Texas law makes selling oil illegal — and that’s causing trouble

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Texas really wants to protect its fossil fuel industry. First, in September 2021, the state voted Senate Bill 13, which bans any operating Texas company from contracting with or investing in companies that divest oil, natural gas, and coal. Essentially: Texas law prohibits anyone from financially boycotting fossil fuel companies.

Adding another layer to the madness, Texas comptroller Glenn Hegar this week sent letters to 19 investment firms to determine if they were violating this new state law — and this is just the beginning! The office plans to send more than 100 Additionally Letters to determine who is refusing to dump their hard-earned dollars into Big Oil and are struggling to follow those championing a zero-emission future.

If you’re doing business in Texas, you better not divest yourself of fossil fuels, or you won’t get any of that decadent Texan funding that has sustained so many Texan companies for a very long time. That the message will be pounded out by the State Comptroller’s Office.

According to a press release, “The law prohibits Texas state agencies investing funds from investing in financial companies that boycott energy companies.” The letters sent from Hegar’s office include requests for listings of mutual funds or exchange-traded funds (ETFs) in portfolios that prohibit or restrict investments in fossil fuels.

Ultimately, the bureau will compile a list of companies boycotting fossil fuels.

If you own or run a company that maintains standards for carbon responsibility, that continually improves and tracks progress toward zero emissions, and that operates with ESG (Environmental, Social, and Governance) transparency, you’re in real trouble when you’re in doing business in texas .

Which investment firms have received letters from the Texas Comptroller? Among others, JPMorgan Chase & Co., Wells Fargo & Company, Jupiter Fund Management PLC and Sumitomo Mitsui Trust Holdings, Inc., BlackRock, Inc. and NatWest Group PLC.

What is in these letters?

  • Every company is asked if there are any guidelines on environmental standards that go beyond state and federal requirements.
  • If the answer is yes, the company must describe how these policies are enforced.
  • Every company must list mutual funds or exchange-traded funds that restrict or disallow investments in fossil fuels.

What happens to a company that doesn’t respond to Hegar’s letter within 60 days? They are suspected of boycotting fossil fuel companies. As a result, existing contracts with Texas government agencies could be terminated and Texas pension funds could purge them from their holdings.

Divestment momentum: Texas isn’t listening

Across the US and around the world, corporations, nonprofits, and governments are separating from fossil fuel companies and their subsidiaries because of their direct connection to the climate crisis. 350.org founder Bill McKibben reminds us, “Most people don’t have oil wells or coal mines in their backyards, (well) divestment is a way to get many people involved in the fight against climate.”

However, the impact of fossil fuels on global warming doesn’t interest Texas GOP lawmakers. In contrast, they will do anything to prop up Big Oil. It’s the old adage, protect them, that brought you here. Damn that Texas Grandstand wrote last year that the increase in donations to state officials looked a lot “like a reward for not passing stricter regulations,” raising questions about whether “legislators are protecting the oil, gas and the broader energy industries because of their massive Getting away with losses makes failures.” Yowza.

Comptroller Hegar wants to find out once and for all how much, if any, many large financial firms have policies and procedures that direct customers elsewhere than fossil fuel company investments. Dubbed socially responsible investing, this smart approach to finance can be more pragmatic than ideological. Banks and money managers are the epitome of capitalist narcissism, and they move money away from risk and towards market influence.

BlackRock, the world’s largest wealth manager, sent a letter to shareholders last year updating them on compelling new investment directions. “I believe we are on the brink of a fundamental transformation of finance,” wrote CEO Laurence Fink. “The evidence of climate risk is forcing investors to reconsider core assumptions about modern finance.”

Texas’ divestiture-barring law means billions of dollars in pension funds and school fees could be siphoned off for some of the country’s biggest investment firms — including BlackRock.

