1 STATE OF OKLAHOMA
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2 2nd Session of the 59th Legislature (2024)
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3 HOUSE BILL 3541 By: Lepak
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6 AS INTRODUCED
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7 An Act relating to state government; amending
7 Sections 2, 3, 4 and 5, O.S.L. 2022 (74 O.S. Supp.
8 2023, Sections 12002, 12003, 12004 and 12005), which
8 relate to the Energy Discrimination Elimination Act
9 of 2022; modifying definitions; modifying procedures
9 with respect to funds managed by state governmental
10 entities; providing for authority of Treasurer to
10 make certain determinations; requiring notice
11 procedures; requiring termination of contracts under
11 certain conditions; prescribing conditions pursuant
12 to which contract termination required; prescribing
12 procedures for divestment; providing certain
13 exceptions; prescribing reporting requirements with
13 respect to timing of divestment; authorizing
14 cessation of divestment process; prescribing
14 procedures for state government entities with respect
15 to cessation of divestment actions; prescribing
15 standards for evaluation of certain financial
16 companies; modifying reporting requirements;
16 providing for reports to be submitted to certain
17 public officials; and declaring an emergency.
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19 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
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20 SECTION 1. AMENDATORY Section 2, Chapter 231, O.S.L.
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21 2022 (74 O.S. Supp. 2023, Section 12002), is amended to read as
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22 follows:
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23 Section 12002. A. As used in the Energy Discrimination
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24 Elimination Act of 2022:
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 1 1. "Boycott energy targeted company" means, without an ordinary
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2 business purpose, refusing to deal with, terminating business
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3 activities with, or otherwise taking any action that is intended to
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4 penalize, inflict economic harm on, or limit commercial relations
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5 with a company because the company:
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6 a. engages in the exploration, production, utilization,
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7 transportation, sale, or manufacturing of timber,
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8 mining, agriculture, or fossil-fuel-based energy and
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9 does not commit or pledge to meet environmental
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10 standards beyond applicable federal and state law, or
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11 b. does business with a company described by subparagraph
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12 a of this paragraph;
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13 2. "Company" means a for-profit sole proprietorship,
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14 organization, association, corporation, partnership, joint venture,
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15 limited partnership, limited liability partnership, or limited
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16 liability company, including a wholly owned subsidiary, majority-
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17 owned subsidiary, parent company, or affiliate of those entities or
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18 business associations, that exists to make a profit;
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19 3. "Treasurer" means the State Treasurer or their designee;
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20 4. "Direct holdings" means, with respect to a financial
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21 company, all securities of that financial company held directly by a
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22 state governmental entity in an account or fund in which a state
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23 governmental entity owns all shares or interests "Divestment from
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24 certain funds" or "divest from certain funds" means removing all
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 1 public money from any investments in funds that are held, managed,
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2 or advised by a listed financial company;
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3 5. "Financial company" means a publicly traded company that is
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4 engaged in financial services, or banking, or that is an investment
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5 company;
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6 6. "Indirect holdings" means, with respect to a financial
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7 company, all securities of that financial company held in an account
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8 or fund, such as a mutual fund, managed by one or more persons not
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9 employed by a state governmental entity, in which the state
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10 governmental entity owns shares or interests together with other
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11 investors not subject to the provisions of this act. The term does
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12 not include money invested under a plan described by Section 401(k)
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13 or 457 of the Internal Revenue Code of 1986;
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14 7. 6. "Listed financial company" means a company that is a
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15 financial company and is listed by the Treasurer; and
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16 8. 7. "State governmental entity" means all any state
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17 retirement systems;
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18 8. "Materially negative financial impact" means a materially
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19 negative financial impact on the state governmental entity. For
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20 goods or services related to investment, any increased cost less
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21 than 0.05% per year of the net asset value of the applicable state
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22 retirement system shall not constitute a "materially negative
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23 financial impact. A state governmental entity's administrative
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24 costs shall not be included in any estimation of costs; and
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 1 9. "Ordinary business purpose" means a purpose directly related
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2 to financial return or financial risk mitigation. It does not
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3 include any purpose to further environmental, social, political, or
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4 ideological interests. A company may reasonably be determined to
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5 have taken an action with a purpose to further environmental,
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6 social, political, or ideological interests based upon evidence
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7 indicating such a purpose, including, but not limited to:
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8 a. advertising, statements, explanations, reports,
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9 communications with portfolio companies, shareholder
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10 votes by the company, or commitments, or
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11 b. participation in, affiliation with, or status as a
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12 signatory to, any coalition, initiative, joint
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13 statement of principles, or agreement, to act or to
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14 endeavor to act in furtherance of environmental,
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15 social, political, or ideological interests.
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16 B. With respect to actions taken in compliance with the Energy
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17 Discrimination Elimination Act of 2022, including all good-faith
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18 determinations regarding financial companies as required by this
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19 act, a state governmental entity and the Treasurer are exempt from
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20 any conflicting statutory or common law obligations including any
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21 obligations with respect to making investments, divesting divestment
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22 from any investment, certain funds, terminating any contracts with
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23 financial companies, preparing or maintaining any list of financial
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24 companies, or choosing asset managers, investment funds, or
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 1 investments for the state governmental entity's securities
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2 portfolios.
