This reversal marks the second Biden-era DOL ruling change this week, since the DOL withdrew its 2022 guidance that cautioned trustees against including cryptocurrencies in 401(k) plans on Wednesday. Now, the DOL’s guidance on crypto reaffirms its neutral stance, neither endorsing, nor disapproving of, plan fiduciaries who conclude that the inclusion of cryptocurrency in a plan’s investment menu is appropriate, according to a statement.

The DOL’s ESG rule allowed that retirement fund managers may consider ESG factors when choosing investment funds. However, Republican attorneys general representing 25 states first filed suit in 2023 in a Texas federal court seeking to block the DOL rule that allows fiduciaries to consider climate change and other ESG factors when they select retirement investments, shortly after the Biden-era DOL finalized the rule.

Related: Crypto in 401(k) plans? Yes, as DOL rolls back Biden-era investment warning to fiduciaries

In the suit, the state officials alleged that the rule "undermines key protections for retirement savings of 152 million workers—approximately two-thirds of the U.S. adult population and totaling $12 trillion in assets—in the name of promoting [ESG] factors in investing, including the Biden Administration's stated desire to address climate change.”

The challenge was denied twice, most recently in February. In March 2023, the House and Senate voted to block the sustainable investing rule, which was then vetoed by President Biden – the first veto of his presidency.

The DOL’s new ESG fiduciary rule “will appear on the Department’s Spring Regulatory Agenda, and the Department intends to move through the rulemaking process as expeditiously as possible,” according to the filing. It is unclear if the DOL will rescind the 2022 final rule and restore the rule from the first Trump Administration, or issue a new rule.