In our recent client alert, “Texas Federal Court Allows an ERISA Fiduciary Challenge Against Alleged “ESG Investing” Without Any ESG Funds,” we reported that a Texas district court recently upheld Biden-administration Department of Labor (DOL) rules permitting environmental, social, and governance (ESG) considerations as “tie breakers” in selecting 401(k) plan investments. The district court, following instructions from the Fifth Circuit Court of Appeals, applied a Loper Bright “post-Chevron” analysis to hold that the Biden-era rules were validly issued.
Well, easy come, easy go. The Trump administration’s DOL has informed the Fifth Circuit that it is reconsidering the ESG investing rule. In a status report filed by the DOL on May 28, 2025, in State of Utah v. Chavez-DeRemer, Docket No. 23-11097 (5th Cir. Oct 30, 2023), the DOL stated that it will “engage in new rulemaking” on this topic. The status report states that this topic will be on the DOL’s spring rulemaking agenda and that the DOL “intends to move through the rulemaking process as expeditiously as possible.”
Interestingly, one of the rationales stated in Loper Bright to reverse Chevron was that Chevron deference too often led to agencies ping-ponging rules from one administration to the next. Here, though, we have a rule that was found to have been validly issued after applying a Loper Bright framework of analysis, but we will still end up with flip-flopping agency positions driven by a change in administrations. For plan sponsors and fiduciaries, all we can do at the present is monitor the ongoing rulemaking process.