By: Bivins S.B. No. 736
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the buying and selling of crude oil and natural gas
1-2 commodity futures or options.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 404.0245, Government Code, is amended to
1-5 read as follows:
1-6 Sec. 404.0245. Crude Oil AND NATURAL GAS Futures Contracts.
1-7 (a) In this section, "hedging" means the buying and selling of
1-8 crude oil and natural gas commodity futures or <the buying of>
1-9 options on crude oil and natural gas commodity futures as a
1-10 protection against loss due to price fluctuations. Hedging at all
1-11 times shall comply with Commodity Futures Trading Commission
1-12 regulations.
1-13 (b) Subject to the limitations of Subsection (c), the board
1-14 may determine and designate the amount of state funds that shall be
1-15 invested by the treasurer in hedging transactions in crude oil and
1-16 natural gas futures contracts and options on crude oil and natural
1-17 gas futures contracts that are traded on an established exchange
1-18 regulated by the Securities and Exchange Commission or the
1-19 Commodity Futures Trading Commission.
1-20 (c) The principal amount of state funds invested and
1-21 outstanding in hedging transactions on any one day may not exceed
1-22 $500,000 with a maximum risk of loss of $5,000,000 <$2,500,000>.
1-23 The total principal amount of state funds that may be invested by
1-24 the state treasurer in hedging transactions during any one biennium
2-1 may not exceed the amount of money credited to the unclaimed money
2-2 fund for that biennium and attributable to the remittance of
2-3 mineral proceeds under Chapter 75, Property Code. Any premium
2-4 incurred in connection with hedging transactions may be paid only
2-5 from funds appropriated for that purpose.
2-6 (d) The board by rule shall regulate the investment of state
2-7 funds in crude oil and natural gas futures contracts or options on
2-8 crude oil and natural gas futures contracts. The rules shall
2-9 provide restrictions and procedures for making the investments that
2-10 persons of ordinary prudence, discretion, and intelligence,
2-11 exercising the judgment and care under the circumstances then
2-12 prevailing, would follow in the management of their own affairs,
2-13 not in regard to speculation but in regard to the permanent
2-14 disposition of their funds, considering the probable income as well
2-15 as the probable safety of their capital. The investments may be
2-16 made only for hedging purposes.
2-17 (e) This section expires <September 1, 1993 or> if the total
2-18 cumulative losses exceed $5,000,000 <$2,500,000, whichever comes
2-19 first>.
2-20 SECTION 2. The importance of this legislation and the
2-21 crowded condition of the calendars in both houses create an
2-22 emergency and an imperative public necessity that the
2-23 constitutional rule requiring bills to be read on three several
2-24 days in each house be suspended, and this rule is hereby suspended,
2-25 and that this Act take effect and be in force from and after its
2-26 passage, and it is so enacted.