Oklahoma 2022 2022 Regular Session

Oklahoma Senate Bill SB527 Introduced / Bill

Filed 01/20/2021

                     
 
 
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STATE OF OKLAHOMA 
 
1st Session of the 58th Legislature (2021) 
 
SENATE BILL 527 	By: Montgomery 
 
 
 
 
 
AS INTRODUCED 
 
An Act relating to public finance; creating the 
Oklahoma Prosperity Act; subjectin g implementation of 
act to certain appropriation; d efining terms; 
requiring State Treasurer to develop and operate the 
Oklahoma Prosperity Act Program in accordance with 
stated requirements; establishing certain persons as 
fiduciary for accounts establishe d under program; 
exempting certain persons f rom fiduciary duty; 
providing standard of fiduciary duty; establishing 
mandates for designing and operating program ; 
authorizing adoption of certain rules; creating the 
Oklahoma Prosperity Act Administrative Fund ; 
specifying terms of the fund; creating the Oklaho ma 
Prosperity Act Trust; authorizing Treasurer to 
appoint certain persons as trustee or custodian; 
requiring assets of certain IRAs be allocated to 
trust and managed for cer tain purpose; requiring 
establishment of at least one investment fund within 
the trust; establishing terms of investment funds; 
authorizing Treasurer to hire investment advisers for 
certain purpose; specifying terms of trust 
maintenance and investments; re quiring trust assets 
be held separate from state assets; prohibiting 
liability of state for trust; exempting trust monies 
from state income ta x; authorizing trust to be 
established by adoption of fund of other state in 
certain circumstances; requiring prog ram be 
established in certain ti me frame; authorizing 
Treasurer to extend time fram e; authorizing Treasurer 
to establish pilot program or roll outs for 
implementing act; amending 75 O.S. 2011, Section 
250.4, as last amended by Section 214, Chapter 408, 
O.S.L. 2019 (75 O.S. Supp. 2020, Sec tion 250.4), 
which relates to the Administrative Pr ocedures Act;   
 
 
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providing exemption for certain activities; providing 
for codification; and providing an effective date. 
 
 
 
 
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA : 
SECTION 1.     NEW LAW     A new sec tion of law to be codified 
in the Oklahoma Statutes as Sect ion 3600 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 
Prosperity Act”. 
SECTION 2.     NEW LAW     A new section of law to be codified 
in the Oklahoma Statutes as Section 3601 of Title 62, unless there 
is created a duplication in numbering, reads as follows: 
A.  Implementation of this ac t shall be subject to the receipt 
of appropriations su fficient to establish the Oklahoma Prosperity 
Act Program, as defined in this section. 
B.  As used in this act: 
1.  “Administrative fund” shall mean the Oklahoma Prosperity Act 
administrative fund estab lished under this act; 
2.  “Contribution rate” means the percentage of the wages of a 
covered employee that is wi thheld from his or her wages and paid to 
the individual retirement account or individual retirement annuity 
established for the covered employe e under the Program; 
3. “Covered employee” means any individual who is e ighteen (18) 
years of age or older, who is employed by a covered employer and who   
 
 
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has wages that are allocable to the state.  For purposes of the 
investment, withdrawal, transfer, rol lover or other distrib ution of 
an individual retirement account or indivi dual retirement annuity , 
the term covered employee also includes the beneficiary of a 
deceased covered employee; 
4.  “Covered employer” means an employer that either: 
a. satisfies the following requirement s: 
(1) has at no time during the previous calendar year 
employed fewer than ten (10) employees in this 
state, 
(2) has been in business for at least tw o (2) years, 
and 
(3) has not been a participating or contributing 
employer in a retirement plan under Sect ion 
401(a), 401(k), 403(a), 403(b), 408(k), or 408( p) 
of Title 26 of Internal Revenue Code at any time 
during the preceding two (2) calendar years, or 
b. elects to be a covered employer if and as permitted in 
accordance with rules and procedures establishe d by 
the Oklahoma Prosperity Act Program; 
5.  “Employer” means a person or entity engaged in a business, 
profession, trade or other enterprise in the state, whether for 
profit or not-for-profit, that employs one or more individuals in 
the state; provided, that a federal or state entity, agency or   
 
