consumer Choice v. DOL, the U.S. District Court for the Eastern District of Texas granted the plaintiff’s motion to stay the implementation of the Fiduciary Rule and amended prohibited transaction exemption (PTE) 84-24. Then on July 26, 2024, the U.S. District Court for the Northern District of Texas, in American Council of Life Insurers v. DOL, issued its own stay of the Fiduciary Rule and the remaining amendments to the PTEs issued with the Fiduciary Rule. Both opinions specify that the stays apply nationwide and are not limited to the parties to the cases.

While the DOL previously stated it was prepared to face challenges against its rule, it is unclear whether the agency will appeal the stays, or whether they may instead choose to do a hearing on the merits. The latter approach would open the door to further appeals, first to the Fifth Circuit Court of Appeals, then to an “en banc review” by all judges of the Fifth Circuit, and possibly to the Supreme Court of the United States. If pursued to the endpoint, this process could take several years to complete. Until both stays are resolved, retirement plan advisors should continue following the current fiduciary regulation, including the original 1975 five-part test and current PTEs 84-24 and 2020-02.