Federal Register / Vol. 82, No. 168 / Thursday, August 31, 2017 / Proposed Rules 41365 

to assist that office in processing your 

request. See the SUPPLEMENTARY

INFORMATION section for electronic 

access to the draft guidance. 

FOR FURTHER INFORMATION CONTACT: 

Jenny Scott, Center for Food Safety and 

Applied Nutrition (HFS–300), Food and 

Drug Administration, 5001 Campus Dr., 

College Park, MD 20740, 240–402–2166. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The FDA Food Safety Modernization 

Act (FSMA) (Pub. L. 111–353) enables 

FDA to better protect public health by 

helping to ensure the safety and security 

of the food supply. It enables FDA to 

focus more on preventing food safety 

problems rather than relying primarily 

on reacting to problems after they occur. 

FSMA recognizes the important role 

industry plays in ensuring the safety of 

the food supply, including the adoption 

of modern systems of preventive 

controls in food production. 

Section 103 of FSMA amended the 

Federal Food, Drug, and Cosmetic Act 

(FD&C Act), in section 418 of the FD&C 

Act (21 U.S.C. 350g), by adding 

requirements for hazard analysis and 

risk-based preventive controls for 

establishments that are required to 

register as food facilities under our 

regulations, in 21 CFR part 1, subpart H, 

in accordance with section 415 of the 

FD&C Act (21 U.S.C. 350d). We have 

established regulations to implement 

these requirements within part 117 (21 

CFR part 117). 

In the Federal Register of August 24, 

2016 (81 FR 57816), we announced the 

availability of several chapters of a 

multichapter draft guidance for industry 

entitled ‘‘Hazard Analysis and RiskBased Preventive Controls for Human 

Food.’’ We now are announcing the 

availability of an additional draft 

chapter of this multichapter guidance 

for industry. We are issuing the draft 

guidance consistent with our good 

guidance practices regulation (21 CFR 

10.115). The draft guidance, when 

finalized, will represent the current 

thinking of FDA on this topic. It does 

not establish any rights for any person 

and is not binding on FDA or the public. 

You can use an alternate approach if it 

satisfies the requirements of the 

applicable statutes and regulations. This 

guidance is not subject to Executive 

Order 12866. 

The multichapter draft guidance for 

industry is intended to explain our 

current thinking on how to comply with 

the requirements for hazard analysis 

and risk-based preventive controls 

under part 117, principally in subparts 

C and G. The chapter that we are 

announcing in this document is entitled 

‘‘Chapter Six—Use of Heat Treatments 

as a Process Control.’’ 

We intend to announce the 

availability for public comment of 

additional chapters of the draft guidance 

as we complete them. 

II. Paperwork Reduction Act of 1995 

This draft guidance refers to 

previously approved collections of 

information found in FDA regulations. 

These collections of information are 

subject to review by the Office of 

Management and Budget (OMB) under 

the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501–3520). The collections 

of information in part 117 have been 

approved under OMB control number 

0910–0751. 

III. Electronic Access 

Persons with access to the Internet 

may obtain the draft guidance at either 

https://www.fda.gov/FoodGuidances or 

https://www.regulations.gov. Use the 

FDA Web site listed in the previous 

sentence to find the most current 

version of the guidance. 

Dated: August 22, 2017. 

Anna K. Abram, 

Deputy Commissioner for Policy, Planning, 

Legislation, and Analysis. 

[FR Doc. 2017–18464 Filed 8–30–17; 8:45 am] 

BILLING CODE 4164–01–P 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

29 CFR Part 2550 

[Application Number D–11712; D–11713; 

D–11850] 

ZRIN 1210–ZA27 

Extension of Transition Period and 

Delay of Applicability Dates; Best 

Interest Contract Exemption (PTE 

2016–01); Class Exemption for 

Principal Transactions in Certain 

Assets Between Investment Advice 

Fiduciaries and Employee Benefit 

Plans and IRAs (PTE 2016–02); 

Prohibited Transaction Exemption 84– 

24 for Certain Transactions Involving 

Insurance Agents and Brokers, 

Pension Consultants, Insurance 

Companies, and Investment Company 

Principal Underwriters (PTE 84–24) 

AGENCY: Employee Benefits Security 

Administration, Labor. 

ACTION: Notice of proposed amendments 

to PTE 2016–01, PTE 2016–02, and PTE 

84–24. 

SUMMARY: This document proposes to 

extend the special transition period 

under sections II and IX of the Best 

Interest Contract Exemption and section 

VII of the Class Exemption for Principal 

Transactions in Certain Assets Between 

Investment Advice Fiduciaries and 

Employee Benefit Plans and IRAs. This 

document also proposes to delay the 

applicability of certain amendments to 

Prohibited Transaction Exemption 84– 

24 for the same period. The primary 

purpose of the proposed amendments is 

to give the Department of Labor the time 

necessary to consider possible changes 

and alternatives to these exemptions. 

The Department is particularly 

concerned that, without a delay in the 

applicability dates, regulated parties 

may incur undue expense to comply 

with conditions or requirements that it 

ultimately determines to revise or 

repeal. The present transition period is 

from June 9, 2017, to January 1, 2018. 

The new transition period would end on 

July 1, 2019. The proposed amendments 

to these exemptions would affect 

participants and beneficiaries of plans, 

IRA owners and fiduciaries with respect 

to such plans and IRAs. 

DATES: Comments must be submitted on 

or before September 15, 2017. 

ADDRESSES: All written comments 

should be sent to the Office of 

Exemption Determinations by any of the 

following methods, identified by RIN 

1210–AB82: 

Federal eRulemaking Portal: http://

www.regulations.gov at Docket ID 

number: EBSA–2017–0004. Follow the 

instructions for submitting comments. 

Email to: 

EBSA.FiduciaryRuleExamination@

dol.gov. 

Mail: Office of Exemption 

Determinations, EBSA, (Attention: D– 

11712, 11713, 11850), U.S. Department 

of Labor, 200 Constitution Avenue NW., 

Suite 400, Washington, DC 20210. 

Hand Delivery/Courier: OED, EBSA 

(Attention: D–11712, 11713, 11850), 

U.S. Department of Labor, 122 C St. 

NW., Suite 400, Washington, DC 20001. 

Comments will be available for public 

inspection in the Public Disclosure 

Room, EBSA, U.S. Department of Labor, 

Room N–1513, 200 Constitution Avenue 

NW., Washington, DC 20210. Comments 

will also be available online at 

www.regulations.gov, at Docket ID 

number: EBSA–2017–0004 and 

www.dol.gov/ebsa, at no charge. Do not 

include personally identifiable 

information or confidential business 

information that you do not want 

publicly disclosed. Comments online 

can be retrieved by most Internet search 

engines. 


nlaroche on DSKBBV9HB2PROD with PROPOSALS
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1The 1975 Regulation was published as a final 

rule at 40 FR 50842 (Oct. 31, 1975). 

2 82 FR 12319. 

3 82 FR 16902. 

FOR FURTHER INFORMATION CONTACT: 

Brian Shiker, telephone (202) 693–8824, 

Office of Exemption Determinations, 

Employee Benefits Security 

Administration. 

SUPPLEMENTARY INFORMATION: 

A. Procedural Background 

ERISA and the 1975 Regulation 

Section 3(21)(A)(ii) of the Employee 

Retirement Income Security Act of 1974, 

as amended (ERISA), in relevant part 

provides that a person is a fiduciary 

with respect to a plan to the extent he 

or she 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. 

Section 4975(e)(3)(B) of the Internal 

Revenue Code (‘‘Code’’) has a parallel 

provision that defines a fiduciary of a 

plan (including an individual retirement 

account or annuity (IRA)). The 

Department of Labor (‘‘the Department’’) 

in 1975 issued a regulation establishing 

a five-part test under this section of 

ERISA. See 29 CFR 2510.3–21(c)(1) 

(2015).1 The Department’s 1975 

regulation also applied to the definition 

of fiduciary in the Code. 

The New Fiduciary Rule and Related 

Exemptions 

On April 8, 2016, the Department 

replaced the 1975 regulation with a new 

regulatory definition (the ‘‘Fiduciary 

Rule’’). The Fiduciary Rule defines who 

is a ‘‘fiduciary’’ of an employee benefit 

plan under section 3(21)(A)(ii) of ERISA 

as a result of giving investment advice 

to a plan or its participants or 

beneficiaries. The Fiduciary Rule also 

applies to the definition of a ‘‘fiduciary’’ 

of a plan in the Code. The Fiduciary 

Rule treats persons who provide 

investment advice or recommendations 

for a fee or other compensation with 

respect to assets of a plan or IRA as 

fiduciaries in a wider array of advice 

relationships than was true under the 

1975 regulation. On the same date, the 

Department published two new 

administrative class exemptions from 

the prohibited transaction provisions of 

ERISA (29 U.S.C. 1106) and the Code 

(26 U.S.C. 4975(c)(1)): The Best Interest 

Contract Exemption (BIC Exemption) 

and the Class Exemption for Principal 

Transactions in Certain Assets Between 

Investment Advice Fiduciaries and 

Employee Benefit Plans and IRAs 

(Principal Transactions Exemption), as 

well as amendments to previously 

granted exemptions (collectively 

referred to as ‘‘PTEs,’’ unless otherwise 

indicated). The Fiduciary Rule and 

PTEs had an original applicability date 

of April 10, 2017. 

Presidential Memorandum 

By Memorandum dated February 3, 

2017, the President directed the 

Department to prepare an updated 

analysis of the likely impact of the 

Fiduciary Rule on access to retirement 

information and financial advice. The 

President’s Memorandum was 

published in the Federal Register on 

February 7, 2017, at 82 FR 9675. On 

March 2, 2017, the Department 

published a notice of proposed 

rulemaking that proposed a 60-day 

delay of the applicability date of the 

Rule and PTEs. The proposal also 

sought public comments on the 

questions raised in the Presidential 

Memorandum and generally on 

questions of law and policy concerning 

the Fiduciary Rule and PTEs.2 The 

Department received nearly 200,000 

comment and petition letters expressing 

a wide range of views on the proposed 

60-day delay. Approximately 15,000 

commenters and petitioners supported a 

delay of 60 days or longer, with some 

requesting at least 180 days and some 

up to 240 days or a year or longer 

(including an indefinite delay or repeal); 

178,000 commenters and petitioners 

opposed any delay whatsoever at that 

time. 

