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114th Congress }                                          { Rept. 114-527
                        HOUSE OF REPRESENTATIVES
 2d Session    }                                          {       Part 1

======================================================================



 
DISAPPROVING THE RULE SUBMITTED BY THE DEPARTMENT OF LABOR RELATING TO 
                THE DEFINITION OF THE TERM ``FIDUCIARY''

                                _______
                                

 April 26, 2016.--Committed to the Committee of the Whole House on the 
             State of the Union and ordered to be printed.

                                _______
                                

Mr. Kline, from the Committee on Education and the Workforce, submitted 
                             the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                      [To accompany H.J. Res. 88]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Education and the Workforce, to whom was 
referred the joint resolution (H.J. Res. 88) disapproving the 
rule submitted by the Department of Labor relating to the 
definition of the term ``Fiduciary'', having considered the 
same, report favorably thereon without amendment and recommend 
that the joint resolution do pass.

                                PURPOSE

    House Joint Resolution 88, as ordered reported by the 
Committee on Education and the Workforce (Committee) on April 
21, 2016, expresses congressional disapproval of the U.S. 
Department of Labor (DOL or Department) rule amending the 
regulatory definition of ``fiduciary''\1\ under the Employee 
Retirement Income Security Act of 1974 (ERISA)\2\ and the 
Internal Revenue Code of 1986 (Code).\3\
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    \1\Definition of the Term ``Fiduciary''; Conflict of Interest Rule-
Retirement Investment Advice, 81 Fed. Reg. 20946 (Apr. 8, 2016).
    \2\29 U.S.C. Sec. 1001 et seq. ERISA section citations will be used 
throughout.
    \3\26 U.S.C. Sec. 1 et seq. [hereinafter the Code].
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                            COMMITTEE ACTION

                             112TH CONGRESS

Full Committee Hearing Reviewing Policies and Priorities at the U.S. 
        Department of Labor

    On February 16, 2011, the Committee held a hearing entitled 
``Policies and Priorities at the U.S. Department of Labor'' to 
examine, among other things, DOL's Employee Benefits Security 
Administration's (EBSA) October 2010 proposed regulation 
significantly expanding the definition of ``fiduciary'' under 
ERISA and the Code. The Honorable Hilda L. Solis, then-
Secretary of the U.S. Department of Labor, was the sole 
witness. During the hearing, Rep. Judy Biggert (R-IL) and 
Carolyn McCarthy (D-NY) expressed concerns regarding DOL's 
proposed rule, specifically regarding the Department's lack of 
coordination with the Securities and Exchange Commission 
(SEC).\4\
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    \4\Policies and Priorities at the U.S. Department of Labor: Hearing 
Before the H. Comm. on Educ. and the Workforce, 112th Cong. 15, 38 
(Feb. 16, 2011).
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Subcommittee hearing assessing the impact of the Labor Department's 
        Proposal on Workers and Retirees

    On July 26, 2011, the Subcommittee on Health, Employment, 
Labor, and Pensions (HELP) held a hearing entitled ``Redefining 
Fiduciary': Assessing the Impact of the Labor Department's 
Proposal on Workers and Retirees'' to examine the consequences 
of EBSA's 2010 proposed rule. Witnesses included the Honorable 
Phyllis Borzi, Assistant Secretary of Labor, Employee Benefits 
Security Administration, Washington, D.C.; Mr. Kenneth Bentsen, 
Executive Vice President, Securities Industry and Financial 
Markets Association, Washington, D.C.; Mr. Kent Mason, Partner, 
Davis & Harman LLP, Washington, D.C.; Mr. Donald Myers, 
Partner, Morgan, Lewis & Bockius LLP, Washington, D.C.; Mr. 
Norman Stein, Professor, Earle Mack School of Law, Drexel 
University, Philadelphia, Pennsylvania; and Mr. Jeffrey 
Tarbell, Director, Houlihan Lokey, San Francisco, 
California.\5\
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    \5\Redefining `Fiduciary': Assessing the Impact of the Labor 
Department's Proposal on Workers and Retirees: Hearing Before the 
Subcomm. on Health, Employment, Labor, and Pensions of the H. Comm. on 
Educ. and the Workforce, 112th Cong. (July 26, 2011).
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Full Committee Hearing Reviewing the President's Fiscal Year 2013 
        Budget Proposal for the Department of Labor

    On March 21, 2012, the Committee held a hearing entitled 
``Reviewing the President's Fiscal Year 2013 Budget Proposal 
for the Department of Labor.'' Then-Secretary Solis was the 
sole witness. During the hearing, members of both parties 
thanked Secretary Solis for withdrawing the 2010 proposed 
fiduciary rule.\6\
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    \6\Reviewing the President's Fiscal Year 2013 Budget Proposal for 
the Department of Labor: Hearing Before the H. Comm. on Educ. and the 
Workforce, 112th Cong. (Mar. 21, 2012).
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                             113TH CONGRESS

Full Committee Hearing Reviewing the President's Fiscal Year 2015 
        Budget Proposal for the Department of Labor

    On March 26, 2014, the Committee held a hearing entitled 
``Reviewing the President's Fiscal Year 2015 Budget Proposal 
for the Department of Labor.'' The Honorable Thomas E. Perez, 
Secretary of the U.S. Department of Labor, was the sole 
witness. During this hearing, Chairman John Kline reiterated 
bipartisan concerns regarding DOL's ongoing fiduciary 
rulemaking. Addressing the consequences of the Department's 
proposed rule, Chairman Kline urged Secretary Perez to keep in 
mind ``what the impact will be on important advice that people, 
particularly low-income people, might need.''\7\
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    \7\Reviewing the President's Fiscal Year 2015 Budget Proposal for 
the Department of Labor: Hearing Before the H. Comm. on Educ. and the 
Workforce, 113th Cong. 86 (Mar. 26, 2014) (closing statement of Rep. 
John Kline, Chairman, H. Comm. on Educ. and the Workforce).
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                             114TH CONGRESS

Full Committee Hearing Reviewing the President's Fiscal Year 2016 
        Budget Proposal for the Department of Labor

    On March 18, 2015, the Committee held a hearing entitled 
``Reviewing the President's Fiscal Year 2016 Budget Proposal 
for the Department of Labor.'' Secretary Perez was the sole 
witness. During the hearing, Rep. Frederica Wilson (D-FL) 
warned that a new proposed fiduciary rule should not ``impact 
the availability of affordable investment advice.''\8\
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    \8\Reviewing the President's Fiscal Year 2016 Budget Proposal for 
the Department of Labor: Hearing Before the H. Comm. on Educ. and the 
Workforce, 114th Cong. (Mar. 18, 2015) (statement of Rep. Frederica S. 
Wilson, Member, H. Comm. on Educ. and the Workforce).
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Subcommittee hearing examining Restricting Access to Financial Advice: 
        Evaluating the Costs and Consequences for Working Families and 
        Retirees

    On June 17, 2015, the HELP Subcommittee held a hearing 
entitled ``Restricting Access to Financial Advice: Evaluating 
the Costs and Consequences for Working Families and Retirees'' 
to examine the new DOL Notice of Proposed Rulemaking amending 
the regulatory definition of ``fiduciary'' under ERISA. 
Witnesses before the Subcommittee included Secretary Perez; Mr. 
Jack Haley, Executive Vice President, Fidelity Investments, 
Boston, Massachusetts; Mr. Dean Harman, CFP, Managing Director, 
Harman Wealth Management, The Woodlands, Texas; Mr. Dennis 
Kelleher, President and CEO, Better Markets, Washington, D.C.; 
Mr. Kent Mason, Partner, Davis & Harman LLP, Washington, D.C.; 
and Dr. Brian Reid, Ph.D., Chief Economist, Investment Company 
Institute, Washington, D.C. During the hearing, Dr. Reid 
testified in opposition to DOL's reproposed fiduciary rule, 
saying, ``[A]ny policy that impairs retirement savers' ability 
to get the help that they need will significantly harm the 
prospects of millions of workers. Unfortunately, the DOL 
proposal will do just that.''\9\
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    \9\Restricting Access to Financial Advice: Evaluating the Costs and 
Consequences for Working Families and Retirees: Hearing Before the 
Subcomm. on Health, Employment, Labor, and Pensions of the H. Comm. on 
Educ. and the Workforce, 114th Cong. (Jun. 17, 2015) (oral testimony of 
Dr. Brian Reid, Ph.D., Chief Economist, Inv. Co. Inst.).
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Subcommittee hearing examining the Principles for Ensuring Retirement 
        Advice Serves the Best Interests of Working Families and 
        Retirees

    On December 2, 2015, the HELP Subcommittee held a hearing 
entitled ``Principles for Ensuring Retirement Advice Serves the 
Best Interests of Working Families and Retirees'' to further 
examine the DOL NPRM amending the regulatory definition of 
``fiduciary'' under ERISA. Notably, the Subcommittee considered 
the potential negative effects of the NPRM on small businesses 
and low- and middle-income families. Witnesses before the 
Subcommittee included the Honorable Bradford (Brad) Campbell, 
Counsel, Drinker Biddle & Reath LLP, Washington, D.C.; Ms. 
Rachel A. Doba, President, DB Engineering, LLC, Indianapolis, 
Indiana; Mr. Jules O. Gaudreau, Jr. ChFC, CIC, President, The 
Gaudreau Group, Inc., Wilbraham, Massachusetts; and Ms. Marilyn 
Mohrman-Gillis, Esq., Managing Director, Public Policy & 
Communications, Certified Financial Planner Board of Standards, 
Washington, D.C. During the hearing,\10\ witnesses praised a 
set of bipartisan principles outlined by Reps. David (Phil) Roe 
(R-TN), Richard Neal (D-MA), Peter Roskam (R-IL), and Michelle 
Lujan Grisham (D-NM) for a legislative solution to help 
strengthen retirement security.\11\
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    \10\Principles for Ensuring Retirement Advice Serves the Best 
Interests of Working Families and Retirees: Hearing Before the Subcomm. 
on Health, Employment, Labor, and Pensions of the H. Comm. on Educ. and 
the Workforce, 114th Cong. (Dec. 2, 2015).
    \11\Press Release, H. Comm. on Educ. and the Workforce, Bipartisan 
House Members Outline Legislative Principles to Ensure Retirement 
Advisors Protect Clients' Best Interests (Nov. 5, 2015), http://
edworkforce.house.gov/news/documentsingle.aspx?DocumentID=399747.
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H.R. 4293, Affordable Retirement Advice Protection Act, introduced

