By Daniel Wiessner
Jan 27 (Reuters) – A 25-state coalition led by Texas and Utah filed a lawsuit to overturn a Biden administration rule that allows pension plans to take environmental, social and governance factors ( ESG) such as climate change and racial justice select investments.
The states filed a complaint Thursday in federal court in Amarillo, Texas, arguing that the rule passed in November will cause many retirement plans to focus on a social agenda rather than long-term financial stability for investors.
The rule, which goes into effect Monday, reverses restrictions on socially conscious investing issued by the Trump administration.
The states in Thursday’s lawsuit said the new rule does not justify departing from Trump-era regulations, which violates federal rulemaking statutes.
And, states say, it violates US law that governs employee pension plans by failing to protect retirement savings.
The U.S. Department of Labor, which passed the rule, and the White House did not immediately respond to requests for comment on Friday.
Texas Attorney General Ken Paxton, a Republican, called the rule “offensive and illegal” in a statement.
“For generations, federal law has required trustees to put their clients’ financial interests first, and I intend to fight the Biden administration in court to ensure it cannot jeopardize the retirement savings of hard-working Americans,” Paxton said.
The lawsuit was assigned to US District Judge Matthew Kacsmaryk, a Trump-appointed official who overturned the Biden administration’s rules on immigration and LGBT health protections.
The case is Utah v. Walsh, United States District Court for the Northern District of Texas, No. 2:23-cv-00016. (Reporting by Daniel Wiessner in Albany, New York; Editing by Alexia Garamfalvi and Jonathan Oatis)
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