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STATE OF OKLAHOMA
1st Session of the 60th Legislature (2025)
SENATE BILL 919 By: Green
AS INTRODUCED
An Act relating to the Commissioners of the Land
Office; defining term; establishing restrictio ns on
certain agricultural leases; amending 18 O.S. 2021,
Section 955, which relates to limitations on
ownership of farming and ranc hing business
corporations; providing exception for qualification
of certain limited liability company; modifying fine
amount; updating statutory language; updating
statutory reference; amending 64 O.S. 2021, Section
1013, as amended by Section 40, Chapter 228, O.S.L.
2022 (64 O.S. Supp. 2024, Section 1013), which
relates to investment of funds; removing certain
investment exemption; 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 1023a o f Title 64, unless there
is created a duplication in numbering, reads as follo ws:
A. For the purposes of leases entered into by the Commissioners
of the Land Office, “commercial lease” shall mean a lease for those
trust lands which may have a greater valu e or use which enables it
to earn more income per year than if used strictly for agricultural
purposes. Any lease entered into for the purpose of renewable
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energy generation on and after the effective date of this act shall
be considered a commercial leas e.
B. No agricultural lease shall be executed in favor of any
corporation or its agent, or a third party for the use and benefit
of a corporation, except as provided in Section 951 et seq. of Title
18 of the Oklahoma Statutes.
SECTION 2. AMENDATORY 18 O.S. 2021, Section 955, is
amended to read as follows:
Section 955. A. No person, corporation, association , or any
other entity shall engage in farming or ranching, or own or lease
any interest in land to be used in the business of farming or
ranching, except the following:
1. Natural persons and the estate s of such persons;
2. Trustees of trusts; provided that:
a. each beneficiary shall be a person or entity
enumerated in paragraphs 1 through 5 of this
subsection, and
b. there shall not be more than ten beneficiaries unless
the beneficiaries in excess of ten are related as
lineal descendants or are or have been related by
marriage or adoption to lineal descendants, and
c. at least sixty-five percent (65%) of the trust ’s
annual gross receipts shall be derived from farming or
ranching, or from allowing others to extract minerals
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underlying lands held by the trust. If the trust
cannot comply with the annual gross receipts test, the
trust may furnish records of its gross receipts for
each of the previous five (5) years, or for each year
that it has been in existence if less than five (5)
years, and the average of such annual gross receipts
may be used for purposes of complying with this
section;
3. Corporations, as provided for in Sec tions 951 through 954 of
this title, or as otherwise permitted by law;
4. Partnerships and limited partnerships; provided that:
a. each partner shall be a person or entity enumerated in
paragraphs 1 through 5 of this subsection, and
b. there shall not be more than ten partners unless said
the partners in excess of ten are related as lineal
descendants or are or have been related by marriage or
adoption to lineal descendants, and
c. at least sixty-five percent (65%) of the partnership ’s
annual gross receipt s shall be derived from farming or
ranching, or from allowing others to extrac t minerals
underlying lands held by the partnership. If the
partnership cannot comply with the annual gross
receipts test, the partnership may furnish records of
its gross receipts for each of the previous five (5)
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years, or for each year that it has been in existence
if less than five (5) years, and the average of such
annual gross receipts may be used for purposes of
complying with this section; and
5. Limited liability compan ies formed pursuant to the Oklahoma
Limited Liability Company Act; provided th at:
a. each member shall be a person or entity enumerated in
paragraphs 1 through 5 of this subsection, and
b. there shall not be more than thirty members unless
said the members in excess of thirty are related as
lineal descendants or are or have been related by
marriage or adoption to lineal descendants, and
c. at least sixty-five percent (65%) of the limited
liability company’s annual gross receipts shall be
derived from farming or ranching, or from allowing
others to extract minerals underlying lands he ld by
the limited liability company. If the limited
liability company cannot comply with the annual gross
receipts test, the limited liability company may
furnish records of its gross receipts for each of the
previous five (5) years, or for each year that it has
been in existence if less than five (5) years, and the
average of such annual gross receipts may be used for
purposes of complying with this section , and
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d. the limited liability company is not engaged in
renewable energy generation .
B. Any farming or ranching corporation, trust, partnership,
limited partnership, limited liability company or other entity which
violates any provisions of this section shall be fined an amou nt not
to exceed Five Hundred Dollars ($500.00) per day until the violation
ceases. Any other person or entity who knowingly violates this
section shall be deemed guilty of a misdemeanor.
C. The provisions of this act Section 951 et seq. of this title
shall not apply to interests in land acquired prior to June 1, 1978.
SECTION 3. AMENDATORY 64 O.S. 2021, Section 1013, as
amended by Section 40, Chapter 228, O.S.L. 2022 (64 O.S. Supp. 2024,
Section 1013), is amended to read as foll ows:
Section 1013. A. The Commissioners of the Land Office shall be
responsible for the investment of the permanent school funds, other
educational funds and public building funds solely in the best
interests of the current and future beneficiaries. The
Commissioners of the Land Office shall make investments:
1. For the exclusiv e purpose of:
a. providing maximum benefits to current and future
beneficiaries, and
b. defraying reasonable expenses of administering the
trust funds;
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2. With the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent person acting in a like
enterprise of a like character and with like aims would use; and
3. By diversifying the investments of the trust funds so as to
minimize the risk of larg e losses.
