TITLE 1. ADMINISTRATION

PART 3. OFFICE OF THE ATTORNEY GENERAL

CHAPTER 65. LANDOWNER COMPENSATION PROGRAM

The Office of the Attorney General (OAG) proposes new Chapter 65 in Title 1 of the Texas Administrative Code (TAC), relating to the Landowner Compensation Program. Proposed new Chapter 65 consists of Subchapter A, §65.1 and §65.2, Scope, Construction, and Definitions; Subchapter B, §§65.200 - 65.203, Program Guidelines; Subchapter C, §§65.300 - 65.307, Application for Compensation; and Subchapter D, §§65.400 - 65.402, Administrative Remedies. Proposed new Chapter 65 is necessary to implement the Landowner Compensation Program in Chapter 56C, Texas Code of Criminal Procedure.

EXPLANATION OF AND JUSTIFICATION RULES

The Legislature, in the 88th Regular Session (2023), added Chapter 56C to the Code of Criminal Procedure (S.B. 1133) which establishes the Landowner Compensation Program (LCP). The purpose of the LCP is to compensate certain landowners who suffer real property damage on agriculture land as a result of certain acts in connection with a border crime.

Senate Bill 1133 provides that the OAG shall establish: Eligibility for compensation, application procedures, criteria for evaluating application and awarding compensation, guidelines for compensation amounts not to exceed $75,000 per incident, and procedures for monitoring the use of awarded compensation.

Proposed new Chapter 65 is necessary to implement Chapter 56C and Contingency Rider Section 18.03, General Appropriations Act (GAA) for Fiscal Years 2024-2025, which appropriates funds to create and administer the LCP. Chapter 56C, Code of Criminal Procedure, as added by S.B.1133 will expire on the second anniversary of the date that the money appropriated for the LCP has been expended.

SECTION-BY-SECTION SUMMARY

Proposed new Chapter 65 adds new Subchapter A - Scope, Construction, and Definitions.

Proposed new §65.1, outlines the authority, scope, and construction of the rules and law establishing the LCP.

Proposed new §65.2, defines the following terms: "Agriculture land," "Agriculture use," "Application," "Border crime," "Claimant," "Closed application," "Collateral source," "Incident," "Landowner," "Law enforcement agency," "LCP," "OAG," "Real property," "Report," and "Trespasser."

Proposed new Chapter 65 adds new Subchapter B - Program Guidelines.

Proposed new §65.200 outlines claimant eligibility requirements, the administration of the program, and compensation and award limits. The eligibility requirements are consistent with Chapter 56C and require that a claimant submit an application in accordance with proposed new Chapter 65. Proposed new §65.200 also establishes that real property damage for which an applicant files a claim must have occurred on or after September 1, 2023.

Proposed new §65.201 establishes that the OAG may award compensation to claimants that the OAG determines have met all eligibility requirements outlined in §65.200. Proposed new §65.201 also establishes parameters the OAG may use to determine the amount of compensation that will be awarded to a claimant who the OAG determines is eligible to receive compensation under the LCP.

Proposed new §65.202 establishes the types of real property repairs for which the OAG may award compensation and how the rates will be set, published, and reviewed. New §65.202 also establishes a maximum compensation amount of $75,000, which is consistent with Chapter 56C, and states that applications for $15 or less will not be considered.

Proposed new §65.203, establishes procedures that the OAG may use to monitor a landowner's use of compensation awarded under the LCP.

Proposed new Chapter 65 adds new Subchapter C - Application for Compensation.

Proposed new §65.300 establishes the application requirements a claimant must meet to be eligible for compensation under the LCP.

Proposed new §65.301 states that claimants must submit applications for compensation no later than 95 days after the date the incident occurred. The OAG has the discretion to extend the time frame for filing an application.

Proposed new §65.302, requires the claimant report an incident to the appropriate state or local law enforcement agency within a reasonable time period as determined by the OAG.

Proposed new §65.303 outlines when an application may be denied or closed. The OAG may reconsider an application that has been closed. The OAG will not reconsider an application that has been denied. However, a claimant may reapply for compensation based on the same incident for which a previous application has been denied if the claimant discovers new relevant information.

Proposed new §65.304 establishes that the OAG is the payer of last resort pursuant to §56C.006 of the Code of Criminal Procedure. Proposed new §65.304 provides that the OAG will not award compensation where another collateral source is or was available to compensate the landowner for real property damage that otherwise qualified for compensation under the LCP. Proposed new §65.304 also establishes that the OAG may consider the availability of collateral sources to determine, award, deny, or reduce compensation.

Proposed new §65.305 establishes that the OAG may require a refund from a claimant if the claimant applied for compensation on the basis of fraud or mistake or based on new information that would disqualify a claimant from being eligible for compensation. The OAG may also pursue available administrative or civil penalties in addition to seeking a refund upon determining that compensation was awarded based on fraud or mistake or based on new information that would disqualify a claimant from being eligible for compensation.

Proposed new §65.306 provides that the OAG will not exceed the amount of money appropriated for compensation under the LCP and available funds will be awarded in a priority deemed appropriate by the OAG.

Proposed new §65.307 provides that the OAG has authority to transmit the submission of notices, forms, and other documentation electronically and also may require a claimant to do so.