First Delay of Applicability Dates 

On April 7, 2017, the Department 

promulgated a final rule extending the 

applicability date of the Fiduciary Rule 

by 60 days from April 10, 2017, to June 

9, 2017 (‘‘April Delay Rule’’).3 It also 

extended from April 10 to June 9, the 

applicability dates of the BIC Exemption 

and Principal Transactions Exemption 

and required investment advice 

fiduciaries relying on these exemptions 

to adhere only to the Impartial Conduct 

Standards as conditions of those 

exemptions during a transition period 

from June 9, 2017, through January 1, 

2018. The April Delay Rule also delayed 

the applicability of amendments to an 

existing exemption, Prohibited 

Transaction Exemption 84–24 (PTE 84– 

24), until January 1, 2018, other than the 

Impartial Conduct Standards, which 

became applicable on June 9, 2017. 

Lastly, the April Delay Rule extended 

for 60 days, until June 9, 2017, the 

applicability dates of amendments to 

other previously granted exemptions. 

The 60-day delay was considered 

appropriate by the Department at that 

time, including for the Impartial 

Conduct Standards in the BIC 

Exemption and Principal Transactions 

Exemption, while compliance with 

other conditions for transactions 

covered by these exemptions, such as 

requirements to make specific 

disclosures and representations of 

fiduciary compliance in written 

communications with investors, was 

postponed until January 1, 2018, by 

which time the Department intended to 

complete the examination and analysis 

directed by the Presidential 

Memorandum. 

Request for Information 

On July 6, 2017, the Department 

published in the Federal Register a 

Request for Information (RFI). 82 FR 

31278. The purpose of the RFI was to 

augment some of the public 

commentary and input received in 

response to the March 2, 2017, request 

for comments on issues raised in the 

Presidential Memorandum. In 

particular, the RFI sought public input 

that could form the basis of new 

exemptions or changes to the Rule and 

PTEs. The RFI also specifically sought 

input regarding the advisability of 

extending the January 1, 2018, 

applicability date of certain provisions 

in the BIC Exemption, the Principal 

Transactions Exemption, and PTE 84– 

24. Comments relating to extension of 

the January 1, 2018, applicability date of 

certain provisions were requested by 

July 21, 2017. All other comments were 

requested by August 7, 2017. As of July 

21, the Department had received 

approximately 60,000 comment and 

petition letters expressing a wide range 

of views on whether the Department 

should grant an additional delay and 

what should be the duration of any such 

delay. These comments are discussed in 

Section C, below, in connection with 

the proposed amendments. 

B. Current Transition Period 

BIC Exemption (PTE 2016–01) and 

Principal Transactions Exemption (PTE 

2016–02) 

Although the Fiduciary Rule, BIC 

Exemption, and Principal Transactions 

Exemption first became applicable on 

June 9, 2017, transition relief is 

provided throughout the current 

Transition Period, which runs from June 

9, 2017, through January 1, 2018. 

‘‘Financial Institutions’’ and 

‘‘Advisers,’’ as defined in the 

exemptions, who wish to rely on these 

exemptions for covered transactions 

during this period must adhere to the 

‘‘Impartial Conduct Standards’’ only. In 

general, this means that Financial 


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4 In the Principal Transactions Exemption, the 

Impartial Conduct Standards specifically refer to 

the fiduciary’s obligation to seek to obtain the best 

execution reasonably available under the 

circumstances with respect to the transaction, 

rather than to receive no more than ‘‘reasonable 

compensation.’’ 

5 During the Transition Period, the Department 

expects financial institutions to adopt such policies 

and procedures as they reasonably conclude are 

necessary to ensure that advisers comply with the 

impartial conduct standards. During that period, 

however, the Department does not require firms and 

advisers to give their customers a warranty 

regarding their adoption of specific best interest 

policies and procedures, nor does it insist that they 

adhere to all of the specific provisions of Section 

IV of the BIC Exemption as a condition of 

compliance. Instead, financial institutions retain 

flexibility to choose precisely how to safeguard 

compliance with the impartial conduct standards, 

whether by tamping down conflicts of interest 

associated with adviser compensation, increased 

monitoring and surveillance of investment 

recommendations, or other approaches or 

combinations of approaches. 6 81 FR 21147 (April 8, 2016). 

7Comment Letter #109 (Securities Industry and 

Financial Markets Association). 

8Comment Letter #181 (Voya Financial). 

9See, e.g., Comment Letter #273 (National 

Employment Law Project) (‘‘Because these workers 

need the protections afforded by the full set of 

Conditions as soon as possible, NELP strongly 

opposes further delay of the application of any of 

the Conditions. NELP also disagrees with the 

Department’s decision to even consider an 

additional delay in the applicability date of the 

Conditions.’’). 

10See, e.g., Comment Letter #316 (Aeon Wealth 

Management) (‘‘The current Fiduciary Rule should 

not be amended or extended in any way. IT 

Continued 

Institutions and Advisers must give 

prudent advice that is in retirement 

investors’ best interest, charge no more 

than reasonable compensation, and 

avoid misleading statements.4

The remaining conditions of the BIC 

Exemption would become applicable on 

January 1, 2018, absent a further delay 

of their applicability. This includes the 

requirement, for transactions involving 

IRA owners, that the Financial 

Institution enter into an enforceable 

written contract with the retirement 

investor. The contract would include an 

enforceable promise to adhere to the 

Impartial Conduct Standards, an express 

acknowledgement of fiduciary status, 

and a variety of disclosures related to 

fees, services, and conflicts of interest. 

IRA owners, who do not have statutory 

enforcement rights under ERISA, would 

be able to enforce their contractual 

rights under state law. Also, as of 

January 1, 2018, the exemption requires 

Financial Institutions to adopt policies 

and procedures that meet specified 

conflict-mitigation criteria. In particular, 

the policies and procedures must be 

reasonably and prudently designed to 

ensure that Advisers adhere to the 

Impartial Conduct Standards and must 

provide that neither the Financial 

Institution nor (to the best of its 

knowledge) its affiliates or related 

entities will use or rely on quotas, 

appraisals, performance or personnel 

actions, bonuses, contests, special 

awards, differential compensation, or 

other actions or incentives that are 

intended or would reasonably be 

expected to cause advisers to make 

recommendations that are not in the 

best interest of the retirement investor.5

Financial Institutions would also be 

required at that time to provide 

disclosures, both to the individual 

retirement investor on a transaction 

basis, and on a Web site. 

Similarly, while the Principal 

Transactions Exemption is conditioned 

solely on adherence to the Impartial 

Conduct Standards during the current 

Transition Period, its remaining 

conditions also will become applicable 

on January 1, 2018, absent a further 

delay of their applicability. The 

Principal Transactions Exemption 

permits investment advice fiduciaries to 

sell to or purchase from plans or IRAs 

investments in ‘‘principal transactions’’ 

and ‘‘riskless principal transactions’’— 

transactions involving the sale from or 

purchase for the Financial Institution’s 

own inventory. Conditions scheduled to 

become applicable on January 1, 2018, 

include a contract requirement and a 

policies and procedures requirement 

that mirror the requirements in the BIC 

Exemption. The Principal Transactions 

Exemption also includes some 

conditions that are different from the 

BIC Exemption, including credit and 

liquidity standards for debt securities 

sold to plans and IRAs pursuant to the 

exemption and additional disclosure 

requirements. 

PTE 84–24 

PTE 84–24, which applies to advisory 

transactions involving insurance and 

annuity contracts and mutual fund 

shares, was most recently amended in 

2016 in conjunction with the 

development of the Fiduciary Rule, BIC 

Exemption, and Principal Transactions 

Exemption.6 Among other changes, the 

amendments included new definitional 

terms, added the Impartial Conduct 

Standards as requirements for relief, and 

revoked relief for transactions involving 

fixed indexed annuity contracts and 

variable annuity contracts, effectively 

requiring those Advisers who receive 

conflicted compensation for 

recommending these products to rely 

upon the BIC Exemption. However, 

except for the Impartial Conduct 

Standards, which were applicable 

beginning June 9, 2017, the remaining 

amendments are not applicable until 

January 1, 2018. Thus, because the 

amendment revoking the availability of 

PTE 84–24 for fixed indexed annuities 

is not applicable until January 1, 2018, 

affected parties (including insurance 

intermediaries) may rely on PTE 84–24, 

subject to the existing conditions of the 

exemption and the Impartial Conduct 

Standards, for recommendations 

involving all annuity contracts during 

the Transition Period. 

C. Comments and Proposed 

Amendments 

Question 1 of the RFI specifically 

asked whether a delay in the January 1, 

2018, applicability date of the 

provisions in the BIC Exemption, 

Principal Transactions Exemption and 

amendments to PTE 84–24 would 

reduce burdens on financial services 

providers and benefit retirement 

investors by allowing for more efficient 

implementation responsive to recent 

market developments. This question 

also made inquiry into risks, 

advantages, and costs and benefits 

associated with such a delay. 

Many commenters supported delaying 

the January 1, 2018, applicability dates 

of these PTEs. For example, one 

commenter stated that there is ‘‘no 

question that the comprehensive 

reexamination directed by the President 

cannot be completed by January 1, 2018, 

especially where the record is replete 

with evidence that the result of that 

review will be required revisions to the 

Rule and exemptions, all of which take 

time.’’ 7 In addition, another commenter 

stated that it believes ‘‘a thorough and 

thoughtful re-assessment of the 

Fiduciary Rule, with appropriate 

coordination with other regulators, will 

take months’’ and that if the Department 

does not delay the applicability date 

during this review period, ‘‘the industry 

has no choice but to continue preparing 

for the Fiduciary Rule in a form that 

may never become effective leading to 

significant wasted expenses that 

benefits no one.’’ 8 Other commenters 

disagreed, however, asserting that full 

application of the Fiduciary Rule and 

PTEs were necessary to protect 

retirement investors from conflicts of 

interests and that the applicability dates 

should not have been delayed from 

April, 2017, and that the January 1, 

2018, date should not be further 

delayed.9 At the same time, still others 

stated their view that the Fiduciary Rule 

and PTEs should be repealed and 

replaced, either with the original 1975 

regulation or with a substantially 

revised rule.10


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41368 Federal Register / Vol. 82, No. 168 / Thursday, August 31, 2017 / Proposed Rules 

SHOULD BE COMPLETELY ELIMINATED! It is the 

first step towards the government taking control of 

everyone’s personal retirement assets.’’). 

11See, e.g., Comment Letter #25 (National 

Federation of Independent Business (delay at least 

until January 1, 2019); Comment Letter #159 (Davis 

& Harman) (delay until at least September 1, 2019); 

Comment Letter #183 (Morgan Stanley) (at least 18 

months); Comment Letter #196 (American Council 

of Life Insurers) (one year); Comment Letter #208 

(Capital Group) (at least January 1, 2019); Comment 

Letter #246 (Ameriprise Financial) (supports a twoyear delay of the January 1, 2018 compliance date 

of the Rule); Comment Letter #258 (Wells Fargo) 

(delay at least 24 months); Comment Letter #290 

(Annexus and other entities/Drinker, Biddle&Reath) 

(delay at least until January 1, 2019); Comment 

Letter #291 (Farmers Financial Solutions) (delay 

until April 2019). 