B. The permanent school fund and other educational funds may
only be invested in bonds issued in the United States, United States
dollar denominated or other investments settled in United States
dollars or traded on the United States exchange ma rkets and real
property to be owned or acquired by the Commissioners of the Land
Office. The Commissioners of the Land Office shall not invest more
than sixty percent (60%) of the trust fund investments in equity
securities. The Commissioners of the Land Office are further
authorized to acquire, purchase, exchange and grant any re al
property under its jurisdiction as is necessary to carry out the
investment in the real property. The Commissioners of the Land
Office shall not invest more than five percent (5%) of the total
value of the assets of the permanent school funds in connection with
investments in real property. The calculation of investments in
real property within the five percent (5%) cap shall not include the
value of real property under long -term lease to the State of
Oklahoma, agencies of the state or subdivisions the reof. In no case
shall the Commissioners of the Land Office bid against private -
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sector bidders above the appraised value of any property to be
acquired.
C. The Commissioners sh all establish an investment committee.
The investment committee shall be composed of not more than three
members of the Commissioners of the Land Office or their designees.
The committee shall make recommendations to the Commissioners of the
Land Office on all matters related to the choice of managers of the
assets of the funds, o n the establishment of investment and fund
management guidelines, and in planning future investment policy.
The committee shall have no authority to act on behalf of the
Commissioners of the Land Office in any circumstances whatsoever.
No recommendations of the committee shall have effect as an action
of the Commissioners of the Land Office or take effect without the
approval of the Commissioners as provided by law. The Commiss ioners
shall promulgate and adopt on an annual basis an investment plan.
The investment plan shall state the criteria for selecting
investment managers, the allocation of assets among investment
managers, and established standards of investment and fund
management.
D. The Commissioners shall retain qualified investment managers
to provide for investment of the fund monies and for the management
of investment real property pursuant to the investment plan.
Investment managers shall be chosen by a solicitat ion of proposals
on a competitive bid basis pursuant to standards set by the
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Commissioners. Subject to the investment plan, each investment
manager shall have full discretion in the management of the funds or
investment real property allocated to the inve stment managers. The
funds allocated to investment managers shall be actively managed by
them, which may include selling investments and realizing losses if
the action is considered advantageous to longer term return
maximization. Because of the total re turn objective, no distinction
shall be made for management and performance ev aluation purposes
between realized and unrealized capital gains and losses.
E. The Commissioners shall take any measures they deem
appropriate to safeguard custody of securities and other assets of
the trusts.
F. By September 1 of each year, the Commissioners shall develop
a written investment plan for the trust funds.
G. The Commissioners shall compile a quarterly financial report
showing the performance of all the combined fu nds under their
control on a fiscal year basis. The report shall contain a li st of
all investments made by the Commissioners and a list of any
commissions, fees or payments made for services regarding the
investments for that reporting period. The report shall be based on
market values and shall be compiled pursuant to uniform reporting
standards prescribed by the Oklahoma State Pension Commission for
all state retirement systems. The report shall be distributed to
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the Oklahoma State Pension Commission, the Cash Management and
Investment Oversight Commission, and the Legislative S ervice Bureau.
H. Before January 1 of each year, the Commissioners shall
publish an annual report of all Trust operations, presented in a
simple and easily understood manner to the extent possible. The
report shall be submitted to the Governor, the Speaker of the House
of Representatives, the President Pro Tempore of the Senate, the
State Department of Education and each higher education beneficiary.
The annual report shall cov er the operation of the Trusts during the
past fiscal year including income, d isbursements and the financial
condition of the Trusts at the end of each fiscal year on a cash
basis. The annual report shall also contain a summary of the assets
of each trust and current market value as of the report date.
I. The Cash Management and Investment Oversight Commission
shall review reports prepared by the Commissioners of the Land
Office pursuant to this subsection and shall make recommendations
regarding the investment strategies and practices, the development
of internal auditing procedur es and practices and any other matters
as determined necessary and applicable.
J. The Commissioners of the Land Office shall select one or
more custodial banks to settle transac tions involving the investment
of the funds under the control of the Commissioners of the Land
Office. The Commissioners of the Land Office shall review the
performance of each custodial bank at least once every year. The
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Commissioners of the Land Office shall require a written competitive
bid every ten (10) years. The custodial bank shall have a minimum
of Five Hundred Million Dollars ($500,000,000.00) in assets to be
eligible for selection. Any out -of-state custodial bank shall have
a service agent in the State of Oklahoma so that service of summons
or legal notice may be had on the designated agent, and the bank
shall submit to the jurisdiction of Oklahoma state courts for
resolution of any and all disputes. In order to be eligible for
selection, the custodial bank shall allow electronic access to all
transaction and portfolio reports maintained by the custodial bank
involving the investment of state funds under control of the
Commissioners of the Land Office and to the Cash Management and
Investment Oversight Commission. The requirement for electronic
access shall be incorporated into any contract between the
Commissioners of the Land Office and the custodial bank. Neither
the Commissioners of the Land Office nor the custodial bank shall
permit any of the funds under the control of the Commissioners of
the Land Office or any of the documents, instruments, securities or
other evidence of a right to be paid money to be located in any
place other than within a jurisdiction or territory under the
control or regulatory power of the United States government.
SECTION 4. This act shall become effective November 1, 2025.
60-1-183 RD 1/16/2025 11:16:25 AM