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SENATE FLOOR VERSION
February 13, 2025
SENATE BILL NO. 714 By: Rader of the Senate
and
Moore of the House
An Act relating to state government; amending
Sections 2, 3, 4, and 5, Chapter 231, O.S.L. 2022 (74
O.S. Supp. 2024, Sections 12002, 12003, 12004, and
12005), which relate to the Energy Discrimination
Elimination Act of 2022; modifying and defining
terms; removing restrictions on certain legal
proceedings; transferring authority for enforcement
of act; modifying process for determination of listed
financial companies; requiring reporting; providing
exemptions for certain state governmental entities
due to fiduciary responsibilities; directing rule
promulgation; removing political subdivisions from
certain provisions of act; updating statutory
language; updating statutory language; repealing
Section 6, Chapter 231, O.S.L. 2022 (74 O.S. Supp.
2024, Section 12006), which relates to contracts
entered into with financial companies; providing an
effective date; and declaring an emergency.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY Section 2, Chapter 231, O.S.L.
2022 (74 O.S. Supp. 2024, Section 12002), is amended to read as
follows:
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Section 12002. A. As used in the Energy Discrimination
Elimination Act of 2022:
1. “Attorney General” means the Attorney General or his or her
designee;
2. “Boycott energy company” means, without an ordinary business
purpose, refusing to deal with, terminating business activities
with, divesting from, or otherwise taking any action that is
intended to penalize, inflict economic harm on, or limit limiting
commercial relations with a company because the company:
a. engages in the exploration, production, utilization,
transportation, sale, or manufacturing of fossil-fuel-
based energy and does not commit or pledge to meet
environmental standards beyond applicable federal and
state law, or
b. does business with a company described by subparagraph
a of this paragraph;
2. 3. “Company” means a for-profit sole proprietorship,
organization, association, corporation, partnership, joint venture,
limited partnership, limited liability partnership, or limited
liability company, including a wholly owned subsidiary, majority-
owned subsidiary, parent company, or affiliate of those entities or
business associations, that exists to make a profit;
3. “Treasurer” means the State Treasurer or their designee;
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4. “Direct holdings” means, with respect to a financial
company, all securities of that financial company held directly by a
state governmental entity in an account or fund in which a state
governmental entity owns all shares or interests;
5. “Financial company” means a publicly traded financial
services, banking, or investment company;
6. “Indirect holdings” means, with respect to a financial
company, all securities of that financial company held in an account
or fund, such as a mutual fund, managed by one or more persons not
employed by a state governmental entity, in which the state
governmental entity owns shares or interests together with other
investors not subject to the provisions of this act. The term does
not include money invested under a plan described by Section 401(a),
401(k), or 457 of the Internal Revenue Code of 1986;
7. “Listed financial company” means a financial company listed
by the Treasurer Attorney General; and
8. “Ordinary business purpose” means a purpose directly related
to financial return or financial risk mitigation. A company may
reasonably be determined to have boycotted an energy company without
an ordinary business purpose based on its public statements or
actions including, but not limited to:
a. prospectuses, reports, communications with portfolio
companies, or shareholder votes, or
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b. participation in, affiliation with, or status as a
signatory to, any coalition, initiative, joint
statement of principles, or agreement, to act or to
endeavor to act predominantly in furtherance of
environmental, social, political, or ideological
interests; and
9. “State governmental entity” means all state retirement
systems.
B. With respect to actions taken in compliance with the Energy
Discrimination Elimination Act of 2022, including all good-faith
determinations regarding financial companies as required by this
act, a state governmental entity and the Treasurer Attorney General
are exempt from any conflicting statutory or common law obligations
including any obligations with respect to making investments,
divesting from any investment, preparing or maintaining any list of
financial companies, or choosing asset managers, investment funds,
or investments for the state governmental entity’s securities
portfolios.