12See, e.g., Comment Letter #134 (Insured 

Retirement Institute (delay until January 1, 2020, or 

the date that is 18 months after the Department 

takes final action on the Fiduciary Rule); Comment 

Letter #229 (Investment Company Institute) (one 

year after finalization of modified rule); Comment 

Letter #109 (Securities Industry and Financial 

Markets Association) (a minimum of 24 months 

after completion of the review and publication of 

final rules); Comment Letter #266 (Edward D. Jones 

& Co.) (later of July 1, 2019 or one year after the 

promulgation of any material amendments); 

Comment Letter #251 (Teachers Insurance and 

Annuity Association of America) (at least one year 

after the Department has promulgated changes to 

the Rule and PTEs); Comment Letter #196 

(Prudential Financial) (at least 12 months with new 

applicability dates in conjunction with proposed 

changes); Comment Letter #212 (American Bankers 

Association) (at least twelve months after the 

effective date of any changes or revisions); 

Comment Letter #211 (Transamerica) (meaningful 

period following promulgation of changes to the 

Fiduciary Rule); Comment Letter #239 (Great-West 

Financial) (provide no less than a 12 month notice 

of existing/newly proposed exemptions; and no less 

than a 12 month notice following any DOL–SEC 

standards prior to their effective date); Comment 

Letter #281 (Bank of New York Mellon) (delay for 

a reasonable period that will allow Department to 

complete review, finalize changes, and for firms to 

implement the processes); Comment Letter #259 

(Fidelity Investments) (delay the requirements for 6 

months following notice if there are no changes to 

the rule; if there are changes, sufficient additional 

time in light of the changes); Comment Letter #248 

(Bank of America) (delay the applicability date until 

the DOL finalizes its work and financial firms have 

a reasonable opportunity to implement its 

requirements); Comment Letter #222 (Vanguard) (at 

least 12 to 18 months from the date that the 

Department publishes its amended Final Rule, 

including exemptions, or confirms that there will be 

no other amendments or exemptions). 

13See Comment Letter #180 (TD Ameritrade). See 

also Comment Letter #212 (American Bankers 

Association) (‘‘it is difficult for institutions to 

determine where to allocate resources for 

compliance when the Department itself is in the 

process of re-examining the Fiduciary Rule’s scope 

and content.’’); Comment Letter #211 

(Transamerica) (‘‘[f]ailure to extend the January 1 

applicability date will result in: (a) Companies such 

as Transamerica continuing to incur costs and 

business model changes to prepare for and 

implement a regulatory regime that might differ 

materially from the regime that results from the 

Rule in effect today. . ..’’); See Comment Letter 

#109 (Securities Industry and Financial Markets 

Association); Comment Letter #293 (the SPARK 

Institute, Inc.) (‘‘[u]ntil we know whether the 

Department intends to make changes to avoid the 

Regulation’s negative impacts, and what those 

changes will be, our implementation efforts will be 

chasing a moving target. That approach not only 

results in significant inefficiencies, it also may 

result in potentially duplicative and unnecessary 

compliance costs if the Department modifies the 

Regulation. If the Department is seriously 

considering ways to reduce those burdens, it must 

delay the January 1, 2018 applicability date. 

Otherwise, firms will be forced to continue 

preparing for a rule that may never go into effect 

as currently drafted.’’). 

14Comment Letter #159 (Davis & Harman). 

15Comment Letter #18 (T. Rowe Price 

Associates). See also Comment Letter #72 (National 

Association of Insurance and Financial Advisors). 

([C]oordination with the SEC, which currently is 

undertaking a parallel public comment process, is 

essential.’’) Other commenters mentioned the need 

to coordinate with FINRA, state insurance and other 

Among the commenters supporting a 

delay, some suggested a fixed length of 

time and others suggested a more openended delay. Of those commenters 

suggesting a fixed length delay, there 

was no consensus among them 

regarding the appropriate length, but the 

range generally was 1 to 2 years from 

the current applicability date of January 

1, 2018.11 Those commenters suggesting 

a more open-ended framework for 

measuring the length of the delay 

generally recommended that the 

applicability date be delayed for at least 

as long as it takes the Department to 

finish the reexamination directed by the 

President. These commenters suggested 

that the length of the delay should be 

measured from the date the Department, 

after finishing the reexamination, either 

decided that there will be no new 

amendments or exemptions or the date 

the Department publishes a new 

exemption or major revisions to the 

Fiduciary Rule and PTEs.12

Regardless of whether advocating for 

a fixed or open-ended delay, many 

commenters focused on the uncertain 

fate of the PTEs. A significant number 

of industry commenters, for example, 

stated that because the Department, as 

part of its ongoing examination under 

the Presidential Memorandum, has 

indicated that it is actively considering 

changes or alternatives to the BIC 

Exemption, the January 1, 2018, 

applicability date should be delayed at 

least until such changes or alternatives 

are finalized, with a reasonable period 

beyond that date for compliance. 

Otherwise, according to these 

commenters, costly systems changes to 

comply with the BIC Exemption by 

January 1, 2018, must commence or 

conclude immediately, and these costs 

could prove unnecessary in whole or in 

part depending on the eventual 

regulatory outcome. Industry 

commenters stated that it is widely 

expected within the financial industry 

that there will be certain change(s) to 

the Rule or to the exemption pursuant 

to the Presidential Memorandum. 

Industry commenters also expressed 

concerns that uncertainty concerning 

expected changes is likely to lead to 

consumer confusion and inefficient 

industry development. Several industry 

commenters indicated their concern 

that, without additional delays, 

compliance efforts may prove to be a 

waste of time and money.13

Many commenters argued that, in 

spite of the level of uncertainty 

surrounding the ultimate fate of the 

Fiduciary Rule and PTEs, the 

Department will need to at least 

partially modify the Fiduciary Rule and 

PTEs. These commenters cite the 

President’s Memorandum dated 

February 3, 2017, requiring the 

Department to prepare an updated 

analysis of the likely impact of the 

Fiduciary Rule on access to retirement 

information and financial advice, and 

predict that this analysis will affirm 

their view that regulatory changes are 

necessary to avoid adverse impacts on 

advice, access, costs, and litigation. 

Many commenters argue that a delay 

in the January 1, 2018, applicability date 

is needed in order for the Department 

and Secretary of Labor Acosta to 

coordinate with the Securities and 

Exchange Commission (SEC) under the 

new leadership of Chairman Clayton. 

These commenters assert that 

meaningful coordination simply is not 

possible between now and January 1, 

2018, on the many important issues 

affecting retirement investors raised by 

the Fiduciary Rule and PTEs, including 

the potential confusion for investors 

caused by different rules and 

regulations applying to different types 

of investment accounts. One commenter 

suggested that, absent a delay in the 

January 1, 2018, applicability date, there 

will be no genuine opportunity for the 

Department to coordinate with the SEC 

under the new leadership regimes. The 

full Fiduciary Rule would become 

applicable before the SEC had done its 

own rulemaking, leaving the SEC no 

choice except to apply the standards in 

the Fiduciary Rule to all of those 

investments subject to SEC jurisdiction, 

write a different rule, which would 

exacerbate the current confusion and 

inconsistencies, or to do nothing, 

according to one commenter.14 On June 

1, 2017, the Chairman of the SEC issued 

a statement seeking public comments on 

the standards of conduct for investment 

advisers and broker dealers when they 

provide investment advice to retail 

investors. One commenter asserted that 

coordination ‘‘suggests that the 

Department of Labor should await the 

SEC’s receipt and evaluation of 

information.’’ 15 At least one commenter 


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regulators in addition to the SEC. See, e.g., 

Comment Letter #196 (Prudential Financial) 

(‘‘assess, in conjunction with the SEC and the 

appropriate state regulatory bodies that also have 

jurisdiction with regard to investment advice 

retirement investors, the appropriate alignment of 

regulatory responsibility and oversight’’); Comment 

Letter #266 (Edward D. Jones and Co.); Comment 

Letter #134 (Insured Retirement Institute). See also 

Comment Letter #212 American Bankers 

Association (mentioning the Office of the 

Comptroller of the Currency, the Federal Reserve, 

and the Federal Deposit Insurance Corporation). 

16See Comment Letter #375 (Stifel Financial) 

(‘‘As the SEC and DOL consider and coordinate on 

developing appropriate standards of conduct for 

retail retirement and taxable accounts, I propose a 

simple solution: the SEC adopt a principles-based 

standard of care for Brokerage and Advisory 

Accounts that incorporates the ‘Impartial Conduct 

Standards’’ as set forth in the DOL’s Best Interest 

Contract Exemption.’’ And to achieve consistency 

between retirement and taxable accounts, ‘‘[t]he 

additional provisions of the Best Interest Contract 

should be eliminated.’’). 

17Comment Letter #208 (Capital Group). 

18Comment Letter #229 (Investment Company 

Institute). 

19Comment Letter #238 (Consumer Federation of 

America). See also Comment Letter #235 (Better 

Markets) (‘‘In short, it would be arbitrary and 

capricious for the DOL to deprive millions of 

American workers and retirees the full protections 

and remedies provided by the Rule and the 

exemptions simply because the DOL may conclude 

that some adjustments to the Rule would be 

appropriate, or because some members of industry 

claim they need additional time to develop new 

products to help them more profitably navigate the 

Rule and the exemptions.’’). 

20See Comment Letter #147 (American 

Retirement Association); Comment Letter #222 

(Vanguard) (‘‘there is no need to rush to apply the 

remaining provisions of the Rule to protect 

investors because the Impartial Conduct Standards 

that are already applicable will provide sufficient 

protection for them during the 12–18 month 

implementation period we propose.’’); Comment 

Letter #180 (TD Ameritrade); Comment Letters #111 

and #131 (BARR Financial Services); Comment 

Letter #134 (Insured Retirement Institute). 

21See Comment Letter #284 (Coalition of 20 

Signatories, including AFGE, AFL–CIO, AFSCME, 

SEIU, NAEFE, Fund Democracy, and others); see 

also Comment Letter #238 (Consumer Federation of 

America). 

22See Comment Letter #213 (AARP). See also 

Comment Letter #216 (American Association for 

Justice) (‘‘As we previously stressed, the earlier 

delays have harmed investors, and any further 

delay would augment this problem rather than 

alleviating it.’’). 