    On December 18, 2015, Rep. Phil Roe, Chairman of the HELP 
Subcommittee, introduced the Affordable Retirement Advice 
Protection Act (H.R. 4293)\12\ with five cosponsors.\13\ 
Recognizing the threat of DOL's proposed rule, Rep. Roe 
introduced the bipartisan bill to protect consumers and 
preserve access to affordable financial advice for low- and 
middle-income families. The legislation amends ERISA to ensure 
retirement advisors act in their clients' best interests and 
prohibits DOL from implementing its flawed proposal unless 
Congress affirmatively approves the final rule.
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    \12\H.R. 4293, 114th Cong. (2015).
    \13\Original co-sponsors of H.R. 4293 include Representatives 
Richard Neal (D-MA), Peter Roskam (R-IL), John Larson (D-CT), Earl L. 
``Buddy'' Carter (R-GA), and David Scott (D-GA).
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H.R. 4294, Strengthening Access to Valuable Education and Retirement 
        Support Act of 2015, introduced

    On December 18, 2015, Rep. Peter Roskam, along with Reps. 
Phil Roe, Richard Neal, John Larson (D-CT), Tom Reed (R-NY), 
and Michelle Lujan Grisham (D-NM), introduced the Strengthening 
Access to Valuable Education and Retirement Support Act of 2015 
(H.R. 4294).\14\ Recognizing the threat of DOL's proposed rule, 
the bipartisan bill was introduced to protect consumers and 
preserve access to affordable financial advice for low- and 
middle-income families. The legislation amends the Code to 
ensure retirement advisors act in their clients' best interests 
and prohibits DOL from implementing its flawed proposal unless 
Congress affirmatively approves the final rule.
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    \14\H.R. 4294, 114th Cong. (2015).
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Committee passes H.R. 4293, Affordable Retirement Advice Protection Act

    On February 2, 2016, the Committee considered H.R. 4293, 
the Affordable Retirement Advice Protection Act.\15\ Rep. Roe 
offered an amendment in the nature of a substitute making 
technical changes to the introduced bill. The Committee voted 
to adopt the amendment in the nature of a substitute by voice 
vote. One additional amendment was offered but was voted down 
by voice vote. The Committee favorably reported H.R. 4293, as 
amended, to the House of Representatives by a vote of 22-14.
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    \15\H.R. 4293, Affordable Retirement Advice Protection Act: Markup 
Before the H. Comm. on Educ. and the Workforce, 114th Cong. (Feb. 2, 
2016).
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Committee passes H.R.4294, Strengthening Access to Valuable Education 
        and Retirement Support Act of 2015

    On February 2, 2016, the Committee considered H.R. 4294, 
the Strengthening Access to Valuable Education and Retirement 
Support Act of 2015.\16\ Representative Earl L. (Buddy) Carter 
(R-GA) offered an amendment in the nature of a substitute 
making technical changes to the introduced bill. The Committee 
voted to adopt the amendment in the nature of a substitute by 
voice vote. One additional amendment was offered and 
subsequently withdrawn. The Committee favorably reported H.R. 
4294, as amended, to the House of Representatives by a vote of 
22-14.
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    \16\H.R. 4294, Strengthening Access to Valuable Education and 
Retirement Support Act of 2015: Markup Before the H. Comm. on Educ. and 
the Workforce, 114th Cong. (Feb. 2, 2016).
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H.J. Res. 88, Disapproving the rule submitted by the Department of 
        Labor relating to the definition of the term ``Fiduciary,'' 
        introduced

    On April 19, 2016, Rep. Roe, along with Reps. Charles 
Boustany (R-LA) and Ann Wagner (R-MO), introduced H.J. Res. 88, 
Disapproving the rule submitted by the Department of Labor 
relating to the definition of the term ``Fiduciary,'' pursuant 
to the Congressional Review Act.

Committee passes H.J. Res. 88, Disapproving the rule submitted by the 
        Department of Labor relating to the definition of the term 
        ``Fiduciary''

    On April 21, 2016, the Committee considered H.J. Res. 88 
and reported the resolution favorably to the House of 
Representatives by a vote of 22-14.

                               BACKGROUND

                              PRESENT LAW

Congressional Review Act

    The Congressional Review Act (CRA), enacted in 1996, 
established special congressional procedures for disapproving a 
broad range of regulatory actions (largely encompassing, but 
not limited to, rules) issued by federal agencies.\17\ Before a 
rule covered by the CRA can take effect, the federal agency 
promulgating the rule must submit it to Congress. If Congress 
passes a joint resolution disapproving the rule, and the 
resolution is enacted, the rule cannot take effect or continue 
in effect. The agency also may not reissue the rule or any rule 
``substantially the same,'' except under authority of a 
subsequently-enacted law.\18\
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    \17\5 U.S.C. Sec. 801.
    \18\5 U.S.C. Sec. 801(b)(2).
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    The CRA established special expedited procedures for 
congressional action on joint resolutions of disapproval.\19\ 
The CRA dictates that, in both houses, to qualify for expedited 
consideration, a disapproval resolution must be submitted 
within 60 days after Congress receives the rule, exclusive of 
recess periods. It then lays out a set of action periods and 
deadlines that must be met before the joint resolution can 
receive privileged treatment in the Senate. Only one rule, a 
2000 DOL rule on ergonomics, has been successfully disapproved 
by Congress using the CRA process.\20\
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    \19\5 U.S.C. Sec. 802.
    \20\``Ergonomics Program,'' 65 Fed. Reg. 68262 (Nov. 14, 2000); 
Joint Resolution providing for congressional disapproval of the rule 
submitted by the Department of Labor under chapter 8 of title 5, United 
States Code, relating to ergonomics, Pub. L. 107-5 (Mar. 20, 2001).
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Retirement savings and fiduciary requirements under the Employee 
        Retirement Income Security Act of 1974 (ERISA) and the Code

    The Code provides two general vehicles for tax-favored 
retirement savings: employer-sponsored retirement plans and 
individual retirement arrangements (IRAs).\21\ Various 
requirements must be met for tax-favored treatment to apply. 
ERISA, generally administered by the Secretary of Labor, 
similarly applies various requirements with respect to employee 
pension benefit plans (pension plans).\22\ The most common type 
of employer-sponsored plan is a qualified retirement plan, 
which may be a defined contribution plan or a defined benefit 
plan.\23\
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    \21\Code Sections 219, 408, and 408A provide rules for IRAs.
    \22\ERISA applies also to employee welfare benefit plans. ERISA 
generally does not apply to church plans or plans of governmental 
employers.
    \23\Code Sec. 401(a). A qualified annuity plan under section 403(a) 
is similar to a qualified retirement plan (and subject to similar 
requirements) except that plan assets consist of annuity contracts, 
rather than investments held in a trust or custodial account. 
References herein to a qualified retirement plan include a qualified 
annuity plan. Simplified employee pension (SEP) plans under section 
408(k) and SIMPLE IRA plans under section 408(p) are employer-sponsored 
plans funded through contributions by the employer to an IRA 
established for each employee.
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    Under a defined contribution plan, benefits are based on an 
individual account for each participant, to which are allocated 
contributions, earnings, and losses.\24\ Defined contribution 
plans commonly allow participants to direct the investment of 
their accounts, usually by choosing among investment options 
offered under the plan. Under a defined benefit plan, benefits 
are determined under a plan formula and funded by the general 
assets of the trust established under the plan, which are 
invested by plan fiduciaries; individual accounts are not 
maintained for employees participating in the plan.\25\
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    \24\Defined contribution plan (or individual account plan) is 
defined at ERISA section 3(34).
    \25\As defined in ERISA section 3(35), a defined benefit plan 
generally is any plan that is not a defined contribution plan.
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    In general, under ERISA and the Code, a fiduciary is a 
person who (1) exercises any discretionary authority or 
discretionary control respecting management of the plan or 
exercises any authority or control respecting management or 
disposition of plan assets, (2) renders investment advice for a 
fee or other compensation, direct or indirect, with respect to 
any moneys or other property of such plan, or has any authority 
or responsibility to do so, or (3) has any discretionary 
authority or discretionary responsibility in the administration 
of the plan.\26\
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    \26\ERISA Sec. 3(21), Code 4975(e)(3).
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    ERISA requires a fiduciary of a plan to discharge his 
duties with respect to the plan solely in the interest of the 
participants and beneficiaries, for the exclusive purpose of 
providing benefits to participants and their beneficiaries as 
well as defraying reasonable expenses of administering the 
plan, and with the care, skill, prudence, and diligence under 
the circumstances then prevailing that a prudent man acting in 
a like capacity and familiar with such matters would use in the 
conduct of an enterprise of a like character and with like 
aims.\27\ With respect to plan assets, ERISA requires a 
fiduciary to diversify the investments of the plan so as to 
minimize the risk of large losses unless under the 
circumstances it is clearly prudent not to do so.
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    \27\ERISA Sec. 404(a)(1). ERISA section 402(a)(1) requires a plan 
to be established pursuant to a written instrument that provides for 
one or more named fiduciaries who jointly or severally have authority 
to control and manage the operation and administration of the plan. For 
this purpose, the term ``named fiduciary'' means a fiduciary who is 
named in the plan instrument, or who, pursuant to a procedure specified 
in the plan, is identified as a fiduciary by a person who is an 
employer or employee organization with respect to the plan or by an 
employer and an employee organization acting jointly.
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    A plan fiduciary who breaches any of the fiduciary 
responsibilities, obligations, or duties imposed by ERISA 
(including the prohibited transaction rules discussed infra) is 
personally liable to make good to the plan any losses to the 
plan resulting from such breach and to restore to the plan any 
profits the fiduciary has made through the use of plan 
assets.\28\ A plan fiduciary may be liable also for a breach of 
responsibility by another fiduciary (a ``co-fiduciary'') in 
certain circumstances, for example, if the fiduciary's failure 
to fulfill his own fiduciary duties enabled the co-fiduciary to 
commit the breach.\29\ Certain fiduciary violations may result 
in the imposition of civil penalties.\30\
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    \28\ERISA Sec. 409. Under ERISA section 502(a)(2), an action for a 
breach of fiduciary responsibility may be brought by DOL, a plan 
participant or beneficiary, or another fiduciary.
    \29\ERISA Sec. 405.
    \30\ERISA Sec. 502(i) and (l).
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    ERISA provides a special rule in the case of a defined 
contribution plan that permits participants to exercise control 
over the assets in their individual accounts (often referred to 
as ``participant-directed investments'').\31\ Under the special 
rule, if a participant exercises control over the assets in his 
or her account, the participant is not deemed to be a fiduciary 
by reason of such exercise, and no person who is otherwise a 
fiduciary is liable for any loss, or by reason of any breach, 
resulting from the participant's exercise of control.
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    \31\ERISA Sec. 404(c), implemented by regulations at 29 C.F.R. sec. 
2550.404c-1. 29 C.F.R. sec. 2550.404c-5 provides rules for qualified 
default investment alternatives (QDIAs) if a participant does not 
select any investment options.
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General prohibited transaction rules

