A group of Republican-led U.S. states has asked a federal judge in Texas to strike down a Biden administration rule allowing socially conscious investing by retirement plans, saying it will imperil Americans' retirement savings.
Lawyers for the 25 states led by Utah and Texas said in a filing in Amarillo, Texas, federal court late Tuesday that the U.S. Department of Labor failed to justify its departure from a Trump-era rule that limited investing based on environmental, social and corporate governance (ESG) factors.
The states sued in January and in February had asked the judge to temporarily block the rule pending the outcome of the case. The judge has not yet ruled on that bid, and in Tuesday's filing, the states asked the judge to rule on the merits of their lawsuit.
The U.S. Department of Justice, which is defending the rule, did not immediately respond to a request for comment.
The Labor Department has said the Trump-era rule, which was criticized by business groups and the financial industry, failed to account for the positive impact that ESG investing can have on long-term returns. Business groups said the Trump administration rule was unnecessary and confusing for investment managers.
The new rule covers plans that collectively invest $12 trillion on behalf of 150 million Americans.
Congress voted in March to repeal the rule but Democratic President Joe Biden rejected the proposal in the first veto of his presidency.
The case has been assigned to U.S. District Judge Matthew Kacsmaryk, a conservative appointee of former Republican President Donald Trump whose courthouse has become a favored destination for Republicans challenging various aspects of the Biden administration's agenda.