23Comment Letter #238 (Consumer Federation of 

America). 

believes that the outcome of such 

coordination should be that the SEC 

adopts the concept of the Impartial 

Conduct Standards, as contained in the 

PTEs, as a universal standard of care 

applicable to both brokerage and 

advisory relationships.16

With respect to recent and ongoing 

market developments, many 

commenters stated that a delay would 

allow for more efficient implementation 

responsive to these innovations, thereby 

reducing burdens on financial services 

providers and benefiting retirement 

investors. For instance, one industry 

commenter asserted that a delay in the 

applicability date would provide 

financial institutions with the necessary 

time to develop ‘‘clean shares’’ 

programs and minimize disruption for 

retirement investors. The commenter 

stated that ‘‘[w]ithout a delay in the 

applicability date, a broker-dealer firm 

that believes the direction of travel is 

towards the clean share will be forced 

to either eliminate access to 

commissionable investment advice or 

make the fundamental business changes 

required by the Best Interest Contract 

Exemption in order to continue offering 

traditional commissionable mutual 

funds. Both approaches would be 

incredibly disruptive for investors who 

could have little choice but to either 

move to a fee-based advisory program in 

order to maintain access to advice or 

enter into a Best Interest Contract only 

to be transitioned into a clean shares 

program shortly thereafter, and would 

make it less likely that firms will evolve 

to clean shares.’’ 17 A different industry 

commenter noted that serious 

consideration is being given to the use 

of mutual fund clean share classes in 

both fee-based and commissionable 

account arrangements, but that certain 

enumerated obstacles prevent their 

rapid adoption, stating that ‘‘even 

absent any changes to the rule, more 

time is needed to develop clean shares 

and other long-term solutions to 

mitigate conflicts of interest.’’ 18

Consumer commenters expressed a 

concern with using recent and ongoing 

market developments as a basis for a 

blanket delay. It was asserted that if the 

Department decides to move forward 

with a delay, it should only allow firms 

to take advantage of the delay if they 

affirmatively show they have already 

taken concrete steps to harness recent 

market developments for their 

compliance plans. For example, one 

commenter contends that if a brokerdealer has decided that it is more 

efficient to move straight to clean shares 

rather than implementing the rule using 

T shares, the broker-dealer should, as a 

condition of delay, be required to 

provide evidence to the Department of 

the steps that it already has taken to 

distribute clean shares, including, for 

example, providing evidence of efforts 

to negotiate sellers agreements with 

funds that are offering clean shares. This 

commenter stated that the Department 

‘‘should not provide a blanket delay to 

all firms, including those firms that 

have not taken any meaningful, concrete 

steps to harness recent market 

developments and have no plans to do 

so. This narrowly tailored approach has 

the advantage of benefitting only those 

firms and, in turn, their customers that 

are using the delay productively rather 

than providing an undue benefit to 

firms that are merely looking for reasons 

to further stall implementation.’’ 19

With respect to risks to retirement 

investors from a delay, many industry 

commenters argue that the risks of a 

delay are very minimal, as they have 

largely been mitigated by the existing 

regulatory structure and the 

applicability of the Impartial Conduct 

Standards. For instance, regarding 

potential additional costs to retirement 

investors associated with any further 

delay, many industry commenters stated 

that these concerns have been mitigated, 

and indeed addressed by the 

Department, through the imposition of 

the Impartial Conduct Standards 

beginning on June 9, 2017. Various 

commenters indicated that Financial 

Institutions have, in fact, taken steps to 

ensure compliance with the Impartial 

Conduct Standards. Commenters have 

also pointed to the SEC and FINRA 

regulatory regimes as a means to ensure 

consumers are appropriately protected. 

It is the position of these commenters 

that there is little, if any, risk that 

consumers will be harmed by a delay of 

the January 1, 2018 applicability date.20

By contrast, many commenters 

representing consumers believe there is 

risk to consumers in further delaying 

these PTEs from becoming fully 

applicable on January 1, 2018. One 

commenter, for example, focused on the 

contract provision of the exemption, 

and expressed concern that delaying 

that provision would significantly 

undermine the protections and 

effectiveness of the rule.21 Other 

commenters pointed to the number of 

covered transactions happening every 

day and emphasized the compounding 

nature of the harm if the applicability 

date is further delayed.22 According to 

these commenters, retirement savings 

face undue risk without all of the 

protections of the Fiduciary Rule and 

PTEs. One commenter asserted that 

‘‘absent the contract requirement and 

the legal enforcement mechanism that 

goes with it, firms would no longer have 

a powerful incentive to comply with the 

Impartial Conduct Standards, 

implement effective anti-conflict 

policies and procedures, or carefully 

police conflicts of interest. It could be 

too easy for firms to claim they are 

complying with the PTEs, but still pay 

advisers in ways that encourage and 

reward them not to.’’ 23

Many commenters asserted that a 

delay would be advantageous both to 

retirement investors and firms; and, 

conversely, that rigid adherence to the 


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24See, e.g., Comment Letter #229 (Investment 

Company Institute) (‘‘a delay would result in 

substantial cost-savings for financial institutions by 

allow them to avoid the significant and burdensome 

costs of implementation that will likely ultimately 

prove unnecessary.’’); Comment Letter #251 

(Teachers Insurance and Annuity Association of 

America) (‘‘we are very concerned that continuing 

to make significant staff and financial investments 

to satisfy the January 1 applicability date will 

ultimately prove both a considerable waste of 

resources and a source of confusion for retirement 

investors.’’); Comment Letter #109 (Securities 

Industry and Financial Markets Association) 

(‘‘[d]espite the uncertainties, our members have 

spent hundreds of millions of dollars thus far; 

causing them to spend still more without certainty 

of the ultimate requirements is not responsible.’’); 

See also Comment Letter #196 (Prudential 

Financial), Comment Letter #169 (Madison Avenue 

Securities), Comment Letter #280 (Guardian Life 

Insurance Company of America) and Comment 

Letter #231 (Massachusetts Mutual Life Insurance 

Company). 

25Comment Letter #256 (Jackson National Life 

Insurance Company). See also Comment Letter #211 

(Transamerica) (pointing to reduced annuity sales). 

26Comment Letter #18 (T. Rowe Price 

Associates). 

27Comment Letter #90 (True Capital Advisors). 

28Comment Letter #256 (Jackson National Life 

Insurance Company). 

29Comment Letter #8 (U.S. Chamber of 

Commerce). 

30See, e.g., Comment Letter #293 (SPARK 

Institute, Inc.) (‘‘[i]n response to the new definition 

of fiduciary investment advice that became 

applicable on June 9, 2017, some retirement 

investors have already been cut off from certain 

retirement products, offerings, and information. 

Smaller plans are losing access to information and 

guidance from their service providers. Also, 

because of increased litigation risk associated with 

the [PTEs] provisions set to become applicable on 

January 1, 2018, this contraction in retirement 

services will only become worse if the Department 

fails to delay the upcoming applicability date and 

materially revise the [Fiduciary Rule and PTEs].’’). 

See also Comment Letter #289 (Sorrento Pacific 

Financial) (‘‘We believe an extension of the Rule’s 

January 1, 2018 applicability date necessary for the 

Department to thoroughly examine the Rule for 

adverse impacts on Americans’ access to retirement 

investment advice and assistance, as required by 

the President’s Memorandum. We are deeply 

concerned that the Rule will cause significant harm 

to retirement investors by restricting their access to 

retirement investment advice and services and 

subjecting firms to meritless litigation due to overly 

broad definitions contained in the Rule, and so we 

strongly support the Department in considering a 

further delay of the Rule and undertaking this 

examination.’’). 

31Comment Letter #267 (American Council of 

Life Insurers). 

32On May 22, 2017, the Department issued a 

temporary enforcement policy covering the 

transition period between June 9, 2017, and January 

1, 2018, during which the Department will not 

pursue claims against investment advice fiduciaries 

who are working diligently and in good faith to 

comply with their fiduciary duties and to meet the 

conditions of the PTEs, or otherwise treat those 

investment advice fiduciaries as being in violation 

of their fiduciary duties and not compliant with the 

PTEs. See Field Assistance Bulletin 2017–02 (May 

22, 2017). Comments are solicited on whether to 

extend this policy for the same period covered by 

the proposed extension of the Transition Period. 

January 1, 2018, applicability date 

would be harmful to both groups. With 

respect to firms, it was argued by many 

that the harm in terms of capital 

expenditures and outlays to meet PTE 

requirements (such as contract, 

warranty, policies and procedures, and 

disclosures) that are actively under 

consideration by the Department and 

that could change (or even be repealed) 

should be obvious to the Department.24

With respect to harm to retirement 

investors from not delaying the 

applicability date, on the other hand, 

one commenter stated that ‘‘the 

stampede to fee-based arrangements will 

leave many small and mid-sized 

investors without access to advice . . .’’ 

and that ‘‘retirement investors are losing 

access to some retirement products they 

need to ensure guaranteed lifetime 

incomes, including variable annuities, 

whose usage has plummeted. These 

market developments will cause more 

leakage and reduce already inadequate 

retirement resources for millions of 

retirement savers.’’ 25 A different 

commenter stated that ‘‘some firms 

announced that retirement investors 

seeking advice would be prohibited 

from commission-based accounts or 

would be barred from purchasing 

certain products, such as mutual funds 

and ETFs, in commission-based 

accounts’’ and that ‘‘[u]ntil the industry, 

with the assistance of regulators, is able 

to resolve availability of accounts and 

products previously available to 

retirement investors, and the 

mechanisms for payment for advice 

services, there will be disruption both to 

the industry and to retirement plans and 

investors seeking advice.’’26 Another 

commenter stated that ‘‘it is easy to see 

how the average client will be confused 

by correspondence announcing changes 

to their investment products and 

business relationship (if the Rule 

becomes applicable), followed by 

correspondence announcing additional 

changes being made for yet another new 

regulatory scheme (if the Rule is 

rescinded or revised).’’ 27

Many commenters drew attention to 

pending litigation challenging the 

Fiduciary Rule and PTEs. In this regard, 

a commenter stated that ‘‘[i]t would be 

poor process for DOL to allow the 

remaining requirements . . . to take 

effect on January 1, 2018, without 

providing detailed and clear guidance 

on critical open legal issues generated 

entirely by the DOL’s own regulatory 

actions. ’’ 28 Another commenter 

similarly suggested that ‘‘[a]t the very 

least, an extension is needed to ensure 

that the regulation accurately reflects 

the Department’s position in litigation’’ 