C. In a cause of action based on an action, inaction, decision,
divestment, investment, financial company communication, report, or
other determination made or taken in connection with the Energy
Discrimination Elimination Act of 2022, the state shall indemnify
and hold harmless for actual damages, court costs, and attorney fees
adjudged against, and defend:
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1. An employee, a member of the governing body, or any other
officer of a state governmental entity;
2. A contractor of a state governmental entity;
3. A former employee, a former member of the governing body, or
any other former officer of a state governmental entity who was an
employee, member of the governing body, or other officer when the
act or omission on which the damages are based occurred;
4. A former contractor of a state governmental entity who was a
contractor when the act or omission on which the damages are based
occurred; and
5. A state governmental entity.
D. 1. A person, including a member, retiree, or beneficiary of
a retirement system to which the Energy Discrimination Elimination
Act of 2022 applies, an association, a research firm, a financial
company, or any other person shall not sue or pursue a private cause
of action against the state, a state governmental entity, a current
or former employee, a member of the governing body, or any other
officer of a state governmental entity, or a contractor of a state
governmental entity, for any claim or cause of action, including
breach of fiduciary duty, or for violation of any constitutional,
statutory, or regulatory requirement in connection with any action,
inaction, decision, divestment, investment, financial company
communication, report, or other determination made or taken in
connection with this act.
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2. A person who files suit against the state, a state
governmental entity, an employee, a member of the governing body, or
any other officer of a state governmental entity, or a contractor of
a state governmental entity, is liable for paying the costs and
attorney fees of a person sued in violation of this section.
3. 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. A state governmental entity that takes the exemption under
this subsection shall electronically submit a report to the
President Pro Tempore of the Senate, the Speaker of the House of
Representatives, and the Attorney General.
SECTION 2. AMENDATORY Section 3, Chapter 231, O.S.L.
2022 (74 O.S. Supp. 2024, Section 12003), is amended to read as
follows:
Section 12003. A. 1. The Treasurer Attorney General shall
prepare and maintain and provide to each state governmental entity a
list of financial companies that boycott energy companies. In
maintaining the list, the Treasurer may Attorney General shall:
a. review and rely, as appropriate in the Treasurer’s
Attorney General’s judgment, on publicly available
information regarding financial companies including
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information provided by the state, nonprofit
organizations, research firms, international
organizations, and governmental entities, and
b. verify that the financial companies on the list are
publicly traded,
c. request written verification from a financial company
that it does not boycott energy companies and rely, as
appropriate in the Treasurer’s Attorney General’s
judgment and without conducting further investigation,
research, or inquiry, on a financial company’s written
response to the request, and
d. develop and publish criteria for the definition of a
boycott energy company and publish the criteria for
removing a company from the list.
2. A The Attorney General, after performing his or her due
diligence, may presume that a financial company that fails to
provide to the Treasurer a written verification under subparagraph b
of paragraph 1 of this subsection before the sixty-first day after
receiving the verification request from the Treasurer is presumed to
be is boycotting energy companies.
3. The Attorney General shall, as part of the list, provide
information to support the determination that a financial company is
boycotting energy companies.
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4. The Attorney General shall notify in writing each financial
company that is included on the list, the evidence used to place
that company on the list, and the process for being removed from the
list.
5. The Treasurer Attorney General shall update the list
annually or more often as the Treasurer considers necessary, but not
more often than quarterly, based on information from, among other
sources, those listed in subparagraph a of paragraph 1 of this
subsection by completing the verification process as outlined in
this subsection.
4. 6. Not later than the thirtieth day after the date the list
of financial companies that boycott energy companies is first
provided or updated, the Treasurer Attorney General shall file the
list with the presiding officer of each house of the Legislature and
the Attorney General and post the list on a publicly available
Internet website.
5. 7. The Treasurer Attorney General may retain third-party
consultants to assist in the implementation of the provisions of
this act.
B. Not later than the thirtieth day after the date a state
governmental entity receives the list provided under paragraph 1 of
subsection A of this section, the state governmental entity shall
notify the Treasurer Attorney General of the listed financial
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companies in which the state governmental entity owns direct
holdings or indirect holdings.
C. 1. For each listed financial company identified under
paragraph 1 of subsection A of this section, the state governmental
entity shall send a written notice:
a. informing the financial company of its status as a
listed financial company,
b. warning the financial company that it may become
subject to divestment by state governmental entities
after the expiration of the period described by
paragraph 2 of this subsection, and
c. offering the financial company the opportunity to
clarify its activities related to companies described
by paragraph 1 of subsection A of this section.