Proposed new Chapter 65 adds new Subchapter D - Administrative Remedies.

Proposed new §65.400 outlines procedures to request a reconsideration of an application or award under the LCP.

Proposed new §65.401 outlines the prehearing conference requirements.

Proposed new §65.402 outlines the hearing procedures.

FISCAL IMPACT ON STATE AND LOCAL GOVERNMENT

Mr. Ryan Fisher, Chief of the Crime Victim Services Division, has determined that for each year of the first five years the proposed rules are in effect, there will be an anticipated additional cost to the state General Revenue Funds, estimated at $18,000,000 for the first fiscal year and $18,000,000 for the second fiscal year.

The additional cost to the state was considered in the fiscal note for S.B. 1133, which amended the Texas Code of Criminal Procedure by adding Chapter 56C. Senate Bill 1133 grants the OAG the ability to adopt rules, establish, and administer the Landowner Compensation Program.

The General Appropriations Act for Fiscal Year 2024-2025 appropriated $18 million per fiscal year for two years, totaling $36 million, with administrative costs of $342,617 per year included in the amount to implement S.B. 1133. Because the LCP is a new program, an accurate forecast of compensation payouts and operating costs is not possible.

Chapter 56C of the Code of Criminal Procedure, as added by S.B. 1133, will expire on the second anniversary of the date the money appropriated for the Landowner Compensation Program has been expended.

Mr. Fisher has determined that there will be no additional costs to local government, no estimated reductions in costs to state or local government, and no estimated increase in revenue or estimated losses in revenue to state or local government.

LOCAL EMPLOYMENT IMPACT STATEMENT

Mr. Fisher has determined that the proposed rules do not have an impact on local employment or economies because the proposed rules impact landowners. Therefore, no local employment or economy impact statement is required under Texas Government Code §2001.022.

PUBLIC BENEFITS

Mr. Fisher has determined that for each year of the first five-year period the proposed rules are in effect, the public benefit will be to the landowners who have suffered real property damage on agriculture land as a result of certain acts in connection with a border crime. Eligible claimants will receive compensation, an award amount of up to $75,000 per incident, for their losses. The compensation will allow for financial recovery for damage caused by trespassing on agricultural land or related to border crimes if compensation from other collateral sources is not available to the landowner.

PROBABLE ECONOMIC COSTS TO PERSONS REQUIRED TO COMPLY WITH PROPOSAL

Mr. Fisher has determined that for each year of the first five-year period the proposed rules are in effect, there are no anticipated economic costs to persons who are required to comply with the proposed rules. Senate Bill 1133 amended the Texas Code of Criminal Procedure adding Chapter 56C, which establishes the Landowner Compensation Program, to assist those affected by border crime on agricultural land to be eligible to receive compensation for real property damage. Those identified as affected by the proposed rules are potential claimants who may be eligible for compensation. Enforcing or administering the proposed rules do not have foreseeable economic costs to those claimants.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS FOR SMALL BUSINESSES, MICROBUSINESSES, AND RURAL COMMUNITIES

Mr. Fisher has determined that for each year of the first five-year period the proposed rules are in effect, there will be no adverse economic effect on small businesses, micro-businesses, or rural communities as a result of the proposed rules.

Since the proposed rules will have no adverse economic effect on small businesses, micro-businesses, or rural communities, preparation of an Economic Impact Statement and a Regulatory Flexibility Analysis, as detailed under Texas Government Code §2006.002, is not required.

GOVERNMENT GROWTH IMPACT STATEMENT

Pursuant to Government Code §2001.0221, the agency provides the following Government Growth Impact Statement for the proposed rules. For each year of the first five years the proposed rules will be in effect, the agency has determined the following:

1. Proposed new chapter 65 creates a new government program. Senate Bill 1133 creates a government program called Landowner Compensation Program and appropriates General Revenue Funds to the OAG for two years to administer the program.

2. Implementation of proposed new chapter 65 requires the OAG to create 10 new full-time employee positions. The proposed rules are necessary to implement S.B. 1133, which resulted in the creation of a new program for which implementation requires additional staff in the Crime Victims Services Division.

3. Implementation of the proposed rules does not require an increase or decrease in future legislative appropriations to the agency. The proposed rules implement General Appropriations Act for Fiscal Year 2024-2025, Contingency Rider Section 18.03, which appropriates funds to create and administer the Landowner Compensation Program. The appropriated amount for the program is $18 million per fiscal year for two years, totaling $36 million, with administrative costs of $342,617 per year included in the amount. Chapter 56C, Code of Criminal Procedure, as added by S.B. 1133 will expire on the second anniversary of the date that the money appropriated for the Landowner Compensation Program has been expended. Unless continued by the Texas Legislature and funded through the General Appropriations Act, the proposed rules do not increase or decrease future legislative appropriations.

4. The proposed rules will not require an increase or decrease in fees paid to the agency.

5. The proposed rules will not create a new regulation.

6. The proposed rules will not expand, limit, or repeal an existing regulation.

7. The proposed rules increase the number of individuals subject to the rules' applicability. The proposed rules implement S.B. 1133 which creates a new Landowner Compensation Program and therefore increases the number of individuals that may be eligible to be claimants.