regarding the limitation on arbitration.29

Regarding the contract and warranty 

requirements, a significant number of 

commenters remain divided on these 

provisions, with many expressing 

concern about potential negative 

implications for access to advice and 

investor costs. Many financial service 

providers have expressed particular 

concern about the potential for class 

litigation and firm liability, and that 

absent a delay of those provisions, there 

will be a reduction in advice and 

services to consumers, particularly 

those with small accounts who may be 

most in need of good investment 

advice.30 They have suggested that 

alternative approaches might promote 

the Department’s interest in compliance 

with fiduciary standards, while 

minimizing the risk that firms restrict 

access to valuable advice and products 

based on liability concerns. These 

commenters argue that a delay of the 

applicability date is needed to allow the 

Department an opportunity to review 

the RFI responses and develop 

alternatives to these requirements. For 

instance, one commenter stated that 

‘‘the Department should further delay 

the January 1, 2018 applicability date of 

the contract, disclosure and warranty 

requirements of the BICE, Principal 

Transactions Exemption, and 

amendments to PTE 84–24, due to the 

high level of controversy surrounding 

the increased liabilities associated with 

these requirements—particularly when 

their incremental benefits are weighed 

against their harm to the retirement 

savings product marketplace.’’ 31

Based on its review and evaluation of 

the public comments, the Department is 

proposing to extend the Transition 

Period in the BIC Exemption and 

Principal Transaction Exemption for 18 

months until July 1, 2019, and to delay 

the applicability date of certain 

amendments to PTE 84–24 for the same 

period. The same rules and standards in 

effect now would remain in effect 

throughout the duration of the extended 

Transition Period, if adopted. Thus, 

Financial Institutions and Advisers 

would have to give prudent advice that 

is in retirement investors’ best interest, 

charge no more than reasonable 

compensation, and avoid misleading 

statements. It is based on the continued 

adherence to these fundamental 

protections that the Department, 

pursuant to 29 U.S.C. 1108, would 

consider granting the proposed 

extension until July 1, 2019.32

The Department believes a delay may 

be necessary and appropriate for 

multiple reasons. To begin with, the 

Department has not yet completed the 

reexamination of the Fiduciary Rule and 

PTEs, as directed by the President on 


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February 3, 2017. More time is needed 

to carefully and thoughtfully review the 

substantial commentary received in 

response to the March 2, 2017, 

solicitation for comments and to honor 

the President’s directive to take a hard 

look at any potential undue burden. 

Whether, and to what extent, there will 

be changes to the Fiduciary Rule and 

PTEs as a result of this reexamination is 

unknown until its completion. The 

examination will help identify any 

potential alternative exemptions or 

conditions that could reduce costs and 

increase benefits to all affected parties, 

without unduly compromising 

protections for retirement investors. The 

Department anticipates that it will have 

a much clearer image of the range of 

such alternatives once it carefully 

reviews the responses to the RFI. The 

Department also anticipates it will 

propose in the near future a new and 

more streamlined class exemption built 

in large part on recent innovations in 

the financial services industry. 

However, neither such a proposal nor 

any other changes or modifications to 

the Fiduciary Rule and PTEs, if any, 

realistically could be implemented by 

the current January 1, 2018, 

applicability date. Nor would that 

timeframe accommodate the 

Department’s desire to coordinate with 

the SEC in the development of any such 

proposal or changes. The Chairman of 

the SEC has recently published a 

Request for Information seeking input 

on the ‘‘standards of conduct for 

investment advisers and brokerdealers,’’ and has welcomed the 

Department’s invitation to engage 

constructively as the Commission 

moves forward with its examination of 

the standards of conduct applicable to 

investment advisers and broker-dealers, 

and related matters. Absent the 

proposed delay, however, Financial 

Institutions and Advisers would feel 

compelled to ready themselves for the 

provisions that become applicable on 

January 1, 2018, despite the possibility 

of alternatives on the horizon. 

Accordingly, the proposed delay avoids 

obligating financial services providers to 

incur costs to comply with conditions, 

which may be revised, repealed, or 

replaced, as well as attendant investor 

confusion. 

Based on the evidence before it at this 

time while it continues to conduct this 

examination, the Department is 

proposing a time-certain delay of 18 

months. The Department is also 

interested in an alternative approach 

raised by several commenters to the RFI, 

however—that the Department institute 

a delay that would end a specified 

period after a certain action on the part 

of the Department, e.g., a delay lasting 

until 12 months after the Department 

concludes its review as directed by the 

Presidential Memorandum. The 

Department is concerned that this type 

of delay would provide insufficient 

certainty to Financial Institutions and 

other market participants who are 

working to comply with the full range 

of conditions under the relevant PTEs. 

Further, the Department is concerned 

that this type of delay would 

unnecessarily harm consumers by 

adding uncertainty and confusion to the 

market. Nevertheless, the Department 

requests comments on whether it could 

structure the delay in a way that could 

be beneficial to retirement investors and 

to market participants. If commenters 

think that such a structure would be 

beneficial, the Department requests 

comments regarding what event or 

action on the part of the Department 

should begin the period by which the 

end of the delay is measured (e.g., the 

end of the Department’s examination 

pursuant to the Presidential 

Memorandum, issuance of a proposed 

or final new PTEs or a statement that the 

Department does not intend any further 

changes or revisions). 

Separately, the Department also 

requests comments on whether it would 

be beneficial to adopt a tiered approach. 

For example, this could be a final rule 

that delayed the Transition Period until 

the earlier or the later of (a) a date 

certain or (b) the end of a period 

following the occurrence of a defined 

event. The Department is particularly 

interested in comments as to whether 

such a tiered approach would provide 

sufficient certainty to be beneficial, and 

how best it could communicate with 

stakeholders the determination that one 

date or the other would trigger 

compliance. The Department is 

interested in comments that provide 

insight as to any relative benefits or 

harms of these three different delay 

approaches: (1) A delay set for a time 

certain, including the 18-months 

proposed by this document, (2) a delay 

that ends a specified period after the 

occurrence of a specific event, and (3) 

a tiered approach where the delay is set 

for the earlier of or the later of (a) a time 

certain and (b) the end of a specified 

period after the occurrence of a specific 

event. 

Finally, several commenters suggested 

that the Department condition any delay 

of the Transition Period on the behavior 

of the entity seeking relief under the 

Transition Period. These commenters 

suggested generally that any delay 

should be conditioned, for example, on 

a Financial Institution’s showing that it 

has, or a promise that it will, take steps 

to harness recent innovations in 

investment products and services, such 

as ‘‘clean shares.’’ Conditions of this 

type generally seem more relevant in the 

context of considering the development 

of additional and more streamlined 

exemption approaches that take into 

account recent marketplace innovations 

and less appropriate and germane in the 

context of a decision whether to extend 

the Transition Period. Although this 

proposal, therefore, does not adopt this 

approach, the Department solicits 

comments on this approach, in 

particular the benefits and costs of this 

suggestion, and ways in which the 

Department could ensure the 

workability of such an approach. 

D. Regulatory Impact Analysis 

The Department expects that this 

proposed transition period extension 

would produce benefits that justify 

associated costs. The proposed 

extension would avert the possibility of 

a costly and disorderly transition from 

the Impartial Conduct Standards to full 

compliance with the exemption 

conditions, and thereby reduce some 

compliance costs. As stated above, the 

Department currently is engaged in the 

process of reviewing the Fiduciary Rule 

and PTEs as directed in the Presidential 

Memorandum and reviewing comments 

received in response to the RFI. As part 

of this process, the Department will 

determine whether further changes to 

the Fiduciary Rule and PTEs are 

necessary. Although many firms have 

taken steps to ensure that they are 

meeting their fiduciary obligations and 

satisfying the Impartial Conduct 

Standards of the PTEs, they are 

encountering uncertainty regarding the 

potential future revision or possible 

repeal of the Fiduciary Rule and PTEs. 

Therefore, as reflected in the comments, 

many financial firms have slowed or 

halted their efforts to prepare for full 

compliance with the exemption 

conditions that currently are scheduled 

to become applicable on January 1, 

2018, because they are concerned about 

committing resources to comply with 

PTE conditions that ultimately could be 

modified or repealed. This proposed 

applicability date extension will assure 

stakeholders that they will not be 

subject to the other exemption 

conditions in the BIC and the Principal 

Transaction PTEs until at least July 1, 

2019. Of course, the benefits of 

extending the transition period 

generally will be proportionately larger 

for those firms that currently have 

committed fewer resources to comply 

with the full exemption conditions. The 

Department’s objective is to complete its 


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33The Department’s baseline for this RIA 

includes all current rules and regulations governing 

investment advice including those that would 

become applicable on January 1, 2018, absent this 

proposed delay. The RIA did not quantify 

incremental gains by each particular aspect of the 

rule and PTEs. 

review pursuant to the President’s 

Memorandum, analyze comments 

received in response to the RFI, and 

propose and finalize any changes to the 

Rule or PTEs sufficiently before July 1, 

2019, to provide firms with sufficient 

time to design and implement an 

orderly transition process. 

The Department believes that investor 

losses from the proposed transition 

period extension could be relatively 

small. Because the Fiduciary Rule and 

the Impartial Conduct Standards 

became applicable on June 9, 2017, the 

Department believes that firms already 

have made efforts to adhere to the rule 

and those standards. Thus, the 

Department believes that relative to 

deferring all of the provisions of the 

Fiduciary Rule and PTEs, a substantial 

portion of the investor gains predicted 

in the Department’s 2016 regulatory 

impact analysis of the Fiduciary Rule 

and PTEs (2016 RIA) would remain 

intact for the proposed extended 

transition period. 

1. Executive Order 12866 Statement 

This proposal is an economically 

significant action within the meaning of 

section 3(f)(1) of Executive Order 12866, 

because it would likely have an effect 

on the economy of $100 million in at 

least one year. Accordingly, the 

Department has considered the costs 

and benefits of the proposal, which has 

been reviewed by the Office of 

Management and Budget (OMB). 

a. Investor Gains 

The Department’s 2016 RIA estimated 

a portion of the potential gains for IRA 

investors at between $33 billion and $36 

billion over the first 10 years for one 

segment of the market and category of 

conflicts of interest. It predicted, but did 

not quantify, additional gains for both 

IRA and ERISA plan investors. 

With respect to this proposal, the 

Department considered whether 

investor losses might result. Beginning 

on June 9, 2017, Financial Institutions 

and Advisers generally are required to 

(1) make recommendations that are in 

their client’s best interest (i.e., IRA 

recommendations that are prudent and 

loyal), (2) avoid misleading statements, 

and (3) charge no more than reasonable 

compensation for their services. If they 

fully adhere to these requirements, the 

Department expects that affected 

investors will generally receive a 

significant portion of the estimated 

gains. However, because the PTE 

conditions are intended to support and 

provide accountability mechanisms for 

such adherence (e.g., conditions 

requiring advisers to provide a written 

acknowledgement of their fiduciary 

status and adherence to the Impartial 

Conduct Standards and enter into 

enforceable contracts with IRA 

investors) the Department acknowledges 

that the proposed delay of the PTE 

conditions may result in deferral of 

some of the estimated investor gains. 

