TITLE 25. HEALTH SERVICES

PART 11. CANCER PREVENTION AND RESEARCH INSTITUTE OF TEXAS

CHAPTER 703. GRANTS FOR CANCER PREVENTION AND RESEARCH

The Cancer Prevention and Research Institute of Texas ("CPRIT" or "the Institute") adopts amendments to 25 Texas Administrative Code §703.23 without changes to the proposed amendments as published in the June 5, 2026, issue of the Texas Register (51 TexReg 3775); therefore, the rule will not be republished.

Reasoned Justification

CPRIT may withhold the last ten percent (10%) of the total Grant Award funds from a Grant Recipient that receives Grant Award funds via advance payment. Pursuant to §703.23(a), the Grant Recipient must successfully complete all close out reports required by the Institute to receive the withheld funds. This functions to ensure the Grant Recipient's required compliance with all Grant Award close out documents.

Grant Recipients under the Product Development Research Program have sought and received advance Grant Award funds. As a result, CPRIT does not disburse the last ten percent (10%) of Grant Award funds for most Product Development Research Grant Recipients until the Grant Recipients have submitted close out documents.

Some Product Development Research Grant Recipients that initially received Grant Award funds paid in advance voluntarily elected to receive Grant Award funds via reimbursement-based disbursement during their Grant Contract term. Section 703.23 does not provide clear guidance regarding the Institute's ability to withhold the final ten percent (10%) of Grant Award funds when the Grant Recipient has received advanced payment of Grant Award funds in the past but has later shifted to receiving payment of Grant Award funds on a reimbursement basis. The proposed rule change to §703.23 clarifies that all Product Development Research Grant Recipients are subject to the ten percent (10%) holdback regardless of whether they receive Grant Award funds in advance or on a reimbursement basis. All other Grant Recipients may be subject to the ten percent (10%) holdback if the Institute determines it is necessary and provides notice no later than the first day of the final Financial Status Report period for the Grant Award.

The proposed rule change permits the Grant Recipient subject to the ten percent (10%) holdback to submit a written request to CPRIT's Chief Executive Officer to reduce or eliminate the amount of Grant Award funds otherwise withheld by the Institute. A Grant Recipient's request must include a reasonable justification of the circumstances supporting a reduced holdback. Because this rule revision codifies the most common practice and applies it to all circumstances easily, it will avoid ambiguity and complexity in the application of the rule with little to no change to current practices.

Summary of Public Comments and Staff Recommendation

CPRIT received public comments from one individual regarding the proposed amendments to §703.23. Below is a summary of CPRIT's response to the comments. CPRIT staff recommends moving forward with adoption of the amendments.

In response to the Proposed Rule Changes and Request for Public Comment, CPRIT received a comment from one commenter, representing the University of Texas at Austin's Office of Sponsored Projects (OSP) requesting the following three changes or clarifications:

1. Advocating the rule limit the 10% withholding requirement for non-Product Development Research grantees to institutions with documented audit findings, poor annual audit results, or a demonstrated history of closeout compliance issues.

CPRIT disagrees with this comment. Although CPRIT appreciates the concern that the rule change could burden Grant Recipients without a documented history of compliance deficiencies, CPRIT believes the rule imposes no additional burdens. The rule creates no additional closeout obligations, and CPRIT presently does not intend to add new closeout obligations through the grant contracting process. In addition, CPRIT presently reserves the right to withhold any reimbursement for failure to meet contractual obligations.

CPRIT notes that many compliance deficiencies may not appear in audit findings and that Grant Recipients may have no prior history of CPRIT Grant Awards to form the basis of a demonstrated history of closeout compliance issues.

CPRIT Grant Recipient organizations vary greatly in their business structure, financial resources, number of CPRIT grants awarded, and familiarity with CPRIT grant reporting requirements. An inflexible, mechanical limitation of this type simply will not meet CPRIT's need to ensure compliance.

CPRIT also notes that the proposed rule as amended under TAC §703.23(c)(2)(A) provides a Grant Recipient that has a demonstrated history of grant reporting compliance with the ability to request a reduction or suspension of withholding. This remedial procedure is not currently available to a Grant Recipient under CPRIT's existing rules.

2. Requesting clarification of how the withholding would operate if a grantee reached the 90% expenditure threshold prior to the end of the award period.

CPRIT disagrees with this comment to the extent it implies the proposed rule creates a textual ambiguity. As the text of the rule states, CPRIT may withhold the final 10% of the total Grant Award to ensure compliance with closeout requirements. CPRIT will withhold the full payment or partial payment of grant expenses against any Financial Status Report (FSR) as soon as the expenses reach an amount in excess of 90% of the Grant Award.

CPRIT notes for the record that it is already possible for CPRIT to withhold 10% of the Grant Award if the final FSR amount were the equivalent of 10% of the Grant Award and, therefore, the final payment to the Grant Recipient pursuant to TAC §703.14 of this title (relating to Termination, Extension, Close Out of Grant Contracts, and De-Obligation of Grant Award funds). If this situation were to occur without the proposed rule, there is no remedial procedure under CPRIT's existing administrative rules that allows a Grant Recipient to request that CPRIT withhold less than 10% of the Grant Award. As indicated above in CPRIT's response to Comment 1, the proposed rule provides a Grant Recipient that has a demonstrated history of grant reporting compliance with the ability to request the reduction or suspension of the withholding.

3. Arguing the rule should reduce withholding to 10% of the final invoice submitted under the award. The comment argues this amount would align with CPRIT's existing closeout procedures and would achieve CPRIT's oversight objectives while reducing administrative burden for both Grant Recipients and CPRIT.

CPRIT disagrees with this comment. CPRIT Grant Awards vary greatly in size and financial structure. Furthermore, as indicated above in CPRIT's response to Comment 1, CPRIT Grant Recipient organizations vary greatly in their business structure, financial resources, number of CPRIT grants awarded, and familiarity with CPRIT grant requirements. Although withholding payment of 10% of the final FSR may be sufficient for many Grant Recipients to ensure compliance with CPRIT's reporting requirements, the amount may be de minimis for others such that it may not ensure compliance with CPRIT grant reporting requirements.

The rule changes are adopted under the authority of the Texas Health and Safety Code Annotated, § 102.108, which provides the Institute with broad rule-making authority to administer the chapter, including rules for awarding grants.

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 2, 2026.

TRD-202603797

John Ellis

General Counsel

Cancer Prevention and Research Institute of Texas

Effective date: September 22, 2026

Proposal publication date: June 5, 2026

For further information, please call: (512) 463-3190