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SENATE FLOOR VERSION
April 14, 2022
COMMITTEE SUBSTITUTE
FOR ENGROSSED
HOUSE BILL NO. 2034 By: McBride, O'Donnell, and
West (Kevin) of the House
and
Allen, David, and Bullard
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 maintain list of cert ain financial
companies; establishing provisions for Treasurer
action pursuant to act; requiring written
verification be submit ted 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 sec urities; establishing
schedule for sale, redemption, divestment, or
withdrawal of certain securities; establishing
limitations on divestment and divestment schedu le;
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 s ecurities 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
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companies before entrance into cer tain contracts;
providing for codification; and providing an
effective date.
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 cite d 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 fol lows:
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 penali ze,
inflict economic harm on, or limit commercial relations with a
company because the company:
a. engages in the explo ration, 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
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b. does business with a company described by subpa ragraph
a of this paragraph;
2. "Company" means a for-profit sole proprietorship,
organization, association, corporation, partnership, j oint 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 pr ofit;
3. "Treasurer" means the State Treasurer or their designee ;
4. "Direct holdings" means, with respect to a finan cial
company, all securities of that financial company held directly by a
state governmental entity in an account or fund in which a stat e
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 com pany held in an account
or fund, such as a mutual fund, managed by one or more persons not
employed by a state governme ntal entity, in which the state
governmental entity owns shares or interests together with other
investors not subject to the provisions of this chapter. The term
does not include money invested under a plan described by Section
401(k) or 457 of the Inter nal Revenue Code of 1986;
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7. "Listed financial company" means a financial company listed
by the Treasurer; and
8. "State governmental e ntity" means all state retirement
systems.
B. With respect to actions taken in compliance with the Energy
Discrimination Elimination Act including all good faith
determinations regarding financial companies as required by this
act, a state governmental en tity and the Treasurer are exempt from
any conflicting statutory or common law obligations including any
obligations with respect to making investments, div esting from any
investment, preparing or maintaining any list of financial
companies, or choosing as set managers, investment funds, or
investments for the state governmental entity 's securities
portfolios.
C. In a cause of action based on an action, inact ion, decision,
divestment, investment, financial company communication, report, or
other determination made or taken in connection with the Ene rgy
Discrimination Elimination Act, 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;
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3. A former employe e, a former member of the governing body, or
any other former officer of a state governmental entity who was an
employee, member of the g overning body, or other offic er when the
act or omission on which the damages are based occurred;
4. A former contract or 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 E nergy Discrimination Elimination
Act 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 clai m or cause of action includin g
breach of fiduciary duty, or for violation of any constitutional,
statutory, or regulato ry requirement in connection with any action,
inaction, decision, divestment, investment, financial company
communication, report, or oth er determination made or take n in
connection with this act.
2. A person who files suit against the state, a state
governmental entity, an employee, a membe r of the governing body, or
any other officer of a state governmental entity, or a contractor of
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a state governmental entity, is liable for paying the costs and
attorney fees of a person sued in violation of this sectio n.
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 relat ing 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 appro priate in the Treasurer's
judgment, on publicly available information regarding
financial companies including information provided by
the state, nonprofit or ganizations, 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
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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 p residing
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 entit y owns direct holdings or indir ect holdings.
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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 tha t 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 t he opportunity to
clarify its activities related to companies descri bed
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 boy cotting 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 com panies.
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4. If, after the time prov ided by paragraph 2 of this
subsection expires, the financial compan y continues to boycott
energy companies, the state governmental entity shall sell, redeem,
divest, or withdraw all publicly traded securities of the fina ncial
company, except securities de scribed 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 securit ies 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 unl ess 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 (1 00%) 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
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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 ent ity will sell,
redeem, divest, or withdraw all publicly traded securities of th e
financial company according to the schedule in paragraph 1 of
subsection D of this section.
3. Except as provided by paragraph 1 of subse ction D of this
section, a state gove rnmental entity may delay the schedule for
divestment under that subsection onl y to the extent that the state
governmental entity determines, in the stat e governmental entity's
good faith judgment, and consistent with t he 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 se ction.
4. If a state governmental entity delays the schedule for
divestment, the state governmental en tity shall submit a report to
the Treasurer, the presiding officer of each hous e 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
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documentation supporting its determination that the divestment would
result in a loss in value or a benchmark deviation descri bed 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 i n 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 b ut
not later than the four hundred fiftieth day after the date the fund
is created.
F. 1. A state governmental entity may cease divesting f rom one
or more listed financial comp anies 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
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by the state governmental entity as a result of having
to divest from listed financial compa nies under this
subsection, or
b. an individual portfolio tha t 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 d eviate from its benchmark as
described by paragraph 1 of this subsection.
3. Before a state gover nmental 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 co mpany. The
state governmental entity shall update the report required by
subsection semiannually, as applicable.
4. This section does not apply to reinvestment in a financial
company that is no longer a listed financial company.
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G. Except as provided in subsection F of this section, a stat e
governmental entity shall not acquire securities o f 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 Jan uary 1 of each year, each state
governmental entity shall file a publicly available report with th e
Treasurer, the presiding officer of each house of the Legislature,
and the Attorney General that:
1. Identifies securities sold, redeemed, divested, o r 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 o f 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 codifi ed
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.
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B. 1. Except for paragraph 4 of this subsection, th is 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 entit y; 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 cont ains 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
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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 , and
b. a contract for which a governmental body determ ines
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 Sectio n 12006 of Title 74, unless there
is created a duplication in numbering, reads as follows:
Section 5 of the Energy Disc rimination Elimination Act of 2022
applies only to a contract entered into on or after t he 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 conti nued in effect for that purpose.
SECTION 7. This act shall beco me effective November 1, 2022.
COMMITTEE REPORT BY: COMMITTEE ON ENERGY
April 14, 2022 - DO PASS AS AMENDED