The federal district court for the Western District of Texas enjoined enforcement of a Texas law enacted in 2021 (Senate Bill 13 (SB 13)) that prohibited State of Texas entities from investing in or contracting with companies that “boycott” fossil fuel-based energy companies. As a threshold matter, the court ruled that the organization that challenged the law, American Sustainable Business Council (ASBC), satisfied the test for associational standing for claims against the divestment provision of SB 13 based on the standing of two ASBC members that had been blacklisted. The court found that the interests ASBC sought to protect in the lawsuit were “‘germane’ to ASBC’s mission of encouraging sustainable investing and business practices” and that ASBC members did not need to participate in the suit given that ASBC sought only prospective and injunctive relief, as opposed to individualized damages. The court also concluded that ASBC had standing for a facial First Amendment challenge to SB 13’s contracting provision. On the merits, the court ruled that SB 13 violated the First Amendment because it was “facially overbroad” since its provisions affected “a broad range of protected activities,” including “speaking about the risks posed by fossil fuels, advocating against reliance on fossil fuels, and associating with like-minded organizations.” The court further concluded that SB 13 was unconstitutionally vague in violation of the Fourteenth Amendment of the U.S. Constitution “because it fails to provide persons of ordinary intelligence a reasonable opportunity to know what conduct is prohibited and does not provide explicit standards for determining compliance with the law.”

Challenge to a Texas 2021 law that prohibits certain State entities from investing in or contracting with companies that “boycott fossil fuels.”

American Sustainable Business Council v. Hancock

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Federal Court Declared Texas Statute’s Prohibitions on State Business with Companies that “Boycott” Fossil Fuel Companies Unconstitutional

Filed

Challenge to a Texas 2021 law that prohibits certain State entities from investing in or contracting with companies that “boycott fossil fuels.” 

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Area of the economy in which actors engage in identical or related activities.

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Oil is a combustible liquid fossil fuel composed mainly of hydrocarbons, occurring as crude oil and refined into petroleum products such as petrol, diesel and kerosene.

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Federal Court Declared Texas Statute’s Prohibitions on State Business with Companies that “Boycott” Fossil Fuel Companies Unconstitutional

Policy instrument

Fossil fuel

Economic sector

Finance