Business Group Sues Texas Officials for Blocking Firms that ‘Boycott’ Energy Companies from State Contracts

A coalition of business leaders is suing Texas’s attorney general and comptroller for enforcing a law prohibiting government entities from doing business with companies that “boycott” energy companies.

The American Sustainable Business Council (ASBC) filed the lawsuit against Comptroller Glenn Hegar (R) and Attorney General Ken Paxton (R) in an Austin federal court on Thursday, arguing that SB 13 was passed to “coerce and punish” businesses that want to reduce fossil fuels, Bloomberg reported. 

The ASBC, a nonprofit that has partnered with brands such as Ben & Jerry’s and Patagonia, states on its website that it fights climate change because it poses an “existential threat to humanity.”

SB 13, which was passed in 2021, also requires companies with ten or more full-time employees that are entering into a contract with the state government valued at $100,000 or more to verify in writing that they do not boycott energy companies. 

Under the law, Hegar publishes a list of businesses that participate in boycotting oil and gas companies so government agencies can reference it when looking to hire private firms. 

More than one dozen firms and “several hundred” individual funds are on that list, Bloomberg reported. 

The lawsuit accuses Hegar and Paxton, whom the outlet both characterized as “vocal supporters of the measure,” of infringing on “rights of free speech and association under a scheme of politicized viewpoint discrimination, based on no legitimate state interest.”

“While SB 13 is in effect, ASBC members like Etho Capital, Sphere, and others are unable to compete for business with Texas entities solely due to the content and viewpoint of their speech and the associations they choose to make,” the lawsuit argued. “The law also denies them any avenue for challenging their exclusion from this major market.”

BlackRock is one of the investment companies on the boycott list, causing the Texas Permanent School Fund to announce in March that it would divest $8.5 billion from it, Breitbart News reported.

“This is a state that has long said that it’s the business-friendly state — this law is anti-business plain and simple,” said Skye Perryman, CEO of Democracy Forward, which is representing the plaintiffs.

Similar laws have been attempted in other states, but judges have blocked their enforcement in Oklahoma and Missouri, according to Bloomberg.