July 18 (Reuters) - A U.S. appeals court on Thursday

ordered a Texas judge to reconsider his decision upholding a

Biden administration rule that allows socially conscious

investing by employee retirement plans, in light of a major

recent Supreme Court ruling.

A group of 25 Republican-led states and oil drilling company

Liberty Energy are suing to block the U.S Department of

Labor rule. U.S. District Judge Matthew Kacsmaryk in Amarillo,

Texas, in September declined to block it, and the states and

Liberty appealed.

Kacsmaryk's decision cited 40-year-old legal doctrine known

as Chevron deference, which required courts to defer to

agencies' interpretations of unclear laws they enforced.

However, the U.S. Supreme Court last month eliminated

Chevron deference, saying courts should instead use their

independent judgment in deciding whether agency rules are valid,

significantly curtailing federal agencies' rulemaking power.

A three-judge panel of the 5th U.S. Circuit Court of Appeals

on Thursday said Kacsmaryk must now decide the case without

Chevron deference, but left the rule in place for now.

The rule, which took effect in February 2023, allows 401(k)

and other plans to consider environmental, social, and corporate

governance (ESG) factors as a "tiebreaker" between two or more

financially equal investment options. It replaced a Trump

administration rule that barred plans from considering any

non-financial factors.

The offices of the Attorneys General of Texas and Utah,

which led the states' challenge, Liberty, and the Department of

Labor did not immediately respond to requests for comment.