Eugene Scalia ready to tackle the challenges at Labor Dept.
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September 30, 2019 12:00 AM

Eugene Scalia ready to tackle the challenges at Labor Dept.

Brian Croce
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    Bloomberg

    The Senate confirmed Eugene Scalia as the next secretary of Labor on Thursday in a 53-44 vote.

    Addressing the multiemployer pension funding crisis and striking the right balance with the Securities and Exchange Commission on fiduciary duty regulations will be top of mind for new Labor Secretary Eugene Scalia.

    The Senate confirmed Mr. Scalia, a partner at Gibson Dunn & Crutcher and son of late Supreme Court Justice Antonin Scalia, as the next secretary of labor on Sept. 26 in a 53-44 vote. He will fill the position left by Alexander Acosta, who resigned in July. Patrick Pizzella, the deputy secretary, has served as acting secretary in the interim.

    His nomination was approved Sept. 24 in a 12-11 party-line vote by the Senate Health, Education, Labor and Pensions Committee. Democrats on the committee said Mr. Scalia's experience in the private sector indicates he will not put workers' interests first as labor secretary. Republicans said he is well qualified and will do a good job leading the department for both businesses and workers.

    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 fiduciary rule, including during oral arguments before the 5th U.S. Circuit Court of Appeals in New Orleans.

    The Labor Department is expected to issue a new fiduciary rule in the coming months while the SEC adopted a best-interest standard in June that aims to compel brokers to put clients' financial interests ahead of their own and requires them to mitigate financial conflicts.

    When asked at a hearing on Sept. 19 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."

    He added that he would not cede the issue to the SEC.

    "The DOL is focused on employment retirement savings and one of the concerns that was raised by the fiduciary rule was that they were treading on the SEC's jurisdiction," Mr. Scalia said. "So I think part of what's necessary in a government is making sure that there's the proper balance between the regulatory authorities and I would want to, if I'm confirmed, work with the SEC if necessary to strike that balance correctly."

    Following a line of questioning at the hearing from Sen. Tina Smith, D-Minn., on the multiemployer pension crisis, Mr. Scalia said it needs to be a priority "both for the workers that are affected and also for the solvency" of the Pension Benefit Guaranty Corp.

    "I think there's been a confluence of factors that has led to the problems and I'm not steeped enough to know exactly what they are but I do agree with you that something does need to be done and I think there's bipartisan recognition of that," he said.

    This won't be the first stop for Mr. Scalia at the Labor Department. He previously served as 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.

    Wayne Chopus, president and CEO of the Insured Retirement Institute, congratulated Mr. Scalia on his confirmation. "We look forward to working with him and the U.S. Department of Labor to ensure a strong and vibrant retirement security system for millions of American workers so that they can enjoy a financially secure and dignified retirement," he said in a statement.

    Financial Services Institute President and CEO Dale Brown also applauded the confirmation. "He will bring an investor-focused, measured approach to his role leading the Department of Labor, and with his experience, be able to recognize the potential for unintended consequences of rule-making," he said in a statement.

    Stephen W. Hall, legal director and securities specialist with watchdog group Better Markets, said he does not believe Mr. Scalia will be effective for workers and retirees.

    "As an attorney in private practice, Eugene Scalia has chosen to represent a long list of financial firms and financial industry trade groups which have relentlessly sought to gut, weaken, rollback or kill some of the most critical financial reform protections for investors, customers, retirees and all Americans," he said.

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