Does the First Amendment give the world’s largest corporations a perpetual right to be subsidized by your tax dollars? The Liberty Justice Center’s recent amicus argues it does not.
Here is the context. In recent years, the European Union (EU)’s laws and regulations have pressured multinational corporations to embrace “environmental, social, and corporate governance” (ESG) objectives. ESG philosophy counsels corporations to eschew competition and instead prioritize the left’s favored public policy choices, such as minimizing so-called hate speech or promoting non-nuclear renewable energy. When the EU’s market-shaping regulation is imposed in the global securities market, it inevitably regulates Texas just as it regulates Germany and France.
The Texas government is the caretaker of seven mandatory pension plans, meaning it must engage in the open market by buying and selling corporate securities. In 2021, the Texas Legislature enacted a statute requiring that its pensions’ funds be divested from companies that engage in the boycott of the fossil fuel industry. The American Sustainable Business Council (ASBC), a powerful trade association, sued, asking the judiciary to mandate that Texas continue to invest taxpayer dollars in anti-fossil fuel companies.
Astoundingly, the district court agreed. In a dangerously extreme ruling, the court found that Texas choosing not to subsidize corporations practicing ESG was a violation of the First Amendment. Texas state officials rapidly appealed to the Fifth Circuit, and the Liberty Justice Center filed an amicus in support of their position.
The district court’s position is untenable. History and precedent, from the Founding to today, show there has never been a First Amendment right to government subsidies.
ASBC’s claim that pulling government subsidies is somehow a form of censorship seems not to have even been broached in court until the mid-20th century. When it was, it met an immediate frosty reception at the Supreme Court, which declared in Maher v. Roe that “[t]here is a basic difference between direct state interference with a protected activity and state encouragement of an alternative activity consonant with legislative policy.” Since then, the Court has repeatedly and without fail held that a state is not discriminating on the basis of viewpoint when it chooses “to fund one activity to the exclusion of another.”
As Chief Justice John Roberts put it in Ysursa v. Pocatello Educational Association: “the First Amendment prohibits government from ‘abridging the freedom of speech’; it does not confer an affirmative right to use government [resources] for the purpose of obtaining funds for expression.”
The district court’s ruling is particularly dangerous because, if allowed to stand, it would imperil actual First Amendment rights and empower foreign governments to silence American speech.
Under the Digital Services Act, the EU requires tech platforms to censor speech based on nebulous, subjective categories such as “hate,” “disinformation,” and “cyber violence.” European authorities have boasted about taking down content not just in their countries, but across the globe. Platforms that resist this censorship face draconian penalties, such as the €120 million fine imposed on X. In accordance with ESG-principles, many companies have joined European authorities and (in likely violation of antitrust laws) coordinated their advertising spending to pressure platforms to follow EU censorship codes.
There are very few ways by which American states can stand up to this attack on our sovereignty. One of the few tools they have left is to not use their citizens’ pension funds to finance these censorship efforts. It would be the most twisted of ironies that judicial activists are using the First Amendment, of all things, to prevent states from combatting foreign censorship.
It is now up to the Fifth Circuit to decide whether the world’s largest corporations have a perpetual right to be subsidized by your tax dollars, even as they pursue ruinous ESG policies. Hopefully, the Circuit listens to the Liberty Justice Center and says “NO!”
Tim Kilcullen serves as a staff attorney at the Liberty Justice Center. He has a deep passion for protecting Americans’ fundamental liberties, particularly their right to free speech.
Tim is a member of the District of Columbia bar and a graduate of the Antonin Scalia Law School, where his focus was antitrust law. Prior to joining LJC, he was Senior Counsel for Investigations at the Media Research Center, where he uncovered collusion between Big Tech and Big Government and fought to stop the enactment of federal censorship laws.
Prior to becoming an attorney, Tim was a field director for the Massachusetts GOP and the Republican nominee for the 49th District of the Virginia Assembly. He also worked at the campaign finance compliance firm State & Federal Communications, where he maintained a database documenting censorship laws across the nation. He received his undergraduate degree in Economics & English from the University of Illinois at Urbana-Champaign.
Tim lives with his wife, Jennifer, in Alexandria, Virginia. When not doing legal work, Tim’s hobbies include going to the movies, following current events, and spending time with family in the Shenandoah.
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