 
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instrumentality or any political subdivision thereof, shall not be 
an employer; 
6.  “Enrollee” means any covered employee enrolle d in the 
Oklahoma Prosperity Act Program; 
7.  “Internal Revenue Code” means the federal Internal Revenue 
Code of 1986, as amended; 
8.  “Investment adviser” means either: 
a. an investment adviser registered as such under the 
U.S. Investment Advisers Act of 1940, or 
b. a bank or other institution exempt from registratio n 
under the U.S. Inves tment Advisers Act of 1940; 
9.  “Investment fund” means each investment portfolio 
established within the trust for investment purposes; 
10.  “IRA” means either an individu al retirement account or 
individual retirement annuity establis hed under Section 408 or 408A 
of Title 26 of the Internal Revenue Code; 
11.  “Program” means the Oklahoma Prosperity Act Program 
established under this act; 
12.  “State” means the State of Okla homa; 
13.  “State Treasurer” means the Oklahoma State Treasurer ; 
14.  “Trust” means the IRA retirement trust or annuity contract 
established under Section 7 of this act;   
 
 
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15.  “Trustee” means the trustee of the trust including an 
insurance company issuing an annuity contract, selected under 
Section 4 of this act; and 
16.  “Wages” means compensation within the meaning of Section 
219(f)(1) of Title 26 the Internal Revenue Code that is received by 
a covered employee from a covered employer . 
SECTION 3.     NEW LAW     A new section of law to be codified 
in the Oklahoma Statutes a s Section 3602 of Title 62, unless there 
is created a duplication in numbering, reads as follows: 
The State Treasurer shall have the following powers and duties 
in implementing the provisions of this act: 
1.  To design, establish and operate the Oklahoma P rosperity Act 
Program in accordance with the requir ements established in this act; 
2.  To collect fees to defray the costs of administering the 
Program; 
3.  To enter into contracts necessary or desirable for the 
establishment and adm inistration of the Prog ram; 
4.  To hire, retain and terminate third -party service providers 
for the Program including, but not limited to, consultants, 
investment managers or advisors, trustee s, custodians, insurance 
companies, record keepers, administrat ors, actuaries, counsel , 
auditors and other professionals; provided, that e ach service 
provider shall be authorized to do business in this state.  For 
purposes of selecting a third-party service provider, the Office of   
 
 
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the State Treasurer shall be exempt f rom the Oklahoma Centra l 
Purchasing Act; provided, that a competitive proce ss shall be 
developed and utilized to select service providers; 
5.  To determine the type or type s of IRAs to be offer ed; 
6.  To employ a program administrator and any other individ uals 
necessary to administer the Program and the administrative fund; 
7.  To develop and implement an outreach plan and disseminate 
information regarding the Program and re tirement and financial 
education in general, to employees, employers and other const ituents 
in the state; 
8. Determine the number of days by which an eligible employer 
must make the Program available to a covered employee upon first 
becoming an eligible e mployer or covered employee; 
9.  To adopt rules and procedures for the establishment and 
operation of the Program and to take such other actions as necessary 
to operate the Program in accordance with the provisions of this 
act.  Any guidelines or procedure s affecting the Program may be 
implemented after reasonable notice to the public and a public 
comment period, in a manner similar to the requirements of the 
Administrative Procedures Act.  However, the Ad ministrative 
Procedures Act shall not apply for purp oses of this section; and 
10.  If applicable, to establish and maintain the Program by 
contracting with ano ther state, partnering with one or more states 
to create a joint auto-IRA Program, allowing states to participat e   
 
