PART 5. OFFICE OF THE GOVERNOR, ECONOMIC DEVELOPMENT AND TOURISM OFFICE
CHAPTER 201. TEXAS MICRO-BUSINESS DISASTER RECOVERY LOAN PROGRAM
The Office of the Governor, Texas Economic Development and Tourism Office ("Office") proposes new 10 TAC §§201.1 - 201.8, concerning the Texas Micro-Business Disaster Recovery Loan program.
EXPLANATION AND JUSTIFICATION OF THE RULES
These rules relate to the establishment and administration of the new Texas Micro-Business Disaster Recovery Loan Program ("Program") established by subchapter CC, chapter 481, Texas Government Code. The Program expands access to capital for qualifying micro-businesses following a declared disaster to create jobs in this state. Under the Program, the Office will make zero-interest loans to community development financial institutions ("CDFIs") to support interest-bearing disaster recovery loans from the CDFIs to qualifying micro-businesses following a declared disaster.
SECTION BY SECTION SUMMARY
Rule §201.1 states the authority and purpose of the new chapter. It references the statutory authorization and sets forth the purpose for the Program as described in statute.
Rule §201.2 provides definitions used throughout the new chapter for words and terms with specific meanings.
Rule §201.3 establishes the process for a CDFI to enter into a participation agreement with the Office. Entering into a participation agreement is required before a CDFI can apply for a zero-interest loan from the Office.
Rule §201.4 describes how a participating CDFI can submit a loan application to the Office. Once a CDFI has entered into a participation agreement, it may submit an application to the Office for a zero-interest loan to support one or more disaster recovery loans to one or more qualifying micro-businesses.
Rule §201.5 states the requirements for a disaster recovery loan from the CDFI to a qualifying micro-business.
Rule §201.6 lists general terms for a loan agreement from the Office to the CDFI. If the Office approves a loan application from a CDFI, the Office and the CDFI will enter into a loan agreement that contains certain minimum requirements. The loan agreement will specify, among other things, that the loan is a zero-interest loan upon which quarterly payments must be made over seven years.
Rule §201.7 details monitoring and reporting requirements for a CDFI under a loan agreement. Certain information must be reported on a quarterly basis, and audited financial statements must be submitted annually. The Office must also be permitted to inspect financial records related to the Program.
Rule §201.8 provides the ability for the Chief of Staff or designee to waive any rules not required under statute upon a showing of good cause or when facts or circumstances make a waiver appropriate.
FISCAL NOTE
Adriana Cruz, Executive Director of Texas Economic Development and Tourism Office, Office of the Governor, 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 as a result of enforcing or administering the rules. Additionally, Ms. Cruz 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
Ms. Cruz has determined for the first five-year period the proposed rules are in effect there will be a benefit to participants in the Program and the general public. Participating CDFIs will be more likely to provide loans to qualifying micro-businesses thanks to the support of a zero-interest loan from the Office. Consequently, qualifying micro-businesses that traditionally have difficulty in accessing capital following a declared disaster will be more likely to obtain a loan to aid their recovery efforts. The general public will benefit in turn by qualifying micro-businesses who are able to recover from disasters to once again offer their goods and services.
PROBABLE ECONOMIC COSTS
Ms. Cruz 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.
Ms. Cruz has determined that the proposed rules will have no adverse economic effect on small businesses, micro-businesses, or rural communities; rather, micro-businesses will be benefited. Thus, the Office is not required to prepare a regulatory flexibility analysis pursuant to §2006.002, Texas Government Code.
LOCAL EMPLOYMENT IMPACT STATEMENT
Ms. Cruz has determined that the proposed rules will have a positive impact on local employment and local economies across the State of Texas. By their very nature, declared disasters create significant negative economic impacts to affected regions. The Office believes that the Program will help mitigate potential losses and inject essential recovery funds into the economy. Micro-businesses are the backbone of many communities and are often the most susceptible to the adverse effects of disasters. The Program will provide up to $5 million in zero-interest loans to participating CDFIs, enabling them to offer interest-bearing loans to qualifying micro-businesses impacted by declared disasters. These loans will, in turn, directly support recovery efforts and foster job creation in the most vulnerable communities.