One RFI commenter suggested that an 

additional one-year extension of the 

transition period during which the full 

PTE conditions would not apply would 

reduce the incentive for mutual fund 

companies to market lower-cost and 

higher-performing funds, which will 

reduce consumer access to such 

products, resulting in consumer losses. 

This commenter argued that in the case 

of IRA rollovers, the consumer losses 

from continued conflicted advice and 

reduced access to more consumerfriendly investment products could 

compound for decades. 

Advisers who presently are ERISAplan fiduciaries are especially likely to 

satisfy fully the PTEs’ Impartial Conduct 

Standards before July 1, 2019, because 

they are subject to ERISA standards of 

prudence and loyalty and thus would be 

subject to claims for civil liability under 

ERISA if they violate their fiduciary 

obligations or fail to satisfy the Impartial 

Conduct Standards if they use an 

exemption. Moreover, fiduciary advisers 

who do not provide impartial advice as 

required by the Rule and PTEs in the 

IRA market would violate the prohibited 

transaction rules of the Code and 

become subject to the prohibited 

transaction excise tax. Even though 

advisers currently are not specifically 

required by the terms of these PTEs to 

notify retirement investors of the 

Impartial Conduct Standards and to 

acknowledge their fiduciary status, 

many investors expect they are entitled 

to advice that adheres to a fiduciary 

standard because of the publicity the 

final rule and PTEs have received from 

the Department and media, and the 

Department understands that many 

advisers notified consumers voluntarily 

about the imposition of the standard 

and their adherence to that standard as 

a best practice. 

Comments received by the 

Department indicate that many financial 

institutions already have completed or 

largely completed work to establish 

policies and procedures necessary to 

make many of the business structure 

and practice shifts necessary to support 

compliance with the Fiduciary Rule and 

Impartial Conduct Standards (e.g., 

drafting and implementing training for 

staff, drafting client correspondence and 

explanations of revised product and 

service offerings, negotiating changes to 

agreements with product manufacturers 

as part of their approach to compliance 

with the PTEs, changing employee and 

agent compensation structures, and 

designing product offerings that mitigate 

conflicts of interest). The Department 

believes that many financial institutions 

are using this compliance infrastructure 

to ensure that they currently are meeting 

the requirements of the Fiduciary Rule 

and Impartial Conduct Standards, 

which the Department believes will 

largely protect the investor gains 

estimated in the 2016 RIA.33

b. Cost Savings 

Based on comments received in 

response to the RFI that are discussed in 

Section C, above, the Department 

believes firms that are fiduciaries under 

the Fiduciary Rule have committed 

resources to implementing procedures 

to support compliance with their 

fiduciary obligations. This may include 

changing their compensation structures 

and monitoring the practices and 

procedures of their advisers to ensure 

that conflicts of interest do not cause 

violations of the Fiduciary Rule and 

Impartial Conduct Standards of the 

PTEs and maintaining sufficient records 

to corroborate that they are complying 

with the Fiduciary Rule and PTEs. 

These firms have considerable 

flexibility to choose precisely how they 

will achieve compliance with the PTEs 

during the proposed extended transition 

period. The Department does not have 

sufficient data to estimate such costs; 

therefore, they are not quantified. 

Some commenters have asserted that 

the proposed transition period 

extension could result in cost savings 

for firms compared to the costs that 

were estimated in the Department’s 

2016 RIA to the extent that the 

requirements of the Fiduciary Rule and 

PTE conditions are modified in a way 

that would result in less expensive 

compliance costs. However, the 

Department generally believes that startup costs not yet incurred for 

requirements now scheduled to become 

applicable on January 1, 2018, should 

not be included, at this time, as a cost 

savings associated with this proposal 

because the proposal would merely 

delay the full implementation of certain 

conditions in the PTEs until July 1, 

2019, while the Department considers 

whether to propose changes and 

alternatives to the exemptions. The 

Department would be required to 

assume for purposes of this regulatory 


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Federal Register / Vol. 82, No. 168 / Thursday, August 31, 2017 / Proposed Rules 41373 

34Annualized to $64.7 million per year. 

35Annualized to $143.9 million per year. 

36Annualized to $252.1 million per year. 

37Annualized to $291.1 million per year. 

38The Department notes that firms may be 

incurring some costs to comply with the impartial 

conduct standards; however, it has no data to 

enable it to estimate these costs. The Department 

solicits comments on the costs of complying with 

the impartial conduct standards, and how these 

costs interact with the costs of all other facets of 

compliance with the conditions of the PTEs. 

impact analysis that those start-up costs 

that have not been incurred generally 

would be delayed rather than avoided 

unless or until the Department acts to 

modify the compliance obligations of 

firms and advisers to make them more 

efficient. Nonetheless, even based on 

that assumption, there may be some cost 

savings that could be quantified as 

arising from the delay being proposed in 

this document because some ongoing 

costs would not be incurred until July 

1, 2019. The Department has taken two 

approaches to quantifying the savings 

resulting from the delay in incurring 

ongoing costs: (1) Quantifying the costs 

based on a shift in the time horizon of 

the costs (i.e., comparing the present 

value of the costs of complying over a 

ten year period beginning on January 1, 

2018 with the costs of complying, 

instead, over a ten year period 

beginning on July 1, 2019); and (2) 

quantifying the reduced costs during the 

18 month period of delay from January 

1, 2018 to July 1, 2019, during which 

regulated parties would otherwise have 

had to comply with the full conditions 

of the BIC Exemption and Principal 

Transaction Exemption but for the 

delay. 

The first of the two approaches 

reflects the time value of money (i.e., the 

idea that money available at the present 

time is worth more than the same 

amount of money in the future, because 

that money can earn interest). The 

deferral of ongoing costs by 18 months 

will allow the regulated community to 

use money they would have spent on 

ongoing compliance costs for other 

purposes during that time period. The 

Department estimates that the ten-year 

present value of the cost savings arising 

from this 18 month deferral of ongoing 

compliance costs, and the regulated 

community’s resulting ability to use the 

money for other purposes is $551.6 

million using a three percent discount 

rate 34 and $1.0 billion using a seven 

percent discount rate.35

The second of the two approaches 

simply estimates the expenses foregone 

during the period from January 1, 2018 

to July 1, 2019 as a result of the delay. 

When the Department published the 

2016 Final Rule and accompanying 

PTEs, it calculated that the total ongoing 

compliance costs of the rule and PTEs 

were $1.5 billion annually. Therefore, 

the Department estimates the ten-year 

present value of the cost savings of firms 

not being required to incur ongoing 

compliance costs during an 18 month 

delay would be approximately $2.2 

billion using a three percent discount 

rate 36 and $2.0 billion using a seven 

percent discount rate.37 38

Based on its progress thus far with the 

review and reexamination directed by 

the President, however, the Department 

believes there may be evidence of 

alternatives that reduce costs and 

increase benefits to all affected parties, 

while maintaining protections for 

retirement investors. The Department 

anticipates that it will have a much 

clearer image of the range of such 

alternatives once it completes a careful 

review of the data and evidence 

submitted in response to the RFI. 

The Department also cannot 

determine at this time to what degree 

the infrastructure that affected firms 

have already established to ensure 

compliance with the Fiduciary Rule and 

PTEs exemptions would be sufficient to 

facilitate compliance with the Fiduciary 

Rule and PTEs conditions if they are 

modified in the future. 

c. Alternatives Considered 

While the Department considered 

several alternatives that were informed 

by public comments, this proposal 

likely would yield the most desirable 

outcome including avoidance of costly 

market disruptions and investor losses. 

In weighing different options, the 

Department took numerous factors into 

account. The Department’s objective 

was to avoid unnecessary confusion and 

uncertainty in the investment advice 

market, facilitate continued marketplace 

innovation, and minimize investor 

losses. 

The Department considered not 

proposing any extension of the 

transition period, which would mean 

that the remaining conditions in the 

PTEs would become applicable on 

January 1, 2018. The Department is not 

pursuing this alternative, however, 

because it would not provide sufficient 

time for the Department to complete its 

ongoing review of, or propose and 

finalize any changes to the Fiduciary 

Rule and PTEs. Moreover, absent the 

proposed extension of the transition 

period, Financial Institutions and 

Advisers would feel compelled to 

prepare for full compliance with PTE 

conditions that become applicable on 

January 1, 2018, the applicability date of 

the additional PTE conditions despite 

the possibility that the Department 

could adopt more efficient alternatives. 

This could lead to unnecessary 

compliance costs and market 

disruptions. As compared to a shorter 

delay with the possibility of consecutive 

additional delays, if needed, this 

proposal would provide more certainty 

for affected stakeholders because it sets 

a firm date for full compliance, which 

would allow for proper planning and 

reliance. The Department’s objective 

would be to complete its review of the 

Fiduciary Rule and PTEs pursuant to 

the President’s Memorandum and the 

RFI responses sufficiently in advance of 

July 1, 2019, to provide firms with 

enough time to prepare for whatever 

action is prompted by the review. As 

discussed above, the Department 

believes that investor losses associated 

with this proposed extension would be 

relatively small. The fact that the 

Fiduciary Rule and the Impartial 

Conduct Standards are now in effect 

makes it likely that retirement investors 

will experience much of the potential 

gains from a higher conduct standard 

and minimizes the potential for an 

undue reduction in those gains as 

compared to the full protections of all 

the PTE conditions as discussed in the 

2016 Regulatory Impact Analysis. 

2. Paperwork Reduction Act 

The Paperwork Reduction Act (PRA) 

(44 U.S.C. 3501, et seq.) prohibits 

federal agencies from conducting or 

sponsoring a collection of information 

from the public without first obtaining 

approval from the Office of Management 

and Budget (OMB). See 44 U.S.C. 3507. 

Additionally, members of the public are 

not required to respond to a collection 

of information, nor be subject to a 

penalty for failing to respond, unless 

such collection displays a valid OMB 

control number. See 44 U.S.C. 3512. 

OMB has previously approved 

information collections contained in the 

Fiduciary Rule and PTEs. The 

Department now is proposing to extend 

the transition period for the full 

conditions of the PTEs associated with 

its Fiduciary Rule until July 1, 2019. 

The Department is not proposing to 

modify the substance of the information 

collections at this time; however, the 

current OMB approval periods of the 

information collection requests (ICRs) 

expire prior to the new proposed 

applicability date for the full conditions 

of the PTEs as they currently exist. 

