Bill McMorris of the Washington Free Beacon details a positive development in the legal world.

A federal judge tossed one of the Obama administration’s most controversial regulations into the retirement industry.

The Fifth Circuit Court of Appeals ruled 2-1 that the Department of Labor’s Fiduciary Rule, which would have given the agency oversight into investment advice given to retirees, represented a usurpation of federal regulatory power. Judge Edith Jones said that the agency engaged in “backdoor regulation” to extend regulatory scrutiny from an employer-based pension system to advisers handling individual retirement accounts (IRAs). The rule would have limited commission-based payment structures for investment advice in favor of fee-based services, which are more popular for large trade accounts. The regulation, the majority said, could harm smaller scale investors by driving up costs for seeking advice.

“Although lacking direct regulatory authority over IRA ‘fiduciaries,’ [the Department of Labor] impermissibly bootstrapped what should have been safe harbor criteria into ‘backdoor regulation,’” the ruling said. “It is likely that many financial service providers will exit the market for retirement investors rather than accept the new regulatory regime.”

Jason Mendro, the Gibson Dunn lawyer who represented the plaintiffs, said vacating the regulation would send a message to government agencies to remain within the bounds of legislation.