GOVERNMENT GROWTH IMPACT STATEMENT
Ms. Cruz 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 a government program;
2) will not require the creation of new employee positions or the elimination of existing employee positions;
3) will not require an increase or decrease in future legislative appropriations to the OOG;
4) will not require an increase or decrease in fees paid to the OOG;
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
Ms. Cruz has determined that there are no private real property interests affected by the proposed rules. Thus, the Office 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 R.J. Hakes, Office of the Governor, Economic Development and Tourism Office, P.O. Box 12428, Austin, Texas 78701, or by email to MBDR@gov.texas.gov with the subject line "Texas MBDR Program Rules." The deadline for receipt of comments is 5:00 p.m., Central Time, on November 18, 2024, which is at least 30 days from the date of publication in the Texas Register.
STATUTORY AUTHORITY.
Section 481.456, Texas Government Code authorizes the Office to adopt rules relating to the implementation of the Program and any other rules necessary to accomplish the purposes of the relevant subchapter, including rules that provide criteria under which CDFIs may qualify for the Program.
CROSS REFERENCE TO STATUTE
No other statutes, articles, or codes are affected by the proposed rules.
§201.1.Authority and Purpose.
(a) Authority. Pursuant to the authority granted by the Texas Government Code, Chapter 481, Subchapter CC, concerning a Micro-Business Disaster Recovery Loan Program, and Texas Government Code, Chapter 2001, Subchapter B, concerning Rulemaking, the Texas Economic Development and Tourism Office in the Office of the Governor prescribes the following rules to provide definitions, procedures, and eligibility standards and criteria for the Texas Micro-Business Disaster Recovery Loan Program.
(b) Purpose. The purpose of this Program is to expand access to capital for qualifying micro-businesses following a declared disaster.
§201.2.Definitions.
The following words and terms, when used in this Subchapter, shall have the following meanings, unless the context clearly indicates otherwise.
(1) Applicant--A CDFI that submits an application to the Program.
(2) CDFI--A Community Development Financial Institution, as that term is defined in 12 U.S.C. § 4702, that has received its CDFI Certification from the United States Department of the Treasury.
(3) Declared Disaster--A declaration of a state of disaster under Texas Government Code §§ 418.014 or 418.108, or a disaster declared by the president of the United States, if any part of the State is named in the federally designated disaster area.
(4) Default rate--The percentage of Disaster Recovery Loans made by a Participant that did not meet the payment terms during a period specified by the Office.
(5) Disaster Recovery Loan--An interest-bearing loan made by a Participant to a Micro-Business that is supported by a Zero-Interest Loan from the Office to the Participant under the Program.
(6) Fiscal Year--The period beginning September 1 and ending August 31.
(7) Fund--The micro-business recovery fund established under Texas Government Code § 481.452.
(8) Loan Agreement--An agreement under the Program made between a Participant and the Office for a Zero-Interest Loan.
(9) Micro-Business--A corporation, partnership, sole proprietorship, or other legal entity that:
(A) is domiciled in this state and has at least 95 percent of its employees located in this state;
(B) is formed to make a profit; and
(C) employs not more than 20 employees.
(10) Office--The Texas Economic Development and Tourism Office in the Office of the Governor, which is authorized to exercise any power necessary to carry out Texas Government Code, Chapter 481, and has established the Texas Economic Development Bank under Texas Government Code, Chapter 489 for the purpose of:
(A) providing globally competitive, cost-effective state incentives to expanding businesses operating in this state and businesses relocating to this state; and
(B) ensuring that communities and businesses in this state have access to capital for economic development purposes.
(11) Participant--A CDFI that is authorized to conduct business in the State, has submitted an application to the Program, been approved by the Office to participate in the Program, and entered into a Participation Agreement with the Office.
