Labor department ESG rule sent back to lower court for rehearing (2024)

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July 23, 2024

The U.S. Court of Appeals for the Fifth Circuit ruled July 18 that the U.S. District Court for the Northern District of Texas must rehear the Republican attorneys general lawsuit opposing the Department of Labor’s 2022 rule allowing the use of ESG in ERISA-governed pension plans. The Fifth Circuit said the lower court needed to consider the Supreme Court’s ruling in Loper Bright v. Raimondo, which overturned Chevron doctrine—the basis of the original lower court ruling:

“

Red-state attorneys general who sued the Labor Department over its rule permitting sustainable 401(k) investing must pursue their claims before a lower court after a Fifth Circuit panel opted to send the case back. The appeals judges cited Loper Bright Enterprises v. Raimondo, a recent landmark US Supreme Court ruling, in a Thursday decision to let a Texas federal district judge weigh arguments against the DOL’s regulation allowing for more environmental, social, and governance considerations in private-sector retirement accounts. … 'In upholding the Department of Labor’s reading, the district court relied upon the decades-old Chevron deference doctrine,' Fifth Circuit Judge Don R. Willett said in the Thursday opinion. 'Given the upended legal landscape, and our status as a court of review, not first view, we vacate and remand so that the district court can reassess the merits.'

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