ENROLLED HOUSE
BILL NO. 2034 By: McBride, O'Donnell, West (Kevin), Bashore, and Roberts (Sean) of the House
and
Allen, David, Bullard, and Bergstrom of the Senate
An Act relating to state government; creating the Energy
Discrimination Elimination Act of 2022; defining terms; exempting certain
entities from provisions of act due to statutory obligations; providing
indemnification for certain entities; prohibiting certain persons and entities
from entering into a lawsuit with state or state affiliate; providing any
person entering a lawsuit against state or state affiliate pursuant to this act
be subject to certain costs and fees; requiring State Treasurer to maintain
list of certain financial companies; establishing provisions for Treasurer
action pursuant to act; requiring written verification be submitted by certain
financial companies; requiring written notice be provided to certain financial
companies; providing that certain financial companies cease certain boycotts by
certain date; requiring sale, redemption, divestment, or withdrawal of certain
securities; establishing schedule for sale, redemption, divestment, or
withdrawal of certain securities; establishing limitations on divestment and
divestment schedule; requiring report to certain public officials upon delay of
divestment schedule; requiring report to certain public officials upon decision
to cease divestment from certain financial company; prohibiting acquisition of
securities from certain financial companies; providing for publishing of report
by state governmental entities to certain public officials; requiring state
governmental entities to receive written verification from certain companies
before entrance into certain contracts; providing for codification; and
providing an effective date.
SUBJECT:
State contracts
BE IT
ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1.
NEW LAW A new section of law
to be codified in the Oklahoma Statutes as Section 12001 of Title 74, unless
there is created a duplication in numbering, reads as follows:
This act shall be known and may be cited as the "Energy
Discrimination Elimination Act of 2022".
SECTION 2.
NEW LAW A new section of law
to be codified in the Oklahoma Statutes as Section 12002 of Title 74, unless
there is created a duplication in numbering, reads as follows:
A. As used in the Energy
Discrimination Elimination Act of 2022:
1. "Boycott energy
company" means, without an ordinary business purpose, refusing to deal
with, terminating business activities with, or otherwise taking any action that
is intended to penalize, inflict economic harm on, or limit 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. "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;
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(k) or 457 of the Internal Revenue Code of
1986;
7. "Listed financial
company" means a financial company listed by the Treasurer; and
8. "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 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:
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.
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.
SECTION 3.
NEW LAW A new section of law
to be codified in the Oklahoma Statutes as Section 12003 of Title 74, unless
there is created a duplication in numbering, reads as follows:
A. 1. The Treasurer 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:
a. review
and rely, as appropriate in the Treasurer's judgment, on publicly available
information regarding financial companies including information provided by the
state, nonprofit organizations, research firms, international organizations,
and governmental entities, and
b. request
written verification from a financial company that it does not boycott energy
companies and rely, as appropriate in the Treasurer's judgment and without
conducting further investigation, research, or inquiry, on a financial company's
written response to the request.
2. 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 request from the Treasurer is presumed to be boycotting
energy companies.
3. The Treasurer 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.
4. 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 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. The Treasurer 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 of the listed financial
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, the Treasurer shall remove the financial company
from the list maintained under paragraph 1 of subsection A of this section, and
this subsection will no longer apply to the financial company unless it resumes
boycotting energy companies.
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
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 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 or a benchmark deviation described by paragraph 1 of subsection F of this
section.
4. If a state
governmental entity delays the schedule for divestment, the state governmental
entity shall submit a report to the Treasurer, 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 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.
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 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 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.
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, 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 update the report required by this subsection
semiannually, as applicable.
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.
SECTION 4.
NEW LAW A new section of law
to be codified in the Oklahoma Statutes as Section 12004 of Title 74, unless
there is created a duplication in numbering, reads as follows:
A. Not later than January
1 of each year, each state governmental entity shall file a publicly available
report with the Treasurer, 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 5.
NEW LAW A new section of law
to be codified in the Oklahoma Statutes as Section 12005 of Title 74, unless
there is created a duplication in numbering, reads as follows:
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.
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
of this act.
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 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, and
b. a
contract for which a governmental body determines the supplies or services to
be provided are not otherwise reasonably available from a company that is not a
listed financial company under Section 3 of this act.
SECTION 6.
NEW LAW A new section of law
to be codified in the Oklahoma Statutes as Section 12006 of Title 74, unless
there is created a duplication in numbering, reads as follows:
Section 5 of the Energy Discrimination Elimination Act of 2022 applies
only to a contract entered into on or after the effective date of this
act. A contract entered into before that
date is governed by the law in effect on the date the contract was entered
into, and the former law is continued in effect for that purpose.
SECTION 7.
This act shall become effective November 1, 2022.
Passed the House of Representatives the 4th day of May, 2022.
Presiding Officer of the House
of Representatives
Passed the Senate the 26th day of April, 2022.
Presiding Officer of the Senate
OFFICE OF THE GOVERNOR
Received by the Office
of the Governor this ____________________ day of ___________________,
20_______, at _______ o'clock _______ M.
By:
_________________________________
Approved by the
Governor of the State of Oklahoma this _________ day of ___________________,
20_______, at _______ o'clock _______ M.
_________________________________
Governor of
the State of Oklahoma
OFFICE
OF THE SECRETARY OF STATE
Received by the Office
of the Secretary of State this __________ day of ___________________,
20_______, at _______ o'clock _______ M.
By:
_________________________________