TITLE 1. ADMINISTRATION

PART 2. TEXAS ETHICS COMMISSION

CHAPTER 20. REPORTING POLITICAL CONTRIBUTIONS AND EXPENDITURES

SUBCHAPTER A. GENERAL RULES

1 TAC §20.1

The Texas Ethics Commission (the commission) adopts an amendment to Texas Ethics Commission Rules §20.1, by adding a definition for the term "vendor." The amendment is adopted without changes to the proposed text as published in the July 28, 2017, issue of the Texas Register (42 TexReg 3711), and will not be republished.

Concurrently with adoption of this rule amendment, the Commission adopts new rule §20.56 and an amendment to §20.61 to clarify reporting requirements and certain prohibitions on the use of political contributions. The term "vendor" is included in each of those other rules and new rule §20.1(24) provides a needed definition of that term for the regulated community. "Vendor" is defined as any person providing goods or services to a candidate, officeholder, political committee, or other filer of a campaign finance report. The term does not include an employee of the filer.

The rule applies only to expenditures occurring on or after January 1, 2018.

Ms. Margo Cardwell provided written comments to the Commission and addressed the Commission at the Commission's public meeting on September 28, 2017. Ms. Cardwell's comments did not specifically address rule §20.1, but concerned rules §20.56 and §20.61, and they are therefore addressed in the orders adopting those rules in this issue of the Texas Register. Mr. Gardner Pate spoke at the meeting in favor of adopting the rule.

The amendment to rule §20.1 is adopted under Texas Government Code §571.062, which authorizes the commission to adopt rules concerning the laws administered and enforced by the commission.

The amendment to rule §20.1 affects Title 15 of the Election Code, specifically in statutes requiring the disclosure of political expenditures, including §254.031, in addition to §§253.035, 253.038, and 253.041.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on September 29, 2017.

TRD-201703936

Seana Willing

Executive Director

Texas Ethics Commission

Effective date: January 1, 2018

Proposal publication date: July 28, 2017

For further information, please call: (512) 463-5800


SUBCHAPTER B. GENERAL REPORTING RULES

1 TAC §20.56

The Texas Ethics Commission (the commission) adopts new Texas Ethics Commission Rule §20.56, regarding expenditures to vendors providing goods or services to a candidate, officeholder, political committee, or other filer. The new rule is adopted without changes to the proposed text as published in the July 28, 2017, issue of the Texas Register (42 TexReg 3711), and will not be republished.

Section 254.031 of the Election Code requires a candidate, officeholder, political committee, or other filer who files a campaign finance report to include certain information regarding political expenditures and expenditures made from political contributions. When an expenditure is required to be itemized in a report, the report must include certain information regarding the expenditure, including the amount, date, and purpose of the expenditure and the name and address of the person to whom the expenditure is made. The rule furthers transparency in political expenditures by addressing the proper disclosure of an expenditure made by a vendor for a filer with the intent to seek reimbursement from the filer, which must be reported by the filer as though the filer made the expenditure directly.

Additionally, §§253.035, 253.038, and 253.041 of the Election Code include prohibitions on candidates, officeholders, and specific-purpose committees converting political contributions to the personal use of a candidate or officeholder, making certain payments to purchase or rent real property, or paying certain family members of the candidate or officeholder for their personal services. The rule is intended to prevent a candidate, officeholder, or specific-purpose committee from using a vendor to circumvent these statutory prohibitions. Accordingly, the rule specifies that, in providing goods or services to a candidate, officeholder, or specific-purpose committee for supporting a candidate or assisting an officeholder, a vendor may not make an expenditure for the candidate, officeholder, or committee that would be prohibited by one of those statutes if it were made by the candidate, officeholder, or committee. The rule also specifies that a candidate, officeholder, or specific-purpose committee for supporting a candidate or assisting an officeholder may not use political contributions to pay or reimburse a vendor for an expenditure that would be prohibited by one of those statutes if it were made by the candidate, officeholder, or committee.

The rule applies only to expenditures occurring on or after January 1, 2018.

