Proposed Rules Title 10

TITLE 10. COMMUNITY DEVELOPMENT

SUBCHAPTER A. COMMISSION STANDARDS ON CONFLICTS OF INTEREST AND CODE OF CONDUCT

The Texas Space Commission ("Commission") proposes new 10 TAC §§320.1 - 320.7, Subchapter A, concerning Commission Standards on Conflicts of Interest and Code Of Conduct.

EXPLANATION AND JUSTIFICATION OF THE RULES

In May 2023, the 88th Texas Legislature passed House Bill 3447, which, in part, created the Texas Space Commission, an agency administratively attached to the Office of the Governor. The Commission was established to strengthen Texas's proven leadership in civil, commercial, and military aerospace activity and to promote innovation in the fields of space exploration and commercial aerospace opportunities. House Bill 3447 established a Board of Directors ("Board") to govern the Commission and directed the Board to adopt conflict-of-interest rules to govern members of the Board and Commission employees. In accordance with that directive, the Commission held its first meeting on May 8, 2024, and unanimously voted to propose the conflict of interest and code of conduct rules detailed in this rulemaking.

SECTION BY SECTION SUMMARY

Proposed new §320.1 specifies the intent of the Commission regarding the rules in Subchapter A.

Proposed new §320.2 establishes definitions the Commission and Board will utilize in undertaking its work.

Proposed new §320.3 establishes when Board members, Commission staff, and staff of the Office of the Governor providing administrative support to the Commission must recuse themselves. The rule also details the circumstances in which a person has a financial or professional interest in a matter. The rule also specifies who must receive notices when the person specified by the rules to receive notice also holds a conflict of interest.

Proposed new §320.4 details how Board members, Commission Executive Director, and other staff assisting the Commission must provide notice and disclose of the existence of a conflict. The rule also establishes that individuals who hold conflicts must recuse themselves. Proposed new §320.5 establishes that the requirement to recuse may be waived in exceptional circumstances and specifies what situations constitute exceptional circumstances.

Proposed new §320.6 establishes how failures to report conflicts of interests shall be reported and investigated.

Proposed new §320.7 establishes the code of conduct for all Board members, the Executive Director, and all other staff that supports the work of the Commission.

FISCAL NOTE

Gwen Griffin, Chair of the Texas Space Commission, has determined that the first five-year period the proposed rules are in effect, there will be no additional estimated cost, reduction of costs, or loss or increase in revenue to the state or local governments due to the enforcement or administration of the rules. Additionally, Chair Griffin has determined that enforcing or administering the rules does not have foreseeable implications relating to the costs or revenues of state or local government.

PUBLIC BENEFIT

Chair Griffin has determined for the first five-year period the proposed rules are in effect there will be a benefit to grant applicants and the general public because the rules will promote the fair and transparent administration of the grant programs entrusted to the Commission.

PROBABLE ECONOMIC COSTS

Chair Griffin has determined for the first five-year period the proposed rules are in effect, there will be no additional economic costs to persons required to comply with the proposed rules.

REGULATORY FLEXIBILITY ANALYSIS FOR SMALL AND MICRO-BUSINESSES AND RURAL COMMUNITIES.

Chair Griffin has determined that the proposed rules will have no adverse economic effect on small businesses, micro-businesses, or rural communities. Therefore, the Commission is not required to prepare a regulatory flexibility analysis pursuant to §2006.002, Texas Government Code.

LOCAL EMPLOYMENT IMPACT STATEMENT

Chair Griffin has determined that the proposed rules will not affect a local economy, so the Commission is not required to prepare a local employment impact statement under §2001.002, Texas Government Code.

GOVERNMENT GROWTH IMPACT STATEMENT

Chair Griffin has determined that during each year of the first five years in which the proposed rules are in effect, the rules:

1) will not create or eliminate government programs;

2) will not require the creation of new employee positions;

3) will not require an increase or decrease in future legislative appropriations to the Commission;

4) will not require an increase or decrease in fees paid to the Commission;

5) will create new regulations;

6) will not expand certain existing regulations, limit certain existing regulations, or repeal existing regulations;

7) will increase the number of individuals subject to the applicability of the rules; and

8) will positively affect the Texas economy.

TAKINGS IMPACT ASSESSMENT

Chair Griffin has determined that there are no private real property interests affected by the proposed rules. Thus, the Commission is not required to prepare a takings impact assessment pursuant to §2007.043, Texas Government Code.