    ERISA and the Code prohibit a plan fiduciary from causing 
the plan to engage in certain transactions (``prohibited 
transactions'') between the plan and a ``party in interest'' 
(referred to as a ``disqualified person'' in the Code).\32\ 
Parties in interest include a fiduciary of the plan; a person 
providing services to the plan; an employer with employees 
covered by the plan; an employee organization for which any of 
whose members are covered by the plan; and certain owners, 
officers, directors, highly compensated employees, family 
members, and related entities.\33\ The prohibited transaction 
rules under the Code apply also to IRAs, Archer MSAs, HSAs, and 
Coverdell ESAs.\34\
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    \32\ERISA Sec. 406; Code Sec. 4975. Unless otherwise noted, ``party 
in interest'' refers to both a party in interest for ERISA purposes and 
a disqualified person under the Code. Under Code section 4975, similar 
rules apply to qualified retirement plans under Code sec. 401(a) and 
qualified annuities under Code sec. 403(a) of private employers, as 
well as individual retirement arrangements (IRAs) under Code section 
408, health savings accounts (HSAs) under Code section 223, Archer 
Medical Savings Accounts (MSAs) under Code section 220, and Coverdell 
education savings accounts (Coverdell ESAs) under Code section 530. The 
prohibited transaction rules under the Code generally do not apply to 
governmental plans or church plans. However, under section 503, the 
trust holding assets of a governmental or church plan may lose its tax-
exempt status in the case of a prohibited transaction listed in section 
503(b).
    \33\ERISA Sec. 3(14); Code Sec. 4975(e)(2).
    \34\These are included in the definition of ``plan'' under Code 
section 4975(e)(1).
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    Under both ERISA and the Code, prohibited transactions 
include the following, whether direct or indirect, between a 
plan and a party in interest: (1) the sale or exchange or 
leasing of property, (2) the lending of money or other 
extension of credit, (3) the furnishing of goods, services, or 
facilities, or (4) the transfer to, or use by or for the 
benefit of, a party in interest of any assets of the plan. 
Under ERISA only, a prohibited transaction also includes an 
acquisition, on behalf of the plan, of any employer security or 
employer real property in violation of ERISA restrictions.\35\
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    \35\ERISA sec. 407 restricts the acquisition or holding of employer 
securities and employer real property by a plan.
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    These rules also provide that a fiduciary, with respect to 
a plan, must not (1) deal with the assets of the plan in his 
own interest or for his own account, (2) in his individual or 
in any other capacity, act in any transaction involving the 
plan on behalf of a party (or represent a party) whose 
interests are adverse to the interests of the plan or the 
interests of its participants or beneficiaries, or (3) receive 
any consideration for his own personal account from any party 
dealing with the plan in connection with a transaction 
involving the assets of the plan.\36\
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    \36\ERISA Sec. 406(b); 26 U.S.C. Sec. 4975(c)(1)(E) and (F).
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    Certain transactions are statutorily exempt from prohibited 
transaction treatment; for example, certain loans to plan 
participants and arrangements with a party in interest for 
legal, accounting, or other services necessary for the 
establishment or operation of a plan if no more than reasonable 
compensation is paid for the services.\37\ In addition, an 
administrative exemption may be granted, on either an 
individual or class basis, subject to a finding that the 
exemption is administratively feasible, in the interests of the 
plan and of its participants and beneficiaries, and protective 
of the rights of participants and beneficiaries of the 
plan.\38\ Before an administrative exemption is granted, notice 
must be provided to interested persons, notice must be 
published in the Federal Register of the pendency of the 
exemption, and interested persons must be given an opportunity 
to provide comments.
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    \37\ERISA Sec. 408(b); Code Sec. 4975(d)(2).
    \38\ERISA Sec. 408(a).
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            Excise tax on prohibited transactions
    If a prohibited transaction occurs, the disqualified person 
who participated in the transaction is generally subject to a 
two-tiered excise tax.\39\ The first tier tax is 15 percent of 
the amount involved in the transaction. The second tier tax, 
imposed if the prohibited transaction is not corrected within a 
certain period, is 100 percent of the amount involved.
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    \39\In the case of an IRA, HSA, Archer MSA or Coverdell ESA, the 
sanction for some prohibited transactions is the loss of tax-favored 
status, rather than an excise tax. See Code section 408(e)(2), also 
cross-referenced in Code sections 220(e)(2), 223(e)(2) and 530(e).
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    For purposes of the excise tax, the amount involved with 
respect to a prohibited transaction is generally the greater of 
(1) the amount of money and the fair market value of the other 
property given or (2) the amount of money and the fair market 
value of the other property received.\40\ For purposes of the 
excise tax, ``correction'' and ``correct'' mean, with respect 
to a prohibited transaction, undoing the transaction to the 
extent possible, but in any case, placing the plan in a 
financial position not worse than it would be if the 
disqualified person were acting under the highest fiduciary 
standards.
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    \40\In the case of certain transactions for services for which more 
than reasonable compensation is paid, the amount involved is only the 
excess compensation.
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            Jurisdiction over the prohibited transaction rules
    Jurisdiction over the Code provisions governing qualified 
retirement plans and similar ERISA provisions is divided 
between the Department of the Treasury (Treasury) and DOL by an 
executive order, referred to as Reorganization Plan No. 4 of 
1978 (Reorganization Plan).\41\ As part of this division, with 
certain exceptions, Treasury authority was transferred to DOL 
with respect to regulations, rulings, opinions, and exemptions 
under the prohibited transaction provisions of the Code.\42\ As 
a result, DOL regulations and other guidance relating to 
prohibited transactions applies for Code purposes, as well as 
for ERISA purposes, and DOL has the authority to grant 
individual and class exemptions applicable under the Code.
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    \41\Reorganization Plan No. 4 of 1978, 43 Fed. Reg. 47713 (Oct. 17, 
1978).
    \42\Sec. Sec. 102 and 105 of Reorganization Plan No. 4 of 1978, 43 
Fed. Reg. 47713. Rules for coordination concerning certain fiduciary 
actions are provided under section 103 of the Reorganization Plan. In 
addition, under section 3003 of ERISA, Treasury and DOL are directed to 
consult with each other from time to time with respect to the 
prohibited transaction rules and exemptions.
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Rules relating to investment advice prior to DOL's final rule