Ms. Margo Cardwell provided written comments to the Commission and addressed the Commission at the Commission's public meeting on September 28, 2017. Ms. Cardwell spoke against adoption of §20.56 and stated that the rule would create significant administrative burdens for filers with respect to reporting incidental expenses incurred by vendors while providing consulting services to a filer. Ms. Cardwell suggested an amendment to §20.56(a) to exclude incidental expenses. The Commission respectfully disagrees that the rule would be significantly burdensome for filers, particularly in such cases where a vendor is able to provide invoices or receipts of the expenses to the filer. Additionally, depending on the amounts of the expenses (e.g., if the amount paid to a person does not exceed the applicable threshold of $100 or $20 in a reporting period), incidental expenses for meals, travel, or lodging would not be required to be itemized in a report.

Mr. Gardner Pate spoke at the meeting in favor of adopting the rule.

The Commission also received a signed petition from the following individuals in support of the bill: Agee, Betsy; Begnaud, Jerome; Begnaud, Lynda; Blewitt, Karen; Blewitt, John; Brown, Brenda; Collier, Gary; Collier, Kathy; Cordell, Carol; Curry, Jeanette; Curry, Richard; Cyrus, Danny; Dunn, Phyllis; Gannaday, Nancy; Gardner, Wanda; Gomez, Ralph; Holland, Bobbie; James, Cindy; Johnson, Sherry; Kinkaid, Kathy; Kinney, Emily; Ledford, Shirley; Link, Carol; Martensson, Lena; Mertz, Linda; Mitchell, Catherine; Mitchell, Donald; Nimon, Evelyn; Paige, Patricia; Proeter-Smith, George L.; Reshorah, Charles; Sampson, Donna; Shuessler, Ann; Sims, Alfred; Snelling, Linda; Trawick, Camille; Turner, Elbert; Vern, Kay; Vick, Robert; Wilson, Emma; Wilson, Bruce; and Wood, Claire.

The new rule §20.56 is adopted under Texas Government Code §571.062, which authorizes the commission to adopt rules concerning the laws administered and enforced by the commission.

The new rule §20.56 affects Chapter 254 of the Election Code as it relates to the requirement to report a political expenditure, including §254.031, and to §§253.035, 253.038, and 253.041.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on September 29, 2017.

TRD-201703938

Seana Willing

Executive Director

Texas Ethics Commission

Effective date: January 1, 2018

Proposal publication date: July 28, 2017

For further information, please call: (512) 463-5800


1 TAC §20.61

The Texas Ethics Commission (the commission) adopts an amendment to Texas Ethics Commission Rule §20.61, regarding expenditures to vendors providing goods or services to a candidate, officeholder, political committee, or other filer. The amendment is adopted with a non-substantive change to the proposed text as published in the July 28, 2017, issue of the Texas Register (42 TexReg 3712), and is republished herein.

Section 254.031 of the Election Code requires a candidate, officeholder, political committee, or other filer who files a campaign finance report to include certain information regarding political expenditures and expenditures made from political contributions. When an expenditure is required to be itemized in a report, the report must include certain information regarding the expenditure, including the amount, date, and purpose of the expenditure and the name and address of the person to whom the expenditure is made. The rule furthers transparency in political expenditures by addressing the proper disclosure of an expenditure made by a vendor for a filer with the intent to seek reimbursement from the filer, which must be reported by the filer as though the filer made the expenditure directly. The rule also requires an expenditure other than a reimbursement for more than one type of good or service to be reported by the filer as separate expenditures for each type of good or service provided. Thus, for example, a single payment of $30,000 to a vendor for $10,000 in political advertising, $10,000 in polling, and $10,000 fundraising must be reported as separate expenditures of $10,000 for each type of goods and services.

The rule applies only to expenditures occurring on or after January 1, 2018.

The non-substantive change is a correction under section (d) to correct the reference of the section from (e)(d) to only (e).

Ms. Margo Cardwell provided written comments to the Commission and addressed the Commission at the Commission's public meeting on September 28, 2017. Ms. Cardwell spoke against adoption of §20.61 and stated that the rule would create significant administrative burdens for filers with respect to reporting incidental expenses incurred by vendors while providing consulting services to a filer. Ms. Cardwell suggested an amendment to §20.61(a)(3) to exclude from the definition of "consulting" incidental expenses, such as meals, travel, and lodging, incurred by a consultant in connection with the provision of advice and strategy. The Commission respectfully disagrees that the rule would be significantly burdensome for filers, particularly in such cases where a vendor is able to provide invoices or receipts of the expenses to the filer. Additionally, depending on the amounts of the expenses (e.g., if the amount paid to a person does not exceed the applicable threshold of $100 or $20 in a reporting period), incidental expenses for meals, travel, or lodging would not be required to be itemized in a report.

