1 STATE OF OKLAHOMA
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2 2nd Session of the 59th Legislature (2024)
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3 SENATE BILL 1536 By: Rader
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6 AS INTRODUCED
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7 An Act relating to the Energy Discrimination
7 Elimination Act of 2022; amending Sections 2, 3, and
8 5, Chapter 231, O.S.L. 2022 (74 O.S. Supp. 2023,
8 Sections 12002, 12003, and 12005), which relate to
9 exemptions, requirements, and contracts; requiring
9 State Treasurer to seek Attorney General opinion
10 following certain adverse determination; updating
10 statutory references; and providing an effective
11 date.
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12
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13 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
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14 SECTION 1. AMENDATORY Section 2, Chapter 231, O.S.L.
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15 2022 (74 O.S. Supp. 2023, Section 12002), is amended to read as
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16 follows:
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17 Section 12002. A. As used in the Energy Discrimination
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18 Elimination Act of 2022:
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19 1. “Boycott energy company” means, without an ordinary business
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20 purpose, refusing to deal with, terminating business activities
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21 with, or otherwise taking any action that is intended to penalize,
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22 inflict economic harm on, or limit commercial relations with a
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23 company because the company:
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 1 a. engages in the exploration, production, utilization,
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2 transportation, sale, or manufacturing of fossil-fuel-
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3 based energy and does not commit or pledge to meet
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4 environmental standards beyond applicable federal and
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5 state law, or
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6 b. does business with a company described by subparagraph
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7 a of this paragraph;
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8 2. “Company” means a for-profit sole proprietorship,
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9 organization, association, corporation, partnership, joint venture,
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10 limited partnership, limited liability partnership, or limited
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11 liability company, including a wholly owned subsidiary, majority-
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12 owned subsidiary, parent company, or affiliate of those entities or
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13 business associations, that exists to make a profit;
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14 3. “Treasurer” means the State Treasurer or their designee;
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15 4. “Direct holdings” means, with respect to a financial
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16 company, all securities of that financial company held directly by a
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17 state governmental entity in an account or fund in which a state
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18 governmental entity owns all shares or interests;
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19 5. “Financial company” means a publicly traded financial
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20 services, banking, or investment company;
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21 6. “Indirect holdings” means, with respect to a financial
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22 company, all securities of that financial company held in an account
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23 or fund, such as a mutual fund, managed by one or more persons not
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24 employed by a state governmental entity, in which the state
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 1 governmental entity owns shares or interests together with other
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2 investors not subject to the provisions of this act the Energy
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3 Discrimination Elimination Act of 2022. The term does not include
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4 money invested under a plan described by Section 401(k) or 457 of
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5 the Internal Revenue Code of 1986;
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6 7. “Listed financial company” means a financial company listed
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7 by the Treasurer; and
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8 8. “State governmental entity” means all state retirement
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9 systems.
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10 B. 1. With respect to actions taken in compliance with the
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11 Energy Discrimination Elimination Act of 2022, including all good-
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12 faith determinations regarding financial companies as required by
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13 this act the Energy Discrimination Elimination Act of 2022, a state
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14 governmental entity and the Treasurer are exempt from any
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15 conflicting statutory or common law obligations including any
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16 obligations with respect to making investments, divesting from any
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17 investment, preparing or maintaining any list of financial
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18 companies, or choosing asset managers, investment funds, or
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19 investments for the state governmental entity’s securities
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20 portfolios.
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21 2. In the event that the Treasurer disagrees with the
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22 determination made by a state governmental entity under this
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23 subsection, the Treasurer shall seek an Attorney General opinion
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 1 ruling whether the determination is in compliance with state laws
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2 binding the state governmental entity.