2. Not later than the ninetieth day after the date the
financial company receives notice under paragraph 1 of this
subsection, the financial company shall cease boycotting energy
companies to avoid qualifying for divestment by state governmental
entities.
3. If, during the time provided by paragraph 2 of this
subsection, the financial company ceases boycotting energy
companies, and notifies the Attorney General in writing of the
cessation, the Treasurer shall Attorney General may remove the
financial company from the list maintained under paragraph 1 of
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subsection A of this section, and this subsection will no longer
apply to the financial company unless it resumes boycotting energy
companies. The Attorney General shall notify state governmental
entities of the financial company’s removal from the list.
4. If, after the time provided by paragraph 2 of this
subsection expires, the financial company continues to boycott
energy companies, the state governmental entity shall sell, redeem,
divest, or withdraw all publicly traded securities of the financial
company, except securities described by subsection E of this
section, according to the schedule provided under subsection D of
this section.
D. 1. A state governmental entity required to sell, redeem,
divest, or withdraw all publicly traded securities of a listed
financial company shall comply with the following schedule:
a. at least fifty percent (50%) of those assets shall be
removed from the state governmental entity’s assets
under management not later than the one-hundred-
eightieth day after the date the financial company
receives notice pursuant to paragraph 1 of subsection
C of this section unless the state governmental entity
determines, based on a good-faith exercise of its
fiduciary discretion and subject to subparagraph b of
this subsection, that a later date is more prudent,
and
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b. one hundred percent (100%) of those assets shall be
removed from the state governmental entity’s assets
under management not later than the three-hundred-
sixtieth day after the date the financial company
receives notice pursuant to paragraph 1 of subsection
C of this section.
2. If a financial company that ceased boycotting energy
companies after receiving notice pursuant to paragraph 1 of
subsection C of this section resumes its boycott, the state
governmental entity shall send a written notice to the financial
company informing it that the state governmental entity will sell,
redeem, divest, or withdraw all publicly traded securities of the
financial company according to the schedule in paragraph 1 of
subsection D of this section.
3. Except as provided by paragraph 1 of this subsection D of
this section, a state governmental entity may delay the schedule for
divestment under that subsection only to the extent that the state
governmental entity determines, in the state governmental entity’s
good-faith judgment, and consistent with the entity’s fiduciary
duty, that divestment from listed financial companies will likely
result in a loss in value, including transaction costs, or a
benchmark deviation described by paragraph 1 of subsection F of this
section.
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4. 3. If a state governmental entity delays the schedule for
divestment, the state governmental entity shall submit a report to
the Treasurer, Attorney General and the presiding officer of each
house of the Legislature, and the Attorney General stating the
reasons and justification for the delay in divestment by the state
governmental entity from listed financial companies. The report
shall include documentation supporting its determination that the
divestment would result in a loss in value, including transaction
costs, or a benchmark deviation described by paragraph 1 of
subsection F of this section including objective numerical
estimates. The state governmental entity shall update the report
every six (6) months to include an update on its delayed divestment
as part of the annual report required by Section 12004 of this
title.
E. A state governmental entity is not required to divest from
any indirect holdings in actively or passively managed investment
funds or private equity funds. The state governmental entity shall
submit letters to the managers of each investment fund containing
listed financial companies requesting that they remove those
financial companies from the fund or create a similar actively or
passively managed fund with indirect holdings devoid of listed
financial companies. If a manager creates a similar fund with
substantially the same management fees and same level of investment
risk and anticipated return, the state governmental entity may
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replace all applicable investments with investments in the similar
fund in a time frame consistent with prudent fiduciary standards but
not later than the four-hundred-fiftieth day after the date the fund
is created.
F. 1. A state governmental entity may cease divesting from one
or more listed financial companies only if clear and convincing
evidence shows that:
a. the state governmental entity has suffered or will
suffer a loss in the value, including transaction
costs, of assets under management by the state
governmental entity as a result of having to divest
from listed financial companies under this subsection,
or
b. an individual portfolio that uses a benchmark-aware
strategy would be subject to an aggregate expected
deviation from its benchmark as a result of having to
divest from listed financial companies under this
subsection.
2. A state governmental entity may cease divesting from a
listed financial company as provided by this section only to the
extent necessary to ensure that the state governmental entity does
not suffer a loss in value or deviate from its benchmark as
described by paragraph 1 of this subsection.