Therefore, many of the information 

collections will remain inactive for the 

remainder of the current ICR approval 

periods. The ICRs contained in the 

exemptions are discussed below. 


nlaroche on DSKBBV9HB2PROD with PROPOSALS
41374 Federal Register / Vol. 82, No. 168 / Thursday, August 31, 2017 / Proposed Rules 

PTE 2016–01, the Best Interest 

Contract Exemption: The information 

collections in PTE 2016–01, the BIC 

Exemption, are approved under OMB 

Control Number 1210–0156 through 

June 30, 2019. The exemption requires 

disclosure of material conflicts of 

interest and basic information relating 

to those conflicts and the advisory 

relationship (Sections II and III), 

contract disclosures, contracts and 

written policies and procedures (Section 

II), pre-transaction (or point of sale) 

disclosures (Section III(a)), web-based 

disclosures (Section III(b)), 

documentation regarding 

recommendations restricted to 

proprietary products or products that 

generate third party payments (Section 

(IV), notice to the Department of a 

Financial Institution’s intent to rely on 

the PTE, and maintenance of records 

necessary to prove that the conditions of 

the PTE have been met (Section V). 

Although the start-up costs of the 

information collections as they are set 

forth in the current PTE may not be 

incurred prior to June 30, 2019 due to 

uncertainty around the Department’s 

ongoing consideration of whether to 

propose changes and alternatives to the 

exemptions, they are reflected in the 

revised burden estimate summary 

below. The ongoing costs of the 

information collections will remain 

inactive through the remainder of the 

current approval period. 

For a more detailed discussion of the 

information collections and associated 

burden of this PTE, see the 

Department’s PRA analysis at 81 FR 

21002, 21071. 

PTE 2016–02, the Prohibited 

Transaction Exemption for Principal 

Transactions in Certain Assets Between 

Investment Advice Fiduciaries and 

Employee Benefit Plans and IRAs 

(Principal Transactions Exemption): 

The information collections in PTE 

2016–02, the Principal Transactions 

Exemption, are approved under OMB 

Control Number 1210–0157 through 

June 30, 2019. The exemption requires 

Financial Institutions to provide 

contract disclosures and contracts to 

Retirement Investors (Section II), adopt 

written policies and procedures (Section 

IV), make disclosures to Retirement 

Investors and on a publicly available 

Web site (Section IV), maintain records 

necessary to prove they have met the 

PTE conditions (Section V). Although 

the start-up costs of the information 

collections as they are set forth in the 

current PTE may not be incurred prior 

to June 30, 2019 due to uncertainty 

around the Department’s ongoing 

consideration of whether to propose 

changes and alternatives to the 

exemptions, they are reflected in the 

revised burden estimate summary 

below. The ongoing costs of the 

information collections will remain 

inactive through the remainder of the 

current approval period. 

For a more detailed discussion of the 

information collections and associated 

burden of this PTE, see the 

Department’s PRA analysis at 81 FR 

21089, 21129. 

Amended PTE 84–24: The 

information collections in Amended 

PTE 84–24 are approved under OMB 

Control Number 1210–0158 through 

June 30, 2019. As amended, Section 

IV(b) of PTE 84–24 requires Financial 

Institutions to obtain advance written 

authorization from an independent plan 

fiduciary or IRA holder and furnish the 

independent fiduciary or IRA holder 

with a written disclosure in order to 

receive commissions in conjunction 

with the purchase of insurance and 

annuity contracts. Section IV(c) of PTE 

84–24 requires investment company 

Principal Underwriters to obtain 

approval from an independent fiduciary 

and furnish the independent fiduciary 

with a written disclosure in order to 

receive commissions in conjunction 

with the purchase by a plan of securities 

issued by an investment company 

Principal Underwriter. Section V of PTE 

84–24, as amended, requires Financial 

Institutions to maintain records 

necessary to demonstrate that the 

conditions of the PTE have been met. 

The proposal delays the applicability 

date of amendments to PTE 84–24 until 

July 1, 2019, except that the Impartial 

Conduct Standards became applicable 

on June 9, 2017. The Department does 

not have sufficient data to estimate that 

number of respondents that will use 

PTE 84–24 with the inclusion of 

Impartial Conduct Standards but 

delayed applicability date of 

amendments. Therefore, the Department 

has not revised its burden estimate. 

For a more detailed discussion of the 

information collections and associated 

burden of this PTE, see the 

Department’s PRA analysis at 81 FR 

21147, 21171. 

These paperwork burden estimates, 

which comprise start-up costs that will 

be incurred prior to the July 1, 2019 

effective date (and the June 30, 2019 

expiration date of the current approval 

periods), are summarized as follows: 

Agency: Employee Benefits Security 

Administration, Department of Labor. 

Titles: (1) Best Interest Contract 

Exemption and (2) Final Investment 

Advice Regulation. 

OMB Control Number: 1210–0156. 

Affected Public: Businesses or other 

for-profits; not for profit institutions. 

Estimated Number of Respondents: 

19,890 over the three year period; 

annualized to 6,630 per year. 

Estimated Number of Annual 

Responses: 34,046,054 over the three 

year period; annualized to 11,348,685 

per year. 

Frequency of Response: When 

engaging in exempted transaction. 

Estimated Total Annual Burden 

Hours: 2,125,573 over the three year 

period; annualized to 708,524 per year. 

Estimated Total Annual Burden Cost: 

$2,468,487,766 during the three year 

period; annualized to $822,829,255 per 

year. 

Agency: Employee Benefits Security 

Administration, Department of Labor. 

Titles: (1) Prohibited Transaction 

Exemption for Principal Transactions in 

Certain Assets between Investment 

Advice Fiduciaries and Employee 

Benefit Plans and IRAs and (2) Final 

Investment Advice Regulation. 

OMB Control Number: 1210–0157. 

Affected Public: Businesses or other 

for-profits; not for profit institutions. 

Estimated Number of Respondents: 

6,075 over the three year period; 

annualized to 2,025 per year. 

Estimated Number of Annual 

Responses: 2,463,802 over the three year 

period; annualized to 821,267 per year. 

Frequency of Response: When 

engaging in exempted transaction; 

Annually. 

Estimated Total Annual Burden 

Hours: 45,872 over the three year 

period; annualized to 15,291 per year. 

Estimated Total Annual Burden Cost: 

$1,955,369,661 over the three year 

period; annualized to $651,789,887 per 

year. 

Agency: Employee Benefits Security 

Administration, Department of Labor. 

Titles: (1) Prohibited Transaction 

Exemption (PTE) 84–24 for Certain 

Transactions Involving Insurance 

Agents and Brokers, Pension 

Consultants, Insurance Companies and 

Investment Company Principal 

Underwriters and (2) Final Investment 

Advice Regulation. 

OMB Control Number: 1210–0158. 

Affected Public: Businesses or other 

for-profits; not for profit institutions. 

Estimated Number of Respondents: 

21,940. 

Estimated Number of Annual 

Responses: 3,306,610. 

Frequency of Response: Initially, 

Annually, When engaging in exempted 

transaction. 

Estimated Total Annual Burden 

Hours: 172,301 hours. 

Estimated Total Annual Burden Cost: 

$1,319,353. 


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3. Regulatory Flexibility Act 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) (RFA) imposes 

certain requirements with respect to 

Federal Rules that are subject to the 

notice and comment requirements of 

section 553(b) of the Administrative 

Procedure Act (5 U.S.C. 551 et seq.) or 

any other laws. Unless the head of an 

agency certifies that a proposed rule is 

not likely to have a significant economic 

impact on a substantial number of small 

entities, section 603 of the RFA requires 

that the agency present an initial 

regulatory flexibility analysis (IRFA) 

describing the Rule’s impact on small 

entities and explaining how the agency 

made its decisions with respect to the 

application of the Rule to small entities. 

Small entities include small businesses, 

organizations and governmental 

jurisdictions. 

This proposal merely extends the 

transition period for the PTEs associated 

with the Department’s 2016 Final 

Fiduciary Rule. Accordingly, pursuant 

to section 605(b) of the RFA, the Deputy 

Assistant Secretary of the Employee 

Benefits Security Administration hereby 

certifies that the proposal will not have 

a significant economic impact on a 

substantial number of small entities. 

4. Congressional Review Act 

This proposal is subject to the 

Congressional Review Act (CRA) 

provisions of the Small Business 

Regulatory Enforcement Fairness Act of 

1996 (5 U.S.C. 801 et seq.) and will be 

transmitted to Congress and the 

Comptroller General for review if 

finalized. The proposal is a ‘‘major rule’’ 

as that term is defined in 5 U.S.C. 804, 

because it is likely to result in an annual 

effect on the economy of $100 million 

or more. 

5. Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 (Pub. L. 104–4) 

requires each Federal agency to prepare 

a written statement assessing the effects 

of any Federal mandate in a proposed or 

final agency rule that may result in an 

expenditure of $100 million or more 

(adjusted annually for inflation with the 

base year 1995) in any one year by State, 

local, and tribal governments, in the 

aggregate, or by the private sector. For 

purposes of the Unfunded Mandates 

Reform Act, as well as Executive Order 

12875, this proposal does not include 

any federal mandate that we expect 

would result in such expenditures by 

State, local, or tribal governments, or the 

private sector. The Department also 

does not expect that the proposed delay 

will have any material economic 

impacts on State, local or tribal 

governments, or on health, safety, or the 

natural environment. 

6. Executive Order 13771: Reducing 

Regulation and Controlling Regulatory 

Costs 

Executive Order 13771, titled 

Reducing Regulation and Controlling 

Regulatory Costs, was issued on January 

30, 2017. Section 2(a) of Executive 

Order 13771 requires an agency, unless 

prohibited by law, to identify at least 

two existing regulations to be repealed 

when the agency publicly proposes for 

notice and comment, or otherwise 

promulgates, a new regulation. In 

furtherance of this requirement, section 

2(c) of Executive Order 13771 requires 

that the new incremental costs 

associated with new regulations shall, to 

the extent permitted by law, be offset by 

the elimination of existing costs 

associated with at least two prior 

regulations. 

The impacts of this proposal are 

categorized consistently with the 

analysis of the original Fiduciary Rule 

and PTEs, and the Department has also 

concluded that the impacts identified in 

the Regulatory Impact Analysis 

accompanying the 2016 final rule may 

still be used as a basis for estimating the 

potential impacts of that final rule. It 

has been determined that, for purposes 

of E.O. 13771, the impacts of the 

Fiduciary Rule that were identified in 

the 2016 analysis as costs, and that are 

presently categorized as cost savings (or 

negative costs) in this proposal, and 

impacts of the Fiduciary Rule that were 

identified in the 2016 analysis as a 

combination of transfers and positive 

benefits are categorized as a 

combination of (opposite-direction) 

transfers and negative benefits in this 

proposal. Accordingly, OMB has 

determined that this proposal, if 

finalized as proposed, would be an E.O. 

13771 deregulatory action. 