            Fiduciary status
    As described above, a fiduciary includes a person who 
renders investment advice for a fee or other compensation, 
direct or indirect, with respect to any moneys or other 
property of the plan, or has any authority or responsibility to 
do so.
    An existing DOL regulation issued in 1975 provides that a 
person is deemed to be rendering ``investment advice'' to an 
employee benefit plan for this purpose only if he--
           Renders advice to the plan as to the value 
        of securities or other property, or makes a 
        recommendation as to the advisability of investing in, 
        purchasing, or selling securities or other property; 
        and
           Either directly or indirectly, for example, 
        through or together with any affiliate, (a) has 
        discretionary authority or control, whether or not 
        pursuant to agreement, arrangement, or understanding, 
        with respect to purchasing or selling securities or 
        other property for the plan, or (b) has rendered advice 
        such that (1) the advice is rendered on a ``regular 
        basis;'' (2) the advice is for a fee, either direct or 
        indirect; (3) the advice is provided pursuant to a 
        ``mutual agreement, arrangement, or understanding;'' 
        (4) the advice is individualized to the plan's 
        particular needs; and (5) the advice serves as a 
        ``primary basis'' for the investment decision (known as 
        the ``five-part test'').\43\
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    \43\29 C.F.R. Sec. 2510.3-21(c).
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    The 1975 regulation further provides that a person who is a 
fiduciary with respect to a plan by reason of rendering 
investment advice (as described supra) for a fee or other 
compensation, direct or indirect, with respect to any moneys or 
other property of the plan, or having any authority or 
responsibility to do so, is not deemed to be a fiduciary 
regarding any assets of the plan with respect to which the 
person does not have any discretionary authority, discretionary 
control, or discretionary responsibility; does not exercise any 
authority or control; does not render investment advice (as 
described supra) for a fee or other compensation; and does not 
have any authority or responsibility to render such investment 
advice. However, this rule does not exempt the person from 
ERISA liability attributable to a breach of responsibility by a 
co-fiduciary or exclude the person from the definition of the 
term ``party in interest'' based on providing services to the 
plan with respect to any assets of the plan.
    In addition to the 1975 regulation, other guidance issued 
by DOL in 1996 (Interpretive Bulletin 96-1) provides that the 
furnishing of mere investment education to a participant or 
beneficiary in a participant-directed individual account plan 
does not constitute the rendering of investment advice.\44\ For 
this purpose, investment education includes the following 
categories of information and materials: plan information, 
general financial and investment information, asset allocation 
models, and interactive investment materials. Interpretive 
Bulletin 96-1 more fully describes these categories and notes 
the information and materials merely represent examples that 
may be furnished to participants and beneficiaries without such 
information and materials constituting investment advice and 
that there may be many other examples of information, 
materials, and educational services, which, if furnished to 
participants and beneficiaries, would not constitute investment 
advice. Accordingly, Interpretive Bulletin 96-1 provides that 
no inferences should be drawn from the description of the four 
categories with respect to whether the furnishing of any 
information, materials, or educational services not described 
therein may constitute investment advice.
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    \44\29 C.F.R. Sec. 2905.96-1. This treatment applies irrespective 
of who provides the information (for example, the plan sponsor, 
fiduciary or service provider), the frequency with which the 
information is shared, the form in which the information and materials 
are provided (for example, on an individual or group basis, in writing 
or orally, or via video or computer software), or whether an identified 
category of information and materials is furnished alone or in 
combination with other identified categories of information and 
materials.
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            Statutory exemptions relating to investment advice
    If certain requirements are met, specific transactions 
relating to investment advice are exempt from prohibited 
transaction treatment if the advice is provided by a fiduciary 
advisor through an eligible investment advice arrangement.\45\ 
The exemptions apply to (1) the provision of investment advice 
to a plan participant or beneficiary with respect to a security 
or other property available as an investment under the plan, 
(2) an investment transaction (that is, a sale, acquisition, or 
holding of a security or other property) pursuant to the 
advice, and (3) the direct or indirect receipt of fees or other 
compensation in connection with the provision of the advice or 
an investment transaction pursuant to the advice.
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    \45\ERISA Sec. 408(b)(14) and (g), enacted by section 601 of the 
Pension Protection Act of 2006, Pub. L. No. 109-280.
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    For purposes of the exemptions, an eligible investment 
advice arrangement is generally an arrangement that either (1) 
provides that any fees (including any commission or 
compensation) received by the fiduciary advisor for investment 
advice or with respect to an investment transaction with 
respect to plan assets do not vary depending on the basis of 
any investment option selected (sometimes referred to as ``fee-
leveling'') or (2) uses a computer model under an investment 
advice program that meets specified requirements in connection 
with the provision of investment advice to a participant or 
beneficiary.\46\ The arrangement must be expressly authorized 
by a plan fiduciary other than (A) the person offering the 
investment advice program, (B) any person providing investment 
options under the plan, or (C) any affiliate of (A) or (B).\47\ 
In addition, the fiduciary advisor must provide disclosures 
applicable under securities laws; any investment transaction 
must occur solely at the direction of the investment advice 
recipient; the compensation received by the fiduciary advisor 
and affiliates in connection with the investment transaction 
must be reasonable; and the terms of the investment transaction 
must be at least as favorable to the plan as an arm's length 
transaction would be.
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    \46\Various requirements with respect to notices and disclosure, 
recordkeeping and audits must also be met.
    \47\Affiliate for this purpose means an affiliated person as 
defined under section 2(a)(3) of the Investment Company Act of 1940, 15 
U.S.C. Sec. 80a-2(a)(3).
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           DOL'S 2016 FINAL REGULATION AND ``BIC'' EXEMPTION

    On April 6, 2016, DOL finalized a regulation that will 
replace the current regulation relating to investment advice 
with a new standard as to whether a person is a fiduciary based 
on rendering investment advice, generally applicable on April 
10, 2017.\48\ Under the regulation, a person is a fiduciary 
based on rendering investment advice if the person--
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    \48\Definition of the Term ``Fiduciary,'' 81 Fed. Reg. at 20946. 
The regulation will apply for purposes of ERISA and the prohibited 
transaction rules of the Code.
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           Provides to a plan, a plan fiduciary, an 
        IRA, or an IRA owner certain types of recommendations 
        or statements (as described below) that constitute 
        investment advice with respect to plan or IRA assets in 
        exchange for a fee or other compensation; and
           Either directly or indirectly (such as 
        through an affiliate) (1) represents or acknowledges 
        that it is acting as a fiduciary with respect to the 
        investment advice, or (2) renders the advice pursuant 
        to a written or verbal agreement, arrangement, or 
        understanding that the advice is individualized to, or 
        that the advice is specifically directed to, the advice 
        recipient for consideration in making investment or 
        management decisions with respect to securities or 
        other property of the plan or IRA.\49\
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    \49\Definition of the Term ``Fiduciary,'' 81 Fed. Reg. at 20997.
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    Under the final regulation, investment advice includes--
           A recommendation as to the advisability of 
        acquiring, holding, disposing of, or exchanging 
        securities or other property, including a 
        recommendation to take a distribution of benefits or a 
        recommendation as to the investment of securities or 
        other property to be rolled over or otherwise 
        distributed from the plan or IRA;\50\ and
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    \50\Definition of the Term ``Fiduciary,'' 81 Fed. Reg. at 20964; 
DOL Advisory Opinion 2005-23A (Dec. 7, 2005) addresses the question of 
whether a recommendation that a participant in a pension plan roll over 
his or her account balance to an IRA to take advantage of investment 
options not available under the plan constitutes investment advice with 
respect to plan assets. The advisory opinion expresses the view that, 
with respect to a person who is not otherwise a plan fiduciary, merely 
advising a plan participant to take an otherwise permissible plan 
distribution, even when the advice is combined with a recommendation as 
to how the distribution should be invested, does not constitute 
investment advice within the meaning of the existing DOL investment 
advice regulations defining when a person is a fiduciary by virtue of 
providing investment advice with respect to employee benefit plan 
assets. The advisory opinion provides that DOL does not view a 
recommendation to take a distribution as advice or a recommendation 
concerning a particular investment (that is, purchasing or selling 
securities or other property) as contemplated by the regulations and 
that any investment recommendation regarding the proceeds of a 
distribution would be advice with respect to funds that are no longer 
plan assets. Part IV.A(2) of the preamble to the regulation notes the 
regulation supersedes Advisory Opinion 2005-23A.
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           A recommendation as to the management of 
        securities or other property, including recommendations 
        as to the management of securities or other property to 
        be rolled over or otherwise distributed from the plan 
        or IRA.
    Subject to specified requirements, the final regulation 
provides exceptions from the definition of fiduciary for (1) 
certain counterparties in transactions with ``independent 
fiduciaries with financial expertise;'' (2) swap and security-
based swap transactions with an employee benefit plan; (3) 
employees of an employee benefit plan sponsor. Additionally, 
platform providers to employee benefit plans, persons providing 
selection and monitoring assistance to employee benefit plans, 
persons providing general financial communications (such as 
talk show hosts), and persons providing certain investment 
education (including to an IRA or IRA owner, but under 
standards somewhat different from the standards in the existing 
DOL guidance) are deemed not to be providing ``investment 
advice.'' However, these exceptions do not apply if the person 
represents or acknowledges that the person is acting as a 
fiduciary with respect to the advice.
    In conjunction with the regulation, DOL finalized new 
prohibited transaction class exemptions, including a ``best 
interest contract'' or BIC exemption,\51\ as well as changes to 
various existing class exemptions. The BIC exemption generally 
applies to compensation received by an investment advisor or 
related party in connection with a transaction (that is, a 
purchase, sale, or holding of assets) resulting from investment 
advice provided to ``retirement investors,'' meaning plan 
participants or beneficiaries who direct the investment of the 
assets in their accounts, IRA owners who make investment 
decisions with respect to their IRAs, and ``retail 
fiduciaries,'' such as independent plan fiduciaries managing 
less than $50 million. Only advice in the ``best interest'' of 
the saver under the regulation qualifies for the exemption.
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    \51\Best Interest Contract Exemption, 81 Fed. Reg. 21002 (Apr. 8, 
2016).
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    The BIC class exemption requires that the advisor and 
financial institution enter into a written contract with the 
retirement investor at the time of the transaction. Among other 
requirements:
           The contract must affirmatively state that 
        the advisor and financial institution are fiduciaries 
        under ERISA, the Code, or both, with respect to any 
        investment advice to the retirement investor;
           Under the contract, the advisor and 
        financial institution must specifically agree to adhere 
        to certain impartial conduct standards, which include 
        providing investment advice that is in the best 
        interest of the retirement investor, not recommending 
        an investment in an asset if they (or affiliates) will 
        receive more than reasonable compensation in relation 
        to the total services they provide to the retirement 
        investor with respect to the investment, and not 
        providing any statements about an asset, fees, material 
        conflict of interest, and any other matter related to 
        the retirement investor's investment decision that are 
        misleading;
           Under the contract, the advisor and 
        financial institution must provide certain warranties 
        and make certain disclosures related to fees and 
        conflicts of interest;
           The contract must not have exculpatory 
        provisions disclaiming or otherwise limiting liability 
        of the advisor or financial institution for a violation 
        of the contract's terms, or a provision under which a 
        plan, IRA, or retirement investor waives or qualifies 
        its right to bring or participate in a class action or 
        other representative action in court in a dispute with 
        the advisor or financial institution;\52\ and
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    \52\As described in DOL's background discussion of the exemption, 
the contract terms to which advisors and financial institutions must 
agree in order to qualify for the BIC class exemption create a cause of 
action that DOL expects will be used by aggrieved retirement investors. 
Best Interest Contract Exemption, 81 Fed. Reg. at 21022.
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           The advisor must comply with a myriad of 
        internet disclosure requirements, including a 
        discussion of the firm's business model, a schedule of 
        typical fees, a list of all product manufacturers and 
        other parties with whom there exists an arrangement to 
        provide third-party payments (and how such payments 
        affect advisor compensation), and disclosures regarding 
        incentives provided to advisors to recommend certain 
        products.

                        SUMMARY OF H.J. RES. 88

    Under the joint resolution, Congress expresses its 
disapproval of the rule submitted by DOL relating to the 
definition of the term ``fiduciary.'' If enacted, the joint 
resolution would prohibit the regulation from going into 
effect.