(12) Participation Agreement--An agreement under the Program made between a Participant and the Office that must be entered before a Participant may apply to obtain a Zero-Interest Loan.
(13) Program--The Texas Micro-Business Disaster Recovery Loan program.
(14) State--The State of Texas.
(15) Zero-Interest Loan--A zero-interest loan made by the Office to a Participant to support one or more Disaster Recovery Loans.
§201.3.Participation Agreement.
(a) A CDFI seeking to participate in the Program must enter a Participation Agreement with the Office.
(b) The Office shall make the Participation Agreement available through the Program website.
(c) Before entering the Participation Agreement, the Applicant must provide the Office:
(1) the Applicant's official name and primary business address, including the county;
(2) the Applicant's federal tax identification and Comptroller of Public Accounts numbers;
(3) documents from the Texas Secretary of State demonstrating the Applicant's authority to do business in Texas;
(4) a letter from the Texas Comptroller of Public Accounts confirming the Applicant is in good standing;
(5) an incumbency certificate from the Applicant; and
(6) the Applicant's audited financial statements from the past three years.
(d) Upon request, an Applicant must provide to the Office any additional information the Office determines is necessary.
(e) The Applicant must identify all information it submits to the Office that the Applicant considers to be confidential or proprietary.
(f) The Office may decline to enter into a Participation Agreement if an Applicant fails to provide the additional information requested under this Section.
(g) The Office shall determine the Applicant's eligibility to participate in the Program based on the information submitted under subsection (c) of this section and any other information the Office determines is necessary and requests pursuant to subsection (d) of this section. The Office has no obligation to enter into a Participation Agreement with an Applicant.
§201.4.Loan Application.
(a) After entering a Participation Agreement, a Participant seeking to obtain a Zero-Interest Loan from the Office to support one or more Disaster Recovery Loans must submit a completed Loan Application to the Office through the Program website.
(b) All confidential and proprietary information must be identified by the Participant.
(c) The Loan Application must provide, at a minimum:
(1) the following information for each Micro-Business that will receive a Disaster Recovery Loan pursuant to the Loan Application:
(A) the official business name and primary business address, including the county;
(B) the federal tax identification and Comptroller of Public Accounts numbers;
(C) certification of Micro-Business eligibility and Disaster Recovery Loan eligibility under the Program;
(D) documents from the Texas Secretary of State demonstrating the Micro-Business's authority to do business in Texas; and
(E) a letter from the Comptroller of Public Accounts confirming the Micro-Business is in good standing;
(2) the total loan amount requested by the Participant from the Office;
(3) a certification of the Loan Application from an authorized Participant representative; and
(4) a resolution by the Participant's governing body authorizing the Loan Application.
(d) The Office, in its sole discretion, may deny a Loan Application in full or in part for any reason.
§201.5.Disaster Recovery Loan Requirements.
(a) A Disaster Recovery Loan may only be made to a Micro-Business that:
(1) is in good standing under the laws of this state; and
(2) did not owe delinquent taxes to a taxing unit of this state before the date of the initial issuance of the Declared Disaster.
(b) A Disaster Recovery Loan may not be made to a Micro-Business that:
(1) has total revenue that exceeds the amount for which no franchise tax is due under Tax Code § 171.002(d)(2);
(2) is a franchise;
(3) is a national chain with operations in this state;
(4) is a lobbying firm; or
(5) is a private equity firm or backed by a private equity firm.
§201.6.Loan Agreement.
(a) Before the Office may provide a Zero-Interest Loan to a Participant, the Office and the Participant must enter a Loan Agreement that will set forth the terms and conditions of the Zero- Interest Loan. The Loan Agreement shall ensure the proper use of funds and will include, but is not limited to, provisions with respect to the following:
(1) Interest Rate-- The Office shall provide a loan at a zero-percent interest rate to an applicant;
(2) Amortization--Each loan shall be repaid on a quarterly basis;
(3) Maturity--Each loan shall mature seven years after loan origination;
(4) Security--The Office shall not take security interest; and
(5) Income--All income received on a Disaster Recovery Loan made by a Participant, including the payment of interest by a Micro-Business and the administrative fees assessed by the Participant, remains the property of the Participant.
