Paxton’s Coal Lawsuit Drew Republican Fire Long Before Tuesday’s Loss

AUSTIN – Ken Paxton’s lawsuit against BlackRock, State Street and Vanguard was sold as a way to lower Texans’ electric bills. Critics, a good number of them Republicans, said all along it would do the opposite, and Tuesday’s results gave them a fresh argument.

Paxton sued in November 2024 and has been attorney general since 2015. On Tuesday he was beaten in the U.S. Senate race by Democrat James Talarico. Nathan Johnson, a Democratic state senator from the Dallas area, is the projected winner of the contest to succeed him, with 52% to Republican Mayes Middleton’s 46% and 94% of the vote in.

Nobody can say how much the lawsuit mattered at the ballot box. Paxton carried plenty of other baggage, and the Texas Tribune reported that his favorability stayed deeply underwater.

But the AP found voters frustrated by the cost of gas, groceries and health care, and said that Paxton mentioned rising costs while spending more energy painting Talarico as too far left for Texas.

The coal case fits that complaint. At the time of the filing, coal accounted for under 10% of Texas generating capacity, down from 18% in 2020, ERCOT figures cited by Bloomberg showed. Texas and its partner states claim the three firms leaned on coal producers through their shareholdings to hold back production, which they say lifted coal prices and power bills.

BlackRock and State Street reject that, calling the suit baseless and describing their holdings as passive. BlackRock also argued from the outset that the case hurt Texas’ pro-business reputation.

U.S. District Judge Jeremy Kernodle in Tyler declined to toss most of the case in August 2025. Vanguard left the suit in February with a $29.5 million settlement. This week, Law360 reported, BlackRock and State Street won a partial trim, but the court left in place claims Iowa and Nebraska filed on behalf of their electricity customers.

The sharpest early criticism came from the right. Former Gov. Rick Perry, a Republican who led Texas for 14 years and served as energy secretary during President Donald Trump’s first term, wrote in the Washington Times that the suit risked “branding Texas as hostile to capital” and cut against the president’s energy agenda. The Journal’s editorial page said the complaint offered no evidence of a conspiracy. Stephen Moore, who advised Trump on the economy, called it “one of the most convoluted lawsuits of all time” and noted that attorneys general in coal states such as Kentucky and Ohio stayed out.

Former Rep. Ken Buck, R-Colo., who served on the anti-trust subcommittee, wrote that it rested on a flimsy factual basis.

Two Trump cabinet members raised alarms as well. Energy Secretary Chris Wright told a National Coal Council meeting in January that forced divestment could undermine grid reliability by choking off capital, and Interior Secretary Doug Burgum agreed it would hurt everyone who pays an electric bill, Forbes reported. Michael Toth of the University of Texas at Austin’s Civitas Institute wrote in National Review that the allegations are a long shot on the merits. S&P Global described the case as splitting opinion on the political right.

The numbers are not kind to the theory. EIA attributes this year’s 11% jump in wholesale power prices largely to Winter Storm Fern and summer heat, and it expects natural gas to supply about 40% of U.S. electricity this year against 16% for coal. In August, EIA’s own figures showed Henry Hub gas undercutting Central Appalachian coal per unit of energy. Gas already supplies more than half of Texas’ electricity, a Houston Chronicle columnist noted, and wind has passed coal in the state.

Then there is the legal team. Paxton brought in Houston trial lawyer Tony Buzbee as lead outside counsel, about a year after Buzbee successfully defended him at his impeachment trial. At the filing, a Chronicle columnist argued Buzbee stood to collect a share of any settlement. The Texas Tribune found that the attorney general’s office had no competitive-bid records for its contingent-fee outside contracts, saying state law exempts it from those steps. Sen. John Cornyn, a Republican who also served as attorney general, said he never hired outside counsel in the job.

What happens next is Johnson’s call. Texas can keep litigating, pare the claims back, settle or exit. Kansas and Iowa, also plaintiff states, were headed toward electing Democrats to replace their Republican attorneys general, though neither race had been called by the AP by Wednesday.

With utility bills near the top of voters’ minds Tuesday, a new attorney general looking for an affordability win would have little to gain from defending a case Republicans themselves picked apart and that offers ratepayers no clear relief.

Paxton remains in office until his successor takes over.