REQUEST FOR PUBLIC COMMENTS

Comments on the proposed rules may be submitted to Joseph Behnke, Counsel for the Texas Space Commission, P.O. Box 12428, Austin, Texas 78701, or by email to joseph.behnke@gov.texas.gov with the subject line "Texas Space Commission Rules." The deadline for receipt of comments is 5:00 p.m., Central Time, on July 3, 2024, which is at least 30 days from the date of publication in the Texas Register.

STATUTORY AUTHORITY.

Section 482.401, Texas Government Code, authorizes the Commission to adopt conflict-of-interest rules to govern the members of the Board and Commission employees. Section 482.403, Texas Government Code, also requires the Commission to adopt rules governing the waiver of conflict-of-interest rules required under section 482.401, Texas Government Code, as well as the investigation and consequences of unreported conflicts of interest.

CROSS REFERENCE TO STATUTE

Chapter 482, Texas Government Code. No other statutes, articles, or codes are affected by the proposed rules.

§320.1.Intent.

It is the intent of the Texas Space Commission, its Board of Directors, Executive Director, Chief Compliance Officer, staff, and all parties affiliated with the Commission to provide applicants for funds from the Space Exploration and Aeronautics Research Fund a fair and unbiased, merit-based assessment free from conflicts of interests, impropriety, and self-dealing. This Subchapter provides requirements to avoid conflicts of interest and a code of conduct to be observed by those individuals involved in the application review process, the creation of contracts related to awards, and compliance and oversight matters.

§320.2.Definitions.

The words and terms used in this Chapter shall have the meanings provided below, unless the context clearly indicates otherwise.

(1) Board--The Board of Directors established under Section 482.105, Texas Government Code, to govern the Texas Space Commission.

(2) Chair--The presiding officer of the Board.

(3) Executive Director--The executive director of the Texas Space Commission, hired by the Board under Section 482.106(a), Texas Government Code.

(4) General Counsel--The General Counsel Division of the Office of the Governor.

(5) Second Degree of Affinity or Consanguinity--A spouse, parent, child, grandparent, grandchild, or sibling, or the spouse of each of those respective relatives, of a member of the Board. Stepfamily members (e.g., stepbrother, stepmother, etc.) are considered consanguineous relatives.

(6) Space Exploration and Aeronautics Research Fund or Fund--The fund established by Section 482.301, Texas Government Code, created as a trust fund outside the treasury with the Texas Comptroller of Public Accounts and administered by the Commission.

(7) Texas Space Commission or Commission--The body governed by the Board and established under Section 482.101, Texas Government Code, to strengthen Texas's proven leadership in civil, commercial, and military aerospace activity and to promote innovation in the fields of space exploration and commercial aerospace opportunities, including the integration of space, aeronautics, and aviation industries into the economy of this state.

(8) Vice-chair--The officer of the Board empowered to fulfill the duties of the Chair in the Chair's absence from or inability to participate during a meeting of the Board.

§320.3.Conflicts of Interest.

(a) A member of the Board, the Executive Director, the Chief Compliance Office, or staff of the Texas Space Commission or the Office of the Governor employee shall recuse himself or herself, as provided by §320.4 of this chapter (concerning Disclosure of Conflict Of Interest; Recusal), if the member or staff member, or an individual who is related to the member or staff member within the Second Degree of Affinity or Consanguinity, has a professional interest or financial interest in an entity receiving or applying to receive a grant from the Fund.

(b) An individual has a financial interest in an entity receiving or applying to receive a grant from the Fund if the individual:

(1) owns or controls, directly or indirectly, an ownership interest, including sharing in profits, proceeds, or capital gains, in an entity, or in a foundation or similar organization affiliated with an entity, receiving or applying to receive a grant from the Commission, unless the ownership interest is limited to shares owned through an investment in a publicly traded mutual fund or similar investment vehicle if the individual subject to this Chapter does not exercise any discretion or control regarding the investment of the assets of the fund or other investment vehicle; or

(2) could reasonably foresee that an action or recommendation by the Board could result in a financial benefit to the individual.

(1) is a member of the board of directors, other governing board, or any committee of an entity or an organization affiliated with an entity receiving or applying to receive a grant from the Fund;

(2) serves as an elected or appointed officer of an entity receiving or applying to receive a grant from the Fund or an organization affiliated with the entity;

(3) is a staff member of, consultant for, or is negotiating future employment or a consulting arrangement with an entity receiving or applying to receive a grant from the Fund or an organization affiliated with the entity; or

(4) represents in business or law, including actively seeking to represent, an entity receiving or applying to receive a grant from the Commission or an organization affiliated with the entity.