8. The proposed rules positively affect this state's economy. Senate Bill 1133 allows landowners who have suffered real property damage on agriculture land as a result of certain acts in connection with a border crime. Eligible claimants will receive compensation, an award amount of up to $75,000 per incident, for their losses. This will allow for a quicker financial recovery for damage caused by trespassing on agricultural land or related to border crimes.

TAKINGS IMPACT ASSESSMENT

The OAG has determined that no private real property interests are affected by the proposed rules and the proposed rules do not restrict, limit, or impose a burden on an owner's rights to his or her private real property that would otherwise exist in the absence of government action. As a result, the proposed rules do not constitute a taking or require a takings impact assessment under Government Code §2007.043.

PUBLIC COMMENTS

Written comments on the proposed rules may be submitted electronically to the Crime Victims Services Division by email at landowner.compensation@oag.texas.gov or by mail to Crime Victim Services Division, Office of the Attorney General, P.O. Box 12198, Austin, Texas 78711.

The deadline for comments is 30 days after publication in the Texas Register.

SUBCHAPTER A. SCOPE, CONSTRUCTION, AND DEFINITIONS

1 TAC §65.1, §65.2

STATUTORY AUTHORITY

New 1 TAC Chapter 65 is proposed pursuant to the Texas Code of Criminal Procedure, Chapter 56C, as added by S.B. 1133 passed by the 88th Texas Legislature, Regular Session (2023) which requires the OAG to adopt rules necessary to implement Chapter 56C.

Proposed new Chapter 65 is further proposed pursuant to the General Appropriations Act for Fiscal Year 2024-2025, Contingency Rider Section 18.03, which appropriates funds to create and administer the Landowner Compensation Program.

CROSS REFERENCE

This regulation clarifies Texas Code of Criminal Procedure, Chapter 56C. No other rule, regulation, or law is affected by this proposed rule.

§65.1.Authority, Scope, and Construction of Rules.

This chapter applies to the administration of the Landowner Compensation for Property Damage caused by Certain Criminal Activities program pursuant to Texas Code of Criminal Procedure, Chapter 56C. The Office of the Attorney General (OAG) adopts this chapter under the authority of the Texas Code of Criminal Procedure, Chapter 56C and Texas Government Code, Chapter 402.

§65.2.Definitions.

The following words and terms, when used in this chapter, shall have the following meanings:

(1) "Agricultural land" means any land the use of which qualifies the land for appraisal based on agricultural use as defined under Subchapter D, Chapter 23, Texas Tax Code.

(2) "Agriculture use" includes but is not limited to the following activities: cultivating the soil, producing crops for human food, animal feed, or planting seed or for the production of fibers; floriculture, viticulture, and horticulture; raising or keeping livestock; raising or keeping exotic animals for the production of human food or of fiber, leather, pelts, or other tangible products having a commercial value; planting cover crops or leaving land idle for the purpose of participating in a governmental program, provided the land is not used for residential purposes or a purpose inconsistent with agricultural use; and planting cover crops or leaving land idle in conjunction with normal crop or livestock rotation procedure. The term also includes the use of land to produce or harvest logs and posts for the use in constructing or repairing fences, pens, barns, or other agricultural improvements on adjacent qualified open-space land having the same owner and devoted to a different agricultural use. The term also includes the use of land for wildlife management. The term also includes the use of land to raise or keep bees for pollination or for the production of human food or other tangible products having a commercial value, defined by the Texas Tax Code §23.51(2).

(3) "Application" means a written request for compensation under the Landowner Compensation for Property Damage caused by Certain Criminal Activities program and includes all supporting documentation that is provided for claim determination as prescribed by the OAG.

(4) "Border crime" means conduct:

(A) constituting an offense under:

(i) Subchapter D, Chapter 481 (Texas Controlled Substances Act), Health and Safety Code;

(ii) Section 20.05 (Smuggling of Persons) or 38.04 (Evading Arrest or Detention), Penal Code; or

(iii) Chapter 20A (Trafficking of Persons), Penal Code; and

(B) involving transnational criminal activity.

(5) "Claimant" means any landowner applying for any benefit under this chapter.

(6) "Closed application" means an application which has been administratively closed under this chapter.

(7) "Collateral source" means financial compensation for real property damage under a state, local, or federal funding program, or an insurance contract and may include property insurance; state funding; local funding; federal funding; or foreign consulate payments.

(8) "Incident" means an occurrence of real property damage on agricultural land caused by a trespasser as a result of an offense under Chapter 28, Penal Code, in the course or furtherance of a border crime or engaged in a border crime that has been reported to law enforcement.

(9) "Landowner" means an individual or business that owns land in the State of Texas.

(10) "Law enforcement agency" means a governmental organization that employs commissioned peace officers as defined by Texas Code of Criminal Procedure Article 2.12.

(11) "LCP" means Landowner Compensation Program.

(12) "OAG" means Office of the Attorney General.

(13) "Real Property" means agricultural land that has the meanings assigned by Texas Tax Code, §1.04(2). The term does not include crops, farm equipment, or livestock.

(14) "Report" means written documentation created or provided by a law enforcement agency in connection with an incident.

(15) "Trespasser" has the meaning assigned by Texas Civil Practice and Remedies Code §75.007.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 5, 2024.

