A former state employee, backed by pension groups and an organization that represents public workers, is suing to overturn an Oklahoma law banning the state from doing business with financial firms accused of boycotting the fossil fuel industry.
Don Keenan worked at the Oklahoma Employment Security Commission as a disabled veterans employment and senior interviewer from 1985 to 1996, and is also the former head of the Oklahoma Public Employees Association. Keenan filed the lawsuit in Oklahoma County District Court on Monday.
As a state retiree, Keenan claims in the lawsuit he is opposed to “his retirement benefits being depleted because the State of Oklahoma believes that making political statements with retiree dollars is more important than taking care of retirees themselves.”
The lawsuit claims the state’s Energy Discrimination Elimination Act, enacted in 2022, violates the First Amendment of the U.S. Constitution as well as provisions in the state constitution that require state pension systems operate exclusively for the benefit of their beneficiaries.
The Oklahoma Public Employees Association announced Monday it was working with the Keep Oklahoma’s Promises Coalition — an arm of the National Public Pension Coalition — and the Oklahoma Retired Educators Association to support the lawsuit.
Under the Oklahoma Energy Discrimination Elimination Act, State Treasurer Todd Russ is tasked with determining whether financial institutions are boycotting the fossil fuel industry and putting violators on a blacklist that prohibits business with public retirement funds.
“We will not allow Todd Russ to play politics with state employees and retirees’ money,” said Tony DeSha, OPEA executive director. “The pension system is not taxpayer money, it is compensation earned by active employees who currently pay into the system and the pensioners who contributed to the same system for decades. The decision to pursue legal action against Todd Russ was not taken lightly, but we feel it is necessary to strengthen the fiduciary responsibility of our pension systems.”
Russ said in a statement released through a spokesperson that he was following the law.
“The spirit and intention of the law is to protect Oklahomans and the economic base of the state,” Russ said. “I will be happy to work with the Legislature in the future.”
Most of the governing boards of Oklahoma’s public employee pension systems — the Oklahoma Public Employee Retirement System, the Oklahoma Teachers Retirement System, the Oklahoma Law Enforcement Retirement System, the Oklahoma Police Pension and Retirement System, and the Oklahoma Firefighters Pension and Retirement System — have expressed concern that divesting from some of its largest retirement fund management firms would end up costing retirees millions of dollars. Meanwhile, other government entities barred from doing business with companies on the blacklist, have said the law is costing them money as well.
Though the state’s Energy Discrimination Elimination Act deals mostly with public pension funds, one section of the law prohibits any government entity from entering into contracts with blacklisted firms, but provides exceptions if doing so would violate an agency’s financial or legal obligations or if a company provides exclusive services.
Earlier this year, Russ said it was likely some exemptions would be allowed for pension and retirement boards over concerns about the cost.
However, House Speaker Charles McCall replaced two Oklahoma Public Employees Retirement System board members after the board voted in August to keep contracts with blacklisted financial firms Blackrock and State Street.
The vote came after the board sought out new investment firms and found a move would cost retirees at least $10 million.
Blackrock and State Street manage roughly a combined 60% of assets for the state’s largest retirement system. Wells Fargo; JPMorgan Chase & Co.; Bank of America and Climate First Bank are also on Russ’s blacklist.
Russ has asked the pension system to issue new requests for proposals, saying the previous attempt was biased and rushed, but the board has thus far refused to budge.
In other states, similar blacklists have been blamed for higher government borrowing costs, and some public pension systems have warned that their retirees could lose tens of millions of dollars each year.