(b) The Office shall specify any other terms and conditions that are reasonable, appropriate, and consistent with the purposes and objectives of the Program.
§201.7.Monitoring and Reporting Requirements.
(a) A Participant must meet reporting and compliance requirements set out in the Loan Agreement, including, but not limited to providing:
(1) annual audited financial statements, including income statement, balance sheet, cash flow, and aging accounts receivables, on or before the one hundred and twentieth day after the end of each Fiscal Year during the term of the Loan Agreement;
(2) quarterly unaudited financial statements, including income statement, balance sheet, cash flow, and aging accounts receivables, on or before the thirtieth day after the end of each quarter during the term of the Loan Agreement;
(3) quarterly report of the Participant's portfolio of Disaster Recovery Loans under the Program on or before the thirtieth day after the end of each quarter during the term of the Loan Agreement, which includes:
(A) the name of the Micro-Businesses that have received a Disaster Recovery Loan;
(B) the current balance of all outstanding Disaster Recovery Loans; and
(C) the default rate of on existing Disaster Recovery Loans.
(b) A Participant shall allow the Office to inspect the Participant's financial records on request for purposes that relate to one or more Disaster Recovery Loans under the Program.
§201.8.Waiver.
The Chief of Staff or designee may suspend or waive any provision not statutorily imposed, in whole or in part, upon the showing of good cause or when, at the discretion of the Chief of Staff or designee, the particular facts or circumstances render such waiver of the Section appropriate in each instance.
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 October 7, 2024.
TRD-202404746
Adriana Cruz
Executive Director, Texas Economic Development and Tourism Office
Office of the Governor, Economic Development and Tourism Office
Earliest possible date of adoption: November 17, 2024
For further information, please call: (512) 936-0100
CHAPTER 321. GRANTS
The Texas Space Commission ("Commission") proposes new 10 TAC §§321.1 - 321.16, relating to Grants. The Commission proposes new §321.1, concerning Definitions, §321.2, concerning Authority, §321.3, concerning Applicability, §321.4, concerning Funding; Availability of Funds, §321.5, concerning Notices, §321.6, concerning Eligible Recipients; Eligible Activities, §321.7, concerning Established Presence in the State, §321.8, concerning Application Process Generally, §321.9, concerning Application Requirements, §321.10, concerning Grant Evaluation, §321.11, concerning Amount of Grant Award; Payment Procedures, §321.12, concerning Reporting, §321.13, concerning Records Retention, §321.14, concerning Requests for Records; Audit, §321.15, concerning Noncompliance; Failure to Perform, and §321.16, concerning Direct Award.
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 rules regarding the procedure for awarding grants to an applicant under Chapter 482, Texas Government Code. In accordance with that directive, the Board unanimously voted to propose the grant-making procedures detailed in this rulemaking.
SECTION BY SECTION SUMMARY
Proposed new §321.1 establishes definitions the Commission and Board will utilize in its grant making process.
Proposed new §321.2 describes the authority under which the Commission may award grants.
Proposed new §321.3 describes the purposes for which grants may be awarded.
Proposed new §321.4 describes the sources of funding for grants and establishes that all grants are subject to the availability of funds and approval by the Commission. The rule also establishes that neither the rules in Title 10, Chapter 321, Texas Administrative Code, nor any grant agreement the Commission may enter with a grantee creates in a grantee any entitlement or right to grant funds.
Proposed new §321.5 establishes notice requirements, allowing for electronic notice.
Proposed new §321.6 establishes eligibility requirements related to eligible recipients and eligible activities.
Proposed new §321.7 requires grant recipients to be engaged in business in Texas.
