Despite the decision's magnitude, industry stakeholders have so far offered restrained reactions.

"This is not a time to celebrate," said Gary Hughes, COO and executive vice president of The American Council of Life Insurers, which represents insurance companies and was one of the plaintiffs that appealed a lower court ruling to the 5th Circuit.

Mr. Hughes and ACLI's CEO, Dirk Kempthorne, told members of the media in a press call that the council remains supportive of new regulations for advisors, brokers, and insurance agents across all investment accounts.

"We recognize that courts are not the appropriate forum for policy making. We hope this decision serves as a catalyst for regulators," said Mr. Kempthorne, referring to efforts by the Securities and Exchange Commission to draft a uniform fiduciary standard, revisions to Labor's rule currently under way at the DOL, and new guidance being considered by state insurance regulators.

5th Circuit's reasoning

The fiduciary rule amended the Employee Retirement Income Security Act to make all providers of investments to qualified retirement accounts fiduciaries, including brokers of securities and insurance agents that make one-time sales recommendations.

In the 5th Circuit's split 2-to-1 decision, the majority said Labor overstepped its authority by attempting to expand the definition of the word "fiduciary" from how it was originally defined by ERISA in 1974, explained David Ogden, a partner at Wilmer Hale and counsel to ACLI.

"This is a comprehensive opinion that held DOL's interpretation of ERISA was unreasonable," Mr. Ogden said in the press call.

The fiduciary rule also extended ERISA's original fiduciary requirements for the employer-provided retirement plan market to IRAs in the retail market.

That effort to impose employer standards on providers to IRAs was seen as "impermissible" by the 5th Circuit, said Mr. Ogden, and "contrary to Congress' design" when it passed ERISA more than 40 years ago.

In the decision, the 5th Circuit detailed what it perceived as the detrimental consequences of the rule on providers and investors.

That energy took some ERISA experts by surprise.

"If it decides to seek further review of the decision, I imagine the DOL will highlight the majority's apparent focus on the impact of the rule for financial professionals, rather than the legal analysis of statutory interpretation, which almost seems secondary in the opinion," said Brendan McGarry, a securities attorney with Kaufman, Dolowich, Voluck.

Mr. Ogden, however, said the decision's many references to the rule's impact on markets served to prove Labor's break with Congress' original intent in ERISA.

"The heart of the 5th Circuit's analysis was the inconsistency of the fiduciary rule with the statute's (ERISA) text, the text and history of other pertinent statutes, and constitutional concerns including separation of powers," Mr. Ogden said in an email.

"It referenced market impact to show that the effect of the Rule was in fact as large as DOL said it would be, which confirmed the court's sense that Congress would not have intended such impact without saying so," he added.

Labor's reaction: the wildcard at hand

Sources have noted to BenefitsPRO the potential that the Labor Department may drop its defense of the rule, which of course would be required to petition the 5th Circuit to reconsider the case, or the Supreme Court to determine the final fate of Labor's rule.

Most of those sources concede to not knowing Labor's intent, but say the decision to drop its defense is the wildcard now at play.

Tony Stich, COO of Advicent, a provider of financial planning software, said, "it has become increasingly evident that the Trump Administration does not plan on pursuing recourse or defense on the DOL's position."

If Labor were to drop its defense, AARP and other consumer advocates could petition to step in to defend the fiduciary rule.

That prospect will motivate Labor to continue to defend the rule, says Erin Sweeney, an ERISA attorney with Miller & Chevalier.

"My view is that the DOL will ask the Supreme Court to hear the case," said Ms. Sweeney. "The DOL's concern would be that if AARP takes up the mantle–and they are most definitely ready, willing and able to do that–then DOL loses control over how the case is argued."

A representative from AARP said the organization has made no decision as to a future role in the case.

"We are disappointed in this 2-1 decision which vacated the rule that protects consumers from conflicts of interest when saving for their retirement. Four previous courts have upheld the protections for the hard-earned retirement savings of Americans," said Nancy LeaMond, AARP's executive vice president.

Ms. Sweeney said the Supreme Court is likely to hear the case.

Others speculate whether the Labor Department will stop its review and potential revisions to the fiduciary rule, the full implementation of which has been delayed to July 2019. Labor could release proposed changes to the rule as early as this fall. The SEC is also expected to release a proposal of its uniform fiduciary standard by the fall.

But Ms. Sweeney said stopping its review may not be in Labor's best interest.

"In my view, the DOL will nevertheless move forward with review of the rule as a hedge," she said, referencing the efforts by state securities regulators to craft their fiduciary standards.