Two Republican senators want to amend a new law that bars state agencies and pension systems from working with banks that an Oklahoma official deemed hostile to fossil fuel energy companies.
Amid uncertainty about the law’s implementation and a lawsuit challenging the measure’s constitutionality, senators Dave Rader, R-Tulsa and Chuck Hall, R-Perry, filed bills to tweak Oklahoma’s Energy Discrimination Elimination Act.
Hall filed Senate Bill 1510 to clarify that the law, which targets financial institutions that are limiting their oil and natural gas investments and adopting environmentally friendly policies, doesn’t apply to municipalities.
This comes after Stillwater officials had to rethink a series of energy efficiency projects across their city because State Treasurer Todd Russ blacklisted the bank from which they intended to borrow millions in funding.
Under the act, Russ’ office was tasked with compiling and maintaining a list of financial institutions that boycott fossil fuel companies. The list includes Bank of America, which offered Stillwater the lowest interest rate to fund more than $13 million in lighting and infrastructure projects.
Hall, a former two-term city mayor whose district includes Stillwater, said he believes the law was never intended to apply to municipalities, but they were inadvertently included.
“We’re excluding these municipalities because, in my opinion, we should do everything we can not to preempt the decisions that are made on a local level,” he said.
Stillwater officials explored all their options, including considering borrowing funds from other banks and seeking legal guidance from Attorney General Gentner Drummond’s Office. Although Drummond’s office advised Stillwater officials that pursuing funding through Bank of America was still an option, city officials felt the move could leave them open to possible legal challenges, said Deputy City Manager Brady Moore.
He’s hopeful the proposed legislation gives municipalities clarity by exempting them.
“Municipalities are already up against a funding challenge just on all the services and amenities that we oversee, so it’d be nice to have the most competitive options for financing and not be at a disadvantage,” Moore said.
In the meantime, Stillwater plans to tackle its energy efficiency projects over the upcoming years without taking out a bank loan.
“We still have a really positive path forward,” Moore said.
During an interim study in October to discuss the law’s implementation, Rader said some legislative tweaks were necessary.
Rader recently filed Senate Bill 1536, which would give the state treasurer the ability to seek an attorney general’s opinion if he disagrees with how an agency or pension system is responding to the law. The attorney general’s opinion would determine if the governmental entity is in compliance with the Energy Discrimination Elimination Act.
Russ has criticized the Oklahoma Public Employees Retirement System for taking an exemption under the law that prevents it from having to divest from the blacklisted companies on the grounds that doing so would be a breach of the pension system’s fiduciary responsibility.
Rader said his bill is likely to change over the course of the legislative session that begins Feb. 5.
“I think this is a door opener for some other issues that were in the bill,” he said. “I do not expect the bill that I submitted will be the bill in its finality.”
A state retiree filed a lawsuit in November to challenge the law he alleges is unconstitutional because pensioners could be forced to cover the costs if pension systems drop certain fund managers.
Oklahoma’s Energy Discrimination Elimination Act is similar to laws implemented in other conservative-led states.
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