Oklahoma fossil fuel 'boycotter' law found unconstitutional for public pensions

An Oklahoma Supreme Court decision on Tuesday finding the state's Energy Discrimination Elimination Act unconstitutional when applied specifically to public pensions apparently keeps the law's prohibitions for governmental contracts, including those related to municipal bond underwriting, intact.

The 2022 act targets financial firms deemed to be "boycotting" the fossil fuel industry for divestment purposes, while also prohibiting state and local government contracts worth $100,000 or more with firms placed on the state treasurer's boycotter list.

The high court's 5-3 ruling affirmed a 2024 district court's summary judgment granting a permanent injunction "to the extent the injunction prevents the (state) treasurer from enforcing or applying (the act) to the Oklahoma Public Employees Retirement System (OPERS)."

The Oklahoma Attorney General's Office said the court's decision "does not apply to other entities within Oklahoma."

"Our office is disappointed by the ruling," a statement said. "We are reviewing the ruling and determining next steps."

Jered Davidson, an attorney with Oklahoma City-based The Public Finance Law Group, said "for right now, we are proceeding as if the law is still in force for all other entities, as the opinion was specific to OPERS, but the opinion may provide precedent to other municipal entities to challenge the applicable provisions of the act."

The lawsuit, brought against state Treasurer Todd Russ by retired state worker Don Keenan, who has since died, came after OPERS determined that commissions, taxes, and fees related to divesting from firms on the list would cost an estimated $9.7 million and tried to use an exemption in the law to avoid divestment.

In 2024, Oklahoma County District Court Judge Sheila Stinson permanently halted the law, determining the act was unconstitutionally vague and violated Oklahoma's constitutional requirement that all pension benefits be used for the benefit of beneficiaries.

Russ said he "respected the judge's ruling from the very beginning."

"My office is currently in communication with the solicitor general to fully understand the appropriate path forward and ensure we proceed in accordance with the law," he said in a statement. "It is important to remember with or without a statue the office is obligated to make sound business decisions as a fiduciary for the state."

OPERS did not immediately respond to a request for comment.

The state treasurer has placed Barclays, Bank of America (BAC), JP Morgan Chase, Wells Fargo (WFC), BlackRock (BLK), State Street Corp. (STT), and Climate First Bank on a list of "boycotters." Wells Fargo (WFC) resigned in May 2023 as lead underwriter for a $500 million Oklahoma Turnpike Authority revenue bond deal after it landed on the list. It was replaced with RBC Capital Markets.

Similar laws have been enacted in several other states, including Texas, which in 2021 banned state and local government contracts with companies that "boycott" or "discriminate" against the fossil fuel or firearm industries. In February, a federal court judge found the fossil fuel law to be unconstitutional.

Oklahoma enacted its version of a firearm-related contract ban in 2025.