 
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in the Program or forming a consort ium with one or more other states 
in which certain aspects of the Program of each st ate are combined 
for administrative convenience and efficiency. 
SECTION 4.     NEW LAW     A new section of law to be c odified 
in the Oklahoma Statutes as S ection 3603 of Title 62, unless there 
is created a duplication in numbering, reads a s follows: 
A.  The trustee and each investment adviser shall be a fiduciary 
with respect to the trust and IRAs established and maintain ed under 
the Oklahoma Prosperity Act Program. 
B.  Each covered employer shall be required to provide covered 
employees with the information as required by the Program.  No 
employer acting pursuant to this act shall be considered a fiduciary 
with respect to the trust o r an IRA or have fiduciary 
responsibilities under the act. 
C.  Each fiduciary shall discharge its duties with respect to 
the Program solely in the best interests of covered employees a nd 
with the care, skill, prudence and diligence under the prevailing 
circumstances that a prudent person acti ng in a similar capacity and 
familiar with those matters would use in th e conduct of an 
enterprise of like character and aims. 
SECTION 5.     NEW LAW     A new section of law to be codified 
in the Oklahoma Statutes as Section 3604 of Title 62, unless there 
is created a duplication in numbering, reads as follows :   
 
 
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A.  The Oklahoma Pros perity Act Program shall be designed, 
established and operated in accordance with the following 
provisions: 
1.  Each covered employer shall be required to offer to each 
covered employee an opportunity to contribute to an IRA establis hed 
under the Program for the benefit of the covered employee through 
withholding from his or her wages.  No employer shall be permitted 
to contribute to the Program; 
2.  Unless the covered employee elects not to participate in the 
Program, he or she shall be automatically enrol led in the Program 
and contributions shall be withhe ld from the wages of the covered 
employee; 
3.  The minimum contribution rate of each covered employee shall 
be three percent (3%); the minimum contribution rate shall be the 
default contribution rate; 
4.  The IRAs shall qualify for favorable federal income tax 
treatment under Sections 408 and 408A of Title 26, as appropriate, 
of the Internal Revenue Code; 
5.  Each covered employer shall deposit withheld contributions 
of the covered employee under the Progr am with the trustee in such 
manner as is determined by the State Treasurer, provided that the 
employer shall deliver the amo unts withheld to the trustee within 
ten (10) business days after the date the amounts otherwise would 
have been paid to the covered employee;   
 
 
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6.  Additional rules and procedures may be adopted in 
conjunction with established IRS regulations for withdrawals , 
distributions, transfers and rollov ers of IRAs and for the 
designation of IRA beneficiaries; 
7.  Information regarding the Program shall be made available to 
the public on a website maintained for the Program; 
8.  Audited financial reports shall be submi tted to the Governor 
and Legislature within two (2) years after the Program is 
established and annually thereafter at the end of each fiscal year; 
9.  Each covered employer shall be pr ovided information 
regarding the Program and disclosures including: 
a. a description of the benefits and risk s associated 
with investments offered in the Program, 
b. instructions about how to obtain addit ional 
information about the Program, 
c. a description of the federal and state income tax 
consequences of an IRA, which may consist of or 
include the disclosure statement required to be 
distributed under the Internal Revenue Code and the 
Treasury Regulations thereunder, 
d. a statement that covered employees seeking financial 
advice should contact their own financial advisors, 
that covered employers shall not provi de financial   
 
 
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advice and that covered employers are not liable for 
decisions covered employees m ake under the act, 
e. a statement that the Program i s not an employer- 
sponsored retirement plan, 
f. a statement that neither the Program nor the IRA of 
the covered employee established under the Program is 
guaranteed by the state, 
g. a statement that neit her a covered employer nor the 
state will monitor or has an obligation to monitor the 
eligibility of the covered employee under the Internal 
Revenue Code to make contributions to an IRA or to 
monitor whether the contributions of the covered 
employee to the IRA established for the covered 
employee under the Program exceeds the maximum 
permissible IRA contribution; it shall be the 
responsibility of the covered emplo yee, and 
h. a statement that neither the state nor the covered 
employer will have any liability with respect to any 
failure of the covered employee to be eligible to make 
IRA contributions or any contribution in excess of the 
maximum IRA contribution; 
10.  Any information, forms or instructions to be furnished to 
covered employees that provide the c overed employee with the 
procedures for:   
 
