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HOUSE OF REPRESENTATIVES - FLOOR VERSION
STATE OF OKLAHOMA
1st Session of the 60th Legislature (2025)
COMMITTEE SUBSTITUTE
FOR
HOUSE BILL NO. 1170 By: Lepak of the House
and
Daniels of the Senate
COMMITTEE SUBSTITUTE
An Act relating to public finance; enacting the
Oklahoma Public Finance Protection Act; defining
terms; providing fiduciary's standard of care;
prohibiting consideration of nonpecuniary factors;
providing who has authority to vote on certain
shares; providing for deleg ation of authority;
providing that proxy votes be reported annually;
directing the State Treasurer to provide notice to
certain individuals in certain situations;
authorizing Treasurer to refer matter to Att orney
General; authorizing Attorney General to en force act
and examine certain persons and records; providing
immunity for the State of Oklahoma and certain
individuals; providing for indemnification; providing
for severability; providing for codification;
providing an effective date; and declaring an
emergency.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
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SECTION 1. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 9101 of Title 62, unless there
is created a duplication in numberi ng, reads as follows:
This act shall be known and may be cited as the "Oklahoma Public
Finance Protection Act".
SECTION 2. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 9102 of Title 62, unless ther e
is created a duplication in numbering, reads as follows:
As used in the Oklahoma Public Finance Protection Act:
1. "Fiduciary" means a person who, with respect to a pension
benefit plan:
a. exercises any discretionary authority or discretionary
control respecting management of such plan or
exercises any authority or control respecting
management or disposition of its assets,
b. renders investment advice for a fee or other
compensation, direct or indirect, with respect to any
monies or other property of s uch plan, or has any
authority or responsibility to do so, or
c. has any discretionary authority or discretionary
responsibility in the administration of such plan,
including making recommendations or voting a plan's
shares or proxies;
2. "Material", when used to qualify a risk or return:
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a. means a risk or return regarding which there is a
substantial likelihood that a reasonable investor
would attach importance when:
(1) evaluating the potential financial risks and
financial returns of an existing or pro spective
investment, or
(2) exercising, or declining to exercise, any rights
appurtenant to securities, and
b. does not include:
(1) furthering environmental, social, political,
ideological, or other nonpecu niary goals or
objectives, or
(2) any portion of a risk or return that primarily
relates to events that are not investment -
specific in nature;
3. "Nonpecuniary" includes any action taken or factor
considered by a fiduciary with any purpose to further environmental,
social, political, or ideological goal s. A fiduciary purpose may be
reasonably determined by evidence, including, but not limited to, a
fiduciary's votes of shares or proxies and a fiduciary's statements
indicating its purpose in selecting inve stments, engaging with
portfolio companies, or vo ting shares or proxies, or any such
statements by any coalition, initiative, or organization that the
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fiduciary has joined, participated in, or become a signatory to, in
its capacity as a fiduciary;
4. "Pecuniary factor" means a factor that has a material effect
on the financial risk or financial return of an investment based on
appropriate investment horizons consistent with the plan's
investment objectives and the funding policy. The term excludes
nonpecuniary factors; and
5. "Pension benefit plan" or "plan" shall mean any plan, fund,
or program which was heretofore or is hereafter established,
maintained, or offered by the State of Oklahoma or any subdivision,
county, municipality, agency, or instrumentality thereof, or any
school, college, university, administration, authority, or other
enterprise operated by the State of Oklahoma, to the extent that by
its terms or as a result of surrounding circumstances:
a. provides retirement income or other retireme nt
benefits to employees or former employees, or
b. results in a deferral of income by such employees for
a period extending to the termination of covered
employment or beyond, and
c. the term does not include a defined contribution plan
under the Retirement Freedom Act, established pursuant
to Section 935.1 et seq. of Title 74 of the Oklahoma
Statutes, except that investment options selected as
default investment options for participating employees
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shall be selected in adherence to the requirements of
this act.
SECTION 3. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 9103 of Title 62, unless there
is created a duplication in numbering, reads as follows:
A fiduciary shall discharge duties with respect to a plan solely
based on pecuniary factors and applicable state law requirements:
1. For the exclusive purpose of providing pecuniary benefits to
participants and their beneficiaries and defraying reasonable
expenses of administering the plan;
2. With the care, skill, prudence, and diligence under th e
circumstances then prevailing that a prudent investor acting in a
like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims;
3. By diversifying the investments of the plan so as to
minimize the risk of large losses, unless under the circumstances it
is clearly prudent not to do so; and
4. In accordance with the documents and instruments governing
the plan and insofar as such documents and instruments are
consistent with the fiduciary re sponsibilities provided by law,
including the provisions of this act.
