Aiken State Representative Melissa Oremus Stands Up for Texas with Copy and Paste Legislation

by Don Moniak

January 16, 2023

South Carolina State Representatives Melissa Oremus (R-Aiken) (1) and James Burns (R- Greenville) are the sponsors of legislation that would prohibit public “investment in companies that boycott energy companies.” Specifically, the law would require South Carolina’s State Fiscal Responsibility Authority (SFRA) to prepare and maintain a list of companies that all state agencies must use to “sell, redeem, divest, or withdraw all publicly traded securities” of any financial company determined by the authority’s Executive Director to be involved in boycotting investment in fossil-fuel producing companies or companies that do business with them. 

The legislation is not just modelled on other legislative examples, it is a duplicate (2). If there were a rule against legislative plagiarism, the bill would be discarded.

.With a few fill-in-the-blank exceptions to allow for differences in South Carolina pension management, House Bill 3525 (H3525) is otherwise word-for-word identical to Chapter 809 in Texas’ Public Retirement Systems code, including provisions prohibiting lawsuits for breach of fiduciary duty, or any other claim or cause of action against government entities or employees who may cause losses to pension funds as a result of enforcing the law.

The Texas law was enacted in 2021, and quickly stirred up considerable controversy, especially after dominant financial firms such as Blackrock and Vanguard had funds listed in the fossil fuel energy company “boycotters” category by the Texas Comptroller. The law has been described as “Infowars Investing,” by free-market investment supporters, and “cancel culture from the right” in an otherwise staid analysis by Forbes contributor and Oxford University economist Robert Eccles.

The Texas law was intended to dissuade ”environmental, social, and governance” influence in the financial sector, particularly as it pertained to Texas fossil fuel energy companies. Chapter 809 mandates that the Comptroller prepare and maintain a list of companies who “boycott energy companies,” defined as:

“without an ordinary business purpose, refusing to deal with, terminating business activities with, or otherwise taking any action that is intended to penalize, inflict econonic harm on, or limit commercial relations with a company because the company engages in the exploration, production, utilization, transportation, sale, or manufacturing of fossil-fuel based energy and does not commit to meet environmental standards beyond applicable federal and state law.”

Once on the list, any government entity such as a pension program is required to meet a schedule to sell, redeem, divest, or withdraw the firm’s publicly traded securities. There are a few loopholes that allow divestment to be delayed, such as if the move “will likely result in a loss of value.”

The Texas law was intended to protect Texas fossil fuel companies, an industry that employs an estimated 450,000 workers who collectively produce 43% of the nation’s crude oil and 25% of our natural gas supplies. Because of the massive size of Texas’ public retirement systems, lawmakers sought to prohibit involvement in the system by companies deemed to be a threat to the state’s largest industries; and thus try to deter efforts to use the financial system to deprive fossil-fuel companies of investment funds.

In contrast, South Carolina is not a coal mining, oil and gas production, or refinery state. Efforts to prevent off-shore oil and gas drilling have bi-partisan support. Texas energy production is measured on the Department of Energy charts by the thousands of trillions of BTUs, South Carolina is measured by the hundreds of trillions of BTU’s. Yet, according to The Nerve, South Carolina politicians appear as adamant as their colleagues in Texas about protecting fossil fuel energy companies as Texas and coal mining states like West Virginia; but almost entirely from an ideological perspective and not one of economic self-interest.

Could Oremus (2) and Burns’ legislation mean South Carolina’s public pension fund management decisions, as they pertain to “fossil-fuel boycotting companies,” will be influenced by the Texas Comptroller’s listing decisions? Since the law does allows the divestment list to be prepared using information provided by “governmental entities,” why prepare a new list when the Texas Comptroller already has completed the task and the intent of the legislation is clearly to emulate Texas?

Footnotes

(1) An example of the word for word nature of the legislation:

The South Carolina bill:

The Texas Law:

(2) Representative Oremus declined to answer questions posed in an email. Oremus is locally notorious for conducting closed debates. She deleted her official Facebook account sometime in late 2021 or early 2022; and requires permission to comment.