Proposed new §321.8 establishes process requirements for grant applicants, including electronic submission.
Proposed new §321.9 establishes requirements for grant applications, including acceptable signatures.
Proposed new §321.10 establishes grant review process for the Board to consider an application.
Proposed new §321.11 establishes the Board as the sole entity permitted to set the grant award amount and establishes that the Commission is not required to fund any grant at the amount the grant applicant requests.
Proposed new §321.12 requires grant recipients to submit periodic reports and documentation in accordance with the grant agreement. This section also authorizes the Commission, upon reasonable notice, to request any additional information necessary to show that grant funds are being used for the intended purpose and that the grant recipient has complied with the grant agreement.
Proposed new §321.13 requires grant recipients to maintain all records regarding the grant project and provides records retention requirements.
Proposed new §321.14 describes requirements for providing records, documentation, or other information required by the Commission and authorizes the Commission, upon reasonable notice, to audit the activities of a grantee as necessary to ensure that grant funds are used for the intended purpose of the reimbursement award and that the grantee has complied with the terms, conditions, and requirements of the reimbursement award.
Proposed new §321.15 describes the process for addressing a grantee's noncompliance with any term or condition of a reimbursement award or any applicable laws, rules, regulations, or guidance relating to the reimbursement award, and the remedies that could result from such noncompliance.
Proposed new §321.16 establishes the circumstances under which a grant may be directly awarded.
FISCAL NOTE
Executive Director of the Commission, Norman Garza, Jr., 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, the Executive Director 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
The Executive Director 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 facilitate the fair and transparent administration of the grant program entrusted to the Commission.
PROBABLE ECONOMIC COSTS
The Executive Director 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.
The Executive Director 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
The Executive Director 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 §2001.022, Texas Government Code.
GOVERNMENT GROWTH IMPACT STATEMENT
The Executive Director 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
The Executive Director 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 Erin Chancellor, Chief Compliance Officer for the Texas Space Commission, P.O. Box 12428, Austin, Texas 78701, or by email to erin.chancellor@space.texas.gov with the subject line "Texas Space Commission Proposed Grant Rules." The deadline for receipt of comments is 5:00 p.m., Central Time, on November 18, 2024, which is at least 30 days from the date of publication in the Texas Register.
STATUTORY AUTHORITY.
Section 482.501, Texas Government Code, directs the Commission to adopt rules regarding the procedure for awarding grants to an applicant under this chapter.
CROSS REFERENCE TO STATUTE
Chapter 482, Texas Government Code. No other statutes, articles, or codes are affected by the proposed rules.
§321.1.Definitions.
The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.
(1) Applicant--A person that has submitted an application for a grant award under this chapter.
(2) Board--The board of directors of the commission.
(3) Classified research--Research whose procedures, including required access to classified materials or cleared facilities, and results, subject to a Security Agreement between the U.S. Department of Defense and the governing body for an institution of higher education, are legally knowable only by individuals with U.S. government security clearance.
(4) Commission--The Texas Space Commission.
(5) Consortium--The Texas Aerospace Research and Space Economy Consortium created under Subchapter G, Chapter 482, Texas Government Code.
(6) Digital signature--A signature that:
(A) is created as an electronic identifier by cryptographic means involving the use of two mathematically related keys (i.e., a public and private key pair, often referred to as Public Key Infrastructure or PKI);
(B) complies with the requirements of Title 1, Chapter 203, Texas Administrative Code (relating to Management of Electronic Transactions and Signed Records); and
(C) is not a photographic digital facsimile of a hand-made signature.
(7) Direct award--The award of a grant without first soliciting competitive proposals or applications.
(8) Electronic signature--A signature that is an image of a hand-made signature such as on a transmitted facsimile, an electronic document created by scanning the original physical document, or an electronic document (such as one created in a portable document format) where a separate image of a hand-made signature has been overlaid onto the electronic document in place of a physical hand-made signature.
(9) Fund--The Space Exploration and Aeronautics Research Fund.