Mr. Gardner Pate spoke at the meeting in favor of adopting the rule.

The amendment to rule §20.61 is adopted under Texas Government Code §571.062, which authorizes the commission to adopt rules concerning the laws administered and enforced by the commission.

The amendment to rule §20.61 affects Chapter 254 of the Election Code as it relates to the requirement to report a political expenditure, including §254.031, and to §§253.035, 253.038, and 253.041.

§20.61.Purpose of Expenditure.

(a) For reporting required under §254.031 of the Election Code, the purpose of an expenditure means:

(1) A description of the category of goods, services, or other thing of value for which an expenditure is made. Examples of acceptable categories include:

(A) advertising expense;

(B) accounting/banking;

(C) consulting expense;

(D) contributions/donations made by candidate/officeholder/political committee;

(E) event expense;

(F) fees;

(G) food/beverage expense;

(H) gifts/awards/memorials expense;

(I) legal services;

(J) loan repayment/reimbursement;

(K) office overhead/rental expense;

(L) polling expense;

(M) printing expense;

(N) salaries/wages/contract labor;

(O) solicitation/fundraising expense;

(P) transportation equipment and related expense;

(Q) travel in district;

(R) travel out of district;

(S) other political expenditures; and

(2) A brief statement or description of the candidate, officeholder, or political committee activity that is conducted by making the expenditure and an additional indication if the expenditure is an officeholder expenditure for living in Austin, Texas. The brief statement or description must include the item or service purchased and must be sufficiently specific, when considered within the context of the description of the category, to make the reason for the expenditure clear. Merely disclosing the category of goods, services, or other thing of value for which the expenditure is made does not adequately describe the purpose of an expenditure.

(3) For purposes of this section, "consulting" means advice and strategy. "Consulting" does not include providing other goods or services, including without limitation media production, voter contact, or political advertising.

(b) An expenditure other than a reimbursement to a person, including a vendor, for more than one type of good or service must be reported by the filer as separate expenditures for each type of good or service provided by the person in accordance with this rule.

(c) The description of a political expenditure for travel outside of the state of Texas must provide the following:

(1) The name of the person or persons traveling on whose behalf the expenditure was made;

(2) The means of transportation;

(3) The name of the departure city or the name of each departure location;

(4) The name of the destination city or the name of each destination location;

(5) The dates on which the travel occurred; and

(6) The campaign or officeholder purpose of the travel, including the name of a conference, seminar, or other event.

(d) Except as provided by subsection (e) of this section, this rule applies to expenditures made on or after July 1, 2010.

(e) The requirement to include an additional indication if an expenditure is an officeholder expenditure for living in Austin, Texas, applies to an expenditure made on or after July 1, 2014.

(f) Comments: The purpose of an expenditure must include both a description of the category of goods or services received in exchange for the expenditure and a brief statement or description of the candidate, officeholder, or political committee activity that is conducted by making the expenditure. A description of an expenditure that merely states the item or service purchased is not adequate because doing so does not allow a person reading the report to know the allowable activity for which an expenditure was made. The following is a list of examples that describe how the purpose of an expenditure may be reported under section 20.61. This list is for illustrative purposes only. It is intended to provide helpful information and to assist filers in reporting the purpose of an expenditure under this rule. However, it is not, and is not intended to be, an exhaustive or an exclusive list of how a filer may permissibly report the purpose of an expenditure under this rule. The rule does not require the candidate or officeholder to identify by name or affiliation an individual or group with whom the candidate or officeholder meets.

(1) Example: Candidate X is seeking the office of State Representative, District 2000. She purchases an airline ticket from ABC Airlines to attend a campaign rally within District 2000. The acceptable category for this expenditure is "travel in district." The candidate activity that is accomplished by making the expenditure is to attend a campaign rally. An acceptable brief statement is "airline ticket to attend campaign event."

(2) Example: Candidate X purchases an airline ticket to attend a campaign event outside of District 2000 but within Texas, the acceptable category is "travel out of district." The candidate activity that is accomplished by making the expenditure is to attend a campaign event. An acceptable brief statement is "airline ticket to attend campaign or officeholder event."