TRD-202400427

Justin Gordon

General Counsel

Office of the Attorney General

Earliest possible date of adoption: March 17, 2024

For further information, please call: (512) 565-8064

SUBCHAPTER B. PROGRAM GUIDELINES

1 TAC §§65.200 - 65.203

STATUTORY AUTHORITY

New 1 TAC Chapter 65 is proposed pursuant to the Texas Code of Criminal Procedure, Chapter 56C, as added by S.B. 1133 passed by the 88th Texas Legislature, Regular Session (2023) which requires the OAG to adopt rules necessary to implement Chapter 56C.

Proposed new Chapter 65 is further proposed pursuant to the General Appropriations Act for Fiscal Year 2024-2025, Contingency Rider Section 18.03, which appropriates funds to create and administer the Landowner Compensation Program.

CROSS REFERENCE

This regulation clarifies Texas Code of Criminal Procedure, Chapter 56C. No other rule, regulation, or law is affected by this proposed rule.

§65.200.Eligibility and Administration.

(a) The OAG shall determine the eligibility, standards, and reasonable limits on compensation for applications and payments in a manner consistent with the law and this chapter. Use of payments made under the LCP are subject to ongoing review by the OAG to ensure compliance with conditions of the awards.

(b) The following requirements must be met in order for a claimant to be eligible for compensation under the LCP:

(1) the claimant must be a landowner;

(2) the land for which the claimant submits an application for compensation under the LCP must be agricultural land;

(3) the damage for which the claimant submits an application must be real property damage caused by a trespasser as a result of an offense under Chapter 28, Texas Penal Code, that was committed in the course of or in furtherance of a border crime or a law enforcement response to a trespasser who was engaged in a border crime;

(4) the claimant must submit a written report created by a law enforcement agency stating real property damage occurred in connection with a border crime; and

(5) the landowner sought and was not eligible to receive compensation from all available collateral sources.

(c) The real property damage for which a claimant files a claim must have occurred on or after September 1, 2023.

(d) A claimant may not be eligible for compensation under the LCP if the claimant does not submit an application in accordance with this chapter.

§65.201.Program Compensation.

(a) The OAG may award compensation to claimants determined by the OAG to have met all eligibility requirements in §65.200 of this chapter.

(b) Compensation will be reduced for any portion of the otherwise eligible real property damage for which the claimant received compensation from a collateral source.

(c) Awarded compensation will be an amount the OAG determines is reasonable to restore the real property to equal value of the real property before the damage.

(d) The OAG may determine the fair market price of a cost to determine a reimbursable amount of compensation if a claimant does not, for a reasonable reason, submit proof of the actual cost for repair. The OAG has the discretion to determine whether the reason a claimant is not able to provide proof of actual cost for repair is reasonable.

§65.202.Compensation Amount Guidelines.

(a) Real property repairs are limited to the following categories:

(1) labor cost for repairs made;

(2) cost for fence repair, including materials;

(3) cost for structure repair, including materials;

(4) disposal and removal of damaged property; or

(5) any other costs the OAG determines is reasonable to restore fair market value.

(b) The OAG will set the compensation rates for costs enumerated in subsection (a) of this section in accordance with fair market value guidelines and publish the rates on the OAG's website. The OAG may periodically review and adjust the compensation rates at its discretion to ensure fair market value.

(c) The maximum amount awarded per incident will not exceed $75,000.

(d) Applications submitted by a claimant for $15 or less will not be considered.

§65.203.Monitoring Use of Compensation.

(a) The OAG may verify and investigate the use of compensation awarded under the LCP. Verification and investigation includes but is not limited to:

(1) verification of any documentation submitted to the OAG;

(2) review of records submitted by a claimant; or

(3) a post-award audit to verify actual charges, bills, payments, and the delivery of goods or services.

(b) The OAG may require additional supporting documentation from a claimant. The claimant must respond to the OAG's request within 10 days, unless good cause is shown.

(c) If the claimant fails to provide additional supporting documentation or the OAG determines the claimant improperly used awarded compensation, then the OAG may require a claimant to refund the awarded funds in accordance with this chapter.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 5, 2024.

TRD-202400486

Justin Gordon

General Counsel

Office of the Attorney General

Earliest possible date of adoption: March 17, 2024

For further information, please call: (512) 565-8064

SUBCHAPTER C. APPLICATION FOR COMPENSATION

1 TAC §§65.300 - 65.307

STATUTORY AUTHORITY

New 1 TAC Chapter 65 is proposed pursuant to the Texas Code of Criminal Procedure, Chapter 56C, as added by S.B. 1133 passed by the 88th Texas Legislature, Regular Session (2023) which requires the OAG to adopt rules necessary to implement Chapter 56C.

Proposed new Chapter 65 is further proposed pursuant to the General Appropriations Act for Fiscal Year 2024-2025, Contingency Rider Section 18.03, which appropriates funds to create and administer the Landowner Compensation Program.

CROSS REFERENCE

This regulation clarifies Texas Code of Criminal Procedure, Chapter 56C. No other rule, regulation, or law is affected by this proposed rule.

§65.300.Application for Compensation.

(a) All communications and applications for compensation shall be submitted to the LCP in a manner and form prescribed by the OAG.

