Description: Challenge to the U.S. Department of Labor's amendment of the Investment Duties regulation governing private-sector benefit plans.
Utah v. Walsh
Filing Date Type File Action Taken Summary 01/26/2023 Complaint Download Complaint filed. Lawsuit Said Department of Labor’s Investment Duties Rule Unlawfully Allowed Fiduciaries to Consider Nonpecuniary Factors Including Climate Change. Twenty-five states, an energy company and its subsidiary, an oil and gas trade group, and an individual plaintiff filed a lawsuit in the federal district court for the Northern District of Texas challenging a rule adopted by the U.S. Department of Labor in 2022 that amended the Investment Duties regulation governs private-sector employee benefit plans under the Employee Retirement Income Security Act of 1974 (ERISA), replacing two rules promulgated by the Trump administration in late 2020. The plaintiffs alleged that the 2022 rule “undermines key protections for retirement savings of 152 million workers … in the name of promoting environmental, social, and governance (‘ESG’) factors in investing, including the Biden Administration’s stated desire to address climate change.” The plaintiffs asserted that the 2022 rule contravened ERISA’s “clear command that fiduciaries act with the sole motive of promoting the financial interests of plan participants and their beneficiaries” by authorizing fiduciaries to select investments “based on collateral benefits other than investment returns” and allowing the exercise of proxy rights to “promote non-pecuniary benefits or goals unrelated to [the] financial interests of the plan participants and beneficiaries.” The plaintiffs also contended that the major questions doctrine precluded the Labor Department from authorizing or mandating ERISA fiduciaries to consider nonpecuniary factors such as climate change. In addition, the plaintiffs asserted that the 2022 rule was an arbitrary and capricious exercise of administrative power.