(3) Example: Candidate X purchases an airline ticket to attend an officeholder related seminar outside of Texas. The acceptable method for the purpose of this expenditure is by selecting the "travel out of district" category and completing the "Schedule T" (used to report travel outside of Texas).

(4) Example: Candidate X contracts with an individual to do various campaign related tasks such as work on a campaign phone bank, sign distribution, and staffing the office. The acceptable category is "salaries/wages/contract labor." The candidate activity that is accomplished by making the expenditure is to compensate an individual working on the campaign. An acceptable brief statement is "contract labor for campaign services."

(5) Example: Officeholder X is seeking re-election and makes an expenditure to purchase a vehicle to use for campaign purposes and permissible officeholder purposes. The acceptable category is "transportation equipment and related expenses" and an acceptable brief description is "purchase of campaign/officeholder vehicle."

(6) Example: Candidate X makes an expenditure to repair a flat tire on a campaign vehicle purchased with political funds. The acceptable category is "transportation equipment and related expenses" and an acceptable brief description is "campaign vehicle repairs."

(7) Example: Officeholder X purchases flowers for a constituent. The acceptable category is "gifts/awards/memorials expense" and an acceptable brief description is "flowers for constituent."

(8) Example: Political Committee XYZ makes a political contribution to Candidate X. The acceptable category is "contributions/donations made by candidate/officeholder/political committee" and an acceptable brief description is "campaign contribution."

(9) Example: Candidate X makes an expenditure for a filing fee to get his name on the ballot. The acceptable category is "fees" and an acceptable brief description is "candidate filing fee."

(10) Example: Officeholder X makes an expenditure to attend a seminar related to performing a duty or engaging in an activity in connection with the office. The acceptable category is "fees" and an acceptable brief description is "attend officeholder seminar."

(11) Example: Candidate X makes an expenditure for political advertising to be broadcast by radio. The acceptable category is "advertising expense" and an acceptable brief description is "political advertising." Similarly, Candidate X makes an expenditure for political advertising to appear in a newspaper. The acceptable category is "advertising expense" and an acceptable brief description is "political advertising."

(12) Example: Officeholder X makes expenditures for printing and postage to mail a letter to all of her constituents, thanking them for their participation during the legislative session. Acceptable categories are "advertising expense" OR "printing expense" and an acceptable brief description is "letter to constituents."

(13) Example: Officeholder X makes an expenditure to pay the campaign office electric bill. The acceptable category is "office overhead/rental expense" and an acceptable brief description is "campaign office electric bill."

(14) Example: Officeholder X makes an expenditure to purchase paper, postage, and other supplies for the campaign office. The acceptable category is "office overhead/rental expense" and an acceptable brief description is "campaign office supplies."

(15) Example: Officeholder X makes an expenditure to pay the campaign office monthly rent. The acceptable category is "office overhead/rental expense" and an acceptable brief description is "campaign office rent."

(16) Example: Candidate X hires a consultant for fundraising services. The acceptable category is "consulting expense" and an acceptable brief description is "campaign services."

(17) Example: Candidate/Officeholder X pays his attorney for legal fees related to either campaign matters or officeholder matters. The acceptable category is "legal services" and an acceptable brief description is "legal fees for campaign" or "for officeholder matters."

(18) Example: Candidate/Officeholder X makes food and beverage expenditures for a meeting with her constituents. The acceptable category is "food/beverage expense" and an acceptable brief statement is "meeting with constituents."

(19)Example: Candidate X makes food and beverage expenditures for a meeting to discuss candidate issues. The acceptable category is "food/beverage expense" and an acceptable brief statement is "meeting to discuss campaign issues."

(20) Example: Officeholder X makes food and beverage expenditures for a meeting to discuss officeholder issues. The acceptable category is "food/beverage expense" and an acceptable brief statement is "meeting to discuss officeholder issues."

(21) Example: Candidate/Officeholder X makes food and beverage expenditures for a meeting to discuss campaign and officeholder issues. The acceptable category is "food/beverage expense" and an acceptable brief statement is "meeting to discuss campaign/officeholder issues."

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on September 29, 2017.