(b) An application for compensation is complete when the application:

(1) is filled out in its entirety as prescribed by the OAG;

(2) signed by the claimant;

(3) contains all relevant required documentation; and

(4) contains any other information requested by the OAG to determine eligibility.

(c) The OAG will not consider an application until the application is complete as prescribed in §65.300(b).

(d) An application must include:

(1) a written report, including an incident or claim number, by a law enforcement agency that documents the real property damage occurred in connection with a border crime;

(2) photographic evidence of the real property damage;

(3) a detailed description of the real property damage;

(4) the Texas Comptrollers of Public Accounts - Ag/Timber Registration Number; and

(5) insurance declarations or denial of coverage.

(e) The OAG may require the claimant to provide:

(1) Federal Tax Identification Number (EIN);

(2) entity formation information;

(3) the claimant's social security number;

(4) the claimant's Individual Taxpayer Number (ITIN);

(5) itemized receipts or invoices of cost for repair(s); or

(6) itemized receipts or invoices of cost for labor.

(f) If the claimant submits an application that is not complete, the OAG will notify the claimant in writing, that the application is incomplete and request additional information be provided.

(g) If the claimant does not return the completed application to the OAG within 30 days from the date generated on the OAG's request for additional information, the application may be closed in accordance with §65.303 of this chapter.

§65.301.Timely Filing an Application.

(a) An application must be submitted with the OAG no later than 90 days from the date of an incident.

(b) The OAG may extend the time for filing an application upon good cause shown by the claimant. Good cause, as determined by the OAG, may include the following circumstances:

(1) The claimant was not reasonably aware of the LCP;

(2) Extenuating circumstances prevented the claimant from filing in a timely manner; or

(3) Any other circumstance that the OAG considers significant.

§65.302.Law Enforcement Report.

(a) A claimant must report an incident to the appropriate law enforcement agency within a reasonable period as determined by the OAG in order to be eligible for compensation under the LCP.

(b) The OAG may extend the time for reporting an incident to law enforcement if the OAG determines that the extension is justified by extraordinary circumstances.

(c) The report must include the location of the incident.

§65.303.Denial or Closure of an Application.

(a) The OAG will deny compensation under this article if:

(1) real property damage was not caused by a trespasser committing a border crime on agricultural land;

(2) the claimant was eligible for reimbursement from another collateral source and failed to seek reimbursement from the collateral source prior to submitting an application;

(3) the claimant did not meet the requirements for eligibility under this chapter; or

(4) the claimant knowingly or intentionally provided false or fraudulent information or supporting documentation to the OAG.

(b) An application for compensation may be closed at the discretion of the OAG if any of the following conditions occurs:

(1) No written report by a law enforcement agency was obtained;

(2) The claimant fails to respond within a 30-day period to a request made by the OAG for additional information as required by §65.300;

(3) The OAG is unable, within 30 days of receiving an application, to obtain information substantiating the incident;

(4) The claimant fails to report that the claimant received or was eligible to receive compensation through a collateral source;

(5) The 30-day time period for appealing the decision of the OAG to award or deny an application has passed without a request from the claimant for reconsideration;

(6) The 30-day time period for appealing the reconsideration has passed without a request from the claimant for a hearing;

(7) The 40-day period has passed for filing a written notice of dissatisfaction with the OAG's final decision; or

(8) The 40-day period has passed to bring suit in district court after filing a written notice of dissatisfaction with the OAG's final decision.

(c) The OAG may reopen an application that has been closed at its discretion upon written request from a claimant that establishes good cause.

(d) The OAG will not reopen an application that has been denied. A claimant may not reapply for compensation for an incident.

§65.304.Collateral Sources.

(a) The LCP is the payer of last resort, and the OAG will not award compensation to a claimant if the OAG determines the claimant is or was eligible for reimbursement from any available collateral source or failed to seek reimbursement from an available collateral source.

(b) The OAG may deny or reduce the compensation if the OAG notifies the claimant of a possible reimbursement amount from any available collateral source, and the claimant fails to apply or pursue the compensation within a reasonable time frame as determined by the OAG. The acceptable time frame will be determined by the OAG upon consideration of all relevant facts and circumstances.

(c) A claimant must seek compensation from any available collateral sources prior to submitting a claim to the OAG, when reasonably possible.

(d) Unless good cause is shown, if a claimant receives compensation from a collateral source, the claimant must report the compensation amount and the source to the OAG before the claimant will be eligible to receive compensation. If a claimant is awarded compensation by a collateral source after the OAG awarded compensation under the LCP, the claimant must notify the OAG of the amount and the source of the collateral source within 10 business days of becoming aware of the compensation from a collateral source.

(e) If the claimant fails to utilize any available collateral source for all or a portion for real property damage, the OAG may deny or reduce an award under the LCP.

(f) Gifts, donations, or charitable contributions made directly to a claimant are not a collateral source and may not reduce the determination of the actual real property damage incurred by the claimant.

§65.305.Refunds from Claimants.

(a) The OAG may require a refund from a claimant if any compensation was awarded under the LCP based on fraud or mistake or based on new information that would disqualify a claimant from being eligible for compensation.

(b) The OAG may require the claimant to refund any overpayment in full or in installments or reduce future or pending payments by the amount of the overpayment.

(c) The OAG may discontinue or suspend all current and future payments to a claimant from whom the OAG has requested a refund.