 
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a. making contributions to the IRA of the covered 
employee established under the Program including a 
description of the minimum contribution rate and the 
right to elect to make no contributi on or to change 
the contribution rate under the Program, 
b. making an investment election with respect to the IRA 
of the covered employee established under the Program 
including a description of the default investment 
fund, and 
c. making transfers, rollov ers, withdrawals and oth er 
distributions from the IRA of the covered employee; 
11.  Each covered employer shall deliver or facilitate the 
delivery of the information about the Program t o each covered 
employee at the time and in the manner as established by Program 
guidelines; and 
12.  The Program shall be designed and operated in a manner that 
will cause it not to be an employee benefit plan within the meaning 
of Section 3(3) of the Empl oyee Retirement Income Security Act of 
1974. 
SECTION 6.    NEW LAW     A new section of law to be codified 
in the Oklahoma Statutes as Section 3605 of Title 62, unless there 
is created a duplication in numbering, reads as follows: 
There is hereby created in the Office of the State Treasurer a 
fund to be designated as the “Oklahoma Prosperity Act Administrative   
 
 
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Fund”.  The fund shall be a continuing fund, not subject to fiscal 
year limitations, and shall consist of monies appropriated for th e 
administration of the Oklahoma Prosperity Act Program, all 
administrative fees collected and any other monies designated to the 
fund by law.  All monies accruing to the credit of the fund are 
hereby appropriated and may be budgeted and expended by the St ate 
Treasurer for expenses related to the administration and support of 
the Program.  Expenditu res from the fund shall be made upon warrants 
issued by the State Treasurer against claims filed as prescribed by 
law with the Director of the Office of Manageme nt of Enterprise 
Services for approval and payment. 
SECTION 7.     NEW LAW     A new section of law to be codified 
in the Oklahoma Statutes as Section 3606 of Title 62, unless there 
is created a duplication in numbering, reads as follows: 
A.  There is hereby created as an instrumentality of the state a 
trust to be known as the “Oklahoma Prosperity Act Trust ”. 
B.  The State Treasurer may appoint qualified financial 
institutions to act as trustee or custodian of the IRA accounts. 
C.  The assets of IRAs established for covered employees shall 
be allocated to the t rust and combined for in vestment purposes.  
Trust assets shall be managed and administered for the purposes of 
providing services to covered employees and defraying reasonable 
administrative expenses of the Oklahoma Prosperity Act Program.   
 
 
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D.  There shall be established within th e trust one or more 
investment funds.  The first One T housand Dollars ($1,000.00) in 
contributions made by, or on behalf of, an enrollee may be deposited 
into a default capital preservation investment fund and the enrollee 
may be provided an account revoca tion period during which, if the 
enrollee chooses to e nd participation in the Program, the enrollee 
may withdraw the deposited amounts from the default investmen t 
without penalty. 
E.  Covered employees may allocate assets of their I RAs among 
investment funds and a default investment fund may be designated for 
the IRAs of covered employees who do not select an investment fund. 
F.  The State Treasurer may retain inv estment advisers to select 
and manage the investments of investment fun ds on a discretionary 
basis, subject to ongoing review and oversight. 
G.  The assets of the trust shall be maintained, invested and 
expended solely for the purposes of the trust and no property rights 
therein shall exist in favor of the state or any covere d employer.  
Trust assets shall not be transferred or used by the state for an y 
purposes other than the purposes of the trust or funding the 
expenses of operating the Program. 
H.  The assets of the trust shall be held separate and apart 
from the assets of the state.   
 
 
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I.  There shall be no liability for the state, the Program, the 
State Treasurer or any employer for investment losses incurred by 
any covered employee as a result of partici pating in the Program. 
J.  The trust and each investment fund shall not be subject to 
income tax of this state. 
K.  If the Program is established by u sing the auto-IRA Program 
of another state, a joint Program or a consortium with one or more 
other states, then the trust may be established by adopting the 
trust established un der the Program of the o ther state or states or 
as a master trust or similar ar rangement with the other state or 
states; provided, that the trust, master trust or similar 
arrangement satisfies the requirements of this section. 
SECTION 8.     NEW LAW     A new sect ion of law to be codified 
in the Oklahoma Statutes as S ection 3607 of Title 62, unless there 
is created a duplication in numbering, reads as follows: 
The Oklahoma Prosperity Act Program shall be established so that 
covered employees may begin making contri butions within twenty-four 
(24) months of the effective date of this act; provided, that the 
State Treasurer may extend the time period within which the Program 
is implemented by twelve (12) months.  The State Treasurer may 
establish a pilot program for ce rtain covered employers, may provide 
for a staggered rollout of the Program so that covered employers are 
initially required to offer the Program to covered empl oyees in 
stages based on employee headcount or other criteria, or both.   
 