SECTION 4. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 9104 of Title 62, unless there
is created a duplication in numbering, r eads as follows:
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A fiduciary's evaluation of an investment, or evaluation or
exercise of any right appurtenant to an investment, must take into
account only pecuniary factors. Plan fiduciaries shall not pro mote
nonpecuniary benefits or any other nonpecuni ary goals.
Notwithstanding the previous provision, environmental, social,
political, ideological, corporate governance, or other similarly
oriented goals, objectives, or considerations may be incidentally
advanced if they present economic risks or opportu nities that
qualified investment professionals would treat as material economic
considerations under generally accepted investment theories. The
weight given to those factors should solely reflect a prudent
assessment of their impact on risk and return.
SECTION 5. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 9105 of Title 62, unless there
is created a duplication in numbering, reads as follows:
A. All proxies held by or on behalf of a pension bene fit plan
or the beneficiaries thereof shall be voted solely in the pecuniary
interest of plan participants. Voting to further nonpecuniary or
other benefits or goals is prohibited.
B. Unless no economicall y practicable alternative is available,
a fiduciary may not adopt a practice of following the
recommendations of a proxy advisory firm or other service provider
unless such firm or service provider has a practice of, and in
writing commits to, following proxy voting guidelines that are
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consistent with the plan's fiduciary obligation to act based only on
pecuniary factors.
C. Unless no economically practicable alternative is available,
plan assets shall not be entrusted to a fiduciary unless that
fiduciary has a practice of, and in writing commits to, fol lowing
guidelines, when engaging with portfolio companies and vote shares
or proxies that match the plan's obligation to act based only on
pecuniary factors.
D. With respect to the pension benefit plans, all such proxy
voting authority shall reside with t he respective Board of Trustees,
except that the Board of Trustees may delegate such authority to a
person who has a practice of, and in writing commits to, following
guidelines that match the plan's obligat ion to act based only on
pecuniary factors.
E. All proxy votes shall be tabulated and reported annually to
the respective Board of Trustees. For each vote, the report shall
contain a vote caption, the plan's vote, the recommendation of
company management, and, if applicable, the proxy advisor's
recommendation. These reports shall be posted on a publicly
available webpage.
SECTION 6. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 9106 of Title 62, u nless there
is created a duplication in numbering , reads as follows:
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A. If the State Treasurer has reasonable cause to believe that
a person has engaged in, is engaging in, or is about to engage in a
violation of this act, notification shall be provided to the Speaker
of the Oklahoma House of Representa tives, the President Pro Tempore
of the Oklahoma State Senate, the Pension Oversight Commission, and
the matter may be referred to the Attorney General for enforcement.
B. This act may be enforced by the At torney General, who is
authorized to:
1. Require such person to file on such forms as he or she
prescribes a statement or report in writing, under oath, as to all
the facts and circumstances concerning the violation, and such other
data and information as he or she may deem necessary;
2. Examine under oath any person in connection with the
violation;
3. Examine any record, book, document, or paper as he or she
may deem necessary; and
4. Pursuant to an order of the Supreme Court of Oklahoma,
impound any record, book, document, paper, or sample or mater ial
relating to such practice and retain the same in his or her
possession until the completion of all proceedings undertaken under
this act or in the courts.
SECTION 7. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 9107 of Title 62, unless there
is created a duplication in numbering, reads as follows:
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A. The State of Oklahoma, pension benefit plans as defined in
this act, as well as officers, board m embers, and employees of the
state or the pension benefit plans are immune from civil liability
for any act or omission related to any provision under this act.
B. In addition to the immunity provided under subsection A of
this section, officers, board members, and employees of the state or
the pension benefit plans are entitled to indemnification from the
pension benefit plan for all losses, costs and expenses, including
reasonable attorney fees, associated with defending against any
claim or suit related to any provision of this act.
SECTION 8. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 9108 of Title 62, unless there
is created a duplication in numbering, reads as follows:
Should a court of competent jurisdiction hold any provision of
this act to be invalid, such provision shall be deemed severable and
not affect the validity of any other provision of this act.
SECTION 9. This act shall become effective July 1, 2025.
SECTION 10. It being immediately necessary fo r the preservation
of the public peace, health or safety, an emergency is hereby
declared to exist, by reason whereof this act shall take effect and
be in full force from and after its passage and approval.
COMMITTEE REPORT BY: COMMITTEE ON GOVERNMENT OVE RSIGHT, dated
03/05/2025 - DO PASS, As Amended and Coauthored.