(10) Governmental entity--Means:
(A) the State of Texas and all the agencies of government that collectively constitute the government of the state, including boards, commissions, departments, committees, institutions, or offices that are within or are created by the executive or legislative branch of state government and that are directed by one or more elected or appointed members;
(B) an institution of higher education, as that term is defined in Section 61.003, Texas Education Code;
(C) a political subdivision of this state, including any city, county, junior college district, or other entity; and
(D) any other institution, agency, or organ of government the status and authority of which are derived from the Constitution of Texas or from laws passed by the legislature under the constitution.
(11) Grant--The award of financial assistance, including cooperative agreements, in the form of money, property in lieu of money, or other financial assistance paid or furnished by the state or federal government to carry out a program in accordance with rules, regulations, and guidance provided by the commission. The term does not include technical assistance which provides services instead of money, or other assistance in the form of revenue sharing, loans, loan guarantees, interest subsidies, insurance, or direct appropriations. Also, the term does not include assistance, such as a fellowship or other lump sum award, for which the grantee is not required to account.
(12) Grant agreement--An agreement between the commission and a grant recipient that establishes the terms, duties, reporting requirements, and other responsibilities of each party in relation to a grant awarded by the commission.
(13) Grant funds--Monies in the Space Exploration and Aeronautics Research Fund.
(14) Grant recipient or Grantee--An applicant that receives a grant award under this chapter.
(15) Hand-made signature--A signature created when a person physically marks a paper document; also known as a "wet ink" or "manual" signature.
(16) TxGMS--The publication titled Texas Grant Management Standards, promulgated by the Texas Comptroller of Public Accounts, in accordance with Texas Government Code, Chapter 783, concerning Uniform Grant and Contract Management.
§321.2.Authority.
Sections 482.301 and 482.302, Texas Government Code, authorize the commission to award grants for purposes set forth in §321.3 of this chapter (relating to Applicability).
§321.3.Applicability.
The commission may award grants for the following purposes:
(1) development of emerging technologies required for any aspect of human space flight;
(2) research involving any aspect of space exploration and space flight;
(3) workforce training to promote space exploration and space flight;
(4) curation of post-mission materials involved in space exploration and space flight; and
(5) development of infrastructure useful or necessary for the establishment or maintenance of a spaceport.
§321.4.Funding; Availability of Funds.
(a) Grants awarded by the board under this chapter may use:
(1) gifts, grants, and donations provided to the commission; and
(2) money from any source designated by the legislature.
(b) All grant funding is contingent upon the availability of funds, upon approval of a grant application by the commission, and the terms of the grant agreement. Neither this chapter nor a grant agreement creates any entitlement or right to grant funds by a grant applicant.
§321.5.Notices.
(a) Unless otherwise required by law, the commission may prescribe all forms or other documents required to implement this chapter and may require that the forms or other documents be submitted electronically.
(b) Any notice required by these rules to be sent by the commission may be provided electronically and the commission is entitled to rely on an email address provided by an applicant, grant recipient, or other person for all purposes relating to notification. Applicants and grant recipients must provide an email address that is designated for receipt of notices from the commission.
(c) If notice cannot be sent electronically, the commission shall provide notice by regular mail via U.S. Postal Service and the commission is entitled to rely on the mailing address currently on file for all purposes relating to notification.
(d) Service of notice by the commission is complete and receipt is presumed on:
(1) the date the notice is sent, if sent before 5:00 p.m. by electronic mail;
(2) the date after the notice is sent, if sent after 5:00 p.m. by electronic mail; or
(3) three business days after the date it is placed in the mail, if sent by regular U.S. Mail.
§321.6.Eligible Recipients; Eligible Activities.
(a) Entities that are eligible for a grant award include:
(1) a business or nonprofit entity with an established presence in this state that is involved in the space exploration, research, or aeronautics industry; and
(2) a governmental entity with which the commission has entered into an intergovernmental agreement for that purpose.
