OKLAHOMA CITY – A district judge issued a temporary injunction May 7 against State Treasurer Todd Russ and his enforcement of a state ‘blacklist’ of financial firms that he claims “boycott” energy companies.
Oklahoma County District Judge Sheila Stinson granted the edict in the lawsuit filed last November by state retiree Don Keenan of Glenpool, who is a former president of the Oklahoma Public Employees Association. He challenged the law and contended it was harmful to state pension systems.
In her ruling, Stinson wrote, “The Court hereby grants temporary injunction against the enforcement of the Oklahoma Energy Discrimination Elimination Act of 2022, based on Plaintiff’s claims of Violation of Exclusive Benefit and Vagueness… Defendant, his employees, agents, and successor in office are hereby temporarily enjoined from enforcing the provisions of the Oklahoma Energy Discrimination Elimination Act of 2022 until and unless the Court orders otherwise.”
The purpose of a temporary injunction is “to preserve the status quo and prevent the perpetuation of a wrong or the doing of an act whereby the rights of” one of the parties to litigation “may be materially invaded, injured, or endangered,” Stinson wrote. A temporary injunction “protects a court’s ability to render a meaningful decision on the merit of the controversy.”
In his lawsuit, Keenan argued the law that was approved by the Legislature [House Bill 2034 by GOP Rep. Mark McBride of Moore] and enacted in 2022 violated the state Constitution. Keenan contended the Constitution requires state-managed pension systems to operate for the “exclusive benefit” of their beneficiaries. Keenan’s suit said, in other words, “the funds may not be used for political warfare.”
“Policymakers at all levels should do more to increase access and opportunity for retirement savings and should avoid inserting politics into all types of investment decisions that ultimately put retirees and taxpayers at risk – from pension plans to projects for schools, to state and local government contracts,” said Tim Hill, president of the Alliance for Prosperity and a Secure Retirement.
“We are hopeful that when this matter is ultimately heard in the courts that the harm from these overreaching efforts will be permanently shelved,” Hill said. “The temporary restraining order to put the implementation of the Oklahoma Energy Discrimination Elimination Act on hold is a strong step in the right direction.”
In seeking the court injunction, Keenan’s lawsuit charged that pensioners “will be left to wonder not just whether they will have retirement funds left, but on what political agenda the funds were wasted on.”
As of June 30, 2023, the close of Fiscal Year 2023, OPERS had 72,331 active, vested and retired members and a funded ratio of 100.7%.
2022 law could alter ‘stability’ of OPERS “The Court finds that divestiture or transfer of assets and investments has the potential to affect the financial soundness of investment accounts,” Stinson wrote. “If the Oklahoma Public Employees Retirement System Board … follows the Treasurer’s interpretation, 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 HB 2034 would cost the pension system $9.7 million. Consequently, the OPERS board voted to exercise an exemption to the law.
Russ notified OPERS trustees and Executive Director Joe Fox that the board’s actions “were in opposition to the letter and spirit” of HB 2034.
“By putting a hold on implementation of the state’s financial boycott law, Judge Sheila Stinson has taken the first step in stopping the harm done to state retirees from a law that increases costs for the state’s public pension funds,” Hill said. The OPERS Board “recognized the cost when they rightfully voted to exercise an exemption from being forced to limit which financial institutions they could continue to work with to manage the state’s retirement funds.”
Prof’s research shows EDEA has been costly A study by the Oklahoma Rural Association claims the two-year-old EDEA law is more harmful than beneficial to the state’s economy.
The association is a group that promotes rural Oklahoma as well as business and industry in rural communities. The discrimination act was created to fight financial firms from using ESG policies against the oil and gas industry.
The research study, entitled “Unintended Consequences of the Energy Discrimination Elimination Act in Oklahoma,” was conducted by Dr. Travis Roach, an associate professor and chairman of the Department of Economics at the University of Central Oklahoma.
“It is clear that the EDEA has caused an unnecessary increase in municipal borrowing rates, increasing costs, harming taxpayers, and resulting in municipalities paying more for less or canceling projects altogether,” Roach wrote. “These unintended consequences are causing significant harm to Oklahoma communities and our economy.”
