Oklahoma Cities and Counties Grapple with Conflicting Information on Anti-Oil and Gas Bank Law
Cities and counties in Oklahoma are facing uncertainty over whether a new law prohibiting the state from doing business with banks deemed hostile to the oil and gas industry applies to their pension funds, bond sales, or bank loans. The ambiguity surrounding the law has caused a project in Stillwater to be put on hold and has led to discussions about taking unilateral action against banks listed as restricted financial companies by the retirement system for Tulsa County.
State Treasurer Todd Russ released a list of 13 banned companies in early May, including BlackRock Inc., JP Morgan Chase & Co., Wells Fargo & Co., Bank of America, and State Street Corp. The list was a result of the Oklahoma Energy Discrimination Elimination Act passed by lawmakers in 2022.
Many states now have laws that prohibit business with financial institutions that have committed to reducing their exposure to the oil and gas industry or have plans to reduce their carbon footprints. Conservative groups have provided model legislation and talking points to lawmakers and financial officials, contributing to the backlash against these financial institutions.
The uncertainty caused by the law has stalled an energy efficiency upgrade project in Stillwater. The mayor of Stillwater, Will Joyce, stated that Bank of America wants assurance that a pending loan for the project will not be affected by their appearance on the state treasurer’s list. Rising interest rates and higher material costs have further complicated the situation.
The impact of the law extends to the state’s seven pension systems, which collectively manage over $47 billion in assets. The Oklahoma Public Employees Retirement System (OPERS) has the largest exposure to the restricted financial companies listed by the treasurer. OPERS trustees are considering whether to exercise an exemption that would allow the system to keep its $6.9 billion assets managed by BlackRock and JP Morgan Chase.
Legal opinions suggest that the state law only applies to state government entities that are pension systems. City and county pension systems, such as those in Tulsa and Oklahoma City, are not covered by the law. However, some counties in Oklahoma have their retirement assets managed by OPERS.
While cities and counties navigate the impact of the anti-oil and gas bank law, Tulsa County Treasurer John Fothergill mentioned that the Tulsa County Employees Retirement System does contract with State Street, one of the restricted financial companies. He expected the state treasurer’s office to update the list accordingly.
In Oklahoma City, officials of the Oklahoma City Employee Retirement System are closely watching as the legislature considers another bill that would impose additional restrictions on doing business with banks or financial firms boycotting the oil and gas industry.
The conflicting information around the anti-oil and gas bank law has put cities and counties in a state of uncertainty, affecting their ability to move forward with projects and obtain financing. The impact on pension systems and the energy industry remains to be seen as officials navigate the complexities and seek clarity on the law’s applicability.