(b) An entity that has made a gift or grant to the commission, or to a nonprofit organization established to provide support to the commission, is not eligible for a grant award.
(c) Multiyear projects are eligible for a grant award.
(d) All activities funded by a grant awarded by the commission must relate directly to a purpose specified in the grant.
§321.7.Established Presence in the State.
(a) To be eligible to receive a grant, an applicant must engage in business in the state of Texas by:
(1) maintaining employees in the state of Texas;
(2) having a fixed place of business in the state of Texas; or
(3) providing any service in the state of Texas, whether or not the individuals performing the service are residents of the state.
(b) Applicants may be located outside the state of Texas when the application is submitted and reviewed; however, the applicant must demonstrate that it engages in business in the state of Texas as a condition of the award of grant funds.
(c) A grant recipient's failure to engage in business in the state of Texas is in violation of these rules for the purpose of §321.15 of this chapter (relating to Noncompliance; Failure to Perform).
§321.8.Application Process Generally.
(a) The commission may not award a competitive grant to persons who do not submit an application or do not submit a complete application in accordance with the requirements established in this chapter.
(b) Applicants must submit an application in the form and manner prescribed by the commission. The commission may require that applicants submit applications electronically.
(c) The commission may reject and take no further action on an application that does not appear to comply with applicable program requirements on its face.
(d) The commission may seek input from the consortium on grant applications.
§321.9.Application Requirements.
(a) As set forth in greater detail in the application instructions prescribed by the commission, each application shall include:
(1) applicant's exact name;
(2) a description of the project, projected milestone dates, and proposed services;
(3) project lead(s) and/or researcher(s), budget(s), matching funds, costs, and proof of funding availability;
(4) project area and location(s) to be served;
(5) information required by the application; and
(6) any other information or documentation that the commission may require.
(b) During the application process, the applicant shall provide any information the commission determines is necessary to make a determination on an application. The commission may disqualify an application if an applicant fails to supply the additional information requested under this subsection on or before the thirtieth day after the date the applicant receives notice from the commission.
(c) The commission may accept:
(1) hand-made signatures;
(2) electronic signatures; or
(3) digital signatures.
§321.10.Grant Evaluation.
(a) Except as provided under §321.16 of this chapter (relating to Direct Award), the commission shall establish, for each proposed grant or series of grants, recipient selection criteria appropriate to the purposes of and activities under the proposed grant or grants.
(b) The commission may specify any selection criterion it considers relevant to the grant.
(c) All selection criteria must address the evaluation and scoring of:
(1) available fiscal controls;
(2) project effectiveness;
(3) project cost;
(4) the potential grant recipient's previous experience with grants and contracts; and
(5) the potential grant recipient's established presence in the state and good faith efforts to achieve a goal of more than 50 percent of its purchase goods and services from suppliers in this state.
(d) In addition to evaluation criteria provided under subsection (c) of this section, the commission may include and provide preferences for the following evaluation criteria:
(1) application participant(s) relevant experience;
(2) estimated project completion date;
(3) the availability of matching funds, including amount, percentage, and source of matching funds;
(4) cost effectiveness and overall impact, as measured by the total project cost; and
(5) any additional factors the commission determines are necessary 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.
(e) The commission may award a grant only to an entity who meets the established eligibility requirements of the proposed grant and who has been selected in accordance with the established selection criteria.
(f) The commission's approval of an award shall not obligate the commission to make any additional, supplemental, or other awards.
(g) All grant funding decisions made by the commission are final and are not subject to appeal.
(h) The commission shall issue the award after the grant agreement is fully executed by the grant recipient and the commission.
§321.11.Amount of Grant Award; Payment Procedures.
(a) The amount of a grant award is determined solely by the commission.
(b) The commission is not obligated to fund a grant at the amount requested by the grant applicant.
