50 US senators propose to overturn DOL’s new sustainable investing rule

Congress. (Photo: AP)

In the latest Republican attack on the Labor Department’s Environmental, Social and Governance rule,  49 GOP senators and one Democrat plan to re-introduce (it was first introduced in the last session of Congress) a resolution attempting to block enforcement of the regulation.

Sen. Mike Braun, R-Ind. is leading the effort, which also includes Sen. Joe Manchin, D-W.V. In the House, the attempt to block the rule is being led by Rep. Andy Barr, R-Ky.

The Biden Administration rule, which allows fiduciaries to consider climate change and other ESG issues when they evaluate retirement investments and shareholder rights, went into effect Monday.

Even though the rule is now in effect, a law, known as the Congressional Review Act, allows Congress, under certain circumstances, to nullify a rule.

Under the CRA, at the start of a new Congress, the House and Senate are permitted to review—and potentially nullify—a rule that was submitted late in the previous session of Congress. The provision was included in the law in an attempt to ensure that an administration cannot submit a rule so late that Congress does not have time to review it before going out of session.

The administration issued the rule on Nov. 22, 2022.

The co-called CRA “lookback mechanism” will allow a joint resolution to be introduced in the House. If passed, it is then sent to the Senate, which is required to hold a vote on it. The resolution could be passed with a simple majority vote.

It then would be sent to the president. Since the current administration issued the rule, President Biden would be likely to veto it. Congress could then attempt to override his veto.

In unveiling his plan, Braun accused Biden of placing retirement savings at risk.

Related: House lawmakers launch sustainable investment caucus to address ESG investing

“President Biden is jeopardizing retirement savings for millions of Americans for a political agenda. In a time when Americans’ 401(k)s have already taken such a hit due to market downturns and record high inflation, the last thing we should do is encourage fiduciaries to make decisions with a lower rate of return for purely ideological reasons,” Braun said.

Manchin, who represents a state in which the energy industry is a major employer, also endorsed the effort.

“At a time when our country is already facing economic uncertainty, record inflation and increasing energy costs, it is irresponsible of the Biden Administration to jeopardize retirement savings for more than 150 million Americans for purely political purposes,” Manchin said.

Many conservative groups also are supporting the resolution.

“There is no room for ESG when considering how to invest retirees’ life savings,” said Grover Norquist, president of Americans for Tax Reform. “Retirement plan managers should only consider pecuniary factors when making investment decisions.”

The congressional effort follows a decision by 25 Republican state attorneys general to file suit in a Texas federal court challenging the rule.