By Daniel Wiessner
(Reuters) – The Biden administration has asked a federal judge to dismiss a lawsuit brought by Republican-led states seeking to strike down a rule allowing socially responsible investments by employee pension plans.
On Friday, the US Department of Justice, in a filing in federal court in Amarillo, Texas, said the rule was needed to replace inappropriate limitations the Trump administration had imposed on the consideration of factors environmental, social and corporate governance (ESG) considerations in making investment decisions.
A 25-state coalition led by Utah and Texas filed a lawsuit in January, saying the US Department of Labor rule would jeopardize the retirement savings of millions of Americans by allowing investments based on political agendas rather than financial considerations.
The states last month requested a ruling permanently blocking the rule, which went into effect Jan. 30.
The Biden administration said Friday that the rule makes it clear that pension plans should base their decisions primarily on financial factors. But unlike the Trump-era rule, it also recognizes that issues such as climate change and social justice can impact the long-term financial health of businesses, the Justice Department said.
The offices of Utah Attorney General Sean Reyes and acting Texas Attorney General John Scott did not immediately respond to requests for comment.
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 vetoed the proposal.
The case was assigned to U.S. District Judge Matthew Kacsmaryk, a conservative appointee of former Republican President Donald Trump, whose courthouse has become a favorite destination for Republicans challenging various aspects of the Biden administration’s agenda. .
Kacsmaryk has not scheduled a hearing on the pending motions.
In March, the judge rejected the Biden administration’s claim that the states were improperly “judge buying” by filing a lawsuit in Amarillo, where Kacsmaryk is the only judge.
(Reporting by Daniel Wiessner in Albany, New York, editing by Alexia Garamfalvi and Chizu Nomiyama)