US Supreme Court ruling on agency powers may impact Biden ESG investing rule
By Daniel Wiessner
(Reuters) — An impending U.S. Supreme Court ruling that could curb the regulatory powers of federal agencies may play a critical role in a challenge by Republican-led states to a rule issued by President Joe Biden's administration allowing socially conscious investing by employee retirement plans, according to a new court filing.
The 26 states, led by Utah and Texas, asked a U.S. appeals court late on Thursday to wait to decide whether to block the U.S. Department of Labor rule until the Supreme Court issues its decision on agency powers, expected by the end of June.
The Supreme Court on Wednesday heard arguments in a dispute involving a government-run program to monitor for overfishing of herring off New England's coast. Two fishing companies asked the justices to restrict or overturn the Supreme Court's 1984 legal precedent requiring judges to defer to reasonable federal agency interpretations of U.S. laws deemed to be ambiguous, a doctrine called "Chevron (NYSE:CVX) deference."
Texas-based U.S. District Judge Matthew Kacsmaryk, presiding over the lawsuit challenging the investing rule, said in September that the U.S. law governing retirement plans was unclear on whether such plans could consider environmental, social and corporate governance (ESG) factors in making investment decisions.
The Labor Department's view that plans can weigh those factors as long as they prioritize traditional financial considerations was reasonable, Kacsmaryk said in declining to block the rule pending the outcome of the lawsuit.
The states on Thursday filed a brief with a New Orleans-based 5th U.S. Circuit Court of Appeals seeking to reverse Kacsmaryk's decision. They said Chevron deference does not apply to the case
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