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A BILL TO BE ENTITLED
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AN ACT
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relating to the collateralization of certain public funds; |
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providing administrative penalties. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Chapter 2257, Government Code, is amended by |
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adding Subchapter F to read as follows: |
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SUBCHAPTER F. POOLED COLLATERAL TO SECURE |
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DEPOSITS OF CERTAIN PUBLIC FUNDS |
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Sec. 2257.101. DEFINITION. In this subchapter, |
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"participating institution" means a financial institution that |
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holds one or more deposits of public funds and that participates in |
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the pooled collateral program under this subchapter. |
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Sec. 2257.102. POOLED COLLATERAL PROGRAM. (a) As an |
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alternative to collateralization under Subchapter B, the |
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comptroller by rule shall establish a program for centralized |
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pooled collateralization of deposits of public funds and for |
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monitoring collateral maintained by participating institutions. |
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The rules must provide that deposits of public funds of a county are |
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not eligible for collateralization under the program. The |
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comptroller shall provide for a separate collateral pool for any |
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single participating institution's deposits of public funds. |
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(b) Under the program, the collateral of a participating |
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institution pledged for a public deposit may not be combined with, |
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cross-collateralized with, aggregated with, or pledged to another |
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participating institution's collateral pools for pledging |
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purposes. |
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(c) A participating institution may pledge its pooled |
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securities to more than one participating depositor under contract |
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with that participating institution. |
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(d) The pooled collateral program must provide for: |
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(1) participation in the program by a participating |
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institution and each affected public entity to be voluntary; |
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(2) uniform procedures for processing all collateral |
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transactions that are subject to an approved security agreement |
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described by Section 2257.103; and |
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(3) the pledging of a participating institution's |
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collateral securities using a single custodial account instead of |
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an account for each depositor of public funds. |
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Sec. 2257.103. PARTICIPATION IN POOLED COLLATERAL PROGRAM. |
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A financial institution may participate in the pooled collateral |
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program only if: |
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(1) the institution has entered into a binding |
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collateral security agreement with a public agency for a deposit of |
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public funds and the agreement permits the institution's |
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participation in the program; |
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(2) the comptroller has approved the institution's |
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participation in the program; and |
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(3) the comptroller has approved or provided the |
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collateral security agreement form used. |
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Sec. 2257.104. COLLATERAL REQUIRED; CUSTODIAN TRUSTEE. (a) |
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Each participating institution shall secure its deposits of public |
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funds with eligible securities the total value of which equals at |
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least 102 percent of the amount of the deposits of public funds |
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covered by a security agreement described by Section 2257.103 and |
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deposited with the participating institution, reduced to the extent |
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that the United States or an instrumentality of the United States |
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insures the deposits. For purposes of determining whether |
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collateral is sufficient to secure a deposit of public funds, |
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Section 2257.022(b) does not apply to a deposit of public funds held |
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by the participating institution and collateralized under this |
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subchapter. |
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(b) A participating institution shall provide for the |
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collateral securities to be held by a custodian trustee, on behalf |
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of the participating institution, in trust for the benefit of the |
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pooled collateral program. A custodian trustee must qualify as a |
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custodian under Section 2257.041. |
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(c) The comptroller by rule shall regulate a custodian |
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trustee under the pooled collateral program in the manner provided |
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by Subchapter C to the extent practicable. The rules must ensure |
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that a custodian trustee depository does not own, is not owned by, |
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and is independent of the financial institution or institutions for |
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which it holds the securities in trust, except that the rules must |
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allow the following to be a custodian trustee: |
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(1) a federal reserve bank; |
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(2) a banker's bank, as defined by Section 34.105, |
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Finance Code; and |
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(3) a federal home loan bank. |
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Sec. 2257.105. MONITORING COLLATERAL. (a) Each |
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participating institution shall file the following reports with the |
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comptroller electronically and as prescribed by rules of the |
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comptroller: |
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(1) a daily report of the aggregate ledger balance of |
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deposits of public agencies participating in the pooled collateral |
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program that are held by the institution, with each public entity's |
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funds held itemized; |
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(2) a weekly summary report of the total market value |
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of securities held by a custodian trustee on behalf of the |
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participating institution; |
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(3) a monthly report listing the collateral securities |
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held by a custodian trustee on behalf of the participating |
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institution together with the value of the securities; and |
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(4) as applicable, a participating institution's |
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annual report that includes the participating institution's |
