TITLE 10. COMMUNITY DEVELOPMENT

PART 9. TEXAS ADVANCED NUCLEAR ENERGY OFFICE

CHAPTER 331. GRANTS

The Office of the Governor, the Texas Advanced Nuclear Energy Office (TANEO) adopts 10 Texas Administrative Code §§331.1 - 331.9, 331.20, 331.21, and 331.30 - 331.32. Section 331.32 is adopted with changes to the proposed text as published in the January 2, 2026, issue of the Texas Register (51 TexReg 9). This rule will be republished. Sections 331.1 - 331.9, 331.20, 331.21, 331.30 and 331.31 are adopted without changes and will not be republished.

REASONED JUSTIFICATION OF ADOPTED RULES

TANEO adopts 10 Texas Administrative Code (TAC) §§331.1 - 331.9, 331.20, 331.21, and 331.30 - 331.32 relating to the Texas Advanced Nuclear Development Fund, the Project Development and Supply Chain Reimbursement Program, and the Advanced Nuclear Construction Reimbursement Program. This adopted rulemaking implements Texas Government Code, Chapter 483 as enacted by House Bill (HB) 14 during the Texas 89th Regular Legislative Session. The adopted rulemaking establishes the policies and procedures governing the reimbursement programs, including the application process, eligibility requirements, and details related to the program's grant agreements. The adopted rules also establish the framework TANEO will use to award grants, enter into grant agreements, and distribute the proceeds of a grant award on a rolling basis, as required by Section 483.204(g), Texas Government Code.

SUMMARY OF COMMENTS AND AGENCY RESPONSE

TANEO received public comments on the proposed rules from The Dow Chemical Company, Fermi America, Last Energy Inc., Pacific Square, and X-energy. Some of the comments were general in nature, while others addressed concerns or questions about specific rule sections. The general comments are addressed as follows:

Comment: One commenter states that they support the intent behind the proposed rules.

Response: TANEO appreciates the support for the rules.

Comment: Two commenters state that they support TANEO's proposed rules and commend TANEO for establishing a clear framework to implement House Bill 14. One commenter states that the proposed rules appropriately balance program transparency with the flexibility necessary to accommodate the range of advanced nuclear technologies and regulatory pathways represented in Texas's emerging nuclear industry. The other commenter states that they recognize TANEO's intention to establish a competitive funding process and tailor milestone-based payments to each awarded project.

Response: TANEO appreciates the support for the rules and agrees with the commenters' assessments.

Comment: One commenter notes that the proposed rules do not address how TANEO will coordinate with other government agencies, whether federal, state, or local. The commenter recommends that TANEO establish a process for applicants to disclose other government funding sources and better coordinate reporting in order to streamline reporting and compliance.

Response: TANEO declines to modify the adopted rules to address how TANEO will coordinate with other government agencies, including federal, state, or local because this information will be addressed in Requests for Applications and the grant agreement.

Comment: One commenter recommends that TANEO clarify that workforce development investments are an important and eligible component of projects supported under proposed Sections 331.2, 331.4, and 331.5, Texas Administrative Code. Specifically, the commenter recommends that the following workforce development investments be identified as eligible components of projects under these rules: apprenticeships and on-the-job training; workforce certification and credentialing; partnerships with Texas community colleges and universities; nuclear-specific safety, quality assurance, and regulatory training; and workforce development tied to in-state manufacturing and supply chains. The commenter suggests that clear documentation standards for workforce-related expenses would improve compliance and reduce administrative burden while protecting taxpayer funds. The commenter also recommends that TANEO explicitly recognize workforce development commitments as a positive evaluation factor for projects supported under these rules, including demonstrated education partnerships, long-term operations staffing plans, and veteran or skilled-trades hiring initiatives.

