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.