Texas forces companies to be neutral on guns or lose business

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To continue doing business with Texas, companies will indeed have to take a vow of neutrality if the latest school shooting sparks another national furor over gun control.

Indeed, in June 2021, flanked by Republican lawmakers and National Rifle Assn. officials, Gov. Greg Abbott signed state legislation that grants gun manufacturers, retailers and industry groups protection. special, which relies on generally reserved language to protect people. racism, sexism, ageism or other forms of prejudice.

As a result, companies that sign contracts with government agencies there — including school districts, cities, and Texas itself — must verify that they don’t “discriminate” against the industry, seeking to force them to ignore any calls to sever their business ties.

The unusual provision, which has since inspired legislation in other Republican-run states, shows how hard the gun lobby has wielded in state homes across the country to push back against any effort to restrict access firearms following mass shootings. The latest occurred Tuesday at an elementary school in Uvalde, Texas, where a gunman killed 19 students and two teachers in the deadliest shooting since the Sandy Hook Elementary School massacre in the Connecticut ten years ago.

The Texas shooting, which took place after a racist attack at a grocery store in Buffalo, NY, has reignited the gun control debate, with President Biden saying it’s time to ask when the nation “will stand head to the gun lobby”.

But such calls have met with little success before. In fact, while legislative efforts have failed in Washington, the gun industry has succeeded in state capitals in pushing back against new regulations – or, in the case of Texas, in finding ways to even increase its power.

“Texas has pro-gun legislation that clearly makes a statement to ensure the gun industry is well protected,” said Janice Iwama, a professor at American University who studies the effect of the legislation. on firearms.

The National Shooting Sports Foundation, a business group based in Newtown, Conn., has encouraged other states to pass legislation like Texas’s, saying companies in the sector are being denied services by banks. Lawmakers in Oklahoma and Louisiana have advanced similar bills, and additional measures have been introduced elsewhere.

The foundation declined to comment on Wednesday, citing respect for the victims of Tuesday’s shooting. Spokespersons for Governor Abbott did not immediately respond to requests for comment.

The Texas law has already made waves on Wall Street, where Bank of America Corp., JPMorgan Chase & Co. and Goldman Sachs Group Inc. had cut some ties with arms companies, including not lending to those who manufacture military style weapons. weapons for civilian use. Citigroup Inc. also had restrictions in place for the retailers it works with.

Texas bill requires any public contract with a value of $100,000 or more to include a provision that the company does not and will not discriminate against any weapons entity fire or trade association.

For months, Texas lawyers and bankers privately complained about the vagueness of the law and the difficulty, if not impossibility, of defining how a bank could discriminate against a firearms entity.

This led Bank of America, JPMorgan and Goldman to stop underwriting most municipal bond deals in Texas as they assessed it, although Citigroup returned to the market last year. JPMorgan cited ambiguity in the law when it previously announced it would not bid on most government contracts. This month, however, the bank took a first step to re-enter the market, with its law firm sending a letter to state officials defending the policy. Meanwhile, the big banks have lost business to regional firms that have not been drawn into political debates, as the industry behemoths have been.

The law is also likely to affect the school district where Tuesday’s murder took place. Uvalde Consolidated Independent School District officials recently considered adding a multimillion-dollar bond referendum to the November ballot for school improvement projects, according to local reports. To launch this debt issue, any underwriter would have to promise not to reduce their ties to the firearms industry.

Bloomberg writers Hannah Levitt and Jenny Surane contributed to this report.