(d) The OAG may pursue available administrative or civil penalties in addition to seeking a refund upon determining that compensation was awarded based on fraud or mistake or based on new information that would disqualify a claimant from being eligible for compensation.

§65.306.Insufficient Funds.

The OAG will not exceed the amount of money appropriated for compensation and available funds will be awarded in a priority deemed appropriate by the OAG.

§65.307.Use of the Electronic Communication.

(a) The OAG may send a claimant any notices, forms, or other documentation and information by electronic means.

(b) The OAG may require a claimant to submit notices, forms, or other documentation and information by electronic means, unless good cause is shown.

(c) In accordance with the Uniform Electronic Transactions Act, Texas Business and Commerce Code, Chapter 322, a notice, form, record, or signature may not be denied legal effect or enforceability solely because it is in electronic form.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 5, 2024.

TRD-202400487

Justin Gordon

General Counsel

Office of the Attorney General

Earliest possible date of adoption: March 17, 2024

For further information, please call: (512) 475-4291

SUBCHAPTER D. ADMINISTRATIVE PENALTIES

1 TAC §§65.400 - 65.402

STATUTORY AUTHORITY

New 1 TAC Chapter 65 is proposed pursuant to the Texas Code of Criminal Procedure, Chapter 56C, as added by S.B. 1133 passed by the 88th Texas Legislature, Regular Session (2023) which requires the OAG to adopt rules necessary to implement Chapter 56C.

Proposed new Chapter 65 is further proposed pursuant to the General Appropriations Act for Fiscal Year 2024-2025, Contingency Rider Section 18.03, which appropriates funds to create and administer the Landowner Compensation Program.

CROSS REFERENCE

This regulation clarifies Texas Code of Criminal Procedure, Chapter 56C. No other rule, regulation, or law is affected by this proposed rule.

§65.400.Request for Reconsideration of Adverse Action.

(a) A claimant may request a reconsideration of all or any part of the OAG's decision to make or deny an award on an application or on the amount of an award.

(b) Within 30 days from the date that the OAG's office provides the claimant with the award written decision notice, the claimant must submit a signed, written request for reconsideration stating the reasons for the request for reconsideration. If the claimant fails to file a written request for reconsideration to the OAG's adverse action within the 30-day time period, the decision of the OAG becomes binding and the claimant waives the right to further appeal.

(c) The OAG may not grant a reconsideration if a request is not filed by the claimant within the 30-day time period, unless the claimant shows good cause for late filing. The claimant must provide to the OAG a signed, written explanation showing good cause for failing to submit a written request for reconsideration of the OAG's adverse action within the 30-day time period. If the OAG does not find that good cause exists for late filing, the decision of the OAG becomes binding and the claimant waives the right to further appeal.

(d) The OAG will provide the claimant a written notification of its reconsideration decision. If the claimant is dissatisfied with the reconsideration of the OAG's award decision, the claimant must file a signed, written request for a hearing with the OAG within 30 days of the date of the reconsideration decision. If the claimant fails to file a written request for a hearing within the 30-day time period, the reconsideration decision becomes binding and the claimant waives the right to a hearing.

(e) A claimant who fails to exhaust all available administrative remedies waives the right to seek judicial review.

§65.401.Prehearing Conference.

At any time before a hearing is conducted, the hearing officer may request a prehearing conference, either in person or by telephone, with the claimant or his or her legal representative in order to establish whether a hearing on an application for compensation is necessary.

§65.402.Hearing.

(a) If the claimant is dissatisfied with the reconsideration decision, the claimant may file a signed, written request for a hearing.

(b) The OAG may not grant a request for a hearing if a request is not filed by the claimant within the 30-day time period, unless the claimant shows good cause for late filing. The claimant must provide to the OAG a signed, written explanation showing good cause for failing to submit a written request for a hearing within the 30-day time period.

(c) If the OAG does not find that good cause exists for late filing, the decision of the OAG becomes binding and the claimant waives the right to further appeal. If the OAG determines that a hearing is necessary, then the claimant will receive notice of the hearing not less than 10 days before the date of the hearing, stating the time, date, and place of the hearing.

(d) The hearing shall be conducted in Texas in a manner consistent with the law and rules adopted under this chapter.

(e) Any costs for the claimant to travel to the hearing are entirely the financial responsibility of the claimant and those costs will not be reimbursed by the OAG.

(f) Failure of the claimant to appear for the hearing may result in the entry of a final decision based upon the available record. A claimant may have the hearing rescheduled by making a request to reschedule at least two OAG business days prior to the hearing. Multiple requests for reschedule may be denied by the OAG. If a claimant fails to make a timely request to reschedule, the OAG may reschedule the hearing upon good cause shown by the claimant.

(g) The OAG will notify the claimant in writing of the final decision, including the reasons for the decision.

(h) A claimant may seek judicial review of all or any part of the final decision.

(i) In any proceeding under this subchapter, the burden of proof is upon the claimant to prove by a preponderance of the evidence that grounds for compensation exist.

(j) A claimant who fails to exhaust all available administrative remedies waives the right to seek judicial review.

(k) A final decision from the OAG may only be rendered by the OAG hearing officer after a prehearing conference, a final ruling hearing, or based on the available record.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 5, 2024.