(c) Payments to grant recipients shall be in accordance with:
(1) all allowable cost standards and payment-related requirements of the TxGMS if the recipient is a local government, a Texas state agency, or an Indian Tribal Government; and
(2) any special payment-related requirements or procedures contained in the signed grant contract.
§321.12.Reporting.
(a) Grant recipients shall submit to the commission periodic reports for each funded project for the duration of the grant agreement. The frequency, format, and requirements of the reports shall be determined at the discretion of the commission and specified in the grant agreement.
(b) The commission, in its sole discretion and at any time, upon reasonable notice, may request any additional data and reporting information the commission deems necessary to substantiate that a grant recipient:
(1) is using grant funds for their intended purpose; and
(2) has complied with the terms, conditions, and requirements of the grant agreement.
§321.13.Records Retention.
(a) A grantee must maintain all financial records, supporting documents, and all other records pertinent to an award for at least five years following the submission of a final report.
(b) If any litigation, claim, or audit is started, or any open records request is received, before the expiration of the five-year records retention period, a grantee must retain the records related to the litigation, claim, audit, or open records request until the completion of the litigation, claim, audit, or open records request and resolution of all issues that arise from it or until the end of the regular five-year records retention period, whichever is later.
(c) A grantee may retain records in an electronic format.
§321.14.Request for Records; Audit.
(a) At any time during the grant agreement and for a period of five years after the project has been completed, the commission or its designee may, upon reasonable notice and in writing, request any records from, or audit the books and records of, a grant recipient to verify the grant recipient has complied with the terms, conditions, and requirements of the grant agreement and this chapter. Grant recipients shall provide the requested records or information to the commission on or before the thirtieth day after the commission makes a written request for such records.
(b) The commission or its designee may, before the end of the five-year records retention period set forth in §321.13 of this chapter (relating to Records Retention), audit a grantee to ensure that grant funds are used for the intended purpose of the reimbursement award and that the grantee has complied with the terms, conditions, and requirements set forth in §321.13 of this chapter.
§321.15.Noncompliance; Failure to Perform.
(a) A grant recipient shall forfeit up to the amount of the grant funds received, or return previously awarded funds, if the commission, in its sole discretion, determines the grant recipient has failed to perform, in material respect, the obligations established in the grant agreement. The commission may make such a determination at any time during the grant agreement. The commission, in its sole discretion, shall determine the amount forfeited.
(b) A failure to perform resulting in forfeiture of grant funds may be cause for the commission to bar an applicant from future consideration for grant funds under this program.
§321.16.Direct Award.
Notwithstanding any provision in this chapter, the commission may issue a direct award grant to an entity allowed by law if:
(1) the grant recipient has entered into an agreement with the consortium under procedures established in Section 482.608(a)(3)(C), Texas Government Code, and:
(A) the purpose of the grant is to enable the consortium to undertake its duties established under Chapter 482, Texas Government Code; and
(B) the commission and grant recipient enter a grant agreement(s);
(2) the board determines that circumstances related to a direct award grant request cannot follow standard application processes because it would result in an entity failing to meet a deadline or similar milestone, and:
(A) without grant funds, the potential grantee could not successfully undertake the project to which the request relates;
(B) failure to undertake the project to which the request relates would result in the loss of a significant commercial, civil, or military related opportunity for advancing the space, aeronautics, or aviation industries in the state;
(C) the commission and grant recipient enter a grant agreement that places sufficient controls on the transaction to ensure the public purpose of the grant is carried out; and
(D) awarding a direct grant is in the best interest of the state; or
(3) the board determines a direct award grant is necessary for a potential grantee to respond to a matter of national security, defined by the intelligence community or the national defense strategy, as well as a natural disaster or public health crisis and states of emergency and, as soon as practicable, the commission and grant recipient enter a grant agreement that places sufficient controls on the transaction to ensure the public purpose of the grant is carried out.
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 October 7, 2024.
TRD-202404744
Norman Garza
Executive Director
Texas Space Commission
Earliest possible date of adoption: November 17, 2024
For further information, please call: (512) 463-8575