The comptroller may use state funds for crude oil and natural gas hedging, but only for hedging purposes and only within the stated dollar limits and funding restrictions.
Sec. 404.0245. CRUDE OIL AND NATURAL GAS FUTURES CONTRACTS. (a) In this section, "hedging" means the buying and selling of crude oil and natural gas commodity futures or options on crude oil and natural gas commodity futures as a protection against loss due to price fluctuations. Hedging at all times shall comply with Commodity Futures Trading Commission regulations. (b) Subject to the limitations of Subsection (c), the comptroller may determine and designate the amount of state funds that shall be invested by the comptroller in hedging transactions in crude oil and natural gas futures contracts and options on crude oil and natural gas futures contracts that are traded on an established exchange regulated by the Securities and Exchange Commission or the Commodity Futures Trading Commission. (c) The principal amount of state funds invested and outstanding in hedging transactions on any one day may not exceed $500,000 with a maximum risk of loss of $5,000,000 in a biennium. The total principal amount of state funds that may be invested by the comptroller in hedging transactions during any one biennium may not exceed the amount of money credited to the unclaimed money fund for that biennium and attributable to the remittance of mineral proceeds under Chapter 75, Property Code. Any premium incurred in connection with hedging transactions may be paid only from funds appropriated for that purpose. (d) The comptroller shall invest state funds in crude oil and natural gas futures contracts or options on crude oil and natural gas futures contracts under the restrictions and procedures for making investments that persons of ordinary prudence, discretion, and intelligence, exercising the judgment and care under the circumstances then prevailing, would follow in the management of their own affairs, not in regard to speculation but in regard to the permanent disposition of their funds, considering the probable income as well as the probable safety of their capital. The investments may be made only for hedging purposes. (e), (f) Repealed by Acts 1995, 74th Leg., ch. 426, Sec. 32, eff. June 9, 1995. Added by Acts 1991, 72nd Leg., ch. 871, Sec. 1, eff. June 16, 1991. Amended by Acts 1993, 73rd Leg., ch. 939, Sec. 4, eff. Aug. 30, 1993; Acts 1995, 74th Leg., ch. 426, Sec. 6, 32, eff. June 9, 1995; Acts 1997, 75th Leg., ch. 891, Sec. 3.09, eff. Sept. 1, 1997; Acts 1997, 75th Leg., ch. 1423, Sec. 7.33, eff. Sept. 1, 1997.