On August 9, 2017, the Department of Labor notified the District Court of Minnesota that it had submitted to the Office of Management and Budget amendments that would delay until July 1, 2019 the applicability of three prohibited transaction exemptions related to the DOL’s “fiduciary rule”: the (i) Best Interest Contract Exemption, (ii) Principal Transaction Exemption and (iii) PTE 84-24. The fiduciary rule became applicable on June 9, 2017, following a sixty-day delay of its initial applicability date of April 10, 2017.
If finalized, these amendments would constitute the second delay in applicability of these controversial exemptions. Pursuant to a final rule dated April 4, 2017, (1) reliance on the Best Interest Contract Exemption and the Principal Transaction Exemption would only require adhering to the Impartial Conduct Standards during the transition period of June 9 through January 1, 2018 and (2) advisors could continue to rely on PTE 84-24 until January 1, 2018, subject to adhering to the Impartial Conduct Standards beginning June 9th. The court filing implies that adherence to the impartial conduct standards is still required prior to July 1, 2019.
The proposed rule is likely in response to a Request for Information filed by the DOL on July 6, 2017. The RFI asked for input regarding the advisability of extending the January 1, 2018 applicability date of the exemptions. It also asked for specific ideas for new exemptions or regulatory changes. It remains to be seen whether the proposed rule includes any additional items beyond the delay in applicability.
In connection with the initial delay finalized in April, the DOL issued Field Assistance Bulletin No. 2017-02 which provides that, during the transition period of June 9, 2017 through January 1, 2018, the DOL would not pursue claims against fiduciaries who are working diligently and in good faith to comply with the fiduciary rule and exemptions. The FAB also confirms that the IRS will not impose reporting obligations or excise taxes on any prohibited transactions to which the FAB applies. We expect that this bulletin will be revised to extend the relief provided until July 1, 2019.
Further information on the transition period can be found in FAQs issued by the DOL on May 22nd and August 3rd.
 See Thrivent Financial for Lutherans v. Perez et al, Docket No. 16-cv-03289 (D.Minn. Sept. 29, 2016).
 The final rule can be found at: https://www.gpo.gov/fdsys/pkg/FR-2017-04-07/pdf/2017-06914.pdf. The fiduciary rule can be found at: http://webapps.dol.gov/FederalRegister/PdfDisplay.aspx?DocId=28806. For a complete overview of the final rule, you may wish to refer to our client publication: “The US Department of Labor’s Final ‘Fiduciary’ Rule Incorporates Concessions to Financial Service Industry but Still Poses Key Challenges,” available at: http://www.shearman.com/~/media/Files/NewsInsights/Publications/2016/04/The-US-Department-of-Labor-Final-Fiduciary-Rule-Incorporates-Concessions-to-Financial-Service-Industry-CGE-041416.pdf. For an overview of the DOL’s delay of the final rule, you may wish to refer to our client publication: “DOL Finalizes 60-Day Delay of the Fiduciary Rule,” available at: http://www.shearman.com/en/newsinsights/publications/2017/04/dol-60day-delay-of-fiduciary-rule.
 Both the BIC Exemption and the Principal Transaction Exemption provided that full compliance would not be required until January 1, 2018. During the transition period, however, fiduciaries had to comply with three conditions. These conditions were: (1) adherence to the Impartial Conduct Standards, (2) the requirement of financial institutions to provide a written notice acknowledging its and its advisors’ fiduciary status and stating that it and its advisors will comply with the Impartial Conduct Standards and disclose material conflicts of interest and (3) the financial institutions must disclose any material conflicts of interest and whether it receives third-party payments or recommends proprietary products. As a result of the final rule released on April 4th, only the first condition will be required during the transition period.
 PTE 84-24 provides an exemption for transactions involving insurance and annuity contracts. In April of 2016, the exemption was amended to require compliance with the Impartial Conduct Standards and to revoke relief for transactions involving fixed indexed annuity contracts and variable annuity contracts as of April 10, 2017. Advisors recommending these products would have to rely on the BIC Exemption.
 See EBSA, Request for Information, available at: https://www.gpo.gov/fdsys/pkg/FR-2017-07-06/pdf/2017-14101.pdf.
 See EBSA Field Assistance Bulletin 2017-02 (May 22,, 2017), available at: https://www.dol.gov/agencies/ebsa/employers-and-advisers/guidance/field-assistance-bulletins/2017-02.
 See IRS Announcement 2017-04 (March 27, 2017), available at: https://www.irs.gov/pub/irs-drop/a-17-04.pdf which provides that the IRS will not apply § 4975 and related reporting obligations with respect to any transaction or agreement to which the DOL’s temporary enforcement policy, or other subsequent related enforcement guidance, would apply.
 See Conflict of Interest FAQs (Transition Period), available at: https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/faqs/coi-transition-period-1.pdf and Conflict of Interest FAQs (408B-2 Disclosure Transition Period, Recommendations to Increase Contributions and Plan Participation), available at: https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/faqs/coi-transition-period-2.pdf.