Revised litigation filed against Oklahoma's fossil fuel boycott law

A constitutional challenge to an Oklahoma law prohibiting state and local government contracts with companies that “boycott” the fossil fuel industry is moving forward after it was revised and refiled.

Federal claims in the litigation, , was empowered under the law to compile a list of companies engaged in boycotting the oil and gas industry. He initially put 13 financial firms on his boycotter list, which was subsequently shrunk to six — Bank of America, BlackRock, Climate First Bank, JP Morgan Chase, State Street Corp., and Wells Fargo.

The Energy Discrimination Elimination Act of 2022 calls for divestment from boycotters and bans investment banks on the list from underwriting municipal bond issues under governmental contracts worth $100,000 or more.

Wells Fargo resigned as senior manager for a $500 million Oklahoma Turnpike Authority revenue bond issue after landing on the treasurer’s list. The deal priced in October with RBC Capital Markets as lead underwriter.

In the revised case, plaintiff Don Keenan, a state pension recipient, pointed to a provision in the Oklahoma Constitution mandating that all proceeds, assets, and income of state pension funds be invested exclusively for the benefit of the retirement systems.

“By using pension funds for political warfare, the funds are no longer being used for the constitutionally mandated ‘exclusive purpose,'” the lawsuit states.

It also claims the law violates the state constitution’s free speech, due process, and prohibition against special laws provisions.

State lawmakers are looking at tweaks to the law, including eliminating its application to local government contracts.

Similar laws enacted in Texas in 2021 to protect the oil, natural gas, and firearm industries led to underwriting bans for two investment banks: UBS, which plans to exit the negotiated muni underwriting business nationwide, and Citigroup, which announced this month it will close its entire muni division by the end of 2024’s first quarter.