State’s anti-ESG law filled with twists, turns (Capitol Update)

Oklahoma politics is sometimes a small world. In 2022, given the opportunity to demonstrate their loyalty to the state’s oil and gas industry, legislators passed House Bill 2034, the “Energy Discrimination Elimination Act of 2022, known as Oklahoma’s anti-ESG (environmental, social and governance) law.”

The act prohibits state government retirement systems from investing in companies that “boycott energy companies.” The bill defines boycotting of an energy company as: “without an ordinary business purpose. . . taking any action that is intended to penalize, inflict economic harm on, or limit commercial relations with a company because the company: a.) engages in the exploration, production, utilization, transportation, sale or manufacturing of fossil-fuel-based energy and does not commit or pledge to meet environmental standards beyond applicable federal and state law, or b.) does business with a company described in subparagraph a of this paragraph.”

Final passage of HB 2034 in the House of Representatives was on May 4, 2022. Rep. Todd Russ, R-Cordell, voted “yes” for the measure, and Rep. Collin Walke, D-Oklahoma City, voted “no.”

About two months later in the Republican primary election on June 28, 2022, Gentner Drummond defeated Attorney General John O’Connor who had been appointed the previous year after Attorney General Mike Hunter resigned. Hunter had defeated Drummond in the Republican primary runoff election for Attorney General four years earlier by 271 votes.

In the 2022 general election, Rep. Russ was elected State Treasurer, and Drummond was elected Attorney General. Collin Walke decided not to run for re-election to the House of Representatives.

Fast forward to December 21, 2023. Don Keenan, a retired state employee, filed an action for a declaratory judgment in Oklahoma County District Court asking that the Energy Discrimination Elimination Act of 2022 be declared unconstitutional, and that prior to final ruling, State Treasurer Russ be enjoined from enforcing the act.

The attorney representing Mr. Kennan is none other than former State Rep. Collin Walke. The attorney representing State Treasurer Russ is Cheryl Plaxico, former wife of former Attorney General Mike Hunter. Russ had apparently insisted on the treasurer’s office hiring its own attorney rather than being represented by the Office of the Attorney General.

Last week, the court ruled the act unconstitutional and issued an order temporarily enjoining State Treasurer Russ from enforcing it pending final outcome of the case.

First, the court said the act violates Okla. Const. Art. 23, Section 12 that provides assets and income of Oklahoma public retirement systems must be held, invested, and disbursed for the exclusive purpose of providing for benefits of the retirement system. The court found the purpose of the Act, according to a notice to the Oklahoma Public Employees Retirement System Board by Treasurer Russ, was to counter the “political agenda” of certain financial companies and to assist the economic status of the oil and gas sector.

Second, the court ruled the act is unconstitutionally vague for, among other things, failing to define what is an “ordinary business purpose.”

Attorney General Drummond has now entered the case and issued a statement “expressing extreme disappointment with state Treasurer Todd Russ and the treasurer’s hand-picked legal counsel.” Drummond said, “It is extremely disappointing that the counsel hired by Treasurer Russ was unable to secure a favorable ruling in defense of Oklahoma’s anti-ESG law. Because of this failure, the law is now on hold and at risk of being struck down entirely. Oklahomans deserve better.”

It’s a complicated legal case that may have more twists and turns in the future, in several ways.


Steve Lewis served as Speaker of the Oklahoma House of Representatives from 1989-1990. He currently practices law in Tulsa and represents clients at the Capitol.