"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," Rep. Scott and Sen. Murray wrote. (Photo: Diego M. Radzinschi/ALM)
The Democratic Chairman and Ranking Member of the Congressional committees that oversee the Labor Department are asking Preston Rutledge, Assistant Secretary of Labor and head of the Employee Benefits Security Administration, to halt a scheduled reorganization of the leadership that oversees workplace retirement and health plans.
"We have questions about the need and basis for this proposed reorganization and whether EBSA's vital mission will be impaired," write Rep. Bobby Scott, D-VA, Chair of the House Committee on Education & Labor, and Sen. Patty Murray, D-WA, Ranking Member of the Senate Committee on Health, Education, Labor, & Pensions.
"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," the lawmakers wrote in a letter dated September 22.
In August, an internal Labor Department email revealed plans to shift primary rule-making oversight from a career position—the Deputy Assistant Secretary for Program Operations—to a politically appointed position—the Principal Deputy Assistant Secretary.
A new career position—the Assistant Secretary for Regional Offices—will be created to oversee EBSA's 10 regional offices. The reorganization is scheduled to take effect on October 1, 2019.
Under the changes, the Office of Regulations and Interpretations and the Office of Exemption and Determinations will shift to the politically appointed position, held by Jeanne Klinefelter Wilson, who was appointed by President Trump in 2017.
The lawmakers laid out 11 questions for Rutledge, the answers to which, along with documentation behind the reorganization, are requested no later than September 30.
Among the questions asked: "What problem is this proposed reorganization designed to solve?" "How does it achieve those goals?" "Does EBSA or DOL have policies and procedures regarding reorganizations?"
The lawmakers want to know what prompted the reorganization, when planning was initiated, what analysis is behind it, and what will be its budgetary impact, among other questions.
The reorganization comes as EBSA is scheduled to release a revised fiduciary rule this fall, and as new regulations for pooled retirement plans will go into effect in October.
Under the Obama administration, Tim Hauser held the title of Deputy Assistant Secretary for Program Operations, and was a key architect of Labor's fiduciary rule, which was ultimately vacated by an appellate court in 2018.
The new regulations for pooled retirement plans that go into effect next month fall short of more expansive regulations for which the financial services industry has lobbied.
The Labor Department has a reputation for inefficiency in promulgating new rules, according to one attorney that formerly worked at EBSA.
"The Labor Department has always moved at a slow pace," said Erin Sweeney, a labor and ERISA attorney with Miller & Chevalier who served as senior benefits counsel at EBSA during the Bush administration.
"The question the Trump administration is asking is if Labor has always had a slow pace, then how can we restructure EBSA so that it can issue guidance and regulations in a more nimble fashion," she added.
In response to an inquiry as to whether the Labor Department intends to respond to the September 30 deadline or delay the reorganization, a Labor spokesperson said the lawmakers' letter will be reviewed, and EBSA's organizational chart will be updated when the changes are effective on October 1.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
