CHARLESTON – West Virginia has joined Texas and nine other states in a antitrust lawsuit against three of the world’s largest institutional investment firms for actions regarding the coal market.
The complaint, filed November 27 in federal court, claims BlackRock, State Street Corporation and Vanguard Group have conspired to artificially constrict the market for coal through anticompetitive trade practices. It says the three asset managers have acquired substantial stockholdings in every significant publicly held coal producer in the United States, thereby gaining the power to control the policies of the coal companies.
The coalition says the investors used their combined influence over the coal market to “weaponize their shares to pressure” coal companies to accommodate environmental, social and governance (ESG) and “green energy” goals. To achieve this, the investment companies pushed to reduce coal output by more than half by 2030.
Texas Attorney General Ken Paxton
| texasattorneygeneral.gov
“Again, this is an example of companies pushing their climate agenda, using investments to force other companies and people to abide by their ideology,” West Virginia Attorney General Patrick Morrisey said. “These companies should only be maximizing returns for investors, not working to advance their radical climate change agenda by leveraging their holdings and pressuring American energy companies.”
The coalition says Blackrock, Vanguard and State Street utilized the Climate Action 100 and the Net Zero Asset Managers Initiative to signal their mutual intent to reduce the output of thermal coal, which increased the cost of electricity for Americans across the United States. The coalition also says the firms deceived investors who chose to invest in non-ESG funds to maximize profits. Yet these funds pursued ESG strategies notwithstanding the defendants’ representations to the contrary.
Texas Attorney General Ken Paxton is leading the coalition that also includes Alabama, Arkansas, Indiana, Iowa, Kansas, Missouri, Montana, Nebraska and Wyoming.
“Texas will not tolerate the illegal weaponization of the financial industry in service of a destructive, politicized ‘environmental’ agenda,” Paxton said. “BlackRock, Vanguard and State Street formed a cartel to rig the coal market, artificially reduce the energy supply, and raise prices.
“Their conspiracy has harmed American energy production and hurt consumers. This is a stunning violation of state and federal law.”
By deliberately and artificially constricting supply, the coalition says the investment firms increased prices and enabled them to produce extraordinary revenue gains while violating multiple federal laws that prevent a major shareholder, or a group of shareholders, from using their shares to lessen competition or engaging in other anticompetitive schemes.
According to the complaint, the alleged schemes by these firms appear to have been designed to disrupt the country’s energy industry.
In BlackRock’s case, the firm allegedly deceived its investors about the nature of its funds.
According to the U.S. Energy Information Administration, West Virginia was the second-largest coal producer in the nation in 2022. Coal-fired electric power plants accounted for 89 percent of the state’s total electricity net generation. Renewable energy resources — primarily hydroelectric power and wind energy — contributed 7 percent, and natural gas provided about 4 percent.
The West Virginia Office of Miners’ Health & Safety Training recorded 55,067 people as being employed in the state’s coal mines for Fiscal Year 2023.
The Buzbee Law Firm and Cooper & Kirk are serving as outside counsel for the coalition.
U.S. District Court for the Eastern District of Texas 6:24-cv-437