Fifth Circuit Appears Skeptical of Invalidating …

Fifth Circuit Appears Skeptical of Invalidating ESG Rule Despite the Fall of Chevron | Hall Benefits Law

During oral arguments in State of Utah v. Su, a U.S. Court of Appeals for the Fifth Circuit panel expressed skepticism about reversing a district judge s decision upholding an ESG rule under the APA. The conservative states and Texas-based energy interests challenged the rule, claiming it conflicted with ERISA. The panel also considered the implications of the Supreme Court s 2024 Loper Bright Enterprises v. Raimundo decision, which overturned the Chevron deference doctrine. The judges indicated that remanding the case for reconsideration in light of Loper was more likely than reevaluating the ESG rule s legality. The tiebreaker test from the 2022 rule, which allows ERISA plan managers to use ESG factors when choosing between equivalent investment options, was a focal point of discussion. Challengers argued that the test was not ERISA-based and should not be used to break ties, while the Department of Labor (DOL) maintained that fiduciaries should have the discretion to act in the best interest of the plan. Overall, the Fifth Circuit panel appeared inclined to remand the case for further examination, taking into account the recent Supreme Court ruling and the contentious tiebreaker test within the ESG rule. The panel s skepticism towards invalidating the ESG rule suggests a cautious approach, potentially preserving the rule s validity despite the Chevron doctrine s overturning.

Source: jdsupra.com
Published on 2024-09-23

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