Last week, the Fifth Circuit Court of Appeals vacated and remanded the appeal from a lower court's decision upholding the Biden Administration's Department of Labor rule enabling ERISA plans to consider ESG factors, ordering that the federal district court reconsider its ruling in light of the Supreme Court's recent overturning of the Chevron doctrine in Loper Bright Enterprises v. Raimondo. Even though the Department of Labor had not relied upon the Chevron doctrine in its briefing of the appeal, the lower court's original decision, awarding summary judgment to the government, had focused on the Chevron doctrine.
Although the federal district court (N.D. Tex.) and the Fifth Circuit have yet to opine on the merits of the Department of Labor's ESG rule, the change in federal jurisprudence renders it less likely that the rule will survive legal challenge, paring back the Biden Administration's regulatory actions in favor of ESG principles. This result serves as yet another demonstration of the far-reaching effects of the Supreme Court's recent disavowal of the Chevron doctrine, and how this can impact a plethora of federal regulations.
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