A federal appeals court on Thursday ordered a judge to reconsider blocking a Biden administration rule allowing environmental, social and governance (ESG) investments in employee retirement plans, following a Supreme Court ruling.
The 5th U.S. Circuit Court of Appeals ruled that a Texas judge must reconsider her decision upholding a Department of Labor rule that takes effect in February 2023 and allows retirement plans to consider factors like racial justice and climate change when investing and to break ties with options of equal quality. The appeals court remanded the decision because it relied on a doctrine called Chevron deference, which the Supreme Court overturned in June.
The Chevron deference previously required courts to defer to agency interpretations when the language of a particular statute was deemed ambiguous. The Supreme Court overturned that precedent in its June decision in Loper Bright Enterprises v. Raimondo, ruling that courts must be allowed to make judgments about the meaning of legal language rather than blindly accepting bureaucrats' interpretations. (Related article: Americans are already fighting back against permanent bureaucracy just days after landmark Supreme Court decision)
“In affirming the Department of Labor's decision, the district court relied on decades of Chevron deference,” Judge Don R. Willett of the Fifth Circuit wrote in his order. “Given the dramatically changed legal situation and our position as a reviewing court rather than a trial court, we vacate and remand so that the district court can reevaluate the factual circumstances.”
The U.S. Department of Labor Headquarters at dusk in Washington, DC on June 21, 2024. (Photo by J. David Ake/Getty Images)
The 5th Circuit ruling left the ESG rule in place and asked a Texas judge to reconsider it without applying the Chevron ruling, according to court documents. The original challengers to the rule were a Republican-led coalition of 25 states and oil drilling companies.
“The Biden Administration's new rules put at risk 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 rules were announced. Reuters report.
“ESG has created an uncontrollable drive to pressure companies to solve complex global and societal problems,” said Utah Treasurer Marlo Oakes. Said In a statement to the House Ways and Means Committee in November, he called for a ban on ESG investing: “Whether it's climate, income inequality, guns, or abortion, these issues should be the domain of democratically elected governments. ESG has hijacked corporate governance to advance ideological agendas that are often separate from and undermine long-term shareholder value.”
The Department of Labor did not immediately respond to a request for comment from the Daily Caller News Foundation.
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