(d) Notwithstanding anything to the contrary in this Chapter, if any notice, report, or disclosure required to be delivered under this Chapter would result in the communication going solely to an individual who holds a conflict of interest related to the matter being noticed, reported, or disclosed, the reporting individual shall instead deliver the notice, report, or disclosure to the first individual from the following list who does not hold a conflict of interest:

(1) Chief Compliance Officer;

(2) Executive Director;

(3) Chair;

(4) Vice-chair; or

(5) a member of the Board, in descending order of seniority, as determined by how long the member has continuously served on the Board.

§320.4.Disclosure of Conflicts of Interest; Recusal.

(a) If a member of the Board has a conflict of interest as described by §320.3 of this chapter (relating to Conflicts of Interest) regarding an application that comes before the Commission for review or other action, the member shall:

(1) provide written notice to the Executive Director and the Chair, or the Vice-chair if the Chair holds a conflict of interest;

(2) disclose the conflict of interest in an open meeting of the Board; and

(3) recuse himself or herself from participating in the review, discussion, deliberation, and vote on the application and from accessing information regarding the matter to be decided.

(b) If the Executive Director has a conflict of interest described by §320.3 of this chapter regarding an application that comes before the Executive Director to take an action, the Executive Director shall:

(1) provide written notice to the Chair and Chief Compliance Officer of the conflict of interest; and

(2) recuse himself or herself from participating in the processing or review of the application and be prevented from accessing information regarding the matter to be decided.

(c) If the Executive Director must recuse himself or herself in a matter, the Chief Compliance Officer shall undertake the tasks and actions the Executive Director would have performed but for the conflict.

(d) If an individual other than the Executive Director is serving as staff to the Commission and has a conflict of interest described by §320.3 of this chapter regarding an application that comes before the staff member for review or other action, the staff member shall:

(1) provide written notice to the Executive Director of the conflict of interest; and

(2) recuse himself or herself from participating in the review of the application and be prevented from accessing any information regarding the matter to be decided.

(e) A member of the Board, the Executive Director, Chief Compliance Officer, or staff of the Commission with a conflict of interest may seek a waiver as provided by §320.5 of this chapter.

(f) An individual who is subject to this Chapter is considered in compliance with the conflict of interest provisions of this Chapter if the individual:

(1) reports his or her potential conflict of interest or another impropriety or self-dealing; and

(2) fully complies with the recommendations of the General Counsel and recusal requirements.

(g) If a member of the Board, the Executive Director, Chief Compliance Officer, or staff of the Commission intentionally violates this Chapter, that individual is subject to removal from further participation in the Commission's application review process.

§320.5.Exceptional Circumstances Requiring Participation.

(a) The requirements of this Chapter related to conflicts of interest may be waived under exceptional circumstances for a member of the Board, the Executive Director, Chief Compliance Officer, or staff of the Commission. The waiver may only be granted in accordance with the requirements of this section.

(b) Exceptional circumstances providing a potential basis for waiver:

(1) Expertise or unique qualifications. The individual who holds the conflict is the only individual affiliated with the Commission with the expertise and ability to appropriately evaluate an application for a grant from the Fund.

(2) Participation Significantly Outweighs Bias. The value of the participation of the individual who holds the conflict significantly outweighs the potential bias the individual may have in the review of an application.

(3) Board Discretion. The Board may determine, in an open meeting and upon a majority vote of members present, that a circumstance presented to the Board presents an exceptional circumstance that requires participation of a member or staff member. A member whose circumstances are under consideration by the Board under this provision must recuse himself or herself from participation in the discussion, consideration, and vote on the determination made in this paragraph.

(1) The Executive Director or a member of the Board may propose granting a waiver to a conflicted individual by submitting to the Chair a written statement about the conflict of interest, the exceptional circumstance requiring the waiver, and any proposed limitations to the waiver;

(2) the proposed waiver must be publicly reported at a meeting of the Board;

(3) a majority vote of the Board members present and voting must vote to grant a waiver; and

(4) the Commission must retain documentation of each waiver granted and retain them in accordance with the record retention policy applicable to the Commission.

§320.6.Investigation of Failures to Report Conflicts of Interest.

(a) Any individual subject to this Chapter who becomes aware of a potential unreported conflict of interest shall immediately notify the Executive Director of the potential conflict of interest. If the potential conflict of interest is held by the Executive Director, the individual may submit the notice to the Chair.

(b) An individual who is not subject to this Chapter who has a good faith belief that an individual who is subject to this Chapter has an unreported conflict of interest may submit written notice to the Executive Director of the potential conflict. If the potential conflict of interest is held by the Executive Director, the individual may submit the notice to the Chair. The written notice must provide all facts regarding the alleged conflict of interest known to the reporting individual.

