A group of US states is suing three major investment companies in a Texas court, alleging they conspired to use their market power to suppress coal production.


“Texas will not tolerate the illegal weaponization of the financial sector in service of a destructive, politicized ‘environmental’ agenda,” Texas Attorney General Ken Paxton, who represents one of the states in the lawsuit, said on social media.





“Their conspiracy has harmed American energy production and harmed consumers. This is a stunning violation of state and federal law.”


Texas, along with ten other states, has this as well filed a complaint (pdf) claim that companies BlackRock, Inc., The Vanguard Group, Inc. and State Street Corporation violated the 1914 laws Clayton Antitrust Law and the 1890s Sherman Antitrust Actas well as state laws. Prosecutors say the companies have “individually acquired significant equity ownership in every major publicly traded coal producer in the United States.” These shareholdings gave them “power to influence the policies” of competitors, which the companies used to effect “a substantial reduction in competition in coal markets.”


The states allege that the companies colluded because all three had joined two organizations – Climate Action 100+ and Net Zero Asset Managers – aimed at pursuing net zero targets. Two of them later left Climate Action 100+, the complaint states.


For some companies in their investment portfolio, such as those that produce coal, the only way to meet the net zero target was to reduce their production. The companies’ collaboration therefore resulted in a coordinated effort to reduce coal production, the complaint states, which in turn “generated supra-competitive profits for (the defendants) and their portfolios.”


“In short, the data show that public domestic coal producers were unresponsive to the laws of supply and demand,” the plaintiffs wrote.


The case was filed in the Eastern District of Texas District Court. That court is overseen by the Fifth Circuit Court of Appeals, which hears cases from Texas, Mississippi and Louisiana. It has a reputation for conservative-oriented, politically motivated statements by a large part of the population Trump-appointed judges, reports Axios.


Although the complaint was filed in a sympathetic court, some legal experts say there is no strong basis for it.


Climate coalitions are “voluntary associations and therefore do not involve any form of conspiracy and coercion, so it is difficult to see a legal basis for this claim,” said Lisa Sachs, director of sustainable investments at Columbia University law school, told Bloomberg. But “coal-funded politicians are now using the pulpit to scare financial institutions, which will in no way benefit the coal sector and will harm the voters these (attorneys general) claim to represent.”


Despite states’ insistence that companies exert influence to curtail coal production, some are doing so Biden-era regulations are putting pressure on coal-fired power stations to reduce emissions or close them. Coal is also increasingly being replaced by cheaper alternatives, such as natural gas and renewable energy, as an energy source for generating electricity. These regulations and the market forces themselves could effectively reduce or eliminate demand for coal, Axios notes.



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