                            COMMITTEE VIEWS

                      HISTORY OF DOL'S RULEMAKING

DOL's withdrawn 2010 proposal

    The Obama administration has long argued the regulatory 
definition of an ``investment advice'' fiduciary is 
insufficiently restrictive.\53\ To address this concern, in 
2010, DOL's EBSA issued a complicated proposed regulation 
expanding the definition of ``fiduciary.''\54\ On September 19, 
2011, in the face of bipartisan opposition from the Committee 
and others in Congress related to access to advice and cost, 
EBSA withdrew its original proposal and announced it would 
repropose a revised rulemaking.\55\
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    \53\E.g., Redefining `Fiduciary': Assessing the Impact of the Labor 
Department's Proposal on Workers and Retirees: Hearing Before the 
Subcomm. on Health, Employment, Labor, and Pensions of the H. Comm. on 
Educ. and the Workforce, 112th Cong. (July 26, 2011) (testimony of the 
Hon. Phyllis Borzi, Asst. Secr'y of Labor of the Emp. Benefits Sec. 
Admin.).
    \54\Definition of the Term ``Fiduciary,'' 75 Fed. Reg. 65263 (Oct. 
15, 2010) [hereinafter 2010 Proposal].
    \55\See Press Release, Dept. of Labor, U.S. Labor Department's EBSA 
to re-propose rule on definition of a fiduciary (Sept. 19, 2011), 
http://www.dol.gov/ebsa/newsroom/2011/11-1382-NAT.html.
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DOL's April 2015 notice of proposed rulemaking

    At a February 2015 speech at AARP, President Obama 
announced his intention to go forward with this rulemaking.\56\ 
In this speech and subsequent public statements, the 
administration rebranded the proposed regulation as a consumer 
protection against ``backdoor payments and hidden fees'' 
generated by structural conflicts of interest in the retirement 
advice industry. Then a Council of Economic Advisors report 
argued ``conflicted advice'' costs Americans $17 billion 
annually.\57\ This figure assumed IRA investors were duped into 
rolling over 401(k) funds into high cost mutual funds by 
advisors and brokers and, as a result, pay on average 1 percent 
more annually. These assumptions came under intense scrutiny 
from analysts who argue IRA holders actually pay only 0.16 
percent more and that these fees are justifiable due to a 
higher level of service.\58\
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    \56\Press Release, White House Office of the Press Secretary, 
Remarks by the President at the AARP (Feb. 23, 2015), http://
www.whitehouse.gov/the-press-office/2015/02/23/remarks-president-aarp. 
    \57\Council of Economic Advisors, The Effects of Conflicted 
Investment Advice on Retirement Saving, (Feb. 2015) http://
www.whitehouse.gov/sites/default/files/docs/cea_coi_report_final.pdf.
    \58\Letter from David M. Abbey, Deputy Gen. Counsel, Retirement 
Policy, Inv. Co. Inst. and Brian Reid, Chief Economist, Inv. Co. Inst., 
to the Hon. Howard Shelanski, Admin., Office of Info. and Reg. Aff., 
OMB (Apr. 7, 2015), http://www.ici.org/pdf/15_ici_omb_data.pdf.
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    Despite this criticism, on April 20, 2015,\59\ DOL proposed 
a regulation and a package of amendments (2015 NPRM) to the 
prohibited transaction rules designed to expand the universe of 
activities that trigger fiduciary liability. The proposal 
effectively eliminated the ``regular basis,'' ``mutual 
agreement,'' and ``primary basis'' prongs of the five-part test 
for investment advice. An application of the existing 
prohibited transaction rules using this new definition would 
have functionally barred commission-based retirement accounts, 
where the advisor receives payment when transactions are 
executed (as opposed to an ``advisory account,'' where the 
advisor receives a flat fee or percentage of assets annually to 
manage the account). Because non-fiduciary commission-based 
accounts are the most cost-effective way to engage low- and 
middle-income savers, this proposal risked millions of 
individuals with IRAs losing access to advice. Purportedly to 
address this, DOL also proposed the BIC Exemption, an exemption 
from the prohibited transaction rules if the IRA provider 
fulfilled a number of conditions.
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    \59\Definition of the Term ``Fiduciary''; Conflict of Interest 
Rule-Retirement Investment Advice, 80 Fed. Reg. 21928 (Apr. 20, 2015) 
[hereinafter 2015 Proposal].
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    The BIC exemption was widely panned as so unworkable that 
it provided little relief. It included a requirement the 
advisor sign a contract prior to providing any recommendation 
promising to provide advice only in the client's best 
interest.\60\ Other requirements included projecting the cost 
of each recommended asset purchase for one-, five-, and ten-
year periods after the transaction; maintaining a website with 
all compensation information for the firm and each individual 
advisor or affiliate for each potential investment offered; and 
recommending only certain types of investment products.
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    \60\Restricting Access to Financial Advice: Evaluating the Costs 
and Consequences for Working Families and Retirees: Hearing Before the 
Subcomm. on Health, Employment, Labor, and Pensions of the H. Comm. on 
Educ. and the Workforce, 114th Cong. 8 (Jun. 17, 2015) (written 
testimony of Jack Haley, Exec. Vice President, Fidelity Invs.).
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    Under this proposed exemption and the proposed regulation, 
advisors would be subject to class action litigation, and 
previously-provided non-fiduciary ``education'' would now 
trigger fiduciary liability. Finally, advisory firms would not 
be able to market to small businesses without triggering 
fiduciary liability, likely leading to a market exodus. In sum, 
the proposal jeopardized Americans' access to affordable 
advice.
    The 2015 NPRM received thousands of comments, including 
numerous letters from members of Congress.\61\ Notably, 46 
House Democrats signed a letter led by HELP Subcommittee 
Ranking Member Jared Polis (D-CO) calling for publication of 
the revised rule prior to finalizing, as well as a supplemental 
comment period.\62\ Another letter, signed by 96 House 
Democrats, expressed concerns the proposal could reduce access 
to investment advice for both small businesses and low- and 
middle-income individuals.\63\ In all, over half of House 
Democrats signed letters questioning the DOL's proposal.
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    \61\Comments received through September 24, 2015, are published on 
EBSA's website, http://www.dol.gov/ebsa/regs/cmt-1210-AB32-92.html.
    \62\See, e.g., Letter from the Hon. Jared Polis, et al to the Hon. 
Thomas E. Perez, Sec'y, Dep't of Labor (Oct. 30, 2015), http://
df2d4c59ccf47b6bc124-
2951e9520e07371e6076e0c8af900fc2.r54.cf5.rackcdn.com/wp-content/
uploads/Secretary-Perez-Fiduciary-Comment-Period-Letter-10-30-15.pdf.
    \63\Letter from the Hon. Gwen Moore, et al to the Hon. Thomas E. 
Perez, Sec'y, Dep't of Labor (Sept. 24, 2015) (on file with the 
Committee).
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    On July 21, 2015, every Republican member of the Committee 
signed a comment letter calling for the proposal to be 
withdrawn and highlighting testimony from a hearing held by the 
HELP Subcommittee on June 17, 2015.\64\ This comment letter 
also explained the Committee's longstanding interest in 
pursuing a responsible best interest standard.
---------------------------------------------------------------------------
    \64\Letter from the Hon. John Kline, Chairman, H. Comm. on Educ. 
and the Workforce, et al to the Hon. Thomas E. Perez, Sec'y, Dep't of 
Labor (July 21, 2015), http://edworkforce.house.gov/uploadedfiles/7-21-
15-_dol_fiduciary_rule.pdf.
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                  CONCERNS WITH DOL'S FINAL REGULATION

    On April 6, 2016, DOL finalized its regulation, 
significantly altering the retirement services 
marketplace.Based on overwhelming testimony from a diverse 
group of stakeholders during two HELP Subcommittee hearings, 
the final rule (even as revised from the 2015 NPRM) disrupts 
advisory relationships, contains a multitude of technical 
shortcomings, and brings about a number of unacceptable 
consequences. The final rule restricts access to affordable 
financial advice for lower- and middle-income Americans and 
makes it harder for employers--especially small businesses--to 
set up retirement plans. For these reasons, even if the final 
rule represents a modest improvement from the 2015 NPRM, the 
rule should still be rejected.

Restricted access to advice

    The final regulation will have the net effect of locking 
lower- and middle-income investors out of the advice market. 
Advisors should have a legal duty to act in the ``best 
interests'' of their clients; however, ``fiduciary'' status 
under the regulation will result in the legal prohibition of 
most transactions because of how the advisor is 
compensated.\65\ DOL claims its goal is not to eliminate 
commission-based accounts,\66\ but it failed to adequately 
rectify this gaping inadequacy in the final rule. For example, 
while the BIC exemption permits advisors to continue to receive 
commissions, there are several onerous disclosure and 
information-gathering requirements that will increase costs, 
which will be passed on to investors. Alternatively, those 
costs will make continued advice to small- and mid-size 
accounts unaffordable and therefore unavailable. Mr. Dean 
Harman, CFP, Harman Wealth Management, summarized these 
concerns, saying:
---------------------------------------------------------------------------
    \65\Id. at 3, 4.
    \66\Restricting Access to Financial Advice: Evaluating the Costs 
and Consequences for Working Families and Retirees: Hearing Before the 
Subcomm. on Health, Employment, Labor, and Pensions of the H. Comm. on 
Educ. and the Workforce, 114th Cong. 5 (Jun. 17, 2015) (written 
testimony of The Hon. Thomas E. Perez, U.S. Sec'y, Dept. of Labor).

          Unfortunately, these and other flawed assumptions 
        cause the DOL to offer a proposal that is poorly 
        designed for investors and unduly burdensome for 
        financial advisors and financial institutions. The 
        result is that the proposal will drive up costs putting 
        retirement advice out of the reach of many 
        investors.\67\
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    \67\Restricting Access to Financial Advice: Evaluating the Costs 
and Consequences for Working Families and Retirees: Hearing Before the 
Subcomm. on Health, Employment, Labor, and Pensions of the H. Comm. on 
Educ. and the Workforce, 114th Cong. 10 (Jun. 17, 2015) (written 
testimony of Dean Harman, CFP, Managing Dir., Harman Wealth 
Management).