Response: TANEO declines to modify the adopted rules in response to the recommended modifications. Adopted Section 331.2 follows applicable statute in Section 483.201(b)(1), Texas Government Code, which explains that grant recipients may be eligible businesses, nonprofit organizations, and governmental entities, including institutions of higher educations. Adopted Section 331.4 describes application requirements, including what an application must include as well as the possibility of requiring an applicant to submit a Notice of Intent to apply to TANEO. Adopted Section 331.5(a) and (b) explain that TANEO may establish and specify any selection criteria it considers relevant to the grant and lists non-exhaustive factors that TANEO shall use to evaluate each application. Although TANEO may use workforce development investments in evaluating grant applications and a project's potential benefits to the State, TANEO declines to include a comprehensive list of what constitutes a project's benefits to the State in the adopted rules. TANEO does not believe these components fit in Section 331.2 or Section 331.4. These components may fit in Section 331.5(d), but TANEO declines to include them in the adopted rule. Each project will have different characteristics that need to be evaluated based on different factors to avoid excluding the full range of benefits to the State. Accordingly, it is inappropriate to include a list of workforce development investments in the rule.

In addition to these general comments, TANEO received comments on specific rules, summarized as follows:

Comments on Subchapter A, General Provisions, §331.5, Grant Evaluation and Review Process.

Comment: One commenter encourages TANEO to interpret "the project's potential benefit to this state" in proposed Section 331.5(b)(2) to include in-state manufacturing and supply chain development, in addition to the creation of project-specific jobs. The commenter states that projects that commit to engaging Texas workers and supporting the State's manufacturing capacity can provide economic benefits that extend beyond electricity generation. The commenter encourages TANEO to include these considerations in TANEO's interpretive framework but does not recommend any changes to the proposed rule.

Response: The purposes for which the Legislature established TANEO are set forth in Section 483.101(b), Texas Government Code. That provision includes TANEO's purposes of "creating high-wage advanced manufacturing jobs in this state" and "support[ing] the development of an advanced nuclear energy supply chain . . . in this state." Tex. Gov't Code § 483.101(b)(3), (8). The aspirations described by the commenter directly align with TANEO's purposes, and, as such, TANEO agrees a project's potential benefit to this State may include increases in in-state manufacturing, supply chain development, and job creation--and all other benefits that align with TANEO's purposes. Because the benefits discussed align with statutory directives, TANEO declines to re-memorialize them in rule.

Comments on Subchapter A, General Provisions, §331.6, Amount of Grant Award Recommendations and Decisions.

Comment: Two commenters suggest that TANEO clarify the intent of the portion of proposed Section 331.6(c), which states "[n]either this chapter nor a grant agreement creates any entitlement or right to grant funds by a grant applicant." One commenter states that they understand that all grants will be subject to the availability of funds and the State's biennial budget process; however, the commenter states, a signed grant agreement by both parties will result in a properly executed contract and should result in funds for the project. Another commenter recommends that TANEO establish language around the reasons that grant funding may not be available to a selected applicant.

Response: TANEO is constitutionally prohibited from assuming obligations in excess of funds the Legislature has appropriated to TANEO to accomplish its duties and purposes. Tex. Const. art. III, § 49a; id. art. VIII, § 6. Additionally, TANEO is constitutionally prohibited from making a grant to a private party unless TANEO "has placed sufficient controls on the transaction to ensure that the public purpose is accomplished." Tex. Att'y Gen. Op. No. JC-0484 (2002); see Tex. Const. art. III, § 51. Accordingly, a grantee can have no entitlement or right to grant funds and may receive funds only if it has satisfied the controls TANEO has set forth in the application and contracting processes, including the Request for Applications and grant agreements. Further, TANEO will ensure the grant agreement sets forth conditions under which grant funding may not be available to a selected applicant.

Comments on Subchapter A, General Provisions, §331.8, Grant Agreement.

Comment: One commenter states that they appreciate TANEO's approach to establish milestones for each selected project to manage risk and steward funds. The commenter believes that these funds will be instrumental in advancing projects and attracting private sector capital, facilitating commercial decisions that advance nuclear projects for the benefit of Texas.

Response: TANEO appreciates the support for the rules and agrees with the commenter's assessments.

Comment: One commenter notes that proposed Section 331.8 indicates that a written grant agreement must specify benchmarks and milestones for the completion of the project for which the grant is provided. The commenter believes this is reasonable and appropriate.

