Bills against ESG face upward battle in the House

Feb. 24—CHEYENNE — Two bills that attempt to address what Republican lawmakers describe as economic boycotts and financial discrimination face an upward battle in the state House of Representatives.

Both pieces of legislation were voted unanimously out of the House Appropriations Committee under a "do not pass" motion and sit at the bottom of a growing general file list. Two-thirds of state representatives would have to vote to suspend the rules to bring them higher, or the chamber has to get through every other bill on the list before the deadline Monday night.

Although the timing of the bills creates a roadblock for their passage out of the House, the sponsor of them has also pulled back his support. Sen. Bo Biteman, R-Ranchester, expressed his disappointment Wednesday night when the committee introduced substitute bills for Senate Files 159 and 172 without previous warning.

He said if the new versions were passed out of the committee, he would ask that his name be taken off as the prime sponsor.

Committee outcome

"To say I'm disappointed is an understatement. To treat a sitting fellow legislator like this in a public committee, which is actually a public execution in a public committee," he told committee members. "But, nonetheless, to spring a substitute bill on me in committee without me even knowing about it, seeing it. I just say shame on you."

Two hours had been spent hearing extensive testimony on his Stop ESG-Eliminate Economic Boycott Act before the substitute came forward, and the next bill would have the same fate.

He said he would have never done it to any other legislator, despite his peers not seeing it as a negative. Rep. Tom Walters, R-Casper, said the bill appeared to be simply a substitute for the 11-page original and accomplished the same task "in a more concise manner," but Biteman disagreed.

"This bill does nothing as written," he said. "To the greatest extent possible, this bill does nothing."

His frustration was backed by the Wyoming Freedom Caucus, which sent out a press release stating that the House Appropriations and Revenue Committee leadership had "engaged in deeply disturbing behavior."

"At the 11th hour, committee leadership revealed the existence of a 'substitute bill' with the same title, sponsor and list of cosponsors, but stripping the bill of its essential components," it said. "Committee members admitted that they had worked on the 'substitute' bill prior to the noticed meeting. Nevertheless, until this 'substitute' bill was revealed, not one member of the public knew of its existence.

"Rather than killing the bill the old-fashioned way, committee leadership engaged in unprecedented levels of gamesmanship and blatant incivility."

House Majority Floor Leader Chip Neiman, R-Hulett, is a member of the Wyoming Freedom Caucus, and he said the statement was based on concerns heard from constituents. He said he also took steps to speak with leadership to understand what happened in the committee, because he had never seen it happen before.

However, he said it has been the case for four bills in total this session and brings up questions about how the process works.

Amendment process

House Speaker Albert Sommers, R-Pinedale, said substitute bills are just amendments that are a part of the process. He said they are created to more easily understand how amendments split and merge into the bill, instead of scratching each line out.

The western Wyoming lawmaker said the House uses substitute bills and large amendments frequently. Many times, he said, it is because they are interested in preserving someone's bill and the philosophy behind it, instead of trying to kill legislation with great challenges.

He said it is good decorum to give notice to a lawmaker if you plan to substantially change a bill they've sponsored.

"But sometimes time doesn't allow that," he said Friday morning. "We have 'x' amount of time. These committees are busy, and maybe things don't get done quite the way they should."

Senate President Ogden Driskill, R-Devils Tower, weighed in on the result of the House Appropriations Committee and said he understood there are time constraints. He still believes lawmakers should go out of their way, even if it is 10 minutes before a committee meeting, to make sure their peers aren't caught off-guard by an amendment.

After a bill has been changed in the crossover process, there is still time to negotiate the merits of the original bill. Driskill said he places bill sponsors on conference committees to put the fate of the legislation in their hands. There are some bills that will be unpalatable or controversial to the other body without amendments, and he said he wants senators to have every opportunity to decide whether it lives or dies.

Making a statement

In the case of the environmental, social and corporate governance bills, Driskill was a co-sponsor and still wary of their possible impact on the state. He said he spoke with Biteman and told him he didn't believe they were ready to move forward, because he heard concerns from financial state agencies that said they could place contracts and investments at risk.

