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Labor Secretary Eugene Scalia

Senate Confirms Eugene Scalia as New Labor Secretary

Scalia may need to recuse himself from any decisions regarding the Department of Labor's upcoming fiduciary rule because of his work as lead counsel in the case that vacated the DOL's previous rule.

The U.S. Senate today confirmed Eugene Scalia as the next Secretary of Labor by a 53-44 vote. Scalia, who is currently a partner at the D.C.-based law firm Gibson Dunn, is the official replacement for Alex Acosta, who resigned in July after coming under criticism for how he handled a sex crimes accusation involving Jeffrey Epstein when he was a U.S. attorney.

Scalia, the son of the late Supreme Court Justice Antonin Scalia, previously was the solicitor of labor in the George W. Bush administration. At Gibson Dunn, he served as counsel for plaintiffs (including the U.S. Chamber of Commerce and the Financial Services Institute) in a civil suit targeting the Department of Labor’s Fiduciary Rule developed during the Obama administration; the rule was vacated last year in federal appeals court. President Donald Trump announced Scalia’s nomination on July 18.

Scalia will take charge of the department months before the DOL is due to release its own revised fiduciary rule for retirement account advice. Acosta had previously testified before the House of Representatives that the DOL would be collaborating with the Securities and Exchange Commission to ensure the rule coordinates with the SEC’s Regulation Best Interest rule.

It remains to be seen what role, if any, Scalia will play in the development of the revised rule. Due to his past experience representing opponents of the DOL’s prior rule, many suspect that Scalia may have to recuse himself from playing any part in developing the department’s new fiduciary rule (the rule is expected to be unveiled by the end of the year). In a letter to an ethics official with the U.S. Department of Labor late last month, Scalia pledged to resign from Gibson Dunn if confirmed. Additionally, he would not participate in any matter where the firm is “a party or represents a party,” as well as matters in which “a former client of mine is a party or represents a party for a period of one year after I last provided service to that client,” he wrote.

The Financial Services Institute, an advocacy organization for financial services advisors and firms, was buoyed by the choice, with FSI CEO Dale Brown lauding his 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 rulemaking,” Brown said.

However, others were deeply critical of the confirmation, including Senate Minority Leader Chuck Schumer (D-NY), who called Scalia’s confirmation a “disgrace” in a speech on the Senate floor.

“Mr. Scalia’s nomination is a slap to the face of labor, because Mr. Scalia’s life work has been utterly opposed to the mission of the agency to which he’s nominated,” Schumer said.

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