Response: TANEO appreciates the support for the rules and agrees with the commenter's assessment. The adopted rule remains unchanged from the proposed rule.

Comment: Two commenters note that proposed Section 331.8(2) does not define "fail[ure]…to reach the specified benchmarks." The commenters suggest that TANEO clarify or define what constitutes such failure, even though the proposed rules state that they will be defined in the grant agreement.

Response: TANEO declines to modify the rule to further define failure to reach the specified benchmarks. Under the adopted rule and applicable statute, benchmarks and milestones will be agreed upon in an arm's length discussion between TANEO and a potential grantee and will be specified in the grant agreement. Accordingly, what constitutes a failure to meet benchmarks may vary from project to project.

Comment: One commenter recommends that TANEO establish a process for no-cost extensions if projects continue to make progress despite failing to reach specific benchmarks. The commenter states that this practice is commonplace among federal grants and provides an avenue to accommodate the complexity of large-scale infrastructure projects.

Response: TANEO declines to modify the rule to include a process for no-cost extensions. Specific benchmarks will vary between entities and will be determined in the grant agreement. TANEO can access the appropriateness of no-cost extensions on a case-by-case basis using the framework outlined in the Texas Grant Management Standards.

Comment: Two commenters note that proposed Section 331.8 suggests that repayment is tied to the specific benchmarks and milestones outlined in the grant agreement, rather than to the whole grant amount. The commenters suggest that if TANEO intends to clawback or seek repayment of the entire grant amount if a recipient fails to reach a particular benchmark or milestone, then TANEO should clearly state such in the rule.

Response: TANEO declines to adopt the recommended modification. TANEO must retain its discretion in this scenario to carry out this program in the best interests of the State of Texas. The benchmark, milestones, and repayment provisions in a grant agreement may vary among various grantees, as projects among the grantees will vary. Benchmarks, milestones, and repayment procedures will be set out in the grant agreement based on each individual grantee and the grantee's project.

Comment: Two commenters state that proposed Section 331.8 does not address a timeframe for when repayment must be made to the State if a grantee fails to reach specified benchmarks. One commenter suggests that TANEO make clear the expectation on timeline for repayment, and the other commenter recommends that TANEO add two provisions to this rule that require, in addition to the proposed rules, a grant agreement to also "address the implications of failing to meet any milestone that is not achieved; and provide clear mechanisms for repayment of grant funds under specified conditions; including the allowance of repayment in no less than 180 days."

Response: TANEO declines to adopt the recommended modification. Circumstances surrounding failure to reach specified benchmarks and repayment will vary among grantees. In the event a grantee fails to reach specified benchmarks and must repay grant funds, the details setting forth that repayment process will be laid out in the grant agreement, through discussions with TANEO, written notices of deficiencies, if applicable, and other applicable law.

Comments on Subchapter A, General Provisions, §331.9, Waiver of Rules.

Comment: One commenter states that proposed Section 331.9 does not provide guidance on its intended application, and that large, advanced nuclear projects may require tailored treatment to reflect scale, maturity, and grid impact. The commenter suggests that TANEO specify that waiver authority may be exercised for multi-unit projects, the United States Nuclear Regulatory Commission (NRC)-certified reactor designs, or projects with demonstrable system-level reliability and economic benefits to Texas.

Response: TANEO declines to adopt the recommended modification. The waiver provision relates to administrative rules found in 10 Texas Administrative Code Chapter 331 and is available only in extraordinary circumstances. Section 331.9 allows for a waiver of any rule for which a waiver (1) would further the public interest; and (2) would be consistent with applicable statutory law.

Comment: One commenter notes that they have concerns with granting TANEO unrestricted authority to override rules that are vital for grantees and stakeholders. The commenter states that the absence of clear criteria or limitations for such waivers creates the potential for inconsistent application. The commenter recommends that any waiver process be narrowly defined, with specific criteria and procedural safeguards to ensure an equitable application. The commenter states that the proposed rule should require TANEO to provide detailed justification for any waiver, including a public explanation of how the waiver serves the public interest, and should establish a formal appeals process for grantees affected by such decisions. The commenter recommends that TANEO add the following language to proposed Section 331.9: "TANEO will provide detailed justification for any waiver, including an explanation of how the waiver serves the public interest."