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3. Before a state governmental entity may cease divesting from
a listed financial company under this section, the state
governmental entity shall provide a written report to the Treasurer,
Attorney General and the presiding officer of each house of the
Legislature, and the Attorney General setting forth the reason and
justification, supported by clear and convincing evidence, for
deciding to cease divestment or to remain invested in a listed
financial company. The state governmental entity shall include an
update to the report required by this subsection semiannually, as
applicable determination made under this subsection as part of the
annual report required by Section 12004 of this title.
4. This section does not apply to reinvestment in a financial
company that is no longer a listed financial company.
G. Except as provided in subsection F of this section, a state
governmental entity shall not acquire securities of a listed
financial company.
H. A state governmental entity shall not be subject to any
requirement of the Energy Discrimination Elimination Act of 2022 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.
I. The Attorney General shall promulgate rules to implement the
provisions of this section, including defining the process and
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criteria for creating the list required in paragraph 1 of subsection
A of this section.
SECTION 3. AMENDATORY Section 4, Chapter 231, O.S.L.
2022 (74 O.S. Supp. 2024, Section 12004), is amended to read as
follows:
Section 12004. A. Not later than January 1 of each year, each
state governmental entity shall file a publicly available report
with the Treasurer, Attorney General and the presiding officer of
each house of the Legislature, and the Attorney General that:
1. Identifies securities sold, redeemed, divested, or withdrawn
in compliance with subsection D of Section 3 of this act;
2. Identifies prohibited investments under subsection F of
Section 3 of this act; and
3. Summarizes any changes made under subsection E of Section 3
of this act.
B. The Attorney General may bring any action necessary to
enforce the Energy Discrimination Elimination Act of 2022.
SECTION 4. AMENDATORY Section 5, Chapter 231, O.S.L.
2022 (74 O.S. Supp. 2024, Section 12005), is amended to read as
follows:
Section 12005. A. As used in this section only of the Energy
Discrimination Elimination Act of 2022, “governmental entity” means
a state agency or political subdivision of this state.
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B. 1. Except for paragraph 4 of this subsection, this section
applies only to a contract that:
a. is between a governmental entity and a company with
ten or more full-time employees, and
b. will pay a company One Hundred Thousand Dollars
($100,000.00) or more over the term of the contract
that is to be paid wholly or partly from public funds
of the governmental entity; provided, however, the
provisions of this paragraph shall apply separately to
all companies in a multiple party contract.
2. Except as provided by paragraph 4 of this subsection, a
governmental entity shall not enter into a contract with a company
for goods or services unless the contract contains a written
verification from the company that it:
a. does not boycott energy companies, and
b. will not boycott energy companies during the term of
the contract.
3. Except as provided by paragraph 4 of this subsection, a
governmental entity shall not enter into a contract for goods or
services with a listed financial company under Section 3 12003 of
this act title.
4. Paragraphs 2 and 3 of this subsection shall not apply to:
a. a governmental entity that determines the requirements
of paragraphs 2 or 3 of this subsection are
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inconsistent with the governmental entity’s
constitutional or statutory duties related to the
issuance, incurrence, or management of debt
obligations or the deposit, custody, management,
borrowing, or investment of funds or its fiduciary
responsibility, and
b. a contract for which a governmental body entity
determines the supplies or services to be provided are
not otherwise reasonably available from a company that
does not boycott energy companies or from a financial
company that is not a listed financial company under
Section 3 of this act, as applicable.
C. 1. The provisions of this act shall not apply to any notes
or bonds issued by this state, any political subdivision, or any
governmental entity, used for public financing.
2. A financial company’s involvement in bond or public
financing projects shall be determined by the political subdivision
or governmental entity’s established processes for such financings.
SECTION 5. REPEALER Section 6, Chapter 231, O.S.L. 2022
(74 O.S. Supp. 2024, Section 12006), is hereby repealed.
SECTION 6. This act shall become effective July 1, 2025.
SECTION 7. It being immediately necessary for the preservation
of the public peace, health or safety, an emergency is hereby
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declared to exist, by reason whereof this act shall take effect and
be in full force from and after its passage and approval.
COMMITTEE REPORT BY: COMMITTEE ON ENERGY
February 13, 2025 - DO PASS