TRD-201703943

Seana Willing

Executive Director

Texas Ethics Commission

Effective date: January 1, 2018

Proposal publication date: July 28, 2017

For further information, please call: (512) 463-5800


PART 8. TEXAS JUDICIAL COUNCIL

CHAPTER 173. INDIGENT DEFENSE GRANTS

The Texas Indigent Defense Commission (Commission) is a permanent Standing Committee of the Texas Judicial Council. The Commission adopts the repeal of §§173.101 - 173.109, 173.201 - 173.205, 173.301 - 173.310, 173.401 and 173.402 concerning rules for grant administration as proposed in the July 21, 2017, issue of the Texas Register (42 TexReg 3604). The rules establish the guidelines for the administration of the Commission's grant program, which is designed to promote compliance by counties with the requirements of state law relating to indigent defense. The rules will be replaced by new rules adopted separately in the Texas Register.

No comments were received on the proposed repeal of the rules.

SUBCHAPTER A. GENERAL FUNDING PROGRAM PROVISIONS

1 TAC §§173.101 - 173.109

The repeal of the rules is adopted under the Texas Government Code §79.037. The Commission is authorized to distribute funds, including grants, to counties for indigent defense services under the Texas Government Code §79.037. This section further authorizes the Commission to monitor grants and enforce compliance with grant terms and to develop policies to ensure funds are allocated and distributed to counties in a fair manner. The Commission interprets §79.037(c) to require the Commission to adopt rules governing the process for distributing grant funds. No other statutes, articles, or codes are affected by the proposed repeal of the rules.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on September 27, 2017.

TRD-201703893

Wesley Shackelford

Deputy Director

Texas Judicial Council

Effective date: October 17, 2017

Proposal publication date: July 21, 2017

For further information, please call: (512) 936-6994


SUBCHAPTER B. ELIGIBILITY AND FUNDING REQUIREMENTS

1 TAC §§173.201 - 173.205

The repeal of the rules is adopted under the Texas Government Code §79.037. The Commission is authorized to distribute funds, including grants, to counties for indigent defense services under the Texas Government Code §79.037. This section further authorizes the Commission to monitor grants and enforce compliance with grant terms and to develop policies to ensure funds are allocated and distributed to counties in a fair manner. The Commission interprets §79.037(c) to require the Commission to adopt rules governing the process for distributing grant funds. No other statutes, articles, or codes are affected by the proposed repeal of the rules.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on September 27, 2017.

TRD-201703895

Wesley Shackelford

Deputy Director

Texas Judicial Council

Effective date: October 17, 2017

Proposal publication date: July 21, 2017

For further information, please call: (512) 936-6994


SUBCHAPTER C. ADMINISTERING GRANTS

1 TAC §§173.301 - 173.310

The repeal of the rules is adopted under the Texas Government Code §79.037. The Commission is authorized to distribute funds, including grants, to counties for indigent defense services under the Texas Government Code §79.037. This section further authorizes the Commission to monitor grants and enforce compliance with grant terms and to develop policies to ensure funds are allocated and distributed to counties in a fair manner. The Commission interprets §79.037(c) to require the Commission to adopt rules governing the process for distributing grant funds. No other statutes, articles, or codes are affected by the proposed repeal of the rules.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on September 27, 2017.

TRD-201703897

Wesley Shackelford

Deputy Director

Texas Judicial Council

Effective date: October 17, 2017

Proposal publication date: July 21, 2017

For further information, please call: (512) 936-6994


SUBCHAPTER D. MONITORING AND AUDITS

1 TAC §173.401, §173.402

The repeal of the rules is adopted under the Texas Government Code §79.037. The Commission is authorized to distribute funds, including grants, to counties for indigent defense services under the Texas Government Code §79.037. This section further authorizes the Commission to monitor grants and enforce compliance with grant terms and to develop policies to ensure funds are allocated and distributed to counties in a fair manner. The Commission interprets §79.037(c) to require the Commission to adopt rules governing the process for distributing grant funds. No other statutes, articles, or codes are affected by the proposed repeal of the rules.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on September 27, 2017.

TRD-201703899

Wesley Shackelford

Deputy Director

Texas Judicial Council

Effective date: October 17, 2017

Proposal publication date: July 21, 2017

For further information, please call: (512) 936-6994


CHAPTER 173. INDIGENT DEFENSE GRANTS

The Texas Indigent Defense Commission (Commission) is a permanent Standing Committee of the Texas Judicial Council. The Commission has adopted new §§173.101 - 173.109, 173.201 - 173.205, 73.301, 173.302, 173.304 - 173.310, 173.401, and 173.402 concerning rules for grant administration. Rules are adopted without changes as proposed in the July 21, 2017, issue of the Texas Register (42 TexReg 3605). New §173.303 is adopted with changes to the rules as proposed in the July 21, 2017, issue of the Texas Register (42 TexReg 3605). The new rules are adopted to establish the guidelines for the administration of the Commission's grant program, which is designed to promote compliance by counties with the requirements of state law relating to indigent defense.

