An Oklahoma law prohibiting state and local government contracts with companies that “boycott” the fossil fuel industry is the target of a lawsuit, claiming the measure prevents public employee pension funds from performing their constitutional duty to operate for the exclusive benefit of their beneficiaries.
The case filed in Oklahoma County District Court this week by a state pension recipient contends the 2022 law also violates the First Amendment and the state’s prohibition against special laws. It seeks a temporary restraining order or injunction to block divestment from financial institutions on the state treasurer’s list of fossil fuel boycotters to prevent “monumental” financial costs to retirement systems.
The litigation against the state of Oklahoma and state Treasurer Todd Russ is backed by groups including the Oklahoma Retired Educators Association and Oklahoma Public Employees Association.
“The pension system is not taxpayer money, it is compensation earned by active employees who currently pay into the system and the pensioners who contributed to the same system for decades,” OPEA Executive Director Tony DeSha said in a statement. “The decision to pursue legal action against Todd Russ was not taken lightly, but we feel it is necessary to strengthen the fiduciary responsibility of our pension systems.”
Russ, a Republican former state representative who was elected treasurer in November 2022, initially put 13 financial firms on a boycott list, which was subsequently shrunk to six — Bank of America, BlackRock, Climate First Bank, JP Morgan Chase, State Street Corp., and Wells Fargo.
“The spirit and intention of the law is to protect Oklahomans and the economic base of the state,” Russ said in a statement in response to a request for comment on the litigation. “I will be happy to follow the legislature in the future.”
State lawmakers are looking at tweaks to the law, including eliminating its application to local government contracts.
Oklahoma’s Energy Discrimination Elimination Act of 2022 is similar to Texas laws enacted in 2021 that blazed the trail for statutes protecting politically favored industries such as oil, gas, and firearms. Pleiades Strategy reported in June that 165 “anti-ESG” measures were introduced in 37 states with at least 22 laws and 6 resolutions in 16 states passing.
In addition to targeting divestment, the Oklahoma and Texas laws led to several national investment banks being banned from underwriting municipal bond deals in their states.
After its placement on Oklahoma’s boycotters list, Wells Fargo resigned as senior manager of a $500 million Oklahoma Turnpike Authority revenue bond issue.