Response: TANEO declines to adopt the recommended modification. The waiver provision relates to administrative rules found in 10 Texas Administrative Code Chapter 331 and is available only in extraordinary circumstances. The provision has appropriate guardrails set forth within the text of the rule, as well as within the requirements set forth in the Texas Administrative Code.

Comments on Subchapter C, Advanced Nuclear Construction Reimbursement Program, §331.31, Limitations on Maximum Grant Amount: Prerequisites to Grant Funding.

Comment: One commenter notes that the $120 million cap on construction reimbursement grants does not scale to the capital requirements of a four-unit AP1000 project. The commenter states that, at this scale, the cap is insufficient to meaningfully reduce financial risk, influence investment decisions, or incentivize accelerated deployment. The commenter also notes that the proposed structure does not recognize the system-level benefits of multi-unit sites, including shared infrastructure, workforce continuity, and long-term grid reliability. The commenter suggests that TANEO establish per-unit caps, tiered caps, or alternative scaling mechanisms that recognize the magnitude and grid value of multi-unit nuclear deployments.

Response: TANEO declines to adopt the recommended modification because it is contrary to statute. Section 483.204(d) states that a "grant provided under this section may not exceed the lesser of: (1) 50 percent of the amount of qualifying expenses associated with the project; or (2) $120 million" for construction of an advanced nuclear project as defined by Section 483.001(1), Texas Government Code. Chapter 483, Texas Government Code, does not contemplate per-unit caps, tiered caps, or alternative scaling mechanisms, but TANEO may take into account long-term grid reliability impacts in the grant selection process.

Comment: One commenter notes that proposed Section 331.31(b) requires docketing of a construction permit or license application from the NRC before TANEO may provide construction reimbursement funding, but states that for a multi-unit AP1000 project using an NRC-certified reactor design, the most capital-intensive and risk-bearing activities occur prior to docketing, including site-specific engineering, long-lead procurement, and supply chain commitments. The commenter notes that by the time docketing occurs, state reimbursement support is unlikely to materially influence project viability, financing, or execution risk. The commenter suggests that TANEO modify the proposed rules to allow condition or phased construction reimbursement eligibility tied to defined pre-docket milestones for NRC-certified reactor designs, such as completion of site-specific engineering or Combined Operating License preparation.

Response: TANEO declines to adopt the recommended modification because it would be contrary to statute. Section 483.204(f), Texas Government Code, states "[TANEO] may not provide a reimbursement grant for a project under this section until the regulatory commission has docketed a construction permit or license application for the project."

Comment: One commenter seeks clarification on proposed Section 331.31(b)'s requirement that TANEO may not provide a reimbursement grant for a project until the NRC has docketed a construction permit or license application for the project. The commenter recommends that TANEO specify when a construction permit or license application must be docketed; specifically, the commenter requests clarification on whether the construction permit or license application must be docketed before TANEO awards the grant, before funds are disbursed, or by a specific date.

Response: TANEO declines to adopt the recommended modification. The adopted rule and applicable statute do specify when a construction permit or license application must be docketed. Adopted Section 331.31(b), Texas Administrative Code, and Section 483.204(f), Texas Government Code, state that TANEO may not provide a reimbursement grant under the Advanced Nuclear Construction Reimbursement Program until the Nuclear Regulatory Commission has docketed a construction permit or license application for the project. To clarify, this means that TANEO may not enter a grant agreement or disburse funds to a grantee until the NRC has docketed a construction permit or license application for the project. TANEO's request for application will provide details on the specific date by which a construction permit or license application for the project must be docketed before TANEO awards the grant.

Comment: One commenter explains that because of lengthy NRC review periods and the current reform effort initiated by President Trump's Executive Order 14300, the official docketing of viable Texas projects may not align with the timing of the grant application window. The commenter states that to ensure the grant programs encompass favorable Texas projects, the commenter encourages TANEO to consider applications for projects that are in the process of being docketed or at a similar stage of oversight by another agency, such as the Department of Energy, and reimburse costs once docketing or similar oversight requirements have been met.

