Clark Mindock and Ross Kerber
(Reuters) – A judge in Oklahoma blocked a state law that would prohibit state pension systems from investing in companies that restrict investment in the oil and gas industry.
Oklahoma County District Court Judge Sheila Stinson on Tuesday issued a temporary injunction blocking enforcement of the law after finding that retiree Don Keenan was likely to succeed in his lawsuit filed last year alleging the law violated the state constitution and was written too vague.
Oklahoma Act 2022 is among dozens of bills sponsored by Republicans across the country that aim to exempt fossil fuel companies from climate restrictions adopted by some Wall Street firms. These laws have led some financial firms such as JPMorgan Chase (NYSE:) and State Street (NYSE:) reduce its participation in industry efforts to reduce climate-damaging emissions through its investments.
Other similar laws address sensitive environmental, social and governance (ESG) topics such as abortion and gun rights.
Oklahoma law prohibits state agencies from doing business with financial firms that restrict investments in energy companies and requires the state treasurer to maintain a list of those companies, even if they continue to own shares in fossil fuel companies. Treasurer Todd Russ last year included BlackRock (NYSE:), Wells Fargo, JPMorgan Chase and Bank of America on the list.
In her ruling, Stinson said the state constitution requires pension funds to be managed solely for the benefit of their beneficiaries, but the law appears aimed at countering certain political agendas and helping the oil and gas sector. Stinson also said the law contains inconsistent and unclear definitions of key terms.
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“This ruling will not stop the Treasurer from fighting ESG,” a spokesman for Russ said in an email, noting that he is preparing to appeal the ruling.
Oklahoma is the largest oil and gas producing state in the United States.
Keenan’s lawyer declined to comment.
Legal experts say the judge’s decision, while specific to Oklahoma law, may illustrate the legal vulnerabilities of other “anti-boycott” laws passed by Republicans in other states.
Robert Skinner, an attorney with the law firm Ropes & Gray, said the “principles underlying the court’s reasoning should resonate widely” in other states with similar laws.
“Many of these laws are vulnerable to the same criticism: using pension assets as a policy tool to supposedly ‘protect’ certain industries runs counter to state laws that require pensions to be administered solely for the benefit of retirees,” Skinner said. .