Industry publication ThinkAdvisor spoke with Drinker Biddle partners Brad Campbell and Fred Reish about the likelihood of Eugene Scalia, President Donald Trump’s pick to be the next Labor secretary, having to recuse himself from crafting a Labor Department fiduciary rule.
A recent report on Scalia in The Wall Street Journal noted that government ethics rules generally prevent officials from participating in issues they were involved in while in the private sector to guard against potential conflicts of interest. The report cited Scalia’s representation against Labor’s rule before the U.S. Court of Appeals for the 5th Circuit, which vacated the rule in June 2018.
Campbell told ThinkAdvisor that traditionally, participation in litigation wouldn’t preclude Scalia from working on a regulation.
“Is it possible that has changed, or in this instance they’ve decided that for whatever reason they want to take a different path? That’s possible,” Campbell noted.
Reish added that “for appearances’ sake alone, [Scalia] should abstain from participation in the development of a new fiduciary regulation and any prohibited exemptions that are similar to those he opposed in court.”
Scalia’s “involvement could suggest continued advocacy for the clients he represented in the private sector or, alternatively, the involvement could be viewed as contrary to the interest of his private-sector clients,” Reish told ThinkAdvisor. “Either way, it makes him look conflicted.”
In terms of the legalities, Reish added, “I think it is a fairly close call. His private-sector representation and arguments regarded the vacated fiduciary rule. It is gone, vacated by the 5th Circuit. His work at the DOL would be on a new regulation. There is some separation there.”