Response: TANEO declines to adopt the recommended modification because it is contrary to statute. Section 483.204(f), Texas Government Code, states that TANEO may not provide a reimbursement grant under the Advanced Nuclear Construction Reimbursement Program until the NRC has docketed a construction permit or license application for the project. TANEO may consider applications for projects that are in the process of being docketed, but TANEO may not enter a grant agreement or provide a reimbursement grant to a grantee until the NRC has docketed a construction permit or license application for the project. TANEO's request for application will provide details regarding the specific date by which a construction permit or license application for the project must be docketed before TANEO awards a grant.

Comments on Subchapter C, Advanced Nuclear Construction Reimbursement Program, §331.32, Grant Agreement.

Comment: One commenter recommends that TANEO retain the proposed rule provision allowing TANEO to accept approvals from federal agencies other than the NRC in Section 331.32(c). The commenter explains that, for example, the Department of Energy's (DOE) Reactor Pilot Program, established following President Trump's Executive Order 14301, is a fast-track initiative designed to accelerate the development and commercial licensing of advanced nuclear reactors. The commenter explains that the DOE's authorization process under 10 C.F.R. 830 mirrors NRC licensing stages in key respects. The commenter states that given the structural similarities between DOE authorization and NRC licensing, and the October 2025 Addendum No. 9 to the Memorandum of Understanding between the DOE and the NRC committing both agencies to leverage DOE-approved safety documentation for future NRC reviews, this proposed provision reflects sound policy. The commenter explains how the proposed provision allows TANEO to evaluate project milestones based on the regulatory framework most applicable to each project while ensuring safety standards remain vigorous.

Response: TANEO agrees that Section 331.32(c) should be adopted as proposed.

Comment: One commenter states that TANEO retains broad discretion to define milestones, evaluate progress, and withhold reimbursement, even for potentially eligible expenses. The commenter states that for large-scale projects that rely on project finance and long-term contracting, uncertainty around milestone verification increases cost of capital and complicates engineering, procurement, and construction (EPC) and vendor negotiations. The commenter also states that financing institutions require predictable, objective reimbursement criteria aligned with established regulatory and construction frameworks. The commenter recommends TANEO align the proposed rules milestone definitions more explicitly with NRC regulatory stages and standard AP1000 construction phases, and commit to objective, transparent milestone verification procedures.

Response: TANEO declines to adopt the recommended modification. The adopted rule follows the applicable statute in Section 483.204, Texas Government Code, and it applies to more than just AP1000 reactors. The Advanced Nuclear Construction Reimbursement program applies to "an advanced nuclear project" in this State, as defined by Section 483.001(1), Texas Government Code. Additionally, Section 331.8(1) states that benchmarks and milestones for the completion of the project for which a grant is provided shall be specified in a grant agreement.

Comment: Two commenters explain that it is important that a grantee be able to work together with TANEO to develop a mutually-agreed upon milestone-based plan, with one commenter stating that each grantee's plan will be different and must be specific for each project, aligning to the project's internal management process, as well as the timing and project financial expenditures. The commenters recommend the inclusion of additional language into proposed Section 331.32 to bring the grantee into the decision-making process for the milestone-based plan.

Response: TANEO declines to adopt the recommended modification. While TANEO agrees that it is important that a grantee be able to work together with TANEO to develop the appropriate milestone-based plan, and that each grantee's plan may be different, TANEO believes that this is something that is appropriately accomplished through a grant agreement and does not require additional administrative memorialization in the rulemaking process.

Comment: Two commenters recommend that TANEO replace "completion" with "incompletion" in proposed Section 331.32(d) for clarity, with one commenter stating that it seems to be a typographical error.

Response: TANEO agrees with these recommendations. Therefore, TANEO agrees to modify proposed Section 331.32(d) in response to comments. Adopted Section 331.32(d) reads as follows: "TANEO may withhold reimbursements of grant funds based on an applicant's failure to complete specified milestones described in the grant agreement." TANEO agrees with one of the commenters that this was a typographical error in the proposed rule and will correct this error in the adopted rule.

