EBSA ready for reorganization, though Congress has questions

The Employee Benefits Security Administration is slated to be reorganized Oct. 1 with the creation of another deputy assistant secretary position, but calls for delay are coming from Capitol Hill.

Preston Rutledge, the assistant secretary of labor who leads EBSA, told staff in an Aug. 27 email that the agency will soon have three deputy assistant secretaries who report directly to him instead of the two in place today. Additionally, oversight responsibilities will be allocated differently among the deputy assistant secretaries.

Two Democratic members of Congress with oversight over the agency have asked for an explanation of the change and have called for a delay until they get some answers

Traditionally, the two EBSA assistant secretaries were split between a political appointee and a member of the career staff. The new position — deputy assistant secretary for regional offices — will be filled by a career staffer, a Labor Department spokesman said in an email.

Regional offices have historically maintained significant independence, and regional directors have had wide latitude in opening investigations and interpreting the Employee Retirement Income Security Act of 1974 to determine if there have been violations, according to a Groom Law Group brief.

David Levine, a Washington-based principal at Groom, said there could be some positives to come out of the reorganization. "Hopefully it can lead to increased consistency in enforcement positions and practical outcomes, such as solutions to the many ongoing missing participant investigations," he said.

Historically, EBSA regional offices have had their own identities, said Brian D. Netter, a Washington-based partner for Mayer Brown LLP. "The reorganization seems designed to create a more nationally uniform enforcement regime," he said. "In theory, a more centralized enforcement regime led by a career official could lead to more consistency in enforcement priorities across administrations. But it's too early to predict how any particular initiatives might be affected."

On Sept. 22, Sen. Patty Murray, D-Wash., ranking member of the Senate Health, Education, Labor and Pensions Committee, and Rep. Bobby Scott, D-Va., chairman of the House Education and Labor Committee, wrote to Mr. Rutledge requesting a delay and an explanation of the rationale behind the proposed reorganization.

"The proposed reorganization appears to be a meaningful structural change from the status quo, shifting authorities to EBSA's politically appointed deputy and creating a new director position to oversee regional offices," Ms. Murray and Mr. Scott wrote in their letter. "We have questions about the need and basis for this proposed reorganization and whether EBSA's vital mission will be impaired. As such, we write to respectfully recommend that you delay the proposed reorganization until Congress and interested stakeholders fully understand the rationale and ramifications of this proposed reorganization for the millions of workers, retirees and families EBSA serves."

Currently, Jeanne Klinefelter Wilson, EBSA's principal deputy assistant secretary since May, is the political appointee, initially appointed deputy assistant secretary for policy in November 2017. Timothy D. Hauser, a career staffer, serves as deputy assistant secretary for program operations, a position he's held since 2013.

If there is no delay, effective Oct. 1 Ms. Wilson will oversee the office of exemption determinations and the office of regulations and interpretations. Mr. Hauser will oversee the office of enforcement, the office of technology and information services, and the office of outreach, education and assistance, according to the Groom brief.

Ms. Wilson will keep her title while Mr. Hauser will become deputy assistant secretary for the national office, according to the Labor Department spokesman. The new deputy assistant secretary. was not identified.

Erin M. Sweeney, a Washington-based member of Miller & Chevalier Chartered's ERISA and fiduciary litigation practice, said the concept behind the proposed reorganization is to allow EBSA to be more nimble.

"When the president issues an executive order and the amount of time that it takes for the Department of Labor to be responsive and get guidance projects out has been extremely frustrating to the administration," she said.

The congressional members sent a list of 11 questions for Mr. Rutledge to answer, including, "What problem is this proposed reorganization designed to solve?" and "What specifically prompted this proposed reorganization and when did formal or informal planning for the proposed reorganization begin?"

The lawmakers requested a response by Sept. 30.

"When responsibilities are shuffled between Senate-approved officials and career employees, there's a natural tendency to wonder whether the reorganization is advancing a political objective," Mr. Netter said. "The Democrats who have engaged on this are the Democrats with primary oversight responsibility over DOL. They want to understand the rationale for the reorganization before it's implemented."