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financial statements. |
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(b) The comptroller shall provide the participating |
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institution an acknowledgment of each report received. |
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(c) The comptroller shall provide a daily report of the |
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market value of the securities held in each pool. |
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(d) The comptroller shall post each report on the |
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comptroller's Internet website. |
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Sec. 2257.106. ANNUAL ASSESSMENT. (a) Once each state |
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fiscal year, the comptroller shall impose against each |
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participating institution an assessment in an amount sufficient to |
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pay the costs of administering this subchapter. The amount of an |
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assessment must be based on factors that include the number of |
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public entity accounts a participating institution maintains, the |
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number of transactions a participating institution conducts, and |
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the aggregate average weekly deposit amounts during that state |
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fiscal year of each participating institution's deposits of public |
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funds collateralized under this subchapter. The comptroller by |
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rule shall establish the formula for determining the amount of the |
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assessments imposed under this subsection. |
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(b) The comptroller shall provide to each participating |
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institution a notice of the amount of the assessment against the |
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institution. |
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(c) A participating institution shall remit to the |
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comptroller the amount assessed against it under this section not |
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later than the 45th day after the date the institution receives the |
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notice under Subsection (b). |
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(d) Money remitted to the comptroller under this section may |
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be appropriated only for the purposes of administering this |
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subchapter. |
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Sec. 2257.107. PENALTY FOR REPORTING VIOLATION. The |
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comptroller may impose an administrative penalty against a |
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participating institution that does not timely file a report |
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required by Section 2257.105. |
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Sec. 2257.108. NOTICE OF COLLATERAL VIOLATION; |
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ADMINISTRATIVE PENALTY. (a) The comptroller may issue a notice to |
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a participating institution that the institution appears to be in |
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violation of collateral requirements under Section 2257.104 and |
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rules of the comptroller. |
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(b) The comptroller may impose an administrative penalty |
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against a participating institution that does not maintain |
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collateral in an amount and in the manner required by Section |
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2257.104 and rules of the comptroller if the participating |
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institution has not remedied the violation before the third |
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business day after the date a notice is issued under Subsection (a). |
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Sec. 2257.109. PENALTY FOR FAILURE TO PAY ASSESSMENT. The |
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comptroller may impose an administrative penalty against a |
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participating institution that does not pay an assessment against |
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it in the time provided by Section 2257.106(c). |
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Sec. 2257.110. PENALTY AMOUNT; PENALTIES NOT EXCLUSIVE. |
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(a) The comptroller by rule shall adopt a formula for determining |
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the amount of a penalty under this subchapter. For each violation |
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and for each day of a continuing violation, a penalty must be at |
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least $100 per day and not more than $1,000 per day. The penalty |
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must be based on factors that include: |
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(1) the aggregate average weekly deposit amounts |
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during the state fiscal year of the institution's deposits of |
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public funds; |
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(2) the number of violations by the institution during |
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the state fiscal year; |
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(3) the number of days of a continuing violation; and |
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(4) the average asset base of the institution as |
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reported on the institution's year-end report of condition. |
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(b) The penalties provided by Sections 2257.107-2257.109 |
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are in addition to those provided by Subchapter D or other law. |
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Sec. 2257.111. PENALTY PROCEEDING CONTESTED CASE. A |
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proceeding to impose a penalty under Section 2257.107, 2257.108, or |
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2257.109 is a contested case under Chapter 2001. |
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Sec. 2257.112. SUIT TO COLLECT PENALTY. The attorney |
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general may sue to collect a penalty imposed under Section |
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2257.107, 2257.108, or 2257.109. |
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Sec. 2257.113. ENFORCEMENT STAYED PENDING REVIEW. |
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Enforcement of a penalty imposed under Section 2257.107, 2257.108, |
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or 2257.109 may be stayed during the time the order is under |
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judicial review if the participating institution pays the penalty |
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to the clerk of the court or files a supersedeas bond with the court |
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in the amount of the penalty. A participating institution that |
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cannot afford to pay the penalty or file the bond may stay the |
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enforcement by filing an affidavit in the manner required by the |
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Texas Rules of Civil Procedure for a party who cannot afford to file |
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security for costs, subject to the right of the comptroller to |
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contest the affidavit as provided by those rules. |
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Sec. 2257.114. USE OF COLLECTED PENALTIES. Money collected |
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as penalties under this subchapter may be appropriated only for the |
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purposes of administering this subchapter. |
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SECTION 2. The comptroller of public accounts shall adopt |
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rules as necessary to implement Subchapter F, Chapter 2257, |
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Government Code, as added by this Act, so that the pooled collateral |
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program established under that subchapter may begin operating not |
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later than the first business day of April 2010. |
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SECTION 3. This Act takes effect September 1, 2009. |