The paranoia that causes divestment

Texas lawmakers continue to insist that addressing climate change comes with a net cost to the global economy. Hegar asked:

“…a handful of companies repeating the Biden administration’s promises of a ‘transition’ to green energy. They’ve managed to convince people that electric cars and wind and solar generation can meet our energy needs, and if we just stop investing in oil and gas, the transition will be quick and painless. Anyone who has paid attention to recent events knows that is not true.”

It is an ideology of climate denial up to the 10th degree – fossil capitalism gone wild.

Hegar even got to the bottom of the motives of companies investing in fossil fuels and clean energy — not just those boycotting fossil-fuel companies.

“We know some of these companies have investments in oil and gas today, but what about the future? Are they selling hope for a “green” future with a promise to divest or reduce their fossil fuel exposure?”

So while some companies continue to invest at least partially in fossil fuel companies and their subsidiaries — which will likely result in lost assets down the road — that’s not enough when you invest in Texas. Heaven forbid that investment firms and their clients actively use financial resources as a vehicle for positive social change. Or run a “value-oriented” company based on the principles of social justice and ecological sustainability.

If you do business in Texas, don’t even think about promoting environmentally friendly standards in the way you source, manufacture and market your products and operate your operations and facilities.

This law, and the prosecution of companies that boycott fossil fuels, is scary and has the potential to lead to scrutiny of other socially just practices that benefit workers, customers, communities and the environment in Texas.

The language behind the No Oil Divestment Texas Law

The law banning boycotts of fossil fuel companies in Texas reads in part as follows.

“Ban on investing in financial firms that boycott certain energy companies. sec 809,001.

“Boycotting an energy company” means, without a normal business purpose, refusing to do business with a company, to cease operations, or otherwise take any action designed to penalize, harm, or restrict doing business with a company because: the company:

    • (A) engages in the exploration, production, use, transportation, sale or manufacture of fossil fuel-based energy and does not commit or promise to comply with environmental standards that exceed applicable federal and state law; or,
      (B) Doing business with any entity described in paragraph (A).”

This is corporatocracy at its finest – fossil fuel companies forge laws that benefit themselves, not the citizens.

We must remember that the Texas Supreme Court agreed to present an argument to Exxon that if it lied about its knowledge of fossil fuels, those misrepresentations protected freedom of speech. Lying is okay now because the Constitution lets us say what we want, right?

Other government spokesmen protecting Big Oil

Hegar and the Texas GOP lawmakers are not alone.

Just last week, Sarah Bloom Raskin withdrew her nomination for the Federal Reserve Board after comments emerged from last year suggesting that regulators “should ask themselves how their existing tools can be used to incentivize a to create a quick, orderly and just transition from high-emission and biodiversity-destroying investments.”

Sen. Joe Manchin (D-Coal) said he couldn’t agree with Bloom Rankin’s confirmation. Manchin has accepted more money from fossil fuel prospects than any other senator during the current cycle.

Since earlier this year, state legislatures in West Virginia, Oklahoma and Indiana have introduced a version of a law drafted by the American Legislative Exchange Council that they call the Energy Discrimination Elimination Act. The legislator demands:

“American and European fossil energy producers…are among the most socially and environmentally responsible companies in the world…Banks are increasingly refusing to finance creditworthy fossil fuel companies just to decarbonize their loan portfolios and market their green credentials.”

This backward-looking law is analogous to companies refusing to advertise with cigarette companies, or choosing iPhones over Blackberries, or favoring digital over analog watches, using laptops over typewriters, or using text messaging over listening to an answering machine, or who Rely on digital databases instead of punched cards. Stick to the Golden Age, the law says, even if it harms us or keeps us from being fully realized individuals in a sane society.

However, being last century is less important to many policymakers than protecting their own financial interests. Big Oil knows this. Boycotting fossil fuel companies has dire consequences.

Featured image courtesy of the US Coast Guard, from a video by Petty Officer Third Class Aidan Cooney (public domain). The appearance of visual information from the United States Department of Defense (DoD) does not imply or constitute Department of Defense endorsement.


 

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