The 2022 Conservative Political Action Conference (CPAC) is held in Dallas
Texas Attorney General Ken Paxton takes the stage to speak at the Conservative Political Action Conference (CPAC) in Dallas, Texas, U.S., August 5, 2022. Reuters

Republican-led U.S. states have added a new plaintiff to their lawsuit challenging a rule that allows socially conscious investing by employee retirement plans, in a bid to thwart the Biden administration's attempt to wrest the case away from a conservative judge.

The states on Tuesday filed an amended complaint in an Amarillo, Texas, federal court where they had filed the lawsuit in January, adding a business owner who lives in the city, which they said should erase any doubt that the case belongs there.

The Biden administration last month accused the states of "judge shopping" by filing the lawsuit in Amarillo. The only sitting judge there is U.S. District Judge Matthew Kacsmaryk, an appointee of former Republican President Donald Trump. Kacsmaryk's court has become a favored destination for Republicans challenging Biden administration regulations.

The 25 states say a U.S. Department of Labor rule allowing retirement plans to consider environmental, social and corporate governance (ESG) factors in selecting investments will jeopardize retirement savings and should be struck down.

The U.S. Department of Justice, which is defending the rule, did not immediately respond to a request for comment. The government has said the rule is valid because it still requires retirement plans to put financial considerations ahead of ESG factors.

In a motion to transfer the case last month, the Biden administration said states can only file lawsuits in federal courts located in their capital cities. Texas is a plaintiff in the lawsuit, but the administration said it is only a "resident" of Austin, its capital.

The states on Tuesday said the addition of Alex Fairly, who owns a medical billing negotiation firm and lives in Amarillo, moots the motion to transfer the case.

And the Biden administration does not need to seek a transfer over concerns about Kacsmaryk's partiality, they said.

"Any public interest in impartial consideration of cases is protected by statutes requiring recusal if a judge can reasonably be believed to be biased or prejudiced," the states said.

The filings came on the same day that the U.S. House of Representatives voted to repeal the ESG rule. A Senate vote is scheduled for Wednesday, but Republicans are unlikely to muster the votes to overcome a veto by Democratic President Joe Biden.

The Justice Department has moved to transfer at least two other cases brought by Republican Texas Attorney General Ken Paxton that were assigned to Trump-appointed judges.