MORGANTOWN — The state Senate Energy Committee approved a bill on Tuesday that allows the state treasurer to put financial institutions that openly boycott fossil energy companies on a publicly available Restricted Financial Institution List and refuse to enter into a banking contract with that institution.
The bill is SB 262. It explains that a boycott means a publicly stated policy framework refusing to do business with a fossil-fuel related company without an ordinary business purpose. It requires the treasurer to notify the company of the restricted status and allow the company to appeal and demonstrate it is not engaged in a boycott. The list would be updated annually.
State Treasurer Riley Moore told the committee that coal and natural gas industries in the state are concerned about losing access to capital, as there are banks that will no longer lend to them.
He said this bill does not address state investments or pension funds, only cash management banking contracts. His office is updating its RFP — request for proposals — process and the new questionnaires will ask institutions to certify they’re not boycotting. If they are, they would not be eligible for banking contracts.
The bill, he said, simply authorizes his office to create and publish a list of restricted institutions. “This is a bit of a transparency exercise here.”
He said the bill, as tweaked by the committee, defines what an ordinary business purpose is. For example, a bank that denies a coal operator a loan based on lack of credit-worthiness would not be considered to be engaging in a boycott.
His office’s decisions about whom to bank with, he said, are made by a selection committee. He and his chief of staff are not on the committee.
The state has about $7.2 billion in deposits under management, he said, with about 30 depositors. The bill and the list would affect just two — he didn’t name them.
Under questioning, Moore said he did not believe this list would raise banking costs or reduce returns on managed cash. “Obviously we’re going to keep an acute eye to maximizing our returns.”
He also disagreed with a comment by Sen. Owens Brown, D-Ohio, that the bill appears to be choosing winners and losers. “I think they’re already picking us a loser,” Moore said. Institutions may be handling taxpayer dollars, including severance tax dollars of industries they’re boycotting, which makes for a conflict of interest.
He’s not a market regulator but a participant, and would be stating his preferences in the marketplace — preferences stated in the RFP process, he said.
“We want to do business with folks that want to do business with us,” Moore told the bill’s lead sponsor, Sen. Rupie Phillips, R-Logan.
Moore said Texas has passed a version of the bill, which is a bit broader and doesn’t define an ordinary business purpose. Indiana is taking up a bill, several others are looking and a 16-state coalition put out a letter about the boycotting practice.
Mike Nasi, with Life Powered out of Austin Texas, told the committee he was involved in drafting the Texas bill and a model bill for several other states. States are constitutionally allowed to put reasonable restrictions on contracting that support the state’s interests.
Because some companies are vocal about refusing to finance fossil fuel-related companies, “Doing nothing is not a neutral position any more in this field,” Nasi said.
The bill passed in a voice vote with no audible votes against. It was originally set to go next to the full Senate but chair Randy Smith, R-Tucker, said he arranged for it to go instead to Finance for additional review.
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