(Reuters) — A coalition of Republican-led states has asked a federal judge to block a Biden administration rule allowing pension plans to consider environmental, social and corporate governance factors when choosing investments pending the outcome of their legal challenge.
The 25 states, in a motion filed Tuesday in Amarillo, Texas, said the rule, which took effect Jan. 30, could cause millions of Americans to lose retirement investments and hurt state finances.
The lawsuit claims the rule violates the federal law governing employee pension plans by allowing them to focus on social issues rather than long-term financial stability.
A subsidiary of oil drilling company Liberty Energy Inc. and an oil and gas trading group are also plaintiffs in the case.
The US Department of Justice did not immediately respond to a request for comment.
The Biden administration has moved to transfer the lawsuit to another court, accusing the states of engaging in judge shopping.
The sole judge in the Amarillo court is U.S. District Judge Matthew Kacsmaryk, whose courthouse has become a favorite destination for Republicans seeking to challenge aspects of President Joe Biden̵7;s agenda.
Judge Kacsmaryk, an appointee of Republican former President Donald Trump, previously struck down the Biden administration’s rules on immigration and health care protections for LGBTQ people.
The states have not responded to the administration’s motion.
The ESG rule makes it easier for pension plans to invest in socially responsible funds and companies, although it also requires traditional financial considerations. The rule covers plans that collectively invest $12 trillion on behalf of more than 150 million people.
The states challenging the rule, led by Texas and Utah, said in Tuesday’s filing that it would lead to lower tax revenues and inhibit economic activity by reducing investment in the fossil fuel industry.
“A rule of such great economic and political importance requires clear authorization from Congress, which is not here,” they said.