A new labor secretary and a reorganization within the Employee Benefits Security Administration could lead to increased guidance and a more uniform enforcement policy, said several attorneys who specialize in ERISA-related matters and retirement industry stakeholders.
Eugene Scalia was sworn in as Department of Labor secretary on Sept. 30 after the Senate confirmed his nomination four days earlier in a 53-44 vote. The son of late Supreme Court Justice Antonin Scalia, Mr. Scalia was most recently a partner at Gibson Dunn & Crutcher LLP and previously served as the Labor Department's solicitor — the legal officer responsible for all department litigation and legal advice on rule-making and administrative law — during President George W. Bush's administration.
"Having someone who knows ERISA can be helpful in getting guidance out the door, helping (EBSA staff) work through the complications of some of the issues, because every issue is complicated," said Lynn Dudley, senior vice president for global retirement and compensation policy at the American Benefits Council in Washington.
Sources expect Mr. Scalia to waste no time in making an impact.
"I think there will be a continued push across the board in the DOL and outside of it to continue the deregulatory efforts in keeping with the administration's goals," said George Michael Gerstein, co-chairman of the fiduciary governance group at Stradley Ronon Stevens & Young LLP in Washington. "I suspect that would be top of mind for Eugene Scalia."
The Labor Department has several regulatory projects in the works, including the expected imminent unveiling of a new rule on electronic disclosures to retirement plan participants; a new fiduciary rule that likely will complement the Securities and Exchange Commission's best-interested standard; and the further implementation of its final rule on association retirement plans, which narrowly expanded the use of open multiple employer plans and went into effect Sept. 30.
Mr. Scalia was part of a Gibson Dunn team representing the U.S. Chamber of Commerce, the Securities Industry and Financial Markets Association and other associations in successful challenges to the Obama administration's fiduciary rule, including oral arguments before the 5th U.S. Circuit Court of Appeals in New Orleans.
When asked at his Senate hearing last month whether he would recuse himself from the upcoming rule-making, Mr. Scalia said he would "seek guidance from the designated agency ethics official at the Department of Labor regarding what my ability to participate would be."
Mr. Gerstein said he doesn't believe Mr. Scalia has a conflict of interest with respect to future fiduciary rule deliberations because while the subject matter overlaps, it will be a different rule from the one struck down in court. "The appearance of a conflict of interest may be enough for the ethics officers and Secretary Scalia to recuse himself, but I don't consider it such an obvious conflict," Mr. Gerstein said.
There won't be much of a need to educate Mr. Scalia on what EBSA does and the issues it cares about because of his past experience, Ms. Dudley said.
One change at EBSA officially took place the day after Mr. Scalia was sworn in to his new post. On Oct. 1, the department was reorganized with the creation of another deputy assistant secretary position. Amy Turner, a 23-year veteran of EBSA who was mostly recently its director of the office of health plan standards and compliance assistance, has stepped into the new position of deputy assistant secretary for the regional offices, a Labor Department spokesman confirmed.
Preston Rutledge, the assistant secretary of labor who leads EBSA, told staff in an August email that the agency was expanding to three deputy assistant secretaries who report directly to him instead of the two in place previously. Oversight responsibilities among the deputy assistant secretaries are now allocated differently. Traditionally, the two EBSA assistant secretaries were split between a political appointee and a member of the career staff. As noted, Ms. Turner is a career staffer.
Historically, EBSA regional offices have had their own identities, sources said. "Different regions have different priorities and different approaches, and I think they've traditionally had quite a bit of autonomy," said Jennifer Eller, a principal at Groom Law Group LLP in Washington. "I think it would be very useful for there to be a greater level of similarity."