Moreover, the disclosure requirements could overwhelm investors 
with the volume of fine print, resulting in confusion or 
functional non-disclosure. This was a concern of many in the 
industry, including Mr. Jules Gaudreau, Jr. ChFC, CIC, 
President of The Gaudreau Group, Inc., who echoed this 
sentiment at a December 2, 2015, HELP Subcommittee hearing, 
---------------------------------------------------------------------------
stating:

          It is, therefore, important to make sure that the 
        U.S. retirement savings and tax policies encourage 
        individuals to take personal responsibility for the 
        need to save to protect their financial futures. It is 
        also important to be sure that the rules in place to 
        protect these savers and savings do not so burden the 
        mechanisms for saving that the rules themselves become 
        a barrier to achieving the goal of post-retirement 
        financial security. . . . Clear, understandable 
        disclosure of this relevant information is a must. 
        However, it is easy to overwhelm a retirement saver, 
        especially one who is in need of basic financial 
        education. Too much disclosure leads to overload and 
        possibly paralysis in the decision-making process. The 
        DOL proposal, as drafted this past April, fails this 
        important balancing test. It requires too much 
        information--and it requires it of financial advisors 
        who usually do not have access to the data the DOL 
        requires.\68\
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    \68\Principles for Ensuring Retirement Advice Serves the Best 
Interests of Working Families and Retirees: Hearing Before the Subcomm. 
on Health, Employment, Labor, and Pensions of the H. Comm. on Educ. and 
the Workforce, 114th Cong. 3, 4 (Dec. 2, 2015) (written testimony of 
Jules Gaudreau, Jr., ChFC, CIC, President, The Gaudreau Group, Inc.).

    Even worse, the final rule reduces the educational material 
that can be provided to IRA holders. For example, if an IRA 
provider notes a sample asset allocation, it cannot mention 
examples of funds in those asset classes without triggering 
fiduciary duties. Therefore, IRA owners will likely be deprived 
of that educational information.
    Furthermore, unlike the 2015 NPRM, under the final rule, 
all variable and fixed-index annuities will need to comply with 
the new requirements. Moreover, the BIC exemption continues to 
envision class action litigation under state law. The costs 
associated with this litigation will drive costs up for those 
least able to bear it, namely low- and middle-income retirement 
savers. More technically, DOL continues to require compliance 
within an unreasonably short amount of time, with most 
requirements being effective within one year.
    The final rule adopts the proposal's narrowing of the five-
part test for determining whether the advisor rendered 
``investment advice'' and the framework of the BIC exemption, 
and amended a few of the most obviously unworkable 
requirements. For example, a contract stating the advisor's 
intent to provide advice in the best interest of the client is 
no longer required prior to any recommendation; instead, a 
contract is required at the time a transaction is executed. The 
one-, five-, and ten-year cost projections are no longer 
required, and other disclosure requirements were modified to be 
more practical. Exemptive relief is not limited to 
recommendations involving only certain products. Nevertheless, 
the remaining burdensome requirements will serve to discourage 
savings, to the detriment of small business owners and low- and 
middle-income savers.

Fewer employer-provided retirement plans

    Small business owners provide nearly half a trillion 
dollars in retirement savings for 9 million households.\69\ 
Employers are very concerned the new rule will make it much 
harder for small businesses to set up retirement plans and for 
plan participants to receive advice.
---------------------------------------------------------------------------
    \69\U.S. Chamber of Commerce, Locked Out of Retirement: The Threat 
to Small Business Retirement Savings (Jun. 9, 2015), http://
www.centerforcapitalmarkets.com/wp-content/uploads/2013/08/US-Chamber-
Locked-Out-of-Retirement-White-Paper.pdf.
---------------------------------------------------------------------------
    Destructively, like the 2015 NPRM, DOL's final rulemaking 
holds large and small businesses to different standards, with 
greater restrictions and additional burdens placed on small 
businesses. Under most circumstances, merely selling your 
services is not fiduciary ``investment advice.''\70\ In one 
counterproductive exception, however, retirement advisors would 
automatically trigger fiduciary duties if they sell to a plan 
managing under $50 million in assets, such as a small 
business's plan.\71\ To continue to provide services to small 
businesses, advisors will either need to increase fees or 
qualify for an exemption. The Honorable Brad Campbell testified 
at the December 2, 2015, HELP Subcommittee Hearing about a 
similar discriminatory rule in the 2015 NPRM, saying:
---------------------------------------------------------------------------
    \70\Definition of the Term ``Fiduciary,'' 81 Fed. Reg. at 20997-
998.
    \71\Definition of the Term ``Fiduciary,'' 81 Fed. Reg. at 20999.

          Small plans and small-account IRA owners may be most 
        in need of basic investment advice, but they would be 
        least likely to be served by the Proposal due to the 
        increased compliance costs and increased legal 
        liability risks it unnecessarily creates.\72\
---------------------------------------------------------------------------
    \72\Principles for Ensuring Retirement Advice Serves the Best 
Interests of Working Families and Retirees: Hearing Before the Subcomm. 
on Health, Employment, Labor, and Pensions of the H. Comm. on Educ. and 
the Workforce, 114th Cong. 5 (Dec. 2, 2015) (written testimony of the 
Hon. Bradford Campbell, Counsel, Drinker Biddle & Reath LLP).

    Because of the complicated new requirements, institutions 
providing retirement plans would be prohibited from offering 
assistance to small business plan sponsors in selecting 
investment options to offer their employees. However, larger 
plans do not have this requirement. While public policy should 
encourage employers to help workers save for retirement, it is 
harmful for DOL to refuse to provide an exemption for 
information provided to small businesses. Even worse, the final 
DOL rule actually will drive up costs for these small firms, 
while shielding larger businesses from the same costs. As Ms. 
Rachel Doba, President of DB Engineering LLC, noted at the same 
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HELP Subcommittee hearing:

          DOL seems to believe that small business owners, such 
        as me, are not as sophisticated as large businesses 
        and, therefore, need additional protections. The 
        validity of this rationale is based on faulty 
        assumptions, and does not justify discriminatory 
        treatment.\73\
---------------------------------------------------------------------------
    \73\Principles for Ensuring Retirement Advice Serves the Best 
Interests of Working Families and Retirees: Hearing Before the Subcomm. 
on Health, Employment, Labor, and Pensions of the H. Comm. on Educ. and 
the Workforce, 114th Cong. 5 (Dec. 2, 2015) (written testimony of Ms. 
Rachel Doba, President, DB Engineering LLC).

    Echoing these concerns, the National Federation of 
Independent Business sent a letter to DOL criticizing the 2015 
NPRM because advisors will no longer provide advice to small 
businesses that establish retirement plans. Instead, the 
regulation will prohibit (or make cost-prohibitive) the 
arrangements currently prevalent.\74\ Additionally, the Small 
Business Administration's Office of Advocacy submitted a 
comment letter to the Department warning, ``the proposed rule 
would likely increase the [advisors'] costs and burdens 
associated with serving smaller plans . . . [and] could limit 
financial advisors' ability to offer savings and investment 
advice to clients . . . ultimately lead[ing] advisors to stop 
providing retirement services to small businesses.''\75\
---------------------------------------------------------------------------
    \74\Letter from Amanda Austin, Vice President, Public Policy, Nat'l 
Fed'n of Indep. Bus. to the Emp. Benefits Sec. Admin. (May 5, 2015), 
http://www.dol.gov/ebsa/pdf/1210-AB32-2-00039.pdf.
    \75\Comment letter from the Small Bus. Admin's Office of Advocacy 
5, 6 (Jul. 17, 2015), 
http://www.dol.gov/ebsa/pdf/1210-AB32-2-00403.pdf.
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                 LEGISLATION ADDRESSING THE RULEMAKING

    In an effort to provide an alternative to DOL's flawed 
proposed rule, on December 18, 2015, Rep. Phil Roe, with five 
bipartisan cosponsors, introduced H.R. 4293, the Affordable 
Retirement Advice Protection Act (ARAPA).\76\ This bill was 
introduced concurrently with the bipartisan H.R. 4294, the 
Strengthening Access to Valuable Education and Retirement 
Support Act of 2015 (SAVERS Act).\77\ H.R. 4293 amends ERISA, 
while H.R. 4294 adds similar provisions to the Code. The bills 
achieve the DOL's stated goal of ensuring retirement advisors 
act in their clients' best interests. They do this by updating 
current law to ensure all financial professionals providing 
personalized advice about investments, distributions, or the 
use of other fiduciaries would be legally required to act in 
the best interest of their customers. However, unlike the DOL 
rules, ARAPA and the SAVERS Act ensure low- and medium-asset 
savers and small businesses have access to affordable 
retirement advice. The bills also prohibit DOL from finalizing 
its regulation unless Congress affirmatively approves the 
regulation. The Committee ordered these bills favorably 
reported on February 2, 2016.
---------------------------------------------------------------------------
    \76\H.R. 4293, 114th Cong. (2015).
    \77\H.R. 4294, 114th Cong. (2015).
---------------------------------------------------------------------------
    Other legislation also attempted to mitigate the damage of 
DOL's rulemaking. In October 2013, the House passed the Retail 
Investor Protection Act, requiring DOL to postpone any 
rulemaking relating to the definition of ``fiduciary'' until 
after a potentially conflicting regulation from the SEC is 
promulgated, pursuant to authority in Dodd-Frank.\78\ The House 
passed the bill by a vote of 255-166 (with 30 Democrats in 
support), but the Senate did not consider it. This Congress, 
the bill was reintroduced by Rep. Ann Wagner\79\ and passed by 
a vote of 245-186.
---------------------------------------------------------------------------
    \78\Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. 
L. No. 111-203, Sec. 913 (2010).
    \79\H.R. 1090, 114th Cong. (2015).
---------------------------------------------------------------------------
    Additionally, both the Fiscal Year 2016 Labor, Health and 
Human Services appropriations bills passed by the House and 
Senate Appropriations Committees included language prohibiting 
funds from being used to finalize, implement, administer, or 
enforce the proposed rule.\80\ However, this language was not 
included in the omnibus appropriations bill enacted in December 
2015.
---------------------------------------------------------------------------
    \80\The Departments of Labor, Health and Human Services, and 
Education, and Related Agencies Appropriations Act, Fiscal Year 2016, 
H.R. 3020, Sec. 113 (2015); The Departments of Labor, Health and Human 
Services, and Education, and Related Agencies Appropriations Act, 
Fiscal Year 2016, S. 1695, 110 (2015).
---------------------------------------------------------------------------
    Finally, on April 19, 2016, Rep. Phil Roe, joined by Reps. 
Charles Boustany and Ann Wagner, introduced H.J. Res. 88, a 
joint resolution of disapproval under the CRA, disapproving the 
rule submitted by DOL relating to the definition of the term 
``fiduciary.'' The Committee ordered the joint resolution 
favorably reported on April 21, 2016, by a vote of 22-14.