 
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SECTION 9.     AMENDATORY     75 O.S. 2011, Section 250.4, a s 
last amended by Section 214, Chapter 408, O.S.L. 2019 (75 O.S. Supp. 
2020, Section 250.4), is amended to read as follows: 
Section 250.4. A.  1.  Except as is otherwise specifically 
provided in this subsection, each agency is required to comply with 
Article I of the Administrative Procedures Act. 
2.  The Corporation Commission shall be required to comply with 
the provisions of Articl e I of the Administrative Procedures Act 
except for subsections A, B, C and E of Section 303 of this title 
and Section 306 of this title.  To the extent of any conflict or 
inconsistency with Article I of the Administr ative Procedures Act, 
pursuant to Section 35 of Article IX of the Oklahoma Constitution, 
it is expressly declared that Article I of the Administrative 
Procedures Act is an amendment to and alteration of Sections 18 
through 34 of Article IX of the Oklahoma Constitution. 
3.  The Oklahoma Military Department shall be exempt from the 
provisions of Article I of the A dministrative Procedures Act to the 
extent it exercises its responsibility for military affairs.  
Military publications, as defined in Section 801 o f Title 44 of the 
Oklahoma Statutes, sh all be exempt from the provisions of Article I 
and Article II of the Administrative Procedures Act, except as 
provided in Section 251 of this title. 
4.  The Oklahoma Ordnance Works Authority, the Northeast 
Oklahoma Public Facilities Authority, the Oklahoma Office of   
 
 
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Homeland Security and the Board of Trustees of the Oklahom a College 
Savings Plan shall be exempt from Article I o f the Administrative 
Procedures Act. 
5.  The Transportation Commission and the Department of 
Transportation shall be exempt from Art icle I of the Administrative 
Procedures Act to the extent they exerci se their authority in 
adopting standard specifications, special provisions, plans, design 
standards, testing procedures, federally imposed requireme nts and 
generally recognized standards, project planning and programming, 
and the operation and control of t he State Highway System. 
6.  The Oklahoma State Regents for Higher Education shall be 
exempt from Article I of the Administrative Procedures Act wit h 
respect to: 
a. prescribing standards of higher education, 
b. prescribing functions and courses of study in each 
institution to conform to the standards, 
c. granting of degrees and other forms of academic 
recognition for completion of the prescribed cours es, 
d. allocation of state-appropriated funds, and 
e. fees within the limits prescribed by the Legislature. 
7.  Institutional governing boards within The Oklahoma State 
System of Higher Education shall be exempt from Article I of the 
Administrative Procedu res Act.   
 
 
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8. a. The Commissioner of Publ ic Safety shall be exempt from 
Sections 303.1, 304, 307.1, 308 and 30 8.1 of this 
title insofar as it is necessary to promulg ate rules 
pursuant to the Oklahoma Motor Carrier Safety and 
Hazardous Materials Transportatio n Act, to maintain a 
current incorporation of federal motor carrier safety 
and hazardous material regulation s, or pursuant to 
Chapter 6 of Title 47 of the Oklahoma Statutes, to 
maintain a current incorporation of federal commercial 
driver license regulatio ns, for which the Commissioner 
has no discretion when the state is mandated to 
promulgate rules identical to federal rules and 
regulations. 
b. Such rules may be ad opted by the Commissioner and 
shall be deemed promulgated twenty (20) days after 
notice of adoption is published in “The Oklahoma 
Register”.  Such publication need not set forth the 
full text of the rule but may incorporate the federal 
rules and regulation s by reference. 
c. Such copies of promulgated rules shall be filed with 
the Secretary as requ ired by Section 251 of this 
title. 
d. For any rules for which the Commissioner has 
discretion to allow varia nces, tolerances or   
 
