On May 29, 2026, the Fifth Circuit Court of Appeals granted the Texas Attorney General and Comptroller’s motion to stay a preliminary injunction blocking enforcement of Texas SB 13, the state’s 2021 law prohibiting investments and contracts with certain financial institutions deemed by the state to “boycott energy companies.”
In February 2026, the US District Court for the Western District of Texas declared SB 13 (2021) unconstitutional under the First and Fourteenth Amendments of the US Constitution, finding the statute facially overbroad and impermissibly vague, and entered an injunction against its enforcement.
The Fifth Circuit did not reverse or otherwise resolve the district court’s injunction on the merits; rather, it granted the motion to “stay the injunction pending appeal.” The practical implication is that Texas may proceed with enforcement of the law while the appeal is ongoing. A June 3, 2026, letter from the Texas Attorney General indicates that the Attorney General’s office will resume enforcing SB 13.
Unless a party seeks further review of the stay order, the appeal will proceed in the ordinary course before the Fifth Circuit on the merits. The Fifth Circuit panel’s decision to stay could be reconsidered and potentially vacated by an en banc review, which is a review by the full Fifth Circuit Court of Appeals’ judges. Notably, en banc review is rare.
Supreme Court review is a possible later step after further proceedings in the Fifth Circuit.
Accordingly, financial institutions with Texas-related public-sector business should prepare for renewed SB 13 enforcement by reviewing their investment, contracting, certification, and compliance practices while continuing to monitor the appeal and any further challenges to the stay.
For more on SB 13, see Latham’s Client Alert.
This post was prepared with the assistance of Lindsey Quinlisk and Catherine Fraser.