                               CONCLUSION

    The DOL rule will have a detrimental impact on low- and 
middle-income Americans and small businesses. The joint 
resolution of disapproval will ensure this regulatory change 
will not impair retirement security.

                           SECTION-BY-SECTION

    Congress expresses its disapproval of the rule submitted by 
DOL relating to the definition of the term ``fiduciary'' and 
prohibits it from going into effect.

                       EXPLANATION OF AMENDMENTS

    The amendments, including the amendment in the nature of a 
substitute, are explained in the body of this report.

              APPLICATION OF LAW TO THE LEGISLATIVE BRANCH

    Section 102(b)(3) of Public Law 104-1 requires a 
description of the application of this bill to the legislative 
branch. House Joint Resolution 88 expresses congressional 
disapproval of the U.S. Department of Labor (DOL or Department) 
rule amending the regulatory definition of ``fiduciary'' under 
the Employee Retirement Income Security Act of 1974 (ERISA) and 
the Internal Revenue Code of 1986 (Code).

                       UNFUNDED MANDATE STATEMENT

    Section 423 of the Congressional Budget and Impoundment 
Control Act (as amended by Section 101(a)(2) of the Unfunded 
Mandates Reform Act, P.L. 104-4) requires a statement of 
whether the provisions of the reported bill include unfunded 
mandates. This issue is addressed in the CBO letter.

                           EARMARK STATEMENT

    H.J. Res. 88 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of House Rule XXI.

                            ROLL CALL VOTES

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee Report to include for 
each record vote on a motion to report the measure or matter 
and on any amendments offered to the measure or matter the 
total number of votes for and against and the names of the 
Members voting for and against.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                             CORRESPONDENCE

    Exchange of letters with the Committee on Ways and Means.
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
         STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

    In accordance with clause (3)(c) of House Rule XIII, the 
goal of House Joint Resolution 88 is to disapprove of the U.S. 
Department of Labor (DOL or Department) rule amending the 
regulatory definition of ``fiduciary'' under the Employee 
Retirement Income Security Act of 1974 (ERISA) and the Internal 
Revenue Code of 1986 (Code).

                    DUPLICATION OF FEDERAL PROGRAMS

    No provision of H.J. Res 88 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  DISCLOSURE OF DIRECTED RULE MAKINGS

    The committee estimates that enacting H.J. Res. 88 does not 
specifically direct the completion of any specific rule makings 
within the meaning of 5 U.S.C. 551.

  STATEMENT OF OVERSIGHT FINDINGS AND RECOMMENDATIONS OF THE COMMITTEE

    In compliance with clause 3(c)(1) of rule XIII and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the committee's oversight findings and recommendations are 
reflected in the body of this report.

               NEW BUDGET AUTHORITY AND CBO COST ESTIMATE

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives and section 
308(a) of the Congressional Budget Act of 1974 and with respect 
to requirements of clause 3(c)(3) of rule XIII of the Rules of 
the House of Representatives and section 402 of the 
Congressional Budget Act of 1974, the committee has received 
the following estimate for H.J. Res. 88 from the Director of 
the Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, April 25, 2016.
Hon. John Kline,
Chairman, Committee on Education and the Workforce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.J. Res. 88, a joint 
resolution providing for congressional disapproval under 
chapter 8 of title 5, United States Code, of a rule submitted 
by the Department of Labor relating to the definition of the 
term ``Fiduciary''.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Noah 
Meyerson.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

H.J. Res. 88--A joint resolution providing for congressional 
        disapproval under chapter 8 of title 5, United States Code, of 
        a rule submitted by the Department of Labor relating to the 
        definition of the term ``Fiduciary''

    H.J. Res. 88 would disapprove the final rule submitted by 
the Department of Labor (DOL) and published in the Federal 
Register on April 8, 2016, relating to investment advice within 
pension and retirement plans; those regulations are sometimes 
referred to as the ``fiduciary rule.'' H.J. Res. 88 would 
invoke a legislative process established by the Congressional 
Review Act (Public Law 104-121) to disapprove the new rule. If 
H.J. Res. 88 is enacted, the rule would have no force or 
effect.
    CBO expects that, if this legislation were enacted, DOL 
would likely not propose a new rule related to the definition 
of fiduciary because the Congressional Review Act prohibits 
agencies from issuing any new rule in substantially the same 
form as a disapproved rule, unless specifically authorized by 
subsequent legislation.
    Under the Employee Retirement Income Security Act of 1974 
(ERISA) and the Internal Revenue Code, a person who is paid to 
provide investment advice is considered a fiduciary and is 
obligated to work in the best sole interest of their clients. 
The rule published on April 8 broadens the definition of 
investment advice within pension and retirement plans and 
therefore applies the fiduciary standard to more advisors.
    CBO and the staff of the Joint Committee on Taxation (JCT) 
estimate that the bill would have a negligible effect on 
revenues over the 2016-2026 period. Enacting the bill would not 
affect direct spending. Because enacting H.J. Res. 88 would 
affect revenues, pay-as-you-go procedures apply.
    CBO and JCT estimate that enacting H.J. Res. 88 would not 
increase net direct spending or on-budget deficits in any of 
the four consecutive 10-year periods beginning in 2027.
    CBO and JCT have determined that the bill contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act and would impose no costs on 
state, local, or tribal governments.
    On February 10, 2016, CBO transmitted a cost estimate of 
H.R. 4294, the Strengthening Access to Valuable Education and 
Retirement Support Act of 2015, as ordered reported by the 
House Committee on Ways and Means on February 3, 2016.
    On April 20, 2016, CBO transmitted a cost estimate of H.R. 
4293, the Affordable Retirement Advice Protection Act, as 
ordered reported by the House Committee on Education and the 
Workforce on February 2, 2016.
    On April 20, 2016, CBO transmitted a cost estimate of H.R. 
4294, the Strengthening Access to Valuable Education and 
Retirement Support Act of 2015, as ordered reported by the 
House Committee on Education and the Workforce on February 2, 
2016.
    All three bills contained a provision that would prevent 
the fiduciary rule or any similar regulations from becoming 
effective unless a bill or joint resolution approving them was 
passed within 60 days of enactment of the proposed legislation. 
Like H.J. Res. 88, those bills would have a negligible effect 
on revenues and would not affect direct spending.
    The CBO staff contact for this estimate is Noah Meyerson. 
The estimate was approved by Theresa Gullo, Assistant Director 
for Budget Analysis.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                        COMMITTEE COST ESTIMATE

    Clause 3(d)(1) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison of the 
costs that would be incurred in carrying out H.J. Res. 88. 
However, clause 3(d)(2)(B) of that rule provides that this 
requirement does not apply when the committee has included in 
its report a timely submitted cost estimate of the bill 
prepared by the Director of the Congressional Budget Office 
under section 402 of the Congressional Budget Act.

         CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    The requirements of clause 3(e) of rule XIII of the Rules 
of the House of Representatives do not apply to H.J. Res. 88.

                             MINORITY VIEWS

    Committee Democrats strongly oppose H.J. Res. 88, which 
would block the Department of Labor's (DOL's) final rule 
protecting workers' hard-earned retirement savings and ensuring 
financial advisors act in the best interest of their retirement 
clients.
    For far too long, some financial advisors have exploited 
loopholes in a decades-old DOL regulation that governs 
investment advice for retirement savers. As a result of these 
loopholes, these unscrupulous advisors were able to steer their 
retirement clients toward financial products that yielded the 
advisor a big commission but were not in their clients' best 
interest.
    This practice is referred to as providing ``conflicted 
advice.'' Conflicted advice costs retirement plan participants 
$17 billion in losses every year and could result in a loss of 
almost a quarter of an individual's savings over a 35-year 
period.\1\
---------------------------------------------------------------------------
    \1\Council of Economic Advisors, The Effects of Conflicted 
Investment Advice on Retirement Savings 17-18 (Feb. 2015); available 
at: https://www.whitehouse.gov/sites/default/files/docs/
cea_coi_report_final.pdf.
---------------------------------------------------------------------------
    The most common point at which conflicted advice occurs is 
when workers are about to retire and roll over their employer-
based retirement account, such as a 401(k), into an Individual 
Retirement Account (IRA) or other financial product. According 
to the White House, ``a typical worker who receives conflicted 
advice when rolling over a 401(k) balance to an IRA at age 45 
will lose an estimated 17 percent from her account by age 65. 
In other words, if a worker has $100,000 in retirement savings 
at age 45, without conflicted advice it would grow to an 
estimated $216,000 by age 65 adjusted for inflation, but if she 
receives conflicted advice it would grow to $179,000--a loss of 
$37,000 or 17 percent.''\2\
---------------------------------------------------------------------------
    \2\White House, ``Fact Sheet: Middle Class Economics: Strengthening 
Retirement Security by Cracking Down on Conflicts of Interest in 
Retirement Savings,'' (April 2016); available at: https://
www.whitehouse.gov/the-press-office/2016/04/06/fact-sheet-middle-class-
economics-strengthening-retirement-security.
---------------------------------------------------------------------------
    Committee Democrats believe that, after a lifetime of hard-
work and sacrifice, these workers should be guaranteed that the 
financial advice they receive about their retirement savings 
will be in their best interest. Retirement savers expect that 
the advice they receive is in their best interest, and they 
rely on it accordingly. Unfortunately, under the existing 
loophole-ridden regulation, that is not always the case. The 
DOL's final rule provides a responsible solution by expanding 
the circumstances under which advisers must abide by a 
fiduciary standard and requiring them to disclose conflicts of 
interest. The final rule will help hardworking Americans enjoy 
a more secure and dignified retirement.
    H.J. Res. 88 nullifies this rule and leaves in place the 
unacceptable status quo that enables certain financial advisors 
to put their interests ahead of their clients'.

