Congressional Review Act seeks to overturn ESG investment rule for federal pension plans

A Congressional Review Act (CRA) measure has been introduced in the US House and Senate by Representative Andy Barr (R-KY) and Senator Mike Braun (R-IN) to nullify the Department of Labor’s recently finalized rule that allows for environmental, social and governance (ESG) investing in federal pension plans.

Why it matters

Under the CRA, Congress has the power to review and reject new regulations issued by federal agencies. If both the House and Senate pass a resolution of disapproval and it is signed by the President, the disapproved rule “shall not take effect (or continue)”. The CRA was last used in the early days of the Trump administration to overturn Obama-era regulations related to state-run IRA programs and ERISA.

In a press release, the ESG regulation was described as “threatening the returns and financial security of unwitting federal employees whose retirement funds will likely be invested in higher fee, less diversified, and lower performing ESG-tethered instruments in the name of woke politics.” However, it should be noted that federal employees’ retirement plans would not be subject to the regulation, as it only applies to ERISA plans.