Study reveals detrimental impact of Oklahoma’s EDEA policy on municipalities

By Shubhangi Singh

April 22, 2024, 5:37 pm SGT

3 min read

Oklahoma Treasurer Todd Russ, at podium, discusses implementation of the Oklahoma Energy Discrimination Elimination Act during a Senate interim study at the Capitol, in Oklahoma City. (Paul Monies/Oklahoma Watch)

A recent study conducted by the Oklahoma Rural Association sheds light on the adverse effects of Oklahoma’s Energy Discrimination Elimination Act (EDEA) on the state’s economy, particularly its municipalities.

The EDEA, enacted in 2022 to combat discrimination against the oil and gas industry by financial firms, is now under scrutiny for its unintended consequences.

The study, titled “Unintended Consequences of the Energy Discrimination Elimination Act in Oklahoma,” was led by Dr. Travis Roach, an esteemed economist from the University of Central Oklahoma.

Dr. Roach’s findings highlight a significant increase in borrowing costs for Oklahoma municipalities, amounting to a staggering 15.7% rise compared to non-EDEA adopting states.

According to Dr. Roach, the EDEA has led to an additional burden of $184,777,344 in expenses for local municipalities since its enactment. This translates to approximately $10,869,256 per month over the duration of the policy’s implementation. These inflated costs have resulted in higher taxes, reduced expenditures in vital areas, and even the abandonment of infrastructure projects, adversely impacting the quality of life for Oklahoma communities.

Monica Collison, president of the Oklahoma Rural Association, expressed deep concern over the negative repercussions of the EDEA on taxpayers and communities, particularly in rural and underserved areas. Collison emphasized that the detrimental effects outlined in the study were avoidable and directly linked to flawed policy decisions.

In response to the study’s findings, Collison urged lawmakers to rectify the situation, asserting that Oklahoma residents deserve better stewardship of their tax dollars. The call for action comes amid growing discontent over the EDEA’s impact on local governments and taxpayers.

Enacted in 2022, the EDEA prohibits certain financial institutions from conducting business with public entities in Oklahoma based on specific banking policies. By restricting competition and tightening the municipal bond market, the policy has inadvertently led to increased borrowing costs and hindered the completion of crucial projects.

The Oklahoma State Treasurer’s office, tasked with implementing the EDEA, issued a list of financial institutions deemed to be “boycotting” the oil and gas industry. Notable entities on the list include BLACKROCK, INC., WELLS FARGO & CO., JPMORGAN CHASE & CO., and others.

As the debate over the EDEA’s efficacy intensifies, stakeholders are calling for a reevaluation of the policy to mitigate its adverse effects on Oklahoma’s economy and communities.