  COMMITTEE REPUBLICANS MOVED WITH RECORD-BREAKING HASTE TO BLOCK THE 
                            DOL'S FINAL RULE

    DOL's final rule was the product of a thorough and 
transparent process. The DOL conducted hundreds of meetings on 
the rule and provided the American public nearly six months to 
provide feedback. On April 8, 2016, DOL published its final 
conflict of interest rule in the Federal Register, which 
included significant changes in response to the feedback DOL 
had received.\3\ Nonetheless, eleven days later on April 19, 
2016, three House Republicans introduced H.J. Res. 88, a joint 
resolution of disapproval of the rule under the Congressional 
Review Act (CRA). On Thursday, April 21, the Committee on 
Education and the Workforce held a mark-up of H.J. Res. 88.
---------------------------------------------------------------------------
    \3\81 Fed. Reg. 20945 (April 2016); available at: https://
www.federalregister.gov/articles/2016/04/08/2016-07924/definition-of-
the-term-fiduciary-conflict-of-interest-rule-retirement-investment-
advice.
---------------------------------------------------------------------------
    In contrast to the DOL's deliberative process, Committee 
Republicans rushed ahead with a mark-up of H.J. Res. 88 only 48 
hours after it was introduced. On top of this, Committee 
Republicans convened a mark-up of H.J. Res. 88 only thirteen 
days after the publication of DOL's final conflict of interest 
rule in the Federal Register. Based on a Congressional Research 
Service (CRS) historical review of mark-ups of joint 
resolutions of disapproval under the CRA that have been 
convened by House and Senate Committees, thirteen days appears 
to be the shortest timespan ever between issuance or 
publication of a final rule and a Committee's CRA mark-up. On 
average, there have been 55 days between issuance or 
publication of a final rule and a scheduled mark-up of a CRA 
resolution of disapproval.

 THE DOL MADE SIGNIFICANT CHANGES TO THE RULE IN RESPONSE TO COMMENTS 
                           FROM STAKEHOLDERS

    Committee Democrats believe the DOL struck an appropriate 
balance between accommodating congressional, industry, and 
other stakeholder concerns without compromising core retirement 
investor protections. Throughout the process, Secretary Perez 
repeatedly stated that the final rule would reflect the 
feedback provided by stakeholders. Secretary Perez lived up to 
his word, as the final rule was changed in meaningful ways in 
response to stakeholder input. For instance, the majority of 
the comments focused on the best interest contract exemption 
(BICE). The DOL made important modifications to the BICE's 
disclosure and notice requirements as well as the timing and 
execution of the contract to make the final rule more workable 
overall.
    The ill-advised haste with which Committee Republicans have 
rushed to judgment on this rule is all the more curious when 
considering these and other modifications, as well as the 
initial positive reactions to the rule from industry and 
others.

 A VARIETY OF STAKEHOLDERS, INCLUDING INDUSTRY, EXPRESSED SUPPORT FOR 
 THE DOL'S FINAL RULE AND ACKNOWLEDGED THE FINAL RULE'S RESPONSIVENESS 
                           TO THEIR FEEDBACK

    A wide range of stakeholders--including industry 
representatives--have expressed their initial support for the 
final rule. For instance, John Thiel, who is the head of 
Merrill Lynch's Wealth Management, said they were ``pleased 
that Secretary Perez and the Department of Labor staff have 
worked to address many of the practical concerns raised during 
the comment period.''\4\ Roger Ferguson, the president and CEO 
of TIAA, said ``based on our preliminary analysis, it appears 
the Department has gone a long way toward making the best 
interest standard the industry standard.''\5\
---------------------------------------------------------------------------
    \4\Reuters, ``Merrill Lynch Sees Many Industry Concerns Addressed 
In Retirement Advice Rule,'' (April 2016); available at: http://
in.reuters.com/article/bank-of-america-fiduciary-idINL2N1790TQ.
    \5\Reuters, ``TIAA Statement on Department of Labor Fiduciary 
Rule,'' (April 2016); available at: http://www.reuters.com/article/dc-
tiaa-idUSnBw065764a+100+BSW20160406.
---------------------------------------------------------------------------
    Morgan Stanley said the Labor Department's final version of 
fiduciary rules were ``meaningfully softened in several 
aspects'' from the original proposal.\6\
---------------------------------------------------------------------------
    \6\Wall Street Journal, ``Reactions to the Labor Department's 
Fiduciary Rule,'' (April 2016); available at: http://www.wsj.com/
articles/reactions-to-the-labor-departments-fiduciary-rule-1459954904.
---------------------------------------------------------------------------
    The Financial Industry Regulatory Authority (FINRA), which 
was one of the most vigorous critics of the DOL's proposed 
rule, and which ``filed one of the most pointed comment letters 
last summer about the proposed rule,'' appears to have changed 
its view after seeing the final rule.\7\ FINRA's chairman and 
chief executive, Richard Ketchum, ``praised DOL for `making 
some very significant changes' to the measure that will make it 
operate better.''\8\ Mr. Ketchum reportedly said that he thinks 
the ``final rule is much better.''\9\
---------------------------------------------------------------------------
    \7\Investment News, ``An Original Critic, FINRA's Ketchum Praises 
Improvements in Final DOL Fiduciary Rule,'' (April 2016); available at: 
http://www.investmentnews.com/article/20160415/FREE/160419932/an-
original-critic-finras-ketchum-praises-improvements-in-final-dol.
    \8\Id.
    \9\Id.
---------------------------------------------------------------------------
    At the same time, DOL has maintained the support of a wide 
and diverse coalition of stakeholders that have championed the 
conflict of interest rule since the promulgation of the 
proposed rule. Such organizations comprise the ``Save Our 
Retirement Coalition'' and include: AARP, AFL-CIO, Alliance for 
Retired Americans, American Association for Justice, American 
Association of University Women, American Federation of 
Government Employees (AFGE), American Federation of State, 
County and Municipal Employees (AFSCME), Americans for 
Financial Reform, Association of University Centers on 
Disabilities, Better Markets, B'nai B'rith International, 
Center for Economic Justice, Center for Responsible Lending, 
Committee for the Fiduciary Standard, Consumer Action, Consumer 
Federation of America, Consumers Union, Demos, International 
Association of Machinists and Aerospace Workers, International 
Brotherhood of Boilermakers, International Brotherhood of 
Electrical Workers (IBEW), International Union, United 
Automobile, Aerospace, & Agricultural Implement Workers of 
America (UAW), Justice in Aging, Leadership Conference on Civil 
and Human Rights, Main Street Alliance, Metal Trades 
Department, AFL-CIO, National Active and Retired Federal 
Employees Association (NARFE), National Consumers League, 
National Council of La Raza, National Women's Law Center, 
NAACP, National Education Association, Public Citizen, Public 
Investors Arbitration Bar Association, Rebalance IRA, United 
Food and Commercial Workers (UFCW), United Steel, Paper and 
Forestry, Rubber, Manufacturing, Energy, Allied Industrial and 
Service Workers International Union (USW), U.S. PIRG, and Young 
Invincibles.
    The Save Our Retirement Coalition issued a letter in 
opposition to H.J. Res. 88 that voiced thoughtful support for 
the rule. The Coalition's letter said ``the rule will at long 
last require all financial professionals who provide retirement 
investment advice to put their clients' best interests ahead of 
their own financial interests. By taking this essential step, 
the rule will help all Americans--many of whom are responsible 
for making their own decisions about how best to invest their 
retirement savings--keep more of their hard-earned savings so 
they can enjoy a more financially secure and independent 
retirement.''\10\
---------------------------------------------------------------------------
    \10\Save our Retirement Coalition, ``Oppose the Resolution to block 
DOL's final conflict of interest rule,'' (April 2016); available at: 
http://saveourretirement.com/2016/04/re-oppose-the-resolution-to-block-
dols-final-conflict-of-interest-rule/.
---------------------------------------------------------------------------

                    ROLL CALL VOTES ON FINAL PASSAGE

    H.J. Res. 88 was reported by straight party-line votes of 
22 ayes and 14 nays. No Democratic Committee Members voted in 
favor of the bill.
    Congresswoman Frederica Wilson (D-FL) issued a statement 
following the Committee mark-up, saying she ``was unavoidably 
detained and missed the vote.'' According to Congresswoman 
Wilson's statement, she would have voted ``nay'' had she been 
present.

                               CONCLUSION

    In its record-setting rush to nullify the DOL's final rule 
through a CRA joint resolution of disapproval, Committee 
Republicans are jeopardizing workers' ability to receive 
retirement investment advice that is in their best interest. 
Committee Democrats reject this misguided and unnecessarily 
partisan approach.
    Instead of wasting precious time and resources on this 
joint resolution, the Education and Workforce Committee should 
be helping working families make ends meet so that they can 
provide a better future for their children and grandchildren. 
For instance, in the scarce time that remains this year, the 
Committee should be taking up legislation that would boost 
workers' wages, help workers achieve a better balance between 
work and family life, end workplace discrimination, and 
strengthen our retirement system.
    For the reasons stated above, among others, we stood 
together in opposing H.J. Res. 88 when it was hastily 
considered by the Education and Workforce Committee. We 
respectfully recommend that the full House of Representatives 
do the same.

                                   Robert C. ``Bobby'' Scott.
                                   Susan A. Davis.
                                   Joe Courtney.
                                   Jared Polis.
                                   Suzanne Bonamici.
                                   Mark Takano.
                                   Katherine M. Clark.
                                   Mark DeSaulnier.
                                   Ruben Hinojosa.
                                   Raul M. Grijalva.
                                   Marcia L. Fudge.
                                   Frederica S. Wilson.
                                   Mark Pocan.
                                   Hakeem S. Jeffries.
                                   Alma S. Adams.