(c) Upon receipt of notice of a conflict under either subsection (a) or (b) of this section, the Executive Director must notify the Chair and the General Counsel. If the Chair receives the notice, the Chair shall notify the General Counsel.

(d) After receiving a notice under this section, the General Counsel shall:

(1) investigate the matter; and

(2) provide an opinion to the Executive Director and Chair unless the alleged conflict is held by the Chair, then the opinion shall be provided to the Vice-chair instead. The opinion shall include:

(A) a statement of the facts giving rise to the alleged conflict;

(B) a determination of whether a conflict of interest, another impropriety, or self-dealing exists; and

(C) if the opinion finds that a conflict of interest or another impropriety or self dealing exists, recommendations for any appropriate course of action.

(e) After receiving the General Counsel's opinion and consulting with the member of the Board who receives notice under subsection (d) of this section, the Executive Director shall take immediate actions regarding the recusal of the individual from any discussion of or access to information regarding the matter at issue. If the alleged conflict of interest is held by the Executive Director, the Chair shall take actions to ensure the recusal of the Executive Director.

(f) The Executive Director shall determine whether a conflict of interest exists involving the individual who is the subject of the investigation. If the Executive Director is alleged to hold the conflict, the Chair shall make the determination. The determination must include actions to be taken, if any, to address the conflict of interest, including reconsideration of an application.

(1) The decision is final unless three or more members of the Board request that the issue be added to the agenda of the next meeting of the Board.

(2) If a conflict of interest is present, the individual making the determination shall report the conflict to the Board, the Chief Compliance Officer, staff of the Commission, and General Counsel.

(3) Unless specifically stated in the final determination, the validity of an action taken on an application is not affected if an individual that failed to report a conflict of interest participated in the action.

§320.7.Code of Conduct.

(a) Each member of the Board, the Executive Director, the Chief Compliance Officer, and staff of the Commission must abide by the code of conduct established in this section.

(b) All member of the Board, the Executive Director, the Chief Compliance Officer, and staff of the Commission shall avoid acts that are improper or give the appearance of impropriety in the disposition of funds and providing advice and recommendations to guide state policies.

(c) A member of the Board, the Executive Director, the Chief Compliance Officer, staff of the Commission, or the spouse of such individuals shall not:

(1) disclose confidential information, information that is excepted from public disclosure under the Texas Public Information, information contained in an application or other document in relation to which the member or staff member executed a Review and Evaluation Conflict of Interest & Non-Disclosure Certification, or information that has been ordered sealed by a court (collectively, "Protected Information"), that was acquired by reason of the member's or staff member's official position, or accept other employment, including self-employment, or engage in a business, charity, nonprofit organization, or professional activity that the member or staff member might reasonably expect would require or induce the member or staff member to disclose Protected Information that was acquired by reason of the member's or staff member's official position;

(2) accept or solicit any gift, favor, or service that could reasonably influence the member or staff member in the discharge of official duties or that the member, staff member, or spouse of the member or staff member knows or should know is being offered with the intent to influence the member's or staff member's official conduct;

(3) fail to disclose any gift or consideration if the gift or consideration is provided by a registered lobbyist;

(4) accept employment or engage in any business or professional activity that would reasonably require or induce the member or staff member to disclose confidential information acquired in the member's or staff member's official position;

(5) accept other employment or compensation that could reasonably impair the member's or staff member's independent judgment in the performance of official duties;

(6) make personal investments or have a financial interest that could reasonably create a substantial conflict between the member's or staff member's private interest and the member's or staff member's official duties;

(7) intentionally or knowingly solicit, accept, or agree to accept any benefit for exercising the member's official powers or performing the member's or staff member's official duties in favor of another;

(8) lease, directly or indirectly, any property, capital equipment, or service to any entity that receives a grant from the Fund;

(9) apply to receive a grant from the Fund;

(10) serve on the board of directors of an organization established with a grant from the Fund;

(11) serve on the board of directors of an organization that received a grant from the Fund;

(12) if a member of a professional organization, fail to comply with the standards of conduct adopted by the professional organizations of which he or she is a member;

(13) take actions that will discredit the Commission, Fund, or Board; or

(14) solicit or accept an honorarium in consideration for services as a member of the Board, a member of any subcommittee established by the Board, or a staff member.

(d) If a member of the Board, the Executive Director, Chief Compliance Officer, or staff of the Commission intentionally violates this section, that individual is subject to removal from further participation in the Commission's application review process.

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 June 3, 2024.

TRD-202402449

Gwen Griffen

Chair

Texas Space Commission

Earliest possible date of adoption: July 14, 2024

For further information, please call: (512) 463-1750