11-state lawsuit accuses top investment firms of manipulating energy market against coal power

Major energy producers Texas and West Virginia are leading nine other states in an antitrust lawsuit against BlackRock, State Street and Vanguard, alleging they leveraged their voting shares to facilitate an "output reduction scheme, which has artificially constrained the supply of coal…"

The investment titans allegedly "significantly diminished competition in the markets for coal, increased energy prices for American consumers, and produced cartel-level profits for [defendant states]," according to the filing lodged in Texas federal court.

They alleged their behavior in regard to shares of coal producing firms violated Sections I & VII of the Clayton Act of 1914. The law, drafted by former Rep. Henry Clayton, D-Ala., governs unfair business practices, including price-fixing as well as organized labor protections.

"Defendants are three of the largest institutional investors in the world," the filing, obtained by Fox News Digital, reads.

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"Each defendant has individually acquired substantial stockholdings in every significant publicly held coal producer in the United States. Each has thereby acquired the power to influence the policies of these competing companies and bring about a substantial lessening of competition in the markets for coal. And each has used its power to affect a substantial reduction in competition in coal markets."

The filing alleges the firms announced their commitment in 2021 to use shares to pressure the portfolio companies’ management to "align with ‘netzero’ goals."

It further accused the three companies of facilitating an "output reduction scheme" to "artificially constrain" the supply of and market for coal.

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The filing included a chart of the three firms' collective stake in top coal-related companies, with a 30% stake in Peabody Energy being the largest.

The top law enforcement officer and governor-elect of the nation’s most prominent coal-producing state said the suit’s allegations reveal the use of the companies’ investment might to push a green climate agenda and force people to fall in line ideologically.

"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," said West Virginia Attorney General Patrick Morrisey, who suggested his state stood to be directly harmed by the actions alleged.

Coal-fired power plants accounted for nearly 90% of Mountaineers’ electricity generation in 2022, Morrisey said in a statement.

The West Virginia Office of Miners’ Health & Safety reported 55,000 West Virginians work in coal mines as of 2023.

Texas led the lawsuit, along with 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," Texas Attorney General Ken Paxton said, Politico reported Monday.

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"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."

"Americans think that when they entrust their hard-earned savings to Wall Street firms, those firms will seek profits, not radical environmental goals," added Alabama Attorney General Steve Marshall.

A spokesman for Boston-based State Street said the firm "acts in the long-term financial interests of investors with a focus on enhancing shareholder value."

"As long-term capital providers, we have a mutual interest in the long-term success of our portfolio companies. This lawsuit is baseless, and we look forward to presenting the facts through the legal process."

Fox News Digital reached out to Valley Forge, Pennsylvania-based Vanguard and New York-based BlackRock but did not receive responses by press time. But in a statement to Reuters, BlackRock said any suggestion it invested in coal producers to harm them was "baseless and defies common sense. This lawsuit undermines Texas' pro-business reputation and discourages investments in the companies consumers rely on."

BlackRock, Vanguard and State Street together have more than $26 trillion of assets under management.