Department of Labor
Note: On January 20, 2025, President Trump issued a memorandum instituting a regulatory freeze, preventing agencies from issuing proposals or rules pending review by Trump-appointed agency heads. On January 31, 2025, President Trump issued Executive Order 14192, directing agencies to identify 10 existing regulations to eliminate for each new regulation they promulgate.
Standards for Considering Climate Change in Retirement Plan Investment Decisions
Section 404 of the Employee Retirement Income Security Act (“ERISA”) retirement plan establishes standards governing private-sector employee benefit plans, including fiduciary responsibility rules that require plan fiduciaries to act prudently. (29 U.S.C. 1104). The Department of Labor is empowered, under ERISA § 505, to promulgate regulations to give effect to the statute. (29 U.S.C. 1135).
On December 1, 2022, the Department of Labor issued a Final Rule confirming that retirement plan managers can act “prudently”—as required by and elaborated on in ERISA—while also considering climate change factors as those managers select investments. (87 Fed. Reg. 73822, Dec. 1, 2022).
The rule does not require climate-focused investment decisions; instead, it is designed to confirm that plan managers may consider the economic effects of climate change as risk and return factors, and may give those considerations the weight they deem reasonable when making decisions on a particular investment. Further, the regulation clarifies that when competing investment strategies will serve the plan’s goals equally well, the plan’s manager “is not prohibited from selecting the investment, or investment course of action, based on collateral benefits other than investment returns” so long as the manager does not “accept expected reduced returns or greater risks to secure such additional benefits.”
This regulation is subject to pending litigation. (See Utah v. Walsh in "Litigation" below).
Biden Administration (2021-2025)
Regulation on Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights
On December 1, 2022, the Department of Labor issued a Final Rule confirming that retirement plan managers can act “prudently”—as required by and elaborated on in ERISA—while also considering climate change factors as those managers select investments. (87 Fed. Reg. 73822, Dec. 1, 2022).
The rule does not require climate-focused investment decisions; instead, it is designed to confirm that plan managers may consider the economic effects of climate change as risk and return factors, and may give those considerations the weight they deem reasonable when making decisions on a particular investment. Further, the regulation clarifies that when competing investment strategies will serve the plan’s goals equally well, the plan’s manager “is not prohibited from selecting the investment, or investment course of action, based on collateral benefits other than investment returns” so long as the manager does not “accept expected reduced returns or greater risks to secure such additional benefits.”
This regulation was proposed on October 14, 2021, to reverse Trump Administration regulations that could have restricted the ability of ERISA fiduciaries to consider climate change when structuring their investment strategies. (86 Fed. Reg. 57272, Oct. 14, 2021). Instead, it returns to the preexisting standards, which allow ERISA fiduciaries to consider a range of factors when selecting investments and exercising shareholder rights, so long as fiduciaries do not increase plan risk or reduce plan returns.
- Final Rule (87 Fed. Reg. 73822, Dec. 1, 2022)
- Proposed Rule (86 Fed. Reg. 57272, Oct. 14, 2021)
This regulation is subject to pending litigation. (See Utah v. Walsh in "Litigation" below).
Trump Administration (2017-2021)
Regulation Limiting Consideration of Climate Change in Selecting ERISA Plan Investments
On November 13, 2020, the Department of Labor finalized a rule limiting the extent to which retirement plan managers could consider investments’ climate impacts while still meeting ERISA’s prudence standard. (85 Fed. Reg. 72846, Nov. 13, 2020). The rule specified that “ERISA fiduciaries must evaluate investments and investment courses of action based solely on pecuniary factors,” and added documentation requirements for situations where a plan manager might conclude that climate change factors merited changing investment strategy. Before this rule was finalized, the Department of Labor had relied on non-regulatory guidance to permit ERISA fiduciaries to conduct investment and shareholder rights activities in a manner that reflected climate change and other considerations.
Litigation
Utah v. Walsh
On January 26, 2023, in Utah v. Walsh, No. 23-cv-16 (Jan. 26, 2023, N.D. Tex.), state attorneys general led by Texas and Utah, sued to prevent the 2022 Rule from taking effect. The plaintiffs contended, among other arguments, that the rule’s flexibility is in conflict with the strictness of ERISA’s statutory mandate that managers make decisions “for the exclusive purpose of providing benefits to participants and their beneficiaries.” 29 U.S.C. § 1104. They further argued that the scale of the funds affected by the rule suggests that a change of this kind should fall under the major questions doctrine.
The trial court upheld the rule, and the plaintiffs appealed. On July 18, 2024, the Fifth Circuit vacated that judgment and sent the case back to the trial court to be reconsidered in light of the Supreme Court’s decision Loper-Bright Enterprises v. Raimondo.
- See Utah v. Walsh, No. 23-cv-16 (Jan. 26, 2023, N.D. Tex.)