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3 C. In a cause of action based on an action, inaction, decision,
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4 divestment, investment, financial company communication, report, or
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5 other determination made or taken in connection with the Energy
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6 Discrimination Elimination Act of 2022, the state shall indemnify
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7 and hold harmless for actual damages, court costs, and attorney fees
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8 adjudged against, and defend:
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9 1. An employee, a member of the governing body, or any other
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10 officer of a state governmental entity;
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11 2. A contractor of a state governmental entity;
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12 3. A former employee, a former member of the governing body, or
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13 any other former officer of a state governmental entity who was an
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14 employee, member of the governing body, or other officer when the
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15 act or omission on which the damages are based occurred;
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16 4. A former contractor of a state governmental entity who was a
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17 contractor when the act or omission on which the damages are based
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18 occurred; and
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19 5. A state governmental entity.
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20 D. 1. A person, including a member, retiree, or beneficiary of
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21 a retirement system to which the Energy Discrimination Elimination
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22 Act of 2022 applies, an association, a research firm, a financial
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23 company, or any other person shall not sue or pursue a private cause
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24 of action against the state, a state governmental entity, a current
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 1 or former employee, a member of the governing body, or any other
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2 officer of a state governmental entity, or a contractor of a state
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3 governmental entity, for any claim or cause of action, including
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4 breach of fiduciary duty, or for violation of any constitutional,
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5 statutory, or regulatory requirement in connection with any action,
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6 inaction, decision, divestment, investment, financial company
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7 communication, report, or other determination made or taken in
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8 connection with this act the Energy Discrimination Elimination Act
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9 of 2022.
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10 2. A person who files suit against the state, a state
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11 governmental entity, an employee, a member of the governing body, or
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12 any other officer of a state governmental entity, or a contractor of
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13 a state governmental entity, is liable for paying the costs and
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14 attorney fees of a person sued in violation of this section.
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15 3. A state governmental entity shall not be subject to any
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16 requirement of this act the Energy Discrimination Elimination Act of
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17 2022 if the state governmental entity determines that such
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18 requirement would be inconsistent with its fiduciary responsibility
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19 with respect to the investment of entity assets or other duties
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20 imposed by law relating to the investment of entity assets.
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21 4. In the event that the Treasurer disagrees with the
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22 determination made by a state governmental entity under this
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23 subsection, the Treasurer shall seek an Attorney General opinion
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 1 ruling whether the determination is in compliance with state laws
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2 binding the state governmental entity.
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3 SECTION 2. AMENDATORY Section 3, Chapter 231, O.S.L.
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4 2022 (74 O.S. Supp. 2023, Section 12003), is amended to read as
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5 follows:
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6 Section 12003. A. 1. The Treasurer shall prepare and maintain
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7 and provide to each state governmental entity a list of financial
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8 companies that boycott energy companies. In maintaining the list,
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9 the Treasurer may:
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10 a. review and rely, as appropriate in the Treasurer’s
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11 judgment, on publicly available information regarding
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12 financial companies including information provided by
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13 the state, nonprofit organizations, research firms,
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14 international organizations, and governmental
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15 entities, and
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16 b. request written verification from a financial company
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17 that it does not boycott energy companies and rely, as
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18 appropriate in the Treasurer’s judgment and without
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19 conducting further investigation, research, or
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20 inquiry, on a financial company’s written response to
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21 the request.
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22 2. A financial company that fails to provide to the Treasurer a
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23 written verification under subparagraph b of paragraph 1 of this
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 1 subsection before the sixty-first day after receiving the request
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2 from the Treasurer is presumed to be boycotting energy companies.
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3 3. The Treasurer shall update the list annually or more often
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4 as the Treasurer considers necessary, but not more often than
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5 quarterly, based on information from, among other sources, those
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6 listed in subparagraph a of paragraph 1 of this subsection.
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7 4. Not later than the thirtieth day after the date the list of
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8 financial companies that boycott energy companies is first provided
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9 or updated, the Treasurer shall file the list with the presiding
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10 officer of each house of the Legislature and the Attorney General
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11 and post the list on a publicly available Internet website.
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12 5. The Treasurer may retain third-party consultants to assist
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13 in the implementation of the provisions of this act the Energy
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14 Discrimination Elimination Act of 2022.
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15 B. Not later than the thirtieth day after the date a state
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16 governmental entity receives the list provided under paragraph 1 of
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17 subsection A of this section, the state governmental entity shall
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18 notify the Treasurer of the listed financial companies in which the
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19 state governmental entity owns direct holdings or indirect holdings.
