OPINION:
In one of the most convoluted lawsuits of all time, a cabal of state attorneys general and the Federal Trade Commission is accusing financial firms BlackRock, State Street and Vanguard of monopolistic behavior. The complaint asserts that these firms bought coal stocks and then helped impose radical environmental restrictions on the companies they partially own so that coal output would fall and the price of coal would rise. The lawsuit alleges that this strategy generated “supra-competitive profits” for those investors.
If your head is spinning around trying to make heads or tails out of this loopy conspiracy theory, it should be. If this were true, these asset managers must be capable of pulling off the equivalent of a triple bank shot in billiards. They allegedly invested in coal companies, then partnered with climate change groups to bankrupt coal companies, which then drove up the price of coal. If that tactic worked to make money, Kellogg’s would stop making Frosted Flakes so that the price of the last boxes on the grocery store shelves sold for $100.
What’s laughable about this lawsuit is that the Vanguards of the world didn’t need to conspire to restrict coal production; that’s what Democrats such as Joseph R. Biden and environmental groups, including the Sierra Club, have been doing for years. They are the ones who are guilty of any conspiracy to rip off consumers, bankrupt an American industry, put blue-collar workers out of jobs and raise energy prices. They ran multimillion-dollar campaigns to “kill coal” by advancing a “net zero” fossil fuel energy policy on America with the explicit goal of shutting down coal plants. Their plan, at least temporarily, succeeded wildly.
Over the past 15 years, 63 major coal companies have closed their mining operations. Where exactly are these “supra” profits that the FTC and the state attorneys assert? It’s true that for a short while in 2022 and 2023, coal and oil profits soared because of Mr. Biden’s war on energy, but coal is often valued lower than other sectors. As Yahoo Finance put it recently: “While the coal industry has traded at different valuations over the past decade, the industry is generally valued at a lower multiple compared to other sectors” partly because of its “lower earnings.”
Maybe this isn’t taught in the top law schools, but money management firms with trillions of dollars in assets such as BlackRock, State Street and Vanguard don’t invest in companies and then try to steer them into bankruptcy. That’s a money-losing proposition every time, except in Mel Brooks’ Broadway show “The Producers,” in which two scammers conspire to make a show that would intentionally flop. That was a make-believe comedy. This lawsuit is too, but no one is laughing.
Even the claim that the three firms on trial here worked with environmental groups to reduce coal output is highly suspect. Some of the large investment companies indeed promoted the radical climate agenda, and, just like Bud Light, they paid a hefty price for their political activism.
Unleash Prosperity, a group I co-founded, has done the seminal analysis over the past several years on how investment firms voted on radical green agenda shareholder resolutions dealing with, among other things, shutting down coal. State Street has indeed been a strong and persistent supporter of some of these shareholder resolutions aimed at advancing the radical anti-coal green agenda, but Vanguard hardly ever votes in favor of resolutions hostile to the industry and BlackRock has sworn off the ESG investing fad in recent years.
They can’t all be guilty here because their shareholder activism runs in opposite directions. Apparently, their real crime was not owning coal stocks.
If this lawsuit succeeds, then three of America’s largest investors would pay a giant penalty for that sin. The biggest loser will be the coal industry itself. A guilty verdict would chase billions of dollars of desperately needed investment out of the industry for many years, meaning coal miners would lose their jobs.
This may explain why many of the state attorneys general from coal-producing states such as Kentucky and Ohio didn’t join this flimsy case.
Sadly, Andrew Ferguson, the chair of the FTC, may do more to destroy the coal industry than all of the radical climate change groups put together.
But wait. President Trump has run for president and signed executive orders to support King Coal in America. He wants an American coal renaissance. How can that happen when the FTC stands ready to sue these companies’ investors if they dare make “supra profits?”
If Mr. Trump wants to make American coal great again, he might want to call his handpicked FTC chair and get him to cease and desist.
• Stephen Moore is a co-founder of Unleash Prosperity and a former senior economic adviser to Donald Trump.
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