TRD-202400488

Justin Gordon

General Counsel

Office of the Attorney General

Earliest possible date of adoption: March 17, 2024

For further information, please call: (512) 475-4291

PART 15. TEXAS HEALTH AND HUMAN SERVICES COMMISSION

CHAPTER 371. MEDICAID AND OTHER HEALTH AND HUMAN SERVICES FRAUD AND ABUSE PROGRAM INTEGRITY

SUBCHAPTER G. ADMINISTRATIVE ACTIONS AND SANCTIONS

DIVISION 3. ADMINISTRATIVE ACTIONS AND SANCTIONS

1 TAC §371.1723

The Executive Commissioner of the Texas Health and Human Services Commission (HHSC), on behalf of the Office of Inspector General (OIG), proposes in the Texas Administrative Code, Title 1, Part 15, Chapter 371, Subchapter G, Division 3, new §371.1723, concerning Recoupment of Overpayments Identified by Retrospective Payment Review.

BACKGROUND AND PURPOSE

The purpose of the proposal is to describe OIG's retrospective payment review procedures related to records requests, review processes, notices, and due process.

Texas Government Code §531.102 authorizes OIG to conduct reviews related to the provision and delivery of all health and human services in Texas to identify fraud, waste, or abuse.

SECTION-BY-SECTION SUMMARY

The proposed new §371.1723(a) identifies the types of retrospective payment reviews - data reviews and record reviews - performed by OIG and states that OIG may recoup an overpayment identified in a retrospective payment review.

The proposed new §371.1723(b) describes the procedures related to a retrospective payment review records request, including the time deadline required to submit records in response to a records request. The proposed new §371.1723(b) also states that failure to timely produce requested records may result in an OIG enforcement action.

The proposed new §371.1723(c) describes the review procedures related to a retrospective payment review, including the dollar limit of overpayment recoveries resulting from retrospective payment reviews and the ability of a person to produce records to address a review finding.

The proposed new §371.1723(d) specifies the notices OIG sends during a retrospective payment review, which includes any finding of an overpayment amount and instructions for filing an appeal.

The proposed new §371.1723(e) outlines the first and second level appeal options available to a person subject to a retrospective payment review.

The proposed new §371.1723(f) specifies the timing and circumstances under which results of a retrospective payment review become final.

FISCAL NOTE

Trey Wood, Chief Financial Officer, has determined that for each year of the first five years that the rule will be in effect, enforcing or administering the rule does not have foreseeable implications relating to costs or revenues of state or local governments.

GOVERNMENT GROWTH IMPACT STATEMENT

HHSC has determined that during the first five years that the rule will be in effect:

(1) the proposed rule will not create or eliminate a government program;

(2) implementation of the proposed rule will not affect the number of HHSC employee positions;

(3) implementation of the proposed rule will result in no assumed change in future legislative appropriations;

(4) the proposed rule will not affect fees paid to HHSC;

(5) the proposed rule will create a new rule;

(6) the proposed rule will not expand, limit, or repeal existing rule(s);

(7) the proposed rule will not change the number of individuals subject to the rule; and

(8) the proposed rule will not affect the state's economy.

SMALL BUSINESS, MICRO-BUSINESS, AND RURAL COMMUNITY IMPACT ANALYSIS

Trey Wood, Chief Financial Officer, has also determined that there will be no adverse economic effect on small businesses, micro-businesses, or rural communities. The rule does not impose any additional costs on small businesses, micro-businesses, or rural communities that are required to comply with the rules.

LOCAL EMPLOYMENT IMPACT

The proposed rule will not affect a local economy.

COSTS TO REGULATED PERSONS

Texas Government Code §2001.0045 does not apply to this new rule because it does not impose a cost on regulated persons; is necessary to receive a source of federal funds or comply with federal law; and is necessary to implement legislation that does not specifically state that §2001.0045 applies to the rule.

PUBLIC BENEFIT AND COSTS

Frank Bryan, OIG Senior Counsel, has determined that for each year of the first five years the rule is in effect, the public benefit will be the identification and review of fraud, waste, and abuse in the provision and delivery of health and human services in the state of Texas.

Trey Wood, Chief Financial Officer, has also determined that for the first five years the rule is in effect, there are no anticipated economic costs to persons who are required to comply with the proposed rule because the new rule does not require a change to business practices and does not create additional costs to comply with the rule.

TAKINGS IMPACT ASSESSMENT

OIG has determined that the proposal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking under Texas Government Code §2007.043.

PUBLIC COMMENT

Written comments on the proposal may be submitted to HHS Office of Inspector General - Chief Counsel Division, P.O. Box 85200, Austin, Texas 78708, or street address 4601 W. Guadalupe St., Austin, Texas 78751-3146; or by email to IG_Rules_Comments_Inbox@hhsc.state.tx.us.

To be considered, comments must be submitted no later than 31 days after the date of this issue of the Texas Register. Comments must be (1) postmarked or shipped before the last day of the comment period; (2) hand-delivered before 5:00 p.m. on the last working day of the comment period; or (3) emailed before midnight on the last day of the comment period. If the last day to submit comments falls on a holiday, comments must be postmarked, shipped, or emailed before midnight on the following business day to be accepted. When emailing comments, please indicate "Comments on Proposed Rule 23R032" in the subject line.

