Former senators say coal lawsuit against Wall Street firms is misguided

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(The Center Square) – Two former U.S. senators are criticizing a lawsuit brought by Republican attorneys general against asset managers over coal investments.

The lawsuit, led by Texas Attorney General Ken Paxton and joined by 10 other states, accuses BlackRock, Vanguard and State Street of conspiring with climate groups to pressure coal companies to reduce production. The firms deny the allegations, claiming they held only small stakes in the companies named. Federal regulators, including the Federal Trade Commission and the U.S. Department of Justice, recently joined the case.

Jon Tester of Montana and Joe Donnelly of Indiana, both Democrats, both published opinion pieces this month opposing the lawsuit.

Tester called it “a false narrative, and not supported by evidence.”

He wrote in the Billings Gazette that “they controlled no more than small minority stakes in the companies; they did not communicate with one another; and domestic coal production actually increased during the period in question.”

Tester argued the lawsuit is “merely political chest-thumping meant to make a spectacle of select firms these officials deem got too close to an imaginary ESG do-not-cross line.”

“The government shouldn’t be in the business of picking winners and losers, which is exactly what this case proposes,” Tester wrote. “It suggests that policymakers should have the authority to litigate ad nauseam any company that runs afoul of the political culture of the moment, even after the fact, no matter how unsupported by facts.”

Donnelly raised similar objections in an IndyStar column.

“They claim these firms conspired to reduce coal output, even though these firms had significantly invested in coal,” he wrote. “That accusation defies logic, and as we say in Indiana, it is ‘wrapped around the axle’ thinking.”

He questioned the lawsuit’s central premise.

“Why would any investor pour money into a company just to sabotage it?” Donnelly wrote. “To believe this lawsuit, you would have to accept that these firms made bigger coal investments just to hurt themselves and their investors. That is not just unlikely; it defies common sense.”

Donnelly warned that forcing divestment would harm workers.

“If this lawsuit succeeds and these firms are forced to pull out of their coal investments, the consequences would be devastating,” he wrote. “Thousands of hard-working union miners and other energy workers would lose their jobs. Families would struggle. Entire communities, often in rural or economically challenged regions, would be devastated.”

Tester said the lawsuit undermines energy production.

“We can’t expect producers to invest and grow if they don’t have access to capital,” he wrote. “This lawsuit would likely compel investors writ large to avoid what otherwise could be good investments for fear they may be the next to get tied up in costly court battles.”

Meanwhile, Donnelly said the stakes go beyond jobs.

“Weakening domestic energy production doesn’t just hurt jobs, it undermines our national security,” he wrote. “The attorneys general's lawsuit is not just misguided; it is dangerous. It threatens jobs, weakens investment, hurts our national security and risks the energy supply needed to keep our economy running.”