A federal appeals court ordered a judge on Thursday to reconsider blocking a Biden administration rule that allows environmental, social and governance (ESG) investing in employee retirement plans following a landmark Supreme Court ruling.
The Fifth Circuit Court of Appeals ruled that a Texas judge must reconsider a decision upholding a Department of Labor rule, which took effect in February 2023 and allows retirement plans to consider factors like racial justice and climate change when investing to break ties in options of equal quality. The appellate court sent back the ruling because it relied on a legal doctrine called Chevron deference, which the Supreme Court overturned in June.
Chevron deference previously required courts to defer to the interpretation of a government agency when the language in a given statute was considered ambiguous. The Supreme Court overturned that precedent in June by issuing its decision in Loper Bright Enterprises v. Raimondo, which found that courts must be permitted to weigh in on the meaning of legal language rather than accepting bureaucratic interpretations without question.
“In upholding the Department of Labor’s reading, the district court relied upon the decades-old Chevron deference doctrine,” Fifth Circuit Judge Don R. Willett wrote in the order. “Given the upended legal landscape, and our status as a court of review, not first view, we vacate and remand so that the district court can reassess the merits.”
The Fifth Circuit ruling left the ESG rule in place and required the Texas judge to reconsider its merits without applying Chevron deference, according to the court filings. A coalition of 25 Republican-led states and an oil drilling company were the initial challengers to the rule.
“The Biden administration’s new rule jeopardizes the financial security of many retirement savers, especially workers and retirees who may be put into ESG investments by default,” Republicans on the House Labor Committee said in a statement around the time the ESG rule was announced, Reuters reported.
“ESG has created an uncontrollable impulse to pressure corporations to solve complex global and societal issues,” Utah State Treasurer Marlo Oaks said of ESG investments in a statement to the House Committee on Ways and Means in November. “These issues, such as climate, income inequality, guns and abortion to name just a few, should be in the purview of a democratically elected government. ESG hijacks corporate governance to advance ideological objectives often divorced from and often detrimental to long-term shareholder value.”
The Department of Labor did not immediately respond to the Daily Caller News Foundation’s request for comment.
All content created by the Daily Caller News Foundation, an independent and nonpartisan newswire service, is available without charge to any legitimate news publisher that can provide a large audience. All republished articles must include our logo, our reporter’s byline and their DCNF affiliation. For any questions about our guidelines or partnering with us, please contact [email protected].
