Oklahoma enacted the Energy Discrimination Elimination Act in 2022. It allows the State Treasurer to create a list of banks that don’t support the oil and gas industry, and then ban state agencies and pensions from doing business with them.
“The third installment of this list shows progress in the state contending with companies targeting Oklahoma industry and ultimately Oklahoma jobs,” said State Treasurer Todd Russ when he added a bank to the list last week.
The list includes some of the country’s largest banks:
- BlackRock, Inc.
- Wells Fargo & Co.
- JPMorgan Chase & Co.
- Bank of America, N.A.
- State Street Corp.
- Climate First Bank
- Barclays
The Oklahoma Public Employee Retirement System (OPERS) estimated it would cost them nearly $10 million to stop working with blacklisted banks.
The OPERS Board of Trustees decided to exercise an exemption to the law but met pushback from Russ. He said the blacklisted banks would use taxpayer money to “help push a political agenda on energy companies.”
Don Keenan is a state government retiree and former member of the OPERS Board of Trustees. He sued Russ at the end of last year.
“Mr. Keenan does object to his retirement benefits being depleted because the Treasurer believes that making political statements with retiree dollars is more important than taking care of retirees themselves,” reads the lawsuit.
On Monday, State Judge Sheila Stinson said the court will likely rule in Keenan’s favor because of issues with the law’s constitutionality.
“The Court finds a substantial likelihood that this stated purpose of countering a ‘political agenda’ is contrary to the retirement system's constitutionally stated purpose,” Stinson wrote in the order. “An attempt by the Treasurer or the [OPERS Board of Trustees] to divest or transfer funds for any purpose other than the benefit of the members or beneficiaries is contrary to and a violation of [the Oklahoma Constitution].”
Stinson blocked the state from enforcing the Treasurer’s blacklist until the case is decided. The block will protect retirees and other taxpayers from potentially irreparable harm in the meantime.
The law has also drawn questions about whether municipal governments can work with blacklisted institutions. The City of Stillwater had to reconsider infrastructure projects because its lowest-interest loan offer came from a blacklisted bank.
Oklahoma fires attorney
Attorney General Gentner Drummond criticized Russ and the lawyer he had hired for the case. He wrote in a news release that he had fired the attorney and his office would now represent the state.
“It is extremely disappointing that the counsel hired by Treasurer Russ was unable to secure a favorable ruling in defense of Oklahoma’s anti-ESG law,” Drummond said in a statement. “Because of this failure, the law is now on hold and at risk of being struck down entirely. Oklahomans deserve better.”
Russ responded in his own statement that he had requested Drummond represent the state's interests in the case, but the AG had twice refused, instead recommending counsel. Russ said he had selected someone else who he was "comfortable" with.
"Certainly, I am disappointed with the outcome but have several facts for appeal," Russ said. "I had hoped to have the Attorney General as my defender all along.”
The State Senate introduced two bills (SB1510 and SB1536) this session to clarify the Oklahoma Energy Discrimination Elimination Act, but neither has made it to the Governor’s desk.
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