The North Dakota House of Representatives struck down a bill that would have created a list of restricted financial institutions determined to boycott energy companies.
The 90-3 vote against the bill Feb. 1 came the day after the House Industry, Business and Labor committee recommended against passage 12-1.
Under the bill, HB 1347, the state treasurer would have prepared and maintained a list of financial institutions engaged in a "boycott of energy companies," which the bill defined as the refusal to deal with a company, terminating business activities of a company, or taking another action intended to "penalize, inflict economic harm on, or limit commercial relations with a company" because it engages in the manufacture, exploration, production or other services related to fossil fuel-based energy.
The bill followed the lead of other states' efforts to punish financial institutions based on their judgment that environmental, social and governance-related investments represented boycotts of energy companies, the most notable of which is Texas, which passed a state law in 2021 that restricts the state's pension funds and other state entities from investing in companies that divest from fossil fuels. That state's comptroller, Glenn Hegar, released his inaugural list in August, which included BlackRock and nine other financial companies that include Credit Suisse Group, Jupiter Fund Management, Schroders and UBS Group.
In a transcript of Jan. 18 testimony, Lise Kruse, commissioner of the North Dakota Department of Financial Institutions, said the bill was too vague regarding the definitions of financial institutions and did not provide ample due process. She said the bill indicated "the treasurer simply needs to receive a complaint about the financial institution. Relying on a one-sided notification, without an appeal right or due process, allows for the possibility of wrongful determinations."
"There does not appear to be any legal checks and balances or appeals processes within this bill," Ms. Kruse said.
The bill would not have affected state retirement funds, which fall under the authority of the North Dakota Retirement and Investment Office.