Texas Seeks To Reinstate Anti-Boycott Fossil Fuel Law After Court Block
Texas asks the Fifth Circuit to lift injunction blocking its anti-fossil-fuel boycott law.
Why it matters: The case raises critical free speech questions about corporate activism and state power over investments. Its outcome could influence how states regulate companies' social responsibility decisions.
- Texas Senate Bill 13 (SB 13) bans state investments/contracts with companies boycotting fossil fuel industries, enacted in 2021.
- On Feb 4, 2026, a district court ruled SB 13 unconstitutional, citing First and Fourteenth Amendments and issued an injunction.
- Texas appealed; on May 29, 2026, the Fifth Circuit stayed the injunction, allowing SB 13's enforcement pending appeal.
- Judge James Ho emphasized the state's interest in public fund spending, arguing SB 13 regulates spending, not speech.
Texas Senate Bill 13 (SB 13), enacted in 2021, prohibits state entities from investing in or contracting with companies that boycott fossil fuel-based energy companies. The American Sustainable Business Council (ASBC) challenged the law, representing companies blacklisted by the Texas Comptroller for such boycotts.
On February 4, 2026, U.S. District Judge Alan Albright ruled that SB 13 violated the First Amendment’s free speech protections and was "facially overbroad." He also found it unconstitutionally vague under the Fourteenth Amendment, issuing an injunction blocking its enforcement. Judge Albright wrote that the law "permits the state to penalize companies for all manner of protected expression concerning fossil fuels."
Texas appealed the ruling. On May 29, 2026, the Fifth Circuit Court of Appeals granted Texas’s motion to stay the injunction. This stay permits Texas to enforce SB 13 while the legal challenge proceeds. Judge James Ho concurred, asserting that "S.B. 13 is about spending, not speech," highlighting the government's authority over how public funds are allocated.
The legal battle centers on whether the government can condition state contracts and investments on companies refraining from boycotts that express particular social or political views, especially around environmental policies. ASBC President David Levine emphasized that businesses should not be punished for investment choices or silenced on climate risks.
This case underscores the ongoing tension between government regulation of public funds and corporate free speech rights, particularly amid growing ESG (environmental, social, governance) considerations.
By the numbers:
- 2021 — Texas enacted Senate Bill 13 banning state business with fossil fuel boycotting firms
- February 4, 2026 — District court ruled SB 13 unconstitutional and blocked enforcement
- May 29, 2026 — Fifth Circuit stayed injunction, allowing Texas to enforce SB 13 pending appeal
Yes, but: The Fifth Circuit’s stay allows enforcement during appeal, meaning companies may face penalties despite ongoing constitutional questions.
What's next: The Fifth Circuit will hear the full appeal to determine whether SB 13 can be permanently enforced without violating constitutional free speech rights.