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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.
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9 2. A person who files suit against the state, a state
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10 governmental entity, an employee, a member of the governing body, or
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11 any other officer of a state governmental entity, or a contractor of
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12 a state governmental entity, is liable for paying the costs and
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13 attorney fees of a person sued in violation of this section.
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14 3. A state governmental entity shall not be subject to any
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15 requirement of this act if the state governmental entity determines,
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16 and the Treasurer agrees, that clear and convincing evidence shows
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17 that such requirement would be lead to a materially negative
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18 financial impact inconsistent with its fiduciary responsibility with
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19 respect to the investment of entity assets or other duties imposed
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20 by law relating to the investment of entity assets.
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21 SECTION 2. AMENDATORY Section 3, Chapter 231, O.S.L.
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22 2022 (74 O.S. Supp. 2023, Section 12003), is amended to read as
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23 follows:
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 1 Section 12003. A. 1. The Treasurer shall prepare and maintain
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2 and provide to each state governmental entity a list of financial
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3 companies that boycott energy targeted companies. In maintaining
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4 the list, the Treasurer may:
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5 a. review and rely, as appropriate in the Treasurer's
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6 judgment, on publicly available information regarding
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7 financial companies including information provided by
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8 the state, nonprofit organizations, research firms,
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9 international organizations, and governmental
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10 entities, and
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11 b. request written verification from a financial company
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12 that it does not boycott energy targeted companies and
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13 rely, as appropriate in the Treasurer's judgment and
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14 without conducting further investigation, research, or
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15 inquiry, on a financial company's written response to
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16 the request.
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17 2. A financial company that fails to provide to the Treasurer a
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18 written verification under subparagraph b of paragraph 1 of this
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19 subsection before the sixty-first day after receiving the request
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20 from the Treasurer is may be, as appropriate in the Treasurer's
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21 judgment, presumed to be boycotting energy targeted companies.
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22 3. The Treasurer shall update the list annually or more often
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23 as the Treasurer considers necessary, but not more often than
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 1 quarterly, based on information from, among other sources, those
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2 listed in subparagraph a of paragraph 1 of this subsection.
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3 4. Not later than the thirtieth day after the date the list of
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4 financial companies that boycott energy targeted companies is first
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5 provided or updated, the Treasurer shall file the list with the
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6 presiding officer of each house of the Legislature and the Attorney
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7 General and post the list on a publicly available Internet website.
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8 5. The Treasurer may retain third-party consultants to assist
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9 in the implementation of the provisions of this act.
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10 B. Not later than the thirtieth day after the date a state
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11 governmental entity receives the list provided under paragraph 1 of
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12 subsection A of this section, the state governmental entity shall
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13 notify the Treasurer of any contract the state governmental entity
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14 has with any of the listed financial companies in which the state
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15 governmental entity owns direct holdings or indirect holdings, or
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16 any funds in which the state governmental entity is invested that
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17 are held, managed, or advised by a listed financial company.
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18 C. 1. For each listed financial company identified under
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19 paragraph 1 of subsection A of this section, the state governmental
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20 entity shall send a written notice:
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21 a. informing the financial company of its status as a
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22 listed financial company,
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23 b. warning the financial company that it may become
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24 subject to contractual termination and divestment from
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 1 certain funds by state governmental entities after the
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2 expiration of the period described by paragraph 2 of
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3 this subsection, and
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4 c. offering the financial company the opportunity to
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5 clarify its activities related to companies described
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6 by paragraph 1 of subsection A of this section Section
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7 12002 of this title.
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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 targeted companies to avoid qualifying for contractual termination
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12 and divestment from certain funds by state governmental 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 targeted
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15 companies, and notifies the Treasurer in writing of the cessation,
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16 the Treasurer shall, as appropriate in the Treasurer's judgment,
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17 remove the financial company from the list maintained under
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18 paragraph 1 of subsection A of this section, and this subsection
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19 will no longer apply to the financial company unless it resumes
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20 boycotting energy targeted companies. The Treasurer also shall
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21 notify any state governmental entities who provided notice pursuant
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22 to subsection B of this section of the financial company's removal
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23 from the list.
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 1 4. If, after the time provided by paragraph 2 of this
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2 subsection expires, the financial company continues to boycott
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3 energy companies, the state governmental entity has not received
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4 confirmation from the Treasurer that the financial company has been
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5 removed from the list, the state governmental entity shall sell,
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6 redeem, divest, or withdraw all publicly traded securities of the
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7 financial company, except securities described by subsection E of
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8 this section, terminate any contract with the listed financial
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9 company and divest from certain funds according to the schedule
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10 provided under subsection D of this section.
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11 D. 1. A state governmental entity required to sell, redeem,
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12 divest, or withdraw all publicly traded securities of a listed
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13 financial company terminate any contract with a listed financial
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14 company or divest from certain funds shall comply with the following
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15 schedule:
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16 a. at least fifty percent (50%) of those assets
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17 divestment from certain funds shall be removed from
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18 the state governmental entity's assets under
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19 management occur not later than the one-hundred-
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20 eightieth day a