House, Senate Vote to Repeal Department of Labor Rule on ESG Investment
This month, the U.S. House of Representatives and the U.S. Senate used the Congressional Review Act (CRA) to block a Department of Labor (DOL) rule that allows ERISA-regulated fiduciaries greater flexibility and leeway to consider ESG factors and explicitly allows for the consideration of certain ESG factors that are financially relevant to an investment’s risk-return analysis. The DOL released the final rule in November 2022 amid Republican protest. The CRA allows Congress to repeal a final rule issued by a federal agency within 60 legislative days of its going into effect via a simple majority in both chambers. The resolution passed the House along mostly party lines with only one Democrat voting with the Republican majority. In the Senate, Senators Jon Tester (D-MT) and Joe Manchin (D-WV) voted to repeal the DOL’s rule. In response to the resolution, President Biden exercised his first veto ensuring the resolution would fail, as House Republicans do not have the two-thirds majority required to override a presidential veto.
Click here to read a client alert from Morgan Lewis covering the attempted rollback of the DOL’s ESG rule.