Compliance May 30, 2025

DOL Announces Intentions to Craft New ESG Retirement Investing Rule

In April the department stated it was considering rescinding the 2022 ESG rule and asked the 5th Circuit to pause its consideration of an appeal of a lower court’s dismissal of a lawsuit challenging that rule.

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The Department of Labor will publish a new rule concerning retirement plan fiduciaries’ consideration of environmental, social and governance factors when selecting plan investments, according to a filing with the U.S. 5th Circuit Court of Appeals on Wednesday.

“The department has determined that it will engage in a new rulemaking on the subject of the challenged rule,” the DOL stated in its filing as part of an appeal in a case originally filed as Utah v. Walsh, challenging the rule. “This rulemaking will appear on the Department’s Spring Regulatory Agenda, and the Department intends to move through the rulemaking process as expeditiously as possible.”

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The letter follows a previous court filing in April, in which the department stated it was considering rescinding the 2022 ESG rule and asked the 5th Circuit to pause its consideration of an appeal of a lower court’s dismissal of a lawsuit challenging that rule.

The reversal marks the second change to a Biden-era DOL retirement plan investment rule this week, after the department said it was resetting its stance to “neutral” regarding cryptocurrency investment options in 401(k) plans, rescinding a 2022 rule that urged plan sponsors to exercise “extreme care” when offering such investments.

The DOL’s letter to the 5th Circuit Court of Appeals effectively ends the Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights rule finalized during the Biden administration in 2022 that took effect in January 2023.

The rule itself did not mandate that plan sponsors consider ESG factors when making investment decisions, but encouraged them to use ESG considerations as a “tiebreaker” if two investment options offered the same rate of return.

When the rule went into effect, 26 Republican attorneys general and several conservative interest groups challenged the rule in U.S. District Court for the Northern District of Texas, Amarillo Division, arguing it violated the DOL’s authority under the Employee Retirement Income Security Act of 1974.

U.S. District Judge Matthew Kacsmaryk denied the challenge twice, most recently in February. Thursday’s filing could end the litigation.

The soon-to-be-updated DOL rule will likely resemble the previous rule implemented during President Donald Trump’s first term, which said fiduciaries needed to consider only “pecuniary factors” when making investment decisions.

Compliance May 30, 2025

EBSA Head Nomination Hearing Scheduled for June 5

The hearing, for Daniel Aronowitz as assistant secretary of labor for the Employee Benefits Security Administration, was scheduled by the Senate Committee on Health, Education, Labor and Pensions.

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The U.S. Senate Committee on Health, Education, Labor and Pensions has scheduled its nomination for June 5 on the nominee to be assistant secretary of labor for the Employee Benefits Security Administration.

In February, President Donald Trump nominated Daniel Aronowitz to serve in the position; Lisa Gomez, the previous assistant secretary of labor for EBSA, had resigned after Trump’s inauguration.

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After his nomination, Aronowitz wrote on his LinkedIn profile that, if confirmed, he would “work hard to protect the retirement and health security of American workers.”

EBSA enforces the Employee Retirement Income Security Act of 1974 and related regulations, safeguarding employer-sponsored retirement, health and welfare benefits for workers and retirees. Its head requires confirmation by the committee and then by the full Senate.

Aronowitz is the president of Encore Fiduciary, which insures employers against liability for alleged violations of their fiduciary duty as sponsors of defined benefit plans. His firm has tracked ERISA-related litigation for about a decade, and he has served as president of Encore Fiduciary for more than 13 years.

In January, Aronowitz co-authored an article, stating that ERISA excessive fee litigation proliferated in 2024, in part because of a surge in plan forfeiture suits, which have continue to be filed with frequency so far this year.

The June 5 hearing also will consider nominations for three other deputy secretary roles: two at the Department of Education and another at the Department of Labor.

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