E. List of Proposed Amendments to 

Prohibited Transaction Exemptions 

The Secretary of Labor has 

discretionary authority to grant 

administrative exemptions under ERISA 

and the Code on an individual or class 

basis, but only if the Secretary first finds 

that the exemptions are (1) 

administratively feasible, (2) in the 

interests of plans and their participants 

and beneficiaries and IRA owners, and 

(3) protective of the rights of the 

participants and beneficiaries of such 

plans and IRA owners. 29 U.S.C. 

1108(a); see also 26 U.S.C. 4975(c)(2). 

Under this authority, and based on 

the reasons set forth above, the 

Department is proposing to amend the: 

(1) Best Interest Contract Exemption 

(PTE 2016–01); (2) Class Exemption for 

Principal Transactions in Certain Assets 

Between Investment Advice Fiduciaries 

and Employee Benefit Plans and IRAs 

(PTE 2016–02); and (3) Prohibited 

Transaction Exemption 84–24 (PTE 84– 

24) for Certain Transactions Involving 

Insurance Agents and Brokers, Pension 

Consultants, Insurance Companies, and 

Investment Company Principal 

Underwriters, as set forth below. These 

amendments would be effective on the 

date of publication in the Federal 

Register of final amendments or January 

1, 2018, whichever is earlier. 

1. The BIC Exemption (PTE 2016–01) 

would be amended as follows: 

A. The date ‘‘January 1, 2018’’ would 

be deleted and ‘‘July 1, 2019’’ inserted 

in its place in the introductory DATES

section. 

B. Section II(h)(4)—Level Fee 

Fiduciaries provides streamlined 

conditions for ‘‘Level Fee Fiduciaries.’’ 

The date ‘‘January 1, 2018’’ would be 

deleted and ‘‘July 1, 2019’’ inserted in 

its place. Thus, for Level Fee Fiduciaries 

that are robo-advice providers, and 

therefore not eligible for Section IX 

(pursuant to Section IX(c)(3)), the 

Impartial Conduct Standards in Section 

II(h)(2) are applicable June 9, 2017, but 

the remaining conditions of Section II(h) 

would be applicable July 1, 2019, rather 

than January 1, 2018. 

C. Section II(a)(1)(ii) provides for the 

amendment of existing contracts by 

negative consent. The date ‘‘January 1, 

2018’’ would be deleted where it 

appears in this section, including in the 

definition of ‘‘Existing Contract,’’ and 

‘‘July 1, 2019’’ inserted in its place. 

D. Section IX—Transition Period for 

Exemption. The date ‘‘January 1, 2018’’ 

would be deleted and ‘‘July 1, 2019’’ 

inserted in its place. Thus, the 

Transition Period identified in Section 

IX(a) would be extended from June 9, 

2017, to July 1, 2019, rather than June 

9, 2017, to January 1, 2018. 

2. The Class Exemption for Principal 

Transactions in Certain Assets Between 

Investment Advice Fiduciaries and 

Employee Benefit Plans and IRAs (PTE 

2016–02), would be amended as 

follows: 

A. The date ‘‘January 1, 2018’’ would 

be deleted and ‘‘July 1, 2019’’ inserted 

in its place in the introductory DATES

section. 

B. Section II(a)(1)(ii) provides for the 

amendment of existing contracts by 

negative consent. The date ‘‘January 1, 

2018’’ would be deleted where it 

appears in this section, including in the 

definition of ‘‘Existing Contract,’’ and 

‘‘July 1, 2019’’ inserted in its place. 


nlaroche on DSKBBV9HB2PROD with PROPOSALS
41376 Federal Register / Vol. 82, No. 168 / Thursday, August 31, 2017 / Proposed Rules 

1 Illinois’ final rule amended other state 

regulations, Parts 214 (Sulfur limitations), and Part 

217(Nitrogen oxide emissions), and other portions 

of Part 225, that are not part of the Illinois SIP, and 

were not submitted to EPA as part of this action. 

Illinois stated in its statement of reasons for the 

final rule that these revisions are proposed to 

control emissions of sulfur dioxide (SO2) in and 

around areas designated as nonattainment with 

respect to the 2010 National Ambient Air Quality 

Standard (NAAQS), and are intended to aid Illinois’ 

attainment planning efforts for the 2010 SO2

NAAQS. 

2 35 IAC 225.230 contains Illinois’ mercury 

emission standards for EGUs, and is not part of the 

federally enforceable SIP. 

C. Section VII—Transition Period for 

Exemption. The date ‘‘January 1, 2018’’ 

would be deleted and ‘‘July 1, 2019’’ 

inserted in its place. Thus, the 

Transition Period identified in Section 

VII(a) would be extended from June 9, 

2017, to July 1, 2019, rather than June 

9, 2017, to January 1, 2018. 

3. Prohibited Transaction Exemption 

84–24 for Certain Transactions 

Involving Insurance Agents and Brokers, 

Pension Consultants, Insurance 

Companies, and Investment Company 

Principal Underwriters, would be 

amended as follows: 

A. The date ‘‘January 1, 2018’’ would 

be deleted where it appears in the 

introductory DATES section and ‘‘July 1, 

2019’’ inserted in its place. 

Signed at Washington, DC, this 28th day of 

August 2017. 

Timothy D. Hauser, 

Deputy Assistant Secretary for Program 

Operations, Employee Benefits Security 

Administration, Department of Labor. 

[FR Doc. 2017–18520 Filed 8–30–17; 8:45 am] 

BILLING CODE 4510–29–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 52 

[EPA–R05–OAR–2016–0397; FRL–9967–19– 

Region 5] 

Air Plan Approval; Illinois; Rule Part 

225, Control of Emissions From Large 

Combustion Sources 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Proposed rule. 

SUMMARY: EPA is proposing to approve 

a revision to the Illinois state 

implementation plan (SIP) to amend 

requirements applicable to certain coalfired electric generating units (EGUs). 

These amendments require the Will 

County 3 and Joliet 6, 7, and 8 EGUs to 

permanently cease combusting coal; 

allow other subject EGUs to cease 

combusting coal as an alternative means 

of compliance with mercury emission 

standards; exempt the Will County 4 

EGU from sulfur dioxide (SO2) control 

technology requirements; require all 

subject EGUs to comply with a group 

annual nitrogen oxide (NOX) emission 

rate; and require only those subject 

EGUs that combust coal to comply with 

a group annual SO2 emission rate. 

DATES: Comments must be received on 

or before October 2, 2017. 

ADDRESSES: Submit your comments, 

identified by Docket ID No. EPA–R05– 

OAR–2016–0397 at http://

www.regulations.gov or via email to 

blakley.pamela@epa.gov. For comments 

submitted at Regulations.gov, follow the 

online instructions for submitting 

comments. Once submitted, comments 

cannot be edited or removed from 

Regulations.gov. For either manner of 

submission, EPA may publish any 

comment received to its public docket. 

Do not submit electronically any 

information you consider to be 

Confidential Business Information (CBI) 

or other information whose disclosure is 

restricted by statute. Multimedia 

submissions (audio, video, etc.) must be 

accompanied by a written comment. 

The written comment is considered the 

official comment and should include 

discussion of all points you wish to 

make. EPA will generally not consider 

comments or comment contents located 

outside of the primary submission (i.e. 

on the web, cloud, or other file sharing 

system). For additional submission 

methods, please contact the person 

identified in the FOR FURTHER

INFORMATION CONTACT section. For the 

full EPA public comment policy, 

information about CBI or multimedia 

submissions, and general guidance on 

making effective comments, please visit 

http://www2.epa.gov/dockets/ 

commenting-epa-dockets. 

FOR FURTHER INFORMATION CONTACT: 

Charles Hatten, Environmental 

Engineer, Control Strategy Section, Air 

Programs Branch (AR–18J), U.S. 

Environmental Protection Agency, 

Region 5, 77 West Jackson Boulevard, 

Chicago, Illinois 60604, (312) 886–6031, 

hatten.charles@epa.gov. 

SUPPLEMENTARY INFORMATION: 

Throughout this document whenever 

‘‘we,’’ ‘‘us,’’ or ‘‘our’’ is used, we mean 

EPA. This supplementary information 

section is arranged as follows: 

I. Background 

II. Discussion of the State’s Submittal 

A. Rule Revisions That EPA Is Proposing 

To Approve 

B. Rule Revisions for Which EPA Is Taking 

No Action 

C. Analysis of the State’s Submittal 

III. What action is EPA taking? 

IV. Incorporation by Reference 

V. Statutory and Executive Order Reviews 

I. Background 

On June 24, 2011, Illinois EPA 

submitted to EPA state rules to address 

the visibility protection requirements of 

Section 169A of the Clean Air Act 

(CAA) and the regional haze rule, as 

codified in 40 CFR 51.308. This 

submission included the following 

provisions contained in Title 35 of the 

Illinois Administrative Code (IAC), Part 

225 (Part 225): sections 225.291, 

225.292, 225.293, 225.295 and 225.296 

(except for 225.296(d)), and Appendix A 

to Part 225. On July 6, 2012, EPA 

approved these provisions (77 FR 

39943). 

On June 23, 2016, Illinois submitted 

revisions to these rules and on January 

9, 2017, Illinois submitted additional 

information explaining the revisions.1

These rules are known as the 

‘‘Combined Pollutant Standard,’’ and 

are codified at 35 IAC Part 225, Subpart 

B, titled ‘‘Control of Emissions from 

Large Combustion Sources’’ (CPS or Part 

225 rules). The CPS provides certain 

EGUs an alternative means of 

compliance with the mercury emission 

standards in 35 IAC 225.230(a).2 The 

CPS applies to EGUs at six power 

plants, which are identified in 

Appendix A to the CPS. Illinois is 

revising the CPS to address the 

conversion of certain EGUs to fuel other 

than coal. 

II. Discussion of the State’s Submittal 

A. Rule Revisions That EPA Is Proposing 

To Approve 

EPA is proposing to approve the 

following revisions as part of Illinois’ 

SIP: 

Section 225.291 Combined Pollutant 

Standard: Purpose 

SIP Section 225.291 sets forth the 

purpose of the CPS, which is to allow 

an alternate means of compliance with 

the emissions standards for mercury in 

35 IAC 225.230(a) for specified EGUs 

through permanent shutdown, the 

installation of an activated carbon 

injection system, or the application of 

pollution control technology for NOX, 

SO2, and particulate matter (PM) 

emissions that also reduce mercury 

emissions as a co-benefit. 

Illinois revised section 225.291 by 

stating as its purpose the conversion of 

an EGU to a fuel other than coal (such 

as natural gas or distillate fuel oil with 

sulfur content no greater than 15 parts 

per million (ppm)) as an additional 

alternative means of compliance with 

the mercury emission standards under 

the CPS. 


nlaroche on DSKBBV9HB2PROD with PROPOSALS