OKLAHOMA CITY–The Oklahoma County district judge who previously suspended enforcement of Oklahoma’s anti-ESG (environmental, social, and governance) Act granted summary judgment in the case.
Judge Sheila Stinson cited three violations of the state Constitution in her Oct. 25 ruling against the Energy Discrimination Elimination Act of 2022, which prohibits the state from doing business with financial institutions deemed to be hostile to the energy industry.
Glenpool retiree Don Keenan challenged the statute in a lawsuit filed in December 2023.
Keenan served 19.5 years in the military and later worked for the Oklahoma Employment Security Commission in 1985-96 as the Disabled Veterans Employment Representative. He also is a member and former president of the Oklahoma Public Employees Association.
After he retired from state service, Keenan was employed by the Sinclair refinery in Tulsa as its human resources director.
As a former Sinclair employee, Keenan “does not have any objections to oil and gas operations and believes they are important and critical to the world economy,” his attorney, former state Rep. Collin Walke, wrote.
However, as a retiree in the Oklahoma Public Employees Retirement System, 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.”
He said his lawsuit was intended to ensure that the State Treasurer “abides by his Oklahoma constitutional and statutory obligations to operate the retirement systems for the ‘exclusive benefit’ of its pensioners.”
Keenan argued that creation of a “blacklist” of companies that allegedly “discriminate” against the oil and gas industry harmed him. He sued State Treasurer Todd Russ for enforcement of the Act and the creation of a list of firms that were not allowed to do financial business with state agencies, including state retirement systems.
In the third installment of the Treasurer’s banned list, which was issued in May, Russ added Barclays PLC to BlackRock Inc., Wells Fargo & Co., JPMorgan Chase & Co., Bank of America, State Street Corp., and Climate First Bank.
Freedom of speech “does not ‘just prevent outright prohibition on speech,’” Judge Stinson wrote. It also prohibits the government from “imposing unconstitutional conditions that chill or deter speech.” The government imposes an unconstitutional condition when it makes government benefits “contingent on endorsing a particular message…” The U.S. Supreme Court ruled in 1982 that a state’s “regulatory power over boycotts is limited when the boycott’s main purpose is to influence governmental action,” Stinson pointed out.
Stinson also said the Act “prohibits private causes of actions and assesses attorney fees against any individual or entity challenging the statue, with no consideration of whether they are successful or not in their challenge.”
In reaching her decision, Stinson wrote that she relied heavily on a similar ruling in a federal case from Missouri where a permanent injunction was issued in case that involved environmental, social, and corporate governance administrative rules.
“While the Missouri rules differ from the Oklahoma Act as to procedural requirements and applications,” Stinson found the case “persuasive as to the issue of commercial speech and the objective of similar legislation.”
State’s anti-ESG law went too far, judge says She also concluded that Oklahoma’s Act “is more extensive than is necessary to serve the governmental interest.”
In her earlier grant of a partial summary judgment, the judge found there were constitutional violations pertaining to the “Exclusive Purpose of Benefits” and “Due Process,” which she determined to be “unconstitutionally vague.”
In issuing her preliminary injunction on May 7, Stinson ruled that “divestiture or transfer of assets and investments has the potential to affect the financial soundness of investment accounts.” If the OPERS Board followed the Treasurer’s interpretation, she wrote, “the system’s assets could decrease or increase in value and potentially substantial[ly] alter the stability of the investment funds prior to a final determination by the Court.”
The OPERS board of trustees estimated the commissions, taxes, and fees related to divestment activity mandated by House Bill 2034 would cost the pension system $9.7 million. Consequently, the OPERS board voted to exercise an exemption to the law.
“This ruling is a victory for current and future retirees who depend on Oklahoma’s pensions for their financial security, as well as for the state’s taxpayers and businesses,” said Tim Hill, president of the Alliance for Prosperity and a Secure Retirement. “First responders, teachers, and other public employees deserve sound financial management of their pensions without the increased risks that come when political agendas are added to the mix.”
State Attorney General Gentner Drummond, who took control of defending the state treasurer, took the case to the State Supreme Court prior to Stinson’s summary judgment. A new briefing schedule was recently granted by the Chief Justice and the new deadline for filings in the case is Oct. 30.