Asset AllocationDecember 14, 2023

Oklahoma Retiree Files Injunction to Stop Anti-ESG Bill

The complaint claims the 2022 law not only violates the US and Oklahoma constitutions, but that that the financial costs to the state are ‘monumental.’

Reported by Michael Katz

A retired state employee and U.S. Army veteran has filed a motion for a temporary injunction against Oklahoma Treasurer Todd Russ to prevent the implementation of the state’s Energy Discrimination Elimination Act, calling it “governmental overreach” and stating it “violates the First Amendment.” The injunction also claims the financial costs of the act are “monumental.”

Last year, Oklahoma Governor Kevin Stitt signed into law the Energy Discrimination Elimination Act of 2022, which forbids state entities, including public pension funds, from doing business with companies that boycott the oil and gas industry.

The lead plaintiff filing the injunction is Donald Keenan, a U.S. Army and Air Force veteran and a former president of the Oklahoma Public Employees Association.

“As a retiree under the [Oklahoma Public Employees Retirement System] system, I object to my retirement benefits being depleted because the State of Oklahoma believes that making political statements with retiree dollars is more important than taking care of retirees themselves,” Keenan said in an affidavit included with the injunction. “I bring this suit to ensure that going forward, the state and the treasurer abide by their constitutional and statutory obligations to operate the retirement systems for the ‘exclusive benefit’ of its pensioners.”

The lawsuit claims the state law “violates the First Amendment for a litany of reasons, including being compelled speech, viewpoint discrimination, and content discrimination,” adding that it is “unconstitutionally vague.” The lawsuit also claims the act violates Oklahoma’s prohibition on “special laws” by creating an exception to the rule that declaratory judgment actions do not require the losing party to pay both parties’ attorney fees.

According to the lawsuit, as of August 15, the treasurer placed BlackRock, Wells Fargo, J.P. Morgan Chase, Bank of America, State Street and Climate First Bank on the state’s restricted financial company list. The complaint also cited an analysis by the city of Stillwater that found the investment firm blacklist, which barred it from using Bank of America for an infrastructure bond issue, would cost the city more than $1 million in higher interest. The complaint also cites the Oklahoma Public Employees Association’s claims that divesting from BlackRock and State Street would cost the pension system approximately $10 million.

The motion states that, “perhaps most egregiously,” the act violates the Constitution of the State of Oklahoma, which requires state-managed pension systems to operate for the “exclusive benefit” of their beneficiaries. It claims the Oklahoma state legislature attempted to “absolve the Treasurer and pension systems of their constitutional fiduciary duties” by saying they were exempt from any conflicting obligations with respect to making investments.

“It goes without saying that a statute cannot not trump the constitution, nor can a state statute contravene federal law,” the injunction states.

In a statement provided to CIO, Russ said, “The spirit and intention of the law is to protect Oklahomans and the economic base of the state. I will be happy to follow the legislature in the future.”

The injunction also argues that the Energy Discrimination Elimination Act is essentially the same as legislation passed in other states that prohibits businesses from contracting with the state if they boycott Israel, which it noted has been held as unconstitutional by five federal courts.