 
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modifications from the federal rule s and regulations, 
the Commissioner shall fully comply with Article I of 
the Administrative P rocedures Act. 
9.  The Council on Judic ial Complaints shall be exempt from 
Section 306 of Article I of the A dministrative Procedures Act, with 
respect to review of the validity or applicability of a rule by an 
action for declaratory judgment, or any other relief based upon the 
validity or applicability of a rule, in the district court or by an 
appellate court.  A party aggrieved by the validity or applicability 
of a rule made by the Council on Judicial Complaints may petition 
the Court on the Judiciary to r eview the rules and issue opinions 
based upon them. 
10.  The Department of Corrections, State Board of Corre ctions, 
county sheriffs and managers of city jails shal l be exempt from 
Article I of the Administrative Procedures Act with respect to: 
a. prescribing internal management procedures for t he 
management of the state prisons, county jails and city 
jails and for the management, supervision and control 
of all incarcerated prisoners, and 
b. prescribing internal management procedures for the 
management of the probation and parole unit of the 
Department of Corrections and for the supervision of 
probationers and par olees.   
 
 
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11.  The State Board of Education shall be exemp t from Article I 
of the Administrative Procedures Act with respect to prescribing 
subject matter standards as provided for in Sectio n 11-103.6a of 
Title 70 of the Oklahoma Statutes. 
B.  As specified, the following agencies or classes of agency 
activities are not required to comply with the provisions of Article 
II of the Administrative Procedures Act: 
1.  The Oklahoma Tax Commission; 
2.  The Commission for Human Services; 
3.  The Oklahoma Ordnance Works Authority; 
4.  The Corporation Commission; 
5.  The Pardon and Parole Board; 
6.  The Midwestern Oklahoma Development Authority; 
7.  The Grand River Dam Authority; 
8.  The Northeast Oklaho ma Public Facilities Authority; 
9.  The Council on Judicial Complaint s; 
10.  The Board of Trustees of the Oklahoma College S avings Plan; 
11.  The supervisory or administrative agency of any penal, 
mental, medical or e leemosynary institution, only with resp ect to 
the institutional supervision, custody, control, care or treat ment 
of inmates, prisoners or patients therein; provide d, that the 
provisions of Article II shall apply to and govern all 
administrative actions of the Oklahoma Alcohol Prevention, Traini ng, 
Treatment and Rehabilitation Authority;   
 
 
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12.  The Board of Regents or employees of any university, 
college, or other institution of higher learning; 
13.  The Oklahoma Horse Racing Commission, its employees or 
agents only with respect to hearing and noti ce requirements on the 
following classes of violations which are an i mminent peril to the 
public health, safety and welfare: 
a. any rule regarding the running of a race, 
b. any violation of medication laws and rules, 
c. any suspension or revocation of an o ccupation license 
by any racing jurisdiction recognized by the 
Commission, 
d. any assault or other destructive acts within 
Commission-licensed premises, 
e. any violation of prohibited devices, laws and rules, 
or 
f. any filing of false information; 
14.  The Commissioner of Public Safety only with respect to 
driver license hearings and hearings conducted pursuant to the 
provisions of Section 2-115 of Title 47 of the Oklahoma Statutes; 
15.  The Administrator of the Depart ment of Securities only with 
respect to hearings conducted pursuant to provisions of the Oklahoma 
Take-over Disclosure Act of 1985; 
16.  Hearings conducted by a pu blic agency pursuant to Section 
962 of Title 47 of the Oklahoma Statutes;   
 
 
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17.  The Oklahoma Military Department; 
18.  The University Hospitals Authority, including all hospitals 
or other institutions o perated by the University Hospitals 
Authority; 
19.  The Oklahoma Health Care Authority Board and the 
Administrator of the Oklahoma Health Care Autho rity; and 
20.  The Oklahoma Office of H omeland Security; and 
21.  The State Treasurer with respect to the ad option of rules 
and procedures for the implementation and operation of the Oklahoma 
Prosperity Act pursuant to Section 1 of this act . 
SECTION 10.  This act shall become effective November 1, 2021. 
 
58-1-563 CB 1/20/2021 11:31:09 AM