Notably, the study found that the EDEA has resulted in:
• A 15.7% increase in borrowing costs for Oklahoma municipalities compared to non-EDEA adopting states.
• More than $184 million in additional expenses for local municipalities since the policy’s enactment.
• Increased borrowing costs, which negatively impact Oklahoma municipalities through higher taxes and delays or complete abandonment of projects intended to improve infrastructure and quality of life.
For example, Stillwater City Council voted in April 2023 to borrow money from Bank of America, which offered the lowest interest rate on the city’s $13.5 million project to update municipal heating and cooling systems, install new streetlights, and improve the water infrastructure in order to reduce rising energy costs.
Less than a week later, Treasurer Russ announced that Bank of America was on the list of financial companies banned from doing business with government entities in Oklahoma. Bank of America was one of 13 companies initially alleged to be “boycotting” oil and gas companies in violation of HB 2034.
The interest rate offered by the next best lender was 0.7% higher, which was almost $1.2 million more than the City of Stillwater anticipated.
Monica Collison, president of the Oklahoma Rural Association, said “the negative impact” of the EDEA on Oklahoma taxpayers and communities, including those in rural and underserved areas, “was completely avoidable and, as the research shows, a direct, negative result” of the failed policy. “Any tax dollar unnecessarily spent is wasteful – especially to the tune of more than $184 million.”
Seven companies on blacklist In his notice to OPERS officials, Russ said the purpose of the Oklahoma Energy Discrimination Elimination Act is “to counter the ‘political agenda’ of certain financial companies and to assist the economic status of the oil and gas sector.”
Earlier this month, Russ announced that his office added Barclays PLC to the Oklahoma Treasurer’s Restricted Financial Companies List of institutions that are currently considered hostile to energy companies.
Russ determined that Barclays PLC is another financial company ineligible for state contracts “because they have publicly committed to boycott fossil-fuel companies.” In February, Barclays pledged to stop directly financing new oil and gas projects.
Oklahoma’s tax dollars and state pension funds “will not be used to sabotage the state’s vital fossil-fuel based industries, whether those strategies target current investment policies or long-term goals,” Russ said.
In the third installment of the Treasurer’s banned list, Barclays was added to Black-Rock Inc., Wells Fargo & Co., JPMorgan Chase & Co., Bank of America, State Street Corp., and Climate First Bank.
Judge Stinson wrote that there is “a substantial likelihood that the law’s stated purpose of countering a ‘political agenda’ is contrary to OPERS’s constitutionally stated purpose.” Any attempt by the Treasurer or the OPERS board 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.
Treasurer tried to get lawsuit tossed out Russ (R-Cordell) attempted to get Keenan’s lawsuit dismissed, but as Southwest Ledger and OK Energy Today previously reported, Judge Stinson ruled in February against him and refused to throw out the case.
In a filing made in January 2024, the Treasurer said Keenan did not have legal standing and was not harmed by his enforcement of the Oklahoma Energy Discrimination Elimination Act.
He further asserted that regardless of the enforcement of the law by his office, Keenan still received a “fixed payment each month, and the payments do not fluctuate with the value of the plan or because of the plan fiduciaries’ good or bad investment decisions.”
Russ also claimed he cannot and should not be sued because he had one obligation, that of creating the list of financial companies banned from state business.
“He plays no role in the remaining implementation or enforcement of the Act,” Russ said. “It is the state government entities themselves, namely the retirement systems, that determine whether to apply one of the statutory exceptions—.”
Jordan Harvey, Russ’s chief of staff, told Southwest Ledger, “The reality is, the judge’s ruling will not stop him from pushing back against outside interests using our hardearned dollars to promote their agendas.” Russ “plans to appeal the ruling,” she said on May 8.
Stinson declared that “five separate sections of the Act contain conflicting and vague provisions,” Harvey noted, and Russ concurred. “We think the law should be clarified,” she said.
The Treasurer is “trying to protect state dollars from being used as pawns for asset managers’ political agendas,” Harvey said. “They can’t use our dollars to promote their ESG agendas. They need to be focused exclusively on their investments.”