department of labor buildingDOL headquarters, Washington D.C. (Phot:o: MichaelScarcella/ALM)

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Updated 10-3-2019 to include DOL spokespersoncomments.

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The reorganization of the Employee Benefits SecurityAdministration, which will shift oversight of rule-making andexemptions from a career, bureaucratic position to apresidentially-appointed political position, was scheduled forimplementation October 1, according to a Labor Departmentspokesperson.

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The reorganization is widely understood as a means to expediteTrump administration priorities under EBSA's auspice, according tosources speaking on the record and on background.

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And it also falls under a wider Trump administration meme tostreamline the federal government's executive branch.

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One proposal floated early in the Trump administration was thecombination of the Departments of Education and Labor.

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The executive branch can't execute such dramatic actionunilaterally; Congress would have to enact legislation for anoverhaul of that magnitude. But how federal agencies likethe Labor Department, which are created by Congress, organize theirleadership is more of an open question.

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Last year, the Congressional Review Service published papersexploring, in part, the degree to which federal agencies canreorganize internal oversight. The papers were in response to morethan 30 reorganization proposals issued through executive orders,directives, and public recommendations by the Trumpadministration.

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Some of those proposals—like merging Labor and Education—weresimply unimaginable under the Democratically controlled House ofRepresentatives.

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So the Trump administration downshifted, and began to focus onareas where restructuring could occur without Congressionalapproval.

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"This is the scalpel approach," said Erin Sweeney, an ERISAattorney with Miller & Chevalier who previously was a seniorbenefits attorney at EBSA.

Can EBSA do that?

Still, there may be legitimate questions as to whether EBSA hasthe authority to reorganize its principal rule-making oversightfrom a career position to a political position. A similarreorganization is being concurrently implemented at Labor's Wageand Hour Division.

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The papers from the CRS, which provides legal an policy analysisto lawmakers, shows the statutes governing federal agencies differon how much discretion they give to agency heads to delegatepower.

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"Whether a proposed reorganization that would transfer functionsor duties within an agency to another part of the same agencyrequires congressional authorization would depend on the particulargoverning statute and appropriations specific to that agency,"according to one CRS paper, Organizing Executive Branch Agencies:Who Makes the Call?

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"Executive authority to implement any reorganization proposalultimately will depend on the circumstances of the particular planat issue and the precise scope of authority delegated by Congress,"the paper says.

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"The question is, 'who has authority here,'" said Sweeney."Congress is the entity that sets up agencies. But does Congresshave authority to decide how an agency organizes itself?"

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That answer is unclear, said Sweeney, who noted that thestatutes governing the Department of Labor and the Department ofEducation on organizational issues widely vary.

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"They are really different. The Education statute says theSecretary has authority to allocate and re-allocate functions. Butthe Labor statute is not nearly as specific," she said.

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Last week, senior Democratic lawmakers with oversight over EBSArequested the documents behind the administration's reorganization,and answers to a series of questions to explain why it was beingpursued. They also requested the reorganization be delayed.

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Their line of questioning suggests the lawmakers, or theirstaffers, are unfamiliar with existing agency protocol onreorganizations.

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Under the reorganization of Labor's Wage and Hour Division, aproposal was sent to the Office of the Assistant Secretary forAdministration & Management, a division of the Labor Departmentthat supports business operations, human resources, and strategicplanning agency-wide.

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If a reorganization proposal is approved by OASAM, it is thensent to the Secretary of the Labor Department. That procedure isstandard, said Sweeney.

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"Presumably, those documents exist," said Sweeney, who alsonoted that Preston Rutledge, Assistant Secretary of Labor for EBSA,has a long reputation as a "rule follower."

Would Congress have standing to sue EBSA?

EBSA worked with all the relevant DOL offices during thereorganization process, without third-party consultants, a LaborDepartment spokesperson said.

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According to the Labor Department spokesperson, thereorganization will help ensure EBSA's policy work–which includesresearch, economic analysis, and regulatory work–is betterintegrated and will foster collaboration.

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The new structure will give EBSA's regional offices a greatervoice in the National Office, help ensure the consistency ofenforcement activities nationwide, a provide expanded opportunityfor career advancement within the agency, the spokespersonsaid.

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If House Democrats determine that EBSA has exceeded it statutoryauthority in implementing the reorganization, what remedy can theypursue?

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Would Congress have standing to sue EBSA to block thereorganization?

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"I'm not aware of a precedent for that, but it's possible," saidSweeney.

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As of late afternoon on October 1, EBSA's organizational charthad yet to be updated on the Labor Department's website. A requestfor comment to the Labor Department as to whether it would be wasnot returned before press time.

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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.