Legislation seeking to end government contracts with companies engaged in “boycotting” an expanded list of industries and business policies passed the Utah House and Senate late Thursday.
Senate Bill 97 builds on laws previously enacted in Texas and a few other states focusing on “boycotts” of the fossil fuel or firearm industries by adding timber, mining, and agriculture, as well as “boycotts” against businesses that do not adhere to environmental emission standards beyond legal requirements, do not meet or commit to meet corporate board or employment criteria addressing diversity, or do not facilitate access to abortions or sex characteristic surgical procedures.
The measure would prohibit state and local government contracts worth $100,000 or more with corporations, partnerships, majority-owned subsidiaries, and affiliates engaging in an “economic boycott.”
Texas enacted laws in 2021 with contract prohibitions against companies, including municipal bond underwriters, that boycott or discriminate against fossil fuel-based energy businesses or the firearm industry.
Republican State Rep. Rex Shipp, the Utah bill’s sponsor, said environmental, social, and governance use has become a big problem that threatens industries like fossil fuel, which is an important part of Utah’s economy.
“It has turned into something that is undeniably embedded in the major banking corporations in the United States,” he said on the House floor.
Democratic State Rep. Joel Briscoe brought up a study last year that found the Texas laws could increase borrowing costs for issuers in that state as a result of less competition among underwriters. He also expressed concern about “creating two Americas.”
“These are the good guys and these are the bad guys and I’m not sure in the end it’s good for all of us and I’m not sure in the end it’s good for the U.S. consumer,” he said.
The bill includes an exception if there is no “economically practicable alternative” for a governmental entity to acquire a particular good or service, or to meet its legal duties to issue, incur, or manage debt obligations or borrow or invest funds.
Utah State Treasurer Marlo Oaks, a vocal ESG critic, testified last month on behalf of the bill, telling a Senate committee the legislation is aimed at institutions that are weaponizing their business.
This year, several states are weighing anti-boycott bills, with some largely mirroring model legislation the conservative Heritage Foundation posted on its website, advising states they “can enact legislation that generally requires companies that contract with the state to certify that they do not boycott or discriminate against companies to achieve woke political objectives.”
The U.S. Supreme Court may have opened the door for these measures to proliferate when it declined last month to take up a challenge to an Arkansas law involving boycotts of Israel.