Utah v. Chavez-DeRemer

In an appeal of a district court decision upholding a 2022 final rule that allows Employee Retirement Income Security Act of 1974 (ERISA) fiduciaries to consider “collateral benefits” such as environment, social, and governance (ESG) factors “when deciding between competing investment options that each equally served the beneficiaries’ financial interests,” the federal government informed the Fifth Circuit Court of Appeals on May 28, 2025 that the U.S. Department of Labor had decided to “engage in a new rulemaking on the subject of the challenged rule.” The government said the rulemaking would be included in the Labor Department’s Spring Regulatory Agenda and that “the Department intends to move through the rulemaking process as expeditiously as possible.”

On April 28, the Fifth Circuit granted the motion “but for 30 days only” and stated that it would “not permit an open-ended abeyance.” The Fifth Circuit directed the Department of Labor to inform the court within 30 days about what “specific actions the Department will take, if any, as a result of its reconsideration of the challenged rule—either to maintain the rule or to rescind it.”

On April 21, 2025, the U.S. Department of Labor asked the Fifth Circuit Court of Appeals to hold in abeyance an appeal from a district court’s February 2025 decision upholding a 2022 final rule that allows Employee Retirement Income Security Act of 1974 (ERISA) fiduciaries to consider “collateral benefits” such as environment, social, and governance (ESG) factors “when deciding between competing investment options that each equally served the beneficiaries’ financial interests.” The Department of Labor informed the court that it had determined “that it intends to reconsider the challenged rule, including by considering whether to rescind the rule.”

The federal district court for the Northern District of Texas again upheld the U.S. Department of Labor’s final rule allowing Employee Retirement Income Security Act of 1974 (ERISA) fiduciaries to consider “collateral benefits” such as environment, social, and governance (ESG) factors “when deciding between competing investment options that each equally served the beneficiaries’ financial interests.” The court initially upheld the rule in September 2023 based on application of Chevron deference. The Fifth Circuit remanded the case in July 2024 for reconsideration after the Supreme Court overruled Chevron in Loper Bright Enterprises v. Raimondo. On remand, the district found that the final rule’s “tiebreaking provision” did not violate ERISA’s text—which requires fiduciaries to act “solely” in the participants’ and beneficiaries’ interest and for the “exclusive purpose” of providing benefits to these parties—because the regulation “never permits fiduciaries to deviate from exclusively achieving financial benefits for the beneficiaries alone.”

Twenty-seven states, two companies, an energy producers trade group, and two individual plaintiffs appealed a decision by the federal district court for the Northern District of Texas upholding the U.S. Department of Labor’s 2022 amendments of its Investment Duties regulation, which included provisions clarifying that employee benefit plan fiduciaries may consider environmental, social, and governance (ESG) factors such as climate change in risk and return analyses for investment decisions.