A federal judge in Austin has hit pause on a high-profile Texas law that tried to punish companies seen as turning their backs on fossil fuels, throwing the state’s anti-ESG push into uncertainty.
On Tuesday, U.S. District Judge Alan D. Albright blocked enforcement of Senate Bill 13, a 2021 statute that barred state agencies from investing in or contracting with firms accused of "boycotting" the fossil-fuel industry. The order immediately stops divestments and contract cancellations tied to the law and leaves state investment managers and vendors in a kind of legal holding pattern, according to FOX 7 Austin.
Judge Albright enjoined the State of Texas from implementing SB 13 and said the law is likely unconstitutional under the First and Fourteenth Amendments. His order called the statute overly broad and unconstitutionally vague, warning that catch-all phrases like "limit commercial relations" and "any action" could be used to punish protected speech or association.
How the Law Worked
Senate Bill 13 directed the state comptroller to keep a blacklist of firms deemed to "boycott" energy companies and required state entities to dump investments or cancel contracts with those companies unless they certified they were not participating in such a boycott. As laid out by Texas Legislature Online, SB 13 also built in a 90-day warning period and mandated non-boycott certifications in new state contracts.
Who Was Affected
The blacklist effort swept up scores of financial firms, including some of the biggest names on Wall Street. One of the most dramatic examples came when the Texas Permanent School Fund ended roughly $8.5 billion in contracts managed by BlackRock under the law. That move grabbed national headlines and drew sharp pushback from asset managers who argued that Texas politicians were politicizing investment decisions, as reported by Reuters.
Reactions and the Lawsuit
Business and advocacy groups fired back in court, suing to block SB 13 and arguing that the law coerces speech and association while denying basic due process to companies that land on the blacklist. As The Texas Tribune reported, the American Sustainable Business Coalition and allied organizations said SB 13 was designed to "coerce and punish" firms that pursue sustainability-focused policies.
Legal Implications
In granting the injunction, Judge Albright leaned heavily on those constitutional claims. He found that SB 13’s vague language poses a serious risk of chilling protected expression and association, and that its broad terms could open the door to arbitrary enforcement against companies based on their perceived stance toward fossil fuels.
What Comes Next
For now, state agencies and affected firms are staring at weeks or months of legal limbo as the case grinds forward in federal court. The injunction does not permanently wipe SB 13 off the books, but it is a significant early win for critics of the law and sets up a wider fight that could eventually play out on appeal.