STATUTORY AUTHORITY

The proposed new section is authorized by Texas Government Code §531.0055, which provides that the Executive Commissioner of HHSC shall adopt rules for the operation and provision of services by the health and human services system; Texas Government Code §531.102(a), which grants OIG the responsibility for the prevention, detection, audit, inspection, review, and investigation of fraud, waste, and abuse in the provision and delivery of all health and human services in the state, including services through any state-administered health or human services program that is wholly or partly federally funded, and which provides OIG with the authority to obtain any information or technology necessary to enable it to meet its responsibilities; Texas Government Code §531.102(a-2), which requires the Executive Commissioner of HHSC to work in consultation with OIG to adopt rules necessary to implement a power or duty of the office; Texas Government Code §531.102(x), which requires the Executive Commissioner of HHSC, in consultation with OIG to adopt rules establishing criteria for determining enforcement and punitive actions with regard to a provider who has violated state law, program rules, or the provider's Medicaid provider agreement; Texas Government Code §531.033, which requires the Executive Commissioner of HHSC to adopt rules necessary to carry out the commission's duties under Chapter 531; Texas Human Resources Code §32.021 and Texas Government Code §531.021(a), which provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas, to administer Medicaid funds, and to adopt rules necessary for the proper and efficient regulations of the Medicaid program; Texas Government Code §531.1131(e), which requires the Executive Commissioner of HHSC to adopt rules necessary to implement §531.1131; and Texas Human Resources Code §32.039, which provides authority to assess administrative penalties and damages and provides due process for persons potentially subject to damages and penalties.

The proposed new section affects Texas Government Code §531.0055 and Texas Human Resources Code Chapter 32.

§371.1723.Recoupment of Overpayments Identified by Retrospective Payment Review.

(a) Introduction. The OIG conducts retrospective payment (RP) reviews related to the provision and delivery of all health and human services in the state. RP reviews include data reviews and record reviews. The OIG may recoup an overpayment identified in a RP review.

(b) Records.

(1) A person who receives a request for records and documentation for an OIG RP review must provide the requested records and documentation to the OIG within the time period requested by the OIG or 10 calendar days from the date of receipt of the request, whichever is later.

(2) When requested, a person must submit a signed and notarized OIG-approved records affidavit that properly authenticates the records and documentation provided to the OIG as business records pursuant to Texas Rules of Evidence Rule §803(6) and Rule §902(10).

(3) Failure to timely produce requested records and affidavits may result in an OIG enforcement action under this chapter.

(c) Review procedures.

(1) A RP review conducted by the OIG:

(A) limits the period covered by a RP review to five years;

(B) includes any finding of an overpayment amount;

(C) is limited to recovery of overpayments less than or equal to $100,000 per case, except recovery of overpayments is limited to less than or equal to $300,000 when the overpayment amount is based on a single Medicaid recipient's treatment; and

(D) permits a person subject to a review to produce records and documentation to address any finding found during a RP review by the date specified by the OIG.

(2) Overpayments identified in a RP review may be referred to other areas within the OIG or other entities outside of the OIG.

(3) For purposes of this section, a case means the application of the selected criteria to a particular set of data or records for a person subject to a review.

(d) Notice.

(1) The OIG provides written notice of review results, first level appeal results, if any, and second level appeal results, if any.

(2) A notice of RP review results includes any finding of an overpayment amount, instructions for filing a first level appeal, and a date by which the first level appeal request must be received.

(3) If applicable, a notice of first level appeal results includes any finding of an overpayment amount, instructions for filing a second level appeal, and a date by which the second level appeal request must be received.

(4) If applicable, a notice of second level appeal results includes any finding of an overpayment amount and instructions related to payment of any overpayment amount.

(5) OIG notices may be sent by electronic mail.

(e) Due process.

(1) A RP review provides an option for a first level appeal and, if necessary, a second level appeal.

(2) A first level appeal is a review conducted by a reviewer who was not associated with the initial review.

(3) A second level appeal, if necessary, is conducted by HHSC, or its contractor.

(4) A request for a first or second level appeal must be timely and complete as specified in the notice of review results or first level appeal results.

(f) Scope and effect.

(1) A notice of RP review results becomes final and unappealable 30 calendar days after the person's receipt of the RP review results notice, unless the OIG, or its contractor, has received a timely and complete request for a first level appeal.

(2) A notice of first level appeal results becomes final and unappealable 30 calendar days after the person's receipt of the first level appeal results notice, unless the OIG, or its contractor, has received a timely and complete request for a second level appeal.

(3) A notice of second level appeal results becomes final and unappealable 30 calendar days after the person's receipt of the second level appeal results notice.

(4) The effect of a final notice as specified in this subsection is to create a final debt in favor of the State of Texas.

(5) A person who receives a final notice as specified in this subsection must, within 60 calendar days after receipt of the final notice:

(A) pay the overpayment; or

(B) submit a request for, and execute, a final payment plan agreement approved by the OIG.

(6) Failure to pay a delinquent debt may result in OIG collection efforts or enforcement action under this chapter.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on January 31, 2024.

TRD-202400342

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Earliest possible date of adoption: March 17, 2024

For further information, please call: (512) 221-7320