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20 C. 1. For each listed financial company identified under
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21 paragraph 1 of subsection A of this section, the state governmental
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22 entity shall send a written notice:
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23 a. informing the financial company of its status as a
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24 listed financial company,
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 1 b. warning the financial company that it may become
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2 subject to divestment by state governmental entities
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3 after the expiration of the period described by
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4 paragraph 2 of this subsection, and
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5 c. offering the financial company the opportunity to
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6 clarify its activities related to companies described
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7 by paragraph 1 of subsection A of this section.
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8 2. Not later than the ninetieth day after the date the
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9 financial company receives notice under paragraph 1 of this
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10 subsection, the financial company shall cease boycotting energy
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11 companies to avoid qualifying for divestment by state governmental
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12 entities.
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13 3. If, during the time provided by paragraph 2 of this
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14 subsection, the financial company ceases boycotting energy
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15 companies, the Treasurer shall remove the financial company from the
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16 list maintained under paragraph 1 of subsection A of this section,
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17 and this subsection will no longer apply to the financial company
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18 unless it resumes boycotting energy companies.
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19 4. If, after the time provided by paragraph 2 of this
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20 subsection expires, the financial company continues to boycott
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21 energy companies, the state governmental entity shall sell, redeem,
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22 divest, or withdraw all publicly traded securities of the financial
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23 company, except securities described by subsection E of this
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 1 section, according to the schedule provided under subsection D of
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2 this section.
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3 D. 1. A state governmental entity required to sell, redeem,
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4 divest, or withdraw all publicly traded securities of a listed
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5 financial company shall comply with the following schedule:
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6 a. at least fifty percent (50%) of those assets shall be
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7 removed from the state governmental entity’s assets
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8 under management not later than the one-hundred-
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9 eightieth day after the date the financial company
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10 receives notice pursuant to paragraph 1 of subsection
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11 C of this section unless the state governmental entity
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12 determines, based on a good-faith exercise of its
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13 fiduciary discretion and subject to subparagraph b of
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14 this subsection, that a later date is more prudent,
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15 and
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16 b. one hundred percent (100%) of those assets shall be
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17 removed from the state governmental entity’s assets
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18 under management not later than the three-hundred-
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19 sixtieth day after the date the financial company
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20 receives notice pursuant to paragraph 1 of subsection
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21 C of this section.
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22 2. If a financial company that ceased boycotting energy
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23 companies after receiving notice pursuant to paragraph 1 of
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24 subsection C of this section resumes its boycott, the state
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 1 governmental entity shall send a written notice to the financial
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2 company informing it that the state governmental entity will sell,
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3 redeem, divest, or withdraw all publicly traded securities of the
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4 financial company according to the schedule in paragraph 1 of
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5 subsection D of this section subsection.
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6 3. Except as provided by paragraph 1 of subsection D of this
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7 section subsection, a state governmental entity may delay the
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8 schedule for divestment under that subsection only to the extent
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9 that the state governmental entity determines, in the state
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10 governmental entity’s good-faith judgment, and consistent with the
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11 entity’s fiduciary duty, that divestment from listed financial
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12 companies will likely result in a loss in value or a benchmark
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13 deviation described by paragraph 1 of subsection F of this section.
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14 4. If a state governmental entity delays the schedule for
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15 divestment, the state governmental entity shall submit a an
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16 electronic report to the Treasurer, the presiding officer of each
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17 house of the Legislature, and the Attorney General stating the
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18 reasons and justification for the delay in divestment by the state
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19 governmental entity from listed financial companies. The report
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20 shall include documentation supporting its determination that the
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21 divestment would result in a loss in value or a benchmark deviation
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22 described by paragraph 1 of subsection F of this section including
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23 objective numerical estimates. The state governmental entity shall
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24 update the report every six (6) months.
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 1 E. A state governmental entity is not required to divest from
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2 any indirect holdings in actively or passively managed investment
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3 funds or private equity funds. The state governmental entity shall
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4 submit letters to the managers of eac