1. (a) The OAG may withhold funds from a grantee if a grantee fails to comply with established guidelines, grant conditions, or contractual agreements or when funds are depleted or insufficient to fund allocations.

2. (b) The OAG may withhold funds from a specific project for reasons that include, but are not limited to:

   1. (1) failure to comply with any applicable federal or state law, rule, regulation, policy, or guideline, or with the terms of any grant agreements;
   2. (2) failure to submit reports of expenditures and the status of funds, grantee progress reports, or special required reports at the times and in the form established for such reporting;
   3. (3) failure to maintain proper records as required by these rules;
   4. (4) failure to conduct the grant project according to the terms of the application for the grant, the statement of grant award, the grantee acceptance notice, or a grant adjustment notice;
   5. (5) failure to comply with any condition that has been made a part of the statement of grant award by reference or inclusion therein, or through the issuance of a grant adjustment notice;
   6. (6) failure to commence project operations within 60 days of the project start date;
   7. (7) failure to submit audit reports, including management letters, responses to audit findings or management letters;
   8. (8) failure to provide timely and adequate responses to audit or monitoring report findings; or
   9. (9) failure to provide accurate information in a grant application, in grantee records, or in reports to the OAG.

3. (c) The OAG may withhold funds from all projects operated by a grantee for reasons that include, but are not limited to:

   1. (1) failure to respond to any deficiency listed in this section;
   2. (2) failure to return to the OAG within the required time unused grant funds remaining in the expired grant; or
   3. (3) refusal to return to the OAG any grant funds improperly accounted for or expended for ineligible purposes under a grant that has expired.
4. (d) The OAG will not give advance notice that a grantee may be placed on financial hold. It is the responsibility of a grantee to submit all reports and other required information in a timely fashion and to comply with OAG grant guidelines.
5. (e) The OAG will notify a grantee when a grant is placed on financial hold. A grantee may, within 10 days of receiving notification, request in writing a reconsideration of the determination to withhold funds. A grantee should direct this request to the OAG grants coordinator, together with any documentation in support of the reconsideration. The OAG will review the determination to withhold funds based on the documentation submitted. The OAG will send the final determination to the grantee in writing.
6. (f) The OAG will release funds when the grantee has provided satisfactory evidence of the correction of the deficient conditions unless the OAG has terminated the grant as provided in §60.105 of this title.

Source Note:The provisions of this §60.103 adopted to be effective December 17, 2001, 26 TexReg 10273.