Dive Brief:
- The U.S. Fifth Circuit Court of Appeals has temporarily paused legal proceedings in a case where more than two dozen states have sought to overturn a Biden-era rule allowing pension funds to consider ESG factors in their investment decisions, according to a Monday court order.
- The federal appeals court granted a 30-day pause in response to a motion for abeyance filed by the Department of Labor last week. The motion asked for legal proceedings to be suspended as the agency — now operating under the Trump administration — considers rescinding the rule entirely.
- Though the New Orleans court granted the Labor Department’s request to pause litigation, the April 28 court order noted that it “will not permit an open-ended abeyance.”
Dive Insight:
The court order directs the DOL to “inform this court within 30 days from the date of this order 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.”
The order gives the Labor Department until May 28 to inform the federal appeals court of its decision.
Last week’s motion for abeyance was filed in an appeal from 26 Republican state attorneys general who have opposed the regulation since 2023. The case was brought back before the appeals court after a federal district court judge ruled for the second time that the regulation was permissible under the Employment Retirement Income Security Act of 1974.
The case was initially tossed by Northern Texas District Court Judge Matthew Kacsmaryk in September 2023, whose dismissal relied on the now-overturned Chevron Doctrine. The doctrine historically allowed courts to give agencies deference in interpreting ambiguous statutes.
Kacsmaryk’s 2023 decision was then challenged in court by the over two dozen Republican attorneys general. Consequently, the Fifth Circuit, after hearing arguments from the plaintiffs — which also included public oilfield services company Liberty Energy — and the Biden administration, remanded the case back to Kacsmaryk for a review in light of the doctrine’s overturn.
The case remained on the Fifth Circuit’s docket pending Kacsmaryk’s narrow ruling, and the Labor Department requested an extension to file supplemental briefs in March.
The DOL, now under a new leadership, told the appeals court in its April 21 motion for abeyance that suspending the legal proceedings would “greatly conserve the litigants’ and the court’s resources,” and that if the agency decides the rescind the rule, it would preclude the need for any litigation at all.
