STATE OF OKLAHOM

2nd Session of the 52nd Legislature (2010)

SENATE BILL 2178	By:	Branan

AS INTRODUCED

An Act relating to public finance; creating the Oklahoma Gross Production Tax Revenue Stabilization and Security Act; providing short title; authorizing the State Treasurer to enter into certain contracts for the stabilization and security of state revenue from the Gross Production Tax; requiring the advice and consent of the Cash Management and Investment Oversight Commission; requiring submission to the attorney general for review and comment; limiting the term of such contracts; providing for codification; and declaring an emergency.

BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1.     NEW LAW     A new section of law to be codified in the Oklahoma Statutes as Section 280 of Title 62, unless there is created a duplication in numbering, reads as follows:
This act shall be known and may be cited as the “Oklahoma Gross Production Tax Revenue Stabilization and Security Act”.
SECTION 2.     NEW LAW     A new section of law to be codified in the Oklahoma  Statutes as Section 280.1 of Title 62, unless there is created a duplication in numbering, reads as follows:
A.  The State Treasurer, on behalf of the state, shall contract with respect to contracts commonly known as commodity or other swap agreements, forward payment conversion agreements, futures, or contracts providing for payments based on levels of or changes in commodity prices, contracts to exchange cash flows or a series of payments or contracts, including without limitation options, puts, or calls to hedge payment, rate, spread, or similar exposure and other devices in order to establish a firm price for all or part of the anticipated mineral production subject to state gross production tax and royalty contract, subject to, and in accordance with, the following limitations, restrictions, and procedure:
1.  Such action has been recommended by the State Treasurer to the Cash Management and Investment Oversight Commission;
2.  The recommendation of the State Treasurer has been reviewed by the Cash Management and Investment Oversight Commission and the Commission has recommended the State Treasurer enter into such contracts based on criteria established by the Commission which may direct that a portion of any revenue gain associated with a contract be set aside or used to purchase risk protection to cover any risk associated with the contract;
3.  All swap agreements, forward conversion agreements, future contract, or other contract authorized in this section have been selected by the state treasurer through a selection process and any swap counter party selected is at least “A\A” rated according to industry standards;
4.  The proposed contract has been submitted for review and comment to the Attorney General who for the purposes of this section shall be considered and shall act as legal counsel for the Cash Management and Investment Oversight Commission and for the State Treasurer.
B.  The Cash Management and Investment Oversight Commission may require that appropriate insurance is purchased to ensure performance of the contract.
C.  In no event shall any contract authorized pursuant to this section be for a period longer than one year, whether calendar or fiscal.
SECTION 3.  It being immediately necessary for the preservation of the public peace, health and safety, an emergency is hereby declared to exist, by reason whereof this act shall take effect and be in full force from and after its passage and approval.

52-2-3246	MJM	1/14/2010 4:24:44 PM