OKLAHOMA CITY – A divided Oklahoma Supreme Court ruled that the Energy Discrimination Elimination Act of 2022 is unconstitutional when applied to the Oklahoma Public Employees Retirement System.
A majority of the Justices affirmed the trial court’s summary judgment that imposed a permanent injunction against State Treasurer Todd Russ that prevented him from “enforcing or applying” the law to OPERS.
The majority allowed the Treasurer’s appeal to proceed “based upon the appellate briefs” and the fact that Russ initiated his appeal prior to the death of plaintiff Don Keenan, 81, who died at his home in Glenpool on April 7.
Keenan sued Russ in December 2023 over his enforcement of House Bill 2034, the Energy Discrimination Elimination Act of 2022, which prohibits the state from doing business with financial institutions deemed by the Legislature and the Treasurer to be hostile to the energy industry.
Keenan was a member and former president of the Oklahoma Public Employees Association. He served 19½ years in the military and later worked for the Oklahoma Employment Security Commission as the Disabled Veterans Employment Representative.
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 did not have “any objections to oil and gas operations” and believed they are “important and critical to the world economy,” his attorney, former state Representative Collin Walke, wrote.
However, as a retiree in OPERS, Keenan objected 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.”
Keenan 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.”
As of 2025, OPERS had 71,120 active, retired, and vested members.
“I was glad Don stood up for retirees to get every dime they are entitled to, without letting politics get in the way,” Walke told Southwest Ledger.
Keenan’s obituary said he “protected the rights of active and retired state workers.” The obituary also took note of his activism and challenge of the state’s anti-ESG (environmental, social, and governance) law.
The ruling by Oklahoma County District Judge Sheila Stinson was appealed by Attorney General Gentner Drummond to the state Supreme Court.
After Keenan’s death, Chief Justice Dustin P.
Rowe decreed, “The appeal shall proceed … and the trial court briefs are the appellate briefs. No additional briefs are necessary. No amicus curiae briefs shall be filed.”
The district court “found and concluded” that the EDEA violated five provisions of the Oklahoma Constitution.
Court’s majority focused on 1 issue
The Supreme Court focused on one: Article 23, Section 12, which stipulates: “All the proceeds, assets and income of any public retirement system administered by an agency of the State of Oklahoma shall be held, invested, or disbursed as provided for by law as in trust for the exclusive purpose of providing for benefits, refunds, investment management, and administrative expenses of the individual public retirement system, and shall not be encumbered for or diverted to any other purposes.”
The Energy Discrimination Elimination Act “requires a state entity to remove its funds/ investments from financial companies that use ESG principles for investment decisions,” the Supreme Court wrote.
Treasurer Russ argued that “A state entity exercising official discretion pursuant to the Act must divest its financial investment from certain financial institutions. However, a state entity may exercise an official discretion and create an exception … and not immediately divest, or alternatively delay” divestiture, in certain circumstances.
The Supreme Court noted that the EDEA also provides that a state governmental entity “ shall not be subject to any requirement of this Act if
the state governmental entity determines that such requirement would be inconsistent with its fiduciary responsibility with respect to the investment of entity assets or other duties imposed by law relating to the investment of entity assets.”
Russ maintained that $28,000 in “switching costs” for one fund were “minimal when compared to the total amount of the fund invested, and two other funds had minimal switching costs of $5,000 and less than $2,500. He also asserted that a $575,000 switching cost “could be overcome with savings over six years if funds were placed with a different entity.”
However, OPERS exercised its right to exempt itself after their board of trustees “estimated the cost of commissions, taxes, and fees related to divestment activity” would cost their pension system $9.7 million, “based upon an affidavit” submitted by Keenan.
“We conclude that application” of the statute to OPERS would create “a ‘dual purpose’ for investment decisions made by OPERS when administering a public retirement system as opposed to the ‘exclusive purpose’ OPERS must follow due to the express language” of Article 23, Section 12, of the state Constitution.
The majority opinion was signed by Justices James R. Winchester, James E. Edmondson, Douglas L. Combs, Noma Gurich, and Richard Darby. Chief Justice Dustin P. Rowe, Vice Chief Justice Dana Kuehn, and Justice M. John Kane dissented. Justice Travis Jett recused himself.
Three justices dissented
The effect of Keenan’s death on the litigation is “profound,” Kane wrote. “It terminated any meaningful opportunity for the Court to seek additional briefing or to engage in an oral argument” of the issues. “I take no position on the merits of the litigation, as this action is no longer procedurally viable.”
The Constitution commands that retirement funds “be held, invested, or disbursed ‘as provided by law,’” Rowe wrote. “This language expressly delegates to the Legislature – the body elected by the people – the authority to implement mechanisms by which retirement funds are administered.” The Energy Discrimination Elimination Act “operates precisely within its constitutional directive.”
This lawsuit had “the wrong plaintiff and the wrong defendant to bring such a challenge,” Kuehn contended.
The Treasurer was the wrong defendant because “[o]nly the Attorney General is authorized to enforce the Act, by bringing ‘any action necessary’ for enforcement,” she wrote. The Treasurer “may not like” the statute; “he may, as he did here, ask the state entity [OPERS] to reconsider. But he cannot make the entity reconsider, and he cannot compel the entity to divest. Only the Attorney General has that power.”
The original plaintiff, Don Keenan, was a beneficiary of OPERS. The state Treasurer sent OPERS a letter “asking that it reconsider its determination, and OPERS declined.” At that point “the matter ended,” Kuehn wrote.
“I would also find” that Keenan lacked legal “standing” to challenge the EDEA, she stated. “The Majority has apparently created a separate category of standing: It allows a suit by a retirement system beneficiary who cannot show damages of any kind, including threats to the OPERS funds from official policy as expressed in the Act,
because the Act was never successfully applied to the OPERS funds. OPERS never divested under the terms of the Act.” And State Treasurer Russ “had no power to make OPERS do so.”
( Editor’s note: Mike W. Ray is a member of OPERS.)
Mike W. Ray is a fifth-generation, award winning journalist who has more than 55 years’ experience covering municipal, county, state, and federal government in Oklahoma and Texas. He can be reached at mike. ray@swoknews.com.