No comments were received on the proposed new rules.

SUBCHAPTER A. GENERAL FUNDING PROGRAM PROVISIONS

1 TAC §§173.101 - 173.109

The new rules are adopted under the Texas Government Code §79.037. The Commission is authorized to distribute funds, including grants, to counties for indigent defense services under the Texas Government Code §79.037. This section further authorizes the Commission to monitor grants and enforce compliance with grant terms and to develop policies to ensure funds are allocated and distributed to counties in a fair manner. The Commission interprets §79.037(c) to require the Commission to adopt rules governing the process for distributing grant funds.

No other statutes, articles, or codes are affected by the adopted new rules.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on September 27, 2017.

TRD-201703909

Wesley Shackelford

Deputy Director

Texas Judicial Council

Effective date: October 17, 2017

Proposal publication date: July 21, 2017

For further information, please call: (512) 936-6994


SUBCHAPTER B. ELIGIBILITY AND FUNDING REQUIREMENTS

1 TAC §§173.201 - 173.205

The new rules are adopted under the Texas Government Code §79.037. The Commission is authorized to distribute funds, including grants, to counties for indigent defense services under the Texas Government Code §79.037. This section further authorizes the Commission to monitor grants and enforce compliance with grant terms and to develop policies to ensure funds are allocated and distributed to counties in a fair manner. The Commission interprets §79.037(c) to require the Commission to adopt rules governing the process for distributing grant funds.

No other statutes, articles, or codes are affected by the adopted new rules.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on September 27, 2017.

TRD-201703911

Wesley Shackelford

Deputy Director

Texas Judicial Council

Effective date: October 17, 2017

Proposal publication date: July 21, 2017

For further information, please call: (512) 936-6994


SUBCHAPTER C. ADMINISTERING GRANTS

1 TAC §§173.301 - 173.310

The new rules are adopted under the Texas Government Code §79.037. The Commission is authorized to distribute funds, including grants, to counties for indigent defense services under the Texas Government Code §79.037. This section further authorizes the Commission to monitor grants and enforce compliance with grant terms and to develop policies to ensure funds are allocated and distributed to counties in a fair manner. The Commission interprets §79.037(c) to require the Commission to adopt rules governing the process for distributing grant funds.

No other statutes, articles, or codes are affected by the adopted new rules.

§173.303.Retention of Records.

(a) Grantees must maintain all financial records, supporting documents, statistical records, and all other records pertinent to the award for at least three years following the closure of the most recent audit report or submission of the final expenditure report. Records retention is required for the purposes of state examination and audit. Grantees may retain records in an electronic format. All records are subject to audit or monitoring during the entire retention period.

(b) Grantees must retain records for equipment, non-expendable personal property, and real property for a period of three years from the date of the item's disposition, replacement, or transfer.

(c) If any litigation, claim, or audit is started before the expiration of the three-year records retention period, the grantee must retain the records under review until the resolution of all litigation, claims, or audit findings.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on September 27, 2017.

TRD-201703912

Wesley Shackelford

Deputy Director

Texas Judicial Council

Effective date: October 17, 2017

Proposal publication date: July 21, 2017

For further information, please call: (512) 936-6994


SUBCHAPTER D. MONITORING AND AUDITS

1 TAC §173.401, §173.402

The new rules are adopted under the Texas Government Code §79.037. The Commission is authorized to distribute funds, including grants, to counties for indigent defense services under the Texas Government Code §79.037. This section further authorizes the Commission to monitor grants and enforce compliance with grant terms and to develop policies to ensure funds are allocated and distributed to counties in a fair manner. The Commission interprets §79.037(c) to require the Commission to adopt rules governing the process for distributing grant funds.

No other statutes, articles, or codes are affected by the adopted new rules.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on September 27, 2017.

TRD-201703913

Wesley Shackelford

Deputy Director

Texas Judicial Council

Effective date: October 17, 2017

Proposal publication date: July 21, 2017

For further information, please call: (512) 936-6994