Oklahoma bill would drop muni bond issuance from anti-ESG law

The sale of bonds or notes by Oklahoma governments would be exempted from a contract provision in a 2022 state law that has led to underwriting bans for four investment banks, under a bill filed ahead of Monday’s start of the legislative session.

Senate Bill 714, introduced by Republican State Sen. Dave Rader, would also transfer enforcement of the Energy Discrimination Elimination Act to the attorney general from the state treasurer.

Attorney General Gentner Drummond, whose press secretary said supports the bill, and state Treasurer Todd Russ, both Republicans, have squabbled over defending the law, which was successfully challenged in court by a state pension recipient.

A permanent injunction blocking the law’s enforcement issued by a state district judge in July has been appealed to the Oklahoma Supreme Court.

The law prohibits state and local government contracts worth $100,000 or more with companies determined by the treasurer’s office to be “boycotting” the fossil fuel industry.

Before the law was halted, Russ had placed Barclays, Bank of American, JP Morgan, and Wells Fargo on a “boycotters” list, which led to Wells Fargo resigning as lead underwriter for a $500 million Oklahoma Turnpike Authority revenue bond sale in 2023.

A study released last year found Oklahoma’s law boosted municipalities borrowing costs by 59 basis points on average.

Rader did not immediately respond to a request for comment. His bill includes modifications to the process for determining if a financial company is a “boycotter” and a fiduciary responsibility exemption from divestment for state agencies. 

The treasurer’s office said it is monitoring many pieces of legislation, including SB 714. 

“We look forward to watching the process unfold and are always available to the legislature if they have questions or concerns,” a statement from the office said.

In October, Russ, his office and his chief of staff and deputy treasurer Jordan Harvey, were sued by an open-records company that accused them of withholding and possibly destroying documents related to the law.

On another environmental, social, and governance front, legislation calling for a state and local government contract ban for companies that “discriminate” against the firearm industry is back after failing to pass in previous sessions. 

SB 500 and House Bill 1231, filed by Republican lawmakers, apply to contracts worth $100,000 or more. The House measure would only affect financial institutions with $50 billion or more in assets. 

Pleiades Strategy reported on Thursday that dozens of anti-ESG legislative measures have been introduced or pre-filed in 16 states so far this year.