TAKINGS IMPACT ASSESSMENT

Mr. Shaffer has determined that there are no private real property interests affected by the adopted rules, and the rules do not restrict, limit, or impose a burden on an owner's rights to the owner's private real property that would otherwise exist in the absence of government action. Thus, the adopted rules do not constitute a taking or require a takings impact assessment pursuant to Section 2007.043, Texas Government Code.

SUBCHAPTER A. GENERAL PROVISIONS

10 TAC §§331.1 - 331.9

STATUTORY AUTHORITY

Section 483.101, Texas Government Code, authorizes TANEO to adopt and enforce rules necessary to carry out the programs established in Chapter 483, Texas Government Code. Section 483.203, Texas Government Code, authorizes TANEO to establish by rule procedures for the application for and provision of a grant under the Project Development and Supply Chain Reimbursement Program. Section 483.204, Texas Government Code, authorizes TANEO to establish by rule procedures for the application for and provision of a grant under the Advanced Nuclear Construction Reimbursement Program.

CROSS REFERENCE TO STATUTE

Chapter 483, Texas Government Code. No other statutes, articles, or codes are affected by the adopted 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 February 27, 2026.

TRD-202601016

Jarred Shaffer

Director

Texas Advanced Nuclear Energy Office

Effective date: March 19, 2026

Proposal publication date: January 2, 2026

For further information, please call: (512) 463-2000

SUBCHAPTER B. PROJECT DEVELOPMENT AND SUPPLY CHAIN REIMBURSEMENT PROGRAM

10 TAC §331.20, §331.21

STATUTORY AUTHORITY

CROSS REFERENCE TO STATUTE

Chapter 483, Texas Government Code. No other statutes, articles, or codes are affected by the adopted 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 February 27, 2026.

TRD-202601017

Jarred Shaffer

Director

Texas Advanced Nuclear Energy Office

Effective date: March 19, 2026

Proposal publication date: January 2, 2026

For further information, please call: (512) 463-2000

SUBCHAPTER C. ADVANCED NUCLEAR CONSTRUCTION REIMBURSEMENT PROGRAM

10 TAC §§331.30 - 331.32

STATUTORY AUTHORITY

CROSS REFERENCE TO STATUTE

Chapter 483, Texas Government Code. No other statutes, articles, or codes are affected by the adopted rules.

§331.32. Grant Agreement.

(a) Before entering a grant agreement for a grant under this subchapter, TANEO will establish a milestone-based plan to distribute grant funds on a rolling basis in accordance with:

(1) a project's respective regulatory commission license or permit regulatory pathway; and

(2) the grant recipient's financial investment decisions as it relates to the project.

(b) To determine the milestones included in a grant agreement, TANEO may consider, but is not limited to, the following considerations:

(1) the applicant's progress and completion of the regulatory commission's regulatory stages and other requirements related to a license or permit, including the:

(A) application schedule and resource letter published;

(B) application safety review;

(D) issuance of license or permit; and

(2) the recipient's financial investment decisions related to a project, including:

(A) a comprehensive description of the entire project management process;

(B) anticipated timing of decisions and associated prerequisites for a project to proceed through a gating process; and

(C) a comprehensive financing and capital expenditure plan for the project, including details relating to sources of funding and project-specific investment decisions and timelines.

(c) Notwithstanding subsection (b)(1) of this section, TANEO may, in its sole discretion, accept approvals that applicants receive from other federal agencies.

(d) TANEO may withhold reimbursements of grant funds based on an applicant's failure to complete specified milestones described in the grant agreement.

(e) TANEO may require a grant recipient to submit any documentation or information TANEO determines is necessary to assess whether a grantee has met a milestone in whole or in part for the purpose of distributing grant funds.

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 February 27, 2026.

TRD-202601018

Jarred Shaffer

Director

Texas Advanced Nuclear Energy Office

Effective date: March 19, 2026

Proposal publication date: January 2, 2026

For further information, please call: (512) 463-2000