"There's some real holes in those bills that are potentially dangerous to the state of Wyoming," he said.

He said the House Appropriations Committee worked hard to save the bills with the substitutes. He doesn't want corporations, companies or banking entities trying to nullify the minerals industry and the economy of the state, but the Senate president said they have to be very careful how they make that statement.

The original version of SF 159 would have directed the state and municipalities not to enter into contracts with companies and financial entities that engaged in economic boycotts, and they would have to declare they would not engage in them during the term of the contract.

An economic boycott as it relates to this particular legislation could be the refusal to deal with or the termination of business that is "intended to penalize, inflict economic harm on, limit commercial relations or limit the activities of the company" because of certain actions. This could be engaging with fossil fuels; facilitating the manufacturing or distribution of firearms and ammunition; not meeting environmental standards; or not committing to facilitating abortion or sex change surgeries.

It is based on a trend of environmental, social and governing investing that was started in the early 2000s and has received a significant amount of attention in the past few years. Reports describe it as "a set of standards for a company's behavior used by socially conscious investors to screen potential investments," such as using renewable energy sources or supporting LGBTQ+ rights.

Biteman said he wanted to use the state's "massive purchasing power," along with other states in the same situation, to fight back against economic warfare that's happening against fossil fuel, and the "whole ESG gamut, whether it's climate-related, social justice or governance."

"That's what this bill is intended to do, is just simply say, 'If you are actively engaged in these boycotts, sorry, but we're not going to do business,'" he said. "There's plenty of other options out there. And then there's also that escape clause when there are no other options."

Biteman's other bill attempts to push back against this standard for investing. SF 172 directs the state not to invest with financial entities that take part in "financial discrimination" and has strict requirements for hiring and retention of investment managers or fiduciaries, as well as their proxy votes.

Bill concerns

Lawmakers, lobbyists and state agency heads have recognized publicly why they believe ESGs can be harmful to Wyoming's industries, but there are also consequences for sending the message.

State Chief Investment Officer Patrick Fleming said they want the highest return on investments, and that requires options. They would lose opportunities with large investment managers such as Blackrock and risk having to divest millions of dollars. That doesn't include the loss of contracts and higher borrowing rates Wyoming and municipalities could face in the contacts bill.

"We're trying to earn good revenues, good income, off of all of our savings," said Driskill. "Thirty percent of our money comes out of those funds, so it's a balancing act."

Even one of the largest gas companies in Sublette County is involved with the ESG framework, and Sommers said they're putting out gas in an environmentally sound way. He believes a ban could tell them they couldn't do that in a free enterprise.

Rep. Clark Stith, R-Rock Springs, sits on the House Appropriations Committee that changed Biteman's bills to have less of a negative impact. He told the Wyoming Tribune Eagle that someone has to responsibly govern and "be the grown-up in the room."

"The substitute bill says that government entities will use best good faith efforts to make sure that they are not supporting anti-fossil fuel policies, anti-gun policies," he said in regards to HB 159. "And I think, broadly speaking, that is the goal we all share. But we don't want to cut off our nose to spite our face."

He said he believed there were members of the Senate who were counting on the House Appropriations Committee to make the amendments to both bills and to make sure the state wasn't damaged.

"Certainly, Sen. Biteman, I'm sure, is disappointed by the rather radical changes to this bill," he said. "But what we've also said is that we want an interim to study this issue."

Leadership also expressed a desire for an interim topic, and Neiman said he wants to figure out how to fight back thoughtfully and without harming the state. He hopes Biteman will get his bills into that process to work through the intricacies, but he hasn't completely written off hearing the legislation at the end of the general file list.

"It needs to be worked on, and needs more work than can be done in this session," Sommers said.

Jasmine Hall is the Wyoming Tribune Eagle's state government reporter. She can be reached by email at jhall@wyomingnews.com or by phone at 307-633-3167. Follow her on Twitter @jasminerhphotos and on Instagram @jhrose25.