Heat Injury and Illness Prevention in Outdoor and Indoor Work Settings
The Occupational Safety and Health Act authorizes the Department of Labor “to set mandatory occupational safety and health standards applicable to businesses affecting interstate commerce.” 29 U.S.C. 651(b)(3). Standards promulgated under this section must be both technologically feasible (see UAW v. OSHA, 37 F.3d 665, 668 (D.C. Cir. 1994)), and economically feasible (see Forging Indus. Ass'n v. Secretary of Labor, 773 F.2d 1436, 1453 (4th Cir. 1985)).
On August 30, 2024, the Occupational Safety and Health Administration (“OSHA”) issued a proposed rule designed to increase protections for workers exposed to extreme heat in indoor and outdoor settings. (89 Fed. Reg. 70698, Aug. 30, 2024).
Biden Administration (2021-2025)
Heat Injury and Illness Prevention in Outdoor and Indoor Work Settings
On August 30, 2024, the Occupational Safety and Health Administration (“OSHA”) issued a proposed rule designed to increase protections for workers exposed to extreme heat in indoor and outdoor settings. (89 Fed. Reg. 70698, Aug. 30, 2024). As proposed, the rule would require an acclimatization period for workers starting jobs that expose them to high heat, regular paid rest breaks, access to shade for outdoor workers and air conditioning for indoor workers, training on recognizing and responding to heart-related illness, or some combination of those measures, depending on the nature of the work and the heat hazard.
- Proposed Rule (89 Fed. Reg. 70698, Aug. 30, 2024)
- Advanced Notice of Proposed Rulemaking (86 Fed. Reg. 59309, Oct. 27, 2021)
Climate Adaptation and Resilience Planning
On January 27, 2021, President Biden signed Executive Order 14008 (Tackling the Climate Crisis at Home and Abroad). This executive order signaled that climate change would be a priority in policy-making across the federal government, established a number of new offices, and instructed agency heads to take steps toward developing climate policies. Section 211 of the Executive Order directed each agency to develop a draft action plan that describes steps the agency can take with regard to its facilities and operations to bolster adaptation and increase resilience to the impacts of climate change.
Beginning in 2021, the Department of Labor began publishing climate action, climate adaptation, and climate resilience plans that describe the Department’s actions to address climate change. The plans describe the agency’s structure, identify key decisionmaking officials, and lay out actions the Department is taking with respect to climate change. The plans respond to President Biden’s calls for an all-of-government approach to responding to climate change as articulated in Executive Order 14008 (Tackling the Climate Crisis at Home and Abroad), along with Executive Order 14030 (Climate-Related Financial Risk) and Executive Order 14057 (Catalyzing Clean Energy Industries and Jobs Through Federal Sustainability).
On June 17, 2024, the Department of Labor released its 2024-2027 Climate Adaptation Plan. The Department's plan outlines "five essential adaptation priorities":
- Ensuring Worker Safety
- Strengthening Facility and Campus Resilience
- Adaptive Workforce Training
- Community Economic Resilience
- Procurement and Acquisition Resilience
Biden Administration (2021-2025)
2024-2027 Climate Adaptation Plan
On June 17, 2024, the Department of Labor released its 2024-2027 Climate Adaptation Plan. The Department's plan outlines "five essential adaptation priorities":
- Ensuring Worker Safety
- Strengthening Facility and Campus Resilience
- Adaptive Workforce Training
- Community Economic Resilience
- Procurement and Acquisition Resilience
2022 Climate Adaptation Progress Report
In October of 2022, the Department of Labor released a 2022 Climate Adaptation Progress Report, which outlined the steps the Department had taken to implement the 2021 Climate Action Plan.
2021 Climate Action Plan
On October 7, 2021, twenty-three federal agencies, including the Department of Labor, released plans detailing how they will adapt to climate change and increase resilience to climate change impacts. The plans include a variety of resiliency and adaptation measures, including steps to develop a more resilient supply change, to enhance protections for workers and communities, and to increase climate literacy and leadership within Federal agencies.
As part of this initiative, the Department of Labor issued its “Climate Action Plan,” which attempts to "identif[y] key vulnerabilities, resilience opportunities, priority adaptation actions, and procurement challenges" for the Department.
Prior to publication, in September 2021 this plan was submitted to and reviewed by the National Climate Task Force, White House Council on Environmental Quality’s Federal Chief Sustainability Officer, and the Office of Management and Budget.
First Trump Administration (2017-2021)
Executive Order Revoking Order Preparing the United States for Climate Change
On March 28, 2017, President Trump issued Executive Order 13783 (Promoting Energy Independence and Economic Growth). Among other directives, E.O. 13783 revoked President Obama's EO 13653 (Preparing the United States for Climate Change).
Obama Administration (2009-2017)
Executive Order on Environmental, Energy, and Economic Performance
On October 5, 2009, President Obama issued Executive Order 13514 (Federal Leadership in Environmental, Energy, and Economic Performance), which instructs federal agencies to set or achieve various emissions reduction and energy and environmental benchmarks by 2015, 2020, and 2030. Among other directions, E.O. 13514 required each agency to evaluate agency climate change risks and vulnerabilities and to identify and manage the effects of climate change on the agency’s operations and mission in both the short and long term.